UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025.

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                   

Commission File Number: 000-55627

US ALLIANCE CORPORATION
(Exact name of registrant as specified in its charter)

Kansas	26-4824142
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1303 SW First American Pl, Suite 200, Topeka, Kansas	66604
(Address of principal executive offices)	(Zip Code)

(785) 228-0200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).        ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑ Emerging growth company ☐

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      ☐ Yes  ☒ No

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the exchange act. ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $0.10 par value

7,748,922 shares outstanding

as of May 1, 2025

US ALLIANCE CORPORATION

FORM 10-Q

TABLE OF CONTENTS

Part I - Financial Information

Item	Item Description	Page
Item 1	Financial Statements	3
	Consolidated Balance Sheets (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) (unaudited)	4
	Consolidated Statements of Changes in Shareholders' Equity (unaudited)	5
	Consolidated Statements of Cash Flows (unaudited)	6
	Notes to Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4	Controls and Procedures	32
Part II - Other Information
Item	Item Description
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	33
	Signatures	34

2

US Alliance Corporation

Consolidated Balance Sheets 

	March 31, 2025			December 31, 2024
	(unaudited)
Assets
Investments:
Available for sale fixed maturity securities (amortized cost: $82,556,371 and $83,785,307, net of allowances for credit losses of $0 and $0, as of March 31, 2025 and December 31, 2024, respectively)	$	78,878,689		$	79,578,179
Equity securities, at fair value		3,728,548			3,876,085
Limited partnership interests		688,788			428,170
Mortgage loans on real estate (net of allowance for credit losses of $488,660 and $55,685 as of March 31, 2025 and December 31, 2024, respectively)		24,194,567			25,192,749
Other invested assets		1,185,571			1,109,606
Policy loans		32,513			31,745
Real estate, net of depreciation		1,638,910			1,652,553
Total investments		110,347,586			111,869,087
Cash and cash equivalents		6,721,441			6,903,783
Investment income due and accrued		1,018,582			954,324
Reinsurance related assets		870,616			522,142
Deferred acquisition costs, net		3,957,070			3,908,636
Value of business acquired, net		2,310,448			2,333,553
Property, equipment and software, net		129,647			136,353
Goodwill		277,542			277,542
Federal and state income tax receivable		182,349			182,349
Deferred tax asset, net of valuation allowance		4,003,493			3,747,111
Other assets		452,541			459,102
Total assets	$	130,271,315		$	131,293,982
Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts	$	74,759,710		$	77,940,378
Policyholder benefit reserves		41,499,062			39,898,138
Dividend accumulation		99,645			100,885
Advance premiums		237,659			248,749
Total policy liabilities		116,596,076			118,188,150
Accounts payable and accrued expenses		2,011,693			1,133,521
Federal Home Loan Bank advance		1,250,000			1,250,000
Other liabilities		569,854			91,893
Total liabilities		120,427,623			120,663,564
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,748,922 and 7,748,922 shares as of March 31, 2025 and December 31, 2024		774,893			774,893
Additional paid-in capital		22,976,543			22,966,657
Accumulated deficit		(11,392,901	)		(10,020,956	)
Accumulated other comprehensive loss		(2,514,843	)		(3,090,176	)
Total shareholders' equity		9,843,692			10,630,418
Total liabilities and shareholders' equity	$	130,271,315		$	131,293,982

See Notes to Consolidated Financial Statements.

3

US Alliance Corporation

Consolidated Statements of Comprehensive (Loss) Income

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Income:
Premium income	$	4,419,593		$	3,668,083
Net investment income		1,724,728			1,669,957
Net investment (losses) gains		(1,049,673	)		140,352
Other income		87,364			145,693
Total income		5,182,012			5,624,085
Expenses:
Death claims		1,442,245			1,118,580
Policyholder benefits		2,092,539			1,835,068
Increase in policyholder reserves		1,565,550			979,669
Commissions, net of deferrals		248,490			201,101
Amortization of deferred acquisition costs		307,263			362,810
Amortization of value of business acquired		23,105			23,105
Salaries & benefits		381,238			400,893
Other operating expenses		716,360			688,902
Total expense		6,776,790			5,610,128
Net (loss) income before tax	$	(1,594,778	)	$	13,957
Deferred federal income tax benefit		222,833			-
Total federal income tax benefit		222,833			-
Net (loss) income	$	(1,371,945	)	$	13,957
Net (loss) income per common share, basic and diluted	$	(0.18	)	$	0.00
Unrealized net holding gains arising during the period, net of tax		519,298			50,021
Reclassification adjustment for losses included in net income		56,035			22,903
Other comprehensive income		575,333			72,924
Comprehensive (loss) income	$	(796,612	)	$	86,881

See Notes to Consolidated Financial Statements.

4

US Alliance Corporation

Consolidated Statements of Changes in Shareholders' Equity

Three Months Ended March 31, 2025 and 2024 (unaudited)

							Accumulated
	Number of						Other
	Shares of		Common		Additional		Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital		Loss			Deficit			Total
Balance, December 31, 2023		7,748,922	$	774,893	$	22,964,490	$	(2,916,372	)	$	(10,491,934	)	$	10,331,077
Other comprehensive income		-		-		-		72,924			-			72,924
Net income		-		-		-		-			13,957			13,957
Balance, March 31, 2024		7,748,922		774,893		22,964,490		(2,843,448	)		(10,477,977	)		10,417,958
Balance, December 31, 2024		7,748,922	$	774,893	$	22,966,657	$	(3,090,176	)	$	(10,020,956	)	$	10,630,418
Other comprehensive income		-		-		-		575,333			-			575,333
Stock based compensation on Restricted Stock Awards		-		-		9,886		-			-			9,886
Net loss		-		-		-		-			(1,371,945	)		(1,371,945	)
Balance, March 31, 2025		7,748,922	$	774,893	$	22,976,543	$	(2,514,843	)	$	(11,392,901	)	$	9,843,692

See Notes to Consolidated Financial Statements.

5

US Alliance Corporation

Consolidated Statements of Cash Flows

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Cash Flows from operating activities:
Net (loss) income	$	(1,371,945	)	$	13,957
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		20,349			19,381
Net losses realized on the sale of securities and net credit losses recognized in operations		909,121			35,898
Unrealized losses (gains) on equity securities		21,790			(96,321	)
Change in fair value of embedded derivative		118,762			(79,929	)
(Accretion) amortization of investment securities, net		(102,099	)		(112,213	)
Deferred acquisition costs capitalized		(355,696	)		(124,726	)
Deferred acquisition costs amortized		307,262			362,810
Value of business acquired amortized		23,105			23,105
Change in deferred tax assets		(256,382	)		-
Interest credited on deposit type contracts		519,097			454,517
(Increase) decrease in operating assets:
Investment income due and accrued		(64,258	)		(159,459	)
Reinsurance related assets		(467,236	)		417,581
Other assets		6,561			41,104
Increase (decrease) in operating liabilities:
Policyowner benefit reserves		1,600,924			1,145,795
Dividend accumulation		(1,240	)		919
Advance premiums		(11,090	)		19,340
Other liabilities		477,961			144,098
Accounts payable and accrued expenses		878,172			279,586
Net cash provided by operating activities		2,253,158			2,385,443
Cash Flows from investing activities:
Purchase of fixed income investments		(1,863,263	)		(2,507,233	)
Purchase of equity investments		(461,430	)		(101,406	)
Purchase of mortgage investments		(132,785	)		(252,642	)
Purchase of other invested assets		-			(26,320	)
Proceeds from fixed income sales and repayments		3,148,409			2,277,763
Proceeds from equity sales		3,000			96,428
Proceeds from mortgage repayments		561,216			1,200,925
Proceeds from other invested assets		-			5,440
Increase in policy loans		(768	)		(623	)
Purchase of property, equipment and software		-			(11,127	)
Net cash provided by investing activities		1,254,379			681,205
Cash Flows from financing activities:
Receipts on deposit-type contracts		1,311,824			2,119,530
Withdrawals on deposit-type contracts		(5,011,589	)		(3,024,646	)
Paid in capital		9,886			-
Net cash (used in) financing activities		(3,689,879	)		(905,116	)
Net (decrease) increase in cash and cash equivalents		(182,342	)		2,161,532
Cash and Cash Equivalents:
Beginning		6,903,783			8,982,138
Ending	$	6,721,441		$	11,143,670

See Notes to Consolidated Financial Statements.

6

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 1. Description of Business and Significant Accounting Policies

Description of business: US Alliance Corporation ("USAC") was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. Our offices are located at 1303 SW First American Place, Suite 200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com.

USAC has four wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was formed June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed April 23, 2012, to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was formed April 23, 2012 to serve as investment manager for USAC. Dakota Capital Life Insurance Company (“DCLIC”), was acquired on August 1, 2017 when USAC merged with Northern Plains Capital Corporation (“NPCC”) and was merged into USALSC on December 31, 2023. US Alliance Life and Security Company - Montana (USALSC-Montana), was acquired December 14, 2018. USALSC-Montana is a wholly-owned subsidiary of USALSC. Unless the context indicates otherwise, references herein to the "Company" refer to USAC and its consolidated subsidiaries.

The Company terminated its initial public offering on February 24, 2013. During the balance of 2013, the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its first insurance product on May 1, 2013. The Company continued to expand its product offerings and distribution channels throughout 2014 and 2015. On February 24, 2015, the Company commenced a warrant exercise offering set to expire on February 24, 2016. On February 24, 2016, the Company extended the offering until February 24, 2017 and made additional shares available for purchase. All outstanding warrants expired on April 1, 2016. The Company further extended this offering to February 24, 2024. During the 4th quarter of 2017, the Company began a private placement offering to accredited investors in the state of North Dakota. Both offerings were terminated in the second quarter of 2024.

USALSC received a Certificate of Authority from the Kansas Insurance Department ("KID") effective January 2, 2012, and sold its first insurance product on May 1, 2013.  In 2023, USALSC re-domesticated to North Dakota with approval of the North Dakota Insurance Department ("NDID").

USALSC seeks opportunities to develop and market additional products.

The Company’s business model also anticipates the acquisition by USAC and/or USALSC of other insurance and insurance related companies, including third-party administrators, marketing organizations, and rights to other blocks of insurance business through reinsurance or other transactions.

Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operation for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ended December 31, 2025 or for any other interim period or for any other future year. Certain financial information which is normally included in notes to financial statements prepared in accordance with US GAAP, but which are not required for interim reporting purposes, has been condensed or omitted. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in USAC’s report on Form 10-K and amendments thereto for the year ended December 31, 2024.

Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated from the consolidated financial statements.

Area of Operation: US Alliance Life and Security Company is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska, Oklahoma, Wyoming, South Dakota, Montana, Kentucky, Utah, Alabama, Ohio, Mississippi, New Mexico, Texas, Arizona, Nevada, and Idaho. USALSC-Montana is authorized to operate in the state of Montana.

7

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Common stock and income (loss) per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of March 31, 2025, and December 31, 2024, USAC had 7,748,922 common shares issued and outstanding.

Income (loss) per share attributable to USAC’s common stockholders were computed based on the net income (loss) and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the three months ended March 31, 2025 and 2024 were 7,748,922 and 7,748,922 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. There was no difference between basic and diluted net loss per common share for the three months ended March 31, 2025 and 2024.

New accounting standards:

Improvements to Income Tax Disclosures

In December 2023, the FASB issued Accounting Standards Update 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 is intended to improve the effectiveness of income tax disclosures by requiring, among other things, the disclosure on an annual basis of: (i) specific categories in the rate reconciliation; and (ii) additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires disclosure (on an annual basis) of the following information about income taxes paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes; and (ii) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). ASU 2023-09 is effective for annual periods beginning January 1, 2026, to be applied prospectively with an option for retrospective application (with early adoption permitted). The adoption of ASU 2023-09 will modify our disclosures but will not have an impact on our financial position or results of operations.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 ("Improvements to Reportable Segment Disclosures") which requires disclosures of significant expenses by segment and interim disclosure of items that were previously required on an annual basis. ASU 2023-07 is to be applied on a retrospective basis and is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The adoption of this ASU modified our disclosures but did not have an impact on our financial position or results of operations. Refer to Note 7 of the consolidated financial statements for the disclosure.

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12 "Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts". This update is aimed at improving the Codification related to long-duration contracts, which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. These updates were originally required to be applied retrospectively to the earliest period presented in the financial statements for periods beginning after December 15, 2020. The FASB recently delayed the effective date of ASU 2018-12 to fiscal years beginning after December 15, 2024 and interim periods for fiscal years beginning after December 31, 2025 for smaller reporting companies, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the Company's financial condition and results of operations. 

In December 2022, the FASB issued amendments ASU 2022-05 to ASU 2018-12 "Targeted Improvements for Long-Duration Contracts" that originally required an insurance entity to apply a retrospective transition method as of the beginning of the earliest period presented or the beginning of the prior fiscal year if early adoption was elected. This updated guidance reduces implementation costs and complexity associated with the adoption of targeted improvements in accounting for long-duration contracts that have been derecognized in accordance with ASU 2018-12 before the delayed effective date. Without the amendments in this ASU, an insurance entity would be required to reclassify a portion of gains or losses previously recognized in the sale or disposal of insurance contracts or legal entities because of the adoption of a new accounting standard.

Because there is no effect on an insurance entity's future cash flows, this reclassification may not be useful to users of financial information. The amendments in this guidance are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are evaluating the effect this standard will have on our Consolidated Financial Statements. 

All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did not relate to accounting policies and procedures pertinent or material to the Company at this time.

8

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments

Fixed Maturity

The amortized cost and fair value of available for sale investments as of March 31, 2025 and December 31, 2024 is as follows:

	March 31, 2025
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	801,639	$	-	$	(70,870	)	$	730,769
Corporate bonds		22,353,128		148,954		(2,781,649	)		19,720,433
Municipal bonds		5,393,259		11		(587,431	)		4,805,839
Redeemable preferred stock		2,563,173		14		(168,153	)		2,395,034
Term loans		12,148,679		40,109		(210,723	)		11,978,065
Mortgage backed and asset backed securities		39,296,493		769,746		(817,690	)		39,248,549
Total available for sale	$	82,556,371	$	958,834	$	(4,636,516	)	$	78,878,689

	December 31, 2024
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	799,543	$	-	$	(88,166	)	$	711,377
Corporate bonds		24,370,244		111,868		(2,990,292	)		21,491,820
Municipal bonds		5,416,888		-		(675,739	)		4,741,149
Redeemable preferred stock		2,562,893		36		(151,695	)		2,411,234
Term loans		12,971,452		28,936		(212,084	)		12,788,304
Mortgage backed and asset backed securities		37,664,287		715,541		(945,533	)		37,434,295
Total available for sale	$	83,785,307	$	856,381	$	(5,063,509	)	$	79,578,179

The amortized cost and fair value of debt securities as of March 31, 2025 and December 31, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of March 31, 2025				As of December 31, 2024
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	312,246	$	312,247	$	2,329,128	$	2,329,128
After one year through five years		17,862,816		17,764,445		18,590,198		18,410,081
After five years through ten years		3,141,352		3,069,474		2,032,061		1,967,540
More than 10 years		19,380,291		16,088,940		20,606,740		17,025,901
Redeemable preferred stocks		2,563,173		2,395,034		2,562,893		2,411,234
Mortgage backed and asset backed securities		39,296,493		39,248,549		37,664,287		37,434,295
Total amortized cost and fair value	$	82,556,371	$	78,878,689	$	83,785,307	$	79,578,179

9

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments (continued)

Proceeds from the sale of securities, maturities, and asset paydowns for the three months ended March 31, 2025 and 2024 were $3,712,625 and $3,580,556, respectively. In June 2016, the FASB issued ASC 326 ("Current Expected Credit Loss (CECL)").  The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. Changes in the allowance for credit losses are included in net losses.  Realized gains and losses related to the sale of securities and net credit losses recognized in income are summarized as follows: 

	Three Months Ended March 31,
	(unaudited)
	2025			2024
Gross gains	$	-		$	6,064
Gross losses		(476,146	)		(41,962	)
Realized losses	$	(476,146	)	$	(35,898	)
Mortgage loans on real estate		(432,975	)		-
(Increase) Decrease in allowance for credit losses	$	(432,975	)	$	-

Gross unrealized losses by duration are summarized as follows:

	Less than 12 months					12 months and Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
March 31, 2025
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	448,887	$	(2,391	)	$	281,883	$	(68,479	)	$	730,769	$	(70,870	)
Corporate bonds		1,834,482		(26,266	)		12,499,659		(2,755,383	)		14,334,141		(2,781,649	)
Municipal bonds		1,111,579		(38,983	)		3,614,469		(548,448	)		4,726,048		(587,431	)
Redeemable preferred stock		-		-			1,974,066		(168,153	)		1,974,066		(168,153	)
Term loans		3,815,563		(34,414	)		2,556,030		(176,309	)		6,371,593		(210,723	)
Mortgage backed and asset backed securities		9,623,974		(202,917	)		4,717,922		(614,773	)		14,341,896		(817,690	)
Total fixed maturities	$	16,834,485	$	(304,971	)	$	25,644,029	$	(4,331,545	)	$	42,478,514	$	(4,636,516	)

	Less than 12 months					12 months and Greater					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2024
Available for sale:
Fixed maturities:
US Treasury securities	$	444,105	$	(7,244	)	$	267,272	$	(80,922	)	$	711,377	$	(88,166	)
Corporate bonds		1,959,130		(52,671	)		12,336,095		(2,937,621	)		14,295,225		(2,990,292	)
Municipal bonds		1,190,019		(56,801	)		3,551,130		(618,938	)		4,741,149		(675,739	)
Redeemable preferred stock		-		-			2,337,770		(151,695	)		2,337,770		(151,695	)
Term loans		-		-			2,609,831		(212,084	)		2,609,831		(212,084	)
Mortgage backed and asset backed securities		10,201,273		(241,577	)		4,708,468		(703,956	)		14,909,741		(945,533	)
Total fixed maturities	$	13,794,527	$	(358,293	)	$	25,810,566	$	(4,705,216	)	$	39,605,093	$	(5,063,509	)

Unrealized losses occur from market price declines due to changes in interest rates. The total number of available for sale fixed maturity securities in the investment portfolio in an unrealized loss position as of March 31, 2025 was 200, which represented an unrealized loss

10

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments (continued)

of $4,636,516 of the aggregate carrying value of those securities. The 200 securities breakdown as follows: 112 bonds, 71 mortgage and asset backed securities, 7 term loans, and 10 redeemable preferred stock.  Management does not intend to sell and it is likely that management will not be required to sell before their anticipated recovery.  Unrealized losses on fixed maturities are almost exclusively related to changes in interest rates and will be recovered if the securities are not sold prior to maturity.

Mortgage Loans on Real Estate

The Company has invested in various mortgage loans through participation agreements with the original issuing entity.  The Company’s mortgage loans by property type as of March 31, 2025 and December 31, 2024 are summarized as follows:

	March 31, 2025			December 31, 2024
	(unaudited)
Commercial mortgage loans by property type
Mixed use	$	2,238,456		$	2,159,630
Lodging		2,478,285			2,486,961
Multi-property		1,707,210			2,188,704
Multi-family		3,052,730			3,202,740
Industrial		1,800,000			1,800,000
Retail/Office		13,406,546			13,410,399
Total commercial mortgages	$	24,683,227		$	25,248,434
Allowance for credit losses		(488,660	)		(55,685	)
Carrying value	$	24,194,567		$	25,192,749

The Company’s mortgage loans by loan-to-value ratio as of March 31, 2025 and December 31, 2024 are summarized as follows:

	March 31, 2025			December 31, 2024
	(unaudited)
Loan to value ratio
Over 70 to 80%	$	892,800		$	892,800
Over 60 to 70%		10,332,347			6,399,210
Over 50 to 60%		7,300,000			10,215,293
Over 40 to 50%		1,818,737			1,820,562
Over 30 to 40%		3,839,343			3,231,865
Over 20 to 30%		-			2,188,704
Over 10 to 20%		500,000			500,000
Total	$	24,683,227		$	25,248,434
Allowance for credit losses		(488,660	)		(55,685	)
Carrying value	$	24,194,567		$	25,192,749

The Company’s mortgage loans by maturity date as of March 31, 2025 and December 31, 2024 are summarized as follows:

	March 31, 2025			December 31, 2024
	(unaudited)
Maturity Date
One year or less	$	9,963,932		$	6,566,055
After one year through five years		14,719,295			18,682,379
Total	$	24,683,227		$	25,248,434
Allowance for credit losses		(488,660	)		(55,685	)
Carrying value	$	24,194,567		$	25,192,749

11

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments (continued)

The Company individually evaluates its commercial mortgage loan portfolio for the establishment of a specific loan loss allowance.   A mortgage loan requires a specific allowance when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If the Company determines that the value of any specific mortgage loan requires an allowance, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell.  

The Company took realized losses by writing down two mortgage loans during the three-month period ending March 31, 2025. The first mortgage loan has a principal amount of $755,663 that is secured by real estate. The loan originated on March 28, 2022 and has an original maturity date of April 10, 2024.  We no longer accrue interest on this asset.  It previously carried an interest rate of 6.95%.  As of the reporting date, the borrower is 355 days past due on payments. Specifically, the borrower has missed payments for the following periods: 

- Payment due on April 10, 2024 - $755,663 Principal Amount

- Payment due on December 31, 2024 - $14,005 Accrued Interest Amount

The total amount of past due payments is $769,668, which includes principal and accrued interest. The Company has assessed the collectability of the loan, which requires an evaluation of the borrower’s payment history, current financial condition, and the underlying collateral value.  As part of this assessment, the Company has determined that the loan is potentially impaired. The fair value of the collateral is estimated to be $226,540 less than the outstanding balance of the loan. Therefore, a realized loss of $226,540 has been recognized as of the reporting date.

The second mortgage loan has a principal amount of $1,899,520 that is secured by real estate. This asset represents a pool of individual loans. The loan was originated on October 22, 2020 and has various maturity dates and interest rates.  We no longer accrue interest on this asset.  As of the reporting date, there are 24 loans. 12 out of the 24 loans are delinquent with total outstanding loan amount of $605,248, and 1 real estated owned property with outstanding loan amount of $122,764. Specifically, the borrower has missed payments totaling $728,012. No interest is being accrued on these loans.

The Company has assessed the collectability of the loan, which requires an evaluation of the borrower’s payment history, current financial condition, and the underlying collateral value.  As part of this assessment, the Company has determined that the loan is potentially impaired. The fair value of the collateral is estimated to be $193,473 less than the outstanding balance of the loan. Therefore, a realized loss of $193,473 has been recognized as of the reporting date.

Additionally, the Company had one mortgage loan participation with a specific allowance which is on non-accrued status and delinquent as of March 31, 2025. The mortgage loan has a principal amount of $1,000,000 that is secured by real estate. The loan was originated on November 4, 2022 and has an original maturity date of December 1, 2025.  We no longer accrue interest on this asset.  It previously carried an interest rate of 8%.  As of the reporting date, the borrower was not past due on payments. Payments due in the second quarter have been modified to a reduced interest rate of 5% with the lost interest capitalized into the principal of the loan. It is uncertain if the borrower will be able to continue to make payments.

The Company has assessed the collectability of the loan, which requires an evaluation of the borrower’s payment history, current financial condition, and the underlying collateral value.   The fair value of the collateral is estimated to be $250,000 less than the outstanding balance of the loan and will be adjusted once a current appraisal is completed. Therefore, an allowance of $250,000 has been recognized as of the reporting date.

The Company analyzes our commercial mortgage loan portfolio for the need of a general loan allowance for expected credit losses on all other loans on a quantitative and qualitative basis by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual loan. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions. The Company does not measure a credit loss allowance on accrued interest receivable as we write off any uncollectible accrued interest receivable balance to net investment income in a timely manner. The Company did not charge off any uncollectible accrued interest receivable on our commercial mortgage loan portfolio during the three months ended March 31, 2025 and 2024. 

12

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments (continued)

The Company's commercial mortgage loans are pooled by risk rating and property collateral type and an estimated loss ratio is applied against each risk pool. The loss ratios are generally based upon historical loss experience for each risk pool and are adjusted for current and forecasted economic factors management believes to be relevant and supportable. Economic factors are forecasted for two years with immediate reversion to historical experience.

The following table presents a roll-forward of our general and specific valuation allowances for our commercial mortgage loan portfolio:

	Three Months Ended March 31, 2025					Three Months Ended March 31, 2024
	Specific Allowance			General Allowance		Specific Allowance		General Allowance
	(unaudited)					(unaudited)
Beginning allowance balance	$	-		$	55,685	$	-	$	21,644
Charge-offs		(420,013	)		-		-		-
Change in provision for credit losses		670,013			182,975		-		-
Ending Allowance	$	250,000		$	238,660	$	-	$	21,644

The following table presents a breakdown of our mortgage loans by aging category:

	As of March 31, 2025
	Outstanding Balance		Allowance for Credit Losses			Net Carrying Amount
	(unaudited)
Aging Category
Not past due (Current)	$	22,446,895	$	(258,684	)	$	22,188,211
1-30 days past due		-		-			-
31-60 days past due		-		-			-
61-90 day past due		-		-			-
Over 90 days past due		2,236,332		(229,976	)		2,006,356
Ending Allowance	$	24,683,227	$	(488,660	)	$	24,194,567

13

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments (continued)

Investment Income, Net of Expenses

The components of net investment income for the three months ended March 31, 2025 and 2024 are as follows:

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Fixed maturities	$	1,337,626		$	1,309,729
Mortgages		440,895			406,549
Equity securities		69,477			83,165
Other invested assets		29,511			60,055
Cash and cash equivalents		66,332			88,972
		1,943,841			1,948,471
Less investment expenses		(219,113	)		(278,514	)
	$	1,724,728		$	1,669,957

Net Investment Gains (losses)

Net investment gains (losses) for the three months ended March 31, 2025 and 2024 are summarized as follows:

	Three Months Ended March 31,
	(unaudited)
	2025			2024
Recognized gains (losses) on sale of investments	$	(56,133	)	$	(35,898	)
Realized loss on mortgage loan participation write downs		(420,013	)	$	-
Change in allowance for credit loss recognized in earnings		(432,975	)		-
Unrealized net gains (losses) recognized in earnings		(21,790	)		96,321
Embedded Derivative		(118,762	)		79,929
Net investment gains (losses)	$	(1,049,673	)	$	140,352

14

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 3. Derivative Instruments

Types of Derivatives used by the Company

The Company’s derivatives consist of a reinsurance contract allocated hedge.

Summary of Derivative Positions

The fair value of the Company’s derivative financial instruments on the consolidated balance sheets is as follows:

	March 31, 2025				December 31, 2024
	Derivative				Derivative				Balance
	Asset		Liability		Asset		Liability		Reported In
	(unaudited)
Derivatives:
Embedded derivatives:
Reinsurance contract allocated hedge	$	594,352		-	$	713,114	$	-	Reinsurance related assets

The following table shows the change in the fair value of the derivative financial instruments in the consolidated statements of comprehensive income (loss) for the three months ended March 31, 2025 and 2024:

	Three Months Ending			Three Months Ending		Balance
	March 31, 2025			March 31, 2024		Reported In
	(unaudited)			(unaudited)
Derivatives:
Embedded derivatives:
Change in reinsurance contract allocated hedge	$	(118,762	)	$	79,929	Net investment gains (losses)

15

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 4. Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement rate.

● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

● Level 3 inputs are unobservable for the asset or liability and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Fixed maturity securities: Fair values of available for sale fixed maturity securities are provided by a third party pricing service. The pricing service uses a variety of sources to determine fair value of securities. The Company’s fixed maturity securities are highly liquid, which allows for a high percentage of the portfolio to be priced through pricing sources.

Equity securities: Fair values for equity securities are also provided by a third party pricing service and are derived from active trading on national market exchanges.

Embedded derivative: The fair value of the reinsurance related assets represents the Company’s allocation of the fair value of the corresponding derivative instruments used in the hedge which are based on the quoted market prices of the underlying derivate instruments.  The fair value of the underlying assets for both embedded derivatives are generally based upon market observable inputs with industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered Level 3 in the fair value hierarchy. The Company’s utilization of a credit-valuation adjustment did not have a material effect on the change in fair value of the embedded derivatives for the three months ended March 31, 2025 and 2024.

Limited partnership interests: Limited partnership interests are carried at net asset value which approximates fair value.

16

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 4. Fair Value Measurements (continued)

The table below presents the amounts of assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024: 

	March 31, 2025
	Total		Level 1		Level 2		Level 3
	(unaudited)
Fixed maturities:
US Treasury securities	$	730,769	$	730,769	$	-	$	-
Corporate bonds		19,720,433		-		19,550,833		169,600
Municipal bonds		4,805,839		-		4,805,839		-
Redeemable preferred stock		2,395,034		-		2,395,034		-
Term loans		11,978,065		-		-		11,978,065
Mortgage backed and asset backed securities		39,248,549		-		38,908,549		340,000
Total fixed maturities		78,878,689		730,769		65,660,255		12,487,665
Equities:
Common stock		2,276,770		2,151,770		125,000		-
Preferred stock		1,451,778		-		1,451,778		-
Total equities		3,728,548		2,151,770		1,576,778		-
Other invested assets		1,185,571		-		-		1,185,571
Reinsurance contract allocated hedge		594,352		-		-		594,352
Limited partnership interests		688,788		-		-		688,788
Total	$	85,075,948	$	2,882,539	$	67,237,033	$	14,956,376

	December 31, 2024
	Total		Level 1		Level 2		Level 3
Fixed maturities:
US Treasury securities	$	711,377	$	711,377	$	-	$	-
Corporate bonds		21,491,820		-		21,322,220		169,600
Municipal bonds		4,741,149		-		4,741,149		-
Redeemable preferred stock		2,411,234		-		2,411,234		-
Term loans		12,788,304		-		-		12,788,304
Mortgage backed and asset backed securities		37,434,295		-		37,090,545		343,750
Total fixed maturities		79,578,179		711,377		65,565,148		13,301,654
Equities:
Common stock		2,395,195		2,271,495		123,700		-
Preferred stock		1,480,890		-		1,480,890		-
Total equities		3,876,085		2,271,495		1,604,590		-
Other invested assets		1,109,606		-		-		1,109,606
Reinsurance contract allocated hedge		713,114		-		-		713,114
Limited partnership interests		428,170		-		-		428,170
Total	$	85,705,154	$	2,982,872	$	67,169,738	$	15,552,544

No transfers occurred between levels during the three months ended March 31, 2025.

17

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 4. Fair Value Measurements (continued)

The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

			Mortgage						Other
For the Three Months Ended March 31, 2025	Corporate		Backed			Term			Invested
(unaudited)	Bonds		Securities			Loans			Assets
Fair value, beginning of period	$	169,600	$	343,750		$	12,788,304		$	1,109,606
Principal payment		-		(3,750	)		(826,472	)		-
Acquisition		-		-			39,273			-
Investment related gains (losses), net		-		-			787,199			75,965
Fair value, end of period	$	169,600	$	340,000		$	12,788,304		$	1,185,571

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed on the previous page. The estimated fair value approximates carrying value for accrued interest. The methodologies for other financial assets and financial liabilities are discussed below:

Cash and cash equivalents: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and accrued: The carrying amounts approximate fair value because of the short maturity of these instruments.

Mortgage loans on real estate:  Mortgage loans are carried at their unpaid principal value as that is considered the fair market values for these loans.  The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using competitive market interest rates currently being offered for similar loans.  The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy.

Limited partnership interests: Limited partnership interests are carried at net asset value which approximates fair value.

Reinsurance contract allocated hedge: The carrying value of funds withheld at interest approximates fair value as funds are specifically identified in the agreement. The fair value of the specified funds is based on the fair value of the underlying assets that are held by the ceding company.  The ceding company uses a variety of sources and pricing methodologies, which are not transparent to the Company and may include significant unobservable inputs to value the securities held in distinct portfolios, therefore the valuation of these funds withheld assets are considered Level 3 in the fair value hierarchy.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value.

Federal Home Loan Bank Advances: FHLB advances are stated at the outstanding principal balances and the carrying value approximates fair value.

Policyholder deposits in deposit-type contracts: The fair value for policyholder deposits deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach.  Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

18

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 4. Fair Value Measurements (continued)

The estimated fair values of the Company’s financial assets and liabilities at March 31, 2025 and December 31, 2024 are as follows:

	March 31, 2025
	(unaudited)
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	6,721,441	$	6,721,441	$	6,721,441	$	-	$	-
Mortgage loans on real estate		24,194,567		24,194,567		-		-		24,194,567
Limited partnership interests		688,788		688,788		-		-		688,788
Investment income due and accrued		1,018,582		1,018,582		-		-		1,018,582
Reinsurance contract allocated hedge		594,352		594,352		-		-		594,352
Policy loans		32,513		32,513		-		-		32,513
Total Financial Assets (excluding available for sale investments)	$	33,250,243	$	33,250,243	$	6,721,441	$	-	$	26,528,802
Financial Liabilities:
Federal Home Loan Bank advance	$	1,250,000	$	1,250,000	$	-	$	-	$	1,250,000
Policyholder deposits in deposit-type contracts		74,759,710		61,861,543		-		-		61,861,543
Total Financial Liabilities	$	76,009,710	$	63,111,543	$	-	$	-	$	63,111,543

	December 31, 2024
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	6,903,783	$	6,903,783	$	6,903,783	$	-	$	-
Mortgage loans on real estate		25,192,749		25,192,749		-		-		25,192,749
Limited partnership interests		428,170		428,170		-		-		428,170
Investment income due and accrued		954,324		954,324		-		-		954,324
Reinsurance contract allocated hedge		713,114		713,114		-		-		713,114
Policy loans		31,745		31,745		-		-		31,745
Total Financial Assets (excluding available for sale investments)	$	34,223,885	$	34,223,885	$	6,903,783	$	-	$	27,320,102
Financial Liabilities:
Federal Home Loan Bank advance	$	1,250,000	$	1,250,000	$	-	$	-	$	1,250,000
Policyholder deposits in deposit-type contracts		77,940,378		64,945,983		-		-		64,945,983
Total Financial Liabilities	$	79,190,378	$	66,195,983	$	-	$	-	$	66,195,983

19

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)  

Note 5. Income Tax Provision

The Company uses the estimated effective tax rate ("ETR") method in computing the interim tax provision. Certain items, including those deemed unusual, infrequent, or that cannot be reliably estimated, are treated as discrete items and excluded from the estimated annual ETR ("AETR"). In these cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the AETR, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions and are recorded in the period in which the change occurs. The AETR is revised, as necessary, at the end of successive interim reporting periods.  

The Company's effective income tax rate was 14.0% for the three months ended March 31, 2025, compared with 18.1% for the same period in 2024. The ETR differs from the statutory rate of 21% primarily due to tax favored investments (i.e., tax-exempt interest and the dividends received deduction) offset by an increase the valuation allowance associated with capital loss carryforwards. The change in the ETR for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was due to the relationship of taxable income to consolidated pre-tax income (loss). The ETR differs for the three months ended March 31, 2025 from the full year-ended December 31, 2024 ETR of 11.5% due to the prior year release in valuation allowance associated with net operating losses and favorable prior period adjustments. 

The Company is required to evaluate the recoverability of its deferred tax assets and establish a valuation allowance, if necessary, to reduce its deferred tax asset to an amount that is more likely than not to be realizable. Considerable judgment and the use of estimates are required when determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. When evaluating the need for a valuation allowance, the Company considers many factors, including: the nature and character of the deferred tax assets and liabilities; taxable income in prior carryback years; future reversals of temporary differences; the length of time carryovers can be utilized; and any tax planning strategies the Company would employ to avoid a tax benefit from expiring unused.

As of March 31, 2025, based on all available evidence, we concluded that a valuation allowance should remain on a portion of the deferred tax asset related to capital loss carryforwards that are not more-likely-than-not to be realized. For the three months ended March 31, 2025, the Company recorded an increase of $79K to the valuation allowance associated with capital loss carryforwards. The expense was recorded in the income tax expense. At March 31, 2025, and December 31, 2024, the Company has recorded a total valuation allowance of approximately $390,000 and $309,000, respectively, associated with the life insurance net operating losses subject to limitations under IRC section 382 and capital loss carryforwards. 

Note 6. Contingencies and Commitments

Investment Commitments

The Company entered into a subscription agreement with Mutual Capital Investment Fund, LP on November 11, 2022.  The agreement set forth a capital commitment of $2,000,000.  As of March 31, 2025, the Company had funded $650,445 of this commitment.  The dates of future capital calls is unknown and the initial investment period for capital calls is five years.

Note 7. Operating Segments

The Company operates as a single reportable segment, defined by our comprehensive business model that encompasses writing direct business and opportunistically assuming reinsurance through wholly owned subsidiaries, namely USALSC and DCLIC (which was merged into USALSC in 2023). On a direct basis, the Company underwrites a diverse range of insurance products, including term life, whole life, group life, short- and long-term disability, critical illness, juvenile term, annuities, and preneed products. Additionally, the Company assumes annuities and life policies on a coinsurance basis.

Our products are underwritten opportunistically across various channels without differentiation in profitability evaluation by product type or whether they were written directly or assumed. This cohesive strategy allows for a streamlined assessment of our overall performance.

The Company’s chief executive officer and chief financial officer employ a consistent set of financial metrics and performance indicators. This approach renders it impractical to separate operations into distinct segments. Key performance indicators utilized by the chief operating decision makers (CODMs) include cash flow from insurance activities, total income, operating expenses as a percentage of total expenses, and net income per share.

20

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 7. Operating Segments (continued)

Resource allocation is centralized, with all major decisions made at the corporate level rather than by separate divisions. This ensures a unified approach to managing resources and strategic initiatives across the organization.

The Company’s financial results are reported collectively, as the financial performance of our operations does not vary significantly among different areas of the business. For instance, the Company does not bifurcate its investment portfolio by product type, further underscoring the integrated nature of our operations.

The CODMs assess the performance of the Company and allocate resources based on net income, which is also reported on the consolidated income statement. The measure of the Company's single segment assets is reflected in total consolidated assets on the balance sheet.

Since we operate as one segment, segment revenue, profit and loss and expenses are the same as presented in the consolidated statements of comprehensive income.

Note 8. Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at the balance sheet date, including the estimates inherent in the process of preparing the consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the balance sheet date but arose after, but before the consolidated financial statements are issued. In some cases, unrecognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included in this Form 10-Q. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, including those relating to the COVID-19 pandemic, and many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

Overview

USAC was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. We presently conduct our business through our four wholly-owned subsidiaries: USALSC, a life insurance corporation; USALSC-Montana, a life insurance corporation; USAMC, an insurance marketing corporation; and USAIC, an investment management corporation

On January 2, 2012, USALSC was issued a Certificate of Authority to conduct life insurance business in the State of Kansas. We began third-party administrative services in 2015. USALSC re-domesticated to North Dakota in 2023. USALSC is currently authorized to conduct business in 18 states.

On August 1, 2017, the Company merged with Northern Plains Capital Corporation with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired Dakota Capital Life Insurance Company which became a wholly owned subsidiary of USALSC. In 2023, Dakota Capital Life Insurance Company was merged into USALSC.

On December 14, 2018, the Company acquired Great Western Life Insurance Company. Great Western Life Insurance Company was renamed US Alliance Life and Security Company – Montana and is a subsidiary of USALSC.

The Company assumes business under reinsurance treaties. On January 1, 2013, the Company entered into an agreement to assume 20% of a certain block of health insurance policies from Unified Life Insurance Company. On September 30, 2017, the Company entered into an agreement (the “2017 ALSC Agreement”) to assume 100% of a certain block of life insurance policies from American Life & Security Company (“ALSC”). On April 15, 2020, with an effective date of January 1, 2020, the Company entered into an agreement with ALSC (the “2020 ALSC Agreement “) to assume a quota share percentage of a block of annuity policies. Effective December 31, 2020, USALSC entered into an agreement with ALSC, which provided for ALSC to recapture all reserves previously ceded to USALSC with respect to a portion of the 2017 ALSC Agreement.

On December 31, 2023, USALSC entered into an agreement with Lewer Life Insurance LLIC to assume a block of life and annuity policies.

Mergers and Acquisitions

On May 23, 2017, the Company entered into a definitive merger agreement with Northern Plains Capital Corporation. The merger transaction closed on August 1, 2017. NPCC shareholders received .5841 shares of US Alliance Corporation stock for each share of NPCC stock owned. USAC issued 1,644,458 shares of common stock to holders of NPCC shares.

On October 11, 2018, the Company entered into a stock purchase agreement with Great Western Insurance Company to acquire Great Western Life Insurance Company. The transaction closed on December 14, 2018. USALSC paid $500,000 to acquire all of the outstanding shares of GWLIC.

Effective December 31, 2020, DCLIC acquired a block of life insurance policies according to the terms of an assumption agreement with ALSC. The Company acquired fixed maturity securities and cash of $9,181,100, assumed liabilities of $10,972,785 and recorded VOBA of $2,163,541.

On December 31, 2023, DCLIC was merged into its parent company, USALSC.

22

Critical Accounting Policies and Estimates

Our accounting and reporting policies are in accordance with GAAP. Preparation of the consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The following is an explanation of our accounting policies and the estimates considered most significant by management. These accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management’s estimates determined using these policies. We believe the following accounting policies, judgments and estimates are the most critical to the understanding of our results of operations and financial position. A detailed discussion of significant accounting policies is provided in this report in the Notes to Consolidated Financial Statements included with this quarterly report.

Valuation of Investments

The Company's principal investments are in fixed maturity, mortgages, and equity securities. Fixed maturity, classified as available for sale, are carried at their fair value in the consolidated balance sheets, with unrealized gains or losses recorded in comprehensive income (loss). Our fixed income investment manager utilizes external independent third-party pricing services to determine the fair values of investment securities available for sale.  Equity securities are carried at their fair value in the consolidated balance sheets, with unrealized gains or losses recorded in net income. Mortgages, including mortgage loan participations, are carried at unpaid principal balances, net of any unamortized premium or discount and valuation allowances.

The recognition of credit losses on debt securities is dependent on the facts and circumstances related to the specific security. If we determine a credit loss exists, the difference between amortized cost and fair value is recognized in the consolidated statements of comprehensive income.  Our membership in the Federal Home Loan Bank (“FHLB”) provides additional liquidity which further reduces the likelihood that we would be required to sell a security prior to recovery for liquidity purposes.  

Mortgage loans on real estate, including mortgage loan participations, are carried at unpaid principal balances, net of any unamortized premium or discount and valuation allowances.  Interest income is accrued on the principal amount of the mortgage loans based on its contractual interest rate.  Amortization of premiums and discounts is recorded using the effective yield method. The Company accrues interest on loans until probable the Company will not receive interest or the loan is 90 days past due.  Interest income, amortization of premiums, accretion of discounts and prepayment fees are reported in investment income, net of related expenses in the consolidated statements of comprehensive income.

A mortgage loan is considered to be impaired when, based on the current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the mortgage agreement.  

Valuation allowances on mortgage loans are established based upon inherent losses expected by management to be realized in connection with future dispositions or settlement of mortgage loans, including foreclosures. The Company establishes valuation allowances for estimated impairments on an individual loan basis as of the balance sheet date. Such valuation allowances are based on the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan’s original effective interest rate, the value of the loan’s collateral if the loan is in the process of foreclosure or is otherwise collateral-dependent, or the loan’s market value if the loan is being sold. These evaluations are revised as conditions change and new information becomes available. In addition to historical experience, management considers qualitative factors that include the impact of changing macro-economic conditions, which may not be currently reflected in the loan portfolio performance, and the quality of the loan portfolio.

Any interest accrued or received on the net carrying amount of the impaired loan will be included in investment income or applied to the principal of the loan, depending on the assessment of the collectability of the loan. Mortgage loans deemed to be uncollectible or that have been foreclosed would be charged off against the valuation allowances and subsequent recoveries, if any, are credited to the valuation allowances. Changes in valuation allowances are reported in net investment gains (losses) on the consolidated statements of comprehensive income.

Other invested assets include collateral loans and private credit investments. The collateral loans and private credit investments are carried at fair value.  The inputs used to measure these assets are classified as Level 3 within the fair value hierarchy.

Limited partnership interests consist of an investment in Mutual Capital Investment Fund. Limited partnerships interests are carried at net asset value as determined by a third-party valuation. 

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Deferred Acquisition Costs

Incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to a product sale and would not have been incurred by us had the sale not occurred, are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Future Policy Benefits

We establish liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by using a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. Such liabilities are reviewed quarterly by an independent consulting actuary.

New Accounting Standards

A detailed discussion of new accounting standards is provided in Note 2 to Consolidated Financial Statements beginning on p. 8 of this quarterly report.

Discussion of Consolidated Results of Operations

Total Income. Insurance revenues are primarily generated from premium revenues and investment income. Total income for the three months ended March 31, 2025 and 2024 are summarized in the table below.

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Income:
Premium income	$	4,419,593		$	3,668,083
Net investment income		1,724,728			1,669,957
Net investment gains (losses)		(1,049,673	)		140,352
Other income		87,364			145,693
Total income	$	5,182,012		$	5,624,085

In the first three months of 2025, total income decreased to $5,182,012, a decrease of $442,073 or 8% from the 2024 first three months total income of $5,624,085. The decrease is driven by investment losses. The Company records unrealized gains and losses on equity securities in total income in accordance with accounting standards. These standards continue to result in increased volatility in total income.

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Premium income: Premium income for the first three months of 2025 was $4,419,593 compared to $3,668,083 in the first three months of 2024, an increase of $751,510 or 20%. The increase was driven by an increase in direct single and recurring premiums. Even though it is a reduction in revenue, ceded premium increases reflect the growth of our group policy premiums as we focused on small companies to assist them with their employee benefits.

Direct, assumed and ceded premiums for the three months ended March 31, 2025 and 2024 are summarized in the following table.

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Direct	$	3,297,658		$	2,597,276
Assumed		1,502,278			1,429,717
Ceded		(380,343	)		(358,910	)
Total	$	4,419,593		$	3,668,083

The Company continuously searches for new product and distribution opportunities to continue to increase premium production on a direct and assumed basis.

Investment income, net of expenses: The components of net investment income for the three months ended March 31, 2025 and 2024 are as follows:

	Three Months Ended March 31,
	2025			2024
	(unaudited)
Fixed maturities	$	1,337,626		$	1,309,729
Mortgages		440,895			406,549
Equity securities		69,477			83,165
Other invested assets		29,511			60,055
Cash and cash equivalents		66,332			88,972
		1,943,841			1,948,471
Less investment expenses		(219,113	)		(278,514	)
	$	1,724,728		$	1,669,957

Net investment income for the first three months of 2025 was $1,724,728, compared to $1,669,957 for the same period in 2024, an increase of $54,771 or 3%. This increase in investment income is a result of improved yields.

Net investment gains (losses): Accounting standards require that the unrealized gains and losses on equity securities be reported as income on the consolidated statements of comprehensive income (loss). For the three months ended March 31, 2025 and 2024, net investment gains are summarized in the following table.

	Three Months Ended March 31,
	(unaudited)
	2025			2024
Recognized losses on sale of investments	$	(56,133	)	$	(35,898	)
Realized loss on mortgage loan participation write downs		(420,013	)	$	-
Change in allowance for credit loss recognized in earnings		(432,975	)		-
Unrealized net (losses) gains recognized in earnings		(21,790	)		96,321
Embedded derivative		(118,762	)		79,929
Net investment (losses) gains	$	(1,049,673	)	$	140,352

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Realized gains and losses related to the sale of securities for the three months ended March 31, 2025 and 2024 are summarized as follows:

	Three Months Ended March 31,
	(unaudited)
	2025			2024
Gross gains	$	-		$	6,064
Gross losses		(476,146	)		(41,962	)
Realized (losses)	$	(476,146	)	$	(35,898	)
Mortgage loans on real estate		(432,975	)		-
(Increase) Decrease in allowance for credit losses	$	(432,975	)	$	-

Other income: Other income for the three months ended March 31, 2025 was $87,364 compared to $145,693 for the same period in 2024, a decrease of $58,329. The decrease was the result of reinsurance allowances received in 2024 which did not recur in 2025.  

Expenses. Expenses for the three months ended March 31, 2025 and 2024 are summarized in the table below.

	Three Months Ended March 31,
	2025		2024
	(unaudited)
Expenses:
Death claims	$	1,442,245	$	1,118,580
Policyholder benefits		2,092,539		1,835,068
Increase in policyholder reserves		1,565,550		979,669
Commissions, net of deferrals		248,490		201,101
Amortization of deferred acquisition costs		307,263		362,810
Amortization of value of business acquired		23,105		23,105
Salaries & benefits		381,238		400,893
Other operating expenses		716,360		688,902
Total expense	$	6,776,790	$	5,610,128

Death claims: Death benefits were $1,442,245 in the three months ended March 31, 2025 compared to $1,118,580 for the same period in 2024, an increase of $323,665 or 29%. This increase is attributable to our growing block of in-force pre-need life insurance policies. We expect these claims to grow as we continue to increase the size of our in-force business. 

Policyholder benefits: Policyholder benefits were $2,092,539 in the three months ended March 31, 2025 compared to $1,835,068 for the same period in 2024, an increase of $257,471 or 14%. The primary driver of this increase is an increase in assumed benefits.

Increase in policyholder reserves: Policyholder reserves increased $1,565,550 in the three months ended March 31, 2025, compared to $979,669 for the same period in 2024, an increase of $585,881 or 60%. The increase in reserve growth is driven by increased premiums.

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Commissions, net of deferrals: The Company pays commissions to the ceding company on a block of assumed policies as well as commissions to agents on directly written business. Commissions, net of deferrals, were $248,490 in the three months ended March 31, 2025, compared to $201,101 for the same period in 2024, an increase of $47,389 or 24%. This increase is due to an increase in and changing mix of premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs ("DAC") was $307,263 in the three months ended March 31, 2025, compared to $362,810 for the same period in 2024, a decrease of $55,547 or 15%. The decrease is driven by a reduction in amortization on assumed business..

Amortization of value of business acquired: The amortization of value of business acquired (“VOBA”) was $23,105 in the Three months ended March 31, 2025 and 2024, respectively.  VOBA is being amortized straight-line over 30 years.

Salaries and benefits: Salaries and benefits were $381,238 for the three months ended March 31, 2025, compared to $346,702 for the same period in 2024, an increase of $34,536 or 10%. The increase was driven by fluctuations in staffing levels.

Other expenses: Other operating expenses were $716,360 in the three months ended March 31, 2025, compared to $743,093 for the same period in 2024, a decrease of $26,733 or 4%. The decrease is driven by a decrease in audit costs. 

Federal income tax expenses: Federal income tax benefit of $222,833 was recorded for the three months ended March 31, 2025. No such benefit was recorded for the three months ended March 31, 2024.

Net Income: Our net loss was $1,371,945 in the three months ended March 31, 2025 compared to net income of $13,957 for the same period in 2024, a decrease of $1,385,902. Our net loss per share was $0.18 compared to net income per share of $0.00 in 2024, basic and diluted.  

Discussion of Consolidated Balance Sheet

Assets. Assets have decreased to $130,271,315 as of March 31, 2025, a decrease of $1,022,667 or 1% from December 31, 2024 assets of $131,293,892. This is primarily the result of a decrease in fixed maturity securities and mortgage loans.

Available for sale fixed maturity securities: As of March 31, 2025, we had available for sale fixed maturity assets of $78,878,689, a decrease of $699,490 or 1% from the December 31, 2024 balance of $79,578,179. The decrease is driven by maturities during the quarter.

Equity securities, at fair value: As of March 31, 2025, we had equity assets of $3,728,548, a decrease of $147,537 or 4% from the December 31, 2024 balance of $3,876,085. This decrease is driven by a decrease in value of our equity securities.

Limited partnership interests: As of March 31, 2025, we had limited partnership interests of $688,788, an increase of $260,618 or 61% from our December 31, 2024 balance of $428,170.  This is driven by additional investments in the Mutual Capital Investment Fund. 

Mortgage loans on real estate: As of March 31, 2025, we had mortgage loans on real estate of $24,194,567, a decrease of $998,182 or 4% from the December 31, 2024 balance of $25,192,749. The decrease is the result of reduced mortgage loan participations payments.

Other invested assets: As of March 31, 2025, we had other invested assets of $1,185,571, an increase of $75,965 or 7% from the December 31, 2024 balance of $1,109,606.

Policy loans: As of March 31, 2025, our policy loans were $32,513, an increase of $768 or 2% from the December 31, 2024 balance of $31,745. The increase is a result of normal policy loan activity.

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Real estate, net of depreciation: As of March 31, 2025, we had real estate assets of $1,638,910 related to our home office building, a decrease of $13,643 from the December 31, 2024 balance of $1,652,553. The decrease is the result of normal depreciation.

Cash and cash equivalents: As of March 31, 2025, we had cash and cash equivalent assets of $6,721,441, a decrease of $182,342 or 3% from the December 31, 2024 balance of $6,903,783. This decrease was the result of cash being redeployed into invested assets.

Investment income due and accrued: As of March 31, 2025, our investment income due and accrued was $1,018,582 compared to $954,324 as of December 31, 2024, an increase of $64,258 or 7%. This decrease is attributable to investment activity.

Reinsurance related assets: As of March 31, 2025, our reinsurance related assets were $870,616 compared to $522,142 as of December 31, 2024, an increase of $348,474. This increase is the result of changes in the net settlement due to/from ALSC under our 2020 ALSC Agreement.

Deferred acquisition costs, net: As of March 31, 2025, our deferred acquisition costs were $3,957,070 compared to $3,908,636 as of December 31, 2024, an increase of $48,434 or 1%. The increase is the result of additional deferrals on renewing multi-year guarantee annuities.

Value of business acquired, net: As of March 31, 2025 our value of business acquired asset was $2,310,448 compared to $2,333,553 as of December 31, 2024, a decrease of $23,105 or 1%. The decrease is the result of amortization of VOBA.

Property, equipment and software, net: As of March 31, 2025 our property, equipment and software assets were $129,647, a decrease of $6,706 from the December 31, 2024 balance of $136,353. The decrease is the result of depreciation.

Goodwill: As of March 31, 2025 and December 31, 2024, our goodwill was $277,542. Goodwill was established as a result of our merger with NPCC. We have determined that there has been no impairment to our goodwill balance.

Deferred tax asset, net of valuation allowance:  The Company had a net deferred tax asset of $4,003,493 as of March 31, 2025, an increase of $256,382 from the December 31, 2024 balance of $3,747,111. The increase is the result of deferred federal income tax benefits.

Other assets: As of March 31, 2025, our other assets were $452,541, a decrease of $6,561 or 1% from the December 31, 2024 balance of $459,102.  The decrease is a result of ___________________.

Liabilities. Our total liabilities were $120,427,623 as of March 31, 2025, a decrease of $235,941 or 0.2% from our December 31, 2024 liabilities of $120,663,564. The decrease is driven by a decrease in our deposit-type contract liabilities.

Policy liabilities: Our total policy liabilities as of March 31, 2025 were $116,596,076 compared to $118,188,150 as of December 31, 2024, a decrease of $1,592,074 or 1%. This decrease is the result of surrenders of deposit-type contracts.

Accounts payable and accrued expenses: As of March 31, 2025, our accounts payable and accrued expenses were $2,011,693 compared to $1,133,521 as of December 31, 2024, an increase of $878,172 or 78%. The increase is driven by reinsurance settlement payables.

Federal Home Loan Bank advance: As of March 31, 2025 and December 31, 2024, respectively, the Company has outstanding advances of $1,250,000 with the Federal Home Loan Bank of Topeka.

Other liabilities: As of March 31, 2025, we had other liabilities of $569,854 compared to $91,893 as of December 31, 2024, an increase of $477,961.  The increase is the result of changes in investment-related payables.

Shareholders’ Equity. Our shareholders’ equity was $9,843,692 as of March 31, 2025, a idecrease of $786,726 or 7% from our December 31, 2024 shareholders’ equity of $10,630,418. The decrease in shareholders’ equity was driven by our first quarter net loss.

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Investments

Our investment philosophy is reflected by the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities, mortgages and other investments. The following table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of March 31, 2025 and December 31, 2024.

	March 31, 2025					December 31, 2024
	Carrying		Percent			Carrying		Percent
	Value		of Total			Value		of Total
	(unaudited)
Fixed maturities:
US Treasury securities	$	730,769		0.6	%	$	711,377		0.6	%
Corporate bonds		19,720,433		16.8	%		21,491,820		18.1	%
Municipal bonds		4,805,839		4.1	%		4,741,149		4.0	%
Redeemable preferred stocks		2,395,034		2.0	%		2,411,234		2.0	%
Term Loans		11,978,065		10.2	%		12,788,304		10.8	%
Mortgage backed and asset backed securities		39,248,549		33.4	%		37,434,295		31.4	%
Total fixed maturities		78,878,689		67.3	%		79,578,179		66.9	%
Mortgage loans		24,194,567		20.7	%		25,192,749		21.2	%
Other invested assets		1,185,571		1.0	%		1,109,606		0.9	%
Limited partnership interests		688,788		0.6	%		428,170		0.4	%
Equities:
Common stock		2,276,770		1.9	%		2,395,195		2.0	%
Preferred stock		1,451,778		1.2	%		1,480,890		1.2	%
Total equities		3,728,548		3.2	%		3,876,085		3.3	%
Real estate, net of depreciation		1,638,910		1.4	%		1,652,553		1.4	%
Cash and cash equivalents		6,721,441		5.7	%		6,903,783		5.8	%
Total	$	117,036,514		100.0	%	$	118,741,125		100.0	%

The total value of our investments and cash and cash equivalents decreased to $117,036,514 as of March 31, 2025 from $118,741,125 at December 31, 2024, a decrease of $1,704,611 or 1%. Decreases in investments are primarily attributable to annuity surrenders.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of March 31, 2025 and December 31, 2024.

	March 31, 2025					December 31, 2024
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
	(unaudited)
AAA and U.S. Government	$	6,684,127		8.5	%	$	5,470,235		6.9	%
AA		12,810,184		16.2	%		10,469,465		13.1	%
A		15,672,205		19.9	%		15,174,048		19.1	%
BBB		31,274,783		39.6	%		35,807,023		45.0	%
BB		3,203,906		4.1	%		4,378,680		5.5	%
B		95,811		0.1	%		90,675		0.1	%
Not Rated - Private Placement		9,137,673		11.6	%		8,188,053		10.3	%
Total	$	78,878,689		100.0	%	$	79,578,179		100.0	%

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The amortized cost and fair value of debt securities as of March 31, 2025 and December 31, 2024, by contractual maturity, are shown below. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of March 31, 2025				As of December 31, 2024
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	312,246	$	312,247	$	2,329,128	$	2,329,128
After one year through five years		17,862,816		17,764,445		18,590,198		18,410,081
After five years through ten years		3,141,352		3,069,474		2,032,061		1,967,540
More than 10 years		19,380,291		16,088,940		20,606,740		17,025,901
Redeemable preferred stocks		2,563,173		2,395,034		2,562,893		2,411,234
Mortgage backed and asset backed securities		39,296,493		39,248,549		37,664,287		37,434,295
Total amortized cost and fair value	$	82,556,371	$	78,878,689	$	83,785,307	$	79,578,179

Market Risk of Financial Instruments

We hold a diversified portfolio of investments that primarily includes cash, bonds, equity securities, mortgage loans, and other invested assets. Each of these investments is subject to market risks that can affect their return and their fair value. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, and equity risk. 

Interest Rate Risk

Interest rate risk arises from the price sensitivity of investments to changes in interest rates. Interest represents the greatest portion of an investment's return for most fixed maturity securities in stable interest rate environments. The changes in the fair value of such investments are inversely related to changes in market interest rates. As interest rates fall, the interest and dividend streams of existing fixed-rate investments become more valuable and fair values rise. As interest rates rise, the opposite effect occurs.

We work to mitigate our exposure to adverse interest rate movements through laddering the maturities of the fixed maturity investments and through maintaining cash and other short-term investments to assure sufficient liquidity to meet our obligations and to address reinvestment risk considerations. Due to the composition of our book of insurance business, we believe it is unlikely that we would encounter large surrender activity due to an interest rate increase that would force the disposal of fixed maturities at a loss.  Additionally, USALSC is a member of the FHLB of Topeka, which provides access to liquidity and further reduces the likelihood of disposing of fixed maturities at a loss.

Credit Risk

We are exposed to credit risk through counterparties and within the investment portfolio. Credit risk relates to the uncertainty associated with an obligor's ability to make timely payments of principal and interest in accordance with the contractual terms of an instrument or contract. We manage our credit risk through established investment policies and guidelines which address the quality of creditors and counterparties, concentration limits, diversification practices and acceptable risk levels. These policies and guidelines are regularly reviewed and approved by senior management and USAC's Board of Directors.

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Liquidity and Capital Resources

Premium income, deposits to policyholder account balances, investment income, and capital raising are the primary sources of funds while withdrawals of policyholder account balances, investment purchases, policy benefits in the form of claims, and operating expenses are the primary uses of funds. To ensure we will be able to pay future commitments, the funds received as premium payments and deposits are invested in primarily fixed income securities. Funds are invested with the intent that the income from investments, plus proceeds from maturities, will in the future meet our ongoing cash flow needs. The approach of matching asset and liability durations and yields requires an appropriate mix of investments. Our investments consist primarily of marketable debt securities that could be readily converted to cash for liquidity needs. Cash flow projections and cash flow tests under various market interest scenarios are also performed annually to assist in evaluating liquidity needs and adequacy.    As a member of the Federal Home Loan Bank, USALSC has immediate access to additional cash liquidity, if needed.

Net cash provided by operating activities was $2,253,158 for the three months ended March 31, 2025. The primary sources of cash from operating activities were premiums received from policyholders as well as investment income. The primary uses of cash for operating activities were for payments of commissions to agents and settlement of policy liabilities. Net cash provided by investing activities was $1,254,379. The primary uses of cash was purchases of fixed maturity, mortgage, and equity investments and the primary sources of cash was from maturities and paydowns of assets. Cash used by financing activities was $3,689,879. The primary uses of cash were withdrawals on deposit-type contracts.

At March 31, 2025, we had cash and cash equivalents totaling $6,721,441. We believe that our existing cash and cash equivalents are sufficient to fund the anticipated operating expenses and capital expenditures for the foreseeable future. We have based this estimate upon assumptions that may prove to be wrong and we could use our capital resources sooner than we currently expect. The growth of USALSC, our primary insurance subsidiary, is uncertain and may require additional capital as it continues to grow.

Impact of Inflation

Insurance premiums are established before the amount of losses, or the extent to which inflation may affect such losses and expenses, are known. We attempt, in establishing premiums, to anticipate the potential impact of inflation. If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by us. Inflation also affects the rate of investment return on the investment portfolio with a corresponding effect on investment income.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, the Company does not provide disclosure pursuant to this item.

ITEM 4.    CONTROLS AND PROCEDURES

We have established disclosure controls and procedures to ensure, among other things, material information relating to our Company, including our consolidated subsidiaries, is made known to our officers who certify our financial reports and to the other members of our senior management and the Board of Directors.

As required by Exchange Act Rule 13a-15(b), management of the Company, including the Chief Executive Officer and the Vice President conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based upon an evaluation at the end of the period, the Chief Executive Officer and the Vice President concluded that the disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the Exchange Act.

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

Part II – Other Information

ITEM 1.   LEGAL PROCEEDINGS

We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of business, and we are not aware of any claims that could materially affect our financial position or results of operation.

ITEM 1A.   RISK FACTORS

As a “smaller reporting company”, the Company is not required to provide disclosure pursuant to this item.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.   MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.   OTHER INFORMATION

None.

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ITEM 6.     EXHIBITS

3.1	Articles of Incorporation of US Alliance Corporation (filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1)
3.1.1	First Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.1 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference a Exhibit 3.1.1.
3.1.2	Second Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.2 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.2.
3.2	Bylaws of US Alliance Corporation (filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2).
3.2.1	Amendment No. 1. to the bylaws of US Alliance Corporation, filed as Exhibit 3.2 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2.1.
31.1*	Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	Inline XBRL Instance
101.SCH**	Inline XBRL Taxonomy Extension Schema
101.CAL**	Inline XBRL Taxonomy Extension Calculation
101.DEF**	Inline XBRL Taxonomy Extension Definition
101.LAB**	Inline XBRL Taxonomy Extension Labels
101.PRE**	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

**XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

* Filed herewith

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized

	US Alliance
	Corporation
	(Registrant)
Date	May 14, 2025
By	/s/ Jack H. Brier
	Jack H. Brier, President and Chairman

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