[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(D)
|
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the fiscal year ended December 31, 2009
|
|
or
|
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D
|
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the transition period from _____________ to
______________
|
UTG,
INC.
|
||
(Exact
name of registrant as specified in its charter)
|
||
Delaware
|
20-2907892
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
5250
South Sixth Street, Springfield, IL
|
62703
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
Securities
registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Name of each exchange on which
registered
|
|
None
|
None
|
Large
Accelerated Filer
|
[ ]
|
Accelerated
Filer
|
[ ]
|
Non
Accelerated Filer
|
[ ]
|
Smaller
Reporting Company
|
[X]
|
FORM
10-K
|
YEAR
ENDED DECEMBER 31, 2009
|
TABLE
OF CONTENTS
|
PART
I……………………………………………………………………………………………………………………...................................................................................
|
3
|
ITEM
1. BUSINESS…………………………………………………………………………………………………...................................................................................................
|
3
|
ITEM
1A. RISK
FACTORS……………………………………………………………………………….………...................................................................................................…
|
14
|
ITEM
1B. UNRESOLVED STAFF
COMMENTS………………………………………………………………...............................................................................................…….
|
16
|
ITEM
2. PROPERTIES…………………………………………………………………………………………….................................................................................................….
|
16
|
ITEM
3. LEGAL
PROCEEDINGS…………………………………………………………………………….................................................................................................……...
|
16
|
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS………………................................................................……...............................………….
|
16
|
PART
II………………………………………………………………………………………………………………..................................................................................……
|
17
|
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER
MATTERS
AND ISSUER PRUCHASES OF EQUTY
SECURITIES………………………………....................................................................................................….
|
17
|
ITEM
6. SELECTED FINANCIAL
DATA……………………………………………………………………….............................................................................................……
|
18
|
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS
OF
OPERATIONS…………………………………………………………………………...................................................................................................…..
|
18
|
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK………………........................................................................................…….
|
32
|
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA………………………………………..........................................................................................….
|
34
|
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE………………………………………………………………………................................................................................................….
|
66
|
ITEM
9A. CONTROLS AND
PROCEDURES…………………………………………………………………….................................................................................................….
|
66
|
ITEM
9B. OTHER
INFORMATION………………………………………………………………………………................................................................................................…..
|
66
|
PART
III…………………………………………………………………………………………………………...................................................................................………..
|
67
|
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE………………….....................................................................................................….
|
67
|
ITEM
11. EXECUTIVE
COMPENSATION……………………………………………………………………….................................................................................................…
|
71
|
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
AND
RELATED SHAREHOLDER
MATTERS………………………………………………………..................................................................................................…
|
75
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND
DIRECTOR
INDEPENDENCE………………………………………………………………………......................................................................................................….
|
78
|
ITEM
14. PRINCIPAL ACCOUNTING FEES AND
SERVICES………………………………………………...................................................................................................…
|
80
|
PART
IV……………………………………………………………………………………………………………....................................................................................……
|
81
|
ITEM
15. EXHIBITS AND FINANCIAL STATEMENTS
SCHEDULES………………………………..……..............................................................................................……
|
81
|
Shown
in thousands
|
2009
Premiums
Earned
|
2008
Premiums
Earned
|
||||
Direct
|
$
|
17,271
|
$
|
18,305
|
|
Assumed
|
163
|
184
|
|||
Ceded
|
(3,932)
|
(5,180)
|
|||
Net
premiums
|
$
|
13,502
|
$
|
13,309
|
December
31,
|
||||
2009
|
2008
|
|||
Fixed
Maturities Held for Sale
|
$
|
8,464,738
|
$
|
10,494,422
|
Equity
Securities
|
970,778
|
2,266,380
|
||
Trading
Securities
|
13,661
|
0
|
||
Mortgage
Loans
|
3,430,295
|
3,042,688
|
||
Real
Estate
|
6,086,901
|
5,452,735
|
||
Policy
Loans
|
868,114
|
704,235
|
||
Short-term
Investments
|
55,375
|
67,027
|
||
Cash
|
44,368
|
336,367
|
||
Total
Consolidated Investment Income
|
19,934,230
|
22,363,854
|
||
Investment
Expenses
|
(5,693,437)
|
(4,847,419)
|
||
Consolidated
Net Investment Income
|
$
|
14,240,793
|
$
|
17,516,435
|
Fixed Maturities
|
|||||||
Rating |
|
%
of Portfolio
|
|||||
2009
|
2008
|
||||||
Investment
Grade
|
|||||||
AAA
|
76%
|
84%
|
|||||
AA
|
4%
|
2%
|
|||||
A
|
13%
|
10%
|
|||||
BBB
|
6%
|
2%
|
|||||
Below
Investment Grade
|
1%
|
2%
|
|||||
100%
|
100%
|
Carrying
Value
|
2009
|
2008
|
|||
U.S.
Government & Government Agencies
|
$
|
73,697,038
|
$
|
51,808,494
|
States,
Municipalities & Political Subdivisions
|
2,419,148
|
475,405
|
||
Collateralized
Mortgage Obligations
|
18,821,461
|
87,590,099
|
||
Public
Utilities
|
0
|
2,702,484
|
||
Corporate
|
44,767,046
|
36,113,379
|
||
$
|
139,704,693
|
$
|
178,689,861
|
Average
|
||||||
Carrying
|
Average
|
Average
|
||||
Investments
|
Value
|
Maturity
|
Yield
|
|||
Fixed
maturities held for sale
|
$
|
159,197,000
|
6
years
|
5.32%
|
||
Equity
securities
|
21,980,000
|
Not
applicable
|
4.42%
|
|||
Trading
securities
|
9,807,000
|
Not
applicable
|
6.14%
|
|||
Mortgage
loans
|
51,872,000
|
5
years
|
6.61%
|
|||
Investment
real estate
|
43,669,000
|
Not
applicable
|
13.94%
|
|||
Policy
loans
|
14,488,000
|
Not
applicable
|
5.99%
|
|||
Short-term
investments
|
350,000
|
Not
applicable
|
6.60%
|
|||
Cash
and cash equivalents
|
39,094,000
|
On
demand
|
0.11%
|
|||
Total
Investments and Cash
and
cash equivalents
|
$
|
340,457,000
|
5.86%
|
Mortgage
Loans
|
Amount
|
%
of Total
|
||
Commercial
– all other
|
$
|
57,676,685
|
94%
|
|
Residential
– all other
|
3,594,699
|
6%
|
||
$
|
61,271,384
|
100%
|
Mortgage
Loans
|
Real
Estate
|
||
Alabama
|
1%
|
0%
|
|
Arizona
|
4%
|
2%
|
|
California
|
1%
|
5%
|
|
Colorado
|
6%
|
0%
|
|
Florida
|
4%
|
0%
|
|
Georgia
|
3%
|
0%
|
|
Illinois
|
0%
|
2%
|
|
Kansas
|
2%
|
0%
|
|
Kentucky
|
16%
|
53%
|
|
Maryland
|
2%
|
0%
|
|
Michigan
|
12%
|
0%
|
|
Minnesota
|
2%
|
0%
|
|
North
Carolina
|
6%
|
0%
|
|
Ohio
|
26%
|
0%
|
|
Pennsylvania
|
1%
|
0%
|
|
Tennessee
|
1%
|
0%
|
|
Texas
|
7%
|
35%
|
|
Utah
|
1%
|
0%
|
|
Washington
|
2%
|
0%
|
|
West
Virginia
|
3%
|
3%
|
|
Total
|
100%
|
100%
|
Delinquent
90
days or more
|
2009
|
2008
|
||
Non-accrual
status
|
$
|
26,959,592
|
$
|
545,059
|
Other
|
0
|
0
|
||
Reserve
on delinquent
Loans
|
(12,730)
|
(19,730)
|
||
Total
delinquent
|
$
|
26,946,862
|
$
|
525,329
|
Interest
income past due
(delinquent
loans)
|
$
|
0
|
$
|
0
|
In
process of restructuring
|
$
|
0
|
$
|
0
|
Restructuring
on other
than
market terms
|
0
|
0
|
||
Other
potential problem
Loans
|
0
|
0
|
||
Total
problem loans
|
$
|
0
|
$
|
0
|
Interest
income foregone
(restructured
loans)
|
$
|
0
|
$
|
0
|
In
process of foreclosure
|
$
|
0
|
$
|
0
|
Total
foreclosed loans
|
$
|
2,262,352
|
$
|
0
|
Interest
income foregone
(restructured
loans)
|
$
|
0
|
$
|
0
|
2009
|
2008
|
PERIOD
|
High
|
Low
|
High
|
Low
|
First
quarter
|
9.00
|
5.00
|
10.00
|
8.05
|
Second
quarter
|
8.00
|
5.00
|
10.01
|
8.25
|
Third
quarter
|
9.01
|
6.05
|
10.75
|
10.00
|
Fourth
quarter
|
11.00
|
8.76
|
10.25
|
7.05
|
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, 2009
|
1,026
|
$
|
8.00
|
1,026
|
N/A
|
$
|
155,173
|
||
Nov.
1 through Nov. 31, 2009
|
933
|
8.00
|
933
|
N/A
|
147,709
|
||||
Dec.
1 through Dec. 31, 2009
|
660
|
8.00
|
660
|
N/A
|
142,429
|
||||
Total
|
2,619
|
$
|
8.00
|
2,619
|
FINANCIAL
HIGHLIGHTS
(000's
omitted, except per share data)
|
||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||
Premium
income
net
of reinsurance
|
$
|
13,502
|
$
|
13,309
|
$
|
14,413
|
$
|
12,860
|
$
|
13,727
|
Net
investment income
|
$
|
14,240
|
$
|
17,516
|
$
|
16,880
|
$
|
11,001
|
$
|
7,377
|
Total
revenues
|
$
|
28,759
|
$
|
35,239
|
$
|
38,873
|
$
|
37,585
|
$
|
27,471
|
Net
income (loss)
|
$
|
(4,290)
|
$
|
654
|
$
|
2,143
|
$
|
3,870
|
$
|
1,260
|
Basic
income (loss) per share
|
$
|
(1.12)
|
$
|
0.17
|
$
|
0.56
|
$
|
1.00
|
$
|
0.32
|
Total
assets
|
$
|
431,519
|
$
|
457,779
|
$
|
473,655
|
$
|
482,732
|
$
|
318,832
|
Total
notes payable
|
$
|
14,403
|
$
|
15,617
|
$
|
19,914
|
$
|
22,990
|
$
|
0
|
Dividends
paid per share
|
NONE
|
NONE
|
NONE
|
NONE
|
NONE
|
1.
|
Prevailing
interest rate levels, which may affect the ability of the Company to sell
its products, the market value of the Company's investments and the lapse
ratio of the Company's policies, notwithstanding product design features
intended to enhance persistency of the Company's
products.
|
2.
|
Changes
in the federal income tax laws and regulations which may affect the
relative tax advantages of the Company's products.
|
3.
|
Changes
in the regulation of financial services, including bank sales and
underwriting of insurance products, which may affect the competitive
environment for the Company's products.
|
4.
|
Other
factors affecting the performance of the Company, including, but not
limited to, market conduct claims, insurance industry insolvencies,
insurance regulatory initiatives and developments, stock market
performance, an unfavorable outcome in pending litigation, and investment
performance.
|
(a)
|
Revenues
|
(b)
|
Expenses
|
(c)
|
Net
income
|
(a)
|
Assets
|
Fixed Maturities
|
|||
Rating
|
%
of Portfolio
|
||
2009
|
2008
|
||
Investment
Grade
|
|||
AAA
|
76%
|
84%
|
|
AA
|
4%
|
2%
|
|
A
|
13%
|
10%
|
|
BBB
|
6%
|
2%
|
|
Below
investment grade
|
1%
|
2%
|
|
100%
|
100%
|
(b)
|
Liabilities
|
(c)
|
Shareholders'
Equity
|
Ratio
of Total Adjusted Capital to
|
|
Authorized
Control Level RBC
|
|
Regulatory Event
|
(Less Than or Equal to)
|
Company
action level
|
2*
|
Regulatory
action level
|
1.5
|
Authorized
control level
|
1
|
Mandatory
control level
|
0.7
|
*
Or, 2.5 with negative trend.
|
Decrease
in Interest Rates
|
Increase
in Interest Rates
|
200
Basis
Points
|
100
Basis
Points
|
100
Basis
Points
|
200
Basis
Points
|
300
Basis
Points
|
$11,037,000
|
$5,448,000
|
$(6,007,000)
|
$(12,015,000)
|
$(17,603,000)
|
December 31,
2009
|
||||||||
Expected
maturity date
|
||||||||
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
Fair
value
|
||
Long
term debt
|
||||||||
Fixed
rate
|
1,224,978
|
1,227,008
|
1,229,207
|
31,586
|
186,434
|
3,899,213
|
3,775,602
|
|
Avg.
int. rate
|
5.0%
|
5.0%
|
5.0%
|
5.0%
|
5.0%
|
5.0%
|
||
Variable
rate
|
3,600,000
|
3,600,000
|
3,291,762
|
0
|
0
|
10,491,762
|
10,491,762
|
|
Avg.
int. rate
|
2.0%
|
2.0%
|
2.0%
|
0.0%
|
0.0%
|
2.0%
|
Page No.
|
|
UTG,
INC. AND CONSOLIDATED SUBSIDIARIES
|
|
Report
of Management on Internal Controls Over Financial
Reporting……..…............................
Report
of Brown Smith Wallace LLC, Independent
Registered
Public Accounting Firm for the years ended December 31, 2009 and
2008……..…....
|
35
36
|
Consolidated
Balance Sheets………………………………………………………………………....….
|
37
|
Consolidated
Statements of Operations…………………………………………………..………...……
|
38
|
Consolidated
Statements of Changes in Equity………………………………………..………...…..
|
39
|
Consolidated
Statements of Cash Flows……………………………………………………......…...….
|
40
|
Notes
to Consolidated Financial
Statements……………………………………………………......…..
|
41-66
|
UTG,
INC.
|
||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||
As
of December 31, 2009 and 2008
|
||||||
ASSETS
|
||||||
2009
|
2008
|
|||||
Investments:
|
||||||
Investments
available for sale:
|
||||||
Fixed
maturities, at market (amortized $138,680,398 and
$175,053,102)
|
$
|
139,704,693
|
$
|
178,689,861
|
||
Equity
securities, at market (cost $14,316,463 and $32,171,722)
|
13,323,322
|
30,636,500
|
||||
Trading
securities, at market (cost $19,043,448 and $0)
|
19,613,472
|
0
|
||||
Mortgage
loans on real estate at amortized cost
|
61,271,384
|
42,472,916
|
||||
Investment
real estate, at cost, net of accumulated depreciation
|
45,556,811
|
41,780,466
|
||||
Policy
loans
|
14,343,606
|
14,632,855
|
||||
Short-term
investments
|
700,000
|
0
|
||||
|
294,513,288
|
308,212,598
|
||||
Cash
and cash equivalents
|
37,492,843
|
39,995,875
|
||||
Investment
in unconsolidated affiliate, at market (cost $5,000,000 and
$4,000,000)
|
5,057,762
|
4,000,000
|
||||
Accrued
investment income
|
1,577,199
|
2,049,173
|
||||
Reinsurance
receivables:
|
||||||
Future
policy benefits
|
68,615,385
|
70,610,348
|
||||
Policy
claims and other benefits
|
5,131,031
|
5,262,560
|
||||
Cost
of insurance acquired
|
15,402,012
|
24,293,914
|
||||
Deferred
policy acquisition costs
|
647,526
|
813,470
|
||||
Property
and equipment, net of accumulated depreciation
|
1,485,253
|
1,672,968
|
||||
Income
taxes receivable
|
500,305
|
422,915
|
||||
Other
assets
|
1,096,368
|
445,483
|
||||
Total
assets
|
$
|
431,518,972
|
$
|
457,779,304
|
||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||
Policy
liabilities and accruals:
|
||||||
Future
policy benefits
|
$
|
313,798,199
|
$
|
340,883,754
|
||
Policy
claims and benefits payable
|
3,248,521
|
3,885,282
|
||||
Other
policyholder funds
|
940,357
|
1,187,870
|
||||
Dividend
and endowment accumulations
|
14,182,516
|
14,129,025
|
||||
Deferred
income taxes
|
11,950,254
|
14,693,795
|
||||
Notes
payable
|
14,402,889
|
15,616,766
|
||||
Trading
securities, at market (proceeds $10,590,552 and $0)
|
11,671,911
|
0
|
||||
Other
liabilities
|
7,265,586
|
8,087,571
|
||||
Total
liabilities
|
377,460,233
|
398,484,063
|
||||
Shareholders'
equity:
|
||||||
Common
stock - no par value, stated value $.001 per share.
|
|
|||||
Authorized
7,000,000 shares - 3,884,445 and 3,834,031 shares
issued
|
||||||
and
outstanding after deducting treasury shares of 410,838 and
400,315
|
3,885
|
3,834
|
||||
Additional
paid-in capital
|
41,782,274
|
41,943,229
|
||||
Retained
earnings (accumulated deficit)
|
(1,261,503)
|
3,028,744
|
||||
Accumulated
other comprehensive income
|
322,156
|
1,269,404
|
||||
Noncontrolling
interest
|
13,211,927
|
13,050,030
|
||||
Total
shareholders' equity
|
54,058,739
|
59,295,241
|
||||
Total
liabilities and shareholders' equity
|
$
|
431,518,972
|
$
|
457,779,304
|
UTG,
INC.
|
||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||
For
the Years Ended December 31, 2009 and 2008
|
||||||
2009
|
2008
|
|||||
Revenues:
|
||||||
Premiums
and policy fees
|
$
|
17,434,156
|
$
|
18,489,073
|
||
Reinsurance
premiums and policy fees
|
(3,931,963)
|
(5,180,334)
|
||||
Net
investment income
|
14,240,793
|
17,516,435
|
||||
Realized
investment gains (losses), net
|
(629,528)
|
2,362,578
|
||||
Other
income
|
1,645,322
|
2,051,528
|
||||
28,758,780
|
35,239,280
|
|||||
Benefits
and other expenses:
|
||||||
Benefits,
claims and settlement expenses:
|
||||||
Life
|
25,633,506
|
25,297,205
|
||||
Reinsurance
benefits and claims
|
(4,645,387)
|
(4,182,981)
|
||||
Annuity
|
810,509
|
1,373,230
|
||||
Dividends
to policyholders
|
695,349
|
1,000,197
|
||||
Commissions
and amortization of deferred
|
||||||
policy
acquisition costs
|
57,313
|
(1,650,926)
|
||||
Amortization
of cost of insurance acquired
|
4,176,539
|
4,043,107
|
||||
Operating
expenses
|
7,042,585
|
7,231,903
|
||||
Interest
expense
|
484,449
|
906,412
|
||||
34,254,863
|
34,018,147
|
|||||
Income
(loss) before income taxes
|
(5,496,083)
|
1,221,133
|
||||
Income
tax (expense) benefit
|
300,745
|
(915,195)
|
||||
Net
income (loss)
|
(5,195,338)
|
305,938
|
||||
Net
income attributable to noncontrolling interest
|
905,091
|
347,816
|
||||
Net
income (loss) attributable to common shareholders
|
$
|
(4,290,247)
|
$
|
653,754
|
||
Amounts
attributable to common shareholders:
|
||||||
Basic
income (loss) per share
|
$
|
(1.12)
|
$
|
0.17
|
||
Diluted
income (loss) per share
|
$
|
(1.12)
|
$
|
0.17
|
||
Basic
weighted average shares outstanding
|
3,843,113
|
3,844,081
|
||||
Diluted
weighted average shares outstanding
|
3,843,113
|
3,844,081
|
UTG,
INC.
|
||||||||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
||||||||||||
For
The Years Ended December 31, 2009 and 2008
|
||||||||||||
2009
|
2008
|
|||||||||||
Common
stock
|
||||||||||||
Balance,
beginning of year
|
$
|
3,834
|
$
|
3,849
|
||||||||
Issued
during year
|
61
|
0
|
||||||||||
Treasury
shares acquired and retired
|
(10)
|
(15)
|
||||||||||
Change
in stated value
|
0
|
0
|
||||||||||
Balance,
end of year
|
$
|
3,885
|
$
|
3,834
|
||||||||
Additional
paid-in capital
|
||||||||||||
Balance,
beginning of year
|
$
|
41,943,229
|
$
|
42,067,229
|
||||||||
Issued
during year
|
(61)
|
0
|
||||||||||
Treasury
shares acquired and retired
|
(160,894)
|
(124,000)
|
||||||||||
Change
in stated value
|
0
|
0
|
||||||||||
Balance,
end of year
|
$
|
41,782,274
|
$
|
41,943,229
|
||||||||
Retained
earnings (accumulated deficit)
|
||||||||||||
Balance,
beginning of year
|
$
|
3,028,744
|
$
|
2,374,990
|
||||||||
Net
income (loss) attributable to common shareholders
|
(4,290,247)
|
$
|
(4,290,247)
|
653,754
|
$
|
653,754
|
||||||
Balance,
end of year
|
$
|
(1,261,503)
|
$
|
3,028,744
|
||||||||
Accumulated
other comprehensive income
|
||||||||||||
Balance,
beginning of year
|
$
|
1,269,404
|
$
|
4,308,457
|
||||||||
Other
comprehensive loss
|
||||||||||||
Unrealized
holding loss on securities
|
||||||||||||
net
of non controlling and
|
||||||||||||
reclassification
adjustment and taxes
|
(947,248)
|
(947,248)
|
(3,039,053)
|
(3,039,053)
|
||||||||
Comprehensive
loss
|
$
|
(5,237,495)
|
$
|
(2,385,299)
|
||||||||
|
Balance,
end of year
|
$
|
322,156
|
$
|
1,269,404
|
|||||||
Noncontrolling
Interest
|
||||||||||||
Balance,
beginning of year
|
$
|
13,050,030
|
$
|
14,231,707
|
||||||||
Contributions
|
0
|
0
|
||||||||||
Distributions
|
0
|
0
|
||||||||||
Gain/Loss
attributable to noncontrolling interest
|
161,897
|
(1,181,677)
|
||||||||||
Balance,
end of year
|
$
|
13,211,927
|
$
|
13,050,030
|
||||||||
Total
shareholders' equity, end of year
|
$
|
54,058,739
|
$
|
59,295,241
|
UTG,
INC.
|
||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||
For
the Years Ended December 31, 2009 and 2008
|
||||||
2009
|
2008
|
|||||
Cash
flows from operating activities:
|
||||||
Net
income (loss) attributable to common shares
|
$
|
(4,290,247)
|
$
|
653,754
|
||
Adjustments
to reconcile net income to net cash
|
||||||
provided
by operating activities net of changes in assets and
liabilities
|
||||||
resulting
from the sales and purchases of subsidiaries:
|
||||||
Amortization/accretion
of fixed maturities
|
136,366
|
127,653
|
||||
Realized
investment (gains) losses, net
|
629,528
|
(2,362,578)
|
||||
Unrealized
trading losses included in income
|
511,339
|
0
|
||||
Amortization
of deferred policy acquisition costs
|
165,944
|
196,058
|
||||
Amortization
of cost of insurance acquired
|
4,176,539
|
4,043,107
|
||||
Depreciation
|
1,430,501
|
1,093,746
|
||||
Net
income attributable to non controlling interest
|
(905,091)
|
(347,816)
|
||||
Charges
for mortality and administration
|
||||||
of
universal life and annuity products
|
(8,042,562)
|
(8,345,932)
|
||||
Interest
credited to account balances
|
5,360,221
|
5,629,810
|
||||
Change
in accrued investment income
|
268,477
|
436,421
|
||||
Change
in reinsurance receivables
|
2,126,492
|
2,234,967
|
||||
Change
in policy liabilities and accruals
|
(3,454,113)
|
(1,741,377)
|
||||
Change
in income taxes payable
|
(1,694,210)
|
(1,219,988)
|
||||
Change
in other assets and liabilities, net
|
(667,668)
|
797,406
|
||||
Net
cash provided by (used in) operating activities
|
(4,248,484)
|
1,195,231
|
||||
Cash
flows from investing activities:
|
||||||
Proceeds
from investments sold and matured:
|
||||||
Fixed
maturities held for sale
|
105,310,516
|
46,480,399
|
||||
Equity
securities
|
46,098,801
|
25,642,253
|
||||
Trading
securities
|
10,590,552
|
0
|
||||
Mortgage
loans
|
17,425,771
|
8,371,546
|
||||
Real
estate
|
1,394,222
|
599,544
|
||||
Policy
loans
|
3,902,483
|
5,646,885
|
||||
Short-term
|
0
|
933,967
|
||||
Total proceeds from investments sold and matured
|
184,722,345
|
87,674,594
|
||||
Cost
of investments acquired:
|
||||||
Fixed
maturities held for sale
|
(89,132,935)
|
(21,695,379)
|
||||
Equity
securities
|
(27,157,177)
|
(25,578,919)
|
||||
Trading
securities
|
(18,829,024)
|
0
|
||||
Mortgage
loans
|
(36,224,239)
|
(5,242,315)
|
||||
Real
estate
|
(6,307,090)
|
(4,116,214)
|
||||
Policy
loans
|
(3,616,417)
|
(4,085,072)
|
||||
Short-term
|
(700,000)
|
0
|
||||
Other
invested assets
|
0
|
(880,000)
|
||||
Total
cost of investments acquired
|
(181,966,882)
|
(61,597,899)
|
||||
Purchase
of property and equipment
|
(17,403)
|
(124,136)
|
||||
Sale
of property and equipment
|
166,913
|
0
|
||||
Net
cash provided by investing activities
|
2,904,973
|
25,952,559
|
||||
Cash
flows from financing activities:
|
||||||
Policyholder
contract deposits
|
7,039,947
|
5,678,617
|
||||
Policyholder
contract withdrawals
|
(7,028,841)
|
(4,668,235)
|
||||
Proceeds
from notes payable/line of credit
|
2,000,000
|
4,000,000
|
||||
Payments
of principal on notes payable/line of credit
|
(3,213,877)
|
(8,297,580)
|
||||
Issuance
of common stock
|
0
|
0
|
||||
Purchase
of treasury stock
|
(160,904)
|
(124,015)
|
||||
Purchase
of minority interest in consolidated subsidiary
|
0
|
(1,487,170)
|
||||
Purchase
of stock of affiliate
|
(1,000,000)
|
0
|
||||
Non
controlling contribution to consolidated subsidiary
|
1,025,000
|
0
|
||||
Cash
received from sale of subsidiary
|
6,365,169
|
0
|
||||
Cash
of subsidiary at date of sale
|
(6,186,015)
|
0
|
||||
Net
cash used in financing activities
|
(1,159,521)
|
(4,898,383)
|
||||
Net
increase (decrease) in cash and cash equivalents
|
(2,503,032)
|
22,249,407
|
||||
Cash
and cash equivalents at beginning of year
|
39,995,875
|
17,746,468
|
||||
Cash
and cash equivalents at end of year
|
$
|
37,492,843
|
$
|
39,995,875
|
||
1.
|
ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
A.
|
ORGANIZATION
- At December 31, 2009, the significant majority-owned subsidiaries
of UTG were as depicted on the following organizational
chart.
|
B.
|
NATURE
OF OPERATIONS - UTG is an insurance holding company, which sells
individual life insurance products through its insurance
subsidiaries. The Company's principal market is the mid-western
United States. The Company’s dominant business is individual
life insurance which includes the servicing of existing insurance business
in force, the solicitation of new individual life insurance and the
acquisition of other companies in the insurance
business.
|
C.
|
BUSINESS
SEGMENTS - The Company has only one significant business segment –
insurance.
|
D.
|
BASIS
OF PRESENTATION - The financial statements of UTG and its subsidiaries
have been prepared in accordance with accounting principles generally
accepted in the United States of America.
|
E.
|
PRINCIPLES
OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Registrant and its majority-owned subsidiaries. All
significant inter-company accounts and transactions have been
eliminated.
|
F.
|
INVESTMENTS
- Investments are shown on the following bases:
|
Investments
available for sale - at fair value, unrealized gains and losses deemed
temporary, net of deferred income taxes, are credited or charged, as
appropriate, directly to accumulated other comprehensive income or loss (a
component of stockholders’ equity). Premiums and discounts on
debt securities purchased at other than par value are amortized and
accreted, respectively, to interest income in the Consolidated Statements
of Operations, using the constant yield method over the period to
maturity. Net realized gains and losses on sales of held for
sale securities, and unrealized losses considered to be other than
temporary, are credited or charged to net realized investment gains
(losses) in the Consolidated Statements of Operations.
|
|
Mortgage
loans on real estate - at 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.
|
|
Real
estate - investment real estate at cost less allowance for depreciation
and, as appropriate, provisions for possible
losses. Accumulated depreciation on investment real estate was
$3,257,916 and $1,962,109 as of December 31, 2009 and 2008,
respectively.
|
|
Policy
loans - at unpaid balances including accumulated interest but not in
excess of the cash surrender value of the related
policy.
|
|
Short-term
investments - at amortized cost, which approximates current market
value.
|
|
Realized
gains and losses include sales of investments, periodic changes in fair
value, and write downs in value. If any due to other-than-temporary
declines in fair value are recognized in net income on the specific
identification basis.
|
|
Unrealized
gains and losses on investments carried at market value are recognized in
other comprehensive income on the specific identification
basis.
|
|
G.
|
CASH
EQUIVALENTS - The Company considers certificates of deposit and other
short-term instruments with an original purchased maturity of three months
or less to be cash equivalents.
|
H.
|
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.
|
Amounts
paid, or deemed to have been paid, for reinsurance contracts are recorded
as reinsurance receivables. Reinsurance receivables are
recognized in a manner consistent with the liabilities relating to the
underlying reinsured contracts. The cost of reinsurance related
to long-duration contracts is accounted for over the life of the
underlying reinsured policies using assumptions consistent with those used
to account for the underlying policies.
|
|
I.
|
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 subsidiaries’ experience adjusted to reflect
anticipated trends and to include provisions for possible unfavorable
deviations. The Company makes these assumptions at the time the contract
is issued or, in the case of contracts acquired by purchase, at the
purchase date. Future policy benefits for individual life
insurance and annuity policies are computed using interest rates ranging
from 2% to 6% for life insurance and 2.5% to 9.3% 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. Current mortality rate assumptions
are based on 1975-80 select and ultimate tables. Withdrawal rate
assumptions are based upon Linton B or C, which are industry standard
actuarial tables for forecasting assumed policy lapse
rates.
|
Benefit
reserves for universal life insurance and interest sensitive life
insurance products are computed under a retrospective deposit method and
represent policy account balances before applicable surrender
charges. Policy benefits and claims that are charged to expense
include benefit claims in excess of related policy account
balances. Interest crediting rates for universal life and
interest sensitive products range from 4.0% to 5.5% as of
December 31, 2009 and 2008.
|
|
J.
|
POLICY
AND CONTRACT CLAIMS - 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 based on prior experience of the
Company. Incurred but not reported claims were $1,309,068 and
$1,312,848 as of December 31, 2009 and 2008,
respectively.
|
K.
|
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. The Company utilizes 12% discount rate on the
remaining business. 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 rate utilized in the amortization
calculation is 12%. The interest rates vary due to differences
in the blocks of business. The amortization is adjusted
retrospectively when estimates of current or future gross profits to be
realized from a group of products are
revised.
|
2009
|
2008
|
|||
Cost
of insurance acquired, beginning of year
|
$
|
24,293,914
|
$
|
28,337,021
|
Interest
accretion
|
4,885,293
|
5,437,426
|
||
Amortization
|
(9,061,832)
|
(9,480,533)
|
||
Net
amortization
|
(4,176,539)
|
(4,043,107)
|
||
Disposed
with the sale of Subsidiary
|
(4,715,363)
|
(0)
|
||
Cost
of insurance acquired, end of year
|
$
|
15,402,012
|
$
|
24,293,914
|
Amortization
of deferred policy acquisition is included on commissions and amortization
of deferred policy acquisition costs on the consolidated statements of
operations.
|
Estimated
net amortization expense of cost of insurance acquired for the next five
years is as follows:
|
Interest
Accretion
|
Amortization
|
Net
Amortization
|
||||
2010
|
$ |
2,437,000
|
$ |
4,345,000
|
$ |
1,908,000
|
2011
|
2,230,000
|
3,833,000
|
1,603,000
|
|||
2012
|
2,037,000
|
3,529,000
|
1,492,000
|
|||
2013
|
1,858,000
|
3,244,000
|
1,386,000
|
|||
2014
|
1,692,000
|
2,976,000
|
1,284,000
|
L.
|
DEFERRED
POLICY ACQUISITION COSTS - Commissions and other costs (salaries of
certain employees involved in the underwriting and policy issue functions
and medical and inspection fees) of acquiring life insurance products that
vary with and are primarily related to the production of new business have
been deferred. Traditional life insurance acquisition costs are
being amortized over the premium-paying period of the related policies
using assumptions consistent with those used in computing policy benefit
reserves.
|
For
universal life insurance and interest sensitive life insurance products,
acquisition costs are being amortized generally in proportion to the
present value of expected gross profits from surrender charges and
investment, mortality, and expense margins. Under SFAS No. 97
(see FASB Codification 944-20-30-40-60-605-825 sections 5, 15, 25, 30, 35,
45, 50, and 50), "Accounting and Reporting by Insurance Enterprises for
Certain Long-Duration Contracts and for Realized Gains and Losses from the
Sale of Investments," the Company makes certain assumptions regarding the
mortality, persistency, expenses, and interest rates it expects to
experience in future periods. These assumptions are to be best
estimates and are to be periodically updated whenever actual experience
and/or expectations for the future change from initial
assumptions. The amortization is adjusted retrospectively when
estimates of current or future gross profits to be realized from a group
of products are revised.
|
|
The
following table summarizes deferred policy acquisition costs and related
data for the years shown:
|
2009
|
2008
|
|||
Deferred,
beginning of year
|
$
|
813,470
|
$
|
1,009,528
|
Acquisition
costs deferred:
|
||||
Commissions
|
0
|
0
|
||
Other
expenses
|
0
|
0
|
||
Total
|
0
|
0
|
||
Interest
accretion
|
8,000
|
9,000
|
||
Amortization
charged to income
|
(173,944)
|
(205,058)
|
||
Net
amortization
|
(165,944)
|
(196,058)
|
||
Change
for the year
|
(165,944)
|
(196,058)
|
||
Deferred,
end of year
|
$
|
647,526
|
$
|
813,470
|
Estimated
net amortization expense of deferred policy acquisition costs for the next
five years is as follows:
|
Interest
|
Net
|
|||||
Accretion
|
Amortization
|
Amortization
|
||||
2010
|
$ |
6,000
|
$ |
104,000
|
$ |
98,000
|
2011
|
5,000
|
77,000
|
72,000
|
|||
2012
|
4,000
|
66,000
|
62,000
|
|||
2013
|
4,000
|
53,000
|
49,000
|
|||
2014
|
3,000
|
20,000
|
17,000
|
M.
|
PROPERTY
AND EQUIPMENT - Company-occupied property, data processing equipment and
furniture and office equipment are stated at cost less accumulated
depreciation of $2,934,312 and $2,896,107 at December 31, 2009 and
2008, respectively. Depreciation is computed on a straight-line
basis for financial reporting purposes using estimated useful lives of
three to thirty years. Depreciation expense was $168,553 and
$214,245 for the years ended December 31, 2009 and 2008,
respectively.
|
N.
|
INCOME
TAXES - Income taxes are reported under Statement of Financial Accounting
Standards Number 109 and Interpretation Number 48 (see FASB Codification
740-10 Section 50.), “Accounting for Uncertainty in Income Taxes – An
Interpretation of FASB Statement number 109”. Deferred income
taxes are recorded to reflect the tax consequences on future periods of
differences between the tax bases of assets and liabilities and their
financial reporting amounts at the end of each such period. The principal
assets and liabilities giving rise to such differences are deferred policy
acquisition costs, differences in tax basis of invested assets, cost of
insurance acquired, future policy benefits, and gains on the sale of
subsidiaries.
|
O.
|
EARNINGS
PER SHARE - Earnings per share (EPS) are reported under Statement of
Financial Accounting Standards Number 128 (see FASB Codification 260-10
sections 5, 10, 15, 45, 50, 55, and 60.) The objective of both
basic EPS and diluted EPS is to measure the performance of an entity over
the reporting period. Basic EPS is computed by dividing net
income/(loss) attributable to common shares (the numerator) by the
weighted-average number of common shares outstanding (the denominator)
during the period. Diluted EPS is similar to the
computation of basic EPS except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been
issued. In addition, the numerator also is adjusted for any
changes in income or loss that would result from the assumed conversion of
those potential common shares.
|
P.
|
TREASURY
SHARES - The Company holds 410,838 and 400,315 shares of common stock as
treasury shares with a cost basis of $3,051,170 and $2,970,533 at
December 31, 2009 and 2008, respectively.
|
Q.
|
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.
|
R.
|
PARTICIPATING
INSURANCE - Participating business represents 9% of life insurance in
force at December 31, 2009 and 2008. Premium income
from participating business represents 24% and 37% of total premiums for
the years ended December 31, 2009 and 2008,
respectively. The amount of dividends to be paid is determined
annually by the insurance subsidiary's Board of
Directors. Earnings allocable to participating policyholders
are based on legal requirements that vary by state.
|
S.
|
RECLASSIFICATIONS
- Certain prior year amounts have been reclassified to conform to the 2009
presentation. Such reclassifications had no effect on previously reported
net income or shareholders' equity.
|
T.
|
USE
OF ESTIMATES - In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent
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. The following estimates have been identified as
critical in that they involve a high degree of judgment and are subject to
a significant degree of variability: (i) deferred acquisition cost; (ii)
reserves; (iii) reinsurance recoverable; (iv) other-than-temporary
impairment; and (v) federal income taxes.
|
U.
|
IMPAIRMENT
OF LONG LIVED ASSETS - The Company evaluates whether events and
circumstances have occurred that indicate the remaining estimated useful
life of long lived assets may warrant revision or that the remaining
balance of an asset may not be recoverable. The measurement of
possible impairment is based on the ability to recover the balance of
assets from expected future operating cash flows on an undiscounted
basis. During the course of 2009 there was an
other-than-temorary impairment recognized of $2,007,173 in fixed maturity
investments that are backed by trust preferred securities of
banks.
|
2.
|
SHAREHOLDER
DIVIDEND RESTRICTION AND MINIMUM STATUTORY
CAPITAL
|
3.
|
INCOME
TAXES
|
2009
|
2008
|
|||
Current
tax
|
$
|
201,041
|
$
|
1,261,641
|
Deferred
tax
|
(501,786)
|
(346,446)
|
||
$
|
(300,745)
|
$
|
915,195
|
2009
|
2008
|
|||
Net
income (loss)
|
$
|
(4,290,247)
|
$
|
653,754
|
Depreciation
|
14,154
|
38,632
|
||
Management/consulting
fees
|
(81,907)
|
(54,500)
|
||
Federal
income tax provision
|
126,349
|
148,730
|
||
(Gain)
loss of subsidiaries
|
4,525,066
|
(407,065)
|
||
Taxable
income
|
$
|
293,415
|
$
|
379,551
|
2009
|
2008
|
|||||
Tax
computed at statutory rate
|
$
|
(1,923,629)
|
$
|
427,397
|
||
Changes
in taxes due to:
|
||||||
Utilization
of AMT credit carryforward
|
0
|
(100,780)
|
||||
Utilization
of capital loss carryforward
|
(344,835)
|
0
|
||||
Current
year losses with no tax benefit
|
147,521
|
529,521
|
||||
Minority
interest
|
276,806
|
121,736
|
||||
Utilization
of net operating loss carryforward
|
(667,980)
|
0
|
||||
Small
company deduction
|
(65,862)
|
(548,120)
|
||||
Sale
of subsidiary
|
2,131,861
|
0
|
||||
Other
|
145,373
|
485,441
|
||||
Income
tax expense
|
$
|
(300,745)
|
$
|
915,195
|
2009
|
2008
|
|||
Investments
|
$
|
3,293,449
|
$
|
4,247,725
|
Cost
of insurance acquired
|
5,390,705
|
8,502,870
|
||
Deferred
policy acquisition costs
|
226,634
|
284,715
|
||
Management/consulting
fees
|
(178,153)
|
(206,820)
|
||
Future
policy benefits
|
2,635,289
|
1,191,307
|
||
Gain
on sale of subsidiary
|
2,312,483
|
2,312,483
|
||
Allowance
for uncollectibles
|
0
|
0
|
||
Other
liabilities
|
(493,837)
|
(306,083)
|
||
Federal
tax DAC
|
(1,236,316)
|
(1,332,402)
|
||
Deferred
tax liability
|
$
|
11,950,254
|
$
|
14,693,795
|
4.
|
ANALYSIS
OF INVESTMENTS, INVESTMENT INCOME AND INVESTMENT GAIN
|
A.
|
NET
INVESTMENT INCOME - The following table reflects net investment income by
type of investment:
|
2009
|
2008
|
|||
Fixed
Maturities Available for Sale
|
$
|
8,464,738
|
$
|
10,494,422
|
Equity
Securities
|
970,778
|
2,266,380
|
||
Trading
Securities
|
13,661
|
0
|
||
Mortgage
Loans
|
3,430,295
|
3,042,688
|
||
Real
Estate
|
6,086,901
|
5,452,735
|
||
Policy
Loans
|
868,114
|
704,235
|
||
Short-term
Investments
|
55,375
|
67,027
|
||
Cash
|
44,368
|
336,367
|
||
Total
Consolidated Investment Income
|
19,934,230
|
22,363,854
|
||
Investment
Expenses
|
(5,693,437)
|
(4,847,419)
|
||
Consolidated
Net Investment Income
|
$
|
14,240,793
|
$
|
17,516,435
|
2009
|
2008
|
|||
Fixed
Maturities Available for Sale
|
$
|
(58,019)
|
$
|
(2,452,424)
|
Fixed
Maturities Available for Sale - OTTI
|
(2,007,174)
|
(537,737)
|
||
Equity
Securities
|
1,196,789
|
5,352,739
|
||
Real
Estate
|
159,282
|
0
|
||
Other
|
79,594
|
0
|
||
Consolidated
Net Realized Gains
|
$
|
(629,528)
|
$
|
2,362,578
|
Carrying
Value
|
2009
|
2008
|
|||||||||
Investments
Available for Sale:
|
||||||||||
Fixed
Maturities
|
||||||||||
U.S.
Government, Government Agencies & Authorities
|
$
|
73,697,038
|
$
|
51,808,494
|
||||||
State,
Municipalities & Political Subdivisions
|
2,419,148
|
475,405
|
||||||||
Collateralized
Mortgage Obligations
|
18,821,461
|
87,590,099
|
||||||||
Public
Utilities
|
0
|
2,702,484
|
||||||||
All
Other Corporate Bonds
|
44,767,046
|
36,113,379
|
||||||||
$
|
139,704,693
|
$
|
178,689,861
|
|||||||
Equity
Securities
|
||||||||||
Public
Utilities
|
$
|
0
|
$
|
500,001
|
||||||
Banks,
Trusts & Insurance Companies
|
5,001,400
|
4,647,000
|
||||||||
Industrial
& Miscellaneous
|
8,321,922
|
25,489,499
|
||||||||
$
|
13,323,322
|
$
|
30,636,500
|
|||||||
Investment in unconsolidated affiliate | $ | 5,057,762 | 4,000,000 |
December
31,
|
|||||
Below
Investment
Grade
Investments
|
2009
|
2008
|
|||
States,
municipalities &
political
subdivisions
|
$
|
0
|
$
|
10,000
|
|
CMO
|
0
|
5,183
|
|||
Corporate
|
1,459,798
|
5,733,113
|
|||
Total
|
$
|
1,459,798
|
$
|
5,748,296
|
B.
|
INVESTMENT
SECURITIES
|
The
amortized cost and estimated market values of investments in securities
including investments available for sale are as
follows:
|
December
31, 2009
|
Original
or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Market
Value
|
||||
Investments
available for sale:
|
||||||||
Fixed
maturities
|
||||||||
U.S.
Government and govt.
agencies
and authorities
|
$
|
73,298,975
|
$
|
1,773,136
|
$
|
(1,375,073)
|
$
|
73,697,038
|
States,
municipalities and
political
subdivisions
|
2,567,650
|
44,274
|
(192,776)
|
2,419,148
|
||||
Collateralized
mortgage
Obligations
|
17,992,385
|
829,076
|
0
|
18,821,461
|
||||
All
other corporate bonds
|
44,821,388
|
1,443,401
|
(1,497,743)
|
44,767,046
|
||||
138,680,398
|
4,089,887
|
(3,065,592)
|
139,704,693
|
|||||
Equity
securities
|
14,316,463
|
29,000
|
(1,022,141)
|
13,323,322
|
||||
Total
|
$
|
152,996,861
|
$
|
4,118,887
|
$
|
(4,087,733)
|
$
|
153,028,015
|
Investment
in unconsolidated affiliate
|
$
|
5,000,000
|
$
|
57,762
|
$
|
0
|
$
|
5,057,762
|
2008
|
Original
or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Market
Value
|
||||
Investments
available for sale:
|
||||||||
Fixed
maturities
|
||||||||
U.S.
Government and govt.
agencies
and authorities
|
$
|
45,837,369
|
$
|
5,971,119
|
$
|
0
|
$
|
51,808,488
|
States,
municipalities and
political
subdivisions
|
485,000
|
1,206
|
(10,801)
|
475,405
|
||||
Collateralized
mortgage
obligations
|
85,281,137
|
2,530,312
|
(221,345)
|
87,590,104
|
||||
Public
utilities
|
2,707,070
|
29,427
|
(34,012)
|
2,702,485
|
||||
All
other corporate bonds
|
40,742,526
|
313,560
|
(4,942,707)
|
36,113,379
|
||||
175,053,102
|
8,845,624
|
(5,208,865)
|
178,689,861
|
|||||
Equity
securities
|
32,171,722
|
20,499
|
(1,555,721)
|
30,636,500
|
||||
Total
|
$
|
207,224,824
|
$
|
8,866,123
|
$
|
(6,764,586)
|
$
|
209,326,361
|
Investment
in unconsolidated affiliate
|
$
|
4,000,000
|
$
|
0
|
$
|
0
|
$
|
4,000,000
|
The
Company held five fixed maturity investments totaling $74,397,459 and one
fixed maturity investment of $4,781,639 that exceeded 10% of shareholder’s
equity at December 31, 2009 and 2008, respectively. The Company
held two equity investments totaling $10,192,382 and $12,157,539 that
exceeded 10% of shareholder’s equity at December 31, 2009 and 2008,
respectively.
|
|
The
fair value of investments with sustained gross unrealized losses at
December 31, 2009 and 2008 are as
follows:
|
2009
|
Less than 12 months
|
12 Months or longer
|
Total
|
Fair value
|
Unrealized
losses
|
Fair value
|
Unrealized
losses
|
Fair value
|
Unrealized
losses
|
||
U.S
Government and govt. agencies and authorities
|
$
|
46,581,332
|
(1,375,073)
|
0
|
0
|
46,581,332
|
(1,375,073)
|
States,
municipalities and political subdivisions
|
0
|
0
|
1,247,224
|
(192,776)
|
1,247,224
|
(192,776)
|
|
All
other corporate bonds
|
12,305,039
|
(215,636)
|
2,514,618
|
(1,282,107)
|
14,819,657
|
(1,497,743)
|
|
Total
fixed maturity
|
$
|
58,886,371
|
(1,590,709)
|
3,761,842
|
(1,474,883)
|
62,648,213
|
(3,065,592)
|
Equity
securities
|
$
|
908,010
|
(244,095)
|
4,474,508
|
(778,046)
|
5,382,518
|
(1,022,141)
|
2008
|
Less than 12 months
|
12 Months or longer
|
Total
|
Fair value
|
Unrealized
losses
|
Fair value
|
Unrealized
losses
|
Fair value
|
Unrealized
losses
|
||
States,
municipalities and political subdivisions
|
$
|
459,199
|
(10,801)
|
0
|
0
|
459,199
|
(10,801)
|
Collateralized
mortgage obligations
|
1,361,720
|
(174,613)
|
4,413,767
|
(46,732)
|
5,775,487
|
(221,345)
|
|
Public
utilities
|
883,589
|
(34,012)
|
0
|
0
|
883,589
|
(34,012)
|
|
All
other corporate bonds
|
9,596,967
|
(1,145,616)
|
15,885,999
|
(3,797,091)
|
25,482,966
|
(4,942,707)
|
|
Total
fixed maturity
|
$
|
12,301,475
|
(1,365,042)
|
20,299,766
|
(3,843,823)
|
32,601,241
|
(5,208,865)
|
Equity
securities
|
$
|
21,212,407
|
(1,471,682)
|
1,583,050
|
(84,041)
|
22,795,457
|
(1,555,723)
|
2008
|
Beginning
Amortized Cost
|
OTTI
Credit Loss
|
Ending
Amortized Cost
|
Unrealized
Loss
|
Carrying
Value
|
Lehman
Brothers
|
$537,737
|
$(537,737)
|
$0
|
N/A
|
$0
|
2009
|
Beginning
Amortized Cost
|
OTTI
Credit Loss
|
Ending
Amortized Cost
|
Unrealized
Loss
|
Carrying
Value
|
Lehman
Brothers
|
$0
|
N/A
|
$0
|
N/A
|
$0
|
Preferred
Term Securities I
|
$508,816
|
$(92,659)
|
$416,157
|
$(99,998)
|
$316,159
|
Preferred
Term Securities II
|
$4,076,323
|
$(1,914,515)
|
$2,161,808
|
$(1,115,670)
|
$1,046,138
|
Fixed
Maturities Available for Sale
December 31,
2009
|
Amortized
Cost
|
Estimated
Market
Value
|
||
Due
in one year or less
|
$
|
3,651,839
|
$
|
3,707,257
|
Due
after one year through five years
|
15,375,484
|
16,152,868
|
||
Due
after five years through ten years
|
40,212,541
|
42,059,742
|
||
Due
after ten years
|
60,442,531
|
57,921,857
|
||
Collateralized
mortgage obligations
|
18,998,003
|
19,862,969
|
||
Total
|
$
|
138,680,398
|
$
|
139,704,693
|
December
31, 2009
|
December
31, 2008
|
||
Type
of Instrument
|
Net
Realized and Unrealized
Gains
(Losses)
|
Net
Realized and Unrealized
Gains
(Losses)
|
|
Equity
|
$ 13,667
|
$ 0
|
An
analysis of sales, maturities and principal repayments of the Company's
fixed maturities portfolio for the years ended December 31, 2009 and
2008 is as follows:
|
Year
ended December 31, 2009
|
Original
or
Amortized
Cost
|
Gross
Realized
Gains
|
Gross
Realized
Losses
|
Proceeds
From
Sale
|
||||
Scheduled
principal repayments,
Calls
and tenders:
|
||||||||
Available
for sale
|
$
|
13,719,413
|
$
|
23,968
|
$
|
0
|
$
|
13,743,381
|
Sales:
|
||||||||
Available
for sale
|
82,949,320
|
3,865,931
|
(3,096,098)
|
83,719,153
|
||||
Total
|
$
|
96,668,733
|
$
|
3,889,899
|
$
|
(3,096,098)
|
$
|
97,462,534
|
Year
ended December 31, 2008
|
Original
or
Amortized
Cost
|
Gross
Realized
Gains
|
Gross
Realized
Losses
|
Proceeds
From
Sale
|
||||
Scheduled
principal repayments,
Calls
and tenders:
|
||||||||
Available
for sale
|
$
|
12,925,569
|
$
|
0
|
$
|
0
|
$
|
12,925,569
|
Sales:
|
||||||||
Available
for sale
|
25,999,838
|
154,242
|
(2,114,241)
|
24,039,839
|
||||
Total
|
$
|
38,925,407
|
$
|
154,242
|
$
|
(2,114,241)
|
$
|
36,965,408
|
C.
|
INVESTMENTS
ON DEPOSIT - At December 31, 2009, investments carried at
approximately $6,153,000 were on deposit with various state insurance
departments.
|
5.
|
DISCLOSURES
ABOUT FAIR VALUES
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||
Assets
|
|||||||
Fixed
Maturities, available for sale
|
$ 6,831,432
|
$132,873,261
|
$ 0
|
$ 139,704,693
|
|||
Equity
Securities, available for sale
|
15,691,037
|
2,690,047
|
0
|
18,381,084
|
|||
Trading
Securities
|
19,613,472
|
0
|
0
|
19,613,472
|
|||
Total
Financial Assets
Carried
at Fair Value
|
$ 42,135,941
|
$135,563,308
|
$ 0
|
$ 177,699,249
|
|||
Trading
Securities (Liabilities)
|
$ 11,671,911
|
$ 0
|
$ 0
|
$ 11,671,911
|
2009
|
2008
|
|||||||||||
Assets
|
Carrying
Amount
|
Estimated
Fair
Value
|
Carrying
Amount
|
Estimated
Fair
Value
|
||||||||
Fixed
maturities available for sale
|
$ |
139,704,693
|
$ |
139,704,693
|
$ |
178,689,861
|
$ |
178,689,861
|
||||
Equity
securities
|
13,323,322
|
13,323,322
|
30,636,500
|
30,636,500
|
||||||||
Trading
securities
|
19,613,472
|
19,613,472
|
0
|
0
|
||||||||
Securities
of affiliate
|
5,057,762
|
5,057,762
|
4,000,000
|
4,000,000
|
||||||||
Mortgage
loans on real estate
|
61,271,384
|
61,618,488
|
42,472,916
|
43,663,279
|
||||||||
Policy
loans
|
14,343,606
|
14,343,606
|
14,632,855
|
14,632,855
|
||||||||
Short
term
|
700,000
|
700,000
|
0
|
0
|
||||||||
Liabilities
|
||||||||||||
Notes
payable
|
14,402,889
|
14,267,364
|
15,616,766
|
15,128,452
|
||||||||
Trading
securities
|
11,671,911
|
11,671,911
|
0
|
0
|
6.
|
STATUTORY
EQUITY AND INCOME FROM OPERATIONS
|
7.
|
REINSURANCE
|
Year
ended December 31,
Shown
in Thousands
|
2009
Premiums
Earned
|
2008
Premiums
Earned
|
|||
Direct
|
$
|
17,271
|
$
|
18,305
|
Assumed
|
163
|
184
|
||
Ceded
|
(3,932)
|
(5,180)
|
||
Net
Premiums
|
$
|
13,502
|
$
|
13,309
|
8.
|
COMMITMENTS
AND CONTINGENCIES
|
9.
|
RELATED
PARTY TRANSACTIONS
|
10.
|
CAPITAL
STOCK TRANSACTIONS
|
A.
|
EMPLOYEE
AND DIRECTOR STOCK PURCHASE PROGRAM
|
B.
|
STOCK
REPURCHASE PROGRAM
|
C.
|
EARNINGS
PER SHARE CALCULATIONS
|
For
the Year Ended December 31, 2009
|
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||
Basic
EPS
|
||||||
(Loss)
attributable to Common Shareholders
|
$
|
(4,290,247)
|
3,843,113
|
$
|
(1.12)
|
|
Effect
of Dilutive Securities
|
||||||
Options
|
0
|
0
|
||||
Diluted
EPS
|
||||||
Income
(Loss) attributable to Common Shareholders
|
||||||
and
Assumed Conversions
|
$
|
(4,290,247)
|
3,843,113
|
$
|
(1.12)
|
For
the Year Ended December 31, 2008
|
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
||||
Basic
EPS
|
||||||
Income
Attributable to Common Shareholders
|
$
|
653,754
|
3,844,081
|
$
|
0.17
|
|
Effect
of Dilutive Securities
|
||||||
Options
|
0
|
0
|
||||
Diluted
EPS
|
||||||
Income
Attributable to Common Shareholders
|
||||||
And
Assumed Conversions
|
$
|
653,754
|
3,844,081
|
$
|
0.17
|
11.
|
NOTES
PAYABLE
|
Year
|
Amount
|
|||
2010
|
$
|
4,824,978
|
||
2011
|
4,827,008
|
|||
2012
|
4,520,969
|
|||
2013
|
31,586
|
|||
2014
|
34,154
|
12.
|
OTHER
CASH FLOW DISCLOSURES
|
13.
|
CONCENTRATIONS
|
14.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
15.
|
COMPREHENSIVE
INCOME
|
2009
|
Before-Tax
Amount
|
(Expense)
Or
Benefit
|
Net
of Tax
Amount
|
|||
Unrealized
holding losses during period
|
$
|
(2,425,809)
|
$
|
849,033
|
$
|
(1,576,776)
|
Less:
reclassification adjustment for losses realized in net
income
|
968,505
|
(338,977)
|
629,528
|
|||
Net
realized losses
|
(1,457,305)
|
510,057
|
(947,248)
|
|||
Other
comprehensive income (loss)
|
$
|
(1,457,305)
|
$
|
510,057
|
$
|
(947,248)
|
2008
|
Before-Tax
Amount
|
(Expense)
Or
Benefit
|
Net
of Tax Amount
|
|||
Unrealized
holding losses during period
|
$
|
(7,831,663)
|
$
|
2,741,082
|
$
|
(5,090,581)
|
Less:
reclassification adjustment for losses realized in net
income
|
3,156,197
|
(1,104,669)
|
2,051,528
|
|||
Net
realized losses
|
(4,675,466)
|
1,636,413
|
(3,039,053)
|
|||
Other
comprehensive income (loss)
|
$
|
(4,675,466)
|
$
|
1,636,413
|
$
|
(3,039,053)
|
16.
|
SELECTED
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
2009
|
1st
|
2nd
|
3rd
|
4th
|
|||||
Premiums
& Policy Fees, Net
|
$
|
4,198,571
|
$
|
3,126,692
|
$
|
3,276,486
|
$
|
2,900,444
|
Net
Investment Income
|
3,443,283
|
3,391,781
|
3,221,707
|
4,184,022
|
||||
Total
Revenues
|
8,032,866
|
3,412,117
|
6,467,860
|
10,845,937
|
||||
Policy
Benefits, Including Dividends
|
6,888,524
|
4,689,295
|
5,345,056
|
5,571,102
|
||||
Commissions
& Amortization of DAC & COI
|
1,229,109
|
1,152,638
|
634,330
|
1,217,775
|
||||
Operating
Expenses
|
1,809,819
|
1,852,517
|
1,648,655
|
1,731,594
|
||||
Operating
Income (Loss)
|
(2,033,422)
|
(4,400,592)
|
(1,263,802)
|
2,201,733
|
||||
Net
Income Attributable to Common Shareholders Income (Loss)
|
(1,269,509)
|
(3,917,008)
|
(738,243)
|
1,634,513
|
||||
Basic
Earnings (Loss) Per Share Attributable to Common
Shareholders
|
(0.33)
|
(1.02)
|
(0.19)
|
0.42
|
||||
Diluted
Earnings (Loss) Per Share Attributable Common Shareholders
|
(0.33)
|
(1.02)
|
(0.19)
|
0.42
|
2008
|
1st
|
2nd
|
3rd
|
4th
|
|||||
Premiums
& Policy Fees, Net
|
$
|
3,927,179
|
$
|
5,153,149
|
$
|
3,553,730
|
$
|
674,681
|
Net
Investment Income
|
4,605,634
|
4,070,042
|
4,110,401
|
4,730,358
|
||||
Total
Revenues
|
9,057,395
|
9,786,288
|
7,532,833
|
8,862,764
|
||||
Policy
Benefits, Including Dividends
|
6,250,647
|
7,894,337
|
5,640,907
|
3,701,760
|
||||
Commissions
& Amortization of DAC & COI
|
544,548
|
649,934
|
550,660
|
647,039
|
||||
Operating
Expenses
|
2,034,227
|
1,840,864
|
1,701,944
|
1,654,868
|
||||
Operating
Income (Loss)
|
(60,580)
|
(814,147)
|
(556,108)
|
2,651,968
|
||||
Net
Income (Loss) Attributable to Common Shareholders
|
(140,552)
|
(415,176)
|
(950,580)
|
2,160,062
|
||||
Basic
Earnings (Loss) Per Share Attributable Common Shareholders
|
(0.04)
|
(0.11)
|
(0.25)
|
0.57
|
||||
Diluted
Earnings (Loss) Per Share Attributable Common Shareholders
|
(0.04)
|
(0.11)
|
(0.25)
|
0.57
|
William
W. Perry -
|
Committee
Chairman
|
||
John
S. Albin
|
|||
Joseph
A. Brinck, II
|
Name, Age
|
Position with the Company, Business Experience and
Other Directorships
|
|||||
John
S. Albin, 81
|
Director
of UTG since 1984; farmer in Douglas and Edgar counties, Illinois, since
1951; Chairman of the Board of Longview State Bank from 1978 to 2005;
President of the Longview Capitol Corporation, a bank holding company,
since 1978; Chairman of First National Bank of Ogden, Illinois, from 1987
to 2005; Chairman of the State Bank of Chrisman from 1988 to 2005;
Chairman of First National Bank in Georgetown from 1994 to 2005; Director
of Illini Community Development Corporation since 1990; Commissioner of
Illinois Student Assistance Commission from 1996 to
2002.
|
|||||
Randall
L. Attkisson, 64
|
Director
of UTG since 1999; Director of ACAP Corporation and American Capitol
Insurance Company since 2006; Director of Texas Imperial Life Insurance
Company from 2006 to 2009; Director of First Southern Bancorp, Inc, a bank
holding company, since 1986; Board Chairman of Young Life Raceway Region
(Kentucky/Indiana) since 2008; Board Chairman of Latin American Micro
Finance Initiative (LAMFI) since 2008; Partner of Bluegrass Capital
Advisors since 2008; Advisory Director of Kentucky Christian Foundation
since 2002; Director of The River Foundation, Inc. since 1990; President
of Randall L. Attkisson & Associates from 1982 to 1986; Commissioner
of Kentucky Department of Banking & Securities from 1980 to 1982;
Self-employed Banking Consultant in Miami, FL from 1978 to
1980.
|
|||||
Joseph
A. Brinck, II, 54
|
Director
of UTG since 2003; CEO of Stelter & Brinck, LTD, a full service
combustion engineering and manufacturing company from 1979 to present;
President of Superior Thermal, LTD from 1990 to present; President of
Sanctity of Life Foundation since 2001. Currently holds
Professional Engineering Licenses in Ohio, Kentucky, Indiana and
Illinois.
|
|||||
Jesse
T. Correll, 53
|
Chairman
and CEO of UTG and Universal Guaranty Life Insurance Company since 2000;
Director of UTG since 1999; Chairman and CEO of ACAP Corporation and
American Capitol Insurance Company since 2006; Chairman and CEO of Texas
Imperial Life Insurance Company from 2006 to 2009; Chairman, President,
Director of First Southern Bancorp, Inc. since 1983; President, Director
of First Southern Funding, LLC since 1992; President, Director of The
River Foundation since 1990; Board member of Crown Financial Ministries
since 2004; Friends of the Good Samaritans since 2005; Generous Giving
since 2006 and the National Christian Foundation since
2006. Mr. Correll and his wife Angela have 3 children and 3
grandchildren. Jesse Correll is the son of Ward and Regina
Correll.
|
|||||
Ward
F. Correll, 81
|
Director
of UTG since 2000; Director of ACAP Corporation and American Capitol
Insurance Company since 2006; Director of Texas Imperial Life Insurance
Company from 2006 to 2009; President, Director of Tradeway, Inc. of
Somerset, KY since 1973; President, Director of Cumberland Lake Shell,
Inc. of Somerset, KY since 1971; President, Director of Tradewind Shopping
Center, Inc. of Somerset, KY since 1966; Director of First Southern
Bancorp since 1987; Director of First Southern Funding, LLC since 1991;
Director of The River Foundation since 1990; and Director First Southern
Insurance Agency since 1987. Ward Correll is the father of
Jesse Correll.
|
|||||
Thomas
F. Darden, 55
|
Mr.
Darden is the Chief Executive Officer of Cherokee Investment Partners, a
private equity fund that invests in brownfields. Cherokee made
its first brownfield investment in 1990 and has since raised five
funds: $50 million in 1996, $250 million in 1999, $620 million
in 2003 and $1.4 billion in 2006. Cherokee has invested $750
million in 54 transactions, purchasing more than 500 sites in 35 states, 5
Canadian provinces and 4 European countries. Cherokee’s annual
spending on remediating pollution on its sites exceeds $50
million. Beginning in 1984, Mr. Darden served for 16 years as
the Chairman of Cherokee Sanford Group, a brick manufacturing and soil
remediation company. From 1981 to 1983, he was a consultant
with Bain & Company in Boston. From 1977 to 1978, he worked
as an environmental planner for the Korea Institute of Science and
Technology in Seoul, where he was a Henry Luce Foundation
Scholar. Mr. Darden is on the Boards of Shaw University, the
Nicholas School of the Environment at Duke University and the Institute
for The Environment at the University of North Carolina. He was
Chairman of the Research Triangle Transit Authority and served two terms
on the N.C. Board of Transportation. Mr. Darden serves on the
Board of Governors of the Research Triangle Institute. Mr.
Darden earned a Masters in Regional Planning from the University of North
Carolina, a Juris Doctor from Yale Law School and a Bachelor of Arts from
the University of North Carolina, where he was a Morehead
Scholar. His 1976 undergraduate thesis analyzed the
environmental impact of third world development and his 1981 Yale thesis
addressed interstate acid rain air pollution. He and his wife,
Jody, have three children.
|
|||||
Howard
L. Dayton, Jr., 66
|
In
1985, Mr. Dayton founded Crown Ministries in Longwood,
Florida. Crown Ministries merged with Christian Financial
Concepts in September 2000 to form Crown Financial Ministries, the world’s
largest financial ministry. He served as Chief Executive
Officer from 1985 to 2007. He recently founded Compass -
Finances God’s Way. Mr. Dayton is a graduate of Cornell
University. He developed The Caboose, a successful
railroad-themed restaurant in Orlando, FL in 1969. In 1972 he began his
commercial real estate development career, specializing in office
development in the Central Florida area. He also is the author
of five books, Your
Money: Frustration or Freedom, Your Money Counts, Free and Clear, Your
Money Map, Money and Marriage God’s Way. He also has
authored five popular small group studies including Crown’s Small Group
Studies and produced several video series. Mr. Dayton became a
director of UTG, Inc. in December 2005.
|
|||||
Daryl
J. Heald, 45
|
Mr.
Heald started in commercial real estate with the Allen Morris Company and
then spent four years at Triaxia Partners Consulting Firm, both in
Atlanta, Georgia. He later began serving as an associate
trustee and executive committee member of the Maclellan
Foundation. In 2000, Daryl helped launch Generous Giving, Inc.
and served as its President until January 2008, when he became Senior Vice
President of the Maclellan Foundation and founded Giving
Wisely. Giving Wisely seeks to serve families on their journey
of generosity by helping to connect their needs and passions with
knowledge, experiences, opportunities, and relationships. Daryl
also serves on the boards of Crown Financial Ministries, ProVision
Foundation, the Haggai Institute and is an elder at Lookout Mountain
Presbyterian Church. Mr. Heald became a director of UTG, Inc. in September
2008. He holds a B.S. degree in economics from Westmont
College. Daryl and his wife, Cathy, live in Lookout Mountain,
Georgia with their six children.
|
|||||
Peter
L. Ochs, 58
|
Mr.
Ochs is founder of Capital III, a private investment banking firm located
in Wichita, Kansas. The firm has acted as an intermediary in
over 120 transactions since its founding in 1982. In addition
the firm provides valuation services to private companies for such
purposes as ESOP’s, estate planning, M & A, buy/sells, and internal
planning strategies. The firm also provides both tactical and
strategic planning for privately held companies. In recent
years the firm has focused primarily on providing services to companies in
which Mr. Ochs holds an equity interest. Since 1987, Mr. Ochs
has been an active investor and officer of several privately held
companies. In most cases his ownership position has represented
a controlling interest in the enterprise. Companies in which he
has held or still holds an investment include a community bank, a medical
equipment company, a manufacturer of electrical assemblies, a sports
training equipment company, a manufacturer of corporate identification
products, a cable TV programming company, and a retail lifestyle clothing
store. Mr. Ochs is also one of the founding members of Trinity
Academy; a Christ centered college preparatory high school in
Wichita. Prior to founding Capital III, Mr. Ochs spent 8 years
in the commercial banking business. He graduated from the
University of Kansas in 1974 with a degree in business &
finance. Mr. Ochs became a director of UTG, Inc. in July
2006.
|
|||||
William
W. Perry, 53
|
Director
of UTG since 2001; Director of American Capitol Insurance Company since
2006, Director of Texas Imperial Life Insurance Company from 2006 to 2009;
Owner of SES Investments, Ltd., an oil and gas investments company since
1991; President of EGL Resources, Inc., an oil and gas operations company
based in Texas and New Mexico since 1992; Vice Chairman of American Shale
Oil Company (AMSO); President of a real estate investment company;
Director of Young Life Foundation and involved with Young Life in various
capacities; Director of Abel-Hangar Foundation, Director of River
Foundation; Director of Millagros Foundation; Director of University of
Oklahoma Associates; Mayor of Midland, Texas since January 2008; Midland,
Texas City Council member from 2002-2008.
|
|||||
James
P. Rousey, 51
|
President
since September 2006, Director of UTG and Universal Guaranty Life
Insurance Company since September 2001; President and Director of ACAP
Corporation and American Capitol Insurance Company since 2006; President
and Director of Texas Imperial Life Insurance Company from 2006 to 2009;
Regional CEO and Director of First Southern National Bank from 1988 to
2001. Board Member with the Illinois Fellowship of Christian Athletes from
2001-2005; Board Member with Contact Ministries since 2007; Board Member
with Amigos En Cristo, Inc from
2007-2009.
|
Jesse
T. Correll
|
Chairman
of the Board and Chief Executive Officer
|
James
P. Rousey
|
President
|
Name,
Age
|
Position
with UTG and Business Experience
|
Theodore
C. Miller, 47
|
Corporate
Secretary since December 2000, Senior Vice President and Chief Financial
Officer since July 1997; Vice President since October 1992 and Treasurer
from October 1992 to December 2003; Vice President and Controller of
certain affiliated companies from 1984 to 1992. Vice President
and Treasurer of certain affiliated companies from 1992 to 1997; Senior
Vice President and Chief Financial Officer of subsidiary companies since
1997; Corporate Secretary of subsidiary companies since
2000.
|
Douglas
P. Ditto, 54
|
Chief
Investment Officer and Vice President since June 2009; Assistant Vice
President from June 2003 to June 2009; Chief Executive Officer, and
Executive Vice President of First Southern Bancorp since March
1985.
|
Summary
Compensation Table
|
|||||||||
Name
and Principal position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Comp
|
Nonqualified
Deferred Comp Earnings
|
All
Other Comp
(1)
|
Total
|
Jesse
T. Correll
Chief
Executive Officer
|
2009
|
140,550
|
0
|
0
|
0
|
0
|
0
|
4,323
(1)
|
144,873
|
2008
|
150,000
|
0
|
0
|
0
|
0
|
0
|
9,000
(1)
|
159,000
|
|
2007
|
111,057
|
25,000
|
0
|
0
|
0
|
0
|
4,398
(1)
|
140,455
|
|
Randall
L. Attkisson (6)
Chief
Operating Officer to 7/1/08
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
2008
|
80,769
|
0
|
0
|
0
|
0
|
0
|
4,846
(1)
|
85,615
|
|
2007
|
110,481
|
25,000
|
0
|
0
|
0
|
0
|
6,491
(1)
|
141,972
|
|
James
P. Rousey
President
|
2009
|
140,000
|
0
|
0
|
0
|
0
|
0
|
983
(2)
|
140,983
|
2008
|
145,000
|
25,000
|
0
|
0
|
0
|
0
|
6,806
(2)
|
176,806
|
|
2007
|
145,000
|
25,000
|
0
|
0
|
0
|
0
|
6,922
(2)
|
176,922
|
|
Theodore
C. Miller
Secretary/Senior
Vice President
|
2009
|
110,000
|
0
|
0
|
0
|
0
|
0
|
1,490
(3)
|
111,490
|
2008
|
110,000
|
20,000
|
0
|
0
|
0
|
0
|
3,030
(3)
|
133,030
|
|
2007
|
110,000
|
20,050
|
0
|
0
|
0
|
0
|
3,071
(3)
|
133,121
|
|
Douglas
P. Ditto
Chief
Investment Officer appointed 7/17/2009
|
2009
|
100,000
|
0
|
0
|
0
|
0
|
0
|
3,077
(1)
|
103,077
|
Douglas
A. Dockter (5)
Vice
President
|
2009
|
100,000
|
0
|
0
|
0
|
0
|
0
|
1,420
(4)
|
101,420
|
2008
|
100,000
|
0
|
0
|
0
|
0
|
0
|
2,820
(4)
|
102,820
|
|
2007
|
100,000
|
4,000
|
0
|
0
|
0
|
0
|
2,820
(4)
|
106,820
|
(1)
|
All
Other Compensation consists of matching contributions to an Employee
Savings Trust 401(k) Plan.
|
(2)
|
All
Other Compensation consists of matching contributions to an Employee
Savings Trust 401(k) Plan of $263, $2,066 and $2,302, group life insurance
premiums of $720, $720 and $720, and country club membership fees of $0,
$4,020 and $3,900 during 2009, 2008 and 2007,
respectively.
|
(3)
|
All
Other Compensation consists of matching contributions to an Employee
Savings Trust 401(k) Plan of $770, $2,310 and $2,351 and group life
insurance premiums of $720, $720 and $720 during 2009, 2008 and 2007,
respectively.
|
(4)
|
All
Other Compensation consists of matching contributions to an Employee
Savings Trust 401(k) Plan of $700, $2,653 and $2,100 and group life
insurance premiums of $720, $720 and $720 during 2009, 2008 and 2007
respectively.
|
(5)
|
Mr.
Douglas A. Dockter is not considered an executive officer of UTG, but is
included in this table pursuant to compensation disclosure
requirements.
|
(6)
|
Mr.
Randall L. Attkisson retired from the Company effective July 1,
2008. Mr. Attkisson remains a member of the Board of
Directors.
|
Director
Compensation
|
|||||||
Name
|
Fees
Earned or Paid in Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan Compensation
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
All
Other Compensation
|
Total
|
Jesse
Thomas Correll
Chief
Executive Officer
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Randall
Lanier Attkisson
Director
|
3,600
|
0
|
0
|
0
|
0
|
0
|
3,600
|
James
Patrick Rousey
President
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
John
Sanford Albin
Director
|
3,000
|
0
|
0
|
0
|
0
|
0
|
3,000
|
Joseph
Anthony Brinck, II
Director
|
3,300
|
0
|
0
|
0
|
0
|
0
|
3,300
|
Ward
Forrest Correll
Director
|
3,300
|
0
|
0
|
0
|
0
|
0
|
3,300
|
William
Wesley Perry
Director
(1)
|
3,300
|
0
|
0
|
0
|
0
|
0
|
3,300
|
Thomas
Francis Darden, II
Director
(1)
|
3,300
|
0
|
0
|
0
|
0
|
0
|
3,300
|
Peter
Loyd Ochs
Director
|
3,600
|
0
|
0
|
0
|
0
|
0
|
3,600
|
Howard
Lape Dayton
Director
|
3,600
|
0
|
0
|
0
|
0
|
0
|
3,600
|
Daryl
Jack Heald
Director
|
3,300
|
0
|
0
|
0
|
0
|
0
|
3,300
|
John
S. Albin
|
Howard
L. Dayton
|
||
Randall
L. Attkisson
|
Daryl
J. Heald
|
||
Joseph
A. Brinck, II
|
Peter
L. Ochs
|
||
Jesse
T. Correll
|
William
W. Perry
|
||
Ward
F. Correll
|
James
P. Rousey
|
||
Thomas
F. Darden
|
(1)
|
The
Company selected the NASDAQ Composite Index Performance as an appropriate
comparison. UTG was listed on the NASDAQ Small Cap exchange
until December 31, 2001. Furthermore, the Company selected the
NASDAQ Insurance Stock Index as the second comparison because there is no
similar single “peer Company” in the NASDAQ system with which to compare
stock performance and the closest additional line-of-business index which
could be found was the NASDAQ Insurance Stock Index. Trading
activity in the Company’s common stock is limited, which may be due in
part as a result of the Company’s low profile. The Return Chart
is not intended to forecast or be indicative of possible future
performance of the Company’s common
stock.
|
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
Principal
Holders of Securities
|
Title
|
Amount
|
Percent
|
|
of
|
Name
and Address
|
and
Nature of
|
Of
|
Class
|
of Beneficial Owner (2)
|
Beneficial Ownership
|
Class
(1)
|
Common
|
Jesse
T. Correll
|
191,058
|
(3)
|
4.9%
|
Stock,
no
|
First
Southern Bancorp, Inc.
|
1,506,785
|
(3)(4)
|
38.8%
|
par
value
|
First
Southern Funding, LLC
|
341,997
|
(3)(4)
|
8.8%
|
First
Southern Holdings, LLC
|
1,277,716
|
(3)(4)
|
32.9%
|
|
Ward
F. Correll
|
268,906
|
(5)
|
6.9%
|
|
WCorrell,
Limited Partnership
|
72,750
|
(3)
|
1.9%
|
|
Cumberland
Lake Shell, Inc.
|
257,501
|
(5)
|
6.6%
|
|
Total
(6)
|
2,308,746
|
59.5%
|
(1)
|
The
percentage of outstanding shares is based on 3,883,129 shares of common
stock outstanding as of March 1, 2010.
|
(2)
|
The
address for each of Jesse Correll, First Southern Bancorp, Inc. (“FSBI”),
First Southern Funding, LLC (“FSF”), First Southern Holdings, LLC (“FSH”),
First Southern Capital Corp., LLC (“FSC”), First Southern Investments, LLC
(“FSI”), and WCorrell, Limited Partnership (“WCorrell LP”), is P.O. Box
328, 99 Lancaster Street, Stanford, Kentucky 40484. The address
for each of Ward Correll and Cumberland Lake Shell, Inc. (“CLS”) is P.O.
Box 430, 150 Railroad Drive, Somerset, Kentucky 42502.
|
(3)
|
The
share ownership of Jesse Correll listed includes 118,308 shares of common
stock owned by him individually. The share ownership of Mr.
Correll also includes 72,750 shares of Common Stock held by WCorrell,
Limited Partnership, a limited partnership in which Jesse Correll serves
as managing general partner and, as such, has sole voting and dispositive
power over the shares held by it.
|
In
addition, by virtue of his ownership of voting securities of FSF and FSBI,
and in turn, their ownership of 100% of the outstanding membership
interests of FSH, Jesse Correll may be deemed to beneficially own the
total number of shares of common stock owned by FSH (as well as the shares
owned by FSBI directly), and may be deemed to share with FSH (as well as
FSBI) the right to vote and to dispose of such shares. Mr.
Correll owns approximately 82% of the outstanding membership interests of
FSF; he owns directly approximately 49%, companies he controls own
approximately 12%, and he has the power to vote but does not own an
additional 3% of the outstanding voting stock of FSBI. FSBI and
FSF in turn own 99% and 1%, respectively, of the outstanding membership
interests of FSH.
|
|
(4)
|
The
share ownership of FSBI consists of 229,069 shares of common stock held by
FSBI directly (which FSBI acquired by virtue of its merger with Dyscim,
LLC) and 1,277,716 shares of common stock held by FSH of which FSBI is a
99% member and FSF is a 1% member, as further described
below. As a result, FSBI may be deemed to share the voting and
dispositive power over the shares held by FSH.
|
(5)
|
Includes
257,501 shares of common stock held by CLS, all of the outstanding voting
shares of which are owned by Ward F. Correll.
|
(6)
|
According
to the most recent Schedule 13D, as amended, filed jointly by each of the
entities and persons listed above, Jesse Correll, FSBI, FSF and FSH, have
agreed in principle to act together for the purpose of acquiring or
holding equity securities of UTG. In addition, the Schedule 13D
indicates that because of their relationships with Jesse Correll and these
other entities, Ward Correll, CLS, and WCorrell, Limited Partnership may
also be deemed to be members of this group. Because the
Schedule 13D indicates that for its purposes, each of these entities and
persons may be deemed to have acquired beneficial ownership of the equity
securities of UTG beneficially owned by the other entities and persons,
each has been identified and listed in the above
tabulation.
|
Title
|
Directors,
Named Executive
|
Amount
|
Percent
|
of
|
Officers,
& All Directors &
|
and
Nature of
|
Of
|
Class
|
Executive Officers as a
Group
|
Ownership
|
Class
(1)
|
UTG’s
|
John
S. Albin
|
10,503
|
(4)
|
*
|
Common
|
Randall
L. Attkisson
|
5,615
|
(2)
|
*
|
Stock,
no
|
Joseph
A. Brinck, II
|
12,225
|
*
|
|
par
value
|
Jesse
T. Correll
|
2,039,840
|
(3)
|
52.5%
|
Ward
F. Correll
|
268,906
|
(5)
|
6.9%
|
|
Thomas
F. Darden
|
60,465
|
*
|
||
Howard
L. Dayton, Jr.
|
4,075
|
*
|
||
Douglas
P. Ditto
|
0
|
*
|
||
Daryl
J. Heald
|
21,739
|
(6)
|
||
Theodore
C. Miller
|
17,115
|
*
|
||
Peter
L. Ochs
|
2,000
|
(6)
|
*
|
|
William
W. Perry
|
96,723
|
2.5%
|
||
James
P. Rousey
|
0
|
*
|
||
All
directors and executive officers
as
a group (thirteen in number)
|
2,539,206
|
65.4%
|
||
(1)
|
The
percentage of outstanding shares for UTG is based on 3,883,129 shares of
common stock outstanding as of March 1, 2010.
|
(2)
|
Randall
L. Attkisson holds minority ownership positions in certain of the
companies listed as owning UTG common stock including First Southern
Bancorp, Inc. Ownership of these shares is reflected in the
ownership of Jesse T. Correll.
|
(3)
|
The
share ownership of Mr. Jesse Correll includes 118,308 shares of UTG, Inc
common stock owned by him individually, 229,069 shares of UTG, Inc common
stock held by First Southern Bancorp, Inc. and 341,997 shares of UTG, Inc
common stock owned by First Southern Funding, LLC. The share
ownership of Mr. Correll also includes 72,750 shares of UTG, Inc common
stock held by WCorrell, Limited Partnership, a limited partnership in
which Mr. Correll serves as managing general partner and, as such, has
sole voting and dispositive power over the shares held by
it. In addition, by virtue of his ownership of voting
securities of First Southern Funding, LLC and First Southern Bancorp,
Inc., and in turn, their ownership of 100% of the outstanding membership
interests of First Southern Holdings, LLC (the holder of 1,277,716 shares
of UTG, Inc common stock), Mr. Correll may be deemed to beneficially own
the total number of shares of UTG, Inc common stock owned by First
Southern Holdings, and may be deemed to share with First Southern Holdings
the right to vote and to dispose of such shares. Mr. Correll owns
approximately 82% of the outstanding membership interests of First
Southern Funding; he owns directly approximately 49%, companies he
controls own approximately 12%, and he has the power to vote but does not
own an additional 3% of the outstanding voting stock of First Southern
Bancorp. First Southern Bancorp and First Southern Funding in
turn own 99% and 1%, respectively, of the outstanding membership interests
of First Southern Holdings.
|
(4)
|
Includes
392 shares owned directly by Mr. Albin’s spouse.
|
(5)
|
The
share ownership of Mr. Ward Correll includes 11,405 shares of UTG, Inc.
common stock owned by him individually. Cumberland Lake Shell,
Inc. owns 257,501 shares of UTG Common Stock, all of the outstanding
voting shares of which are owned by Ward F. Correll. Ward F.
Correll is the father of Jesse T. Correll. There are 72,750
shares of UTG Common Stock owned by WCorrell Limited Partnership in which
Jesse T. Correll serves as managing general partner and, as such, has sole
voting and dispositive power over the shares of Common Stock held by it.
The aforementioned 72,750 shares are deemed to be beneficially owned by
and listed under Jesse T. Correll in this section.
|
(6)
|
Shares
held in a trust for benefit of named
individual
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
(a)
|
The
following documents are filed as a part of the
report:
|
(1)
|
Financial
Statements:
|
See
Item 8, Index to Financial Statements
|
|
(2)
|
Financial
Statement Schedules
|
Schedule
I - Summary of Investments - other than invested in related
parties.
|
|
Schedule
II - Condensed financial information of registrant
|
|
Schedule
IV – Reinsurance
|
|
Schedule
V - Valuation and qualifying accounts
|
|
NOTE: Schedules
other than those listed above are omitted because they are not required or
the information is disclosed in the financial statements or
footnotes.
|
(B)
|
Exhibits:
|
Index
to Exhibits incorporated herein by this reference (See pages
83-84).
|
2.1
|
(3)
|
Agreement
and Plan of Merger of United Trust Group, Inc., An Illinois Corporation
with and into UTG, Inc., A Delaware Corporation dated as of July 1, 2005,
including exhibits thereto.
|
2.2
|
(4)
|
Stock
Purchase Agreement, dated August 7, 2006, between UTG, Inc. and William F.
Guest and John D. Cornett
|
2.3
|
(4)
|
Amendment
No. 1, dated September 6, 2006, to the Stock Purchase Agreement, dated
August 7, 2007, between UTG, Inc. and William F. Guest and John D.
Cornett
|
2.4
|
(4)
|
Amendment
No. 2, dated November 22, 2006, to the Stock Purchase Agreement, dated
August 7, 2006, as amended, between UTG, Inc. and William F. Guest and
John D. Cornett.
|
3.1
|
(3)
|
Certificate
of Incorporation of the Registrant and all amendments
thereto.
|
3.2
|
(3)
|
By-Laws
for the Registrant and all amendments thereto.
|
4.1
|
(2)
|
UTG’s
Agreement pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K with
respect to long-term debt instruments.
|
10.1
|
(1)
|
Management
and Consultant Agreement dated as of January 1, 1993 between First
Commonwealth Corporation and Universal Guaranty Life Insurance
Company.
|
10.2
|
(3)
|
Line
of credit agreement dated June 1, 2005, between Universal Guaranty Life
Insurance Company and First National Bank of Tennessee.
|
10.3
|
(4)
|
Amended
and Restated UTG, Inc. Employee and Director Stock Purchase Plan and form
of related Stock Restriction and Buy-Sell Agreement.
|
10.4
|
(4)
|
Promissory
note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank
National Association.
|
10.5
|
(4)
|
Revolving
credit note dated December 8, 2006, between UTG, Inc. and First Tennessee
Bank National Association.
|
10.6
|
(4)
|
Loan
Agreement dated December 8, 2006, between UTG, Inc. and First Tennessee
Bank National Association.
|
10.7
|
(4)
|
Commercial
pledge agreement dated December 8, 2006, between UTG, Inc. and First
Tennessee Bank National Association.
|
10.8
|
(4)
|
Negative
pledge agreement dated December 8, 2006, between UTG, Inc. and First
Tennessee Bank National Association.
|
10.9
|
(4)
|
Administrative
Services and Cost Sharing Agreement dated as of January 1, 2007 between
UTG, Inc and American Capitol Insurance Company
|
10.10
|
(4)
|
Administrative
Services and Cost Sharing Agreement dated as of January 1, 2007 between
UTG, Inc and Texas Imperial Life Insurance Company
|
10.11
|
(5)
|
Administrative
Services and Cost Sharing Agreement dated as of January 1, 2007 between
UTG, Inc and Universal Guaranty Life Insurance Company
|
14.1
|
(3)
|
Code
of Ethics and Business Conduct
|
14.2
|
(3)
|
Code
of Ethical Conduct for Senior Financial Officers
|
21.1
|
List
of Subsidiaries of the Registrant.
|
|
31.1
|
Certificate
of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a).
|
|
31.2
|
Certificate
of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a).
|
|
32.1
|
Certificate
of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of
UTG, as required pursuant to 18 U.S.C. Section 1350.
|
|
32.2
|
Certificate
of Theodore C. Miller, Chief Financial Officer, Senior Vice President and
Corporate Secretary of UTG, as required pursuant to 18 U.S.C. Section
1350.
|
|
99.1
|
(3)
|
Audit
Committee Charter.
|
99.2
|
(3)
|
Whistleblower
Policy
|
(1)
|
Incorporated
by reference from the Company's Annual Report on Form 10-K, File No.
0-5392, as of December 31, 1993.
|
(2)
|
Incorporated
by reference from the Company's Annual Report on Form 10-K, File No.
0-5392, as of December 31, 2002.
|
(3)
|
Incorporated
by reference from the Company’s Annual Report on Form 10-K, File No.
0-16867, as of December 31, 2005.
|
(4)
|
Incorporated
by reference from the Company’s Annual Report on Form 10-K, File No.
0-16867, as of December 31, 2006
|
(5)
|
Incorporated
by reference from the Company’s Annual Report on Form 10-K, File No.
0-16867, as of December 31, 2007
|
UTG,
INC.
|
||||||||
SUMMARY
OF INVESTMENTS - OTHER THAN
|
||||||||
INVESTMENTS
IN RELATED PARTIES
|
||||||||
As
of December 31, 2009
|
||||||||
Schedule
I
|
||||||||
Column A
|
Column
B
|
Column
C
|
Column
D
|
|||||
Amount
at
|
||||||||
Which
Shown
|
||||||||
in
Balance
|
||||||||
Cost
|
Value
|
Sheet
|
||||||
Fixed
maturities:
|
||||||||
Bonds:
|
||||||||
United
States Government and
|
||||||||
government
agencies and authorities
|
$
|
0
|
$
|
0
|
$
|
0
|
||
State,
municipalities, and political
|
||||||||
subdivisions
|
0
|
0
|
0
|
|||||
Collateralized
mortgage obligations
|
0
|
0
|
0
|
|||||
Public
utilities
|
0
|
0
|
0
|
|||||
All
other corporate bonds
|
0
|
0
|
0
|
|||||
Total
fixed maturities
|
0
|
$
|
0
|
|
0
|
|||
Investments
held for sale:
|
||||||||
Fixed
maturities:
|
||||||||
United
States Government and
|
||||||||
government
agencies and authorities
|
73,298,975
|
$
|
73,697,038
|
73,697,038
|
||||
State,
municipalities, and political
|
||||||||
subdivisions
|
2,567,650
|
2,419,148
|
2,419,148
|
|||||
Collateralized
mortgage obligations
|
17,992,385
|
18,821,461
|
18,821,461
|
|||||
Public
utilities
|
0
|
0
|
0
|
|||||
All
other corporate bonds
|
44,821,388
|
44,767,046
|
44,767,046
|
|||||
138,680,398
|
$
|
139,704,693
|
139,704,693
|
|||||
Equity
securities:
|
||||||||
Banks,
trusts and insurance companies
|
5,206,500
|
$
|
5,001,400
|
5,001,400
|
||||
All
other corporate securities
|
9,109,963
|
8,321,922
|
8,321,922
|
|||||
14,316,463
|
$
|
13,323,322
|
|
13,323,322
|
||||
Trading
securities:
|
19,043,448
|
19,613,472
|
19,613,472
|
|||||
Mortgage
loans on real estate
|
61,271,384
|
61,271,384
|
||||||
Investment
real estate
|
45,556,811
|
45,556,811
|
||||||
Real
estate acquired in satisfaction of debt
|
0
|
0
|
||||||
Policy
loans
|
14,343,606
|
14,343,606
|
||||||
Other
long-term investments
|
0
|
0
|
||||||
Short-term
investments
|
700,000
|
700,000
|
||||||
Total
investments
|
$
|
293,912,110
|
$
|
294,513,288
|
(a)
|
The
condensed financial information should be read in conjunction with the
consolidated financial statements and notes of UTG, Inc. and Consolidated
Subsidiaries.
|
UTG,
INC.
|
||||||
CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
|
||||||
PARENT
ONLY BALANCE SHEETS
|
||||||
As
of December 31, 2009 and 2008
|
||||||
Schedule
II
|
||||||
2009
|
2008
|
|||||
ASSETS
|
||||||
Investment
in affiliates
|
$
|
50,475,591
|
$
|
55,947,905
|
||
Cash
and cash equivalents
|
292,821
|
582,694
|
||||
F.I.T.
Recoverable
|
133
|
25,953
|
||||
Accrued
interest income
|
89,629
|
0
|
||||
Note
receivable from affiliate
|
3,259,084
|
3,259,084
|
||||
Other
assets
|
30,643
|
66,766
|
||||
Total
assets
|
$
|
54,147,901
|
$
|
59,882,402
|
||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||
Liabilities:
|
||||||
Notes
payable
|
$
|
10,491,762
|
$
|
10,494,454
|
||
Payable
to affiliate (net)
|
98,503
|
373,900
|
||||
Deferred
income taxes
|
2,134,330
|
2,105,663
|
||||
Other
liabilities
|
576,494
|
663,174
|
||||
Total
liabilities
|
13,301,089
|
13,637,191
|
||||
Shareholders'
equity:
|
||||||
Common
stock, net of treasury shares
|
|
3,885
|
|
3,834
|
||
Additional
paid-in capital, net of treasury
|
41,782,274
|
41,943,229
|
||||
Retained
earnings (accumulated deficit)
|
(1,261,503)
|
3,028,744
|
||||
Accumulated
other comprehensive
|
||||||
income
of affiliates
|
|
322,156
|
|
1,269,404
|
||
Total
shareholders' equity
|
40,846,812
|
46,245,211
|
||||
Total
liabilities and shareholders' equity
|
$
|
54,147,901
|
$
|
59,882,402
|
||
UTG,
INC.
|
||||||
CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
|
||||||
PARENT
ONLY STATEMENTS OF OPERATIONS
|
||||||
Two
Years Ended December 31, 2009
|
||||||
Schedule
II
|
||||||
2009
|
2008
|
|||||
Revenues:
|
||||||
Management
fees from affiliates
|
$
|
6,961,100
|
$
|
7,623,149
|
||
Interest
income
|
169,909
|
164,501
|
||||
Other
income
|
105,462
|
93,120
|
||||
7,236,471
|
7,880,770
|
|||||
Expenses:
|
||||||
Interest
expense
|
287,969
|
652,720
|
||||
Operating
expenses
|
6,587,334
|
6,832,631
|
||||
6,875,303
|
7,485,351
|
|||||
Operating
income
|
361,168
|
395,419
|
||||
Income
tax expense
|
(126,349)
|
(148,730)
|
||||
Equity
in income (loss) of subsidiaries
|
(4,525,066)
|
407,065
|
||||
Net
income (loss)
|
$
|
(4,290,247)
|
$
|
653,754
|
||
Basic
income (loss) per share
|
$
|
(1.12)
|
$
|
0.17
|
||
Diluted
income (loss) per share
|
$
|
(1.12)
|
$
|
0.17
|
||
Basic
weighted average shares outstanding
|
3,843,113
|
3,844,081
|
||||
Diluted
weighted average shares outstanding
|
3,843,113
|
3,844,081
|
UTG,
INC.
|
||||||
CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
|
||||||
PARENT
ONLY STATEMENTS OF CASH FLOWS
|
||||||
Two
Years Ended December 31, 2009
|
||||||
Schedule
II
|
||||||
2009
|
2008
|
|||||
Increase
(decrease) in cash and cash equivalents
|
||||||
Cash
flows from operating activities:
|
||||||
Net
income (loss)
|
$
|
(4,290,247)
|
$
|
653,754
|
||
Adjustments
to reconcile net income to
|
||||||
net
cash provided by operating activities:
|
||||||
Equity
in (income) loss of subsidiaries
|
4,525,066
|
(407,065)
|
||||
Depreciation
|
33,383
|
85,766
|
||||
Change
in FIT recoverable
|
25,820
|
(25,953)
|
||||
Change
in accrued interest income
|
(89,629)
|
73,689
|
||||
Change
in indebtedness (to) from affiliates, net
|
(275,397)
|
464,276
|
||||
Change
in deferred income taxes
|
28,667
|
19,075
|
||||
Change
in other assets and liabilities
|
(83,940)
|
(202,827)
|
||||
Net
cash provided by (used by) operating activities
|
(126,277)
|
660,715
|
||||
Cash
flows from financing activities:
|
||||||
Purchase
of treasury stock
|
(160,904)
|
(124,015)
|
||||
Issuance
of common stock
|
0
|
0
|
||||
Issuance
of note receivable
|
0
|
(224,084)
|
||||
Proceeds
from repayment of note receivable
|
0
|
0
|
||||
Proceeds
from subsidiary for acquisition
|
0
|
0
|
||||
Purchase
of subsidiary
|
0
|
0
|
||||
Proceeds
from notes payable
|
0
|
0
|
||||
Payments
on notes payable
|
(2,692)
|
(3,049,995)
|
||||
Capital
contribution to subsidiary
|
0
|
0
|
||||
Dividend
received from subsidiary
|
0
|
3,000,000
|
||||
Net
cash (used in) financing activities
|
(163,596)
|
(398,094)
|
||||
Net
increase (decrease) in cash and cash equivalents
|
(289,873)
|
262,621
|
||||
Cash
and cash equivalents at beginning of year
|
582,694
|
320,073
|
||||
Cash
and cash equivalents at end of year
|
$
|
292,821
|
$
|
582,694
|
UTG,
INC.
|
||||||||||
REINSURANCE
|
||||||||||
As
of December 31, 2009 and the year ended December 31,
2009
|
||||||||||
Schedule
IV
|
||||||||||
Column A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
Column
F
|
|||||
Percentage
|
||||||||||
Ceded
to
|
Assumed
|
of
amount
|
||||||||
other
|
from
other
|
assumed
to
|
||||||||
Gross
amount
|
companies
|
companies
|
Net
amount
|
net
|
||||||
Life
insurance
|
|
|||||||||
in
force
|
$
|
1,913,335,495
|
$
|
452,781,000
|
$
|
16,255,505
|
$
|
1,476,810,000
|
|
1.1%
|
Premiums
and policy fees:
|
||||||||||
Life
insurance
|
$
|
17,226,647
|
$
|
3,917,325
|
$
|
162,123
|
$
|
13,471,445
|
1.2%
|
|
Accident
and health
|
||||||||||
insurance
|
44,575
|
14,638
|
811
|
30,748
|
2.6%
|
|||||
$
|
17,271,222
|
$
|
3,931,963
|
$
|
162,934
|
$
|
13,502,193
|
1.2%
|
UTG,
INC.
|
||||||||||
REINSURANCE
|
||||||||||
As
of December 31, 2008 and the year ended December 31,
2008
|
||||||||||
Schedule
IV
|
||||||||||
Column A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
Column
F
|
|||||
Percentage
|
||||||||||
Ceded
to
|
Assumed
|
of
amount
|
||||||||
other
|
from
other
|
assumed
to
|
||||||||
Gross
amount
|
companies
|
companies
|
Net
amount
|
net
|
||||||
Life
insurance
|
|
|||||||||
in
force
|
$
|
2,019,270,704
|
$
|
490,682,000
|
$
|
17,631,296
|
$
|
1,546,220,000
|
|
1.1%
|
Premiums
and policy fees:
|
||||||||||
Life
insurance
|
$
|
18,261,728
|
$
|
5,163,794
|
$
|
180,721
|
$
|
13,278,655
|
1.4%
|
|
Accident
and health
|
||||||||||
insurance
|
43,599
|
16,540
|
3,025
|
30,084
|
10.1%
|
|||||
$
|
18,305,327
|
$
|
5,180,334
|
$
|
183,746
|
$
|
13,308,739
|
1.4%
|
UTG,
INC.
|
||||
VALUATION
AND QUALIFYING ACCOUNTS
|
||||
As
of and for the years ended December 31, 2009 and 2008
|
||||
Schedule
V
|
||||
Balance
at
|
Additions,
|
|||
Beginning
|
Charges
|
Balance
at
|
||
Description
|
Of
Period
|
and
Expenses
|
Deductions
|
End
of Period
|
December
31, 2009
|
||||
.
|
||||
Allowance
for doubtful accounts -
|
||||
mortgage
loans
|
$ 19,730
|
$ -
|
$ 7,000
|
$ 12,730
|
December
31, 2008
|
||||
Allowance
for doubtful accounts -
|
||||
mortgage
loans
|
$ 19,730
|
$ -
|
$ -
|
$ 19,730
|
UTG, Inc
|
(Registrant)
|
/s/
John S. Albin
|
March
17, 2010
|
John
S. Albin
Director
|
|
/s/
Randall L. Attkisson
|
March
17, 2010
|
Randall
L. Attkisson
Director
|
|
/s/
Joseph A. Brinck
|
March
17, 2010
|
Joseph
A. Brinck
Director
|
|
/s/
Jesse T. Correll
|
March
17, 2010
|
Jesse
T. Correll
Chairman
of the Board, Chief Executive Officer and Director
|
|
March
17, 2010
|
|
Ward
F. Correll
Director
|
|
/s/
Thomas F. Darden
|
March
17, 2010
|
Thomas
F. Darden
Director
|
|
March
17, 2010
|
|
Daryl
J. Heald
Director
|
|
/s/
Howard L. Dayton, Jr.
|
March
17, 2010
|
Howard
L. Dayton, Jr.
Director
|
|
/s/
Peter L. Ochs
|
March
17, 2010
|
Peter
L. Ochs
Director
|
|
/s/
William W. Perry
|
March
17, 2010
|
William
W. Perry
Director
|
|
/s/
James P. Rousey
|
March
17, 2010
|
James
P. Rousey
President
and Director
|
|
/s/
Theodore C. Miller
|
March
17, 2010
|
Theodore
C. Miller
Corporate
Secretary and
Chief
Financial Officer
|