10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K

[x]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2018
	or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to ______________

Commission File Number 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.)

205 North Depot Street, Stanford, KY	40484
(Address of principal executive offices)	(Zip code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Title of class

Common Stock, stated value $.001 per share

  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ☐    No ☒

  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes ☐    No ☒

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

  Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 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 such files). Yes ☒ No ☐

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10- K.☐

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

  Large accelerated filer ☐  Accelerated filer ☐  Non accelerated filer ☐  Smaller reporting company ☒

  Emerging growth company ☐

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

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

  As of June 30, 2018, shares of the Registrant’s common stock held by non-affiliates (based upon the price of the last sale of $26.00 per share), had an aggregate market value of approximately $27,776,034.

  At January 31, 2019the Registrant had 3,293,983outstanding shares of common stock, stated value $.001 per share.

  Documents incorporated by reference: None

UTG, Inc.

Form 10-K

Year Ended December 31, 2018

TABLE OF CONTENTS

PART I	4
Item 1.   Business	4
Item 1A. Risk Factors	8
Item 1B. Unresolved Staff Comment	8
Item 2.   Properties	8
Item 3.   Legal Proceedings	9
Item 4.   Mine Safety Disclosures	9
PART II	9
Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	9
Item 6.   Selected Financial Data	10
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	19
Item 8.   Financial Statements and Supplementary Data	19
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	45
Item 9A. Controls and Procedures	45
Item 9B. Other Information	46
PART III	46
Item 10.  Directors, Executive Officers and Corporate Governance	46
Item 11.  Executive Compensation	50
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51
Item 13.  Certain Relationships and Related Transactions, and Director Independence	53
Item 14.  Principal Accounting Fees and Services	54
PART IV	55
Item 15.  Exhibits and Financial Statement Schedules	55

Forward-Looking Statements

This report on Form 10-K 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.

PART I

Item 1. Business

Business Overview

UTG, Inc. (the "Registrant", “Company” or “UTG”) is an insurance holding company incorporated in the state of Delaware in 2005. Its primary direct subsidiary is Universal Guaranty Life Insurance Company (“UG”). The Registrant and its primary subsidiary have only one significant segment, insurance.  The Company’s dominant business is individual life insurance, which includes the servicing of existing insurance business in-force, the acquisition of other companies in the insurance business, and the administration processing of life insurance business for other entities.

The holding company has no significant business operations of its own and relies on fees, dividends and other distributions from its operating subsidiary as the principal source of cash flows to meet its obligations.  Additional information regarding the cash flow and liquidity needs of the holding company can be found in the Liquidity and Capital Resources section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

UG has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate and other investments.  The investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of systems and networks and the confidentiality, availability and integrity of data.  Although the Company makes efforts to maintain the security and integrity of the networks and systems, there can be no assurance that the security efforts will be effective or that attempted security breaches or disruptions would not be successful or damaging.  In the event a security breach or failure results in the disclosure of sensitive third party data or the transmission of harmful/malicious code to third parties, the Company could be subject to liability claims.  The Company does not currently carry insurance coverage against such liabilities.  Depending on their nature and scope, such threats also could potentially lead to improper use of our systems and networks, manipulation and destruction of data, loss of trade secrets, system downtimes and operational disruptions, which in turn, could adversely affect our reputation, competitiveness and results of operations.

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, a Kentucky corporation, (“FSF”) 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 December 31, 2018, Mr. Correll owns or controls directly and indirectly approximately 65.29% of UTG’s outstanding stock.

UTG’s website is: www.utgins.com Information regarding the Company, including recent filings with the Securities and Exchange Commission, are accessible via this website.

Insurance

UG’s product portfolio consists of a limited number of life insurance product offerings. All of the products are individual life insurance products, with design variations from each other to provide choices to the customer. These variations generally center around the length of the premium paying period, length of the coverage period and whether the product accumulates cash value or not.

While the Company does not actively sell any new policies today, it has the following product available for issue:

Tradition – The Tradition policy is a fixed premium whole life insurance policy. Premiums are level and payable for life.  Issue ages are 0-75. The minimum face amount is the greater of $10,000 or the amount of coverage provided by a $100 annual premium.

Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations.  The primary reinsurers of the Company are large, well-capitalized entities.  See Note 4 - Reinsurancein the Notes to the Consolidated Financial Statements for additional information regarding the Company’s reinsurance activities.

Underwriting

The underwriting procedures of the insurance subsidiary are established by Management.  Insurance policies are issued by the Company based upon underwriting practices established for each market in which the Company operates.  Most policies are individually underwritten.  Applications for insurance are reviewed to determine additional information required to make an underwriting decision, which depends on the amount of insurance applied for and the applicant's age and medical history.  Additional information may include inspection reports, medical examinations, and statements from doctors who have treated the applicant in the past and, where indicated, special medical tests.  After reviewing the information collected, the Company either issues the policy as applied for, issues with an extra premium charge because of unfavorable factors, or rejects the application.  Substandard risks may be referred to reinsurers for full or partial reinsurance of the substandard risk.

Reserves

The applicable insurance laws under which the insurance subsidiary operates require that the insurance company report policy reserves as liabilities to meet future obligations on the policies in-force.  These reserves are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated in accordance with applicable laws to be sufficient to meet the various policy and contract obligations as they mature.  These laws specify that the reserves shall not be less than reserves calculated using certain mortality tables and interest rates.

The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method.  These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations.  The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 7.5% for annuities.  Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term.  Policy benefit claims are charged to expense in the period that the claims are incurred.  The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or Linton C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.

Investments

The majority of the investments included in the Consolidated Balance Sheets are owned by UTG's subsidiary, UG. As an insurance company, UG is subject to applicable state insurance laws and regulations, which limit the concentration of investments in any one category or class and further limit the investment in any one issuer.  Generally, these limitations are imposed as a percentage of statutory assets or percentage of statutory capital and surplus of each company.

The following table summarizes the Company's fixed maturities distribution at December 31, 2018by ratings category as issued by Standard and Poor's, a leading ratings analyst.

Rating	2018
Investment Grade
AAA	6%
AA+	26%
AA	2%
AA-	18%
A+	6%
A	10%
A-	10%
BBB+	8%
BBB	8%
BBB-	4%
Below Investment Grade	2%
	100%

The following table shows the composition, average maturity and average yield on the average carrying value of the Company's investment portfolio at December 31, 2018.

	Average
	Carrying		Average	Average
Investments	Value		Maturity	Yield
Fixed maturities held for sale	$	169,758,005	9.94 years		4.28	%
Equity securities		69,315,795	Not applicable		2.35	%
Mortgage loans		13,191,794	7.56 years		9.36	%
Investment real estate		51,511,564	Not applicable		5.38	%
Notes receivable		21,360,664	Not applicable		4.59	%
Policy loans		9,381,682	Not applicable		6.90	%
Cash, cash equivalents and short term		22,792,181	On demand		1.64	%
Total investments	$	357,311,685			4.17	%

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB’s loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company’s Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

During 2018and 2017, the Company acquired approximately $91,954and $360,531in mortgage loans, respectively, in participation mortgage loans.  FSNB services a majority of the mortgage loan portfolio of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of negative financial impact.

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 mortgage loan reserve was $0 at December 31, 2018and 2017.

The following table shows a distribution of the Company’s mortgage loans and discounted mortgage loans by type as of December 31, 2018:

Mortgage Loans	Amount		% of Total
Farm – all other	$	357,372		4	%
Commercial – all other		8,694,606		95	%
Residential – all other		17,133		1	%
Total	$	9,069,111		100	%

The following table shows a geographic distribution of the Company’s mortgage loan portfolio including discounted mortgage loans and investment real estate as of December 31, 2018:

	Mortgage Loans	Real Estate
Alabama	6%	0%
Arizona	21%	0%
California	0%	1%
Florida	3%	13%
Georgia	33%	14%
Kentucky	19%	21%
New Jersey	1%	0%
South Carolina	1%	4%
Tennessee	0%	3%
Texas	0%	25%
West Virginia	16%	19%
Total	100%	100%

See Note 2 – Investments in the Notes to the Consolidated Financial Statements and Management’s Discussion and Analysis for additional information regarding the Company’s investments.

Competition

The insurance business is a highly competitive industry and there are a number of other companies, both stock and mutual, doing business in areas where the Company operates.  Many of these competing insurers are larger, have more diversified and established lines of insurance coverage, have substantially greater financial resources and brand recognition, as well as a greater number of agents.  Other significant competitive factors in the insurance industry include policyholder benefits, service to policyholders, and premium rates.

In recent years, the Company has not placed an emphasis on new business production.  Costs associated with supporting new business can be significant.  Current sales primarily represent sales to existing customers through additional insurance needs or conservation efforts.  The Company currently encourages policy retention as opposed to new sales in an attempt to maintain or improve current persistency levels.

The Company performs administrative work as a third party administrator (“TPA”) for unaffiliated life insurance companies.  The Company intends to continue to pursue other TPA arrangements. The Company provides TPA services to insurance companies seeking business process outsourcing solutions. Revenue generated from TPA services is considered insignificant to the overall financial statements.

Regulation

Holding Company - States have enacted legislation requiring registration and periodic reporting by insurance companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to constitute a holding company system. Insurance holding company system statutes and regulations impose various limitations on investments in subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliates and for the payment of certain dividends and other distributions.

Insurance - Insurance companies are subject to regulation and supervision in the states in which they do business.  Generally the state supervisory agencies have broad administrative powers relating to granting and revoking licenses to transact business, licensing agents, approving policy forms, regulating trade practices, approving certain premium rates, setting minimum reserve and loss ratio requirements, determining the form and content of required financial statements, and prescribing the type and amount of investments permitted.  Insurance companies are also required to file detailed annual reports with supervisory agencies, and records of their business are subject to examination at any time.  Under the rules of the National Association of Insurance Commissioners (“NAIC”), insurance companies are examined periodically by one or more of the supervisory agencies.

Risk-Based Capital - The NAIC requires a risk-based capital formula be applied to all life and health insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are adequately capitalized. UTG’s insurance subsidiary, UG, is more than adequately capitalized under the risk-based capital formula.

Guaranty Assessments – State guaranty laws provide for assessments from insurance companies to be placed into a fund which is used, in the event of failure or insolvency of an insurance company, to fulfill the obligations of that company to its policyholders.  The amount which a company is assessed is determined according to the extent of these unsatisfied obligations in each state.  Assessments are recoverable to a great extent as offsets against state premium taxes.

Personnel

At December 31, 2018, UTG and its subsidiaries had 40full-time employees located in Kentucky and Illinois.  UTG’s operations are headquartered in Stanford, Kentucky.

Item 1A. Risk Factors

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The Company owns an office complex in Springfield, Illinois, which houses a portion of the insurance operations.  The office buildings in this complex contain 57,000 square feet of office and warehouse space. Excess space in Springfield, IL is currently being marketed for lease.

The Company leases space in Stanford, KY from an affiliate, FSNB, to house insurance operations.  The Company rents approximately 8,000 square feet of office space and pays $2,000 per month in rent.

Item 3. Legal Proceedings

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 these matters will not have a material adverse effect on the Company’s results of operations or financial position.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Registrant is a public company whose common stock is traded in the over-the-counter market.  Over-the-counter quotations can be obtained using the UTGN stock symbol.

The following table shows the high and low closing prices for each quarterly period during the past two years, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.  The quotations below were acquired from the Yahoo Finance web site, which also provides quotes for over-the-counter traded securities such as UTG.

	2018		2017
Period	High	Low	High	Low
First quarter	25.20	22.95	18.25	17.00
Second quarter	28.25	24.00	21.75	17.50
Third quarter	34.00	26.00	21.00	18.85
Fourth quarter	33.00	31.00	28.00	19.25

UTG has not declared or paid any dividends on its common stock in the past two fiscal years, and has no current plans to pay dividends on its common stock as it intends to retain all earnings for investment in and growth of the Company’s business.  See Note 9 – Shareholders’ Equity in the Notes to the Consolidated Financial Statements for information regarding dividend restrictions, including applicable restrictions on the ability of the Company’s life insurance subsidiary to pay dividends.

As of January 31, 2019 there were 5,258 record holders of UTG common stock.

Purchases of Equity Securities

The following table provides information with respect to purchases we made of our common stock during the three months ended December 31, 2018 and total repurchases:

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program		Approximate Dollar Value That May Yet Be Purchased Under the Program
Oct. 1 through Oct. 31, 2018		1,062	$	33.00		1,062		N/A	$	2,212,572
Nov. 1 through Nov. 30, 2018		1,404	$	32.50		1,404		N/A	$	2,166,942
Dec. 1 through Dec. 31, 2018		1,398	$	32.24		798		N/A	$	2,121,872
Total		3,864				3,264

The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $1.5 million of UTG’s common stock, for a total repurchase of $16 million of UTG's common stock in the open market or in privately negotiated transactions. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited.  During 2018, the Company repurchased 50,922 shares through the stock repurchase program for $1,329,148. Through December 31, 2018, UTG has spent $13,863,727 in the acquisition of 1,140,106 shares under this program.

Stock Performance Graph

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 6. Selected Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 7. 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”) for the years ended December 31, 2018 and 2017. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.

Cautionary Statement Regarding Forward-Looking Statements

This report on Form 10-K 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, the acquisition of blocks of business and the administration and processing of life insurance business for other entities.

UTG has a strong philanthropic program.  The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor.  The Company also encourages its staff to be involved on a personal level through monetary giving, volunteerism and use of their talents to assist those less fortunate than themselves.  Through these efforts, the Company hopes to make a positive difference in the local community, state, nation and world.

Critical Accounting Policies

We have identified the accounting policies below as critical to the understanding of our results of operations and our financial condition.  The application of these critical accounting policies in preparing our consolidated financial statements requires Management to use significant judgments and estimates concerning future results or other developments including the likelihood, timing or amount of one or more future transactions or amounts.  Actual results may differ from these estimates under different assumptions or conditions.  On an on-going basis, we evaluate our estimates, assumptions and judgments based upon historical experience and various other information that we believe to be reasonable under the circumstances.  For a detailed discussion of other significant accounting policies, see Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Future Policy Benefits – Because of the long-term nature of insurance contracts, the insurance company is liable for policy benefit payments that will be made in the future.  The liability for future policy benefits is determined by standard actuarial procedures common to the life insurance industry.  The accounting policies for determining this liability are disclosed in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Cost of Insurance Acquired – The costs of acquiring blocks of insurance from other companies or through the acquisition of other companies are deferred and recorded as deferred acquisition costs. The deferred amounts are recorded as an asset and amortized to expense in a systematic manner as indicated in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Valuation of Securities – The Company’s investment portfolio consists of fixed maturities, equity securities, trading securities, mortgage loans and real estate to provide funding of future policy contractual obligations.  The Company’s fixed maturities and equity securities are classified as available-for-sale.  Available-for-sale investments are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

The Company’s trading securities are carried at fair value with unrealized gains and losses reported in income in the Consolidated Statements of Operations. Fair value is the price that the Company would expect to receive upon sale of the asset in an orderly transaction.

Mortgage loans on real estate are carried at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. A portion of the mortgage loan balance consists of discounted mortgage loans that were purchased at deep discounts through an auction process led by the Federal Government.  In general, the discounted mortgage 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 mortgage loans at its original purchase price adjusted for any principal receipts received.

Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

While the available-for-sale securities are generally expected to be held to maturity, they are classified as available-for-sale and are sold periodically to manage risk. Although a majority of the investment portfolio is classified as available-for-sale, the Company has the ability and intent to hold the securities until maturity. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company’s investment portfolio.

As a result of ASU No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, changes in the fair value of equity securities are now recognized in net income rather than other comprehensive income. On January 1, 2018, cumulative net unrealized gains on equity securities of $18.3 million, net of deferred taxes of $4.9 million, were reclassified from accumulated other comprehensive income (loss) into retained earnings.

Impairment of Investments – The Company continually monitors the investment portfolio for investments that have become impaired in value; where fair value has declined below carrying value.  While the value of the investments in the Company’s portfolio continuously fluctuate due to market conditions, an other-than-temporary impairment charge is recorded only when a security has experienced a decline in fair market value which is deemed to be other than temporary.  The policies and procedures the Company uses to evaluate and account for impairments of investments are disclosed in Note 1 – Summary of Significant Accounting Policies and Note 2 – Investments in the Notes to the Consolidated Financial Statements. The Company makes every effort to appropriately assess the status and value of the securities with the information available regarding an other-than-temporary impairment. However, it is difficult to predict the future prospects of a distressed or impaired security.

Deferred Income Taxes – The provision for deferred income taxes is based on the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates to temporary differences between amounts reported in the Consolidated Financial Statements and the tax basis of existing assets and liabilities. A valuation allowance is recognized for the portion of deferred tax assets that, in Management's judgment, is not likely to be realized. The effect on deferred income taxes of a change in tax rates or laws is recognized in income tax expense in the period that includes the enactment date.  The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017.  Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA.

Results of Operations

On a consolidated basis, the Company had net income attributable to common shareholders of $12.4 million and $4.8 million in 2018 and 2017, respectively.  In 2018, income before income taxes was $16.5 million compared to $3.3 million in 2017.  Total revenue was $41.3 million in 2018 and $28.7 million in 2017.

One-time events, primarily reflected in realized gains, comprise a substantial portion of the net income and revenue reported by the Company during 2018 and 2017.  The magnitude of realized investment gains and losses in a given year is a function of the timing of trades of investments relative to the markets themselves as well as the recognition of any impairments on investments.  Future earnings will be significantly negatively impacted should earnings from these one-time items not be realizable in a future period.  While Management believes there remain additional investments with such one-time earnings, when or if realized remains uncertain.

Total benefits and other expenses paid in 2018 were $24.8 million compared to $25.4 million in 2017.

The 2017 net earnings of the Company include approximately $1.5 million attributable to a one-time net benefit from the enactment of the TCJA on December 22, 2017.  Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA. The benefit is the result of a one-time non-cash reduction of the Company's net deferred tax liabilities that arose from the reduction in the statutory U.S. corporate income tax rate from 35% to 21%. The Company does not anticipate the TCJA to have a material impact going forward as the Company historically paid an average corporate income tax rate of 20% and will now pay a corporate income tax rate of 21%.

Revenues

Premiums and policy fee revenues, net of reinsurance premiums and policy fees, were comparable for 2018 to 2017.  The Company writes very little new business. Unless the Company acquires a new company or a block of in-force business, Management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company’s average persistency rate for all policies in-force for 2018 and 2017 was approximately 96.1% and 96.7%, respectively.  Persistency is a measure of insurance in-force retained in relation to the previous year.

The following table summarizes the Company's investment performance for the years ended December 31:

	2018			2017
Net investment income	$	11,202,668		$	11,700,998
Net investment gains (losses) (1)		22,456,835			9,117,125
Change in net unrealized investment gains (losses) on available-for-sale securities		(7,744,899	)		17,174,126

(1) Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in fair value of equity securities are now recognized in net income.  Prior periods have not been restated to conform to the current presentation. See Note 1 of the notes to consolidated financial statements.

The following table reflects net investment income of the Company for the years ended December 31:

	2018			2017
Fixed maturities	$	7,273,157		$	8,685,698
Equity securities		1,628,649			1,213,922
Trading securities		0			(1,061	)
Mortgage loans		1,234,115			1,191,865
Real estate		2,771,348			1,990,844
Notes receivable		979,742			1,322,675
Policy loans		646,993			664,116
Cash and cash equivalents		355,276			23,445
Short-term		18,159			1,263
Total consolidated investment income		14,907,439			15,092,767
Investment expenses		(3,704,771	)		(3,391,769	)
Consolidated net investment income	$	11,202,668		$	11,700,998

Net investment income represented approximately 27% and 41% of the Company's total revenues as of December 31, 2018 and 2017, respectively. When comparing current and prior year results, net investment income was comparable in the majority of the investment categories, with the largest vairance being found in the fixed maturities and real estate investment categories.

Income from the fixed maturities investment portfolio is down approximately 16% when comparing 2018 and 2017 results.  The decrease is attributable to the Company holding fewer bonds combined with upgrading credit quality. During 2017 and 2018, the Company sold some lower rated, higher yielding securities and replaced them with higher rated, lower yielding securities.

Income from the real estate portfolio was up approximately 39% as compared to the prior year.  The increased earnings are the result of the Company receiving additional rental income from real estate owned. The Company also recognized an increase of approximately 82%, as compared to the prior year, in oil and gas royalties from real estate owned. The earnings from real estate are expected to vary from year to year depending on the occupancy of the real estate and the oil and gas market.

The following table reflects net realized investment gains (losses) for the years ended December 31:

	2018			2017
Fixed maturities available for sale	$	10,751,955		$	3,877,454
Equity securities		0			2,902,278
Real estate		1,588,122			3,099,554
Mortgage loans – OTTI		0			(72,161	)
Real estate – OTTI		(300,000	)		(690,000	)
Consolidated net realized investment gains		12,040,077			9,117,125
Change in fair value of equity securities		10,416,758			0
Net investment gains	$	22,456,835		$	9,117,125

Net realized investment gains were up approximately 25% in 2018 as compared to 2017. As seen in the table above, the 2018 gains were the result of the sale of certain fixed maturities and real estate, which were offset by the recognition of an other-than-temporary impairment on a parcel of real estate.  Realized investment gains are the result of one-time events and are expected to vary from year to year.

During 2018, the Company sold a substantial bond holding.  The bond holding was initially acquired during 2016 over a period of time at a deep discount, with an average cost of 25% of its par value.  During the third quarter of 2018, the value of this security had recovered sufficiently enough that Management determined the time was right to sell a majority of the holding, realizing a gain of approximately $10 million. At December 31, 2018, the Company still holds $5 million of par value of this security at a cost basis of $651,000.

The 2018 realized gains from real estate are the result of the Company selling three real estate parcels.  The 2017 realized gains from real estate are mainly attributable to the sale of two real estate parcels, which produced realized gains of approximately $3.5 million.

During 2018 and 2017, realized gains were offset by other-than-temporary impairments of $300,000 and $762,161, respectively.  The other-than-temporary impairments were taken as a result of Management’s assessment and consideration of the length of time the securities have remained in an unrealized loss position and as a result of management’s analysis and determination of value.  The investments were written down to better reflect their current estimated fair value.

Realized investment gains are the result of one-time events and are expected to vary from year to year.

As a result of adopting ASU 2016-01, the 2018 net investment gains included an increase in the fair value of equity securities of $10.4 million.  The 2017 increase in the fair value of equity securities of $8.4 million was included in the change in net unrealized investment gains in other comprehensive income. See Note 2 to the Consolidated Financial Statements for details regarding the components of net investments gains (losses) and the change in net unrealized gains (losses) from investments.

The Company has seen significant unrealized gains on its equity investments during 2018.  A significant portion of these gains are from two equity holdings, both in the area of oil and gas.  While the Company has had very strong unrealized gains during 2018, a pull back in the stock market, particularly in the oil and gas arena, could slow these gains or even result in future period unrealized losses.  Management believes these equity investments continue to be solid investments for the Company and have further growth potential; however, changes in market conditions could cause volatility in market prices.

The reclassification of the change in the fair value of equity securities to a component of net income, as a result of ASU 2016-01, resulted in several larger variances when comparing current and prior year numbers.  As a result of ASU 2016-01, approximately $10.4 million of unralized gains from the change in the fair value of equity securities was reported as a component of net income in 2018 rather than as a component of accumulated other comprehensive income.  If you excluded the change in the fair value of equity securities from the calculations, the revenues and expenses, as a percentage of the total, are comparable from the current and prior year.

In summary, the Company’s basis for future revenue is expected to come from the following primary sources: Conservation of business currently in-force, the maximization of investment earnings and the acquisition of other companies or policy blocks in the life insurance business. Management has placed a significant emphasis on the development of these revenue sources to enhance these opportunities.

Expenses

The Company reported total benefits and other expenses of $24.8 million and $25.4 million for the twelve-month periods ended December 31, 2018 and 2017, respectively. Benefits, claims and settlement expenses represented approximately 63% and 66% of the Company’s total expenses for 2018 and 2017, respectively.  The other major expense category of the Company is operating expenses, which represented 34% and 31% of the Company’s total expenses for 2018 and 2017, respectively.

Benefits, claims and settlement expenses, net of reinsurance benefits, decreased approximately 8% in 2018 compared to 2017.  The decrease primarily relates to changes in the Company’s death claim experience.  Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.

Changes in policyholder reserves, or future policy benefits, also impact this line item.  Reserves are calculated on an individual policy basis and generally increase over the life of the policy as a result of additional premium payments and acknowledgment of increased risk as the insured continues to age.

The short-term impact of policy surrenders is negligible since a reserve for future policy benefits payable is held which is, at a minimum, equal to and generally greater than the cash surrender value of a policy.  The benefit of fewer policy surrenders is primarily received over a longer time period through the retention of the Company’s asset base.

Operating expenses increased approximately 9% in 2018 as compared to 2017.  When analyzing 2018 and 2017 results, the operating expenses in two of the major expense categories, salaries and charitable contributions, were higher in 2018 and driving the variance from the prior year to the current year . The increase in salary expense is the result of increased bonuses paid to employees and officers of the Company. Bonuses are not contractual or dependent upon meeting certain financial goals. They are not necessarily paid each year, and when they are paid, the amounts will vary depending on the decision of Management, the Compensation Committee, and the Board of Directors. Charitable contributions are a function of the Company’s earnings. Expenses in all of the other categories were comparable for the current and prior year.

Effective January 1, 2017, the Company and FSNB began sharing certain services. The shared services focuses on departments commonly utilized by both organizations such as financial accounting, human resources and information technology.  The shared services did not initially make a noticeable difference in operating expenses, but provides a larger team, which enhances capabilities and quality.

As mentioned above in the Overview section of the Management Discussion and Analysis, UTG has a strong philanthropic program.  The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor.  Charitable contributions made by the Company are expected to vary from year to year depending on the earnings of the Company.

Net amortization of cost of insurance acquired decreased approximately 4% when comparing current and prior year activity.  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.

Management continues to place significant emphasis on expense monitoring and cost containment. Maintaining administrative efficiencies directly impacts net income.

Financial Condition

Investment Information

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 they are permitted to make, and the amount of funds that may be used for any one type of investment.

The following table reflects, by investment category, the investments held by the Company as of December 31:

	2018		As a % of Total Investments			As a % of Total Assets
Fixed maturities	$	160,960,784		48	%		41	%
Equity securities		79,783,099		24	%		20	%
Mortgage loans		9,069,111		3	%		2	%
Real estate		52,518,577		16	%		13	%
Notes receivable		23,717,312		7	%		6	%
Policy loans		9,204,222		2	%		3	%
Total investments	$	335,253,105		100	%		85	%

	2017		As a % of Total Investments			As a % of Total Assets
Fixed maturities	$	178,555,225		53	%		44	%
Equity securities		58,848,491		18	%		15	%
Mortgage loans		17,314,477		5	%		4	%
Real estate		50,504,550		15	%		12	%
Notes receivable		19,004,016		6	%		5	%
Policy loans		9,559,142		3	%		2	%
Total investments	$	333,785,901		100	%		82	%

The Company's investments are generally managed to match related insurance and policyholder liabilities.  The comparison of investment return with insurance or investment product crediting rates establishes an interest spread.  Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further.  Policy interest crediting rate changes and expense load changes become effective on an individual policy basis on the next policy anniversary.  Therefore, it takes a full year from the time the change was determined for the full impact of such change to be realized.  If interest rates decline in the future, the Company will not be able to lower rates and both net investment income and net income will be impacted negatively.

The Company’s total investments represented 85% and 82% of the Company’s total assets as of December 31, 2018 and 2017, respectively. Fixed maturities consistently represented a substantial portion, 48% and 53%, respectively, of the total investments during 2018 and 2017.  The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the investments held as of December 31, 2018 and 2017.

As of December 31, 2018, 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 available for sale".  Investments available for sale are carried at market value, with changes in market value charged directly to the other comprehensive component of shareholders' equity.  Changes in the market value of available for sale securities resulted in net unrealized gains (losses) of approximately $(7.7) million and $17.2 million as of December 31, 2018 and 2017, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the market place.

Management continues to view the Company’s investment portfolio with utmost priority. Significant time has been spent internally researching the Company’s risk and communicating with outside investment advisors about the current investment environment and ways to ensure preservation of capital and mitigate losses.  Management has put extensive efforts into evaluating the investment holdings.  Additionally, members of the Company’s Board of Directors and investment committee have been solicited for advice and provided with information.  Management reviews the Company’s entire portfolio on a security level basis to be sure all understand our holdings, potential risks and underlying credit supporting the investments.  Management intends to continue its close monitoring of its bond holdings and other investments for possible deterioration or market condition changes.  Future events may result in Management’s determination that certain current investment holdings may need to be sold which could result in gains or losses in future periods.  Such future events could also result in other than temporary declines in value that could result in future period impairment losses.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties related to Management’s assessment of other-than-temporary declines in value include but are not limited to: the risk that Company's assessment of an issuer's ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; the risk that fraudulent information could be provided to the Company's investment professionals who determine the fair value estimates.

Liquidity

Liquidity provides the Company with the ability to meet on demand the cash commitments required by its business operations and financial obligations.  The Company’s liquidity is primarily derived from a portfolio of marketable securities and line of credit facilities.  The Company has two principal needs for cash – the insurance company’s contractual obligations to policyholders and the payment of operating expenses.

Parent Company Liquidity

UTG is a holding company that has no day-to-day operations of its own.  Cash flows from UTG’s insurance subsidiary, UG, are used to pay costs associated with maintaining the Company in good standing with states in which it does business and purchasing outstanding shares of UTG stock.  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.  As of December 31, 2018 and 2017, substantially all of the consolidated shareholders’ equity represents net assets of its subsidiaries.  In 2018, the Parent company received $5 million in dividends from its insurance subsidiary and $2 million in 2017. Certain restrictions exist on the payment of dividends from the insurance subsidiary to the Parent company.  For further information regarding the restrictions on the payment of dividends by the insurance subsidiary, see Note 9 – Shareholders’ Equity in the Notes to the Consolidated Financial Statements.  Although these restrictions exist, dividend availability from the insurance subsidiary has historically been sufficient to meet the cash flow needs of the Parent company.

Insurance Subsidiary Liquidity

Sources of cash flows for the insurance subsidiary primarily consist of premium and investment income.  Cash outflows from operations include policy benefit payments, administrative expenses, taxes and dividends to the Parent company.

Short-Term Borrowings

An additional source of liquidity to the Parent company and its subsidiaries is the line of credit facilities extended to them. As of December 31, 2018 and 2017, the Company and its subsidiaries had available $18 million in line of credit facilities.  The Company did not utilize its available credit facilities during 2017 or 2018.  For additional information regarding the line of credit facilities, see Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company expects to have readily available funds for the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiary through internally generated cash flow and the credit facilities.  In the unlikely event that more liquidity is needed, the Company could generate additional funds through such sources as a short-term credit facility and intercompany borrowing.

Consolidated Liquidity

Cash used in operating activities was approximately $5.4 million and $13.2 million in 2018 and 2017, respectively.  Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments.  Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses.  The Company has not marketed any significant new products for several years.  As such, premium revenues continue to decline.  Management anticipates future cash flows from operations to remain similar to historic trends.

During 2018 and 2017, the Company’s investing activities provided net cash of approximately $2 million and $27 million, respectively. The Company recognized proceeds of approximately $107.7 million and $56.2 million from investments sold and matured in 2018 and 2017, respectively.  The Company used approximately $105.7 million and $29.2 million to acquire investments.  The net cash provided by investing activities is expected to vary from year to year depending on market conditions and management’s ability to find and negotiate favorable investment contracts.

Net cash used in financing activities was approximately $1.9 million and $3.5 million during 2018 and 2017, respectively. As of December 31, 2018, the Company had no debt outstanding with third parties.

The Company had cash and cash equivalents of approximately $20.2 million and $25.4 million as of December 31, 2018 and 2017, respectively.  The Company has a portfolio of marketable fixed and equity securities that are available for sale, if an unexpected event were to occur.  These securities had a fair value of approximately $240.7 million and $238 million at December 31, 2018 and 2017, respectively. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes.  See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company’s investment portfolio.

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

Capital Resources

The Company’s capital structure consists of available short-term debt, long-term debt and shareholders’ equity. A complete analysis and description of the short-term and long-term debt issues available as of December 31, 2018 and 2017 are presented in Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company had $0 debt outstanding as of December 31, 2018 and 2017.

The NAIC's risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula.  The risk-based capital (RBC) formula measures the adequacy of statutory capital and surplus in relation to investment and insurance risks such as asset quality, mortality and morbidity, asset and liability matching and other business factors.  The RBC formula is used by state insurance regulators as an early warning tool to identify, for the purpose of initiating regulatory action, insurance companies that potentially are inadequately capitalized.

At December 31, 2018, UG has a ratio of approximately 5.20, which is 520% of the authorized control level.  Accordingly, the Company meets the RBC requirements.

The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $1.5 million of UTG’s common stock, for a total repurchase of $16 million. Repurchased shares are available for future issuance for general corporate purposes. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited.  During 2018, the Company repurchased 50,922 shares through the stock repurchase program for approximately $1,329,148. Through December 31, 2018, UTG has spent approximately $13.9 million in the acquisition of 1,140,106 shares under this program.

Shareholders’ equity was approximately $106 million and $110 million as of December 31, 2018 and 2017, respectively. Total shareholders' equity decreased approximately 3% in 2018 compared to 2017.  The decrease is primarily attributable to the change in accumulated other comprehensive income and retained earnings. As of December 31, 2018 and 2017, the Company reported  accumulated other comprehensive income of approximately $62,000 and $32.9 million, respectively.The decrease is the result of the adoption of ASU 2016-01 and a decline in the market value of fixed maturity securities.

Effective January 1, 2018, the Company adopted ASU 2016-01. As a result equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. The Company reclassified approximately $18.3 million of unrealized gains from equity securities from being a component of accumulated other comprehensive income to a component of retained earnings.

At December 31, 2018, accumulated other comprehensive income was reduced by approximately $14.6 million as a result of unrealized losses on fixed maturity securities. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the market place.

As a result of the TCJA, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 of approximately $7.3 million. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in law. Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA.

The Company's investments 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 Consolidated Financial Statements at their fair value.

New Accounting Pronouncements

See Note 1 – Summary of Significant Account Policies in the Notes to the Consolidated Financial Statements for information regarding new accounting pronouncements.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, financing activities or other relationships with unconsolidated entities or other persons.

Contractual Obligations

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

	Page No.
UTG, Inc. and Consolidated Subsidiaries
Report of Independent Registered Public Accounting Firm	20
Consolidated Balance Sheets	21
Consolidated Statements of Operations	22
Consolidated Statements of Comprehensive Income	23
Consolidated Statements of Shareholders’ Equity	24
Consolidated Statements of Cash Flows	25
Notes to Consolidated Financial Statements	26

Report of Independent Registered Public Accounting Firm

Board of Directors and

Shareholders of UTG, Inc. and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of UTG, Inc. and subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2018, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Brown Smith Wallace, LLP

We have served as the Company’s auditor since 2005.

St. Louis, Missouri

March 26, 2019

UTG, Inc.

Consolidated Balance Sheets

As of December 31, 2018 and 2017

ASSETS
	2018		2017
Investments:
Investments available for sale:
Fixed maturities, at fair value (amortized cost $160,895,869 and $159,912,511)	$	160,960,784	$	178,555,225
Equity securities, at fair value (cost $0 and $35,712,633)		0		58,848,491
Equity securities, at fair value (cost $34,885,107 and $0)		67,664,482		0
Equity securities, at cost		12,118,617		0
Mortgage loans on real estate at amortized cost		9,069,111		17,314,477
Investment real estate, net		52,518,577		50,504,550
Notes receivable		23,717,312		19,004,016
Policy loans		9,204,222		9,559,142
Total investments		335,253,105		333,785,901
Cash and cash equivalents		20,150,162		25,434,199
Accrued investment income		2,119,882		2,990,721
Reinsurance receivables:
Future policy benefits		26,117,936		26,488,346
Policy claims and other benefits		4,053,882		3,882,047
Cost of insurance acquired		5,622,227		6,428,292
Property and equipment, net of accumulated depreciation		688,567		1,118,826
Income taxes receivable		279,333		549,851
Other assets		1,263,242		5,766,901
Total assets	$	395,548,336	$	406,445,084
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
Future policy benefits	$	253,852,368	$	259,469,205
Policy claims and benefits payable		4,267,481		3,777,175
Other policyholder funds		372,072		408,790
Dividend and endowment accumulations		14,608,838		14,601,645
Deferred income taxes		9,113,480		10,996,404
Other liabilities		6,257,387		6,760,347
Total liabilities		288,471,626		296,013,566
Shareholders' equity:
Common stock - no par value, stated value $0.001 per share. Authorized 7,000,000 shares - 3,295,870 and 3,333,377 shares issued and outstanding		3,296		3,333
Additional paid-in capital		36,567,865		37,536,164
Retained earnings		69,708,901		39,040,456
Accumulated other comprehensive income		62,495		32,952,338
Total UTG shareholders' equity		106,342,557		109,532,291
Noncontrolling interest		734,153		899,227
Total shareholders' equity		107,076,710		110,431,518
Total liabilities and shareholders' equity	$	395,548,336	$	406,445,084

See accompanying notes.

UTG, Inc.

Consolidated Statements of Operations

For the Years Ended December 31, 2018 and 2017

	2018			2017
Revenue:
Premiums and policy fees	$	10,076,351		$	10,413,346
Ceded reinsurance premiums and policy fees		(2,862,701	)		(2,955,989	)
Net investment income		11,202,668			11,700,998
Other income		400,034			458,663
Revenues before net investment gains (losses)		18,816,352			19,617,018
Net investment gains (losses):
Other-than-temporary impairments		(300,000	)		(762,161	)
Other realized investment gains, net		12,340,077			9,879,286
Change in fair value of equity securities		10,416,758			0
Total net investment gains		22,456,835			9,117,125
Total revenues		41,273,187			28,734,143
Benefits and other expenses:
Benefits, claims and settlement expenses:
Life		16,751,922			17,428,286
Ceded reinsurance benefits and claims		(2,610,586	)		(1,893,986	)
Annuity		1,044,397			975,196
Dividends to policyholders		390,368			370,847
Commissions		(147,922	)		(145,722	)
Amortization of cost of insurance acquired		806,065			839,105
Operating expenses		8,531,113			7,854,301
Total benefits and other expenses		24,765,357			25,428,027
Income before income taxes		16,507,830			3,306,116
Income tax expense (benefit)		3,907,536			(1,507,016	)
Net income		12,600,294			4,813,132
Net income attributable to noncontrolling interest		(209,177	)		(2,983	)
Net income attributable to common shareholders	$	12,391,117		$	4,810,149
Amounts attributable to common shareholders:
Basic income per share	$	3.75		$	1.44
Diluted income per share	$	3.75		$	1.44
Basic weighted average shares outstanding		3,307,448			3,346,774
Diluted weighted average shares outstanding		3,307,448			3,346,774

See accompanying notes.

UTG, Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31, 2018 and 2017

	2018			2017
Net income	$	12,600,294		$	4,813,132
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during period, pre-tax		(7,744,899	)		17,174,126
Tax (expense) benefit on unrealized holding gains (losses) arising during the period		1,626,429			(6,010,944	)
Deferred tax adjustment from tax rate change		0			5,842,290
Unrealized holding gains (losses) arising during period, net of tax		(6,118,470	)		17,005,472
Less reclassification adjustment for gains included in net income		(10,751,955	)		(6,779,732	)
Tax expense for gains included in net income		2,257,911			2,372,906
Reclassification adjustment for gains included in net income, net of tax		(8,494,044	)		(4,406,826	)
Subtotal: Other comprehensive income (loss), net of tax		(14,612,514	)		12,598,646
Comprehensive income (loss)		(2,012,220	)		17,411,778
Less comprehensive income attributable to noncontrolling interests		(209,177	)		(2,983	)
Comprehensive income (loss) attributable to UTG, Inc.	$	(2,221,397	)	$	17,408,795

See accompanying notes.

UTG, Inc.

Consolidated Statements of Shareholders' Equity

Year ended December 31, 2018	Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income			Noncontrolling Interest			Total Shareholders' Equity
Balance at December 31, 2017	$	3,333		$	37,536,164		$	39,040,456	$	32,952,338		$	899,227		$	110,431,518
Adoption of Accounting Standards Update No 2016-01 (Note 1)		0			0			18,277,328		(18,277,328	)		0			0
		3,333			37,536,164			57,317,784		14,675,010			899,227			110,431,518
Common stock issued during year		13			360,799			0		0			0			360,812
Treasury shares acquired and retired		(50	)		(1,329,098	)		0		0			0			(1,329,148	)
Net income attributable to common shareholders		0			0			12,391,117		0			0			12,391,117
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes		0			0			0		(14,612,515	)		0			(14,612,515	)
Contributions		0			0			0		0			0			0
Distributions		0			0			0		0			(374,252	)		(374,252	)
Gain attributable to noncontrolling interest		0			0			0		0			209,178			209,178
Balance at December 31, 2018	$	3,296		$	36,567,865		$	69,708,901	$	62,495		$	734,153		$	107,076,710

Year ended December 31, 2017	Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interest			Total Shareholders' Equity
Balance at January 1, 2017	$	3,350		$	37,878,712		$	34,230,307	$	20,353,692	$	1,835,781		$	94,301,842
Common stock issued during year		13			261,474			0		0		0			261,487
Treasury shares acquired and retired		(30	)		(604,022	)		0		0		0			(604,052	)
Net income attributable to common shareholders		0			0			4,810,149		0		0			4,810,149
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes		0			0			0		12,598,646		0			12,598,646
Contributions		0			0			0		0		0			-
Distributions		0			0			0		0		(939,537	)		(939,537	)
Gain attributable to noncontrolling interest		0			0			0		0		2,983			2,983
Balance at December 31, 2017	$	3,333		$	37,536,164		$	39,040,456	$	32,952,338	$	899,227		$	110,431,518

See accompanying notes.

UTG, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2018 and 2017

	2018			2017
Cash flows from operating activities:
Net income attributable to common shares	$	12,391,117		$	4,810,149
Adjustments to reconcile net income to net cash used in operating activities:
Amortization (accretion) of investments		(142,519	)		94,608
Other-than-temporary impairments		300,000			762,161
Realized investment gains, net		(12,340,077	)		(9,879,286	)
Change in fair value of equity securities		(10,416,758	)		0
Unrealized trading (gains) losses included in income		0			111,531
Realized trading (gains) losses included in income		0			(110,470	)
Amortization of cost of insurance acquired		806,065			839,105
Depreciation		1,067,297			701,809
Net income attributable to noncontrolling interest		209,177			2,983
Charges for mortality and administration of universal life and annuity products		(6,602,846	)		(6,636,270	)
Interest credited to account balances		4,221,969			4,346,943
Change in accrued investment income		870,839			(117,871	)
Change in reinsurance receivables		198,575			556,891
Change in policy liabilities and accruals		(2,237,947	)		(2,794,247	)
Change in income taxes receivable (payable)		270,518			673,831
Change in other assets and liabilities, net		5,985,699			(6,560,115	)
Net cash provided by (used in) operating activities		(5,418,891	)		(13,198,248	)
Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale		66,408,611			29,744,619
Equity securities		2,169,989			7,479,886
Mortgage loans		8,878,073			1,840,610
Real estate		14,341,204			13,014,387
Notes receivable		6,783,702			2,170,322
Policy loans		1,599,896			1,951,222
Short-term investments		7,549,076			0
Total proceeds from investments sold and matured		107,730,551			56,201,046
Cost of investments acquired:
Fixed maturities available for sale		(56,940,883	)		(15,615,699	)
Equity securities		(12,687,839	)		(3,275,532	)
Mortgage loans		(91,954	)		(360,531	)
Real estate		(15,704,151	)		(4,226,106	)
Notes receivable		(11,496,998	)		(4,297,853	)
Policy loans		(1,244,976	)		(1,440,230	)
Short-term investments		(7,549,076	)		0
Total cost of investments acquired		(105,715,877	)		(29,215,951	)
Purchase of property and equipment		0			0
Net cash provided by (used in) investing activities		2,014,674			26,985,095
Cash flows from financing activities:
Policyholder contract deposits		4,696,980			4,812,703
Policyholder contract withdrawals		(5,234,212	)		(4,139,797	)
Payments of principal on notes payable/line of credit		0			(2,900,000	)
Purchase of treasury stock		(1,329,148	)		(604,052	)
Issuance of stock		360,812			261,487
Noncontrolling contributions/(distributions) of consolidated subsidiary		(374,252	)		(939,537	)
Net cash provided by (used in) financing activities		(1,879,820	)		(3,509,196	)
Net increase (decrease) in cash and cash equivalents		(5,284,037	)		10,277,651
Cash and cash equivalents at beginning of year		25,434,199			15,156,548
Cash and cash equivalents at end of year	$	20,150,162		$	25,434,199

See accompanying notes.

UTG, Inc.

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Business – UTG, Inc. is an insurance holding company. The Company’s dominant business is individual life insurance, which includes the servicing of existing insurance in-force and the acquisition of other companies in the life insurance business. UTG and its subsidiaries are collectively referred to as the “Company”.

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 December 31, 2018, Mr. Correll owns or controls directly and indirectly approximately 65.29% of UTG’s outstanding stock.

UTG’s life insurance subsidiary has several wholly-owned and majority-owned subsidiaries. The subsidiaries were formed to hold certain real estate and other investments. The investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), under guidance issued by the Financial Accounting Standards Board (“FASB”).  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments – The Company has only one business segment – life insurance.

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities at Fair Value – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses reported as a component of net income (loss) upon adoption of ASU 2016-01.

Equity Securities at Cost – The Company adopted ASU 2016-01 during the current year and transferred equity securities of $12,118,617, that do not have a readily determinable fair value, from equity securities at fair value to equity securities at cost on the financial statements.  There was no impact to the Consolidated Statements of Operations or net Shareholders' Equity as a result of the change. These investments are reported at their cost basis, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Included in the mortgage loans balance is discounted mortgage loans on real estate. Discounted mortgage loans on real estate are loans that the Company purchased at a deep discount through an auction process led by the Federal Government or other intermediary.  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 adjusted for any principal receipts received.  Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate.  For cash payments received during the work out process, the Company records these payments to interest income on a cash basis.  For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date.  Management reviews the discount loan portfolio regularly for impairment.  If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes Receivable – Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments.  If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance.  Fair values are based on quoted market prices, where available.  Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are estimated using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes approximates fair value.  For more specific information regarding the Company’s measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments.  If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors.  The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  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 amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of  $5,655,593 and $5,225,333 at December 31, 2018 and 2017, respectively. Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of 3 to 30 years.  Depreciation expense was $430,260 and $446,117 for the years ended December 31, 2018 and 2017, respectively.

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2.0% to 6.0% for life insurance and 2.5% to 7.5% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 3.0% to 6.0% as of December 31, 2018 and 2017.

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company.  There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company’s ultimate obligation.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax impact attributable to differences between the financial statement book values and tax bases of assets and liabilities.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017.  More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share – The objective of both basic earnings per share (“EPS”) and diluted EPS is to measure the performance of an entity over the reporting period.  The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period.  Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in-force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement or ASU 2018-13. ASU 2018-13 modifies certain disclosure requirements related to fair value measurements including requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements and a requirement to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts or ASU 2018-12.  ASU 2018-12 significantly changes how insurers account for long-duration insurance contracts. The new guidance will require insurers to review and update, if necessary, the assumptions used to measure insurance liabilities periodically, rather than retain assumptions used at contract inception. The updated guidance also changes the recognition and measurement of deferred acquisition costs (DAC) and created a new category of benefit features called market risk benefits (MRB) that will be measured at fair value. The guidance also significantly expands the disclosure requirements for long-duration contracts.  The ASU is effective for fiscal years, and interim periods within those years, for years beginning after December 15, 2020 and early adoption is permitted.  The guidance on measuring the liabilities for future policy benefits and DAC will be adopted on a modified retrospective basis as of the earliest period presented in the year of adoption. The guidance on MRB will be adopted on a retrospective basis as of the earliest period presented in the year of adoption. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting or ASU 2018-07. The amendment in ASU 2018-07 simplifies the accounting for nonemployee share based payments by aligning the measurement and classification guidance for share based payments to nonemployees with share based payments to employees. Under this guidance, the measurement of equity classified awards will be fixed at the grant date. This guidance is effective in annual periods beginning after December 15, 2018. The Company has evaluated the impact of the ASU, and determined that it does not significantly impact the Company’s financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income or ASU 2018-02.  ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017.  Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 35% percent) and to include the change in income from continuing operations.  ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted.  The Company adopted ASU 2018-02 for the year ended December 31, 2017.

Accounting Standards Update (ASU 2016-13), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company adopted ASU 2016-01 on January 1, 2018 as a cumulative net effect adjustment and reclassified $18,277,328 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive income (loss) to retained earnings on the Company's Condensed Consolidated Balance Sheet. Prior periods have not been restated to conform to current presentation. Effective January 1, 2018, the Company's results of operations include the changes in fair value of these financial instruments. During 2018, the FASB implemented ASU 2018-03, which clarifies ASU 2016-01 regarding the measurement alternative for equity securities without a readily determinable fair value as well as clarification for other presentation items. These amendments are effective for interim periods beginning after June 15, 2018.

Note 2 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The following tables provide a summary of fixed maturities available for sale by original or amortized cost and estimated fair value:

December 31, 2018	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	$	25,649,410	$	149,006	$	(138,222	)	$	25,660,194
U.S. special revenue and assessments		16,350,486		334,300		(4,406	)		16,680,380
All other corporate bonds		118,895,973		2,569,287		(2,845,050	)		118,620,210
Total	$	160,895,869	$	3,052,593	$	(2,987,678	)	$	160,960,784

December 31, 2017	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	$	2,679,325	$	33,802	$	(73,530	)	$	2,639,597
U.S. special revenue and assessments		9,012,232		620,789		0			9,633,021
All other corporate bonds		148,220,954		18,359,816		(298,163	)		166,282,607
		159,912,511		19,014,407		(371,693	)		178,555,225
Equity securities (1)		35,712,633		23,648,201		(512,343	)		58,848,491
Total	$	195,625,144	$	42,662,608	$	(884,036	)	$	237,403,716

(1) Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2018. Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2018	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,498,249	$	6,537,005
Due after one year through five years		43,015,419		44,106,710
Due after five years through ten years		60,011,083		60,985,500
Due after ten years		51,371,118		49,331,569
Total	$	160,895,869	$	160,960,784

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers.  In addition, the trading market for these securities is usually more limited than for investment grade debt securities.  Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB+ or below.

The Company held below investment grade investments with an estimated market value of $2,618,594 and $21,108,077 as of December 31, 2018 and December 31, 2017, respectively. The investments are all classified as “All other corporate bonds”.

The fair value of investments with sustained gross unrealized losses at December 31, 2018 and 2017 are as follows:

December 31, 2018	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		$	6,429,700		(49,904	)		$	1,592,679		(88,318	)		$	8,022,379		(138,222	)
U.S. special revenue and assessments			4,023,920		(4,406	)			0		0				4,023,920		(4,406	)
All other corporate bonds			49,270,729		(2,033,507	)			15,337,739		(811,543	)			64,608,468		(2,845,050	)
Total fixed maturities		$	59,724,349		(2,087,817	)		$	16,930,418		(899,861	)		$	76,654,767		(2,987,678	)

December 31, 2017	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			$	1,604,987		(73,530	)		$	1,604,987		(73,530	)
All other corporate bonds			9,732,635		(91,757	)			11,164,317		(206,406	)			20,896,952		(298,163	)
Total fixed maturities		$	9,732,635		(91,757	)		$	12,769,304		(279,936	)		$	22,501,939		(371,693	)
Equity securities (1)		$	4,130,260		(270,774	)		$	1,526,868		(241,569	)		$	5,657,128		(512,343	)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12 months	12 months or longer	Total
As of December 31, 2018
Fixed maturities	30	10	40
As of December 31, 2017
Fixed maturities	6	6	12
Equity securities (1)	2	2	4

(1) Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

Substantially all of the unrealized losses on fixed maturities available for sale at December 31, 2018 and 2017 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The unrealized losses on equity investments were primarily attributable to normal market fluctuations.  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  December 31, 2018 and 2017.

Cost Method Investments

The Company held equity investments with an aggregate cost of $12,118,617 at December 31, 2018.  These equity investments were not reported at fair value because it is not practicable to estimate their fair values due to insufficient information being available. Management did not identify any events or changes in circumstances that might have a significant adverse effect on the reported value of those investments.  Based on Management's evaluation of the expected cash flow of the investments, and the Company's ability and intent to hold the investments for a reasonable period of time, the Company does not deem an other-than-temporary impairment necessary at December 31, 2018.

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 Consolidated Statements of Operations.  Trading Securities included exchange-traded equities and exchange-traded options.  Trading securities carried as liabilities were securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, was recognized upon the termination of the short sale.  Earnings from trading securities were classified in cash flows from operating activities. The Company did not hold any trading securities at December 31, 2018 or 2017.

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

	2018			2017
Net unrealized gains (losses)		$	0		$	(111,531	)
Net realized gains (losses)			0			110,470
Net unrealized and realized gains (losses)		$	0		$	(1,061	)

Mortgage Loans on Real Estate

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB’s loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company’s Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

During 2018 and 2017, the Company acquired $91,954 and $360,531 in mortgage loans, respectively, of participation mortgage loans.  FSNB services the majority of the Company’s mortgage loan portfolio. The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

During 2018 and 2017, the maximum and minimum lending rates for mortgage loans were:

	2018		2017
	Maximum rate	Minimum rate	Maximum rate	Minimum rate
Farm loans	5.00 %	5.00 %	5.00 %	5.00 %
Commercial loans	7.50 %	4.00 %	7.50 %	4.00 %
Residential loans	8.00 %	8.00 %	8.00 %	4.00 %

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

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.  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 mortgage loan reserve was $0 at December 31, 2018 and December 31, 2017.

The following table summarizes the mortgage loan holdings of the Company for the periods ended December 31:

	2018		2017
In good standing	$	7,169,272	$	15,310,941
Overdue interest over 90 days		1,899,839		0
Restructured		0		0
In process of foreclosure		0		2,003,536
Total mortgage loans	$	9,069,111	$	17,314,477
Total foreclosed loans during the year	$	0	$	0

Investment Real Estate

Investment Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the Consolidated Statements of Operations. Based upon Management’s evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the Consolidated Statements of Operations.

Notes Receivable

Notes receivable represent collateral loans and promissory notes issued by the Company and are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. The valuation allowance as of December 31, 2018and 2017was $0. Interest accruals are analyzed based on the likelihood of repayment.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Before a new note is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  Once the note is approved, the Company directly funds the note to the borrower. Several of the notes have participation agreements in place, whereas the Company has reduced its investment in the note receivable by participating a portion of the note to a third party.

Similar to the mortgage loans, FSNB services several of the notes receivable. The Company, and the participants in the notes, share in the risk of loss associated with the terms of the note with the borrower, based upon their ownership percentage in the note.  The Company has in place a monitoring system to provide Management with information regarding potential troubled loans. 

Analysis of Investment Operations

The following table reflects the Company’s net investment income for the periods ended December 31:

	2018			2017
Fixed maturities	$	7,273,157		$	8,685,698
Equity securities		1,628,649			1,213,922
Trading securities		0			(1,061	)
Mortgage loans		1,234,115			1,191,865
Real estate		2,771,348			1,990,844
Notes receivable		979,742			1,322,675
Policy loans		646,993			664,116
Cash and cash equivalents		355,276			23,445
Short-term		18,159			1,263
Total consolidated investment income		14,907,439			15,092,767
Investment expenses		(3,704,771	)		(3,391,769	)
Consolidated net investment income	$	11,202,668		$	11,700,998

The following table presents the Company’s net realized investments gains (losses) and the change in net unrealized gains on available-for-sale investments for the periods ended December 31:

	2018			2017
Realized gains on available-for-sale investments:
Sales of fixed maturities	$	11,708,320		$	3,950,014
Sales of equity securities (1)		0			2,902,278
Sales of real estate		1,588,122			3,622,519
Other		0			0
Total realized gains		13,296,442			10,474,811
Realized losses on available-for-sale investments:
Sales of fixed maturities		(956,365	)		(72,560	)
Sales of equity securities (1)		0			0
Sales of real estate		0			(522,965	)
Other-than-temporary impairments		(300,000	)		(762,161	)
Other		0			0
Total realized losses		(1,256,365	)		(1,357,686	)
Net realized investment gains (losses)		12,040,077			9,117,125
Change in fair value of equity securities: (1)
Realized gains (losses) on equity securities sold during the period (1)		0			0
Change in fair value of equity securities held at the end of the period		10,416,758			0
Change in fair value of equity securities (1)		10,416,758			0
Net investment gains (losses)	$	22,456,835		$	9,117,125
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income:
Fixed maturities	$	(7,744,899	)	$	3,470,929
Equity securities (1)		0			13,703,197
Net increase (decrease)	$	(7,744,899	)	$	17,174,126

(1) Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See Note 1.

Other-Than-Temporary Impairments

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.

Management regularly reviews its real estate portfolio in comparison to appraisal valuations and current market conditions for indications of other-than-temporary impairments. If a decline in value is judged by Management to be other-than-temporary, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations.

The other-than-temporary impairments recognized during 2017 and 2018 were taken as a result of Management's assessment and determination of value of the investments. The investments were written down to better reflect their current expected value.

Based on Management’s review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

	2018		2017
Other than temporary impairments:
Real estate	$	300,000	$	690,000
Mortgage loans		0		72,161
Total other than temporary impairments	$	300,000	$	762,161

Investments on Deposit

The Company had investments with a fair value of $8,317,514 and $8,642,633 on deposit with various state insurance departments as of December 31, 2018 and 2017, respectively.

Note 3 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the 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 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 consist of common and preferred stocks mainly in private equity investments, financial institutions and publicly traded corporations. 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 Company uses industry standard pricing methodologies, including discounted cash flow models that may incorporate various inputs such as payment expectations, risk of the investment, market data, and health of the underlying company. The inputs are based upon Management's assumptions and available market information. When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2018.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	25,660,194	$	134,865,746	$	434,844	$	160,960,784
Equity Securities		27,634,283		10,557,031		29,473,168		67,664,482
Total	$	53,294,477	$	145,422,777	$	29,908,012	$	228,625,266

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2017.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	2,639,597	$	175,437,239	$	478,389	$	178,555,225
Equity Securities, available for sale (1)		20,436,225		7,756,435		30,655,831		58,848,491
Total	$	23,075,822	$	183,193,674	$	31,134,220	$	237,403,716

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 (1)			Total
Balance at December 31, 2017	$	478,389		$	30,655,831		$	31,134,220
Transfers in to Level 3		0			0			0
Transfer out of Level 3		0			(5,118,600	)		(5,118,600	)
Total unrealized gain (losses):
Included in net income (loss)		0			4,633,751			4,633,751
Included in other comprehensive income		0			0			0
Purchases		0			1,505,250			1,505,250
Sales		(43,545	)		(2,203,064	)		(2,246,609	)
Balance at December 31, 2018	$	434,844		$	29,473,168		$	29,908,012

(1) Effective January 1, 2018, the Company Adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

	December 31, 2018		December 31, 2017
Change in fair value of equity securities included in net income (loss) relating to assets held	$	4,633,751	$	0

The Level 3 securities include one fixed maturity and certain equity securities with unobservable inputs. The Company computed fair value of Level 3 equity investments based on a review of current financial information, earnings trends and similar companies in the same industries.

The Company transferred certain cost method investments out of Level 3 during 2018.  Transfers occur when there is a lack of observable market information.

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 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 Consolidated Balance Sheets are shown below. Because the fair value for all 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.

	December 31, 2018				December 31, 2017
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Equity securities	$	12,118,617	$	12,118,617	$	0	$	0
Mortgage loans on real estate		9,069,111		9,069,111		17,314,477		17,314,477
Investment real estate		52,518,577		52,518,577		50,504,550		50,504,550
Notes receivable		23,717,312		23,717,312		19,004,016		19,004,016
Policy loans		9,204,222		9,204,222		9,559,142		9,559,142
Cash and cash equivalents		20,150,162		20,150,162		25,434,199		25,434,199

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.

A portion of the mortgage loans balance consists of discounted mortgage loans. The Company has historically purchased 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.

Notes receivable are carried at their unpaid principal balances, which approximates fair value. The inputs used to measure the fair value of the loans 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 Consolidated Balance Sheets 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.

Note 4 - Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life. At December 31, 2018, the Company had gross insurance in-force of $1.1 billion of which approximately $228 million was ceded to reinsurers.  At December 31, 2017, the Company had gross insurance in-force of $1.2 billion of which approximately $242 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers. The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties. The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations. The primary reinsurers of the Company are large, well-capitalized entities.

Most recently, UG utilized reinsurance agreements with Optimum Re Insurance Company (“Optimum”), and Swiss Re Life and Health America Incorporated (“SWISS RE”).  Optimum and SWISS RE currently hold an “A-” (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  Under the terms of the agreements, UG cedes risk amounts above its retention limit of $100,000 with a minimum cession of $25,000. Ceded amounts are shared equally between the two reinsurers on a yearly renewable term (“YRT”) basis, a common industry method.  The treaty is self-administered; meaning the Company records the reinsurance results and reports them to the reinsurers.

Also, Optimum is the reinsurer of 100% of the accidental death benefits (“ADB”) in force of UG.  This coverage is renewable annually at the Company’s option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company (“PALIC”) effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  Under the terms of the agreement, UG sold 100% of the future results of this block of business to PALIC through a coinsurance agreement.  UG continues to administer the business for PALIC and receives a servicing fee through a commission allowance based on the remaining in-force policies each month.  PALIC has the right to assumption reinsure the business, at its option, and transfer the administration.  The Company is not aware of any such plans.  PALIC’s ultimate parent, The Guardian Life Insurance Company of America (“Guardian”), currently holds an "A++" (Superior) rating from A.M. Best.  The PALIC agreement accounts for approximately 63% of UG’s reinsurance reserve credit, as of December 31, 2018and 2017.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  Effective October 1, 2017, the IOV recaptured its coinsurance agreement with UG. The recapture was completed as a step in the IOV's decision to exit its insurance business.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2018 and 2017 were as follows:

	2018				2017
	Premiums Earned				Premiums Earned
Direct		$	10,074,892			$	10,407,434
Assumed			1,459				5,912
Ceded			(2,862,701	)			(2,955,989	)
Net Premiums		$	7,213,650			$	7,457,357

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  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 utilized may vary due to differences in the blocks of business.  The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

	2018			2017
Cost of insurance acquired, beginning of year	$	6,428,292		$	7,267,397
Interest accretion		866,339			967,032
Amortization		(1,672,404	)		(1,806,137	)
Net amortization		(806,065	)		(839,105	)
Cost of insurance acquired, end of year	$	5,622,227		$	6,428,292

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2019	769,612	1,545,518	775,906
2020	676,503	1,421,353	744,850
2021	587,120	1,302,090	714,970
2022	501,324	1,189,672	688,348
2023	418,722	1,079,979	661,257

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

	2018			2017
Current tax		$	1,922,542		$	751,377
Deferred tax			1,984,994			(2,258,393	)
Income tax expense (benefit)		$	3,907,536		$	(1,507,016	)

The expense for income taxes differed from the amounts computed by applying the applicable United States statutory rate of 21% and 35% as of December 31, 2018 and 2017, respectively, before income taxes as a result of the following differences:

	2018			2017
Tax computed at statutory rate	$	3,466,644		$	1,157,141
Changes in taxes due to:
Non-controlling interest		(43,927	)		(1,044	)
Small company deduction		0			(591,074	)
Dividend received deduction		(170,690	)		(90,698	)
Tax rate change		0			(1,488,646	)
Other		655,509			(492,695	)
Income tax expense (benefit)	$	3,907,536		$	(1,507,016	)

As a result of the TCJA described above in Note 1 - Summary of Significant Accounting Policies, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 in the amount of $7,330,936. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in the law.

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

	2018			2017
Investments	$	6,939,758		$	8,166,343
Cost of insurance acquired		1,180,668			1,349,941
Management/consulting fees		(15,724	)		(27,202	)
Future policy benefits		(1,670,814	)		281,576
Deferred gain on sale of subsidiary		1,387,490			1,387,490
Other assets (liabilities)		65,573			59,095
Reserves adjustment		1,426,205			0
Federal tax DAC		(199,676	)		(220,839	)
Deferred tax liability	$	9,113,480		$	10,996,404

At December 31, 2018 and 2017, the Company had gross deferred tax assets of $2,723,053 and $1,027,203, respectively, and gross deferred tax liabilities of $11,836,533 and $12,023,607, respectively, resulting from temporary differences primarily related to the life insurance subsidiary.  A valuation allowance is to be provided when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded (except as noted below) relating to the Company’s deferred tax assets since, in Management’s judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company also has a deferred tax asset of $43,717 and $118,693 relating to an AMT tax carryforward as of December 31, 2018 and 2017, respectively.  As a result of the changes to the Alternative Minimum Tax and corresponding credits resulting from the TCJA, Management has determined that an allowance against this asset is no longer required. 

The Company’s Federal income tax returns are periodically audited by the Internal Revenue Service (“IRS”). There are currently no examinations in process, nor is Management aware of any pending examination by the IRS.  The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions initially and subsequently need to be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company has evaluated its tax positions, expiring statutes of limitations, changes in tax law and new authoritative rulings and believes that no disclosure relative to a provision of income taxes is necessary, at this time, to cover any uncertain tax positions. Tax years that remain subject to examination are the years ended December 31, 2015, 2016, 2017 and 2018.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense.  No interest or penalties were included in the reported income taxes for the years presented.  The Company is not aware of any potential or proposed changes to any of its tax filings.

Note 7 – Credit Arrangements

At December 31, 2018 and 2017, the Company had the following lines of credit available:

Instrument	Issue Date	Maturity Date	Revolving Credit Limit			December 31, 2017			Borrowings		Repayments		December 31, 2018
Lines of Credit:
UTG	11/20/2013	11/20/2019		$	8,000,000		$	0		0		0		$	0
UG	6/2/2015	5/10/2019			10,000,000			0		0		0			0

The UTG line of credit carries interest at a fixed rate of 5.125% 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").

During May of 2018, the Federal Home Loan Bank approved UG’s Cash Management Advance Application (“CMA”). The CMA gives the Company the option of selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. The variable rate CMA is prepayable at any time without a fee, while the fixed CMA is not prepayable prior to maturity.

Note 8 – 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 condensed consolidated 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 December 31, 2018 related to certain investments:

	Total Funding Commitment		Unfunded Commitment
RLF III, LLC	$	4,000,000	$	398,120
Sovereign’s Capital, LP Fund I		500,000		24,493
Sovereign's Capital, LP Fund II		1,000,000		240,566
Sovereign's Capital, LP Fund III		1,000,000		900,000
Master Mineral Holdings III, LP		4,000,000		1,700,000
Barton Springs Music, LLC		2,000,000		1,158,500

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

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

During 2015, the Company committed to invest in Sovereign’s Capital, LP Fund II (“Sovereign’s II”), which invests in companies in emerging markets. Sovereign’s II makes capital calls to investors as funds are needed.

During 2018, the Company committed to invest in Sovereign’s Capital, LP Fund III (“Sovereign’s III”), which invests in companies in emerging markets. Sovereign’s III makes capital calls to investors as funds are needed.

During 2018, the Company committed to invest in Master Mineral Holdings III, LP (“MMH”), which purchases land for leasing opportunities to those looking to harvest natural resources.  MMH makes capital calls to its investors as funds are needed for continued land purchases.

During 2018, the Company committed to invest in Barton Springs Music, LLC (“Barton”), which invests in music royalties.  Barton makes capital calls to its investors as funds are needed to acquire the royalty rights.

Note 9 – Shareholders’ Equity

Stock Repurchase Program – The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $1.5 million of UTG's common stock, for a total repurchase of $16 million. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited.  During 2018, the Company repurchased 50,922 shares through the stock repurchase program for $1,329,148. Through December 31, 2018, UTG has spent $13,863,728 in the acquisition of 1,140,106 shares under this program.

Director Compensation - Effective September 18, 2013, a compensation arrangement was approved whereby each outside Director annually received $8,000 as a retainer and $1,000 per meeting attended.  In September 2018 the compensation arrangement was amended, effective January 1, 2018 whereby each outside Director annually received $5,000 as a retainer and $2,500 per meeting attended.  All other provisions from the September 2013 arrangement remained the same.   The compensation is be paid in the form of UTG, Inc. common stock.  The value is determined annually on the close of business December 20th or the next business day should December 20^th be a weekend or holiday, based on the activity of the year just ending.  Reasonable travel expenses are reimbursed in cash as incurred.  UTG’s Director Compensation policy provides that Directors who are employees of UTG or its affiliates do not receive any compensation for their services as Directors except for reimbursement for reasonable travel expenses for attending each meeting.

In December of 2018, the Company issued 2,994 shares of its common stock as compensation to the Directors. The shares were valued at $32.50per share, the market value at the date of issue. During 2018, the Company recorded $97,305in operating expense related to the stock issuance.  In December of 2017, the Company issued 2,560shares of its common stock as compensation to the Directors. The shares were valued at $25.00per share, the market value at the date of issue. During 2017, the Company recorded $64,000in operating expense related to the stock issuance.

Other Compensation - During 2018, the Company issued 10,421 shares of stock to management and employees as compensation at a cost of $263,507.  During 2017, The Company issued 11,285 shares of stock to management and employees as compensation at a cost of $197,487.  These awards are determined at the discretion of the Board of Directors.

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2018	2017
Basic weighted average shares outstanding	3,307,448	3,346,774
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,307,448	3,346,774

The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2018 and 2017, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

Statutory Restrictions – Restrictions exist on the flow of funds to UTG from its insurance subsidiary.  Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. UG is required to maintain minimum statutory surplus of $2,500,000. At December 31, 2018, substantially all of the consolidated shareholders' equity represents net assets of UTG’s subsidiaries.

UG is domiciled in the state of Ohio. Ohio 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.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid ordinary dividends of $5 million and $2 million to UTG in 2018 and 2017, respectively. No extraordinary dividends were paid during the two year period. UTG used the dividends received during 2018 and 2017 to purchase outstanding shares of UTG stock and for general operations of the Company.

Note 10 - Statutory Accounting

The insurance subsidiary prepares its statutory-based financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance.  These principles differ significantly from accounting principles generally accepted in the United States of America.  "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC).  "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.

The following table reflects UG’s statutory basis net income and capital and surplus (shareholders’ equity) as of December 31:

	2018			2017
Net income (loss)		$	6,166,411		$	5,356,483
Capital and surplus			60,024,931			54,717,987

Note 11 – Related Party Transactions

The articles of incorporation of UG contain the following language under item 12 relative to related party transactions:

A director shall not be disqualified from-dealing with or contracting with the corporation as vendor, purchaser; employee, agent or otherwise; nor, in the absence of fraud, shall any transaction or contract or act of this corporation be void or in any way affected or invalidated by the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder, director or officer is in any way interested in such transaction or contract or act, provided the fact that such director or such firm or such corporation so interested shall be disclosed or shall be known to the Board of Directors or such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction or act shall be taken: nor shall any such director be accountable .or responsible to the company for or in respect to such transaction or contract or act of. this corporation or for any gains or profits realized by him by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer is interested in such action or contract; and any such director may be counted in determining the existence of a quorum of any meeting of the Board of Directors of thecompany which shall authorize or take action in respect to any such contract or transaction or act and may vote thereat to authorize, ratify, or approve any such contract or transaction or act, with like force and effect as if he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer were not interested in such transaction or contract or act.

On February 20, 2003, UG purchased $4 million of a trust preferred security offering issued by First Southern Bancorp, Inc. (“FSBI”).  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%. The Company received dividends of $283,151 and $259,138 during 2018 and 2017, respectively. On March 30, 2009, UG purchased $1 million of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement. During 2018, the Company received a preferred pay down of $440,000 leaving a cost basis of $3,560,000.

UTG has a 30.10% ownership interest in an aircraft that is jointly owned with First Southern National Bank and Bandyco, LLC. Bandyco, LLC is affiliated with the Estate of Ward F. Correll. Mr. Correll is the father of Jesse Correll and a former director of the Company. The aircraft is used for business related travel by various officers and employees of the Company. For years 2018 and 2017, UTG paid $391,851 and $328,933 for costs associated with the aircraft, respectively.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary. Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula. During 2018 and 2017, UG paid $7,093,227 and $7,213,590, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management’s opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $8,393 and $11,108 in servicing fees and $0 and $0 in origination fees to FSNB during 2018 and 2017, respectively.

Effective January 1, 2017, UTG entered into a shared services contract with FSNB. Pursuant to the terms of the agreement, UTG and FSNB will utilize the services of the other’s staff in certain instances for the betterment of both entities. Personnel within departments, such as accounting, human resources, and information technology, are shared between the entities. Costs of these resources are then reimbursed between the companies.  The shared services arrangement provides benefits to both parties such as access to a greater pool of knowledgeable staff, efficiencies from elimination of redundancies and more streamlined operations.

The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company and received reimbursements from FSNB. The Company paid $571,648 and $186,251 in 2018 and 2017, respectively to FSNB in net reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $307,645 and $346,486 in 2018 and 2017, respectively, which included salaries and other benefits.

The Company rents approximately 8,000 square feet of office space, located in Stanford, Kentucky, from FSNB and pays $2,000 per month in rent. The Company paid rent of $24,000 to FSNB during 2018 and 2017.

As previously disclosed in the Notes Receivable section of Note 2 - Investments, several of the Company’s notes have participation agreements in place with third parties.  Certain participation agreements are with FSF, a related party.  The participation agreements are sold without recourse and assigned to the participant based on their pro-rata share of the principal, interest and collateral as specified in the participation agreements.The undivided participations in the notes receivable range from 20% - 50%.  The total amount of loans participated to FSF was $250,000as of December 31, 2018and 2017.

During 2016, UG and FSF established a partnership agreement and formed a limited liability company to purchase real estate. FSF contributed $140,000 to the partnership, which gave them a 10% ownership in the LLC. The property held by this LLC was sold in January of 2019 and the funds from the sale were subsequently distributed to the members.  The LLC is expected to be dissolved during 2019.

Note 12 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses for the periods ended December 31:

	2018			2017
Interest		$	0		$	0
Federal income tax			1,592,000			165,000

Note 13 - Concentrations

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 T. 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.

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2018 and 2017, approximately 56% and 55%, respectively, of the Company’s total direct premium was collected from Illinois, Ohio, Texas and West Virginia. Thus, results of operations are heavily dependent upon the strength of these economies.

The Company reinsures that portion of insurance risk which is in excess of its retention limits. Retention limits range up to $125,000 per life.  Life insurance ceded represented 20% of total life insurance in force at December 31, 2018 and 2017, respectively.  Insurance ceded represented 35% and 36% of premium income for 2018 and 2017, respectively. The Company would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.

The Company owns a variety of investments associated with the oil and gas industry.  These investments represented approximately 25% and 27% of the Company’s total invested assets at December 31, 2018 and 2017, respectively.

Note 14 – Selected Quarterly Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that are designed to ensure that the information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in our Exchange Act reports is accumulated and communicated to Management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.  In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2018and, based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Report on Internal Controls Over Financial Reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company’s Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making the assessment, Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013).  Based on Management’s assessment, Management concluded that, as of December 31, 2018, the Company’s internal control over financial reporting was effective.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this Annual Report.

Changes in Internal Controls

There have been no changes in the Company’s internal control over financial reporting since December 31, 2018, in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15(e) and 15d-15(e), that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The Board of Directors

In accordance with the laws of Delaware and the Certificate of Incorporation and Bylaws of UTG, as amended, UTG is managed by its executive officers under the direction of the Board of Directors.  The Board elects executive officers, evaluates their performance, works with management in establishing business objectives and considers other fundamental corporate matters, such as the issuance of stock or other securities, the purchase or sale of a business and other significant corporate business transactions.  In the fiscal year ended December 31, 2018, the Board met four times.  During 2018, all Directors attended at least 75% of all meetings of the Board and meetings of committees of the Board except Mr. Joseph Brinck.  Our Board of Directors does not have a policy requiring directors to attend annual meetings of shareholders.  All Board members attended our 2018 annual shareholders’ meeting.

The Board of Directors has an Audit Committee consisting of Messrs. Attkisson, Brinck, Harmon, and Molnar. Our Board has determined that each of the members of the Audit Committee meets the criteria for independence under the NASDAQ listing standards.  The Audit Committee performs such duties as outlined in the Company’s Audit Committee Charter.  The Audit Committee reviews and acts or reports to the Board with respect to various auditing and accounting matters, the scope of the audit procedures and the results thereof, internal accounting and control systems of UTG, the nature of services performed for UTG and the fees to be paid to the independent auditors, the performance of UTG's independent and internal auditors and the accounting practices of UTG.  The Audit Committee also recommends to the full Board of Directors the auditors to be appointed by the Board.  The Audit Committee met four timesin 2018.

The Board has reviewed the qualifications of each member of the audit committee and determined two members of the committee, Randy Attkisson, and Gabriel Molnar, meet the definition of an “audit committee financial expert” as defined in Item 407 of Regulation S-K.

The Board of Directors has a Compensation Committee consisting of Messrs. Dayton and Ochs.  Our Board has determined that each of the members of the Compensation Committee meets the criteria for independence under the NASDAQ listing standards.  The Compensation Committee performs such duties as outlined in the Company’s Compensation Committee Charter.  The Compensation Committee reviews and acts or reports to the Board with respect to various compensation matters relative to the Company’s executive officers.  The Compensation Committee has the authority to delegate appropriate matters to subcommittees as the Committee may determine in its discretion.  The Compensation Committee met two times in 2018.

Under UTG’s By-Laws, the Board of Directors should be comprised of at least six and no more than eleven Directors.  At December 31, 2018, the Board consisted of eleven Directors.  Shareholders elect Directors to serve for a period of one year at UTG’s annual shareholders’ meeting.

The Board of Directors does not have a formal nominating committee, or a committee that performs similar functions, and does not have a nominating committee charter.  The Board has concluded that the nominating process should not be limited to certain members so that a comprehensive selection of candidates can be considered.  Therefore, the nomination process is conducted by the full Board of Directors.  The Board of Directors has not adopted a formal policy with regard to the consideration of Director candidates recommended by shareholders.  Candidates for nomination have been recommended by an executive officer or director, and considered by the Board of Directors.  Generally, candidates have been persons who have been known to one or more of our Board members.  The Board of Directors will, however, consider nominees recommended by shareholders.  Shareholders wishing to recommend candidates for Board membership must submit the recommendations in writing to the Secretary of the Company at least 90 days prior to a date corresponding to the previous year’s Annual Meeting, with the submitting shareholder’s name and address and pertinent information about the proposed nominee similar to that set forth for directors named herein.  The Board does not evaluate potential nominees for director differently based on whether they are recommended by a shareholder.

The Board of Directors has not adopted specific minimum qualifications that it believes must be met by a person it recommends for nomination as a director.  Proposed nominees will be considered in light of their potential contributions to the Board, their backgrounds, their independence and such other factors as the Board considers appropriate.  We do not have a specific policy relating to the consideration of diversity in identifying director candidates.  However, the Board of Directors does consider the diversity of our Board when identifying director candidates.  The amount of consideration given to diversity varies with the Boards’ determination of whether we would benefit from expanding the Board’s diversity in a particular area.  We believe this policy has been effective in identifying candidates with the diverse business experience necessary to lead our Company.

Our directors have demonstrated significant achievement and generally have significant management experience in one or more fields of business, professional, governmental, community or academic endeavors.  Our directors have sound judgement as a result of their management or policy making experience and demonstrate an ability to function effectively in an oversight role.  Given the tenure of most of the directors on our Board, they have a general appreciation regarding major issues facing the Company.  These experiences make each of our directors well qualified to be a member of the Company’s Board of Directors.

The Board of Directors has provided a process for shareholders to send communications directly to the Board.  These communications can be sent to James Rousey, President and Director of UTG, at the corporate headquarters at 205 North Depot Street, Stanford, Kentucky 40484.

Our Board of Directors is led by Jesse Correll, our Chairman of the Board and Chief Executive Officer.  The decision as to who should serve as Chairman of the Board, and who should serve as Chief Executive Officer, and whether those offices should be combined or separate, is properly the responsibility of our Board of Directors.  The Board of Directors believes that the most effective leadership structure for us at this time is for Mr. Correll to serve as both Chairman of the Board and Chief Executive Officer.  Our Board does not have a lead independent director and does not believe that designating a lead independent director would be necessary or helpful at this time.

Our Board of Directors oversees our risk management in cooperation with management.  The Board and management regularly assess and communicate regarding risks confronting the Company, including transaction specific risks, macroeconomic trends, industry developments, and risk factors unique to our business.  The members of the Audit Committee also discuss various financial reporting and accounting risk factors with our independent audit firm.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors and officers of UTG file periodic reports regarding ownership of Company securities with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 as amended, and the rules promulgated there under.  UTG is not aware of any individuals who filed late with the Securities and Exchange Commission during 2018.SEC filings may be viewed from the Company’s Web site www.utgins.com.

Audit Committee Report to Shareholders

In connection with the December 31, 2018 financial statements, the audit committee: (1) reviewed and discussed the audited financial statements with Management; (2) discussed with the independent auditors the matters required by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended, (AICPA, Professional Standards, Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and (3) received the written disclosures and the letter from its independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and has discussed with the independent auditors their independence.  Based upon these reviews and discussions, the audit committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K filed with the SEC for the last fiscal year.

Members of the Company’s Audit Committee:

Randall L. Attkisson	Committee Chairman
Joseph A. Brinck, II
Thomas E. Harmon
Gabriel J. Molnar

The following information with respect to business experience of the Board of Directors has been furnished by the respective Directors or obtained from the records of UTG.

Name, Age	Position with the Company, Business Experience and Other Directorships
Randall L. Attkisson, 73	Director of UTG since 1999; Director of First Southern Bancorp, Inc., a bank holding company, since 1986; Board Chairman of Metro Leadership Foundation since 2014; and Partner of Bluegrass Financial Holdings Subs/Affiliates since 2008.
Joseph A. Brinck, II, 63	Director of UTG since 2003; CEO of Stelter & Brinck, LTD, a full service combustion engineering and manufacturing company from 1983 to present; Salesman at Stelter & Brinck, LTD from 1979 to 1983; President of Superior Thermal, LTD from 1990 to present; President of Sanctity of Life Foundation since 2001 and Vice President of Ruah Woods Ministry since 2009.
Jesse T. Correll, 62	Chairman and CEO of UTG and Universal Guaranty Life Insurance Company since 2000; Director of UTG since 1999; Chairman, President of First Southern Bancorp, Inc. since 1988; CEO of First Southern Bancorp, Inc. from 1988-2016; Manager and President of First Southern Funding, LLC since 1992; President, Director of The River Foundation since 1990; Board member of Crown Financial Ministries from 2004 to 2009; Friends of the Good Samaritans since 2005; Generous Giving from 2006 to 2009 and the National Christian Foundation since 2006.
Preston H. Correll, 38	Founder of Marksbury Farm Market based in Bryantsville, Kentucky. He also owns and operates St. Asaph Farm in Stanford, Kentucky and focuses on sustainable farming and raising natural meat.  He spent a year and a half in India working with the Good Samaritans ministry and now serves on the board of the Friends of the Good Samaritans. Director of UTG, Inc. since December 2018.
John M. Cortines, 30	Chief Operating Officer of Generous Giving. A native of Texas, John began his career as a Petroleum Engineer, most recently with Chevron. While studying at Harvard Business School, John began a journey of discovery on the intersection of faith and wealth which culminated in a decision to leave behind a lucrative post-MBA job to work, speak, and write full-time on generosity. Director of UTG, Inc. since December 2018.
Thomas F Darden, II, 64	Founder and CEO of Cherokee, and investment company that invests in both private equity and venture capital. Beginning in 1984 Mr. Darden served for 16 years as the Chairman of Cherokee Sanford Group, a brick manufacturing and soil remediation company. From 1981 to 1983 he was a consultant with Bain & Company in Boston. From 1977 to 1978 he worked as an environmental planner for the Korea Institute of Science and Technology in Seoul, where he was a Henry Luce Foundation Scholar. Mr. Darden is on the Boards of Shaw University, the Institute for the Environment at the University of North Carolina and the Board of Governors of the Research Triangle Institute. Mr. Darden Earned a Masters in Regional Planning from the University of North Carolina, a Juris Doctor from the Yale Law School and a Bachelor of Arts from the University of North Carolina where he was a Morehead Scholar. Director of UTG, Inc. since June 2018.
Howard L. Dayton, Jr., 75	In 1985, Mr. Dayton founded Crown Ministries in Longwood, Florida.  Crown Ministries merged with Christian Financial Concepts in September 2000 to form Crown Financial Ministries, the world’s largest financial ministry.  He served as Chief Executive Officer from 1985 to 2007 and in 2009 founded Compass - Finances God’s Way.  Mr. Dayton is a graduate of Cornell University.  He developed The Caboose, a successful railroad-themed restaurant in Orlando, FL in 1969. In 1972 he began his commercial real estate development career, specializing in office development in the Central Florida area.  He has authored five popular small group studies, produced several video series, and was the host for the nationally syndicated radio programs MoneyWise and HeyHoward.  Asbury University named their business school the Howard Dayton School of Business.  Mr. Dayton became a Director of UTG, Inc. in December 2005.
Thomas E. Harmon, 64	Director of UTG and Universal Guaranty Life Insurance Company since March 2016.  Mr. Harmon is the owner and President of Harmon Foods, Inc., a chain of retail supermarkets, for the past 40 years.  Mr. Harmon has been active in many charitable organizations over the years, most recently serving as a Board Member with Amigos En Cristo Ministries, an organization serving one of the most disadvantaged parts of the world – Juarez, Mexico.
Gabriel J. Molnar, 32	Director of UTG, Inc. since June 2017; CFO of Capstone Realty, Inc. since 2014; Analyst for Procter & Gamble in 2013; Sr. Associate for Price Waterhouse Coopers from 2009 to 2012. Currently holds a CPA license, in addition to a real estate sales license in Kentucky.
Peter L. Ochs, 67	Mr. Ochs is founder of Capital III, a private equity investment firm located in Wichita, Kansas.  Capital III provides impact investment capital and management with investments in manufacturing, real estate, energy, and education with a geographical focus on the US and Latin America.   Prior to founding Capital III, Mr. Ochs spent 8 years in the commercial banking industry.  Mr. Ochs graduated from the University of Kansas with a degree in business and finance.  He currently serves on the boards of UTG, Inc., the American Independence Funds, and Trinity Academy.
James P. Rousey, 60	President of UTG and Universal Guaranty Life Insurance Company since September 2006; Director of UTG and Universal Guaranty Life Insurance Company since September 2001; Chief Executive Officer of First Southern Bancorp, Inc. since 2016; Chair of ACLI Forum 500 from 2015-2016; Member of Board of Governors of ACLI from November 2014 to November 2017; Regional CEO and Director of First Southern National Bank from 1988 to 2001. Board Member with the Illinois Fellowship of Christian Athletes from 2001-2005; Board Member with Contact Ministries from 2007-2011; Board Member with Amigos En Cristo, Inc. from 2007-2009; Advisory Board Member with Natalie’s Sister since January 2018.

Executive Officers of UTG

More detailed information on the following executive officers of UTG appears under "Directors":

Jesse T. Correll	Chairman of the Board and Chief Executive Officer
James P. Rousey	President

Other executive officers of UTG are set forth below:

Name, Age	Position with UTG and Business Experience
Theodore C. Miller, 56	Corporate Secretary of UTG, Inc. and Universal Guaranty Life Insurance Company since December 2000; Senior Vice President and Chief Financial Officer since July 1997; Vice President since October 1992 and Treasurer from October 1992 to December 2003; Vice President and Controller of certain affiliated companies from 1984 to 1992;  Vice President and Treasurer of certain affiliated companies from 1992 to 1997; Senior Vice President and Chief Financial Officer of subsidiary companies since 1997; Corporate Secretary of subsidiary companies since 2000; and Chief Financial Officer and Corporate Secretary of First Southern Bancorp, Inc. and First Southern National Bank since 2016.
Douglas P. Ditto, 63	Vice President of UTG, Inc. and Universal Guaranty Life Insurance Company since June 2009; Chief Investment Officer from 2009 to 2012; Assistant Vice President from June 2003 to June 2009; Executive Vice President of First Southern Bancorp, Inc. since March 1985.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics for our Directors, officers (including our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, and persons performing similar function) and employees.  The Code of Business Conduct and Ethics is available to our shareholders by requesting a free copy of the Code of Business Conduct and Ethics by writing to us as UTG, Inc., 205 North Depot Street, Stanford, Kentucky 40484.

Item 11. Executive Compensation

Executive Compensation Table

The following table sets forth certain information regarding compensation paid to or earned by UTG's Chief Executive Officer, and each of UTG’s two most highly compensated executive officers whose salary plus bonus exceeded $100,000 during UTG's last fiscal year:

Name and Principal position	Year	Salary		Bonus		Stock Awards (2)		All Other Compensation		Total
Jesse T. Correll Chief Executive Officer	2018	$	176,250	$	0	$	140,000	$	6,386		(1	)	$	322,636
2017		$	175,000	$	0	$	109,988	$	7,000		(1	)	$	291,988
James P. Rousey President	2018	$	95,000	$	115,000	$	0	$	1,912		(1	)	$	211,912
2017		$	190,000	$	90,000	$	0	$	3,990		(1	)	$	283,990
Douglas P. Ditto Vice President	2018	$	138,750	$	0	$	90,000	$	5,420		(1	)	$	234,170
2017		$	127,308	$	0	$	70,000	$	5,092		(1	)	$	202,400

(1)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan.
(2)	Stock awards in the form of an annual bonus of 9,200 and 10,285 shares were issued in 2018 and 2017 respectively.

Outstanding Equity Awards at Fiscal Year End

As of December 31, 2018, there were no unexercised options, stock that has not vested or equity incentive plan awards outstanding for any of the above named executive officers.

Compensation of Directors

Effective September 18, 2013 a new compensation arrangement was approved whereby each outside Director annually received $8,000 as a retainer and $1,000 per meeting attended.  The compensation, however, is paid in UTG Common Stock.  The value is determined annually on the close of business December 20th or the next business day should December 20^th be a weekend or holiday, based on the activity of the year just ending.  Reasonable travel expenses are reimbursed in cash as incurred.  UTG's Director Compensation policy provides that Directors who are employees of UTG or its affiliates do not receive any compensation for their services as Directors except for reimbursement for reasonable travel expenses for attending each meeting.

In September 2018 the compensation arrangement was amended effective January 1, 2018 whereby each outside Director annually received $5,000 as a retainer and $2,500 per meeting attended. The compensation is paid in UTG, Inc. common stock. All other provisions from the September 2013 arrangement remained the same. The following table reflects compensation paid to all Directors who served in 2018.

Name	Fees Earned or Paid in Cash		Stock Awards (2)		All Other Compensation (1)		Total
Jesse T. Correll Chief Executive Officer	$	0	$	0	$	0	$	0
James P. Rousey President	$	0	$	0	$	0	$	0
Randall L. Attkisson Director	$	0	$	15,000	$	0	$	15,000
Joseph A. Brinck, II Director (3)	$	0	$	0	$	0	$	0
Preston H. Correll Director	$	0	$	5,000	$	0	$	5,000
John M. Cortines Director	$	0	$	5,000	$	0	$	5,000
Brian J. Crall Director            Until June 2018	$	0	$	5,000	$	109,000	$	114,000
Thomas F. Darden II Director	$	0	$	10,000	$	0	$	10,000
Howard L. Dayton Director	$	0	$	15,000	$	7,500	$	22,500
Thomas E. Harmon Director	$	0	$	15,000	$	0	$	15,000
Gabriel J. Molnar Director	$	0	$	15,000	$	0	$	15,000
Peter L. Ochs Director	$	0	$	12,500	$	0	$	12,500

(1)  Other Compensation represents payment for consulting services performed relative to management enrichment.

(2)  Market value of stock on earned date was $32.50 per share.

(3) Mr. Brinck waived his rights to the director compensation for the year 2018.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Principal Holders of Securities

The following tabulation sets forth the name and address of the entity known to be the beneficial owners of more than 5% of UTG’s Common Stock and shows:  (i) the total number of shares of Common Stock beneficially owned by such person as of February 28, 2019 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of Common Stock so owned as of the same date.

Title		Amount	Percent
of	Name and Address	and Nature of	Of
Class	of Beneficial Owner (2)	Beneficial Ownership	Class (1)

Common	Jesse T. Correll	127,577	(3)(6)	3.9%
Stock, no	First Southern Bancorp, Inc.	1,406,785	(3)(4)(6)	42.6%
par value	First Southern Funding, LLC	346,032	(3)(4)(6)(7)	10.5%
	First Southern Holdings, LLC	1,201,876	(3)(4)(6)	36.4%
	Estate of Ward F. Correll	271,059	(5)(6)	8.2%
	WCorrell, Limited Partnership	72,750	(3)(6)	2.2%
	Cumberland Lake Shell, Inc.	257,501	(5)(6)	7.8%

(1) The percentage of shares owned is based on 3,299,925 shares of Common Stock outstanding as of February 28, 2019.

(2) The address for each of Jesse Correll, First Southern Bancorp, Inc. (“FSBI”), First Southern Funding, LLC (“FSF”), First Southern Holdings, LLC (“FSH”), and WCorrell, Limited Partnership (“WCorrell LP”), is 205 North Depot Street, Stanford, Kentucky 40484.  The address for the Estate of Ward F. Correll is P O Box 328, 99 Lancaster Street, Stanford, KY 40484 and Cumberland Lake Shell, Inc. (“CLS”) is P.O. Box 430, 150 Railroad Drive, Somerset, Kentucky 42502.  The majority of the shares of CLS are owned by the Estate of Ward F. Correll.

(3) The share ownership of Jesse Correll listed includes 54,827 shares of Common Stock owned by him individually.  The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Jesse Correll serves as managing general partner and as such, has sole voting and dispositive power over the shares held by the entity.

In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH (the holder of 1,201,876 shares of Common Stock), Mr. Correll may be deemed to beneficially own the total number of shares of Common Stock owned by FSH, and may be deemed to share with FSH the right to vote and to dispose of such shares. Mr. Correll owns approximately 71% of the outstanding membership interests of FSF; he owns directly approximately 45%, companies he controls own approximately 15%, and he has the power to vote but does not own an additional 2% of the outstanding voting stock of FSBI.  FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH.

(4) The share ownership of FSBI consists of 204,909 shares of Common Stock held by FSBI directly and 1,201,876 shares of Common Stock held by FSH of which FSBI is a 99% member and FSF is a 1% member.  As a result, FSBI may be deemed to share the voting and dispositive power over the shares held by FSH.

(5) Includes 257,501 shares of Common Stock held by CLS, of which outstanding voting shares are owned by the Estate of Ward F. Correll.

(6) According to the Schedule 13D, as amended, filed November 21, 2018, Jesse Correll, FSBI, FSF and FSH, have agreed in principle to act together for the purpose of acquiring or holding equity securities of UTG.  In addition, because of their relationship with these Reporting Persons, the Estate of Ward F. Correll, Kirk Correll, Cumberland Lake Shell, Inc. and WCorrell Limited Partnership may also be deemed to be members of this group.  Therefore, each may be deemed to have acquired beneficial ownership of the equity securities of UTG beneficially owned by each of the Reporting Persons.

(7) Includes 4,035 shares in street name.

Security Ownership of Management of UTG

The following tabulation shows with respect to each of the Directors of UTG, UTG’s Chief Executive Officer and President, and each of UTG’s two most highly compensated executive officers whose salary plus bonus exceeded $100,000 for fiscal 2018, and with respect to all executive officers and Directors of UTG as a group:  (i) the total number of shares of Common Stock beneficially owned by such person as of February 28, 2019 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of stock so owned as of the same date.

Title of	Name and Address of	Amount and Nature of	Percent of
Class	Beneficial Owner	Beneficial Ownership	Class (1)

UTG’s	Randall L. Attkisson	Louisville, KY	3,953		*
Common	Joseph A. Brinck, II	Cincinnati, OH	15,021		*
Stock, no	Jesse T. Correll	Stanford, KY	2,151,453	(2)	65.2%
Par value	Preston H. Correll	Stanford, KY	153		*
	John M. Cortines	Oviedo, FL	153		*
	Thomas F. Darden, II	Raleigh, NC	60,772		1.8%
	Howard L. Dayton, Jr.	Sanford, FL	8,471	(3)	*
	Douglas P. Ditto	Danville, KY	27,885	(4)	*
	Thomas E. Harmon	Springfield, IL	1,410		*
	Theodore C. Miller	Stanford, KY	12,292		*
	Gabriel J. Molnar	Louisville, KY	741		*
	Peter L. Ochs	Valley Center, KS	5,545	(5)	*
	James P. Rousey	Hustonville, KY	10,515	(6)	*
	All Directors and executive officers as a group (eleven in number)		2,300,380		69.6%

* Less than 1%

(1) The percentage of outstanding shares for UTG is based on 3,299,925 shares of Common Stock outstanding as of February 28, 2019.

(2) The share ownership of Mr. Jesse Correll includes 54,827 shares of Common Stock owned by him individually, 204,909 shares of Common Stock held by FSBI and 346,032 shares of Common Stock owned by FSF.  The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Mr. Correll serves as managing general partner.   Mr. Correll has sole voting and dispositive power over the shares held by these entities.   In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH (the holder of 1,201,876 shares of Common Stock), Mr. Correll may be deemed to beneficially own the total number of shares of Common Stock owned by FSH, and may be deemed to share with FSH the right to vote and to dispose of such shares. Mr. Correll owns approximately 71% of the outstanding membership interests of FSF; he owns directly approximately 45%, companies he controls own approximately 15%, and he has the power to vote but does not own an additional 2% of the outstanding voting stock of FSBI.  FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH.

On July 14, 2016, Jesse T Correll was qualified as co-executor of the Estate of Ward F Correll who died April 21, 2016.  The share ownership of Mr. Correll also included 13,558 shares of Common Stock held by the Estate of Ward F. Correll and 257,501 shares of Common Stock held by Cumberland Lake Shell, Inc.

(3) Includes 473 shares held in street name.

(4) Includes 1,600 shares held in a retirement account and 800 shares in street name.

(5) Includes 2,000 shares held in a trust for benefit of named individual.

(6) Includes 2,077 shares held in street name.

Except as indicated above, the foregoing persons hold sole voting and investment power.

Item 13. Certain Relationships and Related Transactions and Director Independence

The Board of Directors determined that nine of the eleven current Directors are “independent” as defined by Rule 5605 of the NASDAQ listing standards.  The independent Directors are Randall L. Attkisson, Joseph A. Brinck, II, Preston H. Correll, John M. Cortines, Thomas F. Darden, II, Howard L. Dayton, Jr., Thomas E. Harmon, Gabriel J. Molnar, and Peter L. Ochs.

A director shall not be disqualified from-dealing with or contracting with the corporation as vendor, purchaser; employee, agent or otherwise; nor, in the absence of fraud, shall any transaction or contract or act of this corporation be void or in any way affected or invalidated by the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder, director or officer is in any way interested in such transaction or contract or act, provided the fact that such director or such firm or such corporation so interested shall be disclosed or shall be known to the Board of Directors or such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction or act shall be taken: nor shall any such director be accountable .or responsible to the company for or in respect to such transaction or contract or act of. this corporation or for any gains or profits realized by him by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer is interested in such action or contract; and any such director may be counted in determining the existence of a quorum of any meeting of the Board of Directors of thecompany which shall authorize or take action in respect to any such contract or transaction or act and may vote thereat to authorize, ratify, or approve any such contract or transaction or act, with like force and effect as if he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer were not interested in such transaction or contract or act.

On February 20, 2003, UG purchased $4 million of a trust preferred security offering issued by First Southern Bancorp, Inc. (“FSBI”).  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%. The Company received dividends of $283,151 and $259,138 during 2018 and 2017, respectively. On March 30, 2009, UG purchased $1 million of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement.

UTG has a 30.10% ownership interest in an aircraft that is jointly owned with First Southern National Bank and Bandyco, LLC. Bandyco, LLC is affiliated with the Estate of Ward F. Correll. Mr. Correll is the father of Jesse Correll and a former director of the Company. The aircraft is used for business related travel by various officers and employees of the Company. For years 2018 and 2017, UTG paid $391,851 and $328,933 for costs associated with the aircraft, respectively.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary. Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula. During 2018 and 2017, UG paid $7,093,227 and $7,213,590, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management’s opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $8,393 and $11,108 in servicing fees and $0 in origination fees to FSNB during 2018 and 2017.

Effective January 1, 2017, UTG entered into a shared services contract with FSNB. Pursuant to the terms of the agreement, UTG and FSNB will utilize the services of the other’s staff in certain instances for the betterment of both entities. Personnel within departments, such as accounting, human resources, and information technology, are shared between the entities. Costs of these resources are then reimbursed between the companies.  The shared services arrangement provides benefits to both parties such as access to a greater pool of knowledgeable staff, efficiencies from elimination of redundancies and more streamlined operations.

The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company and received reimbursements from FSNB. The Company paid $571,648 and $186,251 in 2018 and 2017, respectively to FSNB in net reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $307,645 and $346,486 in 2018 and 2017, respectively, which included salaries and other benefits.

The Company rents approximately 8,000 square feet of office space, located in Stanford, Kentucky, from FSNB and pays $2,000 per month in rent. The Company paid rent of $24,000 to FSNB during 2018 and 2017.

As previously disclosed in the Notes Receivable section of Note 2 - Investments, several of the Company’s notes have participation agreements in place with third parties.  Certain participation agreements are with FSF, a related party.  The participation agreements are sold without recourse and assigned to the participant based on their pro-rata share of the principal, interest and collateral as specified in the participation agreements.The undivided participations in the notes receivable range from 20% - 50%.  The total amount of loans participated to FSF was $250,000as of December 31, 2018and 2017.

During 2016, UG and FSF established a partnership agreement and formed a limited liability company to purchase real estate. FSF contributed $140,000 to the partnership, which gave them a 10% ownership in the LLC. The property held by this LLC was sold in January of 2019 and the funds from the sale were subsequently distributed to the members.  The LLC is expected to be dissolved during 2019.

Item 14. Principal Accounting Fees and Services

The Audit Committee is required to be directly responsible for the appointment, compensation and retention of the Company’s independent registered public accounting firm.  The Audit Committee appointed Brown Smith Wallace, LLP (“BSW”) as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2018 and 2017.

Amounts paid to, or billed by, the Company’s principal accountant, during the two most recent fiscal years by category were as follows:

Audit Fees - Audit fees paid for these audit services in the fiscal years ended December 31, 2018 and 2017 totaled $106,800 and $106,800 respectively. Fees billed for the quarterly reviews of the Company’s financial statements totaled $19,950 and $19,950 for the years 2018 and 2017, respectively.

Audit Related Fees - No audit related fees were incurred by the Company from BSW for the years ended December 31, 2018 and 2017.

Tax Fees – For the years ended December 31, 2018 and 2017, the Company paid $15,000 and $19,131, respectively, to BSW relating to certain tax advice and electronic filing of certain federal and state income tax returns of the Company.

All Other Fees – During 2018 and 2017, the Company paid no other fees to BSW.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as a part of the report:

(1)	Financial Statements:
	Included in Part II, Item 8 of this Report.
(2)	Financial Statement Schedules
	The financial statement schedules have been omitted as they are deemed inapplicable or not required by Regulation S-X.

(a)(3) & (b) Exhibits The following are exhibits to this report, and if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included:

Exhibit Number	Description
3.1	Certificate of Incorporation of the Registrant and all amendments thereto [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 3.1].
3.2	By-Laws for the Registrant and all amendments thereto [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 3.2].
4.1	UTG’s Agreement pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K with respect to long-term debt instruments [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 4.1].
10.1	Amendment to Reinsurance Agreement between Universal Guaranty Life Insurance Company and Optimum Re Insurance Company originally with Business Men’s Assurance Company of America. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.2].
10.2	Reinsurance Agreement between Universal Guaranty Life Insurance Company and Swiss RE originally with Life Reassurance Corporation of America. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.3].
10.3	Assumption Reinsurance Agreement between Universal Guaranty Life Insurance Company and Park Avenue Life Insurance Company formerly known as First International Life Insurance Company. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.4].
10.5	Commercial pledge agreement dated November 20, 2012, between UTG, Inc. and Illinois National Bank. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2012 originally filed as Exhibit 10.20].
10.6	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc. and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.11].
10.7	Agreement regarding Mortgage Loans by and between First Southern National Bank and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.12].
10.8	Universal Guaranty Participation Agreement-Purchased Loan [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.13].
10.9	Universal Guaranty Participation Agreement-Originated Loan [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.14].
10.10	Management Data, Inc. Software License Agreement [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2014 originally filed as Exhibit 10.16].
10.12	Aircraft Joint Ownership Agreement by and among Bandyco, LLC, First Southern National Bank and UTG, Inc. dated August 11, 2014 [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2014 originally filed as Exhibit 10.18].
10.13*	Promissory Note dated November 20, 2018, between UTG, Inc. and Illinois National Bank.
10.14	Shared Services Agreement between UTG, Inc. and FSNB effective January 1, 2017.
10.15*	Amendment #1 to the Shared Services Agreement between UTG, Inc. and FSNB effective January 1, 2018
10.16*	Amendment #2 to the Shared Services Agreement between UTG, Inc. and FSNB effective September 1, 2018.
10.17*	Amendment #3 to the Shared Services Agreement between UTG, Inc. and FSNB effective January 1, 2019.
14.1	Code of Ethics and Business Conduct [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 14.1].
14.2	Code of Ethical Conduct for Senior Financial Officers [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 14.2].
*21.1	List of Subsidiaries of the Registrant.
*31.1	Certificate 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	Certificate 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.
*99.1	Audit Committee Charter.
99.2	Whistleblower Policy [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 99.2].
99.3	Compensation Committee Charter. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 99.3].
99.4	Investment Committee Charter. [Incorporated by reference to the Registrant’s form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 99.4].
*101	Interactive Data File

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(D) of the Securities Exchange Act of 1934, UTG, Inc. has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

				UTG, Inc.
By:				/s/ Jesse T. Correll
				Jesse T. Correll
		Chairman and Chief Executive Officer and Director
By:				/s/ Theodore C. Miller
				Theodore C. Miller
	Senior Vice President, Chief Financial Officer and Secretary
			(principal financial and accounting officer)

Date: March 26, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:  /s/ Randall L. Attkisson	By: /s/  Howard L. Dayton
Randall L. Attkisson Director	Howard L. Dayton Director
By:	By:  /s/   Thomas E. Harmon
Joseph A. Brinck Director	Thomas E. Harmon Director
By:  /s/ Jesse T. Correll	By:  /s/  Gabriel J. Molnar
Jesse T. Correll Chairman of the Board, Chief Executive Officer and Director	Gabriel J. Molnar Director
By:  /s/  Preston H. Correll	By:  /s/  Peter L. Ochs
Preston H. Correll Director	Peter L. Ochs Director
By:  /s/  John M. Cortines	By:  /s/ James P. Rousey
John M. Cortines Director	James P. Rousey President and Director
By:  /s/  Thomas F. Darden II	By:  /s/ Theodore C. Miller
Thomas F. Darden II Director	Theodore C. Miller Corporate Secretary and Chief Financial Officer

EX-10.19

Exhibit 10.13

PROMISSORY NOTE

Principal $8,000,000.00		Loan Date 11-20-2018	Maturity 11-20-2019	Loan No. 40000	Call / Coll C / 3	Account 72957158	Officer TWG	Initials
	References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.

Borrower:	UTG, INC.		Lender:	ILLINOIS NATIONAL BANK
	5250 SOUTH SIXTH STREET			MAIN BRANCH
	SPRINGFIELD, IL 62703			322 E. CAPITOL
				SPRINGFIELD, IL 62701
Principal Amount:  $8,000,000.00		Interest Rate:  5.125%		Date of Note:  November 20, 2018

PROMISE TO PAY.  UTG, INC. ("Borrower") promises to pay to ILLINOIS NATIONAL BANK ("Lender"), or order, in lawful money of the United States of America, the principal amount of Eight Million & 00/100 Dollars ($8,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 5.125%.  Interest shall be calculated from the date of each advance until repayment of each advance.  The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on November 20, 2019.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning December 20, 2018, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/365 simple interest basis; that is, by applying the ratio of the interest rate over the number of days in a year (366 during leap years), multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.

PREPAYMENT; MINIMUM INTEREST CHARGE.  In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $50.00.  Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  Illinois National Bank, 322 E. Capitol Springfield, IL  62701.

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $25.00, whichever is greater.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 4.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default:  (1)  cures the default within ten (10) days; or  (2)  if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Illinois.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of SANGAMON County, State of Illinois.

CONFESSION OF JUDGMENT.  Borrower hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against Borrower for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of Lender setting forth the amount then due, attorneys' fees plus costs of suit, and to release all errors, and waive all rights of appeal.  If a copy of this Note, verified by an affidavit, shall have been filed in the proceeding, it will not be necessary to file the original as a warrant of attorney.  Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void; but the power will continue undiminished and may be exercised from time to time as Lender may elect until all amounts owing on this Note have been paid in full.  Borrower hereby waives and releases any and all claims or causes of action which Borrower might have against any attorney acting under the terms of authority which Borrower has granted herein arising out of or connected with the confession of judgment hereunder.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

COLLATERAL.  Borrower acknowledges this Note is secured by a Commercial Pledge Agreement dated November 20, 2013.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person.  Lender may, but need not, require that all oral requests be confirmed in writing.  Borrower agrees to be liable for all sums either:  (A)  advanced in accordance with the instructions of an authorized person or  (B)  credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.

SECURITY INTEREST IN DEPOSIT ACCOUNTS. Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's deposit accounts with Lender (whether checking, savings, or some other account), including without limitation all deposit accounts held jointly with someone else and all deposit accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such deposit accounts.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.  If your payment is returned unpaid, you authorize Illinois National Bank to make a one-time electronic fund transfer from your account to collect a fee of $25.00. .

LOAN AGREEMENT. This Note is issued in connection with a Business Loan Agreement dated November 2018 between Borrower and Lender and the terms and conditions of said Business Loan Agreement are expressly incorporated herein and made a part of this Note by reference.

UNCONDITIONAL CANCELABLE COMMITMENT. The line of credit feature provided for in this Note and the Related Documents, including the Business Loan Agreement (Asset Based), may be unconditionally cancelable, without cause, at any time by the Lender, to the extent permitted by applicable law.

PRIOR NOTE.  This Promissory Note is a renewal of, extension of, refinancing of, modification of and substitution for Promissory Note from Borrower to Lender dated November 20, 2017 in the original principal amount of $8,000,000.00, which was a renewal of, extension of, refinancing of, modification of and substitution for the original Promissory Note dated November 20, 2012 in the original principal amount of $8,000,000.00.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE,BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER: UTG, INC.
By:	/s/ James P. Rousey	By:	/s/ Theodore C. Miller
	JAMES P. ROUSEY, President of UTG, INC.		THEODORE C. MILLER, CFO/Secretary of UTG, INC.

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES
Subsidiary Name	State of Incorporation
BCG Land, LLC		Kentucky
Bluegrass Land & Minerals, LLC		Kentucky
Collier Beach, LLC		South Carolina
Consolidated Timberland, LLC		Georgia
Cumberland Woodlands, LLC		Kentucky
Imperial Plan, Inc.		Texas
Midland Superblock Partners, LLC		Texas
Norris Lake Holdings, LLC		Tennessee
Red River Gorge Properties, LLC		Kentucky
Stanford Wilderness Road, LLC		Kentucky
UG Acquisitions, LLC		Delaware
UGL Titusville Marina, LLC		Florida
UTAG, Inc.		Illinois
UTG Avalon, LLC		Florida
Universal Guaranty Life Insurance Company		Ohio

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 annual report on Form 10-K of the registrant, UTG, Inc.;
	2.	Based on my knowledge, this annual 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 changes 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:   March 26, 2019				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 annual report on Form 10-K of the registrant, UTG, Inc.;
2.	Based on my knowledge, this annual 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 changes 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:   March 26, 2019	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 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the "Company") for the period ended December 31, 2018, 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:	March 26, 2019	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 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the "Company") for the period ended December 31, 2018 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:	March 26, 2019	By:	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President, Corporate
			Secretary and Chief Financial Officer

EX-99.1

Exhibit 99.1

Charter of the Audit Committee of the Board of Directors

I. Purpose

The Audit Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) to assist the Board in fulfilling its responsibility to oversee the quality and integrity of the Company’s financial reporting and the audits of the financial statements of the Company. The Audit Committee’s primary purpose is to assist the Board in oversight of:

§ The integrity of the Company’s financial statements and internal controls;

§ The Company’s compliance with legal and regulatory requirements;

§ The qualifications and independence of the Company’s independent registered public accounting firm; and

§ The performance of the Company’s internal audit function and independent registered public accounting firm.

II. Composition

The Audit Committee shall be comprised of one or more members of the Board.  Committee members will be appointed by the Board to serve until their successors are elected. Unless a chairperson is elected by the full Board, the members of the Committee may designate a chairperson by majority vote.  All members of the Committee shall meet the independence criteria and have the qualifications set forth in Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”).

Accordingly, all of the members of the Committee shall be directors:

§ Who do not accept any direct or indirect consulting, advisory or compensatory fee from the Company other than for board service or in respect of retirement or deferred compensation for prior service, who are not an “affiliated person” within the meaning of Rule 10A-3 under the Exchange Act; and

§ Who have a basic understanding of finance and accounting and are able to read and understand fundamental financial statements and the regulatory requirements of the Company’s industry.

It is desirable, but not mandatory that at least one member of the Committee shall have accounting or related financial management expertise, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.  The above is not intended to require a Committee member to meet the SEC definition of a “financial expert”.

III. Meetings

The Committee shall meet as often as deemed necessary or appropriate in its judgment, generally at least twice annually, either in person or by phone.  Any member of the Committee may call meetings of the Committee.

At least annually, the Committee should meet privately in executive session with management, the independent auditors, and as a Committee to discuss any matters that the Committee or each of the groups believes should be discussed.  The Committee may ask members of management or others to attend meetings and provide pertinent information as necessary.

In addition, the Committee, or at least its Chair, should communicate with management and the independent auditors annually, at a minimum, to review the Company’s financial statements and significant audit findings.

IV. Responsibilities and Duties

Documents/Reports/Accounting Information Review

§ Review and reassess the adequacy of this Charter at least annually and submit the charter to the Board of Directors for approval.

§ Review the Company’s annual audited financial statements prior to filing or distribution.  Review should include discussion with management and independent auditors of significant issues regarding accounting principles, practices, and judgments.

§ Recommend to the board whether the financial statements should be included in the annual report on Form 10-K.

Independent Registered Public Accounting Firm and Audit Process

§ Appoint, compensate, retain, and oversee the work performed by the independent auditor retained for the purpose of preparing or issuing an audit report or related work.  Review the performance and independence of the independent auditor and remove the independent auditor if circumstances warrant. The independent auditor will report directly to the Audit Committee and the Audit Committee will oversee the resolution of disagreements between management and the independent auditor if they arise.

§ On an annual basis, the Committee should review and discuss with the independent auditors all significant relationships they have with the Company that could impair the auditors’ independence.

§ Review and approve both audit and nonaudit services to be provided by the independent auditor.  The authority to grant approvals may be delegated to one or more designated members of the Audit Committee, whose decisions will be presented to the full Audit Committee at its next meeting.

§ Discuss with the independent auditor the matters required to be discussed under the standards of the PCAOB.

§ Review with the independent auditor any problems or difficulties and management’s response.

§ Hold timely discussions with the independent auditor regarding the following:

o Critical accounting policies and practices

o Other material written communications between the independent auditor and management, including, but not limited to, the management letter and schedule of unadjusted differences.

§ At least annually, obtain and review a report by the independent auditor describing:

o The independent auditor’s internal quality-control procedures

o Any material issues raised by the most recent internal quality-control review or peer review, or by any inquiry or investigation by governmental or professional authorities within the preceding five years with respect to independent audits carried out by the independent auditor, and any steps taken to deal with such issues

o All relationships between the independent auditor and the Company, addressing the matters set forth in PCAOB Rule 3526.

Financial Reporting Processes, Accounting Policies, and Internal Control Structure

§ Periodically review the adequacy and effectiveness of the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting, including any significant deficiencies and significant changes in internal controls.

§ Understand the scope of the internal auditor’s review of internal control over financial reporting and obtain report on significant findings and recommendations, together with management responses.

§ Receive and review any disclosure from the Company’s CEO and CFO made in connection with the certification of the Company’s quarterly and annual reports filed with the SEC of: a) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control.

§ Review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles; major issues as to the adequacy of the Company’s internal controls; and any special audit steps adopted in light of material control deficiencies.

§ Annually review a summary of director and officers’ related party transactions and potential conflicts of interest.

§ Oversee the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, including the confidential, anonymous submission by Company employees regarding questionable accounting or auditing matters.

Ethical Compliance, Legal Compliance, and Risk Management

§ Review, with the Company’s counsel or other appropriate individuals, legal compliance and legal matters that could have a significant impact on the Company’s financial statements.

§ Discuss policies with respect to risk assessment and risk management, including appropriate guidelines and policies to govern the process, as well as the Company’s major financial risk exposures and the steps management has undertaken to control them.

Reporting and Other Responsibilities

§ Review, with management, the Company’s finance function, including its annual Plan, organization, and quality of personnel.

§ Perform other activities consistent with this Charter, the Company’s bylaws, and governing laws that the Board or Audit Committee determines are necessary or appropriate.

V. Procedures

The Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company.  The Committee shall have the authority and sufficient funding to retain outside legal counsel, accountants or other experts as it determines necessary and appropriate to assist the Committee in carrying out its functions, without obtaining the approval of the Board or management.

VI. Limitation of Audit Committee’s Role

While the Committee has the oversight responsibility set forth in this Charter, it does not have the duty to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibility of management and the independent registered public accounting firm. In addition, the Committee recognizes that the Company’s management, internal audit staff and the independent registered public accounting firm, devote more time to reviewing or analyzing the Company’s business and its operations and as a result, have more knowledge and detailed information concerning the Company than members of the Committee. Consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the quality or adequacy of the independent registered public accounting firm.

EX-10.15

Amendment #1

Dated and Effective: January 1, 2018

To the

SHARED SERVICES AGREEMENT

By and between

FIRST SOUTHERN NATIONAL BANK

And

UTG, INC.

Dated

 January 1, 2017

      Purpose: To amend and replace Item 1-Services of above said agreement in its entirety.

1. Services. During the term of this Agreement, the parties hereby agree to share personnel and the employee costs of certain groups of employees of both entities.  The initial Shared Services of the two entities shall be as follows:

	UTG percentage	FSNB percentage
Accounting	50%	50%
Information Technology	50%	50%
Human Resources	*	*
Investments	50%	50%
CLG	**	**
Leadership	**	**

*Human Resources shall be allocated based on the percentage of the number of individuals on the payroll system for each entity to the total of both entities.

**See attached allocations per Exhibit A.

The Shared Services of each entity shall include the base pay, bonuses paid, payroll related taxes and costs of employee benefits provided for each individual covered.

Allocated costs shall first be reduced for reimbursements, if any, received from other entities or third parties.

Additional employees or groups of employees may be added as shared services upon mutual agreement of both parties and attached hereto as an addendum to this Agreement.

Corporate performance based bonuses or awards are specifically excluded from this formula and sharing arrangement.  Such bonuses or awards shall be borne entirely by the individual entity and determined exclusively by the management of each entity.  Individuals covered under this agreement may receive such corporate performance based bonuses from either or both entities.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the date first above written.

UTG, Inc.	First Southern National Bank
By: /s/ James P. Rousey	By: /s/ Tommy Roberts
James P. Rousey	Tommy Roberts
President	CEO
Attest:	Attest:
/s/ Theodore C. Miller	/s/ Theodore C. Miller
Theodore C. Miller	Theodore C. Miller
Secretary	Secretary

Shared Services Agreement FSNB/UTGExhibit A

CLG

Name	FSNB %	UTG %
Joe Hafley	80%	20%
Shay Pendygraft	20%	80%
Leah Baker	20%	80%

Leadership

Name	FSNB %	UTG %
Jess Correll	25%	75%
Doug Ditto	25%	75%
Cynthia Woodcock	25%	75%
Mason McFarland	50%	50%
Jim Rousey	50%	50%
Candice Smith	50%	50%
Suzanne Short	50%	50%
Sara Downey	50%	50%
Kayla Grubbs	50%	50%

EX-10.16

Amendment #2

Dated and Effective: September 1, 2018

To the

SHARED SERVICES AGREEMENT

By and between

FIRST SOUTHERN NATIONAL BANK

And

UTG, INC.

Dated

 January 1, 2017

      Purpose: To amend and replace Item 1-Services of above said agreement in its entirety.

1. Services. During the term of this Agreement, the parties hereby agree to share personnel and the employee costs of certain groups of employees of both entities.  The initial Shared Services of the two entities shall be as follows:

	UTG percentage	FSNB percentage
Accounting	50%	50%
Information Technology	50%	50%
Human Resources	*	*
Investments	50%	50%
CLG	**	**
Leadership	**	**
Marketing	75%	25%

*Human Resources shall be allocated based on the percentage of the number of individuals on the payroll system for each entity to the total of both entities.

**See attached allocations per Exhibit A.

The Shared Services of each entity shall include the base pay, bonuses paid, payroll related taxes and costs of employee benefits provided for each individual covered.

Allocated costs shall first be reduced for reimbursements, if any, received from other entities or third parties.

Additional employees or groups of employees may be added as shared services upon mutual agreement of both parties and attached hereto as an addendum to this Agreement.

Corporate performance based bonuses or awards are specifically excluded from this formula and sharing arrangement.  Such bonuses or awards shall be borne entirely by the individual entity and determined exclusively by the management of each entity.  Individuals covered under this agreement may receive such corporate performance based bonuses from either or both entities.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the date first above written.

UTG, Inc.	First Southern National Bank
By: /s/ James P. Rousey	By: /s/ Tommy Roberts
James P. Rousey	Tommy Roberts
President	CEO
Attest:	Attest:
/s/ Theodore C. Miller	/s/ Theodore C. Miller
Theodore C. Miller	Theodore C. Miller
Secretary	Secretary

Shared Services Agreement FSNB/UTGExhibit A

CLG

Name	FSNB %	UTG %
Joe Hafley	80%	20%
Shay Pendygraft	20%	80%
Leah Baker	20%	80%

Leadership

Name	FSNB %	UTG %
Jess Correll	25%	75%
Doug Ditto	25%	75%
Cynthia Woodcock	25%	75%
Mason McFarland	50%	50%
Jim Rousey	50%	50%
Candice Smith	50%	50%
Suzanne Short	50%	50%
Sara Downey	50%	50%
Kayla Grubbs	50%	50%

EX-10.17

Amendment #3

Dated and Effective: January 1, 2019

To the

SHARED SERVICES AGREEMENT

By and between

FIRST SOUTHERN NATIONAL BANK

And

UTG, INC.

Dated

 January 1, 2017

      Purpose: To amend and replace Item 1-Services of above said agreement in its entirety.

1. Services. During the term of this Agreement, the parties hereby agree to share personnel and the employee costs of certain groups of employees of both entities.  The initial Shared Services of the two entities shall be as follows:

	UTG percentage	FSNB percentage
Accounting	50%	50%
Information Technology	50%	50%
Human Resources	*	*
Investments	50%	50%
CLG	**	**
Leadership	**	**
Marketing	75%	25%
Training	75%	25%

*Human Resources shall be allocated based on the percentage of the number of individuals on the payroll system for each entity to the total of both entities.

**See attached allocations per Exhibit A.

The Shared Services of each entity shall include the base pay, bonuses paid, payroll related taxes and costs of employee benefits provided for each individual covered.

Allocated costs shall first be reduced for reimbursements, if any, received from other entities or third parties.

Additional employees or groups of employees may be added as shared services upon mutual agreement of both parties and attached hereto as an addendum to this Agreement.

Corporate performance based bonuses or awards are specifically excluded from this formula and sharing arrangement.  Such bonuses or awards shall be borne entirely by the individual entity and determined exclusively by the management of each entity.  Individuals covered under this agreement may receive such corporate performance based bonuses from either or both entities.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers thereunto duly authorized as of the date first above written.

UTG, Inc.	First Southern National Bank
By: /s/ James P. Rousey	By: /s/ Tommy Roberts
James P. Rousey	Tommy Roberts
President	CEO
Attest:	Attest:
/s/ Theodore C. Miller	/s/ Theodore C. Miller
Theodore C. Miller	Theodore C. Miller
Secretary	Secretary

Shared Services Agreement FSNB/UTGExhibit A

CLG

Name	FSNB %	UTG %
Joe Hafley	80%	20%
Shay Pendygraft	20%	80%
Leah Baker	20%	80%
Mike Taylor	80%	20%

Leadership

Name	FSNB %	UTG %
Jess Correll	25%	75%
Doug Ditto	25%	75%
Cynthia Woodcock	25%	75%
Mason McFarland	50%	50%
Jim Rousey	50%	50%
Candice Smith	50%	50%
Suzanne Short	50%	50%
Sara Downey	50%	50%
Kayla Grubbs	50%	50%

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Jan. 31, 2019	Jun. 30, 2018
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	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Public Float			$ 27,776,034
Entity Common Stock, Shares Outstanding		3,293,983
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investments available for sale:
Fixed maturities, at fair value (amortized cost $160,895,869 and $159,912,511)	$ 160,960,784	$ 178,555,225
Equity securities, at fair value (cost $0 and $35,712,633)	0	58,848,491	[1]
Equity securities, at fair value (cost $34,885,107 and $0)	67,664,482	0
Equity securities, at cost	12,118,617	0
Mortgage loans on real estate at amortized cost	9,069,111	17,314,477
Investment real estate, net	52,518,577	50,504,550
Notes receivable	23,717,312	19,004,016
Policy loans	9,204,222	9,559,142
Total investments	335,253,105	333,785,901
Cash and cash equivalents	20,150,162	25,434,199
Accrued investment income	2,119,882	2,990,721
Reinsurance receivables:
Future policy benefits	26,117,936	26,488,346
Policy claims and other benefits	4,053,882	3,882,047
Cost of insurance acquired	5,622,227	6,428,292
Property and equipment, net of accumulated depreciation	688,567	1,118,826
Income taxes receivable	279,333	549,851
Other assets	1,263,242	5,766,901
Total assets	395,548,336	406,445,084
Policy liabilities and accruals:
Future policy benefits	253,852,368	259,469,205
Policy claims and benefits payable	4,267,481	3,777,175
Other policyholder funds	372,072	408,790
Dividend and endowment accumulations	14,608,838	14,601,645
Deferred income taxes	9,113,480	10,996,404
Other liabilities	6,257,387	6,760,347
Total liabilities	288,471,626	296,013,566
Shareholders' equity:
Common stock - no par value, stated value $.001 per share. Authorized 7,000,000 shares - 3,295,270 and 3,333,337 shares outstanding	3,296	3,333
Additional paid-in capital	36,567,865	37,536,164
Retained earnings	69,708,901	39,040,456
Accumulated other comprehensive income	62,495	32,952,338
Total UTG shareholders' equity	106,342,557	109,532,291
Noncontrolling interests	734,153	899,227
Total shareholders' equity	107,076,710	110,431,518
Total liabilities and shareholders' equity	$ 395,548,336	$ 406,445,084

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investments available for sale:
Fixed maturities, amortized cost	$ 160,895,869	$ 159,912,511
Equity securities, cost	0	35,712,633	[1]
Equity securities, cost	$ 34,885,107	$ 0
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0	$ 0
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, issued (in shares)	3,295,870	3,333,377
Common stock, outstanding (in shares)	3,295,870	3,333,377

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Premiums and policy fees	$ 10,076,351	$ 10,413,346
Ceded reinsurance premiums and policy fees	(2,862,701)	(2,955,989)
Net investment income	11,202,668	11,700,998
Other income	400,034	458,663
Revenue before net investment gains (losses)	18,816,352	19,617,018
Net investment gains (losses):
Other-than-temporary impairments	(300,000)	(762,161)
Other realized investment gains, net	12,340,077	9,879,286
Change in fair value of equity securities	10,416,758	0
Total net investment gains (losses)	22,456,835	9,117,125
Total revenues	41,273,187	28,734,143
Benefits, claims and settlement expenses:
Life	16,751,922	17,428,286
Ceded reinsurance benefits and claims	(2,610,586)	(1,893,986)
Annuity	1,044,397	975,196
Dividends to policyholders	390,368	370,847
Commissions	(147,922)	(145,722)
Amortization of cost of insurance acquired	806,065	839,105
Operating expenses	8,531,113	7,854,301
Total benefits and other expenses	24,765,357	25,428,027
Income before income taxes	16,507,830	3,306,116
Income tax expense (benefit)	3,907,536	(1,507,016)
Net income	12,600,294	4,813,132
Net income attributable to noncontrolling interests	(209,177)	(2,983)
Net income attributable to common shareholders	$ 12,391,117	$ 4,810,149
Amounts attributable to common shareholders
Basic income per share (in dollars per share)	$ 3.75	$ 1.44
Diluted income per share (in dollars per share)	$ 3.75	$ 1.44
Basic weighted average shares outstanding (in shares)	3,307,448	3,346,774
Diluted weighted average shares outstanding (in shares)	3,307,448	3,346,774

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Consolidated Statements of Comprehensive Income (Loss) [Abstract]
Net income	$ 12,600,294	$ 4,813,132
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during period, pre-tax	(7,744,899)	17,174,126
Tax (expense) benefit on unrealized holding gains (losses) arising during the period	1,626,429	(6,010,944)
Deferred tax adjustment from tax rate change	0	5,842,290
Unrealized holding gains (losses) arising during period, net of tax	(6,118,470)	17,005,472
Less reclassification adjustment for gains included in net income	(10,751,955)	(6,779,732)
Tax expense for gains included in net income	2,257,911	2,372,906
Reclassification adjustment for gains included in net income, net of tax	(8,494,044)	(4,406,826)
Subtotal: Other comprehensive income (loss), net of tax	(14,612,514)	12,598,646
Comprehensive income (loss)	(2,012,220)	17,411,778
Less comprehensive income attributable to noncontrolling interests	(209,177)	(2,983)
Comprehensive income (loss) attributable to UTG, Inc.	$ (2,221,397)	$ 17,408,795

XML

Consolidated Statements of Shareholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2016	$ 3,350	$ 37,878,712	$ 34,230,307	$ 20,353,692	$ 1,835,781	$ 94,301,842
Common stock issued during year	13	261,474	0	0	0	261,487
Treasury shares acquired and retired	(30)	(604,022)	0	0	0	(604,052)
Net income attributable to common shareholders	0	0	4,810,149	0	0	4,810,149
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes	0	0	0	12,598,646	0	12,598,646
Contributions	0	0	0	0	0	0
Distributions	0	0	0	0	(939,537)	(939,537)
Gain attributable to noncontrolling interest	0	0	0	0	2,983	2,983
Balance at Dec. 31, 2017	3,333	37,536,164	39,040,456	32,952,338	899,227	110,431,518
Adoption of Accounting Standards Update No 2016-01 (Note 1) | ASU 2016-01 [Member]	0	0	18,277,328	(18,277,328)	0	0
Balance at Dec. 31, 2017	3,333	37,536,164	57,317,784	14,675,010	899,227	110,431,518
Common stock issued during year	13	360,799	0	0	0	360,812
Treasury shares acquired and retired	(50)	(1,329,098)	0	0	0	(1,329,148)
Net income attributable to common shareholders	0	0	12,391,117	0	0	12,391,117
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes	0	0	0	(14,612,515)	0	(14,612,515)
Contributions	0	0	0	0	0	0
Distributions	0	0	0	0	(374,252)	(374,252)
Gain attributable to noncontrolling interest	0	0	0	0	209,178	209,178
Balance at Dec. 31, 2018	$ 3,296	$ 36,567,865	$ 69,708,901	$ 62,495	$ 734,153	$ 107,076,710

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2018		Dec. 31, 2017
Cash flows from operating activities:
Net income attributable to common shareholders	$ 12,391,117		$ 4,810,149
Adjustments to reconcile net income to net cash used in operating activities:
Amortization (accretion) of investments	(142,519)		94,608
Other-than-temporary impairments	300,000		762,161
Realized investment gains, net	(12,340,077)		(9,879,286)
Change in fair value of equity securities	(10,416,758)	[1]	0
Unrealized trading (gains) losses included in income	0		111,531
Realized trading (gains) included in income	0		(110,470)
Amortization of cost of insurance acquired	806,065		839,105
Depreciation	1,067,297		701,809
Net income attributable to noncontrolling interest	209,177		2,983
Charges for mortality and administration of universal life and annuity products	(6,602,846)		(6,636,270)
Interest credited to account balances	4,221,969		4,346,943
Change in accrued investment income	870,839		(117,871)
Change in reinsurance receivables	198,575		556,891
Change in policy liabilities and accruals	(2,237,947)		(2,794,247)
Change in income taxes receivable (payable)	270,518		673,831
Change in other assets and liabilities, net	5,985,699		(6,560,115)
Net cash provided by (used in) operating activities	(5,418,891)		(13,198,248)
Proceeds from investments sold and matured:
Fixed maturities available for sale	66,408,611		29,744,619
Equity securities	2,169,989		7,479,886
Mortgage loans	8,878,073		1,840,610
Real estate	14,341,204		13,014,387
Notes receivable	6,783,702		2,170,322
Policy loans	1,599,896		1,951,222
Short-term investments	7,549,076		0
Total proceeds from investments sold and matured	107,730,551		56,201,046
Cost of investments acquired:
Fixed maturities available for sale	(56,940,883)		(15,615,699)
Equity securities	(12,687,839)		(3,275,532)
Mortgage loans	(91,954)		(360,531)
Real estate	(15,704,151)		(4,226,106)
Notes receivable	(11,496,998)		(4,297,853)
Policy loans	(1,244,976)		(1,440,230)
Short-term investments	(7,549,076)		0
Total cost of investments acquired	(105,715,877)		(29,215,951)
Purchase of property and equipment	0		0
Net cash provided by (used in) investing activities	2,014,674		26,985,095
Cash flows from financing activities:
Policyholder contract deposits	4,696,980		4,812,703
Policyholder contract withdrawals	(5,234,212)		(4,139,797)
Payments of principal on notes payable/line of credit	0		(2,900,000)
Purchase of treasury stock	(1,329,148)		(604,052)
Issuance of stock	360,812		261,487
Noncontrolling contributions/(distributions) of consolidated subsidiary	(374,252)		(939,537)
Net cash provided by (used in) financing activities	(1,879,820)		(3,509,196)
Net increase (decrease) in cash and cash equivalents	(5,284,037)		10,277,651
Cash and cash equivalents at beginning of year	25,434,199		15,156,548
Cash and cash equivalents at end of year	$ 20,150,162		$ 25,434,199

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

Business – UTG, Inc. is an insurance holding company. The Company’s dominant business is individual life insurance, which includes the servicing of existing insurance in-force and the acquisition of other companies in the life insurance business. UTG and its subsidiaries are collectively referred to as the “Company”.

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 December 31, 2018, Mr. Correll owns or controls directly and indirectly approximately 65.29% of UTG’s outstanding stock.

UTG’s life insurance subsidiary has several wholly-owned and majority-owned subsidiaries. The subsidiaries were formed to hold certain real estate and other investments. The investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), under guidance issued by the Financial Accounting Standards Board (“FASB”).  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments – The Company has only one business segment – life insurance.

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities at Fair Value – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses reported as a component of net income (loss) upon adoption of ASU 2016-01.

Equity Securities at Cost – The Company adopted ASU 2016-01 during the current year and transferred equity securities of $12,118,617, that do not have a readily determinable fair value, from equity securities at fair value to equity securities at cost on the financial statements.  There was no impact to the Consolidated Statements of Operations or net Shareholders' Equity as a result of the change. These investments are reported at their cost basis, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Included in the mortgage loans balance is discounted mortgage loans on real estate. Discounted mortgage loans on real estate are loans that the Company purchased at a deep discount through an auction process led by the Federal Government or other intermediary.  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 adjusted for any principal receipts received.  Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate.  For cash payments received during the work out process, the Company records these payments to interest income on a cash basis.  For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date.  Management reviews the discount loan portfolio regularly for impairment.  If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes Receivable – Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments.  If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance.  Fair values are based on quoted market prices, where available.  Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are estimated using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes approximates fair value.  For more specific information regarding the Company’s measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments.  If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors.  The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  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 amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of  $5,655,593 and $5,225,333 at December 31, 2018 and 2017, respectively. Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of 3 to 30 years.  Depreciation expense was $430,260 and $446,117 for the years ended December 31, 2018 and 2017, respectively.

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2.0% to 6.0% for life insurance and 2.5% to 7.5% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 3.0% to 6.0% as of December 31, 2018 and 2017.

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company.  There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company’s ultimate obligation.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax impact attributable to differences between the financial statement book values and tax bases of assets and liabilities.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017.  More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share – The objective of both basic earnings per share (“EPS”) and diluted EPS is to measure the performance of an entity over the reporting period.  The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period.  Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in-force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement or ASU 2018-13. ASU 2018-13 modifies certain disclosure requirements related to fair value measurements including requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements and a requirement to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts or ASU 2018-12.  ASU 2018-12 significantly changes how insurers account for long-duration insurance contracts. The new guidance will require insurers to review and update, if necessary, the assumptions used to measure insurance liabilities periodically, rather than retain assumptions used at contract inception. The updated guidance also changes the recognition and measurement of deferred acquisition costs (DAC) and created a new category of benefit features called market risk benefits (MRB) that will be measured at fair value. The guidance also significantly expands the disclosure requirements for long-duration contracts.  The ASU is effective for fiscal years, and interim periods within those years, for years beginning after December 15, 2020 and early adoption is permitted.  The guidance on measuring the liabilities for future policy benefits and DAC will be adopted on a modified retrospective basis as of the earliest period presented in the year of adoption. The guidance on MRB will be adopted on a retrospective basis as of the earliest period presented in the year of adoption. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting or ASU 2018-07. The amendment in ASU 2018-07 simplifies the accounting for nonemployee share based payments by aligning the measurement and classification guidance for share based payments to nonemployees with share based payments to employees. Under this guidance, the measurement of equity classified awards will be fixed at the grant date. This guidance is effective in annual periods beginning after December 15, 2018. The Company has evaluated the impact of the ASU, and determined that it does not significantly impact the Company’s financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income or ASU 2018-02.  ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017.  Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 35% percent) and to include the change in income from continuing operations.  ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted.  The Company adopted ASU 2018-02 for the year ended December 31, 2017.

Accounting Standards Update (ASU 2016-13), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company adopted ASU 2016-01 on January 1, 2018 as a cumulative net effect adjustment and reclassified $18,277,328 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive income (loss) to retained earnings on the Company's Condensed Consolidated Balance Sheet. Prior periods have not been restated to conform to current presentation. Effective January 1, 2018, the Company's results of operations include the changes in fair value of these financial instruments. During 2018, the FASB implemented ASU 2018-03, which clarifies ASU 2016-01 regarding the measurement alternative for equity securities without a readily determinable fair value as well as clarification for other presentation items. These amendments are effective for interim periods beginning after June 15, 2018.

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Investments

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Investments

Note 2 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The following tables provide a summary of fixed maturities available for sale by original or amortized cost and estimated fair value:

December 31, 2018	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	$	25,649,410	$	149,006	$	(138,222	)	$	25,660,194
U.S. special revenue and assessments		16,350,486		334,300		(4,406	)		16,680,380
All other corporate bonds		118,895,973		2,569,287		(2,845,050	)		118,620,210
Total	$	160,895,869	$	3,052,593	$	(2,987,678	)	$	160,960,784

December 31, 2017	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	$	2,679,325	$	33,802	$	(73,530	)	$	2,639,597
U.S. special revenue and assessments		9,012,232		620,789		0			9,633,021
All other corporate bonds		148,220,954		18,359,816		(298,163	)		166,282,607
		159,912,511		19,014,407		(371,693	)		178,555,225
Equity securities (1)		35,712,633		23,648,201		(512,343	)		58,848,491
Total	$	195,625,144	$	42,662,608	$	(884,036	)	$	237,403,716

(1) Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2018. Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2018	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,498,249	$	6,537,005
Due after one year through five years		43,015,419		44,106,710
Due after five years through ten years		60,011,083		60,985,500
Due after ten years		51,371,118		49,331,569
Total	$	160,895,869	$	160,960,784

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers.  In addition, the trading market for these securities is usually more limited than for investment grade debt securities.  Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB+ or below.

The Company held below investment grade investments with an estimated market value of $2,618,594 and $21,108,077 as of December 31, 2018 and December 31, 2017, respectively. The investments are all classified as “All other corporate bonds”.

The fair value of investments with sustained gross unrealized losses at December 31, 2018 and 2017 are as follows:

December 31, 2018	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		$	6,429,700		(49,904	)		$	1,592,679		(88,318	)		$	8,022,379		(138,222	)
U.S. special revenue and assessments			4,023,920		(4,406	)			0		0				4,023,920		(4,406	)
All other corporate bonds			49,270,729		(2,033,507	)			15,337,739		(811,543	)			64,608,468		(2,845,050	)
Total fixed maturities		$	59,724,349		(2,087,817	)		$	16,930,418		(899,861	)		$	76,654,767		(2,987,678	)

December 31, 2017	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			$	1,604,987		(73,530	)		$	1,604,987		(73,530	)
All other corporate bonds			9,732,635		(91,757	)			11,164,317		(206,406	)			20,896,952		(298,163	)
Total fixed maturities		$	9,732,635		(91,757	)		$	12,769,304		(279,936	)		$	22,501,939		(371,693	)
Equity securities (1)		$	4,130,260		(270,774	)		$	1,526,868		(241,569	)		$	5,657,128		(512,343	)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12 months	12 months or longer	Total
As of December 31, 2018
Fixed maturities	30	10	40
As of December 31, 2017
Fixed maturities	6	6	12
Equity securities (1)	2	2	4

(1) Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

Substantially all of the unrealized losses on fixed maturities available for sale at December 31, 2018 and 2017 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The unrealized losses on equity investments were primarily attributable to normal market fluctuations.  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  December 31, 2018 and 2017.

Cost Method Investments

The Company held equity investments with an aggregate cost of $12,118,617 at December 31, 2018.  These equity investments were not reported at fair value because it is not practicable to estimate their fair values due to insufficient information being available. Management did not identify any events or changes in circumstances that might have a significant adverse effect on the reported value of those investments.  Based on Management's evaluation of the expected cash flow of the investments, and the Company's ability and intent to hold the investments for a reasonable period of time, the Company does not deem an other-than-temporary impairment necessary at December 31, 2018.

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 Consolidated Statements of Operations.  Trading Securities included exchange-traded equities and exchange-traded options.  Trading securities carried as liabilities were securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, was recognized upon the termination of the short sale.  Earnings from trading securities were classified in cash flows from operating activities. The Company did not hold any trading securities at December 31, 2018 or 2017.

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

	2018			2017
Net unrealized gains (losses)		$	0		$	(111,531	)
Net realized gains (losses)			0			110,470
Net unrealized and realized gains (losses)		$	0		$	(1,061	)

Mortgage Loans on Real Estate

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB’s loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company’s Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

During 2018 and 2017, the Company acquired $91,954 and $360,531 in mortgage loans, respectively, of participation mortgage loans.  FSNB services the majority of the Company’s mortgage loan portfolio. The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

During 2018 and 2017, the maximum and minimum lending rates for mortgage loans were:

	2018		2017
	Maximum rate	Minimum rate	Maximum rate	Minimum rate
Farm loans	5.00 %	5.00 %	5.00 %	5.00 %
Commercial loans	7.50 %	4.00 %	7.50 %	4.00 %
Residential loans	8.00 %	8.00 %	8.00 %	4.00 %

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

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.  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 mortgage loan reserve was $0 at December 31, 2018 and December 31, 2017.

The following table summarizes the mortgage loan holdings of the Company for the periods ended December 31:

	2018		2017
In good standing	$	7,169,272	$	15,310,941
Overdue interest over 90 days		1,899,839		0
Restructured		0		0
In process of foreclosure		0		2,003,536
Total mortgage loans	$	9,069,111	$	17,314,477
Total foreclosed loans during the year	$	0	$	0

Investment Real Estate

Investment Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the Consolidated Statements of Operations. Based upon Management’s evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the Consolidated Statements of Operations.

Notes Receivable

Notes receivable represent collateral loans and promissory notes issued by the Company and are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. The valuation allowance as of December 31, 2018and 2017was $0. Interest accruals are analyzed based on the likelihood of repayment.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Before a new note is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  Once the note is approved, the Company directly funds the note to the borrower. Several of the notes have participation agreements in place, whereas the Company has reduced its investment in the note receivable by participating a portion of the note to a third party.

Similar to the mortgage loans, FSNB services several of the notes receivable. The Company, and the participants in the notes, share in the risk of loss associated with the terms of the note with the borrower, based upon their ownership percentage in the note.  The Company has in place a monitoring system to provide Management with information regarding potential troubled loans. 

Analysis of Investment Operations

The following table reflects the Company’s net investment income for the periods ended December 31:

	2018			2017
Fixed maturities	$	7,273,157		$	8,685,698
Equity securities		1,628,649			1,213,922
Trading securities		0			(1,061	)
Mortgage loans		1,234,115			1,191,865
Real estate		2,771,348			1,990,844
Notes receivable		979,742			1,322,675
Policy loans		646,993			664,116
Cash and cash equivalents		355,276			23,445
Short-term		18,159			1,263
Total consolidated investment income		14,907,439			15,092,767
Investment expenses		(3,704,771	)		(3,391,769	)
Consolidated net investment income	$	11,202,668		$	11,700,998

The following table presents the Company’s net realized investments gains (losses) and the change in net unrealized gains on available-for-sale investments for the periods ended December 31:

	2018			2017
Realized gains on available-for-sale investments:
Sales of fixed maturities	$	11,708,320		$	3,950,014
Sales of equity securities (1)		0			2,902,278
Sales of real estate		1,588,122			3,622,519
Other		0			0
Total realized gains		13,296,442			10,474,811
Realized losses on available-for-sale investments:
Sales of fixed maturities		(956,365	)		(72,560	)
Sales of equity securities (1)		0			0
Sales of real estate		0			(522,965	)
Other-than-temporary impairments		(300,000	)		(762,161	)
Other		0			0
Total realized losses		(1,256,365	)		(1,357,686	)
Net realized investment gains (losses)		12,040,077			9,117,125
Change in fair value of equity securities: (1)
Realized gains (losses) on equity securities sold during the period (1)		0			0
Change in fair value of equity securities held at the end of the period		10,416,758			0
Change in fair value of equity securities (1)		10,416,758			0
Net investment gains (losses)	$	22,456,835		$	9,117,125
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income:
Fixed maturities	$	(7,744,899	)	$	3,470,929
Equity securities (1)		0			13,703,197
Net increase (decrease)	$	(7,744,899	)	$	17,174,126

(1) Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See Note 1.

Other-Than-Temporary Impairments

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.

Management regularly reviews its real estate portfolio in comparison to appraisal valuations and current market conditions for indications of other-than-temporary impairments. If a decline in value is judged by Management to be other-than-temporary, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations.

The other-than-temporary impairments recognized during 2017 and 2018 were taken as a result of Management's assessment and determination of value of the investments. The investments were written down to better reflect their current expected value.

Based on Management’s review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

	2018		2017
Other than temporary impairments:
Real estate	$	300,000	$	690,000
Mortgage loans		0		72,161
Total other than temporary impairments	$	300,000	$	762,161

Investments on Deposit

The Company had investments with a fair value of $8,317,514 and $8,642,633 on deposit with various state insurance departments as of December 31, 2018 and 2017, respectively.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 3 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the 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 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 consist of common and preferred stocks mainly in private equity investments, financial institutions and publicly traded corporations. 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 Company uses industry standard pricing methodologies, including discounted cash flow models that may incorporate various inputs such as payment expectations, risk of the investment, market data, and health of the underlying company. The inputs are based upon Management's assumptions and available market information. When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2018.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	25,660,194	$	134,865,746	$	434,844	$	160,960,784
Equity Securities		27,634,283		10,557,031		29,473,168		67,664,482
Total	$	53,294,477	$	145,422,777	$	29,908,012	$	228,625,266

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2017.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	2,639,597	$	175,437,239	$	478,389	$	178,555,225
Equity Securities, available for sale (1)		20,436,225		7,756,435		30,655,831		58,848,491
Total	$	23,075,822	$	183,193,674	$	31,134,220	$	237,403,716

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 (1)			Total
Balance at December 31, 2017	$	478,389		$	30,655,831		$	31,134,220
Transfers in to Level 3		0			0			0
Transfer out of Level 3		0			(5,118,600	)		(5,118,600	)
Total unrealized gain (losses):
Included in net income (loss)		0			4,633,751			4,633,751
Included in other comprehensive income		0			0			0
Purchases		0			1,505,250			1,505,250
Sales		(43,545	)		(2,203,064	)		(2,246,609	)
Balance at December 31, 2018	$	434,844		$	29,473,168		$	29,908,012

(1) Effective January 1, 2018, the Company Adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

	December 31, 2018		December 31, 2017
Change in fair value of equity securities included in net income (loss) relating to assets held	$	4,633,751	$	0

The Level 3 securities include one fixed maturity and certain equity securities with unobservable inputs. The Company computed fair value of Level 3 equity investments based on a review of current financial information, earnings trends and similar companies in the same industries.

The Company transferred certain cost method investments out of Level 3 during 2018.  Transfers occur when there is a lack of observable market information.

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 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 Consolidated Balance Sheets are shown below. Because the fair value for all 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.

	December 31, 2018				December 31, 2017
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Equity securities	$	12,118,617	$	12,118,617	$	0	$	0
Mortgage loans on real estate		9,069,111		9,069,111		17,314,477		17,314,477
Investment real estate		52,518,577		52,518,577		50,504,550		50,504,550
Notes receivable		23,717,312		23,717,312		19,004,016		19,004,016
Policy loans		9,204,222		9,204,222		9,559,142		9,559,142
Cash and cash equivalents		20,150,162		20,150,162		25,434,199		25,434,199

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.

A portion of the mortgage loans balance consists of discounted mortgage loans. The Company has historically purchased 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.

Notes receivable are carried at their unpaid principal balances, which approximates fair value. The inputs used to measure the fair value of the loans 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 Consolidated Balance Sheets 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.

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Reinsurance

12 Months Ended

Dec. 31, 2018

Reinsurance [Abstract]

Reinsurance

Note 4 - Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life. At December 31, 2018, the Company had gross insurance in-force of $1.1 billion of which approximately $228 million was ceded to reinsurers.  At December 31, 2017, the Company had gross insurance in-force of $1.2 billion of which approximately $242 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers. The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties. The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations. The primary reinsurers of the Company are large, well-capitalized entities.

Most recently, UG utilized reinsurance agreements with Optimum Re Insurance Company (“Optimum”), and Swiss Re Life and Health America Incorporated (“SWISS RE”).  Optimum and SWISS RE currently hold an “A-” (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  Under the terms of the agreements, UG cedes risk amounts above its retention limit of $100,000 with a minimum cession of $25,000. Ceded amounts are shared equally between the two reinsurers on a yearly renewable term (“YRT”) basis, a common industry method.  The treaty is self-administered; meaning the Company records the reinsurance results and reports them to the reinsurers.

Also, Optimum is the reinsurer of 100% of the accidental death benefits (“ADB”) in force of UG.  This coverage is renewable annually at the Company’s option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company (“PALIC”) effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  Under the terms of the agreement, UG sold 100% of the future results of this block of business to PALIC through a coinsurance agreement.  UG continues to administer the business for PALIC and receives a servicing fee through a commission allowance based on the remaining in-force policies each month.  PALIC has the right to assumption reinsure the business, at its option, and transfer the administration.  The Company is not aware of any such plans.  PALIC’s ultimate parent, The Guardian Life Insurance Company of America (“Guardian”), currently holds an "A++" (Superior) rating from A.M. Best.  The PALIC agreement accounts for approximately 63% of UG’s reinsurance reserve credit, as of December 31, 2018and 2017.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  Effective October 1, 2017, the IOV recaptured its coinsurance agreement with UG. The recapture was completed as a step in the IOV's decision to exit its insurance business.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2018 and 2017 were as follows:

	2018				2017
	Premiums Earned				Premiums Earned
Direct		$	10,074,892			$	10,407,434
Assumed			1,459				5,912
Ceded			(2,862,701	)			(2,955,989	)
Net Premiums		$	7,213,650			$	7,457,357

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Cost of Insurance Acquired

12 Months Ended

Dec. 31, 2018

Cost of Insurance Acquired [Abstract]

Cost of Insurance Acquired

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  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 utilized may vary due to differences in the blocks of business.  The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

	2018			2017
Cost of insurance acquired, beginning of year	$	6,428,292		$	7,267,397
Interest accretion		866,339			967,032
Amortization		(1,672,404	)		(1,806,137	)
Net amortization		(806,065	)		(839,105	)
Cost of insurance acquired, end of year	$	5,622,227		$	6,428,292

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2019	769,612	1,545,518	775,906
2020	676,503	1,421,353	744,850
2021	587,120	1,302,090	714,970
2022	501,324	1,189,672	688,348
2023	418,722	1,079,979	661,257

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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Taxes [Abstract]

Income Taxes

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

	2018			2017
Current tax		$	1,922,542		$	751,377
Deferred tax			1,984,994			(2,258,393	)
Income tax expense (benefit)		$	3,907,536		$	(1,507,016	)

The expense for income taxes differed from the amounts computed by applying the applicable United States statutory rate of 21% and 35% as of December 31, 2018 and 2017, respectively, before income taxes as a result of the following differences:

	2018			2017
Tax computed at statutory rate	$	3,466,644		$	1,157,141
Changes in taxes due to:
Non-controlling interest		(43,927	)		(1,044	)
Small company deduction		0			(591,074	)
Dividend received deduction		(170,690	)		(90,698	)
Tax rate change		0			(1,488,646	)
Other		655,509			(492,695	)
Income tax expense (benefit)	$	3,907,536		$	(1,507,016	)

As a result of the TCJA described above in Note 1 - Summary of Significant Accounting Policies, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 in the amount of $7,330,936. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in the law.

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

	2018			2017
Investments	$	6,939,758		$	8,166,343
Cost of insurance acquired		1,180,668			1,349,941
Management/consulting fees		(15,724	)		(27,202	)
Future policy benefits		(1,670,814	)		281,576
Deferred gain on sale of subsidiary		1,387,490			1,387,490
Other assets (liabilities)		65,573			59,095
Reserves adjustment		1,426,205			0
Federal tax DAC		(199,676	)		(220,839	)
Deferred tax liability	$	9,113,480		$	10,996,404

At December 31, 2018 and 2017, the Company had gross deferred tax assets of $2,723,053 and $1,027,203, respectively, and gross deferred tax liabilities of $11,836,533 and $12,023,607, respectively, resulting from temporary differences primarily related to the life insurance subsidiary.  A valuation allowance is to be provided when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded (except as noted below) relating to the Company’s deferred tax assets since, in Management’s judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company also has a deferred tax asset of $43,717 and $118,693 relating to an AMT tax carryforward as of December 31, 2018 and 2017, respectively.  As a result of the changes to the Alternative Minimum Tax and corresponding credits resulting from the TCJA, Management has determined that an allowance against this asset is no longer required. 

The Company’s Federal income tax returns are periodically audited by the Internal Revenue Service (“IRS”). There are currently no examinations in process, nor is Management aware of any pending examination by the IRS.  The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions initially and subsequently need to be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company has evaluated its tax positions, expiring statutes of limitations, changes in tax law and new authoritative rulings and believes that no disclosure relative to a provision of income taxes is necessary, at this time, to cover any uncertain tax positions. Tax years that remain subject to examination are the years ended December 31, 2015, 2016, 2017 and 2018.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense.  No interest or penalties were included in the reported income taxes for the years presented.  The Company is not aware of any potential or proposed changes to any of its tax filings.

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Credit Arrangements

12 Months Ended

Dec. 31, 2018

Credit Arrangements [Abstract]

Credit Arrangements

Note 7 – Credit Arrangements

At December 31, 2018 and 2017, the Company had the following lines of credit available:

Instrument	Issue Date	Maturity Date	Revolving Credit Limit			December 31, 2017			Borrowings		Repayments		December 31, 2018
Lines of Credit:
UTG	11/20/2013	11/20/2019		$	8,000,000		$	0		0		0		$	0
UG	6/2/2015	5/10/2019			10,000,000			0		0		0			0

The UTG line of credit carries interest at a fixed rate of 5.125% 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").

During May of 2018, the Federal Home Loan Bank approved UG’s Cash Management Advance Application (“CMA”). The CMA gives the Company the option of selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. The variable rate CMA is prepayable at any time without a fee, while the fixed CMA is not prepayable prior to maturity.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 8 – 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 condensed consolidated 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 December 31, 2018 related to certain investments:

	Total Funding Commitment		Unfunded Commitment
RLF III, LLC	$	4,000,000	$	398,120
Sovereign’s Capital, LP Fund I		500,000		24,493
Sovereign's Capital, LP Fund II		1,000,000		240,566
Sovereign's Capital, LP Fund III		1,000,000		900,000
Master Mineral Holdings III, LP		4,000,000		1,700,000
Barton Springs Music, LLC		2,000,000		1,158,500

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

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

During 2015, the Company committed to invest in Sovereign’s Capital, LP Fund II (“Sovereign’s II”), which invests in companies in emerging markets. Sovereign’s II makes capital calls to investors as funds are needed.

During 2018, the Company committed to invest in Sovereign’s Capital, LP Fund III (“Sovereign’s III”), which invests in companies in emerging markets. Sovereign’s III makes capital calls to investors as funds are needed.

During 2018, the Company committed to invest in Master Mineral Holdings III, LP (“MMH”), which purchases land for leasing opportunities to those looking to harvest natural resources.  MMH makes capital calls to its investors as funds are needed for continued land purchases.

During 2018, the Company committed to invest in Barton Springs Music, LLC (“Barton”), which invests in music royalties.  Barton makes capital calls to its investors as funds are needed to acquire the royalty rights.

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Shareholders' Equity

12 Months Ended

Dec. 31, 2018

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 9 – Shareholders’ Equity

Stock Repurchase Program – The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $1.5 million of UTG's common stock, for a total repurchase of $16 million. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited.  During 2018, the Company repurchased 50,922 shares through the stock repurchase program for $1,329,148. Through December 31, 2018, UTG has spent $13,863,728 in the acquisition of 1,140,106 shares under this program.

Director Compensation - Effective September 18, 2013, a compensation arrangement was approved whereby each outside Director annually received $8,000 as a retainer and $1,000 per meeting attended.  In September 2018 the compensation arrangement was amended, effective January 1, 2018 whereby each outside Director annually received $5,000 as a retainer and $2,500 per meeting attended.  All other provisions from the September 2013 arrangement remained the same.   The compensation is be paid in the form of UTG, Inc. common stock.  The value is determined annually on the close of business December 20th or the next business day should December 20^th be a weekend or holiday, based on the activity of the year just ending.  Reasonable travel expenses are reimbursed in cash as incurred.  UTG’s Director Compensation policy provides that Directors who are employees of UTG or its affiliates do not receive any compensation for their services as Directors except for reimbursement for reasonable travel expenses for attending each meeting.

In December of 2018, the Company issued 2,994 shares of its common stock as compensation to the Directors. The shares were valued at $32.50per share, the market value at the date of issue. During 2018, the Company recorded $97,305in operating expense related to the stock issuance.  In December of 2017, the Company issued 2,560shares of its common stock as compensation to the Directors. The shares were valued at $25.00per share, the market value at the date of issue. During 2017, the Company recorded $64,000in operating expense related to the stock issuance.

Other Compensation - During 2018, the Company issued 10,421 shares of stock to management and employees as compensation at a cost of $263,507.  During 2017, The Company issued 11,285 shares of stock to management and employees as compensation at a cost of $197,487.  These awards are determined at the discretion of the Board of Directors.

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2018	2017
Basic weighted average shares outstanding	3,307,448	3,346,774
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,307,448	3,346,774

The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2018 and 2017, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

Statutory Restrictions – Restrictions exist on the flow of funds to UTG from its insurance subsidiary.  Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. UG is required to maintain minimum statutory surplus of $2,500,000. At December 31, 2018, substantially all of the consolidated shareholders' equity represents net assets of UTG’s subsidiaries.

UG is domiciled in the state of Ohio. Ohio 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.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid ordinary dividends of $5 million and $2 million to UTG in 2018 and 2017, respectively. No extraordinary dividends were paid during the two year period. UTG used the dividends received during 2018 and 2017 to purchase outstanding shares of UTG stock and for general operations of the Company.

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Statutory Accounting

12 Months Ended

Dec. 31, 2018

Statutory Accounting [Abstract]

Statutory Accounting

Note 10 - Statutory Accounting

The insurance subsidiary prepares its statutory-based financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance.  These principles differ significantly from accounting principles generally accepted in the United States of America.  "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC).  "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.

The following table reflects UG’s statutory basis net income and capital and surplus (shareholders’ equity) as of December 31:

	2018			2017
Net income (loss)		$	6,166,411		$	5,356,483
Capital and surplus			60,024,931			54,717,987

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Related Party Transactions

12 Months Ended

Dec. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Note 11 – Related Party Transactions

The articles of incorporation of UG contain the following language under item 12 relative to related party transactions:

A director shall not be disqualified from-dealing with or contracting with the corporation as vendor, purchaser; employee, agent or otherwise; nor, in the absence of fraud, shall any transaction or contract or act of this corporation be void or in any way affected or invalidated by the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder, director or officer is in any way interested in such transaction or contract or act, provided the fact that such director or such firm or such corporation so interested shall be disclosed or shall be known to the Board of Directors or such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction or act shall be taken: nor shall any such director be accountable .or responsible to the company for or in respect to such transaction or contract or act of. this corporation or for any gains or profits realized by him by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer is interested in such action or contract; and any such director may be counted in determining the existence of a quorum of any meeting of the Board of Directors of thecompany which shall authorize or take action in respect to any such contract or transaction or act and may vote thereat to authorize, ratify, or approve any such contract or transaction or act, with like force and effect as if he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer were not interested in such transaction or contract or act.

On February 20, 2003, UG purchased $4 million of a trust preferred security offering issued by First Southern Bancorp, Inc. (“FSBI”).  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%. The Company received dividends of $283,151 and $259,138 during 2018 and 2017, respectively. On March 30, 2009, UG purchased $1 million of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement. During 2018, the Company received a preferred pay down of $440,000 leaving a cost basis of $3,560,000.

UTG has a 30.10% ownership interest in an aircraft that is jointly owned with First Southern National Bank and Bandyco, LLC. Bandyco, LLC is affiliated with the Estate of Ward F. Correll. Mr. Correll is the father of Jesse Correll and a former director of the Company. The aircraft is used for business related travel by various officers and employees of the Company. For years 2018 and 2017, UTG paid $391,851 and $328,933 for costs associated with the aircraft, respectively.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary. Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula. During 2018 and 2017, UG paid $7,093,227 and $7,213,590, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management’s opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $8,393 and $11,108 in servicing fees and $0 and $0 in origination fees to FSNB during 2018 and 2017, respectively.

Effective January 1, 2017, UTG entered into a shared services contract with FSNB. Pursuant to the terms of the agreement, UTG and FSNB will utilize the services of the other’s staff in certain instances for the betterment of both entities. Personnel within departments, such as accounting, human resources, and information technology, are shared between the entities. Costs of these resources are then reimbursed between the companies.  The shared services arrangement provides benefits to both parties such as access to a greater pool of knowledgeable staff, efficiencies from elimination of redundancies and more streamlined operations.

The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company and received reimbursements from FSNB. The Company paid $571,648 and $186,251 in 2018 and 2017, respectively to FSNB in net reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $307,645 and $346,486 in 2018 and 2017, respectively, which included salaries and other benefits.

The Company rents approximately 8,000 square feet of office space, located in Stanford, Kentucky, from FSNB and pays $2,000 per month in rent. The Company paid rent of $24,000 to FSNB during 2018 and 2017.

As previously disclosed in the Notes Receivable section of Note 2 - Investments, several of the Company’s notes have participation agreements in place with third parties.  Certain participation agreements are with FSF, a related party.  The participation agreements are sold without recourse and assigned to the participant based on their pro-rata share of the principal, interest and collateral as specified in the participation agreements.The undivided participations in the notes receivable range from 20% - 50%.  The total amount of loans participated to FSF was $250,000as of December 31, 2018and 2017.

During 2016, UG and FSF established a partnership agreement and formed a limited liability company to purchase real estate. FSF contributed $140,000 to the partnership, which gave them a 10% ownership in the LLC. The property held by this LLC was sold in January of 2019 and the funds from the sale were subsequently distributed to the members.  The LLC is expected to be dissolved during 2019.

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Other Cash Flow Disclosures

12 Months Ended

Dec. 31, 2018

Other Cash Flow Disclosures [Abstract]

Other Cash Flow Disclosures

Note 12 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses for the periods ended December 31:

	2018			2017
Interest		$	0		$	0
Federal income tax			1,592,000			165,000

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Concentrations

12 Months Ended

Dec. 31, 2018

Concentrations [Abstract]

Concentrations

Note 13 - Concentrations

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 T. 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.

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2018 and 2017, approximately 56% and 55%, respectively, of the Company’s total direct premium was collected from Illinois, Ohio, Texas and West Virginia. Thus, results of operations are heavily dependent upon the strength of these economies.

The Company reinsures that portion of insurance risk which is in excess of its retention limits. Retention limits range up to $125,000 per life.  Life insurance ceded represented 20% of total life insurance in force at December 31, 2018 and 2017, respectively.  Insurance ceded represented 35% and 36% of premium income for 2018 and 2017, respectively. The Company would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.

The Company owns a variety of investments associated with the oil and gas industry.  These investments represented approximately 25% and 27% of the Company’s total invested assets at December 31, 2018 and 2017, respectively.

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Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2018

Selected Quarterly Financial Data [Abstract]

Selected Quarterly Financial Data

Note 14 – Selected Quarterly Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), under guidance issued by the Financial Accounting Standards Board (“FASB”).  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Principles of Consolidation

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments

Business Segments – The Company has only one business segment – life insurance.

Investments

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities at Fair Value – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses reported as a component of net income (loss) upon adoption of ASU 2016-01.

Equity Securities at Cost – The Company adopted ASU 2016-01 during the current year and transferred equity securities of $12,118,617, that do not have a readily determinable fair value, from equity securities at fair value to equity securities at cost on the financial statements.  There was no impact to the Consolidated Statements of Operations or net Shareholders' Equity as a result of the change. These investments are reported at their cost basis, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Included in the mortgage loans balance is discounted mortgage loans on real estate. Discounted mortgage loans on real estate are loans that the Company purchased at a deep discount through an auction process led by the Federal Government or other intermediary.  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 adjusted for any principal receipts received.  Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate.  For cash payments received during the work out process, the Company records these payments to interest income on a cash basis.  For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date.  Management reviews the discount loan portfolio regularly for impairment.  If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes Receivable – Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments.  If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance.  Fair values are based on quoted market prices, where available.  Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are estimated using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes approximates fair value.  For more specific information regarding the Company’s measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments.  If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors.  The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents and Cash

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  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 amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Property and Equipment

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of  $5,655,593 and $5,225,333 at December 31, 2018 and 2017, respectively. Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of 3 to 30 years.  Depreciation expense was $430,260 and $446,117 for the years ended December 31, 2018 and 2017, respectively.

Future Policy Benefits and Expenses

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2.0% to 6.0% for life insurance and 2.5% to 7.5% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 3.0% to 6.0% as of December 31, 2018 and 2017.

Policy Claims and Benefits Payable

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company.  There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company’s ultimate obligation.

Income Taxes

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax impact attributable to differences between the financial statement book values and tax bases of assets and liabilities.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017.  More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share

Earnings Per Share – The objective of both basic earnings per share (“EPS”) and diluted EPS is to measure the performance of an entity over the reporting period.  The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period.  Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in-force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement or ASU 2018-13. ASU 2018-13 modifies certain disclosure requirements related to fair value measurements including requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements and a requirement to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts or ASU 2018-12.  ASU 2018-12 significantly changes how insurers account for long-duration insurance contracts. The new guidance will require insurers to review and update, if necessary, the assumptions used to measure insurance liabilities periodically, rather than retain assumptions used at contract inception. The updated guidance also changes the recognition and measurement of deferred acquisition costs (DAC) and created a new category of benefit features called market risk benefits (MRB) that will be measured at fair value. The guidance also significantly expands the disclosure requirements for long-duration contracts.  The ASU is effective for fiscal years, and interim periods within those years, for years beginning after December 15, 2020 and early adoption is permitted.  The guidance on measuring the liabilities for future policy benefits and DAC will be adopted on a modified retrospective basis as of the earliest period presented in the year of adoption. The guidance on MRB will be adopted on a retrospective basis as of the earliest period presented in the year of adoption. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting or ASU 2018-07. The amendment in ASU 2018-07 simplifies the accounting for nonemployee share based payments by aligning the measurement and classification guidance for share based payments to nonemployees with share based payments to employees. Under this guidance, the measurement of equity classified awards will be fixed at the grant date. This guidance is effective in annual periods beginning after December 15, 2018. The Company has evaluated the impact of the ASU, and determined that it does not significantly impact the Company’s financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income or ASU 2018-02.  ASU 2018-02 was issued as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) on December 22, 2017.  Accounting guidance required deferred tax items to be revalued based on the new tax laws (the most significant of which reduced the corporate tax rate to 21% percent from 35% percent) and to include the change in income from continuing operations.  ASU 2018-02 is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted.  The Company adopted ASU 2018-02 for the year ended December 31, 2017.

Accounting Standards Update (ASU 2016-13), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company adopted ASU 2016-01 on January 1, 2018 as a cumulative net effect adjustment and reclassified $18,277,328 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive income (loss) to retained earnings on the Company's Condensed Consolidated Balance Sheet. Prior periods have not been restated to conform to current presentation. Effective January 1, 2018, the Company's results of operations include the changes in fair value of these financial instruments. During 2018, the FASB implemented ASU 2018-03, which clarifies ASU 2016-01 regarding the measurement alternative for equity securities without a readily determinable fair value as well as clarification for other presentation items. These amendments are effective for interim periods beginning after June 15, 2018.

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Investments (Tables)

12 Months Ended

Dec. 31, 2018

Investments [Abstract]

Available for Sale Securities

The following tables provide a summary of fixed maturities available for sale by original or amortized cost and estimated fair value:

December 31, 2018	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	$	25,649,410	$	149,006	$	(138,222	)	$	25,660,194
U.S. special revenue and assessments		16,350,486		334,300		(4,406	)		16,680,380
All other corporate bonds		118,895,973		2,569,287		(2,845,050	)		118,620,210
Total	$	160,895,869	$	3,052,593	$	(2,987,678	)	$	160,960,784

December 31, 2017	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	$	2,679,325	$	33,802	$	(73,530	)	$	2,639,597
U.S. special revenue and assessments		9,012,232		620,789		0			9,633,021
All other corporate bonds		148,220,954		18,359,816		(298,163	)		166,282,607
		159,912,511		19,014,407		(371,693	)		178,555,225
Equity securities (1)		35,712,633		23,648,201		(512,343	)		58,848,491
Total	$	195,625,144	$	42,662,608	$	(884,036	)	$	237,403,716

(1) Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

Debt Securities by Contractual Maturity

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2018. Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2018	Amortized Cost		Estimated Fair Value
Due in one year or less	$	6,498,249	$	6,537,005
Due after one year through five years		43,015,419		44,106,710
Due after five years through ten years		60,011,083		60,985,500
Due after ten years		51,371,118		49,331,569
Total	$	160,895,869	$	160,960,784

Fair Value of Investments with Sustained Gross Unrealized Losses

The fair value of investments with sustained gross unrealized losses at December 31, 2018 and 2017 are as follows:

December 31, 2018	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		$	6,429,700		(49,904	)		$	1,592,679		(88,318	)		$	8,022,379		(138,222	)
U.S. special revenue and assessments			4,023,920		(4,406	)			0		0				4,023,920		(4,406	)
All other corporate bonds			49,270,729		(2,033,507	)			15,337,739		(811,543	)			64,608,468		(2,845,050	)
Total fixed maturities		$	59,724,349		(2,087,817	)		$	16,930,418		(899,861	)		$	76,654,767		(2,987,678	)

December 31, 2017	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			$	1,604,987		(73,530	)		$	1,604,987		(73,530	)
All other corporate bonds			9,732,635		(91,757	)			11,164,317		(206,406	)			20,896,952		(298,163	)
Total fixed maturities		$	9,732,635		(91,757	)		$	12,769,304		(279,936	)		$	22,501,939		(371,693	)
Equity securities (1)		$	4,130,260		(270,774	)		$	1,526,868		(241,569	)		$	5,657,128		(512,343	)

Securities in Continuous Unrealized Loss Position

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12 months	12 months or longer	Total
As of December 31, 2018
Fixed maturities	30	10	40
As of December 31, 2017
Fixed maturities	6	6	12
Equity securities (1)	2	2	4

Trading Revenue Charged to Investment Income from Trading Securities

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 Consolidated Statements of Operations.  Trading Securities included exchange-traded equities and exchange-traded options.  Trading securities carried as liabilities were securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, was recognized upon the termination of the short sale.  Earnings from trading securities were classified in cash flows from operating activities. The Company did not hold any trading securities at December 31, 2018 or 2017.

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

	2018			2017
Net unrealized gains (losses)		$	0		$	(111,531	)
Net realized gains (losses)			0			110,470
Net unrealized and realized gains (losses)		$	0		$	(1,061	)

Loan Payment Performance Since Inception

During 2018 and 2017, the maximum and minimum lending rates for mortgage loans were:

	2018		2017
	Maximum rate	Minimum rate	Maximum rate	Minimum rate
Farm loans	5.00 %	5.00 %	5.00 %	5.00 %
Commercial loans	7.50 %	4.00 %	7.50 %	4.00 %
Residential loans	8.00 %	8.00 %	8.00 %	4.00 %

Discounted Mortgage Holdings

The following table summarizes the mortgage loan holdings of the Company for the periods ended December 31:

	2018		2017
In good standing	$	7,169,272	$	15,310,941
Overdue interest over 90 days		1,899,839		0
Restructured		0		0
In process of foreclosure		0		2,003,536
Total mortgage loans	$	9,069,111	$	17,314,477
Total foreclosed loans during the year	$	0	$	0

Schedule of Net Investment Income

Analysis of Investment Operations

The following table reflects the Company’s net investment income for the periods ended December 31:

	2018			2017
Fixed maturities	$	7,273,157		$	8,685,698
Equity securities		1,628,649			1,213,922
Trading securities		0			(1,061	)
Mortgage loans		1,234,115			1,191,865
Real estate		2,771,348			1,990,844
Notes receivable		979,742			1,322,675
Policy loans		646,993			664,116
Cash and cash equivalents		355,276			23,445
Short-term		18,159			1,263
Total consolidated investment income		14,907,439			15,092,767
Investment expenses		(3,704,771	)		(3,391,769	)
Consolidated net investment income	$	11,202,668		$	11,700,998

Net Realized Investment Gains and Losses

The following table presents the Company’s net realized investments gains (losses) and the change in net unrealized gains on available-for-sale investments for the periods ended December 31:

	2018			2017
Realized gains on available-for-sale investments:
Sales of fixed maturities	$	11,708,320		$	3,950,014
Sales of equity securities (1)		0			2,902,278
Sales of real estate		1,588,122			3,622,519
Other		0			0
Total realized gains		13,296,442			10,474,811
Realized losses on available-for-sale investments:
Sales of fixed maturities		(956,365	)		(72,560	)
Sales of equity securities (1)		0			0
Sales of real estate		0			(522,965	)
Other-than-temporary impairments		(300,000	)		(762,161	)
Other		0			0
Total realized losses		(1,256,365	)		(1,357,686	)
Net realized investment gains (losses)		12,040,077			9,117,125
Change in fair value of equity securities: (1)
Realized gains (losses) on equity securities sold during the period (1)		0			0
Change in fair value of equity securities held at the end of the period		10,416,758			0
Change in fair value of equity securities (1)		10,416,758			0
Net investment gains (losses)	$	22,456,835		$	9,117,125
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income:
Fixed maturities	$	(7,744,899	)	$	3,470,929
Equity securities (1)		0			13,703,197
Net increase (decrease)	$	(7,744,899	)	$	17,174,126

(1) Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See Note 1.

Other than Temporary Impairment

Based on Management’s review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

	2018		2017
Other than temporary impairments:
Real estate	$	300,000	$	690,000
Mortgage loans		0		72,161
Total other than temporary impairments	$	300,000	$	762,161

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Measurements [Abstract]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2018.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	25,660,194	$	134,865,746	$	434,844	$	160,960,784
Equity Securities		27,634,283		10,557,031		29,473,168		67,664,482
Total	$	53,294,477	$	145,422,777	$	29,908,012	$	228,625,266

The following table presents the Company’s assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2017.

	Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	2,639,597	$	175,437,239	$	478,389	$	178,555,225
Equity Securities, available for sale (1)		20,436,225		7,756,435		30,655,831		58,848,491
Total	$	23,075,822	$	183,193,674	$	31,134,220	$	237,403,716

Reconciliation for Level 3 Assets Measured at Fair Value on a Recurring Basis

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 (1)			Total
Balance at December 31, 2017	$	478,389		$	30,655,831		$	31,134,220
Transfers in to Level 3		0			0			0
Transfer out of Level 3		0			(5,118,600	)		(5,118,600	)
Total unrealized gain (losses):
Included in net income (loss)		0			4,633,751			4,633,751
Included in other comprehensive income		0			0			0
Purchases		0			1,505,250			1,505,250
Sales		(43,545	)		(2,203,064	)		(2,246,609	)
Balance at December 31, 2018	$	434,844		$	29,473,168		$	29,908,012

(1) Effective January 1, 2018, the Company Adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

	December 31, 2018		December 31, 2017
Change in fair value of equity securities included in net income (loss) relating to assets held	$	4,633,751	$	0

Carrying Values and Estimated Fair Values of Financial Instruments not Recorded at Fair Value

The carrying values and estimated fair values of certain of the Company’s financial instruments not recorded at fair value in the Consolidated Balance Sheets are shown below. Because the fair value for all 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.

	December 31, 2018				December 31, 2017
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Equity securities	$	12,118,617	$	12,118,617	$	0	$	0
Mortgage loans on real estate		9,069,111		9,069,111		17,314,477		17,314,477
Investment real estate		52,518,577		52,518,577		50,504,550		50,504,550
Notes receivable		23,717,312		23,717,312		19,004,016		19,004,016
Policy loans		9,204,222		9,204,222		9,559,142		9,559,142
Cash and cash equivalents		20,150,162		20,150,162		25,434,199		25,434,199

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2018

Reinsurance [Abstract]

Effect of long duration reinsurance contracts on premiums earned

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2018 and 2017 were as follows:

	2018				2017
	Premiums Earned				Premiums Earned
Direct		$	10,074,892			$	10,407,434
Assumed			1,459				5,912
Ceded			(2,862,701	)			(2,955,989	)
Net Premiums		$	7,213,650			$	7,457,357

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Cost of Insurance Acquired (Tables)

12 Months Ended

Dec. 31, 2018

Cost of Insurance Acquired [Abstract]

Cost of Insurance Acquired

	2018			2017
Cost of insurance acquired, beginning of year	$	6,428,292		$	7,267,397
Interest accretion		866,339			967,032
Amortization		(1,672,404	)		(1,806,137	)
Net amortization		(806,065	)		(839,105	)
Cost of insurance acquired, end of year	$	5,622,227		$	6,428,292

Estimated Net Amortization Expense of Cost of Insurance Acquired for Next Five Years

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2019	769,612	1,545,518	775,906
2020	676,503	1,421,353	744,850
2021	587,120	1,302,090	714,970
2022	501,324	1,189,672	688,348
2023	418,722	1,079,979	661,257

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes [Abstract]

Income tax expense (benefits)

Income tax expense (benefit) consists of the following components:

	2018			2017
Current tax		$	1,922,542		$	751,377
Deferred tax			1,984,994			(2,258,393	)
Income tax expense (benefit)		$	3,907,536		$	(1,507,016	)

Income tax expense (benefit) reconciliation

The expense for income taxes differed from the amounts computed by applying the applicable United States statutory rate of 21% and 35% as of December 31, 2018 and 2017, respectively, before income taxes as a result of the following differences:

	2018			2017
Tax computed at statutory rate	$	3,466,644		$	1,157,141
Changes in taxes due to:
Non-controlling interest		(43,927	)		(1,044	)
Small company deduction		0			(591,074	)
Dividend received deduction		(170,690	)		(90,698	)
Tax rate change		0			(1,488,646	)
Other		655,509			(492,695	)
Income tax expense (benefit)	$	3,907,536		$	(1,507,016	)

Major components that comprise the deferred tax liability

As a result of the TCJA described above in Note 1 - Summary of Significant Accounting Policies, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 in the amount of $7,330,936. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in the law.

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

	2018			2017
Investments	$	6,939,758		$	8,166,343
Cost of insurance acquired		1,180,668			1,349,941
Management/consulting fees		(15,724	)		(27,202	)
Future policy benefits		(1,670,814	)		281,576
Deferred gain on sale of subsidiary		1,387,490			1,387,490
Other assets (liabilities)		65,573			59,095
Reserves adjustment		1,426,205			0
Federal tax DAC		(199,676	)		(220,839	)
Deferred tax liability	$	9,113,480		$	10,996,404

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Credit Arrangements (Tables)

12 Months Ended

Dec. 31, 2018

Credit Arrangements [Abstract]

Lines of Credit

At December 31, 2018 and 2017, the Company had the following lines of credit available:

Instrument	Issue Date	Maturity Date	Revolving Credit Limit			December 31, 2017			Borrowings		Repayments		December 31, 2018
Lines of Credit:
UTG	11/20/2013	11/20/2019		$	8,000,000		$	0		0		0		$	0
UG	6/2/2015	5/10/2019			10,000,000			0		0		0			0

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies [Abstract]

Total Funding Commitments and Unfunded Commitment

The following table represents the total funding commitments and the unfunded commitment as of December 31, 2018 related to certain investments:

	Total Funding Commitment		Unfunded Commitment
RLF III, LLC	$	4,000,000	$	398,120
Sovereign’s Capital, LP Fund I		500,000		24,493
Sovereign's Capital, LP Fund II		1,000,000		240,566
Sovereign's Capital, LP Fund III		1,000,000		900,000
Master Mineral Holdings III, LP		4,000,000		1,700,000
Barton Springs Music, LLC		2,000,000		1,158,500

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Shareholders' Equity (Tables)

12 Months Ended

Dec. 31, 2018

Shareholders' Equity [Abstract]

Reconciliation of the numerators and denominators of the basic and diluted EPS

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2018	2017
Basic weighted average shares outstanding	3,307,448	3,346,774
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,307,448	3,346,774

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Statutory Accounting (Tables)

12 Months Ended

Dec. 31, 2018

Statutory Accounting [Abstract]

Statutory Basis Net Income and Capital Surplus

The following table reflects UG’s statutory basis net income and capital and surplus (shareholders’ equity) as of December 31:

	2018			2017
Net income (loss)		$	6,166,411		$	5,356,483
Capital and surplus			60,024,931			54,717,987

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Other Cash Flow Disclosures (Tables)

12 Months Ended

Dec. 31, 2018

Other Cash Flow Disclosures [Abstract]

Expenses Paid on a Cash Basis

On a cash basis, the Company paid the following expenses for the periods ended December 31:

	2018			2017
Interest		$	0		$	0
Federal income tax			1,592,000			165,000

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Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2018 USD ($) Segment	Dec. 31, 2017 USD ($)
Business Segments [Abstract]
Number of business segments | Segment	1
Investments [Abstract]
Equity securities, at cost	$ 12,118,617	$ 0
Reinsurance [Abstract]
Maximum retention limits per life	125,000
Property and Equipment [Abstract]
Accumulated depreciation	5,655,593	5,225,333
Depreciation expense	$ 430,260	$ 446,117
Income Taxes [Abstract]
Corporate Federal income tax rate	21.00%	35.00%
Chief Executive Officer and Chairman of the Board [Member]
Ownership Interest [Abstract]
Ownership interest percentage	65.29%
Accumulated Other Comprehensive Income [Member]
Recently Issued Accounting Standards [Abstract]
Reclassification of unrealized gains on equity investments, net of tax as a cumulative net effect adjustment	$ (18,277,328)
Retained Earnings [Member]
Recently Issued Accounting Standards [Abstract]
Reclassification of unrealized gains on equity investments, net of tax as a cumulative net effect adjustment	$ 18,277,328
Minimum [Member]
Property and Equipment [Abstract]
Estimated useful lives	3 years
Maximum [Member]
Property and Equipment [Abstract]
Estimated useful lives	30 years
Income Taxes [Abstract]
Corporate Federal income tax rate		35.00%
Life Insurance [Member] | Minimum [Member]
Future Policy Benefits and Expenses [Abstract]
Liability for future policy benefits, interest rate	2.00%
Life Insurance [Member] | Maximum [Member]
Future Policy Benefits and Expenses [Abstract]
Liability for future policy benefits, interest rate	6.00%
Universal Life [Member] | Minimum [Member]
Future Policy Benefits and Expenses [Abstract]
Interest crediting rates	3.00%	3.00%
Universal Life [Member] | Maximum [Member]
Future Policy Benefits and Expenses [Abstract]
Interest crediting rates	6.00%	6.00%
Interest Sensitive Life [Member] | Minimum [Member]
Future Policy Benefits and Expenses [Abstract]
Interest crediting rates	3.00%	3.00%
Interest Sensitive Life [Member] | Maximum [Member]
Future Policy Benefits and Expenses [Abstract]
Interest crediting rates	6.00%	6.00%
Annuities [Member] | Minimum [Member]
Future Policy Benefits and Expenses [Abstract]
Liability for future policy benefits, interest rate	2.50%
Annuities [Member] | Maximum [Member]
Future Policy Benefits and Expenses [Abstract]
Liability for future policy benefits, interest rate	7.50%
FSBI [Member] | FSNB [Member]
Ownership Interest [Abstract]
Ownership in subsidiary bank	100.00%

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Investments, Available for Sale Securities - Fixed Maturity and Equity Securities (Details) - USD ($)		Dec. 31, 2018	Dec. 31, 2017
Fixed maturities [Abstract]
Original or amortized cost		$ 160,895,869	$ 159,912,511
Gross unrealized gains		3,052,593	19,014,407
Gross unrealized losses		(2,987,678)	(371,693)
Estimated fair value		160,960,784	178,555,225
Equity securities [Abstract]
Original or amortized cost		0	35,712,633	[1]
Gross unrealized gains	[1]		23,648,201
Gross unrealized losses	[1]		(512,343)
Estimated fair value		0	58,848,491	[1]
Total [Abstract]
Original or amortized cost			195,625,144
Gross unrealized gains			42,662,608
Gross unrealized losses			(884,036)
Estimated fair value			237,403,716
U.S. Government and Govt. Agencies and Authorities [Member]
Fixed maturities [Abstract]
Original or amortized cost		25,649,410	2,679,325
Gross unrealized gains		149,006	33,802
Gross unrealized losses		(138,222)	(73,530)
Estimated fair value		25,660,194	2,639,597
US Special Revenue and Assessments [Member]
Fixed maturities [Abstract]
Original or amortized cost		16,350,486	9,012,232
Gross unrealized gains		334,300	620,789
Gross unrealized losses		(4,406)	0
Estimated fair value		16,680,380	9,633,021
All Other Corporate Bonds [Member]
Fixed maturities [Abstract]
Original or amortized cost		118,895,973	148,220,954
Gross unrealized gains		2,569,287	18,359,816
Gross unrealized losses		(2,845,050)	(298,163)
Estimated fair value		$ 118,620,210	$ 166,282,607

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

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Investments, Fixed Maturities by Contractual Maturity (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Amortized cost [Abstract]
Due in one year or less	$ 6,498,249
Due after one year through five years	43,015,419
Due after five years through ten years	60,011,083
Due after ten years	51,371,118
Original or amortized cost	160,895,869	$ 159,912,511
Estimated fair value [Abstract]
Due in one year or less	6,537,005
Due after one year through five years	44,106,710
Due after five years through ten years	60,985,500
Due after ten years	49,331,569
Estimated fair value	160,960,784	178,555,225
Amortized cost of investment in fixed maturities rated below investment grade	$ 2,618,594	$ 21,108,077

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Investments, Investments with Sustained Gross Unrealized Losses (Details) - USD ($)		Dec. 31, 2018	Dec. 31, 2017
Fixed Maturities in Continuous Unrealized Loss Position [Abstract]
Less than 12 months, fair value		$ 59,724,349	$ 9,732,635
12 months or longer, fair value		16,930,418	12,769,304
Total fair value		76,654,767	22,501,939
Less than 12 months, unrealized losses		(2,087,817)	(91,757)
12 months or longer, unrealized losses		(899,861)	(279,936)
Total unrealized losses		(2,987,678)	(371,693)
Equity Securities in Continuous Unrealized Loss Position [Abstract]
Less than 12 months, fair value	[1]		4,130,260
12 months or longer, fair value	[1]		1,526,868
Total fair value	[1]		5,657,128
Less than 12 months, unrealized losses	[1]		(270,774)
12 months or longer, unrealized losses	[1]		(241,569)
Total unrealized losses	[1]		(512,343)
U.S. Government and Government Agencies and Authorities [Member]
Fixed Maturities in Continuous Unrealized Loss Position [Abstract]
Less than 12 months, fair value		6,429,700	0
12 months or longer, fair value		1,592,679	1,604,987
Total fair value		8,022,379	1,604,987
Less than 12 months, unrealized losses		(49,904)	0
12 months or longer, unrealized losses		(88,318)	(73,530)
Total unrealized losses		(138,222)	(73,530)
U.S. Special Revenue and Assessments [Member]
Fixed Maturities in Continuous Unrealized Loss Position [Abstract]
Less than 12 months, fair value		4,023,920
12 months or longer, fair value		0
Total fair value		4,023,920
Less than 12 months, unrealized losses		(4,406)
12 months or longer, unrealized losses		0
Total unrealized losses		(4,406)
All Other Corporate Bonds [Member]
Fixed Maturities in Continuous Unrealized Loss Position [Abstract]
Less than 12 months, fair value		49,270,729	9,732,635
12 months or longer, fair value		15,337,739	11,164,317
Total fair value		64,608,468	20,896,952
Less than 12 months, unrealized losses		(2,033,507)	(91,757)
12 months or longer, unrealized losses		(811,543)	(206,406)
Total unrealized losses		$ (2,845,050)	$ (298,163)

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

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Investments, Number of Securities in Unrealized Loss Position (Details) - Security	Dec. 31, 2018	Dec. 31, 2017
Fixed Maturities [Abstract]
Less than 12 months, number of securities	30	6
12 months or longer, number of securities	10	6
Total number of securities	40	12
Equity Securities [Abstract]
Less than 12 months, number of securities		2
12 months or longer, number of securities		2
Total number of securities		4

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Investments, Cost Method Investments (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investments [Abstract]
Equity investments, at cost	$ 12,118,617	$ 0

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Investments, Trading Securities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Increase (Decrease) in Trading Securities [Abstract]
Net unrealized gains (losses)	$ 0	$ (111,531)
Net realized gains (losses)	0	110,470
Net unrealized and realized gains (losses)	$ 0	$ (1,061)

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Investments, Mortgage Loans on Real Estate, Investment Real Estate, and Notes Receivables (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Mortgage Loans [Abstract]
Mortgage loans acquired, including discounted mortgage loans	$ 91,954	$ 360,531
Servicing fee on loan	0.25%
Loan origination	0.50%	0.50%
Loan limit threshold for appraised property value	80.00%
Mortgage loans reserve	$ 0	$ 0
Discounted mortgage loan holdings [Abstract]
In good standing	7,169,272	15,310,941
Overdue interest over 90 days	1,899,839	0
Restructured	0	0
In process of foreclosure	0	2,003,536
Total mortgage loans	9,069,111	17,314,477
Total foreclosed loans during the year	0	0
Notes receivable [Abstract]
Valuation allowance	$ 0	$ 0
Farm Loans [Member] | Maximum [Member]
Mortgage Loans [Abstract]
Residential loans	5.00%	5.00%
Farm Loans [Member] | Minimum [Member]
Mortgage Loans [Abstract]
Residential loans	5.00%	5.00%
Commercial Loans [Member] | Maximum [Member]
Mortgage Loans [Abstract]
Residential loans	7.50%	7.50%
Commercial Loans [Member] | Minimum [Member]
Mortgage Loans [Abstract]
Residential loans	4.00%	4.00%
Residential Loans [Member] | Maximum [Member]
Mortgage Loans [Abstract]
Residential loans	8.00%	8.00%
Residential Loans [Member] | Minimum [Member]
Mortgage Loans [Abstract]
Residential loans	8.00%	4.00%

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Investments, Net Investment Income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Net Investment Income [Abstract]
Investment income	$ 14,907,439	$ 15,092,767
Investment expenses	(3,704,771)	(3,391,769)
Consolidated net investment income	11,202,668	11,700,998
Fixed Maturities [Member]
Net Investment Income [Abstract]
Investment income	7,273,157	8,685,698
Equity Securities [Member]
Net Investment Income [Abstract]
Investment income	1,628,649	1,213,922
Trading Securities [Member]
Net Investment Income [Abstract]
Investment income	0	(1,061)
Mortgage Loans [Member]
Net Investment Income [Abstract]
Investment income	1,234,115	1,191,865
Real Estate [Member]
Net Investment Income [Abstract]
Investment income	2,771,348	1,990,844
Notes Receivable [Member]
Net Investment Income [Abstract]
Investment income	979,742	1,322,675
Policy Loans [Member]
Net Investment Income [Abstract]
Investment income	646,993	664,116
Cash and Cash Equivalents [Member]
Net Investment Income [Abstract]
Investment income	355,276	23,445
Short-term [Member]
Net Investment Income [Abstract]
Investment income	$ 18,159	$ 1,263

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Investments, Net Realized Investment Gains and Losses (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018		Dec. 31, 2017
Realized gains on available-for-sale investments [Abstract]
Gross realized gains	$ 13,296,442		$ 10,474,811
Realized losses on available-for-sale investments [Abstract]
Other-than-temporary impairments	(300,000)		(762,161)
Total realized losses	(1,256,365)		(1,357,686)
Net realized investment gains (losses)	12,040,077		9,117,125
Change in fair value of equity securities [Abstract]
Realized gains (losses) on equity securities sold during the period	0	[1]	0
Change in fair value of equity securities held at the end of the period	10,416,758	[1]	0
Change in fair value of equity securities	10,416,758	[1]	0
Total net investment gains (losses)	22,456,835		9,117,125
Unrealized gains (losses) on available-for-sale investments included in other comprehensive income [Abstract]
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income	(7,744,899)		17,174,126
Fixed Maturities [Member]
Realized gains on available-for-sale investments [Abstract]
Gross realized gains	11,708,320		3,950,014
Realized losses on available-for-sale investments [Abstract]
Total realized losses	(956,365)		(72,560)
Unrealized gains (losses) on available-for-sale investments included in other comprehensive income [Abstract]
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income	(7,744,899)		3,470,929
Equity Securities [Member]
Realized gains on available-for-sale investments [Abstract]
Gross realized gains	0	[1]	2,902,278
Realized losses on available-for-sale investments [Abstract]
Total realized losses	0	[1]	0
Unrealized gains (losses) on available-for-sale investments included in other comprehensive income [Abstract]
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income	0	[1]	13,703,197
Real Estate [Member]
Realized gains on available-for-sale investments [Abstract]
Gross realized gains	1,588,122		3,622,519
Realized losses on available-for-sale investments [Abstract]
Other-than-temporary impairments	(300,000)		(690,000)
Total realized losses	0		(522,965)
Other [Member]
Realized gains on available-for-sale investments [Abstract]
Gross realized gains	0		0
Realized losses on available-for-sale investments [Abstract]
Total realized losses	0		0
Mortgage Loans [Member]
Realized losses on available-for-sale investments [Abstract]
Other-than-temporary impairments	$ 0		$ (72,161)

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

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Investments, Other-Than-Temporary Impairments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Other than Temporary Impairment Losses [Abstract]
Other-than-temporary impairments	$ 300,000	$ 762,161
Real Estate [Member]
Other than Temporary Impairment Losses [Abstract]
Other-than-temporary impairments	300,000	690,000
Mortgage loans [Member]
Other than Temporary Impairment Losses [Abstract]
Other-than-temporary impairments	$ 0	$ 72,161

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Investments, Investment on Deposits (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Investments [Abstract]
Fair value of investments on deposit with state insurance departments	$ 8,317,514	$ 8,642,633

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Fair Value Measurements, Financial Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)		Dec. 31, 2018	Dec. 31, 2017
Assets [Abstract]
Fixed Maturities, available for sale		$ 160,960,784	$ 178,555,225
Equity Securities, available for sale		67,664,482	0
Equity Securities, available for sale		0	58,848,491	[1]
Measured on a Recurring Basis [Member]
Assets [Abstract]
Fixed Maturities, available for sale		160,960,784	178,555,225
Equity Securities, available for sale		67,664,482
Equity Securities, available for sale	[2]		58,848,491
Total		228,625,266	237,403,716
Measured on a Recurring Basis [Member] | Level 1 [Member]
Assets [Abstract]
Fixed Maturities, available for sale		25,660,194	2,639,597
Equity Securities, available for sale		27,634,283
Equity Securities, available for sale	[2]		20,436,225
Total		53,294,477	23,075,822
Measured on a Recurring Basis [Member] | Level 2 [Member]
Assets [Abstract]
Fixed Maturities, available for sale		134,865,746	175,437,239
Equity Securities, available for sale		10,557,031
Equity Securities, available for sale	[2]		7,756,435
Total		145,422,777	183,193,674
Measured on a Recurring Basis [Member] | Level 3 [Member]
Assets [Abstract]
Fixed Maturities, available for sale		434,844	478,389
Equity Securities, available for sale		29,473,168
Equity Securities, available for sale	[2]		30,655,831
Total		$ 29,908,012	$ 31,134,220

[1] Effective January 1, 2018, the Company adopted ASU 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

[2] Effective January 1, 2018, the Company Adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

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Fair Value Measurements, Reconciliation for Level 3 Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($)		12 Months Ended
		Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance		$ 31,134,220
Transfers in to Level 3		0
Transfer out of Level 3		(5,118,600)
Total unrealized gain (losses) [Abstract]
Included in net income (loss)		4,633,751
Included in other comprehensive income		0
Purchases		1,505,250
Sales		(2,246,609)
Ending Balance		29,908,012	$ 31,134,220
Change in fair value of equity securities included in net income (loss) relating to assets held		4,633,751	0
Fixed Maturities, Available for Sale [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance		478,389
Transfers in to Level 3		0
Transfer out of Level 3		0
Total unrealized gain (losses) [Abstract]
Included in net income (loss)		0
Included in other comprehensive income		0
Purchases		0
Sales		(43,545)
Ending Balance		434,844	478,389
Equity Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	[1]	30,655,831
Transfers in to Level 3	[1]	0
Transfer out of Level 3	[1]	(5,118,600)
Total unrealized gain (losses) [Abstract]
Included in net income (loss)	[1]	4,633,751
Included in other comprehensive income	[1]	0
Purchases	[1]	1,505,250
Sales	[1]	(2,203,064)
Ending Balance	[1]	$ 29,473,168	$ 30,655,831

[1] Effective January 1, 2018, the Company Adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 1 to the Consolidated Financial Statements for additional information.

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Fair Value Measurements, Carrying Values and Estimated Fair Values of Financial Instruments not Recorded at Fair Value (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Carrying Amount [Member]
Assets [Abstract]
Equity securities	$ 12,118,617	$ 0
Mortgage loans on real estate	9,069,111	17,314,477
Investment real estate	52,518,577	50,504,550
Notes receivable	23,717,312	19,004,016
Policy loans	9,204,222	9,559,142
Cash and cash equivalents	20,150,162	25,434,199
Estimated Fair Value [Member]
Assets [Abstract]
Equity securities	12,118,617	0
Mortgage loans on real estate	9,069,111	17,314,477
Investment real estate	52,518,577	50,504,550
Notes receivable	23,717,312	19,004,016
Policy loans	9,204,222	9,559,142
Cash and cash equivalents	20,150,162	25,434,199
Equity securities	$ 67,664,482	$ 0
Minimum [Member]
Liabilities [Abstract]
Policy loan interest rate	4.00%
Maximum [Member]
Liabilities [Abstract]
Policy loan interest rate	8.00%

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Reinsurance (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Reinsurance [Abstract]
Retention amount limit	$ 125,000
Gross insurance in force	1,100,000,000	$ 1,200,000,000
Gross insurance ceded to reinsurers	228,000,000	$ 242,000,000
Retention limit amount of reinsurers	100,000
Cession on retention limit	$ 25,000
Percentage of reinsurers in force on accidental death benefits	100.00%
Percentage of future results sold	100.00%
Percentage in terms of reinsurance reserve credit	63.00%	63.00%
Percentage of reserves and liabilities	25.00%
Effect of long duration reinsurance contracts on premiums earned [Abstract]
Direct	$ 10,074,892	$ 10,407,434
Assumed	1,459	5,912
Ceded	(2,862,701)	(2,955,989)
Net Premiums	$ 7,213,650	$ 7,457,357

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Cost of Insurance Acquired (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cost of insurance acquired [Roll Forward]
Interest rate used in amortization calculation	12.00%
Cost of insurance acquired, beginning of year	$ 6,428,292	$ 7,267,397
Interest accretion	866,339	967,032
Amortization	(1,672,404)	(1,806,137)
Net amortization	(806,065)	(839,105)
Cost of insurance acquired, end of year	5,622,227	$ 6,428,292
Interest Accretion [Abstract]
2019	769,612
2020	676,503
2021	587,120
2022	501,324
2023	418,722
Amortization [Abstract]
2019	1,545,518
2020	1,421,353
2021	1,302,090
2022	1,189,672
2023	1,079,979
Net Amortization [Abstract]
2019	775,906
2020	744,850
2021	714,970
2022	688,348
2023	$ 661,257

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Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Income tax expense (benefit) [Abstract]
Current tax	$ 1,922,542	$ 751,377
Deferred tax	1,984,994	(2,258,393)
Income tax expense (benefit)	$ 3,907,536	$ (1,507,016)
Income tax expense (benefit) reconciliation [Abstract]
United States statutory rate	21.00%	35.00%
Tax computed at statutory rate	$ 3,466,644	$ 1,157,141
Changes in taxes due to: [Abstract]
Non-controlling interest	(43,927)	(1,044)
Small company deduction	0	(591,074)
Dividend received deduction	(170,690)	(90,698)
Tax rate changes	0	(1,488,646)
Other	655,509	(492,695)
Income tax expense (benefit)	3,907,536	(1,507,016)
Decrease in tax liability from TCJA	7,330,936
Deferred tax liability [Abstract]
Investments	6,939,758	8,166,343
Cost of insurance acquired	1,180,668	1,349,941
Management/consulting fees	(15,724)	(27,202)
Future policy benefits	(1,670,814)	281,576
Deferred gain on sale of subsidiary	1,387,490	1,387,490
Other liabilities	65,573	59,095
Reserves adjustment	1,426,205	0
Federal tax DAC	(199,676)	(220,839)
Deferred tax liability	9,113,480	10,996,404
Gross deferred tax assets	2,723,053	1,027,203
Gross deferred tax liabilities	11,836,533	12,023,607
Allowance	0	0
DTA - Net operating loss carryforward	0
DTA - AMT tax carryforward	$ 43,717	$ 118,693

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Credit Arrangements (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Variable Rate [Member] | Maximum [Member]
Line of Credit Facility [Abstract]
Period of interest under CMA	90 days
Fixed Rate [Member] | Maximum [Member]
Line of Credit Facility [Abstract]
Period of interest under CMA	30 days
UTG 2013-11-20 [Member]
Line of Credit Facility [Abstract]
Issue Date	Nov. 20, 2013
Maturity Date	Nov. 20, 2019
Revolving Credit Limit	$ 8,000,000
Outstanding Balance	0	$ 0
Borrowings	0
Repayments	$ 0
Interest Rate	5.125%
Frequency of payments	monthly
Assets Pledged	100% of the common voting stock of its wholly owned subsidiary, Universal Guaranty Life Insurance Company ("UG").
UTG 2013-11-20 [Member] | UG [Member]
Line of Credit Facility [Abstract]
Percentage of common voting stock pledged	100.00%
UG Avalon 2015-06-02 [Member] | UG [Member]
Line of Credit Facility [Abstract]
Issue Date	Jun. 02, 2015
Maturity Date	May 10, 2019
Revolving Credit Limit	$ 10,000,000
Outstanding Balance	0	$ 0
Borrowings	0
Repayments	$ 0

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Commitments and Contingencies (Details)	Dec. 31, 2018 USD ($)
RLF III, LLC [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	$ 4,000,000
Unfunded Commitment	398,120
Sovereign's Capital, LP Fund I [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	500,000
Unfunded Commitment	24,493
Sovereigns Capital LP Fund II [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	1,000,000
Unfunded Commitment	240,566
Sovereigns Capital LP Fund III [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	1,000,000
Unfunded Commitment	900,000
Master Mineral Holdings III, LP [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	4,000,000
Unfunded Commitment	1,700,000
Barton Springs Music, LLC [Member]
Total Funding Commitments and Unfunded Commitment [Abstract]
Total Funding Commitment	2,000,000
Unfunded Commitment	$ 1,158,500

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Shareholders' Equity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Stock Repurchase Program [Abstract]
Stock repurchase program, additional amount authorized	$ 1.5
Stock repurchase program authorized amount			$ 16,000,000
Amount of common stock repurchased	50,922
Amount paid to repurchase shares during the year	$ 1,329,148
Treasury stock shares acquired (in shares)	1,140,106
Amount paid to repurchase shares from program inception	$ 13,863,728
Share-based Compensation [Abstract]
Annual retainer fee paid to Director		$ 8,000
Per meeting fee paid to Director		$ 1,000
Earnings Per Share [Abstract]
Basic weighted average shares outstanding (in shares)	3,307,448	3,346,774
Weighted average dilutive options outstanding (in shares)	0	0
Diluted weighted average shares outstanding (in shares)	3,307,448	3,346,774
Statutory Restrictions [Abstract]
Minimum statutory surplus required to maintain	$ 2,500,000
Period from declaration of ordinary dividend requires notification to insurance commissioner	5 days
Minimum period prior to payment of dividend requires notification to insurance commissioner	10 days
Percentage of statutory capital and surplus	10.00%
Ordinary dividends paid	$ 5,000,000	$ 2,000,000
Period for which no extraordinary dividends paid	2 years
Outside Directors [Member]
Share-based Compensation [Abstract]
Annual retainer fee paid to Director	$ 5,000
Per meeting fee paid to Director	$ 2,500
Number of shares issued (in shares)	2,994	2,560
Stock issued during period (in dollars per share)	$ 32.50	$ 25.00
Cost of shares issued	$ 97,305	$ 64,000
Management and Employees [Member]
Share-based Compensation [Abstract]
Number of shares issued (in shares)	10,421	11,285
Cost of shares issued	$ 263,507	$ 197,487

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Statutory Accounting (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Statutory Basis Net Income and Capital and Surplus [Abstract]
Net income (loss)	$ 6,166,411	$ 5,356,483
Capital and surplus	$ 60,024,931	$ 54,717,987

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Related Party Transactions (Details)		12 Months Ended
	Feb. 20, 2003 USD ($)	Dec. 31, 2018 USD ($) ft²	Dec. 31, 2017 USD ($)	Mar. 30, 2009 USD ($)
Related Party Transactions [Abstract]
Purchased trust preferred security offering	$ 4,000,000
Ownership interest in aircraft		30.10%
Costs associated with aircraft		$ 391,851	$ 328,933
Administrative Services and Cost		$ 7,093,227	$ 7,213,590
Servicing fee on loan		0.25%
Loan origination		0.50%	0.50%
Servicing fees		$ 8,393	$ 11,108
Origination fees		0	0
Reimbursement cost		571,648	186,251
Total reimbursement payment		307,645	346,486
Loans participated to FSF		$ 250,000	250,000
Area of office space | ft²		8,000
Rent Paid Per Month		$ 2,000
Rental cost Paid to FSNB		24,000	24,000
UTG/FSF Partnership Amt Contributed		$ 140,000
FSF Ownership in Partnership		10.00%
FSBI [Member]
Related Party Transactions [Abstract]
Term for mandatory redemption		P30Y
Term for call provision		P5Y
Dividend rate		6.515%
Dividend income		$ 283,151	$ 259,138
Preferred pay down		440,000
Cost basis left after pay down		$ 3,560,000
Equity Method Investments				$ 1,000,000

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Other Cash Flow Disclosures (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Other Cash Flow Disclosures [Abstract]
Interest	$ 0	$ 0
Federal income tax	$ 1,592,000	$ 165,000

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Concentrations (Details)	12 Months Ended
	Dec. 31, 2018 USD ($) State	Dec. 31, 2017
Concentrations [Abstract]
Number of states by which entity primarily serves | State	4
Maximum retention limits per life | $	$ 125,000
Reinsurer Concentration Risk [Member] | Life Insurance Ceded [Member]
Concentrations [Abstract]
Percentage of gross insurance in force	20.00%	20.00%
Percentage of premium income	35.00%	36.00%
Direct Premium Collected [Member] | Geographic Concentration Risk [Member] | Illinois, Ohio, Texas and West Virginia [Member]
Concentrations [Abstract]
Concentration risk, percentage	56.00%	55.00%
Invested Assets [Member] | Customer Concentration Risk [Member] | Oil and Gas Industry [Member]
Concentrations [Abstract]
Concentration risk, percentage	25.00%	27.00%