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 and regulatory, and 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") 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 1303 SW First American Place, Suite 200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com.

USAC has five wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was incorporated June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was incorporated April 23, 2012, to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was incorporated April 23, 2012 to serve as investment manager for USAC and its subsidiaries. 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. 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 Juvenile and Pre-Need products) accounted for 62% of ~~2021~~2022 direct premium revenue. Our individual life and Critical Illness products (which include Term Life and Whole Life products) accounted for ~~23%~~21% of ~~2021~~2022 direct premium revenue. Our group products accounted for ~~15%~~17% of ~~2021~~2022 direct written premiums.

Our business model also seeks the acquisition by USAC and/or its subsidiaries of other insurance and insurance related companies, including third-party administrators, marketing organizations, and rights to blocks of insurance business through reinsurance 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, ~~2021,~~2022, USALSC assumed premiums of ~~$4,103,194.~~$4,216,484.

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 DCLIC. This agreement had an initial term of 60 months (beginning on September 1, 2015), continues month to month after the initial 60 month period, 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, under which Alliance Merger Sub, Inc. (“Acquisition”), a wholly owned subsidiary of the Company, merged with and into Northern Plains (“Merger”) with Acquisition being the surviving company. Pursuant to the agreement, the Company exchanged .5841 shares of the Company’s common stock for each share of Northern Plains common stock, or 1,644,458 shares. Subsequent to the 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 (the ”2017 ALSC Agreement”). USALSC is also the servicer of this block of policies. USALSC paid a ceding commission of $1,850,000 and received $7,153,663 from ALSC. The 2017 ALSC Agreement will remain in effect until all liabilities associated with this block of policies have been satisfied.

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 14, 2018, USALSC acquired Great Western Life Insurance Company ("GWLIC") pursuant to a 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, ~~2021,~~2022, the Company had assumed ~~$51.5~~$52.3 million in annuity deposits under the 2020 ALSC Agreement.

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 and paid a ceding commission of $927,000 to ALSC.

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

Investments – USAC and USAIC contracted in 2013 with New England Asset Management, Inc. (“NEAM”), a Berkshire Hathaway subsidiary, to manage the investments of USALSC and a portion of the investments of USAC. USALSC, DCLIC and USALSC-Montana have investment management agreements with USAIC, who has a sub-advisory agreement with NEAM. DCLIC was added to this 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, the ~~North Dakota Insurance Department,~~NDID, 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 LLC (“1505 Capital”) to provide investment services on the assets, including mortgage loan participations, 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 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" or "Board of Directors") in compliance with applicable law.

The following summarizes USAC’s Investment Policy, effective 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 and DCLIC use independent consultants and referrals to market their products and build distribution channels among funeral homes, banks, accountants, independent insurance agencies, agents, insurance brokerage firms, 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.

Employees - As of December 31, ~~2021,~~2022, USAC and its subsidiaries have ~~twelve~~eleven full-time employees and ~~one~~three part-time ~~employee.~~employees.

Reports to Security Holders - We provide 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 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 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 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 billion;

• The last day of the fiscal year following the fifth anniversary of our first sale of 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.

Our emerging growth company status ~~will end at~~ended as of the ~~end of~~last day our fiscal year 2022.

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 our common stock held by non-affiliates, or public float, is below $250 million, we are also a “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 is speculative. Shares of our voting common stock constitute a high-risk investment in a developing business that has accumulated losses to 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 our voting Common Stock. The entire value of the shares of USAC Common Stock may be lost.

OPERATING RISK - We ~~face~~faced the risks inherent in ~~establishing~~our a business, including limited capital, 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, costs of marketing or advertising and hacking of our administrative systems. ~~There~~While we have been profitable 3 of the last 4 years, there can be no assurance that our ~~life~~ insurance operations will be successful. The likelihood of any success must be considered in light of our history of operations with the accumulated operating losses to date. These risks make it difficult to accurately predict our future revenues or results of operations. Recent changes to accounting guidance have increased the volatility of our operating results. As a result, our financial results 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.

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 strain and limit financial resources needed for company to grow.

CYBER ATTACK – A variety 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 – While USAC is considered a public company by the SEC, there is no public market for USAC Common Stock, and there is no assurance that one will develop or be sustained, or that USAC Common Stock will become publicly traded. As 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 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 small life insurance companies, we have historically incurred significant losses. As of December 31, ~~2021~~2022 we had a consolidated accumulated deficit of ~~$8.6~~$11.8 million. These losses were attributable primarily to costs of administration, volatility in net investment gains and losses, 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 as well as other expenses incidental to the issuance of new policies as well as with the reserves required to be established for each policy. However, the Company ~~has been~~was profitable in 2019, 2020 and 2021.

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. The success of any investment in USAC Common Stock will depend upon any future appreciation in its value which depends upon the success of our life insurance subsidiaries. We cannot guarantee that 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 - The law requires adequate capital and surplus calculated in accordance with statutory accounting principles prescribed by state insurance regulatory authorities to meet regulatory requirements. The amount of capital and surplus required is based on certain “risk-based capital” standards established by statute and regulation and administered by 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.

DILUTION RISK - We continue to ~~conduct~~have additional offerings of our securities to raise additional capital to fund our growth. In February, 2010, we filed a 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 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 placement of USAC Common Stock in North Dakota in 2017. Any additional offerings of USAC securities that we may conduct in the future will reduce the ownership percentage of existing shareholders and be accretive to existing stockholder book value.

KEY EXECUTIVE RISK - The loss of services from a key executive could have a material adverse effect on our ability to execute our business plan. This could hamper profitability, response time, productivity, image, reputation and confidence. USAC has entered into employment agreements with its principal executive officer and principal officer, but such agreements cannot guarantee that such officers may not separate from the Company during the terms of their respective employment agreements or thereafter. The death or disability of either of our executive officers would also have an adverse effect on the Company.

SEC REGISTRATION - USAC is a public company as defined by the Securities and Exchange Commission. As 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 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” until the end of fiscal year 2022. 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 because of the potential differences in accounting standards used.

POTENTIAL ACQUISITION RISK - In addition to our organic growth, we 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 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 - Premium written 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~~capabilities which makes it difficult to build ~~a small~~our company.

Independent agents are not required to sell the Company’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.

THE COMPANY’S INVESTMENTS ARE SUBJECT TO MARKET AND CREDIT RISKS - Our invested assets, 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~~seeking products from a rated company, as well as a negative impact on ability to compete with rated companies.

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 USALSC-Montana will be rated by a rating agency or that any rating, if and when received, will be favorable.

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 matters, the regulations require prior approval of acquisitions of insurance companies, 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.

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, may 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 in which 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”) reshaped financial regulations in the United States by creating new regulators, regulating new markets and firms, and providing 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. The ultimate outcome of the regulatory rulemaking proceedings cannot be predicted. The regulations promulgated could have a material impact on consolidated financial results or financial condition.

COMPETITION RISK - 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. These larger companies also generally have large distribution opportunities which makes product distribution difficult ~~to build~~in building a small company.

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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. 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 revenues.

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LIABILITY RISK - Underestimating future policy benefits results in 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. Spread is a key component of net income.

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 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 negatively affect profitability in periods of increasing interest rates. The ability to replace invested assets with higher yielding assets needed to fund 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 considers legislation that could adversely affect the sale of life insurance products compared with other financial 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, reinsurers accept a portion of the risk of other insurance companies. However, the direct insurer remains liable with respect to ceded insurance should any reinsurer fail to meet the obligations assumed by the reinsurer.

COVID-19 RISK - The outbreak and world-wide spread of the COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in financial market, and the prolonged impact of COVID-19 could affect various aspects of our business. Following the initial outbreak of the virus, virtually all of USAC's operations were ~~for~~ performed by employees working remotely. We have returned to in-office work, other than occasional temporary office closures due to exposures, and ~~two~~four employees who work remotely due to their geographic locations. While we have not experienced significant disruptions to our business, we have experienced higher claims on our ~~life~~ insurance products in ~~2021,~~2022, which may be due in part to the COVID-19 pandemic. In addition, our investment portfolio may be adversely affected as a result of uncertaintly surrounding the pandemic and its outcome. While we have taken precautionary measures we deem appropriate in response to the COVID-19 pandemic, the prolonged impact of COVID-19 could negatively affect our business.

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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 First American Place, USAC and its subsidiaries rented space at 4123 SW Gage Center Dr, Suite 240, Topeka, KS 66604. No rent was paid for the year ended December 31, 2021 and $37,824 was paid for the year ended December 31, 2020.

DCLIC’s lease expired on September 30, 2021 on its office at 107 W. Main Avenue, Suite 325, Bismarck, North Dakota, 58501, and was not renewed as employees in that office were converted to remote work. The lease rate for this location was $939 per month for the lease year beginning October 1, 2020. The Company paid ~~$7,546~~$0 and ~~$10,322~~$7,546 in rent for this location in ~~2021~~2022 and ~~2020,~~2021, respectively.

Neither the Company nor any of its principals are presently engaged in any material pending litigation which might have an adverse impact on its net assets.

There is no established trading market for 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, ~~2021,~~2022, we had issued and outstanding ~~7,745,404~~7,746,922 shares of our voting common stock. No other equity securities of the Company have been issued.

As of February 1, ~~2022~~2023 there are approximately ~~3,487~~3,500 holders of record of our voting common stock.

We have not paid dividends on 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.

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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, ~~2021,~~2022, the Company ~~issued 86~~did not issue any shares ~~of common stock, for aggregate consideration of $602,~~ pursuant to an offering to residents of the state of Kansas that was registered with the Kansas Securities Commissioner (the “Kansas Offering”).

The Kansas Offering was self-underwritten and sold through agents of the Company licensed to sell securities in Kansas. Proceeds from the sale of common stock were used to finance the growth of the Company’s life insurance subsidiary and to provide working capital for the Company. The 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 common stock were sold only to bona fide residents of the state of Kansas.

During the year ended December 31, ~~2021,~~2022, the Company issued ~~3,831~~1,518 shares of common stock, for aggregate consideration of ~~$26,817,~~$10,626, 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 Offering 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.

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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 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 Authority 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 Northern Plains Capital Corporation with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired 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, ~~2021,~~2022, the Company had assumed ~~$51.5~~$52.3 million in annuity deposits under the 2020 ALSC Agreement. Effective December 31, 2020 USALSC entered into an agreement with ALSC, which provided for ALSC 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 for the year ended December 31, 2020.

Our 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.

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

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 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 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”) represents the estimated value assigned to purchased companies or insurance 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.

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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.

In the 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 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 assets 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. 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.

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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~~The Company has two different embedded derivatives, the first of which ~~are~~existed prior to the transfer of the funds withheld account, which is 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 (loss) in net investment gains (losses). The second embedded derivative recognized after the funds withheld transfer is reported within reinsurance related assets on the balance sheet and within net investment gains (losses) on the statement of comprehensive income (loss).

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 comprehensive income (loss). Funds withheld under coinsurance agreement are presented net of the embedded derivative, discussed above. Under the terms of the 2020 ALSC 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~~amended) and we have attained this designation in the ~~second~~fourth quarter of 2022. The Company ~~will record~~recorded the funds withheld assets at fair value on the date of transfer, which ~~will eliminate~~eliminated the embedded derivative component associated with the ~~2020~~unrealized gains and losses within the funds withheld account.

Additionally, after the transfer of the funds withheld assets, ALSC ~~Agreement.~~continued to manage currency risk within the coinsured liability portfolio using derivative instruments. In accordance with the coinsurance agreement, ALSC allocates a proportion of the derivative activity it manages to the Company, which is settled quarterly as part of the reinsurance settlement. As the derivative allocation is not clearly and closely related to the host contract, the Company recognizes an embedded derivative equal to the fair value of the derivative allocation.

Mortgage loans on real estate, including mortgage loan participations, 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 (loss).

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 comprehensive income (loss).

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.

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Other invested assets include collateral loans and private credit investments. The collateral loans and private credit investments are carried at fair value. The inputs used to measure these assets are classified as Level 3 within the fair value hierarchy.

On May 23, 2017 the Company entered into a definitive merger agreement with Northern Plains Capital Corporation. The merger transaction closed ~~onAugust~~on August 1, 2017. NPCC shareholders received .5841 shares of US Alliance Corporation stock for each share of NPCC stock owned. USAC issued 1,644,458 shares of 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, 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, assumed liabilities of $10,972,785 and recorded VOBA of $2,163,541.

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.

Total Income. Insurance revenues are primarily generated from premium revenues and investment income. ~~Insurance revenues~~Total income for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 are summarized in the table below.

Our 2022 total income decreased to $16,005,853, a decrease of $1,583,392 or 9% from the 2021 total income ~~increased~~of $17,589,245. The decrease is driven by net investment losses and a reduction in funds withheld income due to ~~$17,589,245, an increase of $1,317,340 or 8% from the 2020 total income of $16,271,905. The increase is driven~~market volatility offset by increases in our premium ~~income and net investment~~ income. The Company was required to implement a new accounting standard in 2019 which results in unrealized gains and losses on equity securities being included in total income. This standard continues to result in increased volatility in total income and is the driver of reduced total income.

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The following graph summarizes our ~~four-year~~five-year trend of total income:

Premium income: Premium income for ~~2021~~2022 was ~~$11,792,063~~$12,815,238 compared to ~~$10,117,110~~$11,792,063 in ~~2020,~~2021, an increase of ~~$1,674,953~~$1,023,175 or ~~17%~~9%. The increase was driven by an increase in direct single and recurring premiums. Even though it is a reduction in revenue, ceded premium increases reflect the growth of our group policy premiums as we focused on small companies to assist them with their employee benefits.

Direct, assumed and ceded premiums for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 are summarized in the following table.

The Company continuously searches for new product and distribution opportunities to continue to increase premium production on both a direct and assumed basis.

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Investment income, net of expenses: The components of net investment income for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

Net investment income for ~~2021~~2022 was ~~$5,336,048,~~$4,798,199, compared to ~~$3,552,261~~$5,336,048 in ~~2020, an increase~~2021, a decrease of ~~$1,783,787~~$537,849 or ~~50%~~10%. This ~~increase~~decrease in investment income is ~~primarily~~ a result of ~~increased invested~~decreased funds withheld income. We converted our funds withheld asset to funds paid in the fourth quarter of 2022 and those assets transferred at fair value. Due to the increase in interest rates, this resulted in a temporary loss being reflected in our funds withheld income. While these assets are classified as available for sale, we anticipate holding them to maturity. This will result in the recognition of income over the life of those assets as ~~a result of our premium income, annuity deposits, and the 2020 ALSC Agreement.~~they amortize to par value.

Net investment gains (losses): Net investment ~~gains~~losses for ~~2021~~2022 were ~~$142,280,~~$1,925,086, compared to gains of ~~$1,967,014~~$142,280 for ~~2020,~~2021, a decrease of ~~$1,824,734.~~$2,067,366. The ~~decrease in~~ net investment ~~gains is~~losses are attributable to ~~strong 2020~~decreases in the value of our equity securities and derivatives driven by market volatility and required by accounting standards to be included in our calculation of net income. Net investment ~~gains.~~losses for 2022 were comprised of $1,816,443 of unrealized losses in our equity portfolio and derivative assets and realized losses of $108,643. Net investment gains for 2021 were comprised of $87,712 of unrealized losses in our equity portfolio and funds withheld asset and realized gains of $229,992. ~~Net investment gains for 2020 were comprised of $952,667 of unrealized gains in our equity portfolio and funds withheld asset and realized gains of $1,014,347.~~ Realized gains and losses related to the sale of securities for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 are summarized as follows:

Other income: Other income for the year ended December 31, ~~2021~~2022 was ~~$318,854~~$317,502 compared to ~~$635,520~~$318,854 in ~~2020,~~2021, a decrease of $316,666. The decrease in other income is the result of a gain in 2020 related to the partial recapture of our 2017 ALSC Agreement partially offset by rent collected from a building acquired in late 2020.$1,352.

Expenses. Expenses for the year ended December 31, ~~2021~~2022 and ~~2020~~2021 are summarized in the table below.

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The following chart and graph summarizes our ~~four-year~~five-year expense trend:

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.~~company and consists of salaries and benefits and other operating expenses.

Death claims: Death benefits were ~~$2,314,682~~$2,994,386 in the year ended December 31, ~~2021~~2022 compared to ~~$1,943,563~~$2,314,682 for ~~2020,~~2021, an increase of ~~$371,119~~$679,704 or ~~19%~~29%. This increase is attributable to our growing block of in-force pre-need life insurance ~~policies.~~policies and to increased group life claims. We expect these claims to grow as we continue to increase the size of our in-force business. The COVID-19 pandemic has increased mortality rates for the entire United States population.

Policyholder benefits: Policyholder benefits were ~~$6,238,032~~$6,553,901 in the year ended December 31, ~~2021~~2022 compared to ~~$5,248,470~~$6,238,032 in ~~2020,~~2021, an increase of ~~$989,562~~$315,869 or ~~19%~~5%. The primary driver of this increase is the growth of interest credited on our direct and assumed annuities.

Increase in policyholder reserves: Policyholder reserves increased to ~~$4,063,488~~$4,207,703 in the year ended December 31, ~~2021,~~2022, compared to ~~$3,359,609~~$4,063,488 in ~~2020,~~2021, an increase of ~~$703,879~~$144,215 or ~~21%~~4%. The growth in reserves is the result of increased pre-need premiums.

Commissions, net of deferrals: The Company pays commissions to the ceding company on a block of assumed policies as well as commissions to agents on directly written business. Commissions, net of deferrals, were ~~$772,053~~$777,162 in the year ended December 31, ~~2021,~~2022, compared to ~~$781,400~~$772,053 in ~~2020, a decrease~~2021, an increase of ~~$9,347.~~$5,109. This ~~decrease~~increase is due to aan increase in and changing mix of premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs ("DAC") was ~~$1,210,345~~$1,205,554 in the year ended December 31, ~~2021,~~2022, compared to ~~$970,386~~$1,210,345 in ~~2020, an increase~~2021, a decrease of ~~$239,859 or 25%.~~$4,791. The ~~increase~~decrease is driven by ~~the amortization of costs deferred in conjunction with the 2020 ALSC Agreement. The increase in single pay pre-need policies, where commissions are deferred and immediately amortized, also contributed~~normal adjustments to ~~this increase.~~DAC amortization.

Amortization of value of business acquired: The amortization of value of business acquired (“VOBA”) was $92,420 in the ~~year~~years ended December 31, 2022 and 2021, ~~compared to $20,302 in 2020.~~respectively. In 2021, we began to amortize VOBA associated with DCLIC’s acquisition of policies from ALSC. VOBA is being amortized straight-line over 30 years.

Salaries and benefits: Salaries and benefits were ~~$1,350,851~~$1,465,259 for the year ended December 31, ~~2021,~~2022, compared to ~~$1,219,534~~$1,350,851 in ~~2020,~~2021, an increase of ~~$131,317~~$114,408 or ~~11%~~8%. The increase was driven by increased employee compensation costs and additional team members.

Other expenses: Other operating expenses were ~~$1,893,561~~$2,014,953 in the year ended December 31, ~~2021,~~2022, compared to ~~$2,429,466~~$1,893,561 in ~~2020, a decrease~~2021, an increase of ~~$535,905~~$121,392 or ~~22%~~6%. ~~Operating costs were~~The increase is driven ~~lower due primarily to the non-recurrence of two large 2020 expenditures (our pre-paid software asset being recognized as an expense of $250,000~~by increased marketing, regulatory filing, and ~~expenses associated with implementing a new disability reinsurance program totaling $50,000) as well as reduced operating costs in 2021.~~ information technology expenses.

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Federal income tax benefit: In the year ended December 31, 2022, the Company recognized a deferred income tax benefit of $149,000. In the year ended December 31, 2021, the Company recognized a deferred income tax benefit of $680,542. ~~In the year ended December 31, 2020, the Company recognized a deferred income tax benefit of $140,274.~~ These benefits are the result of ~~reductions~~changes in the deferred tax asset and deferred tax asset valuation allowance.

Net ~~Income:~~Income (loss): Our net ~~income~~loss was ~~$334,355~~$3,156,485 in the year ended December 31, ~~2021~~2022 compared to net income of ~~$439,449~~$334,355 in ~~2020,~~2021, a decrease of ~~$105,094.~~$3,490,840. Our net ~~income~~loss per share was ~~$0.04~~$0.41 compared to net income per share of ~~$0.06~~$0.04 in ~~2020,~~2021, basic and diluted.

The following graph illustrates our ~~four-year~~five-year trend of net income (loss) per share:

Assets. Assets have ~~increased~~decreased to ~~$121,484,834~~$118,298,297 as of December 31, ~~2021, an increase~~2022, a decrease of ~~$6,097,738~~$3,186,537 or 5%3% from December 31, ~~2020~~2021 assets of ~~$115m574,997.~~$121,484,834. This is primarily the result of ~~growth~~a decrease in the market value of our ~~funds withheld asset and cash and cash equivalents.~~fixed maturity securities.

Available for sale fixed maturity securities: As of December 31, ~~2021,~~2022, we had available for sale fixed maturity assets of ~~$37,942,657,~~$65,316,077, an increase of ~~$265,079~~$27,373,420 or 1%72% from the December 31, ~~2020~~2021 balance of ~~$37,677,578.~~$37,942,657. The increase is driven by ~~purchases~~the settlement of ~~additional fixed maturity securities~~our funds withheld asset into assets held by the Company. This increase is partially offset by a decrease in the market value of these ~~securities.~~securities of $7.9 million due to changes in interest rates. If we hold our fixed maturity securities to maturity any change in market value is temporary.

Equity securities, at fair value: As of December 31, ~~2021,~~2022, we had equity assets of ~~$9,157,193,~~$7,395,044, a decrease of ~~$64,381~~$1,762,149 or 1%19% from the December 31, ~~2020~~2021 balance of ~~$9,221,574.~~$9,157,193. This decrease is driven by a reduction in the ~~result~~market value of ~~normal investment activity.~~our equity securities.

Mortgage loans on real estate: As of December 31, ~~2021,~~2022, we had mortgage loans on real estate of ~~$3,653,142~~$23,790,073 an increase of ~~$487,006~~$20,136,931 or ~~15%~~551% from the December 31, ~~2020~~2021 balance of ~~$3,166,136.~~$3,653,142. The increase is the result of acquiring additional mortgage loan ~~participations.~~participations and the settlement of our funds withheld asset into assets held by the Company.

Funds withheld under coinsurance agreement, at fair value: As of December 31, ~~2021,~~2022, we had no funds withheld assets as these assets were settled into assets owned by the Company. As of ~~$49,018,974, an increase of $2,188,898 or 5% from the~~ December 31, ~~2020 balance~~2021 our funds with assets were $49,018,974.

Other invested assets: As of ~~$46,830,076. The growth represents investment returns in the~~December 31, 2022, we had other invested assets of $1,760,777. These assets were acquired when our funds withheld ~~account.~~asset settled into assets owned by the Company. We had no such balance at December 31, 2021.

Policy loans: As of December 31, ~~2021,~~2022, our policy loans were ~~$173,341, an increase~~$34,980, a decrease of ~~$9,616~~$138,361 or 6%80% from the December 31, ~~2020~~2021 balance of ~~$163,725.~~$173,341. The ~~increase~~decrease is a result of ~~normal~~ policy ~~loan activity.~~loans being repaid.

Real estate, net of depreciation: As of December 31, ~~2021,~~2022, we had real estate assets of ~~$1,403,137~~$1,373,716 related to the purchase of our home office building, a decrease of ~~$12,606~~$29,421 from the December 31, ~~2020~~2021 balance of ~~$1,415,743.~~$1,403,137. The decrease is the result of depreciation.

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Cash and cash equivalents: As of December 31, ~~2021,~~2022, we had cash and cash equivalent assets of ~~$7,955,348, an increase~~$4,091,507, a decrease of ~~$3,634,589~~$3,863,481 or ~~84%~~49% from the December 31, ~~2020~~2021 balance of ~~$4,320,759.~~$7,955,348. This ~~increase~~decrease was the result of cash being ~~prepared for deployment~~deployed into invested assets.

Investment income due and accrued: As of December 31, ~~2021,~~2022, our investment income due and accrued was ~~$698,504~~$2,086,365 compared to ~~$423,036~~$698,504 as of December 31, ~~2020,~~2021, an increase of ~~$275,468~~$1,387,861 or ~~65%~~199%. This increase is attributable to investment activity.

Reinsurance related assets: As of December 31, ~~2021,~~2022, our reinsurance related assets were ~~$3,438~~$125,549 compared to ~~$165,082~~$3,438 as of December 31, ~~2020, a decrease~~2021, an increase of ~~$161,644.~~$122,111. This ~~decrease~~increase is the result of changes in the net settlement due to/from ALSC under our 2020 ALSC Agreement.

Deferred acquisition costs, net: As of December 31, ~~2021,~~2022, our deferred acquisition costs were ~~$6,354,875~~$5,629,002 compared to ~~$7,105,890~~$6,354,875 as of December 31, ~~2020,~~2021, a decrease of ~~$751,015~~$725,873 or 11%. The decrease is the result of the amortization of DAC related to our 2020 ALSC Agreement.

Value of business acquired, net: As of December 31, ~~2021~~2022 our value of business acquired asset was ~~$2,610,813~~$2,518,393 compared to ~~$2,703,233~~$2,610,813 as of December 31, ~~2020,~~2021, a decrease of $92,420 or 3%4%. The decrease is the result of amortization of VOBA.

Property, equipment and software, net: As of December 31, ~~2021~~2022 our property, equipment and software assets were ~~$92,785,~~$132,475, an increase of ~~$54,967~~$39,690 from the December 31, ~~2020~~2021 balance of ~~$37,818.~~$92,785. This increase is the result of renovation of our home office.

Goodwill: As of December 31, ~~2021~~2022 and December 31, ~~2020,~~2021, our goodwill was $277,542. Goodwill was established as a result of our merger with 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 ~~$1,560,767~~$3,294,522 as of December 31, ~~2021.~~2022. The Company had a net deferred tax asset of ~~$243,257~~$1,560,767 as of December 31, ~~2020~~2021 and the resulting change in deferred tax asset was recorded as a deferred tax benefit and as ~~a reduction~~an increase in other comprehensive ~~income.~~loss.

Other assets: As of December 31, ~~2021,~~2022, our other assets were ~~$582,318,~~$472,275, a decrease of ~~$1,053,329~~$110,043 or ~~65%~~19% from the December 31, ~~2020~~2021 balance of ~~$1,635,647.~~$582,318. This ~~decrease was driven by a receivable balance due to DCLIC paid in 2021.~~increase is the result of normal business activity.

Liabilities. Our total liabilities were ~~$103,903,078~~$110,228,903 as of December 31, ~~2021,~~2022, an increase of ~~$6,920,773~~$6,325,825 or 7%6% from our December 31, ~~2020~~2021 liabilities of ~~$96,982,305.~~$103,903,078. This increase is driven by ~~growth~~an increase in our policy liabilities.

Policy liabilities: Our total policy liabilities as of December 31, ~~2021~~2022 were ~~$101,026,942~~$108,737,803 compared to ~~$93,459,080~~$101,026,942 as of December 31, ~~2020,~~2021, an increase of ~~$7,567,862~~$7,710,861 or 8%. This increase is the result of the growth of our in-force business.

Accounts payable and accrued expenses: As of December 31, ~~2021,~~2022, our accounts payable and accrued expenses were ~~$689,065~~$448,805 compared to ~~$1,507,756~~$689,065 as of December 31, ~~2020,~~2021, a decrease of ~~$818,691~~$240,260 or ~~54%~~35%. ~~The decrease is driven by the settlement in the first quarter of a payable to ALSC related to the partial termination of our 2017 ALSC Agreement offset by income tax payable.~~

Federal Home Loan Bank advance: As of December 31, ~~2021 and December 31, 2020,~~2022, the Company has outstanding advances of ~~$2,000,000~~$1,000,000 with the Federal Home Loan Bank of ~~Topeka.~~Topeka compared to outstanding advances of $2,000,000 as of December 31, 2021. The decrease is the result of the Company repaying two $500,000 advances ~~were taken to create liquidity and investment opportunities.~~in the second quarter of 2022.

Shareholders’ Equity. Our shareholders’ equity was ~~$17,581,756~~$8,069,394 as of December 31, ~~2021,~~2022, a decrease of ~~$823,035~~$9,512,362 from our December 31, ~~2020~~2021 shareholders’ equity of ~~$18,404,791.~~$17,581,756. The reduction in shareholders’ equity was driven by a decrease in other comprehensive ~~income offset~~loss and by our net ~~income.~~loss. For the year ended December 31, 2022, unrealized losses in our fixed maturity portfolio, before tax, totaled $7,929,744. Other comprehensive income (loss) consists of the unrealized gains and losses on our fixed maturity portfolio. The ~~decrease~~increase in other comprehensive ~~income~~loss is the result of higher interest rates which decreases the market value of our fixed maturity securities.

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Our investment philosophy is reflected by the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities, mortgages and other ~~investments as well as a significant funds withheld investment as a result of the 2020 ALSC Agreement.~~investments. The following 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, ~~2021~~2022 and December 31, ~~2020.~~2021.

The total value of our investments and cash and cash equivalents ~~increased~~decreased to ~~$109,130,451~~$103,840,238 as of December 31, ~~2021~~2022 from ~~$102,631,866~~$109,130,451 at December 31, ~~2020, an increase~~2021, a decrease of ~~$6,498,585~~$5,290,213 or 6%5%. ~~Increases~~Decreases in investments are primarily attributable to ~~growth in~~a reduction of the market value of our ~~cash and cash equivalents and in our funds withheld asset.~~fixed maturity securities.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of December 31, ~~2021~~2022 and ~~2020.~~2021.

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The amortized cost and fair value of debt securities as of December 31, ~~2021~~2022 and ~~2020,~~2021, 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 ~~funds withheld under the 2020 ALSC Agreement.~~other invested assets. Each of these investments is subject to market risks that can affect their return and their fair value. A significant percentage of the investments are fixed maturity securities including debt issuances 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 work 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, we believe 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 FHLB 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.

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The impact of COVID-19 on the Company is evolving, and its future effects are not yet quantified. The Company continues to monitor the effects and risks of COVID-19 to assess its impact on the Company's business, sales, financial condition, results of operations, liquidity and capital position. Death claims have increased 29% from the prior year, but it is currently impossible to quantify the amount of such increase that can be attributed to COVID-19 deaths and deaths not directly attributable to COVID-19.

Premium income, deposits to policyholder account balances, 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, if needed.

Net cash provided by operating activities was ~~$3,411,873~~$4,787,903 for the year ended December 31, ~~2021.~~2022. The primary sources of cash from operating activities were premiums received from policyholders as well as investment income. 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 ~~$1,713,117.~~$9,804,712. The primary use of cash was the purchase of fixed maturity, mortgage, and equity investments. Cash provided by financing activities was ~~$1,935,833.~~$1,152,968. The primary sources of cash were receipts on deposit-type contracts.

The following chart and graph illustrate our ~~four-year~~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 to show the impact of 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:

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At December 31, ~~2021,~~2022, we had cash and cash equivalents totaling ~~$7,955,348.~~$4,091,507. We believe that our existing cash and cash equivalents are sufficient to fund the anticipated operating expenses and capital expenditures 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 may require additional capital as they 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 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 Vice President and Principal Financial Officer conducted an 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 Vice President 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’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the year ended December 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

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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 ~~2022~~2023 annual stockholders’ meeting (“~~2022~~2023 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 ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

The information required by this item is set forth under the captions “Security Ownership” in our ~~2022~~2023 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 ~~2022~~2023 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 ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

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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.

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*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of 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.

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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.

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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.

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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 1303 SW First American Place, Suite 200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com.

USAC has five wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was formed June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed April 23, 2012, to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was formed April 23, 2012 to serve as investment manager for 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. Unless the context indicates otherwise, references herein to the "Company" refer to USAC and its consolidated subsidiaries.

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 and distribution channels throughout 2014 and 2015. On February 24, 2015, the 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, 2022. During the 4th quarter of 2017, the Company began a private placement offering to accredited investors in the state of North Dakota.

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. DCLIC received a Certificate of Authority from the North Dakota Insurance Department ("NDID") effective January 24, 2012.

The Company’s business model also anticipates the acquisition by USAC and/or USALSC of other insurance and insurance related companies, including third-party administrators, marketing 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: US Alliance Life and Security Company is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska, Oklahoma, Wyoming, South Dakota, Montana, Kentucky, Utah, Alabama, Ohio, Mississippi, and ~~Wyoming.~~New Mexico. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of Montana.

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US Alliance Corporation

Notes to Consolidated Financial Statements

Note1.

Description of Business and Significant Accounting Policies (Continued)

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

Investments: Investments in available-for-sale securities are carried in the consolidated financial statements at fair value. Net unrealized holding gains (losses), net of applicable income taxes, 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, ~~2021~~2022 and ~~2020,~~2021, 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 (loss).

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.

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~~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 (loss). The Company had no valuation allowance against mortgage loans as of December 31, 2022 and 2021.

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US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1.

Description of Business and Significant Accounting Policies (Continued)

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.

Funds Withheld under Coinsurance Agreement:Funds withheld under coinsurance agreement represent amounts contractually withheld by American Life and Security Corporation ("ALSC") 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 (loss). Funds withheld under coinsurance agreement are presented net of the embedded derivative, discussed below.

Under the terms of the 2020 ALSC 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). The Company attained this designation in the fourth quarter of 2022. The Company recorded the funds withheld assets at fair value on the date of transfer, which eliminated the embedded derivative component associated with the unrealized gains and losses within the funds withheld account.

Additionally, after the transfer of the funds withheld assets, ALSC continued to manage currency risk within the coinsured liability portfolio using derivative instruments. In accordance with the coinsurance agreement, ALSC allocates a proportion of the derivative activity it manages to the Company, which is settled quarterly as part of the reinsurance settlement. As the derivative allocation is not clearly and closely related to the host contract, the Company recognizes an embedded derivative equal to the fair value of the derivative allocation.

Other Invested Assets:Other invested assets include collateral loans and private credit investments. The collateral loans and private credit investments are carried at fair value. The inputs used to measure these assets are classified as Level 3 within the fair value hierarchy.

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~~The Company has two different embedded derivatives, the first of which ~~are~~existed prior to the transfer of the funds withheld account, which is 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 (loss) in net investment gains (losses).

The second embedded derivative recognized after the funds withheld transfer is reported within reinsurance related assets on the balance sheet and within net investment gains (losses) on the statement of comprehensive income (loss).

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 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, ~~2021.~~2022. 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.

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US Alliance Corporation

Notes to Consolidated Financial Statements

Note 1.

Description of Business and Significant Accounting Policies (Continued)

~~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, ~~2021~~2022 and ~~2020.~~

2021.

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, ~~2021~~2022 and ~~2020,~~2021, respectively.

	Year ended			Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,			December 31,
	2021			2020			2022			2021

Balance at beginning of period	$	7,105,890		$	2,652,674		$	6,354,875		$	7,105,890
DAC on reinsurance recapture		0			(1,146,150	)
Capitalization of commissions, sales and issue expenses		459,330			6,569,752			479,681			459,330
Amortization net of interest		(1,210,345	)		(970,386	)		(1,205,554	)		(1,210,345	)
Balance at end of period	$	6,354,875		$	7,105,890		$	5,629,002		$	6,354,875

Value of business acquired: Value of business acquired (VOBA) represents the estimated value assigned to purchased companies or insurance 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.

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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)

~~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, ~~2021~~2022 and ~~2020~~2021 are represented below.

	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2021			2020			2022			2021
Computer	$	32,182		$	32,182		$	32,182		$	32,182
Furniture and equipment		101,973			39,679			158,374			101,973
Accumulated depreciation		(41,370	)		(34,043	)		(58,081	)		(41,370	)
Balance at end of period	$	92,785		$	37,818		$	132,475		$	92,785

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.

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.

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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)

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

All of the Company’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, ~~2021~~2022 and ~~2020.~~2021. 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.

The tax years which remain subject to examination by taxing authorities are the years ended December 31, ~~2018~~2019 through ~~2021.~~

2022.

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, ~~2021~~2022 and ~~2020.~~2021.

	Year Ended			Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,			December 31,
	2021			2020			2022			2021

Balance at beginning of period	$	71,843,283		$	19,063,141		$	75,410,339		$	71,843,283
Recaptured by American Life & Security Corp		0			(6,799,716	)
Acquired from American Life & Security Corp		0			6,799,716
Deposits received		5,345,302			53,877,845			5,948,185			5,345,302
Interest credited		1,601,155			1,090,820			1,590,654			1,601,155
Withdrawals		(3,379,401	)		(2,188,523	)		(4,068,636	)		(3,379,401	)
Balance at end of period	$	75,410,339		$	71,843,283		$	78,880,542		$	75,410,339

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.

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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)

~~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, ~~2021~~2022 and ~~2020.~~2021.

	Year Ended			Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,			December 31,
	2021			2020			2022			2021

Balance at beginning of period	$	238,924		$	333,473		$	157,534		$	238,924
Recaptured by American Life & Security Corp		0			(93,845	)
Acquired from American Life & Security Corp		0			93,845
Deposits received		13,558			6,180			80,687			13,558
Interest credited		5,185			8,663			6,738			5,185
Withdrawals		(100,133	)		(109,392	)		(90,151	)		(100,133	)
Balance at end of period	$	157,534		$	238,924		$	154,808		$	157,534

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, ~~2021~~2022 and ~~2020~~2021 is ~~$115,524~~$131,489 and ~~$116,019~~$115,524 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.

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.

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 (loss) per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of December 31, ~~2021~~2022 and ~~2020~~2021 the company had ~~7,745,404~~7,746,922 and ~~7,741,487~~7,745,404 common shares issued and outstanding, respectively.

Earnings per share attributable to the Company’s common stockholders were computed based on the net income (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, ~~2021~~2022 and ~~2020~~2021 were ~~7,743,273~~7,746,318 and ~~7,738,693~~7,743,273 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net gain (loss) per common share is the same for the years ended December 31, ~~2021~~2022 and ~~2020.~~2021.

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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)

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

Comprehensive Income (loss): Comprehensive income (loss) is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) 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.

	- Regulatory Factors:	The insurance laws of Kansas, North Dakota, and Montana give 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) 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.

	- Reinsurance:	In order to manage the risk of financial exposure to adverse underwriting results, the Company reinsures a portion of its individual and group life risks with other insurance companies. The Company retains $35,000 on its Whole Life products and $25,000 on its term life products. The Company also reinsures 100% of the risk on its individual accidental death benefit rider. The Company retains 25% of the risk for each covered life on its group life product to a maximum of $100,000 on any individual person. 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 on any individual person. The Company also has catastrophic reinsurance coverage to protect against three or more group life deaths resulting from a single event. The Company also reinsures 90% of the risk on its group disability products. 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.

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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)

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

	- 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.

		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. ~~If interest rates were to increase by~~ ~~1%,~~ ~~the market value of our fixed income securities would decrease by 8.3% as of~~ ~~December 31, 2021.~~ 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 current 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 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.

	- 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.

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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)

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

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.

New accounting standards:

Leases

In February 2016, 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.

The ~~updated guidance is effective for reporting periods beginning after~~ ~~December~~ ~~15,~~~~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.~~

~~Income Taxes - Simplifying the Accounting for Income Taxes~~

In ~~December 2019,~~ ~~the FASB issued updated guidance (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 existing guidance and amending other existing guidance to simplify several other income tax accounting matters. The updated guidance is effective for the quarters ending and after ~~March 31, 2021.~~ ~~The~~ adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or ~~liquidity.~~liquidity as the Company does not have any significant leases as a lessee.

Measurement of Credit Losses on Financial Instruments

In June 2016, 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. reinsurance ~~recoverables)~~recoverables and mortgage loans) 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.

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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)~~

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’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.

The updated guidance iswas effective for reporting periods beginning after December 15, 2019. Early adoption iswas 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.~~adopted in the first quarter of 2023.

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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)

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 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~~ Income Taxes - Simplifying the Accounting for Income Taxes

~~This~~In December 2019, the FASB issued updated guidance (Accounting Standards Update 2019-12) for the accounting for income taxes. The updated guidance is ~~part of~~intended to simplify the ~~FASB’s disclosure framework project~~accounting for income taxes by removing several exceptions contained in existing guidance and ~~eliminates certain disclosure requirements for fair value measurement, requires entities~~amending other existing guidance to ~~disclose new information and modifies existing disclosure requirements. This~~simplify several other income tax accounting matters. The updated guidance iswas effective for ~~fiscal years beginning~~the quarters ending and after ~~December 15, 2019,~~March 31, 2021. ~~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.

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Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 2.~~Acquisitions~~

On ~~December 31, 2020,~~ DCLIC entered into an assumption agreement with ALSC where it acquired a certain block of life insurance policies. Under an assumption agreement, DCLIC becomes directly liable to the policyholders of this block of business.

The acquisition was accounted for under the acquisition method of accounting, which requires the consideration transferred and all assets and liabilities assumed to be recorded at fair value. The following table summarizes the fair value of the assets acquired and liabilities assumed from ALSC:

Cash consideration paid to ALSC
$ 927,000

Preliminary amounts of indentifiable assets acquired and liablities 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 indentifiable net assets
$ 927,000

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~~Table of Contents~~

~~US Alliance Corporation~~

~~Notes to Consolidated Financial Statements~~

~~Note~~ 3.~~Investments~~

Investments

Fixed Maturity

The amortized cost and fair value of available for sale investments as of December 31 is as follows:

	December 31, 2021									December 31, 2022
	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	$	303,195	$	144,570	$	0		$	447,765	$	993,805	$	36,313	$	(5,031	)	$	1,025,087
Corporate bonds		19,397,461		2,101,518		(177,700	)		21,321,279		19,018,738		722		(3,150,382	)		15,869,078
Municipal bonds		6,306,387		671,263		(14,292	)		6,963,358		6,228,636		-		(808,227	)		5,420,409
Redeemable preferred stock		3,612,625		29,995		(21,094	)		3,621,526		3,875,526		-		(519,911	)		3,355,615
Term loans											18,086,124		209,989		(146,395	)		18,149,718
Mortgage backed and asset backed securities		5,636,371		22,617		(70,259	)		5,588,729		22,412,895		157,795		(1,074,520	)		21,496,170
Total available for sale	$	35,256,039	$	2,969,963	$	(283,345	)	$	37,942,657	$	70,615,724	$	404,819	$	(5,704,466	)	$	65,316,077

	December 31, 2020									December 31, 2021
	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	$	574,935	$	127,981	$	0		$	702,916	$	303,195	$	144,570	$	-		$	447,765
Corporate bonds		20,126,836		2,821,508		(533	)		22,947,811		19,397,461		2,101,518		(177,700	)		21,321,279
Municipal bonds		5,992,707		804,443		(496	)		6,796,654		6,306,387		671,263		(14,292	)		6,963,358
Redeemable preferred stock		2,900,330		90,085		(200	)		2,990,215		3,612,625		29,995		(21,094	)		3,621,526
Mortgage backed and asset backed securities		4,189,710		50,274		(2	)		4,239,982		5,636,371		22,617		(70,259	)		5,588,729
Total available for sale	$	33,784,518	$	3,894,291	$	(1,231	)	$	37,677,578	$	35,256,039	$	2,969,963	$	(283,345	)	$	37,942,657

The amortized cost and fair value of debt securities as of December 31, ~~2021~~2022 and ~~2020,~~2021, by contractual maturity, ~~are shown on the following page.~~is as follows. 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.

As of December 31, 2021

As of December 31, 2020

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Amounts maturing in:

One year or less
$ 0 $ 0 $ 373,590 $ 379,823
After one year through five years
1,987,421 2,087,132 1,540,931 1,641,749
After five years through ten years
2,540,089 2,865,020 2,887,066 3,379,930
More than 10 years
21,479,533 23,780,250 21,892,891 25,045,879
Redeemable preferred stocks
3,612,625 3,621,526 2,900,330 2,990,215
Mortgage backed and asset backed securities
5,636,371 5,588,729 4,189,710 4,239,982
Total amortized cost and fair value
$ 35,256,039 $ 37,942,657 $ 33,784,518 $ 37,677,578

	As of December 31, 2022				As of December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	442,846	$	450,461	$	-	$	-
After one year through five years		17,048,721		17,035,270		1,987,421		2,087,132
After five years through ten years		5,498,364		5,340,498		2,540,089		2,865,020
More than 10 years		21,337,372		17,638,063		21,479,533		23,780,250
Redeemable preferred stocks		3,875,526		3,355,615		3,612,625		3,621,526
Mortgage backed and asset backed securities		22,412,895		21,496,170		5,636,371		5,588,729
Total amortized cost and fair value	$	70,615,724	$	65,316,077	$	35,256,039	$	37,942,657

F- 1918

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 2.

Investments (continued)

~~Note~~ 3.~~Investments (continued)~~

Proceeds from the sale of securities, maturities, and asset paydowns in ~~2021~~2022 and ~~2020~~2021 were ~~$4,769,831~~$9,878,340 and ~~$7,795,116,~~$4,769,831, respectively. Realized gains and losses related to the sale of securities are summarized as follows:

	Years Ended December 31,						Year Ended December 31,
	2021			2020			2022			2021
Gross gains	$	248,891		$	1,388,209		$	24,720		$	248,891
Gross losses		(18,899	)		(373,862	)		(133,363	)		(18,899	)
Realized gains	$	229,992		$	1,014,347
Realized gains (losses)							$	(108,643	)	$	229,992

Gross unrealized losses by duration are summarized as follows:

	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, 2021
December 31, 2022															December 31, 2022
Available for sale:
Fixed maturities:
US Treasury securities																$	398,375	$	(5,031	)	$	-	$	-		$	398,375	$	(5,031	)
Corporate bonds	$	4,496,456	$	(177,700	)	$	0	$	0	$	4,496,456	$	(177,700	)			12,378,486		(1,883,706	)		3,206,913		(1,266,676	)		15,585,399		(3,150,382	)
Municipal bonds		927,122		(14,292	)		0		0		927,122		(14,292	)			4,711,895		(587,053	)		708,514		(221,174	)		5,420,409		(808,227	)
Redeemable preferred stock		1,394,650		(21,094	)		0		0		1,394,650		(21,094	)			2,384,771		(363,193	)		970,844		(156,718	)		3,355,615		(519,911	)
Term loans																	6,309,005		(146,395	)		-		-			6,309,005		(146,395	)
Mortgage backed and asset backed securities		4,386,306		(70,259	)		0		0		4,386,306		(70,259	)			10,358,560		(458,754	)		3,281,132		(615,766	)		13,639,692		(1,074,520	)
Total fixed maturities	$	11,204,534	$	(283,345	)	$	0	$	0	$	11,204,534	$	(283,345	)		$	36,541,092	$	(3,444,132	)	$	8,167,403	$	(2,260,334	)	$	44,708,495	$	(5,704,466	)

Less than 12 months

Greater than 12 months

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Loss

Value

Loss

Value

Loss

December 31, 2020

Available for sale:

Fixed maturities:

Corporate bonds
$ 210,625 $ (2 ) $ 49,438 $ (531 ) $ 260,063 $ (533 )
Municipal bonds
47,249 (496 ) 0 0 47,249 (496 )
Redeemable preferred stock
77,918 (200 ) 0 0 77,918 (200 )
Mortgage backed and asset backed securities
309,144 (2 ) 0 0 309,144 (2 )
Total fixed maturities
$ 644,936 $ (700 ) $ 49,438 $ (531 ) $ 694,374 $ (1,231 )

	Less than 12 months					Greater than 12 months				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loss
December 31, 2021
Available for sale:
Fixed maturities:
Corporate bonds	$	4,496,456	$	(177,700	)	$	-	$	-	$	4,496,456	$	(177,700	)
Municipal bonds		927,122		(14,292	)		-		-		927,122		(14,292	)
Redeemable preferred stock		1,394,650		(21,094	)		-		-		1,394,650		(21,094	)
Mortgage backed and asset backed securities		4,386,306		(70,259	)		-		-		4,386,306		(70,259	)
Total fixed maturities	$	11,204,534	$	(283,345	)	$	-	$	-	$	11,204,534	$	(283,345	)

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, ~~2021~~2022 was ~~76,~~230, which represented an unrealized loss of ~~$283,345~~$5,704,466 of the aggregate carrying value of those securities. The 76230 securities breakdown as follows: 29131 bonds, 4173 mortgage and asset backed securities, 10 term loans, and 616 redeemable preferred stock. The Company determined that no securities were considered to be other-than-temporarily impaired as of December 31, ~~2021~~2022 and ~~2020.~~2021.

F- 2019

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 2.

Investments (continued)

~~Note~~ 3.~~Investments (continued)~~

Mortgage Loans on Real Estate

The Company’s mortgage loans by property type as of December 31, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized as follows:

	December 31, 2021		December 31, 2020		December 31, 2022		December 31, 2021
Commercial mortgage loans by property type
Student housing	$	0	$	781,512
Condominium		1,960,547		1,874,445	$	1,696,975	$	1,960,547
Land						1,902,277		-
Multi-property		1,157,950		332,195		9,539,738		1,157,950
Multi-family		534,645		177,984		5,016,424		534,645
Retail/Office						5,634,659		-
Total commercial mortgages	$	3,653,142	$	3,166,136	$	23,790,073	$	3,653,142

The Company’s mortgage loans by loan-to-value ratio as of December 31, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized as follows:

	December 31, 2021		December 31, 2020		December 31, 2022		December 31, 2021
Loan to value ratio
Over 70 to 80%					$	8,219,763	$	-
Over 60 to 70%	$	1,960,547	$	1,874,445		5,196,975		1,960,547
Over 50 to 60%						4,682,750		-
Over 40 to 50%		339,335		0		3,235,951		339,335
Over 30 to 40%		195,310		177,984		-		195,310
Over 20 to 30%						1,319,975		-
Over 10 to 20%		1,157,950		1,113,707		1,134,659		1,157,950
Total	$	3,653,142	$	3,166,136	$	23,790,073	$	3,653,142

The Company’s mortgage loans by maturity date as of December 31, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized as follows:

December 31, 2021

December 31, 2020

Maturity Date

One year or less
$ 2,155,857 $ 2,393,900
After one year through five years
1,497,285 772,236
Total
$ 3,653,142 $ 3,166,136

	December 31, 2022		December 31, 2021
Maturity Date
One year or less	$	15,354,542	$	2,155,857
After one year through five years		8,435,531		1,497,285
Total	$	23,790,073	$	3,653,142

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Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 2.

Investments (continued)

~~Note~~ 3.~~Investments (continued)~~

Investment Income, Net of Expenses

The components of net investment income for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Years Ended December 31,						Years Ended December 31,
	2021			2020			2022			2021

Fixed maturities	$	1,121,170		$	1,178,055		$	2,159,129		$	1,121,170
Mortgages		378,035			129,621			758,362			378,035
Equity securities		617,198			669,147			669,721			617,198
Funds withheld		3,421,796			1,680,220			1,581,453			3,421,796
Other invested assets								47,241			-
Cash and cash equivalents		1,794			12,501			47,285			1,794
		5,539,993			3,669,544			5,263,191			5,539,993
Less investment expenses		(203,945	)		(117,283	)		(464,992	)		(203,945	)
	$	5,336,048		$	3,552,261		$	4,798,199		$	5,336,048

Net Investment Gains (losses)

Accounting standards require that the unrealized gains and losses on equity securities be reported as income on the consolidated statements of comprehensive income (loss). For the year ended December 31, 2022, net investment losses is comprised of $1,638,847 of unrealized losses on our equity portfolio, net realized losses of $108,643, and a loss on the change in the fair value of our embedded derivatives of $177,596. For the year ended December 31, 2021, net investment gains is comprised of $20,814 of unrealized gains on our equity portfolio, net realized gains of $229,992, and a loss on the change in the fair value of our embedded derivative ~~on funds withheld~~ of $108,526. ~~For the year ended~~ ~~December 31, 2020,~~ net investment gains is comprised of $299,273 of unrealized gains on our equity portfolio, net realized gains of $1,014,347, and a gain on the change in the fair value of our embedded derivative on funds withheld of $653,294.

~~Note~~ 4.
Note 3.~~Derivative Instruments~~
Derivative Instruments

Accounting for Derivative Instruments

See Note 1 for a detailed description of the accounting treatment for derivative instruments, including embedded derivatives.

Types of Derivatives used by the Company

The Company’s derivatives ~~consists solely~~consist of embedded derivatives on funds withheld on coinsurance ~~assets.~~assets which was eliminated in October 2022 and a reinsurance contract allocated hedge which was acquired in October 2022.

Summary of Derivative Positions

The fair value of the Company’s derivative financial instruments on the consolidated balance sheets is as follows:

December 31, 2021

December 31, 2020

Derivative

Derivative

Balance

Asset

Liability

Asset

Liability

Reported In
Derivatives:

Embedded derivatives:

Funds withheld embedded derivative
$ 544,768 $ 0 $ 653,294 $ 0
Funds withheld

December 31, 2022

December 31, 2021

Derivative

Derivative

Balance

Asset

Liability

Asset

Liability

Reported In
Derivatives:

Embedded derivatives:

Funds withheld embedded derivative
$ - - $ 544,768 $ -
Funds withheld
Reinsurance contract allocated hedge
724,998 - - -
Reinsurance related assets

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Table of Contents
US Alliance Corporation

Notes to Consolidated Financial Statements

Note3.
Derivative Instruments (continued)
~~Note~~ 4.~~Derivative Instruments (continued)~~
The following table shows the change in the fair value of the derivative financial instruments in the consolidated statements of comprehensive ~~income:~~loss:

Year Ending

Year Ending

Balance

Year Ending

Year Ending

Balance

December 31, 2021

December 31, 2020

Reported In

December 31, 2022

December 31, 2021

Reported In
Derivatives:

Embedded derivatives:

Change in funds withheld embedded derivative
$ (108,526 ) $ 653,294
Net investment gains
$ (544,768 ) $ (108,526 )
Net investment gains (losses)
Change in reinsurance contract allocated hedge
$ 367,172 $ -
Net investment gains (losses)


~~Note~~ 5.
Note 4.~~Fair Value Measurements~~
Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the
assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement rate.

●
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

●
Level 3 inputs are unobservable for the asset or liability and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Investments, available for sale: Fair values of available for sale fixed maturity securities are provided by a third party pricing service. The pricing service uses a variety of sources to determine fair value of securities. The Company’s fixed maturity securities are highly liquid, which allows for a high percentage of the portfolio to be priced through pricing sources.

Equity securities: Fair values for equity securities are also provided by a third party pricing service and are derived from active trading on national market exchanges.

Embedded derivative: The fair value of embedded derivatives associated with ~~funds withheld~~the reinsurance treaty is determined upon a total return swap technique with reference to the fair value of the investments held by the ceding company that support the Company’s ~~fund~~funds withheld asset with an adjustment for a credit valuation adjustment. Additionally, the fair value of the reinsurance related assets represents the Company’s allocation of the fair value of the corresponding derivative instruments used in the hedge. The fair value of the underlying assets isfor both embedded derivatives are generally based upon market observable inputs with industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered level 3 in the fair value hierarchy. The Company’s utilization of a credit-valuation adjustment did not have a material effect on the change in fair value of the embedded ~~derivative~~derivatives for the year ended December 31, ~~2021.~~2022.

F- 2322

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 4.
Fair Value Measurements (continued)
~~Note~~ 5.~~Fair Value Measurements (continued)~~
The table below presents the amounts of assets measured at fair value on a recurring basis as of December 31, ~~2021~~2022 and ~~2020:~~2021:

December 31, 2022

Total

Level 1

Level 2

Level 3

Fixed maturities:

US Treasury securities
$ 1,025,087 $ 1,025,087 $ - $ -
Corporate bonds
15,869,078 - 15,687,478 181,600
Municipal bonds
5,420,409 - 5,420,409 -
Redeemable preferred stock
3,355,615 - 3,355,615 -
Term loans
18,149,718 - - 18,149,718
Mortgage backed and asset backed securities
21,496,170 - 21,099,920 396,250
Total fixed maturities
65,316,077 1,025,087 45,563,422 18,727,568
Equities:

Common stock
6,024,224 5,929,624 94,600 -
Preferred stock
1,370,820 - 1,370,820 -
Total equities
7,395,044 5,929,624 1,465,420 -
Other invested assets 1,760,777 - - 1,760,777
Reinsurance contract allocated hedge
724,998 - - 724,998
Total
$ 75,196,896 $ 6,954,711 $ 47,028,842 $ 21,213,343

December 31, 2021

December 31, 2021

Total

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Fixed maturities:

US Treasury securities
$ 447,765 $ 0 $ 447,765 $ 0 $ 447,765 $ 447,765 $ - $ -
Corporate bonds
21,321,279 0 21,139,679 181,600 21,321,279 - 21,139,679 181,600
Municipal bonds
6,963,358 0 6,963,358 0 6,963,358 - 6,963,358 -
Redeemable preferred stock
3,621,526 0 3,621,526 0 3,621,526 - 3,621,526 -
Mortgage backed and asset backed securities
5,588,729 0 5,588,729 0 5,588,729 - 5,588,729 -
Total fixed maturities
37,942,657 0 37,761,057 181,600 37,942,657 447,765 37,313,292 181,600
Equities:

Common stock
7,319,584 7,226,584 93,000 0 7,319,584 7,226,584 93,000 -
Preferred stock
1,837,609 0 1,837,609 0 1,837,609 - 1,837,609 -
Total equities
9,157,193 7,226,584 1,930,609 0 9,157,193 7,226,584 1,930,609 -
Funds withheld embedded derivative
544,768 0 0 544,768 544,768 - - 544,768
Total
$ 47,644,618 $ 7,226,584 $ 39,691,666 $ 726,368 $ 47,644,618 $ 7,674,349 $ 39,243,901 $ 726,368

December 31, 2020

Total

Level 1

Level 2

Level 3

Fixed maturities:

US Treasury securities
$ 702,916 $ 702,916 $ 0 $ 0
Corporate bonds
22,947,811 0 22,761,011 186,800
Municipal bonds
6,796,654 0 6,796,654 0
Redeemable preferred stock
2,990,215 0 2,990,215 0
Mortgage backed and asset backed securities
4,239,982 0 4,239,982 0
Total fixed maturities
37,677,578 702,916 36,787,862 186,800
Equities:

Common stock
6,808,944 6,717,144 91,800 0
Preferred stock
2,412,630 0 2,412,630 0
Total equities
9,221,574 6,717,144 2,504,430 0
Funds withheld embedded derivative
653,294 0 0 653,294
Total
$ 47,552,446 $ 7,420,060 $ 39,292,292 $ 840,094
F- 23
Table of Contents
US Alliance Corporation

Notes to Consolidated Financial Statements
Note 4.
Fair Value Measurements (continued)
The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

Mortgage

For the Year Ended December 31, 2022

Corporate

Backed

Term

Funds

Hedge

Bonds

Securities

Loans

Withheld

Derivative

Fair value, beginning of period
$ 181,600 $ - $ - $ 544,768 $ -
Acquisition
- 423,965 18,086,124 - 1,045,027
Investment related gains (losses)
- (27,715 ) 63,594 (1,090,434 ) (320,029 )
Settlement
- - - 545,666 -
Fair value, end of period
$ 181,600 $ 396,250 $ 18,149,718 $ - $ 724,998

For the Years Ended December 31, 2021

Corporate

Funds

Bonds

Withheld

Fair value, beginning of period
$ 186,800 $ 653,294
Principal payment
(5,200 ) 0
Investment related losses
0 (108,526 )
Fair value, end of period
$ 181,600 $ 544,768
F- 24

~~Table of Contents~~
~~US Alliance Corporation~~
~~Notes to Consolidated Financial Statements~~

~~Note~~ 5.~~Fair Value Measurements (continued)~~
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 on the previous page. 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.

F- 2524
Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements

Note 4.
Fair Value Measurements (continued)
~~Note~~ 5.~~Fair Value Measurements (continued)~~
The estimated fair values of the Company’s financial assets and liabilities at December 31 are as follows:

December 31, 2021

December 31, 2022

Carrying Value

Fair Value

Level 1

Level 2

Level 3

Carrying Value

Fair Value

Level 1

Level 2

Level 3

Financial Assets:

Cash and cash equivalents
$ 7,955,348 $ 7,955,348 $ 7,955,348 $ 0 $ 0 $ 4,091,507 $ 4,091,507 $ 4,091,507 $ - $ -
Mortgage loans on real estate
3,653,142 3,653,142 0 0 3,653,142 23,790,073 23,790,073 - - 23,790,073
Investment income due and accrued
698,504 698,504 0 0 698,504 2,086,365 2,086,365 - - 2,086,365
Funds withheld
48,474,206 48,474,206 0 0 48,474,206
Reinsurance contract allocated hedge
724,998 724,998 - - 724,998
Policy loans
173,341 173,341 0 0 173,341 34,980 34,980 - - 34,980
Total Financial Assets (excluding available for sale investments)
$ 60,954,541 $ 60,954,438 $ 7,955,348 $ 0 $ 52,999,193 $ 30,727,923 $ 30,727,923 $ 4,091,507 $ - $ 26,636,416

Financial Liabilities:

Federal Home Loan Bank advance
$ 2,000,000 $ 2,000,000 $ 0 $ 0 $ 2,000,000 $ 1,000,000 $ 1,000,000 $ - $ - $ 1,000,000
Policyholder deposits in deposit-type contracts
75,567,873 78,359,733 0 0 78,359,733 79,035,350 67,741,524 - - 67,741,524
Total Financial Liabilities
$ 77,567,873 $ 80,359,733 $ 0 $ 0 $ 80,359,733 $ 80,035,350 $ 68,741,524 $ - $ - $ 68,741,524

December 31, 2020

Carrying Value

Fair Value

Level 1

Level 2

Level 3

Financial Assets:

Cash and cash equivalents
$ 4,320,759 $ 4,320,759 $ 4,320,759 $ 0 $ 0
Mortgage loans on real estate
3,166,136 3,166,136 0 0 3,166,136
Investment income due and accrued
423,036 423,036 0 0 423,036
Funds withheld
46,176,782 46,176,782 0 0 46,176,782
Policy loans
163,725 163,725 0 0 163,725
Total Financial Assets (excluding available for sale investments)
$ 54,250,438 $ 54,250,438 $ 4,320,759 $ 0 $ 49,929,679

Financial Liabilities:

Federal Home Loan Bank advance
$ 2,000,000 $ 2,000,000 $ 0 $ 0 $ 2,000,000
Policyholder deposits in deposit-type contracts
72,082,207 74,351,806 0 0 74,351,806
Total Financial Liabilities
$ 74,082,207 $ 76,351,806 $ 0 $ 0 $ 76,351,806

December 31, 2021

Carrying Value

Fair Value

Level 1

Level 2

Level 3

Financial Assets:

Cash and cash equivalents
$ 7,955,348 $ 7,955,348 $ 7,955,348 $ - $ -
Mortgage loans on real estate
3,653,142 3,653,142 - - 3,653,142
Investment income due and accrued
698,504 698,504 - - 698,504
Funds withheld
48,474,206 48,474,206 - - 48,474,206
Policy loans
173,341 173,341 - - 173,341
Total Financial Assets (excluding available for sale investments)
$ 60,954,541 $ 60,954,541 $ 7,955,348 $ - $ 52,999,193

Financial Liabilities:

Federal Home Loan Bank advance
$ 2,000,000 $ 2,000,000 $ - $ - $ 2,000,000
Policyholder deposits in deposit-type contracts
75,567,873 78,359,733 - - 78,359,733
Total Financial Liabilities
$ 77,567,873 $ 80,359,733 $ - $ - $ 80,359,733

F- 2625
Table of Contents
US Alliance Corporation

Notes to Consolidated Financial Statements

~~Note~~ 6.
Note 5.~~Income Tax Provision~~
Income Tax Provision

USAC files federal income tax returns based on the type of return. USAC files a consolidated corporate federal income tax return with USAMC and USAIC. USASLC, DCLIC, and USALSC-MT file a consolidated life insurance federal income tax return. Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

A reconciliation of federal income tax expense computed by applying the federal income tax rate of 21% to income before federal income tax expense for the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively, is summarized as follows:

2021

2020

2021

2021

Income before total federal income tax
$ (346,187 ) $ 299,175
Loss before total federal income tax
$ (3,305,485 ) $ (346,187 )
Tax rate
21 % 21 % 21 % 21 %
Expected income tax expense (benefit)
(72,700 ) 62,827
Expected income tax benefit
(694,152 ) (72,700 )
Effect of tax-exempt income
(19,588 ) (32,318 ) (19,204 ) (19,588 )
Disallowed deductions
1,181 1,012 - 1,181
Change in unrealized - valuation allowance and unrealized gains (losses)
56,601 148,778
Other GAAP to tax differences
0 4,043
Change in unrealized - valuation allowance and unrealized gains
- 56,601
State income tax, net
66,793 -
Return-to-Provision adjustments
20,471 0 (25,529 ) 20,471
Prior period estimate adjustments
107,906 0
Prior period adjustments
13,334 107,906
Change in valuation allowance
(774,413 ) (324,616 ) 509,758 (774,413 )
Total
$ (680,542 ) $ (140,274 ) $ (149,000 ) $ (680,542 )

For the year ended December 31, 2022, the Company recognized total tax benefit of $(149,000). This benefit is comprised of current tax benefit of $(95,183) and a deferred tax benefit of $(53,817). For the year ended December 31, 2021, the Company recognized a total tax benefit of $(680,542). This benefit is comprised of current tax expense of $473,730 and a deferred tax benefit of $(1,154,272). ~~The Company recognized a deferred tax benefit of $774,413 related to the decrease of its deferred tax asset valuation allowance associated with net operating losses. For the year ended~~ ~~December 31, 2020,~~ ~~the Company recognized a total tax benefit of $140,274.~~

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, ~~2021~~2022 and ~~2020~~2021 are summarized as follows:

Deferred Tax Assets

2021

2020

2022

2021

Net operating and capital loss carryforwards
$ 2,271,246 $ 2,111,431 $ 2,364,039 $ 2,271,246
Unamortized start-up costs
126,603 147,703 105,502 126,603
Policyowner benefit reserves
2,806,586 2,389,259 2,752,406 2,806,586
Goodwill
0 194,670
Unrealized Losses
1,367,975 -
Tax DAC
753,983 775,734 824,896 753,983
Deferred tax asset valuation allowance
(1,324,409 ) (2,098,822 ) (1,834,167 ) (1,324,409 )
4,634,009 3,519,975 5,580,651 4,634,009
Deferred Tax Liabilities

GAAP DAC
1,334,524 1,488,265 1,177,664 1,334,524
Fixed assets
21,703 8,821 29,945 21,703
8 Year Spread
155,620 194,524 116,715 155,620
Value of business acquired
548,271 567,679 528,862 548,271
Other GAAP to Tax Differences
233,953 0 432,943 233,953
Unrealized gains
779,171 1,017,429 - 779,171
3,073,242 3,276,718 2,286,129 3,073,241

Net Deferred Tax
$ 1,560,767 $ 243,257 $ 3,294,522 $ 1,560,767

F- 26

Table of Contents
US Alliance Corporation
Notes to Consolidated Financial Statements
Note 5.
Income Tax Provision (continued)
The Company has federal net operating loss ("NOL") and capital loss carryforwards of ~~$9,198,976~~$9,630,952 and ~~$10,054,432~~$9,198,976 as of December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The federal NOLs generated in the years ended December 31, 2009 through 2017 will begin to expire in 2027 for federal income tax purposes. NOLs originating before January 1, 2018 are eligible to offset taxable income, if not otherwise limited under Internal Revenue Code ("IRC") section 382 limitations. NOLs generated after December 31, 2017, have an indefinite carryforward period and are subject to 80% deduction limitations based upon pre-NOL taxable income.

F- 27
Note 6.
~~Table of Contents~~
~~US Alliance Corporation~~
~~Notes to Consolidated Financial Statements~~

~~Note~~ 7.~~Reinsurance~~
Reinsurance

A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of December 31, ~~2021~~2022 and ~~2020~~2021 and for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 is listed in the following table.

December 31, 2021

December 31, 2020

December 31, 2022

December 31, 2021

Balance Sheet

Benefits and claim reserves ceded
$ 86,777 $ 105,621 $ 87,411 $ 86,777
Amounts due (to) from ceding company
(235,629 ) 59,462 39,817 (235,629 )
Benefits and claim reserves assumed
53,774,832 53,069,522
53,519,377
53,774,832

Years ended

Statements of Comprehensive Income (Loss)

December 31, 2021

December 31, 2020

Ceded premium
$ 1,075,837 $ 923,527
Assumed premium
4,301,496 4,682,634
Allowances on ceded premium
23,649 24,077
Allowances paid on assumed premium
554,388 6,765,030
Assumed benefits and policyholder reserve increases
5,291,774 5,243,836

Years ended

Statements of Comprehensive Loss

December 31, 2022

December 31, 2021

Ceded premium
$ 1,214,932 $ 1,075,837
Assumed premium
4,400,339 4,301,496
Allowances on ceded premium
22,936 23,649
Allowances paid on assumed premium
515,429 554,388
Assumed benefits and policyholder reserve increases
5,566,574 5,291,774

The company currently reinsures 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.


~~Note~~ 8.
Note 7.~~Lease Commitments~~
Lease Commitments

Total rent expense was ~~$7,546~~$0 and ~~$48,146~~$7,546 for the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company terminated its lease on its former Topeka headquarters effective December 31, 2020 and has no future rent obligations for this location. The Company maintained an office in Bismarck, ND with a lease that expired on September 30, 2021.


~~Note~~ 9.
Note 8.~~Related Party Transactions~~
Related Party Transactions

Brier Development Company, Inc. is owned solely by Jack Brier, President and CEO of the Company. Brier Development Company, Inc. owns 20,000 shares of stock in USAC which are in escrow until 5 years after the termination of the public offering. The Company makes reimbursements to Brier Development Company, Inc. on behalf of Jack H. Brier for single coverage for long-term care, Medicare coverage, and an allowance for vehicle expenses. Reimbursements for these items were ~~$25,813~~$26,373 and ~~$21,019~~$25,813 for years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

F- 2827
Table of Contents
US Alliance Corporation

Notes to Consolidated Financial Statements

~~Note~~ ~~10.~~
Note 9.~~Federal Home Loan Bank Advances~~
Federal Home Loan Bank Advances

One of the Company’s subsidiaries, USALSC, is a member of the Federal Home Loan Bank of Topeka (FHLB), which provides access to collateralized borrowings. Any borrowings from FHLB requires the purchase of FHLB common stock in an amount equal to 4.5% of the borrowing. On October 31, 2019, USALSC received an advance of $ 1,000,000 based on USALSC purchasing $ 45,000 of FHLB common stock.   This regular fixed convertible advance has a 10 year term with an FHLB option to convert to an adjustable rate on the 55th^th anniversary. The interest rate at issue was 1.66%. On April 23, 2020 and June 22, 2020 the company took two additional advances with two year terms. The interest rate at issue was 0.37% and 0.28% respectively. As of December 31, ~~2021~~2022, ~~and~~ ~~2020,~~the Company had outstanding advances of ~~$2,000,000.~~$1,000,000.

As of December 31, ~~2021,~~2022, USALSC had pledged ~~$2,554,993~~$1,867,278 of mortgage backed securities and US treasuries ~~and overnight deposits~~ to FHLB in support of its outstanding advance.


~~Note~~ ~~11.~~
Note 10.~~Restricted Funds~~
Restricted Funds

As required by Kansas law, US Alliance Life and Security Company maintains a trust account at Capitol Federal Savings Bank which is jointly owned by the Kansas Insurance Department. The life insurance company is required by the State of Kansas to hold $400,000 of asset book value in this account. The Company placed additional assets into this trust account in 2015 and 2022to meet the minimum deposit ~~requirement~~requirements for ~~the State of Missouri.~~additional states. These assets were held in bonds and other invested assets with a statement value of $1,500,000 and $625,000 as of December 31, ~~2021~~2022 and ~~2020.~~2021, respectively. Additionally, the Company has a special deposit with the State of Missouri with asset book value of $300,000. Dakota Capital Life Insurance Company has $1,030,000 of funds on deposit jointly owned with the North Dakota Insurance Department at the Bank of North Dakota. US Alliance Life and Security Company – Montana has ~~$550,000~~$825,000 of funds on deposit jointly owned by the Montana Department of Insurance at Capitol Federal Savings Bank.

~~Note~~ ~~12.~~
Note 11.~~Statutory Net Income and Surplus~~
Statutory Net Income and Surplus

US Alliance Life and Security Company is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Kansas Insurance Department. Dakota Capital Life Insurance Company is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the North Dakota Insurance Department. US Alliance Life and Security Company - Montana is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Montana Insurance Department. Statutory practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis.

F- 28

Table of Contents
US Alliance Corporation
Notes to Consolidated Financial Statements
Note 11.
Statutory Net Income and Surplus (continued)
The following table summarizes the statutory net income (loss) and statutory capital and surplus of US Alliance Life and Security Company, Dakota Capital Life Insurance Company, and US Alliance Life and Security Company - Montana for the years ended December 31, ~~2021~~2022 and ~~2020.~~2021.

F- 29

Statutory Capital and Surplus as of

December 31,

December 31,

2022

2021

US Alliance Life and Security Company
$ 5,617,538 $ 7,377,352
Dakota Capital Life Insurance Company
3,840,701 3,946,357
US Alliance Life and Security Company - Montana
1,840,134 1,709,322

~~US Alliance Corporation~~
~~Notes to Consolidated Financial Statements~~

~~Note~~ ~~12.~~~~Statutory Net Income and Surplus (continued)~~

Statutory Capital and Surplus as of

December 31,

December 31,

2021

2020

US Alliance Life and Security Company
$ 7,293,547 $ 6,242,080
Dakota Capital Life Insurance Company
3,862,372 3,700,272
US Alliance Life and Security Company - Montana
1,709,322 1,709,032

Statutory Net Income (loss) for the years ended December 31,

Statutory Net Income (loss) for the years ended December 31,

2021

2020

2022

2021

US Alliance Life and Security Company
$ 792,738 $ (1,960,666 ) $ (2,229,098 ) $ 792,748
Dakota Capital Life Insurance Company
73,955 (31,734 ) (219,601 ) 73,953
US Alliance Life and Security Company - Montana
(1,179 ) 39,410 133,180 (1,179 )

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. No dividends were paid in 2022 or 2021.


Note 12.
Commitments
~~Note~~
The Company entered into a subscription agreement with Mutual Capital Investment Fund, LP on ~~13.~~November 11, 2022. The agreement set forth a capital commitment of $2,000,000. As of December 31, 2022 no ~~Subsequent Events~~requests of capital have been made.
Note 13.
Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at the balance sheet date, including the estimates inherent in the process of preparing the consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the balance sheet date but arose after, but before the consolidated financial statements are issued. In some cases, unrecognized subsequent events are disclosed to keep the consolidated financial statements from being misleading. On December 5, 2022, the Company obtained board approval to contribute capital in the amount of $700,000 to US Alliance Life and Security Company, if needed. On February 21, 2022, the decision was made to contribute capital to US Alliance Life and Security Company in the amount of $700,000. This contribution, pending Kansas Insurance Department approval, will increase US Alliance Life and Security Company surplus by $700,000.

The Company has evaluated subsequent events through February ~~22, 2022,~~21, 2023, the date on which the consolidated financial statements were issued.
~~F-30~~F-29

	Kansas	26-4824142
	State of Incorporation	IRS Employer Identification Number

	1303 SW First American Place, Suite 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	7
Item 1B.	Unresolved Staff Comments	12
Item 2.	Properties	12
Item 3.	Legal Proceedings	12
Item 4.	Mine Safety Disclosures	12

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	27
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	27

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	28
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28
Item 13.	Certain Relationships and Related Transactions and Director Independence	28
Item 14.	Principal Accountant Fees and Services	28

PART IV
Item 15.	Exhibits and Financial Statement Schedules	29
	Exhibit Index	29
	Signatures	3233

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

	Increase in		Other						% of Operating		Increase in		Other						% of Operating
	Policyholder		Policy-related		Operating		Total		Expense to		Policyholder		Policy-related		Operating		Total		Expense to
Year	Reserves		Expenses		Expenses		Expenses		Total Expense		Reserves		Expenses		Expenses		Expenses		Total Expense
2018		2,766,169		6,028,730		3,120,524		11,915,423		26%		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%		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%		3,359,609		8,964,121		3,649,000		15,972,730		23%
2021		4,063,488		10,627,532		3,244,412		17,935,432		18%		4,063,488		10,627,532		3,244,412		17,935,432		18%
2022												4,207,703		11,623,423		3,480,212		19,311,338		18%

	As of December 31, 2021				As of December 31, 2020				As of December 31, 2022				As of December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	-	$	-	$	373,590	$	379,823	$	442,846	$	450,461	$	-	$	-
After one year through five years		1,987,421		2,087,132		1,540,931		1,641,749		17,048,721		17,035,270		1,987,421		2,087,132
After five years through ten years		2,540,089		2,865,020		2,887,066		3,379,930		5,498,364		5,340,498		2,540,089		2,865,020
More than 10 years		21,479,533		23,780,250		21,892,891		25,045,879		21,337,372		17,638,063		21,479,533		23,780,250
Redeemable preferred stocks		3,612,625		3,621,526		2,900,330		2,990,215		3,875,526		3,355,615		3,612,625		3,621,526
Mortgage backed and asset backed securities		5,636,371		5,588,729		4,189,710		4,239,982		22,412,895		21,496,170		5,636,371		5,588,729
Total amortized cost and fair value	$	35,256,039	$	37,942,657	$	33,784,518	$	37,677,578	$	70,615,724	$	65,316,077	$	35,256,039	$	37,942,657

	Cash Flow		Net Cash Flow		Cash Flow		Cash Flow		Net Cash Flow		Cash Flow
	From		From Deposit		from Insurance		From		From Deposit		from Insurance
Year	Operations		Type Contracts		Activities		Operations		Type Contracts		Activities
2018		2,249,068		2,598,564	$	4,847,632		2,249,068		2,598,564	$	4,847,632
2019		2,270,041		2,176,602	$	4,446,643		2,270,041		2,176,602	$	4,446,643
2020		2,099,401		4,592,576	$	6,691,977		2,099,401		4,592,576	$	6,691,977
2021		3,411,873		2,050,078	$	5,461,951		3,411,873		2,050,078	$	5,461,951
2022								4,787,903		2,145,995	$	6,933,898

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 incorporated herein by reference as Exhibit 2.2.

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 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.

3.1.1	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 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.

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.

4.2	Description of US Alliance Corporation’s Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed on February 2, 2020, (File No. 000-55627), is incorporated herein by reference as Exhibit 4.2.

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 10.1.

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 10.2.

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 10.3.

10.4	Bulk 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.

10.5	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 10.5.

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 10.6.1.

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 10.6.2.

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 10.7.

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 10.8.

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 10.9.

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

10.10.1	Amendment No. 1 to ALSC 2017 Coinsurance Agreement effective as of June 1, 2020, filed as Exhibit 10.10.1 to the Company's Annual Report on Form 10-K filed on February 23, 2021 (File No. 000-55627), is ~~incoporated~~incorporated herein by reference as Exhibit 10.10.1.

10.10.2	Second Amendment to ALSC 2017 Coinsurance Agreement effective as of December 31, 2020, filed as Exhibit 10.10.2 to the Company's Annual Report on Form 10-K filed on February 23, 2021 (File No. 000-55627), is ~~incoporated~~incorporated herein by reference as Exhibit 10.10.2.

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, filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K filed on February 23, 2021 (File No. 000-55627), is ~~incoporated~~incorporated herein by reference as Exhibit 10.14.

10.15*	Employment Agreement dated March 15, 2021 between US Alliance Corporation and Jeffrey Brown, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 18, 2021 (File No. 000-55627), is incorporated herein by reference as Exhibit 10.15.

10.16*	Employment Agreement dated ~~Septembwr~~September 28, 2021 between US Alliance Corporation and Jack Brier, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 1, 2021 (File No. 000-55627), is incorporated herein by reference as Exhibit 10.16.

21.1** 10.17*	~~List of Subsidiaries~~Amendment to Employment Agreement dated January 1, 2023 between US Alliance Corporation and Jack Brier, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 6, 2023 (File No. 000-55627), is incorporated herein by reference as Exhibit 10.17.

~~24.1~~ 21.1**	List of Subsidiaries

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

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

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

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

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

101.INS***	Inline XBRL Instance

101.SCH***	Inline XBRL Taxonomy Extension Schema

101.CAL***	Inline XBRL Taxonomy Extension Calculation

101.DEF***	Inline XBRL Taxonomy Extension Definition

101.LAB***	Inline XBRL Taxonomy Extension Labels

101.PRE***	Inline XBRL Taxonomy Extension Presentation

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		US ALLIANCE CORPORATION
		(Registrant)

Date: February 22, ~~2022~~2023	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		Vice-President, Principal Financial Officer and Treasuer
Jeff Brown

/S/ Jim Poolman		Director
Jim Poolman

/S/ John Helms		Director
John Helms

/S/ James Concannon		Director.
James Concannon

/S/ William Graves		Director.
William Graves

Report of Independent Registered Public Accounting Firm (PCAOB ID ~~0071800003)~~ 718)	F1F-1

ConsolidatedFinancial Statements

Consolidated Balance Sheets	F2F-2
Consolidated Statements of Comprehensive ~~Income~~Loss	F3F-3
Consolidated Statements of Changes in Shareholders’ Equity	F4F-4
Consolidated Statements of Cash Flows	F5F-5
Supplemental Cash Flow Information	F6F-6

Notes to Consolidated Financial Statements	F7F-7 – ~~F31~~F-29

								Accumulated																Accumulated
	Number of							Other									Number of							Other
	Shares of		Common		Additional			Comprehensive			Accumulated						Shares of		Common		Additional			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Income / (Loss)			Deficit			Total			Common Stock		Stock		Paid-in Capital			Income (Loss)			Deficit			Total
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			0			0			52,381
Costs associated with common stock issued		-		0		(198,616	)		0			0			(198,616	)
Other comprehensive income		-		0		0			1,235,380			0			1,235,380
Net income		-		0		0			0			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			7,741,487	$	774,150	$	23,063,273		$	3,564,875		$	(8,997,507	)	$	18,404,791
Common stock issued, $7 per share		3,917		391		27,028			0			0			27,419			3,917		391		27,028			-			-			27,419
Costs associated with common stock issued		-		0		(141,664	)		0			0			(141,664	)		-		-		(141,664	)		-			-			(141,664	)
Other comprehensive loss		-		0		0			(1,043,145	)		0			(1,043,145	)		-		-		-			(1,043,145	)		-			(1,043,145	)
Net Income		-		0		0			0			334,355			334,355
Net income																		-		-		-			-			334,355			334,355
Balance, December 31, 2021		7,745,404	$	774,541	$	22,948,637		$	2,521,730		$	(8,663,152	)	$	17,581,756			7,745,404	$	774,541	$	22,948,637		$	2,521,730		$	(8,663,152	)	$	17,581,756
Common stock issued, $7 per share																		1,518		152		10,474			-			-			10,626
Costs associated with common stock issued																		-		-		(3,653	)		-			-			(3,653	)
Other comprehensive loss																		-		-		-			(6,362,850	)		-			(6,362,850	)
Net loss																		-		-		-			-			(3,156,485	)		(3,156,485	)
Balance, December 31, 2022																		7,746,922	$	774,693	$	22,955,458		$	(3,841,120	)	$	(11,819,637	)	$	8,069,394

	December 31, 2022				December 31, 2021
	Derivative				Derivative				Balance
	Asset		Liability		Asset		Liability		Reported In
Derivatives:
Embedded derivatives:
Funds withheld embedded derivative	$	-		-	$	544,768	$	-	Funds withheld
Reinsurance contract allocated hedge		724,998		-		-		-	Reinsurance related assets

	Year Ending			Year Ending		Balance	Year Ending			Year Ending			Balance
	December 31, 2021			December 31, 2020		Reported In	December 31, 2022			December 31, 2021			Reported In
Derivatives:
Embedded derivatives:
Change in funds withheld embedded derivative	$	(108,526	)	$	653,294	Net investment gains	$	(544,768	)	$	(108,526	)	Net investment gains (losses)
Change in reinsurance contract allocated hedge							$	367,172		$	-		Net investment gains (losses)

	December 31, 2022
	Total		Level 1		Level 2		Level 3

Fixed maturities:
US Treasury securities	$	1,025,087	$	1,025,087	$	-	$	-
Corporate bonds		15,869,078		-		15,687,478		181,600
Municipal bonds		5,420,409		-		5,420,409		-
Redeemable preferred stock		3,355,615		-		3,355,615		-
Term loans		18,149,718		-		-		18,149,718
Mortgage backed and asset backed securities		21,496,170		-		21,099,920		396,250
Total fixed maturities		65,316,077		1,025,087		45,563,422		18,727,568
Equities:
Common stock		6,024,224		5,929,624		94,600		-
Preferred stock		1,370,820		-		1,370,820		-
Total equities		7,395,044		5,929,624		1,465,420		-
Other invested assets		1,760,777		-		-		1,760,777
Reinsurance contract allocated hedge		724,998		-		-		724,998
Total	$	75,196,896	$	6,954,711	$	47,028,842	$	21,213,343

			Mortgage
For the Year Ended December 31, 2022	Corporate		Backed			Term		Funds			Hedge
	Bonds		Securities			Loans		Withheld			Derivative
Fair value, beginning of period	$	181,600	$	-		$	-	$	544,768		$	-
Acquisition		-		423,965			18,086,124		-			1,045,027
Investment related gains (losses)		-		(27,715	)		63,594		(1,090,434	)		(320,029	)
Settlement		-		-			-		545,666			-
Fair value, end of period	$	181,600	$	396,250		$	18,149,718	$	-		$	724,998

For the Years Ended December 31, 2021	Corporate			Funds
	Bonds			Withheld
Fair value, beginning of period	$	186,800		$	653,294
Principal payment		(5,200	)		0
Investment related losses		0			(108,526	)
Fair value, end of period	$	181,600		$	544,768

	December 31, 2021										December 31, 2022

	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	7,955,348	$	7,955,348	$	7,955,348	$	0	$	0	$	4,091,507	$	4,091,507	$	4,091,507	$	-	$	-
Mortgage loans on real estate		3,653,142		3,653,142		0		0		3,653,142		23,790,073		23,790,073		-		-		23,790,073
Investment income due and accrued		698,504		698,504		0		0		698,504		2,086,365		2,086,365		-		-		2,086,365
Funds withheld		48,474,206		48,474,206		0		0		48,474,206
Reinsurance contract allocated hedge												724,998		724,998		-		-		724,998
Policy loans		173,341		173,341		0		0		173,341		34,980		34,980		-		-		34,980
Total Financial Assets (excluding available for sale investments)	$	60,954,541	$	60,954,438	$	7,955,348	$	0	$	52,999,193	$	30,727,923	$	30,727,923	$	4,091,507	$	-	$	26,636,416

Financial Liabilities:
Federal Home Loan Bank advance	$	2,000,000	$	2,000,000	$	0	$	0	$	2,000,000	$	1,000,000	$	1,000,000	$	-	$	-	$	1,000,000
Policyholder deposits in deposit-type contracts		75,567,873		78,359,733		0		0		78,359,733		79,035,350		67,741,524		-		-		67,741,524
Total Financial Liabilities	$	77,567,873	$	80,359,733	$	0	$	0	$	80,359,733	$	80,035,350	$	68,741,524	$	-	$	-	$	68,741,524

Deferred Tax Assets	2021			2020			2022			2021
Net operating and capital loss carryforwards	$	2,271,246		$	2,111,431		$	2,364,039		$	2,271,246
Unamortized start-up costs		126,603			147,703			105,502			126,603
Policyowner benefit reserves		2,806,586			2,389,259			2,752,406			2,806,586
Goodwill		0			194,670
Unrealized Losses								1,367,975			-
Tax DAC		753,983			775,734			824,896			753,983
Deferred tax asset valuation allowance		(1,324,409	)		(2,098,822	)		(1,834,167	)		(1,324,409	)
		4,634,009			3,519,975			5,580,651			4,634,009
Deferred Tax Liabilities
GAAP DAC		1,334,524			1,488,265			1,177,664			1,334,524
Fixed assets		21,703			8,821			29,945			21,703
8 Year Spread		155,620			194,524			116,715			155,620
Value of business acquired		548,271			567,679			528,862			548,271
Other GAAP to Tax Differences		233,953			0			432,943			233,953
Unrealized gains		779,171			1,017,429			-			779,171
		3,073,242			3,276,718			2,286,129			3,073,241

Net Deferred Tax	$	1,560,767		$	243,257		$	3,294,522		$	1,560,767

	Years ended
Statements of Comprehensive Income (Loss)	December 31, 2021		December 31, 2020

Ceded premium	$	1,075,837	$	923,527
Assumed premium		4,301,496		4,682,634
Allowances on ceded premium		23,649		24,077
Allowances paid on assumed premium		554,388		6,765,030
Assumed benefits and policyholder reserve increases		5,291,774		5,243,836

	Years ended
Statements of Comprehensive Loss	December 31, 2022		December 31, 2021

Ceded premium	$	1,214,932	$	1,075,837
Assumed premium		4,400,339		4,301,496
Allowances on ceded premium		22,936		23,649
Allowances paid on assumed premium		515,429		554,388
Assumed benefits and policyholder reserve increases		5,566,574		5,291,774

	Statutory Capital and Surplus as of
	December 31,		December 31,
	2022		2021

US Alliance Life and Security Company	$	5,617,538	$	7,377,352
Dakota Capital Life Insurance Company		3,840,701		3,946,357
US Alliance Life and Security Company - Montana		1,840,134		1,709,322

	Statutory Net Income (loss) for the years ended December 31,						Statutory Net Income (loss) for the years ended December 31,
	2021			2020			2022			2021

US Alliance Life and Security Company	$	792,738		$	(1,960,666	)	$	(2,229,098	)	$	792,748
Dakota Capital Life Insurance Company		73,955			(31,734	)		(219,601	)		73,953
US Alliance Life and Security Company - Montana		(1,179	)		39,410			133,180			(1,179	)