UTG INC - Quarter Report: 2011 March (Form 10-Q)

utg11q1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT
	OF 1934

For the quarterly period ended March 31, 2011

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
	OF 1934

For the transition period from _____________ to ____________

Commission File No. 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)


Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


	5250 SOUTH SIXTH STREET
	P.O. BOX 5147
	SPRINGFIELD, IL 62705
	(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (217) 241-6300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company.

Yes [ ]

No [X]

The number of shares outstanding of the registrant’s common stock as of April 30, 2011, was 3,827,122.

UTG, INC. AND SUBSIDIARIES

(The “Company”)

TABLE OF CONTENTS

PART 1. FINANCIAL INFORMATION…………………………………………………………………………..…..........................................................................................................	3
ITEM 1. FINANCIAL STATEMENTS...……………………………………………………………………………..…….................................................................................................	3
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010………….……..…......................................................................................................	3
Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010……………………………………………………………………………………......…......................................................................................................	4
Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income
For the three months ended March 31, 2011…..………..……………………………………………………............................................................................................................	5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010………………………………………………………………………..........…......................................................................................................................	6
Notes to Condensed Consolidated Financial Statements………………………..…………………………….……..................................................................................................	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS…………………………………..………………………………………………….……........................................................................................................	18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.…………………..……..............................................................................................	25
ITEM 4. CONTROLS AND PROCEDURES..…………………………………………………………….…………….......................................................................................................	26
PART II. OTHER INFORMATION…..……………………….……………………………………………………………..................................................................................................	26
ITEM 1. LEGAL PROCEEDINGS…………………………………………………………….………………………….......................................................................................................	26
ITEM 1A. RISK FACTORS………………………………………………………………………………………………......................................................................................................	26
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS………………...…….........................................................................................................	26
ITEM 3. DEFAULTS UPON SENIOR SECURITIES…………………………………………………………………........................................................................................................	26
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS………………………………….......................................................................................................	26
ITEM 5. OTHER INFORMATION...……………………………………………………………………………………......................................................................................................	26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...……………………………………………………………….......................................................................................................	27
SIGNATURES...………………………………………………………………………………………………………………...................................................................................................	28
EXHIBIT INDEX...………………………………………………………………………………………………………….......................................................................................................	29

PART 1. FINANCIAL INFORMATION
	Item 1. Financial Statements

UTG, Inc.
AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited)

ASSETS

			March 31,		December 31,
			2011		2010*
Investments:
Investments available for sale:
Fixed maturities, at market (amortized cost $139,690,033 and $142,948,693)		$	142,555,639	$	147,905,948
Equity securities, at market (cost $13,336,210 and $13,940,811)			13,529,265		13,884,257
Trading securities, at market (cost $26,063,645 and $34,183,252)			27,184,049		37,029,550
Mortgage loans on real estate at amortized cost			12,226,892		12,411,587
Discounted mortgage loans on real estate at cost			45,408,443		47,523,860
Investment real estate, at cost, net of accumulated depreciation			55,440,980		53,148,755
Policy loans			13,894,720		13,976,019
			310,239,988		325,879,976

Cash and cash equivalents			25,116,902		18,483,452
Investment in unconsolidated affiliate, at fair value (cost $5,000,000 and $5,000,000)			5,164,518		5,137,700
Accrued investment income			686,919		1,609,425
Reinsurance receivables:
Future policy benefits			65,961,176		67,033,539
Policy claims and other benefits			4,537,284		4,446,940
Cost of insurance acquired			13,769,527		14,077,281
Deferred policy acquisition costs			539,785		556,958
Property and equipment, net of accumulated depreciation			1,442,030		1,478,935
Other assets			10,703,980		2,883,893
Total assets		$	438,162,109	$	441,588,099


LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Future policy benefits		$	306,156,107	$	307,509,531
Policy claims and benefits payable			3,541,020		3,588,914
Other policyholder funds			783,775		810,062
Dividend and endowment accumulations			14,156,088		14,190,946
Income taxes payable			1,209,179		209,888
Deferred income taxes			11,946,952		13,381,278
Notes payable			8,073,065		10,372,239
Trading securities, at market (proceeds $17,064,512 and $17,387,108)			16,307,682		18,429,677
Other liabilities			8,050,468		7,967,807
Total liabilities			370,224,336		376,460,342

Shareholders' equity:
Common stock - no par value, stated value $.001 per share
Authorized 7,000,000 shares - 3,829,006 and 3,848,079 shares issued
and outstanding after deducting treasury shares of 466,002 and 446,929			3,829		3,848
Additional paid-in capital			41,204,042		41,432,636
Retained earnings			9,695,037		6,335,072
Accumulated other comprehensive income			2,920,472		3,679,684
Total UTG shareholders' equity			53,823,380		51,451,240
Noncontrolling interest			14,114,393		13,676,517
Total shareholders' equity			67,937,773		65,127,757
Total liabilities and shareholders' equity		$	438,162,109	$	441,588,099

* Balance sheet audited at December 31, 2010.
See accompanying notes.

UTG, Inc.
AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

		Three Months Ended
		March 31,		March 31,
		2011		2010
Revenues:

Premiums and policy fees	$	3,779,566	$	4,122,858
Ceded Reinsurance premiums and policy fees		(828,274)		(966,091)
Net investment income		6,291,517		4,322,949
Other income		479,224		466,382
Revenues before realized gains (losses)		9,722,033		7,946,098
Realized investment gains (losses), net:
Other-than-temporary impairments		(420,401)		(477,386)
Other realized investment gains (losses), net		1,976,799		214,936
Total realized investment gains (losses), net		1,556,398		(262,450)
		11,278,431		7,683,648

Benefits and other expenses:

Benefits, claims and settlement expenses:
Life		5,073,645		6,011,656
Ceded Reinsurance benefits and claims		(683,989)		(1,755,831)
Annuity		268,731		165,668
Dividends to policyholders		152,569		167,923
Commissions and amortization of deferred policy
acquisition costs		(212,690)		(117,374)
Amortization of cost of insurance acquired		307,754		331,183
Operating expenses		2,066,337		1,971,570
Interest expense		57,962		96,684
		7,030,319		6,871,479


Income (loss) before income taxes		4,248,112		812,169
Income tax (expense) benefit		(463,743)		(312,529)

Net income (loss)		3,784,369		499,640

Net (income) loss attributable to noncontrolling interest		(424,404)		(164,449)

Net income (loss) attributable to common shareholders'	$	3,359,965	$	335,191

Amounts attributable to common shareholders':

Basic income per share	$	0.88	$	0.09

Diluted income per share	$	0.88	$	0.09

Basic weighted average shares outstanding		3,834,110		3,883,020

Diluted weighted average shares outstanding		3,834,110		3,883,020
See accompanying notes.

UTG, Inc.
AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity and Comprehensive Income
(Unaudited)

					Three Months Ended
					March 31, 2011

					Shareholders'		Comprehensive
					Equity		Income
Common stock
	Balance, beginning of year			$	3,848
		Issued during year			0
		Treasury shares acquired and retired			(19)
	Balance, end of period				3,829

Additional paid-in capital
	Balance, beginning of year				41,432,636
		Issued during year			0
		Treasury shares acquired and retired			(228,594)
	Balance, end of period				41,204,042

Retained earnings
	Balance, beginning of year				6,335,072
		Net income attributable to common shareholders			3,359,965	$	3,359,965
	Balance, end of period				9,695,037

Accumulated other comprehensive income
	Balance, beginning of year				3,679,684
	Other comprehensive income (loss)
		Unrealized holding income (loss) on securities net of
			noncontrolling and reclassification adjustment and taxes		(759,212)		(759,212)
	Balance, end of period				2,920,472	$	2,600,753

Noncontrolling interest
	Balance, beginning of year				13,676,517
	Contributions				0
	Distributions				0
	Gain attributable to noncontrolling interest				437,876
	Balance, end of period				14,114,393

Total shareholders' equity, end of period				$	67,937,773
See accompanying notes.

UTG, Inc.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

		Three Months Ended
		March 31,		March 31,
		2011		2010

Cash flows from operating activities:
Net income attributable to common shares	$	3,359,965	$	335,191
Adjustments to reconcile net income to net cash used in
operating activities net of changes in assets and liabilities
resulting from the sales and purchases of subsidiaries:
Amortization (accretion) of investments		(1,561,370)		31,091
Realized investment (gains) losses, net		(1,556,398)		262,450
Unrealized trading gains included in income		(73,504)		(643,348)
Amortization of deferred policy acquisition costs		17,173		33,142
Amortization of cost of insurance acquired		307,754		331,183
Depreciation		341,698		318,795
Net income attributable to noncontrolling interest		424,404		164,449
Charges for mortality and administration of
universal life and annuity products		(1,876,695)		(2,034,801)
Interest credited to account balances		1,456,546		1,474,820
Change in accrued investment income		922,506		183,187
Change in reinsurance receivables		982,019		(159,987)
Change in policy liabilities and accruals		(1,381,400)		(1,080,084)
Change in income taxes receivable/payable		(1,748,580)		(1,628,284)
Change in other assets and liabilities, net		(206,934)		(590,396)
Net cash used in operating activities		(592,816)		(3,002,592)

Cash flows from investing activities:
Proceeds from investments sold and matured:
Fixed maturities available for sale		40,696,499		10,790,333
Equity securities available for sale		1,060,590		186,798
Trading securities		27,070,602		61,510,025
Mortgage loans		185,428		7,915,973
Discounted mortgage loans		5,292,482		4,808,635
Real estate		190,889		870,000
Policy loans		957,907		940,143
Short-term investments		0		700,000
Total proceeds from investments sold and matured		75,454,397		87,721,907
Cost of investments acquired:
Fixed maturities available for sale		(36,977,813)		(20,480,862)
Equity securities available for sale		(683,935)		0
Trading securities		(23,061,679)		(72,910,979)
Mortgage loans		(732)		(952,826)
Discounted mortgage loans		(3,932,036)		(15,967,444)
Real estate		(506,627)		(97,020)
Policy loans		(876,608)		(831,189)
Total cost of investments acquired		(66,039,430)		(111,240,320)
Purchase of property and equipment		0		(31,212)
Net cash provided by (used in) investing activities		9,414,967		(23,549,625)

Cash flows from financing activities:
Policyholder contract deposits		1,700,281		1,792,937
Policyholder contract withdrawals		(1,361,195)		(1,449,866)
Proceeds from notes payable/line of credit		150,000		0
Payments of principal on notes payable/line of credit		(2,449,174)		(1,208,335)
Purchase of treasury stock		(228,613)		(23,249)
Net cash used in financing activities		(2,188,701)		(888,513)

Net increase (decrease) in cash and cash equivalents		6,633,450		(27,440,730)
Cash and cash equivalents at beginning of period		18,483,452		37,492,843
Cash and cash equivalents at end of period		$25,116,902		$10,052,113
See accompanying notes.

UTG, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

1.	BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared by UTG, Inc. (“UTG”) and its consolidated subsidiaries (“Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes the disclosures are adequate to make the information presented not be misleading, it is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto presented in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2010.

The information furnished reflects, in the opinion of the Company, all adjustments (which include only normal and recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. Operating results for interim periods are not necessarily indicative of operating results to be expected for the year or of the Company’s future financial condition.

This document at times will refer to the Registrant’s largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll. Mr. Correll holds a majority ownership of First Southern Funding LLC (“FSF”), a Kentucky corporation, and First Southern Bancorp, Inc. (“FSBI”), a financial services holding company. FSBI operates through its 100% owned subsidiary bank, First Southern National Bank (“FSNB”). Banking activities are conducted through multiple locations within south-central and western Kentucky. Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG’s largest shareholder through his ownership control of FSF, FSBI and affiliates. At March 31, 2011, Mr. Correll owns or controls directly and indirectly approximately 60.3% of UTG’s outstanding stock.

At March 31, 2011 consolidated subsidiaries of UTG, Inc. were as depicted on the following organizational chart:

2.	INVESTMENTS

A.	Available for Sale Securities – Fixed Maturity and Equity Securities

As of March 31, 2011 and December 31, 2010, fixed maturities available for sale represented 46% and 45% of total invested assets, respectively. The Company’s insurance subsidiaries are regulated by insurance statutes and regulations as to the type of investments they are permitted to make, and the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, and the Company’s business and investment strategy, the Company generally seeks to invest in United States government and government agency securities and other high quality low risk investments.

At March 31, 2011, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders’ equity or results from operations. The Company has identified securities it may sell and classified them as “investments available for sale”. Investments available for sale are carried at market, with changes in market value directly recorded to shareholders’ equity.

The amortized cost and estimated market values of investments in securities including investments held for sale are as follows:

March 31, 2011		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	74,682,386	$	2,355,474	$	(164,097)	$	76,873,763
States, municipalities and political subdivisions		310,000		2,570		0		312,570
Collateralized mortgage obligations		8,061,760		123,880		(1,308)		8,184,332
Public utilities		399,878		52,558		0		452,436
All other corporate bonds		56,236,009		2,348,118		(1,851,589)		56,732,538
		139,690,033		4,882,600		(2,016,994)		142,555,639
Equity securities		13,336,210		271,571		(78,516)		13,529,265
Total	$	153,026,243	$	5,154,171	$	(2,095,510)	$	156,084,904

Investment in unconsolidated affiliate	$	5,000,000	$	164,518	$	0	$	5,164,518

December 31, 2010		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	74,596,648	$	4,427,285	$	0	$	79,023,933
States, municipalities and political subdivisions		330,000		5,198		0		335,198
Collateralized mortgage obligations		16,170,099		510,840		(6,677)		16,674,262
Public utilities		904,139		82,886		0		987,025
All other corporate bonds		50,947,807		2,320,965		(2,383,242)		50,885,530
		142,948,693		7,347,174		(2,389,919)		147,905,948
Equity securities		13,940,811		39,700		(96,254)		13,884,257
Total	$	156,889,504	$	7,386,874	$	(2,486,173)	$	161,790,205

Investment in unconsolidated affiliate	$	5,000,000	$	137,700	$	0	$	5,137,700

The fair value of investments with sustained gross unrealized losses at March 31, 2011 and December 31, 2010 are as follows:

March 31, 2011		Less than 12 months			12 months or longer			Total

		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
U.S. Government obligations	$	33,218,393	(164,097)	$	0	0	$	33,218,393	(164,097)
Collateralized mortgage obligations		0	0		100,023	(1,308)		100,023	(1,308)
All other corporate bonds		21,329,232	(182,755)		1,298,878	(1,668,834)		22,628,110	(1,851,589)
Total fixed maturity	$	54,547,625	(346,852)	$	1,398,901	(1,670,142)	$	55,946,526	(2,016,994)

Equity securities	$	457,812	(21,732)	$	2,813,827	(56,784)	$	3,271,639	(78,516)

December 31, 2010		Less than 12 months			12 months or longer			Total

		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	0	0	$	104,033	(6,677)	$	104,033	(6,677)
All other corporate bonds		13,959,305	(413,862)		2,620,277	(1,969,380)		16,579,582	(2,383,242)
Total fixed maturity	$	13,959,305	(413,862)	$	2,724,310	(1,976,057)	$	16,683,615	(2,389,919)

Equity securities	$	1,082,748	(96,254)	$	0	0	$	1,082,748	(96,254)

The unrealized losses of fixed maturity investments were primarily due to financial market participants’ perception of increased risks associated with the current market environment, resulting in higher interest rates. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the par value of the investment. The unrealized losses of equity investments were primarily caused by normal market fluctuations in publicly traded securities.

The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary. Based on an evaluation of the issues, including, but not limited to: intentions to sell or ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover; the length of time and amount of the unrealized loss; and the credit ratings of the issuers of the investments, the Company held two and six investments as other-than-temporarily impaired at March 31, 2011 and December 31, 2010. Other-than-temporary impairments of $420,401 and $1,478,970 were taken in the first three months of 2011 and during the twelve months ended December 31, 2010, respectively. The other-than-temporary impairments during 2011 were due to the Company’s intent to sell certain bond holdings in the near term and a mortgage loan impairment as a result of an appraisal valuation. The other-than-temporary impairments during 2010 were due to changes in expected future cash flows of investments in stocks as well as in bonds backed by trust preferred securities of banks. In addition, in 2010, the Company recognized an other-than-temporary impairment in a mortgage loan as a result of its appraisal valuation. The other-than-temporary impairments are detailed below:

March 31, 2011		Beginning Amortized Cost		OTTI Credit Loss		Ending Amortized Cost		Unrealized Loss		Carrying Value

Jarvis Development	$	769,119	$	(39,119)	$	730,000	$	0	$	730,000

iSHARES Investops Corp.		11,960,818		(381,282)		11,579,536		0		11,579,536

December 31, 2010		Beginning Amortized Cost		OTTI Credit Loss		Ending Amortized Cost		Unrealized Loss		Carrying Value

Preferred Term Securities I	$	416,157	$	(136,935)	$	279,222	$	(206,924)	$	72,298

Preferred Term Securities II	$	2,161,808	$	(473,319)	$	1,688,489	$	(1,621,946)	$	66,543

Investors Heritage Capital Corp	$	618,348	$	(215,174)	$	403,174	$	0	$	403,174

Jarvis Development	$	739,610	$	(128,867)	$	730,000	$	0	$	730,000

SFF Royalty	$	1,934,336	$	(68,643)	$	1,865,693	$	0	$	1,865,693

Amen Properties, Inc.	$	1,628,432	$	(456,032)	$	1,172,400	$	0	$	1,172,400

During the first quarter 2011, the Company recognized an other-than-temporary impairment of $381,282 on certain bond holdings. The Company sold this security in early April 2011.

The amortized cost and estimated market value of debt securities at March 31, 2011, by contractual maturity, is shown below. 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.

Fixed Maturities Available for Sale March 31, 2011		Amortized Cost		Estimated Market Value

Due in one year or less	$	0	$	0
Due after one year through five years		5,032,386		5,580,139
Due after five years through ten years		33,691,350		35,443,595
Due after ten years		92,904,538		93,347,573
Collateralized mortgage obligations		8,061,760		8,184,332
Total	$	139,690,033	$	142,555,639

B.	Trading Securities

Securities designated as trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized in net investment income on the consolidated statements of operations. Trading securities include exchange-traded equities and exchange-traded equity options. The fair value of trading securities included in assets was $27,184,049 and $37,029,550 as of March 31, 2011 and December 31, 2010, respectively. The fair value of trading securities included in liabilities was $(16,307,682) and $(18,429,677) as of March 31, 2011 and December 31, 2010, respectively. Trading securities’ net unrealized gains were $73,504 and $1,803,729 as of March 31, 2011 and December 31, 2010, respectively. Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale. Realized gains from trading securities were $1,032,591 and $184,546 for the three and twelve months ended March 31, 2011 and December 31, 2010, respectively. Earnings from trading securities are classified in cash flows from operating activities. Trading revenue charged to net investment income from trading securities was:

		Three Months March 31, 2011		Twelve Months December 31, 2010

Type of Instrument		Net Realized and Unrealized Gains (Losses)		Net Realized and Unrealized Gains (Losses)

Equity	$	1,106,095	$	1,988,275

C.	Derivatives

As of March 31, 2011, the Company held derivative instruments in the form of exchange-traded equity options. The Company currently does not designate derivatives as hedging instruments. Exchange-traded equity options are combined with exchange-traded equity securities in the Company’s trading portfolio, with the primary objective of generating a fair return while reducing risk. These derivatives are carried at fair value, with unrealized gains and losses recognized in net investment income. The fair value of derivatives included in trading security assets and trading security liabilities as of March 31, 2011 was $1,796,194 and $(15,106,922), respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2010 was $2,244,478 and $(17,246,957), respectively. Realized gains (losses) due to derivatives were $296,580 and $(305,247) for the three and twelve months ended March 31, 2011 and December 31, 2010, respectively. Unrealized gains (losses) included in income and trading security assets due to derivatives were $(1,226,887) and $1,579,071 as of March 31, 2011 and December 31, 2010, respectively. Unrealized gains (losses) included in income and trading security liabilities due to derivatives were $1,817,439 and $(3,392,010) as of March 31, 2011 and December 31, 2010, respectively.

Mortgages

The Company held mortgage loans on real estate in the amount of $57,635,335 and $59,935,447 at March 31, 2011 and December 31, 2010, respectively. Included in the amounts are discounted commercial mortgage loans with a carrying value of $45,408,443 and $47,523,860 at March 31, 2011 and December 31, 2010, respectively.

During the first quarter 2011, the Company acquired $4,670,301 of discounted mortgage loans at a total cost of $3,111,191, representing an average purchase price to outstanding loan of 66.62%. Additionally, during the first quarter 2011, the Company settled, sold, or had paid off mortgage loans totaling $5,590,945. The Company also recorded approximately $3,232,000 in income from the discounted mortgage loan activity, including $1,566,180 in discount accruals during the first quarter 2011. During 2010, the Company acquired $111,258,867 of discounted mortgage loans at a total cost of $36,283,278, representing an average purchase price to outstanding loan of 32.6%. Additionally, during 2010, the Company settled, sold or had paid off discounted mortgage loans totaling $23,607,100. During 2010, the Company recorded approximately $12,898,000 in income from the discounted mortgage loan activity, including $7,645,258 in discount accruals. The Company is currently projecting a very positive return from on-going mortgage loan payments from the discounted commercial mortgage loan portfolio.

While management believes the discounted loans will continue to have favorable earnings and outcomes as they are worked through, there can be no assurance this will remain true in future periods. Changes in the current economy such as an even greater downturn than recently experienced could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers’ ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices. As such, management has taken a conservative approach with these investments and has classified all discounted mortgage loans held as non-accrual. In such status, the Company is not recording any accrued interest income nor is it recording any accrual of discount on the loans held. Discount accruals reported during 2010 and 2011 were the result of the loan basis already being fully paid.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment. In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property. The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on management’s quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value. The Company acquired the discounted mortgage loans at below fair value, therefore no reserve for delinquent loans is deemed necessary. The loan portfolio since purchase is performing very well. Those loans not currently paying are being vigorously worked by management. The current discounted commercial mortgage loan portfolio has an average price of 33.1% of face value and management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased. The mortgage loan reserve was $0 at March 31, 2011 and December 31, 2010.

As of March 31, 2011, the Company’s discounted mortgage loan portfolio contained 124 loans with a carrying value of $45,408,443. The loans’ payment performance since inception is shown as follows:

Payment Frequency	Number of Loans		Carrying Value

No payments	41	$	23,350,301
One-time payment received	17		205,461
Irregular payments received	23		9,966,508
Periodic payments received	43		11,886,173
Total	124	$	45,408,443

The following table summarizes discounted mortgage loan holdings of the Company:

Category		March 31, 2011		December 31, 2010

In good standing	$	11,611,834	$	9,665,059
Overdue interest over 90 days		7,694,316		16,192,815
Restructured		3,511,217		4,306,800
In process of foreclosure		22,591,076		17,359,186
Total discounted mortgage loans	$	45,408,443	$	47,523,860

Total foreclosed discounted mortgage loans	$	11,221,579	$	8,939,548

At March 31, 2011, the Company has 41 discounted mortgage loans totaling $22,591,076 in the process of foreclosure and 20 discounted mortgage loans totaling $3,511,217 under a repayment plan or restructuring. At December 31, 2010, the Company had 26 discounted mortgage loans totaling $17,359,186 in the process of foreclosure and 19 discounted mortgage loans totaling $4,306,800 under a repayment plan or restructuring.

During the first quarter 2011, the Company foreclosed on two discounted mortgage loans with a total carrying value of $2,282,031. These foreclosed loans are now UG’s majority-owned subsidiaries, Wingate of St. Johns Holding, LLC and Northwest Florida of Okaloosa Holding, LLC. During 2010, the Company foreclosed on 20 discounted mortgage loans with a total carrying value of $8,939,548. Of these foreclosures, 17 loans totaling $8,411,458 were transferred to real estate while one loan is now UG’s wholly owned subsidiary, Sand Lake, LLC. Subsequent to the foreclosures, two foreclosed loans were sold with the Company realizing a gain of $51,949 upon the sale.

During the first quarter 2011, the Company recognized an other-than-temporary impairment of $39,119 on one of its mortgage loans as a result of a recent appraisal.

3.	NOTES PAYABLE

At March 31, 2011 and December 31, 2010, the Company had $8,073,065 and $10,372,239 of long-term debt outstanding, respectively.

On December 8, 2006, UTG borrowed funds from First Tennessee Bank National Association through execution of an $18,000,000 promissory note. The note is secured by the pledge of 100% of the common stock of UG. The promissory note carries a variable rate of interest based on the 3 month LIBOR rate plus 180 basis points. Interest is payable quarterly. Principal is payable annually beginning at the end of the second year in five installments of $3,600,000. The loan matures on December 7, 2012. The Company had no borrowings and has made no principal payments during 2011 to date. At March 31, 2011 the outstanding principal balance on this debt was $6,891,411. The next required principal payment on this debt is due in December of 2011.

In addition to the above promissory note, First Tennessee Bank National Association also provided UTG, Inc. with a $5,000,000 revolving credit note. During 2010 Management decided that a reduction to a maximum $2,750,000 in this line of credit was more reasonable for current operations. This note is for a one-year term and may be renewed by consent of both parties. The credit note is to provide operating liquidity for UTG, Inc. The promissory note carries a variable rate of interest based on the 90 day LIBOR rate plus 2.75 percentage points, but at no time will the rate be less than 3.25%. The collateral held on the above note also secures this credit note. During 2011, the Company had borrowings of $150,000 and made $440,000 in principal payments. At March 31, 2011, the Company had no outstanding principal balance attributable to this note.

In November 2007, UG became a member of the Federal Home Loan Bank (“FHLB”). This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG. To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB. Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the “base membership” amount. The Company’s current LOC with the FHLB is $15,000,000. During 2011, the Company had repayments of $2,000,000 against this LOC. At March 31, 2011 the Company had no outstanding principal balance attributable to this LOC.

In January 2007, UG became a 51% owner of the newly formed RLF Lexington Properties LLC (“Lexington”). The entity was formed to hold, for investment purposes, certain investment real estate acquired. As part of the purchase price of the real estate owned by Lexington, the seller provided financing through the issuance of five promissory notes of $1,200,000 each totaling $6,000,000. The notes bear interest at the fixed rate of 5%. The notes came due beginning on January 5, 2008, and each January 5 thereafter until 2012 when the final note is repaid. As of March 31, 2011 the outstanding principal balance was $914,505.

On February 7, 2007, HPG Acquisitions (“HPG”), a 74% owned affiliate of the Company, borrowed funds from First National Bank of Midland, through execution of a $373,862 promissory note. The note is secured by real estate owned by HPG. The note bears interest at a fixed rate of 5%. The first payment was due January 15, 2008. There will be 119 regular payments of $3,965 followed by one irregular last payment estimated at $44,125. At March 31, 2011, the outstanding principal balance on this debt was $267,149.

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year		Amount

2011	$	3,627,008
2012		4,235,123
2013		31,586
2014		34,154
2015		36,935

4.	SHAREHOLDERS’ EQUITY

A.	Stock Repurchase Program

The Board of Directors of UTG has authorized the repurchase in the open market or in privately negotiated transactions of up to $5 million of UTG's common stock. Repurchased shares are available for future issuance for general corporate purposes. This program can be terminated at any time. Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company. Through April 2011, UTG has spent $3,419,516 in the acquisition of 467,886 shares under this program.

B.	Earnings Per Share Calculations

Earnings per share are based on the weighted average number of common shares outstanding during each period, retroactively adjusted to give effect to all stock splits, in accordance with ASC 260-10, Earnings Per Share. At March 31, 2011 and March 31, 2010, diluted earnings per share were the same as basic earnings per share since the Company had no dilutive instruments outstanding.

5.	COMMITMENTS AND CONTINGENCIES

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters. Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages. In some states, juries have substantial discretion in awarding punitive damages in these circumstances. In the normal course of business, the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a materially adverse effect on the Company’s results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies. Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength. Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements, though the Company has no control over such assessments.

As part of the Texas Imperial Life Insurance Company sale, the Company remains contingently liable for certain costs pending the outcome of an ongoing race-based audit on Texas Imperial Life Insurance Company by the Texas Department of Insurance. Under the agreement, the Company is responsible for 100% of the first $50,000 of costs, 90% of the next $50,000, 75% of the third $50,000 and 50% of the costs above $150,000. Management has conservatively estimated the Company’s exposure and other costs at $50,000 based on information provided to date from the examination team and has established a contingent liability in its financial statements of this amount. This contingency expires December 30, 2013.

Within the Company’s trading accounts, certain trading securities carried as liabilities represent securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.

During 2010, the Company committed to invest up to $2,000,000 in Llano Music, LLC, which invests in music royalties. Llano does capital calls as funds are needed to acquire the royalty rights. At March 31, 2011, the Company has $1,821,000 committed that has not been requested by Llano.

6.	OTHER CASH FLOW DISCLOSURES

On a cash basis, the Company paid $44,884 and $93,508 in interest expense during the first three months of 2011 and 2010, respectively. The Company paid $353,739 and $0 in federal income tax during the first three months of 2011 and 2010, respectively.

7.	CONCENTRATION OF CREDIT RISK

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits. The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse Correll, the Company’s CEO and Chairman. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

8.		COMPREHENSIVE INCOME
	Three Months Ended March 31, 2011			Before Tax Amount		Tax (Expense) or Benefit		Net of Tax Amount

	Unrealized holding gains during period		$	1,226,440	$	(429,254)	$	797,186
	Less: reclassification adjustment for gains (losses) realized in net income			(2,394,458)		838,060		(1,556,398)
	Other comprehensive income (loss)		$	(1,168,018)	$	408,806	$	(759,212)

9.	FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted ASC 820, Fair Value Measurements and Disclosures, which requires enhanced disclosures of assets and liabilities carried at fair value. ASC 820 established a hierarchical disclosure framework based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. ASC 820 defines the input levels as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. U.S. treasuries are in Level 1 and valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access. Equity securities and options that are actively traded and exchange listed in the U.S. are also included in Level 1. Equity security valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

Level 2 - Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets consist of fixed income investments valued based on quoted prices for identical or similar assets in markets that are not active and investments carried as equity securities that do not have an actively traded market that are valued based on their audited GAAP book value.

Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The Company does not have any Level 3 financial assets or liabilities.

The following table presents the level within the hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of March 31, 2011.

		Level 1		Level 2		Level 3		Total

Assets
Fixed Maturities, available for sale	$	5,993,090	$	136,562,549	$	0	$	142,555,639
Equity Securities, available for sale		0		18,693,783		0		18,693,783
Trading Securities		27,184,049		0		0		27,184,049
Total	$	33,177,139	$	155,256,332	$	0	$	188,433,471

Liabilities
Trading Securities	$	16,307,682	$	0	$	0	$	16,307,682

The financial statements include various estimated fair value information at March 31, 2011 and December 31, 2010, as required by ASC 820. Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that Statement and does not purport to represent the aggregate net fair value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments required to be valued by ASC 820 for which it is practicable to estimate that value:

(a) Cash and cash equivalents

The carrying amount in the financial statements approximates fair value because of the relatively short period of time between the origination of the instruments and their expected realization.

(b) Fixed maturities and investments available for sale

The Company utilized a pricing service to estimate fair value measurements for its fixed maturities and public common and preferred stocks. The pricing service utilizes market quotations for securities that have quoted market prices in active markets. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes, the estimates of fair value other than U.S. Treasury securities are included in Level 2 of the hierarchy. U.S. Treasury securities are included in the amount disclosed in Level 1 as the estimates are based on unadjusted prices. The Company’s Level 2 investments include obligations of U.S. government agencies, municipal bonds, corporate debt securities and other mortgage backed securities.

Securities designated as trading securities are reported at fair value using market quotes, with gains or losses resulting from changes in fair value recognized in earnings. Trading securities include exchange-traded equities and exchange-traded equity long and short options.

(d) Mortgage loans on real estate

The fair values of mortgage loans are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.

(e) Discounted mortgage loans

The Company has been purchasing non-performing loans at a deep discount through an auction process led by the federal government. In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company. Accordingly, the Company records its investment in the discounted loans at its original purchase price. Management has determined the fair value to be too difficult to calculate but believes it approximates the carrying value of these investments. Management works the loans with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate. For cash payments received during the work out process, the Company records these payments to interest income on a cash basis. For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date. Management reviews the discount loan portfolio regularly for impairment. If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

(f) Policy loans

Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets which approximates fair value, and earn interest at rates ranging from 4% to 8%. Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.

(g) Short-term investments

Quoted market prices, if available, are used to determine the fair value. If quoted market prices are not available, management estimates the fair value based on the quoted market price of a financial instrument with similar characteristics.

(h) Notes payable

For borrowings subject to floating rates of interest, carrying value is a reasonable estimate of fair value. For fixed rate borrowings fair value is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.

The estimated fair values of the Company's financial instruments required to be valued by ASC 820 are as follows as of March 31:

		2011				2010
Assets		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Fixed maturities available for sale	$	142,555,639	$	142,555,639	$	147,905,948	$	147,905,948
Equity securities		13,529,265		13,529,265		13,884,257		13,884,257
Trading securities		27,184,049		27,184,049		37,029,550		37,029,550
Securities of affiliate		5,164,518		5,164,518		5,137,700		5,137,700
Mortgage loans on real estate		12,226,892		12,284,360		12,411,587		12,524,140
Discounted mortgage loans		45,408,443		45,408,443		47,523,860		49,294,797
Policy loans		13,894,720		13,894,720		13,976,019		13,976,019

Liabilities
Notes payable		8,073,065		8,044,205		10,372,239		10,136,433
Trading securities		16,307,682		16,307,682		18,429,677		18,429,677

10.	NEW ACCOUNTING STANDARDS

In April 2011, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update (“ASU”) No. 2011-02 Receivables (Topic 310) A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The amendments in this Update give additional guidance or clarification to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The Company does not expect the adoption of ASU 2011-02 to have a material impact on its consolidated financial statements.

In January 2011, the FASB issued the ASU No. 2011-01 Receivables (Topic 310) Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No 2010-10. The amendments in this Update temporarily delay the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The Company does not expect the adoption of ASU 2011-01 to have a material impact on its consolidated financial statements.

In December 2010, the FASB issued the ASU No. 2010-29 Business Combinations (Topic 805) Disclosure of Supplementary Pro Forma Information for Business Combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this Update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this Update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company does not expect the adoption of ASU 2010-29 to have a material impact on its consolidated financial statements.

In October 2010, the FASB issued the ASU No. 2010-26 Consolidations (Topic 944) Financial Services-Insurance. The amendments in this Update specify that the following costs incurred in the acquisition of new and renewal contracts should be capitalized in accordance with the amendments in this Update: 1. Incremental direct costs of contract acquisition. Incremental direct costs are those costs that result directly from and are essential to the contract transaction(s) and would not have been incurred by the insurance entity had the contract transaction(s) not occurred. 2. Certain costs related directly to Underwriting, policy issuance and processing, medical and inspection, and sales force contract selling performed by the insurer for the contract. The costs related directly to those activities include only the portion of an employee’s total compensation (excluding any compensation that is capitalized as incremental direct costs of contract acquisition) and payroll-related fringe benefits related directly to time spent performing those activities for actual acquired contracts and other costs related directly to those activities that would not have been incurred if the contract had not been acquired. All other acquisition-related costs—including costs incurred by the insurer for soliciting potential customers, market research, training, administration, unsuccessful acquisition or renewal efforts, and product development—should be charged to expense as incurred. Administrative costs, rent, depreciation, occupancy, equipment, and all other general overhead costs are considered indirect costs and should be charged to expense as incurred. If the initial application of the amendments in this Update results in the capitalization of acquisition costs that had not been capitalized previously by an entity, the entity may elect not to capitalize those types of costs. The amendments in this Update do not affect the guidance in paragraphs 944-30-25-4 through 25-5, which prohibits the capitalization of certain costs incurred in obtaining universal life-type contracts. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The amendments in this update should be applied prospectively upon adoption. The Company does not expect the adoption of ASU 2010-26 to have a material impact on its consolidated financial statements.

In July 2010, the FASB issued the ASU No. 2010-20 Consolidations (Topic 310) Receivables. The main objective in developing this Update is to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. This Update is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. Currently, a high threshold for recognition of credit impairments impedes timely recognition of losses. ASU 2010-20 is effective for annual reporting periods ending on or after December 15, 2011. The Company does not expect the adoption of ASU No 2010-20 to have a material impact on its consolidated financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this section is to discuss and analyze the Company's consolidated results of operations, financial condition and liquidity and capital resources. This analysis should be read in conjunction with the consolidated financial statements and related notes that appear elsewhere in this report. The Company reports financial results on a consolidated basis. The consolidated financial statements include the accounts of UTG and its subsidiaries at March 31, 2011.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statement contained herein or in any other oral or written statement by the Company or any of its officers, directors or employees is qualified by the fact that actual results of the Company may differ materially from any such statement due to the following important factors, among other risks and uncertainties inherent in the Company's business:

	1.	Prevailing interest rate levels, which may affect the ability of the Company to sell its products, the market value of the Company's investments and the lapse ratio of the Company's policies, notwithstanding product design features intended to enhance persistency of the Company's products.
	2.	Changes in the federal income tax laws and regulations which may affect the relative tax advantages of the Company's products.
	3.	Changes in the regulation of financial services, including bank sales and underwriting of insurance products, which may affect the competitive environment for the Company's products.
	4.	Other factors affecting the performance of the Company, including, but not limited to, market conduct claims, insurance industry insolvencies, insurance regulatory initiatives and developments, stock market performance, an unfavorable outcome in pending litigation, and investment performance.

Update on Critical Accounting Policies

In our Form 10-K for the year ended December 31, 2010, we identified the accounting policies that are critical to the understanding of our results of operations and our financial position. They relate to deferred acquisition costs (DAC), cost of insurance acquired, assumptions and judgments utilized in determining if declines in fair values of investments are other-than-temporary, and valuation methods for investments that are not actively traded.

We believe that these policies were applied in a consistent manner during the first three months of 2011.

Results of Operations

(a)

Revenues

The Company experienced a decrease of approximately $(205,000) in premiums and policy fee revenues, net of reinsurance premiums and policy fees, when comparing the first three months of 2011 to the same period in 2010. Unless the Company acquires a block of in-force business management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience.

The Company’s primary source of new business production, which has been immaterial, comes from internal conservation efforts. Several of the customer service representatives of the Company are also licensed insurance agents, allowing them to offer other products within the Company’s portfolio to existing customers. Additionally, efforts continue to be made in policy retention through more personal contact with the customer including telephone calls to discuss alternatives and reasons for a customer’s request to surrender their policy.

Net investment income increased approximately 45% when comparing the first three months of 2011 to the same period in 2010. The majority of the increase in investment income is from the Company’s mortgage loan portfolio. Approximately 54%, or $3,401,000, of investment income is attributable to the mortgage loan portfolio. Should any of the factors change, such as the ability to acquire additional loans at such a large discount due to increased competition or insufficient supply, the ability of borrowers to settle loans mainly through refinancing, another decline in the overall economy, and other such factors, the performance of this type of investment could abruptly end, directly affecting future net income. While management believes the current portfolio would remain profitable in another downturn, with no source of new acquisitions of discounted loans, the future profit stream from this activity would be limited. Alternatively, should the Company need to look at fixed maturities for additional investment if discounted loans were no longer a viable option, the rate of return would be significantly lower given the low interest rate environment also resulting in substantially lower income.

Management has extensive background and experience in the analysis and valuation of commercial real estate and believes there are significant opportunities currently available in this arena. Experienced personnel of FSNB have also been utilized in the analysis phase. This experience dates back to discounted loans during the Resolution Trust days where such loans were being sold from defunct savings and loans in the early 1990’s. The discounted loans are available through the FDIC sale of assets of closed banks and from banks wanting to reduce their loan portfolios. The loans are available on a loan by loan bid process. Prior to placing a bid, each loan is reviewed to determine interest level utilizing such information as type of collateral, location of collateral, interest rate, current loan status and available cash flows or other sources of repayment. Once it is determined interest in the loan remains, the collateral is physically inspected. Following physical inspection, if interest still remains, a bid price is determined and a bid is submitted. Once a loan has been acquired, contact is made with the appropriate individuals to begin a dialog with a goal of determining the borrower’s willingness to work together. There are generally three paths a discounted loan will take: the borrower pays as required; a settlement is reached with the loan being paid off at a discounted value; or the loan is foreclosed.

During the fourth quarter of 2009, the Company began purchasing discounted commercial mortgage loans. As of March 31, 2011, the Company held about $137,000,000 of these loans at a total cost of approximately $45,400,000, representing an average purchase price to outstanding loan of about 33%. During the first three months of the year, the Company has recognized approximately $3,232,000 in income from these loans. The Company is currently projecting a very positive return from on-going mortgage loan payments from the discounted commercial mortgage loan portfolio.

While management believes the discounted loans will continue to have favorable earnings and outcomes as they are worked through, there can be no assurance this will remain true in future periods. Changes in the current economy such as an even greater downturn than recently experienced could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers’ ability to pay or to refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices. As such, management has taken a conservative approach with these investments and has classified all discounted mortgage loans held as non-accrual. In such status, the Company is recording interest income on a cash basis and is recording any accrual of discount on the loans held when realized. Discount accruals reported during 2010 were the result of the loan basis already being fully paid.

During 2009, the Company also contributed approximately $20,000,000 to a professionally managed trading account as another way to combat the current low rate environment. The accounts were established to generate a fair return while reducing risk. Securities designated as trading are reported at fair value with gains or losses resulting from changes in fair value recognized in net investment income. Through the first three months of the year, approximately 27%, or $1,704,000, of investment income was due to this trading portfolio. This type of return should not be expected in future periods. Volatility should be expected, as well as possible losses. Management’s target return on these accounts is 8%.

The Company's investments are generally managed to match related insurance and policyholder liabilities. The comparison of investment return with insurance or investment product crediting rates establishes an interest spread. The Company monitors investment yields, and when necessary adjusts credited interest rates on its insurance products to preserve targeted interest spreads, ranging from 1% to 2%. Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot lower them any further. Policy interest crediting rate changes and expense load changes become effective on an individual policy basis on the next policy anniversary. Therefore, it takes a full year from the time the change was determined for the full impact of such change to be realized. If interest rates decline in the future, the Company won’t be able to lower rates and both net investment income and net income will be impacted negatively.

The Company had net realized investment gains of $1,556,398 in the first three months of 2011 compared to net realized investment losses of $(262,450) for the same period in 2010. During the first quarter of 2011, other-than-temporary impairments of approximately $381,000 were taken on securities. The other-than-temporary impairments were due to changes in expected future cash flows. Additionally, an other-than-temporary impairment of approximately $39,000 was taken on a mortgage loan as a result of its appraisal valuation. These losses were off-set from realized gains on bond sales. During the first quarter of 2010, an impairment was recognized on a fixed income investment backed with trust preferred securities of approximately $(477,000).

Although stock markets around the world have rallied sharply from an oversold position on increased liquidity and a perceived improvement in the general economy, Management continues to view the Company’s investment portfolio with utmost priority. Significant time has been spent internally researching the Company’s risk and communicating with outside investment advisors about the current investment environment and ways to ensure preservation of capital and mitigate any losses. Management has put extensive efforts into evaluating the investment holdings. Additionally, members of the Company’s board of directors and investment committee have been solicited for advice and provided with information. Management has reviewed the Company’s entire portfolio on a security level basis to be sure all understand our holdings, potential risks and underlying credit supporting the investments. Management intends to continue its close monitoring of its bond holdings and other investments for additional deterioration or market condition changes. Future events may result in Management’s determination certain current investment holdings may need to be sold which could result in gains or losses in future periods. Such future events could also result in other than temporary declines in value that could result in future period impairment losses.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties related to management’s assessment of other than temporary declines in value include but are not limited to: the risk that Company's assessment of an issuer's ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; the risk that fraudulent information could be provided to the Company's investment professionals who determine the fair value estimates.

Other income primarily represented revenues received relating to the performance of administrative work as a TPA for unaffiliated life insurance companies, which has remained consistent over the periods presented. The Company receives monthly fees based on policy in force counts and certain other activity indicators such as number of policies issued. During 2010, the Company obtained an additional contract for these services, which should provide approximately $300,000 additional revenues annually. Administration for this block of business began March 1, 2011. Management remains committed to the pursuit of additional TPA clients and believes this area continues to show potential for growth.

(b)

Expenses

Life benefits, claims and settlement expenses net of reinsurance benefits and claims, increased $221,540 in the first three months of 2011 compared to the same period in 2010. Policy claims vary from period to period and therefore, fluctuations in mortality are to be expected and are not considered unusual by management. Overall, reserves continue to increase on in-force policies as the average age of the insured increases.

Commissions and amortization of deferred policy acquisition costs decreased approximately $95,000 in the first three months of 2011 compared to the same period in 2010. The majority of this number is driven by an AC financial reinsurance agreement. The earnings on the block of business covered by this agreement are utilized to re-pay the original borrowed amount. The commission allowance reported each period from this agreement represents the net earnings on the identified policies covered by the agreement in each reporting period. Results from this agreement included in this line item were approximately $(169,000) and $(67,000) in the first three months of 2011 compared to the same period in 2010. As financial reinsurance, all financial results relating to this block of business are utilized to repay the outstanding borrowed amount from the reinsurer. Securities are specifically identified and segregated in a trust account relative to this arrangement. Should a gain or loss occur on one of these identified securities in the trust account, the results are included in the calculation of the current period financial results of the treaty with the reinsurer. While the agreement may result in variances in this line item, this arrangement has no material impact on net income. The overall impact to net income was $4,000 and $6,000 in the first three months of 2011 compared to the same period in 2010. A liability for the original ceding commission was established at the origination of the agreement and is amortized through this line item as earnings on the block of business are realized. Another significant factor is attributable to the Company paying fewer commissions since the Company writes very little new business and renewal premiums on existing business continue to decline. Most of the Company’s agent agreements contained vesting provisions, which provide for continued compensation payments to agents upon their termination subject to certain minimums and often limited to a specific period of time. Another factor is attributable to normal amortization of the deferred policy acquisition costs asset. The Company reviews the recoverability of the asset based on current trends and known events compared to the assumptions used in the establishment of the original asset. No impairments were recorded in any of the periods presented.

Net amortization of cost of insurance acquired decreased approximately 7%, or $23,000, in the first three months of 2011 compared to the same period in 2010. Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The Company utilizes a 12% discount rate on the remaining unamortized business. The interest rates vary due to risk analysis performed at the time of acquisition on the business acquired. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised. Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force.

Operating expenses increased approximately 5% in the first three months of 2011 compared to the same period in 2010. A large portion of this increase was due to an increase in charitable contributions as a result of the Company’s increased earnings in the first quarter of 2011. Management continues to place significant emphasis on expense monitoring and cost containment. Maintaining administrative efficiencies directly impacts net income.

Interest expense decreased approximately 40% in the first three months of 2011 compared to the same period in 2010 due to lower outstanding balance of debt as well as the general decline in interest rates. The interest rate is variable on the majority of the Company’s debt.

(c)	Net Income

The Company had net income of $3,359,965 in the first three months of 2011 compared to net income of $335,191 for the same period in 2010. The net income compared to last year is mainly attributable to higher investment income and realized gains.

Financial Condition

Total shareholders’ equity increased approximately $2,810,000 as of March 31, 2011 compared to December 31, 2010. The increase is primarily attributable to net income.

Investments represent approximately 71% and 74% of total assets at March 31, 2011 and December 31, 2010, respectively. Accordingly, investments are the largest asset group of the Company. The Company's insurance subsidiaries are regulated by insurance statutes and regulations as to the type of investments that they are permitted to make and the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, the majority of the Company’s investment portfolio is invested in high quality, low risk investments.

As of March 31, 2011, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets, shareholders’ equity or results from operations. To provide additional flexibility and liquidity, the Company has identified all fixed maturity securities as "investments held for sale". Investments held for sale are carried at market, with changes in market value charged directly to shareholders' equity.

Liquidity and Capital Resources

The Company has three principal needs for cash - the insurance companies' contractual obligations to policyholders, the payment of operating expenses and debt service. Cash and cash equivalents as a percentage of total assets were approximately 6% and 4% as of March 31, 2011, and December 31, 2010, respectively. Fixed maturities as a percentage of total assets were approximately 33% and 34% as of March 31, 2011 and December 31, 2010, respectively.

The Company currently has access to funds for operating liquidity. UTG has a $2,750,000 revolving credit note with First Tennessee Bank National Association. UG is a member of the FHLB which allows UG access to credit. UG’s current line of credit with the FHLB is $15,000,000. At March 31, 2011, there were no outstanding borrowings attributable to the lines of credit.

Future policy benefits are primarily long-term in nature and therefore, the Company's investments are predominantly in long-term fixed maturity investments such as bonds and mortgage loans which provide sufficient return to cover these obligations.

Many of the Company's products contain surrender charges and other features which reward persistency and penalize the early withdrawal of funds. With respect to such products, surrender charges are generally sufficient to cover the Company's unamortized deferred policy acquisition costs with respect to the policy being surrendered.

Net cash used in operating activities was $(592,816) and $(3,002,592) for the three months ending March 31, 2011 and 2010, respectively.

Net cash provided by (used in) investing activities was $9,414,967 and $(23,549,625) for the three month period ending March 31, 2011 and 2010, respectively. During 2010, more emphasis was placed on the trading securities and discounted mortgage loans. The Company’s trading portfolio involved frequent activity and also accounted for a large portion of investing activity. The trading portfolio is designed to provide a reasonable return with an emphasis on risk management.

Net cash used in financing activities was $(2,188,701) and $(888,513) for the three month period ending March 31, 2011 and 2010, respectively.

At March 31, 2011, the Company had $8,073,065 of long-term debt outstanding. At December 31, 2010, the Company had $10,372,239 of debt outstanding. The debt is mainly attributable to the acquisition of ACAP at the end of 2006.

UTG is a holding company that has no day-to-day operations of its own. Funds required to meet its expenses, generally costs associated with maintaining the company in good standing with states in which it does business and the servicing of its debt, are primarily provided by its subsidiaries. On a parent only basis, UTG's cash flow is dependent on management fees received from its insurance subsidiaries, stockholder dividends from its subsidiaries and earnings received on cash balances. At March 31, 2011, substantially all of the consolidated shareholders equity represents net assets of its subsidiaries. The Company's insurance subsidiaries have maintained adequate statutory capital and surplus. The payment of cash dividends to shareholders by UTG is not legally restricted. However, the state insurance department regulates insurance company dividend payments where the company is domiciled. No dividends were paid to shareholders in 2010 or the first three months of 2011.

UG is an Ohio domiciled insurance company, which requires five days prior notification to the insurance commissioner for the payment of an ordinary dividend. Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus. At December 31, 2010 UG statutory capital and surplus was $30,442,880. At December 31, 2010, UG statutory net income was $4,796,439. Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation. UG paid UTG no ordinary dividends during the first three months of 2011.

AC is a Texas domiciled insurance company, which requires eleven days prior notification to the insurance commissioner for the payment of an ordinary dividend. Ordinary dividends are defined as the greater of: a) prior year statutory earnings from operations or b) 10% of statutory surplus. At December 31, 2010 AC statutory surplus was $8,434,448. At December 31, 2010, AC statutory earnings from operations was $2,024,641. Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation. AC paid ACAP ordinary dividends of $600,000 during the first three months of 2011.

Management believes the overall sources of liquidity available will be sufficient to satisfy the Company’s financial obligations.

Accounting Developments

In December 2010, the FASB issued the ASU No. 2010-28 Intangibles-Goodwill and Other (Topic 350) When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this Update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples in paragraph 350-20-35-30, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not expect the adoption of ASU 2010-28 to have a material impact on its consolidated financial statements.

In September 2010, the FASB issued the ASU No. 2010-25 Consolidations (topic 962) Plan Accounting-Defined Contribution Pension Plans. The amendments in this Update require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest. The amendments in this update should be applied retrospectively to all prior periods presented, effective for fiscal years ending after December 15, 2010. The company does not expect the adoption of ASU No 2010-25 to have an impact on the its consolidated financial statements.

In July 2010, the FASB issued the ASU No. 2010-20 Consolidations (Topic 310) Receivables. The main objective in developing this Update is to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. This Update is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. Currently, a high threshold for recognition of credit impairments impedes timely recognition of losses. ASU 2010-20 is effective for annual reporting periods ending on or after December 15, 2011. The Company does not expect the adoption of ASU No 2010-20 to have an impact on the its consolidated financial statements.

In February 2010, FASB issued the ASU No. 2010-10 Consolidation (Topic 810), Amendments for Certain Investment Funds. The amendments to the consolidation requirements of Topic 810 resulting from the issuance of Statement 167 are deferred for a reporting entity’s interest in an entity (1) that has all the attributes of an investment company or (2) for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies. The deferral does not apply in situations in which a reporting entity has the explicit or implicit obligation to fund losses of an entity that could potentially be significant to the entity. The deferral also does not apply to interests in securitization entities, asset-backed financing entities, or entities formerly considered qualifying special purpose entities. In addition, the deferral applies to a reporting entity’s interest in an entity that is required to comply or operate in accordance with requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of variable interest entities in Subtopic 810-10 (before the Statement 167 amendments) or other applicable consolidation guidance, such as the guidance for the consolidation of partnerships in Subtopic 810-20. The amendments in this Update also clarify that for entities that do not qualify for the deferral, related parties should be considered when evaluating each of the criteria in paragraph 810-10-55-37, as amended by Statement 167, for determining whether a decision maker or service provider fee represents a variable interest. In addition, the requirements for evaluating whether a decision maker’s or service provider’s fee is a variable interest are modified to clarify the Board’s intention that a quantitative calculation should not be the sole basis for this evaluation. The amendments in this update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period. The Company does not expect the adoption of ASU No 2010-10 to have an impact on the its consolidated financial statements.

In February 2010, FASB issued ASU 2010-09, Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements, which amends disclosure requirements within Subtopic 855-10. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-09 is effective upon issuance. The Company does not expect the adoption of ASU 2010-09 to have a material impact on the its consolidated financial statements.

In January 2010, FASB issued ASU 2010-06, Improving Disclosures about Fair Measurements, which provides amendments to subtopic 820-10 that require separate disclosure of significant transfers in and out of Level 1 and Level 2 fair value measurements and the presentation of separate information regarding purchases, sales, issuances and settlements for Level 3 fair value measurements. Additionally, ASU 2010-06 provides amendments to subtopic 820-10 that clarify existing disclosures about the level of disaggregation and inputs and valuation techniques. ASU 2010-06 is effective for financial statements issued for interim and annual periods ending after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements, which are effective for interim and annual periods ending after December 15, 2010. The Company does not expect the adoption of ASU 2010-06 to have a material impact on its consolidated financial statements.

In January 2010, FASB issued ASU 2010-02, Accounting and Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification, which addresses the accounting for noncontrolling interests and changes in ownership interests of a subsidiary. ASU 2010-02 is effective for the interim or annual reporting periods ending on or after December 15, 2009, and must be applied retrospectively to interim or annual reporting periods beginning on or after December 15, 2008. The Company does not expect the adoption of ASU 2010-02 to have an impact on the its consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk relates, broadly, to changes in the value of financial instruments that arise from adverse movements in interest rates, equity prices and foreign exchange rates. The Company is exposed principally to changes in interest rates, which affect the market prices of its fixed maturities available for sale. The Company’s exposure to equity prices and foreign currency exchange rates is immaterial. The information presented below is in U.S. dollars, the Company’s reporting currency.

Interest rate risk

The Company’s exposure to interest rate changes results from a significant holding of fixed maturity investments and mortgage loans on real estate, all of which comprised approximately 65% of the investment portfolio as of March 31, 2011. These investments are mainly exposed to changes in treasury rates. The fixed maturities investments include U.S. government bonds, securities issued by government agencies, mortgage-backed bonds and corporate bonds. Approximately 12% of the fixed maturities owned at March 31, 2011 are instruments of the United States government or are backed by U.S. government agencies or private corporations carrying the implied full faith and credit backing of the U.S. government.

To manage interest rate risk, the Company performs periodic projections of asset and liability cash flows to evaluate the potential sensitivity of the investments and liabilities. Management assesses interest rate sensitivity with respect to the available-for-sale fixed maturities investments using hypothetical test scenarios that assume either upward or downward 100-basis point shifts in the prevailing interest rates. The following tables set forth the potential amount of unrealized gains (losses) that could be caused by 100-basis point upward and downward shifts on the available-for-sale fixed maturities investments as of March 31, 2011:

Decrease in Interest Rates		Increase in Interest Rates

200 Basis Points	100 Basis Points	100 Basis Points	200 Basis Points
$ 39,916,000	$ 18,105,000	$ (15,396,000)	$ (28,369,000)

While the test scenario is for illustrative purposes only and does not reflect our expectations regarding future interest rates or the performance of fixed-income markets, it is a near-term change that illustrates the potential impact of such events. The Company attempts to mitigate its exposure to adverse interest rate movements through staggering the maturities of its fixed maturity investments and through maintaining cash and other short term investments to assure sufficient liquidity to meets its obligations and to address reinvestment risk considerations. Due to the composition of the Company’s book of insurance business, Management believes it is unlikely that the Company would encounter large surrender activity due to an interest rate increase that would force the disposal of fixed maturities at a loss.

At March 31, 2011, $27,184,049 of assets and $(16,307,683) of liabilities were classified as trading instruments carried at fair value. Included in these amounts are derivative investments with a fair value of $1,796,194 and $(15,106,923) in trading security assets and trading security liabilities, respectively. At December 31, 2010, $37,029,550 of assets and $(18,429,677) of liabilities were classified as trading instruments carried at fair value. Included in these amounts are derivative investments with a fair value of $2,244,478 and $(17,246,957) in trading security assets and trading security liabilities, respectively.

The Company had no capital lease obligations, material operating lease obligations or purchase obligations outstanding as of March 31, 2011.

The Company currently has $8,073,065 of debt outstanding.

Equity risk

Equity risk is the risk that the Company will incur economic losses due to adverse fluctuations in a particular stock. As of March 31, 2011 and December 31, 2010, the fair value of our equity securities classified as available for sale was $13,529,265 and $13,884,257, respectively. As of March 31, 2011, a 10% decline in the value of the equity securities would result in an unrealized loss of $1,352,927, as compared to an estimated unrealized loss of $1,388,426 as of December 31, 2010. The selection of a 10% unfavorable change in the equity markets should not be construed as a prediction by the Company of future market events, but rather as an illustration of the potential impact of such an event.

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this quarterly report, an evaluation was performed under the supervision and with the participation of the Company's management, including the President and Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective in alerting them on a timely basis to material information relating to the Company required to be included in the Company’s periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation.

ITEM 4T. CONTROLS AND PROCEDURES

Not applicable at this time.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE

ITEM 1A. RISK FACTORS

NONE

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE

ITEM 5. OTHER INFORMATION

NONE

ITEM 6. EXHIBITS.

EXHIBITS

Exhibit Number

Description

31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302
31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302
32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to 18 U.S.C. Section 1350
32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to 18 U.S.C. Section 1350

REPORTS ON FORM 8-K

NONE

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UTG, INC.

(Registrant)

Date:	May 11, 2011	By	/s/ James P. Rousey
			James P. Rousey
			President, and Director

Date:	May 11, 2011	By	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President
			and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number

Description

31.1	Certification of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302
31.2	Certification of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302
32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to 18 U.S.C. Section 1350
32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to 18 U.S.C. Section 1350