Part 1. Financial Information.
Item 1. Financial Statements.
| March 31, 2019 | December 31, 2018* |
| ASSETS |
| Investments: |
| Investments available for sale: |
| Fixed maturities, at fair value (amortized cost $158,812,233 and $160,895,869) | $ | 163,906,663 | $ | 160,960,784 |
| Equity securities, at fair value (cost $34,883,412 and $34,885,107) | 82,450,417 | 67,664,482 |
| Equity securities, at cost | 12,133,745 | 12,118,617 |
| Mortgage loans on real estate at amortized cost | 10,703,553 | 9,069,111 |
| Investment real estate | 51,530,162 | 52,518,577 |
| Notes receivable | 26,595,336 | 23,717,312 |
| Policy loans | 9,117,979 | 9,204,222 |
| Total investments | 356,437,855 | 335,253,105 |
| Cash and cash equivalents | 19,049,555 | 20,150,162 |
| Accrued investment income | 1,887,094 | 2,119,882 |
| Reinsurance receivables: |
| Future policy benefits | 26,091,199 | 26,117,936 |
| Policy claims and other benefits | 4,142,345 | 4,053,882 |
| Cost of insurance acquired | 5,428,250 | 5,622,227 |
| Property and equipment, net of accumulated depreciation | 581,680 | 688,567 |
| Income tax receivable | - | 279,333 |
| Other assets | 355,673 | 1,263,242 |
| Total assets | $ | 413,973,651 | $ | 395,548,336 |
| LIABILITIES & SHAREHOLDERS' EQUITY |
| Liabilities: |
| Policy liabilities and accruals: |
| Future policyholder benefits | $ | 252,418,038 | $ | 253,852,368 |
| Policy claims and benefits payable | 4,335,480 | 4,267,481 |
| Other policyholder funds | 430,413 | 372,072 |
| Dividend and endowment accumulations | 14,586,502 | 14,608,838 |
| Income taxes payable | 333,283 | - |
| Deferred income taxes | 13,231,079 | 9,113,480 |
| Other liabilities | 6,105,232 | 6,257,387 |
| Total liabilities | 291,440,027 | 288,471,626 |
| Shareholders' equity: |
| Common stock - no par value, stated value $.001 per share. Authorized 7,000,000 shares - 3,296,547 and 3,295,870 shares outstanding | 3,297 | 3,296 |
| Additional paid-in capital | 36,585,277 | 36,567,865 |
| Retained earnings | 81,353,780 | 69,708,901 |
| Accumulated other comprehensive income | 3,949,134 | 62,495 |
| Total UTG shareholders' equity | 121,891,488 | 106,342,557 |
| Noncontrolling interests | 642,136 | 734,153 |
| Total shareholders' equity | 122,533,624 | 107,076,710 |
| Total liabilities and shareholders' equity | $ | 413,973,651 | $ | 395,548,336 |

| Three Months Ended |
| March 31, | March 31, |
| 2019 | 2018 |
| Revenue: |
| Premiums and policy fees | $ | 2,503,205 | $ | 2,649,971 |
| Ceded reinsurance premiums and policy fees | (517,055 | ) | (738,965 | ) |
| Net investment income | 3,112,024 | 3,068,118 |
| Other income | 63,838 | 60,935 |
| Revenue before net investment gains (losses) | 5,162,012 | 5,040,059 |
| Net investment gains (losses): |
| Other-than-temporary impairments | - | - |
| Other realized investment gains, net | 1,113,698 | 534,242 |
| Change in fair value of equity securities | 14,787,631 | 4,129,236 |
| Total net investment gains (losses) | 15,901,329 | 4,663,478 |
| Total revenue | 21,063,341 | 9,703,537 |
| Benefits and other expenses: |
| Benefits, claims and settlement expenses: |
| Life | 3,427,200 | 4,168,794 |
| Ceded reinsurance benefits and claims | (474,622 | ) | (688,412 | ) |
| Annuity | 197,670 | 256,884 |
| Dividends to policyholders | 103,599 | 126,999 |
| Commissions and amortization of deferred policy acquisition costs | (24,542 | ) | (40,571 | ) |
| Amortization of cost of insurance acquired | 193,977 | 201,516 |
| Operating expenses | 2,144,389 | 2,085,819 |
| Total benefits and other expenses | 5,567,671 | 6,111,029 |
| Income before income taxes | 15,495,670 | 3,592,508 |
| Income tax expense | 3,697,058 | 905,763 |
| Net income | 11,798,612 | 2,686,745 |
| Net income attributable to noncontrolling interests | (153,733 | ) | (29,500 | ) |
| Net income attributable to common shareholders | $ | $ 11,644,879 | $ | $ 2,657,245 |
| Amounts attributable to common shareholders |
| Basic income per share | $ | $ 3.53 | $ | $ 0.80 |
| Diluted income per share | $ | $ 3.53 | $ | $ 0.80 |
| Basic weighted average shares outstanding | 3,297,353 | 3,325,111 |
| Diluted weighted average shares outstanding | 3,297,353 | 3,325,111 |

| Three Months Ended |
| March 31, | March 31, |
| 2019 | 2018 |
| Net income | $ | 11,798,612 | $ | 2,686,745 |
| Other comprehensive income (loss): |
| Unrealized holding gains (losses) arising during period, pre-tax | 4,934,851 | (4,285,303 | ) |
| Tax (expense) benefit on unrealized holding gains (losses) arising during the period | (1,036,319 | ) | 899,914 |
| Unrealized holding gains (losses) arising during period, net of tax | 3,898,532 | (3,385,389 | ) |
| Less reclassification adjustment for gains included in net income | (15,055 | ) | - |
| Tax expense for gains included in net income | 3,162 | - |
| Reclassification adjustment for gains included in net income, net of tax | (11,893 | ) | - |
| Subtotal: Other comprehensive income (loss), net of tax | 3,886,639 | (3,385,389 | ) |
| Comprehensive income (loss) | 15,685,251 | (698,644 | ) |
| Less comprehensive income attributable to noncontrolling interests | (153,733 | ) | (29,500 | ) |
| Comprehensive income (loss) attributable to UTG, Inc. | $ | 15,531,518 | $ | (728,144 | ) |

| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interest | Total Shareholders' Equity |
| Balance at December 31, 2018 | $ | 3,296 | 36,567,865 | 69,708,901 | 62,495 | 734,153 | $ | 107,076,710 |
| Common stock issued during year | 8 | 229,792 | - | - | - | 229,800 |
| Treasury shares acquired | (7 | ) | (212,380 | ) | - | - | - | (212,387 | ) |
| Net income attributable to common shareholders | - | - | 11,644,879 | - | - | 11,644,879 |
| Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes | - | - | - | 3,886,639 | - | 3,886,639 |
| Contributions | - | - | - | - | - | - |
| Distributions | - | - | - | - | (245,750 | ) | (245,750 | ) |
| Gain attributable to noncontrolling interest | - | - | - | - | 153,733 | 153,733 |
| Balance at March 31, 2019 | $ | 3,297 | 36,585,277 | 81,353,780 | 3,949,134 | 642,136 | $ | 122,533,624 |
| Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Noncontrolling Interest | Total Shareholders' Equity |
| Balance at December 31, 2017 | $ | 3,333 | 37,536,164 | 39,040,456 | 32,952,338 | 899,227 | $ | 110,431,518 |
| Adoption of Accounting Standards Update No 2016-01 | - | - | 18,277,328 | (18,277,328 | ) | - | - |
| January 1, 2018 | 3,333 | 37,536,164 | 57,317,784 | 14,675,010 | 899,227 | 110,431,518 |
| Common stock issued during year | 9 | 229,991 | - | - | - | 230,000 |
| Treasury shares acquired | (24 | ) | (600,216 | ) | - | - | - | (600,240 | ) |
| Net income attributable to common shareholders | - | - | 2,657,245 | - | - | 2,657,245 |
| Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes | - | - | - | (3,385,389 | ) | - | (3,385,389 | ) |
| Contributions | - | - | - | - | - | - |
| Distributions | - | - | - | - | (146 | ) | (146 | ) |
| Gain attributable to noncontrolling interest | - | - | - | - | 29,500 | 29,500 |
| Balance at March 31, 2018 | $ | 3,318 | 37,165,939 | 59,975,029 | 11,289,621 | 928,581 | $ | 109,362,488 |

| Three Months Ended |
| March 31, | March 31, |
| 2019 | 2018 |
| Cash flows from operating activities: |
| Net income attributable to common shareholders | $ | 11,644,879 | $ | 2,657,245 |
| Adjustments to reconcile net income to net cash used in operating activities: |
| Amortization (accretion) of investments | (39,703 | ) | 17,036 |
| Realized investment gains, net | (1,113,698 | ) | (534,242 | ) |
| Change in fair value of equity securities | (14,787,631 | ) | (4,129,236 | ) |
| Amortization of cost of insurance acquired | 193,977 | 201,516 |
| Depreciation | 323,406 | 275,143 |
| Net income attributable to noncontrolling interest | 153,733 | 29,500 |
| Charges for mortality and administration of universal life and annuity products | (1,619,743 | ) | (1,650,201 | ) |
| Interest credited to account balances | 1,029,303 | 883,563 |
| Change in accrued investment income | 232,788 | (357,576 | ) |
| Change in reinsurance receivables | (61,726 | ) | 35,546 |
| Change in policy liabilities and accruals | (772,518 | ) | (6,961 | ) |
| Change in income taxes receivable (payable) | 612,616 | 12,974 |
| Change in other assets and liabilities, net | 3,839,857 | 5,894,257 |
| Net cash provided by (used in) operating activities | (364,460 | ) | 3,328,564 |
| Cash flows from investing activities: |
| Proceeds from investments sold and matured: |
| Fixed maturities available for sale | 2,023,974 | 14,515 |
| Equity securities | 33,075 | 103,298 |
| Mortgage loans | 1,945,760 | 2,009,715 |
| Real estate | 3,045,226 | 7,941,649 |
| Notes receivable | 1,537,984 | 563,926 |
| Policy loans | 410,831 | 366,847 |
| Short-term investments | - | 850,000 |
| Total proceeds from investments sold and matured | 8,996,850 | 11,849,950 |
| Cost of investments acquired: |
| Fixed maturities available for sale | - | (4,971,517 | ) |
| Equity securities | (46,509 | ) | (7,957,471 | ) |
| Mortgage loans | (3,575,500 | ) | - |
| Real estate | (1,174,688 | ) | (6,006,130 | ) |
| Notes receivable | (4,416,008 | ) | - |
| Policy loans | (324,587 | ) | (405,337 | ) |
| Short-term investments | - | (850,000 | ) |
| Total cost of investments acquired | (9,537,292 | ) | (20,190,455 | ) |
| Net cash used in investing activities | (540,442 | ) | (8,340,505 | ) |
| Cash flows from financing activities: |
| Policyholder contract deposits | 1,264,011 | 1,149,533 |
| Policyholder contract withdrawals | (1,231,379 | ) | (1,245,743 | ) |
| Purchase of treasury stock | (212,387 | ) | (600,240 | ) |
| Issuance of stock | 229,800 | 230,000 |
| Non controlling contributions (distributions) of consolidated subsidiary | (245,750 | ) | (146 | ) |
| Net cash used in financing activities | (195,705 | ) | (466,596 | ) |
| Net decrease in cash and cash equivalents | (1,100,607 | ) | (5,478,537 | ) |
| Cash and cash equivalents at beginning of period | 20,150,162 | 25,434,199 |
| Cash and cash equivalents at end of period | $ | 19,049,555 | $ | 19,955,662 |

UTG, Inc. Notes to Condensed Consolidated Financial Statements
Note 1 – Basis of Presentation
The accompanying Condensed Consolidated Balance Sheet as of December 31, 2018, which has been derived from audited consolidated financial statements, and the unaudited interim Condensed Consolidated Financial Statements include the accounts of UTG, Inc. (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which in the opinion of Management, are necessary for a fair presentation of the results for the interim periods. The unaudited Condensed Consolidated Financial Statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The Company’s results of operations for the three-month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other future period.
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 March 31, 2019, Mr. Correll owns or controls directly and indirectly approximately 65.26% of UTG’s outstanding stock. UTG’s life insurance subsidiary, Universal Guaranty Life Insurance Company (“UG”), has several wholly-owned and majority-owned subsidiaries. The subsidiaries were formed to hold certain real estate investments. The real estate investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.
Note 2 – Recently Issued Accounting Standards
During the three months ended March 31, 2019, there were no additions to or changes in the critical accounting policies disclosed in the 2018 Form 10-K.
Note 3 – Investments Available for Sale Securities – Fixed Maturity Securities 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.
| March 31, 2019 | Original or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |
| Investments available for sale: |
| Fixed maturities |
| U.S. Government and govt. agencies and authorities | $ | 25,652,896 | $ | 221,161 | $ | (98,738 | ) | $ | 25,775,319 |
| U.S. special revenue and assessments | 16,350,071 | 545,717 | 0 | 16,895,788 |
| All other corporate bonds | 116,809,266 | 5,163,923 | (737,633 | ) | 121,235,556 |
| $ | 158,812,233 | $ | 5,930,801 | $ | (836,371 | ) | $ | 163,906,663 |
| December 31, 2018 | Original or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value |
| Investments available for sale: |
| Fixed maturities |
| U.S. Government and govt. agencies and authorities | $ | 25,649,410 | $ | 149,006 | $ | (138,222 | ) | $ | 25,660,194 |
| U.S. special revenue and assessments | 16,350,486 | 334,300 | (4,406 | ) | 16,680,380 |
| All other corporate bonds | 118,895,973 | 2,569,287 | (2,845,050 | ) | 118,620,210 |
| $ | 160,895,869 | $ | 3,052,593 | $ | (2,987,678 | ) | $ | 160,960,784 |

| Fixed Maturities Available for Sale March 31, 2019 | Amortized Cost | Fair Value |
| Due in one year or less | $ | 6,498,983 | $ | 6,525,131 |
| Due after one year through five years | 51,055,408 | 53,028,854 |
| Due after five years through ten years | 50,690,937 | 53,501,649 |
| Due after ten years | 50,566,905 | 50,851,029 |
| Total | $ | 158,812,233 | $ | 163,906,663 |

| March 31, 2019 | 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 | $ | - | - | 5,578,536 | (98,738 | ) | 5,578,536 | $ | (98,738 | ) |
| All other corporate bonds | 3,555,300 | (6,923 | ) | 26,553,550 | (730,710 | ) | 30,108,850 | (737,633 | ) |
| Total fixed maturities | $ | 3,555,300 | (6,923 | ) | 32,132,086 | (829,448 | ) | 35,687,386 | $ | (836,371 | ) |
| December 31, 2018 | 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 | $ | 6,429,700 | (49,904 | ) | 1,592,679 | (88,318 | ) | 8,022,379 | $ | (138,222 | ) |
| U.S. special revenue and assessments | 4,023,920 | (4,406 | ) | - | - | 4,023,920 | (4,406 | ) |
| All other corporate bonds | 49,270,729 | (2,033,507 | ) | 15,337,739 | (811,543 | ) | 64,608,468 | (2,845,050 | ) |
| Total fixed maturities | $ | 59,724,349 | (2,087,817 | ) | 16,930,418 | (899,861 | ) | 76,654,767 | $ | (2,987,678 | ) |

| Less than 12 months | 12 months or longer | Total |
| As of March 31, 2019 |
| Fixed maturities | 2 | 14 | 16 |
| As of December 31, 2018 |
| Fixed maturities | 30 | 10 | 40 |

Substantially all of the unrealized losses on fixed maturities and equity securities at March 31, 2019 and December 31, 2018 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s 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 March 31, 2019 and December 31, 2018. Net Investment Gains (Losses)
| Three Months Ended |
| March 31, |
| 2019 | 2018 |
| Realized gains on available-for-sale investments: |
| Sales of fixed maturities | $ | 15,055 | $ | - |
| Sales of equity securities | - | - |
| Sales of real estate | 1,098,643 | - |
| Other | - | 534,242 |
| Total realized gains | 1,113,698 | 534,242 |
| Realized losses on available-for-sale investments: |
| Sales of fixed maturities | - | - |
| Sales of equity securities | - | - |
| Sales of real estate | - | - |
| Other-than-temporary impairments | - | - |
| Other | - | - |
| Total realized losses | - | - |
| Net realized investment gains (losses) | 1,113,698 | 534,242 |
| Change in fair value of equity securities: |
| Realized gains (losses) on equity securities sold during the period | - | - |
| Change in fair value of equity securities held at the end of the period | 14,787,631 | 4,129,236 |
| Change in fair value of equity securities | 14,787,631 | 4,129,236 |
| Net investment gains (losses) | $ | 15,901,329 | $ | 4,663,478 |
| Change in net unrealized gains (losses) on available-for-sale investments included in other comprehensive income: |
| Fixed maturities | $ | 4,934,851 | $ | (4,285,303 | ) |
| Equity securities | - | - |
| Net increase (decrease) | $ | 4,934,851 | $ | (4,285,303 | ) |

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 Condensed Consolidated Statements of Operations. Management regularly reviews its real estate portfolio in comparison to appraisal valuations and current market conditions for indications of other-than-temporary impairments. If a decline in value is judged by Management to be other-than-temporary, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations. The Company did not recognize any other-than-temporary impairments during the first quarter of 2018 or 2019. Cost Method Investments The Company held equity investments with an aggregate cost of $12,133,745 and $12,118,617 at March 31, 2019 and December 31, 2018, respectively. These equity investments were not reported at fair value because it is not practicable to estimate their fair values due to insufficient information being available. Management did not identify any events or changes in circumstances that might have a significant adverse effect on the reported value of those investments. Based on Management's evaluation of the expected cash flow of the investments, and the Company's ability and intent to hold the investments for a reasonable period of time, the Company does not deem an other-than-temporary impairment necessary at March 31, 2019.
Mortgage Loans The Company, from time to time, acquires mortgage loans through participation agreements with FSNB. FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market. The Company is able to receive participations from FSNB for three primary reasons: 1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB’s 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. During the first quarter of 2019 and 2018, the Company acquired $3,575,500 and $0 in mortgage loans, respectively. 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.
| 2019 | 2018 |
| Maximum rate | Minimum rate | Maximum rate | Minimum rate |
| Farm Loans | 5.00% | 5.00% | 5.00% | 5.00% |
| Commercial Loans | 7.50% | 4.00% | 7.50% | 4.00% |
| Residential Loans | 8.00% | 8.00% | 8.00% | 8.00% |

Most mortgage loans are first position loans. Loans issued are generally limited to no more than 80% of the appraised value of the property. The Company has in place a monitoring system to provide Management with information regarding potential troubled loans. Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent. Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency. All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans. Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified. Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact. Changes in the current economy could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers’ ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices. 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 mortgage loan reserve was $0 at March 31, 2019 and December 31, 2018.
| March 31, 2019 | December 31, 2018 |
| In good standing | $ | 8,829,640 | $ | 7,169,272 |
| Overdue interest over 90 days | 1,873,913 | 1,899,839 |
| Total mortgage loans | $ | 10,703,553 | $ | 9,069,111 |

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 Condensed Consolidated Statements of Operations. Notes Receivable Notes receivable represent collateral loans and promissory notes issued by the Company and are reported at their unpaid principal balances, adjusted for valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. The valuation allowance as of March 31, 2019 and December 31, 2018 was $0. Interest accruals are analyzed based on the likelihood of repayment. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status. Before a new note is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control. Once the note is approved, the Company directly funds the note to the borrower. Several of the notes have participation agreements in place, whereas the Company has reduced its investment in the note receivable by participating a portion of the note to a third party. Similar to the mortgage loans, FSNB services several of the notes receivable. The Company, and the participants in the notes, share in the risk of loss associated with the terms of the note with the borrower, based upon their ownership percentage in the note. The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.
Note 4 – Fair Value Measurements The Company measures its assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance. The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories. Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access. Level 1 fair value is not subject to valuation adjustments. Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value. Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company’s 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 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 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 cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.
| Level 1 | Level 2 | Level 3 | Total |
| Assets |
| Fixed Maturities, available for sale | $ | 25,775,319 | $ | 137,696,500 | $ | 434,844 | $ | 163,906,663 |
| Equity Securities | 37,355,757 | 12,176,923 | 32,917,737 | 82,450,417 |
| Total | $ | 63,131,076 | $ | 149,873,423 | $ | 33,352,581 | $ | 246,357,080 |
| Level 1 | Level 2 | Level 3 | Total |
| Assets |
| Fixed Maturities, available for sale | $ | 25,660,194 | $ | 134,865,746 | $ | 434,844 | $ | 160,960,784 |
| Equity Securities | 27,634,283 | 10,557,031 | 29,473,168 | 67,664,482 |
| Total | $ | 53,294,477 | $ | 145,422,777 | $ | 29,908,012 | $ | 228,625,266 |

| Fixed Maturities, Available for Sale | Equity Securities | Total |
| Balance at December 31, 2018 | $ | 434,844 | $ | 29,473,168 | $ | 29,908,012 |
| Total unrealized gain or (losses): |
| Included in net income (loss) | - | 3,444,569 | 3,444,569 |
| Included in other comprehensive income | - | - | - |
| Purchases | - | - | - |
| Sales | - | - | - |
| Balance at March 31, 2019 | $ | 434,844 | $ | 32,917,737 | $ | 33,352,581 |
| March 31, 2019 | December 31, 2018 |
| Change in fair value of equity securities included in net income (loss) relating to assets held | $ | 3,444,569 | $ | 4,633,751 |

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs. The Company computed fair value of Level 3 equity investments based on a review of current financial information, earnings trends and similar companies in the same industries. There were no transfers in or out of Level 3 as of March 31, 2019. Transfers occur when there is a change in the availability of observable market information. Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the Consolidated Financial Statements.
| March 31, 2019 | December 31, 2018 |
| Assets | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value |
| Equity securities | $ | 12,133,745 | $ | 12,133,745 | $ | 12,118,617 | $ | 12,118,617 |
| Mortgage loans on real estate | 10,703,553 | 10,703,553 | 9,069,111 | 9,069,111 |
| Investment real estate | 51,530,162 | 51,530,162 | 52,518,577 | 52,518,577 |
| Notes receivable | 26,595,336 | 26,595,336 | 23,717,312 | 23,717,312 |
| Policy loans | 9,117,979 | 9,117,979 | 9,204,222 | 9,204,222 |
| Cash and cash equivalents | 19,049,555 | 19,049,555 | 20,150,162 | 20,150,162 |

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 historically purchased non-performing discounted mortgage loans at a deep discount through an auction process led by the Federal Government. In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company. Accordingly, the Company records its investment in the discounted loans at its original purchase price, which Management believes approximates fair value. The inputs used to measure the fair value of our discounted mortgage loans are classified as Level 3 within the fair value hierarchy Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell. The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by Management. The inputs used to measure the fair value of our investment real estate are classified as Level 3 within the fair value hierarchy. Notes receivable are carried at their unpaid principal balances, which approximates fair value. The inputs used to measure the fair value of the loans are classified as Level 3 within the fair value hierarchy. Policy loans are carried at the aggregate unpaid principal balances in the Condensed Consolidated Balance Sheets which approximate fair value, and earn interest at rates ranging from 4% to 8%. Individual policy liabilities in all cases equal or exceed outstanding policy loan balances. The inputs used to measure the fair value of our policy loans are classified as Level 3 within the fair value hierarchy. The carrying amount of cash and cash equivalents in the Condensed Consolidated Balance Sheets approximates fair value given the highly liquid nature of the instruments. The inputs used to measure the fair value of our cash and cash equivalents are classified as Level 1 within the fair value hierarchy. The carrying amount of short term investments in the Condensed Consolidated Balance Sheets approximates fair value. The inputs used to measure the fair value of our short term investments are classified as Level 3 within the fair value hierarchy.
Note 5 – Credit Arrangements
| Instrument | Issue Date | Maturity Date | Revolving Credit Limit | December 31, 2018 | Borrowings | Repayments | March 31, 2019 |
| Lines of Credit: |
| UTG | 11/20/2013 | 11/20/2019 | $ | 8,000,000 | - | - | - | - |
| UG | 6/2/2015 | 5/10/2019 | 10,000,000 | - | - | - | - |

The UTG line of credit carries interest at a fixed rate of 5.125% 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. The Company is currently in the process of renewing this line of credit. During May of 2018, 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. The Company is currently in the process of renewing the CMA.
Note 6 – 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 in September of 2018, the Board of Directors of UTG authorized the repurchase of up to an additional $1.5 million of UTG's common stock, for a total repurchase of up to $16.0 million of UTG's common stock in the open market or in privately negotiated transactions. Company Management has broad authority to operate the program, including the discretion of whether to purchase shares and the ability to suspend or terminate the program. Open market purchases are made based on the last available market price but may be limited. During the three months ended March 31, 2019, the Company repurchased 6,955 shares through the stock repurchase program for $212,387. Through March 31, 2019, UTG has spent $14,076,115 million in the acquisition of 1,147,061 shares under this program. During 2019, the Company issued 7,632 shares of stock to management and employees as compensation at a cost of $229,800. These awards are determined at the discretion of the Board of Directors. Earnings Per Share Calculations Earnings per share are based on the weighted average number of common shares outstanding during each period. For the three months ended March 31, 2019 and 2018, diluted earnings per share were the same as basic earnings per share since the Company had no dilutive instruments outstanding.
Note 7 – Commitments and Contingencies The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages. In some states, juries have substantial discretion in awarding punitive damages in these circumstances. In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the Company’s 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.
| Total Funding Commitment | Unfunded Commitment |
| RLF III, LLC | $ | 4,000,000 | $ | 398,120 |
| Sovereign’s Capital, LP Fund I | 500,000 | 24,493 |
| Sovereign's Capital, LP Fund II | 1,000,000 | 240,566 |
| Sovereign's Capital, LP Fund III | 1,000,000 | 900,000 |
| Barton Springs Music, LLC | 1,750,000 | 1,158,500 |
| Master Mineral Holdings III, LP | 4,000,000 | 530,312 |

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 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. During 2018, the Company committed to invest in Sovereign’s Capital, LP Fund III (“Sovereign’s III”), which invests in companies in emerging markets. Sovereign’s III makes capital calls to investors as funds are needed. During 2018, the Company committed to invest in Barton Springs Music, LLC (“Barton”), which invests in music royalties. Barton makes capital calls to its investors as funds are needed to acquire the royalty rights. During 2018, the Company committed to invest in Master Mineral Holdings III, LP (“MMH”), which purchases land for leasing opportunities to those looking to harvest natural resources. MMH makes capital calls to its investors as funds are needed for continued land purchases.
Note 8 – Other Cash Flow Disclosures
| Three Months Ended |
| March 31, |
| 2019 | 2018 |
| Interest | $ | - | $ | - |
| Federal income tax | - | - |

Note 9 – Concentrations of Credit Risk The Company maintains cash balances in financial institutions that at times may exceed federally insured limits. The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse Correll, the Company’s 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 March 31, 2019 and 2018 , approximately 55% and 56%, respectively, 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% of total life insurance in force at March 31, 2019 and December 31, 2018, respectively. Insurance ceded represented 24% and 29% of premium income for the three months ended March 31, 2019 and 2018, 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. The Company owns a variety of investments associated with the oil and gas industry. These investments represent approximately 28% and 25% of the Company's total invested assets as of March 31, 2019 and December 31, 2018, respectively.
Item 2. 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"). The following discussion of the financial condition and results of operations of the Company should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements of the Company and the related Notes thereto appearing in the Company's annual report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission, and our unaudited Condensed Consolidated Financial Statements and related Notes thereto appearing elsewhere in this quarterly report.
Cautionary Statement Regarding Forward-Looking Statements
This report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "probably," or similar expressions, we are making forward-looking statements.
Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur. Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.
Overview
UTG, Inc., a Delaware corporation, is a life insurance holding company. The Company's 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 and the administration and processing of life insurance business for other entities. The Company's focus for the future includes growing the administrative portion of the business.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ significantly from those estimates. The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability. The Company's critical accounting policies and the related estimates considered most significant by Management are disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. Management has identified the accounting policies related to cost of insurance acquired, assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, and valuation methods for investments that are not actively traded as those, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's Condensed Consolidated Financial Statements and this Management's Discussion and Analysis.
During the three months ended March 31, 2019, there were no additions to or changes in the critical accounting policies disclosed in the 2018 Form 10-K.
Results of Operations
On a consolidated basis, the Company reported net income attributable to common shareholders' of approximately $11.6 million and $2.7 million for the three-month periods ended March 31, 2019 and 2018, respectively.
Revenues
The Company reported total revenues of approximately $21.1 million for the three-month period ended March 31, 2019, an increase of approximately $11.4 million as compared to the same period in 2018. The variance in total revenues from the prior year to the current year is mainly attributable to the increase in the change in the fair value of equity securities.
Premium and policy fee revenues, net of reinsurance, were comparable for the three-months ended March 31, 2019 and 2018. The Company writes minimal new business. Premium and policy fee revenues, net of reinsurance, represented 10% and 20% of the Company's revenues as of March 31, 2019 and 2018, respectively.
The following table summarizes the Company's investment performance.
| Three Months Ended March 31, |
| 2019 | 2018 |
| Net investment income | $ | 3,112,024 | $ | 3,068,118 |
| Net investment gains | $ | 15,901,329 | $ | 4,663,478 |
| Change in net unrealized investment gains (losses) on available-for-sale securities, pre-tax | $ | 4,934,851 | $ | (4,285,303 | ) |

The following table reflects net investment income of the Company:
| Three Months Ended |
| March 31, |
| 2019 | 2018 |
| Fixed maturities available for sale | $ | 1,589,985 | $ | 1,837,844 |
| Equity securities | 668,108 | 532,067 |
| Trading securities | (111,693 | ) | - |
| Mortgage loans | 118,612 | 214,558 |
| Real estate | 784,532 | 449,546 |
| Notes receivable | 435,155 | 386,782 |
| Policy loans | 141,552 | 150,081 |
| Short-term | 41,364 | 48,172 |
| Cash and cash equivalents | - | 12,434 |
| Total consolidated investment income | 3,667,615 | 3,631,484 |
| Investment expenses | (555,591 | ) | (563,366 | ) |
| Consolidated net investment income | $ | 3,112,024 | $ | 3,068,118 |

Net investment income represented 15% and 32% of the Company's total revenues as of March 31, 2019 and 2018, respectively. Net investment was comparable in the majority of the investment categories when comparing the first quarter 2019 activity to the same quarter in 2018.
Investment income from the real estate investment portfolio is up approximately $335,000 in the current year as compared to the same period in the prior year. The increase is not attributable to one specific investment or event. Several of the Company's real estate holdings produced more income in the current your as compared to the same period in the prior year. Income is expected to vary from quarter to quarter depending on the activity occurring in relation to each property.
The Company reported net investment gains of approximately $15.9 million and $4.7 million for the three-month periods ended March 31, 2019 and 2018, respectively. Realized investment gains of approximately $1.1 million and $534,000 were recognized by the Company during the first quarter of 2019 and 2018, respectively. These gains are the result of the Company selling a parcel of real estate in 2018 and 2019.
Realized investment gains are the result of one-time events and are expected to vary from quarter to quarter.
The 2019 investment gains mainly consist of approximately $14.8 million in unrealized gains related to the change in the fair value of equity securities. For the same period in 2018, the Company reported approximately $4.1 million of unrealized gains related to the change in the fair value of equity securities.
The Company has seen significant unrealized gains on its equity investments during 2018 and 2019. A significant portion of these gains are from two equity holdings, both in the area of oil and gas. While the Company has had very strong unrealized gains during 2018 and 2019, a pull back in the stock market, particularly in the oil and gas arena, could slow these gains or even result in future period unrealized losses. Management believes these equity investments continue to be solid investments for the Company and have further growth potential; however, changes in market conditions could cause volatility in market prices.
In summary, the Company's basis for future revenue growth is expected to come from the following primary sources: conservation of business currently in-force, the maximization of investment earnings and the acquisition of other companies or policy blocks in the life insurance business. Management has placed a significant emphasis on the development of these revenue sources to enhance these opportunities.
Expenses
The Company reported total benefits and other expenses of approximately $5.6 million for the three-month period ended March 31, 2019, a decrease of approximately 9% from the same period in 2018. Benefits, claims and settlement expenses represented approximately 59% and 63% of the Company's total expenses for the three-month periods ended March 31, 2019 and 2018, respectively. The other major expense category of the Company is operating expenses, which represented approximately 39% and 34% of the Company's total expenses for the three-month periods ended March 31, 2019 and 2018, respectively.
Life benefits, claims and settlement expenses, net of reinsurance benefits and claims, decreased approximately 16% in the three-month period ended March 31, 2019, compared to the same period in 2018. Policy claims vary from period to period and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.
Net amortization of cost of insurance acquired decreased 4% during the three-month period ended March 31, 2019 compared to the same period in 2018. Cost of insurance acquired is established when an insurance company is acquired or when the Company acquires a block of in-force business. The Company assigns a portion of its cost to the right to receive future profits from insurance contracts existing at the date of the acquisition. Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The interest rates may vary due to risk analysis performed at the time of acquisition on the business acquired. The Company utilizes a 12% discount rate on the remaining unamortized business. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised. Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force. This expense is expected to decrease, unless the Company acquires a new block of business.
Operating expenses increased approximately 3% in the three-month period ended March 31, 2019 as compared to the same period in 2018. Overall, expenses were comparable in all of the major expense categories.
Management continues to place significant emphasis on expense monitoring and cost containment. Maintaining administrative efficiencies directly impacts net income.
Financial Condition
Investment Information
Investments represent approximately 86% and 85% of total assets at March 31, 2019 and December 31, 2018, respectively. Accordingly, investments are the largest asset group of the Company. The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments that it is permitted to make and the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, the majority of the Company's investment portfolio is invested in a diverse set of securities.
As of March 31, 2019, 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, with changes in market value charged directly to shareholders' equity. Changes in the market value of available for sale securities resulted in a net unrealized gain of approximately $3.9 million and a net unrealized loss of approximately $3.4 million for the three-month periods ended March 31, 2019 and 2018, respectively. The variance in the net unrealized gains and losses is the result of normal market fluctuations and lower interest rates.
Capital Resources
Total shareholders' equity increased by approximately 14% as of March 31, 2019 compared to December 31, 2018. The increase is mainly attributable to an increase in retained earnings, which is the result of the current year net income reported by the Company.
The Company's investments are predominately in fixed maturity investments such as bonds, which provide sufficient return to cover future obligations. The Company carries all of its fixed maturity holdings as available for sale, which are reported in the Condensed Consolidated Financial Statements at their market value.
Liquidity
The Company has two principal needs for cash - the insurance company's contractual obligations to policyholders and the payment of operating expenses. Cash and cash equivalents represented 5% total assets as of March 31, 2019 and December 31, 2018. Fixed maturities as a percentage of total assets were approximately 40% and 41% as of March 31, 2019 and December 31, 2018, respectively.
The Company currently has access to funds for operating liquidity. UTG has an $8 million revolving credit note with Illinois National Bank. At March 31, 2019, the Company had no outstanding borrowings against the UTG line of credit. UG has a $10 million line of credit with the Federal Home Loan Bank. At March 31, 2019, the Company had no outstanding borrowings against the UG line of credit
Future policy benefits are primarily long-term in nature and therefore, the Company's investments are predominantly in long-term fixed maturity investments such as bonds and mortgage loans which provide sufficient return to cover these obligations. Many of the Company's products contain surrender charges and other features which reward persistency and penalize the early withdrawal of funds.
For the three months ended March 31, 2019 and 2018, operating activities used cash of approximately $364,000 and provided cash of approximately $3.3 million, 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.
The Company used cash in investing activities of approximately $540,000 and $8.3 million for the three month periods ended March 31, 2019 and 2018, respectively. The net cash provided by or used in investing activities is expected to vary from quarter to quarter depending on market conditions and Management’s ability to find and negotiate favorable investment contracts.
UTG is a holding Company that has no day-to-day operations of its own. Funds required to meet its expenses, generally costs associated with maintaining the Company in good standing with states in which it does business are primarily provided by its subsidiaries. On a parent only basis, UTG's cash flow is dependent on Management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances. At March 31, 2019, substantially all of the consolidated shareholders' equity represented net assets of its subsidiary. The Company's insurance subsidiary has maintained adequate statutory capital and surplus. The payment of cash dividends to shareholders by UTG is not legally restricted. However, the state insurance department regulates insurance Company dividend payments where the Company is domiciled. No dividends were paid to shareholders in 2018 or the three-month period ended March 31, 2019.
UG is an Ohio domiciled insurance company, which requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend. Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus. For the year ended December 31, 2018, UG had statutory net income of approximately $6.2 million. At December 31, 2018 UG's statutory capital and surplus amounted to approximately $60 million. Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation. During 2018 , UG paid UTG ordinary dividends of $5 million. During the second quarter of 2019, UG paid UTG a dividend of $2 million. UTG used the dividends received during 2018 and 2019 for general operations of the Company.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to Management, including the principal executive officer and principal financial officer, allowing timely decisions regarding required disclosure. Under the supervision and with the participation of our Management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 1A. RISK FACTORS
NONE
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. MINE SAFETY DISCLOSURES
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS
| *31.1 | Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| *31.2 | Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| *32.1 | Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| *32.2 | Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| **101 | Interactive Data File |

*Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UTG, INC.
(Registrant)
| Date: | May 14, 2019 | By | /s/ James P. Rousey |
| James P. Rousey |
| President and Director |

| Date: | May 14, 2019 | By | /s/ Theodore C. Miller |
| Theodore C. Miller |
| Senior Vice President |
| and Chief Financial Officer |

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

* Filed herewith

Question: What is the return on equity (ROE) for the year ended March 31, 2019, considering the net income for the three months ended March 31, 2019, and total shareholders' equity at the end of 2019 and 2018 in percentages?

Python solution:
def solution():
    #Define variables name and value
    net_income_three_months = 11798612
    total_share_equity_2018 = 107076710
    total_share_equity_2019 = 122533624

    #Do math calculation to get the answer
    annual_income = net_income_three_months*4
    average_shareholders_equity = (total_share_equity_2019 + total_share_equity_2018) / 2
    roe = (annual_income / average_shareholders_equity) * 100
    answer = round(roe, 2)
    return answer


Answer: 41.11