0000832480-23-000021.txt : 20230811 0000832480-23-000021.hdr.sgml : 20230811 20230811125833 ACCESSION NUMBER: 0000832480-23-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20230630 FILED AS OF DATE: 20230811 DATE AS OF CHANGE: 20230811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UTG INC CENTRAL INDEX KEY: 0000832480 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 202907892 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16867 FILM NUMBER: 231162705 BUSINESS ADDRESS: STREET 1: 205 NORTH DEPOT STREET CITY: STANFORD STATE: KY ZIP: 40484 BUSINESS PHONE: 2172416300 MAIL ADDRESS: STREET 1: 205 NORTH DEPOT STREET CITY: STANFORD STATE: KY ZIP: 40484 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TRUST GROUP INC DATE OF NAME CHANGE: 20001206 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TRUST INC /IL/ DATE OF NAME CHANGE: 19920703 10-Q 1 utg23q2.htm UTG23Q2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

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 No. 000-16867

 
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 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 whether the registrant is a 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 in Rule 12b-2 of the Exchange Act).  Yes     No
 
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

The number of shares outstanding of the registrant’s common stock as of July 31, 2023 was 3,167,186.



Part 1.   Financial Information.
Item 1.  Financial Statements.

UTG, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

 
June 30, 2023
   
December 31, 2022*
 
ASSETS
 
Investments:
           
Investments, available for sale:
           
Fixed maturities, at fair value (amortized cost $115,257,457 and $117,279,820)
 
$
107,339,371
   
$
108,313,059
 
    Equity securities, at fair value (cost $80,670,210 and $77,015,688)
   
145,115,511
     
150,053,686
 
Equity securities, at cost
   
15,683,343
     
15,683,343
 
Mortgage loans on real estate at amortized cost
   
28,795,729
     
30,698,694
 
Investment real estate
   
34,557,435
     
34,934,352
 
Notes receivable
   
12,868,853
     
14,424,127
 
Policy loans
   
6,277,787
     
6,567,434
 
Short-term investments
   
3,680,135
     
3,596,941
 
Total investments
   
354,318,164
     
364,271,636
 
                 
Cash and cash equivalents
   
23,841,690
     
45,290,385
 
Accrued investment income
   
1,458,149
     
1,371,677
 
Reinsurance receivables:
               
Future policy benefits
   
24,041,985
     
24,318,030
 
Policy claims and other benefits
   
4,765,349
     
4,638,857
 
Cost of insurance acquired
   
2,367,514
     
2,698,153
 
Income tax receivable
   
578,637
     
0
 
Other assets
   
806,274
     
4,945,627
 
Total assets
 
$
412,177,762
   
$
447,534,365
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Liabilities:
               
Policy liabilities and accruals:
               
Future policyholder benefits
 
$
226,485,914
   
$
229,582,664
 
Policy claims and benefits payable
   
3,591,492
     
4,072,879
 
Other policyholder funds
   
301,209
     
318,096
 
Dividend and endowment accumulations
   
14,698,988
     
14,802,746
 
Income taxes payable
   
0
     
4,189,081
 
Deferred income taxes
   
9,600,138
     
11,582,138
 
Notes payable
   
0
     
19,000,000
 
Other liabilities
   
5,457,701
     
5,958,385
 
Total liabilities
   
260,135,442
     
289,505,989
 
                 
Shareholders' equity:
               
Common stock - no par value, stated value $0.001 per share.  Authorized 7,000,000 shares - 3,183,035 and 3,164,809 shares outstanding
   
3,184
     
3,166
 
Additional paid-in capital
   
33,136,764
     
32,693,972
 
Retained earnings
   
124,672,520
     
131,989,352
 
Accumulated other comprehensive income (loss)
   
(6,283,132
)
   
(7,111,586
)
Total UTG shareholders' equity
   
151,529,336
     
157,574,904
 
Noncontrolling interests
   
512,984
     
453,472
 
Total shareholders' equity
   
152,042,320
     
158,028,376
 
Total liabilities and shareholders' equity
 
$
412,177,762
   
$
447,534,365
 

* Balance sheet audited at December 31, 2022.

See accompanying notes.



UTG, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenue:
                       
Premiums and policy fees
 
$
2,087,436
   
$
2,155,643
   
$
4,144,617
   
$
4,308,704
 
Ceded reinsurance premiums and policy fees
   
(807,170
)
   
(721,650
)
   
(1,324,981
)
   
(1,367,799
)
Net investment income
   
3,243,796
     
4,440,186
     
6,561,961
     
8,899,554
 
Other income
   
70,233
     
93,713
     
106,818
     
155,036
 
      Revenue before net investment gains (losses)
   
4,594,295
     
5,967,892
     
9,488,415
     
11,995,495
 
Net investment gains (losses):
                               
Other realized investment gains, net
   
319,310
     
79,109
     
1,035,610
     
4,859,258
 
Change in fair value of equity securities
   
1,459,478
     
(790,338
)
   
(7,185,996
)
   
7,364,291
 
      Total net investment gains (losses)
   
1,778,788
     
(711,229
)
   
(6,150,386
)
   
12,223,549
 
Total revenue
   
6,373,083
     
5,256,663
     
3,338,029
     
24,219,044
 
                                 
Benefits and other expenses:
                               
Benefits, claims and settlement expenses:
                               
Life
   
4,499,416
     
3,609,121
     
8,148,440
     
8,269,918
 
Ceded reinsurance benefits and claims
   
(883,655
)
   
245,841
     
(1,497,016
)
   
(741,590
)
Annuity
   
257,811
     
256,188
     
509,443
     
519,230
 
Dividends to policyholders
   
81,704
     
85,933
     
168,702
     
173,092
 
Commissions and amortization of deferred policy acquisition costs
   
(26,298
)
   
(26,290
)
   
(54,154
)
   
(51,959
)
Amortization of cost of insurance acquired
   
165,325
     
172,087
     
330,639
     
344,174
 
Operating expenses
   
2,035,539
     
1,899,338
     
4,307,415
     
4,817,661
 
Interest expense
   
2,897
     
23,306
     
16,820
     
35,280
 
Total benefits and other expenses
   
6,132,739
     
6,265,524
     
11,930,289
     
13,365,806
 
                                 
Income (loss) before income taxes
   
240,344
     
(1,008,861
)
   
(8,592,260
)
   
10,853,238
 
Income tax expense (benefit)
   
131,662
     
(270,762
)
   
(1,789,190
)
   
2,372,300
 
                                 
Net income (loss)
   
108,682
     
(738,099
)
   
(6,803,070
)
   
8,480,938
 
                                 
Net income attributable to noncontrolling interests
   
(29,022
)
   
(27,107
)
   
(59,512
)
   
(53,821
)
                                 
Net income (loss) attributable to common shareholders
 
$
79,660
   
$
(765,206
)
 
$
(6,862,582
)
 
$
8,427,117
 
                                 
Amounts attributable to common shareholders
                               
Basic income (loss) per share
 
$
0.03
   
$
(0.24
)
 
$
(2.15
)
 
$
2.66
 
                                 
Diluted income (loss) per share
 
$
0.03
   
$
(0.24
)
 
$
(2.15
)
 
$
2.66
 
                                 
Basic weighted average shares outstanding
   
3,185,576
     
3,172,243
     
3,187,327
     
3,171,667
 
                                 
Diluted weighted average shares outstanding
   
3,185,576
     
3,172,243
     
3,187,327
     
3,171,667
 


See accompanying notes.




UTG, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Net income (loss)
 
$
108,682
   
$
(738,099
)
 
$
(6,803,070
)
 
$
8,480,938
 
                                 
Other comprehensive income (loss):
                               
                                 
Unrealized holding gains (losses) arising during period, pre-tax
   
(1,725,615
)
   
(7,129,016
)
   
1,084,884
     
(16,313,575
)
Tax (expense) benefit on unrealized holding gains (losses) arising during the period
   
366,527
     
1,497,094
     
(220,222
)
   
3,425,851
 
Unrealized holding gains (losses) arising during period, net of tax
   
(1,359,088
)
   
(5,631,922
)
   
864,662
     
(12,887,724
)
                                 
Less reclassification adjustment for (gains) losses included in net income
   
(25,000
)
   
4,896
     
(45,833
)
   
527
 
Tax expense (benefit) for gains included in net income (loss)
   
5,250
     
(1,029
)
   
9,625
     
(111
)
Reclassification adjustment for (gains) losses included in net income, net of tax
   
(19,750
)
   
3,867
     
(36,208
)
   
416
 
Subtotal: Other comprehensive income (loss), net of tax
   
(1,378,838
)
   
(5,628,055
)
   
828,454
     
(12,887,308
)
                                 
Comprehensive income (loss)
   
(1,270,156
)
   
(6,366,154
)
   
(5,974,616
)
   
(4,406,370
)
                                 
Less comprehensive income attributable to noncontrolling interests
   
(29,022
)
   
(27,107
)
   
(59,512
)
   
(53,821
)
                                 
Comprehensive income (loss) attributable to UTG, Inc.
 
$
(1,299,178
)
 
$
(6,393,261
)
 
$
(6,034,128
)
 
$
(4,460,191
)


See accompanying notes.




UTG, Inc.
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

Three Months Ended June 30, 2023
 
Common Stock
   
Additional Paid-In Capital
   
Retained Earnings
   
Accumulated Other
Comprehensive Income
   
Noncontrolling Interest
   
Total Shareholders’ Equity
 
                                     
Balance at March 31, 2023
 
$
3,189
   
$
33,268,111
   
$
124,592,860
   
$
(4,904,294
)
 
$
483,962
   
$
153,443,828
 
Common stock issued during year
   
0
     
0
     
0
     
0
     
0
     
0
 
Treasury shares acquired
   
(5
)
   
(131,347
)
   
0
     
0
     
0
     
(131,352
)
Net income (loss) attributable to common shareholders
   
0
     
0
     
79,660
     
0
     
0
     
79,660
 
Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes
   
0
     
0
     
0
     
(1,378,838
)
   
0
     
(1,378,838
)
Contributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Distributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Gain attributable to noncontrolling interest
   
0
     
0
     
0
     
0
     
29,022
     
29,022
 
Balance at June 30, 2023
 
$
3,184
   
$
33,136,764
   
$
124,672,520
   
$
(6,283,132
)
 
$
512,984
   
$
152,042,320
 

Six Months Ended June 30, 2023
 
Common Stock
   
Additional Paid-In Capital
   
Retained Earnings
   
Accumulated Other
Comprehensive Income
   
Noncontrolling Interest
   
Total Shareholders’ Equity
 
                                     
Balance at December 31, 2022
 
$
3,166
   
$
32,693,972
   
$
131,989,352
   
$
(7,111,586
)
 
$
453,472
   
$
158,028,376
 
Adoption of new accounting standard
   
0
     
0
     
(454,250
)
   
0
     
0
     
(454,250
)
     
3,166
     
32,693,972
     
131,535,102
     
(7,111,586
)
   
453,472
     
157,574,126
 
Common stock issued during year
   
27
     
674,363
     
0
     
0
     
0
     
674,390
 
Treasury shares acquired
   
(9
)
   
(231,571
)
   
0
     
0
     
0
     
(231,580
)
Net income (loss) attributable to common shareholders
   
0
     
0
     
(6,862,582
)
   
0
     
0
     
(6,862,582
)
Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes
   
0
     
0
     
0
     
828,454
     
0
     
828,454
 
Contributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Distributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Gain attributable to noncontrolling interest
   
0
     
0
     
0
     
0
     
59,512
     
59,512
 
Balance at June 30, 2023
 
$
3,184
   
$
33,136,764
   
$
124,672,520
   
$
(6,283,132
)
 
$
512,984
   
$
152,042,320
 

See accompanying notes.




UTG, Inc.
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

Three Months Ended June 30, 2022
 
Common Stock
   
Additional Paid-In Capital
   
Retained Earnings
   
Accumulated Other
Comprehensive Income
   
Noncontrolling Interest
   
Total Shareholders’ Equity
 
                                     
Balance at March 31, 2022
 
$
3,176
   
$
32,999,942
   
$
106,923,670
   
$
2,993,898
   
$
503,266
   
$
143,423,952
 
Common stock issued during year
   
0
     
0
     
0
     
0
     
0
     
0
 
Treasury shares acquired
   
(6
)
   
(145,892
)
   
0
     
0
     
0
     
(145,898
)
Net income attributable to common shareholders
   
0
     
0
     
(765,206
)
   
0
     
0
     
(765,206
)
Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes
   
0
     
0
     
0
     
(5,628,055
)
   
0
     
(5,628,055
)
Contributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Distributions
   
0
     
0
     
0
     
0
     
603
     
603
 
Gain attributable to noncontrolling interest
   
0
     
0
     
0
     
0
     
27,107
     
27,107
 
Balance at June 30, 2022
 
$
3,170
   
$
32,854,050
   
$
106,158,464
   
$
(2,634,157
)
 
$
530,976
   
$
136,912,503
 

Six Months Ended June 30, 2022
 
Common Stock
   
Additional Paid-In Capital
   
Retained Earnings
   
Accumulated Other
Comprehensive Income
   
Noncontrolling Interest
   
Total Shareholders’ Equity
 
                                     
Balance at December 31, 2021
 
$
3,167
   
$
32,780,587
   
$
97,731,347
   
$
10,253,151
   
$
476,555
   
$
141,244,807
 
Common stock issued during year
   
18
     
486,779
     
0
     
0
     
0
     
486,797
 
Treasury shares acquired
   
(15
)
   
(413,316
)
   
0
     
0
     
0
     
(413,331
)
Net income attributable to common shareholders
   
0
     
0
     
8,427,117
     
0
     
0
     
8,427,117
 
Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes
   
0
     
0
     
0
     
(12,887,308
)
   
0
     
(12,887,308
)
Contributions
   
0
     
0
     
0
     
0
     
0
     
0
 
Distributions
   
0
     
0
     
0
     
0
     
600
     
600
 
Gain attributable to noncontrolling interest
   
0
     
0
     
0
     
0
     
53,821
     
53,821
 
Balance at June 30, 2022
 
$
3,170
   
$
32,854,050
   
$
106,158,464
   
$
(2,634,157
)
 
$
530,976
   
$
136,912,503
 


See accompanying notes.





UTG, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2023
   
2022
 
Cash flows from operating activities:
           
Net income (loss)
 
$
(6,803,070
)
 
$
8,480,938
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
Amortization (accretion) of investments
   
(81,839
)
   
(6,865
)
Realized investment (gains) losses, net
   
(1,035,610
)
   
(4,859,258
)
Change in fair value of equity securities
   
7,185,996
     
(7,364,291
)
Unrealized trading (gains) losses included in income
   
0
     
1,086
 
Realized trading (gains) losses included in income
   
0
     
12,197
 
Amortization of cost of insurance acquired
   
330,639
     
344,174
 
Depreciation and depletion
   
318,475
     
918,168
 
Stock-based compensation
   
674,390
     
486,797
 
Charges for mortality and administration of universal life and annuity products
   
(2,869,847
)
   
(2,995,235
)
Interest credited to account balances
   
1,835,166
     
1,891,086
 
Change in accrued investment income
   
(86,472
)
   
(13,861
)
Change in reinsurance receivables
   
149,553
     
832,213
 
Change in policy liabilities and accruals
   
(2,426,980
)
   
(2,016,166
)
Change in income taxes receivable (payable)
   
(4,767,718
)
   
66,735
 
Change in other assets and liabilities, net
   
1,522,196
     
2,052,502
 
Net cash provided by (used in) operating activities
   
(6,055,121
)
   
(2,169,780
)
                 
Cash flows from investing activities:
               
Proceeds from investments sold and matured:
               
Fixed maturities available for sale
   
2,045,833
     
7,628,136
 
Equity securities
   
4,285,222
     
2,806,561
 
Trading securities
   
0
     
17,983
 
Mortgage loans
   
1,755,829
     
961,672
 
Real estate
   
4,365,571
     
8,794,081
 
Notes receivable
   
4,338,516
     
3,921,082
 
Policy loans
   
776,616
     
591,084
 
Short-term investments
   
9,740,815
     
0
 
Total proceeds from investments sold and matured
   
27,308,402
     
24,720,599
 
Cost of investments acquired:
               
Fixed maturities available for sale
   
0
     
(1,112,505
)
Equity securities
   
(6,292,534
)
   
(6,387,281
)
Trading securities
   
0
     
(32,382
)
Mortgage loans
   
(217,864
)
   
(1,560,291
)
Real estate
   
(3,581,370
)
   
(3,271,775
)
Notes receivable
   
(2,953,241
)
   
(3,910,657
)
Policy loans
   
(486,969
)
   
(523,039
)
Short-term investments
   
(9,701,297
)
   
0
 
Total cost of investments acquired
   
(23,233,275
)
   
(16,797,930
)
Net cash provided by (used in) investing activities
   
4,075,127
     
7,922,669
 
                 
Cash flows from financing activities:
               
Policyholder contract deposits
   
2,063,085
     
2,444,662
 
Policyholder contract withdrawals
   
(2,300,206
)
   
(2,522,908
)
Proceeds from notes payable/line of credit
   
0
     
9,500,000
 
Payments of principal on notes payable/line of credit
   
(19,000,000
)
   
(26,500,000
)
Purchase of treasury stock
   
(231,580
)
   
(413,331
)
   Non controlling contributions (distributions) of consolidated subsidiary
   
0
     
600
 
Net cash used in financing activities
   
(19,468,701
)
   
(17,490,977
)
Net increase (decrease) in cash and cash equivalents
   
(21,448,695
)
   
(11,738,088
)
Cash and cash equivalents at beginning of period
   
45,290,385
     
30,787,278
 
Cash and cash equivalents at end of period
 
$
23,841,690
   
$
19,049,190
 

See accompanying notes.



UTG, Inc.

Notes to Condensed Consolidated Financial Statements
 (Unaudited)

Note 1 – Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet as of June 30, 2023, which has been derived from audited consolidated financial statements, and the unaudited interim Condensed Consolidated Financial Statements include the accounts of UTG, Inc. (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).  All significant intercompany accounts and transactions have been eliminated in consolidation.  The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.  The information furnished includes all adjustments and accruals of a normal recurring nature, which in the opinion of Management, are necessary for a fair presentation of the results for the interim periods.  The unaudited Condensed Consolidated Financial Statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022The Company’s results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future period.

This document at times will refer to the Registrant’s largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding, LLC (“FSF”), a Kentucky corporation, and First Southern Bancorp, Inc. (“FSBI”), a financial services holding company.  FSBI operates through its 100% owned subsidiary bank, First Southern National Bank (“FSNB”).  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG’s largest shareholder through his ownership control of FSF, FSBI and affiliates. At June 30, 2023, Mr. Correll owns or controls directly and indirectly approximately 65.41% of UTG’s outstanding stock.

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

Certain amounts in prior periods have been reclassified to conform with the current period presentation.

Note 2 – Recently Issued Accounting Standards

During the six months ended June 30, 2023, there were no additions to or changes in the critical accounting policies disclosed in the 2022 Form 10-K., except for the following:

On January 1, 2023, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss ("CECL") methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposure such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses.

The Company adopted ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposure. The transition adjustment of the adoption of CECL included an increase in the allowance for credit losses on loans of $540,000, which is presented as a reduction to net loans outstanding, and an increase in the allowance for credit losses on unfunded commitments of $35,000, which is recorded within other liabilities. The Company recorded a net decrease to retained earnings of $454,250 as of January 1, 2023 for the cumulative effect of adopting CECL, which reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable accounting standards ("Incurred Loss").

Note 3 – Investments

Available for Sale Securities – Fixed Maturity Securities

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

Investments in available for sale securities are summarized as follows:

June 30, 2023
 
Original or Amortized Cost
   
Gross Unrealized Gains
   
Gross Unrealized Losses
   
Fair Value
 
Investments available for sale:
                       
Fixed maturities
                       
U.S. Government and govt. agencies and authorities
 
$
18,316,746
   
$
0
   
$
(1,049,098
)
 
$
17,267,648
 
U.S. special revenue and assessments
   
7,532,039
     
0
     
(316,968
)
   
7,215,071
 
All other corporate bonds
   
89,408,672
     
54,920
     
(6,606,940
)
   
82,856,652
 
   
$
115,257,457
   
$
54,920
   
$
(7,973,006
)
 
$
107,339,371
 

December 31, 2022
 
Original or Amortized Cost
   
Gross Unrealized Gains
   
Gross Unrealized Losses
   
Fair Value
 
Investments available for sale:
                       
Fixed maturities
                       
U.S. Government and govt. agencies and authorities
 
$
18,315,321
   
$
0
   
$
(1,104,146
)
 
$
17,211,175
 
U.S. special revenue and assessments
   
7,535,018
     
0
     
(335,918
)
   
7,199,100
 
All other corporate bonds
   
91,429,481
     
65,529
     
(7,592,226
)
   
83,902,784
 
   
$
117,279,820
   
$
65,529
   
$
(9,032,290
)
 
$
108,313,059
 

The amortized cost and estimated market value of debt securities at June 30, 2023, by contractual maturity, is shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Available for Sale
June 30, 2023
 
Amortized Cost
   
Fair Value
 
Due in one year or less
 
$
10,499,837
   
$
10,402,435
 
Due after one year through five years
   
51,518,933
     
49,102,579
 
Due after five years through ten years
   
4,199,090
     
4,113,718
 
Due after ten years
   
21,933,561
     
19,661,950
 
Fixed maturities with no single maturity date
   
27,106,036
     
24,058,689
 
Total
 
$
115,257,457
   
$
107,339,371
 

The fair value of investments with sustained gross unrealized losses are as follows:

June 30, 2023
 
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
 
$
1,483,470
     
(17,913
)
   
15,784,178
     
(1,031,185
)
   
17,267,648
   
$
(1,049,098
)
U.S. Special Revenue and Assessments
   
7,215,071
     
(316,968
)
   
0
     
0
     
7,215,071
     
(316,968
)
All other corporate bonds
   
48,366,442
     
(3,624,014
)
   
33,442,210
     
(2,982,926
)
   
81,808,652
     
(6,606,940
)
Total fixed maturities
 
$
57,064,983
     
(3,958,895
)
   
49,226,388
     
(4,014,111
)
   
106,291,371
   
$
(7,973,006
)

December 31, 2022
 
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
 
$
17,211,175
     
(1,104,146
)
   
0
     
0
     
17,211,175
   
$
(1,104,146
)
U.S. special revenue and assessments
   
7,199,100
     
(335,918
)
   
0
     
0
     
7,199,100
     
(335,918
)
All other corporate bonds
   
80,144,564
     
(7,592,226
)
   
0
     
0
     
80,144,564
     
(7,592,226
)
Total fixed maturities
 
$
104,554,839
     
(9,032,290
)
   
0
     
0
     
104,554,839
   
$
(9,032,290
)

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

 
Less than 12 months
   
12 months or longer
   
Total
 
As of June 30, 2023
                 
Fixed maturities
   
25
     
30
     
55
 
As of December 31, 2022
                       
Fixed maturities
   
57
     
0
     
57
 

Substantially all of the unrealized losses on fixed maturities at June 30, 2023 and December 31, 2022 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.  Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of  June 30, 2023 and December 31, 2022.

Net Investment Gains (Losses)

The following table presents net investment gains (losses) and the change in net unrealized gains (losses) on investments. 

 
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2023
   
2022
   
2023
   
2022
 
Realized gains:
                       
Sales of fixed maturities
 
$
25,000
   
$
314
   
$
45,833
   
$
4,683
 
Sales of equity securities
   
163,290
     
12,223
     
248,474
     
397,581
 
Sales of real estate
   
138,986
     
113,398
     
725,760
     
4,571,840
 
Sales of short-term investments
   
0
     
0
     
23,509
     
0
 
Total realized gains
   
327,276
     
125,935
     
1,043,576
     
4,974,104
 
Realized losses:
                               
Sales of fixed maturities
   
0
     
(5,210
)
   
0
     
(5,210
)
Sales of equity securities
   
(7,966
)
   
(41,616
)
   
(7,966
)
   
(109,636
)
Total realized losses
   
(7,966
)
   
(46,826
)
   
(7,966
)
   
(114,846
)
Net realized investment gains (losses)
   
319,310
     
79,109
     
1,035,610
     
4,859,258
 
Change in fair value of equity securities:
                               
Change in fair value of equity securities held at the end of the period
   
1,459,478
     
(790,338
)
   
(7,185,996
)
   
7,364,291
 
Change in fair value of equity securities
   
1,459,478
     
(790,338
)
   
(7,185,996
)
   
7,364,291
 
Net investment gains (losses)
 
$
1,778,788
   
$
(711,229
)