10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2008
	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 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)
Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5250 South Sixth Street, Springfield, IL	62703
(Address of principal executive offices)	(Zip code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class

Common Stock, stated value $.001 per share

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ]  No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ]  No [X]

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10- K. [  ]

Indicate by check mark whether the registrant is large accelerated filer, a non-accelerated filer, or a small company, as defined by Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	[  ]	Accelerated Filer	[  ]
Non Accelerated Filer	[  ]	Smaller Reporting Company	[X]

Indicate by check mark whether the registrant is a shell company, as defined by Rule 12b-2 of the act.

Yes [  ] No [X]

As of June 30, 2008, shares of the Registrant’s common stock held by non-affiliates (based upon the price of the last sale of $10.00 per share), had an aggregate market value of approximately $11,128,220.

At March 2, 2009 the Registrant had 3,834,031 outstanding shares of Common Stock, stated value $.001 per share.

Documents incorporated by reference:  None

UTG, INC.

FORM 10-K

YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

PART I…………………………………………………………………………………………………………………….	3
ITEM 1.   BUSINESS…………………………………………………………………………………………………..	3
ITEM 1A. RISK FACTORS……………………………………………………………………………….…………	15
ITEM 1B. UNRESOLVED STAFF COMMENTS…………………………………………………………………….	16
ITEM 2.   PROPERTIES……………………………………………………………………………………………….	17
ITEM 3.   LEGAL PROCEEDINGS…………………………………………………………………………………...	17
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS……………………………….	17
PART II……………………………………………………………………………………………………………………	18
ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER                    MATTERS AND ISSUER PRUCHASES OF EQUTY SECURITIES………………………………….	18
ITEM 6.   SELECTED FINANCIAL DATA……………………………………………………………………………	20
ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND                    RESULTS OF OPERATIONS……………………………………………………………………………..	20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK…………………….	31
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA………………………………………….	34
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING                    AND FINANCIAL DISCLOSURE………………………………………………………………………….	66
ITEM 9A. CONTROLS AND PROCEDURES……………………………………………………………………….	66
ITEM 9B. OTHER INFORMATION…………………………………………………………………………………..	66
PART III…………………………………………………………………………………………………………………..	67
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE…………………….	67
ITEM 11.  EXECUTIVE COMPENSATION…………………………………………………………………………	71
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                     AND RELATED SHAREHOLDER MATTERS…………………………………………………………	75
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND                     DIRECTOR INDEPENDENCE………………………………………………………………………….	78
ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES…………………………………………………	79
PART IV…………………………………………………………………………………………………………………	80
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES………………………………..…………	80

PART I

ITEM 1.  BUSINESS

FORWARD-LOOKING INFORMATION

Any forward-looking statement contained herein or in any other oral or written statement by the Company or any of its officers, directors or employees is qualified by the fact that actual results of the Company may differ materially from those projected in forward-looking statements.  Additional information concerning factors that could cause actual results to differ from those in the forward-looking statements is contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations."

OVERVIEW

UTG, Inc. (the "Registrant" or “UTG”) was originally incorporated in 1984, under the name United Trust, Inc. under the laws of the State of Illinois, to serve as an insurance holding company.  The Registrant and its subsidiaries (the "Company") have only one significant industry segment - insurance.  The current name, UTG, Inc., and state of incorporation, Delaware, were adopted during 2005 through a merger transaction.  The Company's dominant business is individual life insurance, which includes the servicing of existing insurance business in force, the solicitation of new individual life insurance, the acquisition of other companies in the insurance business, and the administration processing of life insurance business for other entities.

At December 31, 2008, significant majority-owned subsidiaries of the Registrant were as depicted on the following organizational chart:

This document at times will refer to the Registrant’s largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC, a Kentucky corporation, (FSF) and First Southern Bancorp, Inc. (FSBI), a financial services holding company.  FSBI operates through its 100% owned subsidiary bank, First Southern National Bank (FSNB).  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG’s largest shareholder through his ownership control of FSF, FSBI and affiliates.  At December 31, 2008, Mr. Correll owns or controls directly and indirectly approximately 63% of UTG’s outstanding stock.

UTG is a life insurance holding company.  The focus of UTG is the acquisition of other companies in similar lines of business and management of the insurance subsidiaries.  UTG has no activities outside the life insurance focus. UTG has a history of acquisitions and consolidation in which life insurance companies were involved.

UG is a wholly-owned life insurance subsidiary of UTG domiciled in the State of Ohio, which operates in the individual life insurance business.  The primary focus of UG has been the servicing of existing insurance business in force.  In addition, UG provides insurance administrative services for other non-related entities.

ACAP is an insurance holding company that is 73% owned by UG.  ACAP has no day to day operations of its own.  Its only significant asset is its investment in AC.

AC is a wholly-owned life insurance subsidiary of ACAP domiciled in the State of Texas, which operates in the individual life insurance business.  The primary focus of AC has been the servicing of existing insurance business in force.

TI is a wholly-owned life insurance subsidiary of AC domiciled in the State of Texas, which operates in the individual life insurance business.  The primary focus of TI has been the servicing of existing insurance business in force.

REC is a wholly-owned subsidiary of UTG, which was incorporated under the laws of the State of Delaware on June 1, 1971, as a securities broker dealer.  REC was established as an aid to life insurance sales.  Policyholders could have certain policy benefits such as annual dividends automatically transferred to a mutual fund if they elected.  REC acts as an agent for its customers by placing orders of mutual funds and variable annuity contracts, which are placed in the customers’ names.  The mutual fund shares and variable annuity accumulation units are held by the respective custodians.  The only financial involvement of REC is through receipt of commission (load).  REC functions at a minimum broker-dealer level.  It does not maintain any of its customer accounts nor receives customer funds directly.  Operating activity of REC accounted for approximately $7,000 in losses in the current year.

HPG is a 74% owned subsidiary of UG, which owns for investment purposes, commercial property located in downtown Midland, Texas.  The property includes three commercial office buildings with a total of approximately 530,000 square feet and adjoining parking with 280 spaces.

SWR is a wholly-owned subsidiary of UG, which owns for investment purposes commercial real estate located in downtown Stanford, Kentucky.  Future plans for these properties include a re-habilitation of the buildings and will include a hotel and other commercial/retail space once completed.

CW is a wholly-owned subsidiary of UG, which owns for investment purposes, approximately 15,000 acres of land in Kentucky and a 50% partnership interest in an additional 11,000 acres of land in Kentucky.

Lexington is a 51% owned subsidiary of UG, which owns for investment purposes approximately 3,150 acres of land located near Lexington, Kentucky.

HISTORY

UTG was incorporated December 14, 1984, as an Illinois corporation through an intrastate public offering under the name United Trust, Inc. (UTI). Over the years, UTG acquired several additional holding and life insurance companies.  UTG streamlined and simplified the corporate structure following the acquisitions through dissolution of intermediate holding companies and mergers of several life insurance companies.

In March 2005, UTG’s Board of Directors adopted a proposal to change the state of incorporation of UTG from Illinois to Delaware by merging UTG with and into a wholly-owned Delaware subsidiary (the “reincorporation merger”).  The reincorporation merger effected only a change in UTG’s legal domicile and certain other changes of a legal nature.  The Board of Directors submitted the reincorporation proposal to its shareholders for approval at the 2005 annual meeting of shareholders, which was approved subsequently and affected on July 1, 2005.

In December 2006, the Company completed an acquisition transaction whereby it acquired a controlling interest in Acap Corporation, which owns two life insurance subsidiaries.  The acquisition resulted in an increase of approximately $90,000,000 in invested assets, $160,000,000 in total assets and 200,000 additional policies to administer.  The administration of the acquired entities was moved to Springfield, Illinois during December 2006.  The Company believes this acquisition is a good fit with its existing administration and operations.  Significant expense savings were realized as a result of the combining of operations compared to costs of the two entities operating separately.

PRODUCTS

UG’s current product portfolio consists of a limited number of life insurance product offerings.  All of the products are individual life insurance products, with design variations from each other to provide choices to the customer.  These variations generally center around the length of the premium paying period, length of the coverage period and whether the product accumulates cash value or not.  The products are designed to be competitive in the marketplace.

Effective January 1, 2009, the Company will be required to use the 2001 CSO reserve table for new issues on a Statutory basis.

UG offers a universal life policy referred to as the “Legacy” product.  This product was designed for use with several distribution channels including the Company’s own internal agents, bank agent/employees and through personally producing general agents “PPGA”.  This policy is issued for ages 0 – 65, in face amounts with a minimum of $25,000.  The Legacy product has a current declared interest rate of 4.0%, which is equal to its guaranteed rate.  After five years the guaranteed rate drops to 3.0%.  During the first five years the policy fee will be $6.00 per month on face amounts less than $50,000 and $5.00 per month for larger amounts.  After the first five years the Company may increase this rate but not more than $8.00 per month.  The policy has other loads that vary based upon issue age and risk classification. Partial withdrawals, subject to minimum $500 cash surrender value and $25 fee, are allowed once a year after the first duration. Policy loans are available at 7.4% interest in advance. The policy's accumulated fund will be credited the guaranteed interest rate in relation to the amount of the policy loan. Surrender charges are based on a percentage of target premiums starting at 100% for years 1 and 2 then grading downward to zero in year 5.

Also available are a number of traditional whole life policies.  The Company’s “Ten Pay Whole Life” insurance product has a level face amount.  The level premium is payable for the first ten policy years.  This policy is available for issue ages 0-65, and has a minimum face amount of $10,000.  This policy can be used in conversion situations, where it is available up to age 75 and at a minimum face amount of $5,000.   There is no policy fee.

The “Preferred Whole Life” insurance product also has a level face amount and level premium, although the premiums are payable for life on this product.  Issue ages are 0-65 and the minimum face amount is $25,000.  There is no policy fee.  Unlike the Ten Pay, this product has several optional riders available: Accidental Death rider, Children’s Term Insurance rider, Terminal Illness rider and/or Waiver of Premium rider.

The “Tradition” is a fixed premium whole life insurance policy.  Premiums are level and payable for life.  Issue ages are 0-80.  The minimum face amount is the greater of $10,000 or the amount of coverage provided by a $100 annual premium.  There is a $30 policy fee.   This product has the same optional riders as the Preferred Whole Life, listed above.

Kid Kare is a single premium level term policy to age 21.   The product is sold in units, with one unit equal to a face amount of $5,000 for a single premium of $250.  The policy is issued from ages 0-15 and has conversion privileges at age 21.  There is no policy fee.

The “First Annuity” is our only active annuity product in our portfolio.  This product is issued for ages 0-80.  The minimum annual premium in the first year is $5,000, with premiums being optional in all other years. This policy has a decreasing surrender charge during the first five years of the contract.

The Company has recently developed two new term products with the intent of using them internally to existing customers.

The Full Circle is a decreasing term product available in 10, 15, 20, 25 or 30 year terms.  The product is generally issued to ages 20 to 65, with a minimum face amount of $10,000.

The Sentinel is a level term product available in 10, 15, 20, 25 or 30 year terms.  The product is generally issued to ages 18 to 65, with a minimum face amount of $25,000.

The Company's actual experience for earned interest, persistency and mortality varies from the assumptions applied to pricing and for determining premiums.  Accordingly, differences between the Company's actual experience and those assumptions applied may impact the profitability of the Company. The Company monitors investment yields, and when necessary adjusts credited interest rates on its insurance products to preserve targeted interest spreads.  Credited rates are reviewed and established by the Board of Directors of UG.  Currently, all crediting rates have been reduced to the respective product guaranteed interest rate.

The Company has a variety of policies in force different from those being marketed.  Interest sensitive products, including universal life and excess interest whole life (“fixed premium UL”), account for 55% of the insurance in force.  Approximately 9% of the insurance in force is participating business, which represents policies under which the policy owner shares in the insurance company’s statutory divisible surplus.  The Company's average persistency rate for its policies in force for 2008 and 2007 has been 95.8% and 96.1%, respectively.

Interest sensitive life insurance products have characteristics similar to annuities with respect to the crediting of a current rate of interest at or above a guaranteed minimum rate and the use of surrender charges to discourage premature withdrawal of cash values.  Universal life insurance policies also involve variable premium charges against the policyholder's account balance for the cost of insurance and administrative expenses.  Interest-sensitive whole-life products generally have fixed premiums.  Interest-sensitive life insurance products are designed with a combination of front-end loads, periodic variable charges, and back-end loads or surrender charges.

Traditional life insurance products have premiums and benefits predetermined at issue; the premiums are set at levels that are designed to exceed expected policyholder benefits and insurance company expenses.  Participating business is traditional life insurance with the added feature that the policyholder may share in the divisible surplus of the insurance company through policyholder dividend.  This dividend is set annually by the Board of Directors of UG and is completely discretionary.

AC issues a product referred to as the Simplified Issue Whole Life.  This product is a small face whole life insurance product that is issued from ages 0 – 65 with face amounts ranging from $1,000 to $25,000.  The product is primarily used as a final expense type product.

MARKETING

The Company has not actively marketed life products in the past several years.  Management currently places little emphasis on new business production, believing resources could be better utilized in other ways.  Current sales primarily represent sales to existing customers through additional insurance needs or conservation efforts.  In 2001, the Company increased its emphasis on policy retention in an attempt to improve current persistency levels.  In this regard, several of the home office staff have become licensed insurance agents enabling them broader abilities when dealing with the customer in regard to his/her existing policies and possible alternatives.  The conservation efforts described above have been generally positive.  Management will continue to monitor these efforts and make adjustments as seen appropriate to enhance the future success of the program.

Excluding licensed home office personnel, UG has 15 general agents.  These agents primarily service their existing clients.  New sales for UG are primarily in the Midwest region with most sales in the states of Ohio, Illinois and West Virginia.  UG is licensed to sell life insurance in Alabama, Arizona, Arkansas, Colorado, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wisconsin.

AC has no agents.  AC is licensed to sell life insurance in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wyoming.

TI has no agents.  TI is licensed only in the state of Texas.

In 2008, approximately $12,871,000 of total direct premium was collected by UG.  Ohio accounted for 29%, Illinois accounted for 17%, and West Virginia accounted for 10% of total direct premiums collected.  No other state accounted for more than 5% of direct premiums collected.

In 2008, approximately $3,485,000 of total direct premium was collected by AC.  Texas accounted for 30%, Louisiana accounted for 10%, Tennessee accounted for 9%, and Mississippi accounted for 7% of total direct premiums collected.  No other state accounted for more than 5% of direct premiums collected.

In 2008, approximately $1,503,000 of total direct premium was collected by TI.  Texas accounted for 100% of the total direct premiums collected.

UNDERWRITING

The underwriting procedures of the insurance subsidiaries are established by management.  Insurance policies are issued by the Company based upon underwriting practices established for each market in which the Company operates.  Most policies are individually underwritten.  Applications for insurance are reviewed to determine additional information required to make an underwriting decision, which depends on the amount of insurance applied for and the applicant's age and medical history.  Additional information may include inspection reports, medical examinations, and statements from doctors who have treated the applicant in the past and, where indicated, special medical tests.  After reviewing the information collected, the Company either issues the policy as applied for, issues with an extra premium charge because of unfavorable factors, or rejects the application.  Substandard risks may be referred to reinsurers for full or partial reinsurance of the substandard risk.

The Company requires blood samples to be drawn with individual insurance applications for coverage over $45,000 (age 46 and above) or $95,000 (ages 16-45).  Blood samples are tested for a wide range of chemical values and are screened for antibodies to the HIV virus.  Applications also contain questions permitted by law regarding the HIV virus, which must be answered by the proposed insureds.

RESERVES

The applicable insurance laws under which the insurance subsidiaries operate require that the insurance company report policy reserves as liabilities to meet future obligations on the policies in force.  These reserves are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated in accordance with applicable law to be sufficient to meet the various policy and contract obligations as they mature.  These laws specify that the reserves shall not be less than reserves calculated using certain mortality tables and interest rates.

The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method.  These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations.  The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 9.25% for annuities.  Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term.  Policy benefit claims are charged to expense in the period that the claims are incurred.  Current mortality rate assumptions are based on 1975-80 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or Linton C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances. Interest crediting rates for universal life and interest sensitive products range from 4.0% to 5.5% for the years ended December 31, 2008 and 2007.

REINSURANCE

As is customary in the insurance industry, the insurance subsidiaries cede insurance to, and assume insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.  At December 31, 2008, the Company had gross insurance in force of $2.037 billion of which approximately $491 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The primary reinsurers of the Company are large, well capitalized entities.

Currently, UG is utilizing reinsurance agreements with Optimum Re Insurance Company, (Optimum) and Swiss Re Life and Health America Incorporated (SWISS RE).  Optimum and SWISS RE currently hold an “A-” (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  The agreements are a yearly renewable term (YRT) treaty where the Company cedes amounts above its retention limit of $100,000 with a minimum cession of $25,000.

In addition to the above reinsurance agreements, UG entered into reinsurance agreements with Optimum Re Insurance Company (Optimum) during 2004 to provide reinsurance on new products released for sale in 2004.  The agreements are yearly renewable term (YRT) treaties where UG cedes amounts above its retention limit of $100,000 with a minimum cession of $25,000 as has been a practice for the last several years with its reinsurers.  Also, effective January 1, 2005, Optimum became the reinsurer of 100% of the accidental death benefits (ADB) in force of UG.  This coverage is renewable annually at the Company’s option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.  Optimum currently holds an “A-” (Excellent) rating from A.M. Best.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company (PALIC) effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  PALIC and its ultimate parent, The Guardian Life Insurance Company of America (Guardian), currently hold an “A” (Excellent) and "A++" (Superior) rating, respectively, from A.M. Best.  The PALIC agreement accounts for approximately 65% of UG’s reinsurance reserve credit, as of December 31, 2008.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  At December 31, 2008, the IOV insurance in-force assumed by UG was approximately $1,637,000, with reserves being held on that amount of approximately $382,000.

On June 7, 2000, UG assumed an already existing coinsurance agreement, dated January 1, 1992, between Lancaster Life Reinsurance Company (LLRC), an Arizona corporation and Investors Heritage Life Insurance Company (IHL), a corporation organized under the laws of the Commonwealth of Kentucky.  Under the terms of the agreement, LLRC agreed to assume from IHL a 90% quota share of new issues of credit life and accident and health policies that have been written on or after January 1, 1992 through various branches of the First Southern National Bank.  The maximum amount of credit life insurance that can be assumed on any one individual’s life is $15,000.  UG assumed all the rights and obligations formerly held by LLRC as the reinsurer in the agreement.  LLRC liquidated its charter immediately following the transfer.  At December 31, 2008, the IHL agreement has insurance in-force of approximately $1,685,000, with reserves being held on that amount of approximately $23,000.

At December 31, 1992, AC entered into a reinsurance agreement with Canada Life Assurance Company (“the Canada Life agreement”) that fully reinsured virtually all of its traditional life insurance policies.  The reinsurer’s obligations under the Canada Life agreement were secured by assets withheld by AC representing policy loans and deferred and uncollected premiums related to the reinsured policies.  AC continues to administer the reinsured policies, for which it receives an expense allowance from the reinsurer.  At December 31, 2008, the Canada Life agreement has insurance in-force of approximately $73,639,000, with reserves being held on that amount of approximately $38,523,000.

During 1997, AC acquired 100% of the policies in force of World Service Life Insurance Company through a combination of assumption reinsurance and coinsurance.  While 91.42% of the acquired policies are coinsured under the Canada Life agreement, AC did not coinsure the balance of the policies.  AC retains the administration of the reinsured policies, for which it receives an expense allowance from the reinsurer.  Canada Life currently holds an "A+" (Superior) rating from A.M. Best.

During 1998, AC closed a coinsurance transaction with Universal Life Insurance Company (“Universal”). Pursuant to the coinsurance agreement, American Capitol coinsured 100% of the individual life insurance policies of Universal in force at January 1, 1998.  At December 31, 2008, the Universal agreement has insurance in-force of approximately $14,309,000, with reserves being held on that amount of approximately $4,975,000.

The treaty with Canada Life provides that AC is entitled to 85% of the profits (calculated pursuant to a formula contained in the treaty) beginning when the accumulated profits under the treaty reach a specified level.  As of December 31, 2008, there remains $473,304 in profits to be generated before AC is entitled to 85% of the profits.  Should future experience under the treaty match the experience of recent years, which cannot reliably be predicted to occur, the accumulated profits would reach the specified level towards the end of 2009.  However, regarding the uncertainty as to when the specified level may be reached, it should be noted that the experience has been erratic from year to year and the number of policies in force that are covered by the treaty diminishes each year.

All reinsurance for TI was with a single, unaffiliated reinsurer, Hannover Life Reassurance (Ireland) Limited ("Hannover"), secured by a trust account containing letters of credit.  TI administered the reinsurance policies, for which it received an expense allowance from Hannover.  The Hannover treaty provided that TI could recapture the treaty without a charge to surplus under statutory accounting beginning when the accumulated profits (calculated pursuant to a formula contained in the treaty) reached a specified level.  As of December 31, 2007, there remained $91,168 in profits to be generated before TI could recapture the treaty without a surplus charge.  During early 2008, $91,168 was repaid through profits generated on the block of business covered by the agreement and the treaty was recaptured April of 2008.  At December 31, 2008, there is no outstanding money on the surplus aid.

On December 31, 2006, AC and TI entered into 100% coinsurance agreements whereby each company ceded all of its A&H business to an unaffiliated reinsurer, Reserve National Insurance Company (Reserve National).  As part of the agreement, the Company remained contingently liable for claims incurred prior to the effective date of the agreement, for a period of one year.  At the end of the one year period, on December 31, 2007, an accounting of these claims was produced.  Any difference in the actual claims to the claim reserve liability transferred will be refunded to / paid by the Company.  At December 31, 2007, AC owed $93,384 and TI owed $902 to the unaffiliated third party.  The amounts were included in each company’s 2007 financial statements.  Reserve National currently holds an “A-“ (Excellent) rating by A.M. Best.  During 2007, the policies coinsured under these agreements were assumption reinsured by Reserve National, thus releasing the Company from any future contingent liability under these policies.  During March of 2008, AC paid $93,384 and TI paid $902 to the unaffiliated third party.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2008 and 2007 were as follows:

Shown in thousands

		2008 Premiums Earned		2007 Premiums Earned
Direct	$	18,305	$	19,945
Assumed		184		223
Ceded		(5,180)		(5,755)
Net premiums	$	13,309	$	14,413

INVESTMENTS

Investment income represents a significant portion of the Company's total income.  Investments are subject to applicable state insurance laws and regulations, which limit the concentration of investments in any one category or class and further limit the investment in any one issuer.  Generally, these limitations are imposed as a percentage of statutory assets or percentage of statutory capital and surplus of each company.

The following table reflects net investment income by type of investment.

	December 31,
			2008		2007
Fixed maturities held for sale		$	10,494,422	$	11,790,380
Equity securities			2,266,380		1,077,749
Mortgage loans			3,042,688		2,689,956
Real estate			5,452,735		4,599,005
Policy loans			704,235		951,394
Short-term investments			67,027		21,929
Cash			336,367		316,891
Total consolidated investment income			22,363,854		21,447,304
Investment expenses			(4,847,419)		(4,566,942)
Consolidated net investment income		$	17,516,435	$	16,880,362

At December 31, 2008, the Company had a total of $3,201,002 in investment real estate, which did not produce income during 2008.

The following table summarizes the Company's fixed maturities distribution at December 31, 2008 and 2007 by ratings category as issued by Standard and Poor's, a leading ratings analyst.

Fixed Maturities
Rating	% of Portfolio
	2008	2007
Investment Grade
AAA	84%	72%
AA	2%	8%
A	10%	13%
BBB	2%	7%
Below investment grade	2%	0%
	100%	100%

The following table summarizes the Company's fixed maturities held for sale by major classification.

		Carrying Value
			2008		2007
U.S. government and government agencies	$		51,808,494	$	36,011,577
States, municipalities and political subdivisions			475,405		4,044,798
Collateralized mortgage obligations			87,590,099		89,832,147
Public utilities			2,702,484		4,594,501
Corporate			36,113,379		69,498,029
	$		178,689,861	$	203,981,052

The following table shows the composition, average maturity and yield of the Company's investment portfolio at December 31, 2008.

		Average
		Carrying	Average	Average
Investments		Value	Maturity	Yield
Fixed maturities held for sale	$	191,335,000	6 years	5.48%
Equity securities		31,658,000	Not applicable	7.16%
Mortgage Loans		44,038,000	8 years	6.91%
Investment real estate		40,467,000	Not applicable	13.47%
Policy loans		15,138,000	Not applicable	4.65%
Short-term investments		467,000	6 months	0.00%
Cash and cash equivalents		28,871,000	On demand	1.40%
Total Investments and Cash    and cash equivalents	$	351,974,000		6.35%

During the first quarter of 2008, management decided that the remaining fixed maturity investments categorized as held to maturity should be classified as available for sale to provide additional flexibility and liquidity.  As such, all fixed maturity investments are available for sale.  The remaining fixed maturities in the held to maturity category had become relatively small over recent years.  Management determined it would be in the Company’s best interest to be in a position to sell any fixed maturity holding should a need arise rather than having to chose only from a portion of the portfolio.  At the time of the transfer, the fixed maturities held to maturity had an unrealized gain of $323,190.  At December 31, 2008, all fixed maturity investments were carried at their fair market value of $178,689,861.

Management monitors its investment maturities, which in their opinion is sufficient to meet the Company's cash requirements.  Fixed maturities of $3,996,488 mature in one year and $24,584,663 mature in two to five years.

The Company holds $42,472,916 in mortgage loans, which represents approximately 9% of the total assets.  All mortgage loans are first position loans.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Loans issued are limited to no more than 80% of the appraised value of the property and must be first position against the collateral.

FSNB, an affiliate, services the mortgage loan portfolio of the Company.  FSNB has been able to provide the Company with expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  During 2008 and 2007 the Company issued approximately $5,242,000 and $19,765,000 in new mortgage loans, respectively.  These new loans were originated through FSNB and funded by the Company through participation agreements with FSNB.  FSNB services all the mortgage loans of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  UG paid $93,572 and $85,612 in servicing fees and $19,283 and $54,281 in origination fees to FSNB during 2008 and 2007, respectively.

The Company has no mortgage loans in the process of foreclosure and no loans under a repayment plan or restructuring.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Loans 90 days or more delinquent are placed on a non-performing status and classified as delinquent loans.  Reserves for loan losses are established based on management's analysis of the loan balances compared to the expected realizable value should foreclosure take place.  Loans are placed on a non-accrual status based on a quarterly analysis of the likelihood of repayment.  All delinquent and troubled loans held by the Company are loans which were held in portfolios by acquired companies at the time of acquisition.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

The Company has in place a monitoring system to provide management with information regarding potential troubled loans.  Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency.  Quarterly, coinciding with external financial reporting, the Company determines how each delinquent loan should be classified.  All loans 90 days or more past due are classified as delinquent.  Each delinquent loan is reviewed to determine the classification and status the loan should be given.  Interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The mortgage loan reserve was $19,730 and $19,730 at December 31, 2008 and 2007 respectively.

The following table shows a distribution of the Company’s mortgage loans by type.

Mortgage Loans		Amount	% of Total
Commercial – insured or guaranteed	$	895,522	2%
Commercial – all other		35,524,938	84%
Farm		726,635	2%
Residential – insured or guaranteed		826	0%
Residential – all other		5,324,995	12%

The following table shows a geographic distribution of the Company’s mortgage loan portfolio and investment real estate.

	Mortgage Loans	Real Estate
Georgia	17%	0%
Illinois	0%	2%
Kansas	5%	0%
Kentucky	69%	58%
Texas	9%	38%
West Virginia	0%	2%
Total	100%	100%

The following table summarizes delinquent mortgage loan holdings of the Company.

Delinquent 90 days or more		2008		2007
Non-accrual status	$	545,059	$	50,690
Other		0		0
Reserve on delinquent Loans		(19,730)		(19,730)
Total delinquent	$	525,329	$	30,960
Interest income past due (delinquent loans)	$	0	$	0
In process of restructuring	$	0	$	0
Restructuring on other than market terms		0		0
Other potential problem Loans		0		0
Total problem loans	$	0	$	0
Interest income foregone (restructured loans)	$	0	$	0
In process of foreclosure	$	0	$	0
Total foreclosed loans	$	0	$	0
Interest income foregone (restructured loans)	$	0	$	0

See Item 2, Properties, for description of real estate holdings.

COMPETITION

The insurance business is a highly competitive industry and there are a number of other companies, both stock and mutual, doing business in areas where the Company operates.  Many of these competing insurers are larger, have more diversified and established lines of insurance coverage, have substantially greater financial resources and brand recognition, as well as a greater number of agents.  Other significant competitive factors in the insurance industry include policyholder benefits, service to policyholders, and premium rates.

In recent years, the Company has not placed an emphasis on new business production.  Costs associated with supporting new business can be significant.  The insurance industry as a whole has experienced a decline in the total number of agents who sell insurance products; therefore competition has intensified for top producing sales agents.  The relatively small size of the Company, and the resulting limitations, has made it challenging to compete in this area.  The number of agents marketing the Company’s products is a negligible number.

The Company performs administrative work as a third party administrator (TPA) for unaffiliated life insurance companies.  These TPA revenue fees are included in the line item “other income” on the Company’s consolidated statements of operations.  The Company intends to continue to pursue other TPA arrangements through its alliance with Stone River.  Through this alliance, the Company provides TPA services to insurance companies seeking business process outsourcing solutions.  Stone River is responsible for the marketing and sales function for the alliance, as well as providing the data center operations.  UTG staffs the administration effort.  Management believes this alliance with Stone River positions the Company to generate additional revenues by utilizing the Company’s current excess capacity and administrative services.  Stone River is an independent, full-service provider of integrated data processing and information management systems to the financial industry, headquartered in Brookfield, Wisconsin.

GOVERNMENT REGULATION

Insurance companies are subject to regulation and supervision in all the states where they do business.  Generally the state supervisory agencies have broad administrative powers relating to granting and revoking licenses to transact business, license agents, approving forms of policies used, regulating trade practices and market conduct, the form and content of required financial statements, reserve requirements, permitted investments, approval of dividends and in general, the conduct of all insurance activities.  Insurance regulation is concerned primarily with the protection of policyholders.  The Company cannot predict the impact of any future proposals, regulations or market conduct investigations.  UG is domiciled in the state of Ohio.  AC and TI are both domiciled in the state of Texas.

Insurance companies must also file detailed annual reports on a statutory accounting basis with the state supervisory agencies where each does business; (see Note 6 to the consolidated financial statements) regarding statutory equity and income from operations.  These agencies may examine the business and accounts at any time.  Under the rules of the National Association of Insurance Commissioners (NAIC) and state laws, the supervisory agencies of one or more states examine a company periodically, usually at three to five year intervals.

Most states also have insurance holding company statutes, which require registration and periodic reporting by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions.  The insurance subsidiary is subject to such legislation and registered as a controlled insurer in those jurisdictions in which such registration is required.  Statutes vary from state to state but typically require periodic disclosure, concerning the corporation that controls the registered insurers and all subsidiaries of such corporation. In addition, prior notice to, or approval by, the state insurance commission of material transactions with affiliates, including transfers of assets, reinsurance agreements, management agreements (see Note 9 to the consolidated financial statements), and payment of dividends (see Note 2 to the consolidated financial statements) in excess of specified amounts by the insurance subsidiary, within the holding company system, are required.

Risk-based capital requirements and state guaranty fund laws are discussed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Information regarding the Company including recent filings with the Securities and Exchange Commission are available on the Company’s web site at www.utgins.com.

EMPLOYEES

At December 31, 2008, UTG and its subsidiaries had 73 full-time equivalent employees.  UTG’s operations are headquartered in Springfield, Illinois.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are not the only ones that UTG faces.  Additional risks and uncertainties that the Company is unaware of, or currently deemed immaterial, also may become important factors that affect our business.  If any of these risks were to occur, our business, financial condition or results of operations could be materially and adversely affected.

The Company faces significant competition for insurance and third party administration clients.  Competition in the insurance industry may limit our ability to attract and retain customers.  UTG may face competition now and in the future from the following: other insurance and third party administration (TPA) providers, including larger non-insurance related companies which provide TPA services.

In particular, our competitors include insurance companies whose greater resources may afford them a marketplace advantage by enabling them to provide insurance services with lower margins.  Additionally, insurance companies and other institutions with larger capitalization and others not subject to insurance regulatory restrictions have the ability to serve the insurance needs of larger customers.  If the Company is unable to attract and retain insurance clients, continued growth, results of operations and financial condition may otherwise be negatively affected.

The main sources of income from operations are premium and net investment income.  Net investment income is equal to the difference between the investment income received from various types of investment securities and other income-producing assets and the related expenses incurred in connection with maintaining these investments.  The primary sources of income can be affected by changes in market interest rates and various economic conditions.  These conditions are highly sensitive to many factors beyond our control, including general economic conditions, both domestic and foreign, and the monetary and fiscal policies of various governmental and regulatory authorities.  The Company has adopted asset and liability management policies to try to minimize the potential adverse effects of changes in interest rates on our net interest income, primarily by altering the mix and maturity of loans, investments and funding sources.  However, even with these policies in place, the Company cannot provide assurance that changes in interest rates will not negatively impact our operating results.

An increase in interest rates also could have a negative impact on business by reducing the demand for insurance products.  Fluctuations in interest rates may result in disintermediation, which is the flow of funds away from insurance companies into direct investments that pay higher rates of return, and may affect the value of investment securities and other interest-earning assets.

As 2008 saw one of the largest financial crises in our nation’s history, every person and business has been impacted, including the Company.  Significant time has been spent internally researching the Company’s risk and communicating with outside investment advisors about the current investment environment and ways to ensure preservation of capital and mitigate any losses.  Management has put extensive efforts into evaluating its investment holdings.  Management intends to continue its close monitoring of its bond holdings and other investments for additional deterioration or market condition changes.  Future events may result in Management’s determination certain current investment holdings may need to be sold which could result in gains or losses in future periods.  Such future events could also result in other than temporary declines in value that could result in future period impairment losses.

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2008, approximately 59% of our total direct premium was collected from Illinois, Ohio, Texas and West Virginia.  Thus, results of operations are heavily dependent upon the strength of these economies.

In addition, a substantial portion of our investment mortgage loans are secured by real estate located primarily in Kentucky and Georgia.  Consequently, our ability to continue to originate real estate loans may be impaired by adverse changes in local and regional economic conditions in these real estate markets or by acts of nature.  These events also could have an adverse effect on the value of our collateral and, due to the concentration of our collateral in real estate, on our financial condition.

The Company has traditionally obtained funds principally through premium deposits.  If, as a result of competitive pressures, market interest rates, general economic conditions or other events, the balance of the premium deposits decrease relative to our overall operations, the Company may have to look for ways to further reduce operating costs which could have a negative impact on results of operations or financial condition.

The Company has significant business risks in the amount of policy benefit expenses incurred each year.  The majority of these expenses are related to death claims paid on life insurance contracts.  The Company has no control over these expenses, which have a significant impact on our financial results.

Insurance holding companies operate in a highly regulated environment and are subject to supervision and examination by various federal and state regulatory agencies.  The cost of compliance with regulatory requirements may adversely affect our results of operations or financial condition.  Federal and state laws and regulations govern numerous matters including: changes in the ownership or control, maintenance of adequate capital and the financial condition of an insurance company, permissible types, amounts and terms of investments, permissible non-insurance activities, the level of policyholder reserves, and restrictions on dividend payments.

The Company will continue to consider the acquisition of other businesses.  However, the opportunities to make suitable acquisitions on favorable terms in the future may not be available, which could negatively impact the growth of business.  UTG expects that other insurance and financial companies will compete to acquire compatible businesses.  This competition could increase prices for acquisitions that we would likely pursue, and our competitors may have greater resources.  Also, acquisitions of regulated businesses such as insurance companies are subject to various regulatory approvals.  If appropriate regulatory approvals are not received, an acquisition would not be able to complete what we believe is in our best interest.

UTG has in the past acquired, and will in the future consider the acquisition of, other insurance and related businesses.  If other companies are acquired in the future, our business may be negatively impacted by risks related to those acquisitions.  These risks include the following: the risk that the acquired business will not perform in accordance with management’s expectations; the risk that difficulties will arise in connection with the integration of the operations of the acquired business with our operations; the risk that management will divert its attention from other aspects of our business; the risk that key employees of the acquired business are lost; the risks associated with entering into geographic and product markets in which we have limited or no direct prior experience; and the risks of the acquired company assumed in connection with an acquisition.

As a result of these risks, any given acquisition, if and when consummated, may adversely affect our results of operations or financial condition. In addition, because the consideration for an acquisition may involve cash, debt or the issuance of shares of our common stock and may involve the payment of a premium over book and market values, existing holders of our common stock could experience dilution in connection with the acquisition.

UTG relies heavily on communications and information systems to conduct our business.  Any failure or interruptions or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, or administrative servicing systems. The occurrence of any failures or interruptions could result in a loss of customer business and have a material adverse effect on our results of operations and financial condition.

Under regulatory capital adequacy guidelines and other regulatory requirements, we must meet guidelines that include quantitative measures of assets, liabilities, and certain off-balance sheet items, subject to qualitative judgments by regulators about components, risk weightings and other factors.  If we fail to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

The following table shows a breakout of property, net of accumulated depreciation, occupied by the Company.

Property occupied		Amount	% of Total
Home Office	$	1,594,537	100%

The Company owns an office complex in Springfield, Illinois, which houses the primary insurance operations.  The office buildings in this complex contain 57,000 square feet of office and warehouse space, and are carried at $1,594,537.  The facilities occupied by the Company are adequate relative to the Company's present operations.

ITEM 3.  LEGAL PROCEEDINGS

In the normal course of business the Company is involved from time to time in various legal actions and other state and federal proceedings.  There were no proceedings pending as of December 31, 2008.

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

There were no matters submitted to a vote of UTG’s shareholders during the fourth quarter of 2008.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Registrant is a public company whose common stock is traded in the over-the-counter market.  Over-the-counter quotations can be obtained with the UTGN.OB stock symbol.

The following table shows the high and low closing prices for each quarterly period during the past two years, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.  The quotations below were acquired from the NASDAQ web site, which also provides quotes for over-the-counter traded securities such as UTG.

2008 2007

PERIOD	High	Low	High	Low
First quarter	10.00	8.05	9.75	7.90
Second quarter	10.01	9.25	9.75	7.40
Third quarter	10.75	10.00	11.00	7.90
Fourth quarter	10.25	7.05	10.50	9.00

UTG  has not declared or paid any dividends on its common stock in the past two fiscal years, and has no current plans to pay dividends on its common stock as it intends to retain all earnings for investment in and growth of the Company’s business.  See Note 2 in the accompanying consolidated financial statements for information regarding dividend restrictions, including applicable restrictions on the ability of the Company’s life insurance subsidiaries to pay dividends.

As of March 2, 2009 there were 7,990 record holders of UTG common stock.

On March 26, 2002, the Board of Directors of UTG adopted, and on June 11, 2002, the shareholders of UTG approved the UTG, Inc, Inc. Employee and Director Stock Purchase Plan.  The Plan allows for the issuance of up to 400,000 shares of UTG common stock.  The plan’s purpose is to encourage ownership of UTG stock by eligible directors and employees of UTG and its subsidiary by providing them with an opportunity to invest in shares of UTG common stock.  The plan is administered by the Board of Directors of UTG.

A total of 400,000 shares of common stock may be purchased under the plan, subject to appropriate adjustment for stock dividends, stock splits or similar recapitalizations resulting in a change in shares of UTG.  The plan is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.  The Board of Directors of UTG periodically approves offerings under the plan to qualified individuals. Through March 2, 2009, 18 individuals have purchased a total of 109,319 shares under this program.  Each participant under the plan executed a “stock restriction and buy-sell agreement”, which among other things provides UTG with a right of first refusal on any future sales of the shares acquired by the participant under this plan.

The purchase price of shares repurchased under the stock restriction and buy-sell agreement shall be computed, on a per share basis, equal to the sum of (i) the original purchase price(s) paid to acquire such shares from the Holding Company at the time they were sold pursuant to the Plan and (ii) the consolidated statutory net earnings (loss) per share of such shares during the period from the end of the month next preceding the month in which such shares were acquired pursuant to the plan, to the end of the month next preceding the month in which the closing sale of such shares to UTG occurs.  The consolidated statutory net earnings per share shall be computed as the net income of the Holding Company and its subsidiaries on a consolidated basis in accordance with statutory accounting principles applicable to insurance companies, as computed by the Holding Company, except that earnings of insurance companies or block of business acquired after the original plan date, November 1, 2002, shall be adjusted to reflect the amortization of intangibles established at the time of acquisition in accordance with generally accepted accounting principles (GAAP), less any dividends paid to shareholders. The calculation of net earnings per share shall be performed on a monthly basis using the number of common shares of the Holding Company outstanding as of the end of the reporting period. The purchase price for any shares purchased hereunder shall be paid in cash within 60 days from the date of purchase subject to the receipt of any required regulatory approvals as provided in the Agreement.

The original issue price of shares at the time this program began was established at $12.00 per share.  Through March 1, 2009, UTG had 109,319 shares outstanding that were issued under this program.  At December 31, 2008, shares under this program have a value of $16.76 per share pursuant to the above formula.

The following table reflects the Company’s Employee and Director Stock Purchase Plan Information:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under employee and director stock purchase plans (excluding securities reflected in column (a)) (c)
Employee and Director Stock Purchase plans approved by security holders	0	0	290,681
Employee and Director Stock Purchase plans not approved by security holders	0	0	0
Total	0	0	290,681

Purchases of Equity Securities

The following table provides information with respect to purchases we made of our common stock during the three months ended December 31, 2008 and total repurchases:

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Number of Shares That May Yet Be Purchased Underthe Program	Approximate Dollar Value That May Yet Be Purchased Under the Program
Oct 1 through Oct  31, 2008	346	$		8.00		346	N/A	$  231,198
Nov 1 through Nov 30, 2008	294			8.00		294	N/A	228,846
Dec 1 through Dec 31, 2008	720			8.00		720	N/A	223,086
Total	1,360	$		8.00		1,360

On June 5, 2001, the Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of up to $1 million of UTG's common stock.  On June 16, 2004, an additional $1 million was authorized for repurchasing shares.  On April 18, 2006, an additional $1 million was authorized for repurchasing shares.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Through March 1, 2009, UTG has spent $2,776,934 in the acquisition of 400,315 shares under this program.

ITEM 6.  SELECTED FINANCIAL DATA

The following selected historical consolidated financial data should be read in conjunction with “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Item 8 – Financial Statements and Supplementary Data” and other financial information included elsewhere in this report.

FINANCIAL HIGHLIGHTS (000's omitted, except per share data)
		2008		2007		2006		2005		2004
Premium income   net of reinsurance	$	13,309	$	14,413	$	12,860	$	13,727	$	14,140
Total revenues	$	35,239	$	38,873	$	37,585	$	27,471	$	25,467
Net income (loss)*	$	654	$	2,143	$	3,870	$	1,260	$	(276)
Basic income (loss) per share	$	0.17	$	0.56	$	1.00	$	0.32	$	(0.07)
Total assets	$	457,779	$	473,655	$	482,732	$	318,832	$	317,868
Total notes payable	$	15,617	$	19,914	$	22,990	$	0	$	0
Dividends paid per share		NONE		NONE		NONE		NONE		NONE

*Includes equity earnings of investees.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The purpose of this section is to discuss and analyze the Company's consolidated results of operations, financial condition and liquidity and capital resources for the three years ended December 31, 2008.  This analysis should be read in conjunction with the consolidated financial statements and related notes, which appear elsewhere in this Form 10-K.  The Company reports financial results on a consolidated basis.  The consolidated financial statements include the accounts of UTG and its subsidiaries at December 31, 2008.

Cautionary Statement Regarding Forward-Looking Statements

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

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

Critical Accounting Policies

General

We have identified the accounting policies below as critical to the understanding of our results of operations and our financial position.  The application of these critical accounting policies in preparing our financial statement requires management to use significant judgments and estimates concerning future results or other developments including the likelihood, timing or amount of one or more future transactions or amounts.  Actual results may differ from these estimates under different assumptions or conditions.  On an on-going basis, we evaluate our estimates, assumptions and judgments based upon historical experience and various other information that we believe to be reasonable under the circumstances.  For a detailed discussion of other significant accounting policies, see Note 1 to the consolidated financial statements.

DAC and Cost of Insurance Acquired

Deferred acquisition costs (DAC) and cost of insurance acquired reflect our expectations about the future experience of the existing business in-force.  The primary assumptions regarding future experience that can affect the carrying value of DAC and cost of insurance acquired balances include mortality, interest spreads and policy lapse rates.  Significant changes in these assumptions can impact amortization of DAC and cost of insurance acquired in both the current and future periods, which is reflected in earnings.

Investments

The Company accounts for its investments in debt and equity securities under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company has classified all of its investments as available-for-sale. These investments are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets for available-for-sale securities.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity. Net realized gains and losses on investments are computed using the specific identification method and are reported in the Consolidated Statements of Operations.

Declines in value of securities available-for-sale that are judged to be other-than-temporary are determined based on the specific identification method and are reported in the Consolidated Statements of Operations as realized losses. The factors considered by management in determining when a decline is other than temporary include but are not limited to: the length of time and extent to which the fair value has been less than cost; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support; whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions (including, in the case of fixed maturities, the effect of changes in market interest rates); and the Company's intent and ability to hold the security for a period of time sufficient to allow for a recovery in fair value. For structured securities, such as mortgage-backed securities, an impairment loss is recognized when there has been a decrease in expected cash flows and/or a decline in the security's fair value below cost.

Deferred Income Taxes

The provision for deferred income taxes is based on the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates to temporary differences between amounts reported in the Consolidated Financial Statements and the tax bases of existing assets and liabilities. A valuation allowance is recognized for the portion of deferred tax assets that, in management's judgment, is not likely to be realized. The effect on deferred income taxes of a change in tax rates or laws is recognized in income tax expense in the period that includes the enactment date.

Results of Operations

(a) Revenues

Premiums and policy fee revenues, net of reinsurance premiums and policy fees, decreased 8% when comparing 2008 to 2007. The Company writes very little new business.  Unless the Company acquires a block of in-force business as it did in December 2006, management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company’s average persistency rate for all policies in force for 2008 and 2007 was approximately 95.8% and 96.1%, respectively. Persistency is a measure of insurance in force retained in relation to the previous year.

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

Net investment income increased 4% when comparing 2008 to 2007. The overall gross investment yields for 2008 and 2007, are 6.35% and 6.02%, respectively. Significant investments have been made in real estate and equity securities that do not contribute to current year investment earnings, which decreases investment yield.  However, Management expects these investments to significantly impact earnings positively as investments are sold and income is recognized in realized gains over the life of the investment. The increase from 2007 to 2008 is primarily due to higher common stock dividends, mortgage interest, and rental income from a real estate investment.  The stock dividends should be expected to decrease during 2009, as approximately 40% of the dividends were from one investment that was subsequently sold in December of 2008.  Due to the decline of the economy and credit crunch, new mortgage loan issues slowed significantly in 2008, and as such this line item is also expected to decline in 2009.  These increases were offset by a decrease in bond interest.  This decrease is primarily related to the Company holding fewer fixed maturity investments and carrying higher cash balances earning lower rates of interest compared to a year ago.  As the bursting of the housing bubble ripples through the global economy, Management has taken steps to avoid catastrophic future losses.  As part of this portfolio evaluation process, certain investments were subsequently sold, particularly during the third and fourth quarters of 2008.  This has resulted in a higher cash balance earning extremely low rates of interest which will have an immediate impact on income.  This should be expected going forward until re-deploying this cash in investments deemed fairly priced and reasonably safe by Management.  Until the middle of 2007, the marketplace had seen an increase in yields on fixed maturity investments, which resulted in an increase in investment earnings on the fixed maturity portfolio during this time as holdings matured and were re-invested.  Additionally, since 2004, the Company began lengthening the bond portfolio.  Generally, longer term investments carry a higher yield than shorter term investments in the marketplace.  The Company also continued to leverage its affiliation with FSNB through the investment in mortgage loans.  Mortgage loans provide a more attractive investment yield than generally found in the bond market.  The Company is able to acquire these loans utilizing FSNB personnel and expertise.  During 2008 and 2007, the Company issued $5,242,000 and $19,765,000, respectively, in new mortgage loans.

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

Realized investment gains, net of realized losses, were $2,362,578 and $5,467,207 in 2008 and 2007, respectively.  During 2008, approximately $5,353,000 in realized gains was the result of common stock sales.  These gains are mostly the result of three investments.  For diversification purposes, in September, 28% of the Company’s investment in CSI common stock was sold for a gain of approximately $3,059,000.  During 2008, amid growing global economic distress, the Company established a defensive posture in exchange traded funds.  These investments resulted in gains of approximately $2,946,000.   At the end of the year, SFF Production, an energy investment, was also sold resulting in realized gains of approximately $1,701,000.  With 2008 experiencing one of the largest financial crises in our nation’s history, Management has refused to sit on the sidelines hoping for a recovery and spent a significant amount of time analyzing the Company’s investment holdings and reducing risk.  As a result of this, certain investments that were deemed too risky, primarily those in financial institutions were sold, predominantly at losses.  Those losses consisted of approximately $3,100,000 on common stocks and $3,000,000 on fixed maturity investments.  Also included in these losses is an approximate $540,000 loss resulting from writing down a bond investment in Lehman Brothers to $0.

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

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

The net realized gains in 2007 are primarily the result of three sales.  In May 2007, the Company sold its 50% interest in Harbor Village Partners LP, realizing a loss of approximately $643,000.  Management determined the project was not performing as desired and that it was in the Company’s best long-term interest to divest of its equity investment.  As part of the sale, UG is entitled to receive a 10% profit share of future earnings of the development project up to $1,400,000.  This future potential was not considered in the current calculation of loss on the sale.  Should any future profits be received by the Company from this project, they will be recorded as income in the period received.  In June 2007, the Company completed the sale of a real estate holding identified as Drs. Hospital.  The Company reported a gain on the sale of approximately $2,600,000.  In December of 2007, the Company sold its 50% interest in Boone Parklands, LLC that was acquired in April of 2007.  The Company realized a gain of approximately $3,800,000 from the sale.

In recent periods, management focus has been placed on promoting and growing TPA services to unaffiliated life insurance companies.  The Company receives monthly fees based on policy in force counts and certain other activity indicators, such as number of premium collections performed, or services performed.  For the years ended 2008 and 2007, the Company received $1,810,775 and $1,781,173 for this work, respectively.  These TPA revenue fees are included in the line item “other income” on the Company’s consolidated statements of operations.  No new TPA contracts were entered into during 2008.  However, the Company intends to continue to pursue other TPA arrangements, through an alliance with Stone River to insurance companies seeking business process outsourcing solutions.  Stone River is responsible for the marketing and sales function for the alliance, as well as providing the data center operations.  UTG staffs the administration effort.  Management believes this alliance with Stone River positions the Company to generate additional revenues by utilizing the Company’s current excess capacity and administrative services.  Stone River is an independent, full-service provider of integrated data processing and information management systems to the financial industry, headquartered in Brookfield, Wisconsin.  Management believes this area is a growing market and the Company is well positioned to serve this market.

In summary, the Company’s basis for future revenue growth is expected to come from the following primary sources: expansion of TPA revenues, conservation of business currently in force, the maximization of investment earnings and the acquisition of other companies or policy blocks in the life insurance business.  Management has placed a significant emphasis on the development of these revenue sources and products offered to enhance these opportunities.

(b) Expenses

Benefits, claims and settlement expenses net of reinsurance benefits and claims, increased $366,319 from 2007 to 2008.  The increase relates primarily to changes in the Company’s death claim experience.  Death claims were approximately $875,000 more in 2008 as compared to 2007.  There is no single event that caused the mortality variances.  Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by management.

Changes in policyholder reserves, or future policy benefits, also impact this line item.  Reserves are calculated on an individual policy basis and generally increase over the life of the policy as a result of additional premium payments and acknowledgement of increased risk as the insured continues to age.  The short-term impact of policy surrenders is negligible since a reserve for future policy benefits payable is held which is, at a minimum, equal to and generally greater than the cash surrender value of a policy.  The benefit of fewer policy surrenders is primarily received over a longer time period through the retention of the Company’s asset base.

Commissions and amortization of deferred policy acquisition costs slightly increased from 2007 to 2008 mostly as a result of lower commissions offset due to a reinsurance agreement in TI that paid out during April of 2008.  The subsidiaries of ACAP have reinsurance agreements in place with outside companies that drive the majority of this number.  The most significant factor in the continuing decrease is attributable to the Company paying fewer commissions since the Company writes very little new business and renewal premiums on existing business continue to decline.  Most of the Company’s agent agreements contained vesting provisions, which provide for continued compensation payments to agents upon their termination subject to certain minimums and often limited to a specific period of time.  Another factor of the decrease is attributable to normal amortization of the deferred policy acquisition costs asset.  The Company reviews the recoverability of the asset based on current trends and known events compared to the assumptions used in the establishment of the original asset.  No impairments were recorded in the periods reported.

Net amortization of cost of insurance acquired decreased 6% in 2008 compared to 2007.  Cost of insurance acquired is established when an insurance company is acquired.  The Company assigns a portion of its cost to the right to receive future profits from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is comprised of individual life insurance products including whole life, interest sensitive whole life and universal life insurance products.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The interest rates utilized in the amortization calculation are 9% on approximately 7% of the balance, 12% on approximately 50% of the balance, and 15% on the remaining balance.  The interest rates vary due to risk analysis performed at the time of acquisition on the business acquired. The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force. Persistency is a measure of insurance in force retained in relation to the previous year.  The Company's average persistency rate for all policies in force for 2008 and 2007 has been approximately 95.8% and 96.1%, respectively.  The Company monitors these projections to determine the adequacy of present values assigned to future profits.  No impairments were recorded in the periods reported.

Operating expenses decreased 10% in 2008 compared to 2007.  The decrease reflects Management’s significant emphasis on expense monitoring and cost containment.  Maintaining administrative efficiencies directly impacts net income.  In early 2009, five positions were eliminated, four as a result of lay-offs due to the decline of the economy.  This will result in savings of approximately $180,000.

Interest expense decreased approximately $485,000 during 2008 compared to 2007.  This decrease is the result of a lower outstanding balance of debt and paying a variable rate of interest on the majority of this balance which has gone from 6.92% at year-end 2007 to 4.02% at year-end 2008.  The Company prepaid principal due in 2009 during 2008.  The next required principal payment is due December of 2010.  The Company anticipates aggressively repaying the current debt.

Deferred taxes are established to recognize future tax effects attributable to temporary differences between the financial statements and the tax return.  As these differences are realized in the financial statement or tax return, the deferred income tax established on the difference is recognized in the financial statements as an income tax expense or credit.

(c) Net income

The Company had a net income of $653,754 and $2,142,619 in 2008 and 2007 respectively.  The decrease in net income in 2008 is primarily related to a decrease in realized investment gains as compared to 2007.  The Companies acquired in 2006 have generally performed as anticipated by management during 2007 and 2008.

Financial Condition

(a) Assets

Investments are the largest asset group of the Company.  The Company's insurance subsidiaries are regulated by insurance statutes and regulations as to the type of investments they are permitted to make, and the amount of funds that may be used for any one type of investment.  In light of these statutes and regulations, and the Company's business and investment strategy, the Company generally seeks to invest in United States government and government agency securities and other high quality low risk investments.  Some insurance companies have suffered significant losses in their investment portfolios in the last few years; however, because of the Company’s conservative investment philosophy the Company has avoided such significant losses.

At December 31, 2008, the carrying value of fixed maturity securities in default as to principal or interest was immaterial in the context of consolidated assets or shareholders' equity.  The Company has identified securities it may sell and classified them as "investments held for sale".  Investments held for sale are carried at market, with changes in market value charged directly to shareholders' equity. To provide additional flexibility and liquidity, the Company has categorized all fixed maturity investments as “investments held for sale”.

At December 31, 2008, the Company held fixed maturity securities with a carrying value of $577,082 that were guaranteed by two different third parties.  The Standard and Poor's credit ratings ranged from AAA to AA- with and without the guarantees.  The Company had no significant concentration in a guarantor either directly or indirectly as of December 31, 2008.

The following table summarizes the Company's fixed maturities distribution at December 31, 2008 and 2007 by ratings category as issued by Standard and Poor's, a leading ratings analyst.

Fixed Maturities
Rating	% of Portfolio
	2008	2007
Investment Grade
AAA	84%	72%
AA	2%	8%
A	10%	13%
BBB	2%	7%
Below investment grade	2%	0%
	100%	100%

Mortgage loan investments represent 9% and 10% of total assets of the Company at year-end 2008 and 2007, respectively.  The Company’s mortgage loan investments result from opportunities available through FSNB, an affiliate of Mr. Jesse T. Correll.  Mr. Correll is the CEO and Chairman of the Board of Directors of UTG, and directly and indirectly through affiliates, its largest shareholder.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  During 2008 and 2007 the Company issued approximately $5,242,000 and $19,765,000 in new mortgage loans, respectively.  These new loans were originated through FSNB and funded by the Company through participation agreements with FSNB.  FSNB services all the mortgage loans of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  UG paid $93,572 and $85,612 in servicing fees and $19,283 and $54,281 in origination fees to FSNB during 2008 and 2007, respectively.

Sub-prime mortgage lending has received significant attention in recent months.  Default rates have risen sharply on these loans causing a negative impact in the economy in general.  While the Company does not have a material direct exposure to sub-prime mortgage loans, the Company could still be negatively impacted indirectly primarily through fixed maturity holdings in financial institutions that do have sub-prime loan exposures.  Declines in values relating to such entities will negatively impact the Company through unrealized investment losses, should any of these entities declare bankruptcy, the Company would then report a realized loss on its investment.  Management monitors events relating to this topic.

Total investment real estate holdings represent approximately 9% and 8% of the total assets of the Company, net of accumulated depreciation, at year-end 2008 and 2007 respectively. The Company has made several investments in real estate in recent years.  Expected returns on these investments exceed those available in fixed income securities.  However, these returns may not always be as steady or predictable.

Cash and cash equivalents increased significantly, by approximately $22,249,000, or 125%, comparing 2008 to 2007.  As already discussed, Management has taken the current economic crisis very seriously refusing to sit on the sidelines and not using hope as an investment strategy.  As Management put extensive efforts into evaluating each investment holding, many were sold with the cash received not immediately reinvested.

Equity securities decreased approximately $2,042,000 during 2008.  The decrease is attributable to Management’s ongoing portfolio evaluation process amidst the current steep economic downturn and credit crisis.  Many financial institution common stock holdings were subsequently sold as a result of this, with not all of the proceeds being reinvested.

Policy loans remained consistent for the periods presented.  Industry experience for policy loans indicates that few policy loans are ever repaid by the policyholder other than through termination of the policy.  Policy loans are systematically reviewed to ensure that no individual policy loan exceeds the underlying cash value of the policy.

Deferred policy acquisition costs decreased 20% in 2008 compared to 2007.  Deferred policy acquisition costs, which vary with, and are primarily related to producing new business, are referred to as DAC.  DAC consists primarily of commissions and certain costs of policy issuance and underwriting, net of fees charged to the policy in excess of ultimate fees charged.  To the extent these costs are recoverable from future profits, the Company defers these costs and amortizes them with interest in relation to the present value of expected gross profits from the contracts, discounted using the interest rate credited by the policy.  The Company had $0 in policy acquisition costs deferred, $9,000 in interest accretion and $196,058 in amortization in 2008, and had $0 in policy acquisition costs deferred, $9,000 in interest accretion and $188,360 in amortization in 2007.

Cost of insurance acquired decreased $4,043,107 in 2008 compared to 2007.  When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future cash flows from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  In 2008 and 2007, amortization decreased the asset by $4,043,107 and $4,282,715, respectively.  No impairments of this asset were recorded for the periods presented

(b) Liabilities

Total liabilities decreased 3% in 2008 compared to 2007. This decrease is attributable primarily to a decrease in the total future policy benefits held.  As policies in force terminate, the corresponding reserve liability held for those policies is released.

At December 31, 2008, the Company has outstanding notes payable of $15,616,766 as compared to $19,914,346 a year ago.  Approximately $10,500,000 of this debt is related to the acquisition of Acap Corporation and the majority remaining is attributable to borrowings of a subsidiary, Lexington, relating to a real estate investment.  The Company has three lines of credit available for operating liquidity or acquisitions of additional lines of business.  There are no outstanding balances on any of these lines of credit as of the balance sheet date.  The Company's long-term debt is discussed in more detail in Note 11 to the consolidated financial statements.

(c) Shareholders' Equity

Total shareholders' equity decreased 5% in 2008 compared to 2007.  This decrease is primarily due to an unrealized loss in value of approximately $3,039,000 on investments held.  Additionally, the Company repurchased approximately $124,000 of its common stock in the open market during the current year.

Each year, the NAIC calculates financial ratio results (commonly referred to as IRIS ratios) for each insurance company.  These ratios compare key financial data pertaining to the statutory balance sheet and income statement.  The results are then compared to pre-established normal ranges determined by the NAIC.  Results outside the range typically require explanation to the domiciliary insurance department.  At year-end 2008, UG had one ratio outside the normal range and AC and TI had 3 and 2 items, respectively, outside of the normal range.  All variances reported were anticipated by management.  These ratios are discussed in more detail in the Regulatory Environment discussion included in this Item 7.

Liquidity and Capital Resources

The Company has three principal needs for cash - the insurance company’s contractual obligations to policyholders, the payment of operating expenses and servicing its outstanding debt.  Cash and cash equivalents as a percentage of total assets were 9% and 4% as of December 31, 2008 and 2007, respectively.  Fixed maturities as a percentage of total invested assets were 58% and 60% as of December 31, 2008 and 2007, respectively.

The Company's investments are predominantly in fixed maturity investments such as bonds and mortgage loans, which provide sufficient return to cover future obligations. The Company carries all of its fixed maturity holdings as held for sale which are reported in the financial statements at their market value.

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

Cash provided by operating activities was $1,195,231 and $809,699 in 2008 and 2007, respectively.  Reporting regulations require cash inflows and outflows from universal life insurance products to be shown as financing activities when reporting on cash flows.

Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments.  Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses.

Cash provided by investing activities was $25,952,559 and $10,873,952 for 2008 and 2007, respectively.  Equity investments sold increased $25,501,863, as the Company evaluated its investment equity portfolio.  Cash provided by investing activities was significantly impacted during 2007 by the sale of real estate by Boone Parklands, LLC, which resulted in proceeds of approximately $15,750,000.  A significant aspect of cash provided by (used in) investing activities is the fixed maturity transactions.  Fixed maturities account for 35% and 28% of the total cost of investments acquired in 2008 and 2007, respectively.  During 2008, Management began to focus on the preservation of capital as the nation is experiencing one of the largest financial crises in its history.  This is reflected in investment sales exceeding purchases by approximately $26,000,000.

Net cash used in financing activities was $ (4,898,383) and $(2,409,736) for 2008 and 2007, respectively.  Cash used in financing activities during 2008 was mostly the result of debt reduction.

Policyholder contract deposits decreased 23% in 2008 compared to 2007.  Management anticipates continued moderate declines in contract deposits.  Policyholder contract withdrawals have decreased 33% in 2008 compared to 2007.  The change in policyholder contract withdrawals is not attributable to any one significant event.  Factors that influence policyholder contract withdrawals are fluctuation of interest rates, competition and other economic factors.

UTG, Inc. borrowed funds in order to complete the Acap Corporation acquisition from First Tennessee Bank National Association through execution of an $18,000,000 promissory note.  To secure the note, UTG, Inc. has pledged 100% of the common stock of its subsidiary, UG.  At the time of closing on December 8, 2006, UTG, Inc. borrowed $15,700,278 on the promissory note.  The remaining available balance was able to be drawn on at any time during the year and a portion of it was used in the purchase of the stock put option shares of Acap Corporation as they were presented to UTG, Inc. for purchase under the stock put option agreement entered into during 2006 as part of the acquisition.  The promissory note carries a variable rate of interest based on the 3 month LIBOR rate plus 180 basis points.  The initial rate was 7.15%.  Interest is payable quarterly.  Principal is payable annually beginning at the end of the second year in five installments of $3,600,000.  The loan matures on December 7, 2012.  During the year ended December 31, 2007, UTG borrowed $1,994,176 and repaid $3,450,005 on the note.  During 2008, UTG paid an additional $3,049,995 in principal, leaving a balance outstanding at December 31, 2008 of $10,494,454.  No additional borrowings on this note are anticipated.

First Tennessee Bank National Association also provided UTG, Inc. with a $5,000,000 revolving credit note.  This note is for a one-year term and may be renewed by consent of both parties.  The credit note is to provide operating liquidity for UTG, Inc. and replaces a previous line of credit provided by Southwest Bank.  Interest bears the same terms as the above promissory note.  The collateral held on the above note also secures this credit note.  UTG, Inc. has no borrowings against this note at this time.

UG has a $3,300,000 line of credit (LOC) available from the First National Bank of Tennessee.  The LOC is for a one-year term from the date of issue.  The interest rate on the LOC is variable and indexed to be the lowest of the U.S. prime rates as published in the Wall Street Journal, with any interest rate adjustments to be made monthly.  At December 31, 2008 and 2007, the Company had no outstanding borrowings attributable to this LOC.  During 2008 and 2007, the Company had $0 and $5,800,000 in borrowings against this line, respectively, which were repaid during each year.

In November 2007, UG became a member of the FHLB.  This membership will allow the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, UG was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the “base membership” amount.  The Company’s current LOC with the FHLB is $15,000,000.  During 2008 and 2007, the Company had borrowings and repayments of $4,000,000 and $5,443,350, respectively.  At December 31, 2008 and 2007, the Company had no outstanding borrowings attributable to this LOC.

During 2002, UTG and Stone River formed an alliance between their respective organizations to provide third party administration (TPA) services to insurance companies seeking business process outsourcing solutions.  Stone River will be responsible for the marketing and sales function for the alliance, as well as providing the operations processing service for the Company.  The Company will staff the administration effort.  To facilitate the alliance, the Company has converted part of its existing business and all TPA clients to “ID3”, a software system owned by Stone River to administer an array of life, health and annuity products in the insurance industry. Stone River is an independent, full-service provider of integrated data processing and information management systems to the financial industry, headquartered in Brookfield, Wisconsin.  In addition, the Company entered into a five-year contract with Stone River for services related to their purchase of the “ID3” software system.  Under the contract, the Company is required to pay $8,333 per month in software maintenance costs and a monthly fee for offsite data center costs, based on the number and type of policies being administered the ID3 software system through mid-2011.

UTG is a holding company that has no day-to-day operations of its own.  Funds required to meet its expenses, generally costs associated with maintaining the Company in good standing with states in which it does business, and the servicing of its debt are primarily provided by its subsidiaries.  On a parent only basis, UTG's cash flow is dependent on management fees received from its insurance subsidiaries, stockholder dividends from its subsidiaries and earnings received on cash balances.  On December 31, 2008, substantially all of the consolidated shareholders equity represents net assets of its subsidiaries.  The Company's insurance subsidiaries have maintained adequate statutory capital and surplus.  The payment of cash dividends to shareholders by UTG is not legally restricted.  However, the state insurance department regulates insurance company dividend payments where the company is domiciled.

UG is an Ohio domiciled insurance company, which requires five days prior notification to the insurance commissioner for the payment of an ordinary dividend.  Ordinary dividends are defined as the greater of:  a) prior year statutory earnings or b) 10% of statutory capital and surplus.  At December 31, 2008 UG statutory shareholders' equity was $27,483,161.  At December 31, 2008, UG statutory net income was $4,825,058.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid ordinary dividends of $3,000,000 to UTG during 2008.  UG paid ordinary dividends of $3,000,000 to UTG during 2007.

AC and TI are Texas domiciled insurance companies, which requires eleven days prior notification to the insurance commissioner for the payment of an ordinary dividend.  Ordinary dividends are defined as the greater of:  a) prior year statutory earnings or b) 10% of statutory capital and surplus.  At December 31, 2008 AC and TI statutory shareholders' equity was $7,345,919 and $2,565,614, respectively.  At December 31, 2008, AC and TI statutory net income was $1,164,325 and $48,944, respectively.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  AC paid ordinary dividends to ACAP of $0 and $500,000 in 2008 and 2007, respectively.  TI paid AC ordinary dividends of $0 and $250,000 in 2008 and 2007, respectively.

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

Regulatory Environment

The Company's current and merged insurance subsidiaries are assessed contributions by life and health guaranty associations in almost all states to indemnify policyholders of failed companies.  In several states the company may reduce premium taxes paid to recover a portion of assessments paid to the states' guaranty fund association.  This right of "offset" may come under review by the various states, and the company cannot predict whether and to what extent legislative initiatives may affect this right to offset.  In addition, some state guaranty associations have adjusted the basis by which they assess the cost of insolvencies to individual companies.  The Company believes that its reserve for future guaranty fund assessments is sufficient to provide for assessments related to known insolvencies.  This reserve is based upon management's current expectation of the availability of this right of offset, known insolvencies and state guaranty fund assessment bases.  However, changes in the basis whereby assessments are charged to individual companies and changes in the availability of the right to offset assessments against premium tax payments could materially affect the company's results.

Currently, the insurance subsidiaries are subject to government regulation in each of the states in which they conduct business.  Such regulation is vested in state agencies having broad administrative power dealing with all aspects of the insurance business, including the power to:  (i) grant and revoke licenses to transact business;  (ii) regulate and supervise trade practices and market conduct;  (iii) establish guaranty associations;  (iv) license agents;  (v) approve policy forms;  (vi) approve premium rates for some lines of business;  (vii) establish reserve requirements;  (viii) prescribe the form and content of required financial statements and reports;  (ix) determine the reasonableness and adequacy of statutory capital and surplus; and  (x) regulate the type and amount of permitted investments.  Insurance regulation is concerned primarily with the protection of policyholders.  The Company cannot predict the impact of any future proposals, regulations or market conduct investigations.  UG is domiciled in the state of Ohio.  AC and TI are both domiciled in the state of Texas.

The insurance regulatory framework continues to be scrutinized by various states, the federal government and the National Association of Insurance Commissioners (NAIC).  The NAIC is an association whose membership consists of the insurance commissioners or their designees of the various states.  The NAIC has no direct regulatory authority over insurance companies.  However, its primary purpose is to provide a more consistent method of regulation and reporting from state to state.  This is accomplished through the issuance of model regulations, which can be adopted by individual states unmodified, modified to meet the state's own needs or requirements, or dismissed entirely.

Most states also have insurance holding company statutes, which require registration and periodic reporting by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions.  The insurance subsidiary is subject to such legislation and registered as controlled insurers in those jurisdictions in which such registration is required.  Statutes vary from state to state but typically require periodic disclosure, concerning the corporation that controls the registered insurers and all subsidiaries of such corporation. In addition, prior notice to, or approval by, the state insurance commission of material inter-corporate transfers of assets, reinsurance agreements, management agreements (see Note 9 to the consolidated financial statements), and payment of dividends (see Note 2 to the consolidated financial statements) in excess of specified amounts by the insurance subsidiary, within the holding company system, are required.

Each year, the NAIC calculates financial ratio results (commonly referred to as IRIS ratios) for each company.  These ratios measure various statutory balance sheet and income statement financial information.  The results are then compared to pre-established normal ranges determined by the NAIC.  Results outside the range typically require explanation to the domiciliary insurance department.

At year-end 2008, UG had one ratio outside the normal range.  AC had three ratios outside the normal range.  TI had two ratios outside the normal range.  Each of the ratios outside the normal range was anticipated by Management.  UG’s ratio relates to the Company’s affiliated investments.  The Company has made investments in real estate projects, which have been consolidated into these financial statements through limited liability companies.  The limited liability companies were created to provide additional risk protection to the Company.  While this negatively impacts this ratio, the Company believes that this structure is in the best interest of the Company and these investments will have a positive long-term impact on the Company.  Additionally, the newly acquired Acap Corporation is a subsidiary of UG.  AC’s ratios outside the normal range relate to change in premium and change in capital and surplus.  TI’s ratios outside the normal range related to the change in premium and change in reserving.  AC and TI, like UG, have not actively marketed life products in the past several years.  Management currently places little emphasis on new business production, believing resources could be better utilized in other ways.  Current sales primarily represent sales to existing customers through additional insurance needs or conservation efforts.  The sale of the A&H line of business at the end of 2006 had a significant role in these also.

The NAIC's risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula.  The risk-based capital (RBC) formula measures the adequacy of statutory capital and surplus in relation to investment and insurance risks such as asset quality, mortality and morbidity, asset and liability matching and other business factors.  The RBC formula is used by state insurance regulators as an early warning tool to identify, for the purpose of initiating regulatory action, insurance companies that potentially are inadequately capitalized.  In addition, the formula defines new minimum capital standards that supplement the current system of low fixed minimum capital and surplus requirements on a state-by-state basis.  Regulatory compliance is determined by a ratio of the insurance company's regulatory total adjusted capital, as defined by the NAIC, to its authorized control level RBC, as defined by the NAIC.  Insurance companies below specific trigger points or ratios are classified within certain levels, each of which requires specific corrective action.  The levels and ratios are as follows:

	Ratio of Total Adjusted Capital to
	Authorized Control Level RBC
Regulatory Event	(Less Than or Equal to)
Company action level	2*
Regulatory action level	1.5
Authorized control level	1
Mandatory control level	0.7

* Or, 2.5 with negative trend.

At December 31, 2008, UG has a ratio that is in excess of 4.6, which is 460% of the authorized control level.  AC and TI have ratios in excess of 10.4 and 20.0, which is 1040% and 2000% of the authorized control level, respectively.  Accordingly, all three companies meet the RBC requirements.

On July 30, 2002, President Bush signed into law the “SARBANES-OXLEY” Act of 2002 (“the Act”).  This Law, enacted in response to several high-profile business failures, was developed to provide meaningful reforms that protect the public interest and restore confidence in the reporting practices of publicly traded companies.  The implications of the Act to public companies, (which includes UTG) are vast, widespread, and evolving.  The Company has implemented requirements affecting the current reporting period, and is continually monitoring, evaluating, and planning implementation of requirements that will need to be taken into account in future reporting periods.  As part of the implementing these requirements, the Company has developed a compliance plan, which includes documentation, evaluation and testing of key financial reporting controls.

The “USA PATRIOT” Act of 2001 (“the Patriot Act”), enacted in response to the terrorist attacks of September 11, 2001, strengthens our Nation’s ability to combat terrorism and prevent and detect money-laundering activities.  Under Section 352 of the Patriot Act, financial institutions (definition includes insurance companies) are required to develop an anti-money laundering program.  The practices and procedures implemented under the program should reflect the risks of money laundering given the entity’s products, methods of distribution, contact with customers and forms of customer payment and deposits.  In addition, Section 326 of the Patriot Act creates minimum standards for financial institutions regarding the identity of their customers in connection with the purchase of a policy or contract of insurance.  The Company has instituted an anti-money laundering program to comply with Section 352, and has communicated this program throughout the organization.  In addition, all new business applications are regularly screened through the Medical Information Bureau.  The Company regularly updates the information provided by the Office of Foreign Asset Control, U.S. Treasury Department in order to remain in compliance with the Patriot Act and will continue to monitor this issue as changes and new proposals are made.

Accounting Developments

The Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 163, Accounting for Financial Guarantee Insurance Contracts — an interpretation of FASB Statement No. 60 Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days after the SEC’s approval of the Public Company Accounting Oversight Board amendments to the auditing literature.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 this Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 160, Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This Statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS No. 159”).  The Statement permits entities to choose to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  The Statement was effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  The Company chose not to elect the fair value option – therefore, SFAS No. 159 did not impact its consolidated financial position, results of operations or cash flows.

The FASB issued Statement No. 157, Fair Value Measurements. The Statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. In February of 2008, the FASB issued FASB Staff position 157-2 which delays the effective date of SFAS 157 for non-financial assets and liabilities which are not measured at fair value on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008. Adoption of SFAS 157 did not have a material impact on its consolidated financial position, results from operation, or cash flow.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest rate risk

The Company’s exposure to interest rate changes results from a significant holding of fixed maturity investments and mortgage loans on real estate, all of which comprised approximately 72% of the investment portfolio as of December 31, 2008.  These investments are mainly exposed to changes in treasury rates.  The fixed maturities investments include U.S. government bonds, securities issued by government agencies, mortgage-backed bonds and corporate bonds.  Approximately 65% of the fixed maturities owned at December 31, 2008 are instruments of the United States government or are backed by U.S. government agencies or private corporations carrying the implied full faith and credit backing of the U.S. government.

To manage interest rate risk, the Company performs periodic projections of asset and liability cash flows to evaluate the potential sensitivity of the investments and liabilities.  Management assesses interest rate sensitivity with respect to the available-for-sale fixed maturities investments using hypothetical test scenarios that assume either upward or downward 100-basis point shifts in the prevailing interest rates.  The following tables set forth the potential amount of unrealized gains (losses) that could be caused by 100-basis point upward and downward shifts on the available-for-sale fixed maturities investments as of December 31, 2008:

Decreases in Interest Rates		Increases in Interest Rates
200 Basis Points	100 Basis Points	100 Basis Points	200 Basis Points	300 Basis Points
$18,617,000	$11,140,000	$(3,689,000)	$(12,670,000)	$(21,104,000)

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

There are no fixed maturities or other investment that management classifies as trading instruments.  At December 31, 2008 and December 31, 2007, there were no investments in derivative instruments.

The Company had no capital lease obligations, material operating lease obligations or purchase obligations outstanding as of December 31, 2008.

The Company has $15,616,766 in debt outstanding at December 31, 2008.

Future policy benefits reflected as liabilities of the Company on its balance sheet as of December 31, 2008, represent actuarial estimates of liabilities of future policy obligations such as expected death claims on the insurance policies in force as of the financial reporting date.  Due to the nature of these liabilities, maturity is event dependent, and therefore, these liabilities have been classified as having an indeterminate maturity.

Tabular presentation

The following table provides information about the Company’s long term debt that is sensitive to changes in interest rates.  The table presents principal cash flows and related weighted average interest rates by expected maturity dates.  The Company has no derivative financial instruments or interest rate swap contracts.

December 31, 2008
Expected maturity date
	2009	2010	2011	2012	Thereafter	Total	Fair value
Long term debt
Fixed rate	1,223,099	1,224,978	1,227,008	1,229,207	218,020	5,122,312	4,633,998
Avg. int. rate	5.0%	5.0%	5.0%	5.0%	5.0%	5.0%
Variable rate	0	3,600,000	3,600,000	3,294,454	0	10,494,454	10,494,454
Avg. int. rate	4.0%	4.0%	4.0%	4.0%	4.0%	4.0%

Equity risk

Equity risk is the risk that the Company will incur economic losses due to adverse fluctuations in a particular stock.  As of December 31, 2008 and 2007, the fair value of our equity securities was $30,636,500 and $32,678,592, respectively.  As of December 31, 2008, a 10% decline in the value of the equity securities would result in an unrealized loss of $3,063,650, as compared to an estimated unrealized loss of $3,267,859 as of December 31, 2007.  The selection of a 10% unfavorable change in the equity markets should not be construed as a prediction by the Company of future market events, but rather as an illustration of the potential impact of such an event.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Listed below are the financial statements included in this Part of the Annual Report on SEC Form 10-K:

	Page No.
UTG, INC. AND CONSOLIDATED SUBSIDIARIES
Report of Management on Internal Controls Over Financial Reporting……..…............................ Report of Brown Smith Wallace LLC, Independent   Registered Public Accounting Firm for the years ended December 31, 2008 and 2007……..…....	35 36
Consolidated Balance Sheets………………………………………………………………………....….	37
Consolidated Statements of Operations…………………………………………………..………...……	38
Consolidated Statements of Shareholders' Equity………………………………………..………...…..	39
Consolidated Statements of Cash Flows……………………………………………………......…...….	40
Notes to Consolidated Financial Statements……………………………………………………......…..	41-65

Report of Management on Internal Controls Over Financial Reporting

The management of UTG, Inc. (“UTG”) is responsible for establishing and maintaining adequate internal control over financial reporting. UTG’s internal control system is designed to provide reasonable assurance to the Company’s management and board of directors regarding the reliability of financial reporting and fair presentation of published financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financials statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of UTG’s internal controls over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), in Internal Control-Integrated Framework. Based on our assessment we concluded that, as of December 31, 2008 UTG’s internal control over financial reporting is effective.

The Company is considered a non-accelerated filer thus, the registered public accounting firm, which audited the financial statements included in the annual report, is not required to issue an attestation report on management’s assessment of internal control over financial reporting for December, 31 2008. The Securities and Exchange Commission is currently reviewing whether or not an attestation report will be required in the future. If the SEC makes no changes, the Company will be required to have an audit performed as of December 31, 2009.

Report of Brown Smith Wallace, LLC

Independent Registered Public Accounting Firm

Board of Directors and Shareholders

UTG, Inc.

Springfield, Illinois

We have audited the accompanying consolidated balance sheets of UTG, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for years then ended. UTG, Inc’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of UTG, Inc. and subsidiaries as of December 31, 2008 and 2007, and the consolidated results of their operations and their consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to examine management’s assertion about the effectiveness of UTG, Inc.’s internal control over financial reporting as of December 31, 2008 included in the accompanying Report of Management on Internal Control Over Financial Reporting and, accordingly, we do not express an opinion thereon.

We have also audited Schedule I as of December 31, 2008, and the Schedules II, IV and V as of December 31, 2008 and 2007, of UTG, Inc. and subsidiaries and Schedules II, IV and V for the years then ended.  In our opinion, these schedules present fairly, in all material respects, the information required to be set forth therein.

/s/ Brown Smith Wallace, LLC

March 30, 2009

UTG, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and 2007
ASSETS
				2008		2007
Investments:
	Fixed maturities held to maturity, at amortized cost
	(market $0 and $6,330,036)		$	0	$	6,006,846
	Investments held for sale:
	Fixed maturities, at market (cost $175,053,102 and $196,079,174)			178,689,861		197,974,206
	Equity securities, at market (cost $32,171,722 and $26,882,317)			30,636,500		32,678,592
	Mortgage loans on real estate at amortized cost			42,472,916		45,602,147
	Investment real estate, at cost, net of accumulated depreciation			41,780,466		39,154,175
	Policy loans			14,632,855		15,643,238
	Short-term investments			0		933,967
				308,212,598		337,993,171
Cash and cash equivalents				39,995,875		17,746,468
Securities of affiliate				4,000,000		4,000,000
Accrued investment income				2,049,173		2,485,594
Reinsurance receivables:
	Future policy benefits			70,610,348		73,450,212
	Policy claims and other benefits			5,262,560		4,657,663
Cost of insurance acquired				24,293,914		28,337,021
Deferred policy acquisition costs				813,470		1,009,528
Property and equipment, net of accumulated depreciation				1,672,968		1,752,199
Income taxes receivable, current				422,915		0
Other assets				445,483		2,222,898
		Total assets	$	457,779,304	$	473,654,754
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
	Future policy benefits		$	340,883,754	$	346,076,921
	Policy claims and benefits payable			3,885,282		3,198,166
	Other policyholder funds			1,187,870		1,000,216
	Dividend and endowment accumulations			14,129,025		14,039,241
Income taxes payable, current				0		450,626
Deferred income taxes				14,693,795		16,502,035
Notes payable				15,616,766		19,914,346
Other liabilities				8,087,571		9,486,971
		Total liabilities		398,484,063		410,668,522
Minority interests in consolidated subsidiaries				13,050,030		14,231,707
Shareholders' equity:
Common stock - no par value, stated value $.001 per share.
	Authorized 7,000,000 shares - 3,834,031 and 3,849,533 shares issued
	and outstanding after deducting treasury shares of 400,315 and 384,813			3,834		3,849
Additional paid-in capital				41,943,229		42,067,229
Retained earnings				3,028,744		2,374,990
Accumulated other comprehensive income				1,269,404		4,308,457
		Total shareholders' equity		46,245,211		48,754,525
		Total liabilities and shareholders' equity	$	457,779,304	$	473,654,754

See accompanying notes.

UTG, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2008 and 2007
				2008		2007
Revenues:
	Premiums and policy fees		$	18,489,073	$	19,104,158
	Reinsurance premiums and policy fees			(5,180,334)		(4,690,792)
	Net investment income			17,516,435		16,880,362
	Realized investment gains, net			2,362,578		5,467,207
	Other income			2,051,528		2,111,637
				35,239,280		38,872,572
Benefits and other expenses:
	Benefits, claims and settlement expenses:
		Life		25,297,205		25,567,473
		Reinsurance benefits and claims		(4,182,981)		(3,145,550)
		Annuity		1,373,230		(471,222)
		Dividends to policyholders		1,000,197		1,170,631
	Commissions and amortization of deferred
		policy acquisition costs		(1,650,926)		(2,016,521)
	Amortization of cost of insurance acquired			4,043,107		4,282,715
	Operating expenses			7,231,903		8,019,556
	Interest expense			906,412		1,391,427
				34,018,147		34,798,509
Income before income taxes and minority
interest				1,221,133		4,074,063
Income tax expense				(915,195)		(383,197)
Minority interest in income of consolidated
subsidiaries				347,816		(1,548,247)
Net income			$	653,754	$	2,142,619
Basic income per share			$	0.17	$	0.56
Diluted income per share			$	0.17	$	0.56
Basic weighted average shares outstanding				3,844,081		3,851,596
Diluted weighted average shares outstanding				3,844,081		3,851,596

See accompanying notes.

UTG, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For The Years Ended December 31, 2008 and 2007
			2008				2007
Common stock
	Balance, beginning of year	$	3,849			$	3,843
	Issued during year		0				30
	Treasury shares acquired		(15)				(24)
	Change in stated value		0				0
	Balance, end of year	$	3,834			$	3,849
Additional paid-in capital
	Balance, beginning of year	$	42,067,229			$	41,813,690
	Issued during year		0				446,668
	Treasury shares acquired		(124,000)				(190,530)
	Retired during year		0				(2,599)
	Change in stated value		0				0
	Balance, end of year	$	41,943,229			$	42,067,229
Retained earnings (accumulated deficit)
	Balance, beginning of year	$	2,374,990			$	232,371
	Net income		653,754	$	653,754		2,142,619	$	2,142,619
	Balance, end of year	$	3,028,744			$	2,374,990
Accumulated other comprehensive income
	Balance, beginning of year	$	4,308,457			$	2,976,488
	Other comprehensive income (loss)
	Unrealized holding gain (loss) on securities
	net of minority interest and
	reclassification adjustment and taxes		(3,039,053)		(3,039,053)		1,331,969		1,331,969
	Comprehensive income (loss)			$	(2,385,299)			$	3,474,588
	Balance, end of year	$	1,269,404			$	4,308,457
Total shareholders' equity, end of year		$	46,245,211			$	48,754,525

See accompanying notes.

UTG, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008 and 2007
			2008		2007
Cash flows from operating activities:
Net income		$	653,754	$	2,142,619
Adjustments to reconcile net income to net cash
provided by operating activities net of changes in assets and liabilities
resulting from the sales and purchases of subsidiaries:
	Amortization/accretion of fixed maturities		127,653		93,211
	Realized investment (gains) losses, net		(2,362,578)		(5,467,208)
	Amortization of deferred policy acquisition costs		196,058		179,360
	Amortization of cost of insurance acquired		4,043,107		4,282,715
	Depreciation		1,093,746		1,015,083
	Minority interest		(347,816)		1,548,247
	Charges for mortality and administration
	of universal life and annuity products		(8,345,932)		(8,607,194)
	Interest credited to account balances		5,629,810		5,286,528
	Change in accrued investment income		436,421		339,381
	Change in reinsurance receivables		2,234,967		703,076
	Change in policy liabilities and accruals		(1,741,377)		(2,911,180)
	Change in income taxes payable		(1,219,988)		(157,125)
	Change in other assets and liabilities, net		797,406		2,362,186
Net cash provided by operating activities			1,195,231		809,699
Cash flows from investing activities:
Proceeds from investments sold and matured:
	Fixed maturities held for sale		46,480,399		67,386,270
	Fixed maturities matured		0		1,596,785
	Equity securities		25,642,253		140,390
	Mortgage loans		8,371,546		9,230,011
	Real estate		599,544		36,366,487
	Policy loans		5,646,885		4,685,078
	Short-term		933,967		1,312,195
	Other invested assets		0		793,749
Total proceeds from investments sold and matured			87,674,594		121,510,965
Cost of investments acquired:
	Fixed maturities held for sale		(21,695,379)		(29,730,542)
	Fixed maturities		0		(1,319,428)
	Equity securities		(25,578,919)		(16,991,419)
	Mortgage loans		(5,242,315)		(22,816,712)
	Real estate		(4,116,214)		(33,506,988)
	Policy loans		(4,085,072)		(4,396,791)
	Short-term		0		(2,193,967)
	Other invested assets		(880,000)		(800,000)
Total cost of investments acquired			(61,597,899)		(111,755,847)
Purchase of property and equipment			(124,136)		(72,674)
Sale of property and equipment			0		1,191,508
Net cash provided by investing activities			25,952,559		10,873,952
Cash flows from financing activities:
	Policyholder contract deposits		5,678,617		7,331,444
	Policyholder contract withdrawals		(4,668,235)		(6,918,990)
	Proceeds from notes payable/line of credit		4,000,000		21,607,423
	Payments of principal on notes payable/line of credit		(8,297,580)		(24,683,158)
	Issuance of common stock		0		444,099
	Purchase of treasury stock		(124,015)		(190,554)
	Purchase of minority interest in consolidated subsidiary		(1,487,170)		0
Net cash used in financing activities			(4,898,383)		(2,409,736)
Net increase in cash and cash equivalents			22,249,407		9,273,915
Cash and cash equivalents at beginning of year			17,746,468		8,472,553
Cash and cash equivalents at end of year		$	39,995,875	$	17,746,468

See accompanying notes.

UTG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. ORGANIZATION - At December 31, 2008, the significant majority-owned subsidiaries of UTG, Inc were as depicted on the following organizational chart.

UTG, Inc. and its subsidiaries are collectively referred to as (“The Company”).  The Company’s significant accounting policies, consistently applied in the preparation of the accompanying consolidated financial statements, are summarized as follows.

B. NATURE OF OPERATIONS - UTG, Inc., is an insurance holding company, which sells individual life insurance products through its insurance subsidiaries.  The Company's principal market is the mid-western United States and Texas.  The Company’s dominant business is individual life insurance which includes the servicing of existing insurance business in force, the solicitation of new individual life insurance and the acquisition of other companies in the insurance business.

C. BUSINESS SEGMENTS - The Company has only one significant business segment – insurance.

D. BASIS OF PRESENTATION - The financial statements of UTG, Inc., and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America.

  E.   PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Registrant and its majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated.

F.	INVESTMENTS - Investments are shown on the following bases:
	Fixed maturities held to maturity - at cost, adjusted for amortization of premium or discount and other-than-temporary market value declines.  The amortized cost of such investments differs from their market values; however, the Company has the ability and intent to hold these investments to maturity, at which time the full face value is expected to be realized.
	Investments held for sale - at fair value.  Unrealized gains and losses deemed temporary, net of deferred income taxes, are credited or charged, as appropriate, directly to accumulated other comprehensive income or loss (a component of stockholders’ equity).  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of held for sale securities, and unrealized losses considered to be other than temporary, are credited or charged to net realized investment gains (losses) in the Consolidated Statements of Operations.
	Mortgage loans on real estate - at unpaid balances, adjusted for amortization of premium or discount, less allowance for possible losses.
	Real estate - investment real estate at cost less allowance for depreciation and, as appropriate, provisions for possible losses.  Accumulated depreciation on investment real estate was $1,962,109 and $594,043 as of December 31, 2008 and 2007, respectively.
	Policy loans - at unpaid balances including accumulated interest but not in excess of the cash surrender value of the related policy.
	Short-term investments - at cost, which approximates current market value.
	Realized gains and losses on sales of investments are recognized in net income on the specific identification basis.
	Unrealized gains and losses on investments carried at market value are recognized in other comprehensive income on the specific identification basis.
G.	CASH EQUIVALENTS - The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.
H.	REINSURANCE - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.
	Amounts paid, or deemed to have been paid, for reinsurance contracts are recorded as reinsurance receivables.  Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts.  The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.
I.	FUTURE POLICY BENEFITS AND EXPENSES - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method.  These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary’s experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations.  The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 9.25% for annuities.  Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term.  Policy benefit claims are charged to expense in the period that the claims are incurred.  Current mortality rate assumptions are based on 1975-80 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or Linton C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.
	Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 4.0% to 5.5% as of December 31, 2008 and 2007.
J.	POLICY AND CONTRACT CLAIMS - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported based on prior experience of the Company.  Incurred but not reported claims were $1,312,848 and $1,232,848 as of December 31, 2008 and 2007, respectively.
K.	COST OF INSURANCE ACQUIRED - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  The Company utilized 9% discount rate on approximately 14% of the business, 12% discount rate on approximately 83% of the business and 15% discount rate on approximately 3% of the business.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The interest rates utilized in the amortization calculation are 9% on approximately 7% of the balance, 12% on approximately 50% of the balance and 15% on 43% of the balance.  The interest rates vary due to differences in the blocks of business.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

		2008		2007
Cost of insurance acquired, beginning of year	$	28,337,021	$	32,808,159
Acquired with acquisition of Subsidiary		(0)		(188,423)
Interest accretion		5,437,426		6,024,911
Amortization		(9,480,533)		(10,307,626)
Net amortization		(4,043,107)		(4,282,715)
Cost of insurance acquired, end of year	$	24,293,914	$	28,337,021

	Cost of insurance acquired was tested for impairment as part of the regular reporting process.  The fair value of the cost of insurance acquired was estimated using the expected present value of future cash flows.  No impairment loss was realized during any of the three years presented.
	Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:
			Interest Accretion	Amortization	Net Amortization
2009		$	4,885,000	$                      8,879,000	$                          3,994,000
2010			2,437,000	4,345,000	1,908,000
2011			2,230,000	3,833,000	1,603,000
2012			2,037,000	3,529,000	1,492,000
2013			1,858,000	3,244,000	1,386,000

L.	DEFERRED POLICY ACQUISITION COSTS - Commissions and other costs (salaries of certain employees involved in the underwriting and policy issue functions and medical and inspection fees) of acquiring life insurance products that vary with and are primarily related to the production of new business have been deferred.  Traditional life insurance acquisition costs are being amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves.
	For universal life insurance and interest sensitive life insurance products, acquisition costs are being amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality, and expense margins.  Under SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments," the Company makes certain assumptions regarding the mortality, persistency, expenses, and interest rates it expects to experience in future periods.  These assumptions are to be best estimates and are to be periodically updated whenever actual experience and/or expectations for the future change from initial assumptions.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.
	The following table summarizes deferred policy acquisition costs and related data for the years shown.

		2008		2007
Deferred, beginning of year	$	1,009,528	$	1,188,888
Acquisition costs deferred:
Commissions		0		0
Other expenses		0		0
Total		0		0
Interest accretion		9,000		9,000
Amortization charged to income		(205,058)		(188,360)
Net amortization		(196,058)		(179,360)
Change for the year		(196,058)		(179,360)
Deferred, end of year	$	813,470	$	1,009,528

Estimated net amortization expense of deferred policy acquisition costs for the next five years is as follows:

		Interest				Net
		Accretion		Amortization		Amortization
2009	$	8,000	$	186,000	$	178,000
2010		6,000		104,000		98,000
2011		5,000		77,000		72,000
2012		4,000		66,000		62,000
2013		4,000		53,000		49,000

M.	PROPERTY AND EQUIPMENT - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of $2,896,107 and $2,681,009 at December 31, 2008 and 2007, respectively.  Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of three to thirty years.  Depreciation expense was $214,245 and $258,298 for the years ended December 31, 2008 and 2007, respectively.
N.	INCOME TAXES - Income taxes are reported under Statement of Financial Accounting Standards Number 109 and Interpretation Number 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement number 109”.  Deferred income taxes are recorded to reflect the tax consequences on future periods of differences between the tax bases of assets and liabilities and their financial reporting amounts at the end of each such period.
O.	EARNINGS PER SHARE - Earnings per share (EPS) are reported under Statement of Financial Accounting Standards Number 128.  The objective of both basic EPS and diluted EPS is to measure the performance of an entity over the reporting period.  Basic EPS is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.   Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued.  In addition, the numerator also is adjusted for any changes in income or loss that would result from the assumed conversion of those potential common shares.
P.	TREASURY SHARES - The Company holds 400,315 and 384,813 shares of common stock as treasury shares with a cost basis of $2,970,533 and $2,846,517 at December 31, 2008 and 2007, respectively.
Q.	RECOGNITION OF REVENUES AND RELATED EXPENSES - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due.  Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies.  Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs.  For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits.  Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period.  Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.
R.	PARTICIPATING INSURANCE - Participating business represents 9% and 9% of life insurance in force at December 31, 2008 and 2007, respectively.  Premium income from participating business represents 37% and 42% of total premiums for the years ended December 31, 2008 and 2007, respectively.  The amount of dividends to be paid is determined annually by the insurance subsidiary's Board of Directors.  Earnings allocable to participating policyholders are based on legal requirements that vary by state.
S.	RECLASSIFICATIONS - Certain prior year amounts have been reclassified to conform to the 2008 presentation.  Such reclassifications had no effect on previously reported net income or shareholders' equity.
T.	USE OF ESTIMATES - In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
U.	IMPAIRMENT OF LONG LIVED ASSETS - The Company evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long lived assets may warrant revision or that the remaining balance of an asset may not be recoverable.  The measurement of possible impairment is based on the ability to recover the balance of assets from expected future operating cash flows on an undiscounted basis.  In the opinion of management, no such impairment existed at December 31, 2008.

2. SHAREHOLDER DIVIDEND RESTRICTION

At December 31, 2008, substantially all of consolidated shareholders' equity represents net assets of UTG’s subsidiaries.  The payment of cash dividends to shareholders by UTG is not legally restricted.  However, the state insurance department regulates insurance company dividend payments where the company is domiciled.  UG, AC and TI’s dividend limitations are described below.

Ohio domiciled insurance companies require five days prior notification to the insurance commissioner for the payment of an ordinary dividend.  Ordinary dividends are defined as the greater of: a) prior year statutory earnings or b) 10% of statutory capital and surplus.  For the year ended December 31, 2008, UG had a statutory gain from operations of $4,825,058.  At December 31, 2008, UG's statutory capital and surplus amounted to $27,483,161.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid a dividend of $3,000,000 to UTG in 2007 and again in 2008. None of the dividends paid were considered to be an extraordinary dividend.

AC and TI are Texas domiciled insurance companies, which requires eleven days prior notification to the insurance commissioner for the payment of an ordinary dividend.  Ordinary dividends are defined as the greater of:  a) prior year statutory earnings or b) 10% of statutory capital and surplus.  At December 31, 2008 AC and TI statutory shareholders' equity was $7,345,919 and $2,565,614, respectively.  At December 31, 2008, AC and TI statutory net income was $1,164,325 and $48,944, respectively.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  AC paid ordinary dividends of $0 and $500,000 during 2008 and 2007 respectively. TI paid ordinary dividends of $0 and $250,000 during 2008 and 2007 respectively.

3. INCOME TAXES

Until 1984, insurance companies were taxed under the provisions of the Life Insurance Company Income Tax Act of 1959 as amended by the Tax Equity and Fiscal Responsibility Act of 1982.  These laws were superseded by the Deficit Reduction Act of 1984.  All of these laws are based primarily upon statutory results with certain special deductions and other items available only to life insurance companies.  Under the provision of the pre-1984 life insurance company income tax regulations, a portion of “gain from operations” of a life insurance company was not subject to current taxation but was accumulated, for tax purposes, in a special tax memorandum account designated as “policyholders’ surplus account”.  Federal income taxes will become payable on this account at the then current tax rate when and if distributions to shareholders, other than stock dividends and other limited exceptions, are made in excess of the accumulated previously taxed income maintained in the “shareholders surplus account”.   As part of the American Jobs Creation Act of 2004, Congress authorized a limited opportunity for life insurance companies to recognize the balance in the “policyholders’ surplus account” and not pay any federal income tax.  This window of opportunity expired December 31, 2006.  During 2006, each of the insurance subsidiaries took advantage of this opportunity.  As of December 31, 2006, none of the insurance subsidiaries had a balance remaining in the “policyholders’ surplus account”.

The valuation allowance against deferred taxes is a sensitive accounting estimate.  The Company follows Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes,” which prescribes the liability method of accounting for deferred income taxes.  Under the liability method, companies establish a deferred tax liability or asset for the future tax effects of temporary differences between book and tax basis of assets and liabilities.

In June 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109" ("Interpretation 48"), which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The recognition threshold is based on a determination of whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.

At December 31, 2008 and 2007, respectively, the Company had gross deferred tax assets of $2,352,740 and $2,818,386 net of valuation allowances of $529,521 and $404,872, and gross deferred tax liabilities of $17,046,534 and $19,320,421, resulting from temporary differences primarily related to the life insurance subsidiaries.  The valuation allowance in the current period was from ACAP and its consolidated subsidiaries that for tax purposes generated a net operating loss of $1,648,710 and $1,156,777 during 2008 and 2007 respectively.  The Company established a deferred tax asset of $529,521 and $404,872 in 2008 and 2007 respectively relating to the operating loss carry forwards. In 2008 and 2007 the Company established an offsetting allowance of $529,521 and $404,872 respectively for the losses.  The allowance was established as a result of uncertainty in the Company’s ability to utilize the loss carryforward which is dependent on generating sufficient taxable income prior to expiration of the loss carry forward.  The Company has not experienced any reductions of deferred tax assets due to the lapse of applicable statute of limitations. The 2008 net operating loss expires in 2028. The 2007 net operating loss expires in 2027.

The Company does not have any unrecognized tax benefits resulting from tax positions taken that is believed by management to be potentially challenged and disallowed by taxing authorities.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense.  No interest or penalties were included in the reported income taxes for the years presented.  Tax years 2005 to current remain subject to examination.  The Company has no agreements of extension of the review period currently in effect.  The Company is not aware of any potential or proposed changes to any of its tax filings.

The companies of the group file separate federal income tax returns except for Acap Corporation, AC, TI, and Imperial Plan, which file a consolidated life/non-life federal income tax return.

Life insurance company taxation is based primarily upon statutory results with certain special deductions and other items available only to life insurance companies.  Income tax expense consists of the following components:

		2008		2007
Current tax expense	$	1,261,641	$	1,076,824
Deferred tax expense		(346,446)		(693,627)
	$	915,195	$	383,197

ACAP and its consolidated subsidiaries for tax purposes generated a net operating loss during 2008 of $645,932.  The Company has established a deferred tax asset of $226,076 relating to this operating loss carryforward and has established an offsetting allowance of $226,076.

The following table shows the reconciliation of net income to taxable income of UTG:

		2008		2007
Net income	$	653,754	$	2,142,619
Depreciation		38,632		54,564
Management/consulting fees		(54,500)		(99,486)
Federal income tax provision		148,730		221,820
Gain of subsidiaries		(407,065)		(1,870,426)
Taxable income	$	379,551	$	449,091

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

		2008		2007
Tax computed at statutory rate	$	427,397	$	1,425,922
Changes in taxes due to:
Utilization of AMT credit carryforward		(100,780)		0
Utilization of capital loss carryforward		0		0
Dividend received deduction		0		(246,255)
Depreciation		0		0
Current year losses with no tax benefit		529,521		404,872
Minority interest		121,736		(541,886)
Utilization of net operating loss carryforward		0		0
Small company deduction		(548,120)		(604,105)
Other		485,441		(55,351)
Income tax expense	$	915,195	$	383,197

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

		2008		2007
Investments	$	4,247,725	$	5,638,562
Cost of insurance acquired		8,502,870		9,917,957
Deferred policy acquisition costs		284,715		353,335
Management/consulting fees		(206,820)		(225,895)
Future policy benefits		1,191,307		1,098,084
Gain on sale of subsidiary		2,312,483		2,312,483
Allowance for uncollectibles		0		(61,711)
Other liabilities		(306,083)		(637,692)
Federal tax DAC		(1,332,402)		(1,893,088)
Deferred tax liability	$	14,693,795	$	16,502,035

4.	ANALYSIS OF INVESTMENTS, INVESTMENT INCOME AND INVESTMENT GAIN
A.	NET INVESTMENT INCOME - The following table reflects net investment income by type of investment:

			December 31,
		2008			2007
Fixed maturities and fixed    maturities held for sale	$	10,494,422		$	11,790,380
Equity securities		2,266,380			1,077,749
Mortgage loans		3,042,688			2,689,956
Real estate		5,452,735			4,599,005
Policy loans		704,235			951,394
Short-term investments		67,027			21,929
Cash		336,367			316,891
Total consolidated investment income		22,363,854			21,447,304
Investment expenses		(4,847,419)			(4,566,942)
Consolidated net investment income	$	17,516,435		$	16,880,362

The following table summarizes the Company's fixed maturity holdings and investments held for sale by major classifications:

		Carrying Value
				2008		2007
Investments held for sale:
	Fixed maturities
	U.S. Government, government agencies and authorities		$	51,808,494	$	30,536,628
	State, municipalities and political subdivisions			475,405		3,540,633
	Collateralized mortgage obligations			87,590,099		89,804,412
	Public utilities			2,702,484		4,594,514
	All other corporate bonds			36,113,379		69,498,019
			$	178,689,861	$	197,974,206
	Equity securities
	Public utilities		$	500,001	$	0
	Banks, trusts and insurance companies			4,647,000		10,577,587
	Industrial and miscellaneous			25,489,499		22,101,005
			$	30,636,500	$	32,678,592

		Carrying Value
				2008		2007
Fixed maturities held to maturity:
	U.S. Government, government agencies and authorities		$	0	$	5,474,946
	State, municipalities and political subdivisions			0		504,165
	Collateralized mortgage obligations			0		27,735
			$	0	$	6,006,846
Securities of affiliate			$	4,000,000	$	4,000,000

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers.  In addition, the trading market for these securities is usually more limited than for investment grade debt securities.  Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB or below.

The following table summarizes securities held, at amortized cost, that are below investment grade by major classification:

		December 31,
Below Investment Grade Investments		2008		2007
States, municipalities &    political subdivisions	$	10,000	$	0
CMO		5,183		0
Corporate		5,733,113		489,673
Total	$	5,748,296	$	489,673

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

December 31, 2008		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Investments held for sale:
Fixed maturities
U.S. Government and govt.     agencies and authorities	$	45,837,369	$	5,971,119	$	0	$	51,808,488
States, municipalities and     political subdivisions		485,000		1,206		(10,801)		475,405
Collateralized mortgage     obligations		85,281,137		2,530,312		(221,345)		87,590,104
Public utilities		2,707,070		29,427		(34,012)		2,702,485
All other corporate bonds		40,742,526		313,560		(4,942,707)		36,113,379
		175,053,102		8,845,624		(5,208,865)		178,689,861
Equity securities		32,171,722		20,500		(1,555,722)		30,636,500
Total	$	207,224,824	$	8,866,124	$	(6,764,587)	$	209,326,361
Securities of affiliate	$	4,000,000	$	0	$	0	$	4,000,000

2007		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Investments held for sale:
Fixed maturities
U.S. Government and govt.     agencies and authorities	$	29,054,693	$	1,482,348	$	(413)	$	30,536,628
States, municipalities and     political subdivisions		3,457,961		82,672		0		3,540,633
Collateralized mortgage     obligations		89,906,087		541,182		(642,857)		89,804,412
Public utilities		4,425,263		178,004		(8,753)		4,594,514
All other corporate bonds		69,235,170		1,381,579		(1,118,730)		69,498,019
		196,079,174		3,665,785		(1,770,753)		197,974,206
Equity securities		26,882,317		7,377,656		(1,581,381)		32,678,592
Total	$	222,961,491	$	11,043,441	$	(3,352,134)	$	230,652,798
Fixed maturities held to maturity:
U.S. Government and govt.     agencies and authorities	$	5,474,946	$	316,293	$	0	$	5,791,239
States, municipalities and     political subdivisions		504,165		7,016		0		511,181
Collateralized mortgage     obligations		27,735		117		(236)		27,616
Total	$	6,006,846	$	323,426	$	(236)	$	6,330,036
Securities of affiliate	$	4,000,000	$	0	$	0	$	4,000,000

The Company held one fixed maturity investment of $4,781,639 at December 31, 2008 and did not hold any fixed maturity investments at December 31, 2007 that exceeded 10% of shareholder’s equity.  The Company held two equity investments totaling $12,157,539 and two equity investments totaling $18,611,018 that exceeded 10% of shareholder’s equity at December 31, 2008 and 2007, respectively.

The fair value of investments with sustained gross unrealized losses at December 31, 2008 and 2007 are as follows:

2008 Less than 12 months 12 Months or longer Total

		Fair value	Unrealized losses	Fair value	Unrealized losses	Fair value	Unrealized losses
U.S Government and govt. agencies and authorities	$	0	0	0	0	0	0
States, municipalities and political subdivisions		459,199	(10,801)	0	0	459,199	(10,801)
Collateralized mortgage obligations		1,361,720	(174,613)	4,413,767	(46,732)	5,775,487	(221,345)
Public utilities		883,589	(34,012)	0	0	883,589	(34,012)
All other corporate bonds		9,596,967	(1,145,616)	15,885,999	(3,797,093)	25,482,966	(4,942,709)
Total fixed maturity	$	12,301,475	(1,365,042)	20,299,766	(3,843,825)	32,601,241	(5,208,867)
Equity securities	$	21,212,407	(1,471,682)	1,583,050	(84,041)	22,795,457	(1,555,723)

2007 Less than 12 months 12 Months or longer Total

		Fair value	Unrealized losses	Fair value	Unrealized losses	Fair value	Unrealized losses
U.S Government and govt. agencies and authorities	$	338,769	(413)	0	0	338,769	(413)
Collateralized mortgage obligations		7,861,524	(114,149)	34,701,460	(528,944)	42,562,984	(643,093)
Public utilities		501,007	(8,753)	0	0	501,007	(8,753)
All other corporate bonds		30,121,438	(594,641)	7,410,565	(524,089)	37,532,003	(1,118,730)
Total fixed maturity	$	38,822,738	(717,956)	42,112,025	(1,053,033)	80,934,763	(1,770,989)
Equity securities	$	8,624,374	(1,581,381)	0	0	8,624,374	(1,581,381)

The unrealized losses of fixed maturity investments were primarily due to financial market participants perception of increased risks associated with the current market environment, resulting in higher interest rates.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment.  The unrealized losses of equity investments were primarily caused by normal market fluctuations in publicly traded securities.  The Company regularly reviews its investment portfolio for factors that may indicate that a decline in fair value of an investment is other than temporary.  Based on an evaluation of the issues, including, but not limited to, intentions to sell or ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover; the length of time and amount of the unrealized loss; and the credit ratings of the issuers of the investments, the Company held one investment as other-than-temporarily impaired and did not consider any other investments to be other-than-temporarily impaired at December 31, 2008 and 2007, respectively.

The amortized cost and estimated market value of debt securities at December 31, 2008, by contractual maturity, is shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Fixed Maturities Held for Sale December 31, 2008		Amortized Cost		Estimated Market Value
Due in one year or less	$	3,996,488	$	4,022,705
Due after one year through five years		24,584,663		24,077,196
Due after five years through ten years		44,225,709		46,916,073
Due after ten years		24,207,934		24,617,353
Collateralized mortgage obligations		78,038,308		79,056,534
Total	$	175,053,102	$	178,689,861

An analysis of sales, maturities and principal repayments of the Company's fixed maturities portfolio for the years ended December 31, 2008 and 2007 is as follows:

Year ended December 31, 2008		Original or Amortized Cost		Gross Realized Gains		Gross Realized Losses		Proceeds From Sale
Scheduled principal repayments,    Calls and tenders:
Held for sale	$	12,892,114	$	0	$	0	$	12,892,114
Held to maturity		33,455		0		0		33,455
Sales:
Held for sale		25,745,415		154,242		(2,111,910)		23,787,747
Held to maturity		254,423		0		(2,331)		252,092
Total	$	38,925,407	$	154,242	$	(2,114,241)	$	36,965,408

Year ended December 31, 2007		Original or Amortized Cost		Gross Realized Gains		Gross Realized Losses		Proceeds From Sale
Scheduled principal repayments,    Calls and tenders:
Held for sale	$	22,937,961	$	34,076	$	0	$	22,972,037
Held to maturity		1,596,785		0		0		1,596,785
Sales:
Held for sale		44,801,958		183,513		(733,841)		44,251,630
Held to maturity		0		0		0		0
Total	$	69,336,704	$	217,589	$	(733,841)	$	68,820,452

	Annually, the Company completes an analysis of sales of securities held to maturity to further assess the issuer’s creditworthiness of fixed maturity holdings.
C.	INVESTMENTS ON DEPOSIT - At December 31, 2008, investments carried at approximately $9,912,000 were on deposit with various state insurance departments.

5. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

Effective January 1, 2008, the Company adopted SFAS 157 which requires enhanced disclosures of assets and liabilities carried at fair value. SFAS 157 established a hierarchical disclosure framework based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation.  SFAS 157 defines the input levels as follows:

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

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

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

The following table presents the level within the hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of December 31, 2008.

	Level 1	Level 2	Level 3	Total
Assets
Fixed Maturities, held for sale	7,875,271	170,814,590	-	178,689,861
Equity Securities, held for sale	27,142,707	3,493,793	-	30,636,500
Total Financial Assets Carried at Fair Value	$35,017,978	$174,308,383	$-	$209,326,361

The financial statements include various estimated fair value information at December 31, 2008 and 2007, as required by Statement of Financial Accounting Standards 107, Disclosure about Fair Value of Financial Instruments (SFAS 107).  Such information, which pertains to the Company's financial instruments, is based on the requirements set forth in that Statement and does not purport to represent the aggregate net fair value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument required to be valued by SFAS 107 for which it is practicable to estimate that value:

(a)  Cash and cash equivalents

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

(b)  Fixed maturities and investments held for sale

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

 (c)  Mortgage loans on real estate

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

(d)  Policy loans

It is not practical to estimate the fair value of policy loans as they have no stated maturity and their rates are set at a fixed spread to related policy liability rates.  Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets, and earn interest at rates ranging from 4% to 8%.  Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.

(e)  Short-term investments

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

(f)  Notes payable

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

The estimated fair values of the Company's financial instruments required to be valued by SFAS 107 are as follows as of December 31:

		2008					2007
Assets			Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
Fixed maturities	$		0	$	0	$		6,006,846	$	6,330,036
Fixed maturities held for sale			178,689,861		178,689,861			197,974,206		197,974,206
Equity securities			30,636,500		30,636,500			32,678,592		32,678,592
Securities of affiliate			4,000,000		4,000,000			4,000,000		4,000,000
Mortgage loans on real estate			42,472,916		43,663,279			45,602,147		46,026,195
Policy loans			14,632,855		14,632,855			15,643,238		15,643,238
Short-term investments			0		0			933,967		933,967
Liabilities
Notes payable			15,616,766		15,128,452			19,914,346		19,190,061

6. STATUTORY EQUITY AND INCOME FROM OPERATIONS

The Company's insurance subsidiaries are domiciled in Ohio and Texas.  The insurance subsidiaries prepare their statutory-based financial statements in accordance with accounting practices prescribed or permitted by the respective insurance department.  These principles differ significantly from accounting principles generally accepted in the United States of America.  "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC).  "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.  UG's total statutory shareholders' equity was approximately $27,483,000 and $30,131,000 at December 31, 2008 and 2007, respectively.  UG reported a statutory operating income before taxes (exclusive of inter-company dividends) of approximately $4,825,000 and $4,662,000 for 2008 and 2007, respectively.  AC's total statutory shareholders' equity was approximately $7,346,000 and $8,166,000 at December 31, 2008 and 2007.  AC reported a statutory operating income before taxes (exclusive of inter-company dividends) of approximately $1,164,000 and $999,000 for 2008 and 2007 respectively.  TI's total statutory shareholders' equity was approximately $2,565,000 and $2,432,000 at December 31, 2008.and 2007, respectively.  TI reported a statutory operating income before taxes (exclusive of inter-company dividends) of approximately $48,944 and $290,000 for 2008 and 2007 respectively.

7. REINSURANCE

As is customary in the insurance industry, the insurance subsidiaries cede insurance to, and assume insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.  At December 31, 2008, the Company had gross insurance in force of $2.037 billion of which approximately $491 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The primary reinsurers of the Company are large, well capitalized entities.

Currently, UG is utilizing reinsurance agreements with Optimum Re Insurance Company, (Optimum) and Swiss Re Life and Health America Incorporated (SWISS RE).  Optimum and SWISS RE currently hold an “A-” (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  The agreements are a yearly renewable term (YRT) treaty where the Company cedes amounts above its retention limit of $100,000 with a minimum cession of $25,000.

In addition to the above reinsurance agreements, UG entered into reinsurance agreements with Optimum Re Insurance Company (Optimum) during 2004 to provide reinsurance on new products released for sale in 2004.  The agreements are yearly renewable term (YRT) treaties where UG cedes amounts above its retention limit of $100,000 with a minimum cession of $25,000 as has been a practice for the last several years with its reinsurers.  Also, effective January 1, 2005, Optimum became the reinsurer of 100% of the accidental death benefits (ADB) in force of UG.  This coverage is renewable annually at the Company’s option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.  Optimum currently holds an “A-” (Excellent) rating from A.M. Best.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company (PALIC) effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  PALIC and its ultimate parent, The Guardian Life Insurance Company of America (Guardian), currently hold an “A” (Excellent) and "A++" (Superior) rating, respectively, from A.M. Best.  The PALIC agreement accounts for approximately 65% of UG’s reinsurance reserve credit, as of December 31, 2008.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  At December 31, 2008, the IOV insurance in-force assumed by UG was approximately $1,637,000, with reserves being held on that amount of approximately $382,000.

On June 7, 2000, UG assumed an already existing coinsurance agreement, dated January 1, 1992, between Lancaster Life Reinsurance Company (LLRC), an Arizona corporation and Investors Heritage Life Insurance Company (IHL), a corporation organized under the laws of the Commonwealth of Kentucky.  Under the terms of the agreement, LLRC agreed to assume from IHL a 90% quota share of new issues of credit life and accident and health policies that have been written on or after January 1, 1992 through various branches of the First Southern National Bank.  The maximum amount of credit life insurance that can be assumed on any one individual’s life is $15,000.  UG assumed all the rights and obligations formerly held by LLRC as the reinsurer in the agreement.  LLRC liquidated its charter immediately following the transfer.  At December 31, 2008, the IHL agreement has insurance in-force of approximately $1,685,000, with reserves being held on that amount of approximately $23,000.

At December 31, 1992, AC entered into a reinsurance agreement with Canada Life Assurance Company (“the Canada Life agreement”) that fully reinsured virtually all of its traditional life insurance policies.  The reinsurer’s obligations under the Canada Life agreement were secured by assets withheld by AC representing policy loans and deferred and uncollected premiums related to the reinsured policies.  AC continues to administer the reinsured policies, for which it receives an expense allowance from the reinsurer.  At December 31, 2008, the Canada Life agreement has insurance in-force of approximately $73,639,000, with reserves being held on that amount of approximately $38,523,000.

During 1997, AC acquired 100% of the policies in force of World Service Life Insurance Company through a combination of assumption reinsurance and coinsurance.  While 91.42% of the acquired policies are coinsured under the Canada Life agreement, AC did not coinsure the balance of the policies.  AC retains the administration of the reinsured policies, for which it receives an expense allowance from the reinsurer.  Canada Life currently holds an "A+" (Superior) rating from A.M. Best.

During 1998, AC closed a coinsurance transaction with Universal Life Insurance Company (“Universal”). Pursuant to the coinsurance agreement, AC coinsured 100% of the individual life insurance policies of Universal in force at January 1, 1998.  At December 31, 2008, the Universal agreement has insurance in-force of approximately $14,309,000, with reserves being held on that amount of approximately $4,975,000.

The treaty with Canada Life provides that AC is entitled to 85% of the profits (calculated pursuant to a formula contained in the treaty) beginning when the accumulated profits under the treaty reach a specified level.  As of December 31, 2008, there remains $473,304 in profits to be generated before AC is entitled to 85% of the profits.  Should future experience under the treaty match the experience of recent years, which cannot reliably be predicted to occur, the accumulated profits would reach the specified level towards the end of 2009.  However, regarding the uncertainty as to when the specified level may be reached, it should be noted that the experience has been erratic from year to year and the number of policies in force that are covered by the treaty diminishes each year.

All reinsurance for TI was with a single, unaffiliated reinsurer, Hannover Life Reassurance (Ireland) Limited ("Hannover"), secured by a trust account containing letters of credit.  TI administered the reinsurance policies, for which it received an expense allowance from Hannover.  The Hannover treaty provided that TI could recapture the treaty without a charge to surplus under statutory accounting beginning when the accumulated profits (calculated pursuant to a formula contained in the treaty) reached a specified level.  As of December 31, 2007, there remained $91,168 in profits to be generated before TI could recapture the treaty without a surplus charge.  During early 2008, $91,168 was repaid through profits generated on the block of business covered by the agreement and the treaty was recaptured April of 2008.  At December 31, 2008, there is no outstanding money on the surplus aid.

On December 31, 2006, AC and TI entered into 100% coinsurance agreements whereby each company ceded all of its A&H business to an unaffiliated reinsurer, Reserve National Insurance Company (Reserve National).  As part of the agreement, the Company remained contingently liable for claims incurred prior to the effective date of the agreement, for a period of one year.  At the end of the one year period, on December 31, 2007, an accounting of these claims was produced.  Any difference in the actual claims to the claim reserve liability transferred will be refunded to / paid by the Company.  At December 31, 2007, AC owed $93,384 and TI owed $902 to the unaffiliated third party.  The amounts were included in each company’s 2007 financial statements.  Reserve National currently holds an “A-“ (Excellent) rating by A.M. Best.  During 2007, the policies coinsured under these agreements were assumption reinsured by Reserve National, thus releasing the Company from any further contingent liability under these policies.  During March of 2008, AC paid $93,384 and TI paid $902 to the unaffiliated third party.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2008 and 2007 were as follows:

			Year ended December 31, Shown in thousands
			2008 Premiums Earned			2007 Premiums Earned
Direct	$	18,305		$	19,945
Assumed		184			223
Ceded		(5,180)			(5,755)
Net premiums	$	13,309		$	14,413

8. COMMITMENTS AND CONTINGENCIES

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters.  Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages.  In some states, juries have substantial discretion in awarding punitive damages in these circumstances.  In the normal course of business the Company is involved from time to time in various legal actions and other state and federal proceedings.  There were no proceedings pending or threatened as of December 31, 2008.

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

On June 10, 2002 UTG and Stone River formed an alliance between their respective organizations to provide third party administration (TPA) services to insurance companies seeking business process outsourcing solutions.  Stone River is responsible for the marketing and sales function for the alliance, as well as providing the operations processing service for the Company.  The Company will staff the administration effort.  Stone River is an independent, full-service provider of integrated data processing and information management systems to the financial industry, headquartered in Brookfield, Wisconsin.

In June 2002, the Company entered into a five-year contract with Stone River for services related to its purchase of the “ID3” software system.  The contract was amended during 2006 for a five year period ended 2011.  Under the contract, the Company is required to pay $8,333 per month in software maintenance costs and a minimum charge of $14,000 per month in offsite data center costs, for a five-year period ending in 2011.

On December 31, 2006, the Company entered into a 100% coinsurance agreement whereby the insurance subsidiaries, AC and TI, ceded all of their A&H business to an unaffiliated third party.  As part of the agreement, AC and TI remain contingently liable for claims incurred prior to the effective date of the agreement, for a period of one year.  During the first quarter of 2007 the policies coinsured under these agreements were assumption reinsured by Reserve National, thus releasing the Company form any further contingent liability under these policies.

UG currently has an unresolved dispute with one of its outside reinsurers.  The issue relates to reinsurance premiums. The reinsurer claims UG owes for years 2005 through 2007 in the amount of $987,000.  In early 2008, the reinsurer billed UG for these amounts, providing no information or explanation.  The related treaty was originally with another outside reinsurer and was acquired by the current reinsurer in a reinsurance block acquisition.  The treaty is a yearly renewable term (“YRT”) cession based treaty.  UG maintains it has no liability relating to the back billed premium.  UG has initiated arbitration according to the treaty to bring resolution to this matter.  Final resolution is not anticipated until sometime mid 2009.  UG has established a contingent liability of $500,000 relating to this matter to cover costs including legal and arbitration costs.

9. RELATED PARTY TRANSACTIONS

On December 31, 2007, North Plaza was liquidated, with its assets and liabilities transferred into its 100% owned parent company, UG.

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by FSBI.  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%.  The Company received $264,942 and $264,219 of dividends in 2008 and 2007, respectively.

As part of the acquisition of ACAP on December 8, 2006, UTG loaned $3,357,000 to ACAP.  ACAP used the proceeds for the repayment of existing debt with an unaffiliated financial institution and to retire all of its outstanding preferred stock.  The terms of the inter-company loan mirror the interest rate and repayment requirements of the debt with First Tennessee Bank National Association.  No payments were made on the loan in 2008. At December 31, 2008, the interest due of $224,084 was added to the balance. As of December 31, 2008, the balance of the loan is $3,259,084.

During June 2003, UG entered into a lease agreement with Bandyco, LLC, an affiliated entity, for a one-sixth interest in an aircraft.  Bandyco, LLC is affiliated with Ward F. Correll, who is a director of the Company.  The lease term is for a period of five years at a total cost of $523,831.  The Company is responsible for its share of annual non-operational costs, in addition to the operational costs as are billable for specific use.  During 2006, UG entered into an additional lease agreement for a 27.5% interest in a second plane with Bandyco, LLC.  The lease term is for a period of five years at a total cost of $166,913.  The Company is responsible for its share of annual non-operational costs, in addition to the operational costs as are billable for specific use.

On March 26, 2002, the Board of Directors of UTG adopted, and on June 11, 2002, the shareholders of UTG approved, the UTG, Inc. Employee and Director Stock Purchase Plan (See Note 10.A. to the consolidated financial statements).

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiaries, UG, AC and TI.  Under these arrangements, each company pays its proportionate share of expenses of the entire group, based on an allocation formula.  During 2008, UG, AC and TI paid $3,717,696, $3,065,476 and $779,980, respectively. During 2007, UG, AC and TI paid $3,919,684, $3,314,176 and $859,918, respectively.

Respective domiciliary insurance departments have approved the agreements of the insurance companies and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

UG from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services UG's mortgage loans including those covered by the participation agreements.  UG pays a .25% servicing fee on these loans and a one time fee at loanorigination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  UG paid $93,572 and $85,612 in servicing fees and $19,283 and $54,281 in origination fees to FSNB during 2008 and 2007, respectively.

The Company reimbursed expenses incurred by Mr. Jesse T. Correll and Mr. Randall L. Attkisson relating to travel and other costs incurred on behalf of or relating to the Company.  The Company paid $41,819 and $30,327 in 2008 and 2007, respectively to First Southern Bancorp, Inc. in reimbursement of such costs.  In addition, beginning in 2001, the Company began reimbursing FSBI a portion of salaries and pension costs for Mr. Correll and Mr. Attkisson.  The reimbursement was approved by the UTG Board of Directors and totaled $261,777 and $249,209 in 2008 and 2007, respectively, which included salaries and other benefits.

On June 30, 2008, UG paid a cash dividend of $1,000,000 to UTG, Inc.  An additional dividend of $2,000,000 was paid by UG to UTG, Inc. on December 18, 2008.  On July 13, 2007, UG paid a cash dividend of $3,000,000 to UTG, Inc.  AC paid cash dividends to its parent, ACAP, of $0 and $500,000 in 2008 and 2007, respectively.  TI paid cash dividends to AC of $0 and $250,000 in 2008 and 2007, respectively.  These dividends were comprised entirely of ordinary dividends.  No regulatory approvals were required prior to the payment of these dividends.

10. CAPITAL STOCK TRANSACTIONS

A. EMPLOYEE AND DIRECTOR STOCK PURCHASE PROGRAM

On March 26, 2002, the Board of Directors of UTG adopted, and on June 11, 2002, the shareholders of UTG approved, the UTG, Inc. Employee and Director Stock Purchase Plan.  The plan’s purpose is to encourage ownership of UTG stock by eligible directors and employees of UTG and its subsidiaries by providing them with an opportunity to invest in shares of UTG common stock.  The plan is administered by the Board of Directors of UTG.  A total of 400,000 shares of common stock may be purchased under the plan, subject to appropriate adjustment for stock dividends, stock splits or similar recapitalizations resulting in a change in shares of UTG.  The plan is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.

The purchase price of shares repurchased under the stock restriction and buy-sell agreement shall be computed, on a per share basis, equal to the sum of (i) the original purchase price(s) paid to acquire such shares from the Holding Company at the time they were sold pursuant to the Plan and (ii) the consolidated statutory net earnings (loss) per share of such shares during the period from the end of the month next preceding the month in which such shares were acquired pursuant to the plan, to the end of the month next preceding the month in which the closing sale of such shares to UTG occurs.  The consolidated statutory net earnings per Share shall be computed as the net income of the Holding Company and its subsidiaries on a consolidated basis in accordance with statutory accounting principles applicable to insurance companies, as computed by the Holding Company, except that earnings of insurance companies or block of business acquired after the original plan date, November 1, 2002, shall be adjusted to reflect the amortization of intangibles established at the time of acquisition in accordance with generally accepted accounting principles (GAAP), less any dividends paid to shareholders. The calculation of net earnings per Share shall be performed on a monthly basis using the number of common shares of the Holding Company outstanding as of the end of the reporting period. The purchase price for any Shares purchased hereunder shall be paid in cash within 60 days from the date of purchase subject to the receipt of any required regulatory approvals as provided in the Agreement.

The original issue price of shares at the time this program began was established at $12.00 per share.  Through March 1, 2009, UTG had 109,319 shares outstanding that were issued under this program.  At December 31, 2008, shares under this program have a value of $16.76 per share pursuant to the above formula.

B. STOCK REPURCHASE PROGRAM

On June 5, 2001, the Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of up to $1 million of UTG's common stock.  On June 16, 2004, an additional $1 million was authorized for repurchasing shares.  On April 18, 2006, an additional $1 million was authorized for repurchasing shares.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are generally limited to a maximum per share price of $8.00.  Through March 1, 2009, UTG has spent $2,776,934 in the acquisition of 400,315 shares under this program.

C. EARNINGS PER SHARE CALCULATIONS

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations as presented on the income statement.

	For the year ended December 31, 2008
		Income(Loss)	Shares		Per-Share
		(Numerator)	(Denominator)		Amount
Basic EPS
Income available to common shareholders	$	653,754	3,844,081	$	0.17
Effect of Dilutive Securities
Options		0	0
Diluted EPS
Income available to common shareholders and assumed conversions	$	653,754	3,844,081	$	0.17

	For the year ended December 31, 2007
		Income (Loss)	Shares		Per-Share
		(Numerator)	(Denominator)		Amount
Basic EPS
Income available to common shareholders	$	2,142,619	3,851,596	$	0.56
Effect of Dilutive Securities
Options		0	0
Diluted EPS
Income available to common shareholders and assumed conversions	$	2,142,619	3,851,596	$	0.56

In accordance with Statement of Financial Accounting Standards No. 128, the computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2008 and 2007, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

11. NOTES PAYABLE

At December 31, 2008 and 2007, the Company had $15,616,766 and $19,914,346, respectively, of long-term debt outstanding.

On December 8, 2006, UTG borrowed funds from First Tennessee Bank National Association through execution of an $18,000,000 promissory note.  The note is secured by the pledge of 100% of the common stock of UG.  The promissory note carries a variable rate of interest based on the 3 month LIBOR rate plus 180 basis points.  The initial rate was 7.15%.  Interest is payable quarterly.  Principal is payable annually beginning at the end of the second year in five installments of $3,600,000.  The loan matures on December 7, 2012.  The Company made principal payments of $3,049,995 during 2008.  The Company borrowed $1,994,176 and made principal payments of $3,450,005 during 2007.  The funds borrowed during 2007 were used to acquire ACAP shares subject to the put options as they were presented to UTG during the year.  At December 31, 2008, the outstanding principal balance on this debt was $10,494,454.

In addition to the above promissory note, First Tennessee Bank National Association also provided UTG, Inc. with a $5,000,000 revolving credit note.  This note is for a one-year term and may be renewed by consent of both parties.  The credit note is to provide operating liquidity for UTG, Inc. and replaces a previous line of credit provided by Southwest Bank.  Interest bears the same terms as the above promissory note.  The collateral held on the above note also secures this credit note.  UTG, Inc. has no borrowings against this note at this time.

On June 1, 2005, UG was extended a $3,300,000 line of credit from the First National Bank of Tennessee.  The LOC is for a one-year term from the date of issue.  The interest rate on the LOC is variable and indexed to be the lowest of the U.S. prime rates as published in the Wall Street Journal, with any interest rate adjustments to be made monthly.  During 2008 and 2007, UG had borrowings and repayments from the LOC of $0 and $3,300,000, respectively.  At December 31, 2008, and 2007 the Company had no outstanding borrowings attributable to this LOC.

In November 2007, the Company became a member of the FHLB.  This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the "base membership" amount.  The Company's current LOC with the FHLB is $15,000,000.  During 2008, the Company had borrowings of $4,000,000 and repayments of $4,000,000.  During 2007, the Company had borrowings of $5,443,350 and repayments of $5,443,350.  At December 31, 2008, the Company had no outstanding borrowings attributable to this LOC.

At December 31, 2006, Harbor Village Partners ('HVP"), a then 50% owned affiliate of the Company, had $8,000,000 of debt through various borrowings. In May 2007, the Company sold its interest in HVP to an outside third party. As a result of this sale, HVP is no longer a consolidated subsidiary of the Company. Further, the previous outstanding debt of HVP is no longer reflected in the financial statements of UTG, nor does UTG have any responsibility for this debt.

In January 2007, UG became a 51% owner of the newly formed RLF Lexington Properties LLC ("Lexington"). The entity was formed to hold, for investment purposes, certain investment real estate acquired. As part of the purchase price of the real estate owned by Lexington, the seller provided financing through the issuance of five promissory notes of $1,200,000 each totaling $6,000,000. The notes bear interest at the fixed rate of 5%. The notes came due beginning on January 5, 2008, and each January 5 thereafter until 2012 when the final note is repaid.  At December 31, 2008 the outstanding balance was $4,800,000.

On February 7, 2007, HPG Acquisitions ("HPG"), a 74% owned affiliate of the Company, borrowed funds from First National Bank of Midland, through execution of a $373,862 promissory note. The note is secured by real estate owned by the HPG. The note bears interest at a fixed rate of 5%. The first payment was due January 15, 2008. There will be 119 regular payments of $3,965 followed by one irregular last payment estimated at $32,424. HPG made repayments of $47,585 during 2008 and $3,965 during 2007.  The outstanding principal balance on this debt was $322,312 and $369,897 at December 31, 2008 and December 31, 2007, respectively.

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

Year		Amount
2009	$	1,223,099
2010		4,824,978
2011		4,827,008
2012		4,523,661
2013		31,586

12. OTHER CASH FLOW DISCLOSURES

On a cash basis, the Company paid $937,437 and $1,271,847 in interest expense for the years 2008 and 2007, respectively.  The Company paid $2,094,950 and $407,247 in federal income tax for 2008 and 2007, respectively.

13. CONCENTRATIONS

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

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2008, approximately 59% of our total direct premium was collected from Illinois, Ohio, Texas and West Virginia.  Thus, results of operations are heavily dependent upon the strength of these economies.

14. RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 163, Accounting for Financial Guarantee Insurance Contracts — an interpretation of FASB Statement No. 60 Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days after the SEC’s approval of the Public Company Accounting Oversight Board amendments to the auditing literature.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 this Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB also issued Statement No. 160, Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. This Statement applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding non-controlling interest in one or more subsidiaries or that deconsolidate a subsidiary. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  The Company does not believe the adoption will have a material impact on its consolidated financial condition or results of operations.

The FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS No. 159”).  The Statement permits entities to choose to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  The Statement was effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  The Company chose not to elect the fair value option – therefore, SFAS No. 159 did not impact its consolidated financial position, results of operations or cash flows.

The FASB issued Statement No. 157, Fair Value Measurements. The Statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. In February of 2008, the FASB issued FASB Staff position 157-2 which delays the effective date of SFAS 157 for non-financial assets and liabilities which are not measured at fair value on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008. Adoption of SFAS 157 did not have a material impact on its consolidated financial position, results from operation, or cash flow.

15. COMPREHENSIVE INCOME

				Tax
		Before-Tax		(Expense)		Net of Tax
2008		Amount		or Benefit		Amount
Unrealized holding gains during
period	$	(7,831,663)	$	2,741,082	$	(5,090,581)
Less: reclassification adjustment
for gains realized in net income		3,156,197		(1,104,669)		2,051,528
Net unrealized gains		(4,675,466)		1,636,413		(3,039,053)
Other comprehensive income (loss)	$	(4,675,466)	$	1,636,413	$	(3,039,053)
				Tax
		Before-Tax		(Expense)		Net of Tax
2007		Amount		or Benefit		Amount
Unrealized holding losses during
period	$	10,460,271	$	(3,661,095)	$	6,799,176
Less: reclassification adjustment
for losses realized in net income		8,411,088		(2,943,881)		5,467,207
Net unrealized losses		2,049,183		(717,214)		1,331,969
Other comprehensive income (loss)	$	2,049,183	$	(717,214)	$	1,331,969

In 2008 and 2007, the Company established a deferred tax liability of $927,904 and $2,389,697 respectively, for the unrealized gains based on the applicable United States statutory rate of 35%.

16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

	2008
		1st		2nd		3rd		4th
Premiums and policy fees, net	$	3,927,179	$	5,153,149	$	3,553,730	$	674,681
Net investment income		4,605,634		4,070,042		4,110,401		4,730,358
Total revenues		9,057,395		9,786,288		7,532,833		8,862,764
Policy benefits including   dividends		6,250,647		7,894,337		5,640,907		3,701,760
Commissions and   amortization of DAC and COI		544,548		649,934		550,660		647,039
Operating expenses		2,034,227		1,840,864		1,701,944		1,654,868
Operating income (loss)		(60,580)		(814,147)		(556,108)		2,651,968
Net income (loss)		(140,552)		(415,176)		(950,580)		2,160,062
Basic earnings (loss) per share		(0.04)		(0.11)		(0.25)		0.57
Diluted earnings (loss) per   Share		(0.04)		(0.11)		(0.25)		0.57
	2007
		1st		2nd		3rd		4th
Premiums and policy fees, net	$	4,976,503	$	4,513,283	$	2,478,016	$	2,445,564
Net investment income		4,286,925		4,471,452		4,394,621		3,727,364
Total revenues		9,474,343		11,467,081		7,412,135		10,519,013
Policy benefits including   dividends		7,332,162		6,554,409		5,397,281		3,837,480
Commissions and  amortization of DAC and COI		942,694		550,838		507,102		265,560
Operating expenses		2,116,006		2,052,800		1,750,562		2,100,188
Operating income (loss)		(1,195,669)		1,856,533		(553,541)		3,966,740
Net income (loss)		(832,465)		1,670,686		(514,705)		1,819,103
Basic earnings (loss) per share		(0.22)		0.43		(0.13)		0.48
Diluted earnings (loss) per   share		(0.22)		0.43		(0.13)		0.48

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A.  CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”).  Based on that evaluation, the Company's management, including the CEO and CFO, concluded as of the end of the period, that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company’s periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There have been no significant changes in the Company's internal controls over financial reporting.

Company Management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), is responsible for designing and maintaining effective Internal Controls over the Financial Reporting of the Company in order 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. During 2008, an evaluation was performed under the supervision and with the participation of the Company's management, including the "CEO" and "CFO", of the effectiveness of the design and operation of the Company's Internal Controls over Financial Reporting as required by Sections 302 and 404 of the Sarbanes Oxley Act of 2002. The Company used the COSO control framework to evaluate Internal Controls over Financial Reporting and COBIT to evaluate the internal controls related to Information Systems. During the evaluation and related testing of internal controls there were no instances of material weaknesses discovered that would affect the reliability of financial reporting or preparation of financial statements.  After reviewing and testing the internal controls over financial reporting, it is management’s belief that the applicable controls are functioning as designed, are operating effectively, and provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes as of December, 31 2008.  This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only Management reports in this annual report.

ITEM 9B.  OTHER INFORMATION

None

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Board of Directors

In accordance with the laws of Delaware and the Certificate of Incorporation and Bylaws of UTG, as amended, UTG is managed by its executive officers under the direction of the Board of Directors.  The Board elects executive officers, evaluates their performance, works with management in establishing business objectives and considers other fundamental corporate matters, such as the issuance of stock or other securities, the purchase or sale of a business and other significant corporate business transactions.  In the fiscal year ended December 31, 2008, the Board met 5 times.  All directors attended at least 75% of all meetings of the board except Mr. Peter Ochs.

The Board of Directors has an Audit Committee consisting of Messrs. Perry, Albin, and Brinck. The Audit Committee performs such duties as outlined in the Company’s Audit Committee Charter.  The Audit Committee reviews and acts or reports to the Board with respect to various auditing and accounting matters, the scope of the audit procedures and the results thereof, internal accounting and control systems of UTG, the nature of services performed for UTG and the fees to be paid to the independent auditors, the performance of UTG's independent and internal auditors and the accounting practices of UTG.  The Audit Committee also recommends to the full Board of Directors the auditors to be appointed by the Board.  The Audit Committee met four timesin 2008.

The Board has reviewed the qualifications of each member of the audit committee and determined no member of the committee meets the definition of a “financial expert”.  The Board concluded however, that each member of the committee has a proven track record as a successful businessman, each operating their own company and their experience as businessmen provide a knowledge base and experience adequate for participation as a member of the committee.

Compensation Committee

The compensation of UTG's executive officers is determined by the full Board of Directors (see report on Executive Compensation).

Under UTG’s By-Laws, the Board of Directors should be comprised of at least six and no more than eleven directors.  At December 31, 2008, the Board consisted of eleven directors.  Shareholders elect Directors to serve for a period of one year at UTG’s Annual Shareholders’ meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors and officers of UTG file periodic reports regarding ownership of Company securities with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 as amended, and the rules promulgated thereunder.  UTG is not aware of any individuals who filed late with the Securities and Exchange Commission during 2008.  SEC filings may be viewed from the Company’s Web site www.utgins.com.

The Board of Directors has provided a process for shareholders to send communications directly to the Board.  These communications can be sent to James Rousey, President and Director of UTG at the corporate headquarters at 5250 South Sixth Street, Springfield, IL  62703.

Audit Committee Report to Shareholders

In connection with the December 31, 2008 financial statements, the audit committee: (1) reviewed and discussed the audited financial statements with management; (2) discussed with the auditors the matters required by Statement on Auditing Standards No. 114; and (3) received and discussed with the auditors the matters required by Independence Standards Board Statement No.1.  Based upon these reviews and discussions, the audit committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K filed with the SEC.

William W. Perry    -	Committee Chairman
John S. Albin
Joseph A. Brinck, II

The following information with respect to business experience of the Board of Directors has been furnished by the respective directors or obtained from the records of UTG.

Directors

Name, Age	Position with the Company, Business Experience and Other Directorships
John S. Albin, 80	Director of UTG since 1984; farmer in Douglas and Edgar counties, Illinois, since 1951; Chairman of the Board of Longview State Bank from 1978 to 2005; President of the Longview Capitol Corporation, a bank holding company, since 1978; Chairman of First National Bank of Ogden, Illinois, from 1987 to 2005; Chairman of the State Bank of Chrisman from 1988 to 2005; Chairman of First National Bank in Georgetown from 1994 to 2005; Director of Illini Community Development Corporation since 1990; Commissioner of Illinois Student Assistance Commission from 1996 to 2002.
Randall L. Attkisson, 63	Director of UTG since 1999; Director of Acap Corporation, American Capitol Insurance Company, and Texas Imperial Life Insurance Company since 2006; Director of First Southern Bancorp, Inc, a bank holding company, since 1986; Board Chairman of Young Life Raceway Region (Kentucky/Indiana) since 2008; Board Chairman of Latin American Micro Finance Initiative (LAMFI) since 2008; Partner of Bluegrass Capital Advisors since 2008; Advisory Director of Kentucky Christian Foundation since 2002; Director of The River Foundation, Inc. since 1990; President of Randall L. Attkisson & Associates from 1982 to 1986; Commissioner of Kentucky Department of Banking & Securities from 1980 to 1982; Self-employed Banking Consultant in Miami, FL from 1978 to 1980.
Joseph A. Brinck, II, 53	Director of UTG since 2003; CEO of Stelter & Brinck, LTD, a full service combustion engineering and manufacturing company from 1979 to present; President of Superior Thermal, LTD from 1990 to present; President of Sanctity of Life Foundation since 2001.  Currently holds Professional Engineering Licenses in Ohio, Kentucky, Indiana and Illinois.
Jesse T. Correll, 52	Chairman and CEO of UTG and Universal Guaranty Life Insurance Company since 2000; Director of UTG since 1999; Chairman and CEO of Acap Corporation, American Capitol Insurance Company, and Texas Imperial Life Insurance Company since 2006; Chairman, President, Director of First Southern Bancorp, Inc. since 1983; President, Director of First Southern Funding, LLC since 1992; President, Director of The River Foundation since 1990; Board member of Crown Financial Ministries since 2004; Friends of the Good Samaritans since 2005; Generous Giving since 2006 and the National Christian Foundation since 2006.  Mr. Correll and his wife Angela have 3 children and 2 grandchildren.  Jesse Correll is the son of Ward and Regina Correll.
Ward F. Correll, 80	Director of UTG since 2000; Director of Acap Corporation, American Capitol Insurance Company, and Texas Imperial Life Insurance Company since 2006; President, Director of Tradeway, Inc. of Somerset, KY since 1973; President, Director of Cumberland Lake Shell, Inc. of Somerset, KY since 1971; President, Director of Tradewind Shopping Center, Inc. of Somerset, KY since 1966; Director of First Southern Bancorp since 1987; Director of First Southern Funding, LLC since 1991; Director of The River Foundation since 1990; and Director First Southern Insurance Agency since 1987.  Ward Correll is the father of Jesse Correll.
Thomas F. Darden, 54	Mr. Darden is the Chief Executive Officer of Cherokee Investment Partners, a private equity fund with over $1 billion of capital for investing in brownfields. Cherokee has offices in North Carolina, Colorado, New Jersey, London, Toronto and Montreal. Beginning in 1984, he served for 16 years as the Chairman of Cherokee Sanford Group, a privately-held brick manufacturing company in the United States and previously the Southeast's largest soil remediation company. From 1981 to 1983, Mr. Darden was a consultant with Bain & Company in Boston. From 1977 to 1978, he worked as an environmental planner for the Korea Institute of Science and Technology in Seoul, where he was a Henry Luce Foundation Scholar. Mr. Darden is on the Boards of Shaw University and the University of North Carolina's Environmental Department and Duke University’s Nicholas School of the Environment.  He is on the Board of Directors of the National Brownfield Association and on the Board of Trustees of North Carolina Environmental Defense. Mr. Darden is a director of Winston Hotels, Inc. (NYSE) and serves on the board of governors of Research Triangle Institute in Research Triangle Park, N.C.  He was Chairman of the Research Triangle Transit Authority and served two terms on the N.C. Board of Transportation through appointments by the Governor and the Speaker of the House.  Mr. Darden earned a Masters in Regional Planning from the University of North Carolina at Chapel Hill, a Doctor of Jurisprudence from Yale Law School and a Bachelor of Arts from the University of North Carolina at Chapel Hill, where he was a Morehead Scholar. His 1976 undergraduate thesis analyzed the environmental impact of third world development, and his 1981 Yale thesis addressed interstate acid rain air pollution. Mr. Darden and his wife Jody have three children.
Howard L. Dayton, Jr., 65	In 1985, Mr. Dayton founded Crown Ministries in Longwood, Florida.  Crown Ministries merged with Christian Financial Concepts in September 2000 to form Crown Financial Ministries, the world’s largest financial ministry.  He served as Chief Executive Officer from 1985 to 2007.  In 1972 he began his commercial real estate development career, specializing in office development in the Central Florida area.  Mr. Dayton developed The Caboose, a successful railroad-themed restaurant in Orlando, FL in 1969.  He also is the author of Your Money Counts, Free and Clear, Your Money Map and Crown’s Small Group Studies.  Mr. Dayton became a director of UTG, Inc. in December 2005
Daryl J. Heald, 44	Mr. Heald started in commercial real estate with the Allen Morris Company and then spent four years at Triaxia Partners Consulting Firm, both in Atlanta, Georgia.  He later began serving as an associate trustee and executive committee member of the Maclellan Foundation.  In 2000, Daryl helped launch Generous Giving, Inc. and served as its President until January 2008, when he became Senior Vice President of the Maclellan Foundation and founded Giving Wisely.  Giving Wisely seeks to serve families on their journey of generosity by helping to connect their needs and passions with knowledge, experiences, opportunities, and relationships.  Daryl also serves on the boards of Crown Financial Ministries, ProVision Foundation, the Haggai Institute and is an elder at Lookout Mountain Presbyterian Church. Mr. Heald became a director of UTG, Inc. in September 2008.  He holds a B.S. degree in economics from Westmont College.  Daryl and his wife, Cathy, live in Lookout Mountain, Georgia with their six children.
Peter L. Ochs, 57	Mr. Ochs is founder of Capital III, a private investment banking firm located in Wichita, Kansas.  The firm has acted as an intermediary in over 120 transactions since its founding in 1982.  In addition the firm provides valuation services to private companies for such purposes as ESOP’s, estate planning, M & A, buy/sells, and internal planning strategies.  The firm also provides both tactical and strategic planning for privately held companies.  In recent years the firm has focused primarily on providing services to companies in which Mr. Ochs holds an equity interest.  Since 1987, Mr. Ochs has been an active investor and officer of several privately held companies.  In most cases his ownership position has represented a controlling interest in the enterprise.  Companies in which he has held or still holds an investment include a community bank, a medical equipment company, a manufacturer of electrical assemblies, a sports training equipment company, a manufacturer of corporate identification products, a cable TV programming company, and a retail lifestyle clothing store.  Mr. Ochs is also one of the founding members of Trinity Academy; a Christ centered college preparatory high school in Wichita.  Prior to founding Capital III, Mr. Ochs spent 8 years in the commercial banking business.  He graduated from the University of Kansas in 1974 with a degree in business & finance.
William W. Perry, 52	Director of UTG since 2001; Director of American Capitol Insurance Company, and Texas Imperial Life Insurance Company since 2006; Owner of SES Investments, Ltd., an oil and gas investments company since 1991; President of EGL Resources, Inc., an oil and gas operations company based in Texas and New Mexico since 1992; Vice Chairman of American Shale Oil Company (AMSO); President of a real estate investment company; Director of Young Life Foundation and involved with Young Life in various capacities; Director of Abel-Hangar Foundation, Director of River Foundation; Director of Millagros Foundation; Director of University of Oklahoma Associates; Mayor of Midland, Texas since January 2008; Midland, Texas City Council member from 2002-2008.
James P. Rousey, 50	President since September 2006, Director of UTG and Universal Guaranty Life Insurance Company since September 2001; President and Director of Acap Corporation, American Capitol Insurance Company, and Texas Imperial Life Insurance Company since 2006; Regional CEO and Director of First Southern National Bank from 1988 to 2001. Board Member with the Illinois Fellowship of Christian Athletes from 2001-2005; Board Member with Contact Ministries since 2007; Board Member with Amigos En Cristo, Inc since 2007.

Executive Officers of UTG

More detailed information on the following executive officers of UTG appears under "Directors":

Jesse T. Correll	Chairman of the Board and Chief Executive Officer
James P. Rousey	President

Other executive officers of UTG are set forth below:

Name, Age

Position with UTG and Business Experience

Theodore C. Miller, 46

Corporate Secretary since December 2000, Senior Vice President and Chief Financial Officer since July 1997; Vice President since October 1992 and Treasurer from October 1992 to December 2003; Vice President and Controller of certain affiliated companies from 1984 to 1992.  Vice President and Treasurer of certain affiliated companies from 1992 to 1997; Senior Vice President and Chief Financial Officer of subsidiary companies since 1997; Corporate Secretary of subsidiary companies since 2000.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics for our directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions) and employees. The Code of Business Conduct and Ethics is available to our stockholders by requesting a free copy of the Code of Business Conduct and Ethics by writing to us at UTG, Inc, 5250 South Sixth Street, Springfield, Illinois 62703.

ITEM 11.  EXECUTIVE COMPENSATION

Executive Compensation Table

The following table sets forth certain information regarding compensation paid to or earned by UTG's Chief Executive Officer and President, and each of the executive officers of UTG whose salary plus bonus exceeded $100,000 during UTG's last fiscal year:

Summary Compensation Table
Name and Principal position	Year	Salary	Bonus	Stock Awards	Option Awards	Non-Equity Incentive Plan Comp	Nonqualified Deferred Comp Earnings	All Other Comp (1)	Total
Jesse T. Correll Chief Executive Officer	2008	150,000	0	0	0	0	0	9,000(1)	159,000
	2007	111,057	25,000	0	0	0	0	4,398 (1)	140,455
	2006	75,000	0	0	0	0	0	4,743 (1)	79,743
Randall L. Attkisson    (7) Chief Operating Officer to 7/1/08	2008	80,769	0	0	0	0	0	4,846(1)	85,615
	2007	110,481	25,000	0	0	0	0	6,491 (2)	141,972
	2006	75,000	0	0	0	0	0	4,743 (2)	79,743
James P. Rousey President	2008	145,000	25,000	0	0	0	0	6,806(3)	176,806
	2007	145,000	25,000	0	0	0	0	6,922 (3)	176,922
	2006	137,917	0	0	0	0	0	6,989 (3)	144,906
Theodore C. Miller Secretary/Senior Vice President	2008	110,000	20,000	0	0	0	0	3,030(4)	133,030
	2007	110,000	20,050	0	0	0	0	3,071 (4)	133,121
	2006	102,917	15,000	0	0	0	0	3,808 (4)	121,725
Douglas A. Dockter    (6) Vice President	2008	100,000	0	0	0	0	0	2,820(5)	102,820
	2007	100,000	4,000	0	0	0	0	2,820 (5)	106,820
	2006	100,000	5,500	0	0	0	0	3,345 (5)	108,845

(1)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan.
(2)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan.
(3)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $2,066, $2,302 and $2,069, group life insurance premiums of $720, $720 and $720, and country club membership fees of $4,020, $3,900 and $4,200 during 2008, 2007 and 2006, respectively.
(4)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $2,310, $2,351 and $3,088 and group life insurance premiums of $720, $720 and $720 during 2008, 2007 and 2006, respectively.
(5)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $2,653, $2,100 and $2,625 and group life insurance premiums of $720, $720 and $720 during 2008, 2007 and 2006 respectively.
(6)	Mr. Douglas A. Dockter is not considered an executive officer of UTG, but is included in this table pursuant to compensation disclosure requirements.
(7)	Mr. Randall L. Attkisson retired from the Company effective July 1, 2008.  Mr. Attkisson remains a member of the Board of Directors.

Option/SAR Grants/Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

At December 31, 2008 there were no shares of the common stock of UTG subject to unexercised options held by the named executive officers.  There were no options or stock appreciation rights granted to the named executive officers for the past three fiscal years.

Compensation of Directors

UTG's standard arrangement for the compensation of directors provides that each director shall receive an annual retainer of $2,400, plus $300 for each meeting attended and reimbursement for reasonable travel expenses.  UTG's director compensation policy also provides that directors who are employees of UTG or its affiliates do not receive any compensation for their services as directors except for reimbursement for reasonable travel expenses for attending each meeting.

Director Compensation
Name	Fees Earned or Paid in Cash	Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation	Total
Jesse Thomas Correll Chief Executive Officer	0	0	0	0	0	0	0
Randall Lanier Attkisson Director (1)	1,800	0	0	0	0	0	1,800
James Patrick Rousey President	0	0	0	0	0	0	0
John Sanford Albin Director	3,300	0	0	0	0	0	3,300
Joseph Anthony Brinck, II Director	3,900	0	0	0	0	0	3,900
Ward Forrest Correll Director	3,300	0	0	0	0	0	3,300
William Wesley Perry Director (1)	3,600	0	0	0	0	0	3,600
Thomas Francis Darden, II Director (1)	3,300	0	0	0	0	0	3,300
Peter Loyd Ochs Director	3,300	0	0	0	0	0	3,300
Howard Lape Dayton Director	3,900	0	0	0	0	0	3,900
Daryl Jack Heald Director	900	0	0	0	0	0	900

(1)  Messrs. Darden and Perry have their fees donated to various charitable organizations.  Mr. Attkisson donated half of his fees.

Report on Executive Compensation

Introduction

The Board of Directors does not have a formal compensation committee.  The compensation of UTG's executive officers is determined by the full Board of Directors.  The Board of Directors strongly believes that UTG's executive officers directly impact the short-term and long-term performance of UTG.  With this belief and the corresponding objective of making decisions that are in the best interest of UTG's shareholders, the Board of Directors places significant emphasis on the design and administration of UTG's executive compensation plans.

The Company’s philosophy regarding compensation of executive officers is generally one of executive officers qualify for the same benefits and opportunities as provided to all of the employees of the Company.  Special or unique perquisites to executive officers not provided to all employees amount to less than $10,000 to any one individual.  The Company maintains a membership to a local country club that can only be utilized by the President.  During 2008, the Company paid $4,020 to maintain this membership.  During 2009, this membership was suspended at the President’s request in an effort to further control and reduce expenses.

The Company maintains employee benefits such as paid time off, health insurance, dental insurance, group life insurance and long term disability insurance.  These benefits are generally competitive to other entities located in the Midwest where the Company must compete for employees.  Executive officers are entitled to these benefits on the same basis and terms as other employees of the Company.

Executive Compensation Elements

Base Salary. The Board of Directors establishes base salaries at a level intended to be within the competitive market range of comparable companies.  In addition to the competitive market range, many factors are considered in determining base salaries, including the responsibilities assumed by the executive, the scope of the executive's position, experience, length of service, individual performance and internal equity considerations.In addition to a base salary, increased compensation of current and future executive officers of the Company will be determined using a “performance based” philosophy.  UTG’s financial results are analyzed and future increases to compensation will be proportionately based on the profitability of the Company.

Messrs. Jesse Correll and James Rousey, the Company’s CEO and President, voluntarily reduced their annual base salaries by $10,000 and $5,000, respectively, effective January 1, 2009, to further reduce and control expenses.

Incentive Awards.  The Board of Directors from time to time may approve incentive awards for the executive officers.  These incentive awards are generally in the form of a one time cash bonus payment.  Incentive awards are determined based on the overall operations of the Company as well as individual performance considerations.  The Company does not utilize a specific set formula in the determination of incentive awards.

Employee and Director Stock Purchase Plan.  The Company has an employee and director stock purchase plan whereby the Board of Directors periodically approves offerings of stock to qualified individuals under the Plan.  Each participant under the plan executes a “stock restriction and buy-sell agreement”, which among other things provides the Company with a right of first refusal on any future sales of the shares acquired by the participant under the plan.  The plan is intended to provide the individual with a more vested interest in the performance of the Company over the long term.

Stock Options.  Stock options are granted at the discretion of the Board of Directors. There were no options granted to the named executive officers during the last three fiscal years.

Employment Contracts.  There are no employment agreements or understandings in effect with any executive officers of the Company.

Deferred Compensation.  The Company has no deferred compensation arrangements with any of its executive officers.

Chief Executive Officer

On March 27, 2000, Jesse T. Correll assumed the position of Chairman of the Board and Chief Executive Officer of UTG and each of its affiliates.  Under Mr. Correll’s leadership, he declined to receive a salary, bonus or other forms of compensation for his duties with UTG and its affiliates in the year 2000.  In March 2001, the Board of Directors approved an annual salary for Mr. Correll of $75,000, payment of which began on April 1, 2001. As a reflection of Mr. Correll’s leadership, the compensation of current and future executive officers of the Company will be determined by the Board of Directors using a “performance based” philosophy. The Board of Directors will consider UTG’s financial results and future compensation decisions will be proportionately based on the profitability of the Company.  At the June 2007 meeting, members of the Board approved a salary increase for Mr. Correll to $150,000 annually.  The increase became effective July 1, 2007.  Additionally a $25,000 bonus was approved based on 2006 results.  No bonus was paid during 2008 relating to 2007 results nor is one paid in 2009 relating to 2008 results.  Effective January 1, 2009, Mr. Correll voluntarily reduced his annual salary by $10,000.

Conclusion

The Board of Directors believes this executive compensation plan provides a competitive and motivational compensation package to the executive officer team necessary to produce the results UTG strives to achieve.  The Board of Directors also believes theexecutive compensation plan addresses both the interests of the shareholders and the executive team.

BOARD OF DIRECTORS

John S. Albin	Howard L. Dayton
Randall L. Attkisson	Daryl J. Heald
Joseph A. Brinck, II	Peter L. Ochs
Jesse T. Correll	William W. Perry
Ward F. Correll	James P. Rousey
Thomas F. Darden

Compensation Committee Interlocks and Insider Participation

UTG does not have a compensation committee and decisions regarding executive officer compensation are made by the full Board of Directors of UTG.  The following persons served as directors of UTG during 2008 and were officers or employees of UTG or its affiliates during 2008: Jesse T. Correll, Randall L. Attkisson (retired effective July 1, 2008) and James P. Rousey.  Accordingly, these individuals have participated in decisions related to compensation of executive officers of UTG and its subsidiaries.

During 2008, Jesse T. Correll, Randall L. Attkisson (retired effective July 1, 2008) and James P. Rousey, executive officers of UTG, UG, ACAP, AC and TI, were also members of the Board of Directors of UG, ACAP, AC, and TI.

Jesse T. Correll is a director and executive officer of FSBI and participates in compensation decisions of FSBI.  FSBI owns or controls directly and indirectly approximately 41.9% of the outstanding common stock of UTG.

Performance Graph

The following graph compares the cumulative total shareholder return on UTG’s Common Stock during the five fiscal years ended December 31, 2008 with the cumulative total return on the NASDAQ Composite Index Performance and the NASDAQ Insurance Index (1).  The graph assumes that $100 was invested on December 31, 2001 in each of the Company’s common stock, the NASDAQ Composite Index, and the NASDAQ Insurance Stock Index, and that any dividends were reinvested.

(1)   The Company selected the NASDAQ Composite Index Performance as an appropriate comparison.  UTG was listed on the NASDAQ Small Cap exchange until December 31, 2001.  Furthermore, the Company selected the NASDAQ Insurance Stock Index as the second comparison because there is no similar single “peer company” in the NASDAQ system with which to compare stock performance and the closest additional line-of-business index which could be found was the NASDAQ Insurance Stock Index.  Trading activity in the Company’s common stock is limited, which may be due in part as a result of the Company’s low profile.  The Return Chart is not intended to forecast or be indicative of possible future performance of the Company’s common stock.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Principal Holders of Securities

The following tabulation sets forth the name and address of the entity known to be the beneficial owners of more than 5% of UTG’s common stock and shows:  (i) the total number of shares of common stock beneficially owned by such person as of March 2, 2009 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of common stock so owned as of the same date.

Title		Amount	Percent
of	Name and Address	and Nature of	Of
Class	of Beneficial Owner (2)	Beneficial Ownership	Class (1)

Common	Jesse T. Correll	191,058	(3)	5.0%
Stock, no	First Southern Bancorp, Inc.	1,606,785	(3)(4)	41.9%
par value	First Southern Funding, LLC	341,997	(3)(4)	8.9%
	First Southern Holdings, LLC	1,357,716	(3)(4)	35.4%
	Ward F. Correll	264,498	(5)	6.9%
	WCorrell, Limited Partnership	72,750	(3)	1.9%
	Cumberland Lake Shell, Inc.	257,501	(5)	6.7%
	Total (6)	2,404,338		62.7%

(1)	The percentage of outstanding shares is based on 3,834,031 shares of common stock outstanding as of March 2, 2009.
(2)	The address for each of Jesse Correll, First Southern Bancorp, Inc. (“FSBI”), First Southern Funding, LLC (“FSF”), First Southern Holdings, LLC (“FSH”), First Southern Capital Corp., LLC (“FSC”), First Southern Investments, LLC (“FSI”), and WCorrell, Limited Partnership (“WCorrell LP”), is P.O. Box 328, 99 Lancaster Street, Stanford, Kentucky 40484.  The address for each of Ward Correll and Cumberland Lake Shell, Inc. (“CLS”) is P.O. Box 430, 150 Railroad Drive, Somerset, Kentucky 42502.
(3)	The share ownership of Jesse Correll listed includes 118,308 shares of common stock owned by him individually.  The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Jesse Correll serves as managing general partner and, as such, has sole voting and dispositive power over the shares held by it.
	In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH, Jesse Correll may be deemed to beneficially own the total number of shares of common stock owned by FSH (as well as the shares owned by FSBI directly), and may be deemed to share with FSH (as well as FSBI) the right to vote and to dispose of such shares.  Mr. Correll owns approximately 82% of the outstanding membership interests of FSF; he owns directly approximately 50%, companies he controls own approximately 13%, and he has the power to vote but does not own an additional 3% of the outstanding voting stock of FSBI.  FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH.
(4)	The share ownership of FSBI consists of 249,069 shares of common stock held by FSBI directly (which FSBI acquired by virtue of its merger with Dyscim, LLC) and 1,483,791 shares of common stock held by FSH of which FSBI is a 99% member and FSF is a 1% member, as further described below.  As a result, FSBI may be deemed to share the voting and dispositive power over the shares held by FSH.
(5)	Includes 257,501 shares of common stock held by CLS, all of the outstanding voting shares of which are owned by Ward F. Correll.
(6)	According to the most recent Schedule 13D, as amended, filed jointly by each of the entities and persons listed above, Jesse Correll, FSBI, FSF and FSH, have agreed in principle to act together for the purpose of acquiring or holding equity securities of UTG.  In addition, the Schedule 13D indicates that because of their relationships with Jesse Correll and these other entities, Ward Correll, CLS, and WCorrell, Limited Partnership may also be deemed to be members of this group.  Because the Schedule 13D indicates that for its purposes, each of these entities and persons may be deemed to have acquired beneficial ownership of the equity securities of UTG beneficially owned by the other entities and persons, each has been identified and listed in the above tabulation.

Security Ownership of Management of UTG

The following tabulation shows with respect to each of the directors of UTG, with respect to UTG’s chief executive officer and President, and each of UTG’s executive officers whose salary plus bonus exceeded $100,000 for fiscal 2008, and with respect to all executive officers and directors of UTG as a group:  (i) the total number of shares of all classes of stock of UTG or any of its parents or subsidiaries, beneficially owned as of March 1, 2008 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of stock so owned, and granted stock options available as of the same date.

Title	Directors, Named Executive	Amount	Percent
of	Officers, & All Directors &	and Nature of	Of
Class	Executive Officers as a Group	Ownership	Class (1)

UTG’s	John S. Albin	10,503	(4)	*
Common	Randall L. Attkisson	5,615	(2)	*
Stock, no	Joseph A. Brinck, II	7,500	(6)	*
par value	Jesse T. Correll	2,139,840	(3)	55.8%
	Ward F. Correll	264,498	(5)(6)	6.9%
	Thomas F. Darden	37,095	(6)	*
	Howard L. Dayton, Jr.	2,973	(6)	*
	Daryl J. Heald	21,739	(7)
	Theodore C. Miller	10,500	(6)	*
	Peter L. Ochs	2,000	(7)	*
	William W. Perry	72,783	(6)	1.9%
	James P. Rousey	0		*
	All directors and executive officers as a group (twelve in number)	2,575,046		67.2%

* Less than 1%

(1)	The percentage of outstanding shares for UTG is based on 3,834,031 shares of common stock outstanding as of March 2, 2009.
(2)	Randall L. Attkisson holds minority ownership positions in certain of the companies listed as owning UTG common stock including First Southern Bancorp, Inc.  Ownership of these shares is reflected in the ownership of Jesse T. Correll.
(3)	The share ownership of Mr. Correll includes 118,308 shares of UTG, Inc common stock owned by him individually, 249,069 shares of UTG, Inc common stock held by First Southern Bancorp, Inc. and 341,997 shares of UTG, Inc common stock owned by First Southern Funding, LLC.  The share ownership of Mr. Correll also includes 72,750 shares of UTG, Inc common stock held by WCorrell, Limited Partnership, a limited partnership in which Mr. Correll serves as managing general partner and, as such, has sole voting and dispositive power over the shares held by it.   In addition, by virtue of his ownership of voting securities of First Southern Funding, LLC and First Southern Bancorp, Inc., and in turn, their ownership of 100% of the outstanding membership interests of First Southern Holdings, LLC (the holder of 1,483,791 shares of UTG, Inc common stock), Mr. Correll may be deemed to beneficially own the total number of shares of UTG, Inc common stock owned by First Southern Holdings, and may be deemed to share with First Southern Holdings the right to vote and to dispose of such shares. Mr. Correll owns approximately 82% of the outstanding membership interests of First Southern Funding; he owns directly approximately 50%, companies he controls own approximately 13%, and he has the power to vote but does not own an additional 3% of the outstanding voting stock of First Southern Bancorp.  First Southern Bancorp and First Southern Funding in turn own 99% and 1%, respectively, of the outstanding membership interests of First Southern Holdings.
(4)	Includes 392 shares owned directly by Mr. Albin’s spouse.
(5)	Mr. Correll directly owns 6,997 through the UTG Employee and Director Stock Purchase Plan.  Cumberland Lake Shell, Inc. owns 257,501 shares of UTG Common Stock, all of the outstanding voting shares of which are owned by Ward F. Correll.  Ward F. Correll is the father of Jesse T. Correll.  There are 72,750 shares of UTG Common Stock owned by WCorrell Limited Partnership in which Jesse T. Correll serves as managing general partner and, as such, has sole voting and dispositive power over the shares of Common Stock held by it. The aforementioned 72,750 shares are deemed to be beneficially owned by and listed under Jesse T. Correll in this section.
(6)	Shares subject to UTG Employee and Director Stock Purchase Plan.

Joseph A. Brinck, II	7,500
Ward F. Correll	6,997
Thomas F. Darden	37,095
Howard L. Dayton, Jr.	2,500
Theodore C. Miller	10,500
William W. Perry	38,000

(7) Shares held in a trust for benefit of named individual

* Less than 1%.

Except as indicated above, the foregoing persons hold sole voting and investment power.

The following table reflects the Company’s Employee and Director Stock Purchase Plan Information:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under employee and director stock purchase plans (excluding securities reflected in column (a)) (c)
Employee and director stock purchase plans approved by security holders	0	0	290,681
Employee and director stock purchase plans not approved by security holders	0	0	0
Total	0	0	290,681

On March 26, 2002, the Board of Directors of UTG adopted, and on June 11, 2002, the shareholders of UTG approved the UTG, Inc, Inc. Employee and Director Stock Purchase Plan.  The Plan allows for the issuance of up to 400,000 shares of UTG common stock.  The plan’s purpose is to encourage ownership of UTG stock by eligible directors and employees of UTG and its subsidiary by providing them with an opportunity to invest in shares of UTG common stock.  The plan is administered by the Board of Directors of UTG.

A total of 400,000 shares of common stock may be purchased under the plan, subject to appropriate adjustment for stock dividends, stock splits or similar recapitalizations resulting in a change in shares of UTG.  The plan is not intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.  The Board of Directors of UTG periodically approves offerings under the plan to qualified individuals.  Through March 2, 2009, 18 individuals have purchased a total of 109,319 shares under this program.  Each participant under the plan executed a “stock restriction and buy-sell agreement”, which among other things provides UTG with a right of first refusal on any future sales of the shares acquired by the participant under this plan.

The purchase price of shares repurchased under the stock restriction and buy-sell agreement shall be computed, on a per share basis, equal to the sum of (i) the original purchase price(s) paid to acquire such shares from the Holding Company at the time they were sold pursuant to the Plan and (ii) the consolidated statutory net earnings (loss) per share of such shares during the period from the end of the month next preceding the month in which such shares were acquired pursuant to the plan, to the end of the month next preceding the month in which the closing sale of such shares to UTG occurs.  The consolidated statutory net earnings per Share shall be computed as the net income of the Holding Company and its subsidiaries on a consolidated basis in accordance with statutory accounting principles applicable to insurance companies, as computed by the Holding Company, except that earnings of insurance companies or block of business acquired after the original plan date, November 1, 2002, shall be adjusted to reflect the amortization of intangibles established at the time of acquisition in accordance with generally accepted accounting principles (GAAP), less any dividends paid to shareholders. The calculation of net earnings per Share shall be performed on a monthly basis using the number of common shares of the Holding Company outstanding as of the end of the reporting period. The purchase price for any Shares purchased hereunder shall be paid in cash within 60 days from the date of purchase subject to the receipt of any required regulatory approvals as provided in the Agreement.

The original issue price of shares at the time this program began was established at $12.00 per share.  Through March 2, 2009, UTG had 109,319 shares outstanding that were issued under this program.  At December 31, 2008, shares under this program have a value of $16.76 per share pursuant to the above formula.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

On December 31, 2007, North Plaza was liquidated, with its assets and liabilities transferred into its 100% owned parent company, UG.

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by FSBI.  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%.  The Company received $264,942 and $264,219 of dividends in 2008 and 2007, respectively.

As part of the acquisition of ACAP on December 8, 2006, UTG loaned $3,357,000 to ACAP.  ACAP used the proceeds for the repayment of existing debt with an unaffiliated financial institution and to retire all of its outstanding preferred stock.  The terms of the inter-company loan mirror the interest rate and repayment requirements of the debt with First Tennessee Bank National Association.  No payments were made on the loan in 2008. At December 31, 2008, the loan the interest due of $224,084 was capitalized to the loan. As of December 31, 2008, the balance of the loan is $3,259,084.

During June 2003, UG entered into a lease agreement with Bandyco, LLC, an affiliated entity, for a one-sixth interest in an aircraft.  Bandyco, LLC is affiliated with Ward F. Correll, who is a director of the Company.  The lease term is for a period of five years at a total cost of $523,831.  The Company is responsible for its share of annual non-operational costs, in addition to the operational costs as are billable for specific use.  During 2006, UG entered into an additional lease agreement for a 27.5% interest in a second plane with Bandyco, LLC.  The lease term is for a period of five years at a total cost of $166,913.  The Company is responsible for its share of annual non-operational costs, in addition to the operational costs as are billable for specific use.

On March 26, 2002, the Board of Directors of UTG adopted, and on June 11, 2002, the shareholders of UTG approved, the UTG, Inc. Employee and Director Stock Purchase Plan (See Note 10.A. to the consolidated financial statements).

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiaries, UG, AC and TI.  Under these arrangements, each company pays its proportionate share of expenses of the entire group, based on an allocation formula.  During 2008, UG, AC and TI paid $3,717,696, $3,065,476 and $779,980, respectively. During 2007, UG, AC and TI paid $3,919,684, $3,314,176 and $859,918, respectively.

Respective domiciliary insurance departments have approved the agreements of the insurance companies and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

UG from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services UG's mortgage loans including those covered by the participation agreements.  UG pays a .25% servicing fee on these loans and a one time fee at loanorigination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  UG paid $93,572 and $85,612 in servicing fees and $19,283 and $54,281 in origination fees to FSNB during 2008 and 2007, respectively.

The Company reimbursed expenses incurred by Mr. Jesse T. Correll and Mr. Randall L. Attkisson relating to travel and other costs incurred on behalf of or relating to the Company.  The Company paid $41,819 and $30,327 in 2008 and 2007, respectively to First Southern Bancorp, Inc. in reimbursement of such costs.  In addition, beginning in 2001, the Company began reimbursing FSBI a portion of salaries and  pension costs for Mr. Correll and Mr. Attkisson.  The reimbursement was approved by the UTG Board of Directors and totaled $261,777 and $249,209 in 2008 and 2007, respectively, which included salaries and other benefits.

On June 30, 2008, UG paid a cash dividend of $1,000,000 to UTG, Inc.  An additional dividend of $2,000,000 was paid by UG to UTG, Inc. on December 18, 2008.  On July 13, 2007, UG paid a cash dividend of $3,000,000 to UTG, Inc.  AC paid cash dividends to its parent, ACAP, of $0 and $500,000 in 2008 and 2007, respectively.  TI paid cash dividends to AC of $0 and $250,000 in 2008 and 2007, respectively.  These dividends were comprised entirely of ordinary dividends.  No regulatory approvals were required prior to the payment of these dividends.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

Brown Smith Wallace LLC (“BSW”) served as UTG’s independent certified public accounting firm for the fiscal years ended December 31, 2008 and 2007.  In serving their primary function as outside auditor for UTG, BSW performed the following audit services: examination of annual consolidated financial statements; assistance and consultation on reports filed with the Securities and Exchange Commission; and assistance and consultation on separate financial reports filed with the State insurance regulatory authorities pursuant to certain statutory requirements.

Audit Fees.  Audit fees paid for these audit services in the fiscal year ended December 31, 2008 and 2007 totaled $145,000 and $226,965, respectively and audit fees billed for quarterly reviews of the Company’s financial statements totaled $23,452 and $23,759 for the year 2008 and 2007, respectively.

Audit Related Fees. No audit related fees were incurred by the Company from BSW for the fiscal years ended December 31, 2008 and 2007.

Tax Fees.  The Company paid $5,135 and $5,406 to BSW relating to certain tax advice and electronic filing of certain federal income tax returns of the Company for the years ended December 31, 2008 and 2007.

All Other Fees.  No other fees were paid to BSW by the Company during 2008.  During 2007, the Company paid $35,277 to BSW for services relating to a SAS 70 audit of the Company and $9,372 to BSW relating to SOX and internal controls review and implementation.  The audit committee approved the above work and fees of BSW.

The audit committee of the Company appoints the independent certified public accounting firm, with the appointment approved by the entire Board of Directors.  Non-audit related services to be performed by the firm are to be approved by the audit committee prior to engagement.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as a part of the report:

(1)	Financial Statements:
	See Item 8, Index to Financial Statements
(2)	Financial Statement Schedules
	Schedule I - Summary of Investments - other than invested in related parties.
	Schedule II - Condensed financial information of registrant
	Schedule IV – Reinsurance
	Schedule V - Valuation and qualifying accounts
	NOTE:  Schedules other than those listed above are omitted because they are not required or the information is disclosed in the financial statements or footnotes.

(B) Exhibits:

Index to Exhibits incorporated herein by this reference (See pages 81-82).

INDEX TO EXHIBITS

Exhibit

Number

2.1	(3)	Agreement and Plan of Merger of United Trust Group, Inc., An Illinois Corporation with and into UTG, Inc., A Delaware Corporation dated as of July 1, 2005, including exhibits thereto.
2.2	(4)	Stock Purchase Agreement, dated August 7, 2006, between UTG, Inc. and William F. Guest and John D. Cornett
2.3	(4)	Amendment No. 1, dated September 6, 2006, to the Stock Purchase Agreement, dated August 7, 2007, between UTG, Inc. and William F. Guest and John D. Cornett
2.4	(4)	Amendment No. 2, dated November 22, 2006, to the Stock Purchase Agreement, dated August 7, 2006, as amended, between UTG, Inc. and William F. Guest and John D. Cornett.
3.1	(3)	Certificate of Incorporation of the Registrant and all amendments thereto.
3.2	(3)	By-Laws for the Registrant and all amendments thereto.
4.1	(2)	UTG’s Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K with respect to long-term debt instruments.
10.1	(1)	Management and Consultant Agreement dated as of January 1, 1993 between First Commonwealth Corporation and Universal Guaranty Life Insurance Company.
10.2	(3)	Line of credit agreement dated June 1, 2005, between Universal Guaranty Life Insurance Company and First National Bank of Tennessee.
10.3	(4)	Amended and Restated UTG, Inc. Employee and Director Stock Purchase Plan and form of related Stock Restriction and Buy-Sell Agreement.
10.4	(4)	Promissory note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association.
10.5	(4)	Revolving credit note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association.
10.6	(4)	Loan Agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association.
10.7	(4)	Commercial pledge agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association.
10.8	(4)	Negative pledge agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association.
10.9	(4)	Coinsurance Agreement between American Capitol Insurance Company and Reserve National Insurance Company.
10.10	(4)	Coinsurance Agreement between Texas Imperial Life Insurance Company and Reserve National Insurance Company.
10.11	(4)	Administrative Services Agreement between American Capitol Insurance Company and Reserve National Insurance Company.
10.12	(4)	Administrative Services Agreement between Texas Imperial Life Insurance Company and Reserve National Insurance Company.
10.13	(4)	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc and American Capitol Insurance Company
10.14	(4)	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc and Texas Imperial Life Insurance Company
10.15	(5)	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc and Universal Guaranty Life Insurance Company
14.1	(3)	Code of Ethics and Business Conduct
14.2	(3)	Code of Ethical Conduct for Senior Financial Officers
21.1		List of Subsidiaries of the Registrant.
31.1		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
31.2		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.1		Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to 18 U.S.C. Section 1350.
32.2		Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to 18 U.S.C. Section 1350.
99.1	(3)	Audit Committee Charter.
99.2	(3)	Whistleblower Policy

Footnote:

(1)	Incorporated by reference from the Company's Annual Report on Form 10-K, File No. 0-5392, as of December 31, 1993.
(2)	Incorporated by reference from the Company's Annual Report on Form 10-K, File No. 0-5392, as of December 31, 2002.
(3)	Incorporated by reference from the Company’s Annual Report on Form 10-K, File No. 0-16867, as of December 31, 2005.
(4)	Incorporated by reference from the Company’s Annual Report on Form 10-K, File No. 0-16867, as of December 31, 2006
(5)	Incorporated by reference from the Company’s Annual Report on Form 10-K, File No. 0-16867, as of December 31, 2007

UTG, INC.
SUMMARY OF INVESTMENTS - OTHER THAN
INVESTMENTS IN RELATED PARTIES
As of December 31, 2008
								Schedule I
Column A				Column B		Column C		Column D
								Amount at
								Which Shown
								in Balance
				Cost		Value		Sheet
Fixed maturities:
	Bonds:
		United States Government and
		government agencies and authorities	$	0	$	0	$	0
		State, municipalities, and political
		subdivisions		0		0		0
		Collateralized mortgage obligations		0		0		0
		Public utilities		0		0		0
		All other corporate bonds		0		0		0
	Total fixed maturities			0	$	0		0
Investments held for sale:
	Fixed maturities:
		United States Government and
		government agencies and authorities		45,837,369	$	51,808,488		51,808,488
		State, municipalities, and political
		subdivisions		485,000		475,405		475,405
		Collateralized mortgage obligations		85,281,137		87,590,104		87,590,104
		Public utilities		2,707,070		2,702,485		2,702,485
		All other corporate bonds		40,742,526		36,113,379		36,113,379
				175,053,102	$	178,689,861		178,689,861
	Equity securities:
		Banks, trusts and insurance companies		6,206,500	$	6,072,000		6,072,000
		All other corporate securities		25,965,222		24,564,500		24,564,500
				32,171,722	$	30,636,500		30,636,500
Mortgage loans on real estate				42,472,916				42,472,916
Investment real estate				41,780,466				41,780,466
Real estate acquired in satisfaction of debt				0				0
Policy loans				14,632,855				14,632,855
Other long-term investments				0				0
Short-term investments				0				0
	Total investments		$	306,111,061			$	308,212,598

UTG, Inc.

Schedule II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO CONDENSED FINANCIAL INFORMATION

(a) The condensed financial information should be read in conjunction with the consolidated financial statements and notes of UTG, Inc. and Consolidated Subsidiaries.

UTG, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY BALANCE SHEETS
As of December 31, 2008 and 2007
						Schedule II
				2008		2007
ASSETS
	Investment in affiliates		$	55,947,905	$	61,579,893
	Cash and cash equivalents			582,694		320,073
	F.I.T. Recoverable			25,953		0
	Accrued interest income			0		73,689
	Note receivable from affiliate			3,259,084		3,035,000
	Receivable from affiliates (Net)			0		90,376
	Other assets			66,766		178,842
		Total assets	$	59,882,402	$	65,277,873
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
	Notes payable		$	10,494,454	$	13,544,449
	Payable To Affiliate (Net)			373,900		0
	Deferred income taxes			2,105,663		2,086,588
	Other liabilities			663,174		892,311
		Total liabilities		13,637,191		16,523,348
Shareholders' equity:
	Common stock, net of treasury shares			3,834		3,849
	Additional paid-in capital, net of treasury			41,943,229		42,067,229
	Retained earnings			3,028,744		2,374,990
	Accumulated other comprehensive
	income of affiliates			1,269,404		4,308,457
		Total shareholders' equity		46,245,211		48,754,525
		Total liabilities and shareholders' equity	$	59,882,402	$	65,277,873

UTG, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY STATEMENTS OF OPERATIONS
Two Years Ended December 31, 2008
						Schedule II
				2008		2007
Revenues:
	Management fees from affiliates		$	7,623,149	$	8,153,783
	Interest income			164,501		258,503
	Other income			93,120		107,205
				7,880,770		8,519,491
Expenses:
	Interest expense			652,720		1,033,247
	Operating expenses			6,832,631		6,992,231
				7,485,351		8,025,478
	Operating income			395,419		494,013
	Income tax benefit (expense)			(148,730)		(221,820)
	Equity in income of subsidiaries			407,065		1,870,426
		Net income	$	653,754	$	2,142,619
Basic income per share			$	0.17	$	0.56
Diluted income per share			$	0.17	$	0.56
Basic weighted average shares outstanding				3,844,081		3,851,596
Diluted weighted average shares outstanding				3,844,081		3,851,596

UTG, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY STATEMENTS OF CASH FLOWS
Two Years Ended December 31, 2008
					Schedule II
			2008		2007
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income		$	653,754	$	2,142,619
Adjustments to reconcile net income to
net cash provided by operating activities:
	Equity in income of subsidiaries		(407,065)		(1,870,426)
	Depreciation		85,766		138,149
	Change in FIT recoverable		(25,953)		0
	Change in accrued interest income		73,689		(58,564)
	Change in indebtedness (to) from affiliates, net		464,276		59,019
	Change in deferred income taxes		19,075		34,820
	Change in other assets and liabilities		(202,827)		(402,553)
Net cash provided by operating activities			660,715		43,064
Cash flows from financing activities:
	Purchase of treasury stock		(124,015)		(193,153)
	Issuance of common stock		0		446,698
	Issuance of note receivable		(224,084)		0
	Proceeds from repayment of note receivable		0		322,000
	Proceeds from subsidiary for acquisition		0		487,811
	Purchase of subsidiary		0		(2,443,776)
	Proceeds from notes payable		0		1,994,176
	Payments on notes payable		(3,049,995)		(3,450,005)
	Capital contribution to subsidiary		0		0
	Dividend received from subsidiary		3,000,000		3,000,000
Net cash provided by (used in) financing activities			(398,094)		163,751
Net increase in cash and cash equivalents			262,621		206,815
Cash and cash equivalents at beginning of year			320,073		113,258
Cash and cash equivalents at end of year		$	582,694	$	320,073

UTG, INC.
REINSURANCE
As of December 31, 2008 and the year ended December 31, 2008
									Schedule IV
Column A		Column B		Column C		Column D		Column E	Column F
									Percentage
				Ceded to		Assumed			of amount
				other		from other			assumed to
		Gross amount		companies		companies		Net amount	net
Life insurance
in force	$	2,019,270,704	$	490,682,000	$	17,631,296	$	1,546,220,000	1.1%
Premiums and policy fees:
Life insurance	$	18,261,728	$	5,163,794	$	180,721	$	13,278,655	1.4%
Accident and health
insurance		43,599		16,540		3,025		30,084	10.1%
	$	18,305,327	$	5,180,334	$	183,746	$	13,308,739	1.4%

UTG, INC.
REINSURANCE
As of December 31, 2007 and the year ended December 31, 2007
									Schedule IV
Column A		Column B		Column C		Column D		Column E	Column F
									Percentage
				Ceded to		Assumed			of amount
				other		from other			assumed to
		Gross amount		companies		companies		Net amount	net
Life insurance
in force	$	2,138,577,674	$	560,946,000	$	16,693,326	$	1,594,325,000	1.0%
Premiums and policy fees:
Life insurance	$	18,785,742	$	4,619,360	$	220,581	$	14,386,963	1.5%
Accident and health
insurance		95,364		71,432		2,471		26,403	9.4%
	$	18,881,106	$	4,690,792	$	223,052	$	14,413,366	1.5%

UTG, INC.
VALUATION AND QUALIFYING ACCOUNTS
As of and for the years ended December 31, 2008 and 2007
				Schedule V
	Balance at	Additions
	Beginning	Charges		Balances at
Description	Of Period	and Expenses	Deductions	End of Period
December 31, 2008
.
Allowance for doubtful accounts -
mortgage loans	$       19,730	$              -	$              -	$       19,730
December 31, 2007
Allowance for doubtful accounts -
mortgage loans	$       33,500	$              -	$       13,770	$       19,730

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

UTG, Inc

(Registrant)

/s/ John S. Albin	March 18, 2009
John S. Albin Director
/s/ Randall L. Attkisson	March 18, 2009
Randall L. Attkisson Director
/s/ Joseph A. Brinck	March 18, 2009
Joseph A. Brinck Director
/s/ Jesse T. Correll	March 18, 2009
Jesse T. Correll Chairman of the Board, Chief Executive Officer and Director
/s/ Ward F. Correll	March 18, 2009
Ward F. Correll Director
	March 18, 2009
Thomas F. Darden Director
/s/ Daryl J. Heald	March 18, 2009
Daryl J. Heald Director
/s/ Howard L. Dayton, Jr.	March 18, 2009
Howard L. Dayton, Jr. Director
/s/ Peter L. Ochs	March 18, 2009
Peter L. Ochs Director
/s/ William W. Perry	March 18, 2009
William W. Perry Director
/s/ James P. Rousey	March 18, 2009
James P. Rousey President and Director
/s/ Theodore C. Miller	March 18, 2009
Theodore C. Miller Corporate Secretary and Chief Financial Officer

EX-21

	Exhibit 21.1
LIST OF SUBSIDIARIES
Subsidiary Name		State of Incorporation
Cumberland Woodlands, LLC			Kentucky
Stanford Wilderness Road, LLC			Kentucky
Roosevelt Equity Corporation			Delaware
UTAG, Inc.			Illinois
Universal Guaranty Life Insurance Company			Ohio
HPG Acquisitions, LLC			Texas
RLF Lexington, LLC			Colorado
Acap Corporation			Delaware
American Capitol Insurance Company			Texas
Texas Imperial Life Insurance Company			Texas
Imperial Plan, Inc.			Texas

EX-31.1

Exhibit 31.1

CERTIFICATIONS
I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of UTG, Inc., certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant, UTG, Inc.;
2.	Based on my knowledge, this annual 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 changes 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 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 controls over financial reporting.

Date:   March 18, 2009	By	/s/ Jesse T. Correll
		Chairman of the Board and
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS
I, Theodore C. Miller,  Senior Vice President, Corporate Secretary and Chief Financial Officer of UTG, Inc., certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant, UTG, Inc.;
2.	Based on my knowledge, this annual 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 changes 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 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 controls over financial reporting.

Date:   March 18, 2009	By	/s/ Theodore C. Miller
		Senior Vice President, Corporate Secretary and
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the “Company”) for the period ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Jesse T. Correll, Chairman of the Board and 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 the best of 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.

Date:	March 18, 2009	By:	/s/ Jesse T. Correll
			Jesse T. Correll
			Chairman of the Board and
			Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the “Company”) for the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Theodore C. Miller, Senior Vice President, Corporate Secretary and Chief Financial 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 the best of 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.

Date:	March 18, 2009	By:	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President, Corporate
			Secretary and Chief Financial Officer