US Alliance Swings to Q3 Profit, Nine-Month Loss Widens on Higher Claims

TL;DR

**USAC's Q3 profit is a mirage; the nine-month loss and rising claims show underlying weakness, making it a risky bet.**

AI Summary

US Alliance Corp (USAC) reported a net loss of $445,295 for the nine months ended September 30, 2025, a significant decline from the net income of $352,662 in the prior year period. However, for the three months ended September 30, 2025, the company posted a net income of $135,527, reversing a net loss of $372,372 in the same quarter of 2024. Total income for the nine-month period increased to $18,658,061 from $17,629,831, driven by a rise in premium income to $12,982,213 from $11,299,100. Total expenses also rose to $19,126,460 from $17,162,871, primarily due to increased death claims of $3,935,880 and policyholder benefits of $5,611,283. Cash and cash equivalents increased by $1,181,457 to $8,085,240 for the nine months ended September 30, 2025, compared to a decrease of $4,490,132 in the prior year. Total assets decreased slightly to $129,853,398 from $131,293,982 as of December 31, 2024, while total shareholders' equity increased to $11,179,372 from $10,630,418.

Why It Matters

US Alliance Corp's mixed financial results, with a quarterly profit but a larger nine-month loss, signal potential volatility for investors. The increase in premium income suggests business growth, but rising death claims and policyholder benefits could pressure profitability and cash flow, impacting the company's ability to invest in new products or acquisitions. For employees, sustained losses could lead to cost-cutting measures, while customers might see changes in product offerings or service levels if financial health deteriorates. In the competitive insurance market, USAC's performance will be closely watched as it navigates new accounting standards like LDTI, which could introduce significant volatility to its reported comprehensive income.

Risk Assessment

Risk Level: high — The company reported a net loss of $445,295 for the nine months ended September 30, 2025, a significant deterioration from the $352,662 net income in the prior year. This is coupled with a substantial increase in policy liabilities, specifically policyholder benefit reserves rising to $44,791,195 from $39,898,138, indicating higher future obligations.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence. The nine-month net loss and increasing policyholder benefit reserves suggest potential financial strain, despite the recent quarterly profit. Monitor future filings closely for trends in claims and investment performance.

Financial Highlights

debt To Equity

N/A

revenue

$18,658,061

operating Margin

N/A

total Assets

$129,853,398

total Debt

N/A

net Income

-$445,295

eps

-$0.06

gross Margin

N/A

cash Position

$8,085,240

revenue Growth

+6.4%

Revenue Breakdown

Key Numbers

• $445,295 — Net Loss (for the nine months ended September 30, 2025, compared to $352,662 net income in 2024)
• $135,527 — Net Income (for the three months ended September 30, 2025, reversing a $372,372 loss in 2024)
• $12,982,213 — Premium Income (for the nine months ended September 30, 2025, up from $11,299,100 in 2024)
• $19,126,460 — Total Expenses (for the nine months ended September 30, 2025, up from $17,162,871 in 2024)
• $3,935,880 — Death Claims (for the nine months ended September 30, 2025, up from $2,938,512 in 2024)
• $5,611,283 — Policyholder Benefits (for the nine months ended September 30, 2025, up from $5,292,687 in 2024)
• $8,085,240 — Cash and Cash Equivalents (as of September 30, 2025, an increase of $1,181,457 from December 31, 2024)
• $11,179,372 — Total Shareholders' Equity (as of September 30, 2025, up from $10,630,418 as of December 31, 2024)
• $0.06 — Net Loss Per Share (for the nine months ended September 30, 2025)
• $0.02 — Net Income Per Share (for the three months ended September 30, 2025)

Key Players & Entities

• US Alliance Corp (company) — registrant
• US Alliance Life and Security Company (company) — wholly-owned operating subsidiary
• Kansas Insurance Department (regulator) — granted Certificate of Authority
• North Dakota Insurance Department (regulator) — approved re-domestication of USALSC
• $445,295 (dollar_amount) — net loss for nine months ended September 30, 2025
• $135,527 (dollar_amount) — net income for three months ended September 30, 2025
• $12,982,213 (dollar_amount) — premium income for nine months ended September 30, 2025
• $3,935,880 (dollar_amount) — death claims for nine months ended September 30, 2025
• $8,085,240 (dollar_amount) — cash and cash equivalents as of September 30, 2025
• 7,748,922 (dollar_amount) — common shares outstanding as of November 1, 2025

FAQ

Risk Factors

• Investment Portfolio Performance [medium — financial]: The company holds $80.18 million in amortized cost of available-for-sale fixed maturity securities as of September 30, 2025. A significant portion, $22.31 million in corporate bonds, had an unrealized loss of $2.50 million. Overall, the portfolio had net security losses of $355,168 for the nine months ended September 30, 2025, compared to $139,626 in the prior year.
• Increased Claims and Benefits Expenses [medium — financial]: Total expenses rose to $19.13 million for the nine months ended September 30, 2025, up from $17.16 million in the prior year. This increase was primarily driven by higher death claims ($3.94 million vs. $2.94 million) and policyholder benefits ($5.61 million vs. $5.29 million).
• Regulatory Compliance and Changes [low — regulatory]: USAC operates in a regulated insurance industry. The company is subject to various state and federal regulations. New accounting standards like ASU 2023-09 and ASU 2023-07, effective in 2024 and 2026, will modify disclosures but are not expected to impact financial position or results of operations.
• Dependence on Subsidiaries [medium — operational]: The company's operations are conducted through its wholly-owned subsidiaries, including US Alliance Life and Security Company (USALSC) for life insurance and US Alliance Marketing Corporation (USAMC) for marketing. The success of the overall business is therefore dependent on the performance and management of these entities.

Industry Context

US Alliance Corp operates in the life insurance sector, a highly regulated industry characterized by long-term contracts and significant investment management. The industry faces ongoing challenges related to interest rate sensitivity, evolving customer needs, and increasing competition from both traditional insurers and InsurTech companies. Growth often comes from product innovation, strategic acquisitions, and effective distribution networks.

Regulatory Implications

As an insurance provider, USAC is subject to stringent regulatory oversight by state insurance departments, including capital requirements, solvency standards, and consumer protection laws. Changes in accounting standards, such as those related to long-duration contracts and disclosures, require continuous adaptation and compliance efforts.

What Investors Should Do

1. Monitor expense trends, particularly death claims and policyholder benefits, to assess their impact on profitability.
2. Analyze the performance and valuation of the investment portfolio, especially corporate bonds with unrealized losses.
3. Evaluate the sustainability of the recent quarterly net income improvement in the context of the year-to-date net loss.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported a net loss of $445,295 on total income of $18,658,061, with increased expenses driven by death claims and policyholder benefits. Cash and cash equivalents increased to $8,085,240.
• 2025-09-30: Three months ended September 30, 2025 — Reported a net income of $135,527, reversing a loss from the prior year's quarter, indicating a positive trend in the most recent quarter.
• 2024-12-31: As of December 31, 2024 — Total assets were $131,293,982 and total shareholders' equity was $10,630,418.
• 2013-05-01: First insurance product sale — Marked the commencement of insurance operations and sales for USALSC.

Glossary

Amortized Cost

The original cost of an asset minus any accumulated amortization or depreciation. For investments, it's the cost adjusted for amortization of premiums or accretion of discounts. (Used to value the company's fixed maturity investments on the balance sheet.)

Available for Sale Securities

Investments that are not classified as held-to-maturity or trading securities. They are reported at fair value, with unrealized gains and losses included in other comprehensive income. (Represents a significant portion of USAC's investment portfolio, impacting its overall financial position.)

CECL (Current Expected Credit Loss)

An accounting standard requiring companies to estimate and record expected credit losses on financial instruments over their lifetime. (Impacts how USAC accounts for potential losses in its loan and reinsurance receivable portfolios.)

Policyholder Benefits

Payments made to policyholders or beneficiaries, including death benefits, surrender values, and annuity payments. (A major expense category for USAC, directly impacting profitability.)

Premium Income

The revenue generated from selling insurance policies. (The primary source of revenue for USAC, showing growth in the current period.)

Year-Over-Year Comparison

US Alliance Corp has seen a mixed financial performance compared to the prior year. While total income for the nine months ended September 30, 2025, increased by 6.4% to $18.66 million, driven by higher premium income, the company reported a net loss of $445,295, a reversal from a net income of $352,662 in the same period last year. This was primarily due to a substantial increase in total expenses, notably higher death claims and policyholder benefits. However, the most recent quarter (three months ended September 30, 2025) showed a positive net income of $135,527, indicating a potential turnaround. Cash and cash equivalents have strengthened, and shareholders' equity has grown, while total assets saw a slight decrease.

Key Financial Figures

• $0.10 — latest practicable date. Common stock, $0.10 par value 7,748,922 shares outstanding

Filing Documents

• usac20250930_10q.htm (10-Q) — 1895KB
• ex_884118.htm (EX-31.1) — 9KB
• ex_884119.htm (EX-31.2) — 9KB
• ex_884120.htm (EX-32.1) — 4KB
• ex_884121.htm (EX-32.2) — 4KB
• 0001437749-25-035028.txt ( ) — 8390KB
• usac-20250930.xsd (EX-101.SCH) — 48KB
• usac-20250930_cal.xml (EX-101.CAL) — 56KB
• usac-20250930_def.xml (EX-101.DEF) — 331KB
• usac-20250930_lab.xml (EX-101.LAB) — 288KB
• usac-20250930_pre.xml (EX-101.PRE) — 354KB
• usac20250930_10q_htm.xml (XML) — 2012KB

- Financial Information

Part I - Financial Information Item Item Description Page Item 1

Financial Statements

Financial Statements 3 Consolidated Balance Sheets (unaudited) 3 Consolidated Statements of Comprehensive Income (Loss) (unaudited) 4 Consolidated Statements of Changes in Shareholders' Equity (unaudited) 5 Consolidated Statements of Cash Flows (unaudited) 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 35 Item 4

Controls and Procedures

Controls and Procedures 35

- Other Information

Part II - Other Information Item Item Description Item 1

Legal Proceedings

Legal Proceedings 35 Item 1A

Risk Factors

Risk Factors 35 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 3 Defaults Upon Senior Securities 35 Item 4 Mine Safety Disclosures 35 Item 5 Other Information 35 Item 6 Exhibits 36

Signatures

Signatures 37 2 Table of Contents US Alliance Corporation Consolidated Balance Sheets September 30, 2025 December 31, 2024 (unaudited) Assets Investments: Available for sale fixed maturity securities (amortized cost: $ 80,179,352 and $ 83,785,307 , net of allowances for credit losses of $ 0 and $ 0 , as of September 30, 2025 and December 31, 2024, respectively) $ 76,918,671 $ 79,578,179 Equity securities, at fair value 3,298,835 3,876,085 Limited partnership interests 1,160,515 428,170 Mortgage loans on real estate (net of allowance for credit losses of $ 106,085 and $ 55,685 as of September 30, 2025 and December 31, 2024, respectively) 24,733,459 25,192,749 Other invested assets 1,234,463 1,109,606 Policy loans 40,547 31,745 Real estate, net of depreciation 1,611,623 1,652,553 Total investments 108,998,113 111,869,087 Cash and cash equivalents 8,085,240 6,903,783 Investment income due and accrued 803,589 954,324 Reinsurance related assets 794,925 522,142 Deferred acquisition costs, net 3,753,316 3,908,636 Value of business acquired, net 2,264,238 2,333,553 Property, equipment and software, net 126,334 136,353 Goodwill 277,542 277,542 Federal and state income tax receivable 178,087 182,349 Deferred tax asset, net of valuation allowance 3,841,260 3,747,111 Other assets 730,754 459,102 Total assets $ 129,853,398 $ 131,293,982 Liabilities and Shareholders' Equity Liabilities: Policy liabilities Deposit-type contracts $ 70,519,264 $ 77,940,378 Policyholder benefit reserves 44,791,195 39,898,138 Dividend accumulation 101,242 100,885 Advance premiums 252,242 248,749 Total policy liabilities 115,663,943 118,188,150 Accounts payable and accrued expenses 1,713,125 1,133,521 Federal Home Loan Bank advance 1,250,000 1,250,000 Other liabilities 46,958 91,893 Total liabilities 118,674,026 120,663,564 Sharehold

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Note 1. Description of Business and Significant Accounting Policies Description of business : US Alliance Corporation ("USAC") was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. Our offices are located at 1303 SW First American Place, Suite 200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com . USAC has four wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was formed June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed April 23, 2012, to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was formed April 23, 2012 to serve as investment manager for USAC. Dakota Capital Life Insurance Company ("DCLIC"), was acquired on August 1, 2017 when USAC merged with Northern Plains Capital Corporation ("NPCC") and was merged into USALSC on December 31, 2023. US Alliance Life and Security Company - Montana (USALSC-Montana), was acquired December 14, 2018. USALSC-Montana is a wholly-owned subsidiary of USALSC. Unless the context indicates otherwise, references herein to the "Company" refer to USAC and its consolidated subsidiaries. The Company terminated its initial public offering on February 24, 2013. During the balance of 2013, the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its first insurance product on May 1, 2013. The Company continued to expand its product offerings and distribution channels throughout 2014 and 2015. On February 24, 2015, the Company commenced a warrant exercise offering set to expire on February 24, 2016. On February 24, 2016, the Company extended the offering until February 24, 2017 and ma

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Income (loss) per share attributable to USAC's common stockholders were computed based on the net income (loss) and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the nine months ended September 30, 2025 and 2024 were 7,748,922 shares. The weighted average number of shares outstanding during the three months ended September 30, 2025 and 2024 were 7,748,922 shares. Potential common shares are excluded from the computation when their effect is anti-dilutive. There was no difference between basic and diluted net loss per common share for the three and nine months ended September 30, 2025 and 2024. New accounting standards : Improvements to Income Tax Disclosures In December 2023, the FASB issued Accounting Standards Update 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 is intended to improve the effectiveness of income tax disclosures by requiring, among other things, the disclosure on an annual basis of: (i) specific categories in the rate reconciliation; and (ii) additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires disclosure (on an annual basis) of the following information about income taxes paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes; and (ii) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). ASU 2023-09 is effective for annual periods beginning January 1, 2026, to be applied prospectively with an option for retrospective application (with early adoption permitted). The adoption of ASU 2023-09 will modify our disclosures but will not ha

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Note 2. Investments Fixed Maturity The amortized cost and fair value of available for sale investments as of September 30, 2025 and December 31, 2024 is as follows: September 30 2025 Cost or Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value (unaudited) Available for sale: Fixed maturities: US Treasury securities $ 807,508 $ 531 $ ( 73,357 ) $ 734,682 Corporate bonds 22,307,750 253,241 ( 2,504,263 ) 20,056,728 Municipal bonds 5,775,816 1,580 ( 507,023 ) 5,270,373 Redeemable preferred stock 2,140,013 1,469 ( 125,320 ) 2,016,162 Term loans 9,379,677 14,574 ( 165,756 ) 9,228,495 Mortgage backed and asset backed securities 39,768,588 670,766 ( 827,123 ) 39,612,231 Total available for sale $ 80,179,352 $ 942,161 $ ( 4,202,842 ) $ 76,918,671 December 31, 2024 Cost or Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Available for sale: Fixed maturities: US Treasury securities $ 799,543 $ - $ ( 88,166 ) $ 711,377 Corporate bonds 24,370,244 111,868 ( 2,990,292 ) 21,491,820 Municipal bonds 5,416,888 - ( 675,739 ) 4,741,149 Redeemable preferred stock 2,562,893 36 ( 151,695 ) 2,411,234 Term loans 12,971,452 28,936 ( 212,084 ) 12,788,304 Mortgage backed and asset backed securities 37,664,287 715,541 ( 945,533 ) 37,434,295 Total available for sale $ 83,785,307 $ 856,381 $ ( 5,063,509 ) $ 79,578,179 The amortized cost and fair value of debt securities as of September 30, 2025 and December 31, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. As of September 30, 2025 As of December 31, 20

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Note 2. Investments (continued) In June 2016, the FASB issued ASC 326 ("Current Expected Credit Loss (CECL)"). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. Changes in the allowance for credit losses are included in net losses. Proceeds from the sale of securities, maturities, and asset paydowns for the nine months ended September 30, 2025 and 2024 were $ 17,378,257 and $ 17,538,090 , respectively. Realized gains and losses related to the sale of securities and net credit losses recognized in income are summarized as follows: Nine Months Ended September 30, (unaudited) 2025 2024 Gross gains $ 168,416 $ 48,824 Gross losses ( 523,584 ) ( 188,450 ) Net security losses $ ( 355,168 ) $ ( 139,626 ) Mortgage loans on real estate ( 50,400 ) ( 32,150 ) (Increase) Decrease in allowance for credit losses $ ( 50,400 ) $ ( 32,150 ) Proceeds from the sale of securities, maturities, and asset paydowns for the three months ended September 30, 2025 and 2024 were $ 9,744,576 and $ 4,480,697 , respectively. Realized gains and losses related to the sale of securities and net cred

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