The Company's investments are predominantly in fixed maturity investments such as bonds and mortgage loans, which provide sufficient return to cover future obligations. The Company carries certain of its fixed maturity holdings as held to maturity which are reported in the financial statements at their amortized cost.
During 2004, the Company paid in full the remaining debt owed to two former officers and directors of the Company and their respective families as a result of an April 2001 stock purchase transaction. These notes were paid from a draw on a line of credit, which was also repaid in 2004. As of December 31, 2005, the Company has no outstanding notes payable.
The second LOC available to the Company is a $ 5,000,000 line of credit (LOC) extended from Southwest Bank of St. Louis to UG. Borrowings under the LOC bear interest at the rate of 0.25% in excess of Southwest Bank of St. Louis' prime rate. At December 31, 2005 and 2004, the Company had no outstanding borrowings attributable to this LOC. During 2005 and 2004, the Company had total borrowings of $ 0 and $ 2,275,000, respectively, which were repaid during the applicable year.
The "USA PATRIOT" Act of 2001 ("the Patriot Act"), enacted in response to the terrorist attacks of September 11, 2001, strengthens our Nation's ability to combat terrorism and prevent and detect money-laundering activities. Under Section 352 of the Patriot Act, financial institutions (definition includes insurance companies) are required to develop an anti-money laundering program. The practices and procedures implemented under the program should reflect the risks of money laundering given the entity's products, methods of distribution, contact with customers and forms of customer payment and deposits. In addition, Section 326 of the Patriot Act creates minimum standards for financial institutions regarding the identity of their customers in connection with the purchase of a policy or contract of insurance. The Company has instituted an anti-money laundering program to comply with Section 352, and has communicated this program throughout the organization. In addition, all new business applications are regularly screened through the Medical Information Bureau. The Company regularly updates the information provided by the Office of Foreign Asset Control, U.S. Treasury Department in order to remain in compliance with the Patriot Act and will continue to monitor this issue as changes and new proposals are made.
Income (loss) before income taxes and minority interest 1,899,613 (867,939) (9,318,544) Income tax benefit (expense) (158,408) 797,716 2,699,493 Minority interest in (income) loss of consolidated subsidiaries (480,982) (205,394) 222,561 --------------- ---------------- ----------------
Diluted income (loss) per share from continuing operations and net income (loss) $ 0.32 $ (0.07)$ (1.67) =============== ================ ================
Acquisition costs deferred: Commissions 0 0 56,000 Other expenses 5,000 5,000 5,000 ---------------- ----------------- ---------------- Total 5,000 5,000 61,000
Interest accretion 8,000 10,000 17,000 Amortization charged to income (283,899) (452,380) (417,844) ---------------- ----------------- ---------------- Net amortization (275,899) (442,380) (400,844)
The financial statements include various estimated fair value information at December 31, 2005 and 2004, as required by Statement of Financial Accounting Standards 107, Disclosure about Fair Value of Financial Instruments (SFAS 107). Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that Statement and does not purport to represent the aggregate net fair value of the Company.
Shown in thousands --------------------------------------------------------- 2005 2004 2003 Premiums Premiums Premiums Earned Earned Earned ---------------- ---------------- ---------------- Direct $ 16,357 $ 17,238 $ 18,087 Assumed 42 38 34 Ceded (2,672) (3,036) (2,896) ---------------- ---------------- ---------------- Net premiums $ 13,727 $ 14,240 $ 15,225 ================ ================ ================
On July 1, 2005, United Trust Group, Inc., an Illinois corporation, merged with and into its wholly-owned subsidiary, UTG, Inc. (UTG), a Delaware corporation, for the purpose of effecting a change in the Company's state of incorporation from Illinois to Delaware. The merger was effected pursuant to that certain Agreement and Plan of Merger dated as of April 4, 2005, which was approved by the boards of directors of both UTG and United Trust Group, Inc. The merger was approved by the holders of two-thirds of the outstanding shares of common stock of United Trust Group, Inc. at the 2005 annual meeting of shareholders on June 15, 2005, and by the sole stockholder of UTG, Inc. on June 15, 2005.
Unrealized holding losses during period $ 7,896,605 $ (2,763,812) $ 5,132,793 Less: reclassification adjustment for losses realized in net income (31,766) (11,118) (20,648) ----------------- ------------------- ----------------- Net unrealized losses 7,864,838 (2,752,693) 5,112,145 ----------------- ------------------- ----------------- Other comprehensive deficit $ 7,864,838 $ (2,752,693) $ 5,112,145 ================= =================== =================