Note 4 - Fair Value Measurements

3 Months Ended

Mar. 31, 2026

Notes to Financial Statements

Fair Value Disclosures [Text Block]

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.

Investments, available for sale: 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 derivative 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, 2026 and March 31, 2025.

The table below presents the amounts of assets measured at fair value on a recurring basis as of March 31, 2026 and December 31,2025:

	March 31, 2026
	Total		Level 1		Level 2		Level 3
	(Unaudited)
Fixed maturities:
US Treasury securities	$	726,797	$	726,797	$	-	$	-
Corporate bonds		27,558,929		-		27,403,329		155,600
Municipal bonds		5,754,361		-		5,754,361		-
Redeemable preferred stock		1,491,801		-		1,491,801		-
Term loans		12,093,385		-		-		12,093,385
Mortgage backed and asset backed securities		40,638,140		-		40,309,390		328,750
Total fixed maturities		88,263,413		726,797		74,958,881		12,577,735
Equities:
Common stock		6,853,945		6,723,945		130,000		-
Preferred stock		1,382,010		-		1,382,010		-
Total equities		8,235,955		6,723,945		1,512,010		-
Other invested assets		1,012,127		-		-		1,012,127
Reinsurance contract allocated hedge		32,777		-		-		32,777
Limited partnership interests		1,711,176		-		-		1,711,176
Total	$	99,255,448	$	7,450,742	$	76,470,891	$	15,333,815

	December 31, 2025
	Total		Level 1		Level 2		Level 3
Fixed maturities:
US Treasury securities	$	732,892	$	732,892	$	-	$	-
Corporate bonds		28,299,216		-		28,143,616		155,600
Municipal bonds		5,807,136		-		5,807,136		-
Redeemable preferred stock		1,998,438		-		1,998,438		-
Term loans		11,005,804		-		-		11,005,804
Mortgage backed and asset backed securities		38,691,218		-		38,357,468		333,750
Total fixed maturities		86,534,704		732,892		74,306,658		11,495,154
Equities:
Common stock		2,097,203		1,968,303		128,900		-
Preferred stock		1,445,209		-		1,445,209		-
Total equities		3,542,412		1,968,303		1,574,109		-
Other invested assets		1,018,640		-		-		1,018,640
Reinsurance contract allocated hedge		77,197		-		-		77,197
Limited partnership interests		1,293,005		-		-		1,293,005
Total	$	92,465,958	$	2,701,195	$	75,880,767	$	13,883,996

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			Limited
For the three months ended March 31, 2026	Corporate		Backed			Term			Invested			Partnership
	Bonds		Securities			Loans			Assets			Interests
Fair value, beginning of period	$	155,600	$	333,750		$	11,005,804		$	1,018,640		$	1,293,005
Principal payment		-		-			(554,671	)		(15	)		(192,000	)
Acquisition		-		-			1,587,173			33,551			481,998
Investment related gains (losses), net		-		(5,000	)		55,079			(40,049	)		128,173
Fair value, end of period	$	155,600	$	328,750		$	12,093,385		$	1,012,127		$	1,711,176

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.

The estimated fair values of the Company’s financial assets and liabilities at March 31, 2026 and December 31, 2025 are as follows:

	March 31, 2026
	(unaudited)
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	9,513,983	$	9,513,983	$	9,513,983	$	-	$	-
Mortgage loans on real estate		26,173,041		27,630,558		-		-		27,630,558
Investment income due and accrued		999,436		999,436		-		-		999,436
Policy loans		42,081		42,081		-		-		42,081
Total Financial Assets (excluding available for sale investments)	$	36,728,541	$	38,186,058	$	9,513,983	$	-	$	28,672,075
Financial Liabilities:
Federal Home Loan Bank advance	$	1,250,000	$	1,250,000	$	-	$	-	$	1,250,000
Policyholder deposits in deposit-type contracts		88,062,296		75,988,701		-		-		75,988,701
Total Financial Liabilities	$	89,312,296	$	77,238,701	$	-	$	-	$	77,238,701

	December 31, 2025
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	18,036,904	$	18,036,904	$	18,036,904	$	-	$	-
Mortgage loans on real estate		23,645,037		25,123,294		-		-		25,123,294
Investment income due and accrued		860,697		860,697		-		-		860,697
Policy loans		41,314		41,314		-		-		41,314
Total Financial Assets (excluding available for sale investments)	$	42,583,952	$	44,062,209	$	18,036,904	$	-	$	26,025,305
Financial Liabilities:
Federal Home Loan Bank advance	$	1,250,000	$	1,250,000	$	-	$	-	$	1,250,000
Policyholder deposits in deposit-type contracts		87,824,261		76,539,273		-		-		76,539,273
Total Financial Liabilities	$	89,074,261	$	77,789,273	$	-	$	-	$	77,789,273

During the three months ended March 31, 2026 and 2025, there were no transfers in or out of level 3.