UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30~~March 31, ~~2018~~ 2019

☐ 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: 001-38718

Federal Life Group, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania		82-4944172
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3750 West Deerfield Road

Riverwoods, Illinois 60015

(Address of principal executive offices, including zip code)

(847) 520-1900

(Registrant’s telephone number, including area code)

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark whether the registrant (1) has filed all reports required~~ to beSection ~~filed by Sections 13 or 15~~12(db) 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 ☐ No ☒ :

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Indicate by check mark whether the registrant is(1) has afiled ~~large~~all ~~accelerated~~reports ~~filer,~~required anto ~~accelerated~~be ~~filer,~~filed aby ~~non-accelerated filer,~~Sections ~~smaller~~13 ~~reporting~~or ~~company,~~15(d) orof anthe ~~emerging~~Securities ~~growth~~Exchange ~~company.~~Act ~~See~~of 1934 during the ~~definitions~~preceding of12 ~~“large~~months ~~accelerated~~(or ~~filer,”~~for ~~“accelerated~~such ~~filer,”~~shorter ~~“smaller~~period ~~reporting~~that ~~company~~the registrant was required to file such reports),” and ~~“emerging~~(2) has ~~growth~~been ~~company”~~subject into ~~Rule~~such ~~12b-2~~filing ofrequirements for the ~~Exchange~~past ~~Act.~~90 days. Yes ☒ No ☐

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ☐mark ~~Accelerated~~whether ~~filer~~the ☐registrant ~~Non~~has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-~~accelerated~~T ~~filer~~(§ ☐232.405 ~~Smaller~~of ~~reporting~~this ~~company~~chapter) ☒during ~~Emerging~~the ~~growth~~preceding ~~company~~12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

IfIndicate anby ~~emerging~~check ~~growth~~mark ~~company~~whether the registrant is a large accelerated filer, ~~indicate~~an byaccelerated ~~check~~filer, ~~mark~~a ifnon-accelerated ~~the~~filer, ~~registrant~~smaller ~~has~~reporting ~~elected~~company, ~~not~~or toan ~~use~~emerging growth company. See the ~~extended~~definitions ~~transition~~of ~~period for~~“large ~~complying~~accelerated ~~with~~filer,” ~~any~~“accelerated ~~new~~filer,” or“smaller ~~revised~~reporting ~~financial~~company,” ~~accounting~~and ~~standards~~“emerging ~~provided~~growth ~~pursuant~~company” toin ~~Section 13(a)~~Rule 12b-2 of the Exchange Act. ☐

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~☐ ~~whether~~Accelerated ~~the~~filer ~~registrant~~☐ isNon-accelerated afiler ~~shell~~☐ ~~company~~Smaller ~~(as~~reporting ~~defined~~company in☒ ~~Rule~~Emerging ~~12b-2~~growth ofcompany ~~the Exchange Act). Yes ☐ No~~ ☒

~~APPLICABLE~~If TOan ~~CORPORATE~~emerging ~~ISSUERS:~~ growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate ~~the~~by ~~number~~check ofmark ~~shares~~whether ~~outstanding~~the ofregistrant ~~each~~is ofa ~~the~~shell ~~issuer’s~~company ~~classes~~(as ofdefined ~~common~~in ~~stock,~~Rule as12b-2 of the ~~latest~~Exchange ~~practicable date:~~ Act). Yes ☐ No ☒

AsAPPLICABLE ofTO ~~December 26,~~CORPORATE ~~2018, there were 3,530,150 shares of the registrant’s common stock, $.01 par value, outstanding.~~ ISSUERS:

~~Table~~Indicate the number of ~~Contents~~shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

~~TABLE~~As OFof ~~CONTENTS~~May 20, 2019, there were 3,530,250 shares of the registrant’s common stock, $.01 par value, outstanding.

PART I – FINANCIAL INFORMATION			1
Item 1. Financial Statements			1
CONSOLIDATED BALANCE SHEETS			1
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)			2
CONSOLIDATED STATEMENT OF CASH FLOWS			3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			4
1. Organization and Basis of Presentation			4
2. Summary of Significant Accounting Policies			5
3. Recent Accounting Pronouncements			6
4. Investments and Related Income			8
5. Derivative Instruments			14
6. Fair Value of Financial Instruments			14
7. Accumulated Other Comprehensive Income			20
8. Income Taxes			20
9. Commitments and Contingent Liabilities			21
10. Debt and Federal Home Loan Bank Advances			21
11. Related Party Transactions			21
12. Earnings Per Share			22
13. Subsequent Events			22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 4: Controls and Procedures			35
PART II – OTHER INFORMATION			35
Item 1. Legal Proceedings			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Default Upon Senior Securities			36
Item 4. Mine Safety Disclosures			36
Item 5. Other Information			36
Item 6. Exhibits			36
SIGNATURE			37

Table of Contents

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

PART I – FINANCIAL INFORMATION


PART I – FINANCIAL INFORMATION		1
Item 1. Financial Statements		1
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		5
1. Organization and Basis of Presentation		5
2. Summary of Significant Accounting Policies		6
3. Recent Accounting Pronouncements		6
4. Investments and Related Income		8
5. Derivative Instruments		11
6. Fair Value of Financial Instruments		11
7. Accumulated Other Comprehensive Income		15
8. Income Taxes		15
9. Commitments and Contingent Liabilities		16
10. Debt and Federal Home Loan Bank Advances		16
11. Related Party Transactions		16
12. Earnings Per Share		17
13. Subsequent Events		17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 4: Controls and Procedures		25

PART II – OTHER INFORMATION		27
Item 1. Legal Proceedings		27
Item 1.A. Risk Factors		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3. Default Upon Senior Securities		27
Item 4. Mine Safety Disclosures		27
Item 5. Other Information		27
Item 6. Exhibits		28

SIGNATURE		29

~~Item~~Table 1.of ~~Financial Statements~~Contents

~~FEDERAL~~PART ~~LIFE~~I ~~GROUP,~~– ~~INC.~~FINANCIAL INFORMATION

~~CONSOLIDATED~~Item 1. ~~BALANCE~~Financial ~~SHEETS~~ Statements

~~(Dollars~~FEDERAL inLIFE ~~thousands)~~GROUP, INC.

	Predecessor			Predecessor
	9/30/2018			12/31/2017
	(unaudited)
Assets
Investments
Securities available for sale, at fair value:
Fixed maturities (amortized cost; 2018, $184,995; 2017, $183,432)	$	181,497		$	188,452
Equity securities		6,620			6,209
Policy loans		9,599			9,852
Derivative instruments, at fair value		517			395
Total investments		198,233			204,908
Cash and cash equivalents		3,466			4,085
Real estate, property and equipment, net		2,172			2,151
Accrued investment income		1,999			1,886
Accounts receivable		2,489			538
Reinsurance recoverables		3,571			3,727
Prepaid reinsurance premiums		1,387			1,358
Deferred policy acquisition costs, net		13,617			12,179
Deferred sales inducement costs, net		1,192			867
Deferred tax asset, net		495			458
Other assets		249			202
Separate account asset		24,434			24,779
Total Assets		253,304			257,138
Liabilities
Policy liabilities and accruals
Policyholder account balance		115,142			109,823
Future life policy benefits		72,227			71,927
Future accident and health policy benefits		343			386
Reserve for deposit type contracts		10,885			10,850
Other policyholder funds		3,099			1,970
Unearned revenue		1,366			1,387
Deferred reinsurance settlements		2,727			2,949
Taxes payable		6			7
Promissory note		1,050			—
Other liabilities		2,049			1,703
Separate account liability		24,434			24,779
Total Liabilities		232,278			225,781
Equity
Retained earnings		23,165			26,600
Accumulated other comprehensive income (loss)		(2,139	)		4,757
Total Equity		21,026			31,357
Total Liabilities and Equity	$	253,304		$	257,138

CONSOLIDATED BALANCE SHEETS

~~See~~(Dollars ~~accompanying~~in ~~notes to unaudited consolidated financial statements~~ thousands)

	March 31, 2019		December 31, 2018
	(unaudited)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: 2019, $192,573; 2018, $187,035)	$	195,753	$	184,475
Equity securities, at fair value		3,806		6,004
Policy loans		9,488		9,581
Other invested assets		536		202
Total investments		209,583		200,262
Cash and cash equivalents		29,842		33,252
Real estate, property and equipment, net		2,093		2,130
Accrued investment income		2,069		1,908
Accounts receivable		527		498
Reinsurance recoverables		3,521		3,556
Prepaid reinsurance premiums		1,467		1,418
Deferred policy acquisition costs, net		12,832		13,533
Deferred sales inducement costs, net		1,415		1,348
Deferred tax asset, net		–		492
Other assets		608		511
Separate account asset		22,922		20,819
Total Assets	$	286,879	$	279,727
Liabilities
Policy liabilities and accruals:
Policyholder account balance	$	117,995	$	116,298
Future life policy benefits		71,444		71,992
Future accident and health policy benefits		355		345
Reserve for deposit type contracts		10,504		10,587
Other policyholder funds		998		1,398
Unearned revenue		1,342		1,367
Deferred reinsurance settlements		2,563		2,641
Deferred tax liability, net		79		–
Other liabilities		1,513		1,360
Separate account liability		22,922		20,819
Total Liabilities		229,715		226,807
Equity
Common stock, par value $.01 per share, 4,010,250 shares authorized; issued and outstanding:
2019 - 3,530,250
2018 - 3,530,150		35		35
Additional paid-in capital		33,110		33,076
Retained earnings		22,796		21,774
Accumulated other comprehensive income (loss)		1,223		(1,965	)
Total Equity		57,164		52,920
Total Liabilities and Equity	$	286,879	$	279,727

~~Table~~See ofaccompanying ~~Contents~~notes to unaudited consolidated financial statements

~~FEDERAL LIFE GROUP, INC.~~ 1

~~CONSOLIDATED~~Table ~~STATEMENT~~of ~~OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~ Contents

~~(Dollars~~FEDERAL inLIFE ~~thousands~~GROUP, ~~except share and per share data)~~ INC.

CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (~~Unaudited~~LOSS)

	Predecessor						Predecessor
	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2018			2017			2018			2017
Revenues
Insurance revenues	$	2,859		$	3,069		$	9,117		$	9,665
Net investment income		2,063			2,216			6,281			6,508
Net realized investment gains		214			793			538			1,697
Other revenues		51			48			148			133
Total Revenues		5,187			6,126			16,084			18,003
Benefits and expenses
Policyholder benefits		3,794			3,514			10,812			10,729
Interest credit to policyholders		18			215			225			329
Operating costs and expenses		2,307			1,905			6,638			5,899
Amortization of deferred acquisition and sales inducement costs		313			402			1,210			1,526
Taxes, licenses and fees		173			162			571			554
Dividends to policyholders		20			18			51			49
Total Benefits and Expenses		6,625			6,216			19,507			19,086
Net loss before taxes		(1,438	)		(90	)		(3,423	)		(1,083	)
Tax expense		3			5			12			19
Net loss	$	(1,441	)	$	(95	)	$	(3,435	)	$	(1,102	)
Other Comprehensive Income (Loss), net of tax:
Unrealized holding gains (losses) arising during the year (net of tax)		(1,221	)		124			(7,884	)		1,106
Adjustment to deferred acquisition costs (net of tax)		171			9			988			(133	)
Other Comprehensive Income (Loss)		(1,050	)		133			(6,896	)		973
Comprehensive Gain (Loss)	$	(2,491	)	$	38		$	(10,331	)	$	(129	)
Earnings per common share for the periods (Note 12):	Pro forma for the three monthsended September 30,						Pro forma for the nine monthsended September 30,
	2018			2017			2018			2017
Basic loss per common share	$	(0.41	)	$	(0.03	)	$	(0.97	)	$	(0.31	)
Diluted loss per common share	$	(0.41	)	$	(0.03	)	$	(0.97	)	$	(0.31	)

(Dollars in thousands, except share and per share data)

~~See accompanying notes to unaudtied consolidated financial statements~~ (Unaudited)

	Three Months Ended March 31,
	2019			2018
Revenues
Insurance revenues	$	2,120		$	2,744
Net investment income		2,201			2,107
Net investment gains		574			90
Other revenues		26			49
Total Revenues		4,921			4,990
Benefits and expenses
Policyholder benefits		1,954			3,095
Interest credit to policyholders		70			(48	)
Operating costs and expenses		2,459			2,241
Amortization of deferred acquisition and sales inducement costs		371			374
Taxes, licenses and fees		189			197
Dividends to policyholders		18			18
Total Benefits and Expenses		5,061			5,877
Net loss before taxes		(140	)		(887	)
Tax expense (benefit)		(2	)		3
Net loss	$	(138	)	$	(890	)
Other Comprehensive Income (Loss), net of tax:
Unrealized holding gains (losses) arising during the period (net of tax)		4,997			(4,847	)
Adjustment to deferred acquisition costs (net of tax)		(649	)		582
Other Comprehensive Income (Loss)		4,348			(4,265	)
Comprehensive Gain (Loss)	$	4,210		$	(5,155	)

Earnings per common share for the periods (Note 12):	Three months ended March 31,			Pro forma for the three months ended March 31,
	2019			2018
Basic loss per common share	$	(0.04	)	$	(0.25	)
Diluted loss per common share	$	(0.04	)	$	(0.25	)

~~FEDERAL~~See ~~LIFE~~accompanying ~~GROUP,~~notes ~~INC.~~to unaudited consolidated financial statements

~~CONSOLIDATED STATEMENT OF CASH FLOWS~~ 2

~~(Dollars~~Table inof ~~thousands)~~ Contents

~~(Unaudited)~~FEDERAL LIFE GROUP, INC.

	Predecessor						Predecessor
	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2018			2017			2018			2017
Cash flows from operating activities:
Net loss	$	(1,441	)	$	(95	)	$	(3,435	)	$	(1,102	)
Adjustments to reconcile net loss to net cash used in operating activities:
Realized investment gains, net		(214	)		(793	)		(538	)		(1,697	)
Amortization on investments		(11	)		(15	)		(51	)		(61	)
Depreciation		45			66			182			203
Deferred taxes		—			1			1			1
Deferred insurance acquisition costs		(446	)		(616	)		(1,458	)		(1,869	)
Deferred sales inducement costs		(64	)		(142	)		(265	)		(405	)
Interest and amortization of deferred acquisition and sales inducement costs		313			402			1,210			1,526
Change in value of derivatives and other		(91	)		(6	)		6			(69	)
Change in accrued investment income		(70	)		(75	)		(112	)		(88	)
Change in receivables		(72	)		(692	)		(1,951	)		(2,147	)
Change in reinsurance recoverable		51			(56	)		156			(52	)
Change in prepaid reinsurance premiums		(8	)		(137	)		(29	)		(173	)
Change in policy benefits		(16	)		755			1,385			2,405
Change in unearned revenue		8			(4	)		(22	)		(12	)
Change in deferred reinsurance settlements		(99	)		(34	)		(222	)		(142	)
Change in other assets and liabilities		(1,028	)		(538	)		(752	)		64
Net cash used in operating activities	$	(3,143	)	$	(1,979	)	$	(5,895	)	$	(3,618	)
Cash flows from investing activities:
Proceeds from investments sold or matured:
Fixed maturity securities		2,377			4,955			10,574			18,301
Equity securities		—			808			261			2,349
Derivatives		237			81			443			84
Policy loans		119			(30	)		253			121
Costs of investments purchased:
Fixed maturity securities		(2,045	)		(7,498	)		(12,071	)		(26,436	)
Equity securities		(20	)		(105	)		(61	)		(272	)
Derivatives		(123	)		(92	)		(325	)		(182	)
Real estate additions		(46	)		(12	)		(107	)		(15	)
Purchase of property and equipment		(4	)		(8	)		(96	)		(35	)
Net cash (used in) provided by investing activities		495			(1,901	)		(1,129	)		(6,085	)
Cash flows from financing activities:
Policyholder account balances:
Deposits		2,902			5,604			11,290			14,708
Withdrawals		(1,838	)		(2,315	)		(6,022	)		(7,064	)
Receipts from promissory note		1,050			—			1,050			—
Net transfers from separate accounts		87			—			87			260
Net cash provided by financing activities		2,201			3,289			6,405			7,904
Net decrease in cash		(447	)		(591	)		(619	)		(1,799	)
Cash, beginning of period		3,913			7,181			4,085			8,389
Cash, end of period	$	3,466		$	6,590		$	3,466		$	6,590

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

~~See~~(Dollars ~~accompanying~~in ~~notes~~thousands, toexcept ~~unaudited~~share ~~consolidated~~and ~~financial~~per ~~statements~~share data)

3 (Unaudited)

	Common Stock						Accumulated
	Shares		Amount		Additional Paid-In Capital		Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders' Equity
	(Dollars in thousands)
Balance, December 31, 2017		–	$	–	$	–	$	4,757		$	26,600		$	31,357
Net loss for the period		–		–		–		–			(890	)		(890	)
Other comprehensive loss		–		–		–		(4,265	)		–			(4,265	)
Balance, March 31, 2018		–	$	–	$	–	$	492		$	25,710		$	26,202

FEDERAL LIFE GROUP, INC.

Balance, December 31, 2018	3,530,150	$	35	$	33,076	$	(1,965	)	$	21,774		$	52,920
Net loss for the period	–		–		–		–			(138	)		(138	)
Paid in capital	100		–		34		–			–			34
Cumulative net effect of adoption of new accounting principle	–		–		–		(1,160	)		1,160			–
Other comprehensive income	–		–		–		4,348			–			4,348
Balance, March 31, 2019	3,530,250	$	35	$	33,110	$	1,223		$	22,796		$	57,164

~~NOTES~~See TOaccompanying ~~CONSOLIDATED~~notes ~~FINANCIAL~~to ~~STATEMENTS~~unaudited consolidated financial statements

~~September 30, 2018~~ 3

~~(Unaudited)~~Table of Contents

1.FEDERAL ~~Organization~~LIFE ~~and~~GROUP, ~~Basis of Presentation~~INC.

~~Federal~~CONSOLIDATED ~~Life~~STATEMENT ~~Group,~~OF ~~Inc.~~CASH (“FLG”, “we”, “us”, “our” or the “Company”) is a newly created Pennsylvania corporation organized to be the stock holding company for Federal Life Mutual Holding Company and its subsidiaries (the “Predecessor”) following the conversion of Federal Life Mutual Holding Company from mutual to stock form (the “Conversion”). FLG was formed so that it could acquire all of the capital stock of the Predecessor as part of the Conversion. Prior to the Conversion, FLG was not engaged in any significant operations and did not have any assets or liabilities. After the Conversion, which was completed on December 11, 2018, FLG’s primary assets are the outstanding capital stock of the Predecessor and a portion of the net proceeds of the Company’s initial public offering (“IPO”) which was completed on December 11, 2018. Prior to the Conversion, FLG was a direct, wholly-owned subsidiary of the Predecessor. Following the Conversion, the Company reorganized its corporate structure so that the Predecessor is a direct, wholly owned subsidiary of FLG. In connection with the Conversion, a Form S-1 Registration Statement was filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 23, 2018 and declared effective on November 6, 2018 (the “S-1”). FLOWS

~~In 2016, a subsidiary of the Predecessor, Federal Life Insurance Company~~ (~~“Federal~~Dollars ~~Life”), completed a reorganization~~ in which it converted from a mutual to a stock insurance company within a newly created mutual holding company structure. As part of this reorganization, the Predecessor was formed as an Illinois mutual insurance holding company and Federal Life continued its existence as an Illinois stock life insurance company. All of the shares of Federal Life were issued to FEDHO Holding Company (“FEDHO”thousands), an intermediate holding company that, in turn, was a wholly-owned subsidiary of the Predecessor. In the reorganization, policyholders’ membership interests in Federal Life automatically became membership interests in the Predecessor, but policyholders’ contractual rights remained with Federal Life. Since the effective date of the reorganization, each person who has become a Federal Life individual or group policyholder has automatically become a member of the Predecessor and has retained that membership interest so long as the Federal Life policy owned by the member remains in force.

The accompanying consolidated financial statements are of the Predecessor. FLG is the successor to the Predecessor’s operations, which represents substantially all of the business of FLG. Refer to Note 13 for further discussion of subsequent events impacting the Company’s organization and presentation. (Unaudited)

The consolidated statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements; however, they have been prepared consistent with the accounting policies described in the S-1 for the period ended June 30, 2018. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and nine month periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. All significant intercompany accounts and transactions have been eliminated. The December 31, 2017 consolidated balance sheet data was derived from audited consolidated financial statements for the year ended

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(138	)	$	(890	)
Adjustments to reconcile net loss to net cash used in operating activities:
Investment gains, net		(574	)		(90	)
Amortization on investments		(11	)		(21	)
Depreciation		47			68
Stock-based compensation		145			–
Deferred insurance acquisition costs		(482	)		(506	)
Deferred sales inducement costs		(76	)		(99	)
Interest and amortization of deferred acquisition and sales inducement costs		371			374
Change in value of derivatives and other		(314	)		101
Change in accrued investment income		(162	)		(25	)
Change in receivables		(29	)		(654	)
Change in reinsurance recoverable		35			75
Change in prepaid reinsurance premiums		(49	)		(46	)
Change in policy benefits		(937	)		(146	)
Change in unearned revenue		(25	)		(36	)
Change in deferred reinsurance settlements		(77	)		(75	)
Change in other		(57	)		45
Net cash used in operating activities		(2,333	)		(1,925	)
Cash flows from investing activities:
Proceeds from investments sold or matured:
Fixed maturity securities		3,768			5,614
Equity securities		2,827			–
Derivatives		77			128
Policy loans		94			102
Costs of investments purchased:
Fixed maturity securities		(9,286	)		(6,093	)
Equity securities		(35	)		–
Derivatives		(127	)		(111	)
Real estate additions		(1	)		(19	)
Purchase of property and equipment		(9	)		(24	)
Net cash used in investing activities		(2,692	)		(403	)
Cash flows from financing activities:
Policyholder account balances:
Deposits		3,321			4,459
Withdrawals		(1,707	)		(2,417	)
Net proceeds received from issuance of shares of common stock		1			–
Net cash provided by financing activities		1,615			2,042
Net decrease in cash		(3,410	)		(286	)
Cash, beginning of period		33,252			4,085
Cash, end of period	$	29,842		$	3,799
Supplemental disclosures of cash flow information
Supplemental non-cash activity:
Deferral of sales inducements	$	76		$	99

4See accompanying notes to unaudited consolidated financial statements

~~Table of Contents~~4

~~December 31,~~Table ~~2017, which include all disclosures required by GAAP. Therefore, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements~~ of ~~the Predecessor, which are included in the S-1. For the avoidance of doubt, no portion of the S-1 is incorporated by reference into this Form 10-Q.~~ Contents

~~Federal~~FEDERAL ~~Life~~LIFE ~~is a stock life insurance company domiciled in Illinois. Federal Life was incorporated on September 8~~GROUP, ~~1899 under the laws of the State of Illinois and commenced business on May 5, 1900~~INC. Federal Life’s in force business is primarily comprised of traditional life policies (term insurance, whole life insurance, non-medical health insurance, and group life insurance), interest sensitive contracts and fixed deferred annuity contracts. Federal Life is licensed to sell new business in the District of Columbia and all states except Maine, Massachusetts, New Hampshire, New York and Vermont. Although Federal Life is licensed to sell products in 45 states, its primary markets are Illinois, Michigan, Ohio, California, Florida, Texas, and Wisconsin.

~~Federal~~NOTES ~~Life~~TO ~~primarily~~CONSOLIDATED ~~sells~~FINANCIAL ~~its interest sensitive life, whole life, term life, fixed and indexed annuities through a network of independent agents.~~ STATEMENTS

~~Federal~~March ~~Life has two wholly-owned non-insurance subsidiaries: Americana Realty Company (“Americana”) and FED Mutual Financial Services~~31, ~~Inc.~~ 2019

Americana owns mineral rights in Arkansas, Georgia, Oklahoma and Texas. Americana earns royalty revenues from energy producers that are under agreement to drill for and produce oil and gas products on properties where Americana owns mineral rights. (Unaudited)

~~FED Mutual Financial Services, Inc~~1. isOrganization aand ~~Financial~~Basis ~~Industry~~of ~~Regulatory Authority (“FINRA”) licensed broker/dealer that was established to distribute the Predecessor’s variable annuity products.~~ Presentation

2Federal Life Group, Inc. ~~Summary~~(“FLG”, “we”, “us”, “our” or the “Company”) is a Pennsylvania corporation organized to be the stock holding company for Federal Life Mutual Holding Company and its subsidiaries (the “Predecessor”) following the 2018 conversion of ~~Significant~~Federal ~~Accounting~~Life ~~Policies~~Mutual Holding Company from mutual to stock form (the “Conversion”). Federal Life Mutual Holding Company was subsequently renamed Federal Life Holding Company after the Conversion. Prior to the Conversion, FLG was not engaged in any significant operations and did not have any assets or liabilities. After the Conversion, which was completed on December 11, 2018, when FLG issued 3,530,150 shares at $10.00 per share for gross proceeds of $35.3 million, FLG’s primary assets are the outstanding capital stock of the Predecessor and a portion of the net proceeds of the Company’s initial public offering (“IPO”), which was completed on December 11, 2018. Prior to the Conversion, FLG was a direct, wholly-owned subsidiary of the Predecessor. Following the Conversion, the Company reorganized its corporate structure so that the Predecessor is a direct, wholly owned subsidiary of FLG. FLG now contains the accounts of its Predecessor and those accounts are now consolidated with those of FLG within the accompanying financial statements. The reorganization is considered a transaction between entities that are under common control. As a result, the consolidated financial statements prior to the IPO and the reorganization have been presented at their historical amounts.

~~Use~~The accompanying consolidated financial statements include the accounts of ~~Estimates~~FLG and its subsidiaries, Federal Life Holding Company; FEDHO Holding Company (“FEDHO”); Federal Life Insurance Company (“Federal Life”); FED Mutual Financial Services, Inc. (“FED Mutual”); and Americana Realty Company (“Americana”). Additionally, the IPO described above resulted in a change in control according to Business Combinations (Topic 805), however, the Company elected not to apply push down accounting. Accordingly, the consolidated financial statements are presented at the Company’s historical carrying amounts. All intercompany transactions and balances have been eliminated in consolidation.

~~The preparation~~Federal Life, a subsidiary of ~~financial~~Federal ~~statements~~Life inHolding ~~conformity~~Company, ~~with~~completed ~~GAAP~~a ~~requires~~reorganization ~~management~~in to2016 ~~adopt~~in ~~accounting~~which ~~policies~~it ~~and~~converted ~~make~~from ~~estimates~~a ~~and~~mutual ~~assumptions~~to ~~that~~a ~~affect~~stock ~~amounts~~insurance ~~reported~~company inwithin ~~the~~a ~~consolidated~~newly ~~financial~~created ~~statements~~mutual holding company structure. ~~The~~As ~~most~~part ~~significant~~of ~~estimates include~~this ~~those~~reorganization, ~~used~~Federal inLife ~~determining~~Mutual ~~the~~Holding ~~capitalization~~Company ~~and~~was ~~amortization~~formed ofas ~~deferred~~an ~~policy~~Illinois ~~acquisition~~mutual ~~costs~~insurance ~~(“DAC”),~~holding ~~the~~company ~~valuation~~and ofFederal ~~investments,~~Life ~~the~~continued ~~liability~~its ~~for~~existence ~~account~~as ~~balances~~an ~~(interest~~Illinois ~~sensitive~~stock life ~~contracts~~insurance ~~and~~company. ~~annuities)~~All ~~and future~~of ~~policy~~the ~~benefits~~shares ~~(traditional~~of ~~life~~Federal ~~contracts,~~Life ~~immediate~~were ~~annuities~~issued to FEDHO, ~~supplemental~~an ~~contracts~~intermediate ~~with~~holding ~~life~~company ~~contingencies~~that, ~~and~~in ~~accident~~turn, ~~and~~is ~~health),~~a ~~and~~wholly-owned subsidiary of the ~~provision~~Federal ~~for~~Life ~~income~~Holding ~~taxes~~Company. ~~Actual~~Federal ~~results~~Life ~~could~~has ~~differ~~two ~~from~~wholly-owned ~~those~~non-insurance ~~estimates.~~subsidiaries, Americana and FED Mutual, discussed further below.

~~Investments~~Federal Life’s in force business is primarily comprised of traditional life policies (term insurance, whole life insurance, non-medical health insurance, and group life insurance), interest sensitive contracts, and fixed deferred annuity contracts. Federal Life primarily sells its interest sensitive life, whole life, term life, fixed and indexed annuities through a network of independent agents. Federal Life is licensed to sell new business in the District of Columbia and all states except Maine, Massachusetts, New Hampshire, New York and Vermont. Although Federal Life is licensed to sell products in 45 states, its primary markets are Illinois, Michigan, Ohio, California, Florida, Texas, and Wisconsin.

~~Realized capital~~Americana ~~gains~~owns mineral rights in Arkansas, Georgia, Oklahoma and ~~losses~~Texas. onAmericana ~~sales~~earns ofroyalty ~~investments~~revenues ~~include~~from ~~fixed~~energy ~~maturity~~producers ~~securities~~that ~~with~~are ~~calls~~under agreement to drill for and ~~prepayments~~produce oil and ~~are~~gas ~~determined~~products on ~~the~~properties ~~basis~~where ofAmericana ~~specific~~owns ~~security~~mineral ~~identification~~rights.

~~Revisions~~FED Mutual is a FINRA licensed broker/dealer that was established to distribute Federal Life’s variable annuity products.

~~Certain revisions~~The accompanying consolidated financial statements have been ~~made~~prepared toin ~~previously~~accordance ~~reported~~with ~~June 30~~U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, ~~2018~~they ~~consolidated~~do not include all the information and notes required by GAAP for complete financial statements. ofThe ~~cash~~consolidated ~~flows~~financial tostatements ~~reclassify~~reflect $1all adjustments,~~131~~ ~~previously~~consisting ~~reported~~only asof ~~other~~normal ~~investing~~recurring ~~activities~~items, ~~from~~which ~~investing~~are ~~activities~~necessary to ~~operating~~present ~~activities.~~fairly ~~This~~our ~~revision~~financial ~~is embedded~~position ~~within~~and results of operations on a basis consistent with the prior audited consolidated ~~statement~~financial ofstatements. ~~cash~~Operating ~~flows~~results for the three ~~months~~month ~~and~~period ~~nine~~ended ~~months~~March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended ~~September~~December 3031, ~~2018~~2019. The December 31, ~~and~~2018 ~~had~~consolidated nobalance ~~impact~~sheet ondata ~~previously~~was ~~reported~~derived ~~net~~from ~~income~~audited orconsolidated ~~cash~~financial atstatements for the ~~end~~year ofended ~~period.~~December 31, 2018, which include all disclosures required by GAAP.

Table of Contents

3.For ~~Recent~~further ~~Accounting~~information ~~Pronouncements~~related to a description of areas of judgement and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 10-K”).

~~Emerging~~Investor ~~Growth~~Information ~~Company~~

~~The~~Investor ~~Company~~related ~~qualifies~~information, asincluding anperiodic ~~“emerging~~reports ~~growth~~filed ~~company”~~on asForms ~~defined~~10-K, in10-Q ~~the~~and ~~Jumpstart~~8-K ~~Our~~and ~~Business~~any ~~Startups~~amendments ~~Act~~may ofbe ~~2012~~found ~~(the~~on ~~“Jobs Act”).~~our Aswebsite anat ~~emerging~~ir.federallife.com ~~growth~~as ~~company,~~soon ~~the~~as ~~Company~~reasonably ~~utilizes~~practicable ~~the~~after ~~extended~~such ~~transition~~reports ~~period~~are ~~provided~~filed inwith the ~~Securities~~SEC. ~~Act~~In ofaddition, ~~1933~~we ~~for~~have ~~complying~~available ~~with~~on ~~new~~our orwebsite ~~revised~~our: ~~accounting~~(i) ~~standards.~~compliance ~~Under~~reporting ~~this~~policy; ~~accommodation~~(ii) ~~the~~code ~~Company~~of ~~may~~ethics; ~~early~~(iii) ~~adopt~~audit acommittee ~~new or~~charter; ~~revised~~(iv) ~~accounting~~compensation ~~standard~~committee ~~only~~charter ifand ~~early~~(v) ~~adoption~~nominating iscommittee ~~permitted by the standard~~charter. ~~Changes~~The ininformation ~~accounting~~incorporated ~~principles~~herein ~~issued~~by ~~but~~reference ~~not~~is ~~yet~~also ~~adopted~~electronically ~~described~~accessible ~~below~~from ~~reflect~~ the ~~Company’~~SEC's ~~status~~website asat ~~an Emerging Growth Company and the extended adoption period allowed for such companies~~www. sec.gov.

~~Smaller~~2. ~~Reporting~~Summary ~~Company~~of Significant Accounting Policies

~~Additionally,~~Use weof ~~qualify as a “smaller reporting company” as defined by the SEC. In some instances, this permits the Company to provide scaled disclosures under Regulation S-K and Regulation S-X.~~ Estimates

~~Changes~~The preparation of financial statements in ~~Accounting~~conformity ~~Principles~~with –GAAP ~~Adopted~~requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the consolidated financial statements. The most significant estimates include those used in determining the capitalization and amortization of deferred policy acquisition costs (“DAC”), the valuation of investments, future policy benefits (traditional life contracts, immediate annuities, supplemental contracts with life contingencies, and accident and health), the fair value of stock-based compensation awards, and the provision for income taxes. Actual results could differ from those estimates.

InEmerging ~~February~~Growth 2018, the FASB issued ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which provides an option to reclassify stranded tax effects within accumulated other comprehensive income or loss (“AOCI”) to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate described in the “Income Tax Reform” section below is recorded. ASU No. 2018-02 is effective for fiscal years beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the Tax Act is recognized. The Predecessor early adopted ASU No. 2018-02 effective December 31, 2017 using the portfolio method, which resulted in the reclassification of $805,000 of stranded tax effects from AOCI to retained earnings within the Predecessor’s consolidated financial statements. Company

~~Changes~~The Company qualifies as an “emerging growth company” as defined in ~~Accounting~~the ~~Principles~~Jumpstart –Our ~~Issued~~Business Startups Act of 2012 (the “Jobs Act”). As an emerging growth company, the Company utilizes the extended transition period provided in the Securities Act of 1933 for complying with new or revised accounting standards. Under this accommodation, the Company may early adopt a new or revised accounting standard only if early adoption is permitted by the standard. Changes in accounting principles issued but ~~Not~~not ~~Yet~~yet ~~Adopted~~adopted described below reflect the Company’s status as an Emerging Growth Company and the extended adoption period allowed for such companies.

InSmaller ~~February~~Reporting 2016, the FASB issued ASU No. 2016-02 “Leases”, that will require recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements, This ASU affects accounting and disclosure more dramatically for lessees as accounting for lessors is mainly unchanged. This ASU is effective January 1, 2020. The adoption of ASU No. 2016-02 will not have an impact on the Company~~’s consolidated financial statements as we do not have any leases.~~

~~In August 2018~~Additionally, the ~~FASB~~Company ~~issued~~qualifies ~~ASU~~as ~~No. 2018-12,~~a “~~Targeted~~smaller ~~Improvements~~reporting ~~to the Accounting for Long-Duration Contracts,~~company” ~~which~~as ~~revises~~defined ~~certain~~by ~~aspects~~Item of the measurement models and disclosure requirements for long duration insurance and investment contracts. The FASB’s objective in issuing this ASU is to improve, simplify, and enhance the accounting for long-duration contracts. The revisions include updating cash flow assumptions in the calculation of the liability for traditional life products, introducing the term ‘market risk benefit’ 10(~~“MRB”~~f) ~~and requiring all contract features meeting the definition of an MRB to be measured at fair value, simplifying the method used to amortize DAC and deferred sales inducement costs~~ (~~“DSIC”~~1) ~~to a constant basis over the expected term~~ of ~~the~~Regulation ~~related contracts rather than based on gross profits and enhancing disclosure requirements~~S-K. ~~ASU~~In issome ~~effective on January 1~~instances, ~~2022,~~this ~~the~~permits ~~transition date (~~the ~~remeasurement date) is January 1, 2020. Early adoption of this ASU is permitted. The~~ Company isto ~~currently~~provide ~~assessing~~scaled ~~the~~disclosures ~~impact~~under ofRegulation ~~the~~S-K ~~guidance~~and onRegulation ~~its consolidated financial statements~~S-X.

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities,” which changes the recognition and presentation requirements of hedge accounting. ASU No. 2017-12 is effective for annual periods beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU No. 2017- 12 is not expected to have a material impact on the Company’s consolidated financial statements. Investments

6Realized capital gains and losses on sales of investments include fixed maturity securities with calls and prepayments and are determined on the basis of specific security identification.

~~Table~~Equity securities are carried at fair value. Beginning with the adoption of ~~Contents~~Accounting Standards Update (“ASU”) No. 2016-01 on January 1, 2019, changes in the fair value of equity securities are recognized through net income. Prior to January 1, 2019, unrealized gains or losses were recorded in accumulated other comprehensive income (loss) (“AOCI”). Additionally, in connection with the adoption of ASU No. 2016-01, effective January 1, 2019, the Company has reclassified its investment in Federal Home Loan Bank (“FHLB”) common stock from equity securities to other invested assets. These investments are carried at redemption value. The carrying value of these investments at December 31, 2018 was $10,000.

~~In March 2017, the FASB issued ASU No~~3. ~~2017-08, “Receivables~~ –Recent ~~Nonrefundable~~Accounting Fees and Other Costs: Premium Amortization of Purchased Callable Debt Securities,” which requires that certain premiums on callable debt securities be amortized to the earliest call date. ASU No. 2017-08 is effective for annual periods beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company’s consolidated financial statements. Pronouncements

InAdopted ~~June~~Accounting 2016, the FASB issued, regarding recognition of unrealized gains and losses through income, ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses of Financial Instruments,” which provides a new current expected credit loss model to account for credit losses on certain financial assets and off-balance sheet exposure. The model requires an entity to estimate lifetime credit losses related to such assets and exposure based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The guidance also modifies the current other-than- temporary impairment guidance for available-for-sale debt securities to require the use of an allowance rather than a direct write down of the investment and replaces existing guidance for purchased credit deteriorated loans and debt securities. ASU No. 2016-13 is effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted for annual periods beginning after December 15, 2018. The Company is currently assessing the impact of the guidance on its consolidated financial statements. Pronouncements

In ~~January~~March 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016-0109, “~~Financial~~Compensation ~~Instruments~~- –Stock ~~Overall~~Compensation”: ~~Recognition~~ ~~and~~Improvements ~~Measurement~~to ofEmployee ~~Financial~~Shared-Based ~~Assets~~Payment ~~and~~Accounting. The ~~Financial~~aspects ~~Liabilities,”~~of ~~which~~accounting ~~revises~~guidance anaffected ~~entity’s~~by ~~accounting~~this ~~related~~ASU toare ~~the~~income taxes, classification ~~and~~of ~~measurement~~awards ofas ~~certain~~either equity ~~investments~~or liabilities, and classification on the ~~presentation~~statement of ~~certain~~cash ~~fair~~flows. ~~value~~This ~~changes~~ ASU was effective for ~~financial~~annual ~~liabilities~~reporting ~~measured~~periods atbeginning ~~fair~~after ~~value~~December 15, 2017. The ~~guidance~~Company ~~also~~adopted ~~amends~~this ~~certain~~ASU ~~disclosure~~in ~~requirements~~the ~~associated~~fourth ~~with~~quarter ~~the~~of ~~fair~~fiscal ~~value~~2018 upon the issuance of ~~financial~~restricted ~~instruments~~stock and stock options to our employees. The adoption of the ASU ~~No. 2016-01~~did isnot ~~effective~~have ~~for~~an ~~non-public~~impact ~~companies~~on ~~for~~our ~~annual~~financial ~~periods~~statements ~~beginning~~as ~~after~~we ~~December 15,~~did ~~2018.~~not ~~The~~previously ~~Company~~have isstock ~~currently~~compensation. ~~assessing~~The ~~the~~Company ~~impact~~has ofelected ~~the~~to ~~guidance~~account onfor ~~its~~forfeitures ~~consolidated~~when ~~financial~~they ~~statements~~occur.

In May 2014, the FASB issued an ASU 2014-09 “Revenue from Contracts with Customers,” related to revenue arising from contracts with customers. This ASU, which replaces most current revenue recognition guidance, including industry specific guidance, prescribes that an entity should recognize revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU will be effective on January 1, 2019 and may be adopted using either a full retrospective or a modified retrospective approach. While the Company is still evaluating the effect, this ASU will have on our consolidated financial statements, we expect the impact will be immaterial as revenues related to insurance contracts and investment contracts are excluded from its scope. 6

~~Income~~Table ~~Tax~~of ~~Reform~~ Contents

AsIn aFebruary ~~result~~2018, the FASB issued ASU No. 2018-02, “Reclassification of ~~the~~Certain Tax ~~Act~~Effects from Accumulated Other Comprehensive Income,” which provides an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate ~~was~~described ~~reduced~~in ~~from~~the ~~35%~~“Income toTax ~~21%~~Reform” ~~effective~~section ~~January~~below is recorded. ASU No. 12018-02 is effective for fiscal years beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the Tax Act is recognized. The Company early adopted ASU No. 2018-02 effective December 31, 2017 using the portfolio method, which resulted in the reclassification of $805,000 of stranded tax effects from AOCI to retained earnings within the Company’s consolidated financial statements.

7In May 2014, the FASB issued an ASU 2014-09 “Revenue from Contracts with Customers,” related to revenue arising from contracts with customers. This ASU, which replaces most current revenue recognition guidance, including industry specific guidance, prescribes that an entity should recognize revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted this ASU on January 1, 2019. The adoption of this ASU had no impact on our consolidated financial statements as revenues related to insurance contracts and investment contracts are excluded from its scope.

~~Table~~In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments – Overall: Recognition and Measurement of ~~Contents~~Financial Assets and Financial Liabilities,” which revises an entity’s accounting related to the classification and measurement of certain equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. The guidance also amends certain disclosure requirements associated with the fair value of financial instruments. ASU No. 2016-01 is effective for non-public companies for annual periods beginning after December 15, 2018. We adopted this guidance effective January 1, 2019 with no material impact to our consolidated financial statements. Changes in fair value of equity securities, previously recognized through other comprehensive income (loss), are now recognized in net investment gains. We also recorded a cumulative effect adjustment to increase retained earnings by $1,160,000, net of tax, as of January 1, 2019 for unrealized gains previously recognized in AOCI. For additional information, please see Note 7.

4.Issued ~~Investments~~Accounting ~~and~~Pronouncements ~~Related~~Not ~~Income~~Yet Adopted

~~The~~In ~~Predecessor’s~~February ~~principal~~2016, ~~investments~~the ~~are~~FASB inissued ~~fixed~~ASU ~~income~~No. 2016-02 “Leases”, that will require recognizing lease assets and ~~equity~~lease ~~securities~~liabilities on the balance sheet and ~~policy~~disclosing ~~loans~~key information about leasing arrangements, This ASU affects accounting and disclosure more dramatically for lessees as accounting for lessors is mainly unchanged. This ASU is effective January 1, 2020. At this time, we do not believe the adoption of ASU No. 2016-02 will have an impact on the Company’s consolidated financial statements, as we do not have any material leases.

~~The~~In ~~following~~August ~~table~~2018, ~~presents~~the FASB issued ASU No. 2018-12, “Targeted Improvements to the ~~amortized~~Accounting ~~cost~~for Long-Duration Contracts,” ~~gross~~which ~~unrealized~~revises ~~gains~~certain aspects of the measurement models and disclosure requirements for long duration insurance and investment contracts. The FASB’s objective in issuing this ASU is to improve, simplify, and enhance the accounting for long-duration contracts. The revisions include updating cash flow assumptions in the calculation of the liability for traditional life products, introducing the term ‘market risk benefit’ (~~losses~~“MRB”) and requiring all contract features meeting the definition of an MRB to be measured at fair value, ofsimplifying the ~~Predecessor’s~~method ~~fixed~~used ~~maturity~~ to amortize DAC and ~~equities~~deferred assales inducement costs (“DSIC”) to a constant basis over the expected term of ~~September~~the related contracts rather than based on gross profits and enhancing disclosure requirements. ASU is effective on January 301, ~~2018~~2022, ~~and~~the ~~December~~transition date (the remeasurement date) is January 311, ~~2017:~~2020. Early adoption of this ASU is permitted. The Company is currently assessing the impact of the guidance on its consolidated financial statements.

	Predecessor
	September 30, 2018
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
U.S. government	$	4,066	$	143	$	(231	)	$	3,978
States, political subdivisions, other		28,236		383		(871	)		27,748
Corporate		107,090		832		(2,432	)		105,490
Residential mortgage-backed securities		41,828		393		(1,597	)		40,624
Commercial mortgage-backed securities		3,775		53		(171	)		3,657
Total fixed maturity securities		184,995		1,804		(5,302	)		181,497
Equity securities		4,504		2,125		(9	)		6,620
Total fixed maturity and equity securities	$	189,499	$	3,929	$	(5,311	)	$	188,117
	Predecessor
	December 31, 2017
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
U.S. government	$	4,075	$	207	$	(120	)	$	4,162
States, political subdivisions, other		26,850		876		(112	)		27,614
Corporate		106,479		3,459		(543	)		109,395
Residential mortgage-backed securities		41,818		1,480		(212	)		43,086
Commercial mortgage-backed securities		4,210		26		(41	)		4,195
Total fixed maturity securities		183,432		6,048		(1,028	)		188,452
Equity securities		4,443		1,766		—			6,209
Total fixed maturity and equity securities	$	187,875	$	7,814	$	(1,028	)	$	194,661

8In March 2017, the FASB issued ASU No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs: Premium Amortization of Purchased Callable Debt Securities,” which requires that certain premiums on callable debt securities be amortized to the earliest call date. ASU No. 2017-08 is effective for annual periods beginning after December 15, 2019. Early adoption is permitted. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company’s consolidated financial statements.

~~Table of Contents~~7

~~The~~Table ~~scheduled maturities for fixed income securities as~~ of ~~September 30, 2018 and December 31, 2017 are as follows:~~ Contents

	Predecessor				Predecessor
	September 30, 2018				December 31, 2017
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in thousands)
Due in one year or less	$	4,251	$	4,293	$	2,247	$	2,288
Due after one year through five years		41,378		41,840		40,926		42,809
Due after five years through ten years		70,483		68,627		66,739		68,151
Due after ten years		23,280		22,456		27,492		27,923
Mortgage-backed securities		45,603		44,281		46,028		47,281
Total	$	184,995	$	181,497	$	183,432	$	188,452

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses of Financial Instruments,” which provides a new current expected credit loss model to account for credit losses on certain financial assets and off-balance sheet exposure. The model requires an entity to estimate lifetime credit losses related to such assets and exposure based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The guidance also modifies the current other-than- temporary impairment guidance for available-for-sale debt securities to require the use of an allowance rather than a direct write down of the investment and replaces existing guidance for purchased credit deteriorated loans and debt securities. ASU No. 2016-13 is effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted for annual periods beginning after December 15, 2018. The Company is currently assessing the impact of the guidance on its consolidated financial statements.

~~Actual maturities may differ from those scheduled as a result of prepayments by the issuers~~4.Investments ~~Because~~and ofRelated ~~the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.~~ Income

The ~~following~~Company’s ~~table~~principal ~~presents~~investments ~~the sources~~are ofin fixed ~~maturity~~income ~~proceeds~~securities, ~~and~~equity ~~the related gross investment gains (losses) for the three and nine month periods ended September 30~~securities, ~~2018~~ and ~~September 30,~~policy ~~2017, respectively:~~ loans.

	Predecessor								Predecessor
	for the three month period ended								for the nine month period ended
	September 30, 2018								September 30, 2018
	Fixed			Equity		Derivative			Fixed			Equity		Derivative
	Maturities			Securities		Instruments			Maturities			Securities		Instruments
	(Dollars in thousands)
Proceeds from sales or maturities	$	2,377		$	—	$	237		$	10,574		$	261	$	443
Gross gains from sales or maturities		78			—		341			153			261		680
Other-than-temporary-impairment (OTTI) losses		—			—		—			(89	)		—		—
Gross losses from sales or maturities		(9	)		—		(196	)		(48	)		—		(419	)
	Predecessor								Predecessor
	for the three month period ended								for the nine month period ended
	September 30, 2017								September 30, 2017
	Fixed			Equity		Derivative			Fixed			Equity		Derivative
	Maturities			Securities		Instruments			Maturities			Securities		Instruments
	(Dollars in thousands)
Proceeds from sales or maturities	$	4,955		$	808	$	81		$	18,301		$	2,349	$	84
Gross gains from sales or maturities		21			725		82			164			1,503		91
Gross losses from sales or maturities		(2	)		—		(33	)		(21	)		—		(40	)

The following table presents the amortized cost, gross unrealized gains (losses) and fair value of the Company’s fixed maturity securities as of March 31, 2019 and December 31, 2018. Equity securities were removed from this table upon adoption of ASU No. 2016-01 at January 1, 2019.

For the nine month period ended September 30, 2018 a credit loss of $89,000 was recognized through realized losses because the Predecessor did not expect to fully recover the amortized cost value of two fixed income securities in the commercial mortgage backed sector that were held as available for sale. It was determined that that best estimate of the net present value of the future cash flow expected to be collected from these securities was significantly below their amortized cost values. A number of factors were analyzed to determine whether these impairments should be considered other-than-temporary, including but not limited to, fair market values of the securities, changes in fair market values, credit ratings, and an analysis of the underlying loan collateral with an assessment of the likelihood of full repayment of principal and interest. The credit loss reported was equal to the difference between amortized book value and the best estimate of the net present value of the projected cash flow expected to be recovered. The Company will evaluate future recovery estimates on a periodic basis.

	March 31, 2019
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
U.S. government	$	4,060	$	136	$	(92	)	$	4,104
States, political subdivisions, other		33,699		778		(90	)		34,387
Corporate		109,523		2,211		(749	)		110,985
Residential mortgage-backed securities		39,703		990		(92	)		40,601
Commercial mortgage-backed securities		5,588		137		(49	)		5,676
Total fixed maturity securities	$	192,573	$	4,252	$	(1,072	)	$	195,753

	December 31, 2018
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
U.S. government	$	4,063	$	142	$	(148	)	$	4,057
States, political subdivisions, other		30,881		472		(364	)		30,989
Corporate		108,664		617		(2,995	)		106,286
Residential mortgage-backed securities		37,755		455		(688	)		37,522
Commercial mortgage-backed securities		5,672		73		(124	)		5,621
Total fixed maturity securities		187,035		1,759		(4,319	)		184,475
Equity securities		4,514		1,528		(38	)		6,004
Total fixed maturity and equity securities	$	191,549	$	3,287	$	(4,357	)	$	190,479

~~Table~~The scheduled maturities for fixed income securities as of ~~Contents~~March 31, 2019 and December 31, 2018 are as follows:

The following is a presentation of credit related other than temporary impairments (“OTTI”) recognized in earnings for the three and nine month periods ended September 30, 2018 and September 30, 2017, respectively:

	March 31, 2019				December 31, 2018
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in thousands)
Due in one year or less	$	6,699	$	6,795	$	5,998	$	6,041
Due after one year through five years		34,683		35,506		37,917		38,032
Due after five years through ten years		77,014		77,945		74,274		72,209
Due after ten years		28,886		29,230		25,419		25,050
Mortgage-backed securities		45,291		46,277		43,427		43,143
Total	$	192,573	$	195,753	$	187,035	$	184,475

Predecessor

for the three month

for the nine month

for the three month

for the nine month

period ended

September 30, 2018

September 30, 2017

(Dollars in thousands)

Credit related OTTI not previously reported

—

Balance at end of period

—

Actual maturities may differ from those scheduled as a result of prepayments by the issuers. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.

~~The Company has a comprehensive portfolio monitoring process to identify and evaluate each fixed income and equity security whose carrying value may be other-than-temporarily impaired.~~ 8

~~For~~Table each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made a decision to sell or whether it is probable that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets any of these criteria, the security’s decline in fair value is deemed other than temporary and is recorded in earnings. Contents

IfThe ~~the~~following ~~Company~~table ~~has~~presents ~~not made~~ the ~~decision~~sources toof ~~sell~~investment ~~the~~proceeds ~~fixed income security~~ and ~~it is not more likely than not that~~ the ~~Company~~related ~~will~~gross berealized ~~required to~~investment ~~sell~~gains ~~the~~(losses) ~~fixed~~for ~~income security before recovery of its amortized cost basis,~~ the ~~Company~~three ~~evaluates~~month ifperiods itended ~~expects~~March to receive cash flows sufficient to recover the entire amortized cost basis of the security by comparing the estimated recovery value calculated by discounting the best estimate of future cash flows at the security’s original or current effective rate31, as2019 ~~appropriate,~~and ~~with~~March ~~the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security~~31, ~~the credit loss component of the impairment is recorded in earnings~~2018, ~~with the remaining amount of the unrealized loss deemed to be related to other factors and recognized in AOCI.~~ respectively:

For equity securities, the Company considers various factors, including whether the Company has the intent and ability to hold the equity security for a period of time sufficient to recover its cost basis. Where the Company lacks the intent and ability to hold to recovery, or believes the recovery period is extended, the equity security’s decline in fair value is considered other than temporary and is recorded in earnings.

	Three Months Ended
	March 31, 2019
	Fixed			Equity			Derivative
	Maturities			Securities			Instruments
	(Dollars in thousands)
Proceeds from sales or maturities	$	3,768		$	2,827		$	77
Gross gains from sales or maturities		11			715			107
Gross losses from sales or maturities		(2	)		(12	)		(140	)

The Company’s portfolio monitoring process includes a quarterly review of all securities through a screening process which identifies instances where the fair value compared to amortized cost for fixed income securities and cost for equity securities is below established thresholds, and also includes the monitoring of other criteria such as ratings, ratings downgrades or payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity securities are assumptions and estimates about the financial condition of the issue or issuer and its future earnings potential. Some of the factors considered in evaluating whether a decline in fair value is other than temporary are: 1) the length of time and extent to which the fair value has been less than amortized cost for fixed income securities, or cost for equity securities; 2) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; and 3) the specific reasons that a security is in a significant unrealized loss position, including overall market conditions which could affect liquidity.

	Three Months Ended
	March 31, 2018
	Fixed			Equity		Derivative
	Maturities			Securities		Instruments
	(Dollars in thousands)
Proceeds from sales or maturities	$	5,614		$	–	$	128
Gross gains from sales or maturities		48			–		226
Gross losses from sales or maturities		(33	)		–		(151	)

10For the three month period ended March 31, 2019, the Company also recognized $105,000 of unrealized losses on equity securities in net investment gains in accordance with the adoption of ASU 2016-01.

~~Table~~For ofthe ~~Contents~~three month periods ended March 31, 2019 and March 31, 2018 the Company did not recognize any impairment losses.

The ~~following~~Company ~~table~~has ~~shows~~a ~~the~~comprehensive ~~fair~~portfolio ~~value~~monitoring ~~and~~process ~~gross~~to ~~unrealized~~identify ~~losses aggregated by investment category~~ and ~~length~~evaluate ofeach ~~time~~fixed ~~that~~income ~~individual~~and ~~securities~~equity ~~have~~security ~~been~~whose incarrying avalue ~~continuous~~may ~~unrealized~~be ~~loss~~other-than-temporarily ~~position, at September 30, 2018 and December 31, 2017:~~ impaired.

	Predecessor
September 30, 2018	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of securities	Value		Loss			Value		Loss			Value		Loss
	(Dollars in thousands)
U.S. government	$	—	$	—		$	2,825	$	(231	)	$	2,825	$	(231	)
States, political subdivisions, other		14,256		(675	)		2,546		(196	)		16,802		(871	)
Corporate		52,763		(1,696	)		8,985		(736	)		61,748		(2,432	)
Residential mortgage-backed securities		19,642		(1,051	)		5,703		(546	)		25,345		(1,597	)
Commercial mortgage-backed securities		1,982		(67	)		1,571		(104	)		3,553		(171	)
Total	$	88,643	$	(3,489	)	$	21,630	$	(1,813	)	$	110,273	$	(5,302	)
	Predecessor
December 31, 2017	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of securities	Value		Loss			Value		Loss			Value		Loss
	(Dollars in thousands)
U.S. government	$	1,161	$	(31	)	$	1,782	$	(89	)	$	2,943	$	(120	)
States, political subdivisions, other		8,773		(86	)		714		(26	)		9,487		(112	)
Corporate		10,935		(169	)		6,853		(374	)		17,788		(543	)
Residential mortgage-backed securities		11,517		(126	)		2,263		(86	)		13,780		(212	)
Commercial mortgage-backed securities		2,039		(27	)		77		(14	)		2,116		(41	)
Total	$	34,425	$	(439	)	$	11,689	$	(589	)	$	46,114	$	(1,028	)

For each fixed income security in an unrealized loss position, the Company assesses whether management with the appropriate authority has made a decision to sell or whether it is probable that the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If a security meets any of these criteria, the security’s decline in fair value is deemed other than temporary and is recorded in earnings.

ItIf the Company has not made the decision to sell the fixed income security and it is not more likely than not that the Company will be required to sell ~~these~~the ~~investments~~fixed income security before recovery of ~~their~~ its amortized cost ~~bases~~basis, ~~which~~the ~~may~~Company beevaluates ~~maturity~~if it expects to receive cash flows sufficient to recover the entire amortized cost basis of the security by comparing the estimated recovery value calculated by discounting the best estimate of future cash flows at the security’s original or current effective rate, as appropriate, with the amortized cost of the security. If the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the fixed income security, the credit loss component of the impairment is recorded in earnings, with the remaining amount of the unrealized loss deemed to be related to other factors and recognized in AOCI.

11The Company’s portfolio monitoring process includes a quarterly review of all securities through a screening process which identifies instances where the fair value compared to amortized cost for fixed income securities and cost for equity securities is below established thresholds, and also includes the monitoring of other criteria such as ratings, ratings downgrades or payment defaults. The securities identified, in addition to other securities for which the Company may have a concern, are evaluated for potential other-than-temporary impairment using all reasonably available information relevant to the collectability or recovery of the security. Inherent in the Company’s evaluation of other-than-temporary impairment for these fixed income and equity securities are assumptions and estimates about the financial condition of the issue or issuer and its future earnings potential. Some of the factors considered in evaluating whether a decline in fair value is other than temporary are: 1) the length of time and extent to which the fair value has been less than amortized cost for fixed income securities, or cost for equity securities; 2) the financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry specific market conditions and trends, geographic location and implications of rating agency actions and offering prices; and 3) the specific reasons that a security is in a significant unrealized loss position, including overall market conditions which could affect liquidity.

~~Table of Contents~~9

~~The~~Table ~~following~~of ~~table summarizes OTTI for the three and nine month periods ended September 30, 2018 and September 30, 2017, by asset type:~~ Contents

	Predecessor
	Number ofsecurities		Total OTTILosses			Portion ofOTTI LossesRecognized in(from) OtherComprehensiveIncome		Net OTTILossesRecognizedin Operation
	(Dollars in thousands)
Three months ended September 30, 2018
U.S. government		—		—			—		—
States, political subdivisions, other		—		—			—		—
Corporate		—		—			—		—
Residential mortgage-backed securities		—		—			—		—
Commercial mortgage-backed securities		—		—			—		—
	$	—	$	—		$	—	$	—
Three months ended September 30, 2017
U.S. government		—		—			—		—
States, political subdivisions, other		—		—			—		—
Corporate		—		—			—		—
Residential mortgage-backed securities		—		—			—		—
Commercial mortgage-backed securities		—		—			—		—
	$	—	$	—		$	—	$	—
Nine months ended September 30, 2018
U.S. government		—		—			—		—
States, political subdivisions, other		—		—			—		—
Corporate		—		—			—		—
Residential mortgage-backed securities		—		—			—		—
Commercial mortgage-backed securities		2		(89	)		—		(89	)
	$	2	$	(89	)	$	—	$	(89	)
Nine months ended September 30, 2017
U.S. government		—		—			—		—
States, political subdivisions, other		—		—			—		—
Corporate		—		—			—		—
Residential mortgage-backed securities		—		—			—		—
Commercial mortgage-backed securities		—		—			—		—
	$	—	$	—		$	—	$	—

The following table shows the fair value and gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2019 and December 31, 2018. Equity securities were removed from this table upon adoption of ASU No. 2016-01 at January 1, 2019.

March 31, 2019	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of securities	Value		Loss			Value		Loss			Value		Loss
	(Dollars in thousands)
U.S. government	$	–	$	–		$	2,960	$	(92	)	$	2,960	$	(92	)
States, political subdivisions, other		3,045		(8	)		5,619		(82	)		8,664		(90	)
Corporate		4,990		(46	)		25,724		(703	)		30,714		(749	)
Residential mortgage-backed securities		–		–			10,164		(92	)		10,164		(92	)
Commercial mortgage-backed securities		50		(2	)		2,474		(47	)		2,524		(49	)
Total	$	8,085	$	(56	)	$	46,941	$	(1,016	)	$	55,026	$	(1,072	)

December 31, 2018	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of securities	Value		Loss			Value		Loss			Value		Loss
	(Dollars in thousands)
U.S. government	$	–	$	–		$	2,907	$	(148	)	$	2,907	$	(148	)
States, political subdivisions, other		6,106		(103	)		9,339		(261	)		15,445		(364	)
Corporate		49,193		(1,886	)		14,228		(1,109	)		63,421		(2,995	)
Residential mortgage-backed securities		9,401		(158	)		13,065		(530	)		22,466		(688	)
Commercial mortgage-backed securities		2,003		(45	)		1,502		(79	)		3,505		(124	)
Equity securities		379		(38	)		–		–			379		(38	)
Total	$	67,082	$	(2,230	)	$	41,041	$	(2,127	)	$	108,123	$	(4,357	)

~~Net~~It ~~Investment~~is ~~Income~~not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost bases, which may be maturity.

Net ~~investment~~Investment ~~income for the three and nine month periods ended September 30, 2018 and September 30, 2017, respectively, is as follows:~~ Income

	Predecessor						Predecessor
	for the three month periods ended						for the nine month periods ended
	9/30/2018			9/30/2017			9/30/2018			9/30/2017
	(Dollars in thousands)
Fixed maturity securities	$	1,824		$	1,833		$	5,513		$	5,585
Equity securities		45			56			127			150
Real estate		26			38			98			112
Cash equivalents		19			12			38			24
Policy loans		178			181			534			543
Other		129			256			414			556
Subtotal		2,221			2,376			6,724			6,970
Investment expense		(158	)		(160	)		(443	)		(462	)
Net investment income	$	2,063		$	2,216		$	6,281		$	6,508

Net investment income for the three month periods ended March 31, 2019 and March 31, 2018, respectively, is as follows:

Unrealized Capital Gains (Losses)

	Three Months Ended
	March 31,
	2019			2018
	(Dollars in thousands)
Fixed maturity securities	$	1,835		$	1,869
Equity securities		31			37
Real estate		26			37
Cash equivalents		153			8
Policy loans		174			176
Other		128			140
Subtotal		2,347			2,267
Investment expense		(146	)		(160	)
Net investment income	$	2,201		$	2,107

~~Unrealized net capital gains and losses included in AOCI at September 30, 2018 and December 31, 2017 were as follows:~~ 10

	Predecessor
	September 30, 2018
								Net
	Fair		Gross Unrealized					Unrealized
	Value		Gains		Losses			Gain (Loss)
	(Dollars in thousands)
Fixed income securities	$	181,497	$	1,804	$	(5,302	)	$	(3,498	)
Equity securities		6,620		2,125		(9	)		2,116
Net unrealized capital losses								$	(1,382	)
	Predecessor
	December 31, 2017
								Net
	Fair		Gross Unrealized					Unrealized
	Value		Gains		Losses			Gain (Loss)
	(Dollars in thousands)
Fixed income securities	$	188,452	$	6,048	$	(1,028	)	$	5,020
Equity securities		6,209		1,766		—			1,766
Net unrealized capital gains								$	6,786

Table of Contents

AtUnrealized ~~September 30,~~Capital ~~2018~~Gains and December 31, 2017, securities with a market value of approximately $4.5 million and $4.7 million, respectively, were on deposit with governmental agencies as required by State Insurance Departments. (Losses)

13The following table shows the unrealized net capital gains and losses included in AOCI at March 31, 2019 and December 31, 2018. Equity securities were removed from this table upon adoption of ASU No. 2016-01 at January 1, 2019.

	March 31, 2019
								Net
	Fair		Gross Unrealized					Unrealized
	Value		Gains		Losses			Gain (Loss)
	(Dollars in thousands)
Fixed income securities	$	195,753	$	4,252	$	(1,072	)	$	3,180
Net unrealized capital gains								$	3,180

Credit Risk

	December 31, 2018
								Net
	Fair		Gross Unrealized					Unrealized
	Value		Gains		Losses			Gain (Loss)
	(Dollars in thousands)
Fixed income securities	$	184,475	$	1,759	$	(4,319	)	$	(2,560	)
Equity securities		6,004		1,528		(38	)		1,490
Net unrealized capital gains								$	(1,070	)

~~The~~At ~~Company~~March generally strives to maintain a diversified invested asset portfolio but is exposed to credit and other types of risks related to its holding in fixed income and equity securities. Such risk may be related to individual companies31, ~~sectors,~~2019 ~~or entire asset classes. The Company manages this risk by holding a diversified portfolio of securities~~ and ~~sectors and by limiting the amount of exposure to a single issuer of credit. For both September 30, 2018 and~~ December 31, ~~2017~~2018, ~~approximately 25% of the Predecessor’s investments in fixed maturities were invested in commercial and residential mortgage-backed~~ securities ~~and~~with ~~approximately~~a ~~58%~~market ~~and~~value ~~58% in corporate bonds, respectively. Approximately 5%~~ of ~~the~~approximately ~~fixed income maturities were rated below investment grade~~$4.6 million ~~There is certain concentration risk from investments in companies that are engaged in similar activities~~ and ~~have similar economic characteristics~~$4. ~~The largest corporate bond sector exposures at September~~5 30million, ~~2018 are consumer non-cyclical consisting of 11% of the total fixed income portfolio~~respectively, ~~banks 6%, communications 6%, real estate 5%, and energy 5%. The largest corporate bond sector exposures at December 31, 2017~~ were ~~consumer~~on ~~non-cyclical~~deposit ~~consisting~~with ofgovernmental ~~12%~~agencies ofas ~~the~~required ~~total~~by ~~fixed income~~State ~~portfolio,~~Insurance ~~banks 6%, energy 6%, communications 5%, and real estate 5%~~Departments. ~~The Company uses equity index options to fully hedge its equity market exposure to index annuity products. These are exchange-traded options and there is no credit risk.~~

5.Credit ~~Derivative Instruments~~Risk

The Company ~~uses~~generally ~~derivatives~~strives to ~~hedge~~maintain a diversified invested asset portfolio but is exposed to credit and other types of risks related to its holding in fixed income and equity ~~market~~securities. ~~exposure~~Such risk may be related to ~~index~~individual ~~annuity~~companies, ~~products~~sectors, ~~which~~or ~~are~~entire ~~contracts~~asset ~~that~~classes. ~~earn~~The aCompany ~~return~~manages ~~based~~this onrisk ~~the change~~by inholding ~~the~~a ~~value~~diversified portfolio of securities and sectors and by limiting the ~~S&P~~amount ~~500~~of ~~index~~exposure ~~between~~to ~~annual~~a ~~index~~single ~~point~~issuer ~~dates~~of credit. ~~The~~For ~~Company~~March ~~buys~~31, 2019 and ~~sells~~December 31, ~~listed~~2018, ~~equity~~approximately 24% and ~~index~~23%, ~~call~~respectively, ~~options~~of the Company’s investments in fixed maturities were invested in commercial and ~~call~~residential ~~option~~mortgage-backed ~~spreads~~securities and ~~there~~approximately is56% noand ~~credit~~57% ~~risk~~in corporate bonds. ~~The~~Approximately ~~net~~5% ~~premium~~of the fixed income maturities were rated below investment grade. There is ~~paid~~certain upconcentration ~~front~~risk ~~and~~from ~~there~~investments in companies that are ~~no additional~~engaged ~~cash~~in ~~requirements~~similar oractivities ~~additional~~and ~~contingent~~have ~~liabilities~~similar economic characteristics. ~~These~~The ~~contracts~~largest ~~are~~corporate ~~held~~bond sector exposures at ~~fair~~March ~~market~~31, ~~value~~2019 onare consumer non-cyclical consisting of 10% of the ~~Company’s~~total ~~balance~~fixed ~~sheet.~~income Atportfolio, ~~September 30~~banks 6%, ~~2018~~communications 5%, real estate 5%, and energy 5%. The largest corporate bond sector exposures at December 31, ~~2017,~~2018 ~~these~~were ~~derivative~~consumer ~~hedges~~non-cyclical ~~had~~consisting aof ~~net~~11% ~~market value~~ of ~~$517~~the total fixed income portfolio,~~000~~ ~~and~~banks ~~$395~~6%,~~000~~ communications 6%, ~~with~~energy ~~notional~~5%, ~~amounts~~and ofreal ~~$11~~estate 5%.~~9 million~~ ~~and~~The ~~$8.5 million~~Company onuses ~~call~~equity index options ~~purchased~~to ~~and~~fully ~~$8.2 million~~hedge ~~and~~its $6equity market exposure to index annuity products.~~0 million~~ onThese ~~call~~are exchange-traded options ~~written~~and ~~respectively.~~there is no credit risk.

65. ~~Fair~~Derivative ~~Value of Financial~~ Instruments

~~Fair~~The ~~value~~Company ~~estimates~~uses ~~are~~derivatives ~~made~~to athedge ~~specific~~its ~~points~~equity inmarket ~~time,~~exposure to index annuity products which are contracts that earn a return based on ~~relevant~~the ~~market~~change ~~information~~in ~~and~~the ~~information~~value ~~about~~of the ~~financial~~S&P ~~instrument~~500 index between annual index point dates. ~~These~~ ~~estimates~~The doCompany ~~not~~buys ~~reflect~~and ~~any~~sells listed equity and index call options and call option spreads and there is no credit risk. The net premium oris ~~discount~~paid ~~that~~up ~~could~~front ~~result~~and ~~from~~there ~~offering~~are ~~for~~no ~~sale,~~additional cash requirements or additional contingent liabilities. These contracts are held at ~~one~~fair ~~time,~~market value on the Company’s ~~entire~~balance ~~holding~~sheet. ofAt March 31, 2019 and December 31, 2018, these derivative hedges had a ~~particular~~net ~~financial~~market ~~instrument~~value of $0.5 ~~Although~~million ~~fair~~and ~~value~~$0.2 ~~estimates~~million, ~~are~~with ~~calculated~~notional ~~using~~amounts ~~assumptions~~of ~~that management~~$13.2 million ~~believes~~and ~~are~~$12.7 million ~~appropriate~~on call options purchased and $9.1 million and $8.8 million on call options written, ~~changes~~respectively. Derivative instruments are included in ~~assumptions~~other ~~could~~invested ~~significantly~~assets ~~affect~~on ~~estimates~~the consolidated balance sheets.

Fair value estimates are determined for existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and certain liabilities that are not considered financial instruments6. ~~Accordingly,~~Fair ~~the~~Value ~~aggregate fair value estimates presented do not represent the underlying value~~ of ~~the~~Financial ~~Company.~~ Instruments

~~The~~Fair ~~Company has procedures in place to validate the fair values received from the independent pricing service. The Company assesses whether prices received represent a reasonable estimate of fair~~ value ~~through~~estimates ~~various~~are ~~controls~~made ~~designed~~at tospecific ~~ensure~~points ~~that~~in ~~valuations represent a fair price~~time, ~~including~~based ~~calculation~~on ofrelevant ~~portfolio returns,~~market ~~comparison~~information ofand ~~returns~~information toabout ~~corresponding~~the ~~benchmark~~financial ~~returns,~~instrument. ~~analysis~~These ofestimates ~~periodic~~do ~~changes~~not inreflect ~~market~~any ~~prices,~~premium ~~evaluation~~or ofdiscount ~~corresponding~~that ~~market~~could ~~yields~~result ~~and spread levels, and comparing prices~~ from ~~multiple~~offering ~~pricing~~for ~~sources.~~sale, Onat anone ~~ongoing basis~~time, the Company’s ~~monitors~~entire ~~the~~holding ~~pricing service valuation methods and evaluates the various types~~ of ~~securities~~a inparticular ~~its~~financial ~~investment~~instrument. ~~portfolio~~Although ~~to determine an appropriate~~ fair value ~~hierarchy.~~estimates ~~Most~~are ~~prices~~calculated ~~provided~~using byassumptions ~~the~~that ~~pricing~~management ~~services~~believes are ~~classified~~appropriate, ~~into Level 2~~changes ~~due~~in toassumptions ~~their~~could ~~use~~significantly ofaffect ~~market observable inputs~~estimates.

14Fair value estimates are determined for existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and certain liabilities that are not considered financial instruments. Accordingly, the aggregate fair value estimates presented do not represent the underlying value of the Company.

~~Table of Contents~~11

InTable ~~addition, tax ramifications related to the realization~~ of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. The following methods and assumptions were used by the Predecessor in estimating the fair value of its financial instruments: Contents

~~Fixed~~The ~~maturity~~Company ~~and~~has ~~equity~~procedures ~~securities:~~in ~~Fair~~place ~~values~~to ~~were~~validate ~~determined~~the byfair anvalues received from the independent pricing service. ~~and~~The ~~are~~Company ~~downloaded~~assesses ~~from~~whether ~~Clearwater Analytics.~~prices ~~The~~received ~~Predecessor~~represent ~~did~~a ~~not~~reasonable ~~own~~estimate ~~any~~of ~~securities~~fair ~~for~~value ~~which~~through various controls designed to ensure that valuations represent a fair ~~value~~price, ~~was~~including ~~not~~calculation ~~provided~~of byportfolio returns, comparison of returns to corresponding benchmark returns, analysis of periodic changes in market prices, evaluation of corresponding market yields and spread levels, and comparing prices from multiple pricing sources. On an ongoing basis, the Company monitors the pricing service orvaluation amethods ~~custody~~and ~~statement.~~evaluates ~~Fair~~the ~~values~~various ~~are~~types ~~checked~~of ~~for~~securities ~~reasonableness.~~in its investment portfolio to determine an appropriate fair value hierarchy.

IfIn aaddition, ~~fair~~tax ~~value~~ramifications ~~had~~related ~~not~~to ~~been~~the ~~provided~~realization ~~for~~of aunrealized ~~security,~~gains ~~the~~and ~~Predecessor~~losses ~~would~~can ~~use~~have a significant effect on fair value ~~estimated~~estimates ~~from~~and ~~yield~~have ~~data~~not ~~relating~~been toconsidered ~~instruments or~~in ~~securities~~any ~~with~~of ~~similar~~the ~~characteristics~~estimates. orThe asfollowing ~~determined~~methods inand ~~good~~assumptions ~~faith~~were used by the ~~Predecessor’s~~Company ~~investment~~in ~~advisor,~~estimating ~~DWS.~~the fair value of its financial instruments:

~~Derivative instruments~~Fixed maturity and equity securities: Fair values were determined by an independent pricing service and are downloaded from Clearwater Analytics. ~~Fair~~The ~~values~~Company ~~are~~does ~~checked~~not own any securities for ~~reasonableness.~~which a fair value was not provided by the pricing service or a custody statement.

~~Policy~~If ~~loans:~~a ~~The~~fair ~~carrying~~ value ofhad ~~policy~~not ~~loans~~been ~~approximates~~provided for a security, the Company would use a fair value. estimated from yield data relating to instruments or securities with similar characteristics or as determined in good faith by the Company’s investment advisor, DWS.

~~Cash~~Policy ~~and cash equivalents~~loans: The carrying value of ~~cash~~policy ~~and~~loans ~~cash equivalents~~ approximates fair value.

~~Policyholder~~Other ~~account~~invested ~~balance~~assets: ~~For~~Fair ~~deposit~~values ~~liabilities,~~of ~~the~~derivative ~~fair~~instruments ~~value~~were ~~was~~determined ~~based~~by onan ~~the~~independent ~~amount~~pricing ~~payable~~service onand ~~demand~~are atdownloaded ~~the~~from ~~reporting~~Clearwater ~~date and~~Analytics. ~~approximates~~FHLB ~~fair~~common stock is held at redemption value. (see Note 2).

~~Amounts~~Cash ~~related~~and tocash ~~the~~equivalents: ~~Predecessor’s~~The ~~financial~~carrying ~~instruments~~value asapproximates offair ~~September 30, 2018 and December 31, 2017 were as follows:~~ value.

	Predecessor				Predecessor
	September 30, 2018				December 31, 2017
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(Dollars in thousands)
Financial instruments recorded as assets:
Fixed maturity securities	$	181,497	$	181,497	$	188,452	$	188,452
Equity securities		6,620		6,620		6,209		6,209
Policy loans		9,599		9,599		9,852		9,852
Derivative instruments		517		517		395		395
Cash and cash equivalents		3,466		3,466		4,085		4,085
Separate account		24,434		24,434		24,779		24,779
Financial instruments recorded as liabilities:
Policyholder account balance:
Interest sensitive life contracts		41,337		41,337		41,078		41,078
Annuities		73,805		73,805		68,745		68,745
Dividend accumulations and other		6,830		6,830		7,076		7,076
Separate account		24,434		24,434		24,779		24,779

Separate account asset/liability: Fair values are based on net asset values provided daily by fund managers.

15Policyholder account balance: For deposit liabilities, the carrying value was based on the amount payable on demand at the reporting date and approximates fair value.

~~Table~~Dividend ofaccumulations ~~Contents~~and other: The carrying value approximates fair value.

~~Fair~~Amounts ~~value~~related ~~is defined as the price that would be received~~ to ~~sell an asset or paid to transfer a liability in an orderly transaction between market participants at~~ the ~~measurement~~Company’s ~~date.~~financial ~~The~~instruments ~~hierarchy~~as ~~for inputs used in determining fair value maximizes the use~~ of ~~observable~~March ~~inputs~~31, ~~and~~2019 ~~minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Assets~~ and ~~liabilities~~December 31, ~~recorded~~2018 ~~on the Consolidated Statements of Financial Position at fair value~~ are ~~categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques~~ as follows:

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.

	Carrying/Fair Value March 31, 2019		Carrying/Fair Value December 31, 2018
	(Dollars in thousands)
Financial instruments recorded as assets:
Fixed maturity securities	$	195,753	$	184,475
Equity securities		3,806		6,004
Policy loans		9,488		9,581
Other invested assets		536		202
Cash and cash equivalents		29,842		33,252
Separate account		22,922		20,819
Financial instruments recorded as liabilities:
Policyholder account balance:
Interest sensitive life contracts		41,718		41,478
Annuities		76,277		74,820
Dividend accumulations and other⁽¹⁾		6,661		6,705
Separate account		22,922		20,819

~~Level 2~~(1) –included ~~Assets~~within ~~and~~Reserve ~~liabilities whose values are based on the following: Quoted prices~~ for ~~similar~~deposit ~~assets~~type orfunds ~~liabilities~~ in ~~active~~the ~~markets;~~consolidated balance sheet

~~(a) Quoted prices for identical or similar assets or liabilities in markets that are not active; or~~12

~~(b)~~Table ~~Valuation models whose inputs are observable, directly or indirectly, for substantially the full term~~ of ~~the asset or liability.~~Contents

~~Level 3~~Fair –value ~~Assets~~is ~~and~~defined ~~liabilities~~as ~~whose~~the ~~values~~price ~~are~~that ~~based~~would onbe ~~prices~~received to sell an asset or ~~valuation~~paid ~~techniques that~~to ~~require~~transfer ~~that~~a ~~are~~liability ~~both~~in ~~unobservable~~an ~~and~~orderly ~~significant~~transaction tobetween ~~the~~market ~~overall~~participants ~~fair~~at ~~value~~the measurement date. ~~Unobservable~~The hierarchy for inputs ~~reflect~~used ~~the~~in ~~Company’s~~determining ~~estimates~~fair value maximizes the use of observable inputs and minimizes the ~~assumptions~~use of unobservable inputs by requiring that ~~market~~observable ~~participants~~inputs ~~would~~be ~~use~~used when available. Assets and liabilities recorded on the Consolidated Statements of Financial Position at fair value are categorized in ~~valuing~~the fair value hierarchy based on the ~~assets~~observability ~~and~~of ~~liabilities.~~inputs to the valuation techniques as follows:

~~Summary~~Level 1 of– ~~significant~~Assets ~~valuation~~and ~~techniques~~liabilities ~~and~~whose ~~inputs~~values are based on unadjusted quoted prices for identical assets ~~and~~or liabilities ~~measured~~in atan ~~fair~~active ~~value~~market onthat athe ~~recurring~~Company ~~basis:~~can access.

Level 12 ~~measurements~~– Assets and liabilities whose values are based on the following:

~~Fixed maturity~~(a) ~~securities:~~Quoted ~~Comprised of U.S. Treasury and GNMA agency securities. Valuation is based on unadjusted quoted~~ prices for ~~identical~~similar assets or liabilities in active markets ~~that the Company can access.~~ ;

~~Equities:~~(b) ~~Comprised~~Quoted ~~of actively traded, exchange-listed equities. Valuation is based on unadjusted quoted~~ prices for identical or similar assets or liabilities in ~~active~~ markets that ~~the~~are ~~Company~~not ~~can~~active; ~~access.~~ or

~~Derivative~~(c) ~~instruments:~~Valuation ~~Comprised~~models ofwhose ~~actively~~inputs ~~traded~~are observable, ~~exchange-listed~~directly ~~derivatives.~~or ~~Valuation~~indirectly, ~~is based on unadjusted quoted prices~~ for ~~identical~~substantially ~~assets~~the infull ~~active~~term ~~markets~~of ~~that~~ the ~~Company~~asset ~~can~~or ~~access~~liability.

~~Cash~~Level 3 ~~Equivalents:~~– ~~Comprised~~Assets ofand ~~money market~~liabilities ~~funds~~whose values are based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurement. ~~Market~~Unobservable ~~values~~inputs ~~for~~reflect the ~~money~~Company’s estimates of the assumptions that market ~~funds~~participants ~~are~~would ~~obtained~~use ~~from~~in valuing the ~~fund~~assets ~~managers.~~and liabilities.

~~Separate~~Summary ~~account assets: Comprised~~ of ~~actively traded~~significant ~~mutual~~valuation ~~funds~~techniques ~~that~~and ~~have~~inputs ~~daily quoted net asset values~~ for ~~identical~~ assets ~~that~~and ~~the~~liabilities ~~Company~~measured ~~can~~at ~~access.~~fair ~~Market~~value ~~values~~on ~~for~~a ~~the~~recurring ~~actively traded mutual funds in which the separate account assets are invested are obtained daily from the fund managers.~~ basis:

Level 21 measurements:

Fixed maturity securities: Comprised of U.S. Treasury and GNMA agency securities. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

~~States, political subdivisions, and corporate securities~~Equities: AsComprised ~~valuation~~of ~~technique~~actively ~~the pricing vendor employs multi-dimensional relational application model which uses standard inputs including benchmark yields~~traded, ~~reported trades, broker/dealer quotes, issuer spreads, two~~exchange-~~sided~~listed ~~markets, benchmark securities, bids, offers, and reference data including market research publications~~equities. ~~The~~Valuation ~~pricing~~is ~~vendor~~based ~~also~~on ~~monitors~~unadjusted ~~market~~quoted ~~indicators,~~prices ~~and~~for ~~industry~~identical ~~and~~assets ~~economic~~in ~~events.~~active ~~For~~markets ~~high~~that ~~yield~~the ~~corporate~~Company ~~securities,~~can ~~observations of equity and credit default swap curves are also used~~access.

16Other invested assets: Comprised of actively traded, exchange-listed derivative instruments. Valuation is based on unadjusted quoted prices for identical assets in active markets that the Company can access.

~~Table~~Cash Equivalents: Comprised of ~~Contents~~money market funds. Market values for the money market funds are obtained daily from the fund managers.

~~Residential~~Separate ~~mortgage-backed~~account ~~securities~~assets: AsComprised ~~valuation~~of ~~technique~~actively ~~the~~traded ~~pricing~~mutual ~~vendor~~funds ~~employs option-adjusted~~that ~~spread~~have ~~model~~daily ~~and~~quoted ~~prepayment~~net ~~model~~asset asvalues ~~well~~for asidentical ~~volatility~~assets ~~driven,~~that ~~multi-dimensional~~the ~~spread~~Company ~~tables~~can ~~using~~access. ~~standard~~Market ~~inputs~~values ~~including~~for ~~benchmark~~the ~~yields,~~actively ~~reported~~traded ~~trades,~~mutual ~~broker/dealer~~funds ~~quotes,~~in ~~issuer~~which ~~spreads, two-sided~~the ~~markets,~~separate ~~benchmark~~account ~~securities,~~assets ~~bids,~~are ~~offers,~~invested ~~and~~are ~~reference~~obtained ~~data~~daily ~~including~~from ~~market~~the ~~research~~fund ~~publications plus new issue data, monthly prepayment information, and collateral performance~~managers. ~~The pricing vendor also monitors market indicators, and industry and economic events.~~

~~Commercial~~Level 2 ~~mortgage-backed securities~~measurements: As valuation technique the pricing vendor employs multi-dimensional spread table and price tables using standard inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications plus new issue data, monthly prepayment information, collateral performance, and real estate analysis from third party. The pricing vendor also monitors market indicators, and industry and economic events.

~~Level 3~~Fixed ~~measurements~~maturity securities: States, political subdivisions, and corporate securities: As valuation technique the pricing vendor employs multi-dimensional relational application model which uses standard inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. The pricing vendor also monitors market indicators, and industry and economic events. For high yield corporate securities, observations of equity and credit default swap curves are also used.

~~Equities:~~Residential ~~The~~mortgage-backed ~~primary~~securities: ~~inputs~~As tovaluation technique the ~~valuation~~pricing ~~include~~vendor ~~quoted~~employs ~~prices~~option-adjusted ~~for~~spread ~~identical~~(“OAS”) ormodel ~~similar~~and ~~assets~~prepayment inmodel ~~markets~~as ~~that~~well ~~exhibit~~as ~~less~~volatility ~~liquidity relative~~driven, tomulti-dimensional ~~those~~spread ~~markets~~tables ~~supporting~~using ~~Level 2~~standard ~~fair~~inputs ~~value~~including ~~measurements~~benchmark yields, ~~contractual~~reported ~~cash~~trades, ~~flows~~broker/dealer quotes, ~~benchmark~~issuer ~~yields~~spreads, ~~collateral~~two-sided ~~performance~~markets, ~~credit~~benchmark ~~spreads~~securities, bids, offers, and ~~other~~reference ~~estimates~~data including ~~custody~~market ~~statements~~research publications plus new issue data, monthly prepayment information, and collateral performance. The pricing vendor also monitors market indicators, and industry and economic events.

17Commercial mortgage-backed securities: As valuation technique the pricing vendor employs multi-dimensional spread table and price tables using standard inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications plus new issue data, monthly prepayment information, collateral performance, and real estate analysis from third party. The pricing vendor also monitors market indicators, and industry and economic events.

~~Table of Contents~~13

~~The~~Table ~~following table presents the Predecessor’s securities measured at fair value on a recurring basis as~~ of ~~September 30, 2018 and December 31, 2017:~~ Contents

	Predecessor
	Recurring Fair Value Measurements
	at September 30, 2018 Using:
Description	Fair Values		Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	(Dollars in thousands)
Assets
Fixed maturity securities:
U.S. government	$	3,978	$	3,978	$	—	$	—
States, political subdivisions, other		27,748		—		27,748		—
Corporate		105,490		—		105,490		—
Residential mortgage-backed securities		40,624		—		40,624		—
Commercial mortgage-backed securities		3,657		—		3,657		—
Total fixed maturities		181,497		3,978		177,519		—
Equities		6,620		4,350		—		2,270
Derivative instruments		517		517		—		—
Cash equivalents (1)		3,466		3,466		—		—
Separate accounts (2)		24,434		24,434		—		—
Total	$	216,534	$	36,745	$	177,519	$	2,270
	Predecessor
	Recurring Fair Value Measurements
	at December 31, 2017 Using:
Description	Fair Values		Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	(Dollars in thousands)
Fixed maturity securities:
U.S. government	$	4,162	$	4,162	$	—	$	—
States, political subdivisions, other		27,614		—		27,614		—
Corporate		109,395		—		109,395		—
Residential mortgage-backed securities		43,086		—		43,086		—
Commercial mortgage-backed securities		4,195		—		4,195		—
Total fixed maturities		188,452		4,162		184,290		—
Equities		6,209		4,027		—		2,182
Derivative instruments		395		395		—		—
Cash equivalents (1)		4,085		4,085		—		—
Separate accounts (2)		24,779		24,779		—		—
Total	$	223,920	$	37,448	$	179,219	$	2,182

Level 3 measurements:

~~(1)~~Equities: ~~Cash~~The ~~equivalents~~primary ~~are~~inputs ~~invested~~to inthe ~~money~~valuation ~~market~~include ~~funds~~quoted ~~with~~prices ~~daily~~for ~~liquidity.~~identical ~~The~~or ~~estimated~~similar ~~fair~~assets ~~value~~in ofmarkets ~~cash~~that ~~equivalents~~exhibit isless ~~based~~liquidity onrelative ~~the~~to ~~estimated~~those ~~fair~~markets ~~value~~supporting ofLevel 2 ~~the~~fair ~~underlying~~value ~~assets~~measurements, ascontractual ~~provided~~cash byflows, ~~fund~~benchmark ~~managers~~yields, incollateral ~~daily~~performance, ~~net~~credit ~~asset~~spreads, ~~values~~ and ~~included~~other inestimates ~~Level~~including 1custody ~~asssets~~statements.

~~(2)~~The ~~Separate~~following ~~account~~table ~~assets~~presents ~~are~~the ~~invested~~Company’s insecurities ~~money~~measured ~~market~~at ~~funds with daily liquidity. The estimated~~ fair value ~~of separate account assets is based~~ on ~~the~~a ~~estimated~~recurring ~~fair~~basis ~~value~~as of ~~the~~March ~~underlying~~31, ~~assets~~2019 ~~as provided by fund managers in daily net asset values~~ and ~~included~~December 31, ~~in Level 1 assets.~~2018:

Recurring Fair Value Measurements

at March 31, 2019 Using:

Quoted Prices

Significant

in Active

Other

Significant

Markets for

Observable

Unobservable

Identical Assets

Inputs

Description

Fair Values

(Level 1)

(Level 2)

(Level 3)

(Dollars in thousands)

Fixed maturity securities:

U.S. government

4,104

–

States, political subdivisions, other

34,387

–

34,387

–

Corporate

110,985

–

110,985

–

Residential mortgage-backed securities

40,601

–

40,601

–

Commercial mortgage-backed securities

5,676

–

5,676

–

Total fixed maturities

195,753

4,104

191,649

–

Equities ⁽¹⁾

1,551

–

Other invested assets ⁽²⁾

526

–

Cash equivalents ⁽³⁾

29,842

–

Separate accounts ⁽⁴⁾

22,922

–

Total

250,594

58,945

191,649

–

	Recurring Fair Value Measurements
	at December 31, 2018 Using:
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Description	Fair Values		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Fixed maturity securities:
U.S. government	$	4,057	$	4,057	$	–	$	–
States, political subdivisions, other		30,989		–		30,989		–
Corporate		106,286		–		106,286		–
Residential mortgage-backed securities		37,522		–		37,522		–
Commercial mortgage-backed securities		5,621		–		5,621		–
Total fixed maturities		184,475		4,057		180,418		–
Equities ⁽¹⁾		3,767		3,757		–		10
Other invested assets		202		202		–		–
Cash equivalents ⁽³⁾		33,252		33,252		–		–
Separate accounts ⁽⁴⁾		20,819		20,819		–		–
Total	$	242,515	$	62,087	$	180,418	$	10

~~The~~(1) ~~following~~Certain ~~table~~equity ~~shows~~investments ~~quantitative~~for ~~information~~which ~~about significant unobservable inputs related to~~ the ~~Level 3~~ fair value, ~~measurements~~of ~~reported~~$2.3 inmillion ~~the~~and ~~tables~~$2.2 ~~used~~million as of ~~September 30~~March 31, ~~2018~~2019 and December 31, ~~2017:~~2018, respectively, is measured using the net asset value per share (or its equivalent) practical expedient have been excluded from the fair value hierarchy, above.

Fair Value at September 30, 2018			Primary Valuation	Significant	Range						Weighted
			Technique(s)	Unobservable Inputs	Min			Max			Average
(Dollars in thousands)
Rreef America REIT II	$	2,234	Discounted cash flows	Discount rate		4.50	%		8.75	%		6.42	%
				Terminal capitalization rate		4.25	%		8.00	%		5.45	%
Fair Value at December 31, 2017			Primary Valuation	Significant	Range						Weighted
			Technique(s)	Unobservable Inputs	Min			Max			Average
(Dollars in thousands)
Rreef America REIT II	$	2,150	Discounted cash flows	Discount rate		5.50	%		9.00	%		6.61	%
				Terminal capitalization rate		4.00	%		8.25	%		5.62	%

(2)

The Company’s investment in FHLB common stock for which the fair value, of $10,000 at March 31, 2019 and December 31, 2018, is based on its redemption value, effective January 1, 2019 (see Note 2), has been excluded from the fair value hierarchy, above.

The following table presents the rollforward of Level 3 assets held at fair value on a recurring basis for the three and nine month periods ended September 30, 2018 and September 30, 2017, respectively: 14

	Predecessor				Predecessor
	for the three month periods ended				for the nine month periods ended
	9/30/2018		9/30/2017		9/30/2018		9/30/2017
	(Dollars in thousands)
Balance, beginning of period	$	2,239	$	2,141	$	2,182	$	3,169
Gains included in net income		—		—		—		396
Settlements		—		—		—		(1,000	)
Unrealized gains (losses) in OCI		31		—		88		(424	)
Balance, end of period	$	2,270	$	2,141	$	2,270	$	2,141

Table of Contents

19(3) Cash equivalents are invested in money market funds with daily liquidity. The estimated fair value of cash equivalents is based on the estimated fair value of the underlying assets as provided by fund managers in daily net asset values and included in Level 1 assets.

~~Table~~(4) Separate account assets are invested in money market funds with daily liquidity. The estimated fair value of ~~Contents~~separate account assets is based on the estimated fair value of the underlying assets as provided by fund managers in daily net asset values and included in Level 1 assets.

7.There ~~Accumulated~~were ~~Other~~no ~~Comprehensive~~Level ~~Income~~3 purchases, issuances, sales, settlements, or transfers during the three month periods ended March 31, 2019 and March 31, 2018.

~~The~~7. ~~components~~Accumulated ofOther ~~AOCI~~Comprehensive ~~are as follows:~~ Income

	Predecessor
	UnrealizedInvestmentGains (losses)		Shadow DAC			AccumulatedOtherComprehensiveIncome (loss)
	(Dollars in thousands)
Balance, December 31, 2016	$	3,997	$	(448	)	$	3,549
Available-for-sale investment gains (losses) arising during the year:
Fixed maturity securities net of tax of $227		440		—			440
Equity securities net of tax of $9		18		—			18
Change in Shadow DAC net of tax benefit of $28		—		(55

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