UTGN 10-K Annual Report Dec. 31, 2017

UTG INC

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-Q	Quarter ended March 31, 2012
10-K	Fiscal year ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-Q	Quarter ended March 31, 2011
10-K	Fiscal year ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-Q	Quarter ended March 31, 2010
10-K	Fiscal year ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on May 14, 2025
DEF 14A	Filed on May 15, 2024
DEF 14A	Filed on April 25, 2023
DEF 14A	Filed on May 13, 2022
DEF 14A	Filed on May 13, 2021
DEF 14A	Filed on May 12, 2020
DEF 14A	Filed on April 30, 2019
DEF 14A	Filed on May 2, 2018
DEF 14A	Filed on May 3, 2017
DEF 14A	Filed on May 5, 2016
DEF 14A	Filed on April 24, 2015
DEF 14A	Filed on May 7, 2014
DEF 14A	Filed on Aug. 5, 2013
DEF 14A	Filed on May 9, 2012
DEF 14A	Filed on May 9, 2011
DEF 14A	Filed on May 5, 2010
DEF 14A	Filed on None

10-K 1 utg10k2017.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2017
	or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to ______________

Commission File Number 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)
Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

205 North Depot Street, Stanford, KY		40484
(Address of principal executive offices)		(Zip code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Title of class

Common Stock, stated value $.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10- K. [ ]

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

Larger accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Emerging growth company [ ]

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

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes [ ] No [X]

As of June 30, 2017, shares of the Registrant's common stock held by non-affiliates (based upon the price of the last sale of $21.75 per share), had an aggregate market value of approximately $20,059,655.

At February 28, 2018 the Registrant had 3,324,366 outstanding shares of common stock, stated value $.001 per share.

Documents incorporated by reference: None

UTG, Inc.

Form 10-K

Year Ended December 31, 2017

TABLE OF CONTENTS

PART I	4
Item 1. Business	4
Item 1A. Risk Factors	9
Item 1B. Unresolved Staff Comments	9
Item 2. Properties	9
Item 3. Legal Proceedings	9
Item 4. Mine Safety Disclosures	9
PART II	10
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6. Selected Financial Data	11
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	19
Item 8. Financial Statements and Supplementary Data	19
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	46
Item 9A. Controls and Procedures	46
Item 9B. Other Information	46
PART III	47
Item 10. Directors, Executive Officers and Corporate Governance	47
Item 11. Executive Compensation	51
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13. Certain Relationships and Related Transactions, and Director Independence	54
Item 14. Principal Accounting Fees and Services	55
PART IV	56
Item 15. Exhibits and Financial Statement Schedules	56

Forward-Looking Statements

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

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

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

PART I

Item 1. Business

Business Overview

UTG, Inc. (the "Registrant", "Company" or "UTG") is an insurance holding company incorporated in the state of Delaware in 2005. Its primary direct subsidiary is Universal Guaranty Life Insurance Company ("UG"). The Registrant and its primary subsidiary have only one significant segment, insurance. The Company's dominant business is individual life insurance, which includes the servicing of existing insurance business in-force, the acquisition of other companies in the insurance business, and the administration processing of life insurance business for other entities.

The holding company has no significant business operations of its own and relies on fees, dividends and other distributions from its operating subsidiary as the principal source of cash flows to meet its obligations. Additional information regarding the cash flow and liquidity needs of the holding company can be found in the Liquidity and Capital Resources section of the Management's Discussion and Analysis of Financial Conditions and Results of Operations.

UG has several wholly-owned and majority-owned subsidiaries. The subsidiaries were formed to hold certain real estate and other investments. The investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of systems and networks and the confidentiality, availability and integrity of data. Although the Company makes efforts to maintain the security and integrity of the networks and systems, there can be no assurance that the security efforts will be effective or that attempted security breaches or disruptions would not be successful or damaging. In the event a security breach or failure results in the disclosure of sensitive third party data or the transmission of harmful/malicious code to third parties, the Company could be subject to liability claims. The Company does not currently carry insurance coverage against such liabilities. Depending on their nature and scope, such threats also could potentially lead to improper use of our systems and networks, manipulation and destruction of data, loss of trade secrets, system downtimes and operational disruptions, which in turn, could adversely affect our reputation, competitiveness and results of operations.

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll. Mr. Correll holds a majority ownership of First Southern Funding LLC, a Kentucky corporation, ("FSF") and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company. FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ("FSNB"). Banking activities are conducted through multiple locations within south-central and western Kentucky. Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates. At December 31, 2017, Mr. Correll owns or controls directly and indirectly approximately 64.25% of UTG's outstanding stock.

UTG's website is: www.utgins.com Information regarding the Company, including recent filings with the Securities and Exchange Commission, are accessible via this website.

Insurance

UG's product portfolio consists of a limited number of life insurance product offerings. All of the products are individual life insurance products, with design variations from each other to provide choices to the customer. These variations generally center around the length of the premium paying period, length of the coverage period and whether the product accumulates cash value or not.

While the Company does not actively sell any new policies today, it has the following product available for issue:

Tradition – The Tradition policy is a fixed premium whole life insurance policy. Premiums are level and payable for life. Issue ages are 0-75. The minimum face amount is the greater of $10,000 or the amount of coverage provided by a $100 annual premium.

Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements. Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk. The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it. However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies. The Company sets a limit on the amount of insurance retained on the life of any one person. The Company will not retain more than $125,000, including accidental death benefits, on any one life.

The Company's reinsured business is ceded to numerous reinsurers. The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties. The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations. The primary reinsurers of the Company are large, well-capitalized entities. See Note 4 - Reinsurance in the Notes to the Consolidated Financial Statements for additional information regarding the Company's reinsurance activities.

Underwriting

The underwriting procedures of the insurance subsidiary are established by Management. Insurance policies are issued by the Company based upon underwriting practices established for each market in which the Company operates. Most policies are individually underwritten. Applications for insurance are reviewed to determine additional information required to make an underwriting decision, which depends on the amount of insurance applied for and the applicant's age and medical history. Additional information may include inspection reports, medical examinations, and statements from doctors who have treated the applicant in the past and, where indicated, special medical tests. After reviewing the information collected, the Company either issues the policy as applied for, issues with an extra premium charge because of unfavorable factors, or rejects the application. Substandard risks may be referred to reinsurers for full or partial reinsurance of the substandard risk.

Reserves

The applicable insurance laws under which the insurance subsidiary operates require that the insurance company report policy reserves as liabilities to meet future obligations on the policies in-force. These reserves are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated in accordance with applicable laws to be sufficient to meet the various policy and contract obligations as they mature. These laws specify that the reserves shall not be less than reserves calculated using certain mortality tables and interest rates.

The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary's experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date. Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 7.5% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables. Withdrawal rate assumptions are based upon Linton B or Linton C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.

Investments

The majority of the investments included in the Consolidated Balance Sheets are owned by UTG's subsidiary, UG. As an insurance company, UG is subject to applicable state insurance laws and regulations, which limit the concentration of investments in any one category or class and further limit the investment in any one issuer. Generally, these limitations are imposed as a percentage of statutory assets or percentage of statutory capital and surplus of each company.

The following table summarizes the Company's fixed maturities distribution at December 31, 2017 by ratings category as issued by Standard and Poor's, a leading ratings analyst.

Rating		2017
Investment Grade
AAA		2%
AA+		8%
AA		2%
AA-		11%
A+		3%
A		15%
A-		24%
BBB+		7%
BBB		9%
BBB-		7%
Below Investment Grade		12%
		100%

The following table shows the composition, average maturity and average yield on the average carrying value of the Company's investment portfolio at December 31, 2017.

	Average
	Carrying		Average	Average
Investments	Value		Maturity	Yield

Fixed maturities held for sale	$	182,897,472	11.4 years		4.75	%
Equity securities		55,277,797	Not applicable		2.20	%
Trading securities		531	Not applicable		(200.00	)%
Mortgage loans		17,945,925	5.28 years		6.64	%
Investment real estate		53,821,765	Not applicable		3.70	%
Notes receivable		17,940,251	Not applicable		7.37	%
Policy loans		9,814,638	Not applicable		6.77	%
Cash and cash equivalents		20,295,374	On demand		0.12	%
Total Investments	$	357,993,753			4.21	%

The negative yield on the trading securities is related to unrealized losses on those investments.

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

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

During 2017 and 2016, the Company acquired approximately $305,000 and $6.9 million in mortgage loans, respectively, including both regular participation mortgage loans as well as discounted mortgage loans. FSNB services a majority of the mortgage loan portfolio of the Company. The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

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

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

Management has conservatively decided to place the loans in the discounted mortgage loan portfolio on a non-accrual status, due to the instability of the borrowers.

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

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value. The Company acquired the discounted mortgage loans at below contract value, and believes that it will fully recover its carrying value upon disposal, therefore no reserve for delinquent loans is deemed necessary. The loan portfolio since purchase is performing very well with a majority of the loans currently paying. Those not currently paying are being vigorously worked by Management. The current discounted commercial mortgage loan portfolio has an average price of 36% of face value and Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased. The mortgage loan reserve was $0 at December 31, 2017 and 2016.

The following table shows a distribution of the Company's mortgage loans and discounted mortgage loans by type as of December 31, 2017:

Mortgage Loans	Amount		% of Total

Farm – all other	$	441,969		2	%
Commercial – all other		15,205,629		88	%
Residential – all other		1,666,879		10	%
Total	$	17,314,477		100	%

The following table shows a geographic distribution of the Company's mortgage loan portfolio including discounted mortgage loans and investment real estate as of December 31, 2017:

	Mortgage Loans	Real Estate
Alabama	4%	0%
Arizona	12%	1%
California	0%	1%
Florida	6%	18%
Georgia	24%	7%
Kentucky	26%	25%
South Carolina	0%	5%
Texas	0%	23%
Tennessee	17%	3%
West Virginia	11%	17%
Total	100%	100%

See Note 2 – Investments in the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for additional information regarding the Company's investments.

Competition

The insurance business is a highly competitive industry and there are a number of other companies, both stock and mutual, doing business in areas where the Company operates. Many of these competing insurers are larger, have more diversified and established lines of insurance coverage, have substantially greater financial resources and brand recognition, as well as a greater number of agents. Other significant competitive factors in the insurance industry include policyholder benefits, service to policyholders, and premium rates.

In recent years, the Company has not placed an emphasis on new business production. Costs associated with supporting new business can be significant. Current sales primarily represent sales to existing customers through additional insurance needs or conservation efforts. The Company currently encourages policy retention as opposed to new sales in an attempt to maintain or improve current persistency levels.

The Company performs administrative work as a third party administrator (TPA) for unaffiliated life insurance companies. The Company intends to continue to pursue other TPA arrangements. The Company provides TPA services to insurance companies seeking business process outsourcing solutions.

Regulation

Holding Company - States have enacted legislation requiring registration and periodic reporting by insurance companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to constitute a holding company system. Insurance holding company system statutes and regulations impose various limitations on investments in subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliates and for the payment of certain dividends and other distributions.

Insurance - Insurance companies are subject to regulation and supervision in the states in which they do business. Generally the state supervisory agencies have broad administrative powers relating to granting and revoking licenses to transact business, licensing agents, approving policy forms, regulating trade practices, approving certain premium rates, setting minimum reserve and loss ratio requirements, determining the form and content of required financial statements, and prescribing the type and amount of investments permitted. Insurance companies are also required to file detailed annual reports with supervisory agencies, and records of their business are subject to examination at any time. Under the rules of the National Association of Insurance Commissioners ("NAIC"), insurance companies are examined periodically by one or more of the supervisory agencies.

Risk-Based Capital - The NAIC requires a risk-based capital formula be applied to all life and health insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are adequately capitalized. UTG's insurance subsidiary, UG, is more than adequately capitalized under the risk-based capital formula.

Guaranty Assessments – State guaranty laws provide for assessments from insurance companies to be placed into a fund which is used, in the event of failure or insolvency of an insurance company, to fulfill the obligations of that company to its policyholders. The amount which a company is assessed is determined according to the extent of these unsatisfied obligations in each state. Assessments are recoverable to a great extent as offsets against state premium taxes.

Personnel

At December 31, 2017, UTG and its subsidiaries had 45 full-time employees located in Kentucky and Illinois. UTG's operations are headquartered in Stanford, Kentucky.

Item 1A. Risk Factors

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The Company owns an office complex in Springfield, Illinois, which houses a portion of the insurance operations. The office buildings in this complex contain 57,000 square feet of office and warehouse space. Excess space in Springfield, IL is currently being marketed for lease.

The Company leases space in Stanford, KY from an affiliate, FSNB, to house insurance operations. The Company rents approximately 8,000 square feet of office space and pays $2,000 per month in rent.

Item 3. Legal Proceedings

In the normal course of business the Company is involved, from time to time, in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of these matters will not have a material adverse effect on the Company's results of operations or financial position.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Registrant is a public company whose common stock is traded in the over-the-counter market. Over-the-counter quotations can be obtained using the UTGN stock symbol.

The following table shows the high and low closing prices for each quarterly period during the past two years, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The quotations below were acquired from the Yahoo Finance web site, which also provides quotes for over-the-counter traded securities such as UTG.

	2017		2016

Period	High	Low	High	Low

First quarter	18.25	17.00	16.05	14.26
Second quarter	21.75	17.50	16.05	14.55
Third quarter	21.00	18.85	16.05	14.85
Fourth quarter	28.00	19.25	17.75	16.05

UTG has not declared or paid any dividends on its common stock in the past two fiscal years, and has no current plans to pay dividends on its common stock as it intends to retain all earnings for investment in and growth of the Company's business. See Note 9 – Shareholders' Equity in the Notes to the Consolidated Financial Statements for information regarding dividend restrictions, including applicable restrictions on the ability of the Company's life insurance subsidiary to pay dividends.

As of February 28, 2018 there were 5,654 record holders of UTG common stock.

Purchases of Equity Securities

The following table provides information with respect to purchases we made of our common stock during the three months ended December 31, 2017 and total repurchases:

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Under the Program		Approximate Dollar Value That May Yet Be Purchased Under the Program
Oct. 1 through Oct. 31, 2017		2,007	$	20.26		2,007		N/A	$	2,132,180
Nov. 1 through Nov. 30, 2017		1,693	$	21.38		1,693		N/A	$	2,095,990
Dec. 1 through Dec. 31, 2017		5,280	$	24.73		5,280		N/A	$	1,965,420
Total		8,980				8,980

The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors on June 15, 2016, the Board of Directors of UTG authorized the repurchase of up to an additional $2 million of UTG's common stock and on July 14, 2016, the Board of Directors again increased the amount available by an additional $4.5 million, for a total repurchase of $14.5 million. Repurchased shares are available for future issuance for general corporate purposes. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited. During 2017, the Company repurchased 30,395 shares through the stock repurchase program for approximately $604,000. Through December 31, 2017, UTG has spent approximately $12.5 million in the acquisition of approximately 1,089,000 shares under this program.

On July 22, 2016, the Company entered in to an agreement to acquire 300,000 shares of its outstanding common stock from a shareholder that owned approximately 8% of the Company's outstanding common stock. The acquisition was made under the Company's stock buy-back program. As part of this transaction, two promissory notes totaling $2.9 million were issued. The notes required principal payments of one half of the note value to be paid one year from the date of purchase and the other one half to be paid two years from the date of purchase. The notes had an interest rate of 0%. The promissory notes were fully repaid during 2017. See Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.

Stock Performance Graph

Item 6. Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is Management's discussion and analysis of the financial condition and results of operations of UTG, Inc. and its subsidiaries (collectively with the Parent, the "Company") for the years ended December 31, 2017 and 2016. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.

Cautionary Statement Regarding Forward-Looking Statements

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

Overview

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

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

Critical Accounting Policies

We have identified the accounting policies below as critical to the understanding of our results of operations and our financial condition. The application of these critical accounting policies in preparing our consolidated financial statements requires Management to use significant judgments and estimates concerning future results or other developments including the likelihood, timing or amount of one or more future transactions or amounts. Actual results may differ from these estimates under different assumptions or conditions. On an on-going basis, we evaluate our estimates, assumptions and judgments based upon historical experience and various other information that we believe to be reasonable under the circumstances. For a detailed discussion of other significant accounting policies, see Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Future Policy Benefits – Because of the long-term nature of insurance contracts, the insurance company is liable for policy benefit payments that will be made in the future. The liability for future policy benefits is determined by standard actuarial procedures common to the life insurance industry. The accounting policies for determining this liability are disclosed in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Cost of Insurance Acquired – The costs of acquiring blocks of insurance from other companies or through the acquisition of other companies are deferred and recorded as deferred acquisition costs. The deferred amounts are recorded as an asset and amortized to expense in a systematic manner as indicated in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Valuation of Securities – The Company's investment portfolio consists of fixed maturities, equity securities, trading securities, mortgage loans and real estate to provide funding of future policy contractual obligations. The Company's fixed maturities and equity securities are classified as available-for-sale. Available-for-sale investments are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

The Company's trading securities are carried at fair value with unrealized gains and losses reported in income in the Consolidated Statements of Operations. Fair value is the price that the Company would expect to receive upon sale of the asset in an orderly transaction.

Mortgage loans on real estate are carried at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. A portion of the mortgage loan balance consists of discounted mortgage loans that were purchased at deep discounts through an auction process led by the Federal Government. In general, the discounted mortgage loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company. Accordingly, the Company records its investment in the discounted mortgage loans at its original purchase price adjusted for any principal receipts received.

Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

While the available-for-sale securities are generally expected to be held to maturity, they are classified as available-for-sale and are sold periodically to manage risk. Although a majority of the investment portfolio is classified as available-for-sale, the Company has the ability and intent to hold the securities until maturity. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's investment portfolio.

Impairment of Investments – The Company continually monitors the investment portfolio for investments that have become impaired in value; where fair value has declined below carrying value. While the value of the investments in the Company's portfolio continuously fluctuate due to market conditions, an other-than-temporary impairment charge is recorded only when a security has experienced a decline in fair market value which is deemed to be other than temporary. The policies and procedures the Company uses to evaluate and account for impairments of investments are disclosed in Note 1 – Summary of Significant Accounting Policies and Note 2 – Investments in the Notes to the Consolidated Financial Statements. The Company makes every effort to appropriately assess the status and value of the securities with the information available regarding an other-than-temporary impairment. However, it is difficult to predict the future prospects of a distressed or impaired security.

Deferred Income Taxes – The provision for deferred income taxes is based on the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates to temporary differences between amounts reported in the Consolidated Financial Statements and the tax basis of existing assets and liabilities. A valuation allowance is recognized for the portion of deferred tax assets that, in Management's judgment, is not likely to be realized. The effect on deferred income taxes of a change in tax rates or laws is recognized in income tax expense in the period that includes the enactment date. The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017. Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA.

Results of Operations

On a consolidated basis, the Company had net income attributable to common shareholders of $4.8 million and $1.2 million in 2017 and 2016, respectively. In 2017, income before income taxes was $3.3 million compared to $2.1 million in 2016. Total revenue was $28.7 million in 2017 and $27.8 million in 2016.

One-time events, primarily reflected in realized gains, comprise a substantial portion of the net income and revenue reported by the Company during 2017 and 2016. The magnitude of realized investment gains and losses in a given year is a function of the timing of trades of investments relative to the markets themselves as well as the recognition of any impairments on investments. Future earnings will be significantly negatively impacted should earnings from these one-time items not be realizable in a future period. While Management believes there remain additional investments with such one-time earnings, when or if realized remains uncertain.

Total benefits and other expenses paid in 2017 were $25.4 million compared to $25.7 million in 2016.

The 2017 net earnings of the Company include approximately $1.5 million attributable to a one-time net benefit from the enactment of the TCJA on December 22, 2017. Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA. The benefit is the result of a one-time non-cash reduction of the Company's net deferred tax liabilities that arose from the reduction in the statutory U.S. corporate income tax rate from 35% to 21%. The Company does not anticipate the TCJA to have a material impact going forward as the Company historically paid an average corporate income tax rate of 20% and will now pay a corporate income tax rate of 21%.

Revenues

Premiums and policy fee revenues, net of reinsurance premiums and policy fees, were comparable for 2017 to 2016. The Company writes very little new business. Unless the Company acquires a new company or a block of in-force business, Management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company's average persistency rate for all policies in-force for 2017 and 2016 was approximately 96.7% and 96.6%, respectively. Persistency is a measure of insurance in-force retained in relation to the previous year.

The following table reflects net investment income of the Company for the years ended December 31:

	2017			2016

Fixed maturities	$	8,685,698		$	9,217,413
Equity securities		1,213,922			1,393,816
Trading securities		(1,061	)		31,259
Mortgage loans		1,191,865			1,814,499
Real estate		1,990,844			1,862,400
Notes receivable		1,322,675			1,458,878
Policy loans		664,116			618,775
Cash and cash equivalents		23,445			14,583
Short-term		1,263			7,877
Total consolidated investment income		15,092,767			16,419,500
Investment expenses		(3,391,769	)		(3,474,952	)
Consolidated net investment income	$	11,700,998		$	12,944,548

Net investment income represented approximately 41% and 47% of the Company's total revenues as of December 31, 2017 and 2016, respectively. When comparing current and prior year results, net investment income was lower in the current year in most of the major investment categories. The largest declines were in the fixed maturities and mortgage loan investment portfolios.

Income from the fixed maturities investment portfolio is down approximately 6% when comparing 2017 and 2016 results. The decrease is attributable to the Company holding fewer bonds combined with upgrading credit quality. During 2017, the Company sold some lower rated, higher yielding securities and replaced them with higher rated, lower yielding securities.

Income from the mortgage loan investment portfolio is down approximately 34% when comparing 2017 and 2016 results. The decline is the result of the continued pay off of loans within the portfolio, particularly the discounted mortgage loans, which have, in recent periods, provided significant earnings. During the first quarter of 2016, two of the discounted mortgage loans paid off, which produced income of approximately $842,000. Similar such payoffs did not occur during 2017. Management does not anticipate any significant future earnings from its discounted mortgage loans as the remaining balance has become immaterial.

The following table reflects net realized investment gains (losses) for the years ended December 31:

	2017			2016

Fixed maturities available for sale	$	3,877,454		$	1,360,235
Equity securities		2,902,278			1,582,611
Real estate		3,099,554			4,934,566
Mortgage loans – OTTI		(72,161	)		0
Real estate – OTTI		(690,000	)		0
Notes receivable – OTTI		0			(465,754	)
Consolidated net realized investment gains	$	9,117,125		$	7,411,658

Net realized investment gains were up approximately 23% in 2017 as compared to 2016. As seen in the table above, the 2017 gains were the result of the sale of certain fixed maturities, equity securities and real estate, which were offset by the recognition of other-than-temporary impairments on certain assets. Realized investment gains are the result of one-time events and are expected to vary from year to year.

As mentioned above, the Company made the decision to sell some lower rated, higher yielding securities and replace them with higher rated, lower yielding securities. The gains reported in the fixed maturities investment portfolio during 2017 are mainly the result of sale of the lower rated, higher yielding securities.

During 2017, the Company made the decision to sell certain equity securities, which produced gains of approximately $2.9 million. The decision to sell was based upon Management's analysis of current market conditions and it was deemed to be an appropriate time to sell certain equity securities and recognize the associated gains. During 2016, the Company sold certain equity securities as well.

The 2017 realized gains from real estate are mainly attributable to the sale of two real estate parcels, which produced realized gains of approximately $3.5 million. During 2016, the realized gains from real estate were mainly attributable to the sale of two real estate parcels, which produced net gains of approximately $4.4 million. Gains from the sale of real estate are the result of one-time events and are expected to vary from year to year.

During 2017 and 2016, realized gains were offset by other-than-temporary impairments of approximately $762,000 and $466,000, respectively. The other-than-temporary impairments were taken as a result of Management's assessment and consideration of the length of time the securities have remained in an unrealized loss position and as a result of management's analysis and determination of value. The investments were written down to better reflect their current estimated fair value.

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

Expenses

The Company reported total benefits and other expenses of $25.4 million and $25.7 million for the twelve-month period ended December 31, 2017 and 2016, respectively. Benefits, claims and settlement expenses represented approximately 66% and 69% of the Company's total expenses for 2017 and 2016, respectively. The other major expense category of the Company is operating expenses, which represented 31% and 28% of the Company's total expenses for 2017 and 2016, respectively.

Benefits, claims and settlement expenses, net of reinsurance benefits, decreased approximately 5% in 2017 compared to 2016. The decrease primarily relates to changes in the Company's death claim experience. Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.

Changes in policyholder reserves, or future policy benefits, also impact this line item. Reserves are calculated on an individual policy basis and generally increase over the life of the policy as a result of additional premium payments and acknowledgment of increased risk as the insured continues to age.

The short-term impact of policy surrenders is negligible since a reserve for future policy benefits payable is held which is, at a minimum, equal to and generally greater than the cash surrender value of a policy. The benefit of fewer policy surrenders is primarily received over a longer time period through the retention of the Company's asset base.

Operating expenses increased approximately 8% in 2017 as compared to 2016. When analyzing 2017 and 2016 results, the operating expenses in two of the major expense categories, salaries and charitable contributions, were higher in 2017 and driving the variance from the prior year to the current year . The increase in salary expense is the result of increased bonuses paid to employees and officers of the Company. Bonuses are not contractual or dependent upon meeting certain financial goals. They are not necessarily paid each year, and when they are paid, the amounts will vary depending on the decision of Management, the Compensation Committee, and the Board of Directors. Charitable contributions are a function of the Company's earnings. Expenses in all of the other categories were comparable for the current and prior year.

Effective January 1, 2017, the Company and FSNB began sharing certain services. The shared services focuses on departments commonly utilized by both organizations such as financial accounting, human resources and information technology. The shared services did not initially make a noticeable difference in operating expenses, but provides a larger team, which enhances capabilities and quality.

As mentioned above in the Overview section of the Management Discussion and Analysis, UTG has a strong philanthropic program. The Company generally allocates a portion of its earnings to be used for its philanthropic efforts primarily targeted to Christ-centered organizations or organizations that help the weak or poor. Charitable contributions made by the Company are expected to vary from year to year depending on the earnings of the Company.

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

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

Financial Condition

Investment Information

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

The following table reflects, by investment category, the investments held by the Company as of December 31:

	2017		As a % of Total Investments			As a % of Total Assets

Fixed maturities	$	178,555,225		53	%		44	%
Equity securities		58,848,491		18	%		15	%
Mortgage loans		17,314,477		5	%		4	%
Real estate		50,504,550		15	%		12	%
Notes receivable		19,004,016		6	%		5	%
Policy loans		9,559,142		3	%		2	%
Total investments	$	333,785,901		100	%		82	%

	2016		As a % of Total Investments			As a % of Total Assets

Fixed maturities	$	187,239,718		55	%		47	%
Trading securities		2,500		0	%		0	%
Equity securities		51,707,103		15	%		13	%
Mortgage loans		18,577,372		5	%		5	%
Real estate		57,138,980		17	%		14	%
Notes receivable		16,876,485		5	%		4	%
Policy loans		10,070,134		3	%		3	%
Total investments	$	341,612,292		100	%		86	%

The Company's investments are generally managed to match related insurance and policyholder liabilities. The comparison of investment return with insurance or investment product crediting rates establishes an interest spread. Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further. Policy interest crediting rate changes and expense load changes become effective on an individual policy basis on the next policy anniversary. Therefore, it takes a full year from the time the change was determined for the full impact of such change to be realized. If interest rates decline in the future, the Company will not be able to lower rates and both net investment income and net income will be impacted negatively.

The Company's total investments represented 82% and 86% of the Company's total assets as of December 31, 2017 and 2016, respectively. Fixed maturities consistently represented a substantial portion, 53% and 55%, respectively, of the total investments during 2017 and 2016. The overall investment mix, as a percentage of total investments, remained fairly consistent when comparing the investments held as of December 31, 2017 and 2016.

As of December 31, 2017, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders' equity or results from operations. To provide additional flexibility and liquidity, the Company has identified all fixed maturity securities as "investments available for sale". Investments available for sale are carried at market value, with changes in market value charged directly to the other comprehensive component of shareholders' equity. Changes in the market value of available for sale securities resulted in net unrealized gains of approximately $17.3 million and $22.4 million as of December 31, 2017 and 2016, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the market place.

Management continues to view the Company's investment portfolio with utmost priority. Significant time has been spent internally researching the Company's risk and communicating with outside investment advisors about the current investment environment and ways to ensure preservation of capital and mitigate losses. Management has put extensive efforts into evaluating the investment holdings. Additionally, members of the Company's Board of Directors and investment committee have been solicited for advice and provided with information. Management reviews the Company's entire portfolio on a security level basis to be sure all understand our holdings, potential risks and underlying credit supporting the investments. Management intends to continue its close monitoring of its bond holdings and other investments for possible deterioration or market condition changes. Future events may result in Management's determination that certain current investment holdings may need to be sold which could result in gains or losses in future periods. Such future events could also result in other than temporary declines in value that could result in future period impairment losses.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties related to Management's assessment of other-than-temporary declines in value include but are not limited to: the risk that Company's assessment of an issuer's ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; the risk that fraudulent information could be provided to the Company's investment professionals who determine the fair value estimates.

Liquidity

Liquidity provides the Company with the ability to meet on demand the cash commitments required by its business operations and financial obligations. The Company's liquidity is primarily derived from a portfolio of marketable securities and line of credit facilities. The Company has two principal needs for cash – the insurance company's contractual obligations to policyholders and the payment of operating expenses.

Parent Company Liquidity

UTG is a holding company that has no day-to-day operations of its own. Cash flows from UTG's insurance subsidiary, UG, are used to pay costs associated with maintaining the Company in good standing with states in which it does business and purchasing outstanding shares of UTG stock. UTG's cash flow is dependent on management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances. As of December 31, 2017 and 2016, substantially all of the consolidated shareholders' equity represents net assets of its subsidiaries. In 2017, the Parent company received $2 million in dividends from its insurance subsidiary and $1 million in 2016. Certain restrictions exist on the payment of dividends from the insurance subsidiary to the Parent company. For further information regarding the restrictions on the payment of dividends by the insurance subsidiary, see Note 9 – Shareholders' Equity in the Notes to the Consolidated Financial Statements. Although these restrictions exist, dividend availability from the insurance subsidiary has historically been sufficient to meet the cash flow needs of the Parent company.

Insurance Subsidiary Liquidity

Sources of cash flows for the insurance subsidiary primarily consist of premium and investment income. Cash outflows from operations include policy benefit payments, administrative expenses, taxes and dividends to the Parent company.

Short-Term Borrowings

An additional source of liquidity to the Parent company and its subsidiaries is the line of credit facilities extended to them. As of December 31, 2017 and 2016, the Company and its subsidiaries had available $18 million in line of credit facilities. For additional information regarding the line of credit facilities, see Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company expects to have readily available funds for the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiary through internally generated cash flow and the credit facilities. In the unlikely event that more liquidity is needed, the Company could generate additional funds through such sources as a short-term credit facility and intercompany borrowing.

Consolidated Liquidity

Cash used in operating activities was approximately $13.2 million and $11.4 million in 2017 and 2016, respectively. Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments. Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses. The Company has not marketed any significant new products for several years. As such, premium revenues continue to decline. Management anticipates future cash flows from operations to remain similar to historic trends.

During 2017 and 2016, the Company's investing activities provided net cash of approximately $27 million and $16.7 million, respectively. Proceeds from investments sold decreased approximately 17% or $11.4 million when comparing 2017 to 2016. Investment purchases decreased approximately 43% or $22 million. The net cash provided by investing activities is expected to vary from year to year depending on market conditions and management's ability to find and negotiate favorable investment contracts.

Net cash used in financing activities was approximately $3.5 million and $2 million during 2017 and 2016, respectively. On July 22, 2016, the Company entered in to an agreement to acquire 300,000 shares of its outstanding common stock from a shareholder that owned approximately 8% of the Company's outstanding common stock. The acquisition was made under the Company's stock buy-back program. As part of this transaction, two promissory notes totaling $2.9 million were issued. The notes require principal payments of one half of the note value to be paid one year from the date of purchase and the other one half to be paid two years from the date of purchase. The notes had an interest rate of 0%. The notes were fully repaid during 2017.

As of December 31, 2017, the Company had no debt outstanding with third parties.

The Company had cash and cash equivalents of approximately $25.4 million and $15.2 million as of December 31, 2017 and 2016, respectively. The Company has a portfolio of marketable fixed and equity securities that are available for sale, if an unexpected event were to occur. These securities had a fair value of approximately $238 million and $239 million at December 31, 2017 and 2016, respectively. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's investment portfolio.

Management believes the overall sources of liquidity available will be sufficient to satisfy its financial obligations.

Capital Resources

The Company's capital structure consists of short-term debt, long-term debt and shareholders' equity. A complete analysis and description of the short-term and long-term debt issues outstanding as of December 31, 2017 and 2016 are presented in Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company had $0 debt outstanding as of December 31, 2017 and $2.9 million as of December 31, 2016. On July 22, 2016, the Company entered in to an agreement to acquire 300,000 shares of its outstanding common stock from a shareholder that owned approximately 8% of the Company's outstanding common stock. The acquisition was made under the Company's stock buy-back program. As part of this transaction, two promissory notes totaling $2.9 million were issued. The notes require principal payments of one half of the note value to be paid one year from the date of purchase and the other one half to be paid two years from the date of purchase. The notes had an interest rate of 0%. The notes were fully repaid during 2017. See Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's notes payable.

The NAIC's risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula. The risk-based capital (RBC) formula measures the adequacy of statutory capital and surplus in relation to investment and insurance risks such as asset quality, mortality and morbidity, asset and liability matching and other business factors. The RBC formula is used by state insurance regulators as an early warning tool to identify, for the purpose of initiating regulatory action, insurance companies that potentially are inadequately capitalized.

At December 31, 2017, UG has a ratio of approximately 5.76, which is 576% of the authorized control level. Accordingly, the Company meets the RBC requirements.

As mentioned in Note 7 above, on July 22, 2016 the Company entered in to an agreement to acquire 300,000 shares of its outstanding common stock from a shareholder that owned approximately 8% of the Company's outstanding common stock. The purchase price per share was $14.50 was derived through private negotiation. The purchase was paid with cash and the issuance of promissory notes.

Shareholders' equity was approximately $110 million and $94 million as of December 31, 2017 and 2016, respectively. Total shareholders' equity increased approximately 17% in 2017 compared to 2016. The increase is primarily attributable to the change in accumulated other comprehensive income and retained earnings. As of December 31, 2017 and 2016, the Company reported accumulated other comprehensive income of approximately $32.9 million and $20.4 million, respectively. The change in accumulated other comprehensive income is mainly attributable to the net unrealized holding gains of approximately $17 million and $22.4 million in 2017 and 2016. As previously discussed in the above in the Financial Condition – Investment Information section of the MD&A, the variance in the net unrealized gains and losses is the result of normal market fluctuations mainly related to changes in interest rates in the market place.

As a result of the TCJA, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 of approximately $7.3 million. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in law. Refer to Note 1 – Summary of Significant Accounting Policies and Note 6 – Income Taxes in the Notes to the Consolidated Financial Statements for further disclosure regarding the TCJA.

The Company's investments provide sufficient return to cover future obligations. The Company carries all of its fixed maturity holdings as available for sale, which are reported in the Consolidated Financial Statements at their fair value.

New Accounting Pronouncements

See Note 1 – Summary of Significant Account Policies in the Notes to the Consolidated Financial Statements for information regarding new accounting pronouncements.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, financing activities or other relationships with unconsolidated entities or other persons.

Contractual Obligations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

	Page No.
UTG, Inc. and Consolidated Subsidiaries
Report of Independent Registered Public Accounting Firm	20
Consolidated Balance Sheets	21
Consolidated Statements of Operations	22
Consolidated Statements of Comprehensive Income	23
Consolidated Statements of Shareholders' Equity	24
Consolidated Statements of Cash Flows	25
Notes to Consolidated Financial Statements	26

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Shareholders of UTG, Inc. and Subsidiaries

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of UTG, Inc. and subsidiaries (the "Company") as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2017, and the related notes to the consolidated financial statements (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Brown Smith Wallace, LLP

We have served as the Company's auditor since 2005.

St. Louis, Missouri

March 26, 2018

UTG, Inc.

Consolidated Balance Sheets

As of December 31, 2017 and 2016

ASSETS

	2017		2016

Investments:
Investments available for sale:
Fixed maturities, at fair value (amortized cost $159,912,511 and $170,595,860)	$	178,555,225	$	187,239,718
Equity securities, at fair value (cost $35,712,633 and $37,014,712)		58,848,491		51,707,103
Trading securities, at fair value (cost $0 and $70,690)		0		2,500
Mortgage loans on real estate at amortized cost		17,314,477		18,577,372
Investment real estate, net		50,504,550		57,138,980
Notes receivable		19,004,016		16,876,485
Policy loans		9,559,142		10,070,134
Total investments		333,785,901		341,612,292

Cash and cash equivalents		25,434,199		15,156,548
Accrued investment income		2,990,721		2,872,850
Reinsurance receivables:
Future policy benefits		26,488,346		26,974,819
Policy claims and other benefits		3,882,047		3,952,465
Cost of insurance acquired		6,428,292		7,267,397
Property and equipment, net of accumulated depreciation		1,118,826		1,564,944
Income taxes receivable		549,851		1,223,682
Other assets		5,766,901		1,476,356
Total assets	$	406,445,084	$	402,101,353

LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
Future policy benefits	$	259,469,205	$	263,844,559
Policy claims and benefits payable		3,777,175		3,889,572
Other policyholder funds		408,790		428,769
Dividend and endowment accumulations		14,601,645		14,504,583
Deferred income taxes		10,996,404		15,459,049
Notes payable		0		2,900,000
Trading securities, at fair value (proceeds $0 and $181,159)		0		1,439
Other liabilities		6,760,347		6,771,540
Total liabilities		296,013,566		307,799,511

Shareholders' equity:
Common stock - no par value, stated value $0.001 per share. Authorized 7,000,000 shares - 3,333,377 and 3,349,927 shares issued and outstanding		3,333		3,350
Additional paid-in capital		37,536,164		37,878,712
Retained earnings		39,040,456		34,230,307
Accumulated other comprehensive income		32,952,338		20,353,692
Total UTG shareholders' equity		109,532,291		92,466,061
Noncontrolling interest		899,227		1,835,781
Total shareholders' equity		110,431,518		94,301,842
Total liabilities and shareholders' equity	$	406,445,084	$	402,101,353

See accompanying notes.

UTG, Inc.

Consolidated Statements of Operations

As of December 31, 2017 and 2016

	2017			2016

Revenues:

Premiums and policy fees	$	10,413,346		$	9,742,849
Reinsurance premiums and policy fees		(2,955,989	)		(2,853,741	)
Net investment income		11,700,998			12,944,548
Other income		458,663			591,919
Revenues before realized gains (losses)		19,617,018			20,425,575
Realized investment gains (losses), net:
Other-than-temporary impairments		(762,161	)		(465,754	)
Other realized investment gains, net		9,879,286			7,877,412
Total realized investment gains, net		9,117,125			7,411,658
Total revenues		28,734,143			27,837,233

Benefits and other expenses:

Benefits, claims and settlement expenses:
Life		17,428,286			18,657,060
Ceded reinsurance benefits and claims		(1,893,986	)		(2,517,075	)
Annuity		975,196			1,120,684
Dividends to policyholders		370,847			432,150
Commissions		(145,722	)		(139,167	)
Amortization of cost of insurance acquired		839,105			872,982
Operating expenses		7,854,301			7,288,133
Interest expense		-			-
Total benefits and other expenses		25,428,027			25,714,767

Income before income taxes		3,306,116			2,122,466
Income tax expense (benefit)		(1,507,016	)		666,181

Net income		4,813,132			1,456,285

Net income attributable to noncontrolling interest		(2,983	)		(288,260	)

Net income attributable to common shareholders	$	4,810,149		$	1,168,025

Amounts attributable to common shareholders:

Basic income per share	$	1.44		$	0.33

Diluted income per share	$	1.44		$	0.33

Basic weighted average shares outstanding		3,346,774			3,537,394

Diluted weighted average shares outstanding		3,346,774			3,537,394

See accompanying notes.

UTG, Inc.

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31, 2017 and 2016

	2017			2016

Net Income	$	4,813,132		$	1,456,285

Other comprehensive income (loss):

Unrealized holding gains (losses) arising during period, pre-tax		17,174,126			34,494,457
Tax (expense) benefit on unrealized holding gains (losses) arising during the period		(6,010,944	)		(12,073,060	)
Deferred tax adjustment from tax rate change		5,842,290			0
Unrealized holding gains (losses) arising during period, net of tax		17,005,472			22,421,397

Less reclassification adjustment for gains included in net income		(6,779,732	)		(1,360,235	)
Tax expense for gains included in net income		2,372,906			476,082
Reclassification adjustment for gains included in net income, net of tax		(4,406,826	)		(884,153	)
Subtotal: Other comprehensive income (loss), net of tax		12,598,646			21,537,244

Comprehensive income (loss)		17,411,778			22,993,529

Less comprehensive income attributable to no controlling interest		(2,983	)		(288,260	)

Comprehensive income (loss) attributable to UTG, Inc.	$	17,408,795		$	22,705,269

See accompanying notes.

UTG, Inc.

Consolidated Statements of Shareholders' Equity

Year ended December 31, 2017	Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interest			Total Shareholders' Equity

Balance at January 1, 2017	$	3,350		$	37,878,712		$	34,230,307	$	20,353,692	$	1,835,781		$	94,301,842
Common stock issued during year		13			261,474			-		-		-			261,487
Treasury shares acquired		(30	)		(604,022	)		-		-		-			(604,052	)
Net income attributable to common shareholders		-			-			4,810,149		-		-			4,810,149
Unrealized holding gain on securities net of noncontrolling interest and reclassification adjustment and taxes		-			-			-		12,598,646		-			12,598,646
Contributions		-			-			-		-		-			-
Distributions		-			-			-		-		(939,537	)		(939,537	)
Gain attributable to noncontrolling interest		-			-			-		-		2,983			2,983
Balance at December 31, 2017	$	3,333		$	37,536,164		$	39,040,456	$	32,952,338	$	899,227		$	110,431,518

Year ended December 31, 2016	Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income			Noncontrolling Interes			Total Shareholders' Equity
Balance at January 1, 2016	$	3,699		$	43,002,670		$	33,062,282	$	(1,183,552	)	$	2,102,403		$	76,987,502
Common stock issued during year		21			307,866			-		-			-			307,887
Treasury shares acquired		(370	)		(5,431,824	)		-		-			-			(5,432,194	)
Net income attributable to common shareholders		-			-			1,168,025		-			-			1,168,025
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes		-			-			-		21,537,244			-			21,537,244
Contributions		-			-			-		-			83,696			83,696
Distributions		-			-			-		-			(638,578	)		(638,578	)
Gain attributable to noncontrolling interest		-			-			-		-			288,260			288,260
Balance at December 31, 2016	$	3,350		$	37,878,712		$	34,230,307	$	20,353,692		$	1,835,781		$	94,301,842

See accompanying notes.

UTG, INC.

Consolidated Statements of Cash Flows

As of December 31, 2017 and 2016

	2017			2016

Cash flows from operating activities:
Net income attributable to common shares	$	4,810,149		$	1,168,025
Adjustments to reconcile net income to net cash used in operating activities
Amortization (accretion) of investments		94,608			(457,864	)
Realized investment gains, net		(9,117,125	)		(7,411,658	)
Unrealized trading (gains) losses included in income		111,531			(31,259	)
Realized trading (gains) losses included in income		(110,470	)		-
Amortization of cost of insurance acquired		839,105			872,982
Depreciation		701,809			698,374
Net income attributable to noncontrolling interest		2,983			288,260
Charges for mortality and administration of universal life and annuity products		(6,636,270	)		(5,588,667	)
Interest credited to account balances		4,346,943			4,539,416
Change in accrued investment income		(117,871	)		(51,512	)
Change in reinsurance receivables		556,891			89,524
Change in policy liabilities and accruals		(2,794,247	)		(4,679,857	)
Change in income taxes receivable (payable)		673,831			(604,639	)
Change in other assets and liabilities, net		(6,560,115	)		(207,312	)
Net cash used in operating activities		(13,198,248	)		(11,376,187	)

Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale		29,744,619			30,355,159
Equity securities available for sale		7,479,886			13,785,226
Trading securities		-			72,279
Mortgage loans		1,840,610			7,047,158
Real estate		13,014,387			11,142,322
Notes receivable		2,170,322			4,463,966
Policy loans		1,951,222			723,317
Short-term investments		-			-
Total proceeds from investments sold and matured		56,201,046			67,589,427
Cost of investments acquired:
Fixed maturities available for sale		(15,615,699	)		(11,404,577	)
Equity securities available for sale		(3,275,532	)		(5,262,588	)
Trading securities		-			(70,690	)
Mortgage loans		(360,531	)		(6,935,273	)
Real estate		(4,226,106	)		(15,935,233	)
Notes receivable		(4,297,853	)		(11,208,299	)
Policy loans		(1,440,230	)		(109,207	)
Short-term investments		-			-
Total cost of investments acquired		(29,215,951	)		(50,925,867	)
Purchase of property and equipment		-			-
Net cash provided by investing activities		26,985,095			16,663,560

Cash flows from financing activities:
Policyholder contract deposits		4,812,703			5,087,358
Policyholder contract withdrawals		(4,139,797	)		(4,261,609	)
Proceeds from notes payable/line of credit		-			2,900,000
Payments of principal on notes payable/line of credit		(2,900,000	)		-
Purchase of treasury stock		(604,052	)		(5,432,194	)
Issuance of stock		261,487			307,887
Non controlling contributions/(distributions) of consolidated subsidiary		(939,537	)		(554,882	)
Net cash used in financing activities		(3,509,196	)		(1,953,440	)

Net increase in cash and cash equivalents		10,277,651			3,333,933
Cash and cash equivalents at beginning of year		15,156,548			11,822,615
Cash and cash equivalents at end of year	$	25,434,199		$	15,156,548

See accompanying notes.

UTG, Inc.

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Business – UTG, Inc. is an insurance holding company. The Company's dominant business is individual life insurance, which includes the servicing of existing insurance in-force and the acquisition of other companies in the life insurance business. UTG and its subsidiaries are collectively referred to as the "Company".

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll. Mr. Correll holds a majority ownership of First Southern Funding, LLC ("FSF"), a Kentucky corporation, and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company. FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ("FSNB"). Banking activities are conducted through multiple locations within south-central and western Kentucky. Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates. At December 31, 2017, Mr. Correll owns or controls directly and indirectly approximately 64.25% of UTG's outstanding stock.

UTG's life insurance subsidiary has several wholly-owned and majority-owned subsidiaries. The subsidiaries were formed to hold certain real estate and other investments. The investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), under guidance issued by the Financial Accounting Standards Board ("FASB"). The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments – The Company has only one business segment – life insurance.

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income. Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity. Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income (loss).

Trading Securities – Trading security investments are reported at fair value with gains and losses resulting from changes in fair value recognized in earnings. Trading securities include exchange traded equities and exchange traded options.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Included in the mortgage loans balance is discounted mortgage loans on real estate. Discounted mortgage loans on real estate are loans that the Company purchased at a deep discount through an auction process led by the Federal Government or other intermediary. In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company. Accordingly, the Company records its investment in the discounted loans at its original purchase price adjusted for any principal receipts received. Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate. For cash payments received during the work out process, the Company records these payments to interest income on a cash basis. For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date. Management reviews the discount loan portfolio regularly for impairment. If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Notes Receivable – Notes receivable are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments. If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance. Fair values are based on quoted market prices, where available. Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are estimated using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes approximates fair value. For more specific information regarding the Company's measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments. If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings. Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors. The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts. The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition. The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies. Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of $5,225,333 and $4,779,216 at December 31, 2017 and 2016, respectively. Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of three to thirty years. Depreciation expense was $446,117 and $451,667 for the years ended December 31, 2017 and 2016, respectively.

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary's experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date. Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 7.5% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. The mortality rate assumptions for policies currently issued by the Company are based on 2001 select and ultimate tables. Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company. There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company's ultimate obligation.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax impact attributable to differences between the financial statement book values and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Tax Cuts & Jobs Act ("TCJA"), signed into law on December 22, 2017, reduces the corporate Federal income tax rate from 35% to 21%, effective for years beginning after December 31, 2017. More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share – The objective of both basic earnings per share ("EPS") and diluted EPS is to measure the performance of an entity over the reporting period. The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period. Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in-force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

Accounting Standards Update (ASU) 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of certain tax effects from accumulated other comprehensive income. The purpose of this update is to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for public companies for fiscal years beginning after December 15, 2018. Early adoption is permitted. See the Consolidated Statements of Comprehensive Income (Loss) for the impact of ASU 2018-02.

Accounting Standards Update (ASU) 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment – The amendments included in ASU 2017-04 eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for public companies for fiscal years beginning after December 15, 2019. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash – The amendments included in ASU 2016-18 require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. ASU 2016-18 is effective for public companies for fiscal years beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards Update (ASU) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory – The amendments included in ASU 2016-16 require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. The amendments do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effective for public companies for fiscal years beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments – The amendments included in ASU 2016-15 provide cash flow statement classification guidance for debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective Interest Rate of the Borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public companies for fiscal years beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards Update (ASU 2016-13), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments – The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on it's consolidated financial statements.

Accounting Standards Update (ASU) 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities – The amendments included in ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. ASU 2016-01 also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). The guidance eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. ASU 2016-01 is effective for public companies for fiscal years beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018 and it is expected to have a material impact on the Consolidated Statements of Operations. However, the change does not impact total shareholders' equity.

Note 2 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The following tables provide a summary of fixed maturities available for sale and equity securities by original or amortized cost and estimated fair value:

December 31, 2017	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	2,679,325	$	33,802	$	(73,530	)	$	2,639,597
U.S. special revenue and assessments		9,012,232		620,789		-			9,633,021
All other corporate bonds		148,220,954		18,359,816		(298,163	)		166,282,607
		159,912,511		19,014,407		(371,693	)		178,555,225
Equity securities		35,712,633		23,648,201		(512,343	)		58,848,491
Total	$	195,625,144	$	42,662,608	$	(884,036	)	$	237,403,716

December 31, 2016	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value

Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	9,058,210	$	74,581	$	(96,981	)	$	9,035,810
U.S. special revenue and assessments		10,145,531		1,002,789		(14,043	)		11,134,277
All other corporate bonds		151,392,119		17,234,691		(1,557,179	)		167,069,631
		170,595,860		18,312,061		(1,668,203	)		187,239,718
Equity securities		37,014,712		15,214,862		(522,471	)		51,707,103
Total	$	207,610,572	$	33,526,923	$	(2,190,674	)	$	238,946,821

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2017. Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2017	Amortized Cost		Estimated Fair Value

Due in one year or less	$	1,217,352	$	1,250,610
Due after one year through five years		31,340,053		41,789,869
Due after five years through ten years		37,234,486		38,512,732
Due after ten years		90,120,620		97,002,014
Total	$	159,912,511	$	178,555,225

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers. In addition, the trading market for these securities is usually more limited than for investment grade debt securities. Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB+ or below.

The Company held below investment grade investments with an estimated market value of $21,108,077 and $33,064,563 as of December 31, 2017 and December 31, 2016, respectively. The investments are all classified as "All other corporate bonds".

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

December 31, 2017	Less than 12 months						12 months or longer						Total

	Fair value			Unrealized losses			Fair value			Unrealized losses			Fair value			Unrealized losses
U.S. Government and govt. agencies and authorities		$	-		-			$	1,604,987		(73,530	)		$	1,604,987		(73,530	)
U.S. special revenue and assessments			-		-				-		-				-		-
All other corporate bonds			9,732,635		(91,757	)			11,164,317		(206,406	)			20,896,952		(298,163	)
Total fixed maturities		$	9,732,635		(91,757	)		$	12,769,304		(279,936	)		$	22,501,939		(371,693	)
Equity securities		$	4,130,260		(270,774	)		$	1,526,868		(241,569	)		$	5,657,128		(512,343	)

December 31, 2016	Less than 12 months						12 months or longer						Total

	Fair value			Unrealized losses			Fair value			Unrealized losses			Fair value			Unrealized losses
U.S. Government and govt. agencies and authorities		$	6,578,248		(96,981	)		$	-		-			$	6,578,248		(96,981	)
U.S. special revenue and assessments			974,250		(14,043	)			-		-				974,250		(14,043	)
All other corporate bonds			50,161,487		(1,408,828	)			4,023,510		(148,351	)			54,184,997		(1,557,179	)
Total fixed maturities		$	57,713,985		(1,519,852	)		$	4,023,510		(148,351	)		$	61,737,495		(1,668,203	)
Equity securities		$	4,703,033		(522,471	)		$	-		-			$	4,703,033		(522,471	)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12 months	12 months or longer	Total
As of December 31, 2017
Fixed maturities	6	6	12
Equity securities	2	2	4
As of December 31, 2016
Fixed maturities	25	3	28
Equity securities	3	-	3

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

Trading Securities

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

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

	2017				2016

Net unrealized gains (losses)		$	(111,531	)		$	31,259
Net realized gains (losses)			110,470				-
Net unrealized and realized gains (losses)		$	(1,061	)		$	31,259

Mortgage Loans on Real Estate

During 2017 and 2016, the Company acquired $360,531 and $6,935,273 in mortgage loans, respectively, including both regular participation mortgage loans as well as discounted mortgage loans. FSNB services the majority of the Company's mortgage loan portfolio. The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.

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

	2017		2016
	Maximum rate	Minimum rate	Maximum rate	Minimum rate

Farm Loans	5.00 %	5.00 %	5.00 %	5.00 %
Commercial Loans	7.50 %	4.00 %	8.00 %	4.00 %
Residential Loans	8.00 %	4.00 %	8.00 %	3.94 %

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

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

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value. The Company acquired the discounted mortgage loans at below contract value, and believes that it will fully recover its carrying value upon disposal, therefore no reserve for delinquent loans is deemed necessary. Those not currently paying are being vigorously worked by Management. The current discounted commercial mortgage loan portfolio has an average price of 36% and 32% of face value as of December 31, 2017 and 2016, respectively. Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased. The mortgage loan reserve was $0 at December 31, 2017 and 2016.

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

December 31, 2017 Payment Frequency	Number of Loans		Carrying Value

No payments received		8	$	-
One-time payment received		1		-
Irregular payments received		2		-
Periodic payments received		5		2,003,536
Total		16	$	2,003,536

December 31, 2016 Payment Frequency	Number of Loans		Carrying Value

No payments received		8	$	-
One-time payment received		1		-
Irregular payments received		2		20,834
Periodic payments received		5		2,168,062
Total		16	$	2,188,896

The following table summarizes the mortgage loan holdings of the Company for the periods ended December 31:

	2017		2016

In good standing	$	15,310,941	$	16,388,477
Overdue interest over 90 days		-		20,834
Restructured		-		60,827
In process of foreclosure		2,003,536		2,107,234
Total mortgage loans	$	17,314,477	$	18,577,372
Total foreclosed loans during the year	$	-	$	735,000

Investment Real Estate

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

Notes Receivable

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

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

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

Analysis of Investment Operations

The following table reflects the Company's net investment income for the periods ended December 31:

	2017			2016

Fixed maturities	$	8,685,698		$	9,217,413
Equity securities		1,213,922			1,393,816
Trading securities		(1,061	)		31,259
Mortgage loans		1,191,865			1,814,499
Real estate		1,990,844			1,862,400
Notes receivable		1,322,675			1,458,878
Policy loans		664,116			618,775
Cash and cash equivalents		23,445			14,583
Short-term		1,263			7,877
Total consolidated investment income		15,092,767			16,419,500
Investment expenses		(3,391,769	)		(3,474,952	)
Consolidated net investment income	$	11,700,998		$	12,944,548

The following table reflects the Company's net realized investments gains and losses for the periods ended December 31:

2017	Gross Realized Gains		Gross Realized (Losses)			Net Realized Gains (Losses)

Fixed maturities	$	3,950,014	$	(72,560	)	$	3,877,454
Real estate		3,622,519		(522,965	)		3,099,554
Common stock		2,902,278		-			2,902,278
Real estate – OTTI		-		(690,000	)		(690,000	)
Mortgage loans - OTTI		-		(72,161	)		(72,161	)
Total realized gains (losses)	$	10,474,811	$	(1,357,686	)	$	9,117,125

2016	Gross Realized Gains		Gross Realized (Losses)			Net Realized Gains (Losses)

Fixed maturities	$	1,449,956	$	(89,721	)	$	1,360,235
Real estate		4,942,675		(8,109	)		4,934,566
Common stock		1,615,446		(32,835	)		1,582,611
Notes receivable – OTTI		-		(465,754	)		(465,754	)
Total realized gains (losses)	$	8,008,077	$	(596,419	)	$	7,411,658

Other-Than-Temporary Impairments

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

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

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

Based on Management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

	2017		2016

Other than temporary impairments:
Real estate	$	690,000	$	-
Notes Receivable		-		465,754
Mortgage loans		72,161		-
Total other than temporary impairments	$	762,161	$	465,754

The other-than-temporary impairments recognized during 2017 and 2016 were taken as a result of Management's assessment and consideration of the length of time the securities have remained in an unrealized loss position and as a result of management's analysis and determination of value. The investments were written down to better reflect their current expected market value.

Investments on Deposit

The Company had investments with a fair value of $8,642,633 and $8,692,705 on deposit with various state insurance departments as of December 31, 2017 and 2016, respectively.

Note 3 – Fair Value Measurements

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

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

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

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

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

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

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

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

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

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

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

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

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

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2017.

	Level 1		Level 2		Level 3		Total

Assets
Fixed Maturities, available for sale	$	2,639,597	$	175,437,239	$	478,389	$	178,555,225
Equity Securities, available for sale		20,436,225		7,756,435		30,655,831		58,848,491
Total	$	23,075,822	$	183,193,674	$	31,134,220	$	237,403,716

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2016.

	Level 1		Level 2		Level 3		Total

Assets
Fixed Maturities, available for sale	$	9,035,810	$	175,120,657	$	3,083,251	$	187,239,718
Equity Securities, available for sale		19,360,394		6,553,410		25,793,299		51,707,103
Trading Securities		2,500		-		-		2,500
Total	$	28,398,704	$	181,674,067	$	28,876,550	$	238,949,321

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

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

	Fixed Maturities, Available for Sale			Equity Securities, Available for Sale			Total

Balance at December 31, 2016	$	3,083,251		$	25,793,299		$	28,876,550
Transfers in to Level 3		-			-			-
Total unrealized gain (losses):
Included in realized gains (losses)		1,046,401			-			1,046,401
Included in other comprehensive income		(921,709	)		3,775,170			2,853,461
Purchases		-			2,244,306			2,244,306
Sales		(2,729,554	)		(1,156,944	)		(3,886,498	)
Balance at December 31, 2017	$	478,389		$	30,655,831		$	31,134,220

The Level 3 securities include one fixed maturity and certain equity securities with unobservable inputs. The Company computed fair value of Level 3 equity investments based on a review of current financial information, earnings trends and similar companies in the same industries.

There were no transfers in or out of Level 3 during 2017. The Company transferred one fixed maturity security in to Level 3 during 2016 based upon a change in rating. Transfers occur when there is a lack of observable market information.

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

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

	December 31, 2017						December 31, 2016
Assets	Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value

Mortgage loans on real estate		$	17,314,477		$	17,314,477		$	18,577,372		$	18,577,372
Investment real estate			50,504,550			50,504,550			57,138,980			57,138,980
Notes receivable			19,004,016			19,004,016			16,876,485			16,876,485
Policy loans			9,559,142			9,559,142			10,070,134			10,070,134
Cash and cash equivalents			25,434,199			25,434,199			15,156,548			15,156,548

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

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

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

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

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

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

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

Note 4 - Reinsurance

Most recently, UG utilized reinsurance agreements with Optimum Re Insurance Company ("Optimum"), and Swiss Re Life and Health America Incorporated ("SWISS RE"). Optimum and SWISS RE currently hold an " A- " (Excellent) and " A+ " (Superior) rating, respectively, from A.M. Best, an industry rating company. The reinsurance agreements were effective December 1, 1993, and covered most new business of UG. Under the terms of the agreements, UG cedes risk amounts above its retention limit of $100,000 with a minimum cession of $25,000. Ceded amounts are shared equally between the two reinsurers on a yearly renewable term ("YRT") basis, a common industry method. The treaty is self-administered; meaning the Company records the reinsurance results and reports them to the reinsurers.

Also, Optimum is the reinsurer of 100% of the accidental death benefits ("ADB") in force of UG. This coverage is renewable annually at the Company's option. Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company ("PALIC") effective September 30, 1996. Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies. Paid-up life insurance generally refers to non-premium paying life insurance policies. Under the terms of the agreement, UG sold 100% of the future results of this block of business to PALIC through a coinsurance agreement. UG continues to administer the business for PALIC and receives a servicing fee through a commission allowance based on the remaining in-force policies each month. PALIC has the right to assumption reinsure the business, at its option, and transfer the administration. The Company is not aware of any such plans. PALIC's ultimate parent, The Guardian Life Insurance Company of America ("Guardian"), currently holds an " A++ " (Superior) rating from A.M. Best. The PALIC agreement accounts for approximately 63% of UG's reinsurance reserve credit, as of December 31, 2017 and 2016.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society. Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members. Effective October 1, 2017, the IOV recaptured its coinsurance agreement with UG. The recapture was completed as a step in the IOV's decision to exit its insurance business.

The Company does not have any short-duration reinsurance contracts. The effect of the Company's long-duration reinsurance contracts on premiums earned in 2017 and 2016 were as follows:

	2017				2016
	Premiums Earned				Premiums Earned

Direct		$	10,407,434			$	9,720,712
Assumed			5,912				22,137
Ceded			(2,955,989	)			(2,853,741	)
Net Premiums		$	7,457,357			$	6,889,108

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition. The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies. Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The interest rates utilized may vary due to differences in the blocks of business. The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

	2017			2016

Cost of insurance acquired, beginning of year	$	7,267,397		$	8,140,379

Interest accretion		967,032			1,071,790
Amortization		(1,806,137	)		(1,944,772	)
Net amortization		(839,105	)		(872,982	)
Cost of insurance acquired, end of year	$	6,428,292		$	7,267,397

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2018	866,339	1,672,404	806,065
2019	769,612	1,545,518	775,906
2020	676,503	1,421,353	744,850
2021	587,120	1,302,090	714,970
2022	501,324	1,189,672	688,348

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

	2017				2016

Current tax		$	751,377			$	209,576
Deferred tax			(2,258,393	)			456,605
Income tax expense (benefit)		$	(1,507,016	)		$	666,181

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

	2017			2016

Tax computed at statutory rate	$	1,157,141		$	742,863
Changes in taxes due to:
Non-controlling interest		(1,044	)		(100,891	)
Small company deduction		(591,074	)		(260,660	)
Dividend received deduction		(90,698	)		(92,731	)
Tax rate change		(1,488,646	)		-
Other		(492,695	)		377,600
Income tax expense (benefit)	$	(1,507,016	)	$	666,181

As a result of the TCJA described above in Note 1 - Summary of Significant Accounting Policies, the Company has recognized a decrease to their net deferred tax liability as of December 31, 2017 in the amount of $7,330,936. The Company has determined that no other changes are required to the deferred tax liability, and the current income tax expense is unaffected by this change in the law.

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

	2017			2016

Investments	$	8,166,343		$	9,690,287
Cost of insurance acquired		1,349,941			2,543,589
Management/consulting fees		(27,202	)		(52,797	)
Future policy benefits		281,576			1,404,177
Deferred gain on sale of subsidiary		1,387,490			2,312,483
Other assets (liabilities)		59,095			13,245
Federal tax DAC		(220,839	)		(451,935	)
Deferred tax liability	$	10,996,404		$	15,459,049

At December 31, 2017 and 2016, the Company had gross deferred tax assets of $1,027,203 and $1,727,307, respectively, and gross deferred tax liabilities of $12,023,607 and $17,186,356, respectively, resulting from temporary differences primarily related to the life insurance subsidiary. A valuation allowance is to be provided when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded (except as noted below) relating to the Company's deferred tax assets since, in Management's judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company also has a deferred tax asset of $118,693 and 155,930 relating to an AMT tax carryforward as of December 31, 2017 and 2016, respectively. The Company established an allowance of $155,930 against this deferred tax asset as of December 31, 2016, based on Management's assessment of the recoverability of these deferred assets. As a result of the changes to the Alternative Minimum Tax and corresponding credits resulting from the TCJA, Management has determined that an allowance against this asset it no longer required.

The Company's Federal income tax returns are periodically audited by the Internal Revenue Service ("IRS"). There are currently no examinations in process, nor is Management aware of any pending examination by the IRS. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Financial Accounting Standards Board ("FASB") ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions initially and subsequently need to be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company has evaluated its tax positions, expiring statutes of limitations, changes in tax law and new authoritative rulings and believes that no disclosure relative to a provision of income taxes is necessary, at this time, to cover any uncertain tax positions. Tax years that remain subject to examination are the years ended December 31, 2014, 2015, 2016 and 2017.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense. No interest or penalties were included in the reported income taxes for the years presented. The Company is not aware of any potential or proposed changes to any of its tax filings.

Note 7 – Credit Arrangements

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

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

Instrument	Issue Date	Maturity Date	Revolving Credit Limit			December 31, 2016			Borrowings		Repayments		December 31, 2017

Lines of Credit:
UTG	11/20/2013	11/20/2018		$	8,000,000		$	-		-		-		$	-
UG	6/2/2015	5/10/2018			10,000,000			-		-		-			-

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

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

Note 8 – Commitments and Contingencies

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

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

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

The following table represents the total funding commitments and the unfunded commitment as of December 31, 2017 related to certain investments:

	Total Funding Commitment		Unfunded Commitment
RLF III, LLC	$	4,000,000	$	398,120
Sovereign's Capital, LP Fund I		500,000		33,642
UGLIC, LLC		1,600,000		120,000
Sovereign's Capital, LP Fund II		1,000,000		335,301

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

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

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

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

Note 9 – Shareholders' Equity

Stock Repurchase Program – The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. At a meeting of the Board of Directors on June 15, 2016, the Board of Directors of UTG authorized the repurchase of up to an additional $2 million of UTG's common stock and on July 14, 2016, the Board of Directors again increased the amount available by an additional $4.5 million, for a total repurchase of $14.5 million. Repurchased shares are available for future issuance for general corporate purposes. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited. During 2017, the Company repurchased 30,395 shares through the stock repurchase program for $604,052. Through December 31, 2017, UTG has spent $12.5 million in the acquisition of approximately 1,089,184 shares under this program.

Director Compensation - Effective September 18, 2013, each outside Director will annually receive $8,000 as a retainer and $1,000 per meeting attended. The compensation, however, shall be paid in UTG common stock. The value will be determined annually on the close of business December 20th or the next business day should December 20 ^th be a weekend or holiday, based on the activity of the year just ending. UTG's director compensation policy also provides that Directors who are employees of UTG or its affiliates do not receive any compensation for their services as Directors except for reimbursement for reasonable travel expenses for attending each meeting. In December of 2017, the Company issued 2,560 shares of its common stock as compensation to the Directors. The shares were valued at $25.00 per share, the market value at the date of issue. During 2017, the Company recorded $64,000 in operating expense related to the stock issuance. In December of 2016, the Company issued 3,575 shares of its common stock as compensation to the Directors. The shares were valued at $17.05 per share, the market value at the date of issue. During 2016, the Company recorded $60,954 in operating expense related to the stock issuance.

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2017	2016
Basic weighted average shares outstanding	3,346,774	3,537,394
Weighted average dilutive options outstanding	-	-
Diluted weighted average shares outstanding	3,346,774	3,537,394

The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2017 and 2016, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

Statutory Restrictions – Restrictions exist on the flow of funds to UTG from its insurance subsidiary. Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. UG is required to maintain minimum statutory surplus of $2,500,000. At December 31, 2017, substantially all of the consolidated shareholders' equity represents net assets of UTG's subsidiaries.

UG is domiciled in the state of Ohio. Ohio requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend. Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus. Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation. UG paid ordinary dividends of $2 and $1 to UTG in 2017 and 2016, respectively. No extraordinary dividends were paid during the two year period. UTG used the dividends received during 2017 and 2016 to purchase outstanding shares of UTG stock and for general operations of the Company.

Note 10 - Statutory Accounting

The insurance subsidiary prepares its statutory-based financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance. These principles differ significantly from accounting principles generally accepted in the United States of America. "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC). "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.

The following table reflects UG's statutory basis net income and capital and surplus (shareholders' equity) as of December 31:

	2017			2016

Net income (loss)		$	5,356,483		$	4,590,139
Capital and surplus			54,717,987			45,167,092

Note 11 – Related Party Transactions

The articles of incorporation of UG contain the following language under item 12 relative to related party transactions:

A director shall not be disqualified from-dealing with or contracting with the corporation as vendor, purchaser; employee, agent or otherwise; nor, in the absence of fraud, shall any transaction or contract or act of this corporation be void or in any way affected or invalidated by the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder, director or officer is in any way interested in such transaction or contract or act, provided the fact that such director or such firm or such corporation so interested shall be disclosed or shall be known to the Board of Directors or such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction or act shall be taken: nor shall any such director be accountable .or responsible to the company for or in respect to such transaction or contract or act of. this corporation or for any gains or profits realized by him by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer is interested in such action or contract; and any such director may be counted in determining the existence of a quorum of any meeting of the Board of Directors of the company which shall authorize or take action in respect to any such contract or transaction or act and may vote thereat to authorize, ratify, or approve any such contract or transaction or act, with like force and effect as if he or any firm of which he is a member or any corporation of which he is a shareholder, director or officer were not interested in such transaction or contract or act.

On February 20, 2003, UG purchased $4 million of a trust preferred security offering issued by First Southern Bancorp, Inc. ("FSBI"). The security has a mandatory redemption after 30 years with a call provision after 5 years. The security pays a quarterly dividend at a fixed rate of 6.515%. The Company received dividends of $259,138 and $264,946 during 2017 and 2016, respectively. On March 30, 2009, UG purchased $1 million of FSBI common stock. The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement.

UTG has a 30.10% ownership interest in an aircraft that is jointly owned with First Southern National Bank and Bandyco, LLC. Bandyco, LLC is affiliated with the Estate of Ward F. Correll. Mr. Correll is the father of Jesse Correll and a former director of the Company. The aircraft is used for business related travel by various officers and employees of the Company. For years 2017 and 2016, UTG paid $328,933 and $418,104 for costs associated with the aircraft, respectively.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary. Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula. During 2017 and 2016, UG paid $7,213,590 and $7,561,326, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB. FSNB services the Company's mortgage loans including those covered by the participation agreements. The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan. The Company paid $11,108 and $13,517 in servicing fees and $0 in origination fees to FSNB during 2017 and 2016.

Effective January 1, 2017, UTG entered into a shared services contract with FSNB. The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company. The Company paid $186,251 and $269,262 in 2017 and 2016, respectively to FSNB in reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $346,486 and $335,769 in 2017 and 2016, respectively, which included salaries and other benefits.

During 2016, the Company began renting approximately 8,000 square feet of office space, located in Stanford, Kentucky, from FSNB and pays $2,000 per month in rent. The Company paid rent of $24,000 and $8,000 to FSNB during 2017 and 2016, respectively .

As previously disclosed in the Notes Receivable section of Note 2 - Investments, several of the Company's notes have participation agreements in place with third parties. Certain participation agreements are with FSF, a related party. The participation agreements are sold without recourse and assigned to the participant based on their pro-rata share of the principal, interest and collateral as specified in the participation agreements. The undivided participations in the notes receivable range from 20% - 50% . T he total amount of loans participated to FSF was $250,000 as of December 31, 2017 and 2016.

During 2016, UG and FSF established a partnership agreement and formed a limited liability company to purchase real estate. FSF contributed $140,000 to the partnership, which gave them a 10% ownership in the LLC.

Note 12 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses for the periods ended December 31:

	2017			2016

Interest		$	-		$	-
Federal income tax			165,000			811,000

Note 13 - Concentrations

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

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas. As of December 31, 2017 and 2016, approximately 55% of the Company's total direct premium was collected from Illinois, Ohio, Texas and West Virginia. Thus, results of operations are heavily dependent upon the strength of these economies.

The Company reinsures that portion of insurance risk which is in excess of its retention limits. Retention limits range up to $125,000 per life. Life insurance ceded represented 20% and 21% of total life insurance in force at December 31, 2017 and 2016, respectively. Insurance ceded represented 36% and 28% of premium income for 2017 and 2016, respectively. The Company would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.

Note 14 – Selected Quarterly Financial Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that are designed to ensure that the information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in our Exchange Act reports is accumulated and communicated to Management, including our Principal Executive Officer and Principal Financial Officers, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of December 31, 2017 and, based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective at a reasonable assurance level.

Management's Report on Internal Controls Over Financial Reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company's Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2017 . In making the assessment, Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). Based on Management's assessment, Management concluded that, as of December 31, 2017, the Company's internal control over financial reporting was effective.

This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only Management's report in this Annual Report.

Changes in Internal Controls

There have been no changes in the Company's internal control over financial reporting since December 31, 2017, in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15(e) and 15d-15(e), that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. The Company's process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The Board of Directors

In accordance with the laws of Delaware and the Certificate of Incorporation and Bylaws of UTG, as amended, UTG is managed by its executive officers under the direction of the Board of Directors. The Board elects executive officers, evaluates their performance, works with management in establishing business objectives and considers other fundamental corporate matters, such as the issuance of stock or other securities, the purchase or sale of a business and other significant corporate business transactions. In the fiscal year ended December 31, 2017, the Board met four times. During 2017, all Directors attended at least 75% of all meetings of the Board and meetings of committees of the Board except Mr. Joseph Brinck and Mr. Peter Ochs. Our Board of Directors does not have a policy requiring directors to attend annual meetings of shareholders. All Board members attended our 2017 annual shareholders' meeting except Mr. Peter Ochs.

The Board of Directors has an Audit Committee consisting of Messrs. Attkisson, Brinck, Harmon, and Molnar. Our Board has determined that each of the members of the Audit Committee meets the criteria for independence under the NASDAQ listing standards. The Audit Committee performs such duties as outlined in the Company's Audit Committee Charter. The Audit Committee reviews and acts or reports to the Board with respect to various auditing and accounting matters, the scope of the audit procedures and the results thereof, internal accounting and control systems of UTG, the nature of services performed for UTG and the fees to be paid to the independent auditors, the performance of UTG's independent and internal auditors and the accounting practices of UTG. The Audit Committee also recommends to the full Board of Directors the auditors to be appointed by the Board. The Audit Committee met five times in 2017.

The Board has reviewed the qualifications of each member of the audit committee and determined two members of the committee, Randy Attkisson, and Gabriel Molnar, meet the definition of an "audit committee financial expert" as defined in Item 407 of Regulation S-K.

The Board of Directors has a Compensation Committee consisting of Messrs. Dayton and Ochs. Our Board has determined that each of the members of the Compensation Committee meets the criteria for independence under the NASDAQ listing standards. The Compensation Committee performs such duties as outlined in the Company's Compensation Committee Charter. The Compensation Committee reviews and acts or reports to the Board with respect to various compensation matters relative to the Company's executive officers. The Compensation Committee has the authority to delegate appropriate matters to subcommittees as the Committee may determine in its discretion. The Compensation Committee met three times in 2017.

Under UTG's By-Laws, the Board of Directors should be comprised of at least six and no more than eleven Directors. At December 31, 2017, the Board consisted of nine Directors. Shareholders elect Directors to serve for a period of one year at UTG's annual shareholders' meeting.

The Board of Directors does not have a formal nominating committee, or a committee that performs similar functions, and does not have a nominating committee charter. The Board has concluded that the nominating process should not be limited to certain members so that a comprehensive selection of candidates can be considered. Therefore, the nomination process is conducted by the full Board of Directors. The Board of Directors has not adopted a formal policy with regard to the consideration of Director candidates recommended by shareholders. Candidates for nomination have been recommended by an executive officer or director, and considered by the Board of Directors. Generally, candidates have been persons who have been known to one or more of our Board members. The Board of Directors will, however, consider nominees recommended by shareholders. Shareholders wishing to recommend candidates for Board membership must submit the recommendations in writing to the Secretary of the Company at least 90 days prior to a date corresponding to the previous year's Annual Meeting, with the submitting shareholder's name and address and pertinent information about the proposed nominee similar to that set forth for directors named herein. The Board does not evaluate potential nominees for director differently based on whether they are recommended by a shareholder.

The Board of Directors has not adopted specific minimum qualifications that it believes must be met by a person it recommends for nomination as a director. Proposed nominees will be considered in light of their potential contributions to the Board, their backgrounds, their independence and such other factors as the Board considers appropriate. We do not have a specific policy relating to the consideration of diversity in identifying director candidates. However, the Board of Directors does consider the diversity of our Board when identifying director candidates. The amount of consideration given to diversity varies with the Boards' determination of whether we would benefit from expanding the Board's diversity in a particular area. We believe this policy has been effective in identifying candidates with the diverse business experience necessary to lead our Company.

Our directors have demonstrated significant achievement and generally have significant management experience in one or more fields of business, professional, governmental, community or academic endeavors. Our directors have sound judgement as a result of their management or policy making experience and demonstrate an ability to function effectively in an oversight role. Given the tenure of most of the directors on our Board, they have a general appreciation regarding major issues facing the Company. These experiences make each of our directors well qualified to be a member of the Company's Board of Directors.

The Board of Directors has provided a process for shareholders to send communications directly to the Board. These communications can be sent to James Rousey, President and Director of UTG, at the corporate headquarters at 205 North Depot Street, Stanford, Kentucky 40484.

Our Board of Directors is led by Jesse Correll, our Chairman of the Board and Chief Executive Officer. The decision as to who should serve as Chairman of the Board, and who should serve as Chief Executive Officer, and whether those offices should be combined or separate, is properly the responsibility of our Board of Directors. The Board of Directors believes that the most effective leadership structure for us at this time is for Mr. Correll to serve as both Chairman of the Board and Chief Executive Officer. Our Board does not have a lead independent director and does not believe that designating a lead independent director would be necessary or helpful at this time.

Our Board of Directors oversees our risk management in cooperation with management. The Board and management regularly assess and communicate regarding risks confronting the Company, including transaction specific risks, macroeconomic trends, industry developments, and risk factors unique to our business. The members of the Audit Committee also discuss various financial reporting and accounting risk factors with our independent audit firm.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors and officers of UTG file periodic reports regarding ownership of Company securities with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 as amended, and the rules promulgated there under. UTG is not aware of any individuals who filed late with the Securities and Exchange Commission during 2017. SEC filings may be viewed from the Company's Web site www.utgins.com .

Audit Committee Report to Shareholders

In connection with the December 31, 2017 financial statements, the audit committee: (1) reviewed and discussed the audited financial statements with Management; (2) discussed with the independent auditors the matters required by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended, (AICPA, Professional Standards , Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and (3) received the written disclosures and the letter from its independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the audit committee concerning independence, and has discussed with the independent auditors their independence. Based upon these reviews and discussions, the audit committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K filed with the SEC for the last fiscal year.

Members of the Company's Audit Committee:

Randall L. Attkisson	Committee Chairman
Joseph A. Brinck, II
Thomas E. Harmon
Gabriel J. Molnar

The following information with respect to business experience of the Board of Directors has been furnished by the respective Directors or obtained from the records of UTG.

Name, Age	Position with the Company, Business Experience and Other Directorships
Randall L. Attkisson, 72	Director of UTG since 1999; Director of First Southern Bancorp, Inc., a bank holding company, since 1986; Board Chairman of Metro Leadership Foundation since 2014; and Partner of Bluegrass Financial Holdings Subs/Affiliates since 2008.
Joseph A. Brinck, II, 62	Director of UTG since 2003; CEO of Stelter & Brinck, LTD, a full service combustion engineering and manufacturing company from 1983 to present; Salesman at Stelter & Brinck, LTD from 1979 to 1983; President of Superior Thermal, LTD from 1990 to present; President of Sanctity of Life Foundation since 2001 and Vice President of Ruah Woods Ministry since 2009.
Jesse T. Correll, 61	Chairman and CEO of UTG and Universal Guaranty Life Insurance Company since 2000; Director of UTG since 1999; Chairman, President of First Southern Bancorp, Inc. since 1988; CEO of First Southern Bancorp, Inc. from 1988-2016; Manager and President of First Southern Funding, LLC since 1992; President, Director of The River Foundation since 1990; Board member of Crown Financial Ministries from 2004 to 2009; Friends of the Good Samaritans since 2005; Generous Giving from 2006 to 2009 and the National Christian Foundation since 2006.
Brian J. Crall, 58	Director of UTG since 2015; Mr. Crall owns and is the President of foreClarity!, LLC. The Company was formed in 2012 and specializes in executive development, organizational development, strategic planning and public policy development. Mr. Crall also served on the Board of Directors of MainSource Financial Group from 2005-2016 and from 2009 to 2012 Mr. Crall served as the Chief Executive Officer of CMD Holding, LLC, the holding company for CMD Health, Inc., a health insurance company and ClubMD, LLC, a series of primary care medical homes. From July 2008 to March 2009, Mr. Crall served as the Resource Director for the YMCA of the USA. Mr. Crall also served as the Personnel Cabinet Secretary for the Commonwealth of Kentucky from June 2006 to January 2007 and the Deputy Secretary of the Executive Cabinet, Office of the Governor of the Commonwealth of Kentucky from April 2004 to June 2006. During this time Mr. Crall served as a Director for the Kentucky Retirement System, a $15 billion retirement fund serving the employees of the state of Kentucky, and the Kentucky Deferred Compensation Authority, a $1.3 billion deferred compensation plan serving the employees of the Commonwealth of Kentucky. Additionally, Mr. Crall served as CEO of Progress Printing Company from July 2000 until April 2004, and was the 13 ^th District State Representative in the state of Kentucky from January 1995 until April 2004. Mr. Crall was CEO of the Owensboro Family YMCA from November 1986 through June 2000 and has been active in several civic and charitable organizations, including the Kentucky Youth Association, Habitat for Humanity, Owensboro Chamber of Commerce and the Fellowship of Christian Athletes.
Howard L. Dayton, Jr., 74	In 1985, Mr. Dayton founded Crown Ministries in Longwood, Florida. Crown Ministries merged with Christian Financial Concepts in September 2000 to form Crown Financial Ministries, the world's largest financial ministry. He served as Chief Executive Officer from 1985 to 2007 and in 2009 founded Compass - Finances God's Way. Mr. Dayton is a graduate of Cornell University. He developed The Caboose, a successful railroad-themed restaurant in Orlando, FL in 1969. In 1972 he began his commercial real estate development career, specializing in office development in the Central Florida area. He has authored five popular small group studies, produced several video series, and was the host for the nationally syndicated radio programs MoneyWise and HeyHoward. Asbury University named their business school the Howard Dayton School of Business. Mr. Dayton became a Director of UTG, Inc. in December 2005.
Thomas E. Harmon, 63	Director of UTG and Universal Guaranty Life Insurance Company since March 2016. Mr Harmon is the owner and President of Harmon Foods, Inc., a chain of retail supermarkets, for the past 39 years. Mr. Harmon has been active in many charitable organizations over the years, most recently serving as a Board Member with Amigos En Cristo Ministries, an organization serving one of the most disadvantaged parts of the world – Juarez, Mexico.
Peter L. Ochs, 66	Mr. Ochs is founder of Capital III, a private equity investment firm located in Wichita, Kansas. Capital III provides impact investment capital and management with investments in manufacturing, real estate, energy, and education with a geographical focus on the US and Latin America. Prior to founding Capital III, Mr. Ochs spent 8 years in the commercial banking industry. Mr. Ochs graduated from the University of Kansas with a degree in business and finance. He currently serves on the boards of UTG, Inc., the American Independence Funds, and Trinity Academy.
James P. Rousey, 59	President of UTG and Universal Guaranty Life Insurance Company since September 2006; Director of UTG and Universal Guaranty Life Insurance Company since September 2001; Chief Executive Officer of First Southern Bancorp, Inc. since 2016; Chair of ACLI Forum 500 from 2015-2016; Member of Board of Governors of ACLI from November 2014 to November 2017; Regional CEO and Director of First Southern National Bank from 1988 to 2001. Board Member with the Illinois Fellowship of Christian Athletes from 2001-2005; Board Member with Contact Ministries from 2007-2011; Board Member with Amigos En Cristo, Inc. from 2007-2009; Advisory Board Member with Natalie's Sister since January 2018.
Gabriel J. Molnar, 31	Director of UTG, Inc. since June 2017; CFO of Capstone Realty, Inc. since 2014; Analyst for Procter & Gamble in 2013; Sr. Associate for Price Waterhouse Coopers from 2009 to 2012. Currently holds a CPA license, in addition to a real estate sales license in Kentucky.

Executive Officers of UTG

More detailed information on the following executive officers of UTG appears under "Directors":

Jesse T. Correll	Chairman of the Board and Chief Executive Officer
James P. Rousey	President

Other executive officers of UTG are set forth below:

Name, Age	Position with UTG and Business Experience
Theodore C. Miller, 55	Corporate Secretary of UTG, Inc. and Universal Guaranty Life Insurance Company since December 2000; Senior Vice President and Chief Financial Officer since July 1997; Vice President since October 1992 and Treasurer from October 1992 to December 2003; Vice President and Controller of certain affiliated companies from 1984 to 1992; Vice President and Treasurer of certain affiliated companies from 1992 to 1997; Senior Vice President and Chief Financial Officer of subsidiary companies since 1997; Corporate Secretary of subsidiary companies since 2000; and Chief Financial Officer and Corporate Secretary of First Southern Bancorp, Inc. and First Southern National Bank since 2016.
Douglas P. Ditto, 62	Vice President of UTG, Inc. and Universal Guaranty Life Insurance Company since June 2009; Chief Investment Officer from 2009 to 2012; Assistant Vice President from June 2003 to June 2009; Executive Vice President of First Southern Bancorp, Inc. since March 1985.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics for our Directors, officers (including our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, and persons performing similar function) and employees. The Code of Business Conduct and Ethics is available to our shareholders by requesting a free copy of the Code of Business Conduct and Ethics by writing to us as UTG, Inc., 205 North Depot Street, Stanford, Kentucky 40484.

Item 11. Executive Compensation

Executive Compensation Table

The following table sets forth certain information regarding compensation paid to or earned by UTG's Chief Executive Officer and President, and each of UTG's two most highly compensated executive officers whose salary plus bonus exceeded $100,000 during UTG's last fiscal year:

Name and Principal position	Year	Salary		Bonus		Stock Awards (2)		All Other Compensation		Total
Jesse T. Correll Chief Executive Officer	2017	$	175,000	$	0	$	109,988	$	7,000		(1	)	$	291,988
2016		$	175,000	$	0	$	49,988	$	7,000		(1	)	$	231,988
James P. Rousey President	2017	$	190,000	$	90,000	$	0	$	3,990		(1	)	$	283,990
2016		$	190,000	$	0		49,988	$	3,990		(1	)	$	243,978
Douglas P. Ditto Vice President	2017	$	127,308	$	0	$	70,000	$	5,092		(1	)	$	202,400
2016		$	120,000	$	0	$	49,988	$	4,800		(1	)	$	174,788

(1)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan.
(2)	Stock awards in the form of an annual bonus of 10,285 and 10,509 shares were issued in 2017 and 2016 respectively.

Outstanding Equity Awards at Fiscal Year End

As of December 31, 2017, there were no unexercised options, stock that has not vested or equity incentive plan awards outstanding for any of the above named executive officers.

Compensation of Directors

Effective September 18, 2013 a new compensation arrangement was approved whereby each outside Director annually received $8,000 as a retainer and $1,000 per meeting attended. The compensation, however, is paid in UTG Common Stock. The value is determined annually on the close of business December 20th or the next business day should December 20 ^th be a weekend or holiday, based on the activity of the year just ending. Reasonable travel expenses are reimbursed in cash as incurred. UTG's Director compensation policy provides that Directors who are employees of UTG or its affiliates do not receive any compensation for their services as Directors except for reimbursement for reasonable travel expenses for attending each meeting. The following table reflects compensation paid to all Directors who served in 2017.

Name	Fees Earned or Paid in Cash		Stock Awards (2)		All Other Compensation (1)		Total
Jesse T. Correll Chief Executive Officer	$	0	$	0	$	0	$	0
James P. Rousey President	$	0	$	0	$	0	$	0
Randall L. Attkisson Director	$	0	$	11,000	$	0	$	11,000
Joseph A. Brinck, II (3) Director	$	0	$	0	$	0	$	0
Brian J. Crall Director	$	0	$	12,000	$	111,428	$	123,428
Howard L. Dayton Director	$	0	$	12,000	$	5,000	$	17,000
Thomas E. Harmon Director	$	0	$	12,000	$	0	$	12,000
Gabriel J. Molnar Director	$	0	$	7,000	$	0	$	7,000
Peter L. Ochs Director	$	0	$	10,000	$	0	$	10,000

(1) Other Compensation represents payment for consulting services performed relative to management enrichment.

(2) Market value of stock on earned date was $25.00 per share.

(3) Mr. Brinck waived his rights to the director compensation for the year 2017.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Principal Holders of Securities

The following tabulation sets forth the name and address of the entity known to be the beneficial owners of more than 5% of UTG's Common Stock and shows: (i) the total number of shares of Common Stock beneficially owned by such person as of February 28, 2018 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of Common Stock so owned as of the same date.

Title		Amount	Percent
of	Name and Address	and Nature of	Of
Class	of Beneficial Owner (2)	Beneficial Ownership	Class (1)

Common	Jesse T. Correll	127,577	(3)(6)	3.8%
Stock, no	First Southern Bancorp, Inc.	1,406,785	(3)(4)(6)	42.3%
par value	First Southern Funding, LLC	346,032	(3)(4)(6)(7)	10.4%
	First Southern Holdings, LLC	1,201,876	(3)(4)(6)	36.2%
	Estate of Ward F. Correll	271,059	(5)(6)	8.2%
	WCorrell, Limited Partnership	72,750	(3)(6)	2.2%
	Cumberland Lake Shell, Inc.	257,501	(5)(6)	7.7%

(1)	The percentage of shares owned is based on 3,324,366 shares of Common Stock outstanding as of February 28, 2018.
(2)	The address for each of Jesse Correll, First Southern Bancorp, Inc. ("FSBI"), First Southern Funding, LLC ("FSF"), First Southern Holdings, LLC ("FSH"), and WCorrell, Limited Partnership ("WCorrell LP"), is 205 North Depot Street, Stanford, Kentucky 40484. The address for the Estate of Ward F. Correll is P O Box 328, 99 Lancaster Street, Stanford, KY 40484 and Cumberland Lake Shell, Inc. ("CLS") is P.O. Box 430, 150 Railroad Drive, Somerset, Kentucky 42502. The majority of the shares of CLS are owned by the Estate of Ward F. Correll.
(3)	The share ownership of Jesse Correll listed includes 54,827 shares of Common Stock owned by him individually. The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Jesse Correll serves as managing general partner and as such, has sole voting and dispositive power over the shares held by the entity.
	In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH (the holder of 1,201,876 shares of Common Stock), Mr. Correll may be deemed to beneficially own the total number of shares of Common Stock owned by FSH, and may be deemed to share with FSH the right to vote and to dispose of such shares. Mr. Correll owns approximately 73% of the outstanding membership interests of FSF; he owns directly approximately 44%, companies he controls own approximately 15%, and he has the power to vote but does not own an additional 2% of the outstanding voting stock of FSBI. FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH.
(4)	The share ownership of FSBI consists of 204,909 shares of Common Stock held by FSBI directly and 1,201,876 shares of Common Stock held by FSH of which FSBI is a 99% member and FSF is a 1% member. As a result, FSBI may be deemed to share the voting and dispositive power over the shares held by FSH.
(5)	Includes 257,501 shares of Common Stock held by CLS, all of the outstanding voting shares of which are owned by the Estate of Ward F. Correll.
(6)	According to the Schedule 13D, as amended, filed July 22, 2016, Jesse Correll, FSBI, FSF and FSH, have agreed in principle to act together for the purpose of acquiring or holding equity securities of UTG. In addition, because of their relationship with these Reporting Persons, the Estate of Ward F. Correll, Kirk Correll, Cumberland Lake Shell, Inc. and WCorrell Limited Partnership may also be deemed to be members of this group. Therefore, each may be deemed to have acquired beneficial ownership of the equity securities of UTG beneficially owned by each of the Reporting Persons.
(7)	Includes 4,035 shares in street name

Security Ownership of Management of UTG

The following tabulation shows with respect to each of the Directors of UTG, UTG's Chief Executive Officer and President, and each of UTG's two most highly compensated executive officers whose salary plus bonus exceeded $100,000 for fiscal 2017, and with respect to all executive officers and Directors of UTG as a group: (i) the total number of shares of Common Stock beneficially owned by such person as of February 28, 2018 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of stock so owned as of the same date.

Title of	Name and Address of	Amount and Nature of	Percent of
Class	Beneficial Owner	Beneficial Ownership	Class (1)

UTG's	Randall L. Attkisson	Louisville, KY	3,492		*
Common	Joseph A. Brinck, II	Cincinnati, OH	15,021		*
Stock, no	Jesse T. Correll	Stanford, KY	2,151,453	(2)	64.7%
Par value	Brian J. Crall	Nicholasville, KY	1,863	(3)	*
	Howard L. Dayton, Jr.	Sanford, FL	8,010	(4)	*
	Douglas P. Ditto	Danville, KY	21,334	(5)	*
	Thomas E. Harmon	Springfield, IL	949		*
	Theodore C. Miller	Stanford, KY	12,292		*
	Gabriel J. Molnar	Louisville, KY	280		*
	Peter L. Ochs	Valley Center, KS	5,161	(6)	*
	James P. Rousey	Hustonville, KY	9,353	(7)	*
	All Directors and executive officers as a group (eleven in number)		2,229,208		67.1%

* Less than 1%

(1)	The percentage of outstanding shares for UTG is based on 3,324,366 shares of Common Stock outstanding as of February 28, 2018.
(2)	The share ownership of Mr. Jesse Correll includes 54,827 shares of Common Stock owned by him individually, 204,909 shares of Common Stock held by FSBI and 346,032 shares of Common Stock owned by FSF. The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Mr. Correll serves as managing general partner. Mr. Correll has sole voting and dispositive power over the shares held by these entities. In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH (the holder of 1,201,876 shares of Common Stock), Mr. Correll may be deemed to beneficially own the total number of shares of Common Stock owned by FSH, and may be deemed to share with FSH the right to vote and to dispose of such shares. Mr. Correll owns approximately 73% of the outstanding membership interests of FSF; he owns directly approximately 44%, companies he controls own approximately 15%, and he has the power to vote but does not own an additional 2% of the outstanding voting stock of FSBI. FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH. On July 14, 2016, Jesse T Correll was qualified as co-executor of the Estate of Ward F Correll who died April 21, 2016. The share ownership of Mr. Correll also included 13,558 shares of Common Stock held by the Estate of Ward F. Correll and 257,501 shares of Common Stock held by Cumberland Lake Shell, Inc.
(3)	Includes 800 shares held in spouse's IRA and 375 shares held in a retirement account.
(4)	Includes 473 shares held in street name.
(5)	Includes 1,600 shares held in a retirement account and 800 shares in street name.
(6)	Includes 2,000 shares held in a trust for benefit of named individual.
(7)	Includes 2,077 shares held in street name.

Except as indicated above, the foregoing persons hold sole voting and investment power.

Item 13. Certain Relationships and Related Transactions and Director Independence

The Board of Directors determined that six of the nine current Directors are "independent" as defined by Rule 5605 of the NASDAQ listing standards. The independent Directors are Randall L. Attkisson, Joseph A. Brinck, II, Howard L. Dayton, Jr., Thomas E. Harmon, Gabriel J. Molnar, and Peter L. Ochs.

The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company. The Company paid $186,251 and $269,262 in 2017 and 2016, respectively to FSNB in reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $346,486 and $335,769 in 2017 and 2016, respectively, which included salaries and other benefits.

During 2016, UTG and FSF established a partnership agreement and formed a limited liability company to purchase real estate. FSF contributed $140,000 to the partnership, which gave them a 10% ownership in the LLC.

Item 14. Principal Accounting Fees and Services

The Audit Committee is required to be directly responsible for the appointment, compensation and retention of the Company's independent registered public accounting firm. The Audit Committee appointed Brown Smith Wallace, LLP ("BSW") as the Company's independent registered public accounting firm for the fiscal years ended December 31, 2017 and 2016.

Amounts paid to, or billed by, the Company's principal accountant, during the two most recent fiscal years by category were as follows:

Audit Fees - Audit fees paid for these audit services in the fiscal years ended December 31, 2017 and 2016 totaled $106,800 and $109,600 respectively. Fees billed for the quarterly reviews of the Company's financial statements totaled $19,950 and $20,400 for the years 2017 and 2016, respectively.

Audit Related Fees - No audit related fees were incurred by the Company from BSW for the years ended December 31, 2017 and 2016.

Tax Fees – For the years ended December 31, 2017 and 2016, the Company paid $19,131 and $11,300, respectively, to BSW relating to certain tax advice and electronic filing of certain federal and state income tax returns of the Company.

All Other Fees – During 2017 and 2016, the Company paid no other fees to BSW.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	The following documents are filed as a part of the report:

(1)	Financial Statements:
	See Item 8, Index to Financial Statements
(2)	Financial Statement Schedules
	NOTE: The financial statement schedules have been omitted as they are deemed inapplicable or not required by Regulation S-X.

(b)	Exhibits: The following are exhibits to this report, and if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included:

Exhibit Number	Description
3.1	Certificate of Incorporation of the Registrant and all amendments thereto [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 3.1].
3.2	By-Laws for the Registrant and all amendments thereto [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 3.2].
4.1	UTG's Agreement pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K with respect to long-term debt instruments [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 4.1].
10.1	Amendment to Reinsurance Agreement between Universal Guaranty Life Insurance Company and Optimum Re Insurance Company originally with Business Men's Assurance Company of America . [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.2].
10.2	Reinsurance Agreement between Universal Guaranty Life Insurance Company and Swiss RE originally with Life Reassurance Corporation of America . [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.3].
10.3	Assumption Reinsurance Agreement between Universal Guaranty Life Insurance Company and Park Avenue Life Insurance Company formerly known as First International Life Insurance Company . [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 10.4].
10.5	Commercial pledge agreement dated November 20, 2012, between UTG, Inc. and Illinois National Bank . [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2012 originally filed as Exhibit 10.20].
10.6	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc. and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.11].
10.7	Agreement regarding Mortgage Loans by and between First Southern National Bank and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.12].
10.8	Universal Guaranty Participation Agreement-Purchased Loan [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.13].
10.9	Universal Guaranty Participation Agreement-Originated Loan [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 10.14].
10.10	Management Data, Inc. Software License Agreement [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 201 4 originally filed as Exhibit 10.16].
10.12	Aircraft Joint Ownership Agreement by and among Bandyco, LLC, First Southern National Bank and UTG, Inc. dated August 11, 2014 [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 201 4 originally filed as Exhibit 10.18].
* 10.13	Promissory Note dated November 20, 2017, between UTG, Inc. and Illinois National Bank.
* 10.14	Shared Services Agreement between UTG, Inc. and FSNB effective January 1, 2017.
14.1	Code of Ethics and Business Conduct [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 14.1].
14.2	Code of Ethical Conduct for Senior Financial Officers [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 14.2].
* 21.1	List of Subsidiaries of the Registrant.
* 31.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
* 31.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
* 32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
* 32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
99.1	Audit Committee Charter. [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 99.1].
99.2	Whistleblower Policy [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2013 originally filed as Exhibit 99.2].
99.3	Compensation Committee Charter. [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 99.3].
99.4	Investment Committee Charter. [Incorporated by reference to the Registrant's form 10-K, for the year ended December 31, 2015 originally filed as Exhibit 99.4].
*101	Interactive Data File

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(D) of the Securities Exchange Act of 1934, UTG, Inc. has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

				UTG, Inc.


By:				/s/ Jesse T. Correll
				Jesse T. Correll
		Chairman and Chief Executive Officer and Director


By:				/s/ Theodore C. Miller
				Theodore C. Miller
	Senior Vice President, Chief Financial Officer and Secretary
			(principal financial and accounting officer)

Date: March 26, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Randall L. Attkisson		By: /s/ Thomas E. Harmon
Randall L. Attkisson Director		Thomas E. Harmon Director

By:		By: /s/ Gabriel J. Molnar
Joseph A. Brinck Director		Gabriel J. Molnar Director

By: /s/ Jesse T. Correll		By: /s/ Peter L. Ochs
Jesse T. Correll Chairman of the Board, Chief Executive Officer and Director		Peter L. Ochs Director

By: /s/ Brian J. Crall		By: /s/ James P. Rousey
Brian J. Crall Director		James P. Rousey President and Director

By: /s/ Howard L. Dayton		By: /s/ Theodore C. Miller
Howard L. Dayton Director		Theodore C. Miller Corporate Secretary and Chief Financial Officer

TABLE OF CONTENTS

Part I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures Part II Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis Of Financial Condition and Results Of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Note 1 Summary Of Significant Accounting Policies Note 2 Investments Note 3 Fair Value Measurements Note 4 - Reinsurance Note 5 Cost Of Insurance Acquired Note 6 Income Taxes Note 7 Credit Arrangements Note 8 Commitments and Contingencies Note 9 Shareholders' Equity Note 10 - Statutory Accounting Note 11 Related Party Transactions Note 12 Other Cash Flow Disclosures Note 13 - Concentrations Note 14 Selected Quarterly Financial Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Part III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions and Director Independence Item 14. Principal Accounting Fees and Services Part IV Item 15. Exhibits and Financial Statement Schedules

Exhibits

UTGN 10-K Fiscal year ended Dec. 31, 2017

Exhibits