Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Aug. 21, 2018 | Jun. 30, 2017 | |
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 | 22,860,701 | ||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Amendment Description | EXPLANATORY NOTE On April 16, 2018, Midwest Holding Inc. (the “Company”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Original Form 10-K”). The Original Form 10-K included financial statements as of and for the year ended December 31, 2017; however, they were not audited or reported upon by the Company’s independent registered public accountants. Subsequent to the filing of the Original Form 10-K, the audit of the Company’s consolidated financial statements as of and for the year ended December 31, 2017 was completed by its independent registered public accountants whose report thereon is included in this Amendment No. 1 to Form 10-K (the “Audited Financial Statements”). All Items of the Original Form 10-K are included below but only certain Items have been amended as a result of completing the audit described above and inclusion of the audited financial statements described herein which reflects in Note 12 thereof an event subsequent to the date of filing of the Original Form 10-K and prior to the date of the issuance of the report of our independent registered accountants discussed above. Those Items are: Item 1. Business Item 1A. Risk Factors Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Item 8. Financial Statements and Supplementary Data. The financial statements contained in this Form 10-K/A should be relied upon and not the information in the Original Form 10-K. In addition, the Company is filing the following exhibits: 31.1A Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2A Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32A Certificate pursuant to 18 U.S.C. Section 1350, as adopted under Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 5,066,143 | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 | ||
Entity Voluntary Filers | No |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Investments, available for sale, at fair value | ||
Fixed maturities (amortized cost: $21,529,779 and $29,024,083, respectively) | $ 21,005,907 | $ 27,738,939 |
Real estate, held for investment | 505,688 | 517,729 |
Policy Loans | 435,196 | 412,583 |
Total investments | 21,946,791 | 28,669,251 |
Cash and cash equivalents | 951,527 | 661,545 |
Amounts recoverable from reinsurers | 22,501,593 | 11,704,055 |
Interest due and accrued | 223,166 | 312,054 |
Due premiums | 637,574 | 670,989 |
Deferred acquisition costs, net | 2,045,808 | 2,568,799 |
Value of business acquired, net | 427,454 | 1,726,192 |
Intangible assets | 700,000 | 700,000 |
Property and equipment, net | 127,976 | 158,471 |
Other assets | 107,723 | 95,773 |
Total assets | 49,669,612 | 47,267,129 |
Liabilities: | ||
Benefit reserves | 26,228,105 | 24,606,543 |
Policy claims | 447,513 | 565,148 |
Deposit-type contracts | 18,421,055 | 16,012,567 |
Advance premiums | 40,839 | 52,074 |
Deferred gain on coinsurance transaction | 955,427 | |
Total policy liabilities | 46,092,939 | 41,236,332 |
Accounts payable and accrued expenses | 791,294 | 1,211,875 |
Surplus notes | 550,000 | 550,000 |
Total liabilities | 47,434,233 | 42,998,207 |
Commitments and Contingencies (See Note 8) | ||
Stockholders' Equity: | ||
Common stock, $0.001 par value. Authorized 120,000,000 shares; issued and outstanding 22,860,701 shares as of December 31, 2017 and 22,558,956 as of December 31, 2016. | 22,861 | 22,559 |
Additional paid-in capital | 33,006,255 | 33,036,924 |
Accumulated deficit | (30,282,518) | (27,533,447) |
Accumulated other comprehensive loss | (511,219) | (1,257,291) |
Total stockholders' equity | 2,235,379 | 4,268,922 |
Total liabilities and stockholders' equity | 49,669,612 | 47,267,129 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock | 74 | |
Series B Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock | $ 103 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Amortized costs of fixed maturities (in dollars) | $ 21,529,779 | $ 29,024,083 |
Preferred stock, shares authorized | 10,000,000 | |
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 | 22,860,701 | 22,558,956 |
Common stock, shares outstanding | 22,860,701 | 22,558,956 |
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 | 0 | 2,000,000 |
Preferred stock, shares issued | 0 | 74,159 |
Preferred stock, shares outstanding | 0 | 74,159 |
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 | 0 | 1,000,000 |
Preferred stock, shares issued | 0 | 102,669 |
Preferred stock, shares outstanding | 0 | 102,669 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income: | ||
Premiums | $ 2,981,546 | $ 3,517,458 |
Investment income, net of expenses | 949,415 | 878,991 |
Loss on equity method investment | (420,720) | |
Net realized gains on investments | 3,550 | 31,504 |
Extinguishment of Hot Dot payable | 486,361 | |
Miscellaneous income | 82,235 | 107,015 |
Total Income | 4,503,107 | 4,114,248 |
Expenses: | ||
Death and other benefits | 897,839 | 803,091 |
Interest credited | 748,918 | 776,541 |
Increase in benefit reserves | 698,018 | 751,743 |
Amortization of deferred acquisition costs | 404,110 | 367,235 |
Salaries and benefits | 2,143,449 | 2,175,519 |
Goodwill impairment | 1,129,824 | |
Other operating expenses | 2,359,844 | 3,284,743 |
Total Expenses | 7,252,178 | 9,288,696 |
Operating Loss | (2,749,071) | (5,174,448) |
Bargain purchase gain for business acquisition | 1,326,526 | |
Loss before income taxes | (2,749,071) | (3,847,922) |
Income tax expense | ||
Net loss | (2,749,071) | (3,847,922) |
Comprehensive income (loss): | ||
Unrealized income (losses) on investments arising during period | 749,622 | (212,574) |
Less: reclassification adjustment for net realized gains on investments | (3,550) | (31,504) |
Other comprehensive income (loss) | 746,072 | (244,078) |
Comprehensive loss | $ (2,002,999) | $ (4,092,000) |
Net loss per common share, basic and diluted | $ (0.12) | $ (0.18) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2015 | $ 177 | $ 18,006 | $ 31,584,529 | $ (23,685,525) | $ (1,013,213) | $ 6,903,974 |
Preferred stock dividend | (43,120) | (43,120) | ||||
Acquisition of Northstar Financial Corporation | 4,553 | 2,401,321 | 2,405,874 | |||
Merger of First Wyoming Capital Corporation | (905,806) | (905,806) | ||||
Net loss | (3,847,922) | (3,847,922) | ||||
Other comprehensive loss | (244,078) | (244,078) | ||||
Balance at Dec. 31, 2016 | $ 177 | $ 22,559 | $ 33,036,924 | $ (27,533,447) | $ (1,257,291) | $ 4,268,922 |
Series B preferred stock converted to common stock | (103) | 206 | (103) | |||
Series A preferred stock converted to common stock | (74) | 96 | (22) | |||
Preferred stock dividend | $ (30,544) | $ (30,544) | ||||
Net loss | (2,749,071) | (2,749,071) | ||||
Other comprehensive loss | 746,072 | 746,072 | ||||
Balance at Dec. 31, 2017 | $ 22,861 | $ 33,006,255 | $ (30,282,518) | $ (511,219) | $ 2,235,379 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (2,749,071) | $ (3,847,922) |
Adjustments to arrive at cash provided by (used in) operating activities: | ||
Net premium and discount on investments | 177,926 | 213,055 |
Depreciation and amortization | 288,030 | 381,582 |
Deferred acquisition costs capitalized | (333,940) | (178,419) |
Amortization of deferred acquisition costs | 404,110 | 367,235 |
Net realized gains on investments | (3,550) | (31,504) |
Goodwill impairment | 1,129,824 | |
Bargain purchase gain for business acquired | (1,326,526) | |
Loss on equity method investment | 420,720 | |
Deferred coinsurance ceding commission | 955,427 | |
Write-down of DAC and VOBA from coinsurance transaction | 1,523,431 | |
Changes in operating assets and liabilities: | ||
Amounts recoverable from reinsurers | (10,797,537) | 508,601 |
Interest and dividends due and accrued | 88,888 | (47,263) |
Due premiums | 33,415 | (30,916) |
Policy liabilities | 2,289,872 | 939,095 |
Other assets and liabilities | 53,830 | 575,313 |
Extinguishment of Hot Dot payable | (486,361) | |
Net cash used for operating activities | (8,555,530) | (927,125) |
Securities available for sale: | ||
Purchases | (26,266,795) | (19,213,405) |
Proceeds from sale or maturity | 33,586,723 | 14,387,936 |
Securities held for sale: | ||
Proceeds from sale or maturity | 52,703 | |
Net change in equity securities carried at cost: | ||
Proceeds from sale | 30,250 | |
Sale of Capital Reserve Life Insurance Company | 1,432,446 | |
Acquisition of Northstar Financial Corporation | 2,427,394 | |
Net change in policy loans | (22,613) | 8,192 |
Net purchases of property and equipment | (32,567) | (33,180) |
Net cash provided by (used for) investing activities | 7,264,748 | (907,664) |
Cash Flows from Financing Activities: | ||
Preferred stock dividend | (30,544) | (43,120) |
Receipts on deposit-type contracts | 2,511,107 | 2,433,781 |
Withdrawals on deposit-type contracts | (899,799) | (1,086,663) |
Net cash provided by financing activities | 1,580,764 | 1,303,998 |
Net increase (decrease) in cash and cash equivalents | 289,982 | (530,791) |
Cash and cash equivalents: | ||
Beginning | 661,545 | 1,192,336 |
Ending | 951,527 | 661,545 |
Supplemental Disclosure of Non-Cash Information | ||
Converted Series A and B Preferred Stock | (177) | |
Common Stock issues from Converted A and B Preferred Stock | 177 | |
Measurement period adjustment on the First Wyoming acquisition | (905,806) | |
Common stock issued on Northstar Acquisition | 2,405,874 | |
Total | $ 1,500,068 |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
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. (“Midwest” or “the Company”) was incorporated in Nebraska on October 31, 2003 for the primary purpose of operating a financial services company. The Company is in the life insurance business and operates through its wholly owned subsidiary, American Life & Security Corp. (“American Life”). The Company has made several acquisitions of life insurance companies and related entities since 2008, all of which have been merged into the Company or into American Life. Basis of presentation: The accompanying consolidated financial statements include the accounts of Midwest and/or our wholly owned subsidiary American Life. Hereafter, entities are collectively referred to as the “Company,” “we,” “our” or “us.” Management evaluates the Company as one reporting segment in the life insurance industry. The Company is primarily engaged in the underwriting and marketing of life insurance products through American Life. The product offerings, the underwriting processes, and the marketing processes are similar. The Company’s product offerings consist of a multi-benefit life insurance policy that combines cash value life insurance with a tax deferred annuity and a single premium term life product. These product offerings are underwritten, marketed, and managed as a group of similar products on an overall portfolio basis. These consolidated financial statements have been prepared in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. All intercompany accounts and transactions have been eliminated in consolidation and certain immaterial reclassifications have been made to the prior period results to conform to the current period’s presentation with no impact on results of operations or total stockholders’ equity. 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 over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive 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, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, the financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company 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 an 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 Company’s 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. The Company recognized an other-than-temporary impairment of $43,740 for the year ended December 31, 2017 and no other-than-temporary impairment was recognized during the year ended December 31, 2016. Included within the Company’s equity securities carried at cost and equity method investments are certain privately placed common stocks for some development stage holding companies organized for the purpose of forming life insurance subsidiaries. Our privately placed common stocks are recorded using cost basis or the equity method of accounting, depending on the facts and circumstances of each investment. These securities do not have a readily determinable fair value. The Company does not control these entities economically, and therefore does not consolidate these entities. The Company reports the earnings from privately placed common stocks accounted for under the equity method in net investment income. Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. 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. Short-term investments: Short-term investments are stated at cost and consist of certificates of deposit. At December 31, 2017 and 2016 the Company did not have any short-term investments. 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: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At December 31, 2017 and 2016, the Company had no cash equivalents. Deferred acquisition costs: Deferred acquisition costs consist of incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred, are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. 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 unless events occur which require an immediate review. The Company eliminated the $437,620 of deferred acquisition costs (“DAC”) that were associated with the Great Plains Life block of business that was included in the Coinsurance Agreement between American Life and US Alliance effective September 30, 2017. The Company determined during its December 31, 2017 analysis that all deferred acquisition costs were recoverable. The following table provides information about deferred acquisition costs (“DAC”) for the years ended December 31, 2017 and 2016, respectively. Year Ended December 31, 2017 2016 Balance at beginning of period $ 2,568,799 $ 2,765,063 Capitalization of commissions, sales and issue expenses 333,940 178,419 Change in DAC due to unrealized investment losses (15,201 ) (7,448 ) Gross amortization (404,110 ) (367,235 ) Change in DAC due to coinsurance ceding commission (437,620 ) - Balance at end of period $ 2,045,808 $ 2,568,799 Value of business acquired: Value of business acquired (“VOBA”) represents the estimated value assigned to purchased companies or insurance in force of the assumed policy obligations at the date of acquisition of a block of policies. Recoverability of VOBA 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 unless events occur which require an immediate review. The Company eliminated the $1,085,811 of VOBA that was associated with the Great Plains Life and First Wyoming Life blocks of business that was included in the Coinsurance Agreement between American Life and US Alliance effective September 30, 2017. The Company determined during its December 31, 2017 and 2016 analysis that all VOBA was recoverable. Other Intangible Assets: Intangibles represent the state licenses that were recorded when Old Reliance was acquired by the Company. Intangibles are 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. 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. The Company compared the carrying value of its identifiable indefinite-lived intangible assets , which consists of the 14 state licenses, to the estimated fees to obtain a new license in each state. As of December 31, 2017 and 2016, the sum of the estimated fees exceeded the carrying value of the indefinite-lived intangible assets. 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 $65,092 and $103,623 for the years ended December 31, 2017 and 2016, respectively. The accumulated depreciation net of disposals totaled $894,014 and $961,864 as of December 31, 2017 and 2016, 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. The Company determined that no such events occurred that would indicate the carrying amounts may not be recoverable. Reinsurance: In the normal course of business, the Company seeks to limit aggregate and 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 Company’s 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 December 31, 2017 or 2016. 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 2014. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at December 31, 2017 and 2016. 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 life of the premiums produced. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured. Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive loss includes unrealized gains and losses from marketable securities classified as available-for-sale, net of applicable taxes. Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 120,000,000 voting common shares authorized, 20,000,000 non-voting common shares authorized, and 10,000,000 preferred shares authorized. At December 31, 2017 and 2016, the Company had 22,860,701 and 22,558,956 common shares issued and outstanding, respectively. Subsequent to December 31, 2017, the Company entered into a Loan, Convertible Preferred Stock and Convertible Senior Secured Note Purchase Agreement , At December 31, 2016, the Company had 1,179 warrants outstanding. The warrants were exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share. No warrants were exercised during 2016 and are now expired. The Class A preferred shares were 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). The par value per preferred share is $0.001 with 2,000,000 shares authorized. At December 31, 2017 the 74,159 Class A preferred shares outstanding were converted to 96,407 voting common shares by the Company. The Class B preferred shares were non-cumulative, non-voting and convertible by the holder or the Company to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The par value per preferred share was $0.001 with 1,000,000 shares authorized. The stated annual dividend rate on the Class B preferred shares was 7%. Dividends totaling $30,544 and $43,120 were paid as of June 30, 2017 and December 31, 2016, respectively. On June 15, 2017, the 102,669 outstanding Class B preferred shares were converted to 205,338 voting common shares by the Company. Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the years ended December 31, 2017 and 2016 were 22,860,701 and 21,625,878 shares, respectively. Reclassification of certain prior period information: Reclassifications have been made on the Consolidated Statement of Comprehensive Income for the year ended December 31, 2016. These reclassifications do not impact the overall Net loss or Net loss per common share lines of the Consolidated Statement of Comprehensive Income for the year ended December 31, 2016. New accounting standards: On February 14, 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income not 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 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 Instruments—Overall (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 has determined that we currently have no equity securities that would be accounted for under ASU 2016-1 in 2018. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers |
Acquisitions and Divestitures
Acquisitions and Divestitures | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Note 2. Acquisitions and Divestitures On October 27, 2015, Midwest acquired 100% of all of the outstanding shares that it did not previously own of First Wyoming Capital Corporation (“First Wyoming”), a Wyoming corporation, pursuant to an Agreement and Plan of Merger dated July 31, 2015 under which First Wyoming became a wholly-owned subsidiary of Midwest. Pursuant to the Merger Agreement, Midwest issued approximately 4,767,400 shares to the former shareholders of First Wyoming other than Midwest. 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 to the Consolidated Financial Statements in our 2015 10-K. This fair value measurement was 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 and on September 1, 2016 First Wyoming Life, the life insurance subsidiary of First Wyoming, 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 preliminary fair value of our previously held equity interest in First Wyoming as disclosed in Note 2 to the Consolidated Financial Statements in our 2015 10-K was determined to be $642,150 resulting in a loss of $198,760, which was included in net investment income (loss) in the 2015 10-K consolidated statement of comprehensive income for the year ended December 31, 2015 and the remaining $420,720 was recognized in the period ended September 30, 2016 in The following table summarizes the fair value of the consideration transferred and the preliminary 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 Midwests 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 line item in the consolidated statement of comprehensive income for the year ended December 31, 2015. The remaining $1,326,526 was included in the consolidated statement of comprehensive income for the period ended September 30, 2016. The bargain purchase gain was driven by the fact that as a standalone company, First Wyoming Life would have been required to significantly increase its administrative operations in Cheyenne, Wyoming, in the near future, the cost of which would be prohibitive to a small life insurance company such as First Wyoming Life. Value of business acquired (“VOBA”) was being amortized on a straight-line basis over ten years which approximates the earnings pattern of the related policies. On September 30, 2017, American Life entered into a coinsurance agreement with US Alliance to cede 100% of the First Wyoming Life block of business. The VOBA associated with that block of business was written off at the date of the transaction. 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. Pursuant to this 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 merger of Northstar was recorded as an asset acquisition. The assets (primarily cash) and liabilities of Northstar were recorded in the Company’s consolidated financial statements at their estimated fair values as of the acquisition date. On August 29, 2016, American Life sold its interest in its dormant subsidiary, Capital Reserve Life Insurance Company (“Capital Reserve”) to an unrelated third party for cash which approximated the statutory surplus of Capital Reserve, resulting in a net gain of approximately $26,000 including $50,000 cash above book value and unrealized gains on the fair market value of bonds becoming realized at the date of sale of $17,000 offset by the write-off of the VOBA of $40,714. This gain was included in the net realized gain (loss) on investments on the consolidated statement of comprehensive income. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
Investments | Note 3. Investments The amortized cost and estimated fair value of investments classified as available-for-sale as of December 31, 2017 and 2016 are as follows: Cost or Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2017: Fixed maturities: U.S. government obligations $ 2,132,441 $ - $ 102,343 $ 2,030,098 Mortgage-backed 1,365,684 - 47,103 1,318,581 States and political subdivisions -- general obligations 269,884 1,123 1,020 269,987 States and political subdivisions -- special revenue 25,347 38 - 25,385 Corporate 17,736,423 44,037 418,604 17,361,856 Total fixed maturities $ 21,529,779 $ 45,198 $ 569,070 $ 21,005,907 December 31, 2016: Fixed maturities: U.S. government obligations $ 3,390,545 $ - $ 166,326 $ 3,224,219 States and political subdivisions -- general obligations 383,730 732 3,067 381,395 States and political subdivisions -- special revenue 275,262 5,633 3,160 277,735 Corporate 24,974,546 16,232 1,135,188 23,855,590 Total fixed maturities $ 29,024,083 $ 22,597 $ 1,307,741 $ 27,738,939 The Company had two securities that individually exceed 10% of the total of the state and political subdivisions categories as of December 31, 2017. The amortized cost, fair value, credit rating, and description of each such security is as follows: Amortized Estimated Cost Fair Value Credit Rating December 31, 2017: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 109,937 $ 108,917 AA+ Longview Washington Refunding 159,947 161,070 Aa3 Total $ 269,884 $ 269,987 The following table summarizes, for all securities in an unrealized loss position at December 31, 2017 and 2016, 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. December 31, 2017 December 31, 2016 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: Less than 12 months: U.S. government obligations $ 262,662 $ 13,877 2 $ 3,224,219 $ 166,326 17 Mortgage-backed 1,318,581 47,103 19 - - - States and political subdivisions -- general obligations 108,917 1,020 1 271,093 3,066 2 States and political subdivisions -- special revenue - - - 171,711 3,160 2 Corporate 7,511,874 133,061 35 19,737,965 935,546 112 Greater than 12 months: U.S. government obligations 1,767,435 88,466 10 - - - Corporate 7,144,231 285,543 42 2,558,275 199,643 12 Total fixed maturities $ 18,113,700 $ 569,070 109 $ 25,963,263 $ 1,307,741 145 Based on our review of the securities in an unrealized loss position at December 31, 2017, the Company recognized an other-than-temporary impairment of $43,740 due to the downgrade in Diamond Offshore Drilling of its credit rating from a BB+ to a B+ and the amount of time it was in a loss position and no other-than-temporary impairment at December 31, 2016. Management believes that the Company will fully recover its cost basis in the remaining securities held at December 31, 2017, 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 remaining 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 following table discloses the net impairment loss recorded in earnings: Total other-than-temporary impairment losses $ (47,206 ) Portion of loss recognized in other comprehensive income (before taxes) 3,466 Net impairment losses recognized in earnings $ (43,740 ) The amortized cost and estimated fair value of fixed maturities at December 31, 2017, 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 $ 201,090 $ 199,118 Due after one year through five years 1,142,934 1,109,439 Due after five years through ten years 6,823,883 6,647,567 Due after ten years 13,361,872 13,049,783 $ 21,529,779 $ 21,005,907 The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. At December 31, 2017 and 2016, these required deposits had a total amortized cost of $3,287,932 and $2,747,571 and fair values of $3,167,727 and $2,635,225, respectively. The components of net investment income for the years ended December 31, 2017 and 2016 are as follows: Year Ended December 2017 2016 Fixed maturities $ 951,077 $ 889,860 Other 63,380 60,283 1,014,457 950,143 Less investment expenses (65,042 ) (71,152 ) Investment income, net of expenses $ 949,415 $ 878,991 Proceeds for the years ended December 31, 2017 and 2016 from sales of investments classified as available-for-sale were $33,586,723 and $14,179,936, respectively. Gross gains of $199,743 and $178,104 and gross losses of $196,193 and $54,610 were realized on sales and the other-than-temporary impairment during the year ended December 31, 2017 and the realized losses on sales during the year ended December 31, 2016, respectively. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Fair Values of Financial Instruments | Note 4. 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 entity’s 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 entity’s 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 December 31, 2017, 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. 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. The fair values for insurance contracts other than deposit-type contracts are not required to be disclosed. These liabilities are categorized as Level 3 in the fair value hierarchy. Surplus notes: The fair value for surplus notes was equal to book value as a result of the notes reaching maturity in 2016. $293,922 and $261,971 The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of December 31, 2017 and 2016. Significant Quoted Other Significant Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value December 31, 2017 Fixed maturities: U.S. government obligations $ - $ 2,030,098 $ - $ 2,030,098 Mortgage-backed securities - 1,318,581 - 1,318,581 States and political subdivisions — general obligations - 269,987 - 269,987 States and political subdivisions — special revenue - 25,385 - 25,385 Corporate - 17,361,856 - 17,361,856 Total fixed maturities $ - $ 21,005,907 $ - $ 21,005,907 December 31, 2016 Fixed maturities: U.S. government obligations $ - $ 3,224,219 $ - $ 3,224,219 States and political subdivisions — general obligations - 381,395 - 381,395 States and political subdivisions — special revenue - 277,735 - 277,735 Corporate - 23,855,590 - 23,855,590 Total fixed maturities $ - $ 27,738,939 $ - $ There were no transfers of financial instruments between Level 1 , Level 2, and Level 3 2016. 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. 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 December 31, 2017 and 2016, respectively: December 31, 2017 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 435,196 $ - $ - $ 435,196 $ 435,196 Cash 951,527 951,527 - - 951,527 Liabilities: Policyholder deposits (Deposit-type contracts) 18,421,055 - - 18,421,055 18,421,055 Surplus notes and accrued interest payable 843,922 - - 843,922 843,922 December 31, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 412,583 $ - $ - $ 412,583 $ 412,583 Cash 661,545 661,545 - - 661,545 Liabilities: Policyholder deposits (Deposit-type contracts) 16,012,567 - - 16,012,567 16,012,567 Surplus notes and accrued interest payable 811,971 - - 808,602 808,602 |
Income Tax Matters
Income Tax Matters | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Matters | Note 5. Income Tax Matters Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: December 31, 2017 December 31, 2016 Deferred tax assets: Loss carryforwards $ 5,782,670 $ 9,705,974 Capitalized costs 317,026 667,264 Unrealized losses on investments 123,454 436,949 Benefit reserves 656,180 984,640 Total deferred tax assets 6,879,330 Less valuation allowance (6,240,991 ) (10,170,638 ) Total deferred tax assets, net of valuation allowance 638,339 1,624,189 Deferred tax liabilities: Policy acquisition costs 263,683 571,148 Due premiums 133,891 228,136 Value of business acquired 89,765 586,905 Intangible assets 147,000 238,000 Property and equipment 4,000 - Total deferred tax liabilities 638,339 1,624,189 Net deferred tax assets $ - $ - At December 31, 2017 and 2016, the Company recorded a valuation allowance of $6,240,991 Loss carry forwards for tax purposes as of December 31, 2017, have expiration dates that range from 2024 through 2037. There was no income tax expense for the years ended December 31, 2017 and 2016. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% Year Ended December 31, 2017 2016 Computed expected income tax benefit $ (934,684 ) $ ) Increase (reduction) in income taxes resulting from: Bargain purchase gain - (451,019 ) Meals, entertainment and political contributions 15,288 18,956 Goodwill impairment - 384,140 Impact of rate change 3,931,708 - Adjustment to prior period NOLs 878,069 - Other 39,266 (53,722 ) 4,864,331 (101,645 ) Tax benefit before valuation allowance 3,929,647 (1,409,938 ) Change in valuation allowance (3,929,647 ) 1,409,938 Net income tax expenses $ - $ - U.S. tax legislation enacted on December 22, 2017 is referred to as the Tax Cuts and Jobs Act ("New Tax Act"). The New Tax Act made fundamental changes to the U.S. Internal Revenue Code that impacted the Company. The primary impact on our 2017 financial results was associated with the effect of reducing the U.S. statutory tax rate from 35% to 21% which required us to remeasure our deferred tax assets and liabilities using the lower rate at December 22, 2017, the date of enactment. Other provisions of the New Tax Act that will impact us but are not effective until January 1, 2018, include, but are not limited to: 1) provisions reducing the dividends received deduction; 2) eliminating the corporate alternative minimum tax ("AMT"); 3) changing the rules regarding use of net operating losses; and 4) changing the way in which tax reserves will be measured. |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 6. Reinsurance A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016 is as follows: December 31, 2017 December 31, 2016 Balance sheets: Benefit and claim reserves assumed $ 2,638,477 $ 2,470,063 Benefit and claim reserves ceded 22,501,593 11,704,055 Year Ended December 31, 2017 2016 Statements of comprehensive income: Premiums assumed $ 22,591 $ 24,064 Premiums ceded 532,043 287,780 Benefits assumed 58,689 43,602 Benefits ceded 230,997 696,159 Commissions assumed 30 35 Commissions ceded 1,616 1,649 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 December 31, 2017: Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due/Advance from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 12,388 $ 95,980 $ - $ 108,368 Sagicor Life Insurance Company A- - 283,372 12,284,719 247,396 12,320,695 US Alliance Life and Security Company NR - 12,719 10,099,115 39,304 10,072,530 $ - $ 308,479 $ 22,479,814 $ 286,700 $ 22,501,593 Effective September 30, 2017, American Life entered into an indemnity coinsurance transaction with US Alliance to transfer 100% of the risk related to the Great Plains Life and First Wyoming Life blocks of business. The purpose of this transaction was to provide statutory capital and surplus for American Life and has minimal effect on GAAP financials. We paid no commissions or brokerage fees for this transaction and the proceeds of the transaction were based upon valuations prepared by our third party actuary. American Life had more than one offer to assume this business. Under the indemnity coinsurance, US Alliance assumed certain liabilities and obligations. As we are not relieved of our legal liability to the policyholders; the liabilities and obligations associated with the reinsured blocks of business remain on our Consolidated Balance Sheets with a corresponding reinsurance receivable from US Alliance . We $9,569,175 as of September 30, 2017 $7,078,223, $1,850,000, resulting in an increase to surplus on a statutory basis. The ceding commission of $1,850,000 first reduced DAC of $437,620 and VOBA of $1,085,811 which had been held on our books from the Great Plains Life and First Wyoming Life acquisitions. The remaining $ 967,521 At December 31, 2017 and 2016, total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by American Life to Sagicor were $12,320,695 and $11,446,342, respectively. At December 31, 2017, total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by American Life to US Alliance was $10,072,530. The use of reinsurance does not relieve American Life 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 American Life has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business. American Life 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 December 31, 2017 and 2016, no contingency reserve was established. |
Deposit-Type Contracts
Deposit-Type Contracts | 12 Months Ended |
Dec. 31, 2017 | |
Separate Accounts Disclosure [Abstract] | |
Deposit-Type Contracts | Note 7. Deposit-Type Contracts The Company’s 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 the years ended December 31, 2017 and 2016: Year Ended December 31, 2017 2016 Beginning balance $ 16,012,567 $ 13,897,421 Deposits received 2,511,107 2,433,781 Investment earnings 808,085 776,541 Withdrawals (899,799 ) (1,086,661 ) Contract Charges (10,905 ) (8,515 ) Ending balance $ 18,421,055 $ Under the terms of American Life’s coinsurance agreement with Security National Life Insurance Company (“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 Life’s direct business. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. 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 regulatory bodies, the SEC, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning the Company’s 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. The Nebraska Department of Insurance completed its exam for the periods 2013 through 2016 on American Life. Office Lease: The Company leases office space in Lincoln, Nebraska under an agreement executed October 17, 2013 that expires on January 31, 2024. The Company executed an amendment to the above lease for the additional 2,876 square feet of office space in Suite 450 on October 23, 2015, which expired on May 31, 2017. Great Plains entered into a lease on October 4, 2013 for office space in Mitchell, South Dakota, which expired on November 30, 2016. First Wyoming leased space in Cheyenne, Wyoming, which expired on August 31, 2016. Rent expense for the years ended December 31, 2017 and 2016 was $219,357 and $341,424, respectively. Future minimum payments are as follows: 2018 $ 136,557 2019 141,412 2020 146,477 2021 151,543 2022 156,608 Later years 175,182 Total $ 907,779 |
Statutory Net Income and Surplu
Statutory Net Income and Surplus | 12 Months Ended |
Dec. 31, 2017 | |
Statutory Net Income and Surplus [Abstract] | |
Statutory Net Income and Surplus | Note 9. 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. 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 and Great Plains Life merged into American Life as of September 1, 2016 and December 31, 2016, respectively. Capital Reserve was sold effective August 29, 2016. Effective September 30, 2017, American Life entered into a coinsurance agreement with US Alliance to cede 100% of the First Wyoming Life’s and Great Plains Life’s blocks of business. The fourth quarter premiums and benefits were not included in the December 31, 2017 net loss. American Life’s statutory net loss for the year ended December 31, 2017 and 2016 was $2,084,690 and $1,979,009, respectively. Capital and surplus of American Life as of December 31, 2017 and 2016 was $2,962,885 and $3,817,844, respectively. |
Surplus Notes
Surplus Notes | 12 Months Ended |
Dec. 31, 2017 | |
Surplus Notes [Abstract] | |
Surplus Notes | Note 10. Surplus Notes The following provides a summary of the American Life’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of December 31, 2017: Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 12, 2006 September 1, 2016 $ 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 December 31, 2017, the Company has accrued $293,922 of interest expense under accounts payable and accrued expenses on the consolidated balance sheet. No payments were made in the years ended December 31, 2017 and 2016. 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 | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11. Related Party Transactions The Company commenced its third party administrative (“TPA”) services in 2012 as an additional revenue source. These services are offered to non-consolidated entities. These agreements, for various levels of administrative services on behalf of each company, generate fee income for the Company. Services provided 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 years ended December 31, 2017 and 2016 amounted to $71,680 and $63,500, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events On May 9, 2018, the Company entered into a Loan, Convertible Preferred Stock and Convertible Senior Secured Note Purchase Agreement (the “Agreement”) with a non-affiliated third party, Xenith Holdings LLC, a Delaware limited liability company (“Xenith”). The following summarizes the Agreement: Loan, Convertible Preferred Stock and Convertible Senior Secured Note Purchase Agreement. 1. After certain conditions were met, primarily receipt of approval of the Agreement by the Nebraska Department of Insurance which was granted on June 28, 2018, the closing was held (the “Initial Closing”) at which Xenith loaned $600,000 (the “Loan”) to the Company, repayable upon maturity in 10 years with cash interest of 4% per annum payable quarterly and accrued interest of another 4% per annum payable upon maturity. 2. The first $500,000 of the Loan will be convertible, at Xenith’s election, into approximately 24,300,000 shares of the Company’s voting common stock (which equates to approximately $0.02 per share). The remaining $100,000 will also be convertible at the same rate if the Company has adequate authorized voting common stock available which will require an amendment to its Articles of Incorporation under an SEC proxy statement. 3. Also at the Initial Closing Xenith purchased 1,500,000 shares of the Company’s newly created Class C Preferred Stock for $1,500,000. The Preferred Stock will be convertible, at Xenith’s election, into approximately 72,900,000 shares of Company’s voting common stock (also at approximately $0.02 per share). The Company will be recording the Preferred Stock in 2018 at the Mezzanine Level in the equity section of the balance sheet. 4. To summarize the initial investments in Items 2 and 3 above for purposes of illustration assuming the Notes and shares of Preferred Stock are converted into the Companys voting common stock: Number Percentage Current Company Shareholders 22,900,000 18.3 % Note Conversion ($500,000) 24,300,000 19.5 % Note Conversion ($100,000) 4,900,000 3.9 % Preferred Stock Conversion 72,900,000 58.3 % Total Outstanding 125,000,000 100.0 % 5 To summarize the additional subsequent loans for purposes of illustration assuming the Notes and shares of Preferred Stock are converted into the Companys voting common stock: Fully Diluted Number Percentage Current Company Shareholders 22,900,000 1.8 % Note Conversion ($500,000) 24,300,000 1.9 % Note Conversion ($100,000) 4,900,000 0.4 % Preferred Stock Conversion 72,900,000 5.7 % Subsequent loans 1,145,000,000 90.2 % Total Outstanding 1,270,000,000 100.0 % The conversion of Subsequent Loans assumed that Midwests Articles of Incorporation are appropriately amended as does the possible conversion of the $100,000 Note above. This amendment will require approval of Midwests shareholders. See Articles of Amendment below. The Loan and Preferred Stock proceeds must be contributed to Midwests insurance subsidiary, American Life, to be held by it and used for general business purposes (except for up to $100,000 which may be used by Midwest to cover some of its expenses in entering into and complying with its obligations under the Agreement. Terms of Class C Preferred Stock ● Rank: Senior to the Company's voting common stock on liquidation with a liquidation preference of $1.00 per share or $1,500,000 in the aggregate ● Dividends: Subject to the availability of funds, dividends at the annual rate of 8% of the liquidation preference of $1,500,000, if the dividends accrue if not paid. ● Redemption: At any time beginning in early 2025 and subject to Nebraska law, the Lender may require the Company to redeem the shares of Preferred Stock at the liquidation preference (plus accrued dividends) or fair market value, whichever is greater. If the shares are not redeemed for any reason, a default interest rate of 12% per year begins (and increases by 1% per month) ● Voting: The Preferred Stock votes along with the Company's voting common stock as a single class on an "as converted" basis. ● Election of Directors: Holders of Preferred Stock voting as a separate class are entitled to elect five of the Company's eight members of its Board of Directors. ● Protective Provisions: The Preferred Stock has several protections against the Company taking action that would adversely affect the rights of holders of Preferred Stock such as mergers, liquidation, dilutive stock issuances, among others. Articles of Amendment The Agreement, as amended, requires that, as soon as practicable, the Company shall call a meeting of its shareholders to consider and act upon an amendment to its amended and restated articles of incorporation to increase its authorized shares of voting common stock to 1,970,000,000 On April 16, 2018 Midwest came to an agreement with the holder 2017 Midwest recorded a gain in fiscal 2018 of $346,242 as a result of this settlement. |
Schedule I Summary of Investmen
Schedule I Summary of Investments - Other Than Investments in Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Summary of Investments - Other Than Investments in Related Parties | Midwest Holding Inc. and Subsidiaries Summary of Investments — Other Than Investments in Related Parties December 31, 2017 Amount Recognized in Amortized Consolidated Cost Fair Value Balance Sheets Type of Investment Fixed maturity securities, available for sale: U.S. government obligations $ 2,132,441 $ 2,030,098 $ 2,030,098 Mortgage-backed 1,365,684 1,318,581 1,318,581 States and political subdivisions -- general obligations 269,884 269,987 269,987 States and political subdivisions -- special revenue 25,347 25,385 25,385 Corporate 17,736,423 17,361,856 17,361,856 Total fixed maturity securities $ 21,529,779 $ 21,005,907 $ 21,005,907 Real estate, held for investment 505,688 505,688 Policy loans 435,196 435,196 Total Investments $ 22,470,663 $ 21,946,791 |
Schedule II Condensed Financial
Schedule II Condensed Financial Information of Registrant Balance Sheets | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Registrant Balance Sheets | Midwest Holding Inc. (Parent Company) Condensed Financial Information of Registrant Balance Sheets As of December 31, 2017 2016 Assets: Investment in subsidiaries (1) $ 2,229,775 $ 4,424,693 Cash and cash equivalents 4,756 112,563 Property and equipment, net 42,587 78,790 Other assets 38,321 153,502 Total assets $ 2,315,439 $ 4,769,548 Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued expenses 80,060 500,626 Total liabilities 80,060 500,626 Stockholders' Equity: Preferred stock, Series A - 74 Preferred stock, Series B - 103 Common stock 22,861 22,559 Additional paid-in capital 33,006,255 33,036,924 Accumulated deficit (30,282,518 ) (27,533,447 ) Accumulated other comprehensive loss (511,219 ) (1,257,291 ) Total Midwest Holding Inc.'s stockholders' equity 2,235,379 4,268,922 Total liabilities and stockholders' equity $ 2,315,439 $ 4,769,548 (1) Eliminated in consolidation. |
Schedule II Condensed Financi21
Schedule II Condensed Financial Information of Registrant Statements of Comprehensive Income | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Registrant Statements of Comprehensive Income | Midwest Holding Inc. (Parent Company) Condensed Financial Information of Registrant Statements of Comprehensive Income As of December 31, 2017 2016 Income: Investment loss, net of expenses $ (6,776 ) $ (5,635 ) Net realized loss on investments - (117,500 ) Loss on equity method investment - (420,720 ) Extinguishment of Hot Dot payable 486,361 - Miscellaneous income 126,680 515,667 606,265 (28,188 ) Expenses: General 414,346 2,054,032 Gain (loss) 191,919 (2,082,220 ) Income tax expense - - Gain (loss) 191,919 (2,082,220 ) Equity in loss of consolidated subsidiaries (2,940,990 ) (3,092,228 ) Bargain purchase gain for business acquisition - 1,326,526 Net loss $ (2,749,071 ) $ (3,847,922 ) Comprehensive Income gain Unrealized losses on investments arising during period 749,622 (212,574 ) Less: reclassification adjustment for net realized gains on investments (3,550 ) (31,504 ) Other comprehensive income (loss) 746,072 (244,078 ) Comprehensive loss $ (2,002,999 ) $ (4,092,000 ) |
Schedule II Condensed Financi22
Schedule II Condensed Financial Information of Registrant Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Financial Information of Registrant Statements of Cash Flows | Midwest Holding Inc. (Parent Company) Condensed Financial Information of Registrant Statements of Cash Flows Year Ended December 31, 2017 2016 Cash Flows from Operating Activities: Net loss $ (2,749,071 ) $ (3,847,922 ) Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: Equity in net loss of consolidated subsidiaries 2,940,990 2,972,023 Depreciation 30,512 31,931 Net realized gain on investments - 117,500 Bargain purchase gain for business acquired - (1,326,526 ) Equity in the net loss of unconsolidated subsidiaries - 420,720 Other assets and liabilities 180,976 (861,791 ) Extinguishment of Hot Dot payable (486,361 ) - Net cash used by (82,954 ) (2,494,065 ) Cash Flows from Investing Activities: Equity securities carried at cost: Proceeds from equity securities carried at cost - 30,250 Issuance of common stock acquisition of Northstar Financial - 2,427,394 Net disposals (purchases) of property and equipment 5,691 (20,318 ) Net cash provided by investing activities 5,691 2,437,326 Cash Flows from Financing Activities: Issuance of common stock - - Preferred stock dividend (30,544 ) (43,120 ) Net cash used by financing activities (30,544 ) (43,120 ) Net decrease in cash and cash equivalents (107,807 ) (99,859 ) Cash and cash equivalents: Beginning 112,563 212,422 Ending $ 4,756 $ 112,563 2017 2016 Supplemental Disclosure of Non-Cash Information Converted Series B Preferred Stock $ (177 ) $ - Common stock issues from Converted B Preferred Stock 177 - Common stock issued on the First Wyoming acquisition and measurement period adjustment - (905,806 ) Common stock issued on Northstar Acquisition - 2,405,874 $ - $ 1,500,068 |
Schedule III Supplementary Insu
Schedule III Supplementary Insurance Information | 12 Months Ended |
Dec. 31, 2017 | |
Supplementary Insurance Information [Abstract] | |
Supplementary Insurance Information | Midwest Holding Inc. and Subsidiaries Supplementary Insurance Information As of December 31, 2017 For the Year Ended December 31, 2017 Future Policy Death and Amortization Deferred Benefits, Deferred Net Other Benefits of Deferred Policy Claims and Gain on Investment and Increase Policy Other Acquisition Deposit-type Advance Coinsurance Premium Income in Benefit Acquisition Operating Costs Contracts Premiums Transaction Revenue (Loss) Reserves Costs Expenses Life Insurance $ 2,045,808 $ 45,096,673 $ 40,839 $ 955,427 $ 2,981,546 $ 949,415 $ 2,344,775 $ 404,110 $ 4,503,293 As of December 31, 2016 For the Year Ended December 31, 2016 Future Policy Death and Amortization Deferred Benefits, Deferred Net Other Benefits of Deferred Policy Claims and Gain on Investment and Increase Policy Other Acquisition Deposit-type Advance Coinsurance Premium Income in Benefit Acquisition Operating Costs Contracts Premiums Transaction Revenue (Loss) Reserves Costs Expenses Life Insurance $ 2,568,799 $ 41,184,258 $ 52,074 $ - $ 3,517,458 $ 878,991 $ 2,331,375 $ 367,235 $ 6,590,086 |
Schedule IV Reinsurance Informa
Schedule IV Reinsurance Information | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract] | |
Reinsurance Information | Midwest Holding Inc. and Subsidiaries Reinsurance Information Percentage Assumed of Amount Ceded to Other from Other Assumed to Gross Amount Companies Companies Net Amount Net Year ended December 31, 2017 Life insurance in force $ 219,023,000 $ 171,610,000 $ 3,998,000 $ 51,411,000 7.78 % Life insurance premiums $ 3,490,998 $ 532,043 $ 22,591 $ 2,981,546 0.76 % Year ended December 31, 2016 Life insurance in force $ 229,981,000 $ 110,670,000 $ 3,879,000 $ 123,190,000 3.15 % Life insurance premiums $ 3,781,174 $ 287,780 $ 24,064 $ 3,517,458 0.68 % |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | Midwest Holding Inc. and Subsidiaries Valuation and Qualifying Accounts Year Ended December 31, 2017 2016 Accumulated Depreciation: Beginning of the year 961,864 864,526 Depreciation expense 65,092 103,623 Disposals (132,942 ) (6,285 ) End of the year $ 894,014 $ 961,864 |
Nature of Operations and Summ26
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of operations: Midwest Holding Inc. (“Midwest” or “the Company”) was incorporated in Nebraska on October 31, 2003 for the primary purpose of operating a financial services company. The Company is in the life insurance business and operates through its wholly owned subsidiary, American Life & Security Corp. (“American Life”). The Company has made several acquisitions of life insurance companies and related entities since 2008, all of which have been merged into the Company or into American Life. |
Basis of presentation | Basis of presentation: The accompanying consolidated financial statements include the accounts of Midwest and/or our wholly owned subsidiary American Life. Hereafter, entities are collectively referred to as the “Company,” “we,” “our” or “us.” Management evaluates the Company as one reporting segment in the life insurance industry. The Company is primarily engaged in the underwriting and marketing of life insurance products through American Life. The product offerings, the underwriting processes, and the marketing processes are similar. The Company’s product offerings consist of a multi-benefit life insurance policy that combines cash value life insurance with a tax deferred annuity and a single premium term life product. These product offerings are underwritten, marketed, and managed as a group of similar products on an overall portfolio basis. These consolidated financial statements have been prepared in conformity with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. All intercompany accounts and transactions have been eliminated in consolidation and certain immaterial reclassifications have been made to the prior period results to conform to the current period’s presentation with no impact on results of operations or total stockholders’ equity. |
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 over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive 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, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, the financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company 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 an 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 Company’s 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 years ended December 31, 2017 or 2016. Included within the Company’s equity securities carried at cost and equity method investments are certain privately placed common stocks for some development stage holding companies organized for the purpose of forming life insurance subsidiaries. Our privately placed common stocks are recorded using cost basis or the equity method of accounting, depending on the facts and circumstances of each investment. These securities do not have a readily determinable fair value. The Company does not control these entities economically, and therefore does not consolidate these entities. The Company reports the earnings from privately placed common stocks accounted for under the equity method in net investment income. Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. |
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. |
Short-term investments | Short-term investments: Short-term investments are stated at cost and consist of certificates of deposit. At December 31, 2017 and 2016 the Company did not have any short-term investments. |
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 | Cash: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At December 31, 2017 and 2016, the Company had no cash equivalents. |
Deferred acquisition costs | Deferred acquisition costs: Deferred acquisition costs consist of incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred, are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. 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 unless events occur which require an immediate review. The Company eliminated the $437,620 of deferred acquisition costs (“DAC”) that were associated with the Great Plains Life block of business that was included in the Coinsurance Agreement between American Life and US Alliance effective September 30, 2017. The Company determined during its December 31, 2017 analysis that all deferred acquisition costs were recoverable. The following table provides information about deferred acquisition costs (“DAC”) for the years ended December 31, 2017 and 2016, respectively. Year Ended December 31, 2017 2016 Balance at beginning of period $ 2,568,799 $ 2,765,063 Capitalization of commissions, sales and issue expenses 333,940 178,419 Change in DAC due to unrealized investment losses (14,145 ) (7,448 ) Gross amortization (404,110 ) (367,235 ) Change in DAC due to coinsurance ceding commission (437,620 ) - Balance at end of period $ 2,046,864 $ 2,568,799 |
Value of business acquired | Value of business acquired: Value of business acquired (“VOBA”) represents the estimated value assigned to purchased companies or insurance in force of the assumed policy obligations at the date of acquisition of a block of policies. Recoverability of VOBA 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 unless events occur which require an immediate review. The Company eliminated the $1,085,811 of VOBA that was associated with the Great Plains Life and First Wyoming Life blocks of business that was included in the Coinsurance Agreement between American Life and US Alliance effective September 30, 2017. The Company determined during its December 31, 2017 and 2016 analysis that all VOBA was recoverable. |
Other Intangible Assets | Other Intangible Assets: Intangibles represent the state licenses that were recorded when Old Reliance was acquired by the Company. Intangibles are 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. 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. The Company compared the carrying value of its identifiable indefinite-lived intangible assets , which consists of the 14 state licenses, to the estimated fees to obtain a new license in each state. As of December 31, 2017 and 2016, the sum of the estimated fees exceeded the carrying value of the indefinite-lived intangible assets. |
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 $65,092 and $103,623 for the years ended December 31, 2017 and 2016, respectively. The accumulated depreciation net of disposals totaled $894,014 and $961,864 as of December 31, 2017 and 2016, 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. The Company determined that no such events occurred that would indicate the carrying amounts may not be recoverable. |
Reinsurance | Reinsurance: In the normal course of business, the Company seeks to limit aggregate and 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 Company’s 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 December 31, 2017 or 2016. |
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 2014. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at December 31, 2017 and 2016. |
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 life of the premiums produced. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured. |
Comprehensive loss | Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive loss includes unrealized gains and losses from marketable securities classified as available-for-sale, net of applicable taxes. |
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 120,000,000 voting common shares authorized, 20,000,000 non-voting common shares authorized, and 10,000,000 preferred shares authorized. At December 31, 2017 and 2016, the Company had 22,860,701 and 22,558,956 common shares issued and outstanding, respectively. Subsequent to December 31, 2017, the Company entered into a Loan, Convertible Preferred Stock and Convertible Senior Secured Note Purchase Agreement under which additional convertible debt and convertible preferred stock have been issued. See Note 12. At December 31, 2016, the Company had 1,179 warrants outstanding. The warrants were exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share. No warrants were exercised during 2016 and are now expired. The Class A preferred shares were 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). The par value per preferred share is $0.001 with 2,000,000 shares authorized. At December 31, 2017 the 74,159 Class A preferred shares outstanding were converted to 96,407 voting common shares by the Company. The Class B preferred shares were non-cumulative, non-voting and convertible by the holder or the Company to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The par value per preferred share was $0.001 with 1,000,000 shares authorized. The stated annual dividend rate on the Class B preferred shares was 7%. Dividends totaling $30,544 and $43,120 were paid as of June 30, 2017 and December 31, 2016, respectively. On June 15, 2017, the 102,669 outstanding Class B preferred shares were converted to 205,338 voting common shares by the Company. Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the years ended December 31, 2017 and 2016 were 22,860,701 and 21,625,878 shares, respectively. |
Reclassification of certain prior period information | Reclassification of certain prior period information: Reclassifications have been made on the Consolidated Statement of Comprehensive Income for the year ended December 31, 2016. These reclassifications do not impact the overall Net loss or Net loss per common share lines of the Consolidated Statement of Comprehensive Income for the year ended December 31, 2016. |
New accounting standards | New accounting standards: On February 14, 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income 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 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 Instruments—Overall (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 has determined that we currently have no equity securities that would be accounted for under ASU 2016-1 in 2018. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). This amendment defers the effective date of the previously issued ASU 2014-09 until the interim and annual reporting periods beginning after December 15, 2017. Earlier application is permitted for interim and annual reporting periods beginning after December 15, 2016. In addition, the FASB has issued four related ASU's on principal versus agent guidance (ASU 2016-08), identifying performance obligations and the licensing implementation guidance (ASU 2016-10), a revision of certain SEC Staff Observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). The guidance permits two methods of transition upon adoption; full retrospective and modified retrospective. The Company will utilize the modified retrospective method upon adoption of ASU 2014-09 on January 1, 2018. Under the modified retrospective method, revenues and other disclosures for pre-2017 periods would be provided in the notes to the consolidated financial statements as previously reported under the current revenue standard. Insurance contracts, lease contracts and investments are not within the scope of ASU 2014-09; therefore, this standard would not apply to the majority of our consolidated revenues. For the Company's miscellaneous income, which is within the scope of this guidance, the Company reviewed its service fee income revenue streams and compared its historical accounting policies and practices to the new standard. As a result, the Company believes its current revenue recognition will be materially consistent with the way we expect to recognize service fee income once ASU 2014-09 is adopted. |
Nature of Operations and Summ27
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Policy Acquisition Costs | The following table provides information about deferred acquisition costs (“DAC”) for the years ended December 31, 2017 and 2016, respectively. Year Ended December 31, 2017 2016 Balance at beginning of period $ 2,568,799 $ 2,765,063 Capitalization of commissions, sales and issue expenses 333,940 178,419 Change in DAC due to unrealized investment losses (15,201 ) (7,448 ) Gross amortization (404,110 ) (367,235 ) Change in DAC due to coinsurance ceding commission (437,620 ) - Balance at end of period $ 2,045,808 $ 2,568,799 |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of the consideration transferred and the preliminary 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 Midwests previously held equity interest in First Wyoming 221,430 $ 1,127,236 |
Schedule of Pro Forma Information | 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 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
Schedule of Available for Sale Investments | The amortized cost and estimated fair value of investments classified as available-for-sale as of December 31, 2017 and 2016 are as follows: Cost or Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2017: Fixed maturities: U.S. government obligations $ 2,132,441 $ - $ 102,343 $ 2,030,098 Mortgage-backed 1,365,684 - 47,103 1,318,581 States and political subdivisions -- general obligations 269,884 1,123 1,020 269,987 States and political subdivisions -- special revenue 25,347 38 - 25,385 Corporate 17,736,423 44,037 418,604 17,361,856 Total fixed maturities $ 21,529,779 $ 45,198 $ 569,070 $ 21,005,907 December 31, 2016: Fixed maturities: U.S. government obligations $ 3,390,545 $ - $ 166,326 $ 3,224,219 States and political subdivisions -- general obligations 383,730 732 3,067 381,395 States and political subdivisions -- special revenue 275,262 5,633 3,160 277,735 Corporate 24,974,546 16,232 1,135,188 23,855,590 Total fixed maturities $ 29,024,083 $ 22,597 $ 1,307,741 $ 27,738,939 |
Schedule of Amortized Cost, Fair Value, Credit Rating | The Company had two securities that individually exceed 10% of the total of the state and political subdivisions categories as of December 31, 2017. The amortized cost, fair value, credit rating, and description of each such security is as follows: Amortized Estimated Cost Fair Value Credit Rating December 31, 2017: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 109,937 $ 108,917 AA+ Longview Washington Refunding 159,947 161,070 Aa3 Total $ 269,884 $ 269,987 |
Schedule of Unrealized Loss of Securities | The following table summarizes, for all securities in an unrealized loss position at December 31, 2017 and 2016, 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. December 31, 2017 December 31, 2016 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: Less than 12 months: U.S. government obligations $ 262,662 $ 13,877 2 $ 3,224,219 $ 166,326 17 Mortgage-backed 1,318,581 47,103 19 - - - States and political subdivisions -- general obligations 108,917 1,020 1 271,093 3,066 2 States and political subdivisions -- special revenue - - - 171,711 3,160 2 Corporate 7,511,874 133,061 35 19,737,965 935,546 112 Greater than 12 months: U.S. government obligations 1,767,435 88,466 10 - - - Corporate 7,144,231 285,543 42 2,558,275 199,643 12 Total fixed maturities $ 18,113,700 $ 569,070 109 $ 25,963,263 $ 1,307,741 145 |
Schedule of Net Impairment Loss | The following table discloses the net impairment loss recorded in earnings: Total other-than-temporary impairment losses $ (47,206 ) Portion of loss recognized in other comprehensive income (before taxes) 3,466 Net impairment losses recognized in earnings $ (43,740 ) |
Schedule of Fixed Maturities | The amortized cost and estimated fair value of fixed maturities at December 31, 2017, 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 $ 201,090 $ 199,118 Due after one year through five years 1,142,934 1,109,439 Due after five years through ten years 6,823,883 6,647,567 Due after ten years 13,361,872 13,049,783 $ 21,529,779 $ 21,005,907 |
Components of Net Investment Income | The components of net investment income for the years ended December 31, 2017 and 2016 are as follows: Year Ended December 2017 2016 Fixed maturities $ 951,077 $ 889,860 Other 63,380 60,283 1,014,457 950,143 Less investment expenses (65,042 ) (71,152 ) Investment income, net of expenses $ 949,415 $ 878,991 |
Fair Values of Financial Inst30
Fair Values of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis | The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of December 31, 2017 and 2016. Significant Quoted Other Significant Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value December 31, 2017 Fixed maturities: U.S. government obligations $ - $ 2,030,098 $ - $ 2,030,098 Mortgage-backed securities - 1,318,581 - 1,318,581 States and political subdivisions — general obligations - 269,987 - 269,987 States and political subdivisions — special revenue - 25,385 - 25,385 Corporate - 17,361,856 - 17,361,856 Total fixed maturities $ - $ 21,005,907 $ - $ 21,005,907 December 31, 2016 Fixed maturities: U.S. government obligations $ - $ 3,224,219 $ - $ 3,224,219 States and political subdivisions — general obligations - 381,395 - 381,395 States and political subdivisions — special revenue - 277,735 - 277,735 Corporate - 23,855,590 - 23,855,590 Total fixed maturities $ - $ 27,738,939 $ - $ |
Schedule of Financial Assets and Liabilities at Fair Value | 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 December 31, 2017 and 2016, respectively: December 31, 2017 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 435,196 $ - $ - $ 435,196 $ 435,196 Cash 951,527 951,527 - - 951,527 Liabilities: Policyholder deposits (Deposit-type contracts) 18,421,055 - - 18,421,055 18,421,055 Surplus notes and accrued interest payable 843,922 - - 843,922 843,922 December 31, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 412,583 $ - $ - $ 412,583 $ 412,583 Cash 661,545 661,545 - - 661,545 Liabilities: Policyholder deposits (Deposit-type contracts) 16,012,567 - - 16,012,567 16,012,567 Surplus notes and accrued interest payable 811,971 - - 808,602 808,602 |
Income Tax Matters (Tables)
Income Tax Matters (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows: December 31, 2017 December 31, 2016 Deferred tax assets: Loss carryforwards $ 5,782,670 $ 9,705,974 Capitalized costs 317,026 667,264 Unrealized losses on investments 123,454 436,949 Benefit reserves 656,180 984,640 Total deferred tax assets 6,879,330 Less valuation allowance (6,240,991 ) (10,170,638 ) Total deferred tax assets, net of valuation allowance 638,339 1,624,189 Deferred tax liabilities: Policy acquisition costs 263,683 571,148 Due premiums 133,891 228,136 Value of business acquired 89,765 586,905 Intangible assets 147,000 238,000 Property and equipment 4,000 - Total deferred tax liabilities 638,339 1,624,189 Net deferred tax assets $ - $ - |
Schedule of Effective Tax Rate Reconciliation | There was no income tax expense for the years ended December 31, 2017 and 2016. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% Year Ended December 31, 2017 2016 Computed expected income tax benefit $ (934,684 ) $ ) Increase (reduction) in income taxes resulting from: Bargain purchase gain - (451,019 ) Meals, entertainment and political contributions 15,288 18,956 Goodwill impairment - 384,140 Impact of rate change 3,931,708 - Adjustment to prior period NOLs 878,069 - Other 39,266 (53,722 ) 4,864,331 (101,645 ) Tax benefit before valuation allowance 3,929,647 (1,409,938 ) Change in valuation allowance (3,929,647 ) 1,409,938 Net income tax expenses $ - $ - |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Summary of Significant Reinsurance Amounts | A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017 and 2016 is as follows: December 31, 2017 December 31, 2016 Balance sheets: Benefit and claim reserves assumed $ 2,638,477 $ 2,470,063 Benefit and claim reserves ceded 22,501,593 11,704,055 Year Ended December 31, 2017 2016 Statements of comprehensive income: Premiums assumed $ 22,591 $ 24,064 Premiums ceded 532,043 287,780 Benefits assumed 58,689 43,602 Benefits ceded 230,997 696,159 Commissions assumed 30 35 Commissions ceded 1,616 1,649 |
Schedule of Significant Reinsurance Balances | 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 December 31, 2017: Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due/Advance from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 12,388 $ 95,980 $ - $ 108,368 Sagicor Life Insurance Company A- - 283,372 12,284,719 247,396 12,320,695 US Alliance Life and Security Company NR - 12,719 10,099,115 39,304 10,072,530 $ - $ 308,479 $ 22,479,814 $ 286,700 $ 22,501,593 |
Deposit-Type Contracts (Tables)
Deposit-Type Contracts (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deposit Type Contracts [Abstract] | |
Schedule of Contracts | Year Ended December 31, 2017 2016 Beginning balance $ 16,012,567 $ 13,897,421 Deposits received 2,511,107 2,433,781 Investment earnings 808,085 776,541 Withdrawals (899,799 ) (1,086,661 ) Contract Charges (10,905 ) (8,515 ) Ending balance $ 18,421,055 $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments | Rent expense for the years ended December 31, 2017 and 2016 was $219,357 and $341,424, respectively. Future minimum payments are as follows: 2018 $ 136,557 2019 141,412 2020 146,477 2021 151,543 2022 156,608 Later years 175,182 Total $ 907,779 |
Surplus Notes (Tables)
Surplus Notes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Surplus Notes [Abstract] | |
Summary of Surplus Notes | The following provides a summary of the American Life’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of December 31, 2017: Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 12, 2006 September 1, 2016 $ 7 % David G. Elmore August 4, 2011 August 1, 2016 300,000 5 % |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Schedule of Company's Voting Common Stock | To summarize the initial investments in Items 2 and 3 above for purposes of illustration assuming the Notes and shares of Preferred Stock are converted into the Companys voting common stock: Number Percentage Current Company Shareholders 22,900,000 18.3 % Note Conversion ($500,000) 24,300,000 19.5 % Note Conversion ($100,000) 4,900,000 3.9 % Preferred Stock Conversion 72,900,000 58.3 % Total Outstanding 125,000,000 100.0 % |
Additional subsequent loans [Member] | |
Schedule of Company's Voting Common Stock | To summarize the additional subsequent loans for purposes of illustration assuming the Notes and shares of Preferred Stock are converted into the Companys voting common stock: Fully Diluted Number Percentage Current Company Shareholders 22,900,000 1.8 % Note Conversion ($500,000) 24,300,000 1.9 % Note Conversion ($100,000) 4,900,000 0.4 % Preferred Stock Conversion 72,900,000 5.7 % Subsequent loans 1,145,000,000 90.2 % Total Outstanding 1,270,000,000 100.0 % |
Nature of Operations and Summ37
Nature of Operations and Summary of Significant Accounting Policies (Schedule of Deferred Acquisition Costs) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Balance at beginning of period | $ 2,568,799 | $ 2,765,063 |
Capitalization of commissions, sales and issue expenses | 333,940 | 178,419 |
Change in DAC due to unrealized investment losses | (15,201) | (7,448) |
Gross amortization | (404,110) | (367,235) |
Change in DAC due to coinsurance ceding commission | (437,620) | |
Balance at end of period | $ 2,045,808 | $ 2,568,799 |
Nature of Operations and Summ38
Nature of Operations and Summary of Significant Accounting Policies (Narrative) (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Net impairment losses recognized in earnings | $ | $ (43,740) | |||
Change in DAC due to coinsurance ceding commission | $ | (15,201) | $ (7,448) | ||
Goowill imparied | $ | $ 1,129,824 | |||
Preferred stock, shares authorized (in shares) | 10,000,000 | |||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | ||
Common Stock, Shares Authorized (in shares) | 120,000,000 | 120,000,000 | ||
Common stock, shares issued (in shares) | 22,860,701 | 22,558,956 | ||
Common stock, shares outstanding (in shares) | 22,860,701 | 22,558,956 | ||
Warrants outstanding | 1,179 | |||
Number of shares of voting common stock issuable upon exercise of warrant | 10 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 6.50 | |||
Weighted Average Number of Shares Outstanding, Basic (in shares) | 22,860,701 | 21,625,878 | ||
Depreciation | $ | $ 65,092 | $ 103,623 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ | 894,014 | 961,864 | ||
Preferred stock dividend | $ | $ 30,544 | $ 30,544 | $ 43,120 | |
Residential Real Estate [Member] | ||||
Finite-Lived Intangible Assets, Remaining Amortization Period | 50 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 | |||
Computer Software, Intangible Asset [Member] | ||||
Property, Plant and Equipment, Useful Life | 3 years | |||
Non-voting common shares [Member] | ||||
Common Stock, Shares Authorized (in shares) | 20,000,000 | |||
Series A Preferred Stock [Member] | ||||
Conversion Ratio | 1.3 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized (in shares) | 0 | 2,000,000 | ||
Preferred stock, shares outstanding (in shares) | 0 | 74,159 | ||
Converted preferred shares | 96,407 | |||
Series B Preferred Stock [Member] | ||||
Conversion Ratio | 2 | |||
Stated dividend rate | 7.00% | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized (in shares) | 0 | 1,000,000 | ||
Preferred stock, shares outstanding (in shares) | 0 | 102,669 | ||
Converted preferred shares | 205,338 | |||
US Alliance Life and Security Company [Member] | ||||
Change in DAC due to coinsurance ceding commission | $ | $ 437,620 | |||
Unamorized value of business acquired | $ | $ 1,085,811 | $ 1,085,811 |
Acquisitions and Divestitures39
Acquisitions and Divestitures (Narrative) (Details) | Mar. 15, 2016shares | Aug. 29, 2016USD ($) | Oct. 31, 2015USD ($)shares | Oct. 31, 2015USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Oct. 28, 2015USD ($) |
Business Acquisition [Line Items] | ||||||||
Loss on equity method investment | $ (420,720) | |||||||
Voting common stock | 905,806 | |||||||
Bargain purchase gain for business acquisition | $ 904,578 | 1,326,526 | ||||||
Total income | 4,503,107 | 4,114,248 | ||||||
Net loss | (2,749,071) | (3,847,922) | ||||||
Parent Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Loss on equity method investment | 619,480 | (420,720) | ||||||
Elimination of Midwest Investment in First Wyoming | 221,430 | 420,720 | ||||||
Elimination of unrealized gain on Midwest due to First Wyoming | 30,410 | |||||||
Bargain purchase gain for business acquisition | 1,326,526 | |||||||
Total income | 606,265 | (28,188) | ||||||
Net loss | $ 191,919 | $ (2,082,220) | ||||||
Capital Reserve Life Insurance Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Gain loss in sale of interest | $ 26,000 | |||||||
Cash in excess of book value paid | 50,000 | |||||||
Realized gains on the fair market value of bonds | 17,000 | |||||||
Write-off of VOBA | $ 40,714 | |||||||
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] | ||||||||
Loss on equity method investment | $ 198,760 | |||||||
Elimination of Midwest Investment in First Wyoming | $ 221,430 | 642,150 | $ 420,720 | |||||
Shares converted | shares | 4,767,400 | |||||||
Voting common stock | $ 905,806 | $ 1,811,612 | ||||||
Finite-Lived Intangible Assets, Remaining Amortization Period | 10 years | |||||||
Bargain purchase gain for business acquisition | $ 2,231,104 | |||||||
Ownership percentage | 100.00% | 100.00% | ||||||
Discount rate | 16.00% | |||||||
Expected long term growth | 3.00% | |||||||
Capitalization rate | 13.00% | |||||||
Equity method investments | $ 810,500 | |||||||
Ownership percentage prior to acquisition | 22.10% | |||||||
First Wyoming Life Insurance Company [Member] | Minimum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 3.00% | |||||||
First Wyoming Life Insurance Company [Member] | Maximum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 16.00% | |||||||
First Wyoming Life Insurance Company [Member] | Parent Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Discount rate | 18.00% | |||||||
Expected long term growth | 3.00% | |||||||
Capitalization rate | 13.00% | |||||||
First Wyoming Life Insurance Company [Member] | Parent Company [Member] | Minimum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 3.00% | |||||||
First Wyoming Life Insurance Company [Member] | Parent Company [Member] | Maximum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Projected cash flow growth | 13.00% |
Acquisitions and Divestitures40
Acquisitions and Divestitures (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Business Acquisition [Line Items] | |||||
Fair value of Common stock of Midwest issued as consideration | $ 905,806 | ||||
Bargain purchase gain | $ (904,578) | $ (1,326,526) | |||
First Wyoming Life Insurance Company [Member] | |||||
Business Acquisition [Line Items] | |||||
Fair value of Common stock of Midwest issued as consideration | 905,806 | $ 1,811,612 | |||
Fair value of Midwest's previously held equity interest in First Wyoming | 221,430 | 642,150 | $ 420,720 | ||
Total consideration | 1,127,236 | ||||
Investment securities | 3,961,937 | 3,961,937 | |||
Cash | 315,546 | 315,546 | |||
VOBA | 506,600 | 506,600 | |||
Other Assets | 92,045 | 92,045 | |||
Benefit reserves | (611,110) | (611,110) | |||
Policy claims | (41,754) | (41,754) | |||
Deposit type-contracts | (799,990) | (799,990) | |||
Other liabilities | (64,934) | (64,934) | |||
Total identifiable net assets | 3,358,340 | 3,358,340 | |||
Bargain purchase gain | (2,231,104) | ||||
Total | $ 1,127,236 | $ 1,127,236 |
Investments (Schedule of Availa
Investments (Schedule of Available for Sale Investments) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Cost or Amortized Cost | $ 21,573,519 | |
Estimated Fair Value | 21,005,907 | |
Fixed Maturities [Member] | ||
Cost or Amortized Cost | 21,529,779 | $ 29,024,083 |
Gross Unrealized Gains | 45,198 | 22,597 |
Gross Unrealized Losses | 569,070 | 1,307,741 |
Estimated Fair Value | 21,005,907 | 27,738,939 |
Fixed Maturities [Member] | U.S. government obligations [Member] | ||
Cost or Amortized Cost | 2,132,441 | 3,390,545 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | 102,343 | 166,326 |
Estimated Fair Value | 2,030,098 | 3,224,219 |
Fixed Maturities [Member] | States and Political Subdivisions General Obligations [Member] | ||
Cost or Amortized Cost | 269,884 | 383,730 |
Gross Unrealized Gains | 1,123 | 732 |
Gross Unrealized Losses | 1,020 | 3,067 |
Estimated Fair Value | 269,987 | 381,395 |
Fixed Maturities [Member] | States and Political Subdivisions Special Revenue [Member] | ||
Cost or Amortized Cost | 25,347 | 275,262 |
Gross Unrealized Gains | 38 | 5,633 |
Gross Unrealized Losses | 3,160 | |
Estimated Fair Value | 25,385 | 277,735 |
Fixed Maturities [Member] | Corporate [Member] | ||
Cost or Amortized Cost | 17,736,423 | 24,974,546 |
Gross Unrealized Gains | 44,037 | 16,232 |
Gross Unrealized Losses | 418,604 | 1,135,188 |
Estimated Fair Value | 17,361,856 | $ 23,855,590 |
Fixed Maturities [Member] | Mortgage Backed Securities [Member] | ||
Cost or Amortized Cost | 1,365,684 | |
Gross Unrealized Gains | ||
Gross Unrealized Losses | 47,103 | |
Estimated Fair Value | $ 1,318,581 |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Fair Value, Credit Rating) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Amortized Cost | $ 21,529,779 | $ 29,024,083 |
States and Political Subdivisions General Obligations [Member] | ||
Amortized Cost | 269,884 | |
Estimated Fair Value | 269,987 | |
States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member] | Bellingham Wash [Member] | ||
Amortized Cost | 109,937 | |
Estimated Fair Value | $ 108,917 | |
Credit Rating | AA+ | |
States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member] | Longview Washington Refunding [Member] | ||
Amortized Cost | $ 159,947 | |
Estimated Fair Value | $ 161,070 | |
Credit Rating | Aa3 |
Investments (Schedule of Unreal
Investments (Schedule of Unrealized Loss of Securities) (Details) - Fixed Maturities [Member] | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Estimated Fair Value, Total | $ 18,113,700 | $ 25,963,263 |
Gross Unrealized Loss, Total | $ 569,070 | $ 1,307,741 |
Number of Securities, Total | 109 | 145 |
U.S. government obligations [Member] | ||
Estimated Fair Value, Less than 12 months | $ 262,662 | $ 3,224,219 |
Gross Unrealized Loss, Less than 12 months | $ 13,877 | $ 166,326 |
Number of Securities, Less than 12 months | 2 | 17 |
Estimated Fair value, Greater than 12 months | $ 1,767,435 | |
Gross Unrealized Loss, Greater than 12 months | $ 88,466 | |
Number of Securities, Greater than 12 months | 10 | |
States and Political Subdivisions General Obligations [Member] | ||
Estimated Fair Value, Less than 12 months | $ 108,917 | $ 271,093 |
Gross Unrealized Loss, Less than 12 months | $ 1,020 | $ 3,066 |
Number of Securities, Less than 12 months | 1 | 2 |
States and Political Subdivisions Special Revenue [Member] | ||
Estimated Fair Value, Less than 12 months | $ 171,711 | |
Gross Unrealized Loss, Less than 12 months | $ 3,160 | |
Number of Securities, Less than 12 months | 2 | |
Corporate [Member] | ||
Estimated Fair Value, Less than 12 months | $ 7,511,874 | $ 19,737,965 |
Gross Unrealized Loss, Less than 12 months | $ 133,061 | $ 935,546 |
Number of Securities, Less than 12 months | 35 | 112 |
Estimated Fair value, Greater than 12 months | $ 7,144,231 | $ 2,558,275 |
Gross Unrealized Loss, Greater than 12 months | $ 285,543 | $ 199,643 |
Number of Securities, Greater than 12 months | 42 | 12 |
Mortgage Backed Securities [Member] | ||
Estimated Fair Value, Less than 12 months | $ 1,318,581 | |
Gross Unrealized Loss, Less than 12 months | $ 47,103 | |
Number of Securities, Less than 12 months | 19 |
Investments (Schedule of Net Im
Investments (Schedule of Net Impairment Loss) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Marketable Securities [Abstract] | ||
Total other-than-temporary impairment losses | $ (47,206) | |
Portion of loss recognized in other comprehensive income (before taxes) | 3,466 | |
Net impairment losses recognized in earnings | $ (43,740) |
Investments (Schedule of Fixed
Investments (Schedule of Fixed Maturities) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Marketable Securities [Abstract] | ||
Amortized Cost, Due in one year or less | $ 201,090 | |
Amortized Cost, Due after one year through five years | 1,142,934 | |
Amortized Cost, Due after five years through ten years | 6,823,883 | |
Amortized Cost, Due after ten years | 13,361,872 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost | 21,529,779 | $ 29,024,083 |
Estimated Fair Value, Due in one year or less | 199,118 | |
Estimated Fair Value, Due after one year through five years | 1,109,439 | |
Estimated Fair Value, Due after five years through ten years | 6,647,567 | |
Estimated Fair Value, Due after ten years | 13,049,783 | |
Available-for-sale Securities, Debt Securities, Estimated Fair Value | $ 21,005,907 | $ 27,738,939 |
Investments (Components of Net
Investments (Components of Net Investment Income) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Net investment income | $ 1,014,457 | $ 950,143 |
Less investment expenses | (65,042) | (71,152) |
Investment income, net of expenses | 949,415 | 878,991 |
Fixed Maturities [Member] | ||
Net investment income | 951,077 | 889,860 |
Other [Member] | ||
Net investment income | $ 63,380 | $ 60,283 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Investments [Abstract] | ||
Separate Account Assets | $ 3,287,932 | $ 2,747,571 |
Assets On Deposits Fair Value | 3,167,727 | 2,635,225 |
Proceeds From Sale Of Available-For-Sale Securities | 33,586,723 | 14,179,936 |
Available-for-sale Securities, Gross Realized Gains | 199,743 | 178,104 |
Available-for-sale Securities, Gross Realized Losses | $ 196,193 | $ 54,610 |
Fair Values of Financial Inst48
Fair Values of Financial Instruments (Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | $ 21,005,907 | |
Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 21,005,907 | $ 27,738,939 |
Fixed Maturities [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 | ||
Fixed Maturities [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 | 21,005,907 | 27,738,939 |
Fixed Maturities [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 | ||
Fixed Maturities [Member] | U.S. government obligations [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 2,030,098 | 3,224,219 |
Fixed Maturities [Member] | U.S. government 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 | ||
Fixed Maturities [Member] | U.S. government 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 | 2,030,098 | 3,224,219 |
Fixed Maturities [Member] | U.S. government 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 | ||
Fixed Maturities [Member] | Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 1,318,581 | |
Fixed Maturities [Member] | Mortgage Backed 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 | ||
Fixed Maturities [Member] | Mortgage Backed 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 | 1,318,581 | |
Fixed Maturities [Member] | Mortgage Backed 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 | ||
Fixed Maturities [Member] | 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 | 269,987 | 381,395 |
Fixed Maturities [Member] | 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 | ||
Fixed Maturities [Member] | 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 | 269,987 | 381,395 |
Fixed Maturities [Member] | 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 | ||
Fixed Maturities [Member] | 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 | 25,385 | 277,735 |
Fixed Maturities [Member] | 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 | ||
Fixed Maturities [Member] | 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 | 25,385 | 277,735 |
Fixed Maturities [Member] | 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 | ||
Fixed Maturities [Member] | Corporate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 17,361,856 | 23,855,590 |
Fixed Maturities [Member] | Corporate [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 | ||
Fixed Maturities [Member] | Corporate [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 | 17,361,856 | 23,855,590 |
Fixed Maturities [Member] | Corporate [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 |
Fair Values of Financial Inst49
Fair Values of Financial Instruments (Schedule of Financial Assets and Liabilities at Fair Value) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | |||
Cash | $ 951,527 | $ 661,545 | $ 1,192,336 |
Liabilities: | |||
Surplus notes and accrued interest payable | 550,000 | 550,000 | |
Fair Value, Inputs, Level 1 [Member] | |||
Assets: | |||
Policy loans | |||
Cash | 951,527 | 661,545 | |
Liabilities: | |||
Policyholder deposits (Deposit-type contracts) | |||
Surplus notes and accrued interest payable | |||
Fair Value, Inputs, Level 2 [Member] | |||
Assets: | |||
Policy loans | |||
Cash | |||
Liabilities: | |||
Policyholder deposits (Deposit-type contracts) | |||
Surplus notes and accrued interest payable | |||
Fair Value, Inputs, Level 3 [Member] | |||
Assets: | |||
Policy loans | 435,196 | 412,583 | |
Cash | |||
Liabilities: | |||
Policyholder deposits (Deposit-type contracts) | 18,421,055 | 16,012,567 | |
Surplus notes and accrued interest payable | 843,922 | 808,602 | |
Carrying (Reported) Amount, Fair Value Disclosure [Member] | |||
Assets: | |||
Policy loans | 435,196 | 412,583 | |
Cash | 951,527 | 661,545 | |
Liabilities: | |||
Policyholder deposits (Deposit-type contracts) | 18,421,055 | 16,012,567 | |
Surplus notes and accrued interest payable | 843,922 | 811,971 | |
Estimate Of Fair Value, Fair Value Disclosure [Member] | |||
Assets: | |||
Policy loans | 435,196 | 412,583 | |
Cash | 951,527 | 661,545 | |
Liabilities: | |||
Policyholder deposits (Deposit-type contracts) | 18,421,055 | 16,012,567 | |
Surplus notes and accrued interest payable | $ 843,922 | $ 808,602 |
Fair Values of Financial Inst50
Fair Values of Financial Instruments (Narrative) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Investments, All Other Investments [Abstract] | ||
Accrued interest | $ 293,922 | $ 261,971 |
Income Tax Matters (Schedule of
Income Tax Matters (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Loss carryforwards | $ 5,782,670 | $ 9,705,974 |
Capitalized costs | 317,026 | 667,264 |
Unrealized losses on investments | 123,454 | 436,949 |
Benefit reserves | 656,180 | 984,640 |
Total deferred tax assets | 6,879,330 | 11,794,827 |
Less valuation allowance | (6,240,991) | (10,170,638) |
Total deferred tax assets, net of valuation allowance | 638,339 | 1,624,189 |
Deferred tax liabilities: | ||
Policy acquisition costs | 263,683 | 571,148 |
Due premiums | 133,891 | 228,136 |
Value of business acquired | 89,765 | 586,905 |
Intangible assets | 147,000 | 238,000 |
Property and equipment | 4,000 | |
Total deferred tax liabilities | 638,339 | 1,624,189 |
Net deferred tax assets |
Income Tax Matters (Schedule 52
Income Tax Matters (Schedule of Effective Tax Rate Reconciliation) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Computed expected income tax benefit | $ (934,684) | $ (1,308,293) |
Increase (reduction) in income taxes resulting from: | ||
Bargain purchase gain | (451,019) | |
Meals, entertainment and political contributions | 15,228 | 18,956 |
Goodwill impairment | 384,140 | |
Impact of rate change | 3,931,708 | |
Adjustment to prior period NOLs | 878,069 | |
Other | 39,266 | (53,722) |
Income Tax Reconciliation, Deductions | 4,864,331 | (101,645) |
Tax benefit before valuation allowance | 3,929,647 | (1,409,938) |
Change in valuation allowance | (3,929,647) | 1,409,938 |
Net income tax expense |
Income Tax Matters (Narrative)
Income Tax Matters (Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 22, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Matters [Abstract] | |||
Deferred Tax Assets, Valuation Allowance | $ 6,240,991 | $ 10,170,638 | |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 21.00% | 21.00% | |
Maximum [Member] | |||
Income Tax Matters [Abstract] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 35.00% | ||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2037 | ||
Minimum [Member] | |||
Income Tax Matters [Abstract] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 21.00% | ||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2024 |
Reinsurance (Summary of Signifi
Reinsurance (Summary of Significant Reinsurance Amounts) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Balance sheets: | ||
Benefit and claim reserves assumed | $ 2,638,477 | $ 2,470,063 |
Benefit and claim reserves ceded | 22,501,593 | 11,704,055 |
Statements of comprehensive income: | ||
Premiums assumed | 22,591 | 24,064 |
Premiums ceded | 532,043 | 287,780 |
Benefits assumed | 58,689 | 43,602 |
Benefits ceded | 230,997 | 696,159 |
Commissions assumed | 30 | 35 |
Commissions ceded | $ 1,616 | $ 1,649 |
Reinsurance (Schedule of Signif
Reinsurance (Schedule of Significant Reinsurance Balances) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 308,479 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 22,479,814 | |
Ceded Due/Advance Premiums | 286,700 | |
Total Amount Recoverable from Reinsurer | $ 22,501,593 | $ 11,704,055 |
Optimum Reinsurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 12,388 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 95,980 | |
Ceded Due/Advance Premiums | ||
Total Amount Recoverable from Reinsurer | $ 108,368 | |
Sagicor Life Insurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 283,372 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 12,284,719 | |
Ceded Due/Advance Premiums | 247,396 | |
Total Amount Recoverable from Reinsurer | $ 12,320,695 | $ 11,446,342 |
US Alliance Life and Security Company [Member] | ||
AM Best Rating | NR | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 12,719 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 10,099,115 | |
Ceded Due/Advance Premiums | 39,304 | |
Total Amount Recoverable from Reinsurer | $ 10,072,530 |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amounts recoverable from reinsurers | $ 22,501,593 | $ 11,704,055 | |
Net of ceding allowance | 1,850,000 | ||
Deferred acquisition cost | (15,201) | (7,448) | |
American Life and Security Corporation [Member] | Annual GAAP Revenues [Member] | |||
Amount to cede | 883,000 | ||
American Life and Security Corporation [Member] | Statutory Revenues [Member] | |||
Amount to cede | $ 1,758,250 | ||
US Alliance Life and Security Company [Member] | |||
Transferred risk insurance company | 100.00% | ||
Amount transferred for reinsurance | $ 9,569,175 | ||
Adjusted reserves cash | $ 7,078,223 | ||
Net of ceding allowance | 1,850,000 | ||
Coinsurance ceding commission deferred | $ 967,521 | ||
Deferred gain period | 20 years | ||
Deferred acquisition cost | $ 437,620 | ||
Value of business acquired | $ 1,085,811 | 1,085,811 | |
Amount to cede | 10,072,530 | ||
Sagicor Life Insurance Company [Member] | |||
Amounts recoverable from reinsurers | $ 12,320,695 | $ 11,446,342 |
Deposit-Type Contracts (Schedul
Deposit-Type Contracts (Schedule of Contracts) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deposit Type Contracts [Abstract] | ||
Beginning balance | $ 16,012,567 | $ 13,897,421 |
Deposits received | 2,511,107 | 2,433,781 |
Investment earnings | 808,085 | 776,541 |
Withdrawals | (899,799) | (1,086,661) |
Contract Charges | (10,905) | (8,515) |
Ending balance | $ 18,421,055 | $ 16,012,567 |
Commitments and Contingencies58
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases, Rent Expense | $ 219,357 | $ 341,424 |
2,018 | 136,557 | |
2,019 | 141,412 | |
2,020 | 146,477 | |
2,021 | 151,543 | |
2,022 | 156,608 | |
Later years | 175,182 | |
Total | $ 907,779 |
Statutory Net Income and Surp59
Statutory Net Income and Surplus (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
American Life and Security Corporation [Member] | ||
Statutory net loss | $ 2,084,690 | $ 1,979,009 |
Statutory capital and surplus | $ 2,962,885 | $ 3,817,844 |
US Alliance Life and Security Company [Member] | ||
Transferred risk insurance company | 100.00% |
Surplus Notes (Summary of Surpl
Surplus Notes (Summary of Surplus Notes) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Face Amount | $ 550,000 | $ 550,000 |
David Elmore [Member] | Surplus Notes One [Member] | ||
Issue Date | Sep. 12, 2006 | |
Maturity Date | Sep. 1, 2016 | |
Face Amount | $ 250,000 | |
Interest Rate | 7.00% | |
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% |
Surplus Notes (Narrative) (Deta
Surplus Notes (Narrative) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Interest Payable | $ 293,922 | $ 261,971 |
Surplus Notes [Member] | ||
Interest Payable | $ 293,922 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
American Life and Security Corporation [Member] | ||
Related Party Transaction [Line Items] | ||
Amount of transaction | $ 71,680 | $ 63,500 |
Subsequent Events (Schedule of
Subsequent Events (Schedule of Company's Voting Common Stock) (Details) - USD ($) | May 09, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||
Current Company Shareholders, Number | 22,860,701 | 22,558,956 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Current Company Shareholders, Number | 22,900,000 | ||
Current Company Shareholders, percentage | 18.30% | ||
Note Conversion, Number | 24,300,000 | ||
Note Conversion, Value | $ 500,000 | ||
Note Conversion, percentage | 19.50% | ||
Note Conversion, Number | 4,900,000 | ||
Note Conversion, Value | $ 100,000 | ||
Note Conversion, percentage | 3.90% | ||
Preferred Stock Conversion, Number | 72,900,000 | ||
Preferred Stock Conversion, percentage | 58.30% | ||
Total Outstanding, Number | 125,000,000 | ||
Total Outstanding, Percentage | 100.00% | ||
Subsequent Event [Member] | Additional subsequent loans [Member] | |||
Subsequent Event [Line Items] | |||
Current Company Shareholders, Number | 22,900,000 | ||
Current Company Shareholders, percentage | 1.80% | ||
Note Conversion, Number | 24,300,000 | ||
Note Conversion, Value | $ 500,000 | ||
Note Conversion, percentage | 1.90% | ||
Note Conversion, Number | 4,900,000 | ||
Note Conversion, Value | $ 100,000 | ||
Note Conversion, percentage | 0.40% | ||
Preferred Stock Conversion, Number | 72,900,000 | ||
Preferred Stock Conversion, percentage | 5.70% | ||
Subsequent loans, Number | $ 1,145,000,000 | ||
Subsequent loans, percentage | 90.20% | ||
Total Outstanding, Number | 1,270,000,000 | ||
Total Outstanding, Percentage | 100.00% |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) - USD ($) | May 09, 2018 | Apr. 16, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||||
Common Stock, Shares Authorized | 120,000,000 | 120,000,000 | |||
Common stock par value | $ 0.001 | $ 0.001 | |||
Gain on extinguishment of debt | $ 486,361 | ||||
David Elmore [Member] | |||||
Subsequent Event [Line Items] | |||||
Book value | 505,688 | ||||
Appraised value | $ 640,000 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Common Stock, Shares Authorized | 1,970,000,000 | ||||
Common stock par value | $ 0.001 | ||||
Possible conversion amount of notes | $ 100,000 | ||||
Loan and Preferred Stock proceeds | 100,000 | ||||
Debt conversion converted amount | 500,000 | ||||
Subsequent Event [Member] | Xenith [Member] | |||||
Subsequent Event [Line Items] | |||||
Proceeds from issuance of loan | $ 600,000 | ||||
Loan term | 10 years | ||||
Interest rate | 4.00% | ||||
Convertible debt | $ 500,000 | ||||
Voting common stock | 24,300,000 | ||||
Common stock par value | $ 0.02 | ||||
Remaining convertible debt | $ 100,000 | ||||
Proceeds from issuance of notes and preferred stock | 600,000 | ||||
Proceeds from additional loan | $ 22,900,000 | ||||
Conversion price | $ 0.02 | ||||
Subsequent Event [Member] | David Elmore [Member] | |||||
Subsequent Event [Line Items] | |||||
Repayments of surplus notes payable | $ 550,000 | ||||
Gain on extinguishment of debt | $ 346,242 | ||||
Unpaid interest on surplus notes | $ 301,930 | ||||
Subsequent Event [Member] | Transaction One [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt conversion converted amount | $ 100,000 | ||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock liquidation preference percentage | 8.00% | ||||
Preferred stock dividends accrue | $ 1,500,000 | ||||
Default interest rate | 12.00% | ||||
Default interest rate increases per month | 1.00% | ||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | Xenith [Member] | |||||
Subsequent Event [Line Items] | |||||
Voting common stock | 72,900,000 | ||||
Common stock par value | $ 0.02 | ||||
Shares repurchased | 1,500,000 | ||||
Shares repurchased, value | $ 1,500,000 | ||||
Subsequent Event [Member] | Series C Preferred Stock [Member] | Common Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Preferred stock liquidation preference | $ 1 | ||||
Preferred stock liquidation preference aggregate amount | $ 1,500,000 |
Schedule I Summary of Investm65
Schedule I Summary of Investments - Other Than Investments in Related Parties (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Amortized Cost | $ 21,573,519 | |
Fair Value | 21,005,907 | |
Amount Recognized in Consolidated Balance Sheets | 21,005,907 | $ 27,738,939 |
Real estate, held for investment, Amortized Cost | 505,688 | |
Policy loans, Amortized Cost | 435,196 | |
Total investments, Amortized Cost | 22,470,663 | |
Real estate, held for investment, Amount Recognized in Consolidated Balance Sheets | 505,688 | 517,729 |
Policy loans, Amount Recognized in Consolidated Balance Sheets | 435,196 | 412,583 |
Total investments, Amount Recognized in Consolidated Balance Sheets | 21,946,791 | 28,669,251 |
Fixed Maturities [Member] | ||
Amortized Cost | 21,529,779 | 29,024,083 |
Fair Value | 21,005,907 | 27,738,939 |
Amount Recognized in Consolidated Balance Sheets | 21,005,907 | |
U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Amortized Cost | 2,132,441 | 3,390,545 |
Fair Value | 2,030,098 | 3,224,219 |
Amount Recognized in Consolidated Balance Sheets | 2,030,098 | |
Mortgage Backed Securities [Member] | Fixed Maturities [Member] | ||
Amortized Cost | 1,365,684 | |
Fair Value | 1,318,581 | |
Amount Recognized in Consolidated Balance Sheets | 1,318,581 | |
States and Political Subdivisions General Obligations [Member] | Fixed Maturities [Member] | ||
Amortized Cost | 269,884 | 383,730 |
Fair Value | 269,987 | 381,395 |
Amount Recognized in Consolidated Balance Sheets | 269,987 | |
States and Political Subdivisions Special Revenue [Member] | Fixed Maturities [Member] | ||
Amortized Cost | 25,347 | 275,262 |
Fair Value | 25,385 | 277,735 |
Amount Recognized in Consolidated Balance Sheets | 25,385 | |
Corporate [Member] | Fixed Maturities [Member] | ||
Amortized Cost | 17,736,423 | 24,974,546 |
Fair Value | 17,361,856 | $ 23,855,590 |
Amount Recognized in Consolidated Balance Sheets | $ 17,361,856 |
Schedule II Condensed Financi66
Schedule II Condensed Financial Information of Registrant Balance Sheets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assets | ||||
Total investments | $ 21,946,791 | $ 28,669,251 | ||
Cash and cash equivalents | 951,527 | 661,545 | $ 1,192,336 | |
Property and equipment, net | 127,976 | 158,471 | ||
Other assets | 107,723 | 95,773 | ||
Total assets | 49,669,612 | 47,267,129 | ||
Liabilities: | ||||
Accounts payable and accrued expenses | 791,294 | 1,211,875 | ||
Total liabilities | 47,434,233 | 42,998,207 | ||
Stockholders' Equity: | ||||
Common stock | 22,861 | 22,559 | ||
Additional paid-in capital | 33,006,255 | 33,036,924 | ||
Accumulated deficit | (30,282,518) | (27,533,447) | ||
Accumulated other comprehensive loss | (511,219) | (1,257,291) | ||
Total liabilities and stockholders' equity | 49,669,612 | 47,267,129 | ||
Parent Company [Member] | ||||
Assets | ||||
Investment in subsidiaries | [1] | 2,229,775 | 4,424,693 | |
Cash and cash equivalents | 4,756 | 112,563 | $ 212,422 | |
Property and equipment, net | 42,587 | 78,790 | ||
Other assets | 38,321 | 153,502 | ||
Total assets | 2,315,439 | 4,769,548 | ||
Liabilities: | ||||
Accounts payable and accrued expenses | 80,060 | 500,626 | ||
Total liabilities | 80,060 | 500,626 | ||
Stockholders' Equity: | ||||
Common stock | 22,861 | 22,559 | ||
Additional paid-in capital | 33,006,255 | 33,036,924 | ||
Accumulated deficit | (30,282,518) | (27,533,447) | ||
Accumulated other comprehensive loss | (511,219) | (1,257,291) | ||
Total Midwest Holding Inc.'s stockholders' equity | 2,235,379 | 4,268,922 | ||
Total liabilities and stockholders' equity | 2,315,439 | 4,769,548 | ||
Series A Preferred Stock [Member] | ||||
Stockholders' Equity: | ||||
Preferred stock | 74 | |||
Series A Preferred Stock [Member] | Parent Company [Member] | ||||
Stockholders' Equity: | ||||
Preferred stock | 74 | |||
Series B Preferred Stock [Member] | ||||
Stockholders' Equity: | ||||
Preferred stock | 103 | |||
Series B Preferred Stock [Member] | Parent Company [Member] | ||||
Stockholders' Equity: | ||||
Preferred stock | $ 103 | |||
[1] | Eliminated in consolidation. |
Schedule II Condensed Financi67
Schedule II Condensed Financial Information of Registrant Statements of Comprehensive Income (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income: | |||
Investment loss, net of expenses | $ 949,415 | $ 878,991 | |
Net realized loss on investments | 3,550 | 31,504 | |
Loss on equity method investment | (420,720) | ||
Extinguishment of Hot Dot payable | 486,361 | ||
Miscellaneous income | 82,235 | 107,015 | |
Revenues | 4,503,107 | 4,114,248 | |
Expenses: | |||
Income tax expense | |||
Loss before equity in loss of consolidated subsidiaries | (2,749,071) | (3,847,922) | |
Bargain purchase gain for business acquisition | $ 904,578 | 1,326,526 | |
Comprehensive income (loss): | |||
Unrealized losses on investments arising during period | 749,622 | (212,574) | |
Less: reclassification adjustment for net realized gains on investments | (3,550) | (31,504) | |
Other comprehensive income (loss) | 746,072 | (244,078) | |
Parent Company [Member] | |||
Income: | |||
Investment loss, net of expenses | (6,776) | (5,635) | |
Net realized loss on investments | (117,500) | ||
Loss on equity method investment | (420,720) | ||
Extinguishment of Hot Dot payable | 486,361 | ||
Miscellaneous income | 126,680 | 515,667 | |
Revenues | 606,265 | (28,188) | |
Expenses: | |||
General | 414,346 | 2,054,032 | |
Loss before income tax expense | 191,919 | (2,082,220) | |
Income tax expense | |||
Loss before equity in loss of consolidated subsidiaries | 191,919 | (2,082,220) | |
Equity in loss of consolidated subsidiaries | (2,940,990) | (3,092,228) | |
Bargain purchase gain for business acquisition | 1,326,526 | ||
Net loss attributable to Midwest Holding Inc. | (2,749,071) | (3,847,922) | |
Comprehensive income (loss): | |||
Unrealized losses on investments arising during period | 749,622 | (212,574) | |
Less: reclassification adjustment for net realized gains on investments | (3,550) | (31,504) | |
Other comprehensive income (loss) | 746,072 | (244,078) | |
Total comprehensive (loss) income attributable to Midwest Holding Inc. | $ (2,002,999) | $ (4,092,000) |
Schedule II Condensed Financi68
Schedule II Condensed Financial Information of Registrant Statements of Cash Flows (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |
Oct. 31, 2015 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||||
Depreciation | $ 288,030 | $ 381,582 | ||
Net realized gain on investments | (3,550) | (31,504) | ||
Bargain purchase gain for business acquired | $ (904,578) | (1,326,526) | ||
Equity in the net loss of unconsolidated subsidiaries | 420,720 | |||
Other assets and liabilities | 53,830 | 575,313 | ||
Extinguishment of Hot Dot payable | 486,361 | |||
Net cash used by operating activities | (8,555,530) | (927,125) | ||
Equity securities carried at cost: | ||||
Proceeds from equity securities carried at cost | 52,703 | |||
Issurance of common stock acquisition of Northstar Financial | 2,427,394 | |||
Net disposals (purchases) of property and equipment | (32,567) | (33,180) | ||
Net cash provided by investing activities | 7,264,748 | (907,664) | ||
Cash Flows from Financing Activities: | ||||
Preferred stock dividend | $ (30,544) | (30,544) | (43,120) | |
Net cash used by financing activities | 1,580,764 | 1,303,998 | ||
Net decrease in cash and cash equivalents | 289,982 | (530,791) | ||
Cash and cash equivalents: | ||||
Beginning | 661,545 | 661,545 | 1,192,336 | |
Ending | 951,527 | 661,545 | ||
Supplemental Disclosure of Non-Cash Information | ||||
Converted Series A and B Preferred Stock | (177) | |||
Common Stock issues from Converted A and B Preferred Stock | 177 | |||
Common stock issued on Northstar Acquisition | 2,405,874 | |||
Total | 1,500,068 | |||
Parent Company [Member] | ||||
Cash Flows from Operating Activities: | ||||
Net loss | (2,749,071) | (3,847,922) | ||
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | ||||
Equity in net loss of consolidated subsidiaries | 2,940,990 | 2,972,023 | ||
Depreciation | 30,512 | 31,931 | ||
Net realized gain on investments | 117,500 | |||
Bargain purchase gain for business acquired | (1,326,526) | |||
Equity in the net loss of unconsolidated subsidiaries | $ (619,480) | 420,720 | ||
Other assets and liabilities | 180,976 | (861,791) | ||
Extinguishment of Hot Dot payable | 486,361 | |||
Net cash used by operating activities | (82,954) | (2,494,065) | ||
Equity securities carried at cost: | ||||
Proceeds from equity securities carried at cost | 30,250 | |||
Issurance of common stock acquisition of Northstar Financial | 2,427,394 | |||
Net disposals (purchases) of property and equipment | 5,691 | (20,318) | ||
Net cash provided by investing activities | 5,691 | 2,437,326 | ||
Cash Flows from Financing Activities: | ||||
Issuance of common stock | ||||
Preferred stock dividend | (30,544) | (43,120) | ||
Net cash used by financing activities | (30,544) | (43,120) | ||
Net decrease in cash and cash equivalents | (107,807) | (99,859) | ||
Cash and cash equivalents: | ||||
Beginning | $ 112,563 | 112,563 | 212,422 | |
Ending | 4,756 | 112,563 | ||
Supplemental Disclosure of Non-Cash Information | ||||
Converted Series A and B Preferred Stock | (177) | |||
Common Stock issues from Converted A and B Preferred Stock | 177 | |||
Common stock issued on the First Wyoming acquisition and measurement period adjustment | (905,806) | |||
Common stock issued on Northstar Acquisition | 2,405,874 | |||
Total | $ 1,500,068 |
Schedule III Supplementary In69
Schedule III Supplementary Insurance Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Future Policy Benefits, Claims and Deposit-type Contracts | $ 26,228,105 | $ 24,606,543 |
Deferred Gain on Coinsurance Transaction | 955,427 | |
Life Insurance Segment [Member] | ||
Deferred Policy Acquisition Costs | 2,045,808 | 2,568,799 |
Future Policy Benefits, Claims and Deposit-type Contracts | 45,096,673 | 41,184,258 |
Advance Premiums | 40,839 | 52,074 |
Deferred Gain on Coinsurance Transaction | 955,427 | |
Premium Revenue | 2,981,546 | 3,517,458 |
Net Investment Income (Loss) | 949,415 | 878,991 |
Death and Other Benefits and Increase in Benefit Reserves | 2,344,775 | 2,331,375 |
Amortization of Deferred Policy Acquisition Costs | 404,110 | 367,235 |
Other Operating Expenses | $ 4,503,293 | $ 6,590,086 |
Schedule IV Reinsurance Infor70
Schedule IV Reinsurance Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Premiums ceded | $ 532,043 | $ 287,780 |
Premiums assumed | 22,591 | 24,064 |
Premiums | 2,981,546 | 3,517,458 |
Life Insurance Force [Member] | ||
Direct Premiums Earned | 219,023,000 | 229,981,000 |
Premiums ceded | 171,610,000 | 110,670,000 |
Premiums assumed | 3,998,000 | 3,879,000 |
Premiums | $ 51,411,000 | $ 123,190,000 |
Premiums, Percentage Assumed to Net | 7.78% | 3.15% |
Life Insurance Segment [Member] | ||
Direct Premiums Earned | $ 3,490,998 | $ 3,781,174 |
Premiums ceded | 532,043 | 287,780 |
Premiums assumed | 22,591 | 24,064 |
Premiums | $ 2,981,546 | $ 3,517,458 |
Premiums, Percentage Assumed to Net | 0.76% | 0.68% |
Valuation and Qualifying Acco71
Valuation and Qualifying Accounts (Details) - Reduced Depreciation [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Beginning of the year | $ 961,864 | $ 864,526 |
Depreciation expense | 65,092 | 103,623 |
Disposals | (132,942) | (6,285) |
End of the year | $ 894,014 | $ 961,864 |