This report,, and the Annual Report to Shareholders of which this report is a part, contain forward-looking statements within the meaning of the U.S. federal securities laws. You can identify forward-looking statements by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” “may,” “will” or “should,” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties, and similar references to future periods.

We base these and other forward-looking statements on our current expectations and assumptions regarding our business, the economy and other future conditions; however, our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Forward-looking statements, which by their nature relate to the future, are subject to inherent uncertainties, risks and changes in circumstances which we cannot easily predict. Important factors that could cause actual results to differ materially and adversely from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market, regulatory, and ~~regulatory~~health conditions.

Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

Overview and History - US Alliance Corporation ("USAC" ~~or the "Company"~~) was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. Our offices are located at ~~4123~~1303 SW ~~Gage Center Drive,~~First American Place, Suite ~~240,~~200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com.

~~Our~~ ~~four~~USAC has five wholly-owned operating ~~subsidiaries are:~~subsidiaries. US Alliance Life and Security Company ("USALSC") ~~formed~~was incorporated June 9, 2011, to serve as our life insurance ~~company;~~company. US Alliance Marketing Corporation ("USAMC") ~~formed~~was incorporated April 23, 2012, to serve as a marketing ~~resource;~~resource. US Alliance Investment Corporation ("USAIC") ~~formed~~was incorporated April 23, 2012 to serve as investment manager for ~~USAC; and~~USAC. Dakota Capital Life Insurance Company (“DCLIC”), ~~which~~ was acquired ~~by the Company~~ on August 1, 2017 ~~in connection with USAC's merger~~when USAC merged with Northern Plains Capital Corporation (“NPCC”). US Alliance Life and Security Company - Montana ("USALSC-Montana"), was acquired December 14, 2018. Both DCLIC and USALSC-Montana are wholly-owned subsidiaries of USALSC. Unless the context otherwise indicates, references in this registration statement to "we", "us", "our", or the "Company" refer collectively to USAC and its subsidiaries.

We initially capitalized our subsidiaries with proceeds from intrastate public offering(s) registered by qualification with the office of Kansas Securities Commissioner.

USALSC received a Certificate of Authority from the Kansas Insurance Department ("KID") effective January 2, 2012, and sold its first insurance product on May 1, 2013. USALSC currently offers the following eight product categories:

DCLIC received a Certificate of Authority from the North Dakota Insurance Department ("NDID") effective January 24, 2012. DCLIC currently offers the following eight product categories:

Our single pay life products (which include our ~~Legacy~~ Juvenile and ~~Thoughtful~~ Pre-Need products) accounted for ~~73%~~61% of ~~2017~~2020 direct premium revenue. Our individual life and Critical Illness products (which include ~~our Sound and Solid~~ Term Life and ~~Pioneer~~ Whole Life products) accounted for ~~18%~~21% of ~~2017~~2020 direct premium revenue. Our group products accounted for 9%18% of ~~2017~~2020 direct written premiums.

USALSC ~~seeks~~and DCLIC seek opportunities to develop and market additional products.

Our business model also ~~anticipates~~seeks the acquisition by USAC and/or ~~USALSC~~its subsidiaries of other insurance and insurance related companies, including third-party administrators, marketing organizations, and rights to ~~other~~ blocks of insurance business through ~~reinsuran~~cereinsurance or other transactions.

Material Agreements and Partners - Effective January 1, 2013, USALSC entered into a reinsurance agreement with Unified Life Insurance Company (“ULIC”) to assume 20% of a certain block of health insurance policies. This agreement renews annually unless either party provides written notice of its intent not to renew at least 120 days prior to the expiration of the then-current term. The agreement provides for monthly settlement. For the year ended December 31, ~~2017,~~2020, USALSC assumed premiums of ~~$3,643,783.~~$3,825,040.

On September 1, 2015, USALSC entered into an agreement to provide certain insurance administrative functions, data processing systems, daily operational services, management consulting, and marketing development to Dakota Capital Life Insurance Company. This agreement has an initial term of 60 months (beginning on September 1, 2015), and requires 90-day advance written notice to terminate. In addition, the agreement requires that certain products will be exclusively administered by USALSC and administrative services with respect to such products may not be transferred without our consent. The agreement provides for monthly settlement. On August 1, 2017, DCLIC became a wholly-owned subsidiary of USALSC as described below. Subsequent to the acquisition of DCLIC, this agreement became an intra-company agreement and is eliminated as a part of the consolidation of the financial statements of the companies.

On August 1, 2017 the Company acquired NPCC pursuant to a Plan and Agreement of Merger dated May 23, 2017, ~~pursuant to~~under which Alliance Merger Sub, Inc. (“Acquisition”), a wholly owned subsidiary of the Company, merged with and into ~~NPCC~~Northern Plains (“Merger”) with Acquisition being the surviving company. Pursuant to the agreement, the Company exchanged .5841 shares of the Company’s common stock ~~("USAC Common Stock")~~ for each share of ~~NPCC~~Northern Plains common stock, or 1,644,458 shares. Subsequent to the ~~Merger,~~merger, Acquisition was merged into the Company and DCLIC was contributed to USALSC.

On September 30, 2017, USALSC entered into a coinsurance agreement with American Life and Security Corporation (“ALSC”) to assume 100% of a certain block of life insurance ~~policies.~~policies (the "2017 ALSC Agreement"). USALSC is also the servicer of this block of policies. USALSC ~~deferred costs~~paid a ceding commission of ~~$2,861,450 related to this reinsurance trasnaction~~$1,850,000 and received ~~$6,895,145~~$7,153,663 from ALSC. The ~~agreement~~2017 ALSC Agreement will remain in effect until all liabilities associated with this block of policies have been satisfied.

On December 14, 2018, USALSC acquired Great Western Life Insurance Company (GWLIC) pursuant to Stock Purchase agreement entered into on October 11, 2018 with Great Western Insurance Company, a wholly-owned subsidiary of American Enterprise Group, Inc. USALSC paid $500,000 to acquire all outstanding shares of GWLIC. Subsequent to the acquisition, GWLIC was renamed US Alliance Life and Security Company – Montana.

On April 15, 2020, with an effective date of January 1, 2020, USALSC entered into a second coinsurance agreement with ALSC (the “2020 ALSC Agreement”) to assume a quota share percentage of a block of annuity policies. As of December 31, 2020, the Company had assumed $50.1 million in annuity deposits under the 2020 ALSC Agreement.

On December 31, 2020, USALSC and ALSC agreed to terminate a portion of the 2017 ALSC Agreement, pursuant to an amendment to the 2017 ALSC Agreement. USALSC transferred assets of $9,282,836 and received a ceding commission of $927,000.

On December 31, 2020, DCLIC entered into an assumption agreement with ALSC where it acquired a certain block of life insurance policies (the "ALSC Assumption Agreement"). Under the ALSC Assumption Agreement, DCLIC becomes directly liable to the policyholders of this block of business. DCLIC received assets equaling $9,282,836 [IS THIS NUMBER CONSISTENT WITH P. 27?] and paid a ceding commission of $927,000 to ALSC.

USAC uses the ~~actuari~~alactuarial firm of Miller & Newberg to provide valuation, pricing and illustration actuarial services for USALSC and DCLIC.

Investments - ~~USALSC, through USAIC,~~–USAC and ~~USAC~~USAIC contracted in 2013 with New England Asset Management, ~~(NEAM)~~Inc. ("NEAM"), a Berkshire Hathaway subsidiary, to manage the investments of USALSC and a portion of the investments of USAC. USALSC, DCLIC ~~through~~and USALSC-Montana have investment management agreements with USAIC, who has a sub-advisory agreement with NEAM. DCLIC was added to this ~~contract upon acquisition.~~agreement on August 1, 2017 and USALSC-Montana was added to this agreement on December 14, 2018. The investment parameters are determined by Kansas law,, the KID, ~~and~~ the North Dakota Insurance Department, and the Montana Insurance Department, as well as the internal investment policies of USALSC, DCLIC, USALSC-Montana and USAC.

As a part of its 2020 ALSC Agreement, USALSC contracted with 1505 Capital LCL ("1505 Capital") to provide investment services on the assets supporting this agreement.

USAC internally manages a portfolio of equities within its investment policy guidelines (as modified from time to time, "Investment Policy"), which consider type of investments and ~~investment~~investment instruments, and establishes diversification benchmarks to help manage investment risk. USAC's investment in its subsidiaries is managed outside of its Investment Policy.

The USAC Investment Policy may be modified by USAC's Board of Directors (the ~~"Board"~~"Board" or "Board of Directors") in compliance with applicable law.

The following summarizes ~~USAC~~’sUSAC’s Investment Policy, effective ~~December 5, 2016:~~September 13, 2018 as amended:

The Executive Committee of our Board of Directors may modify the above benchmark ranges at any time deemed appropriate based on current conditions. Any such modifications will be subject to approval by the full Board of Directors at its next regularly scheduled meeting. USALSC's, DCLIC’s, and USALSC-Montana’s investment policy, as a regulated insurance entity, contains additional investment limitations as required by law.

Marketing and Distribution - USALSC ~~uses~~and DCLIC use independent consultants ~~the USAC stockholder base,~~ and ~~stockholder-based~~ referrals to market ~~its~~their products and build distribution channels among funeral homes, banks, accountants, independent insurance agencies, agents, insurance brokerage firms, ~~Kansas companies~~business owners and other distribution channels as opportunities arise. USALSC and DCLIC works with other insurance companies who have captive or non-captive agents to broaden their product ~~offerings~~.offerings.

Employees - As of December 31, ~~2017,~~2020, USAC and its subsidiaries have ~~thirteen~~twelve full-time employees and ~~six~~one part-time ~~employees.~~employee.

Reports to Security Holders - We provide ~~the information in this annual report~~reports to our stockholders, along with our audited year-end financial statements. In addition, all periodic reports and other information we file with the U.S. Securities and Exchange Commission (the “SEC”) are available for inspection and copying at the public reference facilities of the Securities and Exchange Commission located at 100 F Street N E, Washington, D C 20549.

Copies of such material may be obtained by mail from the Public Reference Section of the Securities and Exchange C~~ommission,~~Commission, 100 F Street, N E, Washington, D.C. 20549, at prescribed rates.

Information on the operation of the Public Reference Room may be obtained by calling the SEC at l-800-SEC-0330. In addition, the Commission maintains a World Wide Website on the ~~Internet~~Internet at: http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. You may also find this information on our website (http://www.usalliancecorporation.com).

Implications of Emerging Growth Company Status - As a company with less than ~~$1.07~~$1 billion in revenue in our last fiscal year, we are defined as an “emerging growth company” under the Jumpstart Our Business Startups (“JOBS”) Act. We will retain “emerging growth company” status until the earliest of:

• The last day of the fiscal year during which our annual revenues are equal to or exceed ~~$1.07~~$1 billion;

• The last day of the fiscal year following the fifth anniversary of our first sale of ~~USAC Common Stock~~common stock pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”);

• The date on which we have issued more than $1 billion in nonconvertible debt in a previous three-year period; or

• The date on which we qualify as a large accelerated filer under Rule 12b-2 adopted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (i.e., an issuer with a public float of $700 million that has been filing reports with the SEC under the Exchange Act for at least 12 months).

• As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to SEC reporting companies. For so long as we remain an emerging growth company we will not be required to:

• Comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

• Submit certain executive compensation matters to stockholder non-binding advisory votes;

• Submit for stockholder approval golden parachute payments not previously approved;

• Disclose certain executive compensation related items, as we will be subject to the scaled disclosure requirements of a smaller reporting company with respect to executive compensation disclosure.

Pursuant to Section 107(b) of the JOBS Act, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of The JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates. Section 107 of the JOBS Act provides that our decision to opt into the extended transition period for complying with new or revised accounting standards is irrevocable.

Because the worldwide market value of ~~USAC Common Stock~~our common stock held by non-affiliates, or public float, is below $75 million, we are also a “~~smaller~~“smaller reporting company” as defined under the Exchange Act. Some of the foregoing reduced disclosure and other requirements are also available to us because we are a smaller reporting company and may continue to be available to us even after we are no longer an emerging growth company under the JOBS Act but remain a smaller reporting company under the Exchange Act. As a smaller reporting company we are not required to:

• Have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; and

• Present more than two years of audited financial statements in our registration statements and annual reports on Form 10-K and present any selected financial data in such registration statements and annual reports.

We face many significant risks in the operating of our business and may face significant unforeseen risks as well. Our significant material risks are set forth below:

SHARE OWNERSHIP RISK - An investment in our voting common stock ~~("USAC Common Stock")~~ is speculative. Shares of ~~USAC Common Stock~~our voting common stock constitute a high-risk investment in a developing business that has ~~incurred~~accumulated losses to ~~date and expects to continue to incur losses for several years.~~date. No assurance or guaranty can be given that any of the potential benefits envisioned by our business plan will prove to be available to our stockholders, nor can any assurance or guaranty be given as to the actual amount of financial return, if any, which may result from ownership of ~~USAC~~our voting Common Stock. The entire value of the shares of USAC Common Stock may be lost.

OPERATING RISK - We ~~have a limited operating history. We~~ face ~~all of~~ the risks inherent in establishing a ~~new~~ business, including limited capital, ~~uncertain~~challenging product markets, lack of significant revenues, as well as competition from better capitalized and more seasoned companies. We have no control over general economic conditions, competitors’ products or their pricing, customer demand, ~~and~~ costs of marketing or ~~advertising.~~advertising and hacking of our administrative systems. There can be no assurance that our life insurance operations will be ~~successful or result in any significant revenues.~~successful. The likelihood of any success must be considered in light of our ~~limited~~ history of operations and accumulated operating losses ~~incurred~~ to date. These risks ~~and the lack of seasoned operating history~~ make it difficult to accurately predict our future revenues or results of operations. As a result, our financial results ~~may fluctuate~~fluctuate. The Company evaluates the financial condition of its reinsurers to minimize its exposure to losses from reinsurer insolvencies. Management believes that any liabilities arising from this contingency would not be material to the Company’s financial position. Additional Operating Risks include:

BREACH OF INTERNAL CONTROLS/FRAUD – Internal controls are established on all aspects of the business. If internal controls are breached, fraud, incorrect payment of funds, incorrect claim processing, or other material issues within the company could result. Fraud from internal or external sources will hurt profitability and ~~fall below expectations.~~strain and limit financial resources needed for company to grow.

CYBER ATTACK – Avariety of cyber attacks can leave the company vulnerable to loss or theft of data, systems shutdown and a large-scale timeframe of being unable to conduct business related activities.

DEFICIENCY OF INTERNAL CONTROLS OVER FINANCIAL REPORTING – A deficiency of internal controls could leave assets vulnerable from accidental loss or loss from fraud. The integrity of the information used to make accurate business decisions could be compromised and could lead to being not in compliance with many federal, state and local laws and regulations affecting the operation of the business.

STRUCTURAL RISK/SYSTEMS RISK – The loss of primary, secondary and back-up power systems at office or at cloud data facilities, failure of networking devices, file servers, server crashes or undiagnosed errors masked by automated failure detection systems can lead to catastrophic failure of core systems and large scale downtime events.

REINSURANCE RELATIONSHIP RISK – The Company relies upon its reinsurers to provide expertise, financial strength, and growth opportunities and they play a key role in the success of the Company. The loss of a key reinsurance relationship could impact the future success of the Company.

LIQUIDITY RISK -– ~~Although~~ While USAC is considered a public company by the SEC, there is no ~~established~~ public market for USAC Common Stock, and there is no assurance that one will develop or be sustained, or that ~~the~~ USAC Common Stock will ~~ever~~ become publicly traded. ItAs noted in the 2015 prospectus and subsequent post-effective amendments which have been filed with the office of the Security Commissioners in Kansas, it may be difficult to sell ~~your~~shares shares of USAC Common Stock. Our securities are not listed for trading on any national securities exchange nor are bid or asked quotations reported in any over-the-counter quotation service and we do not intend to seek any such listing in the foreseeable future.

PROFITABILITY - As is common among ~~young~~small life insurance companies, we have ~~and will incur~~incurred significant losses. As of December 31, 2020 we had a consolidated accumulated deficit of $9.1 million. These losses ~~for a number of years. The~~were attributable primarily to costs of administration, ~~and~~ the substantial nonrecurring costs of writing new life insurance (which are deferred and amortized in accordance with our deferred acquisition policy) and include first year commissions payable to insurance agents, medical and investigation expenses ~~and~~as well as other expenses incidental to the issuance of new policies ~~which, together~~as well as with the ~~initial~~ reserves required to be established for each ~~policy, may exceed~~policy. The Company was profitable for the first year premium. As of December 31, 2017 we had a consolidated accumulated deficit of $8.5 million. These losses were attributable primarily to our organization, creation of products, distribution channelstime in 2019 and ~~capital raising efforts and to our entry into the life insurance business.~~was profitable again in 2020.

DIVIDENDS - We have not paid a cash dividend on USAC Common Stock and we do not anticipate paying a cash dividend in the foreseeable future. We intend to retain available funds to be used in the expansion of operations. ~~USAC is a holding company without independent operations and on a standalone basis has limited revenues. Because we do not expect to pay any cash dividends for the foreseeable future, the~~The success of any investment in USAC Common Stock will depend upon any future appreciation in its ~~value.~~value which depends upon the success of our life insurance subsidiaries. We cannot guarantee that ~~USAC Common Stock~~our common stock will appreciate in value or achieve or maintain a value equal to the price at which shares were purchased. Further, a market may never develop to sell shares of USAC Common Stock.

CAPITAL RISK - ~~We are required by~~ The law ~~to have~~requires adequate capital and surplus calculated in accordance with statutory accounting principles prescribed by state insurance regulatory authorities to meet regulatory ~~requirements in the states in which we operate.~~requirements. The amount of capital and surplus ~~ultimately~~ required ~~will be~~is based on certain “risk-based capital” standards established by statute and regulation and administered by ~~other~~ regulators. The “risk-based capital” system establishes a framework for evaluating the adequacy of the minimum amount of capital and surplus, calculated in accordance with statutory accounting principles, necessary for an insurance company to support its overall business operations. If we fail to maintain required capital levels, our ability to conduct business would be ~~compromised absent a prompt infusion of capital.~~compromised.

DILUTION RISK - We ~~intend~~continue to conduct additional offerings of our securities to raise additional capital to fund our growth. In February, 2010, we filed a ~~Prospectus~~prospectus with the Kansas Securities Commission to register shares of USAC Common Stock and warrants to purchase USAC Common Stock. In February 2015, we filed a Prospectus with the Kansas Securities Commission to register the ~~USAC Common Stock~~common stock to be issued upon the exercise of the warrants, and in January 2016, filed a Supplement to the Prospectus to register an additional 1,500,000 shares of USAC Common Stock. This offering has been renewed annually by post-effective amendments to the original 2015 offering. We also commenced a private ~~placementof~~placement of USAC Common Stock in North Dakota in 2017. Any additional offerings of USAC ~~equity or convertible~~ securities that we may conduct in the future will reduce the ownership ~~interests~~percentage of existing stockholders and be accretive to existing stockholder book value.

KEY EXECUTIVE RISK - ~~Our ability to operate is dependent primarily upon the efforts of our Chairman and Chief Executive Officer, Jack H. Brier, and Chief Operating Officer of USALSC, Jeff Brown.~~ The loss of ~~the~~ services ~~of these officers~~from a key executive could have a material adverse effect on our ability to execute our business plan. ~~We do not have employment agreements with either Mr. Brier or Mr. Brown.~~This could hamper profitability, response time, productivity, image, reputation and confidence.

SEC REGISTRATION - USAC is a public ~~company.~~company as defined by the securities and exchange commission. As ~~a public company,~~such, we incur significant legal, accounting and other expenses under the Exchange Act and the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC. These rules impose various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and appropriate corporate governance practices. Our management and other personnel are required to devote a substantial amount of time to these compliance requirements. Moreover, these rules and regulations increase our legal and financial compliance costs and ~~make some activities more~~are time-consuming and costly.

EMERGING GROWTH COMPANY - We are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years. However, if our non-convertible debt issued within a three-year period ~~exceeds $1 billion,~~ or revenues exceeds ~~$1.07~~$1 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult ~~or impossible~~ because of the potential differences in accounting standards used.

POTENTIAL ACQUISITION RISK - In addition to our organic growth plans, ~~an additional component of our business~~we plan is to pursue strategic acquisitions of insurance related companies that meet our acquisition criteria. However, suitable acquisition candidates may not be available on terms and conditions that are ~~economic~~economically beneficial to us. In pursuing acquisitions, we compete with other companies, who may have greater financial and other resources than us. Further, if we succeed in consummating acquisitions, our business, financial condition and results of operations may be negatively affected.

MARKETING STRATEGY RISK - We market our products through several different distribution channels which require licensed insurance agents. These distribution channels include funeral directors, bankers, brokerages, accountants, and independent agents. While some of these producers have little or no experience in selling life insurance products, others have extensive experience mitigating some of the risk of agents with little or no experience. We believe the premium volume Premium written ~~will depend~~depends primarily on our products, product pricing and ability to choose and timely and adequately train and motivate agents, producers, and brokers to sell our products.

Large life companies who have greater financial resources, longer business histories, and who may have more products present significant competition to smaller insurance companies. These larger companies also generally have large distribution opportunities which makes it difficult to build a small company.

Independent agents are not required to sell the ~~Company~~’sCompany’s products and are free to sell products from other licensed companies. We are committed to working to educate and incentivize independent agents to sell our products. ~~Failure to build a network of independent agents selling our products could impact our ability to generate future premiums and profits.~~

THE ~~COMPANY~~’SCOMPANY’S INVESTMENTS ARE SUBJECT TO MARKET AND CREDIT RISKS - Our invested assets, ~~primarily including fixed maturity securities,~~ are subject to customary risks of credit defaults and changes in fair value. Factors that may affect the overall default rate on and fair value of the Company’s invested assets include interest rate levels and changes, availability and cost of liquidity, financial market performance, and general economic conditions.

NO INSURANCE RATING RISK – USACSC, DCLIC, and USALSC-Montana have not been rated by a rating agency. The lack of a rating could result in loss of faith from producers, E&O carriers and consumers looking to get products from a rated company, as well as a negative impact on ability to compete with rated companies.

~~RATINGS RISK -~~ Insurance ratings reflect the rating agencies’ opinion of an insurance company’s history, financial strength, operating performance and ability to meet its obligations to policyholders. There can be no assurance that USALSC, DCLIC, or ~~DCLIC~~USALSC-Montana will be rated by a rating agency or that any rating, if and when received, will be favorable.

~~We do not anticipate that USALSC or DCLIC will be rated by rating agencies for several years. This may have a negative impact on its ability to complete with rated insurance companies.~~

Risks Associated with Companies in the Life Insurance Industry,, including USAC and its subsidiaries

GENERAL REGULATORY RISK -All insurance operations are subject to government regulation in each of the states in which they conduct business. Such regulatory authority is vested in state agencies having broad administrative power dealing with all aspects of the insurance business, including premium rates, policy forms, and capital adequacy, and is concerned with the protection of policyholders rather than stockholders. Among other ~~things,~~matters, the regulations require prior approval of acquisitions of insurance companies, ~~certain~~ solvency standards, licensing of insurers and their agents, investment restrictions, deposits of securities for the benefit of policyholders, approval of policy forms and premium rates, periodic examinations, and reserves for unearned premiums, losses and other matters.

Compliance with insurance regulation is costly and time consuming, requiring the filing of detailed annual reports, and the business and accounts are subject to examination by the applicable state insurance ~~regulator, which may include inquiries and follow-up, including investigations.~~regulator.

~~In addition, increased~~Increased scrutiny has been placed upon the insurance regulatory framework during the past several years, and certain state legislatures have considered or enacted laws that alter, and in many cases increase, state authority to regulate insurance companies and insurance holding company systems. The National Association of Insurance Commissioners (“NAIC”) and state insurance regulators reexamine existing laws and regulations on an ongoing basis, and focus on insurance company investments and solvency issues, risk-based capital guidelines, interpretations of existing laws, the development of new laws, the implementation of non-statutory guidelines and the circumstances under which dividends may be paid. Future NAIC initiatives, and other regulatory changes, could have a material adverse impact on the insurance industry. There is no assurance the regulatory requirements of the departments of insurance of their respective state of domicile or a similar department in any other state in which they may wish to transact business can be satisfied.

Individual state guaranty associations assess insurance companies to pay benefits to policyholders of insolvent or failed insurance companies. The amount of any future assessments to be made from known insolvencies cannot be predicted.

REGULATORY FACTORS RISK – Broad insurance laws in the states we do business give insurance regulators broad regulatory authority. Combined with the Dodd-Frank Wall Street Reform and Consumer Protection Act, this authority can allow regulators to interpret and implement additional rules that may take several years to complete. The ultimate outcome of regulatory rulemaking proceedings cannot be predicted with certainty and the regulations promulgated could have a material impact on consolidated financial results or financial condition.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Reform Act”) ~~reshapes~~reshaped financial regulations in the United States by creating new regulators, regulating new markets and firms, and providing ~~new~~additional enforcement powers to regulators. Virtually all major areas of the Reform Act continue to be subject to regulatory interpretation and implementation rules requiring ~~rulemaking that may take several years to complete.~~rulemaking. The ultimate outcome of the regulatory rulemaking proceedings cannot be ~~predicted with certainty.~~predicted. The regulations promulgated could have a material impact on consolidated financial results or financial condition.

COMPETITION RISK - The operating results of life insurance companies are subject to significant fluctuations due to competition, economic conditions, interest rates, investment performance, maintenance of insurance ratings from rating agencies such as A.M. Best, the ability to choose and timely and adequately train agents, and other factors. Each company encounters significant competition from other insurance companies, as well as competition from other available investment alternatives.

Large life ~~insurance~~ companies who have greater financial resources, longer business histories, and who may have more products present significant competition to smaller insurance ~~companies, such as USALSC~~ ~~and DCLIC.~~companies. These larger companies also generally have large distribution ~~opportunities.~~

~~The ability~~opportunities which makes product distribution difficult to ~~compete is dependent upon, among other things, the ability to develop competitive and profitable products, market the insurance products, and achieve efficient costs of placing policies.~~build a small company.

ASSUMPTION RISK - In the life insurance business, assumptions as to expected mortality, lapse rates and other factors in developing the pricing and other terms of life insurance products are made. These assumptions are based on industry experience and are reviewed and revised regularly by an outside actuary to reflect actual experience on a current basis. ~~However, variation~~Variation of actual experience from that assumed in developing such terms may affect a product’s profitability or sales volume and in turn adversely impact ~~our~~ revenues.

LIABILITY RISK - Underestimating future policy benefits results in ~~the incurrence of~~incurring additional expenses at the time a company becomes aware of the inadequacy. As a result, the ability to achieve profits would suffer as a result of such underestimates.

INTEREST RATE RISK - Spread is the difference between the amounts that the insurance company is required to pay under the contracts and the amounts the insurance company is able to earn on its investments intended to support its obligations under the contracts. Interest rate fluctuations could impair an insurance company’s ability to pay policyholder benefits with operating and investment cash flows, cash on hand and other cash sources. Annuity products expose the risk that changes in interest rates will reduce any spread, or the difference between the amounts that the insurance company is required to pay under the contracts and the amounts the insurance company is able to earn on its investments intended to support its obligations under the contracts.spread. Spread is a key component of revenues.

To the extent that interest rates credited are less than those generally available in the marketplace, policyholder lapses, policy loans and surrenders, and withdrawals of life insurance policies and annuity contracts may increase as contract holders seek to purchase products with ~~perceived~~ higher returns. This process may result in cash outflows requiring that an insurance subsidiary sell investments as a time when the prices of those investments are adversely affected by the increase in market interest rates, which may result in realized investment losses.

Increases in market interest rates may ~~also~~ negatively affect profitability in periods of increasing interest rates. The ability to replace invested assets with higher yielding assets needed to fund ~~the~~ higher crediting rates that may be necessary to keep interest sensitive products competitive.

LAPSE AND WITHDRAWAL RISK - Policy lapses in excess of those actuarially anticipated would have a negative impact on financial performance. Profitability could be reduced if lapse and surrender rates exceed the assumptions upon which the insurance policies were priced. Policy sales costs are deferred and recognized over the life of a policy. Excess policy lapses, however, cause the immediate expensing or amortizing of deferred policy sales costs. In addition, some of our policies allow holders to withdraw all or some of the policy’s value, and withdrawals beyond those anticipated could impact our business.

OPERATIONAL RISK - In the insurance industry, successful incorporation and functionality of the internal audit function, the evolution of financial and administrative internal controls to safeguard human, facility and financial assets electronically including anti-fraud initiatives and compliance with anti-money laundering requirements as well as an effective disaster recovery program and effective business continuity programs are necessary.

TAX LAW RISK - Congress ~~from time to time~~ considers ~~possible~~ legislation that would eliminate the deferral of taxation on the accretion of value within certain annuities and life insurance products. This and similar legislation, including a simplified “flat tax” income tax structure with an exemption from taxation for investment income, could adversely affect the sale of life insurance products compared with other financial ~~products if such legislation were to be enacted.~~products. There can be no assurance as to whether such adverse legislation will be enacted or, if enacted, whether such legislation would contain provisions with possible adverse effects on any annuity and life insurance products that we and our operating subsidiaries develop.

Under the Internal Revenue Code, income taxes payable by policyholders on investment earnings is deferred during the accumulation period of certain life insurance and annuity products. This favorable tax treatment may give certain insurance products a competitive advantage over other non-insurance products. To the extent that the Internal Revenue Code may be revised to reduce the tax-deferred status of life insurance and annuity products, or to increase the tax-deferred status of competing products, insurance companies would be adversely affected with respect to their ability to sell products. Also, depending on grandfathering provisions, the surrenders of existing annuity contracts and life insurance policies might increase. In addition, life insurance products are often used to fund estate tax obligations. We cannot predict what future tax initiatives may be proposed with respect to the estate tax or other taxes which may adversely affect us.

REINSURANCE RISK -In order to manage the risk of financial exposure to adverse underwriting results, ~~USALSC and DCLIC reinsure~~reinsurers accept a portion of ~~their~~the risk ~~with~~of other insurance companies. However, ~~USALSC and DCLIC remain~~the direct insurer remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by the reinsurer. The Company evaluates the financial condition of its reinsurers to minimize its exposure to losses from reinsurer insolvencies. Management believes that any liabilities arising from this contingency would not be material to the Company’s financial position.

USAC and its subsidiaries share offices located at 1303 SW First American Place, Suite 200, Topeka, Kansas 66604 in a building purchased by DCLIC on November 15, 2020. Prior to moving into 1303 SW Frist American Place, USAC and its subsidiaries rented space at 4123 SW Gage Center ~~Drive,~~Dr, Suite 240, Topeka, ~~Kansas~~KS 66604. ~~Effective January 1, 2015, the lease rate was $2,250 per month for three years with a one-year option under the same rate, terms, and conditions~~ Total rent expense was ~~$27,000~~$37,824 and ~~$27,000~~$34,671 for the years ended December 31, ~~2017~~2020 and ~~2016~~2019.

DCLIC also maintains an office at 107 W. Main Avenue, Suite 325, Bismarck, North Dakota, 58501. The lease for the Bismarck office ~~expires~~expired on September 30, 2018 and was renewed for an additional two year term. In 2020, this lease was extended for one additional year to September 30, 2021 with ~~monthly rent of $948.~~an optional additional year. The lease rate for this location is $939 per month for the lease year beginning October 1, 2020. The Company paid ~~$4,684~~$10,322 and $11,114 in rent for this location in ~~2017.~~2020 and 2019.

Neither the Company ~~its subsidiaries~~ nor any of its ~~or their respective~~ principals are presently engaged in any material pending litigation which might have an adverse ~~impac~~timpact on ~~our~~its net assets.

There is no established trading market for ~~USAC Common Stock.~~ our voting common stock. Our securities are not listed for trading or quoted on any national securities exchange nor are bid or asked quotations reported in any over-the-counter quotation system.

As of December 31, ~~2017 was~~2020, we had issued and outstanding ~~7,310,939~~7,741,487 shares of ~~USAC Common Stock.~~our voting common stock. No other equity securities of the Company have been issued.

As of February 1, ~~2018~~2021 there are approximately ~~3,380~~3,502 holders of record of ~~USAC Common Stock.~~our voting common stock.

We have not paid dividends on ~~the~~ USAC Common Stock and do not anticipate paying dividends in the foreseeable future. We intend to retain any future earnings for reinvestment into our business.

We have not established any equity compensation plans or granted any equity awards under such plans. As a result, there are no securities authorized for issuance under such plans.

During the year ended December 31, ~~2017,~~2020, the Company issued ~~100,538~~3,483 shares of ~~USAC Common Stock,~~common stock, for aggregate consideration of ~~$703,765,~~$24,381, pursuant to an offering to residents of the state of Kansas that was registered with the Kansas Securities ~~Commissioner.~~Commissioner (the "Kansas Offering").

The ~~offering of shares in the above-described transaction~~Kansas Offering was self-underwritten and sold through agents of the Company licensed to sell securities in Kansas. Proceeds from the sale of ~~USAC Common Stock~~common stock were used to finance the growth of the Company’s life insurance subsidiary and to provide working capital for the Company. The ~~offer and sale of USAC Common Stock~~Kansas Offering was exempt from registration under Section 3(a)11 of the Securities Act of 1933 for securities offered and sold on a wholly intrastate basis. The shares of ~~USAC Common Stock~~common stock were sold only to bona fide residents of the state of Kansas.

During the year ended December 31, 2020, the Company issued 4,000 shares of common stock, for aggregate consideration of $28,000, pursuant to a private placement offering to accredited investor residents of the state of North Dakota (the “North Dakota Offering”). Proceeds from the sale of shares in the North Dakota were used to finance the growth of DCLIC and to provide working capital for the Company. The North Dakota Offering and sales of shares thereunder were not registered with the SEC in reliance on an exemption for registration under Rule 506(b) of Regulation D under this Securities Act of 1933 (“Reg D”). Shares were sold only to “accredited investors”, as that term is defined in Rule 501 of Reg D, and were not sold by any means of general advertisement or solicitation.

As a “smaller reporting company”, the Company is not required to provide disclosure pursuant to this item.

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Form 10-K. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, including those relating to the Covid-19 pandemic, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

USAC was formed as a Kansas corporation on April 24, 2009 for the purpose of raising capital to form a new Kansas-based life insurance company. We presently conduct our business through our ~~four~~five wholly-owned subsidiaries: USALSC, a life insurance corporation; DCLIC, a life insurance corporation; USALSC-Montana, a life insurance corporation; USAMC, an insurance marketing corporation; and USAIC, an investment management corporation

On January 2, 2012, USALSC was issued a Certificate of ~~Authori~~tyAuthority to conduct life insurance business in the State of Kansas. We began third party administrative services in 2015.

On August 1, 2017, the Company merged with ~~NPCC,~~Northern Plains Capital Corporation with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired ~~DCLIC,~~Dakota Capital Life Insurance Company which became a wholly owned subsidiary of USALSC.

On December 14, 2018, the Company acquired Great Western Life Insurance Company. Great Western Life Insurance Company was renamed US Alliance Life and Security Company – Montana and is a subsidiary of USALSC.

The Company assumes business under three reinsurance treaties. On January 1, 2013, the Company entered into an agreement to assume 20% of a certain block of health insurance policies from Unified Life Insurance Company. On September 30, 2017, the Company entered into the 2017 ALSC Agreement to assume 100% of a certain block of life insurance policies from ALSC. On April 15, 2020, with an effective date of January 1, 2020, the Company entered into the 2020 ALSC Agreement to assume a quota share percentage of a block of annuity policies. As of December 31, 2020, the Company had assumed $50.1 million in annuity deposits under the 2020 ALSC Agreement. Effective December 31, 2020 USALSC entered into an agreement with ALSC, which provided for ASLC to recapture all reserves previously ceded to USALSC with respect to a portion of the 2017 ALSC Agreement. USALSC and ASLC agreed that the commuted business shall be discharged by USALSC’s transfer of invested assets and cash in the amount of $9,181,100. As part of the transaction the Company released $10,972,785 in reserve liabilities and $1,146,156 of deferred acquisition costs, resulting in a commutation gain of $543,794, which is recorded in other income.

Our ~~accounting~~accounting and reporting policies are in accordance with GAAP. Preparation of the consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The following is an explanation of our accounting policies and the estimates considered most significant by management. These accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management’s estimates determined using these policies. We believe the following accounting policies, judgments and estimates are the most critical to the understanding of our results of operations and financial position. A detailed discussion of significant accounting policies is provided in this report in the Notes to Consolidated Financial Statements included with this annual report.

The Company's principal investments are in fixed maturity, mortgages, and equity securities. Fixed maturity and equity securities, classified as available for sale, are carried at their fair va~~lue~~value in the consolidated balance sheets, with unrealized gains or losses recorded in comprehensive ~~income (loss).~~income. Our fixed income investment manager utilizes external independent third-party pricing services to determine the fair values of investment securities available for sale.

We have a policy and process in place to identify securities that could potentially have an impairment that is other-than-temporary. The assessment of whether impairments have occurred is based on a case-by-case evaluation of ~~underlying~~underlying reasons for the decline in fair value. We consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and whether we intend to sell a security, or it is more likely than not that we would be required to sell a security, prior to the recovery of the amortized cost. NEAM and 1505 Capital, our investment managers, provide support to the Company in making these determinations.

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the sp~~ecific~~specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the income statement as an other-than-temporary impairment. Our membership in the Federal Home Loan Bank )"FHLB") provides additional liquidity which further reduces the likelihood that we would be required to sell a security prior to recovery. As it relates to debt securities, if we do not expect to recover the amortized basis, do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the other-than-temporary impairment would be recognized. We would recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss.

Incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to a product sale and would not have been incurred by us had the sale not occurred, are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Value of business acquired ~~(VOBA)~~("VOBA") represents the estimated value assigned to purchased companies or insurance in-in- force of the assumed policy obligations at the date of acquisition of a block of policies. At least annually, a review is performed of the models and the assumptions used to develop expected future profits, based upon management’s current view of future events. VOBA is reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. Management’s view primarily reflects our experience but can also reflect emerging trends within the industry. Short-term deviations in experience affect the amortization of VOBA in the period, but do not necessarily indicate that a change to the long-term assumptions of future experience is warranted. If it is determined that it is appropriate to change the assumptions related to future experience, then an unlocking adjustment is recognized for the block of business being evaluated. Certain assumptions, such as interest spreads and surrender rates, may be interrelated. As such, unlocking adjustments often reflect revisions to multiple assumptions. The VOBA balance is immediately impacted by any assumption changes, with the change reflected through the statements of comprehensive income as an unlocking adjustment in the amount of VOBA amortized. These adjustments can be positive or negative with adjustments reducing amortization limited to amounts previously deferred plus interest accrued through the date of the adjustment.

In addition, we may consider refinements in estimates due to improved capabilities resulting from administrative or actuarial system upgrades. We consider such enhancements to determine whether and to what extent they are associated with prior periods or simply improvements in the projection of future expected gross profits due to improved functionality. To the extent they represent such improvements, these items are applied to the appropriate financial statement line items in a manner similar to unlocking adjustments.

VOBA is also reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. If it is determined from emerging experience that the premium margins or gross profits are less than the unamortized value of business acquired, then the asset will be adjusted downward with the adjustment recorded as an expense in the current period.

Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred.

We assess the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired ~~asset~~.asset.

In the no~~rmal~~normal course of business, we seek to limit aggregate and single exposure to losses on risk by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. We diversify our credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish our primary liability under the policies written. We regularly evaluate the financial condition of our reinsurers including their activities with respect to claim settlement practices and commutations, and establish allowances for uncollectible reinsurance recoverable as appropriate.

We establish liabilities for amounts pa~~yable~~payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by using a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. Such liabilities are reviewed quarterly by an independent consulting actuary.

Deferred tax assets are recorded based on the differences between the financial statement and tax basis of ~~asse~~tsassets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. We have no uncertain tax positions we believe are more-likely-than-not that the benefit will not to be realized.

Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due.

Amounts received as payment for annuities are recognized as deposits to policyholder account balances and included in future insurance policy ~~benefits~~.benefits. Revenues from these contracts are comprised of investment earnings of the deposits, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

The Company has entered into coinsurance funds withheld arrangement with ALSC which contains an embedded derivative. Under ASC 815, the Company assesses whether the embedded derivative is clearly and closely related to the host contract. The Company bifurcates embedded derivatives from the host instrument for measurement purposes when the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument. Embedded derivatives, which are reported with the host instrument on the consolidated balance sheets in funds withheld under coinsurance agreement, are reported at fair value with changes in fair value recognized in the consolidated statements of comprehensive income in net investment gains.

Funds withheld under coinsurance agreement represent amounts contractually withheld by a ceding company in accordance with the 2020 ALSC Agreement. For agreements written on a coinsurance funds withheld basis, assets that support the net statutory reserves or as defined by the treaty, are withheld and legally owned by the ceding company. Interest is recorded in net investment income, net of related expenses, in the consolidated statements of income. Funds withheld under coinsurance agreement are presented net of the embedded derivative, discussed above. Under the terms of the 2020ALSC Agreement, the Company may assume custody of the assets in the funds withheld account once the Company attains its "Qualified Institutional Buyer" designation (as that term is defined in Rule 144A under the Securities Act of 1933, as amended, which is anticipated to be achieved in the first quarter of 2021. The Company will record the funds withheld assets at fair value on the date of transfer, which will eliminate the embedded derivative component associated with the 2020 ALSC Agreement.

Mortgage loans on real estate are carried at unpaid principal balances, net of any unamortized premium or discount and valuation allowances. Interest income is accrued on the principal amount of the mortgage loans based on its contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. The Company accrues interest on loans until probable the Company will not receive interest or the loan is 90 days past due. Interest income, amortization of premiums, accretion of discounts and prepayment fees are reported in investment income, net of related expenses in the consolidated statements of comprehensive income.

A mortgage loan is considered to be impaired when, based on the current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the mortgage agreement.

Valuation allowances on mortgage loans are established based upon inherent losses expected by management to be realized in connection with future dispositions or settlement of mortgage loans, including foreclosures. The Company establishes valuation allowances for estimated impairments on an individual loan basis as of the balance sheet date. Such valuation allowances are based on the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan’s original effective interest rate, the value of the loan’s collateral if the loan is in the process of foreclosure or is otherwise collateral-dependent, or the loan’s market value if the loan is being sold. These evaluations are revised as conditions change and new information becomes available. In addition to historical experience, management considers qualitative factors that include the impact of changing macro-economic conditions, which may not be currently reflected in the loan portfolio performance, and the quality of the loan portfolio.

Any interest accrued or received on the net carrying amount of the impaired loan will be included in investment income or applied to the principal of the loan, depending on the assessment of the collectibility of the loan. Mortgage loans deemed to be uncollectible or that have been foreclosed are charged off against the valuation allowances and subsequent recoveries, if any, are credited to the valuation allowances. Changes in valuation allowances are reported in net investment gains (losses) on the consolidated statements of income.

The Company evaluates whether a mortgage loan modification represents a troubled debt restructuring. In a troubled debt restructuring, the Company grants concessions related to the borrower’s financial difficulties. Generally, the types of concessions include: reduction of the contractual interest rate, extension of the maturity date at an interest rate lower than current market interest rates and/or a reduction of accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. Through the continuous monitoring process, the Company may have recorded a specific valuation allowance prior to when the mortgage loan is modified in a troubled debt restructuring. Accordingly, the carrying value (after specific valuation allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

On May 23, 2017 the Company entered into a ~~definitive~~definitive merger agreement with ~~NPCC.~~Northern Plains Capital Corporation. The ~~Merger~~merger transaction closed on July 31, 2017. NPCC shareholders received .5841 shares of ~~USAC Common Stock~~US Alliance Corporation stock for each share of NPCC stock owned. USAC issued 1,644,458 shares of ~~USAC Common Stock~~common stock to holders of NPCC shares.

On October 11, 2018 the Company entered into a stock purchase agreement with Great Western Insurance Company to acquire Great Western Life Insurance Company. The transaction closed on December 14, 2018. USALSC paid $500,000 to acquire all of the outstanding shares of GWLIC.

Effective December 31, 2020, the DCLIC acquired a block of life insurance policies according to the terms of an assumption agreement with ALSC. The Company acquired fixed maturity securities and cash of $9,181,100 [IS THIS NUMBER CONSISTENT WITH P. 3?], assumed liabilities of $10,972,785 and recorded VOBA of $2,163,542.

A detailed discussion of new accounting standards is provided in the Notes to Consolidated Financial Statements beginning on p. F-7 of this annual report.

~~Revenues~~Total Income. Insurance revenues are primarily generated from premium revenues and investment ~~income~~.income. Insurance revenues for the years ended December 31, ~~2017~~2020 and ~~2016~~2019 are summarized in the table below.

Our 2020 total income grew to $16,271,905, an increase of $4,305,619 or 36% from 2019 total income of $11,966,286. The increase in total income was driven by increased investment income as a result of our growth in assets, net investment gains, and premium income.

Premium ~~revenue:~~ income: Premium ~~revenue~~income for the year ended December 31, ~~2017~~2020 was ~~$10,773,246~~$10,117,110 compared to ~~$5,948,978~~$9,076,205 in ~~2016,~~2019, an increase of ~~$4,824,268. USALSC entered into~~$1,040,905 or 11%. The increase is a ~~coinsurance transaction with American Life and Security Corporation (“ALSC”) effective September 30, 2017. This agreement resulted in the immediate recognition~~result of ~~$3,854,902~~growth of ~~assumed premiums and is the primary driver of the increase in~~our direct premiums. ~~Direct written premiums also increased 22% from the prior year.~~

Direct, assumed and ceded premiums for the years ended December 31, ~~2017~~2020 and ~~2016~~2019 are summarized in the following table.

The Company ~~is pursuing~~continues to search for new product and distribution opportunities to increase premium ~~production.~~ ~~The acquisition of DCLIC~~production on both a direct and ~~the reinsurance agreement with ALSC are designed to increase future premiums.~~assumed basis.

Investment income, net of expenses: The components of net investment income for the years ended December 31, ~~2017~~2020 and ~~2016~~2019 are as follows:

Net investment income for ~~201~~7the years ended December 31, 2020 was ~~$817,989,~~$3,552,261, compared to ~~$449,951~~$1,790,601 in ~~2016,~~2019, an increase of ~~$368,038.~~$1,761,660 or 98%. This increase in investment income is primarily a result of increased invested assets as a result of our ~~premium income, merger with NPCC, and coinsurance agreement with~~2020 ALSC ~~as well as an improvement in our book yield.~~Agreement.

Net ~~realized~~investment gains ~~on investments:~~ (losses): Net ~~realized~~investment gains ~~on investments~~ for the ~~years~~year ended December 31, ~~2017~~2020 were ~~$430,565,~~$1,967,014, compared to ~~$100,378~~gains of $1,042,334 in ~~2016,~~2019, an increase of ~~$330,187.~~$924,680 or 89%. The increase in ~~realized~~net investment gains is attributable to ~~the repositioning of an~~unrealized gains in our equity portfolio, ~~from a market return focus to an income focus. Additionally, during the third quarter we reduced~~realized gains in our equity ~~exposure~~portfolio, and an unrealized gain on our funds withheld asset. Net investment gains for 2020 were comprised of $952,667 of unrealized gains in ~~order to facilitate~~ our ~~reinsurance transaction with ALSC.~~equity portfolio and funds withheld asset and realized gains of 1,014,347. Net investment gains for 2019 were comprised of $1,256,769 of unrealized gains in our equity portfolio and realized losses of 214,235. Realized gains and losses related to the sale of securities for the years ended December 31, ~~2017~~2020 and ~~2016~~2019 are summarized as follows:

Other income: Other income for the year ended December 31, ~~2017~~2020 was ~~$50,057~~$635,520 compared to ~~$87,566~~$57,146 in ~~2016, a decrease~~2019, an increase of ~~$37,509. This decrease~~$578,374 or 1012%. The increase is ~~due to~~driven by the ~~acquisition~~net gain on the partial termination of ~~DCLIC, who was previously a third party administration client.~~our 2017 ALSC Agreement.

Expenses. Expenses for the year ended December 31, ~~2017~~2020 and ~~2016~~2019 are summarized in the table below.

Increases in policyholder reserves represents funds that we maintain and invest for the future benefit of our policyholders. Other policy-related expenses represent the other expenses associated with fulfilling our obligations to our policyholders and producers. Operating expenses represent the costs to operate the company. It is important to note that our 2017 operating expense ratio is impacted by the one-time reserve increase which resulted from our transaction with ALSC. Absent this transaction, our 2017 ratio would have been 25%.

Death claims: Death benefits were ~~$823,545~~$1,943,563 in the year ended December 31, ~~2017~~2020 compared to ~~$475,815~~$1,287,893 in ~~2016,~~2019, an increase of ~~$347,730.~~$655,670 or 51%. This increase is attributable to the growth of our in-force block of life insurance policies. The majority of death claims paid from inception have been on pre-need policies. We expect these claims to grow as we continue to increase the size of our in-force pre-need business.

Policyholder benefits: Policyholder benefits were ~~$3,485,564~~$5,248,470 in the year ended December 31, ~~2017~~2020 compared to ~~$3,136,999~~$4,212,534 in ~~2016,~~2019, an increase of ~~$348,565.~~$1,035,936 or 25%. The primary driver of this increase is ~~the growth~~interest credited on annuities assumed as a result of our ~~assumed business and is more than offset by the increased premiums associated with this block of assumed policies.~~2020 ALSC Agreement.

Increase in policyholder reserves: Policyholder reserves increased ~~$5,654,476~~$3,359,609 in the year ended December 31, ~~2017,~~2020, compared to ~~$1,686,841~~$2,599,575 in ~~2016,~~2019, an increase of ~~$3,967,635.~~$760,034 or 29%. The ~~increase~~growth in ~~policyholder~~ reserves is ~~driven by an assumed reserve increase~~the result of ~~$3,824,902 incurred with inception of reinsurance transaction with ALSC.~~increased premiums.

~~Commissions,~~Commissions, net of deferrals: The Company pays commissions to ~~ULIC~~the ceding company on a block of assumed ~~policies.~~policies as well as commissions to agents on directly written business. Commissions, net of deferrals, were ~~$521,155~~$781,400 in the year ended December 31, ~~2017,~~2020, compared to ~~$457,671~~$783,724 in ~~2016, an increase~~2019, a decrease of ~~$63,484.~~$2,324 or 2.9%. This ~~increase~~decrease is due to ~~an increase in assumed~~a changing mix of premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs ("DAC") was ~~$321,451~~$970,386 in the year ended December 31, ~~2017,~~2020, compared to ~~$153,671~~$433,218 in ~~2016,~~2019, an increase of ~~$167,780. This increase~~$537,168 or 124%. As a result of the Covid-19 pandemic and the resulting historic low interest rates, the Company reassessed its DAC assumptions regarding reinvestment rates. As a result, the Company reduced its DAC balance by $430,000 to reflect the current reinvestment environment and the uncertainty of interest rates. Additionally, the Company began amortizing costs deferred in conjunction with its 2020 ALSC Agreement.

Amortization of value of business acquired: The amortization of value of business acquired (“VOBA”) was $20,302 in the year ended December 31, 2020 and is unchanged from the same period in 2019. VOBA amortization is due to ~~amortization~~our 2017 acquisition of ~~the deferred cost of reinsurance on our ALSC reinsurance transaction.~~DCLIC. VOBA is being amortized straight-line over 30 years.

Salaries and benefits: Salaries and benefits were ~~$990,076~~$1,219,534 for the year ended December 31, ~~2017,~~2020, compared to ~~$752,534~~$1,081,955 in ~~2016,~~2019, an increase of ~~$237,542. The increase is primarily attributable~~$137,579 or 13%. Staffing costs increased due to ~~additional staff as a result of our merger with NPCC.~~increased compensation and bonus payments.

Other expenses: Other operating expenses were ~~$1,316,162~~$2,429,466 in the year ended December 31, ~~2017,~~2020, compared to ~~$1,209,115~~$1,379,034 in ~~2016,~~2019, an increase of ~~$107,047. The increase is~~$1,050,432 or 76%. Operating costs were driven ~~by marketing~~higher due primarily to our pre-paid software asset being recognized as an expense of $250,000, increased accounting and actuarial fees totaling approximately $175,000, increased computer and software expense of approximately $100,000, increased regulatory costs as a result of our insurance company examination totaling approximately $75,000 and ~~professional fees~~expenses associated with implementing a new disability reinsurance program totaling $50,000. Additionally, in 2019 we recognized expense savings from our ~~growing business.~~acquisition of USALSC-Montana which reduced 2019 expenses by $100,000. We also recovered a loan balance that had previously been written off which further reduced our 2019 expenses by approximately $60,000.

Federal income tax benefit: In the year ended December 31, 2020, the Company recognized a deferred income tax benefit of $140,274. In the year ended December 31, 2019, the Company recognized a deferred income tax benefit of $431,158. These benefits are the result of reductions in the deferred tax asset valuation allowance.

Net ~~Loss:~~ Income: Our net ~~loss~~income was ~~$1,049,032~~$439,449 in the year ended December 31, ~~2017~~2020 compared to net ~~loss~~income of ~~$1,285,773~~$599,208 in ~~the same period of 2016,~~2019, a decrease of ~~$236,741. This decrease is attributable to growth in our invested assets and our reinsurance agreement with ALSC offset by our increased operating expenses.~~$159,759 or 27%. Our net ~~loss~~income per share ~~decreased~~was $0.06 compared to ~~$0.18 from $0.24~~net income per share of $0.08 in ~~2016,~~2019, basic and diluted.

Assets. Assets have increased to ~~$38,988,337~~$115,574,997 as of December 31, ~~2017,~~2020, an increase of ~~$19,191,989~~$60,635,748 or 110% from December 31, ~~2016.~~2019. This is primarily the result of the ~~growth of our available for sale assets.~~2020 ALSC Agreement.

Available for sale fixed maturity securities: As of December 31, ~~2017,~~2020, we had available for sale fixed maturity assets of ~~$22,945,700,~~$37,677,578, an increase of ~~$12,625,626~~$4,524,686 or 14% from the December 31, ~~2016~~2019 balance of ~~$10,320,074. This growth~~$33,152,892. The increase is driven by the purchase of additional assets and by an increase in the market value of these securities. If we hold our ~~Merger with NPCC and our reinsurance agreement with ALSC.~~

fixed maturity securities to maturity, as we intend to do, any changes in market value is temporary.

~~equity~~ ~~securities~~Mortgage loans on real estate: As of December 31, ~~2017,~~2020, we had mortgage loans on real estate of $3,166,136 which are as a result of the 2020 ALSC Agreement. We held no mortgages at December 31, 2019.

Equity securities, at fair value: As of December 31, 2020, we had available for sale equity assets of ~~$10,663,515, an increase~~$9,221,574, a decrease of ~~$5,520,011~~$919,929 or 9% from the December 31, ~~2016~~2019 balance of ~~$5,143,504.~~$10,141,503. This ~~growth~~decrease is ~~driven by~~the result of repositioning within our ~~Merger~~investment portfolio.

Funds withheld under coinsurance agreement, at fair value: As of December 31, 2020, we had funds withheld assets of $46,830,076 which were acquired with ~~NPCC and~~the 2020 ALSC Agreement. There were no funds withheld assets at December 31, 2019.

Policy loans: As of December 31, 2020, our ~~reinsurance agreement with ALSC.~~policy loans were $163,725, an increase of $44,795 or 38% from the December 31, 2019 balance of $118,930. The increase is a result of normal policy loan activity.

Real estate, net of depreciation: As of December 31, 2020, we had real estate assets of $1,415,743 related to the purchase of our home office building. We had no such assets at December 31, 2019.

Cash and cash equivalents: As of December 31, ~~2017,~~2020, we had cash and cash equivalent assets of ~~$651,809,~~$4,320,759, a decrease of ~~$2,493,936~~$2,358,046 or 35% from the December 31, ~~2016~~2019 balance of ~~$3,145,745.~~$6,678,805. This decrease was the result of deploying more cash into invested ~~assets to provide additional investment earnings.~~assets.

Investment income due and accrued: As of December 31, ~~2017,~~2020, our investment income due and accrued was ~~$214,998~~$423,036 compared to ~~$100,713~~$321,362 as of December 31, ~~2016.~~2019, an increase of $101,674 or 32%. This increase is attributable to the growth of our invested assets.

Reinsurance related assets: As of December 31, ~~2017,~~2020, our reinsurance related assets were ~~$249,879~~$165,082 compared to ~~$31,390~~$188,382 as of December 31, ~~2016.~~2019, a decrease of $23,300 or 12%. This ~~increase~~decrease is the result of ~~the growth of our reinsured business.~~normal reinsurance activity.

Deferred acquisition costs, net: As of December 31, ~~2017,~~2020, our deferred acquisition costs were ~~$2,963,057~~$7,105,890 compared to ~~$153,792~~$2,652,674 as of December 31, ~~2016.~~2019, an increase of $4,453,216 or 168%. The ~~growth~~increase is ~~the result of the cost of reinsurance deferred on~~driven by our ~~coinsurance agreement with~~2020 ALSC ~~in the amount of $2,861,450.~~Agreement.

Value of business acquired, net: As of December 31, ~~2017~~2020 our value of business acquired asset was ~~$600,601. This asset was established in~~$2,703,233, compared to $559,994 as of December 31, 2019, an increase of $2,143,239 or 383%. The increase is the ~~third quarter of 2017 as a~~ result of ~~our acquisition~~additional VOBA being added in conjunction with DCLIC’s assumption of ~~DCLIC.~~policies from ALSC.

Property, equipment and software, net: As of December 31, ~~2017~~2020 our property, equipment and software assets were ~~$221,077,~~$37,818, a decrease of ~~$23,772~~$6,023 from the December 31, ~~2016~~2019 balance of ~~$244,849.~~$43,841. This decrease is athe result of normal amortization ~~during the period. We did purchase additional office furniture and equipment in 2017.~~of these assets.

Goodwill: As of December 31, ~~2017,~~2020 and 2019, our goodwill was $277,542. Goodwill was established as a result of our merger with ~~Northern Plains~~NPCC. We have determined that there has been no impairment to our goodwill balance.

Deferred tax asset, net of valuation allowance: The Company had a net deferred tax asset of $243,257 as of December 31, 2020. The Company had a net deferred tax asset of $431,158 as of December 31, 2019 and ~~we had no previous goodwill balances.~~the resulting change in deferred tax asset was recorded as a deferred tax benefit and as a reduction in other comprehensive income.

Other assets: As of December 31, ~~2017,~~2020, our other assets were ~~$166,184,~~$1,635,647, an increase of ~~$114,262~~$1,263,481 or 339% from the December 31, ~~2016~~2019 balance of ~~$51,922.~~$372,166. This increase was driven by ~~our purchase of pre-paid systems consulting hours.~~a receivable balance due to DCLIC.

Liabilities. Our total liabilities were ~~$25,052,635~~$96,982,305 as of December 31, ~~2017,~~2020, an increase of ~~$17,241,629~~$58,919,253 or 155% from our December 31, ~~2016 liability~~2019 liabilities of ~~$7,811,006.~~$38,063,052. This increase is driven by our 2020 ALSC Agreement.

Policy liabilities: Our total policy liabilities as of December 31, ~~2017~~2020 were ~~$24,945,377~~$93,459,080 compared to ~~$7,740,329~~$36,924,885 as of December 31, ~~2016,~~2019, an increase of ~~$17,205,048.~~$56,534,195 or 153%. This increase is the result of our ~~acquisition of DCLIC, our coinsurance agreement with~~2020 ALSC ~~new policy sales and the growth of our in-force policies.~~Agreement.

Accounts payable and accrued expenses: As of December 31, ~~2017,~~2020, our accounts payable and accrued expenses were ~~$98,382~~$1,507,756 compared to ~~$66,472~~$122,981 as of December 31, ~~2016,~~2019, an increase of ~~$31,910.~~$1,384,775 or 1126%. The increase is driven by ~~growth~~a payable to ALSC related to the partial termination of our 2017 ALSC Agreement.

Federal Home Loan Bank advance: In October of 2019, the Company ~~over~~took an advance of $1,000,000 from the ~~course~~FHLB of ~~2017.~~Topeka which was outstanding as of December 31, 2020 and 2019. In the second quarter of 2020, the Company took two additional advances of $500,000 each, which were outstanding as of December 31, 2020. The advances were taken to create additional liquidity and investment opportunities.

~~Shareholders~~’Shareholders’ Equity. Our shareholders’ equity was ~~$13,935,702~~$18,893,813 as of December 31, ~~2017,~~2020, an increase of ~~$2,554,719~~$2,017,616 or 12% from our December 31, ~~2016~~2019 shareholders’ equity of ~~$11,380,983.~~$16,876,197. The growth in shareholders’ equity was driven by ~~our Merger with NPCC, the issuance of new shares of stock, and the growth of accumulated~~an increase in other comprehensive ~~income. This was partially offset by~~income and our net ~~loss during~~income. Other comprehensive income consists of the ~~year.~~unrealized gains and losses on our fixed maturity portfolio. The increase in other comprehensive income is the result of lower interest rates which increases the market value of our fixed maturity securities. Similarly, higher interest rates would decrease the value of our fixed maturity securities.

Our overall investment philosophy is reflected in the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities, mortgages and other investments. The ~~followi~~ngfollowing table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of December 31, ~~2017~~2020 and December ~~30, 2016.~~31, 2019.

The total value of our investments and cash and cash equivalents increased to ~~$34,261,024~~$102,631,866 as of December 31, ~~2017~~2020 from ~~$18,609,323~~$49,973,200 at December 31, ~~2016,~~2019, an increase of ~~$15,651,701.~~$52,658,666. Increases in investments ~~and cash and cash equivalents~~ are primarily attributable to ~~our Merger with NPCC, our coinsurance agreement with~~the 2020 ALSC ~~and premiums and annuity deposits received by USALSC and DCLIC.~~Agreement.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of December ~~31.~~31, 2020 and 2019.

The ~~amortized~~amortized cost and fair value of debt securities as of December 31, ~~2017~~2020 and ~~2016,~~2019, by contractual maturity, are shown below. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

We hold a diversified portfolio of investments that primarily includes cash, bonds, equity securities, mortgage loans, and ~~equity securities.~~funds withheld under the 2020 ALSC Agreement. Each of these investments is subject to market risks that can affect their return and their fair value. A ~~majority~~significant percentage of the investments are fixed maturity securities including debt issues of corporations, US Treasury securities, or securities issued by government agencies. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, and equity risk. The Company's investment portfolio, including the creditworthiness and valuation of investment assets, as well as availability of new investments may be adversely affected as a result of market developments related to the COVID-19 pandemic and uncertainty regarding its ultimate severity and duration.

Interest rate risk arises from the price sensitivity of investments to changes in interest rates. Interest represents the greatest portion of an investment's return for most fixed maturity securities in stable interest rate environments. The changes in the fair value of such investments are inversely related to changes in market interest rates. As interest rates fall, the interest and dividend streams of existing fixed-rate investments become more valuable and fair values rise. As interest rates rise, the opposite effect occurs.

We attempt to mitigate our exposure to adverse interest rate movements through laddering the maturities of the fixed maturity investments and through maintaining cash and other short term investments to assure sufficient liquidity to meet our obligations and to address reinvestment risk considerations. Due to the composition of our book of insurance business, management believes it is unlikely that we would encounter large surrender activity due to an interest rate increase that would force the disposal of fixed maturities at a loss.

Additionally, USALSC is a member of the FHL of Topeka, which provides access to liquidity and further reduces the likelihood of disposing of fixed maturities at a loss.

We are exposed to credit risk through counterparties and within the investment portfolio. Credit risk relates to the uncertainty associated with an obligor's ability to make timely payments of principal and interest in accordance with the contractual terms of an instrument or contract. We manage our credit risk through established investment policies and guidelines which address the quality of creditors and counterparties, concentration limits, diversification practices and acceptable risk levels. These policies and guidelines are regularly reviewed and approved by senior management and USAC's Board of Directors.

~~Since inception, our~~The impact of COVID-19 on the Company is evolving, and its future effects are not yet quantifiable. The Company is closely monitoring the effects and risks of COVID-19 to assess its impact on the Company's business, sales, financial condition, results of operations, ~~have been financed primarily through the sale of USAC Common Stock. Our operations have not been profitable~~liquidity and ~~have generated significant operating losses since we were incorporated in 2009.~~capital position.

~~Aside from raising capital, which has funded the vast majority of our operations, premium~~Premium income, deposits to policyholder account balances, ~~and~~ investment income, and capital raising are the primary sources of funds while withdrawals of policyholder account balances, investment purchases, policy benefits in the form of claims, and operating expenses are the primary uses of funds. To ensure we will be able to pay future commitments, the funds received as premium payments and deposits are invested in primarily fixed income securities. Funds are invested with the intent that the income from investments, plus proceeds from maturities, will in the future meet our ongoing cash flow needs. The approach of matching asset and liability durations and yields requires an appropriate mix of investments. Our investments consist primarily of marketable debt securities that could be readily converted to cash for liquidity needs. Cash flow projections and cash flow tests under various market interest scenarios are also performed annually to assist in evaluating liquidity needs and adequacy. As a member of the Federal Home Loan Bank, USALSC has immediate access to additional cash liquidity.

Net cash provided by operating activities was ~~$593,160~~$2,099,401 for the year ended December 31, ~~2017.~~2020. The primary sources of cash from operating activities were premiums and deposits received from policyholders. The primary uses of cash for operating activities were for payments of commissions to agents and settlement of policy liabilities. Net cash used in investing activities was ~~$5,007,794.~~$9,903,788. The primary ~~source~~use of cash was from ~~sales~~purchases of available for sale securities and funds transferred to our ~~Merger with NPCC and our reinsurance agreement with ALSC. Offsetting this source of cash was our purchases of investments in available-for-sale securities.~~funds withheld account. Cash provided by financing activities was ~~$1,920,698.~~$5,446,341. The primary sources of cash were receipts on deposit-type contracts.

The following chart and graph illustrate our five-year trend of cash flow from insurance activities:

Cash flow from insurance activities is a non-GAAP financial measure. Cash flow from insurance activities combines cash flow from operations with the net cash received from deposit type contracts ~~and issuance~~to show the impact of ~~USAC Common Stock.~~our insurance operations on our cash flows. Cash flow from deposit type contracts is primarily made up of funds received into our annuity products. The following table reconciles cash flow from operations to cash flow from insurance activities:

At December 31, ~~2017,~~2020, we had cash and cash equivalents totaling ~~$651,809.~~$4,320,759. We believe that our existing cash and cash equivalents ~~along with our cash flow from operations~~ will be sufficient to fund the anticipated operating expenses and capital expenditures ~~through at least 2018.~~for the foreseeable future. We have based this estimate upon assumptions that may prove to be wrong and we could use our capital resources sooner than we currently expect. The growth of USALSC and DCLIC, our insurance subsidiaries, is uncertain and will require additional capital if they ~~continues~~continue to grow.

Insurance premiums are established before the amount of losses, or the extent to which inflation may affect such losses and expenses, are known. We attempt, in establishing premiums, to anticipate the potential impact of inflation. If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by us. Inflation also affects the rate of investment return on the investment portfolio with a corresponding effect on investment income.

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

As a “smaller reporting company”, the Company is not required to provide disclosure pursuant to this item.

The consolidated financial statements are included as part of this reporting beginning on page F-1.

There are not and have not been any disagreements between USAC and its auditor, Kerber, Eck and ~~Braeckel~~Braeckel LLP on any matter of accounting principles, practices or financial statement disclosure.

We have established disclosure controls and procedures to ensure, among other things, material information relating to our Company, including our consolidated subsidiaries, is made known to our officers who certify our financial reports and to the other members of our senior management and the Board of Directors.

As required by Exchange Act Rule 13a-15(b), management of the Company, including the Chief Executive Officer and the ~~Executive~~ Vice President ~~of US Alliance Life~~ and ~~Security Company~~Principal Financial Officer conducted an e~~valuation~~evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based upon an evaluation at the end of the period, the Chief Executive Officer and the ~~Executive~~ Vice President ~~of US Alliance Life and Security Company~~ concluded that the disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the exchange act.

There were no changes to the ~~Company~~’sCompany’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the year ended December 31, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

The information required by this item is set forth under the captions “Proposal One-Election of Directors,” “Corporate Governance,” “Executive Officers” and “Beneficial Ownership Reporting Compliance” in our definitive proxy statement to be filed in connection with our ~~201~~82021 annual stockholders’ meeting (“~~2018~~2021 Proxy Statement”) and is incorporated herein by reference.

The information required by this item is set forth under the captions “Director and Management Compensation” in our ~~2018~~2021 Proxy Statement and is incorporated herein by reference.

The information required by this item is set forth under the captions “Security Ownership” in our ~~201~~82021 Proxy Statement and is incorporated herein by reference.

The information required by this item is set forth under the captions “Certain Relationships and Related Parties” in our ~~201~~82021 Proxy Statement and is incorporated herein by reference.

The information required by this item is set forth under the caption “Principal Accountant Fees and Services” in our ~~201~~82021 Proxy Statement and is incorporated herein by ~~reference~~reference.

The list of financial statements filed with this Annual Report on Form 10-K is provided on page F-1.

We have omitted schedules required by applicable SEC accounting regulations because they are either not required under the related instructions, are inapplicable, or we present the required information in the financial statements or notes thereto.

† ~~XLRB~~XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of ~~section~~sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Pursuant to the requirements of Section 13 or 15(d) 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.

Know all people by these presents, that each person whose signature appears below constitutes and appoints Jack H. Brier his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any amendments to this annual report on Form 10-K, and to file the same, with all exhibits thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he or she might or could do in person, hereby confirming all that said attorneys-in-fact and agents or either of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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 Company and in the capacities indicated on January 29, 2016.

We have audited the accompanying consolidated balance sheets of US Alliance Corporation and Subsidiaries (the Company) as of December 31, ~~2017~~2020 and ~~2016,~~2019, and the related consolidated statements of comprehensive ~~loss,~~income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, ~~2017,~~2020, and the related notes (collectively referred to as the 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~~2020 and ~~2016,~~2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, ~~2017,~~2020, in conformity with accounting principles generally accepted in the United States of America.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 consolidated 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 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 consolidated 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.

~~Note~~ 1.

Note 1. Description of Business and Significant Accounting Policies

~~Description of Business and Significant Accounting Policies~~

Description of business: US Alliance Corporation ("USAC") was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. Our offices are located at ~~4123~~1303 SW ~~Gage Center Drive,~~First American Place, Suite ~~240,~~200, Topeka, Kansas 66604. Our telephone number is ~~785~~-~~228~~-~~0200~~785-228-0200 and our website address is www.usalliancecorporation.com.

~~Our~~ ~~four~~USAC has five wholly-owned operating ~~subsidiaries are:~~subsidiaries. US Alliance Life and Security Company ("USALSC") was formed June 9, ~~2011;~~ 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed April 23, 2012, to serve as a marketing ~~resource;~~resource. US Alliance Investment Corporation ("USAIC") was formed April 23, 2012 to serve as investment manager for ~~USAC and USALSC; and~~USAC. Dakota Capital Life Insurance Company (“DCLIC”), was acquired on August 1, 2017 when USAC merged with Northern Plains Capital Corporation (“NPCC”). US Alliance Life and Security Company - Montana (USALSC-Montana), was acquired December 14, 2018. Both DCLIC and USALSC-Montana are wholly-owned subsidiaries of USALSC.

~~We capitalized our subsidiaries with proceeds from intrastate~~The Company terminated its initial public offering on February 24, 2013. During the balance of 2013, the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its first insurance product on May 1, 2013. The Company continued to expand its product offerings ~~registered by qualification with~~and distribution channels throughout 2014 and 2015. On February 24, 2015, the ~~office~~Company commenced a warrant exercise offering set to expire on February 24, 2016. On February 24, 2016, the Company extended the offering until February 24, 2017 and made additional shares available for purchase. All outstanding warrants expired on April 1, 2016. The Company further extended this offering to February 24, 2021. During the 4^th quarter of ~~Kansas Securities Commissioner.~~2017, the Company began a private placement offering to accredited investors in the state of North Dakota.

USALSC received a Certificate of ~~Authorit~~yAuthority from the Kansas Insurance Department ("KID") effective January 2, 2012, and sold its first insurance product on May 1, 2013. DCLIC received a Certificate of Authority from the North Dakota Insurance Department ("NDID") effective January 24, 2012.

~~Our~~The Company’s single pay life products (which include our ~~Legacy~~ Juvenile and ~~Thoughtful~~ Pre-Need products) accounted for 73%61% of ~~2017~~2020 direct premium revenue. ~~Our individual~~Individual life and Critical Illness products (which include ~~our Sound and Solid~~ Term Life and ~~Pioneer~~ Whole Life products) accounted for 18%21% of ~~2017~~2020 direct premium revenue. ~~Our~~The Company’s group products accounted for 9%18% of ~~2017~~2020 direct written premiums.

USALSC ~~seeks~~and DCLIC seek opportunities to develop and market additional products.

~~Our~~The Company’s business model also anticipates the acquisition by USAC and/or USALSC of other insurance and insurance related companies, including ~~third~~~~-party~~third-party administrators, ~~marketi~~ngmarketing organizations, and rights to other blocks of insurance business through reinsurance or other transactions.

Basis of presentation: The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America.

Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated from the consolidated financial statements.

Area of Operation: ~~USALSC~~ US Alliance Life and Security Company is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska, Oklahoma, and ~~Oklahoma.~~Wyoming. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of ~~North Dakota.~~Montana.

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Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

Available for sale securities: Investments in available-for-sale securities are carried in the consolidated financial statements at fair value. Net unrealized holding gains (losses) on fixed maturity securities are included in accumulated other comprehensive income. Bond premiums and discounts are amortized using the scientific-yield method over the term of the bonds. Net unrealized holding gains (losses) on equity securities are included as a component of net investment gains (losses).

Realized gains and losses on securities sold during the year are determined using the specific identification method and included in investment income as a component of net investment gains (losses). Investment income is recognized as earned.

Management has a policy and process in place to identify securities that could potentially have an impairment that is other-than-temporary. The assessment of whether impairments have occurred is based on a case-by-case evaluation of underlying reasons for the decline in fair value. We consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and whether we intend to sell a security or it is more likely than not that we would be required to sell a security prior to the recovery of the amortized cost.

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security prior to recovery of the amortized cost, the difference between

amortized cost and fair value is recognized in the income statement as an other-than-temporary impairment. As it relates to debt securities, if we do not expect to recover the amortized basis, do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the other-than-temporary impairment would be recognized. We would recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss. As of December 31, 2020 and 2019, the Company had no investment securities that were evaluated to be other than temporarily impaired.

Mortgage Loans on Real Estate:Mortgage loans on real estate are carried at unpaid principal balances, net of any unamortized premium or discount and valuation allowances. Interest income is accrued on the principal amount of the mortgage loans based on its contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. The Company accrues interest on loans until probable the Company will not receive interest or the loan is 90 days past due. Interest income, amortization of premiums, accretion of discounts and prepayment fees are reported in investment income, net of related expenses in the consolidated statements of comprehensive income.

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Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

Any interest accrued or received on the net carrying amount of the impaired loan will be included in investment income or applied to the principal of the loan, depending on the assessment of the collectability of the loan. Mortgage loans deemed to be uncollectible or that have been foreclosed are charged off against the valuation allowances and subsequent recoveries, if any, are credited to the valuation allowances. Changes in valuation allowances are reported in investment related gains (losses), net on the consolidated statements of income.

Funds Withheld under Coinsurance Agreement:Funds withheld under coinsurance agreement represent amounts contractually withheld by American Life and Security Corporation in accordance with a reinsurance agreement entered into in 2020. For agreements written on a coinsurance funds withheld basis, assets that support the net statutory reserves or as defined by the treaty, are withheld and legally owned by the ceding company. Interest is recorded in net investment income, net of related expenses in the consolidated statements of income. Funds withheld under coinsurance agreement are presented net of the embedded derivative, discussed below.

Embedded Derivatives:The Company has entered into coinsurance funds withheld arrangement which contains an embedded derivative. Under ASC 815, the Company assesses whether the embedded derivative is clearly and closely related to the host contract. The Company bifurcates embedded derivatives from the host instrument for measurement purposes when the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument. Embedded derivatives, which are reported with the host instrument on the consolidated balance sheets in funds withheld under coinsurance agreement, are reported at fair value with changes in fair value recognized in the consolidated statements of comprehensive income in net investment gains (losses).

Policy loans: Policy loans are stated at aggregate unpaid principal balances.

Investment Real Estate: Real estate is stated at cost, less allowances for depreciation and, as appropriate, provisions for possible losses.

Cash and cash equivalents: For purposes of the statement of cash flows, the Company considers demand deposits and highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. The Company maintains its cash balances in one financial institution located in Topeka, Kansas. The FDIC insures aggregate balances, including interest-bearing and noninterest-bearing accounts, of ~~$250,000~~$250,000 per depositor per insured institution. The Company’s financial institution is a member of a network that participates in the Insured Cash Sweep (ICS) program. By participating in ICS, the Company’s deposits in excess of the insured limit are apportioned and placed in demand deposit accounts at other financial institutions in amounts under the insured limit. As a result, the Company can access insurance coverage from multiple financial institutions while working directly with one. The Company had no amounts uninsured as of December 31,~~2017.~~ 2020. 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.

F-9

Table of Contents

US Alliance ~~Corporatio~~nCorporation

Notes to Consolidated Financial ~~Statement~~sStatements

Note 1. Description of Business and Significant Accounting Policies (Continued)

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

~~Property~~Reinsurance, ~~equipment~~: In the normal course of business, the Company seeks to limit aggregate and ~~software: Property, equipment and software~~single exposure to losses on risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are ~~stated at cost less accumulated depreciation. Expenditures for additions and improvements that significantly add~~estimated based upon assumptions consistent with those used in establishing the liabilities related to the ~~productive capacity or extend~~underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the ~~useful life~~recoverables are appropriately established. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of ~~an asset are capitalized. Expenditures~~premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for ~~maintenance~~uncollectible reinsurance recoverable as appropriate. There were no allowances as of December 31, 2020 and ~~repairs are charged to income currently. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income.~~2019.

~~Depreciation is computed by the straight-line method over the estimated useful lives of the assets.~~ ~~Computer equipment is depreciated over~~ no ~~longer than a~~ 5~~-year period. Furniture and equipment are depreciated over~~ no ~~longer than a~~ 10~~-year period. Software is depreciated over~~ no ~~longer than a~~ 10~~-year~~ ~~period.~~ ~~Major categories of depreciable assets and the respective book values as of~~ ~~December 31, 2017~~ ~~and~~ ~~2016~~ ~~are represented below.~~

December 31,

December 31,

2017

2016

Computer
$ 20,755 $ 20,755
Furniture and equipment
92,077 80,956
Software
257,500 257,500
Accumulated depreciation
(149,255 ) (114,362 )
Balance at end of period
$ 221,077 $ 244,849

~~Pre-paid expenses:~~Deferred acquisition costs: The Company ~~recognizes pre-paid expenses as the expenses are incurred. Pre-paid expenses consist of systems consulting hours~~capitalizes and ~~insurance. Systems consulting hours are charged as they are incurred on projects. Insurance expenses are charged straight line~~amortizes over the life of the ~~contract.~~

~~Investments: Investments~~premiums produced incremental direct costs that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. An entity may defer incremental direct costs of contract acquisition that are incurred in ~~available-for-sale securities~~transactions with independent third parties or employees as well as the portion of employee compensation and other costs directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated contracts. Additionally, an entity may capitalize as a deferred acquisition cost only those advertising costs meeting the capitalization criteria for direct-response advertising. Acquisition costs are ~~carried in~~amortized over the ~~consolidated financial statements at fair value with~~premium paying period using the net ~~unrealized holding gains (losses) included~~level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in ~~accumulated other comprehensive income. Bond premiums and discounts are amortized using~~force for the ~~scientific-yield method over the term~~lifetime of the ~~bonds.~~

~~Realized gains and losses on securities sold during the year are determined using the specific identification method and included in investment income.~~ ~~Investment income is recognized as earned.~~

~~Management has~~ a policy and process in place to identify securities that could potentially have an impairment that is other-than-temporary. The assessment of whether impairments have occurred is based on a case-by-case evaluation of underlying reasons for the decline in fair value. We consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and whether we intend to sell a security or it is more likely than ~~not~~ ~~that we would be required to sell a security prior to the recovery of the amortized cost.~~insured.

The ~~recognition of other-than-temporary impairment losses on debt securities is dependent on~~following table provides information about deferred acquisition costs for the ~~facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than~~ ~~not~~ that we would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the income statement as an other-than-temporary impairment. As it relates to debt securities, if we do ~~not~~ ~~expect to recover the amortized basis, do~~ ~~not~~ ~~plan to sell the security and if it is~~ ~~not~~ ~~more likely than~~ ~~not~~ ~~that we would be required to sell a security before the recovery of its amortized cost, the other-than-temporary impairment~~ ~~would be recognized. We would recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss. As of~~ years ended December 31, ~~2017~~ 2020 and ~~2016,~~ ~~the Company had~~ no ~~investment securities that were evaluated to be other than temporarily impaired.~~2019, respectively.

	Year ended			Year ended
	December 31,			December 31,
Deferred Acquisition costs	2020			2019

Balance at beginning of period	$	2,652,674		$	2,757,404
DAC on reinsurance recapture		(1,146,150	)		-
Capitalization of commissions, sales and issue expenses		6,569,752			328,488
Amortization net of interest		(970,386	)		(433,218	)
Balance at end of period	$	7,105,890		$	2,652,674

Value of business acquired: Value of business acquired (VOBA) represents the estimated value assigned to purchased companies or insurance in-in- force of the assumed policy obligations at the date of acquisition of a block of policies. At least annually, a review is performed of the models and the assumptions used to develop expected future profits, based upon management’s current view of future events. VOBA is reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. Management’s view primarily reflects our experience but can also reflect emerging trends within the industry. Short-term deviations in experience affect the amortization of VOBA in the period, but do not necessarily indicate that a change to the long-term assumptions of future experience is warranted. If it is determined that it is appropriate to change the assumptions related to future experience, then an unlocking adjustment is recognized for the block of business being evaluated. Certain assumptions, such as interest spreads and surrender rates, may be interrelated. As such, unlocking adjustments often reflect revisions to multiple assumptions. The VOBA balance is immediately impacted by any assumption changes, with the change reflected through the statements of comprehensive income as an unlocking adjustment in the amount of VOBA amortized. These adjustments can be positive or negative with adjustments reducing amortization limited to amounts previously deferred plus interest accrued through the date of the adjustment. VOBA is amortized on a straight-line method over 30 years.

F-10

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

In addition, we may consider refinements in estimates due to improved capabilities resulting from administrative or actuarial system upgrades. We consider such enhancements to determine whether and to what extent they are associated with prior periods or simply improvements in the projection of future expected gross profits due to improved functionality. To the extent they represent such improvements, these items are applied to the appropriate financial statement line items in a manner similar to unlocking adjustments.

Property, equipment and software: Property, equipment and software are stated at cost less accumulated depreciation. Expenditures for additions and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to income currently. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income.

Depreciation is computed by the straight-line method over the estimated useful lives of the assets. Computer equipment is depreciated over no longer than a 5-year period. Furniture and equipment are depreciated over no longer than a 10-year period. Major categories of depreciable assets and the respective book values as of December 31, 2020 and 2019 are represented below.

	Years Ended			Year Ended
	December 31,			December 31,
	2020			2019
Computer	$	32,182		$	20,755
Furniture and equipment		39,679			97,410
Accumulated depreciation		(34,043	)		(74,324	)
Balance at end of period	$	37,818		$	43,841

Goodwill: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. We assess the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired ~~asset~~.

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

~~Reinsurance~~: In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as ~~estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have~~ ~~not~~ ~~yet been paid.~~ ~~Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance~~ ~~liabilities are reported~~ gross of reinsurance recoverable. Management believes the recoverables are appropriately established. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does ~~not~~ ~~extinguish~~ ~~the Company~~’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices ~~and commutations, and establishes allowances for uncollectible~~ ~~reinsurance recoverable as appropriate. There were~~ no ~~allowances as of~~ ~~December 31, 2017~~ ~~and~~ ~~2016.~~

~~Benefit reserves~~: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables.

~~Policy claims: Policy claims are based on reported claims plus estimated incurred but~~ ~~not~~ ~~reported claims developed from trends of historical data applied to current exposure. The Company’s current estimate of incurred but~~ ~~not~~ ~~reported claims is~~ ~~$85,832~~ ~~and is included as a part of policyholder benefit reserves.~~

~~Deposit-type contracts~~: Deposit-type contracts consist of amounts on deposit associated with deferred annuity contracts and premium deposit funds. The deferred annuity contracts credit interest based upon a fixed interest rate set by the Company. The Company has the ability to change this rate annually subject to minimums established by law or administrative regulation.

~~Liabilities for~~ deferred annuity deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deferred annuity deposit-type contracts for the years ended ~~December 31, 2017~~ ~~and~~ ~~2016.~~

Year ended

Year ended

December 31,

December 31,

2017

2016

Balance at beginning of year
$ 3,398,170 $ 1,573,988
Acquisition of Dakota Capital Life
1,853,728 -
Assumed from American Life & Security Corp
5,841,703 -
Deposits received
2,187,387 1,989,833
Interest credited
243,310 80,452
Withdrawals
(592,398 ) (246,103 )
Balance at end of year
$ 12,931,900 $ 3,398,170

~~The~~ premium deposit funds credit interest based upon a fixed interest rate set by the Company. The Company has the ability to change this rate subject to minimums established by law or administrative regulation.

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

~~Liabilities for~~ ~~premium deposit fund deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and~~ ~~less withdrawals. The~~ ~~following table provides information about premium deposit fund deposit-type contracts for the years ended~~ ~~December 31, 2017~~ ~~and~~ ~~2016.~~

Year ended

Year ended

December 31,

December 31,

2017

2016

Balance at beginning of year
$ - $ -
Acquisition of Dakota Capital Life
175,410 -
Assumed from American Life & Security Corp
351,884 -
Deposits received
- -
Interest credited
4,382 -
Withdrawals
(14,685 ) -
Balance at end of year
$ 516,991 $ -

~~Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Premium income includes reinsurance assumed and is reduced by premiums ceded.~~

~~Amounts r~~eceived as payment for annuity contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for contract-holder services, which are recognized over the period ~~of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated~~ ~~Statements of Cash Flows.~~

Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts.

~~Deferred acquisition costs: The Company capitalizes and amortizes over the life of the premiums produced incremental direct costs that result directly from and are essential to the contract acquisition transaction and would~~ ~~not~~ ~~have been incurred by the Company had the contract acquisition~~ ~~not~~ ~~occurred.~~ ~~An entity~~ ~~may~~ ~~defer incremental direct costs of contract acquisition that are incurred in transactions with independent~~ ~~third~~ ~~parties or~~ ~~employees as well as the portion of employee compensation and other costs~~ ~~directly related to underwriting, policy issuance and processing, medical inspection, and contract selling for successfully negotiated~~ ~~contracts. Additionally, an entity~~ ~~may~~ ~~capitalize as a deferred acquisition cost only those advertising costs meeting the capitalization criteria for direct-response advertising. Acquisition~~ costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the ~~lifetime of the insured.~~

~~The following table provides information about deferred acquisition costs for the years ended~~ ~~December 31,~~ ~~201~~7 ~~and~~ ~~2016,~~ ~~respectively.~~

Year ended

Year ended

December 31,

December 31,

2017

2016

Balance at beginning of year
$ 153,792 $ 86,053
Deferred cost of reinsurance, American Life & Security Corp block acquisition
2,861,450 -
Capitalization of commissions, sales and issue expenses
269,266 221,410
Amortization net of interest
(321,451 ) (153,671 )
Balance at end of year
$ 2,963,057 $ 153,792

~~F10~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

~~Comprehensive loss~~: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available for sale, net of applicable taxes.

~~Common stock and earnings (loss) per share:~~ ~~The par value for common stock is~~ ~~$0.10~~ ~~per share with~~ ~~20,000,000~~ ~~shares authorized. As of~~ ~~December 31, 2017~~ ~~and~~ ~~2016~~ ~~the company had~~ ~~7,310,939~~ ~~and~~ ~~5,565,943~~ ~~common shares issued and outstanding, respectively.~~

~~Earnings (loss) per share attributable to the Company~~’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the years ended ~~December 31, 2017~~ ~~and~~ ~~2016~~ ~~were~~ ~~5,871,949~~ ~~and~~ ~~5,421,972~~ ~~shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the years ended~~ ~~December 31, 2017~~ ~~and~~ ~~2016~~.asset.

Income taxes: The Company is subject to U.S. federal and state taxes. The provision for income taxes is based on income as reported in the consolidated financial statements. The income tax provision is calculated using the asset and liability method. Deferred income taxes are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted rates expected to apply to taxable income in the years in which the differences are expected to reverse. A valuation allowance is established for the amount of any deferred tax asset that exceeds the amount of the estimated future taxable income needed to utilize the future tax benefits.

All of the ~~Company~~’sCompany’s tax returns are subject to U.S. federal, state and local income tax examinations by tax authorities. The Company had no known uncertain tax benefits included in its provision for income taxes as of December 31, ~~2017~~ 2020 and ~~2016.~~2019. The Company’s policy is to recognize interest and penalties (if applicable) as an element of the provision for income taxes in the consolidated statements of income.

F-11

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

The tax years which remain subject to examination by taxing authorities are the years ended December 31, ~~201~~42017 through ~~2017.~~2020.

Pre-paid expenses: The Company recognizes pre-paid expenses as the expenses are incurred. Pre-paid expenses consist of systems consulting hours, insurance, and pre-paid benefit expense. Systems consulting hours are charged as they are incurred on projects. Insurance expenses are charged straight line over the life of the contract. Benefit expenses are charged as they are incurred.

Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity contracts and premium deposit funds. The deferred annuity contracts credit interest based upon a fixed interest rate set by the Company. The Company has the ability to change this rate annually subject to minimums established by law or administrative regulation.

Liabilities for deferred annuity deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deferred annuity deposit-type contracts for the years ended December 31, 2020 and 2019.

	Year Ended			Year ended
	December 31,			December 31,
	2020			2019

Balance at beginning of period	$	19,063,141		$	16,201,166
Recaptured by American Life & Security Corp		(6,799,716	)		-
Acquired from American Life & Security Corp		6,799,716			-
Deposits received		53,877,845			3,517,203
Interest credited		1,090,820			583,038
Withdrawals		(2,188,523	)		(1,238,266	)
Balance at end of period	$	71,843,283		$	19,063,141

The premium deposit funds credit interest based upon a fixed interest rate set by the Company. The Company has the ability to change this rate subject to minimums established by law or administrative regulation.

Liabilities for premium deposit fund deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less withdrawals. The following table provides information about premium deposit fund deposit-type contracts for the years ended December 31, 2020 and 2019.

	Year Ended			Year ended
	December 31,			December 31,
	2020			2019

Balance at beginning of period	$	333,473		$	425,052
Recaptured by American Life & Security Corp		(93,845	)		-
Acquired from American Life & Security Corp		93,845			-
Deposits received		6,180			17,891
Interest credited		8,663			10,756
Withdrawals		(109,392	)		(120,226	)
Balance at end of period	$	238,924		$	333,473

F-12

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables.

Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. The Company’s current estimate of incurred but not reported claims as of December 31, 2020 and 2019 is $116,019 and $127,711 and is included as a part of policyholder benefit reserves.

Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Premium income includes reinsurance assumed and is reduced by premiums ceded.

Amounts received as payment for annuity contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for contract-holder services, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

Leases:The Company, as lessor, has entered into an operating lease agreement for office space. The Company recognizes lease income for operating leases on a straight-line basis over the lease term. At contract inception, the Company defers any initial direct costs and amortizes the costs over the life of the lease on the same basis as lease income.

Common stock and earnings per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of December 31, 2020 and 2019 the company had 7,741,487 and 7,734,004 common shares issued and outstanding, respectively.

Earnings per share attributable to the Company’s common stockholders were computed based on the net income and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the years ended December 31, 2020 and 2019 were 7,738,693 and 7,688,560 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the years ended December 31, 2020 and 2019.

Comprehensive Income: Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses from marketable fixed maturity securities classified as available for sale, net of applicable taxes.

Risk and uncertainties: Certain risks and uncertainties are inherent in the Company’s day-to-day operations and in the process of preparing its consolidated financial statements. The more significant of those risks and uncertainties, as well as the Company’s method for mitigating the risks, are presented below and throughout the notes to the consolidated financial statements.

- Use of Estimates:

The preparation of consolidated financial statements in conformity with US GAAP, generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-13

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

	- Regulatory Factors:	The insurance laws of Kansas, North Dakota, and Montana give ~~the KID~~insurance regulators broad regulatory authority, including powers to (i) grant and revoke licenses to transact business; (ii) regulate and supervise trade practices and market conduct, (iii) establish guaranty associations; (iv) license agents; (v) approve policy forms; (vi) approve premium rates for some lines of business; (vii) establish reserve requirements; (viii) prescribe the form and content of required financial statements and reports; (ix) determine the reasonableness and adequacy of statutory capital and surplus; and (x)(x) regulate the type and amount of permitted investments.

		The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Reform Act") reshapes financial regulations in the United States by creating new regulators, regulating new markets and firms, and providing new enforcement powers to regulators. Virtually all major areas of the Reform Act continue to be subject to regulatory interpretation and implementation rules requiring rulemaking that may take several years to complete. The ultimate outcome of the regulatory rulemaking proceedings cannot be predicted with certainty. The regulations promulgated could have a material impact on consolidated financial results or financial condition.

~~F11~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

- Reinsurance:

In order to manage the risk of financial exposure to adverse underwriting results, ~~USALSC~~the Company reinsures a portion of its ~~risk~~individual and group life risks with other insurance companies. ~~USALSC~~The Company retains ~~$35,000~~$35,000 on its ~~Pioneer~~ Whole Life ~~Series~~products and ~~$25,000~~$25,000 on its ~~Solid Solutions Term Life Series* and Sound Solutions Term Life Series®. USALSC~~term life products. The Company also reinsures 100% of the risk on its individual accidental death benefit rider. ~~USALSC~~The Company retains 25% of the risk for each covered life on its group life product to a maximum of ~~$100,000~~$100,000 on any individual person. ~~USALSC~~The Company retains 25% of the risk for each covered life on its group accidental death and dismemberment product to a maximum of ~~$25,000~~$25,000 on any individual person. ~~USALSC~~The Company also has catastrophic reinsurance coverage to protect against three or more group life deaths resulting from a single event. ~~USALSC~~The Company also reinsures ~~100%~~90% of the risk on its group disability products. ~~USALSC~~The Company reinsurers 66% of the risk on its critical illness product. Optimum Re Insurance Company (a subsidiary of Optimum Group), General Reinsurance Corporation (a subsidiary of Berkshire Hathaway), Reliance Standard Life Insurance Company (a subsidiary of Tokio Marine Holdings), Hartford Life and Accident Company, and Unified Life Insurance Company provide reinsurance for USALSC and DCLIC. The Company evaluates the financial condition of its reinsurers to minimize its exposure to losses from reinsurer insolvencies. Management believes that any liabilities arising from this contingency would not be material to the Company’s financial ~~position~~.position.


	- Interest Rate Risk:	Interest rate fluctuations could impair an insurance company's ability to pay policyholder benefits with operating and investment cash flows, cash on hand and other cash sources. Annuity products expose the risk that changes in interest rates will reduce any spread, or the difference between the amounts that the insurance company is required to pay under the contracts and the amounts the insurance subsidiary is able to earn on its investments intended to support its obligations under the contracts. Spread is a key component of revenues.

F-14

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)


		To the extent that interest rates credited are less than those generally available in the marketplace, policyholder lapses, policy loans and surrenders, and withdrawals of life insurance policies and annuity contracts may increase as contract holders seek to purchase products with perceived higher returns. This process may result in cash outflows requiring that an insurance subsidiary sell investments at a time when the prices of those investments are adversely affected by the increase in market interest rates, which may result in realized investment losses.

		Increases in market interest rates may also negatively affect profitability in periods of increasing interest rates. The ability to replace invested assets with higher yielding assets needed to fund the higher crediting rates that may be necessary to keep interest sensitive products competitive.

~~F12~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

		If interest rates were to increase by 1%, the market value of our fixed income securities would decrease by ~~11.1%~~9.3% as of December 31, ~~2017.~~ ~~USALSC and DCLIC~~2020. The Company therefore may have to accept a lower spread and thus lower profitability or face a decline in sales and greater loss of existing contracts.

		Conversely, in a period of prolonged low interest rates it is difficult to invest assets and earn the rate of return necessary to support insurance products. Some central banks currently have negative interest rates which contributes to the ~~curre~~ntcurrent low interest rate environment.

		Policy lapses in excess of those actuarially anticipated would have a negative impact on our financial performance.

		Profitability could be reduced if lapse and surrender rates exceed the assumptions upon which the ~~insuranc~~einsurance policies were priced. Policy sales costs are deferred and recognized over the life of a policy. Excess policy lapses, however, cause the immediate expensing or amortizing of deferred policy sales costs.

	- Investment Risk:	Our invested assets are subject to customary risks of defaults and changes in market values. Factors that may affect the overall default rate on, and market value of, the invested assets include interest rate levels, financial market performance, and general economic conditions.

	- Assumptions Risk:	In the life insurance business, assumptions as to expected mortality, lapse rates and other factors in developing the pricing and other terms of life insurance products are made. These assumptions are based on industry experience and are reviewed and revised regularly by an outside actuary to reflect actual experience on a current basis. However, variation of actual experience from that assumed in developing such terms may affect a product's profitability or sales volume and in turn adversely impact our revenues.

Reclassifications: Certain reclassifications of a minor nature have been made to prior-year balances to conform to current-year presentation with no net impact to net loss/income or equity.

F-15

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

New accounting standards:

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.

~~F13~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

The following steps are applied in the updated guidance: (1)(1) identify the contract(s) with a customer; (2)(2) identify the performance obligations in the contract; (3)(3) determine the transaction price; (4)(4) allocate the transaction price to the performance obligations in the contract and (5)(5) recognize revenue when, or as, the entity satisfies a performance obligation.

In July2015, the FASB deferred the effective date of the updated guidance on revenue recognitionby one year to the quarter ending March 31,2018. As an emerging growth company, the Company has chosen to defer implementation of this accounting standard until the year ending December 31, 2019. The adoption of this guidance is did not ~~expected to~~ have a material effect on the Company’s result of operations, financial position or liquidity.

~~Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern~~

In ~~August 2014,~~ the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within ~~one~~ year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

~~If conditions or events raise substantial doubt that is~~ ~~not~~ ~~alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within~~ ~~one~~ year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

~~The guidance is effective for annual periods ending after~~ ~~December~~~~15,~~~~2016,~~ ~~and interim and annual periods thereafter. The adoption of this guidance did~~ ~~not~~ ~~have a material effect on the Company's results of operations, financial position or liquidity.~~

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after December 15, 2017. As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after December 15, 2018. The recognition and measurement provisions of this guidance ~~will be~~was applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss).

~~The effect of the~~ adoption of this guidance did not have a material effect on the ~~Company’s results of operations,~~Company’s financial position ~~and~~or liquidity ~~is primarily dependent on the fair value of the available-for-sale equity securities in future periods and the existence of a deferred tax asset related~~but does create additional volatility when comparing period to ~~available-for-sale securities in future periods that have~~ ~~not~~ ~~yet been fully assessed.~~period results.

~~F14~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

Leases

In February2016, the FASB issued updated guidance to require lessees to recognize a right-to-use asset and a lease liability for leases with terms of more than 12 months. The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record the right-to-use asset and the lease liability based upon the present value of cash flows. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-to-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not significantly changed by the updated guidance. The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the financial statements.

F-16

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1. Description of Business and Significant Accounting Policies (Continued)

The updated guidance is effective for reporting periods beginning after December15,2018, and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied. Early adoption is permitted. As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after December 15, 2021. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

~~Contingent Put and Call Options in Debt Instruments~~Income Taxes - Simplifying the Accounting for Income Taxes

In ~~March~~~~2016,~~December 2019, the FASB issued updated guidance ~~clarifying that when a call (put) option~~(Accounting Standards Update 2019-12) for the accounting for income taxes. The updated guidance is intended to simplify the accounting for income taxes by removing several exceptions contained in ~~a debt instrument can accelerate the repayment of principal on the debt instrument, a reporting entity does~~ ~~not~~ ~~need~~existing guidance and amending other existing guidance to assess whether the contingent event that triggers the ability to exercise the call (put) option is related to interest rates or credit risk in determining whether the option should be accounted for separately.simplify several other income tax accounting matters. The updated guidance is effective for ~~reporting periods beginning after~~ ~~December~~ ~~15,~~~~2016.~~

the quarter ending March 31, 2021. Early adoption is permitted. The adoption of this guidance ~~did~~ is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In June2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. ~~mortgage loans)~~reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a ~~security~~’ssecurity’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

~~F15~~

~~Table of Contents~~

~~US Alliance Corporatio~~n

~~Notes to Consolidated Financial Statement~~s

~~Note~~ 1.

~~Description of Business and Significant Accounting Policies (Continued)~~

The updated guidance is effective for reporting periods beginning after December 15,2019. Early adoption is permitted for reporting periods beginning after December 15,2018. As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after December 15, 2022. The Company will not be able to determine the impact that the updated guidance will have on its results of operations, financial position or liquidity until the updated guidance is adopted.

F-17

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

~~Classification~~

Note 1. Description of Business and Significant Accounting Policies (Continued)

Reclassification of Certain CTax Effects from Accumulated Other Comprehensive Income~~ash~~ R~~eceipts and~~ ~~Cash P~~~~ayment~~

On December 22, 2017, the U.S. federal government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act). In ~~Aug~~~~ust~~ ~~2016,~~ ~~the~~February 2018, FASB issued guidance to address certain issues related to the Tax Cuts and Jobs Act. This new guidance ~~that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under~~ ~~eight~~ ~~different scenarios including, but~~ ~~not~~ ~~limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds~~allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the ~~settlement~~Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle.information reported to financial statement users. This guidance is effective for fiscal years beginning after December 15, ~~2017,~~ 2018, and interim periods within those fiscal years. Early adoption is permitted. The ~~Company is currently evaluating the impact~~adoption of this guidance did not have a material effect on ~~its statement~~the Company’s results of operations, financial position or liquidity.

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12 “Targeted Improvements to the Accounting for Long-Duration Contracts.” ASU 2018-12 requires periodic reassessment of actuarial and discount rate assumptions used in the valuation of policyholder liabilities and deferred acquisition costs arising from the issuance of long-duration insurance and reinsurance contracts, with the effects of the changes in cash ~~flows.~~flow assumptions reflected in earnings and the effects of changes in discount rate assumptions reflected in other comprehensive income. Under current accounting guidance, the actuarial and discount rate assumptions are set at the contract inception date and not subsequently changed, except in limited circumstances. ASU 2018-12 also requires new disclosures and is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. We are evaluating the effect this standard will have on our Consolidated Financial Statements.

Fair Value Measurement

This guidance is part of the FASB’s disclosure framework project and eliminates certain disclosure requirements for fair value measurement, requires entities to disclose new information and modifies existing disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did not relate to accounting policies and procedures pertinent or material to the Company at this time.

F-18

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

The amortized cost and fair value of debt securities as of December 31, ~~201~~72020 and ~~2016,~~2019, by contractual maturity, are shown ~~on the following page. Equity securities do~~ ~~not~~ ~~have stated maturity dates and therefore are~~ ~~not~~ ~~included in the following maturity summary.~~below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Proceeds from the sale of securities,, maturities, and asset paydowns in ~~2017~~2020 and ~~2016~~2019 were ~~$10,262,522~~$7,795,116 and ~~$1,674,014,~~$8,605,475, respectively. Realized gains and losses related to the sale of securities are summarized as follows:

Unrealized losses occur from market price declines that may be due to a number of factors, including economic downturns, changes in interest rates, competitive forces within an industry, issuer specific events, operational difficulties, lawsuits, and market pricing anomalies caused by factors such as temporary lack of liquidity.

The total number of available for sale securities in the investment portfolio in an unrealized loss position as of December 31,~~2017~~ 2020 was ~~47,~~8, which represented an unrealized loss of ~~$252,190~~$1,231 of the aggregate carrying value of those securities. The 478 securities breakdown as follows: 173 bonds, 214 mortgage and asset backed securities, and 1 ~~common stocks,~~ 3 redeemable preferred ~~stocks,~~ 2 ~~high yield corporate bond funds,~~ 2 ~~preferred stock index funds, and~~ 1 ~~senior loan fund.~~stock. The Company determined that no securities were considered to be other-than-temporarily impaired as of December 31, ~~2017~~ 2020 and ~~2016.~~2019.

The Company has invested in various mortgage loans through participation agreements with the original issuing entity. The Company’s mortgage loans by property type as of December 31, 2020 and December 31, 2019 are summarized as follows:

The Company utilizes loan-to-value of individual mortgage loans to evaluate the credit quality of its mortgage loan portfolio. The loan-to-value measures the loan's carrying value to its appraised value. The Company’s mortgage loans by loan-to-value ratio as of December 31, 2020 and December 31, 2019 are summarized as follows:

The Company’s mortgage loans by maturity date as of December 31, 2020 and December 31, 2019 are summarized as follows:

The Company had no mortgage loans that were on non-accrued status as of December 31, 2020. The were no mortgage loans delinquent on payments due the Company as of December 31, 2020. In addition, the Company did not establish a valuation allowance on any mortgage loans.

The components of net investment income for the years ended December 31, 2020 and 2019 are as follows:

The Company was required to implement a new accounting standard in the first quarter of 2019 which requires that the unrealized gains and losses on equity securities be reported as income on the consolidated statements of comprehensive income. For 2020, net investment gains is compromised of $299,373 of unrealized gains on our equity portfolio, net realized gains of $1,014,347, and a change in the ~~remainder~~fair value of our embedded derivative on funds withheld of $653,294. For 2019, net investment gains (losses) is compromised of $1,256,769 of unrealized gains on our equity portfolio and net realized losses of $214,435.

The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The estimated fair value approximates carrying value for accrued interest. The methodologies for other financial assets and financial liabilities are discussed below:

Cash and cash equivalents: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and accrued: The carrying amounts approximate fair value because of the short maturity of these instruments.

Mortgage loans on real estate: Mortgage loans are carried at their unpaid principal value as that is considered the fair market values for these loans.

Funds withheld: The carrying value of funds withheld at interest approximates fair value as funds are specifically identified in the agreement. The fair value of the specified funds is based on the fair value of the underlying assets that are held by the ceding company. The ceding company uses a variety of sources and pricing methodologies, which are not transparent to the Company and may include significant unobservable inputs to value the securities held in distinct portfolios, therefore the valuation of these funds withheld assets are considered Level 3 in the fair value hierarchy.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value.

Federal Home Loan Bank Advances: FHLB advances are stated at the outstanding principal balances and the carrying value approximates fair value.

Policyholder deposits in deposit-type contracts: The fair value for policyholder deposits deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach. Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The estimated fair values of the ~~Company~~’sCompany’s financial assets and liabilities at December 31 are as follows:

The ~~Company~~company currently ~~reinsures~~reinsurers business in excess of its retention with General Re Life Corporation,, Reliance Standard Life Insurance Company, Unified Life Insurance Company, Hartford Life and Accident Company, and Optimum Re Insurance Company. The Company also currently assumes business under agreements with Unified Life Insurance Company and American Life and Security Corporation.

On ~~September 30, 2017,~~ ~~USALSC entered into a coinsurance agreement with American Life and Security Corporation (“ALSC”) to assume~~ ~~100%~~ ~~of a certain block of life insurance policies. The policies consist primarily of whole life policies with annuity riders. The transaction resulted in a~~ ~~one~~~~-time assumed premium of~~ ~~$3,854,902~~ ~~and an off-setting increase in policyholder reserves in the same amount on the effective date of the agreement. USALSC established a deferred cost of reinsurance in the amount of~~ ~~$2,861,450.~~ ~~USALSC is also the servicer of this block of policies. The agreement will remain in effect until all liabilities associated with this block of policies have been satisfied.~~

The payment of dividends to US Alliance Corporation by US Alliance Life and Security Company is subject to limitations imposed by applicable insurance laws. For example, “extraordinary” dividends may not be paid without permission of the Kansas Insurance Department. An “extraordinary” dividend is defined, in general, as any dividend or distribution of cash or other property whose fair market value, compared with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of (i) 10% of the policyholders’ surplus (total statutory capital stock and surplus) as of December 31 of the preceding year or (ii) the statutory net gain from operations excluding realized gains on investments) of the insurer for the 12 month period ending December 31 of the preceding year.

The payment of dividends to US Alliance Life and Security Company by Dakota Capital Life Insurance Company and US Alliance Life and Security Company – Montana is subject to similar limitations.

	Kansas		26-4824142
	State of Incorporation		IRS Employer Identification Number

	~~4123~~1303 SW ~~Gage Center Drive,~~First American Place, Suite ~~240~~200 Topeka, Kansas 66604		(785) 228-0200
	Address, including zip code, of principal executive offices		Registrant's telephone number, including area code

Large accelerated filer	☐	☐	Accelerated filer	☐	☐	Non-accelerated filer	☐	☐	Smaller reporting company		☑
									Emerging growth company		☑

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	67
Item 1B.	Unresolved Staff Comments	1011
Item 2.	Properties	1012
Item 3.	Legal Proceedings	1012
Item 4.	Mine Safety Disclosures	1012

PART II
Item 5.	Market for ~~Registrant~~’sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1112
Item 6.	Selected Financial Data	1113
Item 7.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations	1214
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	2127
Item 8.	Financial Statements and Supplementary Data	2127
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	2127
Item 9A.	Controls and Procedures	2127
Item 9B.	Other Information	2128

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	2128
Item 11.	Executive Compensation	2128
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	2228
Item 13.	Certain Relationships and Related Transactions and Director Independence	2228
Item 14.	Principal Accountant Fees and Services	2228

PART IV
Item 15.	Exhibits and Financial Statement Schedules	2329

	Exhibit Index	2329
	Signatures	32

	Years Ended December 31,						Years Ended December 31,
	2017			2016			2020			2019

Direct	$	3,167,654		$	2,592,243
Assumed		7,826,619			3,500,758
Ceded		(221,027	)		(144,023	)
Total	$	10,773,246		$	5,948,978
Direct							$	6,358,043		$	4,970,208
Assumed								4,682,634			4,906,522
Ceded								(923,567	)		(800,525	)
Total							$	10,117,110		$	9,076,205

	Years Ended December 31,						Years Ended December 31,
	2017			2016			2020			2019
Fixed maturities	$	497,866		$	304,213
Equity securities		373,141			189,274
Cash and short term investments		6,275			2,504
		877,282			495,991
Less investment expenses		(59,293	)		(46,040	)
Fixed maturities							$	1,178,055		$	1,164,520
Mortgages								129,621			-
Equity securities								669,147			636,668
Funds withheld								1,680,220			-
Cash and cash equivalents								12,501			36,359
	$	817,989		$	449,951			3,669,544			1,837,547
Less investment expenses								(117,283	)		(46,946	)
							$	3,552,261		$	1,790,601

	►	Group Products. This is a series of group non-medical insurance products developed for the small group marketplace. These products are sold to employers and provide benefits for their employees. Our group suite of products includes group term life insurance, group long term disability, and group short term disability.

	♦	Fixed Income Obligations — bonds or other evidence of indebtedness issued, assumed or guaranteed by a corporation.

% of Portfolio Cost Value	% of Portfolio Cost Value		% of Portfolio Cost Value

Asset Class	Minimum	Maximum		Minimum			Maximum
Cash/Short Term	0%	100%			0	%		100	%
Investment Grade Fixed Income	20%	100%			20	%		100	%
High Yield Fixed Income	0%	15%			0	%		15	%
Equity	0%	50%			0	%		50	%
Mortgage and Mortgage related	0%	50%			0	%		50	%
Real Estate (including REITs)	0%	20%			0	%		20	%

	Years Ended December 31,				Years Ended December 30,
	2017		2016		2020		2019
Income:
Premium income	$	10,773,246	$	5,948,978
Net investment income		817,989		449,951
Net realized gain (loss) on sale of securities		430,565		100,378
Other income		50,057		87,566
Total income	$	12,071,857	$	6,586,873
Income:
Premium income					$	10,117,110	$	9,076,205
Net investment income						3,552,261		1,790,601
Net investment gains						1,967,014		1,042,334
Other income						635,520		57,146
Total income						16,271,905		11,966,286

	Increase in		Other						% of Operating
	Policyholder		Policy-related		Operating		Total		Expense to
Year	Reserves		Expenses		Expenses		Expenses		Total Expense
2016		1,686,841		4,224,156		1,961,649		7,872,646		25	%
2017*		5,654,476		5,160,175		2,306,238		13,120,889		18	%
2018		2,766,169		6,028,730		3,120,524		11,915,423		26	%
2019		2,599,575		6,737,672		2,460,989		11,798,236		21	%
2020		3,359,609		8,964,121		3,649,000		15,972,730		23	%

	December 31, 2017					December 31, 2016					December 31, 2020					December 31, 2019
	Fair		Percent			Fair		Percent			Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total			Value		of Total			Value		of Total
Fixed maturities:
US Treasury securities	$	250,750		0.7	%	$	299,162		1.6	%
Corporate bonds		12,156,225		35.6	%		3,845,896		20.7	%
Municipal bonds		6,352,444		18.5	%		2,849,829		15.3	%
Redeemable preferred stocks		100,520		0.3	%		-		0.0	%
Mortgage backed and asset backed securities		4,085,761		11.9	%		3,325,187		17.9	%
Total fixed maturities		22,945,700		67.0	%		10,320,074		55.5	%
Equities:
Equities		10,663,515		31.1	%		4,942,248		26.5	%
Other equity investments		-		0.0	%		201,256		1.1	%
Total equities		10,663,515		31.1	%		5,143,504		27.6	%
Cash and cash equivalents		651,809		1.9	%		3,145,745		16.9	%
Total	$	34,261,024		100.0	%	$	18,609,323		100.0	%
Fixed maturities:
US Treasury securities											$	702,916		0.7	%	$	632,639		1.3	%
Corporate bonds												22,947,811		22.4	%		20,084,397		40.2	%
Municipal bonds												6,796,654		6.6	%		7,055,059		14.1	%
Redeemable preferred stocks												2,990,215		2.9	%		2,133,893		4.3	%
Mortgage backed and asset backed securities												4,239,982		4.1	%		3,246,904		6.5	%
Total fixed maturities												37,677,578		36.7	%		33,152,892		66.3	%
Mortgage loans												3,166,136		3.1	%		-		0.0	%
Equities:
Common stock												6,808,944		6.6	%		9,214,694		18.4	%
Preferred stock												2,412,630		2.4	%		926,809		1.9	%
Total equities												9,221,574		9.0	%		10,141,503		20.3	%
Funds withheld												46,830,076		45.6	%		-		0.0	%
Real estate, net of depreciation												1,415,743		1.4	%		-		0.0	%
Cash and cash equivalents												4,320,759		4.2	%		6,678,805		13.4	%
Total											$	102,631,866		100.0	%	$	49,973,200		100.0	%

	As of December 31, 2017				As of December 31, 2016				As of December 31, 2020				As of December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	-	$	-	$	49,915	$	49,931
After one year through five years		612,088		617,562		1,819,437		1,809,470
After five years through ten years		1,910,307		1,945,454		1,646,576		1,643,823
More than 10 years		15,740,739		16,196,403		3,468,619		3,491,663
Redeemable preferred stocks		99,560		100,520		-		-
Mortgage backed and asset backed securities		4,077,011		4,085,761		3,333,617		3,325,187
	$	22,439,705	$	22,945,700	$	10,318,164	$	10,320,074
Amounts maturing in:
One year or less									$	373,590	$	379,823	$	99,987	$	100,239
After one year through five years										1,540,931		1,641,749		1,424,337		1,471,552
After five years through ten years										2,887,066		3,379,930		3,286,937		3,574,191
More than 10 years										21,892,891		25,045,879		20,743,310		22,626,113
Redeemable preferred stocks										2,900,330		2,990,215		2,097,206		2,133,893
Mortgage backed and asset backed securities										4,189,710		4,239,982		3,171,620		3,246,904
Total amortized cost and fair value									$	33,784,518	$	37,677,578	$	30,823,397	$	33,152,892

	Cash Flow		Net Cash Flow		Cash Flow
	From		From Deposit		from Insurance
Year	Operations		Type Contracts		Activities
2016		409,353		1,743,730	$	2,153,083
2017		593,123		1,580,305	$	2,173,428
2018		2,249,068		2,598,564	$	4,847,632
2019		2,270,041		2,176,602	$	4,446,643
2020		2,099,401		4,592,576	$	6,691,977

	2.1	Plan and Agreement of Merger amount Northern Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.1 to the Company's Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.1.

	2.2	Amendment dated May 21, 2017 to Plan and Agreement of Merger among Northern Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.2 to the Company's Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is ~~incoporated~~incorporated herein by reference as Exhibit 2.2.

~~3.1~~	2.3	Stock Purchase Agreement dated October 11, 2018 between Great Western Insurance Company and US Alliance Life and Security Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2018 (File No. 000-55627), is incorporated herein by reference as Exhibit 2.3.

	3.1	Articles of Incorporation of US Alliance Corporation (~~filed~~(filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.

~~3.2~~	3.1.1	First Amendment to the Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.1 to the Company’s Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.1.

	3.1.2	Second Amendment to the Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.2 to the Company’s Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.2.

	3.2	Bylaws of US Alliance Corporation (~~filed~~(filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2.

~~4.1~~	3.2.1	Amendment No. 1 to the Bylaws of US Alliance Corporation, filed as Exhibit 3.2.1 to the Company’s Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.1.

	4.1	Form of Warrant to Purchase Common Shares of US Alliance Corporation, (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 4.1.


~~10.1~~4.2	~~Commercial Lease Agreement dated October 11, 2011 between~~Description of US Alliance ~~Corporatoin and Lindemuth, Inc., DBA Gage Center,~~Corporation’s Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, filed as Exhibit ~~10.1~~4.2 to the ~~Company's amended Registration Statement~~Company’s Annual Report on Form 1010-K filed ~~June 29, 2016~~on February 2, 2020, (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.1.~~4.2.

~~10.2~~	10.1	Automatic Yearly Term Reinsurance Agreement between US Alliance Life and Security Company and General Re Life Insurance Corporation, filed as Exhibit 10.2 to the amended Company's Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.2.~~10.1.

~~10.3~~	10.2	Group Long Term and Short Term Disability Reinsurance Agreement between US Alliance Life and Security Company and Reliance Standard Life Insurance Company, DBA Custom Disability Solutions, filed as Exhibit 10.3 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.3.~~10.2.

~~10.4~~	10.3	Automatic Reinsurance Agreement between US Alliance Life and Security Company and Optimum Re Insurance Company (schedules omitted), filed as Exhibit 10.4 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.4.~~10.3.

~~10.5~~	10.4	Bulk ~~Reinurance~~Reinsurance Agreement between US Alliance Life and Security Company and Optimum Re Insurance Company, filed as Exhibit 10.5 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 10.5.

~~10.6~~	10.5	Group Medical Reinsurance Agreement between US Alliance Life and Security Company and Unified Life Insurance Company, filed as Exhibit 10.6 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.6.~~10.5.

~~10.7.1~~	10.6.1	Investment Management Agreement between US Alliance Investment Corporation and General Re - New England Asset Management, Inc., filed as Exhibit 10.7.1 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.7.1.~~10.6.1.

~~10.7.2~~	10.6.2	Subadvisory Investment Management Agreement between US Alliance Investment Corporation and General Re - New England Asset Management, Inc., filed as Exhibit 10.17.2 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.7.2.~~10.6.2.

~~10.8~~	10.7	Third Party Insurance Services Agreement between US Alliance Life and Security Company and Dakota Capital Life Insurance Company, as amended, filed as Exhibit 10.8 to the Company's amended Registration Statement on Form 10 filed June 29, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.8.~~10.7.

~~10.9~~	10.8	Critical Illness Reinsurance Treaty, Effective 9/1/16 between US Alliance Life and Security Company and General Re Life Corporation, filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K filed February 17, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.9.~~10.8.

~~10.10~~	10.9	Critical Illness Reinsurance Treaty, Effective 9/1/16 between US Alliance Life and Security Company and Unified Life Insurance Company, filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K filed February 17, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~10.10.~~10.9.

10.11*	10.10	Coinsurance Agreement between US Alliance Life and Security Company and American Life & Security Company of Nebraska effective as of September 30, 2017, filed as Exhibit 10.11 to the Company Annual Report filed on February 21, 2018 (File No. 000-55627) is incorporated herein by reference as Exhibit 10.10

21.1*		~~List of Subsidiaries~~

~~24.1~~	10.10.1*	Amendment No. 1 to ALSC 2017 Coinsurance Agreement effective as of June 1, 2020.

	10.10.2*	Second Amendment to ALSC 2017 Coinsurance Agreement effective as of December 31, 2020.

	10.11	Employment Agreement dated June 4, 2018 between US Alliance Corporation and Jeffrey Brown, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2018 (File No. 000-55627), is incorporated herein by reference as Exhibit 10.11.

	10.12	Coinsurance Agreement effective January 1, 2020 between US Alliance Life and Security Company and American Life & Security Corporation, filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed on May 12, 2020, (File No. 000-55627), is incorporated herein by reference as Exhibit 10.12.

	10.13	Commercial Real Estate Contract dated November 16, 2020 between Dakota Life Insurance Company and Trinity Life Insurance Company, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 20, 2020, (File No. 000-55627), is incorporated herein by reference as Exhibit 10.13.

	10.14*	Assumption Reinsurance Agreement effective December 31, 2020 between Dakota Life Insurance Company and American Life & Security Corporation.

	21.1*	List of Subsidiaries

	24.1	Power of Attorney (contained in the signature page herein)

31.1*	31.1*	Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	31.2*	Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*	32.1*	Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		32.2*	Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	101.INS*†	XBRL Instance	~~XLRB Instance~~

	101.SCH*†		~~XLRB~~XBRL Taxonomy Extension Schema

	101.CAL*†		~~XLRB~~XBRL Taxonomy Extension Calculation

	101.DEF*†		~~XLRB~~XBRL Taxonomy Extension Definition

	101.LAB*†		~~XLRB~~XBRL Taxonomy Extension Labels

	101.PRE*†	XBRL Taxonomy Extention Presentation	~~XLRB Taxonomy Extension Presentation~~

			US ALLIANCE CORPORATION
			(Registrant)

Date:	02/22/2021	By:	/s/ Jack H. Brier
			Jack H. Brier
			President and Chairman
			(principal executive officer)



Signature		Title

/S/ Jack H. Brier		President and Chairman
Jack H. Brier

/S/ Jeff Brown		~~Chief Operating~~Vice-President and Principal Financial Officer ~~and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation~~
Jeff Brown

/S/ Rochelle Chronister		Director
Rochelle Chronister

/S/ Kurt Scott		Treasurer and Director
Kurt Scott

/S/ James Concannon		Director.
James Concannon

/S/ William Graves		Director.
William Graves

Report of Independent Registered Public Accounting Firm	F1F-1

Consolidated Financial Statements

Consolidated Balance Sheets	F2
~~Consolidated~~ ~~Statements of Comprehensive Loss~~	F3F-2
Consolidated Statements of ~~Changes in Shareholders’ Equity~~Comprehensive Income	F4F-3
Consolidated Statements of Changes in Shareholders’ Equity	F-4
Consolidated Statements of Cash Flows	F5F-5
Supplemental Cash Flow Information	F-6

Notes to Consolidated Financial Statements	F7F-7 – ~~F24~~F-31

	December 31, 2017			December 31, 2016			December 31, 2020			December 31, 2019
Assets
Investments:
Available for sale fixed maturity securities (amortized cost: $33,784,518 and $30,823,397 as of December 31, 2020 and December 31, 2019, respectively)							$	37,677,578		$	33,152,892
Equity securities, at fair value								9,221,574			10,141,503
Mortgage loans on real estate								3,166,136			-
Funds withheld under coinsurance agreement, at fair value								46,830,076			-
Policy loans								163,725			118,930
Real estate, net of depreciation								1,415,743			-
Total investments								98,474,832			43,413,325

Assets
Investments:
Available for sale fixed maturity securities (amortized cost: $22,439,705 and $10,318,164 as of December 31, 2017 and December 31, 2016, respectively)	$	22,945,700		$	10,320,074
Available for sale equity securities (cost: $10,764,072 and $4,905,953 as of December 31, 2017 and December 31, 2016, respectively)		10,663,515			5,143,504
Total investments		33,609,215			15,463,578
Cash and cash equivalents								4,320,759			6,678,805
Investment income due and accrued								423,036			321,362
Reinsurance related assets								165,082			188,382
Deferred acquisition costs, net								7,105,890			2,652,674
Value of business acquired, net								2,703,233			559,994
Property, equipment and software, net								37,818			43,841
Goodwill								277,542			277,542
Deferred tax asset, net of valuation allowance								243,257			431,158
Other assets								1,635,647			372,166
Total assets							$	115,387,096		$	54,939,249

Cash and cash equivalents		651,809			3,145,745
Investment income due and accrued		214,998			100,713
Policy loans		33,975			-
Reinsurance related assets		249,879			31,390
Deferred acquisition costs, net		2,963,057			153,792
Value of business acquired, net		600,601			-
Property, equipment and software, net		221,077			244,849
Goodwill		277,542			-
Other assets		166,184			51,922
Total assets	$	38,988,337		$	19,191,989


Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts	$	13,448,891		$	3,398,170
Policyholder benefit reserves		10,632,009			4,220,215
Advance premiums		864,477			121,944
Total policy liabilities		24,945,377			7,740,329
Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts							$	72,082,207		$	19,396,614
Policyholder benefit reserves								21,158,568			17,326,524
Dividend accumulation								116,127			123,038
Advance premiums								102,178			78,709
Total policy liabilities								93,459,080			36,924,885

Accounts payable and accrued expenses		98,382			66,472			1,507,756			122,981
Other liabilities		8,876			4,205
Total liabilities		25,052,635			7,811,006
Federal Home Loan Bank advance								2,000,000			1,000,000
Other liabilities								15,469			15,186
Total liabilities								96,982,305			38,063,052

Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,310,939 and 5,565,943 shares as of December 31, 2017 and December 31, 2016, respectively		731,095			556,595
Additional paid-in capital		21,280,437			18,017,163
Accumulated deficit		(8,481,268	)		(7,432,236	)
Accumulated other comprehensive income		405,438			239,461
Total shareholders' equity		13,935,702			11,380,983
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,741,487 and 7,734,004 shares as of December 30, 2020 and December 31, 2019, respectively								774,150			773,401
Additional paid-in capital								23,063,273			23,210,257
Accumulated deficit								(8,997,507	)		(9,436,956	)
Accumulated other comprehensive income								3,564,875			2,329,495
Total shareholders' equity								18,404,791			16,876,197

Total liabilities and shareholders' equity	$	38,988,337		$	19,191,989
Total liabilities and shareholders' equity							$	115,387,096		$	54,939,249

								Accumulated
	Number of							Other
	Shares of		Common		Additional			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Income / (Loss)			Deficit			Total
Balance, December 31, 2018		7,650,551	$	765,056	$	22,989,443		$	(2,184,429	)	$	(8,937,404	)	$	12,632,666
Common stock issued, $7 per share		83,453		8,345		575,826			-			-			584,171
Costs associated with common stock issued		-		-		(355,012	)		-			-			(355,012	)
Cumulative effect, adoption of accounting guidance for equity sercurities		-		-		-			1,098,760			(1,098,760	)		-
Other comprehensive income		-		-		-			3,415,164			-			3,415,164
Net income		-		-		-			-			599,208			599,208
Balance, December 31, 2019		7,734,004	$	773,401	$	23,210,257		$	2,329,495		$	(9,436,956	)	$	16,876,197
Common stock issued, $7 per share		7,483		749		51,632			-			-			52,381
Costs associated with common stock issued		-		-		(198,616	)		-			-			(198,616	)
Other comprehensive income		-		-		-			1,235,380			-			1,235,380
Net income		-		-		-			-			439,449			439,449
Balance, December 31, 2020		7,741,487	$	774,150	$	23,063,273		$	3,564,875		$	(8,997,507	)	$	18,404,791

	December 31,			December 31,
	2017			2016
Computer	$	20,755		$	20,755
Furniture and equipment		92,077			80,956
Software		257,500			257,500
Accumulated depreciation		(149,255	)		(114,362	)
Balance at end of period	$	221,077		$	244,849

	Year ended			Year ended
	December 31,			December 31,
	2017			2016

Balance at beginning of year	$	3,398,170		$	1,573,988
Acquisition of Dakota Capital Life		1,853,728			-
Assumed from American Life & Security Corp		5,841,703			-
Deposits received		2,187,387			1,989,833
Interest credited		243,310			80,452
Withdrawals		(592,398	)		(246,103	)
Balance at end of year	$	12,931,900		$	3,398,170

Fair value of US Alliance Corporation common stock issued as consideration	$	3,099,165

Amounts of indentifiable assets acquired and liablities assumed
Investment securities	$	4,623,449
Cash		1,079,627
Value of business acquired		609,061
Other assets		60,080
Policyholder reserves		(1,277,411	)
Deposit type contracts		(2,029,138	)
Other liabilities		(243,608	)
Total indentifiable net assets	$	2,822,060
Goodwill		277,105
Total amounts of indentifiable assets acquired and liabilties assumed	$	3,099,165

	Years Ended December 31,
	2017			2016
	(unaudited)
Income:
Premium income	$	11,193,686		$	6,533,765
Net investment income		877,319			539,801
Net realized gain (loss) on sale of securities		478,303			44,282
Other income		20,995			14,391
Total income		12,570,303			7,132,239

Net Loss	$	(1,201,899	)	$	(1,887,423	)

Net Loss per share	$	(0.33	)	$	(0.52	)

Net consideration to ALSC	$	927,000

Preliminary amounts of identifiable assets acquired and liabilities assumed
Investment securities	$	7,990,509
Cash receivable		2,117,591
Policy loan assets		101,736
Value of business acquired		2,163,541
Policyholder reserves		(4,552,816	)
Deposit type contracts		(6,893,561	)
Total identifiable net assets	$	927,000

	December 31, 2017									December 31, 2020
	Cost or		Gross		Gross					Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	271,620	$	-	$	(20,870	)	$	250,750	$	574,935	$	127,981	$	-		$	702,916
Corporate bonds		11,857,191		309,754		(10,720	)		12,156,225		20,126,836		2,821,508		(533	)		22,947,811
Municipal bonds		6,134,323		230,842		(12,721	)		6,352,444		5,992,707		804,443		(496	)		6,796,654
Redeemable preferred stock		99,560		960		-			100,520		2,900,330		90,085		(200	)		2,990,215
Mortgage backed and asset backed securities		4,077,011		32,726		(23,976	)		4,085,761		4,189,710		50,274		(2	)		4,239,982
Total fixed maturities		22,439,705		574,282		(68,287	)		22,945,700
Equities:
Equities		10,764,072		83,346		(183,903	)		10,663,515
Total available for sale	$	33,203,777	$	657,628	$	(252,190	)	$	33,609,215	$	33,784,518	$	3,894,291	$	(1,231	)	$	37,677,578

	December 31, 2016									December 31, 2019
	Cost or		Gross		Gross					Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	314,992	$	-	$	(15,830	)	$	299,162	$	608,477	$	24,162	$	-		$	632,639
Corporate bonds		3,828,418		62,712		(45,234	)		3,845,896		18,407,211		1,697,265		(20,079	)		20,084,397
Municipal bonds		2,841,137		46,883		(38,191	)		2,849,829		6,538,883		518,059		(1,883	)		7,055,059
Redeemable preferred stock											2,097,206		36,687		-			2,133,893
Mortgage backed and asset backed securities		3,333,617		36,870		(45,300	)		3,325,187		3,171,620		77,593		(2,309	)		3,246,904
Total fixed maturities		10,318,164		146,465		(144,555	)		10,320,074
Equities:
Equities		4,723,024		350,981		(131,757	)		4,942,248
Other equity investments		182,929		23,046		(4,719	)		201,256
Total equities		4,905,953		374,027		(136,476	)		5,143,504
Total available for sale	$	15,224,117	$	520,492	$	(281,031	)	$	15,463,578	$	30,823,397	$	2,353,766	$	(24,271	)	$	33,152,892

	As of December 31, 2017				As of December 31, 2016				As of December 31, 2020				As of December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	-	$	-	$	49,915	$	49,931	$	373,590	$	379,823	$	99,987	$	100,239
After one year through five years		612,088		617,562		1,819,437		1,809,470		1,540,931		1,641,749		1,424,337		1,471,552
After five years through ten years		1,910,307		1,945,454		1,646,576		1,643,823		2,887,066		3,379,930		3,286,937		3,574,191
More than 10 years		15,740,739		16,196,403		3,468,619		3,491,663		21,892,891		25,045,879		20,743,310		22,626,113
Redeemable preferred stocks		99,560		100,520		-		-		2,900,330		2,990,215		2,097,206		2,133,893
Mortgage backed and asset backed securities		4,077,011		4,085,761		3,333,617		3,325,187		4,189,710		4,239,982		3,171,620		3,246,904
Total amortized cost and fair value	$	22,439,705	$	22,945,700	$	10,318,164	$	10,320,074	$	33,784,518	$	37,677,578	$	30,823,397	$	33,152,892

	Less than 12 months					Greater than 12 months					Total						Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized				Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss				Value		Loss			Value		Loss			Value		Loss
December 31, 2017
December 31, 2020																December 31, 2020
Available for sale:																	(unaudited)
Fixed maturities:
US Treasury securities	$	250,750	$	(20,870	)	$	-	$	-		$	250,750	$	(20,870	)
Corporate bonds		848,853		(5,733	)		121,718		(4,987	)		970,571		(10,720	)		$	210,625	$	(2	)	$	49,438	$	(531	)	$	260,063	$	(533	)
Municipal bonds		735,257		(5,683	)		192,962		(7,038	)		928,219		(12,721	)			47,249		(496	)		-		-			47,249		(496	)
Redeemable preferred stock																		77,918		(200	)		-		-			77,918		(200	)
Mortgage backed and asset backed securities		2,056,887		(6,970	)		654,936		(17,006	)		2,711,823		(23,976	)			309,144		(2	)		-		-			309,144		(2	)
Total fixed maturities		3,891,747		(39,256	)		969,616		(29,031	)		4,861,363		(68,287	)		$	644,936	$	(700	)	$	49,438	$	(531	)	$	694,374	$	(1,231	)
Equities:
Equities		7,971,440		(105,946	)		1,161,121		(77,957	)		9,132,561		(183,903	)
Total available for sale	$	11,863,187	$	(145,202	)	$	2,130,737	$	(106,988	)	$	13,993,924	$	(252,190	)

	December 31, 2020		December 31, 2019
Commercial mortgage loans by property type
Student housing	$	781,512	$	-
Condominium		1,874,445		-
Multi-property		332,195		-
Multi-family		177,984		-
Total commercial mortgages	$	3,166,136	$	-

	December 31, 2020		December 31, 2019
Loan to value ratio
Over 60 to 70%	$	1,874,445	$	-
Over 30 to 40%		177,984
Over 10 to 20%		1,113,707		-
Total	$	3,166,136	$	-

	December 31, 2020		December 31, 2019
Maturity Date
One year or less	$	2,393,900	$	-
After one year through five years		772,236		-
Total	$	3,166,136	$	-

	Period Ending		Period Ending		Balance
	December 31, 2020		December 31, 2019		Reported In
Derivatives:
Embedded derivatives:
Change in funds withheld embedded derivative	$	653,294	$	-	Net investment gains (losses)

	December 31, 2017								December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	250,750	$	250,750	$	-	$	-	$	702,916	$	702,916	$	-	$	-
Corporate bonds		12,156,225		-		11,956,225		200,000		22,947,811		-		22,761,011		186,800
Municipal bonds		6,352,444		-		6,352,444		-		6,796,654		-		6,796,654		-
Redeemable preferred stock		100,520		-		100,520		-		2,990,215		-		2,990,215		-
Mortgage backed and asset backed securities		4,085,761		-		4,085,761		-		4,239,982		-		4,239,982		-
Total fixed maturities		22,945,700		250,750		22,494,950		200,000		37,677,578		702,916		36,787,862		186,800
Equities:
Equities		10,663,515		10,663,515		-		-
Common stock										6,808,944		6,717,144		91,800		-
Preferred stock										2,412,630		-		2,412,630		-
Total equities										9,221,574		6,717,144		2,504,430		-
Funds withheld embedded derivative										653,294		-		-		653,294
Total	$	33,609,215	$	10,914,265	$	22,494,950	$	200,000	$	47,552,446	$	7,420,060	$	39,292,292	$	840,094