10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017.

or

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

For the transition period from _________________________ to _________________________________

Commission File Number: 000-55627

US ALLIANCE CORPORATION
(Exact name of registrant as specified in its charter)

KANSAS	26-4824142
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4123 SW Gage Center Drive, Suite 240, Topeka, Kansas	66604
(Address of principal executive offices)	(Zip Code)

(785) 228-0200

(Registrant’s telephone number, including area code)

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. [X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      [X] Yes [  ] No

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

Large accelerated filer	[   ]	Accelerated filer	[   ]
Non-accelerated filer	[   ]	(Do not check if a smaller reporting company)
		Smaller reporting company	[X]
		Emerging growth company	[X ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [X ]

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[  ]Yes [ X ] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $0.10 par value

7,302,192 shares outstanding

as of November 6, 2017

1

US ALLIANCE CORPORATION

FORM 10-Q

TABLE OF CONTENTS

Part I - Financial Information

Item	Item Description	Page
Item 1	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Comprehensive Loss	4
	Consolidated Statements of Changes in Shareholders' Equity	5
	Consolidated Statements of Cash Flows	6
	Supplemental Cash Flow Disclosure	7
	Notes to Consolidated Financial Statements	8
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	31
Part II - Other Information
Item	Item Description	Page
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	32
	Signatures	33

2

ITEM 1.      FINANCIAL STATEMENTS

US Alliance Corporation

Consolidated Balance Sheets

	September 30, 2017			December 31, 2016
	(unaudited)
Assets
Investments:
Available for sale fixed maturity securities (amortized cost: $14,911,919 and $10,318,164 as of September 30, 2017 and December 31, 2016, respectively)	$	15,153,824		$	10,320,074
Available for sale equity securities (cost: $7,615,226 and $4,905,953 as of September 30, 2017 and December 31, 2016, respectively)		7,665,497			5,143,504
Total investments		22,819,321			15,463,578
Cash and cash equivalents		11,015,077			3,145,745
Investment income due and accrued		124,745			100,713
Policy loans		33,376			-
Reinsurance related assets		315,702			31,390
Deferred acquisition costs, net		3,083,154			153,792
Value of business acquired, net		605,677			-
Property, equipment and software, net		229,939			244,849
Goodwill		277,542			-
Other assets		241,517			51,922
Total assets	$	38,746,050		$	19,191,989
Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts	$	12,749,556		$	3,398,170
Policyholder benefit reserves		10,216,596			4,220,215
Advance premiums		836,805			121,944
Total policy liabilities		23,802,957			7,740,329
Accounts payable and accrued expenses		75,399			66,472
Other liabilities		551,485			4,205
Total liabilities		24,429,841			7,811,006
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,296,351 and 5,565,943 shares as of September 30, 2017 and December 31, 2016, respectively		729,636			556,595
Additional paid-in capital		21,319,758			18,017,163
Accumulated deficit		(8,025,339	)		(7,432,236	)
Accumulated other comprehensive income		292,154			239,461
Total shareholders' equity		14,316,209			11,380,983
Total liabilities and shareholders' equity	$	38,746,050		$	19,191,989

See Notes to Consolidated Financial Statements (unaudited).

3

US Alliance Corporation

Consolidated Statements of Comprehensive Loss

	Nine Months Ended September 30,						Three Months Ended September 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Income:
Premium income	$	8,902,208		$	4,721,091		$	5,169,638		$	1,490,255
Net investment income		485,147			320,491			189,028			116,780
Net realized gain on sale of securities		435,392			40,653			226,890			29,889
Other income		40,656			57,468			1,201			21,878
Total income		9,863,403			5,139,703			5,586,757			1,658,802
Expenses:
Death claims		624,864			355,151			152,234			119,700
Policyholder benefits		2,609,324			2,520,956			479,965			715,171
Increase in policyholder reserves		5,205,124			1,473,287			4,357,257			556,685
Commissions, net of deferrals		362,585			315,550			97,151			88,952
Amortization of deferred acquisition costs		136,709			128,540			52,484			39,441
Amortization of value of business acquired		3,384			-			3,384			-
Salaries & benefits		627,286			564,410			244,143			171,226
Other operating expenses		887,230			902,598			278,795			321,925
Total expense		10,456,506			6,260,492			5,665,413			2,013,100
Net loss	$	(593,103	)	$	(1,120,789	)	$	(78,656	)	$	(354,298	)
Net loss per common share, basic and diluted	$	(0.10	)	$	(0.21	)	$	(0.01	)	$	(0.06	)
Unrealized net holding gains arising during the period		488,085			855,203			19,839			168,793
Reclassification adjustment for (gains) losses included in net loss		(435,392	)		(40,653	)		(226,890	)		(29,889	)
Other comprehensive income (loss)		52,693			814,550			(207,051	)		138,904
Comprehensive loss	$	(540,410	)	$	(306,239	)	$	(285,707	)	$	(215,394	)

See Notes to Consolidated Financial Statements (unaudited).

4

US Alliance Corporation

Consolidated Statements of Changes in Shareholders' Equity

Nine Months Ended September 30, 2017 and 2016 (unaudited)

														Common			Accumulated
	Number of										Common			Stock			Other
	Shares of		Common		Additional			Outstanding			Stock			Subscription			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Warrants			Subscribed			Receivable			Income / (Loss)			Deficit			Total
Balance, December 31, 2015		5,177,245	$	517,725	$	17,018,285		$	15,876		$	13,799		$	(827,952	)	$	(100,477	)	$	(6,146,463	)	$	10,490,793
Common stock issued upon exercise of warrants, $6.00 per share		372,003		37,200		2,210,694			(15,876	)		-			-			-			-			2,232,018
Common stock issued, $7 per share		4,886		489		33,713			-			-			-			-			-			34,202
Costs associated with common stock issued		-		-		(482,385	)		-			-			-			-			-			(482,385	)
Common stock subscribed		-		-		(814,153	)		-			(13,799	)		827,952			-			-			-
Other comprehensive income		-		-		-			-			-			-			814,550			-			814,550
Net loss		-		-		-			-			-			-			-			(1,120,789	)		(1,120,789	)
Balance, September 30, 2016		5,554,134	$	555,414	$	17,966,154		$	-		$	-		$	-		$	714,073		$	(7,267,252	)	$	11,968,389
Balance, December 31, 2016		5,565,943	$	556,595	$	18,017,163		$	-		$	-		$	-		$	239,461		$	(7,432,236	)	$	11,380,983
Common stock issued, $7 per share		85,950		8,595		593,055			-			-			-			-			-			601,650
Costs associated with common stock issued		-		-		(223,394	)		-			-			-			-			-			(223,394	)
Common stock issued, Northern Plains Capital Corporation merger		1,644,458		164,446		2,932,934																		3,097,380
Other comprehensive income		-		-		-			-			-			-			52,693			-			52,693
Net loss		-		-		-			-			-			-			-			(593,103	)		(593,103	)
Balance, September 30, 2017		7,296,351	$	729,636	$	21,319,758		$	-		$	-		$	-		$	292,154		$	(8,025,339	)	$	14,316,209

See Notes to Consolidated Financial Statements (unaudited).

5

US Alliance Corporation
Consolidated Statements of Cash Flows
(unaudited)

	Nine Months Ended September 30,
	2017			2016
Cash Flows from Operating Activities:
Net loss	$	(593,103	)	$	(1,120,789	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		26,031			29,074
Net realized (gains) on the sale of securities		(435,392	)		(40,653	)
Amortization of investment securities, net		27,429			12,406
Deferred acquisition costs capitalized		(204,620	)		(182,537	)
Deferred acquisition costs amortized		136,709			128,540
Value of business acquired amortized		3,384			-
Interest credited on deposit type contracts		110,097			49,395
(Increase) decrease in operating assets:
Investment income due and accrued		9,315			3,097
Reinsurance related assets		(8,294	)		(51,893	)
Other assets		(132,357	)		91,353
Increase (decrease) in operating liabilities:
Policyowner benefit reserves		1,284,750			1,497,064
Advance premiums		92,016			41,297
Other liabilities		3,600			73,434
Accounts payable and accrued expenses		(32,519	)		(16,609	)
Net cash provided by operating activities		287,046			513,179
Cash Flows from Investing Activities:
Available-for-sale securities
Purchase of fixed income investments		(4,629,966	)		(2,624,560	)
Purchase of equity investments		(4,669,164	)		(1,210,646	)
Proceeds from fixed income sales and repayments		3,081,710			573,590
Proceeds from equity sales and repayments		4,439,235			190,583
Acquisition of Northern Plains Capital Corporation		1,079,627			-
Assumed reinsurance from American Life & Security Corporation		6,895,145			-
Purchase of property, equipment and software		(11,121	)		-
Net cash provided by (used in) investing activities		6,185,466			(3,071,033	)
Cash Flows from Financing Activities:
Receipts on deposit-type contracts		1,368,680			1,485,628
Withdrawals on deposit-type contracts		(350,116	)		(170,906	)
Proceeds received from issuance of common stock, net of costs of issuance		378,256			1,783,835
Net cash provided by financing activities		1,396,820			3,098,557
Net increase in cash and cash equivalents		7,869,332			540,703
Cash and Cash Equivalents:
Beginning		3,145,745			2,466,526
Ending	$	11,015,077		$	3,007,229

See Notes to Consolidated Financial Statements (unaudited).

6

US Alliance Corporation
Supplemental Cash Flow Information
(unaudited)

	Nine Months Ended September 30,
	2017		2016
Supplemental Disclosure of Non-Cash Information
Common stock issued on the acquisition of Northern Plains	$	3,097,380	$	-
Cost of reinsurance deferred on coinsurance transaction with American Life & Security Corp	$	2,861,450	$	-

7

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 1.     Description of Business and Significant Accounting Policies

Description of business: US Alliance Corporation ("USAlliance" or “the Company”) is a Kansas corporation located in Topeka, Kansas. The Company was incorporated April 24, 2009, as a holding company to form, own, operate and manage a life insurance company and its marketing and investment affiliates. On June 9, 2011, the wholly owned subsidiary, US Alliance Life and Security Company (“USALSC”) was incorporated. USALSC received its Certificate of Authority from the Kansas Insurance Department (KID) effective January 2, 2012. On April 23, 2012, US Alliance Investment Corporation (“USAIC”) and US Alliance Marketing Corporation (“USAMC”) were incorporated as wholly-owned subsidiaries of the Company to provide investment management and marketing services. On August 1, 2017, the Company, through its wholly owned subsidiary, merged with Northern Plains Capital Corporation (“Northern Plains”) with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired Dakota Capital Life Insurance Company (“DCLIC”) which became a wholly owned subsidiary of US Alliance Life and Security Company.

The Company terminated its initial public offering on February 24, 2013. During the balance of 2013, the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its first insurance product on May 1, 2013. The Company continued to expand its product offerings and distribution channels throughout 2014 and 2015. On February 24, 2015, the Company commenced a warrant exercise offering set to expire on February 24, 2016. On February 24, 2016, the Company extended its current offering until February 24, 2017 and made additional shares available for purchase. All outstanding warrants expired on April 1, 2016. The Company further extended this offering to February 24, 2018.

The Company began offering third party administrative (“TPA”) services in 2015. TPA agreements generate service fee income for the Company. The Company currently has one TPA agreement in place. The Company has been able to perform its TPA services using existing resources.

Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operation for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ended December 31, 2017 or for any other interim period or for any other future year. Certain financial information which is normally included in notes to financial statements prepared in accordance with US GAAP, but which are not required for interim reporting purposes, has been condensed or omitted. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s report on Form 10-K and amendments thereto for the year ended December 31, 2016.

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

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

Area of Operation: USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Oklahoma and Nebraska. DCLIC is authorized to operate in the state of North Dakota.

8

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Common stock and earnings (loss) per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of September 30, 2017, and December 31, 2016, the company had 7,296,351 and 5,565,943 common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended September 30, 2017 and 2016 were 6,181,492 and 5,552,227 shares, respectively. The weighted average number of shares outstanding during the nine months ended September 30, 2017 and 2016 were 5,698,514 and 5,395,456 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters and nine months ended September 30, 2017 and 2016 because all warrants for common shares are anti-dilutive.

New accounting standards

Revenue from Contracts with Customers

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

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

In July 2015, the FASB deferred the effective date of the updated guidance on revenue recognition by one year to the quarter ending March 31, 2018.  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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

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

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

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

9

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Recognition and Measurement of Financial Assets and Financial Liabilities

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

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

The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods and the existence of a deferred tax asset related to available-for-sale securities in future periods that have not yet been fully assessed.

Leases

In February 2016, the FASB issued updated guidance to require lessees to recognize a right-to-use asset and a lease liability for leases with terms of more than 12 months.  The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease).  Both lease classifications require the lessee to record the right-to-use asset and the lease liability based upon the present value of cash flows.  Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-to-use asset.  Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease.   The accounting by lessors is not significantly changed by the updated guidance.  The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the financial statements.

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

Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate the repayment of principal on the debt instrument, a reporting entity does not need to assess whether the contingent event that triggers the ability to exercise the call (put) option is related to interest rates or credit risk in determining whether the option should be accounted for separately.  The updated guidance is effective for reporting periods beginning after December 15, 2016.  Early adoption is permitted.  The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

10

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments.  The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

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

The updated guidance is effective for reporting periods beginning after December 15, 2019.  Early adoption is permitted for reporting periods beginning after December 15, 2018.  The Company will not be able to determine the impact that the updated guidance will have on its results of operations, financial position or liquidity until the updated guidance is adopted.

Classification of Certain Cash Receipts and Cash Payment

In August 2016, the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under eight different scenarios including, but not limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its statement of cash flows.

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

Note 2.     Acquisitions

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

11

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The Merger was accounted for under the acquisition method of accounting, which requires the consideration transferred and all assets and liabilities assumed to be recorded at fair value. The table on the following page summarizes the preliminary fair value of the consideration transferred and the preliminary fair value of Northern Plains’ assets acquired and liabilities assumed:

Fair value of US Alliance common stock issued as consideration	$	3,099,165
Preliminary amounts of indentifiable assets acquired and liablities assumed
Investment securities	$	4,623,449
Cash		1,079,627
VOBA		609,061
Other assets		60,080
Policyholder reserves		(1,277,411	)
Deposit type contracts		(2,029,138	)
Other liabilities		(243,608	)
Total indentifiable net assets	$	2,822,060
Goodwill		277,105
Total	$	3,099,165

The fair value of the US Alliance  common stock issued as consideration and the assets acquired and liabilities assumed from our Merger with  Northern Plains was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary areas that are not yet finalized are related to the fair value of US Alliance common stock issued and the fair value of value of business acquired ("VOBA"). Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements.

VOBA is being amortized on a straight-line basis over 30 years which approximates the earnings pattern of the related policies.

The following table presents unaudited pro forma consolidated total income and net loss as if the Merger had occurred as of January 1, 2016 (the earliest date presented).

	Nine Months Ended September 30,
	2017			2016
	(unaudited)
Income:
Premium income	$	9,322,648		$	5,231,372
Net investment income		544,477			396,697
Net realized gain (loss) on sale of securities		483,130			16,031
Other income		11,594			6,987
Total income		10,361,849			5,651,087
Net Loss	$	(745,970	)	$	(1,508,555	)
Net Loss per share	$	(0.10	)	$	(0.21	)

The unaudited pro forma total income and net loss above was adjusted to eliminate the TPA fees paid by Northern Plains to the Company of $31,250 and $50,781 for the nine months ended September 30, 2017 and 2016, respectively; and eliminate the loss of $201,577 for acquisition related expenses that Northern Plains recorded for the nine months ended September 30, 2017 and also includes adjustments for the amortization of VOBA and elimination of DAC amortization for the nine months ending September 30, 2017 and 2016 of $78,379 and $21,498, respectively.

12

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 3.     Investments

The amortized cost and fair value of available for sale and held to maturity investments as of September 30, 2017 and December 31, 2016 is as follows:

	September 30, 2017
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(Unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	269,529	$	-	$	(29,054	)	$	240,475
Government agency bonds		299,842		-		(539	)		299,303
Corporate bonds		6,119,784		140,246		(25,617	)		6,234,413
Municipal bonds		5,570,008		152,099		(19,519	)		5,702,588
Redeemable preferred stock		99,560		480		-			100,040
Mortgage backed and asset backed securities		2,553,196		38,963		(15,154	)		2,577,005
Total fixed maturities		14,911,919		331,788		(89,883	)		15,153,824
Equities:
Equities		7,615,226		114,845		(64,574	)		7,665,497
Total available for sale	$	22,527,145	$	446,633	$	(154,457	)	$	22,819,321

	December 31, 2016
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	314,992	$	-	$	(15,830	)	$	299,162
Corporate bonds		3,828,418		62,712		(45,234	)		3,845,896
Municipal bonds		2,841,137		46,883		(38,191	)		2,849,829
Mortgage backed and asset backed securities		3,333,617		36,870		(45,300	)		3,325,187
Total fixed maturities		10,318,164		146,465		(144,555	)		10,320,074
Equities:
Equities		4,723,024		350,981		(131,757	)		4,942,248
Other equity investments		182,929		23,046		(4,719	)		201,256
Total equities		4,905,953		374,027		(136,476	)		5,143,504
Total available for sale	$	15,224,117	$	520,492	$	(281,031	)	$	15,463,578

13

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The amortized cost and fair value of debt securities as of September 30, 2017, by contractual maturity, are shown in the following table. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized
September 30, 2017	Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	200,568	$	200,473
After one year through five years		1,932,156		1,933,444
After five years through ten years		2,490,661		2,517,547
More than 10 years		7,635,778		7,825,315
Redeemable preferred stocks		99,560		100,040
Mortgage backed and asset backed securities		2,553,196		2,577,005
Total fixed maturities	$	14,911,919	$	15,153,824

Proceeds from the sale of securities, maturities, and asset paydowns for the first nine months of 2017 and 2016 were $7,520,945 and $764,173, respectively. Realized gains and losses related to the sale of securities are summarized as follows:

	Nine Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	486,523		$	42,719
Gross losses		(51,131	)		(2,066	)
Net security gains	$	435,392		$	40,653

Proceeds from the sale of securities, maturities, and asset paydowns for the three months ended September 30, 2017 and 2016 were $4,688,796 and $204,422, respectively. Realized gains and losses related to the sale of securities for the three months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	259,061		$	29,889
Gross losses		(32,171	)		-
Net security gains	$	226,890		$	29,889

14

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Gross unrealized losses by duration are summarized as follows:

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
September 30, 2017
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	(29,054	)	$	-	$	-		$	240,475	$	(29,054	)
Government agency bonds		299,303		(539	)		-		-			299,303		(539	)
Corporate bonds		1,734,089		(14,488	)		798,161		(11,129	)		2,532,250		(25,617	)
Municipal bonds		1,571,608		(18,464	)		98,945		(1,055	)		1,670,553		(19,519	)
Mortgage backed and asset backed securities		995,261		(13,137	)		92,315		(2,017	)		1,087,576		(15,154	)
Total fixed maturities		4,840,736		(75,682	)		989,421		(14,201	)		5,830,157		(89,883	)
Equities:
Equities		1,283,438		(4,999	)		1,179,505		(59,575	)		2,462,943		(64,574	)
Total available for sale	$	6,124,174	$	(80,681	)	$	2,168,926	$	(73,776	)	$	8,293,100	$	(154,457	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2016
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	(15,830	)	$	-	$	-		$	299,162	$	(15,830	)
Corporate bonds		1,897,000		(42,994	)		196,399		(2,240	)		2,093,399		(45,234	)
Municipal bonds		1,296,688		(38,191	)		-		-			1,296,688		(38,191	)
Mortgage backed and asset backed securities		1,700,173		(39,264	)		134,090		(6,036	)		1,834,263		(45,300	)
Total fixed maturities		5,193,023		(136,279	)		330,489		(8,276	)		5,523,512		(144,555	)
Equities:
Equities		1,007,860		(59,357	)		1,063,959		(72,400	)		2,071,819		(131,757	)
Other equity investments		52,840		(4,719	)		-		-			52,840		(4,719	)
Total equities		1,060,700		(64,076	)		1,063,959		(72,400	)		2,124,659		(136,476	)
Total available for sale	$	6,253,723	$	(200,355	)	$	1,394,448	$	(80,676	)	$	7,648,170	$	(281,031	)

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

The total number of securities in the investment portfolio in an unrealized loss position as of September 30, 2017 was 71, which represented an unrealized loss of $154,457 of the aggregate carrying value of those securities. The 71 securities breakdown as follows: 51 bonds, 14 mortgage and asset backed securities, 1 common stock, 2 high yield corporate bond funds, 2 preferred stock index funds, and 1 senior loan fund. The Company determined that no securities were considered to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. The unrealized gains on the remainder of the available for sale portfolio as of September 30, 2017 were $446,663. 

15

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 4.     Fair Value Measurements

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

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

● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The Company’s Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.  This category generally includes U.S. Government and agency mortgage-backed debt securities and corporate debt securities.

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

Investments, available for sale: Investments in securities that are classified as available for sale are recorded at fair value utilizing Level 1 and Level 2 measurements.

16

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The following table presents the amounts of assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:

	September 30, 2017
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	240,475	$	-	$	-
Government agency bonds		299,303		-		299,303		-
Corporate bonds		6,234,413		-		6,234,413		-
Municipal bonds		5,702,588		-		5,702,588		-
Redeemable preferred stock		100,040		-		100,040		-
Mortgage backed and asset backed securities		2,577,005		-		2,577,005		-
Total fixed maturities		15,153,824		240,475		14,913,349		-
Equities:
Equities		7,665,497		7,665,497		-		-
Total	$	22,819,321	$	7,905,972	$	14,913,349	$	-

	December 31, 2016
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	299,162	$	-	$	-
Corporate bonds		3,845,896		-		3,845,896		-
Municipal bonds		2,849,829		-		2,849,829		-
Mortgage backed and asset backed securities		3,325,187		-		3,325,187		-
Total fixed maturities		10,320,074		299,162		10,020,912		-
Equities:
Equities		4,942,248		4,942,248		-		-
Other equity investments		201,256		201,256		-		-
Total equities		5,143,504		5,143,504		-		-
Total	$	15,463,578	$	5,442,666	$	10,020,912	$	-

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

Cash and cash equivalents, investment income due and accrued, and policy loans: The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents are included in Level 1 of the fair value hierarchy due to their highly liquid nature.

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

and the nonperformance risk of the liabilities.

17

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The estimated fair values of the Company’s financial assets and liabilities at September 30, 2017 and December 31, 2016 are as follows:

	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(unaudited)
Financial Assets:
Cash and cash equivalents	$	11,015,077	$	11,015,077	$	3,145,745	$	3,145,745
Investment income due and accrued		124,745		124,745		100,713		100,713
Policy loans		33,376		33,376		-		-
Investments, at fair value		22,819,321		22,819,321		15,463,578		15,463,578
Total Financial Assets	$	33,992,519	$	33,992,519	$	18,710,036	$	18,710,036
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086
Total Financial Liabilities	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086

Note 5.     Income Tax Provision

No income tax expense or (benefit) has been reflected for the quarters ended September 30, 2017 and 2016 due to the lack of taxable net income generated by the Company and the 100% valuation allowance pertaining to the deferred tax asset. The difference between the reported amount of income tax expense and the amount expected based upon statutory rates is primarily due to the increase in the valuation allowance on deferred taxes.

The net operating loss carryforwards for the Company are $6,500,000 and $5,050,176 as of September 30, 2017 and December 31, 2016, respectively. The September 30, 2017 net operating loss carryforward is estimated as the impact of the Merger with Northern Plains has not been finalized.  The components of the deferred tax assets and liabilities due to book and tax differences are the following: fixed asset depreciation, net operating loss carryforward, net unrealized gains (losses) on investment securities, policyowner benefit reserves and deferred acquisition costs. The net deferred tax asset is offset 100 percent by the valuation allowance.

Note 6.     Warrants

The Company conducted its public stock offering through the sale of units. Each unit was sold for $1,000 and consisted of 200 shares of common stock and a warrant to purchase an additional 200 shares of common stock at $6.00 per share. The warrants were originally scheduled to expire, if not exercised, on February 24, 2016. The board of directors of the Company extended the warrant expiration date to April 1, 2016. As of December 31, 2014 warrant-holders had the right to purchase 2,532,400 shares of common stock. On February 24, 2015, the Company registered a warrant exercise offering with the Kansas Securities Commissioner. During 2015, warrant-holders exercised warrants for the purchase of 944,845 shares of common stock. As of December 31, 2015 warrant-holders had the right to purchase 1,587,555 shares of common stock. During 2016, warrant-holders exercised their rights to purchase an additional 372,003 shares of common stock.

Management engaged the services of an experienced valuation firm to value the warrants as of February 24, 2013. The valuation performed valued the warrants to be worth $0.01 per share of common stock and management has allocated this amount from additional paid-in capital to the outstanding warrants. As the warrants have been exercised, the value allocated to the warrants exercised has been restored to additional paid-in capital. The value of outstanding warrants was reduced to zero at March 31, 2016. 

18

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 7.   Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at the balance sheet date, including the estimates inherent in the process of preparing the consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the balance sheet date but arose after, but before the consolidated financial statements are issued. In some cases, unrecognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

The Company has evaluated subsequent events through November 13, 2017, the date on which the consolidated financial statements were issued.

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

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

Overview

US Alliance Corporation (“USAC”) was formed as a Kansas corporation on April 24, 2009 for the purpose of raising capital to form a new Kansas-based life insurance company. We presently conduct our business through our four wholly-owned subsidiaries: US Alliance Life and Security Company ("USALSC"), a life insurance corporation; Dakota Capital Life Insurance Corporation ("DCLIC"), a life insurance corporation; US Alliance Marketing Corporation ("USAMC"), an insurance marketing corporation; and US Alliance Investment Corporation ("USAIC"), an investment management corporation.

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

On August 1, 2017, the Company, throught its wholly owned subsidiary,  merged with Northern Plains Capital Corporation (“Northern Plains”) with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired DCLIC, which subsequently became a wholly owned subsidiary of USALSC.

Critical Accounting Policies and Estimates

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

Valuation of Investments

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

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

20

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the income statement as an other-than-temporary impairment. As it relates to debt securities, if we do not expect to recover the amortized basis, do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the other-than-temporary impairment would be recognized. We would recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss.

Deferred Acquisition Costs

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

Value of Business Acquired

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

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

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

Goodwill

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

21

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

Reinsurance

In the normal course of business, we seek to limit aggregate and single exposure to losses on risk by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. We diversify our credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish our primary liability under the policies written. We regularly evaluate the financial condition of our reinsurers including their activities with respect to claim settlement practices and commutations, and establish allowances for uncollectible reinsurance recoverable as appropriate.

Future Policy Benefits

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

Income Taxes

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

Recognition of Revenues

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

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

Merger

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

New Accounting Standards

A detailed discussion of new accounting standards is provided in the Notes to Consolidated Financial Statements beginning on p. 8 of this quarterly report.

22

Discussion of Consolidated Results of Operations

Revenues. Insurance revenues are primarily generated from premium revenues and investment income. Insurance revenues for the nine months ended September 30, 2017 and 2016 are summarized in the table below.

	Nine Months Ended September 30,
	2017		2016
	(unaudited)
Income:
Premium income	$	8,902,208	$	4,721,091
Net investment income		485,147		320,491
Net realized gain (loss) on sale of securities		435,392		40,653
Other income		40,656		57,468
Total income	$	9,863,403	$	5,139,703

Insurance revenues for the three months ended September 30, 2017 and 2016 are summarized in the table below.

	Three Months Ended September 30,
	2017		2016
	(unaudited)
Income:
Premium income	$	5,169,638	$	1,490,255
Net investment income		189,028		116,780
Net realized gain (loss) on sale of securities		226,890		29,889
Other income		1,201		21,878
Total income	$	5,586,757	$	1,658,802

Premium revenue: Premium revenue for the first nine months of 2017 was $8,902,208 compared to $4,721,091 in the first nine months of 2016, an increase of $4,181,117. USALSC entered into a coinsurance transaction with American Life and Security Corporation (“ALSC”) effective September 30, 2017. This agreement resulted in the immediate recognition of $3,854,902 of assumed premiums and is the primary driver of the increase in premiums.

Direct, assumed and ceded premiums for the nine months ended September 30, 2017 and 2016 are summarized in the following table.

	Nine Months Ended September 30,
	2017			2016
	(unaudited)
Direct	$	2,422,907		$	2,048,060
Assumed		6,639,092			2,770,010
Ceded		(159,791	)		(96,979	)
Total	$	8,902,208		$	4,721,091

Premium revenue for the third quarter of 2017 was $5,169,638 compared to $1,490,255 in 2016, an increase of $3,679,383. This growth is primarily attributable to the coinsurance transaction with ALSC.

23

Direct, assumed and ceded premiums for the three months ended September 30, 2017 and 2016 are summarized in the following table.

	Three Months ended September 30,
	2017			2016
	(unaudited)
Direct	$	931,463		$	747,100
Assumed		4,323,692			778,281
Ceded		(85,517	)		(35,126	)
Total	$	5,169,638		$	1,490,255

The Company is pursuing new product and distribution opportunities to increase premium production. The acquisition of DCLIC and the reinsurance agreement with ALSC are both expected to increase future premiums.

Investment income, net of expenses: The components of net investment income for the nine months ended September 30, 2017 and 2016 are as follows:

	Nine Months Ended September 30,
	2017			2016
	(unaudited)
Fixed maturities	$	306,614		$	225,790
Equity securities		213,920			126,571
Cash and short term investments		3,730			1,527
		524,264			353,888
Less investment expenses		(39,117	)		(33,397	)
	$	485,147		$	320,491

Net investment income for the first nine months of 2017 was $485,147, compared to $320,491 in 2016, an increase of $164,656. This increase in investment income is primarily a result of increased invested assets as a result of our premium income and the Merger with Northern Plains, as well as an improvement in our book yield.

The components of net investment income for the three months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended September 30,
	2017			2016
	(unaudited)
Fixed maturities	$	114,132		$	80,174
Equity securities		91,228			48,130
Cash and short term investments		2,238			761
		207,598			129,065
Less investment expenses		(18,570	)		(12,285	)
	$	189,028		$	116,780

Net investment income for the second quarter of 2017 was $189,028, compared to $116,780 in 2016, an increase of $72,248. This increase in investment income is a result of increased invested assets as a result of our premium income and the Merger with Northern Plains as well as an improvement in our book yield.

24

Net realized gains on investments: Net realized gains on investments for the nine months ended September 30, 2017 were $435,392, compared to gains of $40,653 in 2016, an increase of $394,739. The increase in realized gains is attributable to the repositioning of an equity portfolio from a market return focus to an income focus. Additionally, during the third quarter we reduced our equity exposure in order to facilitate our coinsurance transaction with ALSC. Realized gains and losses related to the sale of securities for the nine months ended September 30, 2017 and 2016 are summarized as follows:

	Nine Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	486,523		$	42,719
Gross losses		(51,131	)		(2,066	)
Net security gains	$	435,392		$	40,653

Net realized gains on investments for the third quarter of 2017 were $226,890 compared to gains of $29,889 in 2016. Realized gains and losses related to the sale of securities for the three months ended September 30, 2017 and 2016 are summarized as follows:

	Three Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	259,061		$	29,889
Gross losses		(32,171	)		-
Net security gains	$	226,890		$	29,889

Other income: Other income for the nine months ended September 30, 2017 was $40,656 compared to $57,468 in 2016, a decrease of $16,812. This decrease is due to the acquisition of DCLIC who was previously a third party administration client.

Other income for the third quarter of 2017 was $1,201 compared to $21,878 in 2016, a decrease of $20,677. This decrease is due to the acquisition of DCLIC who was previously a third party administration client.

Expenses. Expenses for the nine months ended September 30, 2017 and 2016 are summarized in the table below.

	Nine Months Ended September 30,
	2017		2016
	(unaudited)
Expenses:
Death claims	$	624,864	$	355,151
Policyholder benefits		2,609,324		2,520,956
Increase in policyholder reserves		5,205,124		1,473,287
Commissions, net of deferrals		362,585		315,550
Amortization of deferred acquisition costs		136,709		128,540
Amortization of value of business acquired		3,384		-
Salaries & benefits		627,286		564,410
Other operating expenses		887,230		902,598
Total expense	$	10,456,506	$	6,260,492

25

Expenses for the three months ended September 30, 2017 and 2016 are summarized in the table below.

	Three Months Ended September 30,
	2017		2016
	(unaudited)
Expenses:
Death claims	$	152,234	$	119,700
Policyholder benefits		479,965		715,171
Increase in policyholder reserves		4,357,257		556,685
Commissions, net of deferrals		97,151		88,952
Amortization of deferred acquisition costs		52,484		39,441
Amortization of value of business acquired		3,384		-
Salaries & benefits		244,143		171,226
Other operating expenses		278,795		321,925
Total expense	$	5,665,413	$	2,013,100

Death and other benefits: Death benefits were $624,864 in the nine months ended September 30, 2017 compared to $355,151 in 2016, an increase of $269,713. This increase is attributable to the growth of our in-force block of life insurance policies. The majority of death claims paid from inception have been on pre-need policies. We expect these claims to grow as we continue to increase the size of our in-force pre-need business.

Death benefits were $152,234 for the three months ended September 30, 2017, compared to $119,700 for the same period in 2016, an increase of $32,534. This increase is attributable to the growth of our in-force block of life insurance policies. We expect these claims to grow as we continue to increase the size of our in-force life business.

Policyholder benefits: Policyholder benefits were $2,609,324 in the nine months ended September 30, 2017 compared to $2,520,956 in 2016, an increase of $88,368. The primary driver of this increase is the growth of our assumed business with ULIC and is more than offset by the increased premiums associated with this block of assumed policies.

Policyholder benefits were $479,965 during the third quarter of 2017, compared to $715,171 in the third quarter of 2016, a decrease of $235,206. The primary driver of this decrease is reduced benefits payments on our assumed business with ULIC.

Increase in policyholder reserves: Policyholder reserves increased $5,205,124 in the nine months ended September 30, 2017, compared to $1,473,287 in 2016, an increase of $3,731,837. The increase in policyholder reserves is driven by an assumed reserve increase of $3,824,902 associated with our reinsurance transaction with ALSC.

Policyholder reserves increased by $4,357,257 in the third quarter of 2017, compared to $556,685 in the third quarter of 2016, an increase of $3,800,572. The increase in policyholder reserves is driven by an assumed reserve increase of $3,824,902 associated with our reinsurance transaction with ALSC.

Commissions, net of deferrals: The Company pays commissions to the ceding company on a block of assumed policies. Commissions were $362,585 in the nine months ended September 30, 2017, compared to $315,550 in 2016, an increase of $47,035. This increase is due to an increase in assumed premiums.

Commissions were $97,151 in the third quarter of 2017, compared to $88,952 in the third quarter of 2016, an increase of $8,199. This increase is driven by an increase in non-deferred commissions on direct written premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs was $136,709 in the nine months ended September 30, 2017, compared to $128,540 in 2016, an increase of $8,169. The amortization increase is attributable to the growth of our DAC asset and product margins.

26

The amortization of deferred acquisition costs was $52,484 in the third quarter of 2017, compared to $39,441 in the third quarter of 2016, an increase of $13,043. The amortization increase is attributable to the growth of our DAC asset and product margins.

Amortization of value of business acquired: The amortization of value of business acquired was $3,384 in the nine months ended September 30, 2017. Our initial VOBA balance was established August 1, 2017 with acquisition of DCLIC. VOBA is being amortized straight-line over 30 years.

Salaries and benefits: Salaries and benefits were $627,286 for the nine months ended September 30, 2017, compared to $564,410 in 2016, an increase of $62,876. Staffing costs have increased due to additional employees acquired with the Northern Plains Merger.

Salaries and benefits were $244,143 in the third quarter of 2017, compared to $171,226 in the third quarter of 2016, an increase of $72,917. Staffing costs have increased due to additional employees acquired with the Northern Plains Merger.

Other expenses: Other operating expenses were $887,230 in the nine months ended September 30, 2017, compared to $902,598 in 2017, a decrease of $15,368. Operating costs have remained in line with the prior period.

Other operating expenses were $278,795 during the third quarter of 2017, compared to $321,925 in the third quarter of 2016, a decrease of $43,130.

Net Loss: Our net loss was $593,103 in the nine months ended September 30, 2017 compared to net loss of $1,120,789 in the same period of 2016, a decrease of $527,686. This decrease is primarily attributable to our increased realized gains as well as growing product margins. Our net loss per share decreased to $0.10 from $0.21 in 2016, basic and diluted.

Our net loss was $78,656 for the third quarter of 2017, compared to $354,298 for the same period in 2016, a decrease of $275,642. This decrease is primarily attributable to increased realized gains as well as improved product margins. Our net loss per share was $0.01 per share in the third quarter of 2017, basic and diluted, compared to $0.06 net loss per share in the second quarter of 2016.

Discussion of Consolidated Balance Sheet

Assets. Assets have increased to $38,746,049 as of September 30, 2017, an increase of $19,554,060 from December 31, 2016. This is primarily the result of the Merger with Northern Plains and our coinsurance agreement with ALSC.

Available for sale fixed maturity securities: As of September 30, 2017, we had available for sale fixed maturity assets of $15,153,824, an increase of $4,833,750 from the December 31, 2016 balance of $10,320,074. This growth is driven by our Merger with Northern Plains and our premium income.

Available for sale equity securities: As of September 30, 2017, we had available for sale equity assets of $7,665,497, an increase of $2,521,993 from the December 31, 2016 balance of $5,143,504. This growth is driven by our Merger with Northern Plains and our premium income.

Cash and cash equivalents: As of September 30, 2017, we had cash and cash equivalent assets of $11,015,077, an increase of $7,869,332 from the December 31, 2016 balance of $3,145,745. This increase is primarily the result of cash received upon entering into our coinsurance agreement with ALSC.

Investment income due and accrued: As of September 30, 2017, our investment income due and accrued was $124,745 compared to $100,713 as of December 31, 2016. This increase is attributable to normal investment activity and the growth of our invested assets.

Reinsurance related assets: As of September 30, 2017, our reinsurance related assets were $315,702, an increase of $284,312 from the December 31, 2016 balance of $31,390. This increase was driven by a $264,311 receivable from ALSC related to our coinsurance transaction.

27

Policy loans: As of September 30, our policy loans were $33,376. All of our policy loans were the result of our coinsurance agreement with ALSC and we had no policy loans prior to this transaction.

Deferred acquisition costs, net: As of September 30, 2017, our deferred acquisition costs were $3,083,154, an increase of $2,929,362 from the December 31, 2016 balance of $153,792. The growth is the result of the cost of reinsurance deferred on our coinsurance agreement with ALSC in the amount of $2,861,450.

Value of business acquired, net: As of September 30, 2017 our value of business acquired asset was $605,677. This asset was established in the third quarter of 2017 as a result of our acquisition of DCLIC.

Goodwill: As of September 30, 2017, our goodwill was $277,542. Goodwill was established as a result of our merger with Northern Plains and we had no previous goodwill balances.

Property, equipment and software, net: As of September 30, 2017 our property, equipment and software assets were $229,939, a decrease of $14,910 from the December 31, 2016 balance of $244,849. This decrease is a result of normal amortization during the period. We did purchase additional office furniture and equipment in 2017.

Other assets: As of September 30, 2017, our other assets were $241,517, an increase of $189,595 from the December 31, 2016 balance of $51,922. This increase was the result of a receivable related to the recovery of merger related expenses and pre-paid insurance.

Liabilities. Our total liabilities were $24,429,841 as of September 30, 2017, an increase of $16,618,835 from our December 31, 2016 liability of $7,811,006.

Policy liabilities: Our total policy liabilities as of September 30, 2017 were $23,802,957, an increase of $16,062,718 from the December 31, 2016 balance of $7,740,239. This increase is the result of our acquisition of DCLIC, our coinsurance agreement with ALSC, new policy sales and the growth of our in-force policies.

Accounts payable and accrued expenses: As of September 30, 2017, our accounts payable and accrued expenses were $75,399, an increase of $8,927 from the December 31, 2016 balance of $66,472. The growth is the result of expenses accrued related to our Merger with Northern Plains.

Shareholders’ Equity. Our shareholders’ equity was $14,316,208 as of September 30, 2017, an increase of $2,935,225 from our December 31, 2016 shareholders’ equity of $11,380,983. The growth in shareholders’ equity was driven by our Merger with Northern Plains, the issuance of new shares of stock, and the growth of accumulated other comprehensive income. This was partially offset by our net loss during the period.

28

Investments and Cash and Cash Equivalents

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

	September 30, 2017					December 31, 2016
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
	(unaudited)
Fixed maturities:
US Treasury securities	$	240,475		0.7	%	$	299,162		1.6	%
Government agency bonds		299,303		0.9	%		-		0.0	%
Corporate bonds		6,234,413		18.4	%		3,845,896		20.7	%
Municipal bonds		5,702,588		16.9	%		2,849,829		15.3	%
Redeemable preferred stocks		100,040		0.3	%		-		0.0	%
Mortgage backed and asset backed securities		2,577,005		7.6	%		3,325,187		17.9	%
Total fixed maturities		15,153,824		44.8	%		10,320,074		55.5	%
Equities:
Equities		7,665,497		22.6	%		4,942,248		26.5	%
Other equity investments		-		0.0	%		201,256		1.1	%
Total equities		7,665,497		22.6	%		5,143,504		27.6	%
Cash and cash equivalents		11,015,077		32.6	%		3,145,745		16.9	%
Total	$	33,834,398		100.0	%	$	18,609,323		100.0	%

The total value of our investments and cash and cash equivalents increased to $33,834,398 as of September 30, 2017 from $18,609,323 at December 31, 2016, an increase of $15,225,075. Increases in investments are primarily attributable to our Merger with Northern Plains, our coinsurance agreement with American Life & Security Corporation, and premiums and annuity deposits received by USALSC and DCLIC.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of September 30, 2017 and December 31, 2016.

	September 30, 2017					December 31, 2016
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
	(unaudited)					(audited)
AAA and U.S. Government	$	903,776		6.0	%	$	1,080,028		10.5	%
AA		6,643,397		43.8	%		4,887,863		47.3	%
A		3,845,353		25.4	%		1,961,311		19.0	%
BBB		3,554,606		23.5	%		2,194,473		21.3	%
BB		206,692		1.3	%		196,399		1.9	%
Total	$	15,153,824		100.0	%	$	10,320,074		100.0	%

Reflecting the high quality of securities maintained by us, 98.1% of all fixed maturity securities were investment grade as of December 31, 2016. As of September 30, 2017, 98.7% of all fixed maturity securities were investment grade.

29

The amortized cost and fair value of debt securities as of September 30, 2017 and December 31, 2016, by contractual maturity, are shown below. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of September 30, 2017				As of December 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	200,568	$	200,473	$	49,915	$	49,931
After one year through five years		1,932,156		1,933,444		1,819,437		1,809,470
After five years through ten years		2,490,661		2,517,547		1,646,576		1,643,823
More than 10 years		7,635,778		7,825,315		3,468,619		3,491,663
Redeemable preferred stocks		99,560		100,040		-		-
Mortgage backed and asset backed securities		2,553,196		2,577,005		3,333,617		3,325,187
	$	14,911,919	$	15,153,824	$	10,318,164	$	10,320,074

Market Risk of Financial Instruments

We hold a diversified portfolio of investments that primarily includes cash, bonds and equity securities. Each of these investments is subject to market risks that can affect their return and their fair value. A majority of the investments are fixed maturity securities including debt issues of corporations, US Treasury securities, or securities issued by government agencies. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, and equity risk.

Interest Rate Risk

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

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

Credit Risk

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

Liquidity and Capital Resources

Since inception, our operations have been financed primarily through the sale of voting common stock. Our operations have not been profitable and have generated significant operating losses since we were incorporated in 2009.

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

30

Net cash provided by operating activities was $287,047 for the nine months ended September 30, 2017. The primary sources of cash from operating activities were premiums and deposits received from policyholders. The primary uses of cash for operating activities were for payments of commissions to agents and settlement of policy liabilities. Net cash provided by investing activities was $6,185,465. The primary source of cash was from our coinsurance agreement with ALSC, sales of available for sale securities and the sale of the short-term investments. Offsetting this source of cash was our purchases of investments in available-for-sale securities. Cash provided by financing activities was $1,396,820. The primary sources of cash were receipts on deposit-type contracts and issuance of common stock.

At September 30, 2017, we had cash and cash equivalents totaling $11,015,077. We believe that our existing cash and cash equivalents will be sufficient to fund the anticipated operating expenses and capital expenditures through at least 2018. We have based this estimate upon assumptions that may prove to be wrong and we could use our capital resources sooner than we currently expect. The growth of our insurance subsidiary is uncertain and will require additional capital if it continues to grow.

Impact of Inflation

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

Off-Balance Sheet Arrangements

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

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4.    CONTROLS AND PROCEDURES

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

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

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the nine months ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

31

Part II – Other Information

ITEM 1.   LEGAL PROCEEDINGS

We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of business, and we are not aware of any claims that could materially affect our financial position or results of operation.

ITEM 1A.   RISK FACTORS

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

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

During the quarter ended September 30, 2017, the Company issued 27,830 shares of common stock, for aggregate consideration of $194,810, pursuant to an offering to residents of the state of Kansas that was registered with the Kansas Securities Commissioner.

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

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.   MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.    OTHER INFORMATION

None.

ITEM 6.	EXHIBITS
2.1	Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.1 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.1.
2.2	Amendment No 1 to Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.2 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.2.
3.1	Articles of Incorporation of US Alliance Corporation (filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1)
3.2	Bylaws of US Alliance Corporation (filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2).
4.1	Form of Warrant to Purchase Common Shares of US Alliance (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 4.1)
10.1	Co-Insurance Agreement dated September 30, 2017 by and between US Alliance Life & Security Company and American Life & Security Company of Nebraska.
31.1	Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

31.2	Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XLRB Instance
101.SCH**	XLRB Taxonomy Extension Schema
101.CAL**	XLRB Taxonomy Extension Calculation
101.DEF**	XLRB Taxonomy Extension Definition
101.LAB**	XLRB Taxonomy Extension Labels
101.PRE**	XLRB Taxonomy Extention Presentation

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

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized

		US Alliance Corporation
		(Registrant)
Date
By	/s/ Jack H. Brier
	Jack H. Brier, President and Chairman

33

EX-10.1

Exhibit 10.1

CONFIDENTIAL

ATTORNEY-CLIENT PRIVILEGE

Coinsurance Agreement

between

American Life & Security Corporation

Lincoln, Nebraska

(hereinafter referred to as “Ceding Company”)

and

US Alliance Life and Security Company

Topeka, Kansas

(hereinafter referred to as “Reinsurer”)

effective September 30, 2017

Treaty Number 1

CONFIDENTIAL

ATTORNEY-CLIENT PRIVILEGE

Table of Contents
Article 1 — COINSURANCE AGREEMENT		1
1.1	Parties to the Agreement	1
1.2	Effective Date	1
Article 2 – DEFINITIONS		2
2.1	Defined Terms	2
2.2	Other Definitional Provisions	5
Article 3 — COVERAGE		7
3.1	Scope	7
3.2	Basis of Reinsurance	7
3.3	Retention	7
3.4	Existing Reinsurance	7
3.5	Reinstatement	7
3.6	Misstatement of Fact	8
3.7	Credited Rates and Nonguaranteed Elements	8
3.8	Internal Replacements	8
3.9	Recapture	8
Article 4 – REINSURANCE PREMIUMS		9
4.1	Reinsurance Premiums	9
4.2	Initial Consideration	9
4.3	Ceding Commission	9
4.4	Premium Taxes	9
Article 5 – REINSURANCE BENEFITS AND EXPENSES		10
5.1	Policy Claims	10
5.2	Commissions	10
5.3	Expenses	10
Article 6 – ADMINISTRATION		11
6.1	Administrator	11
6.2	Record Keeping	11
Article 7 – REPORTING AND SETTLEMENTS		12
7.1	Initial and Monthly Reporting	12
7.2	Quarterly and Annual Reporting	12
7.3	Settlements	12
Article 8 – CREDIT FOR REINSURANCE		13
8.1	Reserves	13
8.2	Form of Security	13
Article 9 – TERM AND TERMINATION		14
9.1	Duration of Agreement	14
9.2	Termination for Non-Payment	14
9.3	Termination for Material Breach	14
9.4	Termination for Insolvency of Reinsurer	14
9.5	Termination Payment	14
9.6	Rescission	15
9.7	Survival	15
Article 10 – ERRORS AND OMISSIONS		16

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Article 11 – DISPUTE RESOLUTION		17
11.1	Negotiation	17
11.2	Arbitration	17
11.3	Waiver of Trial by Jury	18
Article 12 – INSOLVENCY		20
Article 13 – REPRESENTATIONS, WARRANTIES AND COVENANTS		21
13.1	Representations and Warranties of Ceding Company	21
13.2	Covenants of Ceding Company	22
13.3	Representations and Warranties of Reinsurer	22
Article 14 – MISCELLANEOUS		24
14.1	Currency	24
14.2	Interest	24
14.3	Right of Setoff and Recoupment	24
14.4	No Third Party Beneficiaries	24
14.5	Amendment	24
14.6	Notices	24
14.7	Consent to Jurisdiction	25
14.8	Service of Process	26
14.9	Inspection of Records	26
14.10	Confidentiality	26
14.11	Indemnification	26
14.12	Reinsurance Brokers	27
14.13	Successors	27
14.14	Entire Agreement	27
14.15	Severability	27
14.16	Construction	27
14.17	Non-Waiver	27
14.18	Further Assurances	28
14.19	Governing Law	28
14.20	Counterparts	28

Schedules

Schedule A – Reinsured Policies

Exhibits

Exhibit A – Monthly Accounting Report

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Article 1 — COINSURANCE AGREEMENT

1.1     Parties to the Agreement

This coinsurance agreement for indemnity reinsurance (the “Agreement”) is entered into on the ______ day of September, 2017 (the “Agreement Date”) by and between American Life & Security Corporation, a Nebraska domiciled insurance company with executive offices in Lincoln, Nebraska (“Ceding Company”), and US Alliance Life and Security Company (“Reinsurer”), a Kansas domiciled insurance company with executive offices in Topeka, Kansas, collectively referred to as the “parties”.

Performance of the obligations of each party under this Agreement shall be rendered solely to the other party. The acceptance of risks under this Agreement will create no right or legal relationship between Reinsurer and the insured, owner, or beneficiary of any insurance policy or other contract of Ceding Company.

The Agreement will be binding upon Ceding Company and Reinsurer and their respective successors and assigns.

1.2     Effective Date

The Effective Date of this Agreement is September 30, 2017. Hereinafter, the Effective Date shall mean midnight Central Time on this date.

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Article 2 – DEFINITIONS

2.1     Defined Terms

As used in this Agreement, the following terms shall have the following meanings:

“Adjusted Net Reserves” shall be calculated as Net Reserves, less Net Due and Deferred Premiums, less Net Policy Loans, plus Advanced Premiums.

“Administrator” shall mean the Ceding Company from the effective date to December 31, 2017 and after December 31, 2017 shall mean the Reinsurer.

“Advance Premiums” shall mean premiums received in advance calculated in accordance with SAP, net of Existing Reinsurance, which would have been or should have been reported by Ceding Company on its NAIC Convention Blank as of the date of calculation with respect to the Reinsured Policies as if this Agreement were not in effect.

“Affiliate” shall mean, with respect to any person, any other person that directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such specified person; provided, that “control” (including, with correlative meanings, “controlled by” and “under common control with”), as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise.

“Agreement” shall have the meaning as specified in Article 1.1.

“Agreement Date” shall have the meaning as specified in Article 1.1.

“Basic Policy Data” shall mean, with respect to active Reinsured Policies, policy number, plan code, issue date, issue age, gender, risk class, policy units, face amount, in force amount, annual premium, modal premium, premium mode, paid-to date, policy status, expiry date (in the case of extended term insurance), amount of accidental death benefit, direct statutory reserve, direct statutory net valuation premium, direct accidental death benefit reserve, loan value, annuity fund value, annuity cash value, and annuity reserve. With respect to orphaned annuity riders associated with inactive Reinsured Policies, such data shall mean policy number, plan code, issue date, issue age, gender, risk class, policy status, annuity fund value, annuity cash value, and annuity reserve.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions are authorized or required by law or executive order to close in Lincoln, Nebraska or Topeka, Kansas.

“Ceded Reserves” shall have the meaning as specified in Article 8.2.

“Ceding Company” shall have the meaning as specified in Article 1.1.

“Ceding Commission” shall mean $1,850,000.00 payable as set forth in Article 4.3.

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“Claims” shall mean, with respect to the contractual provisions and obligations of the Reinsured Policies incurred on or after the Effective Date, all death benefits, maturity or endowment benefits, full surrender benefits, partial surrender or withdrawal benefits, loan proceeds, accrued interest, accrued credits or other nonguaranteed elements, annuitizations, benefits under Supplementary Contracts, and other contractual benefits, as further described in Article 5.1, net of Existing Reinsurance, where surrender or withdrawal benefits are net of applicable surrender or withdrawal charges, if any. Claims shall not include any Excluded Liabilities or any liabilities other than the Reinsured Liabilities.

“Contested Claim” shall have the meaning as specified in Article 5.1.

“Effective Date” shall have the meaning as specified in Article 1.2.

“Excluded Liabilities” shall mean

“Existing Reinsurance” shall mean, for FWL, reinsurance under an automatic reinsurance agreement with Optimum Re Insurance Company, Number 2537-12AY05, dated May 1, 2012, and subsequent amendments, and for GPL, reinsurance under an automatic reinsurance agreement with Optimum Re Insurance Company, Number 2516-10AY01, dated January 4, 2010, and subsequent amendments, and for both FWL and GPL, bulk reinsurance agreements with Optimum Re Insurance Company covering accidental death benefit riders associated with the Reinsured Policies.

“Extra-Contractual Obligations” shall mean any liabilities or obligations not arising under the express terms and conditions of, or in excess of the applicable policy limits of, the Reinsured Policies, which arise from the handling of any claim with respect to the Reinsured Policies, including liabilities or obligations for fines, penalties, fees, forfeitures, compensatory damages, and punitive, special, treble, bad faith, tort, exemplary or other forms of extracontractual damages awarded against or paid by Ceding Company, which liabilities or obligations arise from any act, error or omission committed by Ceding Company, relating to (a) the investigation, defense, trial, settlement or handling of claims, benefits or payments under the Reinsured Policies, or (b) the failure to pay, the delay in payment, or errors in calculating or administering the payment of benefits, claims or any other amounts due or alleged to be due under or in connection with the Reinsured Policies; however excluded from “Extra-Contractual Obligations” are any liabilities or obligations arising out of fraud or any act of a member of the Ceding Company’s officers or board of directors

“Factual Information” shall have the meaning as specified in Article 13.1.

“FWL” shall mean First Wyoming Life Insurance Company, NAIC Company Code 14086, prior to its merger into Ceding Company on September 1, 2016.

“GPL” shall mean Great Plains Life Assurance Company, NAIC Company Code 13561, prior to its merger into Ceding Company on December 1, 2016.

“Initial Consideration” shall have the meaning as specified in Article 4.2.

“Monthly Accounting Period” shall have the meaning as specified in Article 7.1.

“Monthly Accounting Report” shall have the meaning as specified in Article 7.1.

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“Net Due and Deferred Premiums” shall mean net due and deferred premiums calculated in accordance with SAP, net of Existing Reinsurance, which would have been or should have been reported by Ceding Company on its NAIC Convention Blank as of the date of calculation with respect to the Reinsured Policies as if this Agreement were not in effect.

“Net Policy Loans” shall mean contract loans originating under provisions contained in the Reinsured Policies calculated in accordance with SAP, net of Existing Reinsurance, which would have been or should have been reported by Ceding Company on its NAIC Convention Blank as of the date of calculation with respect to the Reinsured Policies as if this Agreement were not in effect.

“Net Reserves” shall be calculated as Statutory Reserves, net of Statutory Reserves for Existing Reinsurance, which would have been or should have been reported by Ceding Company on its NAIC Convention Blank as of the date of calculation with respect to the Reinsured Policies as if this Agreement were not in effect.

“Non-Payment Event” shall have the meaning as specified in Article 9.2.

“Non-Public Personal Information” shall mean personally identifiable medical, financial, and other personal information about proposed, current and former applicants, policy owners, contract holders, insureds, annuitants, claimants, and beneficiaries of Reinsured Policies or contracts issued by Ceding Company, and their representatives, that is not publicly available. Non-Public Personal Information does not include de-identified personal data, i.e., information that does not identify, or could not reasonably be associated with, an individual.

“Person” shall mean and include an individual, a corporation, a partnership, an association, a trust, an unincorporated organization or a government or political subdivision thereof.

“Proprietary Information” shall include, but not be limited to, underwriting manuals and guidelines, applications, contract forms, agent lists and premium rates and allowances of Reinsurer and Ceding Company, but shall not include the existence of this Agreement and the identity of the parties. Additionally, Proprietary Information may be shared by either party on a need-to-know basis with its officers, directors, employees, Affiliates, third party service providers, auditors, consultants or retrocessionaires, or in connection with the dispute process specified in this Agreement.

“Receiver” shall have the meaning as specified in Article 9.5.

“Reinsurance Premiums” shall have the meaning as specified in Article 4.1.

“Reinsured Liabilities” shall mean, with respect to the contractual provisions and obligations of the Reinsured Policies, the liabilities incurred or accrued by Ceding Company that relate to death benefits, maturity or endowment benefits, full surrender benefits, partial surrender or withdrawal benefits, accrued interest, accrued credits or other nonguaranteed elements, annuitizations, benefits under Supplementary Contracts, and other contractual benefits, net of Existing Reinsurance, provided that in no case shall Reinsured Liabilities include any Excluded Liabilities.

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“Reinsured Policies” shall mean all policies and riders, including any amendments or endorsements attached thereto, and all Supplementary Contracts in force as of the Effective Date originally issued by FWL, which through merger of FWL into Ceding Company became contracts of Ceding Company, and GPL, which through merger of GPL into Ceding Company became contracts of Ceding Company, and as listed by policy number in Schedule A, excluding policies and riders terminated subsequent to the listing date (June 30, 2017) and prior to the Effective Date. Any riders, amendments, or endorsements issued by Ceding Company on Reinsured Policies or increase in benefits on Reinsured Policies subsequent to the effective date shall be reinsured under the terms of this Agreement.

“Reinsured Policies Report” shall have the meaning as specified in Article 7.1.

“Reinsurer” shall have the meaning as specified in Article 1.1.

“Relevant Regulatory Authority” shall mean the insurance regulatory authority of Ceding Company’s state of domicile.

“SAP” shall mean the statutory accounting principles and practices prescribed or permitted for life insurance companies domiciled in Ceding Company’s state of domicile.

“Statutory Reserves” shall mean reserves and claim liabilities, including in course of settlement and incurred but not reported, calculated in accordance with SAP. Such reserves shall be calculated in good faith on a seriatim basis by Ceding Company (for calculation dates prior to December 31, 2017) or by Reinsurer (for calculation dates on or after December 31, 2017), but shall not include (a) additional actuarial reserves as used in connection with SAP, if any, established by Ceding Company as a result of its annual cash flow testing, (b) any asset valuation reserves as used in connection with SAP established by Ceding Company, or (c) any other reserve not directly attributable to the Reinsured Policies.

“Supplementary Contracts” shall mean all supplementary contracts or settlement options, whether with or without life contingencies, issued by Ceding Company in exchange for a Reinsured Policy.

“Termination Effective Date” shall have the meaning as specified in Article 9.5.

“Terminal Accounting Period” shall have the meaning as specified in Article 7.1.

“Third Party Administrative Services Agreement” shall have the meaning as specified in Article 6.1.

2.2     Other Definitional Provisions

For purposes of this Agreement, the words “hereof,” “herein,” “hereby” and other words of similar import refer to this Agreement as a whole, including all Schedules and Exhibits to this Agreement, unless otherwise indicated.

Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.

The term “including” means “including but not limited to.”

Whenever used in this Agreement, the masculine gender shall include the feminine and neutral genders and vice versa.

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The Schedules and Exhibits hereto are hereby incorporated by reference into the body of this Agreement.

All references herein to Articles, Exhibits and Schedules shall be deemed references to Articles of and Exhibits and Schedules to this Agreement unless the context shall otherwise require.

All terms defined in this Agreement shall have the defined meaning when used in any Schedule, Exhibit, report or other documents attached hereto or made or delivered pursuant hereto unless otherwise defined therein.

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Article 3 — COVERAGE

3.1     Scope

Ceding Company agrees to transfer to Reinsurer and Reinsurer agrees to accept and indemnify risk on all Reinsured Policies, subject in all respects to the terms, clauses, conditions, stipulations, waivers and modifications of the Reinsured Policies, provided, however, that Reinsurer acknowledges and agrees that Ceding Company shall submit this Agreement to the Nebraska Department of Insurance and the parties will negotiate in good faith any amendments to this Agreement requested thereby. In the event the parties are unable to so agree on any such amendments within ten (10) Business Days following notice to both parties of such request, this Agreement shall be rescinded according to the provisions set forth in Article 9.

Ceding Company and Reinsurer acknowledge the existence of a signed letter of intent dated August 31, 2017, which set forth the general terms and conditions leading to the execution of this Agreement, and agree that such letter of intent is both generally consistent with and fully replaced by this Agreement.

3.2     Basis of Reinsurance

Reinsurer shall accept, on a first dollar quota share coinsurance basis, one hundred percent (100%) of all risks and liabilities associated with the Reinsured Policies, subject in all respects to the terms, clauses, conditions, stipulations, waivers, modifications, and cancellations of the Reinsured Policies, and Extra-Contractual Obligations arising therefrom, but in no event shall Reinsurer be liable for Extra-Contractual Obligations unless Reinsurer shall have received notice in writing of and concurred with the actions taken or not taken by Ceding Company which led to its liability. Subject to the terms, conditions and limits of this Agreement, Reinsurer shall follow the fortunes and settlements of Ceding Company, and to that end, Reinsurer’s liability for the Reinsured Policies shall be identical to that of Ceding Company and shall be subject to the same risks, terms, conditions, interpretations, waivers, modifications, alterations and cancellations as the respective insurances of Ceding Company, subject in each case to Ceding Company’s duty to adhere to its obligations pursuant to Article 6 and to Reinsurer’s duty to adhere to its obligations pursuant to the same Article 6.

3.3     Retention

Ceding Company shall retain zero percent (0%) of the liabilities with respect to each of the Reinsured Policies.

3.4     Existing Reinsurance

Reinsurance under this Agreement shall be subject to Existing Reinsurance associated with the Reinsured Policies. The total reinsurance recoverable under Existing Reinsurance and reinsurance under this Agreement shall not exceed Ceding Company’s total contractual liability on any Reinsured Policy less Ceding Company’s retention under the respective reinsurance agreements.

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3.5     Reinstatement

If a Reinsured Policy that has lapsed or surrendered is reinstated in accordance with its terms and in accordance with Ceding Company’s rules and procedures for reinstatement, Reinsurer will, upon notification, reinstate reinsurance coverage for such Reinsured Policy. Upon reinstatement of reinsurance coverage, Ceding Company shall pay to Reinsurer all applicable Reinsurance Premiums, if any, plus accrued interest for the period and at the interest rate for which it receives premiums in arrears.

3.6     Misstatement of Fact

In the event of a change in the amount payable under a Reinsured Policy due to an applicant’s or policy owner’s misstatement in fact on the application for the Reinsured Policy, Reinsurer’s liability with respect to such Reinsured Policy will change proportionately to the change in amount payable under the Reinsured Policy. If the Ceding Company has misstated facts otherwise correct on the application which results in the incorrect amount of premium being collected, the Ceding Company will reimburse the Reinsurer for the correct amount of premium. Should this misstatement result in the over collection of premium, the Ceding Company will work the the Reinsurer to refund the excess premium to the policyowner.

3.7     Credited Rates and Nonguaranteed Elements

Subsequent to the Effective Date, Reinsurer shall have ultimate discretion and control for determining credited interest rates and other nonguaranteed elements of the Reinsured Policies, provided that Reinsurer shall consider in good faith any recommendations provided by Ceding Company regarding credited interest rates and other nonguaranteed elements of the Reinsured Policies for a period of ten (10) years subsequent to the Effective Date.

3.8     Internal Replacements

Ceding Company shall not solicit, directly or indirectly, contract holders of the Reinsured Policies in connection with the replacement of a Reinsured Policy with any other policy not reinsured by the Reinsurer.

3.9     Recapture

Reinsurance under this Agreement is not eligible for recapture by Ceding Company unless mutually agreed by the parties.

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Article 4 – REINSURANCE PREMIUMS

4.1     Reinsurance Premiums

Reinsurer shall be entitled to 100% of all premiums due and collected subsequent to the Effective Date under the terms of all Reinsured Policies, including modal loadings and policy fees, less agent commissions and premium taxes. Reinsurance premiums are on the same mode as direct premiums.

4.2     Initial Consideration

On the Effective Date, Ceding Company shall pay to Reinsurer the Initial Consideration in an amount equal the Adjusted Net Reserves calculated immediately prior to the application of this Agreement and as of the Effective Date, less the Ceding Commission.

4.3     Ceding Commission

The Ceding Commission due Ceding Company on the Effective Date shall be paid to Ceding Company by Reinsurer by means of Ceding Company retaining said amount from the Adjusted Net Reserves transferred to Reinsurer as set forth in Article 4.2.

4.4     Premium Taxes

Premium taxes that first become due to state or local taxing authorities on or after the Effective Date with respect to the Reinsured Policies shall be paid or reimbursed by Reinsurer.

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Article 5 – REINSURANCE BENEFITS AND EXPENSES

5.1     Policy Claims

Reinsurer shall pay or reimburse Ceding Company for all Claims incurred on or after the Effective Date in accordance with the terms and conditions of the Reinsured Policies, applicable law, and Article 7.3.

Reinsurer may request that Ceding Company investigate, contest, compromise or litigate any Claim involving a Reinsured Policy (any such claim, a “Contested Claim”), consent thereto shall not be unreasonably withheld, conditioned or delayed. Ceding Company may authorize Reinsurer to act on its behalf in such matter. Administrator shall provide to the other party all relevant information and documents, as such become available, pertaining to Contested Claim and will promptly report any developments during the review. Subject to limitations relating to Excluded Liabilities, Reinsurer shall bear the expenses, or reimburse Ceding Company for the reasonable expenses, of any contest or compromise of a Claim, and will be entitled to any reduction of liability.

If Reinsurer so elects, it may discharge its liability with respect to any Contested Claim by paying to Ceding Company its share of such Claim as originally presented to Ceding Company and, thereafter, will have no obligation to Ceding Company for reimbursement of expenses related to the contest of such Claim and will not share in any subsequent reduction in liability relating to such Claim.

5.2     Commissions

Commissions due on or after the Effective Date under the terms of valid agents’ contracts existing as of the Effective Date shall be paid or reimbursed by Reinsurer. Reinsurer shall not be responsible for any uncollectible agent debit balances.

5.3     Expenses

Expenses associated with the administration and reporting of the Reinsured Policies on or after the Effective Date shall be paid or reimbursed by Reinsurer after December 31, 2017. Ceding Company agrees to administer the Reinsured Policies through December 31, 2017 at no cost to Reinsurer. Provided, however, if Ceding Company is requested to provide administrative services after December 31, 2017, Reinsurer agrees to pay for those services at $100 per policy per annum, prorated for the period during which such administrative services are are provided.

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Article 6 – ADMINISTRATION

6.1     Administrator

Administrator shall perform all appropriate administrative, claims and other services customarily performed by a direct company in the life insurance industry, including reporting under Article 7, as well as duties customarily performed by an assuming company in the reinsurance industry, such services to include all required and necessary policyholder service, premium billing and collection, commission processing, claim adjudication, insurance accounting, valuation of statutory reserves and other liabilities, and valuation of assets (Administrative Services). Administrator agrees to use reasonable care in its administration, conform with law, and use all reasonable efforts to preserve the value of the Reinsured Policies.

Neither party shall outsource any administrative functions or claims administration with respect to the Reinsured Policies without the consent of the other party, such consent not to be unreasonably withheld. Prior to any such outsourcing, the right to audit and inspect the party performing such outsourced services shall be secured.

All monetary considerations for such Administrative Services are explicitly reflected in the Ceding Commission or Reinsurance Premiums with no further monetary considerations owed to Ceding Company or Reinsurer.

6.2     Record Keeping

Administrator shall maintain all records and correspondence for services performed under Article 6.1 in

accordance with industry standards of insurance record keeping. In addition, such records shall be made available for examination, audit, and inspection by the department of insurance of any state within whose jurisdiction Ceding Company or Reinsurer operates. Administrator further agrees that in the event of the termination of this Agreement, any such records in the possession of the Administrator shall promptly be duplicated and forwarded to the other party unless otherwise instructed.

Administrator shall establish and maintain an adequate system of internal controls and procedures for financial reporting relating to the Reinsured Policies, including associated documentation and shall make such documentation available for examination and inspection by the other party. All reports provided by the Administrator pursuant to Article 7 shall be prepared in accordance with such system and procedures and shall be consistent with the Administrator’s books and records.

6.3     Administrative Account

Administrator shall maintain with sufficient funds, at its own expense, and Ceding Company shall cooperate in the establishment and maintenance of a checking account in the name of Ceding Company in a bank insured by the Federal Deposit Insurance Corporation for the purpose of facilitating Administrator’s performance of Administrative Services, including receiving premium and paying claims (“Administrative Account”).

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Article 7 – REPORTING AND SETTLEMENTS

7.1     Initial and Monthly Reporting

Within ten (10) Business Days following the Effective date and within ten (10) Business Days following the end of each Monthly Accounting Period thereafter, Administrator shall deliver to the other party a report of the Reinsured Policies (a “Reinsured Policies Report”) similar in form to the report set forth on Schedule A, along with seriatim information in electronic format containing Basic Policy Data with respect to each of the Reinsured Policies.

Within ten (10) Business Days following the end of each calendar month, the Administrator shall deliver to the other party an accounting report (a “Monthly Accounting Report”) prepared in accordance with SAP and substantially in the form set forth in Exhibit A for the immediately preceding calendar month (a “Monthly Accounting Period”) or, in the case of termination, the period from the end of the immediately preceding Monthly Accounting Period to the date on which this Agreement is terminated (the “Terminal Accounting Period”), as applicable.

7.2     Quarterly and Annual Reporting

Ceding Company shall deliver to Reinsurer and Reinsurer shall deliver to Ceding Company (a) a copy of its unaudited annual statement (Blue Book) within five (5) Business Days following the filing thereof with the Relevant Regulatory Authority but no later than March 5 of each year, (b) a copy of its audited annual statutory financial statements within five (5) Business Days following the filing thereof with the Relevant Regulatory Authority but no later than June 5 of each year and (c) a copy of its unaudited quarterly statutory financial statements within five (5) Business Days following the filing thereof with the Relevant Regulatory Authority but no later than fifty (50) calendar days after the end of each calendar quarter.

Upon request, Administrator shall promptly provide the other party with any additional information related to the Reinsured Policies that the other party reasonably requires to complete its financial statements.

Administrator acknowledges that timely and correct compliance with the reporting requirements of this Agreement are material elements of the Administrator’s responsibilities hereunder and an important basis of the other party’s ability to assess the risks hereunder. Material noncompliance with reporting requirements, including extended delays, will constitute a material breach of the terms of this Agreement.

7.3     Settlements

Administrator shall calculate a Monthly Settlement Amount on the first Business Day of each calendar month on the basis of Reinsurance Premiums received during the previous calendar month and Claims paid during the previous calendar month. On the first Business Day of each month, Administrator shall effectuate the payment of the Settlement Amount by paying Reinsurance Premiums to Reinsurer and collecting amounts paid for Claims from Reinsurer, consistent with Article 14.3.

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Article 8 – CREDIT FOR REINSURANCE

8.1     Admitted Reinsurer

Reinsurer represents that it is an admitted insurance company licensed in the state of Nebraska, Ceding Company’s state of domicile.

8.2     Reserves

Reinsurer shall establish reserves in respect to the Reinsured Policies (“Ceded Reserves”) in an amount equal to Adjusted Net Reserves.

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Article 9 – TERM AND TERMINATION

9.1     Duration of Agreement

Subject to Article 9.2, this Agreement shall be in effect until all assumed liabilities have been fully satisfied. Subject to Articles 4.1 and 9.2, all Reinsured Policies in force as of the Effective Date will remain Reinsured Policies until the expiration thereof and Reinsurer shall remain liable thereon.

9.2     Termination for Non-Payment

Either party may terminate this Agreement as to all Reinsured Policies if the other party fails to pay any amounts due under this Agreement within thirty (30) calendar days following written notice of non-payment from the non-defaulting party (a “Non-Payment Event”); provided, that reinsurance that is terminated due to non-payment by Ceding Company may be reinstated by Ceding Company, subject to Reinsurer’s approval, within sixty (60) calendar days of the date of termination, and upon payment of all amounts in arrears including any interest accrued thereon; provided, further, that Reinsurer shall have no liability for the payment of any Claims under the Reinsured Policies that are incurred between the date of termination and the date of the reinstatement of the reinsurance.

9.3     Termination for Material Breach

In addition to all other rights and remedies available under this Agreement, either party may terminate this Agreement as to all Reinsurance Policies by providing the other party with a minimum of thirty (30) calendar days prior written notice (except in the case of a Non-Payment Event, in which case notice may be given immediately) in the event the other party commits a material breach of any provision of this Agreement (including any failure by Reinsurer, within Reinsurer’s control, that causes Ceding Company not to receive full credit for the reinsurance effected hereunder on its statutory financial statements filed in Ceding Company’s state of domicile), which notice shall specify the nature of such material breach. The breaching party shall have twenty (20) calendar days from the date of the breaching party's receipt of the foregoing notice to cure such material breach to the reasonable satisfaction of the non-breaching party. If the breach is cured, the other party shall provide written notice to the curing party that the breach has been adequately cured. In the event the breaching party fails to cure the material breach within such twenty (20) calendar day period, then, at the option of the non-breaching party and upon notice, this Agreement will terminate upon expiration of the thirty (30) calendar day notice period. Notwithstanding the foregoing, the parties shall cooperate with each other to effect a cure of any breach of the terms of this Agreement.

9.4     Termination for Insolvency of Reinsurer

Ceding Company may terminate this Agreement as to all Reinsured Policies in the event that Reinsurer becomes insolvent (as set forth in Article 12) by promptly providing Reinsurer or its Authorized Representative with written notice of termination, to be effective as of the date on which Reinsurer’s insolvency is established by the authority responsible for such determination. Any requirement for a notification period prior to the termination of this Agreement shall not apply under such circumstances.

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9.5     Termination Payment

In the event that this Agreement is terminated as to all Reinsured Policies, including if this Agreement is rejected by any liquidator, receiver, rehabilitator, trustee or similar person acting on behalf of Ceding Company (a “Receiver”), a net accounting and settlement as to any balance due under this Agreement will be undertaken by Ceding Company in accordance with Article 7. In addition, on the date of delivery of the Monthly Accounting Report related to such termination, Reinsurer shall transfer to Ceding Company, within fifteen (15) Business Days after receipt of the Monthly Accounting Report, an amount equal to the Ceded Reserves as of the Termination Effective Date.

Reinsurer’s right to terminate the reinsurance provided hereunder will not prejudice its right to collect Reinsurance Premiums, if any, and applicable interest as specified in Article 14.2, for the period during which such reinsurance was in force, through and including any notice period.

9.6     Rescission

If this Agreement is rescinded pursuant to Article 3.1, the parties agree to cooperate in good faith and use all reasonable efforts to return each party to an economic position that is substantially similar to the economic position it was in immediately prior to the date of this Agreement, after the satisfaction of which this Agreement shall be extinguished and neither party shall have any further liability to the other party hereunder.

9.7     Survival

All provisions of this Agreement will survive any termination of this Agreement to the extent necessary to carry out its purpose.

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Article 10 – ERRORS AND OMISSIONS

Any unintentional or accidental failure to comply with the terms of this Agreement that can be shown to be the result of an oversight or clerical error relating to the administration of reinsurance by either party will not constitute a breach of this Agreement. Upon discovery, the error will be promptly corrected so that both parties are restored to the position they would have occupied had the oversight or clerical error not occurred. In the event a payment is corrected, the party receiving the payment shall be entitled to interest in accordance with Article 14.2. Should it not be possible to restore both parties to this position, the party responsible for the oversight or clerical error will be responsible for any resulting liabilities and expenses.

If Ceding Company has failed to cede reinsurance as provided under this Agreement or has failed to comply with reporting requirements with respect to business ceded hereunder, Reinsurer may require Ceding Company to audit its records for similar errors and take reasonable actions necessary to correct errors and avoid similar errors. Failing prompt correction, Reinsurer may limit its liability to the correctly reported Reinsured Policies.

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Article 11 – DISPUTE RESOLUTION

11.1     Negotiation

Within fifteen (15) calendar days after Reinsurer or Ceding Company has given the other party written notification of a specific dispute arising out of or relating to this Agreement, each party will appoint a designated officer of its company to attempt to resolve such dispute. The officers will meet at a mutually agreeable location as soon as reasonably possible and as often as reasonably necessary in order to gather and furnish the other with all appropriate and relevant information concerning the dispute. The officers will discuss the matter in dispute and will negotiate in good faith without the necessity of formal arbitration proceedings. During the negotiation process, all reasonable requests made by one officer to the other for information will be honored. The specific format for such discussions will be decided by the designated officers.

If the officers cannot resolve the dispute within thirty (30) calendar days of their first meeting, the dispute will be submitted to formal arbitration pursuant to Article 11.2, unless the parties agree in writing to extend the negotiation period for an additional thirty (30) calendar days.

11.2     Arbitration

It is the intention of Reinsurer and Ceding Company that the customs and practices of the insurance and reinsurance industry will be given full effect in the operation and interpretation of this Agreement. The parties agree to act in all matters with the utmost good faith. However, if Reinsurer and Ceding Company cannot mutually resolve a dispute that arises out of or relates to this Agreement, including, without limitation, the rights and obligations arising under, formation, interpretation, and/or validity of this Agreement, and the dispute cannot be resolved through the negotiation process, then, the dispute shall be submitted to arbitration in accordance with the provisions of this Article 11.2.

To initiate arbitration, either Ceding Company or Reinsurer will notify the other party by certified mail of its desire to arbitrate, stating the nature of the dispute and the remedy sought. Each party shall select an arbitrator within thirty (30) days of the written request for arbitration. If either party refuses or neglects to appoint an arbitrator withing thirty (30) days of the written request for arbitration, the other party may appoint the second arbitrator. The two arbitrators shall select an umpire within thirty (30) days of the appointment of the second arbitrator. If the two arbitrators fail to agree on the selection of the umpire withing thirty (30) days of the appointment of the second arbitrator, each arbitrator shall submit to the other a list of three umpire candidates, each arbitrator shall select one name from the list submitted by the other and the umpire shall be selected from the two names chosen by a lot drawing procedure to be agreed upon by the arbitrators.

The arbitratrors and umpire shall all be disinterested, ARIAS-certified arbitrators, who are current or former executive officers of a life insurance or life reinsurance company other than the parties to this Agreement, their Affiliates or subsidiaries. The arbitrator shall be familiar with the prevailing customs and practices for reinsurance in the life insurance and life reinsurance industry in the United States.

Each arbitration hearing under this Agreement will be held on the dates set by the umpire in Topeka, Kansas or other mutually agreed upon location. As soon as possible, the arbitrator shall establish arbitration procedures as warranted by the facts and issues of the particular case. Notwithstanding Article 14.19, the arbitration and this Article 11.2 shall be governed by Title 9 (Arbitration) of the United States Code.

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The arbitration panel shall interpret this Agreement as an honorable engagement rather than merely as a legal obligation and shall make its decision considering the terms and conditions of this Agreement and the customs and practices of the insurance and reinsurance industries with a view to effecting the general purpose of the Agreement. The arbitration panel is released from judicial formalities and shall not be bound by strict interpretation of the law.

The decision of a majority of the arbitration panel shall be final and binding on both parties, except to the extent otherwise provided in the Federal Arbitration Act. The arbitration panel shall render its award in writing. Judgment upon the award may be entered in any court having jurisdiction, pursuant to the Federal Arbitration Act.

The parties agree that the federal courts in either party’s state of domicile have jurisdiction to hear any matter relating to compelling arbitration or enforcing the judgment of an arbitral panel, and the parties hereby consent to such jurisdiction. Each party hereby waives, to the fullest extent permitted by law, any objection it may have to such venue, or any claim that a proceeding brought in federal court in either party’s state of domicile has been brought in an inconvenient forum. In addition, Ceding Company and Reinsurer hereby consent to service of process out of such courts at the addresses set forth in Article 14.6.

Unless the arbitration panel decides otherwise, each party will bear the expense of its own arbitration activities, including the fees and expenses of its own arbitrator, and any outside attorney and witness fees. The parties will jointly bear an equal share of the fees and expenses of the umpire and of the other expenses of the arbitration.

11.3     Waiver of Trial by Jury

Reinsurer and Ceding Company hereby waive any and all rights to trial by jury in any matter arising out of or relating to this Agreement.

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Article 12 – INSOLVENCY

A party to this Agreement will be deemed “insolvent” when: (a) a receiver, rehabilitator, conservator, liquidator or statutory successor is appointed; (b) it is adjudicated as bankrupt or insolvent; (c) it files or consents to the filing of a petition in bankruptcy, seeks reorganization or an arrangement with creditors or takes advantage of any bankruptcy, dissolution, liquidation, rehabilitation, conservation or similar law or statute; or (d) it becomes the subject of an order of rehabilitation or an order of liquidation as defined by the insurance code of the jurisdiction of the party’s domicile.

In the event of the insolvency of either party, the rights or remedies of this Agreement will remain in full force and effect.

In the event of the insolvency of Ceding Company, the following three paragraphs shall apply:

The reinsurance provided under this Agreement will be payable by Reinsurer directly to Ceding Company or to its liquidator, receiver, conservator, statutory successor, or other authorized representative on the basis of the reported claims allowed against Ceding Company by any court of competent jurisdiction or by the liquidator, receiver, conservator, statutory successor, or other authorized representative having authority to allow such claims, without diminution because of such insolvency, or because the liquidator, receiver, conservator, statutory successor, or other authorized representative failed to pay all or a portion of any claims. It is agreed, however, that the liquidator, receiver, conservator, statutory successor, or other authorized representative shall give prompt written notice to Reinsurer of the pendency of a claim against Ceding Company within a reasonable time after such claim is filed in the receivership, conservation, insolvency or liquidation proceeding and that during the lendency of such claim, Reinsurer may investigate such Claim and interpose, at its own expense, in the proceedings where the Claim is to be adjudicated, any defense or defenses which it may deem available to Ceding Company or its Authorized Representative. Under no circumstances shall Reinsurer have any obligation to the policy owner of any Reinsured Policy.

Reinsurer will be liable only for benefits reinsured as benefits become due under the terms of the Reinsured Policies and will not be or become liable for any amounts or reserves to be held by Ceding Company as to the Reinsured Policies or for any damages or payments resulting from the termination or restructuring of the Reinsured Policies that are not otherwise expressly covered by this Agreement.

The expense incurred by Reinsurer will be chargeable, subject to court approval, against Ceding Company as part of the expense of its insolvency proceedings to the extent of a proportionate share of the benefit which may accrue to Ceding Company solely as a result of the defense undertaken by Reinsurer. Where two or more reinsurers are involved in the same Claim and a majority in interest elect to interpose a defense to such Claim, the expense will be apportioned in accordance with the terms of this Agreement as though such expense had been incurred by Ceding Company.

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Article 13 – REPRESENTATIONS, WARRANTIES AND COVENANTS

13.1     Representations and Warranties of Ceding Company

Ceding Company hereby represents and warrants to Reinsurer as follows:

(a) Organization and Qualification. Ceding Company is a corporation duly incorporated, validly existing and in good standing under the laws of Ceding Company’s state of domicile and has all requisite corporate power and authority to operate its business as now conducted, and is duly qualified as a foreign corporation to do business, and, to the extent legally applicable, is in good standing, in each jurisdiction where the character of its owned, operated or leased properties or the nature of its activities makes such qualification necessary, except for failures to be so qualified or be in good standing that, individually or in the aggregate, do not have, and would not reasonably be expected to have, a material adverse effect on Ceding Company’s ability to perform its obligations under this Agreement.

(b) Authorization. Ceding Company has all requisite corporate power to enter into, consummate the transactions contemplated by and carry out its obligations under, this Agreement. The execution and delivery by Ceding Company of this Agreement, and the consummation by Ceding Company of the transactions contemplated by, and the performance by Ceding Company of its obligations under, this Agreement have been duly authorized by all requisite corporate action on the part of Ceding Company. This Agreement has been duly executed and delivered by Ceding Company, and (assuming due authorization, execution and delivery by Reinsurer) this Agreement constitutes the legal, valid and binding obligation of Ceding Company, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium, or similar laws relating to or affecting creditors’ rights generally.

(c) No Conflict. The execution, delivery and performance by Ceding Company of, and the consummation by Ceding Company of the transactions contemplated by, this Agreement do not and will not (i) violate or conflict with the organizational documents of Ceding Company, (ii) conflict with or violate any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any governmental authority applicable to Ceding Company or by which it or its properties or assets is bound or subject, or (iii) result in any breach of, or constitute a default (or event which, with the giving of notice or lapse of time, or both, would become a default) under, or give to any Person any rights of termination, acceleration or cancellation of, any agreement, lease, note, bond, loan or credit agreement, mortgage, indenture or other instrument, obligation or contract of any kind to which Ceding Company or any of its subsidiaries is a party or by which Ceding Company or any of its subsidiaries or any of their respective properties or assets is bound or affected, except, in the case of clause (iii), any such conflicts, violations, breaches, loss of contractual benefits, defaults or rights that, individually or in the aggregate, do not have, and would not reasonably be expected to have, a material adverse effect on Ceding Company’s ability to perform its obligations under this Agreement.

(d) Factual Information Relating to the Reinsured Policies. The information relating to the business reinsured under this Agreement that was supplied by or on behalf of Ceding Company to Reinsurer or any of Reinsurer’s representatives in connection with this Agreement (such information, the “Factual Information”), as of the date supplied (or if later corrected or supplemented prior to the date hereof, as of the date corrected or supplemented), was true and correct in all material respects.

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13.2     Covenants of Ceding Company

(a) Investigations. To the extent permitted by applicable law or regulation, Ceding Company will notify Reinsurer within five (5) Business Days after notice thereof, in writing, of any and all investigations of Ceding Company conducted by any federal or state governmental authority commencing after the date hereof, which relates in any way whatsoever to the business reinsured under this Agreement.

(b) Governmental Notices. Ceding Company shall provide Reinsurer, within five (5) Business Days after receipt thereof, copies of any written notice or report from any governmental authority that relates in any way whatsoever to the business reinsured under this Agreement and a written summary of any material oral communication with any governmental authority that relates in any way whatsoever to the business reinsured under this Agreement.

13.3     Representations and Warranties of Reinsurer

Reinsurer hereby represents and warrants to Ceding Company as follows:

(a) Organization and Qualification. Reinsurer is a corporation duly incorporated, validly existing and in good standing under the laws of Reinsurer’s state of domicile and has all requisite corporate power and authority to operate its business as now conducted, and is duly qualified as a foreign corporation to do business, and, to the extent legally applicable, is in good standing, in each jurisdiction where the character of its owned, operated or leased properties or the nature of its activities makes such qualification necessary, except for failures to be so qualified or be in good standing that, individually or in the aggregate, do not have, and would not reasonably be expected to have, a material adverse effect on Reinsurer’s ability to perform its obligations under this Agreement.

(b) Authorization. Reinsurer has all requisite corporate power to enter into, consummate the transactions contemplated by and carry out its obligations under, this Agreement. The execution and delivery by Reinsurer of this Agreement, and the consummation by Reinsurer of the transactions contemplated by, and the performance by Reinsurer of its obligations under, this Agreement have been duly authorized by all requisite corporate action on the part of Reinsurer. This Agreement has been duly executed and delivered by Reinsurer, and (assuming due authorization, execution and delivery by Ceding Company) this Agreement constitutes the legal, valid and binding obligation of Reinsurer, enforceable against it in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium, or similar laws relating to or affecting creditors’ rights generally.

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(c) No Conflict. The execution, delivery and performance by Reinsurer of, and the consummation by Reinsurer of the transactions contemplated by, this Agreement do not and will not (i) violate or conflict with the organizational documents of Reinsurer, (ii) conflict with or violate any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any governmental authority applicable to Reinsurer or by which it or its properties or assets is bound or subject, or (iii) result in any breach of, or constitute a default (or event which, with the giving of notice or lapse of time, or both, would become a default) under, or give to any Person any rights of termination, acceleration or cancellation of, any agreement, lease, note, bond, loan or credit agreement, mortgage, indenture or other instrument, obligation or contract of any kind to which Reinsurer or any of its subsidiaries is a party or by which Reinsurer or any of its subsidiaries or any of their respective properties or assets is bound or affected, except, in the case of clause (iii), any such conflicts, violations, breaches, loss of contractual benefits, defaults or rights that, individually or in the aggregate, do not have, and would not reasonably be expected to have, a material adverse effect on Reinsurer’s ability to perform its obligations under this Agreement.

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Article 14 – MISCELLANEOUS

14.1     Currency

All payments due under this Agreement will be made in U.S. Dollars.

14.2     Interest

All amounts due and payable by Ceding Company or Reinsurer under this Agreement that remain unpaid for more than fifteen (15) calendar days from the date due hereunder will incur interest from the date due hereunder. Except as otherwise set forth in this Agreement, such interest shall accrue at a rate equal to the greater of six percent (6%) or 300 basis points over LIBOR, calculated on a 30/360 basis.

14.3     Right of Setoff and Recoupment

Each of Ceding Company and Reinsurer shall have, and may exercise at any time and from time to time, the right to setoff or recoup any undisputed balance or balances, whether on account of Reinsurance Premiums, allowances, credits, Claims or otherwise, due from one party to the other under this Agreement and may setoff or recoup such balance or balances against any balance or balances due to the former from the latter under this Agreement.

The rights provided under this Article 14.3 are in addition to any rights of setoff that may exist at common law. The parties’ setoff rights may be enforced notwithstanding any other provision of this Agreement including, without limitation, the provisions of Article 12.

14.4     No Third Party Beneficiaries

This Agreement is an indemnity reinsurance agreement solely between Ceding Company and Reinsurer. The acceptance of risks under this Agreement by Reinsurer will create no right or legal relation between Reinsurer and the insured, owner, beneficiary, or assignee of any insurance policy of Ceding Company. In addition, nothing in this Agreement is intended to relieve or discharge the obligation or liability of any third party to any party to this Agreement.

14.5     Amendment

This Agreement may not be changed or modified or in any way amended except by a written instrument duly executed by the proper officers of both parties to this Agreement and any change or modification to this Agreement will be null and void unless made by amendment to this Agreement and duly executed by the proper officers of both parties to this Agreement.

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14.6     Notices

All demands, notices, reports and other communications provided for herein shall be delivered by the following means: (i) hand delivery, (ii) overnight courier service (e.g., FedEx, Airborne Express, or DHL); (iii) registered or certified U.S. mail, postage prepaid and return receipt requested; or (iv) facsimile transmission or e-mail provided that the fax or e-mail is confirmed by delivery using one of the three methods identified in clauses (i) through (iii). All such demands, notices, reports and other communications shall be delivered to the parties as follows:

if to Ceding Company:

American Life & Security Corporation

2900 South 70th Street, Suite 400

Lincoln, NE 68506

Attention: Mark A. Oliver, Chairman and CEO

Phone: 402-489-8266

Email: _______________________________

with a copy to:

_____________________________________

_____________________________________

_____________________________________

Attention: ____________________________

Phone: _______________________________

Email: _______________________________

if to Reinsurer:

US Alliance Life and Security Company

4123 SW Gage Center Drive, Suite 240

Topeka, KS 66604

Attention: Jack H. Brier, Chairman and CEO

Phone: 785-228-0200

Email: _______________________________

with a copy to:

_____________________________________

_____________________________________

_____________________________________

Attention: ____________________________

Phone: _______________________________

Email: _______________________________

Either party hereto may change the names or addresses where notice is to be given by providing notice to the other party of such change in accordance with this Article 14.6.

If either party hereto becomes aware of any change in applicable law restricting the transmission of notices or other information in accordance with the foregoing, such party shall notify the other party hereto of such change in law and such resulting restriction.

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14.7     Consent to Jurisdiction

Subject to the terms and conditions of Article 11, Reinsurer (a) submits to the jurisdiction of any court of competent jurisdiction in the State of Nebraska for the adjudication of any issues arising out of this Agreement, (b) agrees to comply with all requirements necessary to give such court jurisdiction, and (c) will abide by the final decision of such court or of any appellate court in the event of an appeal. This

Article 14.7 is not intended to conflict with or override Article 11.

14.8     Service of Process

Reinsurer hereby designates the Insurance Commissioner of the State of Nebraska as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of Ceding Company. A copy of any such process shall be delivered to Reinsurer in accordance

with Article 14.6. This Article 14.8 is not intended to conflict with or override Article 7.

14.9     Inspection of Records

Provided that the requesting party is current on all amounts owing to the other party (other than amounts that are being disputed in accordance with the terms and conditions of this Agreement), upon giving at least five (5) Business Days’ prior written notice, the requesting party, or its duly authorized representatives, will have the right to audit, examine and copy, during regular business hours, at the home office of the other party, any and all books, records, statements, correspondence, reports, and other documents that relate to the Reinsured Policies or this Agreement, subject to the confidentiality provisions contained in this Agreement. In the event the requesting party exercises its inspection rights, the other party must provide a reasonable work space for such audit, examination or copying, cooperate fully and faithfully, and produce any and all materials reasonably requested to be produced, subject to confidentiality provisions contained in this Agreement. The administrative expenses, including expenses relating to copying, phone, fax and providing work space to the requesting party shall be borne by the requesting party; provided that if any material breach of this Agreement by the other party has occurred, the expenses relating to all such inspections shall be borne by the non-breaching party.

The requesting party’s right of access as specified above will survive until all of the requesting party’s obligations under this Agreement have terminated or been fully discharged.

14.10     Confidentiality

The parties agree to keep confidential and not disclose or make competitive use of any shared Proprietary Information, unless: (a) the information becomes publicly available or is obtained other than through unauthorized disclosure by the party seeking to disclose or use such information; (b) the information is independently developed by the recipient; (c) the disclosure is required by law, provided that, if applicable, the party required to make such disclosure will allow the other party to seek an appropriate protective order.

In addition, Reinsurer agrees to protect the confidentiality and security of Non-Public Personal Information by: (a) holding all Non-Public Personal Information in strict confidence; (b) maintaining appropriate measures that are designed to protect the security, integrity and confidentiality of Non-Public Personal Information; and (c) disclosing and using Non-Public Personal Information received under this Agreement for purposes of carrying out Reinsurer’s obligations under this Agreement, for purposes of retrocession, or as may be required or permitted by law.

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14.11     Indemnification

Reinsurer shall indemnify Ceding Company against the Reinsured Liabilities strictly in accordance with the terms and conditions set forth in this Agreement.

14.12     Reinsurance Brokers

The parties acknowledge that no broker or finder has acted directly or indirectly for Ceding Company or Reinsurer, nor has Ceding Company or Reinsurer incurred any obligation to pay any brokerage or finder’s fee or other commission, in connection with this Agreement and the transactions contemplated hereby.

14.13     Successors

This Agreement will be binding upon the parties hereto and their respective successors and assigns including any Authorized Representative of either party. Neither party may effect any novation of this Agreement without the other party’s prior written consent.

14.14     Entire Agreement

This Agreement and the Schedules and Exhibits hereto constitute the entire agreement between the parties with respect to the Reinsured Policies hereunder and supersede any and all prior representations, warranties, prior agreements or understandings between the parties pertaining to the subject matter of this Agreement. There are no understandings between the parties other than as expressed in this Agreement and the Schedules and Exhibits hereto. In the event of any express conflict between this Agreement and the Schedules and Exhibits hereto, the Schedules and Exhibits hereto will control.

14.15     Severability

Determination that any provision of this Agreement is invalid or unenforceable will not affect or impair the validity or the enforceability of the remaining provisions of this Agreement.

14.16     Construction

This Agreement will be construed and administered without regard to authorship and without any presumption or rule of construction in favor of either party. This Agreement is between sophisticated parties, each of which has reviewed this Agreement and is fully knowledgeable about its terms and conditions.

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14.17     Non-Waiver

Neither the failure nor any delay on the part of Ceding Company or Reinsurer to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof. No single or partial exercise of any right, remedy, power or privilege shall preclude the further exercise of that right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. No waiver of any right, remedy, power or privilege with respect to any occurrence shall be construed as a waiver of that right, remedy, power or privilege with respect to any other occurrence. No prior transaction or dealing between the parties will establish any custom, sage or precedent waiving or modifying any provision of this Agreement. No waiver shall be effective unless it is in writing and signed by the party granting the waiver.

14.18     Further Assurances

From time to time, as and when requested by a party hereto, the other party hereto shall execute and deliver all such documents and instruments and shall take all actions as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

14.19     Governing Law

Subject to Article 11.2, this Agreement will be governed by and construed in accordance with the laws of the State of Nebraska without giving effect to any principles of conflicts of law thereof that are not mandatorily applicable by law and would permit or require the application of the laws of another jurisdiction.

14.20     Counterparts

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. When this Agreement has been fully executed by Ceding Company and Reinsurer, it will become effective as of the Effective Date.

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The parties hereto have caused this Agreement to be executed effective as of the Effective Date.

American Life & Security Corporation	US Alliance Life and Security Company
By: /s/ Mark A. Oliver	By: /s/ Jack H. Brier
(signature)	(signature)
Mark A. Oliver	Jack H. Brier
(print or type name)	(print or type name)
Title: CEO	Title: President
Date: 9-29-17	Date: 9-29-17
Location: Lincoln, NE	Location: Topeka, Kansas
Attest: /s/ Todd C. Boeve	Attest: /s/ Jeff Brown
(signature)	(signature)
Title: VP & COO	Title: EVP & COO

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Schedule A – Policies Reinsured

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Exhibit A – Monthly Accounting Report

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jack H. Brier, certify that:

1. I have reviewed this quarterly report on Form 10-Q of US Alliance Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jack H. Brier

Jack H. Brier

President and Chief Executive Officer

Date: November ____, 2017

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeff Brown, certify that:

1. I have reviewed this quarterly report on Form 10-Q of US Alliance Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jeff Brown

Jeff Brown

Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation

Date:  November ____, 2017

EX-32.1

Exhibit 32.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Alliance Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack H. Brier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jack H. Brier

Jack H. Brier

President and Chief Executive Officer

Date: November _______, 2017

EX-32.2

Exhibit 32.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Alliance Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeff Brown, Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeff Brown

Jeff Brown

Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation

Date: November _______, 2017

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document Information [Line Items]
Entity Registrant Name	US Alliance Corp
Entity Central Index Key	0001463913
Trading Symbol	usac
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,302,192
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false

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Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Assets
Available for sale securities	$ 22,819,321	$ 15,463,578
Cash and cash equivalents	11,015,077	3,145,745
Investment income due and accrued	124,745	100,713
Policy loans	33,376
Reinsurance related assets	315,702	31,390
Deferred acquisition costs, net	3,083,154	153,792
Value of business acquired, net	605,677
Property, equipment and software, net	229,939	244,849
Goodwill	277,542
Other assets	241,517	51,922
Total assets	38,746,050	19,191,989
Liabilities:
Deposit-type contracts	12,749,556	3,398,170
Policyholder benefit reserves	10,216,596	4,220,215
Advance premiums	836,805	121,944
Total policy liabilities	23,802,957	7,740,329
Accounts payable and accrued expenses	75,399	66,472
Other liabilities	551,485	4,205
Total liabilities	24,429,841	7,811,006
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,296,351 and 5,565,943 shares as of September 30, 2017 and December 31, 2016, respectively	729,636	556,595
Additional paid-in capital	21,319,758	18,017,163
Accumulated deficit	(8,025,339)	(7,432,236)
Accumulated other comprehensive income	292,154	239,461
Total shareholders' equity	14,316,209	11,380,983
Total liabilities and shareholders' equity	38,746,050	19,191,989
Fixed Maturities [Member]
Assets
Available for sale securities	15,153,824	10,320,074
Equities, Including Equity Securities and Other Equity Investments [Member]
Assets
Available for sale securities	$ 7,665,497	$ 5,143,504

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Available for sale securities, amortized cost	$ 22,527,145	$ 15,224,117
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	7,296,351	5,565,943
Common stock, shares outstanding (in shares)	7,296,351	5,565,943
Fixed Maturities [Member]
Available for sale securities, amortized cost	$ 14,911,919	$ 10,318,164
Equities, Including Equity Securities and Other Equity Investments [Member]
Available for sale securities, amortized cost	$ 7,615,226	$ 4,905,953

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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income:
Premium income	$ 5,169,638	$ 1,490,255	$ 8,902,208	$ 4,721,091
Net investment income	189,028	116,780	485,147	320,491
Net realized gain on sale of securities	226,890	29,889	435,392	40,653
Other income	1,201	21,878	40,656	57,468
Total income	5,586,757	1,658,802	9,863,403	5,139,703
Expenses:
Death claims	152,234	119,700	624,864	355,151
Policyholder benefits	479,965	715,171	2,609,324	2,520,956
Increase in policyholder reserves	4,357,257	556,685	5,205,124	1,473,287
Commissions, net of deferrals	97,151	88,952	362,585	315,550
Amortization of deferred acquisition costs	52,484	39,441	136,709	128,540
Value of business acquired amortized	3,384		3,384
Salaries & benefits	244,143	171,226	627,286	564,410
Other operating expenses	278,795	321,925	887,230	902,598
Total expense	5,665,413	2,013,100	10,456,506	6,260,492
Net loss	$ (78,656)	$ (354,298)	$ (593,103)	$ (1,120,789)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.01)	$ (0.06)	$ (0.10)	$ (0.21)
Unrealized net holding gains arising during the period	$ 19,839	$ 168,793	$ 488,085	$ 855,203
Reclassification adjustment for (gains) losses included in net loss	(226,890)	(29,889)	(435,392)	(40,653)
Other comprehensive income (loss)	(207,051)	138,904	52,693	814,550
Comprehensive loss	$ (285,707)	$ (215,394)	$ (540,410)	$ (306,239)

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Warrant [Member]	Common Stock Subscribed [Member]	Subscription Receivable [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2015	5,177,245
Balance at Dec. 31, 2015	$ 517,725	$ 17,018,285	$ 15,876	$ 13,799	$ (827,952)	$ (100,477)	$ (6,146,463)	$ 10,490,793
Common stock issued upon exercise of warrants, $6.00 per share (in shares)	372,003
Common stock issued upon exercise of warrants, $6.00 per share	$ 37,200	2,210,694	(15,876)					2,232,018
Common stock issued, $7 per share (in shares)	4,886
Common stock issued, $7 per share	$ 489	33,713						34,202
Costs associated with common stock issued		(482,385)						(482,385)
Common stock subscribed		(814,153)		(13,799)	827,952
Other comprehensive income						814,550		814,550
Net loss							(1,120,789)	(1,120,789)
Balance (in shares) at Sep. 30, 2016	5,554,134
Balance at Sep. 30, 2016	$ 555,414	17,966,154				714,073	(7,267,252)	11,968,389
Balance (in shares) at Dec. 31, 2015	5,177,245
Balance at Dec. 31, 2015	$ 517,725	17,018,285	15,876	13,799	(827,952)	(100,477)	(6,146,463)	$ 10,490,793
Common stock issued upon exercise of warrants, $6.00 per share (in shares)								372,003
Balance (in shares) at Dec. 31, 2016	5,565,943
Balance at Dec. 31, 2016	$ 556,595	18,017,163				239,461	(7,432,236)	$ 11,380,983
Common stock issued, $7 per share (in shares)	85,950
Common stock issued, $7 per share	$ 8,595	593,055						601,650
Costs associated with common stock issued		(223,394)						(223,394)
Other comprehensive income						52,693		52,693
Net loss							(593,103)	(593,103)
Common stock issued, Northern Plains Capital Corporation merger (in shares)	1,644,458
Common stock issued, Northern Plains Capital Corporation merger	$ 164,446	2,932,934						3,097,380
Balance (in shares) at Sep. 30, 2017	7,296,351
Balance at Sep. 30, 2017	$ 729,636	$ 21,319,758				$ 292,154	$ (8,025,339)	$ 14,316,209

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2017	Sep. 30, 2016
Warrant [Member]
Warrants, exercise price per share (in dollars per share)		$ 6
Common Stock [Member]
Common stock, price per share (in dollars per share)		$ 7
Common stock, price per share (in dollars per share)	$ 7

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities:
Net loss	$ (593,103)	$ (1,120,789)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,031	29,074
Net realized (gains) on the sale of securities	(435,392)	(40,653)
Amortization of investment securities, net	27,429	12,406
Deferred acquisition costs capitalized	(204,620)	(182,537)
Deferred acquisition costs amortized	136,709	128,540
Value of business acquired amortized	3,384
Interest credited on deposit type contracts	110,097	49,395
(Increase) decrease in operating assets:
Investment income due and accrued	9,315	3,097
Reinsurance related assets	(8,294)	(51,893)
Other assets	(132,357)	91,353
Increase (decrease) in operating liabilities:
Policyowner benefit reserves	1,284,750	1,497,064
Advance premiums	92,016	41,297
Other liabilities	3,600	73,434
Accounts payable and accrued expenses	(32,519)	(16,609)
Net cash provided by operating activities	287,046	513,179
Cash Flows from Investing Activities:
Purchase of fixed income investments	(4,629,966)	(2,624,560)
Purchase of equity investments	(4,669,164)	(1,210,646)
Proceeds from fixed income sales and repayments	3,081,710	573,590
Proceeds from equity sales and repayments	4,439,235	190,583
Acquisition of Northern Plains Capital Corporation	1,079,627
Assumed reinsurance from American Life & Security Corporation	6,895,145
Purchase of property, equipment and software	(11,121)
Net cash provided by (used in) investing activities	6,185,466	(3,071,033)
Cash Flows from Financing Activities:
Receipts on deposit-type contracts	1,368,680	1,485,628
Withdrawals on deposit-type contracts	(350,116)	(170,906)
Proceeds received from issuance of common stock, net of costs of issuance	378,256	1,783,835
Net cash provided by financing activities	1,396,820	3,098,557
Net increase in cash and cash equivalents	7,869,332	540,703
Cash and Cash Equivalents:
Beginning	3,145,745	2,466,526
Ending	11,015,077	3,007,229
Supplemental Disclosure of Non-Cash Information
Common stock issued on the acquisition of Northern Plains	3,097,380
Cost of reinsurance deferred on coinsurance transaction with American Life & Security Corp	$ 2,861,450

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Note 1 - Description of Business and Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

Note

1.

     Description of Business and Significant Accounting Policies

Description of business

: US Alliance Corporation ("USAlliance" or “the Company”) is a Kansas corporation located in Topeka, Kansas. The Company was incorporated

April 24, 2009,

as a holding company to form, own, operate and manage a life insurance company and its marketing and investment affiliates. On

June 9, 2011,

the wholly owned subsidiary, US Alliance Life and Security Company (“USALSC”) was incorporated. USALSC received its Certificate of Authority from the Kansas Insurance Department (KID) effective

January 2, 2012.

On

April 23, 2012,

US Alliance Investment Corporation (“USAIC”) and US Alliance Marketing Corporation (“USAMC”) were incorporated as wholly-owned subsidiaries of the Company to provide investment management and marketing services. On

August 1, 2017,

the Company, through its wholly owned subsidiary, merged with Northern Plains Capital Corporation (“Northern Plains”) with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired Dakota Capital Life Insurance Company (“DCLIC”) which became a wholly owned subsidiary of US Alliance Life and Security Company.

The Company terminated

its initial public offering on

February 24, 2013.

During the balance of

2013,

the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its

first

insurance product on

May 1, 2013.

The Company continued to expand its product offerings and distribution channels throughout

2014

and

2015.

On

February 24, 2015,

the Company commenced a warrant exercise offering set to expire on

February 24, 2016.

On

February 24, 2016,

the Company extended its current offering until

February 24, 2017

and made additional shares available for purchase. All outstanding warrants expired on

April 1, 2016.

The Company further extended this offering to

February 24, 2018.

The Company began offering

third

party administrative (“TPA”) services in

2015.

TPA agreements generate service fee income for the Company. The Company currently has

one

TPA agreement in place. The Company has been able to perform its TPA services using existing resources.

Basis of presentation

: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operation for the

three

and

nine

months ended

September 30, 2017

are

not

necessarily indicative of the results to be expected for the year ended

December 31, 2017

or for any other interim period or for any other future year. Certain financial information which is normally included in notes to financial statements prepared in accordance with US GAAP, but which are

not

required for interim reporting purposes, has been condensed or omitted. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s report on Form

10

-K and amendments thereto for the year ended

December 31, 2016.

Principles of consolidation

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

Reclassifications:

Certain reclassifications of a minor nature have been made to prior-period balances to conform to current-period presentation with

no

net impact to net loss/income or equity.

Area of Operation

: USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Oklahoma and Nebraska. DCLIC is authorized to operate in the state of North Dakota.

Common stock and earnings (loss) per share:

The par value for common stock is

$0.10

per share with

20,000,000

shares authorized. As of

September 30, 2017,

and

December 31, 2016,

the company had

7,296,351

and

5,565,943

common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company

’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended

September 30, 2017

and

2016

were

6,181,492

and

5,552,227

shares, respectively. The weighted average number of shares outstanding during the

nine

months ended

September 30, 2017

and

2016

were

5,698,514

and

5,395,456

shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters and

nine

months ended

September 30, 2017

and

2016

because all warrants for common shares are anti-dilutive.

New accounting standards

Revenue from Contracts with Customers

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are

not

within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.

The following steps are applied in the updated guidance: (

1

)

 identify the contract(s) with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to the performance obligations in the contract and (

5

) recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March 

31,

2018.

  The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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

In

August 2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is

not

alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December

 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did

not

have a material effect on the Company's results of operations, financial position or liquidity.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January 2016,

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

This guidance is effective for fiscal years beginning after

December 15, 2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is

not

permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss).

The effect of the adoption of this guidance on the Company

’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods and the existence of a deferred tax asset related to available-for-sale securities in future periods that have

not

yet been fully assessed.

Leases

In

February

 

2016,

the FASB issued updated guidance to require lessees to recognize a right-to-use asset and a lease liability for leases with terms of more than

12

months.  The updated guidance retains the

two

classifications of a lease as either an operating or finance lease (previously referred to as a capital lease).  Both lease classifications require the lessee to record the right-to-use asset and the lease liability based upon the present value of cash flows.  Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-to-use asset.  Operating leases will recognize lease expense (with

no

separate recognition of interest expense) on a straight-line basis over the term of the lease.   The accounting by lessors is

not

significantly changed by the updated guidance.  The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the financial statements.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2018,

and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied.  Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate the repayment of principal on the debt instrument, a reporting entity does

not

need to assess whether the contingent event that triggers the ability to exercise the call (put) option is related to interest rates or credit risk in determining whether the option should be accounted for separately.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016.

  Early adoption is permitted.  The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

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

 

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value.  In addition, the length of time a security has been in an unrealized loss position will

no

longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

  Early adoption is permitted for reporting periods beginning after

December 

15,

2018.

  The Company will

not

be able to determine the impact that the updated guidance will have on its results of operations, financial position or liquidity until the updated guidance is adopted.

Classification of Certain C

ash

R

eceipts and

Cash P

ayment

In

Aug

ust

2016,

the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under

eight

different scenarios including, but

not

limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its statement of cash flows.

All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did

not

relate to accounting policies and procedures pertinent or material to the Company at this time.

XML

Note 2 - Acquisitions

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note

2.

     Acquisitions

On

August 1, 2017

the Company acquired Northern Plains pursuant to a Plan and Agreement of Merger dated

May 23, 2017 (

the "Merger Agreement") under which Alliance Merger Sub, Inc. (“Acquisition”), a wholly owned subsidiary of the Company, merged with and into Northern Plains

(“Merger”) with Acquisition being the surviving company. Pursuant to the Merger Agreement, the Company exchanged

.5841

shares of the Company’s common stock for each share of Northern Plains common stock, or approximately

1,644,458

shares, as consideration for the Merger. Subsequent to the Merger, Acquisition was merged into the Company and the Company contributed its interest in DCLIC to USALSC.

The

Merger was accounted for under the acquisition method of accounting, which requires the consideration transferred and all assets and liabilities assumed to be recorded at fair value. The table on the following page summarizes the preliminary fair value of the consideration transferred and the preliminary fair value of Northern Plains’ assets acquired and liabilities assumed:

Fair value of US Alliance common stock issued as consideration	$	3,099,165
Preliminary amounts of indentifiable assets acquired and liablities assumed
Investment securities	$	4,623,449
Cash		1,079,627
VOBA		609,061
Other assets		60,080
Policyholder reserves		(1,277,411	)
Deposit type contracts		(2,029,138	)
Other liabilities		(243,608	)
Total indentifiable net assets	$	2,822,060
Goodwill		277,105
Total	$	3,099,165

The fair value of the

US Alliance  common stock issued as consideration and the assets acquired and liabilities assumed from our Merger with  Northern Plains was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary areas that are

not

yet finalized are related to the fair value of US Alliance common stock issued and the fair value of value of business acquired ("VOBA"). Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements

.

VOBA

is being amortized on a straight-line basis over

30

years which approximates the earnings pattern of the related policies.

The following table presents unaudited pro forma consolidated total income and net loss as if the Merger had occurred as of

January 1,

201

6

(the earliest date presented).

	Nine Months Ended September 30,
	2017			2016
	(unaudited)
Income:
Premium income	$	9,322,648		$	5,231,372
Net investment income		544,477			396,697
Net realized gain (loss) on sale of securities		483,130			16,031
Other income		11,594			6,987
Total income		10,361,849			5,651,087
Net Loss	$	(745,970	)	$	(1,508,555	)
Net Loss per share	$	(0.10	)	$	(0.21	)

The unaudited pro forma total income and net loss above was adjusted to eliminate the TPA fees paid by

Northern Plains to the Company of

$31,250

and

$50,781

for the

nine

months ended

September 30, 2017

and

2016,

respectively; and eliminate the loss of

$201,577

for acquisition related expenses that Northern Plains recorded for the

nine

months ended

September 30, 

2017

and also includes adjustments for the amortization of VOBA and elimination of DAC amortization for the

nine

months ending

September 30, 2017

and

2016

of 

$78,379

and

$21,498,

respectively.

XML

Note 3 - Investments

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Investment [Text Block]

Note

3

.     Investments

The amortized cost and fair value of available for sale and held to maturity investments as of

September 30, 2017

and

December

31,

2016

is as follows:

	September 30, 2017
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(Unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	269,529	$	-	$	(29,054	)	$	240,475
Government agency bonds		299,842		-		(539	)		299,303
Corporate bonds		6,119,784		140,246		(25,617	)		6,234,413
Municipal bonds		5,570,008		152,099		(19,519	)		5,702,588
Redeemable preferred stock		99,560		480		-			100,040
Mortgage backed and asset backed securities		2,553,196		38,963		(15,154	)		2,577,005
Total fixed maturities		14,911,919		331,788		(89,883	)		15,153,824
Equities:
Equities		7,615,226		114,845		(64,574	)		7,665,497
Total available for sale	$	22,527,145	$	446,633	$	(154,457	)	$	22,819,321

	December 31, 2016
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	314,992	$	-	$	(15,830	)	$	299,162
Corporate bonds		3,828,418		62,712		(45,234	)		3,845,896
Municipal bonds		2,841,137		46,883		(38,191	)		2,849,829
Mortgage backed and asset backed securities		3,333,617		36,870		(45,300	)		3,325,187
Total fixed maturities		10,318,164		146,465		(144,555	)		10,320,074
Equities:
Equities		4,723,024		350,981		(131,757	)		4,942,248
Other equity investments		182,929		23,046		(4,719	)		201,256
Total equities		4,905,953		374,027		(136,476	)		5,143,504
Total available for sale	$	15,224,117	$	520,492	$	(281,031	)	$	15,463,578

The amortized cost and fair value of debt securities as of

September 30, 2017,

by contractual maturity, are shown in the following table. Equity securities do

not

have stated maturity dates and therefore are

not

included in the following maturity summary. Actual maturities

may

differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized
September 30, 2017	Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	200,568	$	200,473
After one year through five years		1,932,156		1,933,444
After five years through ten years		2,490,661		2,517,547
More than 10 years		7,635,778		7,825,315
Redeemable preferred stocks		99,560		100,040
Mortgage backed and asset backed securities		2,553,196		2,577,005
Total fixed maturities	$	14,911,919	$	15,153,824

Proceeds from the sale of securities, maturities, and asset paydowns for the

first

nine

months of

2017

and

2016

were

$7,520,945

and

$764,173,

respectively. Realized gains and losses related to the sale of securities are summarized as follows:

	Nine Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	486,523		$	42,719
Gross losses		(51,131	)		(2,066	)
Net security gains	$	435,392		$	40,653

Proceeds from the sale of securities, maturities, and asset paydowns for the

three

months ended

September 30, 2017

and

2016

were

$4,688,796

and

$204,422,

respectively. Realized gains and losses related to the sale of securities for the

three

months ended

September 30, 2017

and

2016

are summarized as follows:

	Three Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	259,061		$	29,889
Gross losses		(32,171	)		-
Net security gains	$	226,890		$	29,889

Gross unrealized losses by duration are summarized as follows:

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
September 30, 2017
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	(29,054	)	$	-	$	-		$	240,475	$	(29,054	)
Government agency bonds		299,303		(539	)		-		-			299,303		(539	)
Corporate bonds		1,734,089		(14,488	)		798,161		(11,129	)		2,532,250		(25,617	)
Municipal bonds		1,571,608		(18,464	)		98,945		(1,055	)		1,670,553		(19,519	)
Mortgage backed and asset backed securities		995,261		(13,137	)		92,315		(2,017	)		1,087,576		(15,154	)
Total fixed maturities		4,840,736		(75,682	)		989,421		(14,201	)		5,830,157		(89,883	)
Equities:
Equities		1,283,438		(4,999	)		1,179,505		(59,575	)		2,462,943		(64,574	)
Total available for sale	$	6,124,174	$	(80,681	)	$	2,168,926	$	(73,776	)	$	8,293,100	$	(154,457	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2016
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	(15,830	)	$	-	$	-		$	299,162	$	(15,830	)
Corporate bonds		1,897,000		(42,994	)		196,399		(2,240	)		2,093,399		(45,234	)
Municipal bonds		1,296,688		(38,191	)		-		-			1,296,688		(38,191	)
Mortgage backed and asset backed securities		1,700,173		(39,264	)		134,090		(6,036	)		1,834,263		(45,300	)
Total fixed maturities		5,193,023		(136,279	)		330,489		(8,276	)		5,523,512		(144,555	)
Equities:
Equities		1,007,860		(59,357	)		1,063,959		(72,400	)		2,071,819		(131,757	)
Other equity investments		52,840		(4,719	)		-		-			52,840		(4,719	)
Total equities		1,060,700		(64,076	)		1,063,959		(72,400	)		2,124,659		(136,476	)
Total available for sale	$	6,253,723	$	(200,355	)	$	1,394,448	$	(80,676	)	$	7,648,170	$	(281,031	)

Unrealized losses occur from market price declines that

may

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

The total number of securities in the investment portfolio in an unrealized loss position as of

September 

30,

2017

was

71,

which represented an unrealized loss of

$154,457

of the aggregate carrying value of those securities. The

71

securities breakdown as follows:

51

bonds,

14

mortgage and asset backed securities,

1

common stock,

2

high yield corporate bond funds,

2

preferred stock index funds, and

1

senior loan fund. The Company determined that

no

securities were considered to be other-than-temporarily impaired as of

September 30, 2017

and

December 31, 2016.

The unrealized gains on the remainder of the available for sale portfolio as of

September 30, 2017

were

$446,663.

 

XML

Note 4 - Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

4

.

     

Fair Value Measurements

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

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

● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The Company’s Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.  This category generally includes U.S. Government and agency mortgage-backed debt securities and corporate debt securities.

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

Investments, available for sale

: Investments in securities that are classified as available for sale are recorded at fair value utilizing Level

1

and Level

2

measurements.

The

following table presents the amounts of assets measured at fair value on a recurring basis as of

September 30, 2017

and

December 31, 2016:

	September 30, 2017
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	240,475	$	-	$	-
Government agency bonds		299,303		-		299,303		-
Corporate bonds		6,234,413		-		6,234,413		-
Municipal bonds		5,702,588		-		5,702,588		-
Redeemable preferred stock		100,040		-		100,040		-
Mortgage backed and asset backed securities		2,577,005		-		2,577,005		-
Total fixed maturities		15,153,824		240,475		14,913,349		-
Equities:
Equities		7,665,497		7,665,497		-		-
Total	$	22,819,321	$	7,905,972	$	14,913,349	$	-

	December 31, 2016
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	299,162	$	-	$	-
Corporate bonds		3,845,896		-		3,845,896		-
Municipal bonds		2,849,829		-		2,849,829		-
Mortgage backed and asset backed securities		3,325,187		-		3,325,187		-
Total fixed maturities		10,320,074		299,162		10,020,912		-
Equities:
Equities		4,942,248		4,942,248		-		-
Other equity investments		201,256		201,256		-		-
Total equities		5,143,504		5,143,504		-		-
Total	$	15,463,578	$	5,442,666	$	10,020,912	$	-

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are

not

measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The estimated fair value approximates carrying value for accrued interest. The methodologies for other financial assets and financial liabilities are discussed below:

Cash and cash equivalents

, investment income due and accrued, and policy loans

: The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents are included in Level

1

of the fair value hierarchy due to their highly liquid nature.

Policyholder deposits in deposit-type contracts

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

and the nonperformance risk of the liabilities.

The estimated fair values of the Company

’s financial assets and liabilities at

September 30, 2017

and

December 31, 2016

are as follows:

	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(unaudited)
Financial Assets:
Cash and cash equivalents	$	11,015,077	$	11,015,077	$	3,145,745	$	3,145,745
Investment income due and accrued		124,745		124,745		100,713		100,713
Policy loans		33,376		33,376		-		-
Investments, at fair value		22,819,321		22,819,321		15,463,578		15,463,578
Total Financial Assets	$	33,992,519	$	33,992,519	$	18,710,036	$	18,710,036
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086
Total Financial Liabilities	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086

XML

Note 5 - Income Tax Provision

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

5

.     Income Tax Provision

No

income tax expense or (benefit) has been reflected for the quarters ended

September 30, 2017

and

2016

due to the lack of taxable net income generated by the Company and the

100%

valuation allowance pertaining to the deferred tax asset. The difference between the reported amount of income tax expense and the amount expected based upon statutory rates is primarily due to the increase in the valuation allowance on deferred taxes.

The net operating loss carryforwards for the Company are

$6,500,000

and

$5,050,176

as of

September 30, 2017

and

December 31, 2016,

respectively. The

September 30, 2017

net operating loss carryforward is estimated as the impact of the Merger with Northern Plains has

not

been finalized.  The components of the deferred tax assets and liabilities due to book and tax differences are the following: fixed asset depreciation, net operating loss carryforward, net unrealized gains (losses) on investment securities, policyowner benefit reserves and deferred acquisition costs. The net deferred tax asset is offset

100

percent by the valuation allowance.

XML

Note 6 - Warrants

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

6

.

     

Warrants

The Company conducted its public stock offering through the sale of units. Each unit was sold for

$1,000

and consisted of

200

shares of common stock and a warrant to purchase an additional

200

shares of common stock at

$6.00

per share. The warrants were originally scheduled to expire, if

not

exercised, on 

February 24, 2016.

The board of directors of the Company extended the warrant expiration date to

April 1, 2016.

As of

December 31, 2014

warrant-holders had the right to purchase

2,532,400

shares of common stock. On

February 24, 2015,

the Company registered a warrant exercise offering with the Kansas Securities Commissioner. During

2015,

warrant-holders exercised warrants for the purchase of

944,845

shares of common stock. As of

December 31, 2015

warrant-holders had the right to purchase

1,587,555

shares of common stock. During

2016,

warrant-holders exercised their rights to purchase an additional

372,003

shares of common stock.

Management engaged the services of an experienced valuation firm to value the warrants as of

February 24, 2013.

The valuation performed valued the warrants to be worth

$0.01

per share of common stock and management has allocated this amount from additional paid-in capital to the outstanding warrants. As the warrants have been exercised, the value allocated to the warrants exercised has been restored to additional paid-in capital. The value of outstanding warrants was reduced to

zero

at

March 31, 2016. 

XML

Note 7 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

7

.

   

Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at the balance sheet date, including the estimates inherent in the process of preparing the consolidated financial statements, are recognized in the consolidated financial statements. The Company does

not

recognize subsequent events that provide evidence about conditions that did

not

exist at the balance sheet date but arose after, but before the consolidated financial statements are issued. In some cases, unrecognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

The Company has evaluated subsequent events through

November 13, 2017,

the date on which the consolidated financial statements were issued.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operation for the

three

and

nine

months ended

September 30, 2017

are

not

necessarily indicative of the results to be expected for the year ended

December 31, 2017

or for any other interim period or for any other future year. Certain financial information which is normally included in notes to financial statements prepared in accordance with US GAAP, but which are

not

required for interim reporting purposes, has been condensed or omitted. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Company’s report on Form

10

-K and amendments thereto for the year ended

December 31, 2016.

Consolidation, Policy [Policy Text Block]

Principles of consolidation

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

Reclassification, Policy [Policy Text Block]

Reclassifications:

Certain reclassifications of a minor nature have been made to prior-period balances to conform to current-period presentation with

no

net impact to net loss/income or equity.

Area of Operation, Policy [Policy Text Block]

Area of Operation

: USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Oklahoma and Nebraska. DCLIC is authorized to operate in the state of North Dakota.

Earnings Per Share, Policy [Policy Text Block]

Common stock and earnings (loss) per share:

The par value for common stock is

$0.10

per share with

20,000,000

shares authorized. As of

September 30, 2017,

and

December 31, 2016,

the company had

7,296,351

and

5,565,943

common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company

’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended

September 30, 2017

and

2016

were

6,181,492

and

5,552,227

shares, respectively. The weighted average number of shares outstanding during the

nine

months ended

September 30, 2017

and

2016

were

5,698,514

and

5,395,456

shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters and

nine

months ended

September 30, 2017

and

2016

because all warrants for common shares are anti-dilutive.

New Accounting Pronouncements, Policy [Policy Text Block]

New accounting standards

Revenue from Contracts with Customers

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are

not

within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.

The following steps are applied in the updated guidance: (

1

)

 identify the contract(s) with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to the performance obligations in the contract and (

5

) recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March 

31,

2018.

  The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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

In

August 2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is

not

alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December

 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did

not

have a material effect on the Company's results of operations, financial position or liquidity.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January 2016,

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

This guidance is effective for fiscal years beginning after

December 15, 2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is

not

permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss).

The effect of the adoption of this guidance on the Company

’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods and the existence of a deferred tax asset related to available-for-sale securities in future periods that have

not

yet been fully assessed.

Leases

In

February

 

2016,

the FASB issued updated guidance to require lessees to recognize a right-to-use asset and a lease liability for leases with terms of more than

12

months.  The updated guidance retains the

two

classifications of a lease as either an operating or finance lease (previously referred to as a capital lease).  Both lease classifications require the lessee to record the right-to-use asset and the lease liability based upon the present value of cash flows.  Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-to-use asset.  Operating leases will recognize lease expense (with

no

separate recognition of interest expense) on a straight-line basis over the term of the lease.   The accounting by lessors is

not

significantly changed by the updated guidance.  The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the financial statements.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2018,

and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied.  Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate the repayment of principal on the debt instrument, a reporting entity does

not

need to assess whether the contingent event that triggers the ability to exercise the call (put) option is related to interest rates or credit risk in determining whether the option should be accounted for separately.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016.

  Early adoption is permitted.  The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

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

 

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value.  In addition, the length of time a security has been in an unrealized loss position will

no

longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

  Early adoption is permitted for reporting periods beginning after

December 

15,

2018.

  The Company will

not

be able to determine the impact that the updated guidance will have on its results of operations, financial position or liquidity until the updated guidance is adopted.

Classification of Certain C

ash

R

eceipts and

Cash P

ayment

In

Aug

ust

2016,

the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under

eight

different scenarios including, but

not

limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its statement of cash flows.

All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did

not

relate to accounting policies and procedures pertinent or material to the Company at this time.

XML

Note 2 - Acquisitions (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Fair value of US Alliance common stock issued as consideration	$	3,099,165
Preliminary amounts of indentifiable assets acquired and liablities assumed
Investment securities	$	4,623,449
Cash		1,079,627
VOBA		609,061
Other assets		60,080
Policyholder reserves		(1,277,411	)
Deposit type contracts		(2,029,138	)
Other liabilities		(243,608	)
Total indentifiable net assets	$	2,822,060
Goodwill		277,105
Total	$	3,099,165

Business Acquisition, Pro Forma Information [Table Text Block]

	Nine Months Ended September 30,
	2017			2016
	(unaudited)
Income:
Premium income	$	9,322,648		$	5,231,372
Net investment income		544,477			396,697
Net realized gain (loss) on sale of securities		483,130			16,031
Other income		11,594			6,987
Total income		10,361,849			5,651,087
Net Loss	$	(745,970	)	$	(1,508,555	)
Net Loss per share	$	(0.10	)	$	(0.21	)

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Note 3 - Investments (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Available-for-sale Securities [Table Text Block]

	September 30, 2017
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(Unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	269,529	$	-	$	(29,054	)	$	240,475
Government agency bonds		299,842		-		(539	)		299,303
Corporate bonds		6,119,784		140,246		(25,617	)		6,234,413
Municipal bonds		5,570,008		152,099		(19,519	)		5,702,588
Redeemable preferred stock		99,560		480		-			100,040
Mortgage backed and asset backed securities		2,553,196		38,963		(15,154	)		2,577,005
Total fixed maturities		14,911,919		331,788		(89,883	)		15,153,824
Equities:
Equities		7,615,226		114,845		(64,574	)		7,665,497
Total available for sale	$	22,527,145	$	446,633	$	(154,457	)	$	22,819,321

	December 31, 2016
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	314,992	$	-	$	(15,830	)	$	299,162
Corporate bonds		3,828,418		62,712		(45,234	)		3,845,896
Municipal bonds		2,841,137		46,883		(38,191	)		2,849,829
Mortgage backed and asset backed securities		3,333,617		36,870		(45,300	)		3,325,187
Total fixed maturities		10,318,164		146,465		(144,555	)		10,320,074
Equities:
Equities		4,723,024		350,981		(131,757	)		4,942,248
Other equity investments		182,929		23,046		(4,719	)		201,256
Total equities		4,905,953		374,027		(136,476	)		5,143,504
Total available for sale	$	15,224,117	$	520,492	$	(281,031	)	$	15,463,578

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized
September 30, 2017	Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	200,568	$	200,473
After one year through five years		1,932,156		1,933,444
After five years through ten years		2,490,661		2,517,547
More than 10 years		7,635,778		7,825,315
Redeemable preferred stocks		99,560		100,040
Mortgage backed and asset backed securities		2,553,196		2,577,005
Total fixed maturities	$	14,911,919	$	15,153,824

Realized Gain (Loss) on Investments [Table Text Block]

	Nine Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	486,523		$	42,719
Gross losses		(51,131	)		(2,066	)
Net security gains	$	435,392		$	40,653

	Three Months Ended September 30,
	(unaudited)
	2017			2016
Gross gains	$	259,061		$	29,889
Gross losses		(32,171	)		-
Net security gains	$	226,890		$	29,889

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
September 30, 2017
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	(29,054	)	$	-	$	-		$	240,475	$	(29,054	)
Government agency bonds		299,303		(539	)		-		-			299,303		(539	)
Corporate bonds		1,734,089		(14,488	)		798,161		(11,129	)		2,532,250		(25,617	)
Municipal bonds		1,571,608		(18,464	)		98,945		(1,055	)		1,670,553		(19,519	)
Mortgage backed and asset backed securities		995,261		(13,137	)		92,315		(2,017	)		1,087,576		(15,154	)
Total fixed maturities		4,840,736		(75,682	)		989,421		(14,201	)		5,830,157		(89,883	)
Equities:
Equities		1,283,438		(4,999	)		1,179,505		(59,575	)		2,462,943		(64,574	)
Total available for sale	$	6,124,174	$	(80,681	)	$	2,168,926	$	(73,776	)	$	8,293,100	$	(154,457	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2016
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	(15,830	)	$	-	$	-		$	299,162	$	(15,830	)
Corporate bonds		1,897,000		(42,994	)		196,399		(2,240	)		2,093,399		(45,234	)
Municipal bonds		1,296,688		(38,191	)		-		-			1,296,688		(38,191	)
Mortgage backed and asset backed securities		1,700,173		(39,264	)		134,090		(6,036	)		1,834,263		(45,300	)
Total fixed maturities		5,193,023		(136,279	)		330,489		(8,276	)		5,523,512		(144,555	)
Equities:
Equities		1,007,860		(59,357	)		1,063,959		(72,400	)		2,071,819		(131,757	)
Other equity investments		52,840		(4,719	)		-		-			52,840		(4,719	)
Total equities		1,060,700		(64,076	)		1,063,959		(72,400	)		2,124,659		(136,476	)
Total available for sale	$	6,253,723	$	(200,355	)	$	1,394,448	$	(80,676	)	$	7,648,170	$	(281,031	)

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Note 4 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	September 30, 2017
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	240,475	$	-	$	-
Government agency bonds		299,303		-		299,303		-
Corporate bonds		6,234,413		-		6,234,413		-
Municipal bonds		5,702,588		-		5,702,588		-
Redeemable preferred stock		100,040		-		100,040		-
Mortgage backed and asset backed securities		2,577,005		-		2,577,005		-
Total fixed maturities		15,153,824		240,475		14,913,349		-
Equities:
Equities		7,665,497		7,665,497		-		-
Total	$	22,819,321	$	7,905,972	$	14,913,349	$	-

	December 31, 2016
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	299,162	$	299,162	$	-	$	-
Corporate bonds		3,845,896		-		3,845,896		-
Municipal bonds		2,849,829		-		2,849,829		-
Mortgage backed and asset backed securities		3,325,187		-		3,325,187		-
Total fixed maturities		10,320,074		299,162		10,020,912		-
Equities:
Equities		4,942,248		4,942,248		-		-
Other equity investments		201,256		201,256		-		-
Total equities		5,143,504		5,143,504		-		-
Total	$	15,463,578	$	5,442,666	$	10,020,912	$	-

Fair Value, by Balance Sheet Grouping [Table Text Block]

	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(unaudited)
Financial Assets:
Cash and cash equivalents	$	11,015,077	$	11,015,077	$	3,145,745	$	3,145,745
Investment income due and accrued		124,745		124,745		100,713		100,713
Policy loans		33,376		33,376		-		-
Investments, at fair value		22,819,321		22,819,321		15,463,578		15,463,578
Total Financial Assets	$	33,992,519	$	33,992,519	$	18,710,036	$	18,710,036
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086
Total Financial Liabilities	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086

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Note 1 - Description of Business and Significant Accounting Policies (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 $ / shares shares	Sep. 30, 2016 shares	Sep. 30, 2017 $ / shares shares	Sep. 30, 2016 shares	Dec. 31, 2016 $ / shares shares
Number of Third Party Administrative Agreements in Place	1		1
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.10		$ 0.10		$ 0.10
Common Stock, Shares Authorized	20,000,000		20,000,000		20,000,000
Common Stock, Shares, Issued	7,296,351		7,296,351		5,565,943
Common Stock, Shares, Outstanding	7,296,351		7,296,351		5,565,943
Weighted Average Number of Shares Outstanding, Basic and Diluted	6,181,492	5,552,227	5,698,514	5,395,456

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Note 2 - Acquisitions (Details Textual) - Northern Plains [Member]		9 Months Ended
	Aug. 01, 2017 shares	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Business Acquisition, Equity Interest Issued or Issuable, Exchange Ratio	0.5841
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares	1,644,458
Present Value of Future Insurance Profits, Weighted Average Amortization Period	30 years
Proceeds from Third Party Administrative (TPA) Fees Received		$ 31,250	$ 50,781
Business Combination, Acquisition Related Costs		201,577
Business Acquisition, Pro Forma Information, Adjustments for Amortization of VOBA and Elimination of DAC Amortization		$ 78,379	$ 21,498

XML

Note 2 - Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($)	Aug. 01, 2017	Sep. 30, 2017	Dec. 31, 2016
Preliminary amounts of indentifiable assets acquired and liablities assumed
Goodwill		$ 277,542
Northern Plains [Member]
Fair value of US Alliance common stock issued as consideration	$ 3,099,165
Preliminary amounts of indentifiable assets acquired and liablities assumed
Investment securities	4,623,449
Cash	1,079,627
VOBA	609,061
Other assets	60,080
Policyholder reserves	(1,277,411)
Deposit type contracts	(2,029,138)
Other liabilities	(243,608)
Total indentifiable net assets	2,822,060
Goodwill	277,105
Total	$ 3,099,165

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Note 2 - Acquisitions - Pro Forma Information (Details) - Northern Plains [Member] - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Premium income	$ 9,322,648	$ 5,231,372
Net investment income	544,477	396,697
Net realized gain (loss) on sale of securities	483,130	16,031
Other income	11,594	6,987
Total income	10,361,849	5,651,087
Net Loss	$ (745,970)	$ (1,508,555)
Net Loss per share (in dollars per share)	$ (0.10)	$ (0.21)

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Note 3 - Investments (Details Textual)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Proceeds from Sale, Maturity and Collection of Investments	$ 4,688,796	$ 204,422	$ 7,520,945	$ 764,173
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	71		71
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	$ 154,457		$ 154,457		$ 281,031
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities			0		$ 0
Available-for-sale Equity Securities, Accumulated Gross Unrealized Gain, before Tax	$ 446,663		$ 446,663
Fixed Income Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	51		51
Collateralized Mortgage Backed Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	14		14
Common Stock [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	1		1
Corporate Debt Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	2		2
Preferred Stock [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	2		2
Senior Loan Fund [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	1		1

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Note 3 - Investments - Amortized Cost and Fair Value of Available-for-sale and Held-to-maturity Investments (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Cost or Amortized Cost	$ 22,527,145	$ 15,224,117
Gross Unrealized Gains	446,633	520,492
Gross Unrealized Losses	(154,457)	(281,031)
Available for sale securities	22,819,321	15,463,578
Fixed Maturities [Member]
Cost or Amortized Cost	14,911,919	10,318,164
Gross Unrealized Gains	331,788	146,465
Gross Unrealized Losses	(89,883)	(144,555)
Available for sale securities	15,153,824	10,320,074
Equity Securities [Member]
Cost or Amortized Cost	7,615,226	4,723,024
Gross Unrealized Gains	114,845	350,981
Gross Unrealized Losses	(64,574)	(131,757)
Available for sale securities	7,665,497	4,942,248
Other Equity Investments [Member]
Cost or Amortized Cost		182,929
Gross Unrealized Gains		23,046
Gross Unrealized Losses		(4,719)
Available for sale securities		201,256
Equities, Including Equity Securities and Other Equity Investments [Member]
Cost or Amortized Cost	7,615,226	4,905,953
Gross Unrealized Gains		374,027
Gross Unrealized Losses		(136,476)
Available for sale securities	7,665,497	5,143,504
US Treasury Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	269,529	314,992
Gross Unrealized Gains
Gross Unrealized Losses	(29,054)	(15,830)
Available for sale securities	240,475	299,162
US Government Agencies Debt Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	299,842
Gross Unrealized Gains
Gross Unrealized Losses	(539)
Available for sale securities	299,303
Corporate Debt Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	6,119,784	3,828,418
Gross Unrealized Gains	140,246	62,712
Gross Unrealized Losses	(25,617)	(45,234)
Available for sale securities	6,234,413	3,845,896
US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	5,570,008	2,841,137
Gross Unrealized Gains	152,099	46,883
Gross Unrealized Losses	(19,519)	(38,191)
Available for sale securities	5,702,588	2,849,829
Collateralized Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	2,553,196	3,333,617
Gross Unrealized Gains	38,963	36,870
Gross Unrealized Losses	(15,154)	(45,300)
Available for sale securities	2,577,005	$ 3,325,187
Redeemable Preferred Stock [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	99,560
Gross Unrealized Gains	480
Gross Unrealized Losses
Available for sale securities	$ 100,040

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Note 3 - Investments - Amortized Cost and Fair Value of Debt Securities By Contractual Maturity (Details)	Sep. 30, 2017 USD ($)
One year or less, amortized cost	$ 200,568
One year or less, fair value	200,473
After one year through five years, amortized cost	1,932,156
After one year through five years, fair value	1,933,444
After five years through ten years, amortized cost	2,490,661
After five years through ten years, fair value	2,517,547
More than 10 years, amortized cost	7,635,778
More than 10 years, fair value	7,825,315
Total fixed maturities, amortized cost	14,911,919
Total fixed maturities, fair value	15,153,824
Redeemable Preferred Stock [Member]
Debt securities, amortized cost	99,560
Debt securities, fair value	100,040
Collateralized Mortgage Backed Securities [Member]
Debt securities, amortized cost	2,553,196
Debt securities, fair value	$ 2,577,005

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Note 3 - Investments - Realized Gains and Losses Related to the Sale of Securities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Gross gains	$ 259,061	$ 29,889	$ 486,523	$ 42,719
Gross losses	(32,171)		(51,131)	(2,066)
Net security gains	$ 226,890	$ 29,889	$ 435,392	$ 40,653

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Note 3 - Investments - Gross Unrealized Losses (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale securities, less than 12 months, fair value	$ 6,124,174	$ 6,253,723
Available-for-sale securities, less than 12 months, unrealized loss	(80,681)	(200,355)
Available-for-sale securities, greater than 12 months, fair value	2,168,926	1,394,448
Available-for-sale securities, greater than 12 months, unrealized loss	(73,776)	(80,676)
Available-for-sale securities, fair value	8,293,100	7,648,170
Available-for-sale securities, unrealized loss	(154,457)	(281,031)
Fixed Maturities [Member]
Available-for-sale securities, less than 12 months, fair value	4,840,736	5,193,023
Available-for-sale securities, less than 12 months, unrealized loss	(75,682)	(136,279)
Available-for-sale securities, greater than 12 months, fair value	989,421	330,489
Available-for-sale securities, greater than 12 months, unrealized loss	(14,201)	(8,276)
Available-for-sale securities, fair value	5,830,157	5,523,512
Available-for-sale securities, unrealized loss	(89,883)	(144,555)
Fixed Maturities [Member] | US Treasury Securities [Member]
Available-for-sale securities, less than 12 months, fair value	240,475	299,162
Available-for-sale securities, less than 12 months, unrealized loss	(29,054)	(15,830)
Available-for-sale securities, greater than 12 months, fair value
Available-for-sale securities, greater than 12 months, unrealized loss
Available-for-sale securities, fair value	240,475	299,162
Available-for-sale securities, unrealized loss	(29,054)	(15,830)
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale securities, less than 12 months, fair value	299,303
Available-for-sale securities, less than 12 months, unrealized loss	(539)
Available-for-sale securities, greater than 12 months, fair value
Available-for-sale securities, greater than 12 months, unrealized loss
Available-for-sale securities, fair value	299,303
Available-for-sale securities, unrealized loss	(539)
Fixed Maturities [Member] | Corporate Debt Securities [Member]
Available-for-sale securities, less than 12 months, fair value	1,734,089	1,897,000
Available-for-sale securities, less than 12 months, unrealized loss	(14,488)	(42,994)
Available-for-sale securities, greater than 12 months, fair value	798,161	196,399
Available-for-sale securities, greater than 12 months, unrealized loss	(11,129)	(2,240)
Available-for-sale securities, fair value	2,532,250	2,093,399
Available-for-sale securities, unrealized loss	(25,617)	(45,234)
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities, less than 12 months, fair value	1,571,608	1,296,688
Available-for-sale securities, less than 12 months, unrealized loss	(18,464)	(38,191)
Available-for-sale securities, greater than 12 months, fair value	98,945
Available-for-sale securities, greater than 12 months, unrealized loss	(1,055)
Available-for-sale securities, fair value	1,670,553	1,296,688
Available-for-sale securities, unrealized loss	(19,519)	(38,191)
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member]
Available-for-sale securities, less than 12 months, fair value	995,261	1,700,173
Available-for-sale securities, less than 12 months, unrealized loss	(13,137)	(39,264)
Available-for-sale securities, greater than 12 months, fair value	92,315	134,090
Available-for-sale securities, greater than 12 months, unrealized loss	(2,017)	(6,036)
Available-for-sale securities, fair value	1,087,576	1,834,263
Available-for-sale securities, unrealized loss	(15,154)	(45,300)
Equity Securities [Member]
Available-for-sale securities, less than 12 months, fair value	1,283,438	1,007,860
Available-for-sale securities, less than 12 months, unrealized loss	(4,999)	(59,357)
Available-for-sale securities, greater than 12 months, fair value	1,179,505	1,063,959
Available-for-sale securities, greater than 12 months, unrealized loss	(59,575)	(72,400)
Available-for-sale securities, fair value	2,462,943	2,071,819
Available-for-sale securities, unrealized loss	$ (64,574)	(131,757)
Other Equity Investments [Member]
Available-for-sale securities, less than 12 months, fair value		52,840
Available-for-sale securities, less than 12 months, unrealized loss		(4,719)
Available-for-sale securities, greater than 12 months, fair value
Available-for-sale securities, greater than 12 months, unrealized loss
Available-for-sale securities, fair value		52,840
Available-for-sale securities, unrealized loss		(4,719)
Equities, Including Equity Securities and Other Equity Investments [Member]
Available-for-sale securities, less than 12 months, fair value		1,060,700
Available-for-sale securities, less than 12 months, unrealized loss		(64,076)
Available-for-sale securities, greater than 12 months, fair value		1,063,959
Available-for-sale securities, greater than 12 months, unrealized loss		(72,400)
Available-for-sale securities, fair value		2,124,659
Available-for-sale securities, unrealized loss		$ (136,476)

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Note 4 - Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Available for sale securities	$ 22,819,321	$ 15,463,578
Fair Value, Measurements, Recurring [Member]
Available for sale securities	22,819,321	15,463,578
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities	7,905,972	5,442,666
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	14,913,349	10,020,912
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member]
Available for sale securities	15,153,824	10,320,074
Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	15,153,824	10,320,074
Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities	240,475	299,162
Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	14,913,349	10,020,912
Fixed Maturities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | US Treasury Securities [Member]
Available for sale securities	240,475	299,162
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	240,475	299,162
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities	240,475	299,162
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Available for sale securities	299,303
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	299,303
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	299,303
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | Corporate Debt Securities [Member]
Available for sale securities	6,234,413	3,845,896
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	6,234,413	3,845,896
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	6,234,413	3,845,896
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Available for sale securities	5,702,588	2,849,829
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	5,702,588	2,849,829
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	5,702,588	2,849,829
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member]
Available for sale securities	2,577,005	3,325,187
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	2,577,005	3,325,187
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	2,577,005	3,325,187
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Fixed Maturities [Member] | Redeemable Preferred Stock [Member]
Available for sale securities	100,040
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	100,040
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities	100,040
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Equity Securities [Member]
Available for sale securities	7,665,497	4,942,248
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities	7,665,497	4,942,248
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities	7,665,497	4,942,248
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Other Equity Investments [Member]
Available for sale securities		201,256
Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities		201,256
Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities		201,256
Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities
Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities
Equities, Including Equity Securities and Other Equity Investments [Member]
Available for sale securities	$ 7,665,497	5,143,504
Equities, Including Equity Securities and Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member]
Available for sale securities		5,143,504
Equities, Including Equity Securities and Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available for sale securities		5,143,504
Equities, Including Equity Securities and Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available for sale securities
Equities, Including Equity Securities and Other Equity Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available for sale securities

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Note 4 - Fair Value Measurements - Estimated Fair Values of the Company's Financial Assets and Liabilities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Reported Value Measurement [Member]
Financial Assets:
Cash and cash equivalents	$ 11,015,077	$ 3,145,745
Investment income due and accrued	124,745	100,713
Policy loans	33,376
Investments, at fair value	22,819,321	15,463,578
Total Financial Assets	33,992,519	18,710,036
Financial Liabilities:
Policyholder deposits in deposit-type contracts	12,749,556	3,398,170
Total Financial Liabilities	12,749,556	3,398,170
Estimate of Fair Value Measurement [Member]
Financial Assets:
Cash and cash equivalents	11,015,077	3,145,745
Investment income due and accrued	124,745	100,713
Policy loans	33,376
Investments, at fair value	22,819,321	15,463,578
Total Financial Assets	33,992,519	18,710,036
Financial Liabilities:
Policyholder deposits in deposit-type contracts	11,950,167	3,260,086
Total Financial Liabilities	$ 11,950,167	$ 3,260,086

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Note 5 - Income Tax Provision (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Income Tax Expense (Benefit)	$ 0	$ 0
Deferred Tax Assets, Valuation Allowance, Percentage	100.00%	100.00%
Operating Loss Carryforwards	$ 6,500,000		$ 5,050,176

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Note 6 - Warrants (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Mar. 31, 2016	Dec. 31, 2014	Feb. 24, 2013
Equity Unit, Original Price Per Unit at Issuance					$ 1,000
Equity Unit, Number of Shares of Common Stock in Each Unit					200
Equity Unit, Number of Common Stock Warrants in Each Unit					200
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 6
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		1,587,555		2,532,400
Stock Issued During Period, Shares, Warrants Exercised	372,003	944,845
Class of Warrant or Right, Value Per Share of Common Stock					$ 0.01
Warrants and Rights Outstanding			$ 0