10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2014

OR

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

For the transition period from _____________ to ____________

Commission File No. 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)
Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
	5250 SOUTH SIXTH STREET
	P.O. BOX 5147
	SPRINGFIELD, IL  62705
	(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (217) 241-6300

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 x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company.  See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting companyx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the registrant's common stock as of April 25, 2014, was 3,768,203.

UTG, Inc.

(The "Company")

TABLE OF CONTENTS

PART I.   Financial Information		3
	Item 1.  Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
	Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 4.  Controls and Procedures	20
	PART II.  Other Information	21
	Item 1.  Legal Proceedings	21
	Item 1A. Risk Factors	21
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	21
	Item 3.  Defaults Upon Senior Securities	21
	Item 4.  Mine Safety Disclosures	21
	Item 5.  Other Information	21
	Item 6.  Exhibits	21
	Signatures	22
	Exhibit Index	23

Part 1.   Financial Information.

Item 1.  Financial Statements.

UTG, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

	March 31,		December 31,
	2014			2013*
Investments:
Investments available for sale:
Fixed maturities, at fair value (amortized cost $169,147,449 and $171,085,396)	$	175,911,151	$	174,409,824
Equity securities, at fair value (cost $38,479,572 and $38,625,230)		40,705,899		40,514,978
Trading securities, at fair value (cost $7,105,592 and $6,924,413)		7,206,667		6,614,111
Mortgage loans on real estate at amortized cost		13,935,687		14,454,534
Discounted mortgage loans on real estate at cost		11,419,581		12,830,735
Investment real estate		83,937,511		83,585,359
Policy loans		11,638,101		11,860,960
Short-term investments		184,800		0
Total investments		344,939,397		344,270,501
Cash and cash equivalents		18,515,389		19,838,618
Accrued investment income		2,215,115		2,432,939
Reinsurance receivables:
Future policy benefits		28,572,534		28,767,326
Policy claims and other benefits		3,652,857		3,926,736
Cost of insurance acquired		9,787,222		10,636,412
Deferred policy acquisition costs		356,872		369,786
Property and equipment, net of accumulated depreciation		1,147,139		1,185,108
Income tax receivable		1,293,637		1,296,043
Other assets		4,581,866		4,390,620
Total assets	$	415,062,028	$	417,114,089
Liabilities:
Policy liabilities and accruals:
Future policyholder benefits	$	280,179,067	$	286,472,435
Policy claims and benefits payable		4,328,556		3,283,897
Other policyholder funds		378,000		378,772
Dividend and endowment accumulations		14,154,130		14,162,510
Deferred income taxes		10,275,593		9,633,641
Notes payable		19,097,534		19,097,534
Trading securities, at fair value (proceeds $503,854 and $505,272)		153,615		357,439
Other liabilities		6,819,339		5,860,420
Total liabilities		335,385,834		339,246,648
Shareholders' equity:
Common stock - no par value, stated value $.001 per share.  Authorized 7,000,000 shares - 3,769,565 and 3,776,197 shares outstanding		3,769		3,776
Additional paid-in capital		43,972,782		44,050,778
Retained earnings		23,641,330		25,169,646
Accumulated other comprehensive income		6,751,519		3,459,401
Total UTG shareholders' equity		74,369,400		72,683,601
Noncontrolling interests		5,306,794		5,183,840
Total shareholders' equity		79,676,194		77,867,441
Total liabilities and shareholders' equity	$	415,062,028	$	417,114,089

* Balance sheet audited at December 31, 2013.

See accompanying notes.

UTG, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended
	March 31,			March 31,
	2014			2013
Revenue:
Premiums and policy fees	$	2,733,687		$	3,212,746
Ceded reinsurance premiums and policy fees		(780,983	)		(775,702	)
Net investment income		4,533,119			4,381,392
Other income		520,431			521,359
Revenues before realized gains		7,006,254			7,339,795
Realized investment gains, net:
Other-than-temporary impairments		0			(26,926	)
Other realized investment gains, net		277,424			71,649
Total realized investment gains, net		277,424			44,723
Total revenue		7,283,678			7,384,518
Benefits and other expenses:
Benefits, claims and settlement expenses:
Life		6,686,047			5,856,321
Ceded Reinsurance benefits and claims		(1,202,470	)		(597,779	)
Annuity		278,577			267,539
Dividends to policyholders		136,172			147,222
Commissions and amortization of deferred policy acquisition costs		(101,137	)		(23,552	)
Amortization of cost of insurance acquired		246,412			266,088
Operating expenses		2,656,118			2,055,125
Interest expense		181,832			110,437
Total benefits and other expenses		8,881,551			8,081,401
Loss before income taxes		(1,597,873	)		(696,883	)
Income tax (expense) benefit		192,511			(67,308	)
Net loss		(1,405,362	)		(764,191	)
Net income attributable to noncontrolling interests		(122,954	)		(146,081	)
Net loss attributable to common shareholders'	$	(1,528,316	)	$	(910,272	)
Amounts attributable to common shareholders'
Basic loss per share	$	(0.41	)	$	(0.24	)
Diluted loss per share	$	(0.41	)	$	(0.24	)
Basic weighted average shares outstanding		3,771,867			3,796,527
Diluted weighted average shares outstanding		3,771,867			3,796,527

See accompanying notes.

UTG, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended
	March 31,			March 31,
	2014			2013
Net loss	$	(1,405,362	)	$	(764,191	)
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during period		3,455,923			(23,750	)
(net of tax of $1,860,882 and $(12,788))
Less reclassification adjustment for gains included in net loss		(163,805	)		(59,366	)
(net of tax of $88,203 and $31,966)
Subtotal:  Other comprehensive income (loss), net of tax		3,292,118			(83,116	)
Comprehensive income (loss)		1,886,756			(847,307	)
Less comprehensive income attributable to noncontrolling interests		(122,954	)		(146,081	)
Comprehensive income (loss) attributable to UTG, Inc.	$	1,763,802		$	(993,388	)

See accompanying notes.

UTG, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended
	March 31,			March 31,
	2014			2013
Cash flows from operating activities:
Net loss attributable to common shareholders	$	(1,528,316	)	$	(910,272	)
Adjustments to reconcile net loss to net cash provided by used in operating activities:
Amortization (accretion) of investments		(536,311	)		(403,748	)
Realized investment gains, net		(277,424	)		(44,723	)
Unrealized trading (gains) losses included in income		(260,651	)		297,344
Amortization of deferred policy acquisition costs		12,914			14,108
Amortization of cost of insurance acquired		246,412			266,088
Depreciation		318,708			320,071
Net income attributable to noncontrolling interest		122,954			146,081
Charges for mortality and administration of universal life and annuity products		(1,689,689	)		(1,737,635	)
Interest credited to account balances		1,419,880			1,450,681
Change in accrued investment income		217,824			350,518
Change in reinsurance receivables		468,671			927,606
Change in policy liabilities and accruals		(1,207,644	)		(1,121,391	)
Change in income taxes receivable (payable)		2,406			(1,982,692	)
Change in other assets and liabilities, net		566,693			1,624,775
Net cash used in operating activities		(2,123,573	)		(803,189	)
Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale		10,868,969			6,173,142
Equity securities available for sale		167,504			0
Trading securities		75,134			17,829,177
Mortgage loans		626,528			7,785,104
Discounted mortgage loans		2,087,795			1,505,565
Real estate		521,361			2,733,460
Policy loans		886,346			997,774
Short-term investments		0			29,383
Total proceeds from investments sold and matured		15,233,637			37,053,605
Cost of investments acquired:
Fixed maturities available for sale		(8,813,706	)		(8,856,558	)
Equity securities available for sale		0			(250,617	)
Trading securities		(257,730	)		(15,124,263	)
Mortgage loans		(107,681	)		(1,122,724	)
Discounted mortgage loans		(5,638	)		(1,280,456	)
Real estate		(1,150,682	)		(5,918,258	)
Policy loans		(663,488	)		(803,607	)
Short-term investments		(184,800	)		(25,000	)
Total cost of investments acquired		(11,183,725	)		(33,381,483	)
Net cash provided by investing activities		4,049,912			3,672,122
Cash flows from financing activities:
Policyholder contract deposits		1,489,219			1,521,403
Policyholder contract withdrawals		(1,615,210	)		(1,360,777	)
Payments of principal on notes payable/line of credit		0			(9,500	)
Purchase of treasury stock		(78,003	)		(54,048	)
Sale of block of businees		(3,045,574	)		0
Net cash provided by (used in)  financing activities		(3,249,568	)		97,078
Net increase (decrease) in cash and cash equivalents		(1,323,229	)		2,966,011
Cash and cash equivalents at beginning of period		19,838,618			23,321,246
Cash and cash equivalents at end of period	$	18,515,389		$	26,287,257

See accompanying notes.

UTG, Inc.

Notes to Condensed Consolidated Financial Statements

  Note 1 – Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet as of December 31, 2013, which has been derived from audited financial statements, and the unaudited interim Condensed Consolidated Financial Statements include the accounts of UTG, Inc. (the "Parent") and its subsidiaries (collectively with the Parent, the "Company").  All significant intercompany accounts and transactions have been eliminated in consolidation.  The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.  The information furnished includes all adjustments and accruals of a normal recurring nature, which in the opinion of management, are necessary for a fair presentation of the results for the interim periods.  The unaudited Condensed Consolidated Financial Statements included herein and these related notes should be read in conjunction with the Company's consolidated financial statements, and the notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.  The Company's results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any other future period.

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC ("FSF"), a Kentucky corporation, and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company.  FSBI operates through its 100 % owned subsidiary bank, First Southern National Bank ("FSNB").  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates.  At March 31, 2014, Mr. Correll owns or controls directly and indirectly approximately 56 % of UTG's outstanding stock.

UTG's life insurance subsidiary, Universal Guaranty Life Insurance Company ("UG"), has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate investments.  The real estate investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Note 2 – Recently Issued Accounting Standards

Income Taxes – In July 2013, the Financial Accounting Standards Board ("FASB") issued guidance providing specific financial statement presentation requirements of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance states that an unrecognized tax benefit in those circumstances should be presented as a reduction to the deferred tax asset.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted.  The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Note 3 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments they are permitted to make, and the amount of funds that may be used for any one type of investment.

Investments in available for sale securities are summarized as follows:

March 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,967,799	$	3,197,556	$	(94,083	)	$	36,071,272
States, municipalities and political subdivisions		105,000		513		0			105,513
U.S. special revenue and assessments		1,703,755		83,382		(227,230	)		1,559,907
Collateralized mortgage obligations		1,188,632		108,187		(14	)		1,296,805
Public utilities		399,917		50,438		0			450,355
All other corporate bonds		132,782,346		5,604,616		(1,959,663	)		136,427,299
		169,147,449		9,044,692		(2,280,990	)		175,911,151
Equity securities		38,479,572		2,226,327		0			40,705,899
Total	$	207,627,021	$	11,271,019	$	(2,280,990	)	$	216,617,050

December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,963,938	$	3,156,158	$	(107,550	)	$	36,012,546
States, municipalities and political subdivisions		110,000		0		(924	)		109,076
U.S. special revenue and assessments		2,152,892		95,763		(239,620	)		2,009,035
Collateralized mortgage obligations		1,289,975		116,900		(13	)		1,406,862
Public utilities		399,913		49,567		0			449,480
All other corporate bonds		134,168,678		3,483,229		(3,229,082	)		134,422,825
		171,085,396		6,901,617		(3,577,189	)		174,409,824
Equity securities		38,625,230		1,889,748		0			40,514,978
Total	$	209,710,626	$	8,791,365	$	(3,577,189	)	$	214,924,802

The amortized cost and estimated market value of debt securities at March 31, 2014, by contractual maturity, is shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Available for Sale March 31, 2014	Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,324,432	$	1,369,862
Due after one year through five years		25,476,209		27,068,104
Due after five years through ten years		98,191,729		102,656,995
Due after ten years		42,966,447		43,519,385
Collateralized mortgage obligations		1,188,632		1,296,805
Total	$	169,147,449	$	175,911,151

The fair value of investments with sustained gross unrealized losses at March 31, 2014 and December 31, 2013 are as follows:

March 31, 2014	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	0		0		$	4,902,734		(94,083	)	$	4,902,734		(94,083	)
U.S. Special Revenue and Assessments		760,090		(227,230	)		0		0			760,090		(227,230	)
MBS/Collateralized mortgage obligations		1,884		(14	)		0		0			1,884		(14	)
All other corporate bonds		20,790,667		(517,325	)		6,571,706		(1,442,338	)		27,362,373		(1,959,663	)
Total fixed maturities	$	21,552,641		(744,569	)	$	11,474,440		(1,536,421	)	$	33,027,081		(2,280,990	)
Equity securities	$	0		0		$	0		0		$	0		0

December 31, 2013	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	4,889,060		(107,550	)	$	0		0		$	4,889,060		(107,550	)
States, municipalities and political subdivisions		109,076		(924	)		0		0			109,076		(924	)
U.S. special revenue and assessments		747,700		(239,620	)		0		0			747,700		(239,620	)
Collateralized mortgage obligations		1,922		(13	)		0		0			1,922		(13	)
All other corporate bonds		49,430,637		(1,481,562	)		7,318,832		(1,747,520	)		56,749,469		(3,229,082	)
Total fixed maturities	$	55,178,395		(1,829,669	)	$	7,318,832		(1,747,520	)	$	62,497,227		(3,577,189	)
Equity securities	$	0		0		$	0		0		$	0		0

Additional information regarding investments in an unrealized loss position is as follows:

	Less than 12 months	12 months or longer	Total
As of March 31, 2014
Fixed maturities	13	7	20
Equity securities	0	0	0
As of December 31, 2013
Fixed maturities	30	5	35
Equity securities	0	0	0

Substantially all of the unrealized losses on fixed maturities available for sale at March 31, 2014 and December 31, 2013 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.  Based upon the Company's expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company's evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of March 31, 2014 and December 31, 2013.

The Company regularly reviews its investment securities for factors that may indicate that a decline in fair value of an investment is other than temporary.  The factors considered by management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support, whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions, including the effect of changes in market interest rates.  If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to other-than-temporary losses in the Condensed Consolidated Statements of Operations.

Equity securities may experience other-than-temporary impairments in the future based on the prospects for full recovery in value in a reasonable period of time and the Company's ability and intent to hold the security to recovery.  If a decline in fair value is judged by management to be other-than-temporary or management does not have the intent or ability to hold a security, a loss is recognized by a charge to other-than-temporary impairment losses in the Condensed Consolidated Statements of Operations.

Based on management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Condensed Consolidated Statements of Operations:

	Three Months Ended
	March 31,
	2014		2013
Other than temporary impairments:
Real estate	$	0	$	26,926

The other-than-temporary impairment recognized during 2013 was due to Management's assessment of the value of the real estate. The real estate was written down to better reflect current expected market value.

Trading Securities

Securities designated as trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized in net investment income on the Condensed Consolidated Statements of Operations.  Trading securities include exchange-traded equities and exchange-traded options.  Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.  The fair value of derivatives included in trading security assets and trading security liabilities as of March 31, 2014 was $124,000 and $(149,956), respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2013 was $194,000 and $(353,907), respectively.  Earnings from trading securities are classified in cash flows from operating activities. The derivatives held by the Company are for income generation purposes only.

Trading revenue charged to net investment income from trading securities was:

	Three Months Ended
	March 31,
	2014		2013
Net unrealized gains (losses)	$	260,651	$	(297,344	)
Net realized gains (losses)		21,173		86,271
Net unrealized and realized gains (losses)	$	281,824	$	(211,073	)

Mortgage Loans

As of March 31, 2014 and December 31, 2013, the Company's mortgage loan portfolio contained 36 and 39 mortgage loans, including discounted mortgage loans, with a carrying value of $25,355,268 and $27,285,269, respectively.

Changes in the current economy could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers' ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices.  Given the uncertainty of the current market, management has taken a conservative approach with the discounted mortgage loans and has classified all discounted mortgage loans held as non-accrual.  In such status, the Company is not recording any accrued interest income nor is it recording any accrual of discount on the loans held.  Discount accruals reported during 2014 and 2013 were the result of the loan basis already being fully paid.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The Company acquires the discounted mortgage loans at below contract value, and believes that it will fully recover its carrying value upon disposal, therefore no reserve for delinquent loans is deemed necessary.  Those loans not currently paying are being vigorously worked by management.  The current discounted commercial mortgage loan portfolio has an average price of33.1 % of face value and management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased.

Note 4 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance.  The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date.  The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories.

Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access.  Level 1 fair value is not subject to valuation adjustments.

Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company determines the existence of an active market for an asset or liability based on its judgment as to whether transactions for the asset or liability occur in such market with sufficient frequency and volume to provide reliable pricing information.  If the Company concludes that there has been a significant decrease in the volume and level of activity for an investment in relation to normal market activity for such investment, adjustments to transactions and quoted prices are made to estimate fair value.

The inputs used in the valuation techniques employed by the Company are provided by nationally recognized pricing services, external investment managers and internal resources.  To assess these inputs, the Company's review process includes, but is not limited to, quantitative analysis including benchmarking, initial and ongoing evaluations of methodologies used by external parties to calculate fair value, and ongoing evaluations of fair value estimates based on the Company's knowledge and monitoring of market conditions.

The Company periodically reviews the pricing service provider's policies and procedures for valuing securities.  The assumptions underlying the valuations from external service providers, including unobservable inputs, are generally not readily available as this information is often deemed proprietary.  Accordingly, the Company is unable to obtain comprehensive information regarding these assumptions and methodologies.

The Company's investments in fixed maturity securities available for sale, equity securities available for sale and trading securities assets and liabilities are carried at fair value.  The following are the Company's methodologies and valuation techniques for assets and liabilities measured at fair value.

Fixed maturities available for sale mainly consist of U.S. treasury securities and corporate debt securities. The Company employs a market approach to the valuation of securities where there are sufficient market transactions involving identical or comparable assets. If sufficient market data is not available for identical or comparable assets, the Company uses an income approach to valuation. The majority of the financial instruments included in fixed maturity securities available for sale are evaluated utilizing observable inputs; accordingly, they are categorized in either Level 1 or Level 2 of the fair value hierarchy. However, in instances where significant inputs utilized in valuation of the securities are unobservable, the securities are categorized in Level 3 of the fair value hierarchy.

Corporate securities primarily include fixed rate corporate bonds. Inputs utilized in connection with the Company's valuation techniques relating to this class of securities include recently executed transactions, market price quotations, benchmark yields and issuer spreads. Corporate securities are categorized in Level 2 of the fair value hierarchy.

U.S. treasury securities are based on quoted prices in active markets and are generally categorized in Level 1 of the fair value hierarchy.

Equity securities available for sale consist of common and preferred stocks mainly in private equity investments, financial institutions and insurance companies. Equity securities for which there is sufficient market data are categorized as Level 1 or 2 in the fair value hierarchy.  For the equity securities in which quoted market prices are not available, the transaction price is used as the best estimate of fair value at inception.  When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected exit values. The Company performs ongoing reviews of the underlying investments. The reviews consist of the evaluations of expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Securities designated as trading securities consist of exchange traded equities and exchange traded options.  These securities are primarily valued at quoted active market prices, and are therefore categorized as Level 1 in the fair value hierarchy.

The following table presents the Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of March 31, 2014.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,384,352	$	156,225,114	$	301,685	$	175,911,151
Equity Securities, available for sale		1,669,042		6,764,208		32,272,649		40,705,899
Trading Securities		7,206,667		0		0		7,206,667
Total	$	28,260,061	$	162,989,322	$	32,574,334	$	223,823,717
Liabilities
Trading Securities	$	153,615	$	0	$	0	$	153,615

The following table presents the Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of December 31, 2013.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,407,301	$	154,688,710	$	313,813	$	174,409,824
Equity Securities, available for sale		1,643,803		6,774,589		32,096,586		40,514,978
Trading Securities		6,614,111		0		0		6,614,111
Total	$	27,665,215	$	161,463,299	$	32,410,399	$	221,538,913
Liabilities
Trading Securities	$	357,439	$	0	$	0	$	357,439

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

	Fixed Maturities, Available for Sale			Equity Securities, Available for Sale		Total
Balance at December 31, 2013	$	313,813		$	32,096,586	$	32,410,399
Total unrealized gains or (losses):
Included in realized gains/(losses)		82,287			0		82,287
Included in other comprehensive income		53,128			176,063		229,191
Sales		(147,543	)		0		(147,543	)
Balance at March 31, 2014	$	301,685		$	32,272,649	$	32,574,334

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs.  The Company computed fair value of Level 3 investments based on a review of current financial information, earnings trends and similar companies in the same industries.

Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Condensed Consolidated Financial Statements.

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Condensed Consolidated Balance Sheets are shown below. Because the fair value for all Condensed Consolidated Balance Sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

	March 31, 2014				December 31, 2013
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	13,935,687	$	14,171,392	$	14,454,534	$	14,734,756
Discounted mortgage loans		11,419,518		11,419,581		12,830,735		12,830,735
Investment real estate		83,937,511		83,937,511		83,585,359		83,585,359
Policy loans		11,638,101		11,638,101		11,860,960		11,860,960
Cash and cash equivalents		18,515,389		18,515,389		19,838,618		19,838,618
Short term investments		184,800		184,800		0		0
Liabilities
Notes payable		19,097,534		19,097,534		19,097,534		19,097,534

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange.  The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.  The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 3 within the fair value hierarchy.

The Company has been purchasing non-performing discounted mortgage loans at a deep discount through an auction process led by the federal government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price, which management believes approximates fair value.  The inputs used to measure the fair value of our discounted mortgage loans are classified as Level 3 within the fair value hierarchy.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell.  The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by management.  The inputs used to measure the fair value of our investment real estate are classified as Level 3 within the fair value hierarchy.

Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets which approximate fair value, and earn interest at rates ranging from  4 % to 8 %.  Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.  The inputs used to measure the fair value of our policy loans are classified as Level 3 within the fair value hierarchy.

The carrying amount of cash and cash equivalents in the financial statements approximates fair value given the highly liquid nature of the instruments.  The inputs used to measure the fair value of our cash and cash equivalents are classified as Level 1 within the fair value hierarchy.

The carrying amount of short term investments in the financial statements approximates fair value.  The inputs used to measure the fair value of our short term investments are classified as Level 3 within the fair value hierarchy.

The carrying value is a reasonable estimate of fair value for notes payable subject to floating rates of interest.  The fair value of notes payable with fixed rate borrowings is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.  The inputs used to measure the fair value of our notes payable are classified as Level 2 within the fair value hierarchy.

Note 5 – Credit Arrangements

At March 31, 2014 and December 31, 2013, the Company had the following outstanding debt:

					Outstanding Principal Balance
Instrument	Issue Date		Maturity Date		March 31, 2014		December 31, 2013
Promissory Note:
HPG Acquisitions		2012-12-27		2018-03-04		12,000,000		12,000,000

Instrument	Issue Date		Maturity Date		Revolving Credit Limit		December 31, 2013		Borrowings		Repayments		March 31, 2014
Lines of Credit:
UTG		2013-11-20		2014-11-20	$	8,000,000	$	2,097,534		0		1,655,035	$	2,097,534
UTG Avalon		2013-03-28		2015-03-28		5,000,000		5,000,000		0		0		5,000,000
UG		2010-12-28		2014-12-05		15,000,000		0		0		0		0

The HPG Acquisitions promissory note issued on December 27, 2012 is secured by real estate owned by HPG. The promissory note bears interest at a fixed rate of 4%. Interest is payable monthly. Principal is payable monthly beginning in the third year of the note.

The UTG line of credit carries interest at a fixed rate of  3.75% and is payable monthly. As collateral, UTG has pledged 100% of the common voting stock of its wholly owned subsidiary, Universal Guaranty Life Insurance Company ("UG"). .In April 2014, the Company repaid $900,000 in principal on this line of credit.

The UTG Avalon line of credit issued on March 28, 2013 currently carries interest at a rate of 4.0% with monthly interest payments. The interest rate is a variable rate that will be 0.50% above the lowest of the U.S. Prime Rates as published in the money section of the Wall Street Journal with a floor rate of 4%. The interest rate is subject to change monthly and changes in the interest rate will take effect on the first day of the month following the rate change. This line of credit was renewed on March 28, 2014.

UG is a member of the Federal Home Loan Bank ("FHLB").  This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the "base membership" amount.

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year	Amount
2014	$	2,097,534
2015		5,345,459
2016		478,193
2017		499,278
2018		10,677,070

Note 6 – Shareholders' Equity

Stock Repurchase Programs

The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of up to $6 million of UTG's common stock. Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.  During the three month period ended March 31, 2014, the Company repurchased 6,632 shares through the stock repurchase program for $78,003.Through March 31, 2014, UTG has spent $5.0 million in the acquisition of 595,158 shares under this program.

Earnings Per Share Calculations

Earnings per share are based on the weighted average number of common shares outstanding during each period.  At March 31, 2014 and 2013, diluted earnings per share were the same as basic earnings per share since the Company had no dilutive instruments outstanding.

Note 7 – Commitments and Contingencies

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters.  Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages.  In some states, juries have substantial discretion in awarding punitive damages in these circumstances.  In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings.  Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the Company's results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies.  Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength.  Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements, though the Company has no control over such assessments.

Within the Company's trading accounts, certain trading securities carried as liabilities represent securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.

The following table represents the total funding commitments and the unfunded commitment as of March 31, 2014 related to certain investments:

	Total Funding		Unfunded
	Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		4,000,000		517,000
Marcellus HBPI, LLP		1,800,000		141,300
PBEX, LLC		5,600,000		2,818,750
Sovereign's Capital, LP		500,000		250,000
MM-Appalachia IV, LP		2,475,000		1,056,000

During 2006, the Company committed to invest in RLF III, LLC ("RLF"), which makes land-based investment in undervalued assets. RLF makes capital calls as funds are needed for continued land purchases.

During 2010, the Company made a commitment to invest in Llano Music, LLC ("Llano"), which invests in music royalties. Llano makes capital calls to its investors as funds are needed to acquire the royalty rights.  During 2014, the commitment amount increased by $2 million.

During 2012, the Company committed to invest in Marcellus HBPI, LLP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus HPBI, LLP makes capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in PBEX, LLC, which purchases land for leasing opportunities to those looking to harvest natural resources. PBEX, LLC makes capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in Sovereign's Capital, LP ("Sovereign's"), which invests in companies in emerging markets. Sovereign's makes capital calls to investors as funds are needed.

During 2013, the Company committed to invest in MM-Appalachia IV, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. MM-Appalachia IV, LP makes capital calls to investors as funds are needed for continued land purchases.

Note 8 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses:

	Three Months Ended
	March 31,
	2014		2013
Interest expense	$	19,672	$	16,398
Federal income tax		0		2,050,000

During the first quarter of 2013 and 2014, UG's wholly-owned subsidiary, UTG Avalon, LLC, entered into a noncash transaction whereby the subsidiary obtained a new line of credit in the amount of $5 million and utilized the line of credit to repay the prior line of credit. The terms of the new line of credit are consistent with the terms of the prior line of credit.

During the first quarter of 2014, the Company sold a block of life insurance business.  As a result of this transaction, the Company transferred approximately $3,100,000.0 million in cash to purchaser.  The transaction also resulted in a reduction of approximately $3.7 million of future policyholder benefits and approximately $600,000 of cost of insurance acquired.

Note 9 – Concentrations of Credit Risk

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits.  The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse Correll, the Company's CEO and Chairman.  The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is Management's discussion and analysis of the financial condition and results of operations of UTG, Inc. and its subsidiaries (collectively with the Parent, the "Company").  The following discussion of the financial condition and results of operations of the Company should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements of the Company and the related Notes thereto appearing in the Company's annual report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission, and our unaudited Condensed Consolidated Financial Statements and related Notes thereto appearing elsewhere in this quarterly report.

Cautionary Statement Regarding Forward-Looking Statements

This report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "probably," or similar expressions, we are making forward-looking statements.

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur.  Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

Overview

UTG, Inc., a Delaware corporation, is a life insurance holding company.  The Company's dominant business is individual life insurance, which includes the servicing of existing insurance policies in force, the acquisition of other companies in the life insurance business and the administration and processing of life insurance business for other entities.  The Company's focus for the future includes growing the administrative portion of the business.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ significantly from those estimates.  The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability.  The Company's critical accounting policies and the related estimates considered most significant by Management are disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.  Management has identified the accounting policies related to cost of insurance acquired, assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, and valuation methods for investments that are not actively traded as those, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's Condensed Consolidated Financial Statements and this Management's Discussion and Analysis.

During the three months ended March 31, 2014, there were no additions to or changes in the critical accounting policies disclosed in the 2013 Form 10-K, except for recently adopted accounting standards discussed in Note 2 of the Notes to the Condensed Consolidated Financial Statements.

Results of Operations

On a consolidated basis, the Company reported a net loss attributable to common shareholders' of $(1.5) million and $(910,000) for the three month period ended March 31, 2014 and 2013, respectively.  During the three month period ended March 31, 2014 and 2013, the Company reported a net loss before income taxes of $(1.6) million and $(697,000), respectively.

The Company reported total revenues of $7.3 million and $7.4 million for the three month period ended March 31, 2014 and 2013, respectively.  Total benefits and other expenses reported by the Company for the three month period ended March 31, 2014 and 2013 were $8.9 million and $8.1 million, respectively.

Revenues

The Company's premium and policy fee revenues, net of reinsurance, were approximately $2 million for the first quarter of 2014, a decrease of approximately 20% compared to the same quarter in 2013. The Company writes minimal new business.  Unless the Company acquires a new insurance company or a block of in-force business, Management expects premium revenue to continue to decline on the existing blocks of business at a rate consistent with prior experience.

The Company reported net investment income of approximately $4.5 million and $4.4 million during the first quarter of 2014 and 2013, respectively.  Net investment income increased slightly, when comparing the first quarter of 2014 to the same quarter in 2013.  Income from the bond portfolio and the preferred stock portfolio was slightly higher in 2014, compared to 2013.  Also, the Company reported income of approximately $282,000 in the trading security portfolio during 2014 and a loss of approximately $(221,000) during 2013.

The Company reported a net realized investment gain of $277,000 and $45,000 during the first quarter of 2014 and 2013, respectively.  The 2014 net realized investment gains are mainly the result of the sale of fixed maturity securities.  During 2014 and 2013, the Company recognized $252,000 and $91,000, respectively, in net gains from the sale of fixed maturity securities.  During 2013, realized investment gains were reduced by realized losses of $47,000 from the sale of real estate and an other-than-temporary impairment.  Similar losses were not recognized during the first quarter of 2014.

Expenses

Life benefits, claims and settlement expenses, net of reinsurance benefits and claims, increased approximately 4% in the three month period ended March 31, 2014, compared to the same period in 2013.  Policy claims vary from period to period and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.

In early 2013, the Company began a proactive analysis of its in-force business to try to reconnect with lost customers and verify its customers are not deceased.  In some instances, the Company found that the customer was indeed deceased, but no notification or claim was presented to the Company.  During 2013, the Company paid approximately $2.9 million in death claim benefits as a result of this action.  During the first quarter of 2014, the Company paid approximately $1 million in death claim benefits.  This process remains ongoing with a target completion date of May of 2014.

Net amortization of cost of insurance acquired decreased approximately 7% during the three month period ended March 31, 2014 compared to the same period in 2013.  Cost of insurance acquired is established when an insurance company is acquired or when the Company acquires a block of in-force business.  The Company assigns a portion of its cost to the right to receive future profits from insurance contracts existing at the date of the acquisition.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The interest rates may vary due to risk analysis performed at the time of acquisition on the business acquired. The Company utilizes a 12% discount rate on the remaining unamortized business.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.  Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force.  This expense is expected to decrease, unless the Company acquires a new block of business.

Operating expenses increased approximately 29% in the three month period ended March 31, 2014 in comparison to the same period in 2013.  The increase in expenses is primarily attributable to an increase in information technology expenses incurred during the first quarter of 2014.

Following an extensive analysis of current administrative systems available in the market place, early in 2014 the Company determined it would change its administrative system.  Management anticipates it will be year-end 2015 before fully converted to the new system.  Management believes this system change will well position the Company for the future by providing a more modern and flexible operating system while reducing ongoing operating costs.

Financial Condition

Investment Information

Investments represent approximately 83% and 82% of total assets at March 31, 2014 and December 31, 2013, respectively.  Accordingly, investments are the largest asset group of the Company.  The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments that it is permitted to make and the amount of funds that may be used for any one type of investment.  In light of these statutes and regulations, the majority of the Company's investment portfolio is invested in a diverse set of securities.

As of March 31, 2014, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders' equity or results from operations.  To provide additional flexibility and liquidity, the Company has identified all fixed maturity securities as "investments held for sale".  Investments held for sale are carried at market, with changes in market value charged directly to shareholders' equity.  Changes in the market value resulted in net unrealized gains of approximately $3.5 million during the first quarter of 2014.

The trading securities investment portfolio increased by 9% when comparing March 31, 2014 to December 31, 2013.  The increase in the portfolio balance is the result of Management's decision to purchase additional securities.

The Company's March 31, 2014 discounted mortgage loan asset balance decreased by approximately 11% in comparison to the December 31, 2013 balance.  The decrease in the discounted mortgage loan balance is mainly attributable to a mortgage loan being fully repaid during 2014.

Capital Resources

Total shareholders' equity increased by approximately 2% as of March 31, 2014 compared to December 31, 2013. The increase in shareholders' equity is mainly attributable to the change in accumulated other comprehensive income.

At March 31, 2014 and December 31, 2013, the Company had $19.1 million of debt outstanding.  Approximately $2.1 million of this debt is related to the ACAP dissenters' settlement that occurred during the fourth quarter of 2013.  Approximately $12 million of this debt is related to credit facilities extended to a majority owned subsidiary of UTG, HPG Acquisitions, LLC ("HPG"), during 2012. HPG borrowed money to return capital to its investors.  UTG Avalon, LLC, a wholly owned subsidiary of UG, has an outstanding line of credit in the amount of $5 million.

The Company's investments are predominately in fixed maturity investments such as bonds, which provide sufficient return to cover future obligations.  The Company carries all of its fixed maturity holdings as available for sale, which are reported in the Condensed Consolidated Financial Statements at their market value.

Liquidity

The Company has three principal needs for cash - the insurance company's contractual obligations to policyholders, the payment of operating expenses and debt service.  Cash and cash equivalents as a percentage of total assets were approximately 4% and 5% as of March 31, 2014 and December 31, 2013.  Fixed maturities as a percentage of total assets were approximately 40% and 42% as of March 31, 2014 and December 31, 2013, respectively.

The Company currently has access to funds for operating liquidity.  UTG has an $8 million revolving credit note with Illinois National Bank.  UTG Avalon, LLC also has a $5 million revolving credit note.  UG is a member of the FHLB which allows UG access to credit.  UG's current line of credit with the FHLB is $15 million.  At March 31, 2014, the Company had $7.1 million of outstanding borrowings attributable to the lines of credit.  In April 2014, the Company paid $900,000 in principal on the UTG revolving credit note.

Future policy benefits are primarily long-term in nature and therefore, the Company's investments are predominantly in long-term fixed maturity investments such as bonds and mortgage loans which provide sufficient return to cover these obligations.

Many of the Company's products contain surrender charges and other features which reward persistency and penalize the early withdrawal of funds.  With respect to such products, surrender charges are generally sufficient to cover the Company's unamortized deferred policy acquisition costs with respect to the policy being surrendered.

Net cash used in operating activities was approximately $2.1 million and $803,000 for the three month period ended March 31, 2014 and 2013, respectively.  The variance in cash used in operating activities, when comparing March 31, 2014 and March 31, 2013 activity, is mainly attributable to the net loss recognized by the Company during the current year. During the first quarter of 2014, the Company did not recognize any substantial positive one-time events, but did recognize an increase in operating expenses related to information technology.

Net cash provided by investing activities was approximately $4 million and $3.7 million for the three month period ended March 31, 2014 and 2013, respectively.  The cash provided by and used in investing activities is expected to vary from quarter to quarter depending on market conditions and Management's ability to find and negotiate favorable investment contracts.

Net cash provided by (used in) financing activities was approximately $(3.2) million and $97,000 for the three month period ended March 31, 2014 and 2013, respectively.  During 2014, the Company used cash of approximately $3 million in the settlement of the sale of a small block of life insurance business.  The sale of this block of business was approved by the Ohio Department of Insurance during the first quarter of 2014.

UTG is a holding company that has no day-to-day operations of its own.  Funds required to meet its expenses, generally costs associated with maintaining the company in good standing with states in which it does business and the servicing of its debt, are primarily provided by its subsidiaries.  On a parent only basis, UTG's cash flow is dependent on management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances.  At March 31, 2014, substantially all of the consolidated shareholders equity represents net assets of its subsidiary.  The Company's insurance subsidiary has maintained adequate statutory capital and surplus.  The payment of cash dividends to shareholders by UTG is not legally restricted.  However, the state insurance department regulates insurance company dividend payments where the company is domiciled.  No dividends were paid to shareholders in 2013 or the three month period ended March 31, 2014.

UG is an Ohio domiciled insurance company, which requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend.  Ordinary dividends are defined as the greater of:  a) prior year statutory net income or b) 10% of statutory capital and surplus.  For the year ended December 31, 2013, UG had statutory net income of $4.8 million.  At December 31, 2013 UG's statutory capital and surplus amounted to $34.9 million.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  During 2013, UG paid UTG ordinary dividends of $2.7 million.  UTG used the dividends to pay on its outstanding line of credit balance. UG has not paid UTG any ordinary dividends during 2014.

Management believes the overall sources of liquidity available will be sufficient to satisfy the Company's financial obligations.

ITEM 4.  CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the principal executive officer and principal financial officer, allowing timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

NONE

ITEM 1A.  RISK FACTORS

NONE

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

NONE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4.  MINE SAFETY DISCLOSURES

NONE

ITEM 5.  OTHER INFORMATION

NONE

ITEM 6.  EXHIBITS

*10.22	Promissory Note dated March 28, 2013 between UTG Avalon, LLC and First Southern Funding
*31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**101	Interactive Data File

*Filed herewith

SIGNATURES

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

UTG, INC.

(Registrant)

Date:	May 12, 2014	By	/s/ James P. Rousey
			James P. Rousey
			President and Director

Date:	May 12, 2014	By	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President
			and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number Description

*10.22	Promissory Note dated March 28, 2013 between UTG Avalon, LLC and First Southern Funding
*31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**101	Interactive Data File

* Filed herewith

EX-31.1

Exhibit 31.1

CERTIFICATIONS
I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of UTG, Inc., certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant, UTG, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:	May 12, 2014	By	/s/ Jesse T. Correll
			Chairman of the Board and
			Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS
I, Theodore C. Miller,  Senior Vice President, Corporate Secretary and Chief Financial Officer of UTG, Inc., certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant, UTG, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:	May 12, 2014	By	/s/ Theodore C. Miller
			Senior Vice President, Corporate Secretary and
			Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of UTG, Inc. (the "Company") for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Date:	May 12, 2014	By:	/s/ Jesse T. Correll
			Jesse T. Correll
			Chairman of the Board and
			Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of UTG, Inc. (the "Company") for the period ended March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Theodore C. Miller, Senior Vice President, Corporate Secretary and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company

Date:	May 12, 2014	By:	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President, Corporate
			Secretary and Chief Financial Officer

XML

CREDIT ARRANGEMENTS (Details) (USD $)		3 Months Ended		0 Months Ended	3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended
	Mar. 31, 2014	Mar. 31, 2014 UTG 2012-11-20 [Member]	Dec. 31, 2013 UTG 2012-11-20 [Member]	Oct. 28, 2013 UTG 2012-11-20 [Member] Subsequent Event [Member]	Mar. 31, 2014 UTG Avalon 2011-12-28 [Member]	Dec. 31, 2013 UTG Avalon 2011-12-28 [Member]	Mar. 31, 2014 UTG Avalon 2013-03-28 [Member]	Dec. 31, 2013 UTG Avalon 2013-03-28 [Member]	Mar. 31, 2014 UG 2010-12-28 [Member]	Dec. 31, 2013 UG 2010-12-28 [Member]	Mar. 31, 2014 HPG Acquisition 2007-02-07 [Member]	Dec. 31, 2013 HPG Acquisition 2007-02-07 [Member]	Mar. 31, 2014 HPG Acquisitions 2012-12-27 [Member]	Dec. 31, 2013 HPG Acquisitions 2012-12-27 [Member]
Debt Instrument [Line Items]
Issue Date											Feb. 07, 2007		Dec. 27, 2012
Maturity Date											Nov. 07, 2017		Mar. 04, 2018
Outstanding Principal Balance											$ 0	$ 202,919	$ 12,000,000	$ 12,000,000
Interest Rate											5.00%		4.00%
Lines of Credit [Line Items]
Issue Date		Nov. 20, 2013			Dec. 28, 2011		Mar. 28, 2013		Dec. 28, 2010
Maturity Date		Nov. 20, 2014			Jan. 03, 2014		Mar. 28, 2015		Dec. 05, 2014
Revolving Credit Limit		8,000,000			5,000,000		5,000,000		15,000,000
Outstanding Balance		2,097,534	2,097,534		0	5,000,000	5,000,000	5,000,000	0	0
Borrowings		0		3,000,000	0		0		0
Repayments		1,655,035			5,000,000		0		0
Interest Rate		3.75%			4.00%		4.00%
Assets Pledged		100% of the common voting stock of its wholly owned subsidiary, Universal Guaranty Life Insurance Company (“UG”).
Frequency of Payments					two semi-annual		two semi-annual
Interest Rate Description							0.50% above the lowest of the U.S. Prime Rates as published in the money section of the Wall Street Journal with a floor rate of 4%.
Additional Credit Capacity									up to a maximum of 50% of the total assets of UG.
Borrowing Capacity									based on 50 times each dollar of stock acquired in FHLB above the “base membership” amount.
Scheduled principal reductions on notes payable for the next five years [Abstract]
2013	2,097,534
2014	5,345,459
2015	478,193
2016	499,278
2017	$ 10,677,070

XML

INVESTMENTS

3 Months Ended

Mar. 31, 2014

INVESTMENTS [Abstract]

INVESTMENTS

Note 3 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments they are permitted to make, and the amount of funds that may be used for any one type of investment.

Investments in available for sale securities are summarized as follows:

March 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,967,799	$	3,197,556	$	(94,083	)	$	36,071,272
States, municipalities and political subdivisions		105,000		513		0			105,513
U.S. special revenue and assessments		1,703,755		83,382		(227,230	)		1,559,907
Collateralized mortgage obligations		1,188,632		108,187		(14	)		1,296,805
Public utilities		399,917		50,438		0			450,355
All other corporate bonds		132,782,346		5,604,616		(1,959,663	)		136,427,299
		169,147,449		9,044,692		(2,280,990	)		175,911,151
Equity securities		38,479,572		2,226,327		0			40,705,899
Total	$	207,627,021	$	11,271,019	$	(2,280,990	)	$	216,617,050

December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,963,938	$	3,156,158	$	(107,550	)	$	36,012,546
States, municipalities and political subdivisions		110,000		0		(924	)		109,076
U.S. special revenue and assessments		2,152,892		95,763		(239,620	)		2,009,035
Collateralized mortgage obligations		1,289,975		116,900		(13	)		1,406,862
Public utilities		399,913		49,567		0			449,480
All other corporate bonds		134,168,678		3,483,229		(3,229,082	)		134,422,825
		171,085,396		6,901,617		(3,577,189	)		174,409,824
Equity securities		38,625,230		1,889,748		0			40,514,978
Total	$	209,710,626	$	8,791,365	$	(3,577,189	)	$	214,924,802

The amortized cost and estimated market value of debt securities at March 31, 2014, by contractual maturity, is shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Available for Sale March 31, 2014	Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,324,432	$	1,369,862
Due after one year through five years		25,476,209		27,068,104
Due after five years through ten years		98,191,729		102,656,995
Due after ten years		42,966,447		43,519,385
Collateralized mortgage obligations		1,188,632		1,296,805
Total	$	169,147,449	$	175,911,151

The fair value of investments with sustained gross unrealized losses at March 31, 2014 and December 31, 2013 are as follows:

March 31, 2014	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	0		0		$	4,902,734		(94,083	)	$	4,902,734		(94,083	)
U.S. Special Revenue and Assessments		760,090		(227,230	)		0		0			760,090		(227,230	)
MBS/Collateralized mortgage obligations		1,884		(14	)		0		0			1,884		(14	)
All other corporate bonds		20,790,667		(517,325	)		6,571,706		(1,442,338	)		27,362,373		(1,959,663	)
Total fixed maturities	$	21,552,641		(744,569	)	$	11,474,440		(1,536,421	)	$	33,027,081		(2,280,990	)
Equity securities	$	0		0		$	0		0		$	0		0

December 31, 2013	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	4,889,060		(107,550	)	$	0		0		$	4,889,060		(107,550	)
States, municipalities and political subdivisions		109,076		(924	)		0		0			109,076		(924	)
U.S. special revenue and assessments		747,700		(239,620	)		0		0			747,700		(239,620	)
Collateralized mortgage obligations		1,922		(13	)		0		0			1,922		(13	)
All other corporate bonds		49,430,637		(1,481,562	)		7,318,832		(1,747,520	)		56,749,469		(3,229,082	)
Total fixed maturities	$	55,178,395		(1,829,669	)	$	7,318,832		(1,747,520	)	$	62,497,227		(3,577,189	)
Equity securities	$	0		0		$	0		0		$	0		0

Additional information regarding investments in an unrealized loss position is as follows:

	Less than 12 months	12 months or longer	Total
As of March 31, 2014
Fixed maturities	13	7	20
Equity securities	0	0	0
As of December 31, 2013
Fixed maturities	30	5	35
Equity securities	0	0	0

Substantially all of the unrealized losses on fixed maturities available for sale at March 31, 2014 and December 31, 2013 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.  Based upon the Company's expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company's evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of March 31, 2014 and December 31, 2013.

The Company regularly reviews its investment securities for factors that may indicate that a decline in fair value of an investment is other than temporary.  The factors considered by management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support, whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions, including the effect of changes in market interest rates.  If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to other-than-temporary losses in the Condensed Consolidated Statements of Operations.

Equity securities may experience other-than-temporary impairments in the future based on the prospects for full recovery in value in a reasonable period of time and the Company's ability and intent to hold the security to recovery.  If a decline in fair value is judged by management to be other-than-temporary or management does not have the intent or ability to hold a security, a loss is recognized by a charge to other-than-temporary impairment losses in the Condensed Consolidated Statements of Operations.

Based on management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Condensed Consolidated Statements of Operations:

	Three Months Ended
	March 31,
	2014		2013
Other than temporary impairments:
Real estate	$	0	$	26,926

The other-than-temporary impairment recognized during 2013 was due to Management's assessment of the value of the real estate. The real estate was written down to better reflect current expected market value.

Trading Securities

Securities designated as trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized in net investment income on the Condensed Consolidated Statements of Operations.  Trading securities include exchange-traded equities and exchange-traded options.  Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.  The fair value of derivatives included in trading security assets and trading security liabilities as of March 31, 2014 was $124,000 and $(149,956), respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2013 was $194,000 and $(353,907), respectively.  Earnings from trading securities are classified in cash flows from operating activities. The derivatives held by the Company are for income generation purposes only.

Trading revenue charged to net investment income from trading securities was:

	Three Months Ended
	March 31,
	2014		2013
Net unrealized gains (losses)	$	260,651	$	(297,344	)
Net realized gains (losses)		21,173		86,271
Net unrealized and realized gains (losses)	$	281,824	$	(211,073	)

Mortgage Loans

As of March 31, 2014 and December 31, 2013, the Company's mortgage loan portfolio contained 36 and 39 mortgage loans, including discounted mortgage loans, with a carrying value of $25,355,268 and $27,285,269, respectively.

Changes in the current economy could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers' ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices.  Given the uncertainty of the current market, management has taken a conservative approach with the discounted mortgage loans and has classified all discounted mortgage loans held as non-accrual.  In such status, the Company is not recording any accrued interest income nor is it recording any accrual of discount on the loans held.  Discount accruals reported during 2014 and 2013 were the result of the loan basis already being fully paid.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The Company acquires the discounted mortgage loans at below contract value, and believes that it will fully recover its carrying value upon disposal, therefore no reserve for delinquent loans is deemed necessary.  Those loans not currently paying are being vigorously worked by management.  The current discounted commercial mortgage loan portfolio has an average price of33.1 % of face value and management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased.

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OTHER CASH FLOW DISCLOSURES (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
OTHER CASH FLOW DISCLOSURES [Abstract]
Interest expense paid	$ 19,672	$ 16,398
Federal income tax	0	2,050,000
Noncash transaction LOC	5,000,000
Cash to purchaser	3,100,000
Approximate future policyholder benefits	3,700,000
Approximate cost of insurance acquired	600,000
Noncash transaction short term investments	6,300,000
Noncash transaction real estate	$ 6,300,000

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NEW ACCOUNTING STANDARDS

3 Months Ended

Mar. 31, 2014

NEW ACCOUNTING STANDARDS [Abstract]

NEW ACCOUNTING STANDARDS

Note 2 – Recently Issued Accounting Standards

Income Taxes – In July 2013, the Financial Accounting Standards Board ("FASB") issued guidance providing specific financial statement presentation requirements of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance states that an unrecognized tax benefit in those circumstances should be presented as a reduction to the deferred tax asset.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted.  The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

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Balance Sheet (USD $)	Mar. 31, 2014	Dec. 31, 2013
Investments available for sale:
Fixed maturities, at fair value (amortized cost $169,147,449 and $171,085,396)	$ 175,911,151	$ 174,409,824
Equity securities, at fair value (cost $38,479,572 and $38,625,230)	40,705,899	40,514,978
Trading securities, at fair value (cost $7,105,592 and $6,924,413)	7,206,667	6,614,111
Mortgage loans on real estate at amortized cost	13,935,687	14,454,534
Discounted mortgage loans on real estate at cost	11,419,581	12,830,735
Investment real estate	83,937,511	83,585,359
Policy loans	11,638,101	11,860,960
Short-term investments	184,800	0
Total investments	344,939,397	344,270,501
Cash and cash equivalents	18,515,389	19,838,618
Accrued investment income	2,215,115	2,432,939
Future policy benefits	28,572,534	28,767,326
Policy claims and other benefits	3,652,857	3,926,736
Cost of insurance acquired	9,787,222	10,636,412
Deferred policy acquisition costs	356,872	369,786
Property and equipment, net of accumulated depreciation	1,147,139	1,185,108
Income tax receivable	1,293,637	1,296,043
Other assets	4,581,866	4,390,620
Total assets	415,062,028	417,114,089
Liabilities:
Future policyholder benefits	280,179,067	286,472,435
Policy claims and benefits payable	4,328,556	3,283,897
Other policyholder funds	378,000	378,772
Dividend and endowment accumulations	14,154,130	14,162,510
Deferred income taxes	10,275,593	9,633,641
Notes payable	19,097,534	19,097,534
Trading securities, at fair value (proceeds $503,854 and $505,272)	153,615	357,439
Other liabilities	6,819,339	5,860,420
Total liabilities	335,385,834	339,246,648
Common stock - no par value, stated value $.001 per share. Authorized 7,000,000 shares - 3,769,565 and 3,776,197 shares outstanding	3,769	3,776
Additional paid-in capital	43,972,782	44,050,778
Retained earnings	23,641,330	25,169,646
Accumulated other comprehensive income	6,751,519	3,459,401
Total UTG shareholders' equity	74,369,400	72,683,601
Noncontrolling interests	5,306,794	5,183,840
Total shareholders' equity	79,676,194	77,867,441
Total liabilities and shareholders' equity	$ 415,062,028	$ 417,114,089

XML

Statement of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net loss attributable to common shareholders	$ (1,528,316)	$ (910,272)
Adjustments to reconcile net loss to net cash used in operating activities
Amortization (accretion) of investments	(536,311)	(403,748)
Realized investment gains, net	(277,424)	(44,723)
Unrealized trading (gains) losses included in income	(260,651)	297,344
Amortization of deferred policy acquisition costs	12,914	14,108
Amortization of cost of insurance acquired	246,412	266,088
Depreciation	318,708	320,071
Net income attributable to noncontrolling interest	122,954	146,081
Charges for mortality and administration of universal life and annuity products	(1,689,689)	(1,737,635)
Interest credited to account balances	1,419,880	1,450,681
Change in accrued investment income	217,824	350,518
Change in reinsurance receivables	468,671	927,606
Change in policy liabilities and accruals	(1,207,644)	(1,121,391)
Change in income taxes receivable (payable)	2,406	(1,982,692)
Change in other assets and liabilities, net	566,693	1,624,775
Net cash used in operating activities	(2,123,573)	(803,189)
Proceeds from investments sold and matured:
Fixed maturities available for sale	10,868,969	6,173,142
Equity securities available for sale	167,504	0
Trading securities	75,134	17,829,177
Mortgage loans	626,528	7,785,104
Discounted mortgage loans	2,087,795	1,505,565
Real estate	521,361	2,733,460
Policy loans	886,346	997,774
Proceeds from Short-Term Investments	0	29,383
Total proceeds from investments sold and matured	15,233,637	37,053,605
Cost of investments acquired:
Fixed maturities available for sale	(8,813,706)	(8,856,558)
Equity securities available for sale	0	(250,617)
Trading securities	(257,730)	(15,124,263)
Mortgage loans	(107,681)	(1,122,724)
Discounted mortgage loans	(5,638)	(1,280,456)
Real estate	(1,150,682)	(5,918,258)
Policy loans	(663,488)	(803,607)
Short-term investments	(184,800)	(25,000)
Total cost of investments acquired	(11,183,725)	(33,381,483)
Net cash provided by investing activities	4,049,912	3,672,122
Cash flows from financing activities:
Policyholder contract deposits	1,489,219	1,521,403
Policyholder contract withdrawals	(1,615,210)	(1,360,777)
Payments of principal on notes payable/line of credit	0	(9,500)
Purchase of treasury stock	(78,003)	(54,048)
Sale of block of business	(3,045,574)	0
Net cash provided by (used in) financing activities	(3,249,568)	97,078
Net increase (decrease) in cash and cash equivalents	(1,323,229)	2,966,011
Cash and cash equivalents at beginning of period	19,838,618	23,321,246
Cash and cash equivalents at end of period	$ 18,515,389	$ 26,287,257

XML

BASIS OF PRESENTATION (Details)	3 Months Ended
	Mar. 31, 2014
Subsidiary or Equity Method Investee [Line Items]
Ownership in subsidiary bank (in hundredths)	100.00%
Related Party Disclosure [Line Items]
Ownership or control of outstanding common stock directly or indirectly (in hundredths)	56.33%

XML

FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Assets [Abstract]
Fixed Maturities, available for sale	$ 175,911,151	$ 174,409,824
Trading Securities	7,206,667	6,614,111
Liabilities [Abstract]
Trading Securities	149,956	353,907
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	32,410,399
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unobservable Input, Realized Gain (Loss), Total	82,287
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	229,191
Purchases	(147,543)
Ending Balance	32,574,334
Assets [Abstract]
Discounted mortgage loans	11,419,581	12,830,735
Investment real estate	83,937,511	83,585,359
Cash and cash equivalents	18,515,389	19,838,618	26,287,257	23,321,246
Liabilities [Abstract]
Policy loan interest rate, minimum (in hundredths)	4.00%
Policy loan interest rate, maximum (in hundredths)	8.00%
Carrying Amount [Member]
Assets [Abstract]
Mortgage loans on real estate	13,935,687	14,454,534
Discounted mortgage loans	11,419,518	12,830,735
Investment real estate	83,937,511	83,585,359
Policy Loans	11,638,101	11,860,960
Cash and cash equivalents	18,515,389	19,838,618
Other Assets, Fair Value Disclosure	184,800	0
Liabilities [Abstract]
Notes payable	19,097,534	19,097,534
Estimated Fair Value [Member]
Assets [Abstract]
Mortgage loans on real estate	14,171,392	14,734,756
Discounted mortgage loans	11,419,581	12,830,735
Investment real estate	83,937,511	83,585,359
Policy Loans	11,638,101	11,860,960
Cash and cash equivalents	18,515,389	19,838,618
Other Assets, Fair Value Disclosure	184,800	0
Liabilities [Abstract]
Notes payable	19,097,534	19,097,534
Fixed Maturities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	313,813
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unobservable Input, Realized Gain (Loss), Total	82,287
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	53,128
Purchases	(147,543)
Ending Balance	301,685
Equity Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	32,096,586
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share, Unobservable Input, Realized Gain (Loss), Total	0
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	176,063
Purchases	0
Ending Balance	32,272,649
Measured on a recurring basis [Member]
Assets [Abstract]
Fixed Maturities, available for sale	175,911,151	174,409,824
Equity Securities, available for sale	40,705,899	40,514,978
Trading Securities	7,206,667	6,614,111
Total Financial Assets	223,823,717	221,538,913
Liabilities [Abstract]
Trading Securities	153,615	357,439
Measured on a recurring basis [Member] | Level 1 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	19,384,352	19,407,301
Equity Securities, available for sale	1,669,042	1,643,803
Trading Securities	7,206,667	6,614,111
Total Financial Assets	28,260,061	27,665,215
Liabilities [Abstract]
Trading Securities	153,615	357,439
Measured on a recurring basis [Member] | Level 2 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	156,225,114	154,688,710
Equity Securities, available for sale	6,764,208	6,774,589
Trading Securities	0	0
Total Financial Assets	162,989,322	161,463,299
Liabilities [Abstract]
Trading Securities	0	0
Measured on a recurring basis [Member] | Level 3 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	301,685	313,813
Equity Securities, available for sale	32,272,649	32,096,586
Trading Securities	0	0
Total Financial Assets	32,574,334	32,410,399
Liabilities [Abstract]
Trading Securities	$ 0	$ 0

XML

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2014

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

  Note 1 – Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet as of December 31, 2013, which has been derived from audited financial statements, and the unaudited interim Condensed Consolidated Financial Statements include the accounts of UTG, Inc. (the "Parent") and its subsidiaries (collectively with the Parent, the "Company").  All significant intercompany accounts and transactions have been eliminated in consolidation.  The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.  The information furnished includes all adjustments and accruals of a normal recurring nature, which in the opinion of management, are necessary for a fair presentation of the results for the interim periods.  The unaudited Condensed Consolidated Financial Statements included herein and these related notes should be read in conjunction with the Company's consolidated financial statements, and the notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.  The Company's results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any other future period.

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC ("FSF"), a Kentucky corporation, and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company.  FSBI operates through its 100 % owned subsidiary bank, First Southern National Bank ("FSNB").  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates.  At March 31, 2014, Mr. Correll owns or controls directly and indirectly approximately 56 % of UTG's outstanding stock.

UTG's life insurance subsidiary, Universal Guaranty Life Insurance Company ("UG"), has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate investments.  The real estate investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

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Balance Sheet Parenthetical (USD $)	Mar. 31, 2014	Dec. 31, 2013
Investments available for sale:
Fixed maturities, amortized cost	$ 169,147,449	$ 171,085,396
Equity securities, cost	38,479,572	38,625,230
Trading securities, cost	7,105,592	6,924,413
Liabilities:
Trading Securities, Proceeds	$ 503,854	$ 505,272
Shareholders' equity:
Common stock, stated value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	7,000,000	7,000,000
Common stock, outstanding (in shares)	3,769,565	3,776,197

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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2014

INVESTMENTS [Abstract]

Amortized cost and estimated values of investments in securities including investments held for sale

Investments in available for sale securities are summarized as follows:

March 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,967,799	$	3,197,556	$	(94,083	)	$	36,071,272
States, municipalities and political subdivisions		105,000		513		0			105,513
U.S. special revenue and assessments		1,703,755		83,382		(227,230	)		1,559,907
Collateralized mortgage obligations		1,188,632		108,187		(14	)		1,296,805
Public utilities		399,917		50,438		0			450,355
All other corporate bonds		132,782,346		5,604,616		(1,959,663	)		136,427,299
		169,147,449		9,044,692		(2,280,990	)		175,911,151
Equity securities		38,479,572		2,226,327		0			40,705,899
Total	$	207,627,021	$	11,271,019	$	(2,280,990	)	$	216,617,050

December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	32,963,938	$	3,156,158	$	(107,550	)	$	36,012,546
States, municipalities and political subdivisions		110,000		0		(924	)		109,076
U.S. special revenue and assessments		2,152,892		95,763		(239,620	)		2,009,035
Collateralized mortgage obligations		1,289,975		116,900		(13	)		1,406,862
Public utilities		399,913		49,567		0			449,480
All other corporate bonds		134,168,678		3,483,229		(3,229,082	)		134,422,825
		171,085,396		6,901,617		(3,577,189	)		174,409,824
Equity securities		38,625,230		1,889,748		0			40,514,978
Total	$	209,710,626	$	8,791,365	$	(3,577,189	)	$	214,924,802

Amortized cost and estimated market value of debt securities, by contractual maturity

The amortized cost and estimated market value of debt securities at March 31, 2014, by contractual maturity, is shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Available for Sale March 31, 2014	Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,324,432	$	1,369,862
Due after one year through five years		25,476,209		27,068,104
Due after five years through ten years		98,191,729		102,656,995
Due after ten years		42,966,447		43,519,385
Collateralized mortgage obligations		1,188,632		1,296,805
Total	$	169,147,449	$	175,911,151

Fair value of investments with sustained gross unrealized losses

The fair value of investments with sustained gross unrealized losses at March 31, 2014 and December 31, 2013 are as follows:

March 31, 2014	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	0		0		$	4,902,734		(94,083	)	$	4,902,734		(94,083	)
U.S. Special Revenue and Assessments		760,090		(227,230	)		0		0			760,090		(227,230	)
MBS/Collateralized mortgage obligations		1,884		(14	)		0		0			1,884		(14	)
All other corporate bonds		20,790,667		(517,325	)		6,571,706		(1,442,338	)		27,362,373		(1,959,663	)
Total fixed maturities	$	21,552,641		(744,569	)	$	11,474,440		(1,536,421	)	$	33,027,081		(2,280,990	)
Equity securities	$	0		0		$	0		0		$	0		0

December 31, 2013	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	4,889,060		(107,550	)	$	0		0		$	4,889,060		(107,550	)
States, municipalities and political subdivisions		109,076		(924	)		0		0			109,076		(924	)
U.S. special revenue and assessments		747,700		(239,620	)		0		0			747,700		(239,620	)
Collateralized mortgage obligations		1,922		(13	)		0		0			1,922		(13	)
All other corporate bonds		49,430,637		(1,481,562	)		7,318,832		(1,747,520	)		56,749,469		(3,229,082	)
Total fixed maturities	$	55,178,395		(1,829,669	)	$	7,318,832		(1,747,520	)	$	62,497,227		(3,577,189	)
Equity securities	$	0		0		$	0		0		$	0		0

Additional information regarding investments in an unrealized loss position is as follows:

	Less than 12 months	12 months or longer	Total
As of March 31, 2014
Fixed maturities	13	7	20
Equity securities	0	0	0
As of December 31, 2013
Fixed maturities	30	5	35
Equity securities	0	0	0

Other than temporary impairments

Based on management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Condensed Consolidated Statements of Operations:

	Three Months Ended
	March 31,
	2014		2013
Other than temporary impairments:
Real estate	$	0	$	26,926

Trading revenue charged to investment

Trading revenue charged to net investment income from trading securities was:

	Three Months Ended
	March 31,
	2014		2013
Net unrealized gains (losses)	$	260,651	$	(297,344	)
Net realized gains (losses)		21,173		86,271
Net unrealized and realized gains (losses)	$	281,824	$	(211,073	)

XML

Document and Entity Information (USD $)	3 Months Ended
	Mar. 31, 2014	Oct. 24, 2013	Mar. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	UTG Inc
Entity Central Index Key	0000832480
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 0
Entity Common Stock, Shares Outstanding		0
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014

XML

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2014

FAIR VALUE MEASUREMENTS [Abstract]

Financial assets and liabilities measured on recurring basis

The following table presents the Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of March 31, 2014.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,384,352	$	156,225,114	$	301,685	$	175,911,151
Equity Securities, available for sale		1,669,042		6,764,208		32,272,649		40,705,899
Trading Securities		7,206,667		0		0		7,206,667
Total	$	28,260,061	$	162,989,322	$	32,574,334	$	223,823,717
Liabilities
Trading Securities	$	153,615	$	0	$	0	$	153,615

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,407,301	$	154,688,710	$	313,813	$	174,409,824
Equity Securities, available for sale		1,643,803		6,774,589		32,096,586		40,514,978
Trading Securities		6,614,111		0		0		6,614,111
Total	$	27,665,215	$	161,463,299	$	32,410,399	$	221,538,913
Liabilities
Trading Securities	$	357,439	$	0	$	0	$	357,439

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

	Fixed Maturities, Available for Sale			Equity Securities, Available for Sale		Total
Balance at December 31, 2013	$	313,813		$	32,096,586	$	32,410,399
Total unrealized gains or (losses):
Included in realized gains/(losses)		82,287			0		82,287
Included in other comprehensive income		53,128			176,063		229,191
Sales		(147,543	)		0		(147,543	)
Balance at March 31, 2014	$	301,685		$	32,272,649	$	32,574,334

Estimated fair value of financial instruments required to be valued by ASC 820

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Condensed Consolidated Balance Sheets are shown below. Because the fair value for all Condensed Consolidated Balance Sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

	March 31, 2014				December 31, 2013
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	13,935,687	$	14,171,392	$	14,454,534	$	14,734,756
Discounted mortgage loans		11,419,518		11,419,581		12,830,735		12,830,735
Investment real estate		83,937,511		83,937,511		83,585,359		83,585,359
Policy loans		11,638,101		11,638,101		11,860,960		11,860,960
Cash and cash equivalents		18,515,389		18,515,389		19,838,618		19,838,618
Short term investments		184,800		184,800		0		0
Liabilities
Notes payable		19,097,534		19,097,534		19,097,534		19,097,534

XML

Income Statement (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Premiums and policy fees	$ 2,733,687	$ 3,212,746
Ceded reinsurance premiums and policy fees	(780,983)	(775,702)
Net investment income	4,533,119	4,381,392
Other income	520,431	521,359
Revenues before realized gains	7,006,254	7,339,795
Realized investment gains (losses), net:
Other-than-temporary impairments	0	(26,926)
Other realized investment gains, net	277,424	71,649
Total realized investment gains, net	277,424	44,723
Total revenue	7,283,678	7,384,518
Benefits, claims and settlement expenses:
Life	6,686,047	5,856,321
Ceded Reinsurance benefits and claims	(1,202,470)	(597,779)
Annuity	278,577	267,539
Dividends to policyholders	136,172	147,222
Commissions and amortization of deferred policy acquisition costs	(101,137)	(23,552)
Amortization of cost of insurance acquired	246,412	266,088
Operating expenses	2,656,118	2,055,125
Interest expense	181,832	110,437
Total benefits and other expenses	8,881,551	8,081,401
Loss before income taxes	(1,597,873)	(696,883)
Income tax (expense) benefit	192,511	(67,308)
Net loss	(1,405,362)	(764,191)
Net income attributable to noncontrolling interests	(122,954)	(146,081)
Net loss attributable to common shareholders'	$ (1,528,316)	$ (910,272)
Amounts attributable to common shareholders':
Basic loss per share	$ (0.41)	$ (0.24)
Diluted loss per share	$ (0.41)	$ (0.24)
Basic weighted average shares outstanding	3,771,867	3,796,527
Diluted weighted average shares outstanding	3,771,867	3,796,527

XML

SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2014

CAPITAL STOCK TRANSACTIONS [Abstract]

CAPITAL STOCK TRANSACTIONS

Stock Repurchase Programs

The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of up to $6 million of UTG's common stock. Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.  During the three month period ended March 31, 2014, the Company repurchased 6,632 shares through the stock repurchase program for $78,003.Through March 31, 2014, UTG has spent $5.0 million in the acquisition of 595,158 shares under this program.

Earnings Per Share Calculations

Earnings per share are based on the weighted average number of common shares outstanding during each period.  At March 31, 2014 and 2013, diluted earnings per share were the same as basic earnings per share since the Company had no dilutive instruments outstanding.

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CREDIT ARRANGEMENTS

3 Months Ended

Mar. 31, 2014

NOTES PAYABLE [Abstract]

CREDIT ARRANGEMENTS

Note 5 – Credit Arrangements

At March 31, 2014 and December 31, 2013, the Company had the following outstanding debt:

					Outstanding Principal Balance
Instrument	Issue Date		Maturity Date		March 31, 2014		December 31, 2013
Promissory Note:
HPG Acquisitions		2012-12-27		2018-03-04		12,000,000		12,000,000

Instrument	Issue Date		Maturity Date		Revolving Credit Limit		December 31, 2013		Borrowings		Repayments		March 31, 2014
Lines of Credit:
UTG		2013-11-20		2014-11-20	$	8,000,000	$	2,097,534		0		1,655,035	$	2,097,534
UTG Avalon		2013-03-28		2015-03-28		5,000,000		5,000,000		0		0		5,000,000
UG		2010-12-28		2014-12-05		15,000,000		0		0		0		0

The HPG Acquisitions promissory note issued on December 27, 2012 is secured by real estate owned by HPG. The promissory note bears interest at a fixed rate of 4%. Interest is payable monthly. Principal is payable monthly beginning in the third year of the note.

The UTG line of credit carries interest at a fixed rate of  3.75% and is payable monthly. As collateral, UTG has pledged 100% of the common voting stock of its wholly owned subsidiary, Universal Guaranty Life Insurance Company ("UG"). .In April 2014, the Company repaid $900,000 in principal on this line of credit.

The UTG Avalon line of credit issued on March 28, 2013 currently carries interest at a rate of 4.0% with monthly interest payments. The interest rate is a variable rate that will be 0.50% above the lowest of the U.S. Prime Rates as published in the money section of the Wall Street Journal with a floor rate of 4%. The interest rate is subject to change monthly and changes in the interest rate will take effect on the first day of the month following the rate change. This line of credit was renewed on March 28, 2014.

UG is a member of the Federal Home Loan Bank ("FHLB").  This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the "base membership" amount.

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year	Amount
2014	$	2,097,534
2015		5,345,459
2016		478,193
2017		499,278
2018		10,677,070

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INVESTMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2014 Loans	Mar. 31, 2013	Dec. 31, 2013 Loans
Amortized cost and estimated value of debt securities, by contractual maturity [Abstract]
Due in one year or less	$ 1,369,862
Due after one year through five years	27,068,104
Due after five years through ten years	102,656,995
Due after ten years	43,519,385
Collateralized mortgage obligations	1,296,805
Total	175,911,151
Fixed maturities [Abstract]
Original or Amortized Cost	207,627,021		209,710,626
Gross Unrealized Gains	11,271,019	8,791,365
Gross Unrealized Losses	(2,280,990)	(3,577,189)
Estimated Market Value	216,617,050		214,924,802
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Twelve months or longer, Fair value			0
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities [Abstract]
Other than temporary impairment losses, investments, available-for-sale securities	0	26,926
Amortized cost and estimated market value of debt securities, by contractual maturity [Abstract]
Due in one year or less	1,324,432
Due after one year through five years	25,476,209
Due after five years through ten years	98,191,729
Due after ten years	42,966,447
Collateralized mortgage obligation	1,188,632
Total	169,147,449
Trading Securities [Abstract]
Fair value, derivatives included in trading security assets	124,000		194,000
Fair value, derivative included in trading security liabilities	(149,956)		(353,907)
Trading securities, net unrealized gain (loss)	260,651	(297,344)
Trading securities, realized gain (loss)	21,173	86,271
Increase (Decrease) in Trading Securities [Abstract]
Net Realized and Unrealized Gain (Loss) on Trading Securities	281,824	(211,073)
Mortgages [Abstract]
Number of Mortgage Loans including Discounted Mortgage Loans	36		39
Mortgage Loans including Discounted Mortgage Loans	25,355,268		27,285,269
Mortgage loans reserve			0
Average purchase price to outstanding loan (in hundredths)	33.10%
U.S. Government and Government Agencies and Authorities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	32,967,799		32,963,938
Gross Unrealized Gains	3,197,556	3,156,158
Gross Unrealized Losses	(94,083)	(107,550)
Estimated Market Value	36,071,272		36,012,546
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	0		4,889,060
Less than 12 months, Unrealized losses	0	(107,550)
Twelve months or longer, Fair value	4,902,734
Twelve months or longer, Unrealized losses	(94,083)	0
Total Fair value	4,902,734		4,889,060
Total Unrealized losses	(94,083)	(107,550)
US Special Revenue and Assessments [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	1,703,755		2,152,892
Gross Unrealized Gains	83,382	95,763
Gross Unrealized Losses	(227,230)	(239,620)
Estimated Market Value	1,559,907		2,009,035
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	760,090		747,700
Less than 12 months, Unrealized losses	(227,230)	(239,620)
Twelve months or longer, Fair value	0
Twelve months or longer, Unrealized losses	0	0
Total Fair value	760,090		747,700
Total Unrealized losses	(227,230)	(239,620)
States, Municipalities and Political Subdivisions [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	105,000		110,000
Gross Unrealized Gains	513	0
Gross Unrealized Losses	0	(924)
Estimated Market Value	105,513		109,076
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value			109,076
Less than 12 months, Unrealized losses		(924)
Twelve months or longer, Unrealized losses		0
Total Fair value			109,076
Total Unrealized losses		(924)
Collateralized Mortgage Obligations [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	1,188,632		1,289,975
Gross Unrealized Gains	108,187	116,900
Gross Unrealized Losses	(14)	(13)
Estimated Market Value	1,296,805		1,406,862
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	1,884		1,922
Less than 12 months, Unrealized losses	(14)	(13)
Twelve months or longer, Fair value	0		0
Twelve months or longer, Unrealized losses	0	0
Total Fair value	1,884		1,922
Total Unrealized losses	(14)	(13)
Public Utilities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	399,917		399,913
Gross Unrealized Gains	50,438	49,567
Gross Unrealized Losses	0	0
Estimated Market Value	450,355		449,480
Debt Securities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	169,147,449		171,085,396
Gross Unrealized Gains	9,044,692	6,901,617
Gross Unrealized Losses	(2,280,990)	(3,577,189)
Estimated Market Value	175,911,151		174,409,824
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	21,552,641		55,178,395
Less than 12 months, Unrealized losses	(744,569)	(1,829,669)
Twelve months or longer, Fair value	11,474,440		7,318,832
Twelve months or longer, Unrealized losses	(1,536,421)	(1,747,520)
Total Fair value	33,027,081		62,497,227
Total Unrealized losses	(2,280,990)	(3,577,189)
Less than 12 months Number of Securities	13		30
Twelve months or longer Number of Securities	7		5
Total Number of Securities	20		35
Equity Securities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	38,479,572		38,625,230
Gross Unrealized Gains	2,226,327	1,889,748
Gross Unrealized Losses	0	0
Estimated Market Value	40,705,899		40,514,978
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	0		0
Less than 12 months, Unrealized losses	0	0
Twelve months or longer, Fair value	0		0
Twelve months or longer, Unrealized losses	0	0
Total Fair value	0		0
Total Unrealized losses	0	0
Less than 12 months Number of Securities	0		0
Twelve months or longer Number of Securities	0		0
Total Number of Securities	0		0
All Other Corporate Bonds [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	132,782,346		134,168,678
Gross Unrealized Gains	5,604,616	3,483,229
Gross Unrealized Losses	(1,959,663)	(3,229,082)
Estimated Market Value	136,427,299		134,422,825
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	20,790,667		49,430,637
Less than 12 months, Unrealized losses	(517,325)	(1,481,562)
Twelve months or longer, Fair value	6,571,706		7,318,832
Twelve months or longer, Unrealized losses	(1,442,338)	(1,747,520)
Total Fair value	27,362,373		56,749,469
Total Unrealized losses	$ (1,959,663)	$ (3,229,082)

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CREDIT ARRANGEMENTS (Tables)

3 Months Ended

Mar. 31, 2014

NOTES PAYABLE [Abstract]

Schedule of promissory note

At March 31, 2014 and December 31, 2013, the Company had the following outstanding debt:

					Outstanding Principal Balance
Instrument	Issue Date		Maturity Date		March 31, 2014		December 31, 2013
Promissory Note:
HPG Acquisitions		2012-12-27		2018-03-04		12,000,000		12,000,000

Schedule of lines of credit

Instrument	Issue Date		Maturity Date		Revolving Credit Limit		December 31, 2013		Borrowings		Repayments		March 31, 2014
Lines of Credit:
UTG		2013-11-20		2014-11-20	$	8,000,000	$	2,097,534		0		1,655,035	$	2,097,534
UTG Avalon		2013-03-28		2015-03-28		5,000,000		5,000,000		0		0		5,000,000
UG		2010-12-28		2014-12-05		15,000,000		0		0		0		0

Scheduled principal reduction on notes payable for the next five years

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year	Amount
2014	$	2,097,534
2015		5,345,459
2016		478,193
2017		499,278
2018		10,677,070

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CONCENTRATIONS

3 Months Ended

Mar. 31, 2014

CONCENTRATIONS [Abstract]

CONCENTRATIONS

Note 9 – Concentrations of Credit Risk

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits.  The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse Correll, the Company's CEO and Chairman.  The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

Note 7 – Commitments and Contingencies

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters.  Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages.  In some states, juries have substantial discretion in awarding punitive damages in these circumstances.  In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings.  Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the Company's results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies.  Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength.  Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements, though the Company has no control over such assessments.

Within the Company's trading accounts, certain trading securities carried as liabilities represent securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.

The following table represents the total funding commitments and the unfunded commitment as of March 31, 2014 related to certain investments:

	Total Funding		Unfunded
	Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		4,000,000		517,000
Marcellus HBPI, LLP		1,800,000		141,300
PBEX, LLC		5,600,000		2,818,750
Sovereign's Capital, LP		500,000		250,000
MM-Appalachia IV, LP		2,475,000		1,056,000

During 2006, the Company committed to invest in RLF III, LLC ("RLF"), which makes land-based investment in undervalued assets. RLF makes capital calls as funds are needed for continued land purchases.

During 2010, the Company made a commitment to invest in Llano Music, LLC ("Llano"), which invests in music royalties. Llano makes capital calls to its investors as funds are needed to acquire the royalty rights.  During 2014, the commitment amount increased by $2 million.

During 2012, the Company committed to invest in Marcellus HBPI, LLP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus HPBI, LLP makes capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in PBEX, LLC, which purchases land for leasing opportunities to those looking to harvest natural resources. PBEX, LLC makes capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in Sovereign's Capital, LP ("Sovereign's"), which invests in companies in emerging markets. Sovereign's makes capital calls to investors as funds are needed.

During 2013, the Company committed to invest in MM-Appalachia IV, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. MM-Appalachia IV, LP makes capital calls to investors as funds are needed for continued land purchases.

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OTHER CASH FLOW DISCLOSURES

3 Months Ended

Mar. 31, 2014

OTHER CASH FLOW DISCLOSURES [Abstract]

OTHER CASH FLOW DISCLOSURES

Note 8 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses:

	Three Months Ended
	March 31,
	2014		2013
Interest expense	$	19,672	$	16,398
Federal income tax		0		2,050,000

During the first quarter of 2013 and 2014, UG's wholly-owned subsidiary, UTG Avalon, LLC, entered into a noncash transaction whereby the subsidiary obtained a new line of credit in the amount of $5 million and utilized the line of credit to repay the prior line of credit. The terms of the new line of credit are consistent with the terms of the prior line of credit.

During the first quarter of 2014, the Company sold a block of life insurance business.  As a result of this transaction, the Company transferred approximately $3,100,000.0 million in cash to purchaser.  The transaction also resulted in a reduction of approximately $3.7 million of future policyholder benefits and approximately $600,000 of cost of insurance acquired.

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NEW ACCOUNTING STANDARDS (Policies)

3 Months Ended

Mar. 31, 2014

NEW ACCOUNTING STANDARDS [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Note 2 – Recently Issued Accounting Standards

Income Taxes – In July 2013, the Financial Accounting Standards Board ("FASB") issued guidance providing specific financial statement presentation requirements of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance states that an unrecognized tax benefit in those circumstances should be presented as a reduction to the deferred tax asset.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted.  The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

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OTHER CASH FLOW DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2014

OTHER CASH FLOW DISCLOSURES [Abstract]

Expenses paid on a cash basis

On a cash basis, the Company paid the following expenses:

	Three Months Ended
	March 31,
	2014		2013
Interest expense	$	19,672	$	16,398
Federal income tax		0		2,050,000

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SHAREHOLDERS' EQUITY (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
STOCK REPURCHASE PROGRAM [Abstract]
Stock repurchase program authorized amount	$ 6,000,000
Treasury Stock, Shares, Acquired	6,632
Amount paid to repurchase shares during the year	78,003
Amount of common stock repurchased	$ 5
Number of common stock acquired (in shares)	595,158

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Condensed Consolidated Statement of Comprehensive Income (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statement of Comprehensive Income (Unaudited) [Abstract]
Net Loss	$ (1,405,362)	$ (764,191)
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during period	3,455,923	(23,750)
Less reclassification adjustment for gains included in net loss	(163,805)	(59,366)
Subtotal: Other comprehensive income (loss), net of tax	3,292,118	(83,116)
Comprehensive income (loss)	1,886,756	(847,307)
Less comprehensive income attributable to noncontrolling interests	(122,954)	(146,081)
Comprehensive income (loss) attributable to UTG, Inc.	$ 1,763,802	$ (993,388)

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2014

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

Note 4 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance.  The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date.  The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories.

Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access.  Level 1 fair value is not subject to valuation adjustments.

Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company determines the existence of an active market for an asset or liability based on its judgment as to whether transactions for the asset or liability occur in such market with sufficient frequency and volume to provide reliable pricing information.  If the Company concludes that there has been a significant decrease in the volume and level of activity for an investment in relation to normal market activity for such investment, adjustments to transactions and quoted prices are made to estimate fair value.

The inputs used in the valuation techniques employed by the Company are provided by nationally recognized pricing services, external investment managers and internal resources.  To assess these inputs, the Company's review process includes, but is not limited to, quantitative analysis including benchmarking, initial and ongoing evaluations of methodologies used by external parties to calculate fair value, and ongoing evaluations of fair value estimates based on the Company's knowledge and monitoring of market conditions.

The Company periodically reviews the pricing service provider's policies and procedures for valuing securities.  The assumptions underlying the valuations from external service providers, including unobservable inputs, are generally not readily available as this information is often deemed proprietary.  Accordingly, the Company is unable to obtain comprehensive information regarding these assumptions and methodologies.

The Company's investments in fixed maturity securities available for sale, equity securities available for sale and trading securities assets and liabilities are carried at fair value.  The following are the Company's methodologies and valuation techniques for assets and liabilities measured at fair value.

Fixed maturities available for sale mainly consist of U.S. treasury securities and corporate debt securities. The Company employs a market approach to the valuation of securities where there are sufficient market transactions involving identical or comparable assets. If sufficient market data is not available for identical or comparable assets, the Company uses an income approach to valuation. The majority of the financial instruments included in fixed maturity securities available for sale are evaluated utilizing observable inputs; accordingly, they are categorized in either Level 1 or Level 2 of the fair value hierarchy. However, in instances where significant inputs utilized in valuation of the securities are unobservable, the securities are categorized in Level 3 of the fair value hierarchy.

Corporate securities primarily include fixed rate corporate bonds. Inputs utilized in connection with the Company's valuation techniques relating to this class of securities include recently executed transactions, market price quotations, benchmark yields and issuer spreads. Corporate securities are categorized in Level 2 of the fair value hierarchy.

U.S. treasury securities are based on quoted prices in active markets and are generally categorized in Level 1 of the fair value hierarchy.

Equity securities available for sale consist of common and preferred stocks mainly in private equity investments, financial institutions and insurance companies. Equity securities for which there is sufficient market data are categorized as Level 1 or 2 in the fair value hierarchy.  For the equity securities in which quoted market prices are not available, the transaction price is used as the best estimate of fair value at inception.  When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected exit values. The Company performs ongoing reviews of the underlying investments. The reviews consist of the evaluations of expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Securities designated as trading securities consist of exchange traded equities and exchange traded options.  These securities are primarily valued at quoted active market prices, and are therefore categorized as Level 1 in the fair value hierarchy.

The following table presents the Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of March 31, 2014.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,384,352	$	156,225,114	$	301,685	$	175,911,151
Equity Securities, available for sale		1,669,042		6,764,208		32,272,649		40,705,899
Trading Securities		7,206,667		0		0		7,206,667
Total	$	28,260,061	$	162,989,322	$	32,574,334	$	223,823,717
Liabilities
Trading Securities	$	153,615	$	0	$	0	$	153,615

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	19,407,301	$	154,688,710	$	313,813	$	174,409,824
Equity Securities, available for sale		1,643,803		6,774,589		32,096,586		40,514,978
Trading Securities		6,614,111		0		0		6,614,111
Total	$	27,665,215	$	161,463,299	$	32,410,399	$	221,538,913
Liabilities
Trading Securities	$	357,439	$	0	$	0	$	357,439

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

	Fixed Maturities, Available for Sale			Equity Securities, Available for Sale		Total
Balance at December 31, 2013	$	313,813		$	32,096,586	$	32,410,399
Total unrealized gains or (losses):
Included in realized gains/(losses)		82,287			0		82,287
Included in other comprehensive income		53,128			176,063		229,191
Sales		(147,543	)		0		(147,543	)
Balance at March 31, 2014	$	301,685		$	32,272,649	$	32,574,334

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs.  The Company computed fair value of Level 3 investments based on a review of current financial information, earnings trends and similar companies in the same industries.

Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Condensed Consolidated Financial Statements.

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Condensed Consolidated Balance Sheets are shown below. Because the fair value for all Condensed Consolidated Balance Sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

	March 31, 2014				December 31, 2013
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	13,935,687	$	14,171,392	$	14,454,534	$	14,734,756
Discounted mortgage loans		11,419,518		11,419,581		12,830,735		12,830,735
Investment real estate		83,937,511		83,937,511		83,585,359		83,585,359
Policy loans		11,638,101		11,638,101		11,860,960		11,860,960
Cash and cash equivalents		18,515,389		18,515,389		19,838,618		19,838,618
Short term investments		184,800		184,800		0		0
Liabilities
Notes payable		19,097,534		19,097,534		19,097,534		19,097,534

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange.  The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.  The inputs used to measure the fair value of our mortgage loans on real estate are classified as Level 3 within the fair value hierarchy.

The Company has been purchasing non-performing discounted mortgage loans at a deep discount through an auction process led by the federal government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price, which management believes approximates fair value.  The inputs used to measure the fair value of our discounted mortgage loans are classified as Level 3 within the fair value hierarchy.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell.  The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by management.  The inputs used to measure the fair value of our investment real estate are classified as Level 3 within the fair value hierarchy.

Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets which approximate fair value, and earn interest at rates ranging from  4 % to 8 %.  Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.  The inputs used to measure the fair value of our policy loans are classified as Level 3 within the fair value hierarchy.

The carrying amount of cash and cash equivalents in the financial statements approximates fair value given the highly liquid nature of the instruments.  The inputs used to measure the fair value of our cash and cash equivalents are classified as Level 1 within the fair value hierarchy.

The carrying amount of short term investments in the financial statements approximates fair value.  The inputs used to measure the fair value of our short term investments are classified as Level 3 within the fair value hierarchy.

The carrying value is a reasonable estimate of fair value for notes payable subject to floating rates of interest.  The fair value of notes payable with fixed rate borrowings is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.  The inputs used to measure the fair value of our notes payable are classified as Level 2 within the fair value hierarchy.

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Liability for contingent costs [Line Items]
Litigation Settlement, Amount	$ 3,000,000
RLF III, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	4,000,000
Unfunded Commitment	398,120
Llano Music, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	4,000,000
Unfunded Commitment	517,000
Marcellus HBPI, LLP [Member]
Investment Commitment [Line Items]
Total Funding Commitment	1,800,000
Unfunded Commitment	141,300
PBEX, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	5,600,000
Unfunded Commitment	2,818,750
Sovereign's Capital, LP [Member]
Investment Commitment [Line Items]
Total Funding Commitment	500,000
Unfunded Commitment	250,000
MM-Appalachia IV, LP [Member]
Investment Commitment [Line Items]
Total Funding Commitment	2,475,000
Unfunded Commitment	1,056,000
ACAP [Member]
Liability for contingent costs [Line Items]
Loss Contingency Accrual, Ending Balance	3,000,000
Loss Contingency	$ 3,000,000
Share Conversion

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

Funding commitment and unfunded commitment

The following table represents the total funding commitments and the unfunded commitment as of March 31, 2014 related to certain investments:

	Total Funding		Unfunded
	Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		4,000,000		517,000
Marcellus HBPI, LLP		1,800,000		141,300
PBEX, LLC		5,600,000		2,818,750
Sovereign's Capital, LP		500,000		250,000
MM-Appalachia IV, LP		2,475,000		1,056,000