The overall investment yields for 2001, 2000 and 1999, are 6.39%, 7.01% and 6.45%, respectively.
During 2000, real estate accounted for almost all of the realized gain and loss activity. By third quarter of 2000, the Company had sold the remaining real estate properties identified for disposal in prior years. The Company recorded net realized gains of $728,000 from these sales. By fourth quarter 2000, remaining real estate consisted of the North Plaza holdings and development real estate located in Springfield, IL. In December 2000, management studied its development properties, analyzing such issues as remaining time to fully develop without over saturation, historic sales trends, management time and resources to continue development and other alternatives such as modifying current plans or discontinuing entirely. Management determined it would be in the long term best interests of the Company to discontinue development and attempt to liquidate the remaining properties. As such, a realized loss of $913,000 was recorded in December 2000 to reduce the book value of these properties to the amount management determined it would accept net of selling costs to facilitate liquidation. During the fourth quarter of 2000, the Company recorded a $170,000 increase to the allowance maintained for potential mortgage loan losses.
Total shareholders' equity decreased 4% in 2001 compared to 2000. This is primarily due to the UTG acquisition of its common stock in April of 2001 from two former officers and directors of the Company and their respective families. Income during the year of $2,439,573 and unrealized gains on investments held for sale of $573,457 also influenced total shareholders' equity.
At December 31, 2001, each of the insurance subsidiaries has a Ratio that is in excess of 4, which is 400% of the authorized control level; accordingly the insurance subsidiaries meet the RBC requirements.
Basic weighted average shares outstanding 3,733,432 4,056,439 2,839,703 ============= ============= =============
Total shareholders' equity, end of year $ 44,773,614 $ 46,714,433 $ 43,376,672 =========== =========== ===========
Real estate - investment real estate at cost less allowance for depreciation and, as appropriate, provisions for possible losses. Accumulated depreciation on investment real estate was $169,281 and $307,294 as of December 31, 2001 and 2000, respectively.
2001 2000 1999 ------------ ------------ ------------- Net income (loss) $ 2,439,573 $ (696,426) $ 1,075,909 Federal income tax provision 12,043 60,550 192,247 Loss (gain) of subsidiaries (2,409,467) 762,656 (615,995) Gain of investees 0 0 (53,555) ------------ ------------ ------------- Taxable income $ 42,149 $ 126,780 $ 598,606 ============ ============ =============
On April 26, 1999, the above lawsuit was filed by David Morlan and Louis Black in the Southern District of Illinois against Universal Guaranty Life Insurance Company ("UG") and United Trust Assurance Company ("UTAC") (merged into UG in 1992). After the lawsuit was filed, the plaintiffs, who were former insurance salesmen, amended their complaint, dropped Louis Black as a plaintiff, and added United Security Assurance Company ("USAC"), UTG and FCC as defendants. The plaintiffs are alleging that they were employees of UG, UTAC or USAC rather than independent contractors. The plaintiffs are seeking class action status and have asked to recover various employee benefits, costs and attorneys' fees, as well as monetary damages based on the defendants' alleged failure to withhold certain taxes.
2001 2000 ----------- ----------- Subordinated 20 yr. Notes $ 514,674 $ 1,817,169 Other notes payable 3,885,996 0 ----------- ----------- $ 4,400,670 $ 1,817,169 =========== ===========
On a cash basis, the Company paid $333,365, $373,988, and $643,429 in interest expense for the years 2001, 2000 and 1999, respectively. The Company paid $92,006, $(173,500) and $557,812 in federal income tax for 2001, 2000 and 1999, respectively.
Statement 141 improves the transparency of accounting and reporting for business combinations by requiring that all business combinations be accounted for under a single method - the purchase method. Use of the pooling-of-interests method is no longer permitted. Statement 141 requires that the purchase method be used for business combinations initiated after June 30, 2001. The adoption of Statement 141 did not affect the Company's financial position or results of operations, since the Company has had no such business combinations during the reporting period.
Unrealized holding gains during Period $ 1,513,673 $ 0 $ 1,513,673 Less: reclassification adjustment for gains realized in net income (39,486) 0 (39,486) -------------- -------------- ------------- Net unrealized gains 1,474,187 0 1,474,187 -------------- -------------- ------------- Other comprehensive income $ 1,474,187 $ 0 $ 1,474,187 ============== ============== =============