Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MIDWEST HOLDING INC. | |
Entity Central Index Key | 355,379 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 22,860,701 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Investments, available for sale, at fair value | ||
Fixed maturities (amortized cost: $20,915,363 and $21,573,519, respectively) | $ 19,297,644 | $ 21,005,907 |
Other invested assets | 110,223 | |
Real estate, held for investment | 499,668 | 505,688 |
Policy loans | 438,465 | 435,196 |
Total investments | 20,346,000 | 21,946,791 |
Cash and cash equivalents | 2,660,663 | 951,527 |
Amounts recoverable from reinsurers | 22,853,760 | 22,501,593 |
Interest due and accrued | 224,691 | 223,166 |
Due premiums | 584,091 | 637,574 |
Deferred acquisition costs, net | 1,926,743 | 2,046,864 |
Value of business acquired, net | 390,738 | 427,454 |
Intangible assets | 700,000 | 700,000 |
Property and equipment, net | 109,449 | 127,976 |
Other assets | 183,921 | 107,723 |
Total assets | 49,980,056 | 49,670,668 |
Liabilities: | ||
Benefit reserves | 26,321,196 | 26,228,105 |
Policy claims | 384,634 | 447,513 |
Deposit-type contracts | 19,189,533 | 18,421,055 |
Advance premiums | 37,740 | 40,839 |
Deferred gain on coinsurance transaction | 931,239 | 955,427 |
Total policy liabilities | 46,864,342 | 46,092,939 |
Notes payable | 600,000 | |
Accounts payable and accrued expenses | 490,937 | 791,294 |
Surplus notes | 550,000 | 550,000 |
Total liabilities | 48,505,279 | 47,434,233 |
Commitments and Contingencies (See Note 8) | ||
Stockholders' Equity: | ||
Preferred stock, Series C , $0.001 par value. Authorized 1,500,00 shares; issued and outstanding 1,500,000 as of June 30, 2018 | 1,500 | |
Common stock, $0.001 par value. Authorized 120,000,000 shares; issued and outstanding 22,860,701 as of June 30, 2018 and as of December 31, 2017 | 22,861 | 22,861 |
Additional paid-in capital | 34,504,755 | 33,006,255 |
Accumulated deficit | (31,607,275) | (30,238,778) |
Accumulated other comprehensive loss | (1,447,064) | (553,903) |
Total stockholders' equity | 1,474,777 | 2,236,435 |
Total liabilities and stockholders' equity | $ 49,980,056 | $ 49,670,668 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Amortized Cost | $ 20,915,363 | $ 21,573,519 |
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 1,500,000 | |
Preferred stock, shares issued | 1,500,000 | |
Preferred stock, shares outstanding | 1,500,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 22,860,701 | 22,860,701 |
Common stock, shares outstanding | 22,860,701 | 22,860,701 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income: | ||||
Premiums | $ 514,057 | $ 871,535 | $ 971,423 | $ 1,704,382 |
Investment income, net of expenses | 201,471 | 250,153 | 404,932 | 504,833 |
Net realized (losses) gains on investments | (152,203) | 54,513 | (201,874) | 19,009 |
Miscellaneous income | 25,044 | 19,055 | 51,284 | 37,855 |
Total Income | 588,369 | 1,195,256 | 1,225,765 | 2,266,079 |
Expenses: | ||||
Death and other benefits | 237,421 | 270,337 | 504,281 | 565,594 |
Interest credited | 124,644 | 234,149 | 246,151 | 453,381 |
Increase in benefit reserves | 20,904 | 162,620 | 12,563 | 307,746 |
Amortization of deferred acquisition costs | 108,055 | 134,149 | 202,913 | 292,854 |
Salaries and benefits | 429,821 | 528,042 | 912,537 | 1,103,608 |
Other operating expenses | 276,136 | 656,434 | 715,817 | 1,377,275 |
Total Expenses | 1,196,981 | 1,985,731 | 2,594,262 | 4,100,458 |
Loss before income taxes | (608,612) | (790,475) | (1,368,497) | (1,834,379) |
Income tax expense | ||||
Net loss | (608,612) | (790,475) | (1,368,497) | (1,834,379) |
Comprehensive loss: | ||||
Unrealized (losses) gains on investments arising during period | (472,135) | 356,652 | (1,095,035) | 539,665 |
Less: reclassification adjustment for net realized losses (gains) on investments | 152,203 | (54,513) | 201,874 | (19,009) |
Other comprehensive (loss) income | (319,932) | 302,139 | (893,161) | 520,656 |
Comprehensive loss | $ (928,544) | $ (488,336) | $ (2,261,658) | $ (1,313,723) |
Net loss per common share, basic and diluted | $ (0.03) | $ (0.03) | $ (0.06) | $ (0.08) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (1,368,497) | $ (1,834,379) |
Adjustments to arrive at cash provided by operating activities: | ||
Net premium and discount on investments | 58,719 | 102,300 |
Depreciation and amortization | 67,970 | 170,063 |
Deferred acquisition costs capitalized | (59,771) | (220,360) |
Amortization of deferred acquisition costs | 202,913 | 292,854 |
Net realized losses (gains) on investments | 201,874 | (19,009) |
Deferred coinsurance ceding commission | (24,188) | |
Changes in operating assets and liabilities: | ||
Amounts recoverable from reinsurers | (352,167) | 251,005 |
Interest and dividends due and accrued | (1,525) | 4,887 |
Due premiums | 53,483 | 21,709 |
Policy liabilities | 672,821 | 460,412 |
Other assets and liabilities | (352,853) | 291,124 |
Net cash used for operating activities | (901,221) | (479,394) |
Securities available for sale: | ||
Purchases | (5,837,939) | (14,009,798) |
Proceeds from sale or maturity | 6,335,502 | 15,381,725 |
Other invested assets purchased | (100,000) | |
Net change in policy loans | (3,269) | (10,148) |
Net purchases of property and equipment | (6,707) | (41,588) |
Net cash provided by investing activities | 387,587 | 1,320,191 |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of preferred stock | 1,500,000 | |
Preferred stock dividend | (30,543) | |
Proceeds from issuance of notes payable | 600,000 | |
Receipts on deposit-type contracts | 579,352 | 1,405,247 |
Withdrawals on deposit-type contracts | (456,582) | (594,544) |
Net cash provided by financing activities | 2,222,770 | 780,160 |
Net increase in cash and cash equivalents | 1,709,136 | 1,620,957 |
Cash and cash equivalents: | ||
Beginning | 951,527 | 661,545 |
Ending | 2,660,663 | 2,282,502 |
Supplemental Disclosure of Non-Cash Information | ||
Converted Series B Preferred Stock | (103) | |
Common stock issues from converted Series B Preferred Stock | 103 | |
Total Non-Cash Information |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Note 1. Nature of Operations and Summary of Significant Accounting Policies Nature of operations: Midwest Holding Inc. (“Midwest” or “the Company”) was incorporated in Nebraska on October 31, 2003 for the primary purpose of becoming Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions from the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements. In the opinion of management, and subject to the Special Note above, Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive loss. Declines in the fair value of available for sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company to hold the investment until the recovery of the 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 the Company intends to sell a security or it is more likely than not that the Company 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 statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the six months ended June 30, 2018 or 2017. Investment income consists of interest, dividends, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. Policy loans: Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value. Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years. Cash: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At June 30, 2018 and December 31, 2017, the Company had no cash equivalents. Deferred acquisition costs: Deferred acquisition costs (“DAC”) consist of incremental direct costs, net of amounts ceded to reinsurers, 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. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. 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. The Company performs a recoverability analysis annually in the fourth quarter unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2018 that suggest a review should be undertaken. The following table provides information about deferred acquisition costs for the periods ended June 30, 2018 and December 31, 2017, respectively. Six Months Ended Year Ended June 30, December 31 2018 2017 Balance at beginning of period $ 2,046,864 $ 2,568,799 Capitalization of commissions, sales and issue expenses 59,771 333,940 Change in DAC due to unrealized investment losses 23,021 (14,144 ) Gross amortization (202,913 ) ) Change in DAC due to coinsurance ceding commission - (437,620 ) Balance at end of period $ 1,926,743 $ 2,046,864 V alue 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. Recoverability of value of business acquired 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. The Company performs a recoverability analysis annually in the fourth quarter unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2018 that suggest a review should be undertaken. Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $12,676 and $17,258 for the three months ended June 30, 2018 and 2017, respectively. Depreciation expense totaled $25,234 and $33,647 for the six months ended June 30, 2018 and 2017, respectively. Accumulated depreciation net of disposals totaled $919,248 and $894,014 as of June 30, 2018 and December 31, 2017, respectively. Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2018 that would indicate the carrying amounts may not be recoverable. Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large 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. The Company generally strives to diversify its 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 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 June 30, 2018 or December 31, 2017. 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. Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies. Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2010. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. 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. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at June 30, 2018 or Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other 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 administrative and contract-holder services and cost of insurance, 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. Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy. 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. 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. Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available for sale, net of applicable taxes. Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 120,000,000 voting common shares authorized, 20,000,000 non-voting common shares authorized, and 10,000,000 preferred shares authorized. At June 30, 2018 and December 31, 2017, the Company had 22,860,701 voting common shares issued and outstanding, respectively. The Class A preferred shares were non-cumulative, non-voting and convertible by the holder to voting common shares after May, 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). The par value per preferred share was $0.001 with 2,000,000 shares authorized. At December 31, 2017 the 74,159 Class A preferred shares outstanding were converted by the Company into 96,407 voting common shares. The Class B preferred shares were non-cumulative, non-voting and convertible by the holder or the Company to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The par value per preferred share was $0.001 with 1,000,000 shares authorized. The stated annual dividend rate on the Class B preferred shares was 7%. Dividends totaling $30,544 were paid as of June 30, 2017. On June 15, 2017, the 102,669 outstanding Class B preferred shares were converted by the Company into 205,338 voting common shares. The Class C preferred shares are cumulative Each preferred share has a liquidation preference of $1.00 per share. Loss per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended June 30, 2018 and 2017 were 22,860,701 and 22,764,294 shares, respectively. The weighted average number of shares outstanding during the six months ended June 30, 2018 and 2017 were 22,860,701 and 22,763,160 shares, respectively. New accounting standards: On February 14, 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. It allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for public business entities for reporting periods for which financial statements have not yet been issued. The Company has evaluated the impact of this update and has determined that this does not impact us currently due to not recording unrealized losses or gains net of tax. The Company has incurred net operating losses since inception so we don't record deferred tax assets or deferred tax liabilities due to establishing a valuation allowance. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which assists in determining whether a transaction should be accounted for as an acquisition or disposal of assets or as a business. This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a prospective approach, with early adoption permitted for transactions not previously reported in issued financial statements. The Company adopted this ASU on January 1, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements, however, the Company will apply the provisions of ASU 2017-01 to future acquisitions. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). This amendment defers the effective date of the previously issued ASU 2014-09 until the interim and annual reporting periods beginning after December 15, 2017. Earlier application is permitted for interim and annual reporting periods beginning after December 15, 2016. In addition, the FASB has issued four related ASU's on principal versus agent guidance (ASU 2016-08), identifying performance obligations and the licensing implementation guidance (ASU 2016-10), a revision of certain SEC Staff Observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). The guidance permits two methods of transition upon adoption; full retrospective and modified retrospective. The Company will utilize the modified retrospective method upon adoption of ASU 2014-09 on January 1, 2018. Under the modified retrospective method, revenues and other disclosures for pre-2017 periods would be provided in the notes to the consolidated financial statements as previously reported under the current revenue standard. Insurance contracts, lease contracts and investments are not within the scope of ASU 2014-09; therefore, this standard would not apply to the majority of our consolidated revenues. For the Company's miscellaneous income, which is within the scope of this guidance, the Company reviewed its service fee income revenue streams and compared its historical accounting policies and practices to the new standard. The Company believes its historical revenue recognition was materially consistent with the way we recognized service fee income as of June 30, 2018. |
Change in Control
Change in Control | 6 Months Ended |
Jun. 30, 2018 | |
Change In Control | |
Change in Control | Note 2. Change in Control On May 9, 2018, the Company The terms and conditions of the Agreement were described in Midwest’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on May 14, 2018. All conditions to consummation of the Agreement, including approval of the transactions contemplated therein by the State of Nebraska Department of Insurance, were subsequently met and a closing was held pursuant to the Agreement on June 28, 2018 (the “Closing”). At Closing, Xenith loaned a total of $600,000 to Midwest, repayable upon maturity in 10 years with cash interest of 4% per annum payable quarterly and accrued interest of another 4% per annum payable upon maturity. The loans were made under two notes of $500,000 and $100,000, respectively. The first $500,000 note is convertible, at Xenith’s election, into approximately 24,300,000 shares of Midwest’s voting common stock (“Common Stock”) which equates to approximately $0.02 per share. The remaining $100,000 note will also be convertible at the same rate if Midwest has adequate authorized Common Stock available which will require an amendment to its Articles of Incorporation under a proxy statement to be filed with the SEC as soon as practicable. The Agreement further provides that Xenith, in its sole discretion, may loan up to an additional $22,900,000 to Midwest. Any loans made by Xenith under this election (“Subsequent Loans”) will also be convertible into Midwest’s Common Stock at the rate of approximately $0.02 per share. The conversion of Subsequent Loans assumes that Midwest’s Articles of Incorporation are appropriately amended. This amendment will require approval of Midwest’s shareholders as indicated above. The notes are secured under a Security Agreement which is collateralized by all of the issued and outstanding shares of Midwest’s wholly owned insurance subsidiary, American Life and Security Corp (“American Life”). Xenith has the right to foreclose on the collateral if Midwest commits an event of default under the notes. Defaults include Midwest’s failure to pay interest or principal on the notes when due, failure to observe any material provision of the Agreement, misrepresentations under the Agreement or bankruptcy or insolvency proceedings involving Midwest. Also at the Closing, Midwest sold 1,500,000 shares of newly created Class C Preferred Stock to Xenith for $1,500,000. The Class C Preferred Stock is convertible, at Xenith’s election, into approximately 72,900,000 shares of Midwest’s Common Stock at approximately $0.02 per share. To summarize the above for purposes of illustration assuming the Notes and shares of Preferred Stock are converted in the Company’s voting common stock: Number Percentage Current company shareholders 22,900,000 18.3 % Note conversion ($500,000) 24,300,000 19.5 % Note conversion ($100,000) 4,900,000 3.9 % Preferred stock conversion 72,900,000 58.3 % Total Outstanding 125,000,000 100.0 % For additional details, see the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2018. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2018 | |
Marketable Securities [Abstract] | |
Investments | Note 3. Investments The cost or amortized cost and estimated fair value of investments classified as available-for-sale as of June 30, 2018 and December 31, 2017 are as follows: Cost or Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value June 30, 2018: Fixed maturities: U.S. government obligations $ 2,121,765 $ - $ 149,574 $ 1,972,191 Mortgage-back securities 1,231,344 - 68,185 1,163,159 States and political subdivisions -- general obligations 267,710 - 4,726 262,984 States and political subdivisions -- special revenue 25,290 - 166 25,124 Corporate 17,169,254 3,131 1,298,199 15,874,186 Total fixed maturities $ 20,815,363 $ 3,131 $ 1,520,850 $ 19,297,644 Other invested assets 100,000 10,223 - 110,223 Total Investments $ 20,915,363 $ 13,354 $ 1,520,850 $ 19,407,867 December 31, 2017: Fixed maturities: U.S. government obligations $ 2,132,441 $ - $ 102,343 $ 2,030,098 Mortgage-back securities 1,365,684 - 47,103 1,318,581 States and political subdivisions -- general obligations 269,884 1,123 1,020 269,987 States and political subdivisions -- special revenue 25,347 38 - 25,385 Corporate 17,780,163 44,037 462,344 17,361,856 Total fixed maturities $ 21,573,519 $ 45,198 $ 612,810 $ 21,005,907 The Company has two securities that individually exceed 10% of the total of the state and political subdivisions categories as of June 30, 2018. The amortized cost, fair value, credit ratings, and description of each security is as follows: Amortized Estimated Cost Fair Value Credit Rating June 30, 2018: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 109,400 $ 105,415 AA+ Longview Washington Refunding 158,310 157,569 Aa3 Total $ 267,710 $ 262,984 The following table summarizes, for all securities in an unrealized loss position at June 30, 2018 and December 31, 2017, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position. June 30, 2018: December 31, 2017 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: Less than 12 months: U.S. government obligations $ 7,741 $ 575 1 $ 262,662 $ 13,877 2 Mortgage-back securities 287,576 16,854 4 1,318,581 47,103 19 States and political subdivisions -- general obligations 262,984 4,726 2 108,917 1,020 1 States and political subdivisions -- special revenue 25,124 166 1 - - - Corporate 9,079,753 605,867 50 7,511,874 133,061 35 Greater than 12 months: U.S. government obligations 1,964,450 148,999 11 1,767,435 88,466 10 Mortgage-back securities 875,583 51,331 15 Corporate 6,295,257 692,332 36 7,144,231 329,283 42 Total fixed maturities $ 18,798,468 $ 1,520,850 120 $ 18,113,700 $ 612,810 109 (1) Based on our review of the securities in an unrealized loss position at June 30, 2018 and December 31, 2017, no other-than-temporary impairments were deemed necessary. Management believes that the Company will fully recover its cost basis in the securities held at June 30, 2018, and management does not have the intent to sell nor is it more likely than not that the Company will be required to sell such securities until they recover or mature. The temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. The amortized cost and estimated fair value of fixed maturities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Estimated Cost Fair Value Due in one year or less $ 200,545 $ 199,218 Due after one year through five years 982,973 940,764 Due after five years through ten years 5,262,866 4,889,471 Due after ten years 14,368,979 13,268,191 $ 20,815,363 $ 19,297,644 The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. At June 30, 2018 and December 31, 2017, these required deposits had a total amortized cost of $3,171,705 and $3,287,932 and fair values of $2,958,143 and $3,167,727, respectively. The components of net investment income for the three and six months ended June 30, 2018 and 2017 are as follows: Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed maturities $ 197,086 $ 244,867 $ 397,192 $ 509,448 Other 14,755 16,611 29,466 32,618 211,841 261,478 426,658 542,066 Less investment expenses (10,370 ) (11,325 ) (21,726 ) (37,233 ) Investment income, net of expenses $ 201,471 $ 250,153 $ 404,932 $ 504,833 Proceeds for the three months ended June 30, 2018 and 2017 from sales of investments classified as available-for-sale were $3,023,134 and $10,669,580, respectively. Gross gains of $0 and $77,394 and gross losses of $152,203 and $22,881 were realized on those sales during the three months ended June 30, 2018 and 2017, respectively. Proceeds for the six months ended June 30, 2018 and 2017 from sales of investments classified as available-for-sale were $6,335,502 and $15,381,725, respectively. Gross gains of $24,910 and $87,535 and gross losses of $226,784 and $68,526 were realized on those sales during the six months ended June 30, 2018 and 2017, respectively. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Fair Values of Financial Instruments | Note 4. Fair Values of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish 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: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ● Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ● Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the period in which the reclassifications occur. A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Fixed maturities: Fixed maturities are recorded at fair value on a recurring basis utilizing a third-party pricing source. The valuations are reviewed and validated quarterly through random testing by comparisons to separate pricing models or other third party pricing services. For the period ended June 30, 2018, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third party prices were changed from the values received. Securities with prices based on validated quotes from pricing services are reflected within Level 2. Cash: The carrying value of cash and cash equivalents and short-term investments approximate the fair value because of the short maturity of the instruments. 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. Policy loans are categorized as Level 3 in the fair value hierarchy. Deposit-type contracts: The fair value for direct and assumed liabilities under 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 nonperformance risk of the liabilities. These liabilities are categorized as Level 3 in the fair value hierarchy. Surplus notes: The fair value for surplus notes was calculated using a discounted cash flow approach. Cash flows were projected utilizing scheduled repayments and discounted to the valuation date using market rates currently available for debt with similar remaining maturities. These notes were structured such that all interest is paid at maturity. American Life reached an agreement with the holder of the notes upon the completion of the transaction between Midwest and Xenith that the surplus notes in the tables below would be settled by netting the face value of the notes against certain real estate held by American Life. The interest accrued will not need to be paid at time of settlement as it has been forgiven. It is expected that the settlement will be completed before the end of 2018. The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017. Significant Quoted Other Significant In Active Observable Unobservable Estimated Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value June 30, 2018 Fixed maturities: U.S. government obligations $ - $ 1,972,191 $ - $ 1,972,191 Agency securities - 1,163,159 - 1,163,159 States and political subdivisions — general obligations - 262,984 - 262,984 States and political subdivisions — special revenue - 25,124 - 25,124 Corporate - 15,874,186 - 15,874,186 Total fixed maturities - 19,297,644 - 19,297,644 Other invested assets - 110,223 - 110,223 Total Investments $ - $ 19,407,867 $ - $ 19,407,867 December 31, 2017 Fixed maturities: U.S. government obligations $ - $ 2,030,098 $ - $ 2,030,098 Mortgage-back securities - 1,318,581 - 1,318,581 States and political subdivisions - general obligations - 269,987 - 269,987 States and political subdivisions - special revenue - 25,385 - 25,385 Corporate - 17,361,856 - 17,361,856 Total fixed maturities $ - $ 21,005,907 $ - $ 21,005,907 There were no transfers of financial instruments between any levels during the six months ended June 30, 2018 or during the year ended December 31, 2017. Accounting standards require disclosure of 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 basis are discussed above. There were no financial assets or financial liabilities measured at fair value on a non-recurring basis. The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy, for financial assets and financial liabilities as of June 30, 2018 and December 31, 2017, respectively: June 30, 2018 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 438,465 $ - $ - $ 438,465 $ 438,465 Cash 2,660,663 2,660,663 - - 2,660,663 Liabilities: Policyholder deposits (Deposit-type contracts) 19,189,533 - - 19,189,533 19,189,533 Surplus notes 550,000 - - 550,000 550,000 December 31, 2017 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 435,196 $ - $ - $ 435,196 $ 435,196 Cash 951,527 951,527 - - 951,527 Liabilities: Policyholder deposits (Investment-type contracts) 18,421,055 - - 18,421,055 18,421,055 Surplus notes and accrued interest payable 843,922 - - 843,922 843,922 |
Income Tax Matters
Income Tax Matters | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Matters | Note 5. Income Tax Matters Significant components of the Company’s deferred tax assets and liabilities as of June 30, 2018 and December 31, 2017 are as follows: June 30, 2018 December 31, 2017 Deferred tax assets: Loss carryforwards $ 607,688 $ 5,782,670 Capitalized costs 293,249 317,026 Unrealized losses on investments 320,306 123,454 Benefit reserves 654,347 656,180 Total deferred tax assets 1,875,590 6,879,330 Less valuation allowance (1,223,662 ) (6,240,769 ) Total deferred tax assets, net of valuation allowance 651,928 638,561 Deferred tax liabilities: Policy acquisition costs 288,049 263,905 Due premiums 122,659 133,891 Value of business acquired 82,055 89,765 Intangible assets 147,000 147,000 Policy loans 8,401 - Property and equipment 3,764 4,000 Total deferred tax liabilities 651,928 638,561 Net deferred tax assets $ - $ - At June 30, 2018 and December 31, 2017, the Company recorded a valuation allowance of $1,223,662 $6,240,769 Loss carryforwards for tax purposes as of June 30, 2018, have expiration dates that range from 2024 through 2036. There was no income tax expense for the three and six months ended June 30, 2018 and 2017. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% in 2018 and 34% in 2017 Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Computed expected income tax benefit $ (131,568 ) $ (268,762 ) $ (287,384 ) $ (623,689 ) Increase (reduction) in income taxes resulting from: Meals, entertainment and political contributions 2,247 3,388 4,204 6,265 Adjustment to prior year NOL - (1,172,196 ) - (1,172,196 ) Other (17,497 ) (9,798 ) (34,890 ) (9,562 ) 5,516,779 (1,178,606 ) 5,501,343 (1,175,493 ) Tax benefit before valuation allowance 5,385,211 (1,447,368 ) 5,213,959 (1,799,182 ) Change in valuation allowance (5,385,211 ) 1,447,368 (5,213,959 ) 1,799,182 Net income tax expenses $ - $ - $ - $ - |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 6. Reinsurance A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017 is as follows: June 30, 2018 December 31, 2017 Balance sheets: Benefit and claim reserves assumed $ 2,613,489 $ 2,638,477 Benefit and claim reserves ceded 22,853,760 22,501,593 Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Statements of comprehensive income: Premiums assumed $ 2,111 $ 5,076 $ 8,347 $ 11,590 Premiums ceded 298,156 57,581 640,665 107,597 Benefits assumed 33,165 13,364 92,435 29,130 Benefits ceded 41,986 97,109 103,062 212,955 Commissions assumed 9 4 14 14 Commissions ceded 2,286 - 4,220 - The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer along with the A.M. Best credit rating as of June 30, 2018: Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 6,700 $ 87,362 $ - $ 94,062 Sagicor Life Insurance Company A- - 238,158 12,165,157 256,928 12,146,387 US Alliance Life and Security Company NR - 8,000 10,696,862 91,551 10,613,311 $ - $ 252,858 $ 22,949,381 $ 348,479 $ 22,853,760 Effective September 30, 2017, American Life entered into an indemnity coinsurance transaction with US Alliance Life and Security Company (“US Alliance”) to transfer 100% of the risk related to the Great Plains Life and First Wyoming Life blocks of business. The purpose of this transaction was to provide statutory capital and surplus for American Life and has minimal effect on GAAP financials. We paid no commissions or brokerage fees for this transaction and the proceeds of the transaction were based upon valuations prepared by our third party actuary. American Life had more than one offer to assume this business. Under the indemnity coinsurance, US Alliance assumed certain liabilities and obligations for incurred claims, surrenders and commissions. As we are not relieved of our legal liability to the policyholders; the liabilities and obligations associated with the reinsured blocks of business remain on our Consolidated Balance Sheets with a corresponding reinsurance receivable from US Alliance. We transferred $9,569,175 of GAAP net adjusted reserves as of September 30, 2017 to US Alliance for cash of $7,078,223 which was net of a ceding allowance of $1,850,000 which is treated as an increase to surplus on a statutory basis. As a result of the transaction, in addition to the reserves, American Life will cede approximately $883,000 of annual GAAP revenues and $1,758,250 of statutory revenues. US Alliance assumes all responsibilities for incurred claims, surrenders and commission from the effective date. The ceding commission of $1,850,000 first reduced DAC of $437,620 and VOBA of $1,085,811 which had been held on our books from the Great Plains Life and First Wyoming Life acquisitions. The remaining $967,521 was reflected as a deferred gain, which is being recognized into income over the expected duration of the Great Plains Life and First Wyoming Life blocks of business. At June 30, 2018 and December 31, 2017, total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by American Life to Sagicor were $12,146,387 and $12,320,695, respectively. At June, 2018 and December 31, 2017, total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by American Life to US Alliance was $10,613,311 and $10,072,530, respectively. American Life remains contingently liable on the ceded reinsurance should Sagicor or US Alliance be unable to meet their obligations. The use of reinsurance does not relieve American Life of its primary liability to pay the full amount of the insurance benefit in the event of the failure of a reinsurer to honor its contractual obligation. No reinsurer of business ceded by American Life has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business. American Life monitors several factors that it considers relevant to satisfy itself as to the ongoing ability of a reinsurer to meet all obligations of the reinsurance agreements. These factors include the credit rating of the reinsurer, the financial strength of the reinsurer, significant changes or events of the reinsurer, and any other relevant factors. If American Life believes that any reinsurer would not be able to satisfy its obligations with American Life, a separate contingency reserve may be established. At June 30, 2018 and December 31, 2017, no contingency reserve was established. |
Deposit-Type Contracts
Deposit-Type Contracts | 6 Months Ended |
Jun. 30, 2018 | |
Separate Accounts Disclosure [Abstract] | |
Deposit-Type Contracts | Note 7. Deposit-Type Contracts The Company’s deposit-type contracts represent the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. Liabilities for these 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 deposit-type contracts for the quarter ended June 30, 2018 and the year ended December 31, 2017: Six Months Ended Year Ended June 30, 2018 December 31, 2017 Beginning balance $ 18,421,055 $ 16,012,567 US Alliance 403,125 - Deposits received 579,352 2,511,107 Investment earnings 246,152 808,085 Withdrawals (456,582 ) (899,799 ) Contract charges (3,569 ) (10,905 ) Ending balance $ 19,189,533 $ 18,421,055 Under the terms of American Life’s coinsurance agreement with Security National Life |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Legal Proceedings: We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of our business, and we are not aware of any claims that could materially affect our financial position or results of operations. Regulatory Matters : State regulatory bodies and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning the Company’s compliance with laws in relation to, but not limited to, insurance and securities Office Lease: The Company leases office space in Lincoln, Nebraska under an agreement executed October 17, 2013 that expires on January 31, 2024. The Company executed an amendment to its lease for an additional 2,876 square feet of office space on October 23, 2015, which expired on May 31, 2017. Rent expense for the three months ended June 30, 2018 and 2017 was $47,683 and $60,914, respectively. Rent expense for the six months ended June 30, 2018 and 2017 was $95,144 and $117,134, respectively. Future minimum lease payments for the remainder of 2018 and the subsequent years are as follows: 2018 $ 68,279 2019 141,412 2020 146,477 2021 151,543 2022 156,608 Later years 175,182 Total $ 839,501 |
Statutory Net Income and Surplu
Statutory Net Income and Surplus | 6 Months Ended |
Jun. 30, 2018 | |
Statutory Net Income and Surplus [Abstract] | |
Statutory Net Income and Surplus | Note 9. Statutory Net Income and Surplus American Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Nebraska Department of Insurance. 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. American Life’s statutory net loss for the six months ending June 30, 2018 and 2017 was $1,378,230 and $1,477,855, respectively. Capital and surplus of American Life as of June 30, 2018 and December 31, 2017 were |
Surplus Notes
Surplus Notes | 6 Months Ended |
Jun. 30, 2018 | |
Surplus Notes [Abstract] | |
Surplus Notes | Note 10. Surplus Notes The following provides a summary of the Company’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of June 30, 2018: Annual Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 1, 2006 September 1, 2016 $ 7% David G. Elmore August 4, 2011 August 1, 2016 300,000 5% The Company reached an agreement with David Elmore following the closing of the transaction with Xenith and subject to approval by the Nebraska Department of Insurance, that of 10 $310,000 of prior on the surplus notes on the note |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11. Related Party Transactions The Company commenced its third party administrative (“TPA”) services in 2012 as an additional revenue source. These services are offered to non-affiliated entities. These agreements, for various levels of administrative services on behalf of each company, generate fee income for the Company. Services provided vary based on their needs and can include some or all aspects of back-office accounting and policy administration. We have been able to perform our TPA services using our existing in-house resources. Fees earned during the three months ended June 30, 2018 and 2017 were $23,100 and $16,500, respectively. Fees earned during the six months ended June 30, 2018 and 2017 were $47,340 and $33,000, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events All of the effects of subsequent events that provide additional evidence about conditions that existed at June 30, 2018, including the estimates inherent in the process of preparing 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 date of the consolidated financial statements but arose after, but before the consolidated financial statements were available to be issued. In some cases, non-recognized subsequent events are disclosed to keep the consolidated financial statements from being misleading. The Company has evaluated subsequent events through the date that the consolidated financial statements were issued and found no events to report. |
Nature of Operations and Summ18
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of operations: Midwest Holding Inc. (“Midwest” or “the Company”) was incorporated in Nebraska on October 31, 2003 for the primary purpose of becoming |
Basis of presentation | Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions from the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements. In the opinion of management, and subject to the Special Note above, |
Investments | Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive loss. Declines in the fair value of available for sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company to hold the investment until the recovery of the 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 the Company intends to sell a security or it is more likely than not that the Company 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 statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of an other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the six months ended June 30, 2018 or 2017. Investment income consists of interest, dividends, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts. |
Policy loans | Policy loans: Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value. |
Real estate, held for investment | Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years. |
Cash | Cash: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At June 30, 2018 and December 31, 2017, the Company had no cash equivalents. |
Deferred acquisition costs | Deferred acquisition costs: Deferred acquisition costs (“DAC”) consist of incremental direct costs, net of amounts ceded to reinsurers, 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. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. 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. The Company performs a recoverability analysis annually in the fourth quarter unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2018 that suggest a review should be undertaken. The following table provides information about deferred acquisition costs for the periods ended June 30, 2018 and December 31, 2017, respectively. Six Months Ended Year Ended June 30, December 31 2018 2017 Balance at beginning of period $ 2,046,864 $ 2,568,799 Capitalization of commissions, sales and issue expenses 59,771 333,940 Change in DAC due to unrealized investment losses 23,021 (14,144 ) Gross amortization (202,913 ) ) Change in DAC due to coinsurance ceding commission - (437,620 ) Balance at end of period $ 1,926,743 $ 2,046,864 |
Value of business acquired | V alue 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. Recoverability of value of business acquired 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. The Company performs a recoverability analysis annually in the fourth quarter unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2018 that suggest a review should be undertaken. |
Property and equipment | Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $12,676 and $17,258 for the three months ended June 30, 2018 and 2017, respectively. Depreciation expense totaled $25,234 and $33,647 for the six months ended June 30, 2018 and 2017, respectively. Accumulated depreciation net of disposals totaled $919,248 and $894,014 as of June 30, 2018 and December 31, 2017, respectively. Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2018 that would indicate the carrying amounts may not be recoverable. |
Reinsurance | Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large 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. The Company generally strives to diversify its 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 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 June 30, 2018 or December 31, 2017. |
Benefit reserves | 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: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. |
Deposit-type contracts | Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies. |
Income taxes | Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2010. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. 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. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at June 30, 2018 or December 31, 2017. |
Revenue recognition and related expenses | Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other 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 administrative and contract-holder services and cost of insurance, 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. Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy. 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. 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. |
Comprehensive loss | Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available for sale, net of applicable taxes. |
Common and preferred stock and earnings (loss) per share | Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 120,000,000 voting common shares authorized, 20,000,000 non-voting common shares authorized, and 10,000,000 preferred shares authorized. At June 30, 2018 and December 31, 2017, the Company had 22,860,701 voting common shares issued and outstanding, respectively. The Class A preferred shares were non-cumulative, non-voting and convertible by the holder to voting common shares after May, 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). The par value per preferred share was $0.001 with 2,000,000 shares authorized. At December 31, 2017 the 74,159 Class A preferred shares outstanding were converted by the Company into 96,407 voting common shares. The Class B preferred shares were non-cumulative, non-voting and convertible by the holder or the Company to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The par value per preferred share was $0.001 with 1,000,000 shares authorized. The stated annual dividend rate on the Class B preferred shares was 7%. Dividends totaling $30,544 were paid as of June 30, 2017. On June 15, 2017, the 102,669 outstanding Class B preferred shares were converted by the Company into 205,338 voting common shares. The Class C preferred shares are cumulative Each preferred share has a liquidation preference of $1.00 per share. Loss per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended June 30, 2018 and 2017 were 22,860,701 and 22,764,294 shares, respectively. The weighted average number of shares outstanding during the six months ended June 30, 2018 and 2017 were 22,860,701 and 22,763,160 shares, respectively. |
New accounting standards | New accounting standards: On February 14, 2018, the FASB issued Accounting Standards Update ("ASU") No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. It allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for public business entities for reporting periods for which financial statements have not yet been issued. The Company has evaluated the impact of this update and has determined that this does not impact us currently due to not recording unrealized losses or gains net of tax. The Company has incurred net operating losses since inception so we don't record deferred tax assets or deferred tax liabilities due to establishing a valuation allowance. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which assists in determining whether a transaction should be accounted for as an acquisition or disposal of assets or as a business. This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a prospective approach, with early adoption permitted for transactions not previously reported in issued financial statements. The Company adopted this ASU on January 1, 2017. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements, however, the Company will apply the provisions of ASU 2017-01 to future acquisitions. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"). This amendment defers the effective date of the previously issued ASU 2014-09 until the interim and annual reporting periods beginning after December 15, 2017. Earlier application is permitted for interim and annual reporting periods beginning after December 15, 2016. In addition, the FASB has issued four related ASU's on principal versus agent guidance (ASU 2016-08), identifying performance obligations and the licensing implementation guidance (ASU 2016-10), a revision of certain SEC Staff Observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). The guidance permits two methods of transition upon adoption; full retrospective and modified retrospective. The Company will utilize the modified retrospective method upon adoption of ASU 2014-09 on January 1, 2018. Under the modified retrospective method, revenues and other disclosures for pre-2017 periods would be provided in the notes to the consolidated financial statements as previously reported under the current revenue standard. Insurance contracts, lease contracts and investments are not within the scope of ASU 2014-09; therefore, this standard would not apply to the majority of our consolidated revenues. For the Company's miscellaneous income, which is within the scope of this guidance, the Company reviewed its service fee income revenue streams and compared its historical accounting policies and practices to the new standard. The Company believes its historical revenue recognition was materially consistent with the way we recognized service fee income as of June 30, 2018. |
Nature of Operations and Summ19
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Deferred Policy Acquisition Costs | The following table provides information about deferred acquisition costs for the periods ended June 30, 2018 and December 31, 2017, respectively. Six Months Ended Year Ended June 30, December 31 2018 2017 Balance at beginning of period $ 2,046,864 $ 2,568,799 Capitalization of commissions, sales and issue expenses 59,771 333,940 Change in DAC due to unrealized investment losses 23,021 (14,144 ) Gross amortization (202,913 ) ) Change in DAC due to coinsurance ceding commission - (437,620 ) Balance at end of period $ 1,926,743 $ 2,046,864 |
Change in Control (Tables)
Change in Control (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Change In Control | |
Schedule of Company's Voting Common Stock | To summarize the above for purposes of illustration assuming the Notes and shares of Preferred Stock are converted in the Company’s voting common stock: Number Percentage Current company shareholders 22,900,000 18.3 % Note conversion ($500,000) 24,300,000 19.5 % Note conversion ($100,000) 4,900,000 3.9 % Preferred stock conversion 72,900,000 58.3 % Total Outstanding 125,000,000 100.0 % |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Marketable Securities [Abstract] | |
Schedule of Available for Sale Investments | The cost or amortized cost and estimated fair value of investments classified as available-for-sale as of June 30, 2018 and December 31, 2017 are as follows: Cost or Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value June 30, 2018: Fixed maturities: U.S. government obligations $ 2,121,765 $ - $ 149,574 $ 1,972,191 Mortgage-back securities 1,231,344 - 68,185 1,163,159 States and political subdivisions -- general obligations 267,710 - 4,726 262,984 States and political subdivisions -- special revenue 25,290 - 166 25,124 Corporate 17,169,254 3,131 1,298,199 15,874,186 Total fixed maturities $ 20,815,363 $ 3,131 $ 1,520,850 $ 19,297,644 Other invested assets 100,000 10,223 - 110,223 Total Investments $ 20,915,363 $ 13,354 $ 1,520,850 $ 19,407,867 December 31, 2017: Fixed maturities: U.S. government obligations $ 2,132,441 $ - $ 102,343 $ 2,030,098 Mortgage-back securities 1,365,684 - 47,103 1,318,581 States and political subdivisions -- general obligations 269,884 1,123 1,020 269,987 States and political subdivisions -- special revenue 25,347 38 - 25,385 Corporate 17,780,163 44,037 462,344 17,361,856 Total fixed maturities $ 21,573,519 $ 45,198 $ 612,810 $ 21,005,907 |
Schedule of Amortized Cost, Fair Value, Credit Rating | The Company has two securities that individually exceed 10% of the total of the state and political subdivisions categories as of June 30, 2018. The amortized cost, fair value, credit ratings, and description of each security is as follows: Amortized Estimated Cost Fair Value Credit Rating June 30, 2018: Fixed maturities: States and political subdivisions -- general obligations Bellingham Wash $ 109,400 $ 105,415 AA+ Longview Washington Refunding 158,310 157,569 Aa3 Total $ 267,710 $ 262,984 |
Schedule of Unrealized Loss of Securities | The following table summarizes, for all securities in an unrealized loss position at June 30, 2018 and December 31, 2017, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position. June 30, 2018: December 31, 2017 Gross Number Gross Number Estimated Unrealized of Estimated Unrealized of Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: Less than 12 months: U.S. government obligations $ 7,741 $ 575 1 $ 262,662 $ 13,877 2 Mortgage-back securities 287,576 16,854 4 1,318,581 47,103 19 States and political subdivisions -- general obligations 262,984 4,726 2 108,917 1,020 1 States and political subdivisions -- special revenue 25,124 166 1 - - - Corporate 9,079,753 605,867 50 7,511,874 133,061 35 Greater than 12 months: U.S. government obligations 1,964,450 148,999 11 1,767,435 88,466 10 Mortgage-back securities 875,583 51,331 15 Corporate 6,295,257 692,332 36 7,144,231 329,283 42 Total fixed maturities $ 18,798,468 $ 1,520,850 120 $ 18,113,700 $ 612,810 109 (1) |
Schedule of Fixed Maturities | The amortized cost and estimated fair value of fixed maturities at June 30, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Estimated Cost Fair Value Due in one year or less $ 200,545 $ 199,218 Due after one year through five years 982,973 940,764 Due after five years through ten years 5,262,866 4,889,471 Due after ten years 14,368,979 13,268,191 $ 20,815,363 $ 19,297,644 |
Components of Net Investment Income | The components of net investment income for the three and six months ended June 30, 2018 and 2017 are as follows: Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Fixed maturities $ 197,086 $ 244,867 $ 397,192 $ 509,448 Other 14,755 16,611 29,466 32,618 211,841 261,478 426,658 542,066 Less investment expenses (10,370 ) (11,325 ) (21,726 ) (37,233 ) Investment income, net of expenses $ 201,471 $ 250,153 $ 404,932 $ 504,833 |
Fair Values of Financial Inst22
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis | The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017. Significant Quoted Other Significant In Active Observable Unobservable Estimated Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value June 30, 2018 Fixed maturities: U.S. government obligations $ - $ 1,972,191 $ - $ 1,972,191 Agency securities - 1,163,159 - 1,163,159 States and political subdivisions — general obligations - 262,984 - 262,984 States and political subdivisions — special revenue - 25,124 - 25,124 Corporate - 15,874,186 - 15,874,186 Total fixed maturities - 19,297,644 - 19,297,644 Other invested assets - 110,223 - 110,223 Total Investments $ - $ 19,407,867 $ - $ 19,407,867 December 31, 2017 Fixed maturities: U.S. government obligations $ - $ 2,030,098 $ - $ 2,030,098 Mortgage-back securities - 1,318,581 - 1,318,581 States and political subdivisions - general obligations - 269,987 - 269,987 States and political subdivisions - special revenue - 25,385 - 25,385 Corporate - 17,361,856 - 17,361,856 Total fixed maturities $ - $ 21,005,907 $ - $ 21,005,907 |
Schedule of Financial Assets and Liabilities at Fair Value | The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy, for financial assets and financial liabilities as of June 30, 2018 and December 31, 2017, respectively: June 30, 2018 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 438,465 $ - $ - $ 438,465 $ 438,465 Cash 2,660,663 2,660,663 - - 2,660,663 Liabilities: Policyholder deposits (Deposit-type contracts) 19,189,533 - - 19,189,533 19,189,533 Surplus notes 550,000 - - 550,000 550,000 December 31, 2017 Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant for Identical Assets Observable Unobservable Carrying and Liabilities Inputs Inputs Fair Amount (Level 1) (Level 2) (Level 3) Value Assets: Policy loans $ 435,196 $ - $ - $ 435,196 $ 435,196 Cash 951,527 951,527 - - 951,527 Liabilities: Policyholder deposits (Investment-type contracts) 18,421,055 - - 18,421,055 18,421,055 Surplus notes and accrued interest payable 843,922 - - 843,922 843,922 |
Income Tax Matters (Tables)
Income Tax Matters (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities as of June 30, 2018 and December 31, 2017 are as follows: June 30, 2018 December 31, 2017 Deferred tax assets: Loss carryforwards $ 607,688 $ 5,782,670 Capitalized costs 293,249 317,026 Unrealized losses on investments 320,306 123,454 Benefit reserves 654,347 656,180 Total deferred tax assets 1,875,590 6,879,330 Less valuation allowance (1,223,662 ) (6,240,769 ) Total deferred tax assets, net of valuation allowance 651,928 638,561 Deferred tax liabilities: Policy acquisition costs 288,049 263,905 Due premiums 122,659 133,891 Value of business acquired 82,055 89,765 Intangible assets 147,000 147,000 Policy loans 8,401 - Property and equipment 3,764 4,000 Total deferred tax liabilities 651,928 638,561 Net deferred tax assets $ - $ - |
Schedule of Effective Tax Rate Reconciliation | There was no income tax expense for the three and six months ended June 30, 2018 and 2017. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% in 2018 and 34% in 2017 Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Computed expected income tax benefit $ (131,568 ) $ (268,762 ) $ (287,384 ) $ (623,689 ) Increase (reduction) in income taxes resulting from: Meals, entertainment and political contributions 2,247 3,388 4,204 6,265 Adjustment to prior year NOL - (1,172,196 ) - (1,172,196 ) Other (17,497 ) (9,798 ) (34,890 ) (9,562 ) 5,516,779 (1,178,606 ) 5,501,343 (1,175,493 ) Tax benefit before valuation allowance 5,385,211 (1,447,368 ) 5,213,959 (1,799,182 ) Change in valuation allowance (5,385,211 ) 1,447,368 (5,213,959 ) 1,799,182 Net income tax expenses $ - $ - $ - $ - |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Reinsurance Disclosures [Abstract] | |
Summary of Significant Reinsurance Amounts | A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017 is as follows: June 30, 2018 December 31, 2017 Balance sheets: Benefit and claim reserves assumed $ 2,613,489 $ 2,638,477 Benefit and claim reserves ceded 22,853,760 22,501,593 Three months ended June 30, Six months ended June 30, 2018 2017 2018 2017 Statements of comprehensive income: Premiums assumed $ 2,111 $ 5,076 $ 8,347 $ 11,590 Premiums ceded 298,156 57,581 640,665 107,597 Benefits assumed 33,165 13,364 92,435 29,130 Benefits ceded 41,986 97,109 103,062 212,955 Commissions assumed 9 4 14 14 Commissions ceded 2,286 - 4,220 - |
Schedule of Significant Reinsurance Balances | The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer along with the A.M. Best credit rating as of June 30, 2018: Recoverable on Total Amount Recoverable Recoverable Benefit Ceded Recoverable AM Best on Paid on Unpaid Reserves/Deposit- Due from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company A- $ - $ 6,700 $ 87,362 $ - $ 94,062 Sagicor Life Insurance Company A- - 238,158 12,165,157 256,928 12,146,387 US Alliance Life and Security Company NR - 8,000 10,696,862 91,551 10,613,311 $ - $ 252,858 $ 22,949,381 $ 348,479 $ 22,853,760 |
Deposit-Type Contracts (Tables)
Deposit-Type Contracts (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deposit Type Contracts [Abstract] | |
Schedule of Contracts | The following table provides information about deposit-type contracts for the quarter ended June 30, 2018 and the year ended December 31, 2017: Six Months Ended Year Ended June 30, 2018 December 31, 2017 Beginning balance $ 18,421,055 $ 16,012,567 US Alliance 403,125 - Deposits received 579,352 2,511,107 Investment earnings 246,152 808,085 Withdrawals (456,582 ) (899,799 ) Contract charges (3,569 ) (10,905 ) Ending balance $ 19,189,533 $ 18,421,055 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments | Future minimum lease payments for the remainder of 2018 and the subsequent years are as follows: 2018 $ 68,279 2019 141,412 2020 146,477 2021 151,543 2022 156,608 Later years 175,182 Total $ 839,501 |
Surplus Notes (Tables)
Surplus Notes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Surplus Notes [Abstract] | |
Summary of Surplus Notes | The following provides a summary of the Company’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of June 30, 2018: Annual Creditor Issue Date Maturity Date Face Amount Interest Rate David G. Elmore September 1, 2006 September 1, 2016 $ 7% David G. Elmore August 4, 2011 August 1, 2016 300,000 5% |
Nature of Operations and Summ28
Nature of Operations and Summary of Significant Accounting Policies (Schedule of Deferred Acquisition Costs) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||||
Balance at beginning of period | $ 2,046,864 | $ 2,568,799 | $ 2,568,799 | ||
Capitalization of commissions, sales and issue expenses | 59,771 | 333,940 | |||
Change in DAC due to unrealized investment losses | 23,021 | (14,144) | |||
Gross amortization | $ (108,055) | $ (134,149) | (202,913) | $ (292,854) | (404,110) |
Change in DAC due to coinsurance ceding commission | (437,620) | ||||
Balance at end of period | $ 1,926,743 | $ 1,926,743 | $ 2,046,864 |
Nature of Operations and Summ29
Nature of Operations and Summary of Significant Accounting Policies (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)shares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017USD ($)shares | May 09, 2018shares | Dec. 31, 2017USD ($)$ / sharesshares | Jun. 15, 2017shares | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares authorized (in shares) | 1,500,000 | 1,500,000 | ||||||
Preferred stock, shares outstanding (in shares) | 1,500,000 | 1,500,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Common stock, shares authorized | 120,000,000 | 120,000,000 | ||||||
Common stock, shares issued (in shares) | 22,860,701 | 22,860,701 | 22,860,701 | |||||
Common stock, shares outstanding (in shares) | 22,860,701 | 22,860,701 | 22,900,000 | 22,860,701 | ||||
Weighted Average Number of Shares Outstanding, Basic (in shares) | 22,860,701 | 22,764,294 | 22,860,701 | 22,763,160 | ||||
Depreciation | $ | $ 12,676 | $ 17,258 | $ 25,234 | $ 33,647 | ||||
Accumulated Depreciation, net of disposals | $ | $ 919,248 | 919,248 | $ 894,014 | |||||
Preferred stock dividend | $ | $ 1,500,000 | $ 30,543 | ||||||
Converted preferred shares | 72,900,000 | |||||||
US Alliance Life and Security Company [Member] | ||||||||
Transferred risk insurance company | 100.00% | |||||||
Series B Preferred Stock [Member] | ||||||||
Conversion Ratio | 2 | |||||||
Stated dividend rate | 7.00% | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | ||||||
Preferred stock, shares outstanding (in shares) | 102,669 | |||||||
Preferred stock dividend | $ | $ 30,544 | |||||||
Converted preferred shares | 205,338 | |||||||
Series A Preferred Stock [Member] | ||||||||
Conversion Ratio | 1.3 | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 | ||||||
Preferred stock, shares outstanding (in shares) | 74,159 | |||||||
Converted preferred shares | 96,407 | |||||||
Series C Preferred Stock [Member] | ||||||||
Conversion Ratio | 48.57 | |||||||
Stated dividend rate | 8.00% | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares authorized (in shares) | 1,500,000 | 1,500,000 | ||||||
Liquidation preference per share | $ / shares | $ 1 | $ 1 | ||||||
Non-voting common shares [Member] | ||||||||
Common stock, shares authorized | 20,000,000 | 20,000,000 | ||||||
Computer Software, Intangible Asset [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Residential Real Estate [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 50 years | |||||||
Minimum [Member] | Furniture and Fixtures [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Maximum [Member] | Furniture and Fixtures [Member] | ||||||||
Property, Plant and Equipment, Useful Life | 7 years |
Change in Control (Narrative) (
Change in Control (Narrative) (Details) - USD ($) | May 09, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Common stock par value | $ 0.001 | $ 0.001 | |
Xenith [Member] | |||
Proceeds from issuance of loan | $ 600,000 | ||
Loan term | 10 years | ||
Interest rate | 4.00% | ||
Convertible debt | $ 500,000 | ||
Voting common stock | 24,300,000 | ||
Common stock par value | $ 0.02 | ||
Remaining convertible debt | $ 100,000 | ||
Proceeds from additional loan | $ 22,900,000 | ||
Conversion price | $ 0.02 | ||
Xenith [Member] | Series C Preferred Stock [Member] | |||
Voting common stock | 72,900,000 | ||
Common stock par value | $ 0.02 | ||
Shares repurchased | 1,500,000 | ||
Shares repurchased, value | $ 1,500,000 | ||
Xenith [Member] | Notes One [Member] | |||
Proceeds from issuance of notes and preferred stock | 500,000 | ||
Xenith [Member] | Notes Two [Member] | |||
Proceeds from issuance of notes and preferred stock | $ 100,000 |
Change in Control (Schedule of
Change in Control (Schedule of Company's Voting Common Stock) (Details) - USD ($) | May 09, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Change In Control | |||
Current Company Shareholders, Number | 22,900,000 | 22,860,701 | 22,860,701 |
Current Company Shareholders, percentage | 18.30% | ||
Note Conversion, Number | 24,300,000 | ||
Note Conversion, Value | $ 500,000 | ||
Note Conversion, percentage | 19.50% | ||
Note Conversion, Number | 4,900,000 | ||
Note Conversion, Value | $ 100,000 | ||
Note Conversion, percentage | 3.90% | ||
Preferred Stock Conversion, Number | 72,900,000 | ||
Preferred Stock Conversion, percentage | 58.30% | ||
Total Outstanding, Number | 125,000,000 | ||
Total Outstanding, Percentage | 100.00% |
Investments (Schedule of Availa
Investments (Schedule of Available for Sale Investments) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Cost or Amortized Cost | $ 20,915,363 | $ 21,573,519 |
Gross Unrealized Gains | 13,354 | |
Gross Unrealized Losses | 1,520,850 | |
Estimated Fair Value | 19,407,867 | |
Other invested assets [Member] | ||
Cost or Amortized Cost | 100,000 | |
Gross Unrealized Gains | 110,223 | |
Gross Unrealized Losses | ||
Estimated Fair Value | 110,223 | |
Fixed Maturities [Member] | ||
Cost or Amortized Cost | 20,815,363 | 21,573,519 |
Gross Unrealized Gains | 3,131 | 45,198 |
Gross Unrealized Losses | 1,520,850 | 612,810 |
Estimated Fair Value | 19,297,644 | 21,005,907 |
States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||
Cost or Amortized Cost | 267,710 | 269,884 |
Gross Unrealized Gains | 1,123 | |
Gross Unrealized Losses | 4,726 | 1,020 |
Estimated Fair Value | 262,984 | 269,987 |
States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||
Cost or Amortized Cost | 25,290 | 25,347 |
Gross Unrealized Gains | 38 | |
Gross Unrealized Losses | 166 | |
Estimated Fair Value | 25,124 | 25,385 |
U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Cost or Amortized Cost | 2,121,765 | 2,132,441 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | 149,574 | 102,343 |
Estimated Fair Value | 1,972,191 | 2,030,098 |
U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||
Cost or Amortized Cost | 1,231,344 | 1,365,684 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | 68,185 | 47,103 |
Estimated Fair Value | 1,163,159 | 1,318,581 |
Corporate [Member] | Fixed Maturities [Member] | ||
Cost or Amortized Cost | 17,169,254 | 17,780,163 |
Gross Unrealized Gains | 3,131 | 44,037 |
Gross Unrealized Losses | 1,298,199 | 462,344 |
Estimated Fair Value | $ 15,874,186 | $ 17,361,856 |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost, Fair Value, Credit Rating) (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Amortized Cost | $ 20,815,363 |
Us States and Political Subdivisions Debt Securities [Member] | |
Amortized Cost | 267,710 |
Estimated Fair Value | 262,984 |
States and Political Subdivisions - general obligations [Member] | Longview Washington Refunding Taxable [Member] | Us States and Political Subdivisions Debt Securities [Member] | |
Amortized Cost | 158,310 |
Estimated Fair Value | $ 157,569 |
Credit Rating | Aa3 |
States and Political Subdivisions - general obligations [Member] | Bellingham Washington [Member] | Us States and Political Subdivisions Debt Securities [Member] | |
Amortized Cost | $ 109,400 |
Estimated Fair Value | $ 105,415 |
Credit Rating | AA+ |
Investments (Schedule of Unreal
Investments (Schedule of Unrealized Loss of Securities) (Details) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | ||
Fixed Maturities [Member] | ||||
Estimated Fair Value, Total | $ 18,798,468 | $ 18,113,700 | ||
Gross Unrealized Loss, Total | $ 1,520,850 | $ 612,810 | ||
Number of Securities, Total | [1] | 120 | 109 | |
States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||||
Estimated Fair Value, Less than 12 months | $ 262,984 | $ 108,917 | ||
Gross Unrealized Loss, Less than 12 months | $ 4,726 | $ 1,020 | ||
Number of Securities, Less than 12 months | [1] | 2 | 1 | |
States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||||
Estimated Fair Value, Less than 12 months | $ 25,124 | |||
Gross Unrealized Loss, Less than 12 months | $ 166 | |||
Number of Securities, Less than 12 months | [1] | 1 | ||
U.S. government obligations [Member] | Fixed Maturities [Member] | ||||
Estimated Fair Value, Less than 12 months | $ 7,741 | $ 262,662 | ||
Gross Unrealized Loss, Less than 12 months | $ 575 | $ 13,877 | ||
Number of Securities, Less than 12 months | [1] | 1 | 2 | |
Estimated Fair value, Greater than 12 months | $ 1,964,450 | $ 1,767,435 | ||
Gross Unrealized Loss, Greater than 12 months | $ 148,999 | $ 88,466 | ||
Number of Securities, Greater than 12 months | [1] | 11 | 10 | |
U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||||
Estimated Fair Value, Less than 12 months | $ 287,576 | $ 1,318,581 | ||
Gross Unrealized Loss, Less than 12 months | $ 16,854 | $ 47,103 | ||
Number of Securities, Less than 12 months | [1] | 4 | 19 | |
Estimated Fair value, Greater than 12 months | $ 875,583 | |||
Gross Unrealized Loss, Greater than 12 months | $ 51,331 | |||
Number of Securities, Greater than 12 months | 15 | [1] | ||
Corporate [Member] | Fixed Maturities [Member] | ||||
Estimated Fair Value, Less than 12 months | $ 9,079,753 | $ 7,511,874 | ||
Gross Unrealized Loss, Less than 12 months | $ 605,867 | $ 133,061 | ||
Number of Securities, Less than 12 months | [1] | 50 | 35 | |
Estimated Fair value, Greater than 12 months | $ 6,295,257 | $ 7,144,231 | ||
Gross Unrealized Loss, Greater than 12 months | $ 692,332 | $ 329,283 | ||
Number of Securities, Greater than 12 months | [1] | 36 | 42 | |
[1] | We may reflect a security in more than one aging category based on various purchase dates. |
Investments (Schedule of Fixed
Investments (Schedule of Fixed Maturities) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Marketable Securities [Abstract] | ||
Amortized Cost, Due in one year or less | $ 200,545 | |
Amortized Cost, Due after one year through five years | 982,973 | |
Amortized Cost, Due after five years through ten years | 5,262,866 | |
Amortized Cost, Due after ten years | 14,368,979 | |
Available-for-sale Securities, Debt Maturities, Amortized Cost | 20,815,363 | |
Estimated Fair Value, Due in one year or less | 199,218 | |
Estimated Fair Value, Due after one year through five years | 940,764 | |
Estimated Fair Value, Due after five years through ten years | 4,889,471 | |
Estimated Fair Value, Due after ten years | 13,268,191 | |
Available-for-sale Securities, Debt Securities, Estimated Fair Value | $ 19,297,644 | $ 21,005,907 |
Investments (Components of Net
Investments (Components of Net Investment Income) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net investment income | $ 211,841 | $ 261,478 | $ 426,658 | $ 542,066 |
Less investment expenses | (10,370) | (11,325) | (21,726) | (37,233) |
Investment income, net of expenses | 201,471 | 250,153 | 404,932 | 504,833 |
Other [Member] | ||||
Net investment income | 14,755 | 16,611 | 29,466 | 32,618 |
Fixed Maturities [Member] | ||||
Net investment income | $ 197,086 | $ 244,867 | $ 397,192 | $ 509,448 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Marketable Securities [Abstract] | |||||
Assets on Deposit, Amortized Cost | $ 3,171,705 | $ 3,171,705 | $ 3,287,932 | ||
Assets on Deposit, Fair Value | 2,958,143 | 2,958,143 | $ 3,167,727 | ||
Proceeds From Sale Of Available-For-Sale Securities | 3,023,134 | $ 10,669,580 | 6,335,502 | $ 15,381,725 | |
Available-for-sale Securities, Gross Realized Gains | 0 | 77,394 | 24,910 | 87,535 | |
Available-for-sale Securities, Gross Realized Losses | $ 152,203 | $ 22,881 | $ 226,784 | $ 68,526 |
Fair Values of Financial Inst38
Fair Values of Financial Instruments (Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | $ 19,407,867 | |
Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 19,297,644 | $ 21,005,907 |
Other invested assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 110,223 | |
States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 262,984 | 269,987 |
States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 25,124 | 25,385 |
Corporate [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 15,874,186 | 17,361,856 |
U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 1,972,191 | 2,030,098 |
U.S. government obligations [Member] | Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 1,163,159 | |
U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 1,163,159 | 1,318,581 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | Other invested assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | Corporate [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | U.S. government obligations [Member] | Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 3 [Member] | U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | Other invested assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | Corporate [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | U.S. government obligations [Member] | Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 1 [Member] | U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 19,407,867 | |
Fair Value, Inputs, Level 2 [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 19,297,644 | 21,005,907 |
Fair Value, Inputs, Level 2 [Member] | Other invested assets [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 110,223 | |
Fair Value, Inputs, Level 2 [Member] | States and Political Subdivisions - general obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 262,984 | 269,987 |
Fair Value, Inputs, Level 2 [Member] | States and Political Subdivisions - special revenue [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 25,124 | 25,385 |
Fair Value, Inputs, Level 2 [Member] | Corporate [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 15,874,186 | 17,361,856 |
Fair Value, Inputs, Level 2 [Member] | U.S. government obligations [Member] | Fixed Maturities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | 1,972,191 | 2,030,098 |
Fair Value, Inputs, Level 2 [Member] | U.S. government obligations [Member] | Agency Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | $ 1,163,159 | |
Fair Value, Inputs, Level 2 [Member] | U.S. government obligations [Member] | Mortgages-backed securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, available for sale, equity securities | $ 1,318,581 |
Fair Values of Financial Inst39
Fair Values of Financial Instruments (Schedule of Financial Assets and Liabilities at Fair Value) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Assets: | ||||
Cash | $ 2,660,663 | $ 951,527 | $ 2,282,502 | $ 661,545 |
Liabilities: | ||||
Surplus notes | 550,000 | 550,000 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Assets: | ||||
Policy loans | ||||
Cash | 2,660,663 | 951,527 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | ||||
Surplus notes | ||||
Fair Value, Inputs, Level 2 [Member] | ||||
Assets: | ||||
Policy loans | ||||
Cash | ||||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | ||||
Surplus notes | ||||
Fair Value, Inputs, Level 3 [Member] | ||||
Assets: | ||||
Policy loans | 438,465 | 435,196 | ||
Cash | ||||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 19,189,533 | 18,421,055 | ||
Surplus notes | 550,000 | 843,922 | ||
Carrying (Reported) Amount, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Policy loans | 438,465 | 435,196 | ||
Cash | 2,660,663 | 951,527 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 19,189,533 | 18,421,055 | ||
Surplus notes | 550,000 | 843,922 | ||
Estimate Of Fair Value, Fair Value Disclosure [Member] | ||||
Assets: | ||||
Policy loans | 438,465 | 435,196 | ||
Cash | 2,660,663 | 951,527 | ||
Liabilities: | ||||
Policyholder deposits (Deposit-type contracts) | 19,189,533 | 18,421,055 | ||
Surplus notes | $ 550,000 | $ 843,922 |
Income Tax Matters (Schedule of
Income Tax Matters (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Loss carryforwards | $ 607,688 | $ 5,782,670 |
Capitalized costs | 293,249 | 317,026 |
Unrealized losses on investments | 320,306 | 123,454 |
Benefit reserves | 654,347 | 656,180 |
Total deferred tax assets | 1,875,590 | 6,879,330 |
Less valuation allowance | (1,223,662) | (6,240,769) |
Total deferred tax assets, net of valuation allowance | 651,928 | 638,561 |
Deferred tax liabilities: | ||
Policy acquisition costs | 288,049 | 263,905 |
Due premiums | 122,659 | 133,891 |
Value of business acquired | 82,055 | 89,765 |
Intangible assets | 147,000 | 147,000 |
Policy loans | 8,401 | |
Property and equipment | 3,764 | 4,000 |
Total deferred tax liabilities | 651,928 | 638,561 |
Net deferred tax assets |
Income Tax Matters (Schedule 41
Income Tax Matters (Schedule of Effective Tax Rate Reconciliation) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Computed expected income tax benefit | $ (131,568) | $ (268,762) | $ (287,384) | $ (623,689) |
Increase (reduction) in income taxes resulting from: | ||||
Meals, entertainment and political contributions | 2,247 | 3,388 | 4,204 | 6,265 |
Adjustment to Prior Year NOL | (1,172,196) | (1,172,196) | ||
Other | (17,497) | (9,798) | (34,890) | (9,562) |
Total deductions | 5,516,779 | (1,178,606) | 5,501,343 | (1,175,493) |
Tax benefit before valuation allowance | 5,385,211 | (1,447,368) | 5,213,959 | (1,799,182) |
Change in valuation allowance | (5,385,211) | 1,447,368 | (5,213,959) | 1,799,182 |
Net income tax expenses |
Income Tax Matters (Narrative)
Income Tax Matters (Narrative) (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Deferred Tax Assets, Valuation Allowance | $ 1,223,662 | $ 6,240,769 | |
U.S. federal income tax rate | 21.00% | 34.00% | |
Minimum [Member] | |||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2024 | ||
Maximum [Member] | |||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2036 |
Reinsurance (Summary of Signifi
Reinsurance (Summary of Significant Reinsurance Amounts) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Balance sheets: | |||||
Benefit and claim reserves assumed | $ 2,613,489 | $ 2,613,489 | $ 2,638,477 | ||
Benefit and claim reserves ceded | 22,853,760 | 22,853,760 | $ 22,501,593 | ||
Statements of comprehensive income: | |||||
Premiums assumed | 2,111 | $ 5,076 | 8,347 | $ 11,590 | |
Premiums ceded | 298,156 | 57,581 | 640,665 | 107,597 | |
Benefits assumed | 33,165 | 13,364 | 92,435 | 29,130 | |
Benefits ceded | 41,986 | 97,109 | 103,062 | 212,955 | |
Commissions assumed | 9 | 4 | 14 | 14 | |
Commissions ceded | $ 2,286 | $ 4,220 |
Reinsurance (Schedule of Signif
Reinsurance (Schedule of Significant Reinsurance Balances) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 252,858 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 22,949,381 | |
Ceded Due Premiums | 348,479 | |
Total Amount Recoverable from Reinsurer | $ 22,853,760 | $ 22,501,593 |
Sagicor Life Insurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 238,158 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 12,165,157 | |
Ceded Due Premiums | 256,928 | |
Total Amount Recoverable from Reinsurer | $ 12,146,387 | |
Optimum Reinsurance Company [Member] | ||
AM Best Rating | A- | |
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 6,700 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 87,362 | |
Ceded Due Premiums | ||
Total Amount Recoverable from Reinsurer | 94,062 | |
US Alliance Life and Security Company [Member] | ||
Recoverable on Paid Losses | ||
Recoverable on Unpaid Losses | 8,000 | |
Recoverable on Benefit Reserves/Deposit-type Contracts | 10,696,862 | |
Ceded Due Premiums | 91,551 | |
Total Amount Recoverable from Reinsurer | $ 10,613,311 | $ 10,072,530 |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Amounts recoverable from reinsurers | $ 22,853,760 | $ 22,501,593 | |
Net of ceding allowance | (24,188) | ||
Coinsurance ceding commission deferred | 931,239 | 955,427 | |
Deferred acquisition cost | (437,620) | ||
US Alliance Life and Security Company [Member] | |||
Amounts recoverable from reinsurers | $ 10,613,311 | 10,072,530 | |
Transferred risk insurance company | 100.00% | ||
Amount transferred for reinsurance | $ 9,569,175 | ||
Adjusted reserves cash | 7,078,223 | ||
Net of ceding allowance | 1,850,000 | ||
Coinsurance ceding commission deferred | $ 967,521 | ||
Deferred gain period | 20 years | ||
Deferred acquisition cost | $ 437,620 | ||
Value of business acquired | 1,085,811 | ||
Annual GAAP revenue | 883,000 | ||
Statutory revenues | 1,758,250 | ||
Sagicor Life Insurance Company [Member] | |||
Amounts recoverable from reinsurers | 12,146,387 | ||
Sagicor Life Insurance Company [Member] | |||
Amounts recoverable from reinsurers | $ 12,146,387 | $ 12,320,695 |
Deposit-Type Contracts (Details
Deposit-Type Contracts (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Deposit Type Contracts [Abstract] | ||
Beginning balance | $ 18,421,055 | $ 16,012,567 |
US Alliance | 403,125 | |
Deposits received | 579,352 | 2,511,107 |
Investment earnings | 246,152 | 808,085 |
Withdrawals | (456,582) | (899,799) |
Contract charges | (3,569) | (10,905) |
Ending balance | $ 19,189,533 | $ 18,421,055 |
Commitments and Contingencies47
Commitments and Contingencies (Details) | Jun. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 68,279 |
2,019 | 141,412 |
2,020 | 146,477 |
2,021 | 151,543 |
2,022 | 156,608 |
Later years | 175,182 |
Total | $ 839,501 |
Statutory Net Income and Surp48
Statutory Net Income and Surplus (Details) - American Life and Security Corporation [Member] - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Statutory Net Loss | $ 1,378,230 | $ 1,477,855 | |
Capital and Surplus | 3,379,086 | $ 2,962,885 | |
Increase in capital and surplus | $ 2,000,000 |
Surplus Notes (Summary of Surpl
Surplus Notes (Summary of Surplus Notes) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Face Amount | $ 550,000 | $ 550,000 |
David Elmore [Member] | Surplus Notes One [Member] | ||
Issue Date | Sep. 1, 2006 | |
Maturity Date | Sep. 1, 2016 | |
Face Amount | $ 250,000 | |
Interest Rate | 7.00% | |
David Elmore [Member] | Surplus Notes Two [Member] | ||
Issue Date | Aug. 4, 2011 | |
Maturity Date | Aug. 1, 2016 | |
Face Amount | $ 300,000 | |
Interest Rate | 5.00% |
Surplus Notes (Narrative) (Deta
Surplus Notes (Narrative) (Details) - Surplus Notes [Member] | Jun. 30, 2018USD ($) |
Book value of condominiums | $ 499,668 |
Surplus notes, prior accrued interest | 310,000 |
Appraised value of condominiums | $ 640,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
TPA [Member] | ||||
Related Party Transaction [Line Items] | ||||
Amount of transaction | $ 23,100 | $ 16,500 | $ 47,340 | $ 33,000 |