Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Contractual Obligations and Off-balance Sheet Arrangements We have committed to the following contractual obligations as of December 31, 2018, with the payments due by the period indicated below: The payments related to the future policy benefits and policy claims payable reflected in the table above have been projected utilizing assumptions based upon our historical experience and anticipated future experience. The Company’s principal executive office is currently located at 2900 Esperanza Crossing, 2$^{nd }$Floor, Austin, Texas. In August 2017, the Company entered into a two-year lease agreement with an unrelated party for our principal executive office. The lease started in August 2017 and will expire in August 2019. In January 2019, the Company entered into a long-term lease agreement with an unrelated party for our new principal executive office. The building in which we have leased office space is under construction and is expected to be completed in 2020. The long-term lease will commence after construction of the building is complete and has a 121-month term. Payments under the new long-term lease agreement will average approximately $112,340 per month. To bridge the gap between the expiration date of the current lease and the lease commencement date of the new long-term lease, the Company is in the process of locating a short-term lease for our principal executive office.  The Company does not have off-balance sheet arrangements at December 31, 2018 and, therefore, does not expect any future effects on the Company's financial condition related to any such arrangements. We do not utilize special purpose entities as investment vehicles, nor are there any such entities in which we have an investment that engages in speculative activities of any nature, and we do not use such investments to hedge our investment positions. Citizens is a holding company and has had minimal operations of its own. Our assets consist of the capital stock of our subsidiaries, cash, fixed income securities, mutual funds and investment real estate. Our cash flows depend primarily upon the availability of statutorily permissible payments, primarily payments under management agreements from our life insurance subsidiaries. The ability to make payments is limited by applicable laws and regulations of Bermuda and U.S. states of domicile, which subject insurance operations to significant regulatory restrictions. These laws and regulations require, among other things, that these insurance subsidiaries maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay to the holding company. We historically have not relied upon dividends from subsidiaries for our cash flow needs. However, our subsidiaries have made dividend payments of available funds from time to time in relation to business strategies. Parent Company Liquidity and Capital Resources 56 Contractual Obligation Total Less than 1 Year 1 to 3 Years 3 to 5 Years More than 5 Years (In thousands) Operating leases $ 3,265 1,939 1,296 30 — Future policy benefit reserves: Life insurance 1,179,946 17,613 47,573 74,363 1,040,397 Annuities 76,377 76,151 14 7 205 Accident and health 944 129 530 12 273 Total future policy benefit reserves 1,257,267 93,893 48,117 74,382 1,040,875 Policy claims payable: Life insurance 7,194 7,194 — — — Accident and health 99 99 — — — Casualty 321 321 — — — Total policy claims payable 7,614 7,614 — — — Total purchase obligations — — — — — Total contractual obligations $ 1,268,146 103,446 49,413 74,412 1,040,875