Credit Arrangements

9 Months Ended

Sep. 30, 2021

Note 5 – Credit Arrangements

Instrument	Issue Date	Maturity Date	Revolving Credit Limit		December 31, 2020		Borrowings	Repayments	September 30, 2021
Lines of Credit:
UTG	11/20/2013	11/20/2021	$	8,000,000		0	0	0	$	0
UG	6/2/2015	5/6/2022		10,000,000		0	0	0		0

The UTG line of credit carries interest at a fixed rate of 3.750% 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.

During May of 2021, 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. The Company has pledged bonds with a collateral lendable value of $12,129,569.

During the fourth quarter of 2021, Management made the business decision to pledge additional collateral to the Federal Home Loan Bank in order to increase the Company's borrowing capacity. The Company submitted, and the Federal Home Loan Bank approved, a new Cash Management Advance ("CMA") with a collateral lendable value of $25 million. This CMA replaces the CMA that was approved in May of 2021 for $10 million. During October of 2021, the Company borrowed $3 million on the CMA and Management will utilize the funds for investing activities. The interest rate on the borrowed funds is variable and currently is 0.24%.

The CMA is a source of overnight liquidity utilized to address the day-to-day cash needs of a Company. In order to provide the Company with multiple lending options, Management also applied for, and the FHLB approved, the Company's Repurchase ("REPO") Advance Application for $25 million. The REPO Advance requires a minimum borrowing of $15 million and provides financing for one day to one year at a fixed rate of interest. The Company has enough qualifying investments for collateral pledging of $25 million total against these two borrowing vehicles.