UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, ~~2017~~2018

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

For the transition period from _____________ to ____________

Commission File No. 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)


Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)



	205 NORTH DEPOT STREET
	STANFORD, KY 40484
	(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (217) 241-6300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,”" accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~company" and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☐	Smaller reporting company ☒
(Do not check if a smaller reporting company)
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by ~~checkmark~~check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES~~ Yes ☐ NO No ☒

Indicate the number of shares outstanding of each of the ~~registrant’s~~registrant's classes of common stock, as of the latest practicable date.

The number of shares outstanding of the ~~registrant’s~~registrant's common stock as of October 31, ~~2017~~2018 was ~~3,337,790.~~3,294,527.

UTG, Inc.

(The ~~“Company”~~"Company")

TABLE OF CONTENTS

PART I. Financial Information	3
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Comprehensive Income (Loss)	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 4. Controls and Procedures	2123
PART II. Other Information	2223
Item 1. Legal Proceedings	2223
Item 1A. Risk Factors	2223
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2223
Item 3. Defaults Upon Senior Securities	2223
Item 4. Mine Safety Disclosures	2223
Item 5. Other Information	2223
Item 6. Exhibits	2223
Signatures	2324
Exhibit Index	2425

Part 1. Financial Information.

Item 1. Financial Statements.

UTG, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

		September 30, 2017		December 31, 2016*		September 30, 2018		December 31, 2017*
ASSETS	ASSETS					ASSETS
Investments:
Investments available for sale:
Fixed maturities, at fair value (amortized cost $165,885,262 and $170,595,860)		$	186,123,212	$	187,239,718
Equity securities, at fair value (cost $37,097,494 and $37,014,712)			59,578,028		51,707,103
Trading securities, at fair value (cost $0 and $70,690)			-		2,500
Fixed maturities, at fair value (amortized cost $159,587,426 and $159,912,511)						$	162,042,523	$	178,555,225
Equity securities, at fair value (cost $0 and $35,712,633)							0		58,848,491
Equity securities, at fair value (cost $44,408,225 and $0)							89,594,570		0
Mortgage loans on real estate at amortized cost			18,171,257		18,577,372		12,938,166		17,314,477
Investment real estate			52,637,677		57,138,980		48,634,135		50,504,550
Notes receivable			17,638,632		16,876,485		20,444,752		19,004,016
Policy loans			9,669,594		10,070,134		9,381,104		9,559,142
Short-term investments							5,435,076		0
Total investments			343,818,400		341,612,292		348,470,326		333,785,901

Cash and cash equivalents			15,989,747		15,156,548		25,906,410		25,434,199
Accrued investment income			2,482,541		2,872,850		2,948,210		2,990,721
Reinsurance receivables:
Future policy benefits			26,550,413		26,974,819		26,194,748		26,488,346
Policy claims and other benefits			4,286,510		3,952,465		4,084,066		3,882,047
Cost of insurance acquired			6,638,069		7,267,397		5,823,743		6,428,292
Property and equipment, net of accumulated depreciation			1,230,096		1,564,944		795,455		1,118,826
Income tax recoverable			1,391,041		1,223,682		0		549,851
Other assets			2,961,268		1,476,356		1,396,045		5,766,901
Total assets		$	405,348,085	$	402,101,353	$	415,619,003	$	406,445,084

LIABILITIES & SHAREHOLDERS' EQUITY	LIABILITIES & SHAREHOLDERS' EQUITY					LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Future policyholder benefits		$	259,711,034	$	263,844,559	$	255,877,460	$	259,469,205
Policy claims and benefits payable			5,191,752		3,889,572		3,687,580		3,777,175
Other policyholder funds			421,728		428,769		405,934		408,790
Dividend and endowment accumulations			14,548,345		14,504,583		14,601,717		14,601,645
Income taxes payable							1,671,201		0
Deferred income taxes			19,080,765		15,459,049		11,864,024		10,996,404
Notes payable			1,450,000		2,900,000
Trading securities, at fair value (proceeds $0 and $181,159)			-		1,439
Other liabilities			6,673,467		6,771,540		8,101,863		6,760,347
Total liabilities			307,077,091		307,799,511		296,209,779		296,013,566

Shareholders' equity:
Common stock - no par value, stated value $.001 per share. Authorized 7,000,000 shares - 3,339,797 and 3,349,927 shares outstanding			3,339		3,350
Common stock - no par value, stated value $.001 per share. Authorized 7,000,000 shares - 3,295,589 and 3,333,337 shares outstanding							3,296		3,333
Additional paid-in capital			37,679,582		37,878,712		36,565,156		37,536,164
Retained earnings			31,836,019		34,230,307		80,061,321		39,040,456
Accumulated other comprehensive income (loss)			27,752,144		20,353,692		1,943,251		32,952,338
Total UTG shareholders' equity			97,271,084		92,466,061		118,573,024		109,532,291

Noncontrolling interests			999,910		1,835,781		836,200		899,227
Total shareholders' equity			98,270,994		94,301,842		119,409,224		110,431,518
Total liabilities and shareholders' equity		$	405,348,085	$	402,101,353	$	415,619,003	$	406,445,084

* Balance sheet audited at December 31, ~~2016.~~2017.

See accompanying notes.

UTG, Inc.

Condensed Consolidated Statements of ~~Operations(Unaudited)~~Operations (Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended				Nine Months Ended
	September 30,			September 30,			September 30,			September 30,			September 30,		September 30,		September 30,		September 30,
	2017			2016			2017			2016			2018		2017		2018		2017
Revenue:
Premiums and policy fees	$	2,519,544		$	2,996,420		$	7,892,766		$	8,812,151		$	2,469,322	$	2,519,544	$	7,659,198	$	7,892,766
Ceded reinsurance premiums and policy fees		(659,789	)		(740,340	)		(2,230,079	)		(2,244,538	)		(652,418)		(659,789)		(2,164,581)		(2,230,079)
Net investment income		3,121,288			2,850,301			8,974,189			10,079,273			2,309,470		3,121,288		8,996,566		8,974,189
Other income		93,287			90,209			304,824			385,756			128,059		93,287		308,616		304,824
Revenues before realized gains (losses)		5,074,330			5,196,590			14,941,700			17,032,642
Realized investment gains (losses), net:
Revenue before net investment gains (losses)														4,254,433		5,074,330		14,799,799		14,941,700
Net investment gains (losses):
Other-than-temporary impairments		-			-			-			-			(300,000)		0		(300,000)		0
Other realized investment gains, net		1,121,860			1,855,576			1,665,920			5,923,373			12,074,120		1,121,860		12,723,566		1,665,920
Total realized investment gains (losses), net		1,121,860			1,855,576			1,665,920			5,923,373
Change in fair value of equity securities														6,689,533		0		22,050,489		0
Total net investment gains (losses)														18,463,653		1,121,860		34,474,055		1,665,920
Total revenue		6,196,190			7,052,166			16,607,620			22,956,015			22,718,086		6,196,190		49,273,854		16,607,620

Benefits and other expenses:
Benefits, claims and settlement expenses:
Life		3,756,203			5,024,528			13,584,805			16,407,007			4,388,733		3,756,203		12,927,216		13,584,805
Ceded reinsurance benefits and claims		(178,945	)		(511,137	)		(1,168,721	)		(2,017,207	)		(1,044,894)		(178,945)		(1,996,044)		(1,168,721)
Annuity		162,374			260,264			700,584			887,840			252,260		162,374		783,724		700,584
Dividends to policyholders		82,820			93,053			304,020			342,287			77,489		82,820		301,779		304,020
Commissions and amortization of deferred policy acquisition costs		(21,389	)		(21,923	)		(98,473	)		(93,865	)		(34,464)		(21,389)		(110,920)		(98,473)
Amortization of cost of insurance acquired		209,775			218,246			629,328			654,738			201,516		209,775		604,549		629,328
Operating expenses		1,663,349			1,792,990			5,468,014			5,471,329			3,401,169		1,663,349		7,271,820		5,468,014
Total benefits and other expenses		5,674,187			6,856,021			19,419,557			21,652,129			7,241,809		5,674,187		19,782,124		19,419,557


Income (loss) before income taxes		522,003			196,145			(2,811,937	)		1,303,886			15,476,277		522,003		29,491,730		(2,811,937)
Income tax (expense) benefit		(355,682	)		152,829			354,532			(339,658	)
Income tax expense (benefit)														3,506,656		355,682		6,563,628		(354,532)

Net income (loss)		166,321			348,974			(2,457,405	)		964,228			11,969,621		166,321		22,928,102		(2,457,405)

Net (income) loss attributable to noncontrolling interests		(32,485	)		(29,663	)		63,117			(75,636	)		(32,078)		(32,485)		(184,565)		63,117

Net income (loss) attributable to common shareholders	$	133,836		$	319,311		$	(2,394,288	)	$	888,592		$	11,937,543	$	133,836	$	22,743,537	$	(2,394,288)

Amounts attributable to common shareholders'
Amounts attributable to common shareholders
Basic income (loss) per share	$	0.04		$	0.09		$	(0.71	)	$	0.25		$	3.62	$	0.04	$	6.87	$	(0.71)

Diluted income (loss) per share	$	0.04		$	0.09		$	(0.71	)	$	0.25		$	3.62	$	0.04	$	6.87	$	(0.71)

Basic weighted average shares outstanding		3,344,236			3,439,426			3,350,364			3,602,164			3,299,615		3,344,236		3,311,912		3,350,364

Diluted weighted average shares outstanding		3,344,236			3,439,426			3,350,364			3,602,164			3,299,615		3,344,236		3,311,912		3,350,364

See accompanying notes.

UTG, Inc.

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

	Three Months Ended						Nine Months Ended						Three Months Ended				Nine Months Ended
	September 30,			September 30,			September 30,			September 30,				September 30,		September 30,		September 30,		September 30,
	2017			2016			2017			2016				2018		2017		2018		2017
Net income (loss)	$	166,321		$	348,974		$	(2,457,405	)	$	964,228		$	11,969,621	$	166,321	$	22,928,102	$	(2,457,405)

Other comprehensive income (loss):

Unrealized holding gains (losses) arising during period, pre-tax		7,534,111			7,196,483			12,390,006			38,064,491			1,244,302		7,534,111		(4,982,237)		12,390,006
Tax (expense) benefit on unrealized holding gains (losses) arising during the period		(2,636,939	)		(2,518,769	)		(4,336,502	)		(13,322,572	)		(261,303)		(2,636,939)		1,046,270		(4,336,502)
Unrealized holding gains (losses) arising during period, net of tax		4,897,172			4,677,714			8,053,504			24,741,919			982,999		4,897,172		(3,935,967)		8,053,504

Less reclassification adjustment for gains included in net income		(797,165	)		(709,955	)		(1,007,772	)		(1,406,628	)		(11,018,710)		(797,165)		(11,133,914)		(1,007,772)
Tax expense for gains included in net income		279,008			248,484			352,720			492,320			2,313,929		279,008		2,338,122		352,720
Reclassification adjustment for gains included in net income, net of tax		(518,157	)		(461,471	)		(655,052	)		(914,308	)		(8,704,781)		(518,157)		(8,795,792)		(655,052)
Subtotal: Other comprehensive income (loss), net of tax		4,379,015			4,216,243			7,398,452			23,827,611			(7,721,782)		4,379,015		(12,731,759)		7,398,452

Comprehensive income (loss)		4,545,336			4,565,217			4,941,047			24,791,839			4,247,839		4,545,336		10,196,343		4,941,047

Less comprehensive (income) loss attributable to noncontrolling interests		(32,485	)		(29,663	)		63,117			(75,636	)		(32,078)		(32,485)		(184,565)		63,117

Comprehensive income (loss) attributable to UTG, Inc.	$	4,512,851		$	4,535,554		$	5,004,164		$	24,716,203		$	4,215,761	$	4,512,851	$	10,011,778	$	5,004,164

See accompanying notes.

UTG, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,		September 30,
	2017			2016			2018		2017
Cash flows from operating activities:
Net income (loss) attributable to common shareholders	$	(2,394,288	)	$	888,592		$	22,743,537	$	(2,394,288)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Amortization (accretion) of investments		191,820			(553,517	)		137,899		191,820
Other-than-temporary impairments								300,000		0
Realized investment gains, net		(1,665,920	)		(5,923,373	)		(12,723,566)		(1,665,920)
Change in fair value of equity securities								(22,050,489)		0
Unrealized trading (gains) losses included in income		111,531			-			0		111,531
Realized trading (gains) included in income		(110,470	)		-			0		(110,470)
Amortization of cost of insurance acquired		629,328			654,738			604,549		629,328
Depreciation		515,132			500,538			814,202		515,132
Net income (loss) attributable to noncontrolling interest		(63,117	)		75,636			184,565		(63,117)
Charges for mortality and administration of universal life and annuity products		(4,982,000	)		(2,116,902	)		(4,948,332)		(4,982,000)
Interest credited to account balances		3,268,536			3,466,719			3,177,834		3,268,536
Change in accrued investment income		390,309			(152,822	)		42,511		390,309
Change in reinsurance receivables		90,361			(22,291	)		91,579		90,361
Change in policy liabilities and accruals		(988,645	)		(1,897,222	)		(2,613,125)		(988,645)
Change in income taxes receivable (payable)		(167,359	)		(796,159	)		2,221,052		(167,359)
Change in other assets and liabilities, net		(1,927,847	)		603,671			9,987,926		(1,927,847)
Net cash used in operating activities		(7,102,629	)		(5,272,392	)
Net cash provided by (used in) operating activities								(2,029,858)		(7,102,629)

Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale		17,036,549			26,829,015			54,220,638		17,036,549
Equity securities available for sale		3,401,217			4,506,115
Trading securities		0			72,279
Equity securities								843,260		3,401,217
Mortgage loans		860,187			3,482,189			4,496,554		860,187
Real estate		6,422,788			9,939,470			12,783,088		6,422,788
Notes receivable		2,035,706			2,778,401			2,559,264		2,035,706
Policy loans		1,481,824			1,465,996			1,423,014		1,481,824
Short-term investments								2,114,000		0
Total proceeds from investments sold and matured		31,238,271			49,073,465			78,439,818		31,238,271
Cost of investments acquired:
Fixed maturities available for sale		(11,603,539	)		(7,919,941	)		(42,955,401)		(11,603,539)
Equity securities available for sale		(2,471,066	)		(2,475,777	)
Trading securities		0			(70,690	)
Equity securities								(9,538,853)		(2,471,066)
Mortgage loans		(360,531	)		(6,922,723	)		(16,453)		(360,531)
Real estate		(2,473,761	)		(11,937,317	)		(10,113,852)		(2,473,761)
Notes receivable		(2,797,853	)		(7,144,707	)		(4,000,000)		(2,797,853)
Policy loans		(1,081,284	)		(1,018,958	)		(1,244,976)		(1,081,284)
Short-term investments								(7,549,076)		0
Total cost of investments acquired		(20,788,034	)		(37,490,113	)		(75,418,611)		(20,788,034)
Net cash provided by investing activities		10,450,237			11,583,352
Net cash provided by (used in) investing activities								3,021,207		10,450,237

Cash flows from financing activities:
Policyholder contract deposits		3,641,050			407,633			3,548,809		3,641,050
Policyholder contract withdrawals		(3,733,565	)		(3,434,052	)		(2,849,310)		(3,733,565)
Proceeds from notes payable/line of credit		-			2,900,000			0		0
Payments of principal on notes payable/line of credit		(1,450,000	)		-			0		(1,450,000)
Purchase of treasury stock		(396,628	)		(5,296,904	)		(1,217,802)		(396,628)
Issuance of stock		197,488			246,933			246,757		197,488
Non controlling contributions (distributions) of consolidated subsidiary		(772,754	)		(123,016	)		(247,592)		(772,754)
Net cash used in financing activities		(2,514,409	)		(5,299,406	)
Net cash provided by (used in) financing activities								(519,138)		(2,514,409)

Net increase in cash and cash equivalents		833,199			1,011,554
Net increase (decrease) in cash and cash equivalents								472,211		833,199
Cash and cash equivalents at beginning of period		15,156,548			11,822,615			25,434,199		15,156,548
Cash and cash equivalents at end of period	$	15,989,747		$	12,834,169		$	25,906,410	$	15,989,747

See accompanying notes.

UTG, Inc.

Notes to Condensed Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying Condensed Consolidated Balance Sheet as of December 31, ~~2016,~~2017, which has been derived from audited consolidated financial statements, and the unaudited interim Condensed Consolidated Financial Statements include the accounts of UTG, Inc. (the ~~“Parent”~~"Parent") and its subsidiaries (collectively with the Parent, the ~~“Company”~~"Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which in the opinion of Management, are necessary for a fair presentation of the results for the interim periods. The unaudited Condensed Consolidated Financial Statements included herein and these related notes should be read in conjunction with the ~~Company’s~~Company's consolidated financial statements, and the notes thereto, included in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. The ~~Company’s~~Company's results of operations for the three and nine ~~month periods~~months ended September 30, ~~2017~~2018 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~2018 or for any other future period.

This document at times will refer to the ~~Registrant’s~~Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll. Mr. Correll holds a majority ownership of First Southern Funding, LLC ~~(“FSF”~~("FSF"), a Kentucky corporation, and First Southern Bancorp, Inc. ~~(“FSBI”~~("FSBI"), a financial services holding company. FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ~~(“FSNB”~~("FSNB"). Banking activities are conducted through multiple locations within south-central and western Kentucky. Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently ~~UTG’s~~UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates. At September 30, ~~2017,~~2018, Mr. Correll owns or controls directly and indirectly approximately ~~64.13%~~65.16% of ~~UTG’s~~UTG's outstanding stock.

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

Note 2 – Recently Issued Accounting Standards

~~During~~In August 2018, the ~~nine months ended September 30, 2017, there were no additions~~FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement or ASU 2018-13. ASU 2018-13 modifies certain disclosure requirements related to fair value measurements including requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements and a requirement to disclose the ~~critical accounting policies disclosed~~range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts or ASU 2018-12. ASU 2018-12 significantly changes how insurers account for long-duration insurance contracts. The new guidance will require insurers to review and update, if necessary, the assumptions used to measure insurance liabilities periodically, rather than retain assumptions used at contract inception. The updated guidance also changes the recognition and measurement of deferred acquisition costs (DAC) and created a new category of benefit features called market risk benefits (MRB) that will be measured at fair value. The guidance also significantly expands the disclosure requirements for long-duration contracts. The ASU is effective for fiscal years, an interim periods within those years, for years beginning after December 15, 2020 and early adoption is permitted. The guidance on measuring the liabilities for future policy benefits and DAC will be adopted on a modified retrospective basis as of the earliest period presented in the year of adoption. The guidance on MRB will be adopted on a retrospective basis as of the earliest period presented in the year of adoption. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-Employee Share Based Payment Accounting or ASU 2018-07. The amendment in ASU 2018-07 simplifies the accounting for nonemployee share based payments by aligning the measurement and classification guidance for share based payments to nonemployees with share based payments to employees. Under this guidance, the measurement of equity classified awards will fixed at the grant date. This guidance is effective in annual periods beginning after December 15, 2018. The Company has evaluated the impact of the ASU, and determined that it does not significantly impact the Company's financial statements.

In June 2016, ~~Form 10-K.~~the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, or ASU 2016-01. The amendments in ASU 2016-01 change the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company adopted ASU 2016-01 on January 1, 2018 as a cumulative net effect adjustment and reclassified $18,277,328 of unrealized gains on equity investments, net of tax, from accumulated other comprehensive income (loss) to retained earnings on the Company's Condensed Consolidated Balance Sheet. Prior periods have not been restated to conform to current presentation. Effective January 1, 2018, the Company's results of operations include the changes in fair value of these financial instruments. During 2018, the FASB implemented ASU 2018-03, which clarifies ASU 2016-01 regarding the measurement alternative for equity securities without a readily determinable fair value as well as clarification for other presentation items. These amendments are effective for interim periods beginning after June 15, 2018.

In 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), and related amendments, which created a new comprehensive revenue recognition standard, ASC 606, that serves as a single source of revenue guidance for all contracts with customers to transfer goods or services or contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, such as insurance contracts. ASC 606 is not applicable to the Company's insurance premium revenues or revenues from its investment portfolio. The Company has evaluated the impact of the ASU, and has determined that it does not significantly impact the Company's financial statements.

Note 3 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

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

Investments in available for sale securities are summarized as follows:

September 30, 2017	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2018											Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	7,678,557	$	47,605	$	(67,183	)	$	7,658,979	$	12,657,069	$	5,984	$	(271,045)	$	12,392,008
U.S. special revenue and assessments		9,010,920		755,683		-			9,766,603		16,354,783		307,439		(149,904)		16,512,318
All other corporate bonds		149,195,785		19,913,522		(411,677	)		168,697,630		130,575,574		5,566,740		(3,004,117)		133,138,197
		165,885,262		20,716,810		(478,860	)		186,123,212	$	159,587,426	$	5,880,163	$	(3,425,066)	$	162,042,523
Equity securities		37,097,494		22,866,154		(385,620	)		59,578,028
Total	$	202,982,756	$	43,582,964	$	(864,480	)	$	245,701,240

December 31, 2016	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
December 31, 2017											Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	9,058,210	$	74,581	$	(96,981	)	$	9,035,810	$	2,679,325	$	33,802	$	(73,530)	$	2,639,597
U.S. special revenue and assessments		10,145,531		1,002,789		(14,043	)		11,134,277		9,012,232		620,789		0		9,633,021
All other corporate bonds		151,392,119		17,234,691		(1,557,179	)		167,069,631		148,220,954		18,359,816		(298,163)		166,282,607
		170,595,860		18,312,061		(1,668,203	)		187,239,718		159,912,511		19,014,407		(371,693)		178,555,225
Equity securities(1)		37,014,712		15,214,862		(522,471	)		51,707,103		35,712,633		23,648,201		(512,343)		58,848,491
Total	$	207,610,572	$	33,526,923	$	(2,190,674	)	$	238,946,821	$	195,625,144	$	42,662,608	$	(884,036)	$	237,403,716

The amortized cost and estimated market value of debt securities at September 30, ~~2017,~~2018, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Available for Sale September 30, 2017	Amortized Cost		Estimated Fair Value
Fixed Maturities Available for Sale September 30, 2018						Amortized Cost		Estimated Fair Value
Due in one year or less	$	5,383,493	$	5,473,716	$	4,996,905	$	5,084,620
Due after one year through five years		29,857,885		41,316,685		30,412,755		34,408,309
Due after five years through ten years		44,110,567		48,479,332		60,548,458		60,929,783
Due after ten years		86,533,317		90,853,479		63,629,308		61,619,811
Total	$	165,885,262	$	186,123,212	$	159,587,426	$	162,042,523

The fair value of investments with sustained gross unrealized losses at September 30, ~~2017~~2018 and December 31, ~~2016~~2017 are as follows:

September 30, 2017	Less than 12 months					12 months or longer					Total
September 30, 2018																	Less than 12 months			12 months or longer				Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses				Fair value	Unrealized losses			Fair value	Unrealized losses			Fair value		Unrealized losses
U.S. Government and govt. agencies and authorities	$	6,610,509	$	(67,183	)	$	-	$	-		$	6,610,509	$	(67,183	)	$	9,842,145	$	(133,915)	$	1,543,243	$	(137,130)	$	11,385,388	$	(271,045)
U.S. special revenue and assessments		-		-			-		-			-		-
U.S. Special Revenue and Assessments																	7,408,605		(149,904)		0		0		7,408,605		(149,904)
All other corporate bonds		16,381,344		(234,288	)		5,357,880		(177,389	)		21,739,224		(411,677	)		82,216,653		(2,386,342)		7,618,210		(617,775)		89,834,863		(3,004,117)
Total fixed maturities	$	22,991,853	$	(301,471	)	$	5,357,880		(177,389	)	$	28,349,733		(478,860	)	$	99,467,403	$	(2,670,161)	$	9,161,453	$	(754,905)	$	108,628,856	$	(3,425,066)

Equity securities	$	5,260,992	$	(385,620	)	$	-	$	-		$	5,260,992	$	(385,620	)

December 31, 2016	Less than 12 months					12 months or longer					Total
December 31, 2017																	Less than 12 months			12 months or longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses				Fair value	Unrealized losses			Fair value	Unrealized losses			Fair value	Unrealized losses
U.S. Government and govt. agencies and authorities	$	6,578,248	$	(96,981	)	$	-	$	-		$	6,578,248	$	(96,981	)	$	0	$	0	$	1,604,987	$	(73,530)	$	1,604,987	$	(73,530)
U.S. special revenue and assessments		974,250		(14,043	)		-		-			974,250		(14,043	)
All other corporate bonds		50,161,487		(1,408,828	)		4,023,510		(148,351	)		54,184,997		(1,557,179	)		9,732,635		(91,757)		11,164,317		(206,406)		20,896,952		(298,163)
Total fixed maturities	$	57,713,985	$	(1,519,852	)	$	4,023,510		(148,351	)	$	61,737,495		(1,668,203	)	$	9,732,635	$	(91,757)	$	12,769,304	$	(279,936)	$	22,501,939	$	(371,693)

Equity securities	$	4,703,033	$	(522,471	)	$	-	$	-		$	4,703,033	$	(522,471	)
Equity securities (1)																$	4,130,260	$	(270,774)	$	1,526,868	$	(241,569)	$	5,657,128	$	(512,343)

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

Less than 12 months 12 months or longer Total
As of September 30, 2017
Fixed maturities 11 3 14
Equity securities 4 - 4
As of December 31, 2016
Fixed maturities 25 3 28
Equity securities 3 - 3

	Less than 12 months	12 months or longer	Total
As of September 30, 2018
Fixed maturities	47	6	53
As of December 31, 2017
Fixed maturities	6	6	12
Equity securities (1)	2	2	4

(1)	Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 2 to the Condensed Consolidated Financial Statements for additional information.

Substantially all of the unrealized losses on fixed maturities ~~available for sale~~available-for-sale and equity securities at September 30, ~~2017~~2018 and December 31, ~~2016~~2017 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the ~~Company’s~~Company's expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the ~~Company’s~~Company's evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of September 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

Net Investment Gains (Losses)

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Realized gains on available-for-sale investments:
Sales of fixed maturities	$	11,018,711	$	799,615	$	11,392,373	$	1,044,254
Sales of equity securities (1)		0		159,910		0		1,012,936
Sales of real estate		1,055,409		168,177		1,589,651		168,177
Other		0		0		0		0
Total realized gains		12,074,120		1,127,702		12,982,024		2,225,367
Realized losses on available-for-sale investments:
Sales of fixed maturities		0		(2,450)		(258,458)		(36,482)
Sales of equity securities (1)		0		0		0		0
Sales of real estate		0		(3,392)		0		(522,965)
Other-than-temporary impairments		(300,000)		0		(300,000)		0
Other		0		0		0		0
Total realized losses		(300,000)		(5,842)		(558,458)		(559,447)
Net realized investment gains (losses)		11,774,120		1,121,860		12,423,566		1,665,920
Change in fair value of equity securities: (1)
Realized gains (losses) on equity securities sold during the period (1)		0		0		0		0
Change in fair value of equity securities held at the end of the period		6,689,533		0		22,050,489		0
Change in fair value of equity securities (1)		6,689,533		0		22,050,489		0
Net investment gains (losses)	$	18,463,653	$	1,121,860	$	34,474,055	$	1,665,920
Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income:
Fixed maturities	$	1,244,302	$	4,444,400	$	(4,982,237)	$	9,630,582
Equity securities		0		3,089,712		0		2,759,425
Net increase (decrease)	$	1,244,302	$	7,534,112	$	(4,982,237)	$	12,390,007

(1)

Effective January 1, 2018, the Company adopted ASU No. 2016-01. As a result, equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income; rather, all changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2.

Other-Than-Temporary Impairments

The Company regularly reviews its investment securities for factors that may indicate that a decline in fair value of an investment is other than temporary. The factors considered by Management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the ~~Company’s~~Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support, whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions, including the effect of changes in market interest rates. If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the ~~security’s~~security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to other-than-temporary ~~losses in the Condensed Consolidated Statements of Operations.~~

Equity securities may experience other-than-temporary impairments in the future based on the prospects for full recovery in value in a reasonable period of time and the Company’s ability and intent to hold the security to recovery. If a decline in fair value is judged by Management to be other-than-temporary or Management does not have the intent or ability to hold a security, a loss is recognized by a charge to other-than-temporary impairment losses in the Condensed Consolidated Statements of Operations.

Management regularly reviews its real estate portfolio in comparison to appraisal valuations and current market conditions for indications of other-than-temporary impairments. If a decline in value is judged by Management to be other-than-temporary, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations.

Based onupon Management's review of the investment portfolio, the Company ~~did not record any losses for~~recorded an other-than-temporary ~~impairments in~~impairment on real estate during the ~~Condensed Consolidated Statements~~third quarter of ~~Operations for the three-month period ended September 30, 2017.~~2018. The other-than-temporary impairment ~~recognized during the first quarter~~was taken as a result of ~~2017 was recognized during the second quarter~~Management's assessment and determination of ~~2017. The Company did not recognize any losses for other-than-temporary impairments during the nine-month period ended September 30, 2017.~~

~~Trading Securities~~

~~Securities designated as trading securities are reported at fair~~ value with gains or losses resulting from changes in fair value recognized in net investment income on the Condensed Consolidated Statements of Operations. Trading securities include exchange-traded equities and exchange-traded options. Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the ~~short sale.~~real estate. The ~~fair value of derivatives included in trading security assets and trading security liabilities as of September 30, 2017~~real estate was $0 and $0, respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2016 was $2,500 and $(1,439), respectively. Earnings from trading securities are classified in cash flows from operating activities. The derivatives held by the Company are for income generation purposes only.

~~Trading revenue charged~~written down to ~~net investment income from trading securities was:~~better reflect its current expected value.

Three Months Ended
September 30,
2017 2016
Net unrealized gains (losses) $ - $ -
Net realized gains (losses) - -
Net unrealized and realized gains (losses) $ - $ -

Nine Months Ended
September 30,
2017 2016
Net unrealized gains (losses) $ (111,531 ) $ -
Net realized gains (losses) 110,470 -
Net unrealized and realized gains (losses) $ (1,061 ) $ -

Mortgage Loans

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB. FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market. The Company is able to receive participations from FSNB for three primary reasons: 1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) ~~FSNB’s~~FSNB's loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away. For originated loans, the ~~Company’s~~Company's Management is responsible for the final approval of such loans after evaluation. Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control. These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity. Once the loan is approved, the Company directly funds the loan to the borrower. The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

~~Approximately 12% of the mortgage loan portfolio consists of discounted commercial mortgage loans as of September 30,~~During 2018 and 2017, and December 31, 2016. The Company began purchasing discounted commercial mortgage loans in 2009. Management has extensive background and experience in the analysis and valuation of commercial real estate. The discounted loans are available through the FDIC’s sale of assets of closed banks and from banks wanting to reduce their loan portfolios. The loans are available on a loan by loan bid process. Once a loan has been acquired, contact is made with the appropriate individuals to begin a dialog with a goal of determining the borrower’s willingness to work together. There are generally three paths a discounted loan will take: the borrowers pay as required; a settlement is reached with the loan being paid off at a discounted value; or the loan is foreclosed.

~~During 2017 and 2016,~~ the Company acquired ~~$360,531~~$16,453 and ~~$6,922,723~~$354,306 in mortgage loans, ~~respectively, including both regular participation mortgage loans as well as discounted mortgage loans.~~respectively. FSNB services the majority of the ~~Company’s~~Company's mortgage loan portfolio. The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

During ~~2017~~2018 and ~~2016,~~2017, the maximum and minimum lending rates for mortgage loans were:

	2017						2016						2018		2017
	Maximum rate			Minimum rate			Maximum rate			Minimum rate			Maximum rate	Minimum rate	Maximum rate	Minimum rate
Farm Loans		5.00	%		5.00	%		5.00	%		5.00	%	5.00%	5.00%	5.00%	5.00%
Commercial Loans		8.50	%		3.94	%		8.00	%		4.00	%	7.50%	4.00%	7.50%	4.00%
Residential Loans		8.00	%		4.00	%		8.00	%		3.94	%	8.00%	8.00%	8.00%	4.00%

Most mortgage loans are first position loans. Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans. Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent. Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency. All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans. Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified. Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

Changes in the current economy could have a negative impact on the loans, including the financial stability of the borrowers, the ~~borrowers’~~borrowers' ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices. Given the uncertainty of the current market, Management has taken a conservative approach with the discounted mortgage loans and has classified all discounted mortgage loans held as non-accrual. In such status, the Company is not recording any accrued interest income nor is it recording any accrual of discount on the loans held. The Company records repayments on loans as discount accrual when the loan basis has been paid in full.

~~On the remainder of the mortgage loan portfolio, interest~~Interest accruals are analyzed based on the likelihood of repayment. In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value. The Company acquired the discounted mortgage loans at below contract value, and believes that it will fully recover its carrying value upon disposal, therefore no reserve for delinquent loans is deemed necessary. Those not currently paying are being vigorously worked by Management. The current discounted commercial mortgage loan portfolio has an average price of 32% of face value as of September 30, 2017 and December 31, 2016. Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased. The mortgage loan reserve was $0 at September 30, ~~2017~~2018 and December 31, ~~2016.~~2017.

~~The following table summarizes the number of loans held in the discounted mortgage loan portfolio and the carrying value of the loans:~~

September 30, 2017
Payment Frequency
Number of Loans Carrying Value
No payments received 8 $ -
One-time payment received 1 -
Irregular payments received 2 20,834
Periodic payments received 5 2,090,929
Total 16 $ 2,111,763

December 31, 2016
Payment Frequency
Number of Loans Carrying Value
No payments received 8 $ -
One-time payment received 1 -
Irregular payments received 2 20,834
Periodic payments received 5 2,168,062
Total 16 $ 2,188,896

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

	September 30, 2017		December 31, 2016			September 30, 2018		December 31, 2017
In good standing	$	16,059,494	$	16,388,477	$	8,164,844	$	15,310,941
Overdue interest over 90 days		20,834		20,834		4,773,322		0
Restructured		52,827		60,827		0		0
In process of foreclosure		2,038,102		2,107,234		0		2,003,536
Total mortgage loans	$	18,171,257	$	18,577,372	$	12,938,166	$	17,314,477
Total foreclosed loans during the year	$	-	$	735,000	$	0	$	0

Investment Real Estate

Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the Consolidated Statements of Operations. Based upon ~~Management’s~~Management's evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the Condensed Consolidated Statements of Operations.

Notes Receivable

Notes receivable represent collateral loans and promissory notes issued by the Company and are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. The valuation allowance as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 was $0. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Before a new note is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control. Once the note is approved, the Company directly funds the note to the borrower. Several of the notes have participation agreements in place, whereas the Company has reduced its investment in the note receivable by participating a portion of the note to a third party.

Similar to the mortgage loans, FSNB services several of the notes receivable. The Company, and the participants in the notes, share in the risk of loss associated with the terms of the note with the borrower, based upon their ownership percentage in the note. The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.

Note 4 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance. The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories.

Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access. Level 1 fair value is not subject to valuation adjustments.

Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the ~~Company’s~~Company's own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company determines the existence of an active market for an asset or liability based on its judgment as to whether transactions for the asset or liability occur in such market with sufficient frequency and volume to provide reliable pricing information. If the Company concludes that there has been a significant decrease in the volume and level of activity for an investment in relation to normal market activity for such investment, adjustments to transactions and quoted prices are made to estimate fair value.

The inputs used in the valuation techniques employed by the Company are provided by nationally recognized pricing services, external investment managers and internal resources. To assess these inputs, the ~~Company’s~~Company's review process includes, but is not limited to, quantitative analysis including benchmarking, initial and ongoing evaluations of methodologies used by external parties to calculate fair value, and ongoing evaluations of fair value estimates based on the ~~Company’s~~Company's knowledge and monitoring of market conditions.

The Company periodically reviews the pricing service ~~provider’s~~provider's policies and procedures for valuing securities. The assumptions underlying the valuations from external service providers, including unobservable inputs, are generally not readily available as this information is often deemed proprietary. Accordingly, the Company is unable to obtain comprehensive information regarding these assumptions and methodologies.

The ~~Company’s~~Company's investments in fixed maturity securities available for sale, equity securities available for sale and trading securities assets and liabilities are carried at fair value. The following are the ~~Company’s~~Company's methodologies and valuation techniques for assets and liabilities measured at fair value.

Fixed maturities available for sale mainly consist of U.S. treasury securities and corporate debt securities. The Company employs a market approach to the valuation of securities where there are sufficient market transactions involving identical or comparable assets. If sufficient market data is not available for identical or comparable assets, the Company uses an income approach to valuation. The majority of the financial instruments included in fixed maturity securities available for sale are evaluated utilizing observable inputs; accordingly, they are categorized in either Level 1 or Level 2 of the fair value hierarchy. However, in instances where significant inputs utilized in valuation of the securities are unobservable, the securities are categorized in Level 3 of the fair value hierarchy.

Corporate securities primarily include fixed rate corporate bonds. Inputs utilized in connection with the ~~Company’s~~Company's valuation techniques relating to this class of securities include recently executed transactions, market price quotations, benchmark yields and issuer spreads. Corporate securities are categorized in Level 2 of the fair value hierarchy.

U.S. treasury securities are based on quoted prices in active markets and are generally categorized in Level 1 of the fair value hierarchy.

Equity securities ~~available for sale~~ consist of common and preferred stocks mainly in private equity investments, financial institutions and ~~insurance companies.~~publicly traded corporations. Equity securities for which there is sufficient market data are categorized as Level 1 or 2 in the fair value hierarchy. For the equity securities in which quoted market prices are not available, the ~~transaction price is used~~Company uses industry standard pricing methodologies, including discounted cash flow models that may incorporate various inputs such as payment expectations, risk of the ~~best estimate~~investment, market data, and health of ~~fair value at inception.~~the underlying company. The inputs are based upon Management's assumptions and available market information. When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected ~~exit values. The Company performs ongoing reviews of the underlying investments. The reviews consist of the evaluations of expected~~ cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Securities designated as trading securities consist of exchange traded equities and exchange traded options. These securities are primarily valued at quoted active market prices, and are therefore categorized as Level 1 in the fair value hierarchy.

The following table presents the ~~Company’s~~Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of September 30, ~~2017.~~2018.

	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	9,683,209	$	173,683,226	$	2,756,777	$	186,123,212	$	12,392,008	$	149,215,671	$	434,844	$	162,042,523
Equity Securities, available for sale		22,709,227		7,428,608		29,440,193		59,578,028
Equity Securities										38,683,164		10,407,300		40,504,106		89,594,570
Total	$	32,392,436	$	181,111,834	$	32,196,970	$	245,701,240	$	51,075,172	$	159,622,971	$	40,938,950	$	251,637,093

The following table presents the ~~Company’s~~Company's assets and liabilities measured at fair value in the Condensed Consolidated Balance Sheet on a recurring basis as of December 31, ~~2016.~~2017.

	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	9,035,810	$	175,120,657	$	3,083,251	$	187,239,718	$	2,639,597	$	175,437,239	$	478,389	$	178,555,225
Equity Securities, available for sale(1)		19,360,394		6,553,410		25,793,299		51,707,103		20,436,225		7,756,435		30,655,831		58,848,491
Trading Securities		2,500		-		-		2,500
Total	$	28,398,704	$	181,674,067	$	28,876,550	$	238,949,321	$	23,075,822	$	183,193,674	$	31,134,220	$	237,403,716

Liabilities
Trading Securities	$	1,439	$	-	$	-	$	1,439

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

Fixed Maturities,
Available for Sale

Equity Securities,
Available for Sale
Total
Balance at December 31, 2016 $ 3,083,251 $ 25,793,299 $ 28,876,550
Total unrealized gains (losses):
Included in realized gains (losses) - - -
Included in other comprehensive income 702,375 2,640,392 3,342,767
Purchases - 2,114,307 2,114,307
Sales (1,028,849 ) (1,107,805 ) (2,136,654 )
Balance at September 30, 2017 $ 2,756,777 $ 29,440,193 $ 32,196,970

		Fixed Maturities, Available for Sale		Equity Securities (1)		Total
Balance at December 31, 2017	$	478,389	$	30,655,831	$	31,134,220
Total unrealized gain or (losses):
Included in net income (loss)		0		4,258,287		4,258,287
Included in other comprehensive income		0		0		0
Purchases		0		6,127,750		6,127,750
Sales		(43,545)		(537,762)		(581,307)
Balance at September 30, 2018	$	434,844	$	40,504,106	$	40,938,950

(1)	Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale. Prior periods have not been restated to conform to the current presentation. See Note 2 to the Condensed Consolidated Financial Statements for additional information.

		September 30, 2018			December 31, 2017
Change in fair value of equity securities included in net income (loss) relating to assets held	$	4,258,287		$	0

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs. The Company computed fair value of Level 3 equity investments based on a review of current financial information, earnings trends and similar companies in the same industries.

There were no transfers in or out of Level 3 as of September 30, ~~2017.~~2018. Transfers occur when there is a ~~lack~~change in the availability of observable market information.

Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Consolidated Financial Statements.

The carrying values and estimated fair values of certain of the ~~Company’s~~Company's financial instruments not recorded at fair value in the Consolidated Balance Sheets are shown below. Because the fair value for all Consolidated Balance Sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

	September 30, 2017				December 31, 2016				September 30, 2018				December 31, 2017
Assets	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	18,171,257	$	18,171,257	$	18,577,372	$	18,577,372	$	12,938,166	$	12,938,166	$	17,314,477	$	17,314,477
Investment real estate		52,637,677		52,637,677		57,138,980		57,138,980		48,634,135		48,634,135		50,504,550		50,504,550
Notes receivable		17,638,632		17,638,632		16,876,485		16,876,485		20,444,752		20,444,752		19,004,016		19,004,016
Policy loans		9,669,594		9,669,594		10,070,134		10,070,134		9,381,104		9,381,104		9,559,142		9,559,142
Cash and cash equivalents		15,989,747		15,989,747		15,156,548		15,156,548		25,906,410		25,906,410		25,434,199		25,434,199
Short term investments										5,435,076		5,435,076		0		0

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange. The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings. The inputs used to measure the fair value of our mortgage loans on real estate ~~are classified as Level 3 within the fair value hierarchy.~~

A portion of the mortgage loans balance consists of discounted mortgage loans. The Company has been purchasing non-performing discounted mortgage loans at a deep discount through an auction process led by the Federal Government. In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company. Accordingly, the Company records its investment in the discounted loans at its original purchase price, which Management believes approximates fair value. The inputs used to measure the fair value of our discounted mortgage loans are classified as Level 3 within the fair value hierarchy.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell. The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by Management. The inputs used to measure the fair value of our investment real estate are classified as Level 3 within the fair value hierarchy.

Notes receivable are carried at their unpaid principal balances, which approximates fair value. The inputs used to measure the fair value of the loans are classified as Level 3 within the fair value hierarchy.

Policy loans are carried at the aggregate unpaid principal balances in the Condensed Consolidated Balance Sheets which approximate fair value, and earn interest at rates ranging from 4% to 8%. Individual policy liabilities in all cases equal or exceed outstanding policy loan balances. The inputs used to measure the fair value of our policy loans are classified as Level 3 within the fair value hierarchy.

The carrying amount of cash and cash equivalents in the Condensed Consolidated Balance Sheets approximates fair value given the highly liquid nature of the instruments. The inputs used to measure the fair value of our cash and cash equivalents are classified as Level 1 within the fair value hierarchy.

The carrying amount of short term investments in the Condensed Consolidated Balance Sheets approximates fair value. The inputs used to measure the fair value of our short term investments are classified as Level 3 within the fair value hierarchy.

The carrying value is a reasonable estimate of fair value for notes payable subject to floating rates of interest. The fair value of notes payable with fixed rate borrowings is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities. The inputs used to measure the fair value of our notes payable are classified as Level 2 within the fair value hierarchy.

Note 5 – Credit Arrangements

~~At September 30, 2017 and December 31, 2016, the Company had the following outstanding debt:~~

Outstanding Principal Balance
Instrument Issue Date Maturity Date September 30, 2017 December 31, 2016
Promissory Note:
SoftVest, LP 7/22/2016 7/22/2018 $ 725,000 $ 1,450,000
SoftSearch Investment, L.P. 7/22/2016 7/22/2018 725,000 1,450,000

Instrument	Issue Date	Maturity Date	Revolving Credit Limit		December 31, 2016		Borrowings		Repayments		September 30, 2017			Issue Date	Maturity Date		Revolving Credit Limit		December 31, 2017	Borrowings	Repayments		September 30, 2018
Lines of Credit:													Lines of Credit:
UTG	11/20/2013	11/20/2018	$	8,000,000	$	-		-		-	$	-		11/20/2013	11/20/2018	$	8,000,000	$	0	0	0	$	0
UG	6/2/2015	5/10/2018		10,000,000		-		-		-		-		6/2/2015	5/10/2019		10,000,000		0	0	0		0

The UTG line of credit carries interest at a fixed rate of 4.00% and is payable monthly. As collateral, UTG has pledged 100% of the common voting stock of its wholly owned subsidiary, Universal Guaranty Life Insurance ~~Company (“UG”).~~Company. The Company is currently in the process of renewing this line of credit.

During May of ~~2017,~~2018, the Federal Home Loan Bank approved ~~UG’s~~UG's Cash Management Advance Application ~~(“CMA”~~("CMA"). The CMA gives the Company the option of selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. The variable rate CMA is prepayable at any time without a fee, while the fixed CMA is not prepayable prior to maturity. The Company is currently in the process of renewing the CMA.

On July 22, 2016, the Company entered in to an agreement to acquire 300,000 shares of its outstanding common stock from a shareholder that owned approximately 8% of the Company’s outstanding common stock. The acquisition was made under the Company’s stock buy-back program. As part of this transaction, two promissory notes totaling $2.9 million were issued. The notes require principal payments of one half of the note value to be paid one year from the date of purchase and the other one half to be paid two years from the date of purchase. The notes bear interest at 0%. During April of 2017, the Company paid $725,000 on the outstanding principal balance of each promissory note.

Note 6 – ~~Shareholders’~~Shareholders' Equity

Stock Repurchase Program – The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors ~~on June 15, 2016,~~in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $2$1.5 million of ~~UTG’s~~UTG's common stock, ~~and on July 14, 2016, the Board of Directors again increased the amount available by an additional $4.5 million,~~ for a total repurchase of ~~$14.5 million. Repurchased shares are available for future issuance for general corporate purposes.~~up to $16.0 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 the nine ~~month period~~months ended September 30, ~~2017,~~2018, the Company repurchased ~~approximately 21,400~~47,658 shares through the stock repurchase program for ~~approximately $397,000.~~$1,217,802. Through September 30, ~~2017,~~2018, UTG has spent approximately ~~$12.3~~$13.8 million in the acquisition of ~~approximately 1,080,000~~1,136,842 shares under this program.

During ~~2017,~~2018, the Company issued ~~approximately 11,000~~9,870 shares of stock to ~~Management~~management and employees as ~~compensation.~~compensation at a cost of $246,757. These awards are determined at the discretion of the Board of Directors.

Earnings Per Share Calculations

Earnings per share are based on the weighted average number of common shares outstanding during each period. For the three and nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, diluted earnings per share were the same as basic earnings per share since the Company had no dilutive instruments outstanding.

Note 7 – Commitments and Contingencies

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages. In some states, juries have substantial discretion in awarding punitive damages in these circumstances. In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the ~~Company’s~~Company's results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies. Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength. Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the condensed consolidated financial statements, though the Company has no control over such assessments.

Within the Company’s trading accounts, certain trading securities carried as liabilities represent securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale. All trading securities were settled during the first quarter of 2017.

The following table represents the total funding commitments and the unfunded commitment as of September 30, ~~2017~~2018 related to certain investments:

Total Funding
Commitment

Unfunded
Commitment

RLF III, LLC $ 4,000,000 $ 398,120
Sovereign’s Capital, LP Fund I 500,000 33,642
UGLIC, LLC 1,600,000 120,000
Sovereign's Capital, LP Fund II 1,000,000 410,301
Barton Springs Music, LLC 2,500,000 1,339,063
Master Mineral Holdings II, LP 4,122,167 556,286

During 2006, the Company committed to invest in RLF III, LLC (“RLF”), which makes land-based investments in undervalued assets. RLF makes capital calls as funds are needed for continued land purchases.

		Total Funding Commitment		Unfunded Commitment
Sovereign's Capital, LP Fund I	$	500,000	$	30,000
Sovereign's Capital, LP Fund II		1,000,000		372,000
Barton Springs Music, LLC		1,750,000		1,658,500
Master Mineral Holdings III, LP		4,000,000		2,200,000

During 2012, the Company committed to invest in ~~Sovereign’s~~Sovereign's Capital, LP Fund I ~~(“Sovereign’s”~~("Sovereign's"), which invests in companies in emerging markets. ~~Sovereign’s~~Sovereign's makes capital calls to investors as funds are needed.

During ~~2014, the Company committed to invest in UGLIC, LLC, which purchases real estate tax receivables. UGLIC, LLC makes capital calls as funds are needed for additional purchases.~~

~~During~~ 2015, the Company committed to invest in ~~Sovereign’s~~Sovereign's Capital, LP Fund II ~~(“Sovereign’s II”~~("Sovereign's II"), which invests in companies in emerging markets. ~~Sovereign’s~~Sovereign's II makes capital calls to investors as funds are needed.

During 2016, the Company made a commitment to invest in Barton Springs Music, LLC ~~(“Barton”~~("Barton"), which invests in music royalties. Barton makes capital calls to its investors as funds are needed to acquire the royalty rights. During 2018, the Company revised its investment commitments with Barton.

During ~~2016,~~2018, the Company made a commitment to invest in Master Mineral Holdings ~~II,~~III, LP ~~(“MMH”~~("MMH"), which purchases land for leasing opportunities to those looking to harvest natural resources. MMH makes capital calls to its investors as funds are needed for continued land purchases.

Note 8 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses:

	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2017		2016		2018		2017
Interest	$	-	$	-	$	0	$	0
Federal income tax		20,000		33,000		0		20,000

	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2018		2017
Interest	$	-	$	-	$	0	$	0
Federal income tax		175,000		768,000		67,000		175,000

Note 9 – Concentrations of Credit Risk

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits. The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse Correll, the ~~Company’s~~Company's CEO and Chairman. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

The Company owns a variety of investments associated with the oil and gas industry. These investments represent approximately 30% and 27% of the Company's total invested assets as of September 30, 2018 and December 31, 2017, respectively.

Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is ~~Management’s~~Management's discussion and analysis of the financial condition and results of operations of UTG, Inc. and its subsidiaries (collectively with the Parent, the ~~“Company”~~"Company"). The following discussion of the financial condition and results of operations of the Company should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements of the Company and the related Notes thereto appearing in the ~~Company’s~~Company's annual report on Form 10-K for the year ended December 31, ~~2016,~~2017, as filed with the Securities and Exchange Commission, and our unaudited Condensed Consolidated Financial Statements and related Notes thereto appearing elsewhere in this quarterly report.

Cautionary Statement Regarding Forward-Looking Statements

This report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as ~~“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probably,”~~"anticipate," "believe," "estimate," "expect," "intend," "plan," "probably," or similar expressions, we are making forward-looking statements.

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur. Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

Overview

UTG, Inc., a Delaware corporation, is a life insurance holding company. The ~~Company’s~~Company's dominant business is individual life insurance, which includes the servicing of existing insurance policies in force, the acquisition of other companies in the life insurance business, the acquisition of blocks of business and the administration and processing of life insurance business for other entities.

UTG has a strong philanthropic program. The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor. The Company also encourages its staff to be involved on a personal level through monetary giving, volunteerism, and use of their talents to assist those less fortunate than themselves. Through these efforts, the Company hopes to make a positive difference in the local community, state, nation and world.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ significantly from those estimates. The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability. The ~~Company’s~~Company's critical accounting policies and the related estimates considered most significant by Management are disclosed in the ~~Company’s~~Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Management has identified the accounting policies related to cost of insurance acquired, assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, and valuation methods for investments that are not actively traded as those, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the ~~Company’s~~Company's Condensed Consolidated Financial Statements and this ~~Management’s~~Management's Discussion and Analysis.

As a result of ASU No. 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities, changes in the fair value of equity securities are now recognized in net income rather than other comprehensive income. On January 1, 2018, cumulative net unrealized gains on equity securities of $18.3 million, net of deferred taxes of $4.9 million, were reclassified from accumulated other comprehensive income (loss) into retained earnings.

During the nine months ended September 30, ~~2017,~~2018, there were no additions to or changes in the critical accounting policies disclosed in the ~~2016~~2017 Form 10-K, asexcept for recently adopted accounting standards discussed in Note 2 of the Notes to the Condensed Consolidated Financial Statements.

Results of Operations

On a consolidated basis, the Company reported net income attributable to common shareholders' of approximately $22.7 million for the nine-month period ended September 30, 2018 and net income attributable to common shareholders' of approximately $11.9 million for the three-month period ended September 30, 2018. For the nine-month period ended September 30, 2017, the Company reported a net loss attributable to common ~~shareholders’~~shareholders' of approximately of approximately $(2.4) million ~~for the nine month period ended September 30, 2017~~ and net income attributable to common ~~shareholders’~~shareholders' of approximately $134,000 for the three-month period ended September 30, 2017.

Revenues

The Company reported total revenues of approximately $49 million for the nine months ended September 30, 2018, an increase of approximately $33 million as compared to the same period in 2017. The Company reported total revenues of approximately $23 million for the three months ended September 30, 2018, an increase of approximately $17 million as compared to the three month period ended September 30, 2017. For the nine month period ended September 30, 2016, the Company reported net income attributable to common shareholders’ of approximately $889,000 and net income attributable to common shareholders’ of approximately $319,000 for the three month period ended September 30, 2016.

~~Revenues~~

The Company’s total revenues decreased approximately 28% when comparing the nine month periods ended September 30, 2017 and 2016. The Company’s revenues decreased by approximately 14% when comparing the three month periods ended September 30, 2017 and 2016. The variance in total revenues ~~reported,~~from the prior year to ~~date and for~~ the ~~quarter,~~current year is mainly attributable to ~~fluctuations in net investment income~~the realized and ~~net realized~~unrealized investment gains reported by the Company during ~~2017 and 2016. Further analysis of the fluctuations in net investment income and net realized~~2018. The unrealized investment gains ~~is provided below.~~are attributable to the adoption of ASU 2016-01, which requires the Company to report the change in the fair value of equity securities as a component of net income, rather than other comprehensive income. Prior periods have not been restated to conform to the current presentation. See below for further analysis regarding the implementation of ASU 2016-01.

Premium and policy fee revenues, net of reinsurance, decreased approximately ~~14%~~3% when comparing the ~~nine month~~nine-month period ended September 30, ~~2017~~2018 to the same period in ~~2016.~~2017. Premium and policy fee revenues, net of reinsurance, decreased by approximately ~~18%~~2% when comparing the third quarter of ~~2017~~2018 to the same quarter in ~~2016.~~2017. The Company writes minimal new business. Premium and policy fee revenues, net of reinsurance, represented ~~35%~~11% and ~~29%~~34% of the ~~Company’s~~Company's revenues as of September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

The following table ~~reflects~~summarizes our investment performance.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net investment income	$	2,309,470	$	3,121,288	$	8,996,566	$	8,974,189
Net investment gains (losses) ⁽¹⁾	$	18,463,653	$	1,121,860	$	34,474,055	$	1,665,920
Change in net unrealized investment gains (losses) on available-for-sale securities	$	1,244,302	$	7,534,111	$	(4,982,237)	$	12,390,006

(1)

Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income, rather, changes in the fair value of equity securities are now recognized in net income. Prior periods have not been restated to conform to the current presentation. See note 2 of the notes to consolidated financial statements.

As a result of adopting ASU No. 2016-01, net investment ~~income of~~gains for the ~~Company:~~

Three Months Ended Nine Months Ended September 30,
September 30, September 30,
2017 2016 2017 2016

Fixed maturities available for sale $ 2,312,874 $ 2,308,923 $ 6,531,313 $ 6,946,490
Equity securities 230,476 297,682 826,119 998,544
Trading securities - (119,749 ) (1,061 ) (80,272 )
Mortgage loans 310,804 314,128 908,488 1,566,902
Real estate 533,291 363,052 1,544,739 1,489,981
Notes receivable 295,181 284,142 664,697 1,225,723
Policy loans 151,054 177,317 499,813 442,435
Short term - 7,877 - 7,877
Cash and cash equivalents 8,349 10,905 12,315 20,465
Total consolidated investment income 3,842,029 3,644,277 10,986,423 12,618,145
Investment expenses (720,741 ) (793,976 ) (2,012,234 ) (2,538,872 )
Consolidated net investment income $ 3,121,288 $ 2,850,301 $ 8,974,189 $ 10,079,273

~~Net investment income represented 54%~~three and ~~445% of the Company’s total revenues as of~~nine months ended September 30, ~~2017~~2018 included an increase in the fair value of equity securities of $6.7 million and ~~2016,~~$22 million, respectively. ~~The Company reported net investment income of approximately $9 million for~~For the three and nine ~~month period~~months ended September 30, 2017, ~~a decrease~~the increase (decrease) in the fair value of ~~approximately 11% compared~~equity securities, which totaled $3.1 million and $2.8 million, respectively, was included in the change in net unrealized investment gains in other comprehensive income. See Note 3 of the Notes to the ~~same period in 2016. For~~Condensed Consolidated Financial Statements for details regarding the ~~three month period ended September 30, 2017,~~components of net investment ~~income increased approximately 10%, compared to~~gains (losses) and the ~~same quarter~~change in ~~2016. When comparing~~net unrealized gains (losses) from investments.

The Company has seen significant unrealized gains on its equity investments during 2018. The stock market as a whole has been very positive through the ~~three and~~first nine ~~month periods ended September 30, 2017 and 2016, income~~months of 2018. A significant portion of these gains are from ~~investing activities was down in most of the investment categories, with the largest variances being found~~two equity holdings, both in the ~~fixed maturities, mortgage loans,~~area of oil and ~~notes receivable investment categories.~~

Income from the fixed maturities investment portfolio is down approximately 6% when comparing the nine month period ended September 30, 2017 to the same period in 2016. The decrease is attributable togas. While the Company ~~holding fewer bonds combined with upgrading credit quality. During 2017,~~has had very strong unrealized gains during 2018, a pull back in the stock market, particularly in the oil and gas arena, could slow these gains or even result in future period unrealized losses. Management believes these equity investments continue to be solid investments for the Company ~~sold some lower rated, higher yielding securities~~ and ~~replaced them with higher rated, lower yielding securities.~~

~~Income from the mortgage loan investment portfolio is down~~have further growth potential; however, changes in ~~the current year, when comparing the three and nine month periods ended September 30, 2017 to the same periods~~market conditions could cause volatility in 2016. This is the result of the continued pay off of loans within the portfolio, particularly the discounted mortgage loans, which have, in recent periods, provided significant earnings. During the first quarter of 2016, two of the discounted mortgage loans paid off, which produced income of approximately $842,000.

Income from the notes receivable investment portfolio is down in the current year, when comparing the three and nine month periods ended September 30, 2017 to the same periods in 2016. During the first quarter of 2016, one of the notes receivable was fully repaid and produced income of approximately $500,000.market prices.

The Company reported net realized investment gains of approximately ~~$1.7~~$11.7 million and $6$12.4 million for the three and nine ~~month periods~~months ended September 30, ~~2017 and 2016,~~2018, respectively. During 2018, the Company sold three parcels of real estate that resulted in gross gains of approximately $1.3 million. During the third quarter of ~~2017 and 2016,~~2018, the Company sold a substantial portion of a bond holding. The bond holding was initially acquired during 2016 over a period of time at a deep discount, with an average cost of approximately 25% of its par value. During the third quarter of 2018, the value of this security had recovered sufficiently enough that Management determined the time was right to sell a majority of the holding, realizing a gain of approximately $10 million. At September 30, 2018, the Company still holds $5 million of par value of this security at a cost basis of $651,000.

For the three and nine months ended September 30, 2017, the Company reported ~~net realized investment gains of~~ approximately $1.1 million and ~~$1.9~~$1.7 million, ~~respectively. Realized~~respectively, in net realized investment ~~gains are the result of one-time events and are expected to vary from quarter to quarter.~~

gains. The 2017 net realized gains are attributable to the sales of certain fixed maturities and equity securities. During the ~~second~~third quarter of 2017, the Company sold certain equity securities that produced gains of approximately ~~$850,000. During the third quarter of 2017, the Company sold certain fixed maturities that produced gains of approximately~~ $800,000. ~~As mentioned above, the~~The Company made the decision to sell some lower rated, higher yielding securities and replace them with higher rated, lower yielding securities.

~~The 2016 net realized~~Realized investment gains ~~were mainly attributable~~are the result of one-time events and are expected to vary from quarter to quarter.

The following table reflects net investment income of the Company:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2018		2017		2018		2017

Fixed maturities available for sale	$	1,887,731	$	2,312,874	$	5,650,502	$	6,531,313
Equity securities		431,176		230,476		1,303,489		826,119
Trading securities		0		0		0		(1,061)
Mortgage loans		267,137		310,804		673,209		908,488
Real estate		531,892		533,291		2,396,586		1,544,739
Notes receivable		599,622		295,181		1,133,129		664,697
Policy loans		156,520		151,054		485,630		499,813
Short term		236,397		0		331,898		0
Cash and cash equivalents		6,109		8,349		11,863		12,315
Total consolidated investment income		4,116,584		3,842,029		11,986,306		10,986,423
Investment expenses		(1,807,114)		(720,741)		(2,989,740)		(2,012,234)
Consolidated net investment income	$	2,309,470	$	3,121,288	$	8,996,566	$	8,974,189

Net investment income represented 18% and 54% of the Company's total revenues as of September 30, 2018 and 2017, respectively. The Company reported net investment income of approximately $2.3 million for the three month period ended September 30, 2018, a decrease of approximately 26% compared to the ~~sale~~same period in 2017. When comparing the three and nine months ended September 30, 2018 and 2017, income from investing activities was comparable in the majority of ~~a parcel of~~the investment categories, with the largest variance being found in the real estate ~~during~~category.

During 2018, two of the ~~second quarter~~Company's real estate subsidiaries sold certain real estate parcels and distributed earnings to the members. Earnings from the real estate portfolio are expected to vary depending on the activities of ~~2016~~the subsidiaries and the potential distributions that ~~produced~~will occur based upon the activities. The fluctuation in earnings from real estate, when comparing the three and nine months ended September 30, 2018 and 2017, are considered reasonable by Management.

The reclassification of the change in the fair value of equity securities to a ~~gain~~component of ~~approximately $3.2 million.~~net income (loss), as a result of ASU 2016-01, caused several of the revenue and expense categories to appear as though they did not represent the percentage of total revenues and expenses comparably from year to year. However, that is not the case. If you excluded the change in the fair value of equity securities from the calculations, the revenue and expenses, as a percentage of the total, are comparable for the current and prior period.

In summary, the ~~Company’s~~Company's basis for future revenue growth is expected to come from the following primary sources: conservation of business currently in-force, the maximization of investment earnings and the acquisition of other companies or policy blocks in the life insurance business. Management has placed a significant emphasis on the development of these revenue sources to enhance these opportunities.

Expenses

The Company reported total benefits and other expenses of approximately ~~$19.4~~$20 million for the nine ~~month period~~months ended September 30, ~~2017, a decrease~~2018, an increase of approximately ~~10%~~2% from the same period in ~~2016.~~2017. For the three month period ended September 30, ~~2017,~~2018, total benefits and other expenses ~~decreased~~increased approximately ~~17%~~28%, compared to the same quarter in ~~2016.~~2017. Benefits, claims and settlement expenses represented approximately ~~70%~~51% and ~~71%~~61% of the ~~Company’s~~Company's total expenses for the three and nine ~~month periods~~months ended September 30, ~~2017,~~2018, respectively. The other major expense category of the Company is operating expenses, which represented approximately ~~28%~~47% and ~~27%~~37% of the ~~Company’s~~Company's total expenses for the three and nine ~~month periods~~months ended September 30, ~~2017,~~2018, respectively.

Life benefits, claims and settlement expenses, net of reinsurance benefits and claims, decreased approximately ~~14%~~10% in the nine ~~month period~~months ended September 30, ~~2017,~~2018, compared to the same period in ~~2016.~~2017. For the three ~~month period~~months ended September 30, ~~2017,~~2018, life benefits, claims and settlement expenses, net of reinsurance benefits and claims, decreased approximately ~~21%~~4%, compared to the same quarter in ~~2016.~~2017. Policy claims vary from period to period and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.

Net amortization of cost of insurance acquired decreased 4% during the three and nine ~~month and three month periods~~months ended September 30, ~~2017~~2018 compared to the same period in ~~2016.~~2017. Cost of insurance acquired is established when an insurance company is acquired or when the Company acquires a block of in-force business. The Company assigns a portion of its cost to the right to receive future profits from insurance contracts existing at the date of the acquisition. Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The interest rates may vary due to risk analysis performed at the time of acquisition on the business acquired. The Company utilizes a 12% discount rate on the remaining unamortized business. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised. Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force. This expense is expected to decrease, unless the Company acquires a new block of business.

Operating expenses were up approximately $1.7 million and $1.8 million when comparing the three and nine months ended September 30, 2018 and 2017. The increase in charitable expenses and accrued year end bonuses are the main cause of the 2018 expenses being higher than the 2017 expenses. With the increased earnings during 2018, anticipated year end bonus accruals have increased over 2017. Final determination of bonuses will be paid following year end results, by senior management, and the Compensation Committee of the Board of Directors. Charitable contributions are a function of the Company's earnings. 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 ~~taxable income~~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.

Effective January 1, 2017, the Company and FSNB began sharing certain services. The shared services focuses on departments commonly utilized by both organizations such as Financial Accounting, Human Resources and Information Technology.

Management continues to place significant emphasis on expense monitoring and cost containment. Maintaining administrative efficiencies directly impacts net income.

Comprehensive Income (Loss) to Shareholders

Comprehensive income (loss) to shareholders was approximately $10 million and $5 million for the nine months ended September 30, 2018 and 2017, respectively. Included in the nine months ended September 30, 2018 and 2017 comprehensive income (loss) is a decrease of approximately $4 million and an increase of $8 million, respectively, in net unrealized gains on available-for-sale securities, net of taxes. Comprehensive income (loss) to shareholders was approximately $4.2 million and $4.5 million for the three months ended September 30, 2018 and 2017, respectively. Included in the three months ended September 30, 2018 and 2017 comprehensive income (loss) is an increase of approximately $1 million and $4.9 million, respectively, in net unrealized gains on available-for-sale securities, net of taxes. Effective January 1, 2018, the Company adopted ASU No. 2016-01 and equity securities are no longer classified as available-for-sale with unrealized gains and losses recognized in other comprehensive income (loss). Rather, all changes in fair value of equity securities are now recognized in net income (loss). For the three and nine months ended September 30, 2018, the change in fair value of equity securities included in net income (loss) gains of approximately $6.7 million and $22.1 million, respectively. For the three and nine months ended September 30, 2017, gains of approximately $3.1 million and $2.8 million were included in other comprehensive income. The change in presentation has no impact on comprehensive income to shareholders.

Financial Condition

Investment Information

Investments represent approximately ~~85%~~84% and 82% of total assets at September 30, ~~2017~~2018 and December 31, ~~2016.~~2017, respectively. Accordingly, investments are the largest asset group of the Company. The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments that it is permitted to make and the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, the majority of the ~~Company’s~~Company's investment portfolio is invested in a diverse set of securities.

As of September 30, ~~2017,~~2018, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, ~~shareholders’~~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, with changes in market value charged directly to shareholders' equity. Changes in the market value of available for sale securities resulted in net unrealized gains of ~~approximately $8.1~~$1 million and net unrealized losses of $(4) million for the three and nine ~~month period~~months ended September 30, ~~2017 and $5 million for the third quarter of 2017.~~2018, respectively. Changes in the market value of available for sale securities resulted in net unrealized gains of ~~approximately $24.7~~$5 million and $8.1 million for the three and nine ~~month period~~months ended September 30, ~~2016 and $4.7 million for the third quarter of 2016.~~2017, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations and changes in interest rates.

Capital Resources

Total ~~shareholders’~~shareholders' equity increased by approximately 4%8% as of September 30, ~~2017~~2018 compared to December 31, ~~2016. The increase in total shareholders’ equity~~2017 and is mainly the result of ~~an increase in accumulated other comprehensive income.~~realized and unrealized gains on investments.

The ~~Company’s~~Company's investments are predominately in fixed maturity investments such as bonds, which 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 Condensed Consolidated Financial Statements at their market value.

Liquidity

The Company has ~~three~~two principal needs for cash - the insurance ~~company’s~~company's contractual obligations to policyholders and the payment of operating ~~expenses and debt service.~~expenses. Cash and cash equivalents represented 4%6% of total assets as of September 30, ~~2017~~2018 and December 31, ~~2016.~~2017. Fixed maturities, as a percentage of total assets, were approximately ~~46%~~39% and ~~47%~~44% as of September 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

The Company currently has access to funds for operating liquidity. UTG has an $8,000,000 revolving credit note with Illinois National Bank. At September 30, ~~2017,~~2018, the Company had no outstanding borrowings against the UTG line of credit.

Future policy benefits are primarily long-term in nature and therefore, the Company's investments are predominantly in long-term fixed maturity investments such as bonds and mortgage loans which provide sufficient return to cover these obligations. Many of the Company's products contain surrender charges and other features which reward persistency and penalize the early withdrawal of funds.

Net cash used inby operating activities was approximately $2 million for the nine months ended September 30, 2018 and net cash used by operating activities was approximately $7.1 million ~~and $5.3 million~~ for the nine ~~month periods~~months ended September 30, ~~2017 and 2016, respectively.~~2017. 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.

Net cash used by investing activities was approximately $3 million for the nine months ended September 30, 2018 and net cash provided by investing activities was approximately $10.5 million ~~and $11.6 million~~ for the nine ~~month period~~months ended September 30, ~~2017 and 2016, respectively. The~~2017.The net cash provided by and used in investing activities is expected to vary from quarter to quarter depending on market conditions and ~~management’s~~management's ability to find and negotiate favorable investment contracts.

UTG is a holding Company that has no day-to-day operations of its own. Funds required to meet its expenses, generally costs associated with maintaining the Company in good standing with states in which it does business and the servicing of its debt, are primarily provided by its subsidiaries. On a parent only basis, 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. At September 30, ~~2017,~~2018, substantially all of the consolidated ~~shareholders’~~shareholders' equity represented net assets of its subsidiary. The Company's insurance subsidiary has maintained adequate statutory capital and surplus. The payment of cash dividends to shareholders by UTG is not legally restricted. However, the state insurance department regulates insurance Company dividend payments where the Company is domiciled. No dividends were paid to shareholders in ~~2016~~2017 or the nine ~~month period~~months ended September 30, ~~2017.~~2018.

UG is an Ohio domiciled insurance company, which requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend. Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus. For the year ended December 31, ~~2016,~~2017, UG had statutory net income of approximately ~~$4.6~~$5.4 million. At December 31, ~~2016 UG’s~~2017 UG's statutory capital and surplus amounted to approximately ~~$45.2~~$54.7 million. Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation. During ~~2016,~~2017, UG paid UTG ordinary dividends of $1$2 million. ~~During the second quarter~~Through September 30, 2018, UG paid UTG ordinary dividends of ~~2017,~~$3.5 million. In October of 2018, UG paid UTG an ordinary dividend of $2$1.5 million. UTG used the dividends received during ~~2016~~2017 and ~~2017~~2018 for general operations of the Company.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to Management, including the principal executive officer and principal financial officer, allowing timely decisions regarding required disclosure. Under the supervision and with the participation of our Management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE

ITEM 1A. RISK FACTORS

NONE

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. MINE SAFETY DISCLOSURES

NONE

ITEM 5. OTHER INFORMATION

NONE

ITEM 6. EXHIBITS

*31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**101	Interactive Data File

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UTG, INC.

(Registrant)

Date:	November 9, ~~2017~~2018	By	/s/ James P. Rousey
			James P. Rousey
			President and Director

Date:	November 9, ~~2017~~2018	By	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
*31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**101	Interactive Data File

* Filed herewith

September 30, 2017 Payment Frequency	Number of Loans		Carrying Value
No payments received		8	$	-
One-time payment received		1		-
Irregular payments received		2		20,834
Periodic payments received		5		2,090,929
Total		16	$	2,111,763

December 31, 2016 Payment Frequency	Number of Loans		Carrying Value
No payments received		8	$	-
One-time payment received		1		-
Irregular payments received		2		20,834
Periodic payments received		5		2,168,062
Total		16	$	2,188,896

	Fixed Maturities, Available for Sale			Equity Securities, Available for Sale			Total
Balance at December 31, 2016	$	3,083,251		$	25,793,299		$	28,876,550
Total unrealized gains (losses):
Included in realized gains (losses)		-			-			-
Included in other comprehensive income		702,375			2,640,392			3,342,767
Purchases		-			2,114,307			2,114,307
Sales		(1,028,849	)		(1,107,805	)		(2,136,654	)
Balance at September 30, 2017	$	2,756,777		$	29,440,193		$	32,196,970

			Outstanding Principal Balance
Instrument	Issue Date	Maturity Date	September 30, 2017		December 31, 2016
Promissory Note:
SoftVest, LP	7/22/2016	7/22/2018	$	725,000	$	1,450,000
SoftSearch Investment, L.P.	7/22/2016	7/22/2018		725,000		1,450,000

	Total Funding Commitment		Unfunded Commitment
RLF III, LLC	$	4,000,000	$	398,120
Sovereign’s Capital, LP Fund I		500,000		33,642
UGLIC, LLC		1,600,000		120,000
Sovereign's Capital, LP Fund II		1,000,000		410,301
Barton Springs Music, LLC		2,500,000		1,339,063
Master Mineral Holdings II, LP		4,122,167		556,286