UTG INC
For the period ended Dec 31, 2024. Filed Mar 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 26, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001140361-24-016714
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-26.
0000832480-25-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 98 previous paragraphs and 89 current paragraphs.
54 unchanged; 32 reworded; 2 added; 12 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Beginning in March 2022 and ending in July 2023, the Federal Open Market Committee (“FOMC”) aggressively raised interest rates to fight inflation. During this time period, the interest rate environment experienced eleven rate increases totaling 5.50%, including four increases during the first part of 2023. While these actions had a negative impact on some of our investments currently owned, this has also allowed for better yields on cash balances and recent investments acquired as investments mature. In the second half of 2024, the FOMC cut the interest rate 3 times for a total of 1% making the current rate 4.50%. The Company anticipates a similar decline in earnings on cash balances and any new investments that are acquired as investments mature.
Current report
The earnings reported by the cash and short term investments represented 14% and 11% of the total consolidated net investment income reported by the Company during 2024 and 2023. The increase in earnings in this category is the result of a combination of higher cash and short term holdings in 2024 and from increased interest rates received from banks and other deposit institutions due to FOMC rate changes. With the three rate declines in 2024 moving it down 1.00%, the Company anticipates experiencing a similar decline in earnings on cash balances going forward.
Removed paragraphs (12)
Previous report
On February 21, 2023, Mr. James Rousey submitted a letter of resignation stating his desire to retire. In this regard, he retired as President of UTG, Inc. and its subsidiary, Universal Guaranty Life Insurance Company as well as his position as a Director of both entities. This was effective as of the date of the letter. The Board of Directors of UTG, Inc. and Universal Guaranty Life Insurance Company formally accepted the resignation letter on February 22, 2023. Mr. Jesse Correll, CEO and Chairman of the Board of the companies, assumed the title of President initially. At the September 2023 Board of Directors meeting, the Board appointed Mr. Daniel Roberts as President of Universal Guaranty Life Insurance Company. Mr. Correll continues to hold the President title for UTG, Inc. Mr. Roberts was previously a Vice President with both companies.
Previous report
Cost of Insurance Acquired – The costs of acquiring blocks of insurance from other companies or through the acquisition of other companies are deferred and recorded as deferred acquisition costs. The deferred amounts are recorded as an asset and amortized to expense in a systematic manner as indicated in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.
Previous report
Since the start of 2022, we have seen more volatility in the U.S. markets in general and have seen an increase in bonds yields. This is due to the Federal Open Market Committee (“FOMC”) aggressively raising interest rates to fight the inflation that is currently being experienced. As of December 31, 2023, the interest rate environment experienced eleven rate increases totaling 5.25% over the past two years. While these actions had a negative impact on some of our investments that we currently own, this will also allow for better yields on future investments acquired as current investments mature.
Previous report
Earnings from the equity securities and real estate investment portfolios are primarily related to the oil and gas and timber industries. In 2022, we experienced the reopening of the world economies post-COVID, and the demand for oil and gas and other commodities substantially increased, which resulted in increases in prices in the marketplace. Add to this the Russian invasion of Ukraine, and more upward pricing pressure was felt. In 2022, oil averaged $95 per barrel compared to an average price of $78 in 2023. Earnings from the real estate investment portfolio are expected to vary depending on the real estate activities and the potential distributions that may occur.
Previous report
The total gains from equity securities sold in 2022 were approximately $23.4 million, of which $8.9 million is being reported as gains from equity securities and $14.5 million is reported as a component of the change in the fair value of equity securities. The disposal of two equity securities represented 89% of the total gains from the equity securities portfolio. The Company fully disposed of one equity security that produced a realized gain of $6.6 million in 2022. The Company disposed of 7,500 shares of an equity security, associated with the oil and gas industry, producing a realized gain of $14.3 million. The Company still owns 5,000 shares of this equity security as of December 31, 2022. This disposal will impact future dividend earnings of the Company as it represented a significant portion of the 2022 investment income from equity securities.
Previous report
Early in the COVID-19 pandemic, the Company implemented a process to monitor death claims resulting from COVID-19. Prior to the pandemic, death benefits were $12.6 million, $12.8 million and $12.4 million in 2017, 2018 and 2019, respectively. During the three plus years of the pandemic, total death benefits were $14.3 million, $16.0 million, and $13.3 million in 2020, 2021, and 2022, respectively. Death benefits of the Company have been higher than recent past experience, even when adjusting for the identified COVID-19 claims. This anomaly showed throughout the entire U.S. insurance industry. Industry experts believe this increase in death benefits, while not always directly related to COVID-19, were caused indirectly by the pandemic due to delays in medical care as a result of the lockdown in 2020 and then later, people’s fears of seeking out treatment and trouble making up appointments. This is further compounded by depression from isolation. In the latter half of 2022, claims appeared to be moving back to pre-pandemic levels. This has continued throughout 2023. While we believe our mortality experience has returned to pre-pandemic norms, we cannot be absolutely certain at this time. During 2023, the Company paid approximately $75,000 of claims associated with COVID.
Previous report
Charitable expenses fluctuate based on reported taxable income of the Company. Repairs and maintenance expenses related to an aircraft partially owned by the Company were down approximately 73% when comparing 2023 and 2022 activity. In 2022, there were significant maintenance needs that were addressed. Expenses in the remaining categories were comparable between years.
Previous report
In the first quarter of 2023, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASCD 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposure such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses.
Previous report
The Company adopted ASC 326 and all related subsequent amendments thereto using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposure. The transition adjustment of the adoption of CECL included an increase in the allowance for credit losses on loans of $524,000, which is presented as a reduction to net loans outstanding, and an increase in the allowance for credit losses on unfunded commitments of $51,000, which is recorded within other liabilities. The Company recorded a net decrease to retained earnings of $454,250 as of January 1, 2023 for the cumulative effect of adopting CECL, which reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable accounting standards (“Incurred Loss”).
Previous report
The updated guidance also amended the current other-than-temporary model for available-for-sale securities and requires the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized costs basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. See Note 1 – Recently Issued Accounting Standards – of the Consolidated Financial Statements for further information on this topic.
Previous report
For the period ended December 31, 2023, the Company recognized an increase in accumulated other comprehensive income of approximately $2.2 million and a decrease in accumulated other comprehensive income of approximately $(17.4) million for the same period in the prior year. The fluctuations in accumulated other comprehensive income (loss) are the result of unrealized gains (losses) on fixed maturity securities. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the marketplace.
Previous report
The Company’s investments provide sufficient return to cover future obligations. The Company carries all of its fixed maturity holdings as available for sale, which are reported in the Consolidated Financial Statements at their fair value.
Reworded paragraphs (32)
Previous wording
Valuation of Securities – The Company’s investment portfolio consists of fixed maturities, equity securities, trading securities, mortgage loans, notes receivable and real estate to provide funding of future policy contractual obligations.
Current wording
Valuation of Securities – The Company’s investment portfolio consists of fixed maturities, equity securities, mortgage loans, notes receivable and real estate to provide funding of future policy contractual obligations.
Previous wording
On a consolidated basis, the Company had net income attributable to common shareholders of approximately $2.0 million and $34.3 million in 2023 and 2022, respectively. In 2023, income before income taxes was approximately $2.0 million compared to $44.0 million in 2022. Total revenues were approximately $25.4 million in 2023 and $70.0 million in 2022.
Current wording
On a consolidated basis, the Company had net income attributable to common shareholders of approximately $49.3 million and $2.7 million in 2024 and 2023, respectively. In 2024, income before income taxes was approximately $62.2 million compared to $2.8 million in 2023. Total revenues were approximately $84.9 million in 2024 and $26.3 million in 2023.
Previous wording
The Company reported a change in fair value of equity securities of approximately $(3.8) million and $33.7 million for the years ended December 31, 2023 and 2022, respectively. This line item is material to the results reported in the Consolidated Statements of Operations. This line item can also be extremely volatile, reflecting changes in the stock market. These results can be material and volatile, most of the equity holdings of the Company were acquired with a long-term view, thus making these intermediate changes in value of less concern to Management. Management monitors its equity holdings looking more at the specific entity and market it is in relative to performance and less to changes due to general market swings that occur over the holding period of the investment.
Current wording
The Company reported a change in fair value of equity securities of approximately $56.8 million and $(2.9) million for the years ended December 31, 2024 and 2023, respectively. This line item is material to the results reported in the Consolidated Statements of Operations. This line item can also be extremely volatile, reflecting changes in the stock market. These results can be material and volatile, most of the equity holdings of the Company were acquired with a long-term view, thus making these intermediate changes in value of less concern to Management. Management monitors its equity holdings looking more at the specific entity and market it is in relative to performance and less to changes due to general market swings that occur over the holding period of the investment.
Previous wording
Total benefits and other expenses paid in 2023 were approximately $23.5 million compared to $25.8 million in 2022.
Current wording
Total benefits and other expenses paid in 2024 were approximately $22.7 million compared to $23.5 million in 2023.
Previous wording
Premiums and policy fee revenues, net of reinsurance premiums and policy fees, declined approximately 6% when comparing 2023 to 2022. The Company writes very little new business. Unless the Company acquires a new company or a block of in-force business, Management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company’s average persistency rate for all policies in-force for 2023 and 2022 was approximately 96.7% and 96.8%, respectively. Persistency is a measure of insurance in-force retained in relation to the previous year. A positive impact on premium income is the consistency of the lapse percentage. Persistency of the business has been consistent over the last several years. The lapse percentages were 3.3% and 3.2% for 2023 and 2022, respectively.
Current wording
Premiums and policy fee revenues, net of reinsurance premiums and policy fees, declined approximately 1% when comparing 2024 to 2023. The Company writes very little new business. Unless the Company acquires a new company or a block of in-force business, Management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company’s average persistency rate for all policies in-force for 2024 and 2023 was approximately 96.6% and 96.7%, respectively. Persistency is a measure of insurance in-force retained in relation to the previous year. A positive impact on premium income is the consistency of the lapse percentage. Persistency of the business has been consistent over the last several years. The lapse percentages were 3.4% and 3.3% for 2024 and 2023, respectively.
Previous wording
Net investment income represented 71% and 78% of the Company’s revenue before net investment gains (losses) as of December 31, 2023 and 2022, respectively. Income from the fixed maturities, equity securities, and real estate portfolios represented 77% and 87%, respectively, of the gross investment income reported by the Company for 2023 and 2022.
Current wording
Net investment income represented 74% and 71% of the Company’s revenue before net investment gains (losses) as of December 31, 2024 and 2023, respectively. Income from the fixed maturities, equity securities, and real estate portfolios represented 76% and 77%, respectively, of the gross investment income reported by the Company for 2024 and 2023.
Previous wording
Earnings from the fixed maturities investment portfolio represented 30% and 21% of the total consolidated net investment income for the years ended December 31, 2023 and 2022, respectively. When comparing earnings from the fixed maturities portfolio for the years ended December 31, 2023 and 2022 income was down approximately 3%. The decrease is due to the maturity of certain fixed maturity investments during 2023. The Company’s investment in fixed maturities continues to decline as we have, for the most part, chosen not to reinvest in fixed maturities. As of December 31, 2023 and 2022, fixed maturities represented 29% and 30%, respectively, of the total investments owned by the Company.
Current wording
Earnings from the fixed maturities investment portfolio represented 17% and 22% of the total consolidated net investment income for the years ended December 31, 2024 and 2023, respectively. When comparing earnings from the fixed maturities portfolio for the years ended December 31, 2024 and 2023 income was down approximately 9%. The decrease is due to the maturity of certain fixed maturity investments during 2024. The Company’s investment in fixed maturities continues to decline as we have, for the most part, chosen not to reinvest in fixed maturities. As of December 31, 2024 and 2023, fixed maturities represented 19% and 22%, respectively, of the total investments owned by the Company.
Previous wording
Earnings from the equity securities portfolio represented 19% and 30% of the total consolidated net investment income for the years ended December 31, 2023 and 2022, respectively. Earnings were down approximately $3.4 million when comparing current year and prior year results. The 2022 investment income from equity securities was exceptionally high, and the result of dividends from oil and gas equity securities. While the oil and gas equity securities continued to pay dividends in 2023, they were down substantially from the prior year.
Current wording
Earnings from the equity securities portfolio represented 26% of the total consolidated net investment income for the years ended December 31, 2024 and 2023, respectively. Earnings were up approximately $525,000 when comparing current year and prior year results. The 2024 increase in investment income from equity securities was mainly the result of increased dividends from oil and gas equity securities.
Previous wording
Earnings from the real estate portfolio represented 59% and 56% of the total consolidated net investment income for the years ended December 31, 2023 and 2022, respectively. Earnings were down about $3.3 million when comparing current year and prior year results.
Current wording
Earnings from the real estate portfolio represented 56% and 59% of the total consolidated net investment income for the years ended December 31, 2024 and 2023, respectively. Earnings were up about $640,000 when comparing current year and prior year results.
Previous wording
During 2023, the Company received $550,000 of income from timber sales as compared to $2.3 million in the prior year. Included in the 2023 and 2022 real estate income is approximately $4.2 million and $10.4 million of income from oil and gas royalty distributions, respectively. Income from oil and gas royalties represented approximately 50% and 55% of the real estate income for 2023 and 2022, respectively.
Current wording
During 2024, the Company received $1.3 million of income from timber sales as compared to $550,000 in the prior year. Included in the 2024 and 2023 real estate income is approximately $3.6 million and $4.2 million of income from oil and gas royalty distributions, respectively. Income from oil and gas royalties represented approximately 41% and 50% of the real estate income for 2024 and 2023, respectively.
Previous wording
Realized gains and losses from equity securities represent the difference between the fair value at the beginning of the reporting period and the fair value at the time of sale. The total gains from equity securities sold in 2023 were approximately $2.9 million, of which $812,035 is being reported as gains from equity securities and $2.0 million is reported as a component of the change in the fair value of equity securities. The gains were the result of selling several small equity securities holdings.
Current wording
Realized gains and losses from equity securities represent the difference between the fair value at the beginning of the reporting period and the fair value at the time of sale. The total gains from equity securities sold in 2024 were approximately $12.0 million, of which $7.2 million is being reported as gains from equity securities and $4.8 million is reported as a component of the change in the fair value of equity securities. The gains were the result of selling several equity securities holdings.
Previous wording
The Company reported a change in fair value of equity securities of approximately $(3.8) million and $33.7 million for the years ended December 31, 2023 and 2022, respectively. This line item is material to the results reported in the Consolidated Statements of Operations, and this line item can also be extremely volatile. While these results can be material and volatile, most of the equity holdings of the Company were acquired with a long-term view, thus making these intermediate changes in value less of a concern to Management. Management monitors its equity holdings looking more at the specific entity and market it is in relative to performance and less to changes due to general market swings that occur over the holding period of the investment.
Current wording
The Company reported a change in fair value of equity securities of approximately $56.8 million and $(2.9) million for the years ended December 31, 2024 and 2023, respectively. This line item is material to the results reported in the Consolidated Statements of Operations, and this line item can also be extremely volatile. While these results can be material and volatile, most of the equity holdings of the Company were acquired with a long-term view, thus making these intermediate changes in value less of a concern to Management. Management monitors its equity holdings looking more at the specific entity and market it is in relative to performance and less to changes due to general market swings that occur over the holding period of the investment.
Previous wording
Year to date, the Company has seen negative results in its equity investments. However, most all the negative results occurred in the first quarter of 2023. Since that time, we reported a slight rebound, and it appears to be the result of market stabilization. Equity investments primarily in the oil and gas area represent almost all of the unrealized losses reported in 2023. The Company experienced significant unrealized gains on these same investments in 2022. Oil prices declined in early 2023 as concerns of recession intensified leading to a reduction in world demand for oil temporarily causing the price to decline. Periodic pull backs and downward market adjustments are expected by management. Management believes its current equity investments continue to be solid investments for the Company and have further growth potential; however, changes in market conditions could cause volatility in market prices.
Current wording
Equity investments, primarily in the oil and gas industry, represent almost all the unrealized gains reported in 2024 and unrealized losses reported in 2023. Periodic pull backs and rallies are expected by management. Management believes its current equity investments continue to be solid investments for the Company and have further growth potential; however, changes in market conditions could cause volatility in market prices. In 2023, the Company saw negative results in its equity investments. However, most all the negative results occurred in the first quarter of 2023.
Previous wording
In 2022, the Company recognized an other-than-temporary impairments of $5 million on an equity security. The other-than-temporary impairment recognized during 2023 was taken as a result of Management’s assessment and determination of value of the investment. The investment was written down to better reflect its current expected value.
Current wording
In 2024, the Company recognized an other-than-temporary impairment of $900,149 on an equity security. The other-than-temporary impairment recognized during 2024 was taken as a result of Management’s assessment and determination of value of the investment. The investment was written down to better reflect its current expected value.
Previous wording
During 2023, the Company sold several pieces of real estate located in Kentucky producing realized gains of approximately $940,000. Additionally, during third quarter 2023, the Company sold a large land parcel in West Virginia realizing a gain of approximately $7.6 million. During 2022, the Company sold a real estate parcel in Kentucky that produced a gain of $3.0 million and a parcel in Georgia that produced a gain of $812,000.
Current wording
During 2024, the Company sold several real estate land parcels in Kentucky and one small parcel in Illinois which makes up all of the realized gains in Real Estate. During 2023, the Company sold several smaller real estate land parcels located in Kentucky producing realized gains of approximately $940,000. Additionally, during third quarter 2023, the Company sold a large land parcel in West Virginia realizing a gain of approximately $7.6 million.
Previous wording
The Company reported total benefits and other expenses of approximately $23.5 million and $25.8 million for the years ended December 31, 2023 and 2022, respectively. Benefits, claims and settlement expenses represented approximately 62% and 57% of the Company’s total expenses for 2023 and 2022, respectively. The other major expense category of the Company is operating expenses, which represented 36% and 41% of the Company’s total expenses for 2023 and 2022, respectively.
Current wording
The Company reported total benefits and other expenses of approximately $22.7 million and $23.5 million for the years ended December 31, 2024 and 2023, respectively. Benefits, claims and settlement expenses represented approximately 56% and 62% of the Company’s total expenses for 2024 and 2023, respectively. The other major expense category of the Company is operating expenses, which represented 42% and 36% of the Company’s total expenses for 2024 and 2023, respectively.
Previous wording
Life benefits, claims and settlement expenses, net of reinsurance benefits, were comparable for 2022 and 2023. Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.
Current wording
Life benefits, claims and settlement expenses, net of reinsurance benefits, were down approximately 12% when comparing 2024 and 2023. Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.
Previous wording
Overall, the Company’s persistency for business in-force remained relatively steady at 96.7% in 2023 compared to 96.8% in 2022. The Company’s actual experience for earned interest, persistency, and mortality varies from the assumptions applied to pricing and for determining premiums. Accordingly, differences between the Company’s actual experience and those assumptions applied may affect the profitability of the Company. Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further.
Current wording
Overall, the Company’s persistency for business in-force remained relatively steady at 96.6% in 2024 compared to 96.7% in 2023. The Company’s actual experience for earned interest, persistency, and mortality varies from the assumptions applied to pricing and for determining premiums. Accordingly, differences between the Company’s actual experience and those assumptions applied may affect the profitability of the Company. Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further.
Previous wording
Operating expenses decreased approximately 20% or $2.1 million in 2023 as compared to that of the same period in 2022. When comparing 2023 and 2022 expenses, two expense categories make up the majority of the decline - charitable contributions and aircraft maintenance.
Current wording
Operating expenses increased approximately 13% or $1.1 million in 2024 as compared to that of the same period in 2023. When comparing 2024 and 2023 expenses, there is one expense item that comprises the majority of the increase, charitable contributions. Charitable expense was approximately $690,000 more when comparing 2024 and 2023. Charitable expense fluctuates based on reported taxable income of the Company. Expenses in the remaining categories were comparable between years.
Previous wording
As mentioned above in the Overview section of the Management Discussion and Analysis, UTG has a strong philanthropic program. The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor. Charitable contributions made by the Company are expected to vary from year to year depending on the earnings of the Company. In 2023, the Company paid approximately $582,000 in charitable donations as compared to $2.1 million in 2022.
Current wording
As mentioned above in the Overview section of the Management Discussion and Analysis, UTG has a strong philanthropic program. The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor. Charitable contributions made by the Company are expected to vary from year to year depending on the earnings of the Company. In 2024, the Company paid approximately $1.3 million in charitable donations as compared to $582,000 in 2023.
Previous wording
The Company’s total investments represented 83% and 81% of the Company’s total assets as of December 31, 2023 and 2022, respectively. Fixed maturities and equity securities, at fair value, consistently represent the majority, of the Company’s total investments – 72% in 2023 and 2022. The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the respective investments held as of December 31, 2023 and 2022.
Current wording
The Company’s total investments represented 84% and 83% of the Company’s total assets as of December 31, 2024 and 2023, respectively. Fixed maturities and equity securities, at fair value, consistently represented a substantial portion, 79% and 73%, of the total investments during 2024 and 2023, respectively. The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the respective investments held as of December 31, 2024 and 2023.
Previous wording
As of December 31, 2023, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders’ equity or results from operations. To provide additional flexibility and liquidity, the Company has identified all fixed maturity securities as “investments available-for-sale”. Investments available-for-sale are carried at market value, with changes in market value charged directly to the other comprehensive income component of shareholders’ equity. Changes in the market value of available for sale securities resulted in net unrealized gains (losses) of approximately $2.2 million and $(17.4) million as of December 31, 2023 and 2022, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the marketplace.
Current wording
As of December 31, 2024, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders’ equity or results from operations. To provide additional flexibility and liquidity, the Company has identified all fixed maturity securities as "investments available-for-sale". Investments available-for-sale are carried at market value, with changes in market value charged directly to the other comprehensive income component of shareholders' equity. Changes in the market value of available for sale securities resulted in net unrealized gains (losses) of approximately $(222,000) and $1.6 million as of December 31, 2024 and 2023, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the marketplace.
Previous wording
UTG is a holding company that has no day-to-day operations of its own. Cash flows from UTG’s insurance subsidiary, UG, are used to pay costs associated with maintaining the Company in good standing with states in which it does business and purchasing outstanding shares of UTG stock. UTG’s cash flow is dependent on management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances. As of December 31, 2023 and 2022, substantially all of the consolidated shareholders’ equity represents net assets of its subsidiaries. In 2023, the Parent company received $2 million in dividends from its insurance subsidiary and $3 million in 2022. Certain restrictions exist on the payment of dividends from the insurance subsidiary to the Parent company. For further information regarding the restrictions on the payment of dividends by the insurance subsidiary, see Note 9 – Shareholders’ Equity in the Notes to the Consolidated Financial Statements. Although these restrictions exist, dividend availability from the insurance subsidiary has historically been sufficient to meet the cash flow needs of the Parent company.
Current wording
UTG is a holding company that has no day-to-day operations of its own. Cash flows from UTG’s insurance subsidiary, UG, are used to pay costs associated with maintaining the Company in good standing with states in which it does business and purchasing outstanding shares of UTG stock. UTG's cash flow is dependent on management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances. As of December 31, 2024 and 2023, substantially all of the consolidated shareholders’ equity represents net assets of its subsidiaries. In 2024, the Parent company received no dividends from its insurance subsidiary and received $2 million in 2023. Certain restrictions exist on the payment of dividends from the insurance subsidiary to the Parent company. For further information regarding the restrictions on the payment of dividends by the insurance subsidiary, see Note 9 – Shareholders’ Equity in the Notes to the Consolidated Financial Statements. Although these restrictions exist, dividend availability from the insurance subsidiary has historically been sufficient to meet the cash flow needs of the Parent company.
Previous wording
During October of 2023, the Federal Home Loan Bank approved UG’s Cash Management Advance Application (“CMA”). The CMA is a source of overnight liquidity utilized to address the day-to-day cash needs of a Company. The CMA gives the Company the option of selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. The variable rate CMA is prepayable at any time without a fee, while the fixed CMA is not prepayable prior to maturity. The Company has pledged bonds with a collateral lendable value of $20.3 million. During the fourth quarter of 2023, the Company borrowed $19 million and planned to utilize the funds for investing activities. The interest rate on the borrowed funds is variable and currently is 5.47%. During the first quarter of 2024, the Company repaid the entire outstanding principal balance.
Current wording
During October of 2024, the Federal Home Loan Bank approved the renewal of UG’s Cash Management Advance Application (“CMA”). The CMA is a source of overnight liquidity utilized to address the day-to-day cash needs of a Company. The CMA gives the company the option of selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. The variable rate CMA is prepayable at any time without a fee, while the fixed CMA is not prepayable prior to maturity. The Company has pledged bonds with a collateral lendable value of $21.4 million as of December 31, 2024. During the fourth quarter of 2023, the Company borrowed $19 million and planned to utilize the funds for investing activities. During the first quarter of 2024, the Company repaid the entire outstanding principal balance.
Previous wording
Cash used in operating activities was approximately $9.8 million and $5.3 million in 2023 and 2022, respectively. Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments. Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses. The Company has not marketed any significant new products for several years. As such, premium revenues continue to decline. Management anticipates future cash flows from operations to remain similar to historic trends.
Current wording
Cash used in operating activities was approximately $1.6 million and $9.8 million in 2024 and 2023, respectively. Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments. Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses. The Company has not marketed any significant new products for several years. As such, premium revenues continue to decline with the exception of fluctuations in reinsurance premiums. Management anticipates future cash flows from operations to remain similar to historic trends.
Previous wording
During 2023 and 2022, the Company’s investing activities provided net cash of approximately $6.9 million and $26.2 million, respectively. The Company recognized proceeds of approximately $79.6 million and $79.7 million from investments sold and matured in 2023 and 2022, respectively. The Company used approximately $(72.7) million and $(53.5) million to acquire investments during 2023 and 2022, respectively. The net cash provided by investing activities is expected to vary from year to year depending on market conditions and management’s ability to find and negotiate favorable investment contracts.
Current wording
During 2024 and 2023, the Company’s investing activities provided net cash of approximately $26.5 million and $6.9 million, respectively. The Company recognized proceeds of approximately $71.8 million and $79.6 million from investments sold and matured in 2024 and 2023, respectively. The Company used approximately $(45.3) million and $(72.7) million to acquire investments during 2024 and 2023, respectively. The net cash provided by investing activities is expected to vary from year to year depending on market conditions and management’s ability to find and negotiate favorable investment contracts.
Previous wording
Net cash used in financing activities was approximately $1.2 million and $6.4 million during 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company had $19 million in debt outstanding with third parties.
Current wording
Net cash used in financing activities was approximately $(20.9) million and $(1.2) million during 2024 and 2023, respectively. As of December 31, 2024 and 2023, the Company had $0 and $19 million, respectively, in debt outstanding with third parties.
Previous wording
The Company had cash and cash equivalents of approximately $41.2 million and $45.3 million as of December 31, 2023 and 2022, respectively. The Company has a portfolio of marketable fixed maturity securities that could be sold, if an unexpected event were to occur. These securities had a fair value of approximately $103.4 million and $108.3 million at December 31, 2023 and 2022, respectively. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company’s investment portfolio.
Current wording
The Company had cash and cash equivalents of approximately $45.3 million and $41.2 million as of December 31, 2024 and 2023, respectively. The Company has a portfolio of marketable fixed maturity securities that could be sold, if an unexpected event were to occur. These securities had a fair value of approximately $76.5 million and $79.1 million at December 31, 2024 and 2023, respectively. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company’s investment portfolio.
Previous wording
The Company had $19 million of debt outstanding as of December 31, 2023 and 2022.
Current wording
The Company had $0 and $19 million of debt outstanding as of December 31, 2024 and 2023, respectively.
Previous wording
At December 31, 2023, UG has a ratio of approximately 6.19, which is 619% of the authorized control level. Accordingly, the Company meets the RBC requirements.
Current wording
At December 31, 20244, UG has a ratio of approximately 4.90, which is 490% of the authorized control level. Accordingly, the Company meets the RBC requirements.
Previous wording
The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG’s common stock. At a meeting of the Board of Directors in March of 2022, the Board of Directors of UTG authorized the repurchase of up to an additional $2 million of UTG’s common stock, for a total repurchase of $22 million of UTG’s common stock in the open market or in privately negotiated transactions. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited. During 2023, the Company repurchased 30,646 shares through the stock repurchase program for $881,966. Through December 31, 2023, UTG has spent $20,191,403 in the acquisition of 1,356,859 shares under this program.
Current wording
The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG’s common stock. At a meeting of the Board of Directors in December of 2024, the Board of Directors of UTG authorized the repurchase of up to an additional $2 million of UTG’s common stock, for a total repurchase of $24 million of UTG’s common stock in the open market or in privately negotiated transactions since inception of the program. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited. During 20244, the Company repurchased 23,961 shares through the stock repurchase program for $648,152. Through December 31, 20244, UTG has spent $20,839,555 in the acquisition of 1,380,820 shares under this program.
Previous wording
Total shareholders’ equity was approximately $161.7 million and $158.0 million as of December 31, 2023 and 2022, respectively. Total shareholders’ equity increased approximately 2% in 2023 as compared to 2022. The increase is primarily attributable to net income from operations. As of December 31, 2023 and 2022, the Company reported accumulated other comprehensive loss of approximately $(4.9) million and $(7.1) million, respectively.
Current wording
Total shareholders’ equity was approximately $210.6 million and $161.7 million as of December 31, 2024 and 2023, respectively. Total shareholders' equity increased approximately 30% in 2024 as compared to 2023. The increase is primarily attributable to net income from operations. As of December 31, 2024 and 2023, the Company reported accumulated other comprehensive loss of approximately $(2.9) million and $(2.7) million, respectively.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The total gains from equity securities sold in 2023 were approximately $2.9 million, of which $812,035 is being reported as gains from equity securities and $2.0 million is reported as a component of the change in the fair value of equity securities. The gains were the result of selling one large equity securities holding and several other small holdings.