First Trinity Financial Corporation (“we” “us”, “our”, or the Company) conducts operations as an insurance holding company emphasizing ordinary life insurance products in niche markets and a premium finance company, financing casualty insurance premiums.
Results of Operations - Years Ended December 31, 2013 and 2012
The $351,998 decrease in the acquisition costs deferred is primarily due to a decline in commissions due to decreased 2013 final expense production and our decision, based upon the evaluation of 2013 operations, to decrease the deferral of non-commission acquisition costs for products sold in 2013. This reduction in the deferral of non-commission acquisition costs for products sold in 2013 amounted to approximately $150,000.
The $1,603,793 increase in revenues from Life and Annuity Insurance Operations for the year ended December 31, 2013 is primarily due to the following:
The $205,491 decrease in revenues from Corporate Operations is primarily due to $350,000 of net realized investment gains from the sale of an equity security in 2012 that exceeded $187,009 of increased net investment income in 2013 less $42,500 of net realized investment losses from the 2013 full impairment of an equity security.
The progression of the Company’s loans from premium financing for the years ended December 31, 2013 and 2012 is summarized as follows:
failures or limitations of our computer, data security and administration systems;
On June 22, 2005, the Company’s intrastate public stock offering filed with the Oklahoma Department of Securities for $12,750,000, which included a 10% "over-sale" provision (additional sales of $1,275,000), was declared effective. The offering was completed February 23, 2007. The Company raised $14,025,000 from this offering.
As of December 31, 2013, Level 3 financial instruments consisted of two private placement common stocks that have no active trading. During 2013, one private placement common stock was purchased. In addition, a private placement equity security with a carrying value of $42,500 was deemed to be fully impaired in the fourth quarter of 2013 with the decrease in value reported as a realized loss. During 2012, one private placement common stock was sold and another was purchased.
FTFC files a consolidated federal income tax return with FTCC but does not file a consolidated tax return with TLIC or Family Benefit Life. TLIC and Family Benefit Life are taxed as life insurance companies under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for five years. However, in 2013, TLIC and Family Benefit Life filed a combined life insurance company 2012 federal tax return and intend to also file a combined life insurance company 2013 federal tax return for TLIC and Family Benefit Life in 2014. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.
The Company has no known uncertain tax benefits within its provision for income taxes. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, have not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions. The 2010 through 2013 U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements.
In December 2013, TLIC purchased one acre of land in Greensburg, Indiana and a 3,975 square foot building constructed on approximately 8% of this land at a cost of $2,393,687. The building is leased through October 31, 2027 with future lease extentions on November 1, 2017 and November 1, 2022 through October 31, 2022 and October 31, 2027, respectively. The terms of the lease have the lessee responsible for paying real estate taxes, building insurance and building and ground maintenance. The monthly lease payments are as follows: $14,661 in 2014; $14,881 in 2015; $15,104 in 2016 and $15,331 in 2017.
The future minimum lease payments to be received under the above non-cancellable lease agreements are $632,052, $509,840, $382,506, $249,358 and $64,032 for the years 2014 through 2018, respectively.