v3.26.1
Note 2 - Investments
6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Investment in Debt and Equity Securities and Other Trading Assets [Text Block]

2. Investments

 

Investments in fixed maturity available-for-sale securities as of June 30, 2026 and December 31, 2025 are summarized as follows:

 

           

Gross

   

Gross

         
   

Amortized Cost

   

Unrealized

   

Unrealized

   

Fair

 
   

or Cost

   

Gains

   

Losses

   

Value

 
   

June 30, 2026 (Unaudited)

 

Fixed maturity securities

                               

U.S. government and U.S. government agencies

  $ 4,284,833     $ 568     $ 39,606     $ 4,245,795  

States and political subdivisions

    6,402,163       36,554       265,522       6,173,195  

U.S. government agency mortgage backed securities

    49,869,894       310,075       494,820       49,685,149  

Commercial mortgage-backed securities

    27,306,242       88,847       1,023,730       26,371,359  

Residential mortgage-backed securities

    4,922,246       5,888       80,008       4,848,126  

Corporate bonds

    108,783,363       328,576       5,521,379       103,590,560  

Asset-backed securities

    14,259,658       40,267       526,064       13,773,861  

Foreign bonds

    25,785,374       17,483       1,292,560       24,510,297  

Redeemable preferred securities

    1,250,000       -       235,000       1,015,000  

Total fixed maturity securities

  $ 242,863,773     $ 828,258     $ 9,478,689     $ 234,213,342  
                                 

Fixed maturity securities held in trust under coinsurance agreement

  $ 12,902,523     $ -     $ 3,812,428     $ 9,090,095  
                                 

 

   

December 31, 2025

 

Fixed maturity securities

                               

U.S. government and U.S. government agencies

  $ 4,277,139     $ 8,812     $ -     $ 4,285,951  

States and political subdivisions

    6,645,125       81,942       221,635       6,505,432  

U.S. government agency mortgage backed securities

    35,136,311       549,560       145,116       35,540,755  

Commercial mortgage-backed securities

    24,293,112       270,654       912,864       23,650,902  

Residential mortgage-backed securities

    2,490,458       5,498       28,357       2,467,599  

Corporate bonds

    102,571,386       744,128       4,714,451       98,601,063  

Asset-backed securities

    11,988,613       59,759       478,278       11,570,094  

Exchange traded securities

    500,000       -       8,000       492,000  

Foreign bonds

    26,837,279       79,509       1,124,079       25,792,709  

Redeemable preferred securities

    1,250,000       -       230,000       1,020,000  

Total fixed maturity securities

  $ 215,989,423     $ 1,799,862     $ 7,862,780     $ 209,926,505  
                                 

Fixed maturity securities held in trust under coinsurance agreement

  $ 16,595,881     $ -     $ 4,218,278     $ 12,377,603  

 

All securities in an unrealized loss position as of the financial statement dates, 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 as of June 30, 2026 and December 31, 2025 are summarized as follows:

 

           

Unrealized

   

Number of

 
   

Fair Value

   

Loss

   

Securities

 
   

June 30, 2026 (Unaudited)

 

Fixed maturity securities

                       

Less than 12 months in an unrealized loss position

                       

U.S. government and U.S. government agencies

  $ 3,674,792     $ 39,606       4  

States and political subdivisions

    1,650,354       59,295       7  

U.S. government agency mortgage backed securities

    27,692,727       494,820       37  

Commercial mortgage-backed securities

    8,689,550       74,081       14  

Residential mortgage-backed securities

    4,833,975       80,008       7  

Corporate bonds

    24,973,089       445,889       64  

Asset-backed securities

    4,923,406       33,752       15  

Foreign bonds

    5,822,083       40,159       15  

Total less than 12 months in an unrealized loss position

    82,259,976       1,267,610       163  

More than 12 months in an unrealized loss position

                       

States and political subdivisions

    1,923,513       206,227       10  

Commercial mortgage-backed securities

    7,148,688       949,649       18  

Corporate bonds

    53,886,038       5,075,490       148  

Asset-backed securities

    7,164,045       492,312       21  

Foreign bonds

    17,227,221       1,252,401       39  

Redeemable preferred securities

    1,015,000       235,000       4  

Total more than 12 months in an unrealized loss position

    88,364,505       8,211,079       240  

Total fixed maturity securities in an unrealized loss position

  $ 170,624,481     $ 9,478,689       403  
                         

Fixed maturity securities held in trust under coinsurance agreement

                       
                         

Total more than 12 months in an unrealized loss position

  $ 9,090,095     $ 3,812,428       45  

Total fixed maturity securities held in trust under coinsurance agreement in a unrealized loss position

  $ 9,090,095     $ 3,812,428       45  

 

                         
   

December 31, 2025

 

Fixed maturity securities

                       

Less than 12 months in an unrealized loss position

                       

States and political subdivisions

  $ 1,307,678     $ 44,604       5  

U.S. government agency mortgage backed securities

    5,160,399       123,520       6  

Commercial mortgage-backed securities

    695,052       1,718       1  

Residential mortgage-backed securities

    2,453,338       28,357       3  

Corporate bonds

    7,377,235       138,721       20  

Asset-backed securities

    1,210,524       5,917       5  

Total less than 12 months in an unrealized loss position

    18,204,226       342,837       40  

More than 12 months in an unrealized loss position

                       

States and political subdivisions

    2,239,531       177,031       11  

U.S. government agency mortgage backed securities

    1,911,879       21,596       3  

Commercial mortgage-backed securities

    7,905,115       911,146       20  

Corporate bonds

    57,656,183       4,575,730       159  

Asset-backed securities

    7,139,007       472,361       20  

Exchange traded securities

    492,000       8,000       2  

Foreign bonds

    19,057,958       1,124,079       44  

Redeemable preferred securities

    1,020,000       230,000       4  

Total more than 12 months in an unrealized loss position

    97,421,673       7,519,943       263  

Total fixed maturity securities in an unrealized loss position

  $ 115,625,899     $ 7,862,780       303  
                         

Fixed maturity securities held in trust under coinsurance agreement

                       

Total less than 12 months in an unrealized loss position

  $ 89,555     $ 356       1  

Total more than 12 months in an unrealized loss position

    12,288,048       4,217,922       56  

Total fixed maturity securities held in trust under coinsurance agreement in a unrealized loss position

  $ 12,377,603     $ 4,218,278       57  

 

As of June 30, 2026, the Company held 403 available-for-sale fixed maturity securities with an unrealized loss of $9,478,689, fair value of $170,624,481 and amortized cost of $180,103,170. These unrealized losses were primarily due to the market interest rate movements in the bond market as of June 30, 2026. The ratio of the fair value to the amortized cost of these 403 securities is 95%.

 

As of December 31, 2025, the Company held 303 available-for-sale fixed maturity securities with an unrealized loss of $7,862,780, fair value of $115,625,899 and amortized cost of $123,488,679. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2025. The ratio of the fair value to the amortized cost of these 303 securities is 94%.

 

The change in the current estimate of credit losses on fixed maturity available-for-sale securities for the six months ended June 30, 2026 and December 31, 2025, are summarized as follows:

 

   

(Unaudited)

         
   

June 30, 2026

   

December 31, 2025

 
                 

Beginning balance

  $ (529,984 )   $ (725,960 )

Current estimate of credit losses

    (67,185 )     195,976  

Ending balance

  $ (597,169 )   $ (529,984 )

 

Net unrealized losses included in other comprehensive income (loss) for investments classified as available-for-sale, net of the effect of deferred income taxes and future policy benefits related to discount rates as of June 30, 2026 and December 31, 2025, are summarized as follows:

 

   

(Unaudited)

         
   

June 30, 2026

   

December 31, 2025

 

Unrealized depreciation

               

Available-for-sale fixed maturity securities

  $ (8,650,431 )   $ (6,062,918 )

Other long-term investments

    (49,645 )     (50,714 )

Future policy benefits related to discount rate

    18,215,710       16,873,830  

Deferred income taxes

    (1,998,283 )     (2,259,642 )

Accumulated other comprehensive income

  $ 7,517,351     $ 8,500,556  
                 

Assets held in trust under coinsurance agreement

               

Unrealized depreciation on fixed maturity securities available-for-sale

  $ (3,812,428 )   $ (4,218,278 )

 

The information on future policy benefits related to discount rate is discussed in Note 10.

 

The Company’s other long-term investments as of June 30, 2026 and December 31, 2025 are summarized as follows:

 

   

(Unaudited)

         
   

June 30, 2026

   

December 31, 2025

 

Lotteries

  $ 47,788,375     $ 50,487,453  

Co-op loans

    550,597       556,682  

Commercial mortgage-backed securities

    338,461       231,984  
                 

Total long-term investments

  $ 48,677,433     $ 51,276,119  

 

The Company’s other long-term investments in lottery prize cash flows were $47,788,375 and $50,487,453 as of June 30, 2026 and December 31, 2025, respectively. The lottery prize cash flows are assignments of the future rights from lottery winners purchased at a discounted price. Payments on these investments are made by state run lotteries.

 

The Company’s other long-term investments in co-op loans were $550,597 and $556,682 as of June 30, 2026 and December 31, 2025, respectively. A co-op ownership is represented by shares of stock in a corporation that owns the real estate. Co-op loans use the shares of stock and not the real estate to secure the debt.

 

The Company’s amortized cost of other long-term investments in investments in specified properties were $388,106 and $282,698, as of June 30, 2026 and December 31, 2025, respectively. The Company’s fair value of other long-term investments in investments in specified properties were $338,461 and $231,984, as of June 30, 2026 and December 31, 2025, respectively. The Company has unfunded commitments for new investments totaling $4,766,466 and $4,872,846 as of June 30, 2026 and December 31, 2025, respectively.

 

The amortized cost and fair value of fixed maturity available-for-sale securities and other long-term investments as of June 30, 2026, by contractual maturity, are summarized as follows:

 

   

June 30, 2026 (Unaudited)

 
   

Fixed Maturity Available-For-Sale Securities

   

Lottery Prize Cash Flows

 
   

Amortized Cost

   

Fair Value

   

Amortized Cost

   

Fair Value

 

Due in one year or less

  $ 4,197,617     $ 4,155,338     $ 10,386,150     $ 10,470,865  

Due after one year through five years

    29,103,834       27,917,279       22,067,329       23,272,834  

Due after five years through ten years

    59,641,153       57,817,727       9,578,870       11,029,253  

Due after ten years

    116,288,108       111,983,586       5,756,026       7,282,305  

Due at multiple maturity dates

    33,633,061       32,339,412       -       -  
                                 
    $ 242,863,773     $ 234,213,342     $ 47,788,375     $ 52,055,257  

 

The amortized cost and fair value of fixed maturity available-for-sale securities held in trust under coinsurance agreement as of June 30, 2026, by contractual maturity, are summarized as follows:

 

   

June 30, 2026 (Unaudited)

 
   

Fixed Maturity Available-For-Sale Securities

 
   

Amortized Cost

   

Fair Value

 

Due in one year or less

  $ 380,225     $ 379,377  

Due after one year through five years

    -       -  

Due after five years through ten years

    140,000       119,137  

Due after ten years

    11,890,074       8,201,205  

Due at multiple maturity dates

    492,224       390,376  
                 
    $ 12,902,523     $ 9,090,095  

 

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity securities available-for-sale, mortgage loans on real estate, investment real estate and equity securities for the three and six months ended June 30, 2026 and 2025 are summarized as follows:

 

   

Three Months Ended June 30, (Unaudited)

 
   

Fixed Maturity Securities

   

Mortgage Loans on Real Estate

   

Investment Real Estate

   

Equity Securities

 
   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

 

Proceeds

  $ 3,909,828     $ 23,889,372     $ 19,688,748     $ 38,122,063     $ -     $ -     $ -     $ 4,222  

Gross realized gains

    48,980       -       -       -       -       -       -       4,222  

Gross realized losses

    (7,145 )     (73,291 )             (1,137 )     -       -       -       -  

Loss on impairments

    -       -       -       -       -       -       -       -  

 

 

   

Six Months Ended June 30, (Unaudited)

 
   

Fixed Maturity Securities

   

Mortgage Loans on Real Estate

   

Investment Real Estate

   

Equity Securities

 
   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

 

Proceeds

  $ 12,401,062     $ 55,696,776     $ 38,148,884     $ 58,809,803     $ 184,832     $ 294,982     $ -     $ 6,944  

Gross realized gains

    54,924       221,430       -       -       34,462       29,412       -       6,944  

Gross realized losses

    (7,567 )     (68,641 )     -       (1,137 )     -       -       -       -  

Loss on impairments

    -       -       -       -       -       -       -       -  

 

The accumulated change in unrealized investment gains (losses) for fixed maturity available-for-sale securities and other long-term investments for the three and six months ended June 30, 2026 and 2025 and the amount of net realized investment gains (losses) on fixed maturity securities available-for-sale, mortgage loans on real estate, investment real estate and equity securities for the three and six months ended June 30, 2026 and 2025 are summarized as follows:

 

   

Three Months Ended June 30, (Unaudited)

   

Six Months Ended June 30, (Unaudited)

 
   

2026

   

2025

   

2026

   

2025

 

Change in unrealized investment gains (losses):

                               

Available-for-sale securities:

                               

Fixed maturity securities

  $ 91,489     $ 631,473     $ (2,587,513 )   $ 4,479,851  

Fixed maturity securities held in trust under coinsurance agreement

    395,099       37,699       405,850       223,632  

Other long-term investments

    1,017       (52,192 )     1,069       (52,192 )
                                 

Net realized investment gains (losses):

                               

Available-for-sale securities:

                               

Fixed maturity securities

    41,835       (73,291 )     47,357       152,789  

Fixed maturity securities credit losses

    (27,301 )     (13,056 )     (67,185 )     618,110  

Mortgage loans on real estate

    -       (1,137 )     -       (1,137 )

Investment real estate

    -       -       34,462       29,412  

Equity securities

    -       4,222       -       6,944  

Equity securities, changes in fair value

    (106,350 )     60,304       63,663       33,128  

 

Major categories of net investment income for the three and six months ended June 30, 2026 and 2025 are summarized as follows:

 

   

Three Months Ended June 30, (Unaudited)

   

Six Months Ended June 30, (Unaudited)

 
   

2026

   

2025

   

2026

   

2025

 

Fixed maturity securities

  $ 2,734,698     $ 2,530,774     $ 5,316,105     $ 4,670,728  

Equity securities

    114,810       86,081       216,784       163,027  

Other long-term investments

    929,687       1,069,651       1,906,527       2,191,549  

Mortgage loans

    5,383,012       5,612,876       10,784,741       10,456,826  

Policy loans

    108,801       88,103       209,226       171,410  

Short-term and other investments

    298,478       410,977       567,123       741,125  

Gross investment income

    9,569,486       9,798,462       19,000,506       18,394,665  

Investment expenses

    (642,255 )     (687,224 )     (1,214,703 )     (1,465,144 )

Net investment income

  $ 8,927,231     $ 9,111,238     $ 17,785,803     $ 16,929,521  

 

TLIC and FBLIC are required to hold assets on deposit with various state insurance departments for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of June 30, 2026 and December 31, 2025, these required deposits, included in investment assets, had amortized costs that totaled $5,082,632 and $5,074,730, respectively. As of June 30, 2026 and December 31, 2025, these required deposits had fair values that totaled $5,038,316 and $5,077,193, respectively.

 

The Company’s mortgage loans by property type as of June 30, 2026 and December 31, 2025 are summarized as follows:

 

   

(Unaudited)

         
   

June 30, 2026

   

December 31, 2025

 

Residential mortgage loans

  $ 219,472,643     $ 221,015,308  
                 

Commercial mortgage loans by property type

               

Agricultural

    240,428       241,755  

Apartment

    7,513,027       6,556,864  

Industrial

    5,592,636       2,631,676  

Lodging

    2,787,415       1,235,173  

Office building

    7,040,496       5,746,795  

Retail

    14,524,791       13,472,143  
                 

Total commercial mortgage loans by property type

    37,698,793       29,884,406  
                 

Total mortgage loans

  $ 257,171,436     $ 250,899,714  
                 

Mortgage loans held in trust under coinsurance agreement

               

Commercial mortgage loans

  $ 4,853,932     $ 5,298,828  
                 

Total mortgage loans held in trust under coinsurance agreement

  $ 4,853,932     $ 5,298,828  

 

There were 35 mortgage loans with a remaining principal balance of $6,435,923 that were more than 90 days past due as of June 30, 2026. There were 33 mortgage loans with a remaining principal balance of $7,935,123 that were more than 90 days past due as of June 30, 2025.

 

There were 10 mortgage loans in default and in the foreclosure process with a remaining principal balance of $1,034,571 as of June 30, 2026. There were 10 mortgage loans in default and in the foreclosure process with a remaining principal balance of $2,304,822 as of June 30, 2025.

 

The Company’s investment real estate as of June 30, 2026 and December 31, 2025 is summarized as follows:

 

   

(Unaudited)

         
   

June 30, 2026

   

December 31, 2025

 

Land - held for investment

  $ 411,000     $ 411,000  

Residential real estate - held for sale

    2,272,607       2,115,085  

Total investment in real estate

  $ 2,683,607     $ 2,526,085  

 

TLIC owns approximately three acres of undeveloped land located in Topeka, Kansas with a carrying value of $280,000.

 

FBLIC owns approximately one-half acre of undeveloped land located in Jefferson City, Missouri with a carrying value of $131,000.

 

During 2026, the Company foreclosed on residential mortgage loans of real estate totaling $307,892 and transferred those properties to investment real estate held for sale.

 

During 2025, the Company foreclosed on residential mortgage loans of real estate totaling $459,180 and transferred those properties to investment real estate held for sale.

 

During 2026, the Company sold investment real estate property with an aggregate carrying value of $150,370. The Company recorded a gross realized investment gain on sale of $34,462 based on an aggregate sales price of $184,832.

 

During 2025, the Company sold investment real estate property with an aggregate carrying value of $452,370. The Company recorded a gross realized investment gain on sale of $44,054 based on an aggregate sales price of $496,424.