UTG, Inc. Annual Report 2024

FY2024 Annual Report · UTG, Inc.

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2024 Annual Report

Business Overview

UTG, Inc. (the “Registrant”, “Company” or “UTG”) is an insurance holding company incorporated
in the state of Delaware in 2005 and headquartered in Stanford, KY. The Company’s principal
subsidiary is Universal Guaranty Life Insurance Company (“UG”). The Registrant and its primary
subsidiary have only one significant segment, insurance.

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. The Company may explore supplemental sources of income in the future. The cash
outlays of the Company mainly consist of operational costs and the costs of repurchasing Company
common stock.

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.

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, President, 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, 2024, Mr. Correll owns or controls
directly and indirectly approximately 66% of UTG’s outstanding stock.

At December 31, 2024, the Company had consolidated assets of $477 million, consolidated
liabilities of $266 million and total shareholders’ equity of $211 million. The Company’s consolidated
liabilities include policyholder liabilities and accruals of $237 million.

The Company’s principal executive office is located at 205 North Depot Street, Stanford, Kentucky
40484. The Company’s telephone number is 217-241-6300.

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, 2024 and 2023. 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,”
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“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.

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.

Valuation of Securities – The Company’s investment portfolio consists of fixed maturities, equity
securities, mortgage loans, notes receivable and real estate to provide funding of future policy
contractual obligations.

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. While the available-for-
sale fixed maturity securities are generally expected to be held to maturity, they are classified as
available-for-sale and are sold periodically to manage risk. Although all of the fixed maturity
securities are classified as available-for-sale, the Company has the ability and intent to hold the
securities until maturity. The Company has an evaluation process in place to monitor fixed maturity
securities available for sale for credit loss. See Note 2 - Investments for further disclosure of the
allowance for credit loss (“ACL”).

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).

Equity Securities at Cost – 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. The Company recognizes an ACL in earnings at time of
purchase or origination based on expected lifetime credit loss on mortgage loans carried at
amortized cost, in an amount that represents the portion of the amortized cost basis of such
financing receivables, that the Company does not expect to collect, resulting in mortgage loans
being presented at the net amount expected to be collected. See Note 2 - Investments for further
discussion of the ACL.

Investment Real Estate – Real estate held-for-investment is stated at cost less accumulated
depreciation. Depreciation is computed on a straight-line-basis for financial reporting purposes
using estimated useful lives of 3 to 30 years. Real estate for which the Company commits to a plan
to sell within one year and actively markets in its current condition, for a reasonable price, in
comparison to its estimated fair value, is classified as held-for-sale. Real estate held-for-sale is
stated at lower of depreciated cost or estimated fair value less expected disposition costs and is
not depreciated.

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. The Company recognizes an ACL in earnings at time of
purchase or origination based on expected lifetime credit loss on notes receivable carried at
amortized cost, in an amount that represents the portion of the amortized cost basis of such
financing receivables, that the Company does not expect to collect, resulting in notes receivable
being presented at the net amount expected to be collected. See Note 2 - Investments for further
discussion of the ACL.

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.
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Results of Operations

On a consolidated basis, the Company had net income attributable to common shareholders of
approximately $49.3 million and $2.7 million in 2024 and 2023, respectively. In 2024, income
before income taxes was approximately $62.2 million compared to $2.8 million in 2023. Total
revenues were approximately $84.9 million in 2024 and $26.3 million in 2023.

One-time events, primarily reflected in realized gains, comprise a substantial portion of the net
income and revenue reported by the Company during 2024 and 2023. 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.

The Company reported a change in fair value of equity securities of approximately $56.8 million
and $(2.9) million for the years ended December 31, 2024 and 2023, respectively. This line item
is material to the results reported in the Consolidated Statements of Operations. This line item can
also be extremely volatile, reflecting changes in the stock market. These results can be material
and volatile, most of the equity holdings of the Company were acquired with a long-term view, thus
making these intermediate changes in value of less concern to Management. Management
monitors its equity holdings looking more at the specific entity and market it is in relative to
performance and less to changes due to general market swings that occur over the holding period
of the investment.

Total benefits and other expenses paid in 2024 were approximately $22.7 million compared to
$23.5 million in 2023.

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.

Revenues

Premiums and policy fee revenues, net of reinsurance premiums and policy fees, declined
approximately 1% when comparing 2024 to 2023. 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 2024 and 2023 was approximately 96.6% and 96.7%, respectively. Persistency is a measure
of insurance in-force retained in relation to the previous year. A positive impact on premium income
is the consistency of the lapse percentage. Persistency of the business has been consistent over
the last several years. The lapse percentages were 3.4% and 3.3% for 2024 and 2023, respectively.

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

2024
2023
Net investment income
$
16,093,592
$
14,053,528
Net realized investment gains
7,356,275
9,463,843
Change in fair value of equity
securities
56,839,751
(2,856,543)

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

2024

2023
Fixed maturities, available for sale
$
2,652,249
$
2,932,220
Fixed maturities, held to maturity

167,536

165,137
Equity securities

4,233,674

3,708,633
Mortgage loans

952,084

1,115,145
Real estate

8,958,452

8,318,201
Notes receivable

1,341,095

1,371,973
Policy loans

412,701

433,556
Cash and cash equivalents

1,668,712

1,007,840
Short-term investments

661,962

529,125
Total consolidated investment income

21,048,465

19,581,830
Investment expenses

(4,954,873)

(5,528,302)
Consolidated net investment income
$
16,093,592
$
14,053,528

Net investment income represented 74% and 71% of the Company’s revenue before net
investment gains (losses) as of December 31, 2024 and 2023, respectively. Income from the fixed
maturities, equity securities, and real estate portfolios represented 76% and 77%, respectively, of
the gross investment income reported by the Company for 2024 and 2023.

Beginning in March 2022 and ending in July 2023, the Federal Open Market Committee (“FOMC”)
aggressively raised interest rates to fight inflation. During this time period, the interest rate
environment experienced eleven rate increases totaling 5.50%, including four increases during the
first part of 2023. While these actions had a negative impact on some of our investments currently
owned, this has also allowed for better yields on cash balances and recent investments acquired
as investments mature. In the second half of 2024, the FOMC cut the interest rate 3 times for a
total of 1% making the current rate 4.50%. The Company anticipates a similar decline in earnings
on cash balances and any new investments that are acquired as investments mature.

Earnings from the fixed maturities investment portfolio represented 17% and 22% of the total
consolidated net investment income for the years ended December 31, 2024 and 2023,
respectively. When comparing earnings from the fixed maturities portfolio for the years ended
December 31, 2024 and 2023 income was down approximately 9%. The decrease is due to the
maturity of certain fixed maturity investments during 2024. The Company’s investment in fixed
maturities continues to decline as we have, for the most part, chosen not to reinvest in fixed
maturities. As of December 31, 2024 and 2023, fixed maturities represented 19% and 22%,
respectively, of the total investments owned by the Company.

Earnings from the equity securities portfolio represented 26% of the total consolidated net
investment income for the years ended December 31, 2024 and 2023, respectively. Earnings were
up approximately $525,000 when comparing current year and prior year results. The 2024 increase
in investment income from equity securities was mainly the result of increased dividends from oil
and gas equity securities.

Earnings from the real estate portfolio represented 56% and 59% of the total consolidated net
investment income for the years ended December 31, 2024 and 2023, respectively. Earnings were
up about $640,000 when comparing current year and prior year results.

During 2024, the Company received $1.3 million of income from timber sales as compared to
$550,000 in the prior year. Included in the 2024 and 2023 real estate income is approximately $3.6
million and $4.2 million of income from oil and gas royalty distributions, respectively. Income from
oil and gas royalties represented approximately 41% and 50% of the real estate income for 2024
and 2023, respectively.
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The earnings reported by the cash and short term investments represented 14% and 11% of the
total consolidated net investment income reported by the Company during 2024 and 2023. The
increase in earnings in this category is the result of a combination of higher cash and short term
holdings in 2024 and from increased interest rates received from banks and other deposit
institutions due to FOMC rate changes. With the three rate declines in 2024 moving it down 1.00%,
the Company anticipates experiencing a similar decline in earnings on cash balances going
forward.

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

2024

2023
Fixed maturities available for sale
$
0
$
58,333
Equity securities

7,190,262

812,035
Real estate

166,020

8,577,155
Short term investments

(7)

16,320
Equity securities - OTTI

(900,149)

0
Consolidated net realized investment gains
6,456,126
9,463,843

Change in fair value of equity securities -
held
52,025,699
(4,900,829)
Change in fair value of equity securities -
sold
4,814,052
2,044,286
Total change in fair value of equity securities
56,839,751
(2,856,543)

Net investment gains
$
63,295,877
$
6,607,300

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

Realized gains and losses from equity securities represent the difference between the fair value at
the beginning of the reporting period and the fair value at the time of sale. The total gains from
equity securities sold in 2024 were approximately $12.0 million, of which $7.2 million is being
reported as gains from equity securities and $4.8 million is reported as a component of the change
in the fair value of equity securities. The gains were the result of selling several equity securities
holdings.

The total gains from equity securities sold in 2023 were approximately $2.9 million, of which
$812,035 is being reported as gains from equity securities and $2.0 million is reported as a
component of the change in the fair value of equity securities. The gains were the result of selling
one large equity securities holding and several other small holdings.

The Company reported a change in fair value of equity securities of approximately $56.8 million
and $(2.9) million for the years ended December 31, 2024 and 2023, respectively. This line item
is material to the results reported in the Consolidated Statements of Operations, and this line item
can also be extremely volatile. While these results can be material and volatile, most of the equity
holdings of the Company were acquired with a long-term view, thus making these intermediate
changes in value less of a concern to Management. Management monitors its equity holdings
looking more at the specific entity and market it is in relative to performance and less to changes
due to general market swings that occur over the holding period of the investment.

Equity investments, primarily in the oil and gas industry, represent almost all the unrealized gains
reported in 2024 and unrealized losses reported in 2023. Periodic pull backs and rallies are
expected by management. Management believes its current equity investments continue to be
solid investments for the Company and have further growth potential; however, changes in market
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conditions could cause volatility in market prices. In 2023, the Company saw negative results in its
equity investments. However, most all the negative results occurred in the first quarter of 2023.

In 2024, the Company recognized an other-than-temporary impairment of $900,149 on an equity
security. The other-than-temporary impairment recognized during 2024 was taken as a result of
Management’s assessment and determination of value of the investment. The investment was
written down to better reflect its current expected value.

During 2024, the Company sold several real estate land parcels in Kentucky and one small parcel
in Illinois which makes up all of the realized gains in Real Estate. During 2023, the Company sold
several smaller real estate land parcels located in Kentucky producing realized gains of
approximately $940,000. Additionally, during third quarter 2023, the Company sold a large land
parcel in West Virginia realizing a gain of approximately $7.6 million.

Expenses

The Company reported total benefits and other expenses of approximately $22.7 million and $23.5
million for the years ended December 31, 2024 and 2023, respectively. Benefits, claims and
settlement expenses represented approximately 56% and 62% of the Company’s total expenses
for 2024 and 2023, respectively. The other major expense category of the Company is operating
expenses, which represented 42% and 36% of the Company’s total expenses for 2024 and 2023,
respectively.

Life benefits, claims and settlement expenses, net of reinsurance benefits, were down
approximately 12% when comparing 2024 and 2023. 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.

Overall, the Company’s persistency for business in-force remained relatively steady at 96.6% in
2024 compared to 96.7% in 2023. The Company’s actual experience for earned interest,
persistency, and mortality varies from the assumptions applied to pricing and for determining
premiums. Accordingly, differences between the Company’s actual experience and those
assumptions applied may affect the profitability of the Company. Interest crediting rates on
adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot
be lowered any further.

Operating expenses increased approximately 13% or $1.1 million in 2024 as compared to that of
the same period in 2023. When comparing 2024 and 2023 expenses, there is one expense item
that comprises the majority of the increase, charitable contributions. Charitable expense was
approximately $690,000 more when comparing 2024 and 2023. Charitable expense fluctuates
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based on reported taxable income of the Company. Expenses in the remaining categories were
comparable between years.

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. In 2024, the
Company paid approximately $1.3 million in charitable donations as compared to $582,000 in 2023.

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:

2024

As a % of
Total
Investments

As a % of
Total Assets

Fixed maturities, available for sale
$
76,480,086
19%
16%
Fixed maturities, held to maturity

2,500,000

1%
1%
Equity securities, at fair value

234,506,227

59%
49%
Equity securities, at cost

21,203,393

5%
4%
Mortgage loans

16,277,981

4%
3%
Real estate

28,615,602

7%
6%
Notes receivable

12,672,175

3%
3%
Policy loans

5,692,565

1%
1%
Short-term investments

1,954,687

1%
1%
Total investments
$
399,902,716

100%
84%

2023

As a % of
Total
Investments

As a % of
Total Assets

Fixed maturities, available for sale
$
79,084,545

22%
18%
Fixed maturities, held to maturity

2,500,000

1%
1%
Equity securities, at fair value

178,625,485

50%
41%
Equity securities, at cost

18,227,986

4%
4%
Mortgage loans

15,318,176

4%
3%
Real estate

21,975,120

6%
5%
Notes receivable

14,009,225

4%
3%
Policy loans

6,018,248

2%
1%
Short-term investments

29,132,236

7%
7%
Total investments
$
364,891,021

100%
83%

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 84% and 83% of the Company’s total assets as of
December 31, 2024 and 2023, respectively. Fixed maturities and equity securities, at fair value,
consistently represented a substantial portion, 79% and 73%, of the total investments during 2024
and 2023, respectively. The overall investment mix, as a percentage of total investments, remained
fairly consistent when comparing the respective investments held as of December 31, 2024 and
2023.

As of December 31, 2024, 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 income
component of shareholders' equity. Changes in the market value of available for sale securities
resulted in net unrealized gains (losses) of approximately $(222,000) and $1.6 million as of
December 31, 2024 and 2023, 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
marketplace.

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.

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 cash balances, 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, 2024 and 2023, substantially all of the consolidated shareholders’ equity represents net assets
of its subsidiaries. In 2024, the Parent company received no dividends from its insurance
subsidiary and received $2 million in 2023. 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

During October of 2024, the Federal Home Loan Bank approved the renewal of UG’s Cash
Management Advance Application (“CMA”). The CMA is a source of overnight liquidity utilized to
address the day-to-day cash needs of a Company. 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 $21.4 million
as of December 31, 2024. During the fourth quarter of 2023, the Company borrowed $19 million
and planned to utilize the funds for investing activities. During the first quarter of 2024, the Company
repaid the entire outstanding principal balance.

Consolidated Liquidity

Cash used in operating activities was approximately $1.6 million and $9.8 million in 2024 and 2023,
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 with
the exception of fluctuations in reinsurance premiums. Management anticipates future cash flows
from operations to remain similar to historic trends.

During 2024 and 2023, the Company’s investing activities provided net cash of approximately $26.5
million and $6.9 million, respectively. The Company recognized proceeds of approximately $71.8
12

million and $79.6 million from investments sold and matured in 2024 and 2023, respectively. The
Company used approximately $(45.3) million and $(72.7) million to acquire investments during
2024 and 2023, respectively. 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 $(20.9) million and $(1.2) million during
2024 and 2023, respectively. As of December 31, 2024 and 2023, the Company had $0 and $19
million, respectively, in debt outstanding with third parties.

The Company had cash and cash equivalents of approximately $45.3 million and $41.2 million as
of December 31, 2024 and 2023, respectively. The Company has a portfolio of marketable fixed
maturity securities that could be sold, if an unexpected event were to occur. These securities had
a fair value of approximately $76.5 million and $79.1 million at December 31, 2024 and 2023,
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, 2024 and 2023 are presented in Note 7 – Credit Arrangements
in the Notes to the Consolidated Financial Statements.

The Company had $0 and $19 million of debt outstanding as of December 31, 2024 and 2023,
respectively.

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, 2024, UG has a ratio of approximately 4.90, which is 490% 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
December of 2024, the Board of Directors of UTG authorized the repurchase of up to an additional
$2 million of UTG’s common stock, for a total repurchase of $24 million of UTG’s common stock in
the open market or in privately negotiated transactions since inception of the program. 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 2024, the Company
repurchased 23,961 shares through the stock repurchase program for $648,152. Through
December 31, 2024, UTG has spent $20,839,555 in the acquisition of 1,380,820 shares under this
program.

Total shareholders’ equity was approximately $210.6 million and $161.7 million as of December
31, 2024 and 2023, respectively. Total shareholders' equity increased approximately 30% in 2024
as compared to 2023. The increase is primarily attributable to net income from operations. As of
December 31, 2024 and 2023, the Company reported accumulated other comprehensive loss of
approximately $(2.9) million and $(2.7) million, respectively.

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.

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, 2024. 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, 2024, 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, 2024, 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.

Report of Independent Registered Public Accounting Firm

To the 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, 2024 and 2023, and the related consolidated statements of operations,
comprehensive income (loss), shareholders’ equity, and cash flows for the years then ended, and the
related notes (collectively referred to as the financial statements). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then
ended, 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
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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
15

Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of
the financial statements that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Classification, Valuation and Disclosure of Investments in Equity Securities – Refer to Notes 1 and 3
Critical Audit Matter Description

The Company invests in numerous equity securities including common stocks, limited partnerships
and limited liability companies that are not publicly traded and may not have readily determinable
fair values. These investments require a detailed analysis of the type of investment on an
investment by investment basis to determine the appropriate classification of the investment as to
whether the investment should be reported using the cost basis, the equity method or whether the
investment should be reported at fair value based on the accounting literature. Since these
investments are not publicly traded, the Company employs various methods in determining the
appropriate valuation of the investments reported at fair value. These methods at times include
utilizing industry specialists in assisting them in determining the fair value method and at other
times, management is able to utilize the practical expedient of net asset value when the investment
is an investment company. These methods at times depend on key inputs and assumptions crucial
to determining fair value that may not be observable requiring managerial judgment and
estimation. Last, the disclosure of this information in the Company’s financial statements can be
challenging to management due to the volume of data and information needed to appropriately
provide the necessary and generally accepted information for a reader to understand the
classification and valuation decisions made by management.

The audit of these equity investments requires a substantial amount of time and effort in order to
obtain the necessary audit evidence and opine on management’s classification, valuation and
disclosure of the investments.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the equity investments that are not publicly traded included the
following procedures, among others:


We gained an understanding of the processes and procedures utilized by management to
classify these investments and determine their values
16


We obtained documentation supporting the investments including purchase agreements,
partnership agreements and limited liability company operating agreements as appropriate
for each investment

We discussed and documented management’s determination of the classification of each
investment as to cost method, equity method or fair value, including whether management
asserted significant influence over operations of the investment

We obtained confirmation of the investment from investment entity personnel, and if
appropriate, audited financial statements of the investment entity

We obtained and discussed valuation information from industry specialists when appropriate
and when utilized by management in determining the fair value of an equity investment and
considered and evaluated the valuation information provided by the specialist in concluding
on the fair value estimated by management for financial reporting

For a selection of equity investments, we recalculated the Company’s valuation based on
information obtained via confirmation, agreements and/or valuation specialists

We obtained and accumulated detailed information on the investments provided by
management for disclosure of these investments in the financial statements and agreed this
information to the documents obtained as a part of our audit procedures for purposes of
classification and valuation

Future Policy Benefits – Refer to Note 1
Critical Audit Matter Description

Liabilities for amounts payable under the Company’s life insurance products are recorded as future
policy benefits liabilities. Such liabilities are established based on actuarial assumptions at the
time policies are issued, or in the case of contracts acquired by purchase, at the purchase date. 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’s future policy benefits liability was $ 218.3 million as of December 31, 2024.

The audit of future policy benefits requires the utilization of an actuarial specialist when considering
the complex methods, assumptions and models management utilizes in determining the value of
these liabilities.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the liability for future policy benefits included the following
procedures, among others:


We gained an understanding of the processes utilized and controls implemented in
determining the valuation of future policy benefits
17


We tested the underlying data used by management in developing the valuation and the
completeness and accuracy of the data

We performed various analytical procedures

We obtained an opinion from management’s actuarial specialist confirming that the actuarial
assumptions and methodologies used were reasonable and in accordance with presently
accepted actuarial standards

We confirmed the independence of management’s consulting actuarial specialist and
reviewed her qualifications as appointed consulting actuary
We have served as the Company’s auditor since 2023.
Springfield, Illinois
March 25, 2025
18

UTG, Inc.
Consolidated Balance Sheets
As of December 31, 2024 and 2023

ASSETS
2024
2023
(as restated)
Investments:
Investments available for sale:
Fixed maturities, at fair value (amortized cost $80,204,532 and $82,493,075)
$
76,480,086
$
79,084,545
Held to maturity redeemable preferred stock, at amortized cost
2,500,000
2,500,000
Equity securities, at fair value (cost $117,599,471 and $113,744,429)
234,506,227
178,625,485
Equity securities, at cost
21,203,393
18,227,986
Mortgage loans on real estate at amortized cost
(net of credit loss reserve of $235,000 and $274,000)
16,277,981

15,318,176
Investment real estate, net
28,615,602
21,975,120
Notes receivable (net of credit loss reserve of $195,000 and $250,000)
12,672,175
14,009,225
Policy loans
5,692,565
6,018,248
Short-term investments
1,954,687
29,132,236
Total investments
399,902,716
364,891,021
Cash and cash equivalents
45,263,967
41,185,196
Accrued investment income
1,264,416
2,001,064
Reinsurance receivables:

Future policy benefits
23,525,945
23,847,623
Policy claims and other benefits
4,480,091
4,734,575
Cost of insurance acquired
1,401,081
2,036,896
Income taxes receivable
790,608
2,128,027
Other assets
317,981
884,531
Total assets
$
476,946,805
$
441,708,933

LIABILITIES AND SHAREHOLDERS' EQUITY

Policy liabilities and accruals:
Future policy benefits
$
218,284,203
$
223,757,860
Policy claims and benefits payable
3,847,214
4,188,917
Other policyholder funds
181,541
260,892
Dividend and endowment accumulations
14,628,119
14,749,258
Deferred income taxes
23,072,061
12,426,840
Notes payable
0
19,000,000
Other liabilities
6,339,303
5,635,373
Total liabilities
266,352,441
280,019,140

Shareholders' equity:

Common stock - no par value, stated value $0.001 per share. Authorized 7,000,000 shares - 3,157,765 and
3,165,320 shares issued and outstanding

3,159
3,167
Additional paid-in capital
32,442,486
32,613,817
Retained earnings
180,631,577
131,330,062
Accumulated other comprehensive loss
(2,942,313)
(2,720,582)
Total UTG shareholders' equity
210,134,909
161,226,464
Noncontrolling interest
459,455
463,329
Total shareholders' equity
210,594,364
161,689,793
Total liabilities and shareholders' equity
$
476,946,805
$
441,708,933

See accompanying notes
UTG, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2024 and 2023

2024

2023

(as restated)
Revenue:

Premiums and policy fees
$
7,567,703

$
7,918,235
Ceded reinsurance premiums and policy fees
(2,280,397)

(2,553,010)
Net investment income
16,093,592

14,053,528
Other income
236,846

280,303
Revenues before net investment gains (losses)
21,617,744

19,699,056
Net investment gains (losses):

Other-than-temporary impairments
(900,149)

0
Other realized investment gains, net
7,356,275

9,463,843
Change in fair value of equity securities
56,839,751

(2,856,543)
Total net investment gains
63,295,877

6,607,300
Total revenues
84,913,621

26,306,356

Benefits and other expenses:

Benefits, claims and settlement expenses:

Life
13,740,517

16,089,474
Ceded reinsurance benefits and claims
(2,323,619)

(2,882,312)
Annuity
1,021,454

1,029,885
Dividends to policyholders
287,779

302,685
Commissions
(109,946)

(102,971)
Amortization of cost of insurance acquired
635,815

661,257
Operating expenses
9,429,857

8,368,135
Interest expense
11,600

28,389
Total benefits and other expenses
22,693,457

23,494,542

Income before income taxes
62,220,164

2,811,814
Income tax expense
12,818,983

41,807

Net income
49,401,181

2,770,007

Net income attributable to noncontrolling interest
(99,666)

(113,397)

Net income attributable to common shareholders
$
49,301,515

$
2,656,610

Amounts attributable to common shareholders:

Basic income per share
$
15.57

$
0.84

Diluted income per share
$
15.57

$
0.84

Basic weighted average shares outstanding
3,165,541

3,176,757

Diluted weighted average shares outstanding
3,165,541

3,176,757

See accompanying notes.
20

UTG, Inc.
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2024 and 2023

2024

2023

Net income
$
49,401,181

$
2,770,007

Other comprehensive income (loss):

Unrealized holding gains (losses) arising during period, pre-tax
(288,074)

1,981,974
Tax (expense) benefit on unrealized holding gains (losses) arising
during the period
66,343

(406,537)
Unrealized holding gains (losses) arising during period, net of tax
(221,731)

1,575,437

Less reclassification adjustment for (gains) losses included in net
income
0

(58,333)
Tax expense (benefit) for (gains) losses included in net income
0

12,250
Reclassification adjustment for (gains) losses included in net income,
net of tax
0

(46,083)
Subtotal: Other comprehensive income (loss), net of tax
(221,731)

1,529,354

Comprehensive income
49,179,450

4,299,361

Less comprehensive income attributable to noncontrolling interests
(99,666)

(113,397)

Comprehensive income attributable to UTG, Inc.
$
49,079,784

$
4,185,964

See accompanying notes.

UTG, Inc.
Consolidated Statements of Shareholders’ Equity

Year ended December 31, 2024
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolli
ng Interest
Total
Shareholders'
Equity
Balance at January 1, 2024
$
3,167
32,613,817
131,330,062
(2,720,582)
463,329
161,689,793
Common stock issued during year
16
476,797
0
0
0
476,813
Treasury shares acquired and retired
(24)
(648,128)
0
0
0
(648,152)
Net income attributable to common shareholders
0
0
49,301,515
0
0
49,301,515
Unrealized holding loss on securities net of
noncontrolling interest and reclassification
adjustment and taxes
0
0
0
(221,731)
0
(221,731)
Distributions
0
0
0
0
(103,540)
(103,540)
Gain attributable to noncontrolling interest
0
0
0
0
99,666
99,666
Balance at December 31, 2024
$
3,159
32,442,486
180,631,577
(2,942,313)
459,455
210,594,364

Year ended December 31, 2023
(as restated)
Common
Stock
Additional
Paid-In Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolli
ng Interest
Total
Shareholders'
Equity
Balance at January 1, 2023
$
3,166
32,693,972
131,989,352
(7,111,586)
453,472
158,028,376
Prior period adjustment
0
0
(2,861,650)
2,861,650
0
0
Adoption of new accounting standard
0
0
(454,250)
0
0
(454,250)
3,166
32,693,972
128,673,452
(4,249,936)
453,472
157,574,126
Common stock issued during year
31
801,781
0
0
0
801,812
Treasury shares acquired and retired
(30)
(881,936)
0
0
0
(881,966)
Net income attributable to common shareholders
0
0
2,656,610
0
0
2,656,610
Unrealized holding gain on securities net of
noncontrolling interest and reclassification
adjustment and taxes
0
0
0
1,529,354
0
1,529,354
Distributions
0
0
0
0
(103,540)
(103,540)
Gain attributable to noncontrolling interest
0
0
0
0
113,397
113,397
Balance at December 31, 2023
$
3,167
32,613,817
131,330,062
(2,720,582)
463,329
161,689,793

See accompanying notes.

UTG, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2024 and 2023

2024
2023
(as restated)
Net income
$
49,401,181
$
2,770,007
Adjustments to reconcile net income to net cash used in operating
activities:

Accretion of investments
(344,267)
(225,762)
Other-than-temporary impairments
900,149
0
Realized investment gains, net
(7,356,275)
(9,463,843)
Change in fair value of equity securities
(56,839,751)
2,856,543
Amortization of cost of insurance acquired
635,815
661,257
Provision for deferred income tax expense
10,711,564
558,916
Depreciation and depletion
1,905,768
728,887
Stock-based compensation
476,813
801,812
Charges for mortality and administration of universal life and
annuity products
(5,472,812)

(5,692,118)
Interest credited to account balances
3,564,187
3,646,515
Change in accrued investment income
736,648
(629,387)
Change in reinsurance receivables
576,162
374,689
Change in policy liabilities and accruals
(3,005,006)
(3,535,674)
Change in income taxes receivable (payable)
1,337,419
(6,317,108)
Change in other assets and liabilities, net
1,204,314
3,679,893
Net cash used in operating activities
(1,568,091)
(9,785,373)
Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale
11,000,000
7,558,333
Equity securities
19,742,295
7,838,385
Trading securities
102,699
0
Mortgage loans
4,512,139
17,770,810
Real estate
3,223,290
16,531,219
Notes receivable
2,197,052
4,944,143
Policy loans
1,283,752
1,453,634
Short-term investments
29,750,000
23,490,815
Total proceeds from investments sold and matured
71,811,227
79,587,339
Cost of investments acquired:
Fixed maturities available for sale
(9,040,152)
0
Equity securities
(15,468,580)
(12,454,268)
Trading securities
(102,699)
0
Mortgage loans
(5,421,945)
(2,654,293)
Real estate
(11,603,519)
(3,417,744)
Notes receivable
(805,000)
(4,779,241)
Policy loans
(958,071)
(904,446)
Short-term investments
(1,910,488)
(48,473,476)
Total cost of investments acquired
(45,310,454)
(72,683,468)
Net cash provided by investing activities
26,500,773
6,903,871
Cash flows from financing activities:
Policyholder contract deposits
3,931,531
4,056,116
Policyholder contract withdrawals
(5,033,750)
(4,294,297)
Proceeds from notes payable/line of credit
0
21,500,000
Payments of principal on notes payable/line of credit
(19,000,000)
(21,500,000)
Purchase of treasury stock
(648,152)
(881,966)
Noncontrolling contributions/(distributions) of consolidated
subsidiary
(103,540)

(103,540)
Net cash used in financing activities
(20,853,911)
(1,223,687)
Net increase (decrease) in cash and cash equivalents
4,078,771
(4,105,189)
Cash and cash equivalents at beginning of year
41,185,196
45,290,385
Cash and cash equivalents at end of year
$
45,263,967
$
41,185,196

See accompanying notes.
23

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”.

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.

Financial Information about Segments - The Financial Accounting Standards Board (“FASB”)
guidance requires a “management approach” in the presentation of business segments based on
how management internally evaluates the operating performance of business units. The Company
has evaluated our operations and has determined there is not definitive segregation between
corporate and insurance operations or between life and annuity operations. Therefore, the
Company reports only consolidated operations.

Investments – The Company reports its investments as follows:

Investments in Fixed Maturity Securities – The Company classifies its investments in fixed maturity
securities on the acquisition date and at each balance sheet date. Securities classified as held-to-
maturity consist of redeemable preferred stock, and are carried at amortized cost, reflecting the
ability and intent to hold the securities to maturity. Securities classified as available-for-sale consist
of bonds and 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. The Company has an evaluation process in place to monitor fixed maturity
24

securities available for sale for credit loss. See Note 2 - Investments for further disclosure of the
allowance for credit loss (“ACL”).

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

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 have remaining maturities exceeding three
months and under 12 months at the time of purchase and are stated 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 is defined as the price that would be received to sell an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. Subsequent to
initial recognition, fair values are based on unadjusted quoted prices for identical assets or liabilities
25

in active markets that are readily and regularly obtainable. When such unadjusted quoted prices
are not available, estimated fair values are based on quoted prices in markets that are not active,
quoted prices for similar but not identical assets or liabilities, or other observable inputs. If these
inputs are not available, or observable inputs are not determinable, unobservable inputs and/or
adjustments to observable inputs requiring significant management judgment are used to
determine the estimated fair value of assets and liabilities. These unobservable inputs can be
based on Management’s judgment, assumptions or estimation and may not be observable in
market activity. Unobservable inputs are based on Management’s assumptions about the inputs
market participants would use in pricing the assets. For more specific information regarding the
Company’s measurements and procedures in valuing financial instruments, see Note 3 – Fair Value
Measurements.

Cash Equivalents – Cash equivalents consist of money market accounts and investments with
maturities of three months or less when purchased.

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 reinsurance 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. In the event that reinsurers do not meet their
obligations to the Company under the terms of the reinsurance agreements, or when events or
changes in circumstances indicate that its carrying amount may not be recoverable, reinsurance
recoverable balances could become uncollectible. In such instances, reinsurance recoverable
balances are stated net of allowances for uncollectible reinsurance, consistent with the credit loss
guidance which requires recording an allowance for credit loss (“ACL”). See Note 4 - Reinsurance
for additional information.

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.

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 2017 CSO Ultimate tables. Withdrawal rate assumptions are
based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed
policy lapse rates.
26

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, 2024 and 2023.

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. 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

ASUs not listed below were assessed and either determined to be not applicable or are not
expected to have a material impact on the Company’s consolidated financial statements or
disclosures. ASUs issued but not yet adopted as of December 31, 2024 that are currently being
assessed and may or may not have a material impact on the Company’s consolidated financial
statements or disclosures are disclosed below:

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.
2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. 'This ASU requires
public companies to disclose, in the notes to financial statements, specified information about
certain costs and expenses at each interim and annual reporting period. Specifically, they will be
required to: Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c)
depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization
recognized as part of oil- and gas-producing activities (or other amounts of depletion expense)
included in each relevant expense caption. Include certain amounts that are already required to be
disclosed under current generally accepted accounting principles (GAAP) in the same disclosure
as the other disaggregation requirements. Disclose a qualitative description of the amounts
remaining in relevant expense captions that are not separately disaggregated quantitatively.
Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition
of selling expenses. ASU 2024-03 is effective for public business entities for annual reporting
periods beginning after December 15, 2026. Accounting Standards Update No. 2025-01 amended
the effective date of ASU No. 2024-03 to clarify that all public entities are required to adopt the
guidance in annual reporting periods beginning after December 15, 2026, and interim periods after
December 15, 2027. The Company is evaluating the impact of the guidance on its consolidated
financial statements.

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.
2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Amendments in
this update require that public business entities, on an annual basis: (1) disclose specific categories
in the rate reconciliation and (2) provide additional information for reconciling items that meet a
quantitative threshold. In addition, the amendments in this update require that all entities disclose
on an annual basis the following information about income taxes: (1) the amounts of income taxes
paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount
of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which
income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes
paid (net of refunds received). ASU 2023-09 is effective for public business entities for annual
periods beginning after December 15, 2024. The Company is evaluating the impact of the guidance
on its consolidated financial statements.

The FASB issued Accounting Standards Update No. 2022-05, Financial Services-Insurance (Topic
944): Transition for Sold Contracts. ASU 2022-05 amends transition guidance in ASU No. 2018-
12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-
Duration Contracts (LDTI), for contracts that have been derecognized because of a sale or disposal
of individual or a group of contracts or legal entities before the LDTI effective date. This ASU
amends the LDTI transition guidance to allow an insurance entity to make an accounting policy
election to exclude certain contracts or legal entities from applying the LDTI guidance when, as of
the LDTI effective date, (a) the insurance contracts have been derecognized because of a sale or
disposal and (b) the insurance entity has no significant continuing involvement with the
derecognized contracts. See below for further analysis regarding ASU No. 2018-12.

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 was originally 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
28

adoption. The guidance on MRB will be adopted on a retrospective basis as of the earliest period
presented in the year of adoption. In November of 2019, the FASB issued ASU 2019-09, which
delayed the effective date of ASU 2018-12 to fiscal years beginning after December 15, 2024, for
smaller reporting companies. The Company is evaluating the impact on the consolidated financial
statements.

Reclassifications - Certain reclassifications have been made to the 2023 Consolidated Financial
Statements to make them comparable to the current year Consolidated Financial Statements. The
Company has elected to reclassify certain investments on the Consolidated Balance Sheets and
related footnotes for prior periods to conform with the presentation in the fiscal year ended
December 31, 2024 Consolidated Financial Statements.

Revision of previously issued financial statements – The Company identified an error in its
previously issued Consolidated Financial Statements related to the classification of certain
investment types on the Consolidated Balance Sheets. The impact of the error to the prior period’s
Consolidated Financial Statements was not considered to be material. See Note 16 - Revision of
Previously Issued Consolidated Financial Statements for details of the revision.

Subsequent Events - Management has evaluated subsequent events for recognition and
disclosure in the consolidated financial statements through the date the consolidated financial
statements were available to be issued. The Company did not identify any subsequent events
requiring recognition or disclosure.

Note 2 – Investments

Investment Risks and Uncertainties

Investments are exposed to the following primary sources of risk: credit, interest rate, liquidity,
market valuation, currency and real estate risk. The financial statement risks, stemming from such
investment risks, are those associated with the determination of estimated fair values, the
diminished ability to sell certain investments in times of strained market conditions, the recognition
of ACL and impairments, and the recognition of income on certain investments. The use of different
methodologies, assumptions and inputs relating to these financial statement risks may have a
material effect on the amounts presented within the Consolidated Financial Statements.

The determination of ACL and impairments is highly subjective and is based upon quarterly
evaluations and assessments of known and inherent risks associated with the respective asset
class. Such evaluations and assessments are revised as conditions change and new information
becomes available.

Investment in 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 fixed maturity securities are summarized by type as follows for the years ended
December 31:

2024
Original or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Fixed maturities, at fair value

U.S. Government and govt. agencies and
authorities
$
21,354,053
$
1,484
$
(473,243)
$
20,882,294
U.S. special revenue and assessments

7,522,751
0
(288,560)
7,234,191
All other corporate bonds

51,327,728
47,632
(3,011,759)
48,363,601
Total fixed maturities, at fair value
$
80,204,532 $
49,116 $ (3,773,562) $
76,480,086

Held to maturity redeemable preferred stock, at
amortized cost

$
2,500,000

$
0

$
2,500,000

2023
Original or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Fixed maturities, at fair value
U.S. Government and govt. agencies and
authorities
$
14,316,976
$
0
$
(729,197)
$
13,587,779
U.S. special revenue and assessments

7,528,985
0
(220,527)
7,308,458
All other corporate bonds

60,647,114
89,002
(2,547,808)
58,188,308
Total fixed maturities, at fair value
$
82,493,075
$
89,002 $ (3,497,532)
$
79,084,545

Held to maturity redeemable preferred stock, at
amortized cost

$
2,500,000
$
0

$
0
$
2,500,000

The amortized cost and estimated fair value of fixed maturity securities at December 31, 2023, by
contractual maturity date, is shown below.

Fixed Maturity Securities
December 31, 2024

Amortized
Cost

Estimated
Fair Value
Due in one year or less

$
10,019,145
$
9,957,350
Due after one year through five years

45,640,691

44,544,266
Due after five years through ten years

4,371,713

4,227,940
Due after ten years

20,172,983

17,750,530
Total

$
80,204,532
$
76,480,086

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment
options.

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 $0 as
of December 31, 2024 and 2023.

The following table presents the estimated fair value and gross unrealized losses of fixed maturity
securities in an unrealized loss position as of December 31:

2024
Less than 12 months
12 months or longer
Total

Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
U.S. Government and govt.
agencies and authorities

$
10,022,087
(19,341)
$ 10,360,047
(453,902)
$
20,382,134
(473,243)
U.S. special revenue and
assessments

0
0

7,234,191
(288,560)

7,234,191
(288,560)
All other corporate bonds

6,457,282
(38,492)

38,176,295
(2,973,267)

44,633,577
(3,011,759)
Total fixed maturities
$
16,479,369
(57,833)
$ 55,770,533
(3,715,729)
$
72,249,902
(3,773,562)

2023
Less than 12 months
12 months or longer
Total

Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
Estimated
fair value
Unrealized
losses
U.S. Government and govt.
agencies and authorities

$
1,497,390
(3,696)
$
12,090,389
(725,501)
$
13,587,779
(729,197)
U.S. special revenue and
assessments

0
0

7,308,458
(220,527)

7,308,458
(220,527)
All other corporate bonds

544,610
(2,319)

49,353,275
(2,545,489)

49,897,885
(2,547,808)
Total fixed maturities
$
2,042,000
(6,015)
$
68,752,122
(3,491,517)
$
70,794,122
(3,497,532)

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, 2024

Fixed maturities
9

42
As of December 31, 2023

Fixed maturities
2

Allowance for Credit Loss - Available for Sale Securities

Management considers a wide range of factors about the security issuer and uses its best judgment
in evaluating the cause of the decline in the estimated fair value of the security and in assessing
the prospects for near-term recovery. Inherent in management’s evaluation of the security are
assumptions and estimates about the operations of the issuer and its future earnings potential.
Considerations used in the credit loss evaluation process include, but are not limited to: (1) the
extent to which the estimated fair value has been below amortized cost, (2) adverse conditions
specifically related to a security, an industry sector, adverse change in the financial condition of the
issuer of the security, (3) payment structure of the security and likelihood of the issuer being able
to make payments, (4) failure of the issuer to make scheduled interest and principal payments,
(5) whether the issuer, or series of issuers or an industry has suffered a catastrophic loss or has
exhausted natural resources, (6) whether the Company has the intent to sell or will more likely than
not be required to sell a particular security before the decline in estimated fair value below
amortized cost recovers, (7) changes in the rating of the security by a rating agency, and (8) other
subjective factors.

Substantially all of the unrealized losses on fixed maturity securities at December 31, 2024 and
2023 are attributable to changes in market interest rates and general disruptions in the credit
market subsequent to purchase. At December 31, 2024, the Company did not intend to sell its
31

securities in an unrealized loss position, and it was not more likely than not that the Company would
be required to sell these securities before the anticipated recovery of the remaining amortized cost.
Therefore, the Company concluded that these securities had not incurred a credit loss and should
not have an allowance for credit loss at December 31, 2024.

Future provisions for credit loss will depend primarily on economic fundamentals, issuer
performance, and changes in credit ratings.

Net unrealized losses included in other comprehensive income (loss) for investments classified as
available-for-sale, net of the effect of deferred income taxes, assuming that the depreciation had
been realized as of December 31, 2024 and December 31, 2023:

December 31, 2024

December 31, 2023
Unrealized appreciation (depreciation) on
available-for-sale securities
$
(3,724,446)
$
(3,443,775)
Deferred income taxes
782,133

723,193
Net unrealized appreciation (depreciation) on
available-for-sale securities
$
(2,942,313)
$
(2,720,582)

Cost Method Investments

The Company held equity investments with an aggregate cost of $21,203,393 and $18,227,986 at
December 31, 2024 and 2023, respectively. 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 reviews and considers 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 equity securities reported at cost, the Company reported an other-than-temporary
impairment of $900,149 on one security during the fourth quarter of 2024. The other-than-
temporary impairment was taken as a result of Management’s assessment and determination of
value of the investment.

Mortgage Loans

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 2024 and 2023, the Company acquired $5,421,945 and $2,654,293 in mortgage loans,
respectively. FSNB services the majority of the Company’s mortgage loan portfolio. The Company
pays FSNB a 0.25% servicing fee on these loans and a one-time fee at loan origination of 0.50%
of the original loan cost to cover costs incurred by FSNB relating to the processing and
establishment of the loan.

During 2024 and 2023, the maximum and minimum lending rates for mortgage loans were:

2024

2023

Maximum
rate

Minimum
rate

Maximum
rate

Minimum
rate
Farm loans
8.00 %

8.00 %

5.00 %

5.00 %
Commercial loans
10.00 %

4.00 %

8.75 %

4.00 %
Residential loans
5.00 %

4.15 %

5.00 %

4.15 %

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.

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

2024

2023
In good standing
$
16,277,981

$
15,318,176
Total mortgage loans
$
16,277,981

$
15,318,176
Total foreclosed loans during the year
$
0

$
0

The following is a summary of the mortgage loans outstanding and the related allowance for
credit losses:

December 31,
2024

December 31,
2023
Farm
$
321,774

$
332,417
Commercial

14,749,509

13,764,209
Residential

1,441,698

1,495,550
Total mortgage loans

16,512,981

15,592,176
Less allowance for credit losses

(235,000)

(274,000)
Total mortgage loans, net
$
16,277,981

$
15,318,176

There were no past due loans as of December 31, 2024 and December 31, 2023.

Investment Real Estate

Real estate held-for-investment is stated at cost less accumulated depreciation. Depreciation is
computed on a straight-line-basis for financial reporting purposes using estimated useful lives of 3
to 30 years. The Company periodically reviews its real estate held-for-investment for impairment
and tests for recoverability whenever events or changes in circumstances indicate the carrying
value may not be recoverable. During 2024 and 2023, no impairments were recognized on the
investment real estate.

Note 3 - Fair Value Measurements of the Consolidated Financial Statements provides further
information regarding the fair value of financial instruments that are not measured at fair value. The
investment real estate owned by the Company is included in this portion of the Note 3 - Fair Value
Measurements disclosure.

The following table provides an allocation of the Company’s investment real estate by type for the
periods ended December 31:

2024

2023
Raw land
$
16,446,147
$
6,971,930
Commercial
6,269,217
4,106,938
Residential
1,932,390
3,512,408
Land, minerals and royalty interests
3,967,848
7,383,844
Total investment real estate
$
28,615,602
$
21,975,120

The Company’s investment real estate portfolio includes ownership in oil and gas royalties. As of
December 31, 2024 and 2023, investments in oil and gas royalties represented 20% and 34%,
respectively, of the total investment real estate portfolio. See Note 13 - Concentrations of the
Consolidated Financial Statements for additional information regarding the allocation of the oil and
gas investment real estate holdings by industry type.

Gains and losses recognized on the disposition of the properties are recorded as realized gains
and losses in the Consolidated Statements of Operations. During 2024 and 2023, the Company
acquired $11,603,519 and $3,417,744 of investment real estate, respectively.

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. 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. During 2024 and 2023, the Company
acquired $805,000 and $4,779,241 of notes receivable, respectively.

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.

The following is a summary of the notes receivable outstanding and the related allowance for credit
losses:

December 31,
2024

December 31,
2023
Notes receivable
$
12,867,175

$
14,259,225
Less allowance for credit losses

(195,000)

(250,000)
Total notes receivable, net
$
12,672,175

$
14,009,225

Short-Term Investments

Short-term investments have remaining maturities exceeding three months and under 12 months
at the time of purchase and are stated at amortized cost, which approximates fair value. The short-
term investments consist of United States Treasury securities.

During 2024 and 2023, the Company acquired $1,910,488 and $48,473,476, respectively, in short-
term investments.

Allowance for Credit Loss - Loans

The allowance for credit loss (“ACL”) is a valuation account that is deducted from the loans’
amortized cost basis to present the net amount expected to be collected on the loans. Loans are
charged off against the allowance when Management believes the uncollectibility of a loan balance
is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off
and expected to be charged-off.

The allowance for credit losses represents Management’s estimate of lifetime credit losses inherent
in loans as of the balance sheet date. The allowance for credit losses is estimated by Management
using relevant available information, from both internal and external sources, relating to past
events, current conditions, and reasonable and supportable forecasts.

The Company measures expected credit losses for loans on a pooled basis when similar risk
characteristics exist. The Company has identified the following portfolio segments - mortgage loans
on real estate and notes receivable.

The allowance for credit losses calculation includes subjective adjustments for qualitative risk
factors that are likely to cause estimated credit losses to differ from historical experience. These
qualitative adjustments may increase or reduce reserve levels and include adjustments for risk
tolerance, loan review and audit results, asset quality and portfolio trends, industry concentrations,
external factors and economic conditions.

Loans that do not share risk characteristics are evaluated on an individual basis. When
Management determines that foreclosure is probable and the borrower is experiencing financial
difficulty, the expected credit losses are based on the fair value of collateral at the reporting date
unadjusted for selling costs as appropriate.

Allowance for Credit Loss - Unfunded Commitments

Financial instruments include off-balance sheet credit instruments, such as commitments to make
loans and commercial letters of credit issued to meet customer financing needs. The Company’s
exposure to credit loss in the event of nonperformance by the other party to the financial instrument
for off-balance sheet loan commitments is represented by the contractual amount of those
instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures, unless
the commitments to extend credit are unconditionally cancelable, through a charge to provision for
35

unfunded commitments in the Company’s income statements. The allowance for credit losses on
off-balance sheet credit exposures is estimated by loan segment at each balance sheet date under
the current expected credit loss model using the same methodologies as portfolio loans, taking into
consideration the likelihood that funding will occur as well as any third-party guarantees. The
allowance for unfunded commitments as of December 31, 2024 and 2023 is $50,000 and $51,000,
respectively, and is included in other liabilities on the Company’s Consolidated Balance Sheets.

Allowance for Credit Loss - Accrued Interest

Accrued interest is not included in the ACL and if deemed uncollectible, it is charged against
interest income when determined to be uncollectible.

Allowance for Credit Loss - Summary of Activity

The following is a summary of activity related to the allowance for credits loss:

Allowance For Credit Losses

Mortgage

Notes

Unfunded

Loans

Receivable

Commitments

Total
January 1, 2023
$
0

0
0
$
0
2023 Allowance
274,000

250,000
51,000
575,000
December 31, 2023
274,000

250,000
51,000
575,000
2024 Change in
Allowance
(39,000)

(55,000)
(1,000)
(95,000)
December 31, 2024
$
235,000

195,000
50,000
$
480,000

Analysis of Investment Operations

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

2024

2023
Fixed maturities, available for sale
$
2,652,249
$
2,932,220
Fixed maturities, held to maturity

167,536

165,137
Equity securities

4,233,674

3,708,633
Mortgage loans

952,084

1,115,145
Real estate

8,958,452

8,318,201
Notes receivable

1,341,095

1,371,973
Policy loans

412,701

433,556
Cash and cash equivalents

1,668,712

1,007,840
Short-term investments

661,962

529,125
Total consolidated investment income

21,048,465

19,581,830
Investment expenses

(4,954,873)

(5,528,302)
Consolidated net investment income
$
16,093,592
$
14,053,528

The following table presents net investment gains (losses) and the change in net unrealized gains
on investments for the periods ended December 31:

2024

2023
Realized gains:

Sales of fixed maturities
$
0
$
58,333
Sales of equity securities

7,190,262

820,001
Sales of real estate

166,020

8,577,155
Sales of short-term investments

23,509
Total realized gains

7,356,282

9,478,998
Realized losses:

Sales of equity securities

(7,966)
Sales of short-term investments

(7)

(7,189)
Other-than-temporary impairments

(900,149)

0
Total realized losses

(900,156)

(15,155)
Net realized investment gains

6,456,126

9,463,843
Change in fair value of equity securities:

Change in fair value of equity securities held at
the end of the period

56,839,751

(2,856,543)
Change in fair value of equity securities

56,839,751

(2,856,543)
Net investment gains
$
63,295,877
$
6,607,300
Change in net unrealized gains (losses) on
available-for-sale investments included in other
comprehensive income:

Fixed maturities
$
(288,074)
$
1,981,974
Net increase (decrease)
$
(288,074)
$
1,981,974

Investments on Deposit

The Company had investments with a fair value of $8,400,396 and $7,959,076 on deposit with
various state insurance departments as of December 31, 2024 and 2023, respectively.

Note 3 – Fair Value Measurements

Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are measured and
classified in accordance with a fair value hierarchy consisting of three levels based on the
observability of valuation inputs:

Level 1 – Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in
active markets.

Level 2 – Valuation methodologies include quoted prices for similar assets and liabilities in active
markets or quoted prices for identical, quoted prices for identical or similar assets or liabilities in
markets that are not active, or 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.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, the level in the fair value hierarchy within which the fair value
37

measurement in its entirety falls is determined based on the lowest level input that is significant to
the fair value measurement in its entirety.

The following table presents information about assets and liabilities measured at fair value on a
recurring basis and indicates the level of the fair value measurement based on the observability of
the inputs used as of December 31:

2024
Level 1
Level 2
Level 3
Total
Fixed maturity securities:
U.S. Government and
government agencies
and authorities
$
20,882,294
$
0
$
0
$
20,882,294
U.S. special revenue and
assessments
0
7,234,191
0
7,234,191
Corporate securities
0
48,363,601
0
48,363,601
Total fixed maturities
20,882,294
55,597,792
0
76,480,086
Equity securities:
Common stocks
59,125,859
5,519,600
3,064,983
67,710,442
Limited liability companies
0
0
82,654,596
82,654,596
Total equity securities
59,125,859
5,519,600
85,719,579
150,365,038
Short-term investments
1,954,687
0
0
1,954,687
Total financial assets
$
81,962,840
$
61,117,392
$
85,719,579
$
228,799,811

2023
Level 1
Level 2
Level 3
Total
Fixed maturity securities:
U.S. Government and
government agencies and
authorities
$
13,587,779
$
0
$
0
$
13,587,779
U.S. special revenue and
assessments
0
7,308,458
0
7,308,458
Corporate securities
0
58,188,308
0
58,188,308
Total fixed maturities
13,587,779
65,496,766
0
79,084,545
Equity securities:
Common stocks
60,145,264
5,329,080
2,807,634
68,281,978
Limited liability companies
0
0
57,604,806
57,604,806
Total equity securities
60,145,264
5,329,080
60,412,440
125,886,784
Short-term investments
29,132,236
0
0
29,132,236
Total financial assets
$
102,865,279
$
70,825,846
$
60,412,440
$
234,103,565

Total assets included in the fair value hierarchy exclude certain equity securities that were
measured at estimated fair value using the net asset value (“NAV”) per share practical expedient.
At December 31, 2024 and 2023, the estimated fair value of such investments was $84,141,189
and $52,738,701, respectively. These investments are generally not readily redeemable by the
investee.

The following is a description of the valuation techniques used by the Company to measure assets
reported at fair value on a recurring basis.

Available for Sale Securities

Securities classified as available for sale are recorded at fair value on a recurring basis. Securities
classified as Level 1 utilized fair value measurements based upon quoted market prices, when
available. If quoted market prices are not available, the Company obtains fair value measurements
from recently executed transactions, market price quotations, benchmark yields and issuer spreads
to value Level 2 securities. In certain instances where Level 1 or Level 2 inputs are not available,
securities are classified within Level 3 of the hierarchy. Fair value determinations for Level 3
measurements are estimated on a quarterly basis where assumptions used are reviewed to ensure
the estimated fair value complies with accounting standards generally accepted in the United
States.

Equity Securities at Fair Value

Equity securities consist of common and preferred stocks and limited liability companies 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.

Change in Level 3 Recurring Fair Value Measurements

The following table presents the changes in Level 3 assets and liabilities measured at fair value on
a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and
liabilities.

Investments in
Common Stocks

Investments in
Limited Liability
Companies

Total
Balance at December 31, 2023
$
2,807,634

$
57,604,806

$
60,412,440
Unrealized gains

257,349

21,923,259

22,180,608
Purchases

3,741,594

3,741,594
Sales

(615,063)

(615,063)
Balance at December 31, 2024
$
3,064,983

$
82,654,596

$
85,719,579

Both observable and unobservable inputs may be used to determine the fair values of positions
classified in Level 3 in the tables above. As a result, the unrealized gains on instruments held at
December 31, 2024 and 2023 may include changes in fair value that were attributable to both
observable and unobservable inputs.

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated
with market observable data. This occurs when market activity decreases significantly and
underlying inputs cannot be observed, current prices are not available, and/or when there are
significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are
transferred out of Level 3 when circumstances change such that a significant input can be
corroborated with market observable data. This may be due to a significant increase in market
activity, a specific event, or one or more significant input(s) becoming observable.
39

In 2024, there were no transfers in or out of Level 3.

Quantitative Information About Level 3 Fair Value Measurements

The following table presents information about the significant unobservable inputs used for
recurring fair value measurements for certain Level 3 instruments and includes only those
instruments for which information about the inputs is reasonably available to the Company, such
as data from independent third-party valuation service providers and from internal valuation
models.

Financial Assets

Fair Value at
December 31, 2024

Fair Value at
December 31, 2023

Valuation Technique
Limited liability companies
$
82,654,596
$
57,604,806
Pricing Model
Common stocks
3,064,983
2,807,634
Pricing Model
Total
$
85,719,579
$
60,412,440

Uncertainty of Fair Value Measurements

The significant unobservable inputs used in the determination of the fair value of assets classified
as Level 3 have an inherent measurement uncertainty that if changed could result in higher or lower
fair value measurements of these assets as of the reporting date.

Equity Securities at Fair Value

Fair market value for equity securities is derived based on unobservable inputs, such as projected
normalized revenues and industry standard multiples of revenue for the equity securities valued
using pricing model. Significant increases (decreases) in either of those inputs in isolation would
result in a significantly higher (lower) fair value measurement.

Investments in Certain Entities Carried at Fair Value Using Net Asset Value per Share

The Company holds certain equity securities that are measured at estimated fair value using the
NAV per share practical expedient. These investments are generally not readily redeemable by the
investee. The following tables provide additional information regarding the assets carried at NAV.

Investment Category

Fair Value at
December 31,
2024

Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period
Equity securities

Growth equity

Redeemable

Limited partnership

52,518,353

$
0

Quarterly

45
Non-redeemable

Limited liability
companies

4,802,917

2,100,000

n/a

n/a
Limited partnerships

26,819,919

2,025,771

n/a

n/a
Total
$
84,141,189
$
4,125,771
40

Investment Category

Fair Value at
December 31, 2023

Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period
Equity securities
Growth equity
Redeemable
Limited partnership
$
34,081,797
$
0
Quarterly
45
Non-redeemable

Limited liability
companies

9,710,311

3,550,546

n/a

n/a
Limited partnerships
8,946,593
2,410,599
n/a
n/a
Total
$
52,738,701
$
5,961,145

The following are descriptions of the Company’s assets held at NAV.

The Company invested in a limited partnership that was formed under the laws of the State of
Delaware in 1999, as a Delaware limited partnership (“LP”). The Limited Partnership Agreement
provides for the Fund to continue until dissolved. There are significant restrictions to the dissolution
process, which are outlined in the LP Agreement. The Fund invests in listed equity and fixed income
securities as well as non-listed securities, including direct-owned minerals and other royalties. In
2013, UG entered into an irrevocable subscription agreement to invest in the LP.

The Company invested in a Limited Liability Company (“LLC”) that was formed under the laws of
the state of Delaware in 2020. The LLC agreement provides for the Company to continue until
dissolved. There are significant restrictions to the dissolution process, which are outlined in the LLC
Agreement. The LLC Company was formed for the purpose of acquiring, making investments in,
and owning, holding, and growing operating businesses through the United States. In 2020, UG
entered into a LLC Agreement to invest in this LLC.

The Company invested in a Limited Liability Company (“LLC”) that was formed under the laws of
the state of Delaware. The LLC was formed in 2020 to provide long-term investment returns. The
Company will continue to operate until December 31, 2032, or until each of the investment funds
in which the LLC invests terminates, unless terminated earlier or extended in accordance with the
Operating Agreement. In 2020, UG completed the Subscription Agreement to become an investor
in this LLC.

The Company invested in a Limited Liability Company (“LLC”) that was formed under the laws of
the state of Delaware. The LLC was formed in 2022 to amplify philanthropy by primarily investing
in venture capital investment funds and in direct venture capital investments of operating
companies. The Company will continue to operate until December 31, 2034, or until each of the
investment funds in which the LLC invests terminates, unless terminated earlier or extended in
accordance with the Operating Agreement. In 2022, the Company completed the Subscription
Agreement to become an investor in this LLC.

The Company invested in the Limited Partnership ("LP"), a closed-end fund, formed pursuant to
the laws of the state of Delaware under a limited partnership agreement in 2022, and shall dissolve
upon the first to occur of either the end of the tenth anniversary of the final closing date or, if
extended, upon the end of such extension(s), upon the dissolution or removal of the General
Partner or upon other specific circumstances as defined in the LP Agreement.

The Company invested in a closed-end LP fund that was formed pursuant to the laws of the State
of Delaware under a limited partners agreement (the “Agreement”) in 2012 and is scheduled to
terminate on the tenth anniversary of the final closing date, unless terminated sooner or extended
in accordance with the Agreement. The purpose of the LP is to make investments in and pursue
targets that educate, train, and inspire men and women in the United States and around the world
to value free enterprise, business, and economics to improve the quality of their lives and the lives
and the lives of those in their communities. In 2012, the Company entered into a Limited Partnership
Agreement to invest in this LP. The Company is currently in the process of winding down
operations.
41

The Company invested in a closed-end LP fund that was formed pursuant to the laws of the State
of Delaware under a limited partners agreement (the “Agreement”) in 2015 and is scheduled to
terminate on the tenth anniversary of the final closing date, unless terminated sooner or extended
in accordance with the Agreement. The purpose of the LP is to make investments in and pursue
targets that educate, train, and inspire men and women in the United States and around the world
to value free enterprise, business, and economics to improve the quality of their lives and the lives
and the lives of those in their communities. In 2015, the Company entered into a Limited Partnership
Agreement to invest in this LP.

The Company invested in a closed-end LP fund that was formed pursuant to the laws of the State
of Delaware under a limited partners agreement (the “Agreement”) in 2018 (the “Agreement”) and
is scheduled to terminate on the twelfth anniversary of the Final Closing Date, unless terminated
sooner or extended in accordance with the Agreement. The purpose of the Partnership is to make
investments in and pursue targets that educate, train, and inspire men and women in the United
States and around the world to value free enterprise, business, and economics to improve the
quality of their lives and the lives and the lives of those in their communities. In 2018, the Company
entered into a Limited Partnership Agreement to invest in this LP.

The Company invested in a Limited Liability Company (“LLC”) that was formed under the laws of
the state of Delaware. The LLC was formed in 2021 for the purpose of investing in companies
located in emerging markets. The Limited Liability Company Agreement provides for LLC to
continue until dissolved, unless terminated earlier through terms specified in the Operating
Agreement. In 2021, the Company entered into a Limited Liability Company Agreement to invest
in the LLC.

The Company invested in a closed-end LP fund that was formed pursuant to the laws of the State
of Delaware under a limited partners agreement (the “Agreement”) in 2024 and is scheduled to
terminate on the tenth anniversary of the final closing date, unless terminated sooner or extended
in accordance with the Agreement. The purpose of the LP is to invest in fire prevention related
services. In 2024, the Company entered into a Limited Partnership Agreement to invest in this LP.

The Company invested in a LP that was formed pursuant to the laws of the state of Delaware under
a limited partnership agreement in 2021 (the “Agreement”) and is scheduled to terminate on the
tenth anniversary of the Final Closing Date, unless terminated sooner or extended in accordance
with the Agreement. The Partnership is organized for the principal purposes of acquiring, holding,
supervising, managing and disposing of investment in recapitalization, management buyouts, and
corporate divestitures of Portfolio Companies operating in various segments of the U.S. lower
middle markets. In 2022, the Company entered into a Limited Partnership Agreement to invest in
this LP.

Fair Value Measurements on a Nonrecurring Basis

Certain assets are not carried at fair value on a recurring basis. 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 Company did not recognize any re-measurements or
impairments of financial instruments during the years ended December 31, 2024 and 2023.
.

Fair Value Information About Financial Instruments Not Measured at Fair Value

Certain assets are not carried at fair value on a recurring basis. 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.
42

The following table presents the carrying amount and estimated fair values of the Company’s
financial instruments not measured at fair value and indicates the level in the fair value hierarchy
of the estimated fair value measurement based on the observability of the inputs used as of
December 31:

2024
Carrying
Amount

Estimated
Fair Value

Level 1

Level 2

Level 3
Assets

Held to maturity redeemable
preferred stock

2,500,000

$
2,500,000
Equity securities, at cost

21,203,393

21,203,393
Mortgage loans on real estate

16,277,981

15,532,707

15,532,707
Notes receivable

12,672,175

12,750,201

12,750,201
Policy loans

5,692,565

5,692,565
Accrued investment income

1,264,416

Liabilities

Policy claims and benefits
payable

3,847,214

3,847,214
Dividend and endowment
accumulations

14,628,119

2023
Carrying
Amount

Estimated
Fair Value

Level 1

Level 2

Level 3
Assets

Held to maturity redeemable
preferred stock

$
2,500,000

$
0

$
2,500,000
Equity securities, at cost

18,227,986

18,227,986
Mortgage loans on real estate

15,318,176

14,447,026

14,447,026
Notes receivable

14,009,225

14,189,147

14,189,147
Policy loans

6,018,248

6,018,248
Accrued investment income

2,001,064

Liabilities

Policy claims and benefits
payable

4,188,917

4,188,917
Dividend and endowment
accumulations

14,749,258

14,749,258
Notes payable

19,000,000

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.

Held to maturity redeemable preferred stock is carried at cost, which approximates fair value.

Certain equity securities 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. It is not practicable to estimate their fair values due to insufficient
information being available.

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
43

used to measure the fair value of our mortgage loans on real estate are classified as Level 3 within
the fair value hierarchy.

The fair values of notes receivable 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 the notes receivable are classified as Level 3 within the fair value
hierarchy.

Policy loans are carried at the aggregate unpaid principal balances in the Condensed 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 value of accrued investment income approximates its fair value.

The carrying amounts reported for policy claims and benefits payable approximates fair value.

The carrying value for dividend and endowment accumulations approximates fair value.

The carrying value for notes payable is a reasonable estimate of fair value subject to floating rates
of interest. The fair value of notes payable with fixed rate borrowings is determined based on the
borrowing rates currently available to the Company for loans with similar terms and average
maturities. The inputs used to measure the fair value of notes payable are classified as Level 2
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. As of December 31, 2024, the
Company had gross insurance in-force of approximately $801 million of which approximately $162
million was ceded to reinsurers. As December 31, 2023, the Company had gross insurance in-
force of approximately $847 million of which approximately $172 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 64% of UG’s reinsurance reserve credit, as of December 31, 2024 and 2023.

The Company does not have any short-duration reinsurance contracts. The effect of the
Company’s long-duration reinsurance contracts on premiums earned in 2024 and 2023 were as
follows:

2024

2023

Premiums Earned

Premiums Earned
Direct
$
7,567,703
$
7,918,235
Assumed

0
Ceded

(2,280,397)

(2,553,010)
Net Premiums
$
5,287,306
$
5,365,225

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

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

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

2024

2023
Current tax expense (benefit) $
2,107,419
$
(517,109)
Deferred tax

10,711,564

558,916
Income tax expense
$
12,818,983
$
41,807

The expense for income taxes differed from the amounts computed by applying the applicable
United States statutory rate of 21% as of December 31, 2024 and 2023, before income taxes as a
result of the following differences:

2024

2023
Tax computed at statutory rate
$
13,066,234
$
590,481
Changes in taxes due to:

Non-controlling interest

(20,930)

(23,813)
Dividend received deduction

(143,534)

(109,642)
Oil and gas royalty's depletion

(104,115)

(106,797)
Other, including prior year true up

21,328

(308,422)
Income tax expense
$
12,818,983
$
41,807

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

2024

2023
Investments
$
23,066,656
$
11,862,470
Cost of insurance acquired

294,227

427,748
Management/consulting fees

(7,596)

(7,899)
Future policy benefits

(600,175)

(697,024)
Deferred gain on sale of subsidiary

1,387,490

1,387,490
Other liabilities

(786,095)

(284,350)
Reserves adjustment

48,051

96,105
Federal tax DAC

(229,697)

(236,950)
Loan loss reserve

(100,800)

(120,750)
Deferred tax liability
$
23,072,061
$
12,426,840

At December 31, 2024 and 2023, the Company had gross deferred tax assets of $2,175,830 and
$1,939,816, respectively, and gross deferred tax liabilities of $25,247,891 and $14,366,656,
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 relating to the
46

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’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, 2021, 2022, 2023, 2024.

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, 2024 and 2023, the Company had the following line of credit available:

Instrument
Issue
Date
Maturity
Date

Revolving
Credit Limit
December
31, 2023
Borrowings
Repayments

December
31, 2024
Line of
Credit:

UG - CMA
10/21/2021
10/3/2025
$
25,000,000
19,000,000
0
19,000,000
$
0

UTG had a variable rate revolving line of credit that expired on November 20, 2024. As collateral,
UTG had pledged 100% of the common voting stock of its wholly owned subsidiary, Universal
Guaranty Life Insurance Company ("UG"). The Company had not utilized the line of credit in several
years. Management determined the line was no longer needed at this time.

During October of 2024, 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 $21,371,910. During the fourth quarter of 2023,
the Company borrowed $19 million and planned to utilize the funds for investing activities. The
variable interest rate on the borrowed funds was 5.47%. During the first quarter of 2024, the
Company repaid the entire outstanding principal balance.

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
47

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 consolidated financial statements, though the Company has no control over such
assessments.

Mortgage Loan Commitments - The Company commits to lend funds under mortgage loan
commitments. The amounts of these mortgage loan commitments were $745,561 and $878,132 at
December 31, 2024 and 2023, respectively.

Notes Receivable Commitments - The Company commits to lend funds under notes receivable
funding commitments. The amounts of these notes receivable commitments were $3,250,000 and
$2,800,000 at December 31, 2024 and 2023, respectively.

Commitments to Fund Limited Liability Company and Limited Partnership Investments - The
Company commits to fund investments in limited liability companies and limited partnership. The
amounts of the unfunded commitments were $14,316,279 and $16,153,903 at December 31, 2024
and 2023, respectively.

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 December of 2024, the Board of Directors of UTG authorized the
repurchase of up to an additional $2 million of UTG’s common stock, for a total repurchase of $24
million of UTG’s common stock in the open market or in privately negotiated transactions since
inception of the program. 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 2024, the Company repurchased 23,961 shares through the stock repurchase
program for $648,152. Through December 31, 2024, UTG has spent $20,839,555 in the acquisition
of 1,380,820 shares under this program.

Director Compensation - Effective January 1, 2018, a compensation arrangement was approved
whereby each outside Director annually received $5,000 as a retainer and $2,500 per meeting
attended. 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 20th 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 2024, the Company issued 4,539 shares of its common stock as compensation to
the Directors. The shares were valued at $28.09 per share, the market value at the date of issue.
During 2024, the Company recorded $127,501 in operating expense related to the stock issuance.
In December of 2023, the Company issued 4,246 shares of its common stock as compensation to
the Directors. The shares were valued at $30.01 per share, the market value at the date of issue.
During 2023, the Company recorded $127,422 in operating expense related to the stock issuance.
48

Other Compensation - During 2024, the Company issued 11,867 shares of stock to management
and employees as compensation at a cost of $349,312. During 2023, The Company issued 26,911
shares of stock to management and employees as compensation at a cost of $674,390. 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:

2024

2023
Basic weighted average shares outstanding
3,165,541
3,176,757
Weighted average dilutive options outstanding
0
0
Diluted weighted average shares outstanding
3,165,541
3,176,757

The computation of diluted earnings per share is the same as basic earnings per share for the
years ending December 31, 2024 and 2023, 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, 2024, 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 5 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 $0
million and $2 million to UTG in 2024 and 2023, respectively. No extraordinary dividends were paid
during the two year period. UTG used the dividends received in 2023 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:

2024

2023
Net income
$
7,730,512
$
8,320,315
Capital and surplus

104,126,189

91,828,094

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
the company 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 $165,590 and $165,137 during 2024 and 2023, 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 2024 and 2023, UTG
paid $332,445 and $307,442 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 2024 and 2023, UG paid $7,480,761 and
$7,910,324, 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 0.25% servicing fee on these loans and a one-time fee at loan
origination of 0.50% of the original loan cost to cover costs incurred by FSNB relating to the
processing and establishment of the loan. The Company paid $20,137 and $18,694 in servicing
fees and $26,665 and $18,630 in origination fees to FSNB during 2024 and 2023, 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
50

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 $1,217,395 and $1,337,096 in 2024 and 2023, respectively to FSNB in
net reimbursement of such costs.

Effective July 1, 2018, the Company assumed the employees of several smaller entities owned or
associated with UTG. The purpose of this was to support the continued efforts to further streamline
operations amongst associated entities. The salaries, benefits, and payroll related processing fees
are 100% reimbursed by the associated entities on a monthly basis. During 2024 and 2023, the
Company received reimbursements of $1,605,028 and $1,438,450, respectively. These costs are
eliminated for consolidation of these entities, where applicable.

The Company rents a portion of the first floor and second floor of an 8,000 square foot, two-story
office building, located in Stanford, KY. The first floor of the building is occupied by UTG and FSNB
employees that are included in the shared services agreement between the two entities. The
second floor is occupied by the customer service call centers for both UTG and FSNB employees.
The building is owned by FSNB and UTG pays $2,000 per month in rent to FSNB for the portion of
the building occupied by UTG employees. The Company paid rent of $24,000 to FSNB in 2024 and
2023.

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 $0 and $60,031 as of
December 31, 2024 and 2023, respectively.

During the 4th quarter of 2023, UTG entered into a loan participation agreement with FSNB to fund
a commercial mortgage loan issued to a company that is owned/managed by a member of UTG’s
Board of Directors. UG had a 9% interest in the participated loan and agreed to fund up to
$1,482,300. The loan was fully repaid in 2024.

Note 12 – Other Cash Flow Disclosures

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

2024

2023
Interest
$
23,169

$
44,814
Federal income tax

770,000

5,800,000

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 three states, the ability of our customers to
pay their insurance premiums is impacted by the economic conditions in these areas. As of
51

December 31, 2024 and 2023, approximately 52% and 51%, respectively, of the Company’s total
direct premium was collected from Illinois, Ohio, and Texas. 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, 2024 and 2023. Insurance ceded represented 30% and 40%
of premium income for 2024 and 2023, 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 34% and 28% of the Company’s total invested assets at
December 31, 2024 and 2023, respectively. The following table provides an allocation of the oil
and gas investments by type as of December 31:

2024

Land, Minerals &
Royalty Interests

Exploration

Total
Fixed maturities, at fair value
$
0

$
1,068,400

$
1,068,400
Equity securities, at fair value
124,155,007

124,155,007
Equity securities, at cost
4,863,572

4,863,572
Investment real estate
5,677,061

5,677,061
Notes receivable
1,875,000

1,875,000
Total
$
136,570,640

$
1,068,400

$
137,639,040

2023

Land, Minerals &
Royalty Interests

Exploration

Total
Fixed maturities, at fair value

$
0

$
1,075,240

$
1,075,240
Equity securities, at fair value

84,066,203

84,066,203
Equity securities, at cost

5,826,381

5,826,381
Investment real estate

7,383,851

7,383,851
Notes receivable

2,000,000

2,000,000
Total

$
99,276,435

$
1,075,240

$
100,351,675

As of December 31, 2024 and 2023, the Company owned four equity securities that represented
approximately 81% and four securities that represented approximately 73%, respectively, of the
total investments associated with the oil and gas industry.

The Company’s results of operations and financial condition have in the past been, and may in the
future be, adversely affected by the degree of certain industry specific concentrations in the
Company’s investment portfolio. The Company has significant exposure to investments associated
with the oil and gas industry. Events or developments that have a negative effect on the oil and gas
industry may adversely affect the valuation of our investments in this specific industry. The
Company’s ability to sell its investments associated with the oil and gas industry may be limited.

Note 14 – Segment Information

The Company is organized into a single reportable segment: insurance distribution. The Company
derives its revenue entirely from within the United States and manages business activities on a
consolidated basis. The Company’s chief operating decision maker is its Chief Executive Officer.

The accounting policies of the insurance distribution segment are the same as those described in
the summary of significant accounting policies. The chief operating decision maker uses net income
or loss, as reported on the Consolidated Statements of Operations, to assess performance and
allocate resources for the insurance distribution segment. The significant segment expense
52

categories regularly provided to the chief operating decision maker are the same as those included
on the Consolidated Statements of Operations. The measure of segment assets is total assets as
reported on the Consolidated Balance Sheets.

Note 15 – Selected Quarterly Financial Data

Note 16 – Revision of Previously Issued Consolidated Financial Statements

The Company identified an error in its previously issued Consolidated Financial Statements related
to the classification of certain investment types on the Consolidated Balance Sheets. The impact
of the error to the prior period’s Consolidated Financial Statements was not considered to be
material. Certain exchange traded funds ("ETFs") were previously classified as fixed maturities,
available for sale. To comply with GAAP reporting requirements, the Company has reclassified
$24,325,291 of exchange traded funds out of fixed maturities, available for sale, to equity securities,
at fair value.

Management evaluated this error in accordance with SEC Staff Accounting Bulletin Number 99,
Materiality, which is since codified in ASC 250 – Accounting Changes and Error Corrections, and
concluded it was not material to any previously reported financial statements. However, in order
to improve the consistency and comparability of the consolidated financial statements,
Management will revise the consolidated financial statements and related disclosures to correct
the error in future filings.

As Previously
December 31, 2023
Reported
Adjustments
As Restated
Consolidated Balance Sheets
Fixed maturities, at fair value
$
103,409,836
$
(24,325,291)
$
79,084,545
Equity securities, at fair value
156,550,812
22,074,673
178,625,485
Equity securities, at cost
15,977,368
2,250,618
18,227,986
Retained earnings
133,491,797
(2,161,735)
131,330,062
Accumulated other comprehensive loss
(4,882,317)
2,161,735
(2,720,582)
Consolidated Statements of Operations
Net investment income
$
14,141,809
$
(88,281)
$
14,053,528
Change in fair value of equity securities
(3,830,793)
974,250
(2,856,543)
Income tax expense (benefit)
(144,247)
186,054
41,807
Net income attributable to common shareholders
1,956,695
699,915
2,656,610
Basic income per share
0.62
0.22
0.84
Diluted income per share
0.62
0.22
0.84
Consolidated Statements of Comprehensive Income (Loss)
Net income
$
2,070,092
$
699,915
$
2,770,007
Unrealized holding gains (losses) arising during the period, pre-tax
2,867,943
(885,969)
1,981,974
Tax (expense) benefit on unrealized holding gains (losses) arising
during the period

(592,591)

186,054

(406,537)
Unrealized holding gains (losses) during period, net of tax
2,275,352
(699,915)
1,575,437
Subtotal: Other comprehensive income (loss), net of tax
2,229,269
(699,915)
1,529,354
Consolidated Statements of Cash Flows
Net income
$
2,070,092
$
699,915
$
2,770,007
Accretion of investments
(314,042)
88,280
(225,762)
Change in fair value of equity securities
3,830,793
(974,250)
2,856,543
Change in deferred income taxes
372,861
186,055
558,916

BOARD OF DIRECTORS

EXECUTIVE OFFICERS

Jesse T. Correll Jesse T. Correll
Chairman, President and Director Chairman of the Board,
of First Southern Bancorp, Inc. Chief Executive Officer, and President

Preston H. Correll Theodore C. Miller
Co-Founder, Marksbury Farm Market and Senior Vice President,
Owner, St. Asaph Farm Chief Financial Officer

John M. Cortines Douglas P. Ditto
Director of Grantmaking, Maclellan Foundation Vice President
Thomas F. Darden, II Daniel T. Roberts
Founder and Chief Executive Officer Vice President
of Cherokee
Howard L. Dayton, Jr.
Founder of Compass -
Finances God’s Way

Thomas E. Harmon
Owner and President of Harmon Foods, Inc.

Gabriel J. Molnar
Chief Financial Officer, Capstone Realty, Inc.

SHAREHOLDER INFORMATION

Annual Meeting

The 2025 Annual Meeting of Shareholders will be held on Friday, June 27, 2025 at 9:30 a.m. eastern
time at 205 North Depot Street, Stanford, Kentucky 40484. All shareholders are welcome to attend
and to take part in the discussion of Company affairs.

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.

2024

2023

Period

High

Low

High

Low

First quarter

32.00
30.01
26.75
24.18
Second quarter

30.54
29.00
38.63
26.00
Third quarter

29.08
25.75
38.63
29.60
Fourth quarter

29.50
24.81
34.00
30.01

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, 2025 there were 3,988 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, 2024 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, 2024
12,786
$
25.09

12,786

N/A
$
1,161,029
Nov. 1 through Nov. 30, 2024
0
$
0

N/A
$
1,161,029
Dec. 1 through Dec. 31, 2024
21
$
27.82

N/A
$
3,160,445
Total
12,807

12,807

Corporate Office

205 North Depot Street

Stanford, KY 40484

(217) 241-6300

Corporate Website

www.utgins.com

Shareholder Services

The Company acts as its own transfer agent. Communications regarding stock transfer, lost
certificates or changes of address should be directed to the Stock Transfer Department at the
corporate office address above or telephone (217) 241-6410.

Certified Public Accountants

Kerber, Eck & Braeckel LLP

Springfield, IL 62704

Request for Information

Shareholders may receive a copy, without charge, of the annual report, Form 10-K, or Form 10-Q
upon written request. Copies of Form 10-K or Form 10-Q are also available electronically at the
Securities and Exchange Commission’s Web site address at www.sec.gov.