Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 01, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MIDWEST HOLDING INC. | |
Entity Central Index Key | 355,379 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,558,956 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Investments, available for sale, at fair value | ||
Fixed maturities (amortized cost: $27,443,918 and $24,279,231, respectively) | $ 27,375,374 | $ 23,271,277 |
Equity securities, at cost | 53,816 | 140,250 |
Real estate, held for investment | 520,739 | 529,769 |
Policy Loans | 400,393 | 420,775 |
Total investments | 28,350,322 | 24,362,071 |
Cash and cash equivalents | 2,390,031 | 1,192,336 |
Amounts recoverable from reinsurers | 11,809,580 | 12,212,656 |
Interest and dividends due and accrued | 308,431 | 264,791 |
Due premiums | 680,938 | 640,073 |
Deferred acquisition costs, net | 2,571,878 | 2,765,063 |
Value of business acquired, net | 1,791,534 | 2,039,110 |
Intangible assets | 700,000 | 700,000 |
Goodwill | 1,129,824 | 1,129,824 |
Property and equipment, net | 171,396 | 217,565 |
Assets associated with business held for sale (see Note 3) | 16,870,241 | |
Other assets | 448,887 | 532,674 |
Total assets | 50,352,821 | 62,926,404 |
Liabilities: | ||
Benefit reserves | 24,474,953 | 24,155,140 |
Policy claims | 553,415 | 839,859 |
Deposit-type contracts | 15,361,883 | 13,897,421 |
Advance premiums | 53,501 | 57,699 |
Total policy liabilities | 40,443,752 | 38,950,119 |
Accounts payable and accrued expenses | 1,564,723 | 1,013,313 |
Liabilities associated with business held for sale (see Note 3) | 15,508,998 | |
Surplus notes | 550,000 | 550,000 |
Total liabilities | 42,558,475 | 56,022,430 |
Commitments and Contingencies (See Note 9) | ||
Stockholders' Equity: | ||
Common stock, $0.001 par value. Authorized 120,000,000 shares; issued and outstanding 22,558,956 as of September 30, 2016 and 18,006,301 shares as of December 31, 2015 | 22,559 | 18,006 |
Additional paid-in capital | 33,034,824 | 31,584,529 |
Accumulated deficit | (25,196,383) | (23,685,525) |
Accumulated other comprehensive loss | (66,831) | (1,013,213) |
Total Midwest Holding Inc.'s stockholders' equity | 7,794,346 | 6,903,974 |
Total liabilities and stockholders' equity | 50,352,821 | 62,926,404 |
Series B Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock | 103 | 103 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock | $ 74 | $ 74 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Amortized costs of fixed maturities (in dollars) | $ 27,443,918 | $ 24,279,231 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 22,558,956 | 18,006,301 |
Common stock, shares outstanding | 22,558,956 | 18,006,301 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, liquidation preference per share | $ 6 | $ 6 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 102,669 | 102,669 |
Preferred stock, shares outstanding | 102,669 | 102,669 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, liquidation preference per share | $ 6 | $ 6 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 74,159 | 74,159 |
Preferred stock, shares outstanding | 74,159 | 74,159 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income: | ||||
Premiums | $ 738,522 | $ 819,017 | $ 2,597,997 | $ 2,691,122 |
Investment income, net of expenses | 219,778 | 157,686 | 634,684 | 470,081 |
Loss on equity method investment | (420,720) | (79,000) | (420,720) | (95,650) |
Net realized gain (loss) on investments | 121,578 | (16,088) | 67,834 | (12,383) |
Miscellaneous income | 21,558 | 53,963 | 85,115 | 153,207 |
Total Income | 680,716 | 935,578 | 2,964,910 | 3,206,377 |
Expenses: | ||||
Death and other benefits | 213,351 | 194,398 | 621,469 | 655,697 |
Interest credited | 195,566 | 105,657 | 548,555 | 361,255 |
Increase in benefit reserves | 112,948 | 74,051 | 504,617 | 572,602 |
Amortization of deferred acquisition costs | 122,788 | 119,282 | 270,515 | 373,132 |
Salaries and benefits | 589,254 | 438,128 | 1,702,577 | 1,429,963 |
Other operating expenses | 595,198 | 473,919 | 2,154,561 | 1,886,790 |
Total Expenses | 1,829,105 | 1,405,435 | 5,802,294 | 5,279,439 |
Operating loss | (1,148,389) | (469,857) | (2,837,384) | (2,073,062) |
Bargain purchase gain for business acquisition | 1,326,526 | 1,326,526 | ||
Income (loss) before income taxes | 178,137 | (469,857) | (1,510,858) | (2,073,062) |
Income tax expense | ||||
Net income (loss) | 178,137 | (469,857) | (1,510,858) | (2,073,062) |
Comprehensive income: | ||||
Unrealized gains (losses) on investments arising during period | 84,298 | 128,952 | 1,014,216 | (372,958) |
Less: reclassification adjustment for net realized (gains) losses on investments | (121,578) | 16,088 | (67,834) | 12,383 |
Other comprehensive (loss) income | (37,280) | 145,040 | 946,382 | (360,575) |
Comprehensive income (loss) | $ 140,857 | $ (324,817) | $ (564,476) | $ (2,433,637) |
Net income (loss) per common share, basic and diluted | $ 0.01 | $ (0.04) | $ (0.07) | $ (0.16) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ (1,510,858) | $ (2,073,062) |
Adjustments to reconcile net loss to net cash and cash equivalents provided by (used in) operating activities: | ||
Net adjustment for premium and discount on investments | 158,793 | 114,777 |
Depreciation and amortization | 297,736 | 294,248 |
Deferred acquisition costs capitalized | (110,918) | (524,000) |
Amortization of deferred acquisition costs | 270,515 | 373,132 |
Net realized (gain) loss on investments | (67,834) | 28,343 |
Bargain purchase gain for business acquired | (1,326,526) | |
Loss on equity method investment | 420,720 | 95,650 |
Changes in operating assets and liabilities: | ||
Amounts recoverable from reinsurers | 403,076 | 600,746 |
Interest and dividends due and accrued | (43,640) | (29,015) |
Due premiums | (40,865) | (38,278) |
Policy liabilities | 572,112 | 716,066 |
Other assets and liabilities | 575,047 | (322,553) |
Other assets and liabilities held for sale | (81,068) | |
Net cash (used for) operating activities | (402,642) | (845,014) |
Securities available for sale: | ||
Purchases | (15,744,683) | (11,533,877) |
Proceeds from sale or maturity | 12,539,971 | 9,583,796 |
Securities associated with business held for sale: | ||
Purchases | 52,703 | (964,451) |
Proceeds from sale | 941,528 | |
Net change in equity securities carried at cost: | ||
Proceeds from sale or maturity | 26,434 | 9,000 |
Sale of Capital Reserve Life Insurance Company | 1,432,446 | |
Proceeds from payments on mortgage loans on real estate, held for investment | 349,386 | |
Acquisition of Northstar Financial Corporation | 2,427,394 | |
Net change in policy loans | 20,382 | (44,236) |
Net change in short-term investments | 633 | |
Purchases of property and equipment | (30,611) | (4,566) |
Net cash provided by (used for) investing activities | 724,036 | (1,662,787) |
Cash Flows from Financing Activities: | ||
Issuance of common stock | 214,720 | |
Preferred stock dividend | (45,220) | (56,057) |
Receipts on deposit-type contracts | 1,786,850 | 1,725,623 |
Withdrawals on deposit-type contracts | (865,329) | (477,400) |
Net cash provided by financing activities | 876,301 | 1,406,886 |
Net increase (decrease) in cash and cash equivalents | 1,197,695 | (1,100,915) |
Cash and cash equivalents: | ||
Beginning | 1,192,336 | 2,310,047 |
Ending | 2,390,031 | 1,209,132 |
Supplemental Disclosure of Non-Cash Information | ||
Measurement period adjustment on the First Wyoming acquisition | (905,806) | |
Common stock issued on Northstar Acquisition | 2,405,874 | |
Total Non-Cash Information | $ 1,500,068 |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Note 1. Nature of Operations and Summary of Significant Accounting Policies Nature of operations: Midwest Holding Inc. and its wholly owned subsidiaries (Midwest or the Company, which also may be referred to as we, our or us) operate multiple insurance businesses through one business segment. These insurance companies are: American Life & Security Corporation (American Life), Capital Reserve Life Insurance Company (Capital Reserve), First Wyoming Life Insurance Company (First Wyoming Life) and Great Plains Life Assurance Company (Great Plains). Through these insurance companies we sell traditional, non-traditional and multi-benefit life insurance policies. Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (GAAP) for interim financial information and with the instructions from the Securities and Exchange Commission (SEC) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015 In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Companys results. Operating results for the nine month period ended September 30, 2016, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. All material inter-company accounts and transactions have been eliminated in consolidation . Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method (calculated by multiplying the adjusted basis by the yield at issuance and then subtracting the coupon interest) over the term of the bonds. Realized gains and losses on securities sold during the year are determined by the specific security sold. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive income (loss) Declines in the fair value of available-for-sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, we consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and the intent and ability of us to hold the investment until the recovery of the cost. The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of the other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Companys best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the nine months ended September 30, 2016 or 2015. Investment income consists of interest, dividends, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. Included within the Companys equity securities are certain privately purchased common stocks. These investments are recorded using the cost basis method of accounting. These securities do not have a readily determinable fair value. Losses related to equity method investments relates Policy loans: Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value. Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years. Cash and cash equivalents: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At September 30, 2016 and December 31, 2015, the Company had no cash equivalents. The Company has cash on deposit with financial institutions which at times may exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not suffered any losses in the past and does not believe it is exposed to any significant credit risk in these balances. Deferred acquisition costs: Deferred acquisition costs (DAC) Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. The Company performs a recoverability analysis annually in the fourth quarter of its fiscal year unless events occur which require an immediate review. The Company determined during its December 31, 2015 analysis that all deferred acquisition costs were recoverable. The following table provides information about deferred acquisition costs for the periods ended September 30, 2016 and December 31, 2015, respectively. Nine Months Ended Year Ended September 30, December 31, 2016 2015 Balance at beginning of period $ 2,765,063 $ 2,646,970 Capitalization of commissions, sales and issue expenses 110,918 552,466 Change in DAC due to unrealized investment (gains) losses (33,588 ) 35,301 Gross amortization (270,515 ) (469,674 ) Balance at end of period $ 2,571,878 $ 2,765,063 Value of business acquired: American Life paid an upfront ceding commission of $375,000 to Security National Life (SNL) at the time of acquisition of Capital Reserve in a separate transaction. An initial asset was established for the value of this business acquired totaling $348,010, representing primarily the ceding commission. Midwest acquired Great Plains Financial in 2014 and established an asset for value of business acquired of $1,288,207. Midwest acquired First Wyoming Capital during 2015 and established an asset for value of business acquired of $506,600. These assets are being amortized on a straight-line basis, which approximates the earnings pattern of the related policies, over ten years. The Company recognized amortization expense of $53,570 and $43,813 for the three months ended September 30, 2016 and 2015, respectively relative to these transactions. The Company recognized amortization expense of $166,528 and $131,441 for the nine months ended September 30, 2016 and 2015, respectively related to these transactions. Additionally, American Life purchased Old Reliance in August 2011, resulting in an initial capitalized asset for value of business acquired of $824,485. This asset is being amortized over the life of the related policies (refer to revenue recognition and related expenses discussed later regarding amortization methods). Amortization recognized during the three months ended September 30, 2016 and 2015 totaled $12,168 and $14,002, respectively. Amortization recognized during the nine months ended September 30, 2016 and 2015 totaled $40,344 and $33,714, respectively. Recoverability of value of business acquired is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. If this current estimate is less than the existing balance, the difference is charged to expense. Management has determined that no events occurred in the nine months ended September 30, 2016 that suggest a review should be undertaken. Goodwill and Other Intangible Assets: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. Midwest sold Capital Reserve effective August 29, 2016 and the VOBA related to Capital Reserve was written off by American Life. The Company assesses the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Management has determined that no events occurred in the nine months ended September 30, 2016 that suggest a review should be undertaken. Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $20,275 and $37,230 for the three months ended September 30, 2016 and 2015, respectively. Depreciation expense totaled $81,366 and $120,063 for the nine months ended September 30, 2016 and 2015, respectively. Accumulated depreciation totaled $946,370 and $864,526 as of September 30, 2016 and December 31, 2015, respectively. Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the nine months ended September 30, 2016 that would indicate the carrying amounts may not be recoverable. Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Companys primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances as of September 30, 2016 or December 31, 2015. Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies. Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2012 Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows. Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy. Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured. Comprehensive income (loss) Comprehensive income (loss) income (loss) Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 100,000,000 shares authorized and 20,000,000 preferred shares authorized. At September 30, 2016 and December 31, 2015, the Company had 22,558,956 and 18,006,301 common shares issued and outstanding, respectively. At September 30, 2016 and December 31, 2015, the Company had 1,179 warrants outstanding. The warrants are exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share. The Class A preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). There is The Class B preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The Company may only affect a conversion through a deemed liquidation or initial public offering. The par value per preferred Class B share is $0.001 with 1,000,000 shares authorized. The stated dividend rate on the Class B preferred shares is 7%. Dividends of $45,220 and $56,057 were paid as of September 30, 2016 and December 31, 2015 respectively. At September 30, 2016, and December 31, 2015, the Company had 102,669 Class B preferred shares issued and outstanding. Earnings (loss) per share attributable to the Companys common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended September 30, 2016 and 2015 were 22,558,956 and 13,212,653 shares, respectively. The weighted average number of shares outstanding during the nine months ended September 30, 2016 and 2015 were 21,312,581 and 13,195,416 shares, respectively. Risk and uncertainties: Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our consolidated financial statements. The more significant of those risks and uncertainties, as well as the Companys method for mitigating the risks, can be referenced in the Notes to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2105 (2015 Form 10-K), and should be read in connection with the reading of these interim unaudited consolidated financial statements. New accounting standards: In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments Credit Losses (Topic 326) . Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments Equity Method and Joint Ventures (Topic 323). Under the new guidance, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, this ASU In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-1, Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance also changes certain disclosure requirements and other aspects of current GAAP. This guidance is effective for fiscal years beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements. Effective January 1, 2016, the Company adopted ASU No. 2015-16, Business Adjustments 2 below |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Note 2. Acquisitions On March 15, 2016, Midwest acquired Northstar Financial Corporation (Northstar), an inactive Minnesota corporation, pursuant to an Agreement and Plan of Merger dated December 18, 2015, under which Midwest Acquisition Minnesota, Inc. (Acquisition) a wholly owned subsidiary of Midwest merged (the Merger) with and into Northstar, with Northstar being the survivor. Pursuant to the Merger, Midwest exchanged 1.27 shares of its voting common stock for each share of Northstar common stock, or approximately 4,553,000 shares The was recorded On October 27, 2015, Midwest acquired 100% of the remaining outstanding shares of First Wyoming, a Wyoming corporation, that it did not previously own pursuant to an Agreement and Plan of Merger dated July 31, 2015 by and among the Company, First Wyoming and Midwest Acquisition, Inc., a Wyoming corporation and wholly-owned subsidiary of the Company (Merger Subsidiary) (the Merger Agreement). Under the Merger Agreement, the Merger Subsidiary merged with and into First Wyoming (the Merger); the separate corporate existence of the Merger Subsidiary ceased and First Wyoming became the surviving corporation of the Merger and a wholly owned subsidiary of Midwest. Pursuant to the Merger Agreement, Midwest agreed to exchange 1.37 shares of its voting common stock for each share of First Wyoming common stock, or approximately 4,767,400 shares. The fair value of the Midwest shares exchanged to acquire 100% of the remaining outstanding shares of First Wyoming that it did not previously own was estimated by applying the income approach to be $905,806, which is different from our preliminary estimate of $1,811,612 as disclosed in Note 2 of the 2015 10-K. This fair value measurement is based on significant inputs that are not observable in the market. Key assumptions include projected total income growth of between 3% and 16%, expected long term growth of 3%, a discount rate of 16.0%, and a terminal value based on earnings and a capitalization rate of 13.0%. Subsequent to the Closing, First Wyoming merged into Midwest. On September 1, 2016 First Wyoming Life was merged into American Life. The First Wyoming acquisition was accounted for under the acquisition method of accounting, which requires the consideration transferred and all assets and liabilities assumed to be recorded at fair value. Prior to the acquisition, Midwest held 22.1% of the outstanding shares of First Wyoming, which it had recorded in its financial statements under the equity method of accounting at a book value of $810,500 with a related accumulated other comprehensive loss of $30,410. The fair value of our previously held equity interest in First Wyoming was determined to be $221,430, resulting in a loss of $619,480 on the previously held equity interest. The in Loss investment on Income. The The following table summarizes the fair value of the consideration transferred and the fair value of First Wyoming assets acquired and liabilities assumed: Fair value of Common stock of Midwest issued as consideration $ 905,806 Fair value of Midwest's previously held equity interest in First Wyoming 221,430 $ 1,127,236 Recognized amounts of identifiable assets acquired and liabilities assumed: Investment securities $ 3,961,937 Cash 315,546 VOBA 506,600 Other assets 92,045 Benefit reserves (611,110 ) Policy claims (41,754 ) Deposit-type contracts (799,990 ) Other liabilities (64,934 ) Total identifiable net assets 3,358,340 Bargain purchase gain (2,231,104 ) $ 1,127,236 All amounts related to the business combination are finalized and are no longer provisional. The transaction resulted in a bargain purchase gain of $2,231,104 and, of that amount, $904,578 was included in the Bargain purchase gain for business acquisition Value of business acquired (VOBA) is being amortized on a straight-line basis over ten years which approximates the earnings pattern of the related policies. Acquisition costs relating to the business combination totaling $123,219 were expensed as incurred and are included in the other operating expenses line item in the Consolidated Statement of Comprehensive Income for the year ended December 31, 2015. Total income and net loss of $71,165 and $73,939, respectively, were included in the 2015 10-K Consolidated Statements of Comprehensive Income from the October 27, 2015 acquisition date through December 31, 2015. Operations of the acquired entity and its subsidiary (First Wyoming Life) were immediately integrated with the Companys operations. The following table presents unaudited pro forma consolidated total income and net loss as if the acquisition had occurred as of January 1, 2014. Three months ended Nine months ended September 30, 2015 September 30, 2015 (unaudited) (unaudited) Premiums $ 886,307 $ 2,980,998 Investment income 157,314 518,799 Miscellaneous income 23,094 57,844 Total income $ 1,066,715 $ 3,557,641 Net loss $ (759,888 ) $ (2,778,616 ) The unaudited pro forma total income and net loss above was adjusted to eliminate months ended and nine 30, 2015. |
Assets and Liabilities Held for
Assets and Liabilities Held for Sale | 9 Months Ended |
Sep. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets and Liabilities Held for Sale | Note 3. Assets and Liabilities Held for Sale In December 2015 American Life entered into a purchase agreement with an outside third party to sell its interest in Capital Reserve Life Insurance Company (Capital Reserve), which was dormant. Under the terms of the purchase agreement, American Life received cash which approximated the statutory surplus of Capital Reserve. The sale of Capital Reserve was effective as of August 29, 2016 with a purchase price of $1,432,446. Prior to the sale of Capital Reserve, Midwest had $16.9 million and $15.4 million of assets and liabilities, respectively, classified as held for sale on the Consolidated Balance Sheet |
Investments
Investments | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Securities [Abstract] | |
Investments | Note 4. Investments See Note 1 in our 2015 Form 10-K for information regarding our accounting policy relating to available-for-sale (AFS) securities, which also includes additional disclosures regarding our fair value measurements. The amortized Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value September 30, 2016: Fixed maturities: U.S. government obligations $ 3,397,371 $ 17,820 $ 3,490 $ 3,411,701 States and political subdivisions -- general obligations 385,184 12,334 - 397,518 States and political subdivisions -- special revenue 275,285 14,911 - 290,196 Corporate 23,386,078 205,075 315,194 23,275,959 Total fixed maturities $ 27,443,918 $ 250,140 $ 318,684 $ 27,375,374 December 31, 2015: Fixed maturities: U.S. government obligations $ 3,256,704 $ 6,610 $ 69,815 $ 3,193,499 States and political subdivisions -- general obligations 1,001,993 - 6,942 995,051 States and political subdivisions -- special revenue 275,333 - 1,997 273,336 Corporate 19,745,201 1,468 937,278 18,809,391 Total fixed maturities $ 24,279,231 $ 8,078 $ 1,016,032 $ 23,271,277 The Company has five Amortized Estimated Cost Fair Value Credit Rating September 30, 2016: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 111,245 $ 116,321 AA+ Longview Washington Refunding 163,969 166,971 NR Memphis Tenn 109,970 114,226 AA States and political subdivisions -- special revenue Philadelphia PA Auth For Indl Dev City Svc Agreement 149,398 154,953 AA Riviera Beach FLA Pub Impt Rev 100,399 109,628 AA Total $ 634,981 $ 662,099 The following table summarizes, for all securities in an unrealized loss position at September 30, 2016 and December 31, 2015, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position. September 30, 2016 December 31, 2015 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities Fair Value Loss Securities Fixed Maturities: Less than 12 months: U.S. government obligations $ 1,799,558 $ 3,490 8 $ 2,484,188 $ 62,343 14 States and political subdivisions -- general obligations - - - 660,569 5,004 5 States and political subdivisions -- special revenue - - - 248,146 1,618 2 Corporate 10,479,113 180,456 48 15,320,916 796,204 97 Greater than 12 months: U.S. government obligations - - - 305,055 7,472 3 States and political subdivisions -- general obligations - - - 334,481 1,938 1 States and political subdivisions -- special revenue - - - 25,190 379 1 Corporate 2,630,059 134,738 12 3,166,108 141,074 22 Total fixed maturities $ 14,908,730 $ 318,684 68 $ 22,544,653 $ 1,016,032 145 Based on our review of the securities in an unrealized loss position at September 30, 2016 and December 31, 2015, no other-than-temporary impairments were deemed necessary. Management believes that the Company will fully recover its cost basis in the securities held at September 30, 2016, and management does not have the intent to sell nor is it more likely than not that the Company will be required to sell such securities until they recover or mature. The temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. The amortized cost and estimated fair value of fixed maturities at September 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Estimated Cost Fair Value Due in one year or less $ - $ - Due after one year through five years 1,329,264 1,333,666 Due after five years through ten years 13,573,316 13,559,392 Due after ten years 12,541,338 12,482,316 $ 27,443,918 $ 27,375,374 The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. At September 30, 2016 and December 31, 2015, these required deposits had a total amortized cost of $7,958,319 and $6,186,865 and fair values of $7,951,180 and $6,000,376, respectively. The components of net investment income for the three and nine months ended September 30, 2016 and 2015 are as follows: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Fixed maturities $ 218,689 $ 167,947 $ 635,840 $ 488,562 Equity securities - - 5,250 186 Other 16,488 2,416 43,775 32,834 235,177 170,363 684,865 521,582 Less investment expenses (15,399 ) (12,677 ) (50,181 ) (51,501 ) Investment income, net of expenses $ 219,778 $ 157,686 $ 634,684 $ 470,081 Proceeds for the three months ended September 30, 2016 and 2015 from sales of investments classified as available-for-sale were $4,868,073 and $3,108,704, respectively. Gross gains of $96,696 and $28,366 and gross losses of $629 and $44,454 were realized on those sales during the three months ended September 30, 2016 and 2015, respectively. Proceeds for the nine months ended September 30, 2016 and 2015 from sales of investments classified as available-for-sale were $12,384,674 and $10,274,724, respectively. Gross gains of $166,349 and $146,767 and gross losses of $56,526 and $159,150 were realized on those sales during the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, all mortgage loans were sold. The following table summarizes the activity in the mortgage loans on real estate, held for investment account for the periods ended September 30, 2016 and December 31, 2015. Nine Year ended September December 31, 2015 Balance at beginning of period $ - $ 349,386 Proceeds from settlement on mortgage loans on real estate, held for investment - (349,386 ) Balance at end of period $ - $ - |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
Fair Values of Financial Instruments | Note 5. Fair Values of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entitys own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: ● Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ● Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ● Level 3: Significant unobservable inputs that reflect a reporting entitys own assumptions about the assumptions that market participants would use in pricing an asset or liability. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the period in which the reclassifications occur. A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Fixed maturities: Fixed maturities are recorded at fair value on a recurring basis utilizing a third-party pricing source. The valuations are reviewed and validated quarterly through random testing by comparisons to separate pricing models or other third party pricing services. For the period ended September 30, 2016, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third party prices were changed from the values received. Securities with prices based on validated quotes from pricing services are reflected within Level 2. Cost method investments: The cost method investments are comprised of New Mexico Capital Corporation. This security has no active trading and the fair value for this security is not readily determinable. Therefore, this investment has been omitted from the fair value disclosure tables. Cash: The carrying value of cash and cash equivalents and short-term investments approximate the fair value because of the short maturity of the instruments. Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value. Policy loans are categorized as Level 3 in the fair value hierarchy. Deposit-type contracts: The fair value for direct and assumed liabilities under deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach. Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and nonperformance risk of the liabilities. These Surplus notes: The fair value for surplus notes is calculated using a discounted cash flow approach. Cash flows are projected utilizing scheduled repayments and discounted to the valuation date using market rates currently available for debt with similar remaining maturities. These notes are structured such that all interest is paid at maturity. In the following fair value tables, the Company has included accrued interest expense, which is recorded in the accounts payable and accrued expenses, of approximately $253,785 and $229,405 in carrying value of the surplus notes as of September 30, 2016 and December 31, 2015, respectively. These liabilities are categorized as Level 3 in the fair value hierarchy. The following table presents the Companys fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015. Significant Quoted Other Significant In Active Observable Unobservable Estimated Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value September 30, 2016 Fixed maturities: U.S. government obligations $ - $ 3,411,701 $ - $ 3,411,701 States and political subdivisions general obligations - 397,518 - 397,518 States and political subdivisions special revenue - 290,196 - 290,196 Corporate - 23,275,959 - 23,275,959 Total fixed maturities $ - $ 27,375,374 $ - $ 27,375,374 December 31, 2015 Fixed maturities: U.S. government obligations $ - $ 3,193,499 $ - $ 3,193,499 States and political subdivisions general obligations - 995,051 - 995,051 States and political subdivisions special revenue - 273,336 - 273,336 Corporate - 18,809,391 - 18,809,391 $ - $ 23,271,277 $ - $ 23,271,277 There were no transfers of financial instruments between any levels during the nine months ended September 30, 2016 or during the year ended December 31, 2015. Accounting standards require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis are discussed above. There were no financial assets or financial liabilities measured at fair value on a non-recurring basis. Equity securities carried at cost are privately purchased common stocks. These common stocks are recorded using the cost basis of accounting. These securities have no active trading and the fair value for these securities is not readily determinable. The Company does not control these entities economically, and therefore does not consolidate these entities. The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy, for financial assets and financial liabilities as of September 30, 2016 and December 31, 2015, respectively: September 30, 2016 Fair Value Measurements at Date Using Quoted Prices in Active Markets for Identical Significant Other Significant Assets and Observable Unobservable Carrying Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 400,393 $ - $ - $ 400,393 $ 400,393 Cash and cash equivalents 2,390,031 2,390,031 - - 2,390,031 Liabilities: Policyholder deposits (Deposit-type contracts) 15,361,883 - - 15,361,883 15,361,883 Surplus notes and accrued interest payable 803,785 - - 800,450 800,450 December 31, 2015 Fair Value Measurements at Date Using Quoted Prices in Active Markets for Identical Significant Other Significant Assets and Observable Unobservable Carrying Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 420,775 $ - $ - $ 420,775 $ 420,775 Cash and cash equivalents 1,192,336 1,192,336 - - 1,192,336 Liabilities: Policyholder deposits (Deposit-type contracts) 13,897,421 - - 13,897,421 13,897,421 Surplus notes and accrued interest payable 779,405 - - 768,022 768,022 |
Income Tax Matters
Income Tax Matters | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Matters | Note 6. Income Tax Matters Significant components of the Companys deferred tax assets and liabilities as of September 30, 2016 and December 31, 2015 are as follows: September 30, 2016 December 31, 2015 Deferred tax assets: Loss carry forwards $ 9,387,518 $ 8,962,587 Capitalized costs 648,016 667,264 Unrealized losses on investments 23,305 356,495 Benefit reserves 992,978 1,071,997 Total deferred tax assets 11,051,817 11,058,343 Less valuation allowance (9,410,173 ) (9,287,024 ) Total deferred tax assets, net of valuation allowance 1,641,644 1,771,319 Deferred tax liabilities: Policy acquisition costs 563,003 593,654 Due premiums 231,519 234,468 Value of business acquired 609,122 693,297 Intangible assets 238,000 238,000 Property and equipment - 11,900 Total deferred tax liabilities 1,641,644 1,771,319 Net deferred tax assets $ - $ - At September 30, 2016 and December 31, 2015, the Company recorded a valuation allowance of $ 9,410,173 Loss carryforwards for tax purposes as of September 30, 2016, have expiration dates that range from 2024 through 2035. There was no income tax expense for the three or nine months ended September 30, 2016 and 2015. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% to pretax income, as a result of the following: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Computed expected income tax benefit $ 60,566 $ (159,751 ) $ (513,692 ) $ (704,841 ) Increase (reduction) in income taxes resulting from: Meals, entertainment and political contributions 7,753 - 26,508 24,084 Dividends received deduction 1,250 7,550 1,250 (44 ) Other 4,529 160,280 29,595 419,501 13,532 167,830 57,353 443,541 Tax benefit before valuation allowance 74,098 8,079 (456,339 ) (261,300 ) Change in valuation allowance (74,098 ) (8,079 ) 456,339 261,300 Net income tax expense $ - $ - $ - $ - |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2016 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 7. Reinsurance A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of September 30, 2016 and December 31, 2015 and for the three and nine months ended September 30, 2016 and 2015 is as follows: September 30, 2016 December 31, 2015 Balance sheets: Benefit and claim reserves assumed $ 2,492,880 $ 2,763,779 Benefit and claim reserves ceded 11,809,580 12,212,656 Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Statements of comprehensive income: Premiums assumed $ 6,301 $ 6,162 $ 18,532 $ 19,830 Premiums ceded 95,126 69,005 245,400 226,375 Benefits assumed 10,539 3,206 40,697 55,165 Benefits ceded 124,503 217,543 696,159 750,036 Commissions assumed 10 2 26 12 Commissions ceded 361 875 1,649 2,729 The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer along with the A.M. Best credit rating as of September 30, 2016: Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 67,857 $ 182,176 $ - $ 250,033 Sagicor Life Insurance Company A- - 294,798 11,506,949 242,200 11,559,547 $ - $ 362,655 $ 11,689,125 $ 242,200 $ 11,809,580 During 1999, Old Reliance entered into a 75% coinsurance agreement with Sagicor Life (Sagicor) whereby 75% of the business written by Old Reliance is ceded to Sagicor. During 2000, Old Reliance coinsured the remaining 25% with Sagicor. At September 30, 2016 and December 31, 2015 total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by Old Reliance to Sagicor were $11,559,547 The use of reinsurance does not relieve the Company of its primary liability to pay the full amount of the insurance benefit in the event of the failure of a reinsurer to honor its contractual obligation. No reinsurer of business ceded by the Company has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business. The Company monitors several factors that it considers relevant to satisfy itself as to the ongoing ability of a reinsurer to meet all obligations of the reinsurance agreements. These factors include the credit rating of the reinsurer, the financial strength of the reinsurer, significant changes or events of the reinsurer, and any other relevant factors. If the Company believes that any reinsurer would not be able to satisfy its obligations with the Company, a separate contingency reserve may be established. At September 30, 2016 and December 31, 2015, no contingency reserve was established. |
Deposit-Type Contracts
Deposit-Type Contracts | 9 Months Ended |
Sep. 30, 2016 | |
Separate Accounts Disclosure [Abstract] | |
Deposit-Type Contracts | Note 8. Deposit-Type Contracts The Companys deposit-type contracts represent the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. Liabilities for these deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deposit-type contracts for nine months ended September 30, 2016 and year ended December 31, 2015: Nine Months Ended Year Ended September 30, 2016 December 31, 2015 Beginning balance $ 13,897,421 $ 10,722,227 First Wyoming Life beginning balance - 799,990 Change in deposit-type contracts assumed from SNL - (1,200 ) Deposits received 1,786,850 2,387,104 Investment earnings 548,556 533,646 Withdrawals (865,329 ) (533,762 ) Contract Charges (5,615 ) (10,584 ) Ending Balance $ 15,361,883 $ 13,897,421 Under the terms of American Lifes coinsurance agreement with SNL, American Life assumes certain deposit-type contract obligations, as shown in the table above. The remaining deposits, withdrawals and interest credited represent those for American Lifes direct business. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9. Commitments and Contingencies Legal Proceedings: We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of our business, and we are not aware of any claims that could materially affect our financial position or results of operations. Regulatory Matters : State and federal regulatory bodies regularly make inquiries and conduct examinations or investigations concerning the Companys compliance with laws in relation to, but not limited to, insurance and securities. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries. Office Lease: The Company leases office space in Lincoln, Nebraska under an agreement executed October 17, 2013 that expires on January 31, 2024. Great Plains entered into a lease on October 4, 2013 for office space in Mitchell, South Dakota, which expires on November 30, 2016. First Wyoming leased space in Cheyenne, Wyoming, which expired on August 31, 2016. Rent expense for the three months ended September 30, 2016 and 2015 was $65,933 and $52,125 respectively. Rent expense for the nine months ended September 30, 2016 and 2015 was $238,976 and $163,877 respectively. Future minimum payments rental are as follows: 2016 $ 42,547 2017 149,481 2018 136,557 2019 141,412 2020 146,477 Later years 483,333 Total $ 1,099,807 |
Statutory Net Income and Surplu
Statutory Net Income and Surplus | 9 Months Ended |
Sep. 30, 2016 | |
Statutory Net Income and Surplus [Abstract] | |
Statutory Net Income and Surplus | Note 10. Statutory Net Income and Surplus American Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Nebraska Department of Insurance. Likewise, Great Plains Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the South Dakota Department of Insurance. Statutory practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. First Wyoming Life merged with 2015 and September 30, 2015 in the table below filing. The Statutory Capital and Surplus as of September 30, 2016 December 31, 2015 American Life $ 4,279,855 $ 5,241,886 Great Plains Life $ 1,514,555 $ 1,663,368 Capital Reserve Life $ - $ 1,464,044 Statutory Net Income (Loss) for the Nine months ended September 30, 2016 2015 American Life $ (1,358,777 ) $ (1,104,389 ) Great Plains Life $ (158,607 ) $ (319,807 ) Capital Reserve Life $ - $ (43,513 ) |
Surplus Notes
Surplus Notes | 9 Months Ended |
Sep. 30, 2016 | |
Surplus Notes [Abstract] | |
Surplus Notes | Note 11. Surplus Notes The following provides a summary of the Companys surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of September 30, 2016: Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 1, 2006 September 1, 2016 $ 250,000 7% David G. Elmore August 4, 2011 August 1, 2016 300,000 5% Any payments and/or repayments must be approved by the Nebraska Department of Insurance. As of September 30, 2016, the Company has accrued $253,785 of interest expense under accounts payable and accrued expenses on the consolidated balance sheet. No payments were made in the nine months ending September 30, 2016, or during the year ended December 31, 2015. The surplus notes for $300,000 and $250,000 matured on August 1, 2016 and September 1, 2016, respectively. Due to the nature of surplus notes, a repayment cannot be made without the prior approval of the Nebraska insurance regulators. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12. Related Party Transactions The Company commenced its third party administrative (TPA) services in 2012 as an additional revenue source. These agreements, for various levels of administrative services on behalf of each customer, generate fee income for the Company. Services provided to each customer vary based on their needs and can include some or all aspects of back-office accounting and policy administration. We have been able to perform our TPA services using our existing in-house resources. Fees earned during the three months ended September 30, 2016 and 2015 were $19,000 and $44,419, respectively. Fees earned during the nine months ended September 30, 2016 and 2015 were $47,000 and $140,013, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events All of the effects of subsequent events that provide additional evidence about conditions that existed at September 30, 2016, including the estimates inherent in the process of preparing consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the date of the consolidated financial statements but arose after, but before the consolidated financial statements were available to be issued. In some cases, non-recognized subsequent events are disclosed to keep the consolidated financial statements from being misleading. The Company has evaluated subsequent events through the date that the consolidated financial statements were issued and found no events to report. |
Nature of Operations and Summ19
Nature of Operations and Summary of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (GAAP) for interim financial information and with the instructions from the Securities and Exchange Commission (SEC) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015 In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Companys results. Operating results for the nine month period ended September 30, 2016, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. All material inter-company accounts and transactions have been eliminated in consolidation . |
Investments | Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method (calculated by multiplying the adjusted basis by the yield at issuance and then subtracting the coupon interest) over the term of the bonds. Realized gains and losses on securities sold during the year are determined by the specific security sold. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive income (loss) Declines in the fair value of available-for-sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, we consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and the intent and ability of us to hold the investment until the recovery of the cost. The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of the other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Companys best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the nine months ended September 30, 2016 or 2015. Investment income consists of interest, dividends, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. Included within the Companys equity securities are certain privately purchased common stocks. These investments are recorded using the cost basis method of accounting. These securities do not have a readily determinable fair value. Losses related to equity method investments relates |
Policy loans | Policy loans: Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value. |
Real estate, held for investment | Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years. |
Cash and cash equivalents | Cash and cash equivalents: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At September 30, 2016 and December 31, 2015, the Company had no cash equivalents. The Company has cash on deposit with financial institutions which at times may exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not suffered any losses in the past and does not believe it is exposed to any significant credit risk in these balances. |
Deferred acquisition costs | Deferred acquisition costs: Deferred acquisition costs (DAC) Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. The Company performs a recoverability analysis annually in the fourth quarter of its fiscal year unless events occur which require an immediate review. The Company determined during its December 31, 2015 analysis that all deferred acquisition costs were recoverable. The following table provides information about deferred acquisition costs for the periods ended September 30, 2016 and December 31, 2015, respectively. Nine Months Ended Year Ended September 30, December 31, 2016 2015 Balance at beginning of period $ 2,765,063 $ 2,646,970 Capitalization of commissions, sales and issue expenses 110,918 552,466 Change in DAC due to unrealized investment (gains) losses (33,588 ) 35,301 Gross amortization (270,515 ) (469,674 ) Balance at end of period $ 2,571,878 $ 2,765,063 |
Value of business acquired | Value of business acquired: American Life paid an upfront ceding commission of $375,000 to Security National Life (SNL) at the time of acquisition of Capital Reserve in a separate transaction. An initial asset was established for the value of this business acquired totaling $348,010, representing primarily the ceding commission. Midwest acquired Great Plains Financial in 2014 and established an asset for value of business acquired of $1,288,207. Midwest acquired First Wyoming Capital during 2015 and established an asset for value of business acquired of $506,600. These assets are being amortized on a straight-line basis, which approximates the earnings pattern of the related policies, over ten years. The Company recognized amortization expense of $53,570 and $43,813 for the three months ended September 30, 2016 and 2015, respectively relative to these transactions. The Company recognized amortization expense of $166,528 and $131,441 for the nine months ended September 30, 2016 and 2015, respectively related to these transactions. Additionally, American Life purchased Old Reliance in August 2011, resulting in an initial capitalized asset for value of business acquired of $824,485. This asset is being amortized over the life of the related policies (refer to revenue recognition and related expenses discussed later regarding amortization methods). Amortization recognized during the three months ended September 30, 2016 and 2015 totaled $12,168 and $14,002, respectively. Amortization recognized during the nine months ended September 30, 2016 and 2015 totaled $40,344 and $33,714, respectively. Recoverability of value of business acquired is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. If this current estimate is less than the existing balance, the difference is charged to expense. Management has determined that no events occurred in the nine months ended September 30, 2016 that suggest a review should be undertaken. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. Midwest sold Capital Reserve effective August 29, 2016 and the VOBA related to Capital Reserve was written off by American Life. The Company assesses the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Management has determined that no events occurred in the nine months ended September 30, 2016 that suggest a review should be undertaken. |
Property and equipment | Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $20,275 and $37,230 for the three months ended September 30, 2016 and 2015, respectively. Depreciation expense totaled $81,366 and $120,063 for the nine months ended September 30, 2016 and 2015, respectively. Accumulated depreciation totaled $946,370 and $864,526 as of September 30, 2016 and December 31, 2015, respectively. Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the nine months ended September 30, 2016 that would indicate the carrying amounts may not be recoverable. |
Reinsurance | Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Companys primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances as of September 30, 2016 or December 31, 2015. |
Benefit reserves | Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. |
Policy claims | Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. |
Deposit-type contracts | Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies. |
Income taxes | Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2012 |
Revenue recognition and related expenses | Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows. Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy. Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (loss) income (loss) |
Common and preferred stock and earnings (loss) per share | Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 100,000,000 shares authorized and 20,000,000 preferred shares authorized. At September 30, 2016 and December 31, 2015, the Company had 22,558,956 and 18,006,301 common shares issued and outstanding, respectively. At September 30, 2016 and December 31, 2015, the Company had 1,179 warrants outstanding. The warrants are exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share. The Class A preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). There is The Class B preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The Company may only affect a conversion through a deemed liquidation or initial public offering. The par value per preferred Class B share is $0.001 with 1,000,000 shares authorized. The stated dividend rate on the Class B preferred shares is 7%. Dividends of $45,220 and $56,057 were paid as of September 30, 2016 and December 31, 2015 respectively. At September 30, 2016, and December 31, 2015, the Company had 102,669 Class B preferred shares issued and outstanding. Earnings (loss) per share attributable to the Companys common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended September 30, 2016 and 2015 were 22,558,956 and 13,212,653 shares, respectively. The weighted average number of shares outstanding during the nine months ended September 30, 2016 and 2015 were 21,312,581 and 13,195,416 shares, respectively. |
Risks and uncertainties | Risk and uncertainties: Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our consolidated financial statements. The more significant of those risks and uncertainties, as well as the Companys method for mitigating the risks, can be referenced in the Notes to Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2105 (2015 Form 10-K), and should be read in connection with the reading of these interim unaudited consolidated financial statements. |
New accounting standards | New accounting standards: In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments Credit Losses (Topic 326) . Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments Equity Method and Joint Ventures (Topic 323). Under the new guidance, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, this ASU In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-1, Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance also changes certain disclosure requirements and other aspects of current GAAP. This guidance is effective for fiscal years beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements. Effective January 1, 2016, the Company adopted ASU No. 2015-16, Business Adjustments 2 below |
Nature of Operations and Summ20
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Policy Acquisition Costs | Nine Months Ended Year Ended September 30, December 31, 2016 2015 Balance at beginning of period $ 2,765,063 $ 2,646,970 Capitalization of commissions, sales and issue expenses 110,918 552,466 Change in DAC due to unrealized investment (gains) losses (33,588 ) 35,301 Gross amortization (270,515 ) (469,674 ) Balance at end of period $ 2,571,878 $ 2,765,063 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | Fair value of Common stock of Midwest issued as consideration $ 905,806 Fair value of Midwest's previously held equity interest in First Wyoming 221,430 $ 1,127,236 Recognized amounts of identifiable assets acquired and liabilities assumed: Investment securities $ 3,961,937 Cash 315,546 VOBA 506,600 Other assets 92,045 Benefit reserves (611,110 ) Policy claims (41,754 ) Deposit-type contracts (799,990 ) Other liabilities (64,934 ) Total identifiable net assets 3,358,340 Bargain purchase gain (2,231,104 ) $ 1,127,236 |
Schedule of Pro Forma Information | Three months ended Nine months ended September 30, 2015 September 30, 2015 (unaudited) (unaudited) Premiums $ 886,307 $ 2,980,998 Investment income 157,314 518,799 Miscellaneous income 23,094 57,844 Total income $ 1,066,715 $ 3,557,641 Net loss $ (759,888 ) $ (2,778,616 ) |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Marketable Securities [Abstract] | |
Schedule of Available for Sale Investments | Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value September 30, 2016: Fixed maturities: U.S. government obligations $ 3,397,371 $ 17,820 $ 3,490 $ 3,411,701 States and political subdivisions -- general obligations 385,184 12,334 - 397,518 States and political subdivisions -- special revenue 275,285 14,911 - 290,196 Corporate 23,386,078 205,075 315,194 23,275,959 Total fixed maturities $ 27,443,918 $ 250,140 $ 318,684 $ 27,375,374 December 31, 2015: Fixed maturities: U.S. government obligations $ 3,256,704 $ 6,610 $ 69,815 $ 3,193,499 States and political subdivisions -- general obligations 1,001,993 - 6,942 995,051 States and political subdivisions -- special revenue 275,333 - 1,997 273,336 Corporate 19,745,201 1,468 937,278 18,809,391 Total fixed maturities $ 24,279,231 $ 8,078 $ 1,016,032 $ 23,271,277 |
Schedule of Amortized Cost, Fair Value, Credit Rating | Amortized Estimated Cost Fair Value Credit Rating September 30, 2016: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 111,245 $ 116,321 AA+ Longview Washington Refunding 163,969 166,971 NR Memphis Tenn 109,970 114,226 AA States and political subdivisions -- special revenue Philadelphia PA Auth For Indl Dev City Svc Agreement 149,398 154,953 AA Riviera Beach FLA Pub Impt Rev 100,399 109,628 AA Total $ 634,981 $ 662,099 |
Schedule of Unrealized Loss of Securities | September 30, 2016 December 31, 2015 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities Fair Value Loss Securities Fixed Maturities: Less than 12 months: U.S. government obligations $ 1,799,558 $ 3,490 8 $ 2,484,188 $ 62,343 14 States and political subdivisions -- general obligations - - - 660,569 5,004 5 States and political subdivisions -- special revenue - - - 248,146 1,618 2 Corporate 10,479,113 180,456 48 15,320,916 796,204 97 Greater than 12 months: U.S. government obligations - - - 305,055 7,472 3 States and political subdivisions -- general obligations - - - 334,481 1,938 1 States and political subdivisions -- special revenue - - - 25,190 379 1 Corporate 2,630,059 134,738 12 3,166,108 141,074 22 Total fixed maturities $ 14,908,730 $ 318,684 68 $ 22,544,653 $ 1,016,032 145 |
Schedule of Fixed Maturities | Amortized Estimated Cost Fair Value Due in one year or less $ - $ - Due after one year through five years 1,329,264 1,333,666 Due after five years through ten years 13,573,316 13,559,392 Due after ten years 12,541,338 12,482,316 $ 27,443,918 $ 27,375,374 |
Components of Net Investment Income | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Fixed maturities $ 218,689 $ 167,947 $ 635,840 $ 488,562 Equity securities - - 5,250 186 Other 16,488 2,416 43,775 32,834 235,177 170,363 684,865 521,582 Less investment expenses (15,399 ) (12,677 ) (50,181 ) (51,501 ) Investment income, net of expenses $ 219,778 $ 157,686 $ 634,684 $ 470,081 |
Schedule of Mortgage Loan Activity | Nine Year ended September December 31, 2015 Balance at beginning of period $ - $ 349,386 Proceeds from settlement on mortgage loans on real estate, held for investment - (349,386 ) Balance at end of period $ - $ - |
Fair Values of Financial Inst23
Fair Values of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis | Significant Quoted Other Significant In Active Observable Unobservable Estimated Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value September 30, 2016 Fixed maturities: U.S. government obligations $ - $ 3,411,701 $ - $ 3,411,701 States and political subdivisions general obligations - 397,518 - 397,518 States and political subdivisions special revenue - 290,196 - 290,196 Corporate - 23,275,959 - 23,275,959 Total fixed maturities $ - $ 27,375,374 $ - $ 27,375,374 December 31, 2015 Fixed maturities: U.S. government obligations $ - $ 3,193,499 $ - $ 3,193,499 States and political subdivisions general obligations - 995,051 - 995,051 States and political subdivisions special revenue - 273,336 - 273,336 Corporate - 18,809,391 - 18,809,391 $ - $ 23,271,277 $ - $ 23,271,277 |
Schedule of Financial Assets and Liabilities at Fair Value | September 30, 2016 Fair Value Measurements at Date Using Quoted Prices in Active Markets for Identical Significant Other Significant Assets and Observable Unobservable Carrying Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 400,393 $ - $ - $ 400,393 $ 400,393 Cash and cash equivalents 2,390,031 2,390,031 - - 2,390,031 Liabilities: Policyholder deposits (Deposit-type contracts) 15,361,883 - - 15,361,883 15,361,883 Surplus notes and accrued interest payable 803,785 - - 800,450 800,450 December 31, 2015 Fair Value Measurements at Date Using Quoted Prices in Active Markets for Identical Significant Other Significant Assets and Observable Unobservable Carrying Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 420,775 $ - $ - $ 420,775 $ 420,775 Cash and cash equivalents 1,192,336 1,192,336 - - 1,192,336 Liabilities: Policyholder deposits (Deposit-type contracts) 13,897,421 - - 13,897,421 13,897,421 Surplus notes and accrued interest payable 779,405 - - 768,022 768,022 |
Income Tax Matters (Tables)
Income Tax Matters (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | September 30, 2016 December 31, 2015 Deferred tax assets: Loss carry forwards $ 9,387,518 $ 8,962,587 Capitalized costs 648,016 667,264 Unrealized losses on investments 23,305 356,495 Benefit reserves 992,978 1,071,997 Total deferred tax assets 11,051,817 11,058,343 Less valuation allowance (9,410,173 ) (9,287,024 ) Total deferred tax assets, net of valuation allowance 1,641,644 1,771,319 Deferred tax liabilities: Policy acquisition costs 563,003 593,654 Due premiums 231,519 234,468 Value of business acquired 609,122 693,297 Intangible assets 238,000 238,000 Property and equipment - 11,900 Total deferred tax liabilities 1,641,644 1,771,319 Net deferred tax assets $ - $ - |
Schedule of Effective Tax Rate Reconciliation | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Computed expected income tax benefit $ 60,566 $ (159,751 ) $ (513,692 ) $ (704,841 ) Increase (reduction) in income taxes resulting from: Meals, entertainment and political contributions 7,753 - 26,508 24,084 Dividends received deduction 1,250 7,550 1,250 (44 ) Other 4,529 160,280 29,595 419,501 13,532 167,830 57,353 443,541 Tax benefit before valuation allowance 74,098 8,079 (456,339 ) (261,300 ) Change in valuation allowance (74,098 ) (8,079 ) 456,339 261,300 Net income tax expense $ - $ - $ - $ - |
Reinsurance (Tables)
Reinsurance (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Reinsurance Disclosures [Abstract] | |
Summary of Significant Reinsurance Amounts | September 30, 2016 December 31, 2015 Balance sheets: Benefit and claim reserves assumed $ 2,492,880 $ 2,763,779 Benefit and claim reserves ceded 11,809,580 12,212,656 Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Statements of comprehensive income: Premiums assumed $ 6,301 $ 6,162 $ 18,532 $ 19,830 Premiums ceded 95,126 69,005 245,400 226,375 Benefits assumed 10,539 3,206 40,697 55,165 Benefits ceded 124,503 217,543 696,159 750,036 Commissions assumed 10 2 26 12 Commissions ceded 361 875 1,649 2,729 |
Schedule of Significant Reinsurance Balances | Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 67,857 $ 182,176 $ - $ 250,033 Sagicor Life Insurance Company A- - 294,798 11,506,949 242,200 11,559,547 $ - $ 362,655 $ 11,689,125 $ 242,200 $ 11,809,580 |
Deposit-Type Contracts (Tables)
Deposit-Type Contracts (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deposit Type Contracts [Abstract] | |
Schedule of Contracts | Nine Months Ended Year Ended September 30, 2016 December 31, 2015 Beginning balance $ 13,897,421 $ 10,722,227 First Wyoming Life beginning balance - 799,990 Change in deposit-type contracts assumed from SNL - (1,200 ) Deposits received 1,786,850 2,387,104 Investment earnings 548,556 533,646 Withdrawals (865,329 ) (533,762 ) Contract Charges (5,615 ) (10,584 ) Ending Balance $ 15,361,883 $ 13,897,421 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments | 2016 $ 42,547 2017 149,481 2018 136,557 2019 141,412 2020 146,477 Later years 483,333 Total $ 1,099,807 |
Statutory Net Income and Surp28
Statutory Net Income and Surplus (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Statutory Net Income and Surplus [Abstract] | |
Statutory Accounting Practices Disclosure | Statutory Capital and Surplus as of September 30, 2016 December 31, 2015 American Life $ 4,279,855 $ 5,241,886 Great Plains Life $ 1,514,555 $ 1,663,368 Capital Reserve Life $ - $ 1,464,044 Statutory Net Income (Loss) for the Nine months ended September 30, 2016 2015 American Life $ (1,358,777 ) $ (1,104,389 ) Great Plains Life $ (158,607 ) $ (319,807 ) Capital Reserve Life $ - $ (43,513 ) |
Surplus Notes (Tables)
Surplus Notes (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Surplus Notes [Abstract] | |
Summary of Surplus Notes | Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 1, 2006 September 1, 2016 $ 250,000 7% David G. Elmore August 4, 2011 August 1, 2016 300,000 5% |
Nature of Operations and Summ30
Nature of Operations and Summary of Significant Accounting Policies (Schedule of Deferred Acquisition Costs) (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Balance at beginning of period | $ 2,765,063 | $ 2,646,970 | $ 2,646,970 |
Capitalization of commissions, sales and issue expenses | 110,918 | 552,466 | |
Change in DAC due to unrealized investment (gains) losses | (33,588) | 35,301 | |
Gross amortization | (270,515) | $ (373,132) | (469,674) |
Balance at the end of period | $ 2,571,878 | $ 2,765,063 |
Nature of Operations and Summ31
Nature of Operations and Summary of Significant Accounting Policies (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 29, 2016USD ($) | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2010USD ($) | Aug. 31, 2011USD ($) | |
Insurance Ceding Commission Paid | $ 375,000 | |||||||
Business Acquisition, Asset Representing Ceding Commission | 348,010 | |||||||
Preferred stock, shares authorized (in shares) | shares | 20,000,000 | 20,000,000 | 20,000,000 | |||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Common stock, shares authorized | shares | 100,000,000 | 100,000,000 | 100,000,000 | |||||
Common stock, shares issued (in shares) | shares | 22,558,956 | 22,558,956 | 18,006,301 | |||||
Common stock, shares outstanding (in shares) | shares | 22,558,956 | 22,558,956 | 18,006,301 | |||||
Warrants outstanding | shares | 1,179 | 1,179 | 1,179 | |||||
Number of shares of voting common stock issuable upon exercise of warrant | shares | 10 | 10 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 6.50 | $ 6.50 | ||||||
Weighted Average Number of Shares Outstanding, Basic (in shares) | shares | 22,558,956 | 13,212,653 | 21,312,581 | 13,195,416 | ||||
Depreciation | $ 20,275 | $ 37,230 | $ 81,366 | $ 120,063 | ||||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 946,370 | 946,370 | $ 864,526 | |||||
Value of business acquired | 1,791,534 | 1,791,534 | $ 2,039,110 | 1,288,207 | ||||
Preferred stock dividend | 45,220 | 56,057 | ||||||
American Life and Security Corporation [Member] | ||||||||
Loss on sale of business | $ (40,714) | |||||||
Great Plains Financial and First Wyoming Capital [Member] | ||||||||
Amortization/Accretion of Other Deferred Charges | $ 53,570 | 43,813 | $ 166,528 | 131,441 | ||||
Capital Reserve Life Insurance Company [Member] | ||||||||
Cost Of Acquired Entity In Addition To Statutory Capital and Surplus | $ 116,326 | |||||||
Series B Preferred Stock [Member] | ||||||||
Conversion Ratio | 2 | |||||||
Preferred Stock, Shares Issued (in shares) | shares | 102,669 | 102,669 | 102,669 | |||||
Stated dividend rate | 7.00% | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | shares | 1,000,000 | 1,000,000 | 1,000,000 | |||||
Preferred stock, shares outstanding (in shares) | shares | 102,669 | 102,669 | 102,669 | |||||
Preferred stock dividend | $ 45,220 | $ 56,057 | ||||||
Series A Preferred Stock [Member] | ||||||||
Conversion Ratio | 1.3 | |||||||
Preferred Stock, Shares Issued (in shares) | shares | 74,159 | 74,159 | 74,159 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | shares | 2,000,000 | 2,000,000 | 2,000,000 | |||||
Preferred stock, shares outstanding (in shares) | shares | 74,159 | 74,159 | 74,159 | |||||
Computer Software, Intangible Asset [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Furniture and Fixtures [Member] | Minimum [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Furniture and Fixtures [Member] | Maximum [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||||
Residential Real Estate [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 50 years | |||||||
Old Reliance [Member] | ||||||||
Value of business acquired | $ 824,485 | |||||||
Amortization/Accretion of Other Deferred Charges | $ 12,168 | 14,002 | $ 40,344 | $ 33,714 | ||||
First Wyoming Life Insurance Company [Member] | ||||||||
Finite-Lived Intangible Assets, Remaining Amortization Period | 10 years | |||||||
Value of business acquired | 506,600 | $ 506,600 | ||||||
Amortization/Accretion of Other Deferred Charges | $ 12,665 | $ 12,665 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 31, 2015USD ($)shares | Dec. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)shares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Oct. 27, 2015USD ($) | |
Business Acquisition [Line Items] | ||||||||
Accumulated other comprehensive loss | $ (1,013,213) | $ (66,831) | $ (66,831) | $ (1,013,213) | ||||
Loss on equity method investment | (420,720) | $ (79,000) | (420,720) | $ (95,650) | ||||
Bargain purchase gain for business acquisition | 1,326,526 | 1,326,526 | $ 904,578 | |||||
Total Income | 680,716 | 935,578 | 2,964,910 | 3,206,377 | ||||
Net income (loss) | 178,137 | (469,857) | $ (1,510,858) | (2,073,062) | ||||
First Wyoming Life Insurance Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Elimination of TPA fees | 30,919 | |||||||
Amortization of Other Deferred Charges | 12,665 | 12,665 | ||||||
Voting common stock | $ 905,806 | |||||||
Expected long term growth | 3.00% | |||||||
Discount rate | 18.00% | |||||||
Capitalization rate | 13.00% | |||||||
Elimination of Midwest investment in First Wyoming | $ 221,430 | |||||||
Loss on equity method investment | $ (79,000) | |||||||
Northstar Financial Corporation [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Conversion Ratio | 1.27 | |||||||
Shares converted | shares | 4,553,000 | |||||||
First Wyoming Life Insurance Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Conversion Ratio | 1.37 | |||||||
Shares converted | shares | 4,767,400 | |||||||
Ownership percentage acquired | 100.00% | |||||||
Elimination of TPA fees | 95,513 | |||||||
Amortization of Other Deferred Charges | $ 37,995 | 37,995 | ||||||
Voting common stock | $ 1,811,612 | |||||||
Expected long term growth | 3.00% | |||||||
Discount rate | 16.00% | |||||||
Capitalization rate | 13.00% | |||||||
Ownership percentage prior to acquisition | 22.10% | |||||||
Equity method investments | $ 810,500 | |||||||
Accumulated other comprehensive loss | 30,410 | |||||||
Loss on equity interest | $ (619,480) | |||||||
Elimination of Midwest investment in First Wyoming | 642,150 | |||||||
Loss on equity method investment | (198,760) | $ (95,650) | ||||||
Bargain purchase gain for business acquisition | $ 2,231,104 | |||||||
Acquisition costs | $ 123,219 | |||||||
Total Income | 71,165 | |||||||
Net income (loss) | $ (73,939) | |||||||
First Wyoming Life Insurance Company [Member] | Minimum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 3.00% | 3.00% | ||||||
First Wyoming Life Insurance Company [Member] | Maximum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 16.00% | 13.00% |
Acquisitions (Schedule of Asset
Acquisitions (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 31, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Bargain purchase gain | $ (1,326,526) | $ (1,326,526) | $ (904,578) | |||
First Wyoming Life Insurance Company [Member] | ||||||
Fair value of Common stock of Midwest issued as consideration | 905,806 | |||||
Fair value of Midwest's previously held equity interest in First Wyoming | 221,430 | |||||
Total consideration | $ 1,127,236 | |||||
First Wyoming Life Insurance Company [Member] | ||||||
Fair value of Common stock of Midwest issued as consideration | $ 1,811,612 | |||||
Fair value of Midwest's previously held equity interest in First Wyoming | 642,150 | |||||
Investment securities | 3,961,937 | |||||
Cash | 315,546 | |||||
VOBA | 506,600 | |||||
Other assets | 92,045 | |||||
Benefit reserves | (611,110) | |||||
Policy claims | (41,754) | |||||
Deposit-type contracts | (799,990) | |||||
Other liabilities | (64,934) | |||||
Total identifiable net assets | 3,358,340 | |||||
Bargain purchase gain | $ (2,231,104) |
Acquisitions (Schedule of Pro F
Acquisitions (Schedule of Pro Forma Information) (Details) - First Wyoming Life Insurance Company [Member] - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Business Acquisition [Line Items] | ||
Premiums | $ 886,307 | $ 2,980,998 |
Investment income | 157,314 | 518,799 |
Miscellaneous income | 23,094 | 57,844 |
Total income | 1,066,715 | 3,557,641 |
Net loss | $ (759,888) | $ (2,778,616) |
Assets and Liabilities Held f35
Assets and Liabilities Held for Sale (Details) - USD ($) | 1 Months Ended | ||
Aug. 29, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Assets of discontinued operations | $ 16,870,241 | ||
Liabilities of discontinued operations | $ 15,508,998 | ||
Capital Reserve Life Insurance Company [Member] | |||
Total purchase price | $ 1,432,446 | ||
Gain (loss) on sale of business | 26,000 | ||
Cash over book value | 50,000 | ||
Realized gain on fair market value bonds | 17,000 | ||
American Life and Security Corporation [Member] | |||
Gain (loss) on sale of business | $ (40,714) |
Investments (Schedule of Availa
Investments (Schedule of Available for Sale Investments) (Details) - Fixed Maturities [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Amortized Cost | $ 27,443,918 | $ 24,279,231 |
Gross Unrealized Gains | 250,140 | 8,078 |
Gross Unrealized Losses | 318,684 | 1,016,032 |
Estimated Fair Value | 27,375,374 | 23,271,277 |
States and Political Subdivisions General Obligations [Member] | ||
Amortized Cost | 385,184 | 1,001,993 |
Gross Unrealized Gains | 12,334 | |
Gross Unrealized Losses | 6,942 | |
Estimated Fair Value | 397,518 | 995,051 |
States and Political Subdivisions Special Revenue [Member] | ||
Amortized Cost | 275,285 | 275,333 |
Gross Unrealized Gains | 14,911 | |
Gross Unrealized Losses | 1,997 | |
Estimated Fair Value | 290,196 | 273,336 |
Corporate Debt Securities [Member] | ||
Amortized Cost | 23,386,078 | 19,745,201 |
Gross Unrealized Gains | 205,075 | 1,468 |
Gross Unrealized Losses | 315,194 | 937,278 |
Estimated Fair Value | 23,275,959 | 18,809,391 |
Us Treasury and Government [Member] | ||
Amortized Cost | 3,397,371 | 3,256,704 |
Gross Unrealized Gains | 17,820 | 6,610 |
Gross Unrealized Losses | 3,490 | 69,815 |
Estimated Fair Value | $ 3,411,701 | $ 3,193,499 |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Fair Value, Credit Rating) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Amortized Cost | $ 27,443,918 | $ 24,279,231 |
Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | 634,981 | |
Estimated Fair Value | 662,099 | |
Longview Washington Refunding Taxable [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | 163,969 | |
Estimated Fair Value | $ 166,971 | |
Credit Rating | NR | |
Memphis Tennessee [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | $ 109,970 | |
Estimated Fair Value | $ 114,226 | |
Credit Rating | AA | |
Philadelphia PA Authority for Industrial [Member] | States and Political Subdivisions Special Revenue [Member] | Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | $ 149,398 | |
Estimated Fair Value | $ 154,953 | |
Credit Rating | AA | |
Bellingham Washington [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | $ 111,245 | |
Estimated Fair Value | $ 116,321 | |
Credit Rating | AA+ | |
Riviera Beach Florida [Member] | States and Political Subdivisions Special Revenue [Member] | Us States and Political Subdivisions Debt Securities [Member] | ||
Amortized Cost | $ 100,399 | |
Estimated Fair Value | $ 109,628 | |
Credit Rating | AA |
Investments (Schedule of Unreal
Investments (Schedule of Unrealized Loss of Securities) (Details) - Fixed Maturities [Member] | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Estimated Fair Value, Total | $ 14,908,730 | $ 22,544,653 |
Gross Unrealized Loss, Total | $ 318,684 | $ 1,016,032 |
Number of Securities, Total | 68 | 145 |
Us Treasury and Government [Member] | ||
Estimated Fair Value, Less than 12 months | $ 1,799,558 | $ 2,484,188 |
Gross Unrealized Loss, Less than 12 months | $ 3,490 | $ 62,343 |
Number of Securities, Less than 12 months | 8 | 14 |
Estimated Fair value, Greater than 12 months | $ 305,055 | |
Gross Unrealized Loss, Greater than 12 months | $ 7,472 | |
Number of Securities, Greater than 12 months | 3 | |
States and Political Subdivisions General Obligations [Member] | ||
Estimated Fair Value, Less than 12 months | $ 660,569 | |
Gross Unrealized Loss, Less than 12 months | $ 5,004 | |
Number of Securities, Less than 12 months | 5 | |
Estimated Fair value, Greater than 12 months | $ 334,481 | |
Gross Unrealized Loss, Greater than 12 months | $ 1,938 | |
Number of Securities, Greater than 12 months | 1 | |
States and Political Subdivisions Special Revenue [Member] | ||
Estimated Fair Value, Less than 12 months | $ 248,146 | |
Gross Unrealized Loss, Less than 12 months | $ 1,618 | |
Number of Securities, Less than 12 months | 2 | |
Estimated Fair value, Greater than 12 months | $ 25,190 | |
Gross Unrealized Loss, Greater than 12 months | $ 379 | |
Number of Securities, Greater than 12 months | 1 | |
Corporate Debt Securities [Member] | ||
Estimated Fair Value, Less than 12 months | 10,479,113 | $ 15,320,916 |
Gross Unrealized Loss, Less than 12 months | $ 180,456 | $ 796,204 |
Number of Securities, Less than 12 months | 48 | 97 |
Estimated Fair value, Greater than 12 months | $ 2,630,059 | $ 3,166,108 |
Gross Unrealized Loss, Greater than 12 months | $ 134,738 | $ 141,074 |
Number of Securities, Greater than 12 months | 12 | 22 |
Investments (Schedule of Fixed
Investments (Schedule of Fixed Maturities) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Marketable Securities [Abstract] | ||
Amortized Cost, Due in one year or less | ||
Amortized Cost, Due after one year through five years | 1,329,264 | |
Amortized Cost, Due after five years through ten years | 13,573,316 | |
Amortized Cost, Due after ten years | 12,541,338 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost | 27,443,918 | $ 24,279,231 |
Estimated Fair Value, Due in one year or less | ||
Estimated Fair Value, Due after one year through five years | 1,333,666 | |
Estimated Fair Value, Due after five years through ten years | 13,559,392 | |
Estimated Fair Value, Due after ten years | 12,482,316 | |
Available-for-sale Securities, Debt Securities, Estimated Fair Value | $ 27,375,374 | $ 23,271,277 |
Investments (Components of Net
Investments (Components of Net Investment Income) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net investment income | $ 235,177 | $ 170,363 | $ 684,865 | $ 521,582 |
Less investment expenses | (15,399) | (12,677) | (50,181) | (51,501) |
Total | 219,778 | 157,686 | 634,684 | 470,081 |
Other Long Term Investment [Member] | ||||
Net investment income | 16,488 | 2,416 | 43,775 | 32,834 |
Equity Securities [Member] | ||||
Net investment income | 5,250 | 186 | ||
Fixed Maturities [Member] | ||||
Net investment income | 218,689 | $ 167,947 | $ 635,840 | $ 488,562 |
Equity Method Investments [Member] | ||||
Net investment income |
Investments (Schedule of Mortga
Investments (Schedule of Mortgage Loan Activity) (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Marketable Securities [Abstract] | ||
Balance at beginning of period | $ 349,386 | |
Proceeds from settlement on mortgage loans on real estate, held for investment | (349,386) | |
Balance at end of period |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Marketable Securities [Abstract] | |||||
Separate Account Assets | $ 7,958,319 | $ 7,958,319 | $ 6,186,865 | ||
Assets On Deposits Fair Value | 7,951,180 | 7,951,180 | $ 6,000,376 | ||
Proceeds From Sale Of Available-For-Sale Securities | 4,868,073 | $ 3,108,704 | 12,384,674 | $ 10,274,724 | |
Available-for-sale Securities, Gross Realized Gains | 96,696 | 28,366 | 166,349 | 146,767 | |
Available-for-sale Securities, Gross Realized Losses | $ 629 | $ 44,454 | $ 56,526 | $ 159,150 |
Fair Values of Financial Inst43
Fair Values of Financial Instruments (Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis) (Details) - Fixed Maturities [Member] - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | $ 27,375,374 | $ 23,271,277 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 27,375,374 | 23,271,277 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Us Treasury and Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 3,411,701 | 3,193,499 |
Us Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Us Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 3,411,701 | 3,193,499 |
Us Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
States and Political Subdivisions General Obligations [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 397,518 | 995,051 |
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 397,518 | 995,051 |
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
States and Political Subdivisions Special Revenue [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 290,196 | 273,336 |
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 290,196 | 273,336 |
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Corporate Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 23,275,959 | 18,809,391 |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 23,275,959 | 18,809,391 |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities |
Fair Values of Financial Inst44
Fair Values of Financial Instruments (Schedule of Financial Assets and Liabilities at Fair Value) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Assets: | ||||
Cash and cash equivalents | $ 2,390,031 | $ 1,192,336 | $ 1,209,132 | $ 2,310,047 |
Liabilities: | ||||
Surplus Notes and Accrued Interest Payable | 550,000 | 550,000 | ||
Estimate Of Fair Value, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Policy loans | 400,393 | 420,775 | ||
Cash and cash equivalents | 2,390,031 | 1,192,336 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 15,361,883 | 13,897,421 | ||
Surplus Notes and Accrued Interest Payable | 800,450 | 768,022 | ||
Carrying (Reported) Amount, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Policy loans | 400,393 | 420,775 | ||
Cash and cash equivalents | 2,390,031 | 1,192,336 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 15,361,883 | 13,897,421 | ||
Surplus Notes and Accrued Interest Payable | 803,785 | 779,405 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Assets: | ||||
Policy loans | ||||
Cash and cash equivalents | 2,390,031 | 1,192,336 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | ||||
Surplus Notes and Accrued Interest Payable | ||||
Fair Value, Inputs, Level 2 [Member] | ||||
Assets: | ||||
Policy loans | ||||
Cash and cash equivalents | ||||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | ||||
Surplus Notes and Accrued Interest Payable | ||||
Fair Value, Inputs, Level 3 [Member] | ||||
Assets: | ||||
Policy loans | 400,393 | 420,775 | ||
Cash and cash equivalents | ||||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 15,361,883 | 13,897,421 | ||
Surplus Notes and Accrued Interest Payable | $ 800,450 | $ 768,022 |
Fair Values of Financial Inst45
Fair Values of Financial Instruments (Narrative) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Investments, All Other Investments [Abstract] | ||
Accrued interest | $ 253,785 | $ 229,405 |
Income Tax Matters (Schedule of
Income Tax Matters (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Loss carryforwards | $ 9,387,518 | $ 8,962,587 |
Capitalized costs | 648,016 | 667,264 |
Unrealized losses on investments | 23,305 | 356,495 |
Benefit reserves | 992,978 | 1,071,997 |
Total deferred tax assets | 11,051,817 | 11,058,343 |
Less valuation allowance | (9,410,173) | (9,287,024) |
Total deferred tax assets, net of valuation allowance | 1,641,644 | 1,771,319 |
Deferred tax liabilities: | ||
Policy acquisition costs | 563,003 | 593,654 |
Due premiums | 231,519 | 234,468 |
Value of business acquired | 609,122 | 693,297 |
Intangible assets | 238,000 | 238,000 |
Property and equipment | 11,900 | |
Total deferred tax liabilities | 1,641,644 | 1,771,319 |
Net deferred tax assets |
Income Tax Matters (Schedule 47
Income Tax Matters (Schedule of Effective Tax Rate Reconciliation) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Computed expected income tax benefit | $ 60,566 | $ (159,751) | $ (513,692) | $ (704,841) |
Increase (reduction) in income taxes resulting from: | ||||
Meals, entertainment and political contributions | 7,753 | 26,508 | 24,084 | |
Dividends received deduction | 1,250 | 7,550 | 1,250 | (44) |
Other | 4,529 | 160,280 | 29,595 | 419,501 |
Total deductions | 13,532 | 167,830 | 57,353 | 443,541 |
Tax benefit before valuation allowance | 74,098 | 8,079 | (456,339) | (261,300) |
Change in valuation allowance | (74,098) | (8,079) | 456,339 | 261,300 |
Net income tax expense |
Income Tax Matters (Narrative)
Income Tax Matters (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Deferred Tax Assets, Valuation Allowance | $ 9,410,173 | $ 9,287,024 |
Minimum [Member] | ||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2024 | |
Maximum [Member] | ||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2035 |
Reinsurance (Summary of Signifi
Reinsurance (Summary of Significant Reinsurance Amounts) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Balance sheets: | |||||
Benefit and claim reserves assumed | $ 2,492,880 | $ 2,492,880 | $ 2,763,779 | ||
Benefit and claim reserves ceded | 11,809,580 | 11,809,580 | $ 12,212,656 | ||
Statements of comprehensive income: | |||||
Premiums assumed | 6,301 | $ 6,162 | 18,532 | $ 19,830 | |
Premiums ceded | 95,126 | 69,005 | 245,400 | 226,375 | |
Benefits assumed | 10,539 | 3,206 | 40,697 | 55,165 | |
Benefits ceded | 124,503 | 217,543 | 696,159 | 750,036 | |
Commissions assumed | 10 | 2 | 26 | 12 | |
Commissions ceded | $ 361 | $ 875 | $ 1,649 | $ 2,729 |
Reinsurance (Schedule of Signif
Reinsurance (Schedule of Significant Reinsurance Balances) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 362,655 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 11,689,125 | |
Ceded Due Premiums | 242,200 | |
Total Amount Recoverable from Reinsurer | $ 11,809,580 | $ 12,212,656 |
Sagicor Life Insurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 294,798 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 11,506,949 | |
Ceded Due Premiums | 242,200 | |
Total Amount Recoverable from Reinsurer | $ 11,559,547 | |
Optimum Reinsurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 67,857 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 182,176 | |
Ceded Due Premiums | ||
Total Amount Recoverable from Reinsurer | $ 250,033 |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2000 | Dec. 31, 1999 | Sep. 30, 2016 | Dec. 31, 2015 | |
Amounts recoverable from reinsurers | $ 11,809,580 | $ 12,212,656 | ||
Sagicor Life Insurance Company [Member] | ||||
Percentage Of Co Insurance Agreement | 25.00% | 75.00% | ||
Premiums, Percentage Assumed to Net | 75.00% | |||
Amounts recoverable from reinsurers | $ 11,559,547 | $ 11,873,254 |
Deposit-Type Contracts (Details
Deposit-Type Contracts (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Beginning balance | $ 13,897,421 | $ 10,722,227 |
Change in deposit-type contracts assumed from Security National | (1,200) | |
Deposits received | 1,786,850 | 2,387,104 |
Investment earnings | 548,556 | 533,646 |
Withdrawals | (865,329) | (533,762) |
Contract Charges | (5,615) | (10,584) |
Ending balance | 15,361,883 | 13,897,421 |
First Wyoming Life Insurance Company [Member] | ||
Beginning balance | 799,990 | |
Change in deposit-type contracts assumed from Security National | ||
Ending balance |
Commitments and Contingencies53
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating Leases, Rent Expense | $ 65,933 | $ 52,125 | $ 238,976 | $ 163,877 |
2,016 | 42,547 | 42,547 | ||
2,017 | 149,481 | 149,481 | ||
2,018 | 136,557 | 136,557 | ||
2,019 | 141,412 | 141,412 | ||
2,020 | 146,477 | 146,477 | ||
Later years | 483,333 | 483,333 | ||
Total | $ 1,099,807 | $ 1,099,807 |
Statutory Net Income and Surp54
Statutory Net Income and Surplus (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
American Life and Security Corporation [Member] | |||
Statutory capital and surplus | $ 4,279,855 | $ 5,241,886 | |
Statutory net loss | (1,358,777) | $ (1,104,389) | |
Great Plains Financial Corporation [Member] | |||
Statutory capital and surplus | 1,514,555 | 1,663,368 | |
Statutory net loss | (158,607) | (319,807) | |
Capital Reserve Life Insurance Company [Member] | |||
Statutory capital and surplus | $ 1,464,044 | ||
Statutory net loss | $ (43,513) |
Surplus Notes (Summary of Surpl
Surplus Notes (Summary of Surplus Notes) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Face Amount | $ 550,000 | $ 550,000 |
David Elmore [Member] | Surplus Notes Two [Member] | ||
Issue Date | Aug. 4, 2011 | |
Maturity Date | Aug. 1, 2016 | |
Face Amount | $ 300,000 | |
Interest Rate | 5.00% | |
David Elmore [Member] | Surplus Notes One [Member] | ||
Issue Date | Sep. 1, 2006 | |
Maturity Date | Sep. 1, 2016 | |
Face Amount | $ 250,000 | |
Interest Rate | 7.00% |
Surplus Notes (Narrative) (Deta
Surplus Notes (Narrative) (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Interest Payable | $ 253,785 | $ 229,405 |
Surplus Notes [Member] | ||
Interest Payable | $ 253,785 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
TPA [Member] | ||||
Related Party Transaction [Line Items] | ||||
Amount of transaction | $ 19,000 | $ 44,419 | $ 47,000 | $ 140,013 |