SHAREHOLDER DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL

12 Months Ended

Dec. 31, 2011

SHAREHOLDERS DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL [Abstract]

SHAREHOLDERS DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL

3. SHAREHOLDER DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL

At December 31, 2011, 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 and AC’s dividend limitations are described below.

UG is an Ohio domiciled insurance company, which requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend.  Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus.  For the year ended December 31, 2011, UG had statutory net income of $582,217.  At December 31, 2011, UG's statutory capital and surplus amounted to $33,167,222.  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 $2,930,000 and $2,725,000 to UTG in 2011 and 2010, respectively. No extraordinary dividends were paid during the two year period.

AC is a Texas domiciled insurance company, which requires notification within two business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend.  Ordinary dividends are defined as the greater of: a) prior year statutory earnings from operations or b) 10% of statutory surplus.  At December 31, 2011, AC statutory earnings from operations were $874,660.  At December 31, 2011 AC, statutory surplus was $6,625,808.  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 $600,000 and $728,130 during 2011 and 2010, respectively.  No extraordinary dividends were paid during the two year period.

UG is required to maintain minimum statutory surplus of $2,500,000. AC is required to maintain minimum statutory surplus of $1,400,000.