Federal Life : 2021 Annual Report

Federal Life Group, Inc.

A Pennsylvania Corporation

3750 West Deerfield Road Riverwoods, Illinois 60015 Telephone: [phone]

I.R.S. Employer Identification No.: 82-4944172

ANNUAL REPORT (UNAUDITED)

FOR THE YEAR ENDED DECEMBER 31, 2021

Title of each class of security	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.01	FLFG	OTC Pink Open Market

APPLICABLE TO CORPORATE ISSUERS:

As of December 31, 2021, there were 3,647,642 shares of the registrant's common stock, $.01 par value, outstanding.

TABLE OF CONTENTS

CONSOLIDATED BALANCE SHEETS 1

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 2

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 3

CONSOLIDATED STATEMENT OF CASH FLOWS 4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6

1.	Organization and Basis of Presentation	6
2.	Summary of Significant Accounting Policies	7
3.	Recent Accounting Pronouncements	7
4.	Investments and Related Income	9
5.	Derivative Instruments	12
6.	Deferred Policy Acquisition Costs and Deferred Sales Inducements	12
7.	Fair Value of Financial Instruments	14
8.	Policyholder Liabilities	17
9.	Accumulated Other Comprehensive Income	18
10.	Real Estate	19
11.	Property and Equipment	19
12.	Income Taxes	19
13.	Commitments and Contingent Liabilities	20
14.	Employer's Disclosures About Postretirement Benefits	20
15.	Debt and Federal Home Loan Bank Advances	20
16.	Related Party Transactions	20
17.	Earnings Per Share	21
18.	Reinsurance	21
19.	Management Discussion and Analysis	21

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

December 31, 2021

Assets Investments:

December 31, 2020

Fixed maturity securities available for sale, at fair value (amortized cost: 2021, $196,527; 2020, $206,706) $ 206,329

$ 225,406

2,878 8,911

Equity securities, at fair value 4,554

Mortgage loans 1,700

-

Other invested assets 2,030 1,552

Policy loans 8,503

Total investments 223,116

238,747

Cash and cash equivalents 12,835Real

Real estate, property and equipment, net 1,896

2,044

20,525

Accrued investment income 1,664Accounts

1,810

Accounts receivable 704

490

Reinsurance recoverables 3,566Prepaid

3,273

Prepaid reinsurance premiums 1,615

1,481

Deferred policy acquisition costs, net 11,206Deferr

10,208

Other assets 10,568Separate

Deferred sales inducement costs, net 2,083

1,892

468

Separate account asset 31,207	26,929
Total Assets $ 300,460	$ 307,867

Policy liabilities and accruals:

Liabilities

Policyholder account balance Future life policy benefits

Future accident and health policy benefits Reserve for deposit type contracts

Other policyholder funds

Unearned revenue

Deferred reinsurance settlements Deferred tax liability, net

Other liabilities

$$

133,818 129,232

67,223 68,979

1,057 320

15,058 12,005

2,802 3,125

1,093 1,224

1,903 2,095

1,276 2,872

1,249 1,014

Separate account liability 31,207

26,929

247,795

Total Liabilities Equity

Common stock, par value $.01 per share, 4,010,250 shares authorized; issued and outstanding: 2021 - 3,647,642 2020 - 3,630,249

Additional paid-in capital Retained earnings

Accumulated other comprehensive income (loss)

Total Equity

256,686

36

36

34,860 34,342

3,157 13,965

5,721 11,729

43,774

60,072

Total Liabilities and Equity

$ 300,460

$ 307,867

See accompanying notes to unaudited consolidated financial statements

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

2021

2020

Insurance revenues Net investment income Net investment gains

$

14,061 $ 7,941

7,973 8,176

(3,156) 1,885

Other revenues

556

187

18,189

Total Revenues 19,434

Benefits and expenses

11,450

Policyholder benefits 14,167

Interest credit to policyholders 331 308

Operating costs and expenses 11,451 8,434 Amortization of deferred acquisition and sales inducement

costs

Taxes, licenses and fees

Dividends to policyholders

58

60

28,23214

Net loss before taxes

(8,798)

(4,616)

Total Benefits and ExpensesTax expense

1,480745

1,822 731 22,805

13

Net Loss

$ (8,812)

$ (4,629)

Unrealized holding gains (losses) arising during the period, net of tax

Other Comprehensive Income (Loss), net of tax:

Adjustment to deferred acquisition costs, net of tax

(7,033) 1,025

6,620 (930)

Other Comprehensive Income (Loss)

(6,008)

5,690

$

Comprehensive Income (Loss)

(14,820) $

1,061

Earnings per common share for the periods (Note 17):

Year ended Dec 31, 2021

Year ended Dec 31, 2020

Basic loss per common share

$ (2.42)

$ (1.28)

$

Diluted loss per common share

$

See accompanying notes to unaudited consolidated financial statements

(2.42)

(1.28)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Balance, January 1, 2020

Net loss for the period Paid in capital

Other comprehensive income

Common StockSharesAmount

3,565,150 $ - 65,099 -

AccumulatedAdditional Paid-In Capital

Other Comprehensive Income (Loss)

(Dollars in thousands)Retained EarningsTotal Stockholders'

Equity

35 $ - 1 -

33,548 $ - 794 -

6,039 $ - - 5,690

18,594 $ (4,629)

58,216 (4,629)

- -

795 5,690

Balance, December 31, 2020 3,630,249 $ 36

$ 34,342

$ 11,729

$ 13,965

$ 60,072

Net loss for the period (8,812)

-	-	-	(8,812)
-	-	-	(1,996)
-	518	-	518

Stockholder dividends - (1,996)Paid in capital

-17,393

518

Other comprehensive loss - - - (6,008) -

(6,008)

$

Balance, December 31, 2021

3,647,642

$

36

$

34,860

$

5,721$

See accompanying notes to unaudited consolidated financial statements

3,157

43,774