RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2015

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

Note 11 – Related Party Transactions

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by First Southern Bancorp, Inc. ("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 dividends of $264,219 during 2015 and 2014. On March 30, 2009, UG purchased $1,000,000 of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement.

On September 28, 2011 UTG entered a joint ownership agreement with Bandyco, LLC and First Southern National Bank, for an 8.08 % interest in an aircraft. Bandyco, LLC is affiliated with Ward F Correll, who is a Director of the Company. The Company paid a monthly operational fee of $25,000 through July of 2014 when the aircraft was sold.  During July of 2014, the Company acquired a different aircraft.  UTG paid $1,600,000 in the acquisition of the aircraft, increasing the Company's ownership interest to 30.10 %. The aircraft is used for business related travel by various officers and employees of the Company. For years 2015 and 2014, UTG paid $255,920 and $879,453 for costs associated with the aircraft, respectively.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary. Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula. During 2015 and 2014, UG paid $6,867,882 and $8,902,568, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement 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.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a 0.25 % servicing fee on these loans and a one-time fee at loan origination of 0.50 % of the original loan cost to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $11,622 and $33,894 in servicing fees and $25,000 and $0 in origination fees to FSNB during 2015 and 2014, respectively.

The Company reimbursed expenses incurred by employees of FSNB relating to salaries, travel and other costs incurred on behalf of or relating to the Company. The Company paid $324,918 and $325,479 in 2015 and 2014, respectively to FSNB in reimbursement of such costs. In addition, the Company reimburses FSNB a portion of salaries and pension costs for Mr. Correll and Mr. Ditto. The reimbursement was approved by the UTG Board of Directors and totaled $349,351 and $332,725 in 2015 and 2014, respectively, which included salaries and other benefits.

As previously disclosed in the Notes Receivable section of Note 2 – Investments, several of the Company's notes have participation agreements in place with third parties.  Certain participation agreements are with FSF, a related party.  The participation agreements are sold without recourse and assigned to the participant based on their pro-rata share of the principal, interest and collateral as specified in the participation agreements.The undivided participations in the notes receivable range from 20% - 50%.  The total amount of loans participated to FSF were $3,170,000and $0 as of December 31, 2015 and 2014, respectively. One of the participated notes receivable was fully repaid during the first quarter of 2016 reducing the outstanding participating notes receivable balance with FSF to $670,000.