Cost of Insurance Acquired

12 Months Ended

Dec. 31, 2024

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.

	2024			2023
Cost of insurance acquired, beginning of year	$	2,036,896		$	2,698,153
Interest accretion		339,372			418,722
Amortization		(975,187	)		(1,079,979	)
Net amortization		(635,815	)		(661,257	)
Cost of insurance acquired, end of year	$	1,401,081		$	2,036,896

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

	Interest Accretion		Amortization		Net Amortization
2025		263,074		877,240		614,166
2026		189,374		799,520		610,146
2027		116,157		292,926		176,769