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## Property and Equipment 

## CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued 

Property and equipment are carried at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the useful lives of the assets, ranging from three to thirty years. 

The following is a summary of property and equipment. 

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During 2017, the Company relocated its home office to a different location and entered into a two-year lease with an unrelated party expiring in August 2019. The Company's previous home office was in a building owned by the Company. During the second quarter of 2018, the building was reclassified in the amount of $1.5 million from real estate held for investment to real estate held for sale on the Consolidated Statement of Financial Position. 

Lease payments for the home office are $118,000 per month during the twelve months beginning August 1, 2018. The Company entered into a long-term lease agreement for a new home office in January 2019. The building in which the Company has leased office space is in the process of being constructed. The new long-term lease will commence after the construction of the building is complete, which is expected to be at the end of 2020. The Company is currently looking for a short-term lease to bridge the period in between. 

The Company sold its airplane in 2017 for a gain of $99,000, which is included in other income on the Consolidated Statement of Operations. 

## Reinsurance Recoverable 

Reinsurance recoverable includes expected reimbursements for policyholder claim amounts in excess of the Company's retention, as well as profit sharing and experience refund accruals. Reinsurance recoverable is reduced for estimated uncollectible amounts, if any. 

Reinsurance premiums, benefits and expenses are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. The cost of reinsurance related to long duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. The cost of reinsurance related to short duration contracts is accounted for over the coverage period. Profit-sharing and similar adjustable provisions are accrued based on the experience of the underlying policies. 

