Ernst & Young LLP 155 North Wacker Drive Chicago, IL 60606-1787

Tel: +1 312 879 2000 Fax: +1 312 879 4000 ey.com

 

Report of Independent Auditors

 

The Board of Directors
COUNTRY Life/Health Group

 

Opinion

 

We have audited the combined statutory-basis financial statements of COUNTRY Life/Health Group (the Company), which comprise the combined balance sheets as of December 31, 2025 and 2024, and the related combined statements of operations, changes in capital and surplus, and cash flow for the years then ended, and the related notes to the financial statements (collectively referred to as the “financial statements”).

 

Unmodified Opinion on Statutory Basis of Accounting

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, on the basis of accounting described in Note 2.

 

Adverse Opinion on U.S. Generally Accepted Accounting Principles

 

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report, the financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company at December 31, 2025 and 2024, or the results of its operations or its cash flows for the years then ended.

 

Basis for Opinion

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

 

A member firm of Ernst & Young Global Limited

 

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

 

As described in Note 2 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Illinois Department of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these statutory accounting practices described in Note 2 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material and pervasive.

 

Responsibilities of Management for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting practices prescribed or permitted by the Illinois Department of Insurance. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are issued.

 

Auditor’s Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

A member firm of Ernst & Young Global Limited

 

In performing an audit in accordance with GAAS, we:

 

●

Exercise professional judgment and maintain professional skepticism throughout the audit.

●

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

●

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

●

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

●

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

 

 

April 23, 2026

 

A member firm of Ernst & Young Global Limited

COUNTRY Life/Health Group

 

Combined Balance Sheets – Statutory-Basis

 

		December 31
		2025				2024
		(In Thousands)
Admitted assets
Cash and invested assets:
Bonds		$	8,046,852			$	7,996,526
Preferred stocks			34,178				19,455
Common stocks			581,724				472,967
Mortgage loans			545,107				422,216
Policy loans			422,106				406,950
Cash, cash equivalents, and short term investments			184,317				205,658
Real estate			10,972				8,871
Derivatives			7,923				4,064
Other invested assets			543,081				457,838
Securities lending reinvested collateral			5,318				13,552
Total cash and invested assets			10,381,578				10,008,097
Premiums deferred and uncollected			149,928				150,475
Accrued investment income			86,439				84,951
Due from affiliates			607				14,004
Federal income taxes recoverable, including net deferred tax assets (2025 – $44,852; 2024 – $43,457)			68,545				75,223
Reinsurance balances recoverable			24,296				15,997
Admitted disallowed IMR			169,881				160,025
Other assets			11,249				10,458
Separate accounts			51,927				50,670
Total admitted assets		$	10,944,450			$	10,569,900

 

See accompanying notes.

COUNTRY Life/Health Group

 

Combined Balance Sheets – Statutory-Basis

 

		December 31
		2025				2024
		(In Thousands)
Liabilities and capital and surplus
Policy reserves		$	7,474,194			$	7,309,546
Liability for deposit-type contracts			1,043,588				967,883
Policy and contract claims			37,924				39,653
Dividends payable to policyholders			95,923				78,241
Commissions and expenses due or accrued			6,946				20,923
Federal income taxes payable			2,488				3,167
Unearned investment income			11,363				11,289
Asset valuation reserve			246,304				228,499
Payable to reinsurers			12,502				8,246
Due to affiliates			1,874				769
Derivatives - liability			3,013				701
Derivatives - collateral payable			3,912				2,513
Payable for securities			–				9,000
Borrowed money			45,129				48,206
Other liabilities			31,213				22,370
Securities lending collateral held			5,317				13,553
Separate accounts			51,927				50,670
Total liabilities			9,073,617				8,815,229
Capital and surplus:
Common stock – par value $25 per share – 179,980 shares authorized, issued, and outstanding			4,500				4,500
Gross paid-in and contributed surplus			22,703				22,703
Special surplus funds - admitted disallowed IMR			169,881				160,025
Unassigned surplus			1,673,873				1,567,567
Treasury stock			(124	)			(124	)
Total capital and surplus			1,870,833				1,754,671
Total liabilities and capital and surplus		$	10,944,450			$	10,569,900

 

See accompanying notes.

COUNTRY Life/Health Group

 

Combined Statements of Operations – Statutory-Basis

 

		Year Ended December 31
		2025				2024
		(In Thousands)
Premium and annuity considerations		$	634,670			$	695,088
Supplemental contract considerations			7,287				13,087
Net investment income			513,363				486,257
Amortization of interest maintenance reserve			(14,899	)			(9,486	)
Commission and expense allowance on reinsurance ceded			9,954				10,217
Other income (expense)			2,081				(1,544	)
Total income			1,152,456				1,193,619
Death benefits			204,447				203,296
Annuity benefits including surrenders			175,878				154,760
Disability benefits and benefits under accident and health contracts			142,928				130,960
Other policy and contract benefits			55,078				55,851
Changes in policy reserves			164,677				226,428
Total benefits			743,008				771,295
Commission expenses			29,171				32,401
General insurance expenses			133,642				127,396
Insurance taxes, licenses and fees			19,326				18,465
Total operating expenses			182,139				178,262
Miscellaneous income			5,153				6,872
Net operating income			232,462				250,934
Dividends to policyholders			94,898				77,284
Net income before federal income taxes and net realized capital gains			137,564				173,650
Federal income tax expense			34,812				35,591
Net income before net realized capital gains			102,752				138,059
Net realized capital gains			13,817				27,349
Net income		$	116,569			$	165,408

 

See accompanying notes.

COUNTRY Life/Health Group

 

Combined Statements of Changes in Capital and Surplus – Statutory-Basis

 

		Year Ended December 31
		2025				2024
		(In Thousands)
Capital and surplus, beginning of year		$	1,754,671			$	1,652,022
Net income			116,569				165,408
Change in net unrealized gains and losses			43,132				18,358
Change in nonadmitted assets			(4,359	)			(38,208	)
Change in net deferred income tax assets			10,704				2,288
Change in reserve on account of change in valuation basis			31				–
Change in asset valuation reserve			(17,805	)			(24,098	)
Dividends to stockholders			(32,000	)			(21,200	)
Change in liability for OPEB benefits			(110	)			101
Net increase			116,162				102,649
Capital and surplus, end of year		$	1,870,833			$	1,754,671

 

See accompanying notes.

COUNTRY Life/Health Group

 

Combined Statements of Cash Flow – Statutory-Basis

 

		Year Ended December 31
		2025				2024
		(In Thousands)
Operating activities
Premiums collected, net of reinsurance		$	639,089			$	693,623
Net investment income			506,780				480,610
Other income			14,235				11,362
Benefits and loss-related payments			(588,143	)			(530,012	)
Commissions and expenses paid			(175,335	)			(162,923	)
Dividends paid to policyholders			(77,215	)			(74,813	)
Federal income taxes paid			(28,741	)			(32,587	)
Net cash provided by operating activities			290,670				385,260
Investing activities
Proceeds from investments sold, matured, or repaid:
Bonds			1,081,569				986,155
Stocks			189,423				136,304
Mortgage loans			30,421				38,772
Real estate			1,888				19,175
Other invested assets			226,760				177,095
Net gains (losses) on cash and short-term investments			12				(11	)
Miscellaneous proceeds			9,004				47,744
Total investment proceeds			1,539,077				1,405,234
Purchases of investments:
Bonds			(1,230,733	)			(1,350,004	)
Stocks			(213,349	)			(112,177	)
Mortgage loans			(153,312	)			(53,002	)
Real estate			(2,350	)			(224	)
Other invested assets			(248,487	)			(205,911	)
Miscellaneous applications			(9,022	)			–
Total investments purchased			(1,857,253	)			(1,721,318	)
Increase in policy loans			(15,171	)			(4,528	)
Net cash used in investing activities			(333,347	)			(320,612	)
Financing and miscellaneous activities
Borrowed funds (paid) received			(18,974	)			34,134
Net deposits on deposit-type contract funds			75,704				47,984
Dividends paid to stockholder			(32,000	)			(21,200	)
Other cash used in financing and miscellaneous activities			(3,394	)			(52,027	)
Net cash provided by financing and miscellaneous activities			21,336				8,891
(Decrease) increase in cash and cash equivalents			(21,341	)			73,539
Cash and cash equivalents, beginning of year			205,658				132,119
Cash and cash equivalents, end of year		$	184,317			$	205,658
Supplemental disclosures of cash flow information for non-cash transactions:
Bond exchanges		$	46,475			$	22,251
Bond to other invested assets resulting from principles-based bond project			45,948				-
Bond to preferred stocks resulting from principles-based bond project			27,110				-
Transfer of unassigned surplus for admitted disallowed IMR to special surplus funds			10,098				9,888
Common Stock Spinoff			183				-
Bonds in Lieu of Cash			57				-
Common Stock exchanges			-				393

 

See accompanying notes.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements

 

December 31, 2025

 

1. Nature of Operations

 

COUNTRY Life/Health Group (the Company) includes the accounts of COUNTRY Life Insurance Company (COUNTRY Life) and its wholly owned subsidiary COUNTRY Investors Life Assurance Company (COUNTRY Investors), both of which are domiciled in the state of Illinois.

 

COUNTRY Life is a wholly owned subsidiary of the Illinois Agricultural Holding Co. (IAHC), which, in turn, is a subsidiary of the Illinois Agricultural Association (IAA). COUNTRY Life has several wholly owned subsidiaries: COUNTRY Investors which writes principally universal life and fixed annuity products; COUNTRY Trust Bank, a Federal Savings Association; and COUNTRY Capital Management Company, a broker-dealer.

 

The Company’s primary business is the sale of life insurance, accident and health, and annuity products through more than 1,757 financial representatives. Life insurance premiums represent approximately 72%, accident and health premiums approximately 15%, and annuity premiums approximately 14% of total premium income. Although the Company is licensed in 44 states, approximately 54% of premium income is written in Illinois.

 

2. Significant Accounting Policies

 

Use of Estimates

 

The preparation of combined financial statements requires management to make estimates and assumptions that affect amounts reported in the combined statutory-basis financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

 

Principles of Combination

 

The accompanying combined financial statements include the accounts of COUNTRY Life and COUNTRY Investors and have been prepared in conformity with accounting practices prescribed or permitted by the Illinois Department of Insurance (the Department). These practices are consistent with those prescribed or permitted under the National Association of Insurance Commissioners (NAIC) accounting practices and procedures manual. All significant intercompany transactions and balances have been eliminated in preparation of the combined financial statements. These eliminations include, but are not limited to, the carrying values of COUNTRY Investors and the capital and surplus accounts from the balance sheets as well as unrealized capital gains and losses due to equity investments in combined subsidiaries.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Basis of Presentation

 

The accompanying combined statutory-basis financial statements have been prepared in conformity with accounting practices prescribed or permitted by the Department. Such practices vary from U.S. generally accepted accounting principles (GAAP). The more significant variances from GAAP are as follows:

 

Investments

 

Investments in bonds and redeemable preferred stocks are reported at either amortized cost or fair value based on their NAIC rating; for GAAP, such investments would be designated at purchase as held-to-maturity, trading, or available-for-sale. Held-to-maturity investments would be reported at either amortized cost or fair value. If the fair value option were selected for held-to-maturity investments, the unrealized holding gains and losses would be reported in earnings. The remaining investments would be reported at fair value, with unrealized holding gains and losses reported in income for those designated as trading and in stockholder’s equity for those designated as available-for-sale. Other-than-temporary impairment (OTTI) losses are reported in operations; for GAAP, expected credit losses for certain financial assets are recorded in accordance with Current Expected Credit Loss (CECL) model. Credit losses are reported in operations through the establishment of a valuation allowance. Changes between cost and admitted asset investment amounts are credited or charged directly to unassigned surplus, rather than to a separate surplus account.

 

Valuation allowances, if necessary, are established for mortgage loans based on the difference between the net value of the collateral, determined as the fair value of the collateral, less estimated costs to obtain and sell, and the recorded investment in the mortgage loans. Under GAAP, such allowances are based on the present value of expected future cash flows discounted at the loan’s effective-interest rate or, if foreclosure is probable, on the estimated fair value of the collateral. The initial valuation allowance and subsequent changes in the allowance for mortgage loans as a result of a temporary impairment are charged or credited directly to unassigned surplus rather than being included as a component of earnings, as would be required under GAAP.

 

Real estate owned by the Company is primarily occupied by employees of affiliates who provide services to the Company. This real estate is included in investments rather than reported as an operating asset.

 

Changes between cost and admitted asset investment amounts are credited or charged directly to unassigned surplus rather than to a separate surplus account.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Valuation Reserves

 

Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed-income investments, principally bonds, attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity based on groupings of individual securities sold in five-year bands.

 

The net deferral is reported as the interest maintenance reserve (IMR) in the accompanying combined statutory-basis balance sheets. Realized capital gains and losses from sales of assets are reported in operations, net of federal income taxes, and amounts transferred to the IMR. Realized capital losses from declines in values deemed other than temporary are reported in operations, net of federal income taxes. Under GAAP, realized capital gains and losses would be reported in the statements of operations on a pretax basis in the period that the asset giving rise to the gain or loss is sold, and valuation allowances would be provided when there has been a decline in value deemed other than temporary, in which case the provision for such declines are reported in operations through the establishment of a valuation allowance.

 

The asset valuation reserve (AVR) provides a valuation allowance for invested assets. The AVR is determined by an NAIC formula, with changes reflected directly in unassigned surplus. AVR is not recognized for GAAP.

 

Investment in Subsidiaries

 

The accounts and operations of COUNTRY Trust Bank and COUNTRY Capital Management Company are not consolidated with the accounts and operations of the Company, as would be required under GAAP.

 

Policy Acquisition Costs

 

The costs of acquiring and renewing business are expensed when incurred. Under GAAP, acquisition costs related to traditional life insurance and certain long-duration accident and health insurance, to the extent recoverable from future policy revenues, would be deferred and amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy benefit reserves; for universal life insurance and investment products, to the extent recoverable from future gross profits, deferred policy acquisition costs would be amortized generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality, and expense margins.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Nonadmitted Assets

 

Certain assets designated as nonadmitted, principally certain deferred tax assets, disallowed IMR, and prepaid expenses, are excluded from the accompanying combined statutory-basis balance sheets and are charged directly to unassigned surplus. Under GAAP, such assets are included in the balance sheets to the extent that those assets are not impaired.

 

Policy Reserves

 

Policy reserves are calculated based on statutorily required interest and mortality assumptions rather than on estimated expected experience or actual account balances, as would be required under GAAP.

 

At December 31, 2025 and 2024, the Company recorded a premium deficiency reserve of $0 and $20,000,000, respectively. The Company considers anticipated investment income when calculating the premium deficiency reserve.

 

Universal Life and Annuity Policies

 

Revenues for universal life and annuity policies with mortality or morbidity risk, except for group annuity contracts, consist of the entire premium received, and benefits incurred represent the total of death benefits paid (or surrender benefits paid, less surrender charges) and the change in policy reserves. Premiums received for annuity policies without mortality or morbidity risk, including supplementary contracts without life contingencies and for group annuity contracts, are recorded using deposit accounting and are credited directly to an appropriate policy reserve account, without recognizing premium income. Under GAAP, premiums received in excess of policy charges would not be recognized as premium revenue, and benefits would represent the excess of benefits paid over the policy account value and interest credited to the account values.

 

Reinsurance

 

Policy and contract liabilities ceded to reinsurers have been reported as reductions of the related reserves rather than as assets, as would be required under GAAP. Commissions allowed by reinsurers on business ceded are reported as income when incurred rather than being deferred and amortized with deferred policy acquisition costs, as required under GAAP.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Deferred Income Taxes

 

Admitted deferred tax assets (DTAs) are calculated as the sum of (1) the amount of federal capital income taxes paid in prior years that can be recovered through capital loss carrybacks for existing temporary differences in a time frame consistent with the Internal Revenue Service (IRS) capital loss carryback provisions, not to exceed three years, that reverse by the end of the subsequent calendar year; (2) the remaining amount of DTAs expected to be realized within three years not to exceed 15% of the current period adjusted statutory surplus; and (3) the amount of remaining gross DTAs that can be offset against existing gross deferred tax liabilities (DTLs). The remaining DTAs are nonadmitted. Deferred taxes do not include amounts for state taxes. The change in net deferred taxes is included directly in unassigned surplus. Under GAAP, state taxes are included in the computation of deferred taxes, a DTA is recorded for the amount of gross DTAs expected to be realized in future years, and the change in net deferred taxes is included in earnings.

 

Statements of Cash Flow

 

Cash, cash equivalents, and short-term investments in the combined statutory-basis statements of cash flow represent cash balances and investments with initial maturities of one year or less. Under GAAP, the corresponding captions of cash and cash equivalents include cash balances and investments with initial maturities of three months or less at the date of purchase. If, in the aggregate, the Company has a net negative cash balance, it is recorded at the date of purchase as a negative net asset rather than a liability.

 

Policyholder Dividends

 

Policyholders’ dividends are recognized when declared by the Board of Directors rather than over the term of the related policies.

 

The effects of the foregoing variances from GAAP on the accompanying combined statutory-basis financial statements have not been determined but are presumed to be material.

 

Other significant accounting practices are as follows:

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Investments

 

Investments are stated at values prescribed by the NAIC as follows:

 

Bonds not backed by other loans are stated at either amortized cost using the interest method or the lower of amortized cost or fair value. For perpetual bonds that do not possess or no longer possess an effective call option, the bond is reported at fair value regardless of NAIC designation. The Company holds SVO identified investments at fair value. The Company does not hold any mandatory convertible securities.

 

Loan-backed securities are stated at either amortized cost or the lower of amortized cost or fair value using the interest method including anticipated prepayments. The retrospective adjustment method is used to value all securities except for securities with an other-than-temporary impairment and newly acquired securities rated below AA, which are valued using the prospective method.

 

Investments in perpetual preferred stocks are stated at the lower of cost or fair value.

 

The Company’s noninsurance subsidiaries that have significant ongoing operations other than for the Company and its affiliates are reported at the Company’s interest in the affiliates’ audited GAAP equity. The net changes in the subsidiaries’ equity are included in the change in net unrealized gains or losses in the accompanying combined statutory-basis statements of changes in capital and surplus.

 

Common stocks, other than investments in subsidiaries and controlled and affiliated companies, are stated at fair value. Unrealized gains and losses on common stocks are reported directly in unassigned surplus and do not affect operations.

 

Mortgage loans on real estate are stated at the aggregate carrying value, less accrued interest.

 

Policy loans are stated at unpaid balances.

 

Land is reported at cost. Real estate occupied by the Company and real estate held for the production of income are reported at depreciated cost, net of related obligations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the properties. A portion of non-home office real estate is nonadmitted due to statutory requirements that a current appraisal has to be on file that is not older than five years from the current accounting period.

 

The Company has ownership interests in joint ventures that are included in other invested assets. The Company carries these interests based on its interest in the underlying audited GAAP equity.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Investments

 

The Company has a loan with an affiliate that it states at carrying value. See Note 8.

 

Realized gains and losses are determined using the specific-identification basis.

 

Investment Income

 

Interest on bonds and performing mortgage loans is recorded as income when earned and is adjusted for any amortization of premium or accretion of discount. Interest on restructured mortgage loans is recorded as income when earned based on the new contractual rate. Interest on delinquent mortgage loans is recorded as income on a cash basis. Dividends are recorded as income on ex-dividend dates.

 

Premiums

 

Life insurance premiums are recognized as revenue over the premium paying period of the related policies. Annuity considerations are recognized as revenue when received. Health insurance premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred.

 

Benefits

 

Life, annuity, and accident and health benefit reserves are developed by actuarial methods and are determined based on published tables using statutorily specified interest rates and valuation methods that provide, in the aggregate, reserves that are greater than or equal to the minimum or guaranteed policy cash values or the amounts required by law.

 

Liabilities related to policyholder funds left on deposit with the Company generally are equal to fund balances, less applicable surrender charges.

 

The Company waives deduction of deferred fractional premiums upon death of insured and returns any portion of the final premium beyond the date of death. Surrender values are not promised in excess of the legally computed reserves.

 

Tabular interest, tabular reserves less actual reserves released, and tabular cost have been determined by formula. The tabular interest on funds not involving life contingencies is determined from basic policy information.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Annuity Reserves

 

The withdrawal characteristics of annuity reserves and deposit fund liabilities, including separate account liabilities, at December 31, 2025, are as follows:

 

						Separate				Separate
						Account				Account
		General				With				Non-
		Account				Guarantees				Guaranteed				Total				%
		(In Thousands)
INDIVIDUAL ANNUITIES:
(1) Subject to discretionary withdrawal:
a. With market value adjustment		$	-			$	-			$	-			$	-				-	%
b. At book value less current surrender charge of 5% or more			379,861				-				-				379,861				22	%
c. At fair value			-				-				-				-				-	%
d. Total with market value adjustment or at fair value			379,861				-				-				379,861				22	%
e. At book value without adjustment (minimal or no charge adjustment)			1,163,853				-				38,676				1,202,529				68	%
(2) Not Subject to discretionary withdrawal			168,653				-				50				168,703				10	%
(3) Total (gross)			1,712,367				-				38,726				1,751,093				100	%
(4) Reinsurance ceded			1,118,286				-				-				1,118,286
(5) Total (net)		$	594,081			$	-			$	38,726			$	632,807
(6) Amount included in (1)b above that will move to (1)e in the year after the statement date		$	-			$	-			$	-			$	-

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Annuity Reserves

 

The withdrawal characteristics of annuity reserves and deposit fund liabilities, including separate account liabilities, at December 31, 2025, are as follows:

 

						Separate				Separate
						Account				Account
		General				With				Non-
		Account				Guarantees				Guaranteed				Total				%
		(In Thousands)
GROUP ANNUITIES:
(1) Subject to discretionary withdrawal:
a. With market value adjustment		$	6			$	-			$	-			$	6				-	%
b. At book value less current surrender charge of 5% or more			-				-				-				-				-	%
c. At fair value			-				-				-				-				-	%
d. Total with market value adjustment or at fair value			6				-				-				6				-	%
e. At book value without adjustment (minimal or no charge adjustment)			-				-				-				-				-	%
(2) Not Subject to discretionary withdrawal			65,915				-				801				66,716				100	%
(3) Total (gross)			65,921				-				801				66,722				100	%
(4) Reinsurance ceded			-				-				-				-
(5) Total (net)		$	65,921			$	-			$	801			$	66,722
(6) Amount included in (1)b above that will move to (1)e in the year after the statement date		$	-			$	-			$	-			$	-

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Annuity Reserves

 

The withdrawal characteristics of annuity reserves and deposit fund liabilities, including separate account liabilities, at December 31, 2025, are as follows:

 

						Separate				Separate
						Account				Account
		General				With				Non-
		Account				Guarantees				Guaranteed				Total				%
		(In Thousands)
DEPOSIT-TYPE CONTRACTS (no life contingencies):
(1) Subject to discretionary withdrawal:
a. With market value adjustment		$	-			$	-			$	-			$	-				-	%
b. At book value less current surrender charge of 5% or more			-				-				-				-				-	%
c. At fair value			-				-				-				-				-	%
d. Total with market value adjustment or at fair value			-				-				-				-				-	%
e. At book value without adjustment (minimal or no charge adjustment)			468,433				-				-				468,433				45	%
(2) Not Subject to discretionary withdrawal			575,159				-				-				575,159				55	%
(3) Total (gross)			1,043,592				-				-				1,043,592				100	%
(4) Reinsurance ceded			4				-				-				4
(5) Total (net)		$	1,043,588			$	-			$	-			$	1,043,588
(6) Amount included in (1)b above that will move to (1)e in the year after the statement date		$	-			$	-			$	-			$	-

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Annuity Reserves

 

The withdrawal characteristics of annuity reserves and deposit fund liabilities, including separate account liabilities, at December 31, 2025, are as follows:

 

		Total
			(In Thousands)
Life & Accident & Health Annual Statement:
Exhibit 5, Section B Total (Net)		$	525,552
Exhibit 5, Section C Total (Net)			134,450
Exhibit 7, Column 1, Line 14			1,043,588
Subtotal			1,703,590
Separate Accounts Annual Statement:
Exhibit 3, Column 2, Line 0299999			39,478
Exhibit 3, Column 2, Line 0399999			50
Policyholder dividend & coupon accumulations			-
Policyholder premiums			-
Guaranteed interest contracts			-
Other contract deposit funds			-
Subtotal			39,528
Combined Total		$	1,743,118

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Life Reserves

 

The withdrawal characteristics of life reserves at December 31, 2025, are as follows:

 

		Account				Cash
		Value				Value				Reserve
		(In Thousands)
GENERAL ACCOUNT:
(1) Subject to discretionary withdrawal:
a. Term Policies with Cash Value		$	-			$	65,321			$	225,333
b. Universal Life			256,413				256,109				258,893
c. Universal Life with Secondary Guarantees			149,324				139,178				354,229
d. Indexed Universal Life			-				-				-
e. Indexed Universal Life with Secondary			-				-				-
Guarantees			21,975				8,840				10,025
f. Indexed Life			-				-				-
g. Other Permanent Cash Value Life Insurance			-				4,684,338				5,012,080
h. Variable Life			-				-				-
i. Variable Universal Life			1,006				997				1,136
j. Miscellaneous Reserves			-				-				-
Subtotal		$	428,718			$	5,154,783			$	5,861,696
(2) Not subject to discretionary withdrawal or no cash values:
a. Term Policies without Cash Value			x				x				593,298
b. Accidental Death Benefits			x				x				667
c. Disability - Active Lives			x				x				3,631
d. Disability - Disabled Lives			x				x				6,328
e. Miscellaneous Reserves			x				x				60,597
Subtotal			-				-				664,521
(3) Total (gross: direct + assumed)			428,718				5,154,783				6,526,217
(4) Reinsurance ceded			-				-				289,088
(5) Total (net)		$	428,718			$	5,154,783			$	6,237,129

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Life Reserves

 

The withdrawal characteristics of life reserves at December 31, 2025, are as follows:

 

		Account				Cash
		Value				Value				Reserve
		(In Thousands)
SEPARATE ACCOUNT NONGUARANTEED:
(1) Subject to discretionary withdrawal, surrender values or policy loans:
a. Term Policies with Cash Value		$	-			$	-			$	-
b. Universal Life			-				-				-
c. Universal Life with Secondary Guarantees			-				-				-
d. Indexed Universal Life			-				-				-
e. Indexed Universal Life with Secondary Guarantees			-				-				-
f. Indexed Life			-				-				-
g. Other Permanent Cash Value Life Insurance			-				-				-
h. Variable Life			-				-				-
i. Variable Universal Life			12,390				12,390				12,390
j. Miscellaneous Reserves			-				-				-
Subtotal		$	12,390			$	12,390			$	12,390
(2) Not subject to discretionary withdrawal or no cash values:
a. Term Policies without Cash Value			x				x				-
b. Accidental Death Benefits			x				x				-
c. Disability - Active Lives			x				x				-
d. Disability - Disabled Lives			x				x				-
e. Miscellaneous Reserves			x				x				-
Subtotal			-				-				-
(3) Total (gross: direct + assumed)			12,390				12,390				12,390
(4) Reinsurance ceded			-				-				-
(5) Total (net)		$	12,390			$	12,390			$	12,390

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Life Reserves

 

The withdrawal characteristics of life reserves at December 31, 2025, are as follows:

 

		Total
		(In Thousands)
Life & Accident & Health Annual Statement:
Exhibit 5, Life Insurance Section, Total (Net)		$	6,184,357
Exhibit 5, Accidental Death Benefits Section, Total (Net)			667
Exhibit 5, Disability - Active Lives Section, Total (Net)			3,614
Exhibit 5, Disability - Disabled Lives Section, Total (Net)			5,999
Exhibit 5, Miscellaneous Reserves Section, Total (Net)			60,428
Subtotal			6,255,065
Separate Accounts Annual Statement:
Exhibit 3, Column 2, Line 0199999			12,390
Exhibit 3, Column 2, Line 0499999			-
Exhibit 3, Column 2, Line 0599999			-
Subtotal			12,390
Combined Total		$	6,267,455

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Policy and Contract Claims

 

Unpaid policy and contract claims on accident and health policies represent management’s best estimate of the ultimate net cost of all reported and unreported claims incurred but not paid through December 31. The Company discounts its policy and contract claim reserves for long-term disability insurance policies using disability tables and discount rates (generally 3.5% or 4.5%) approved by the Department. Reserves for unpaid policy and contract claims are estimated using individual-case-basis valuations and statistical analyses. Those estimates are subject to the effects of trends in claim severity and frequency. Although considerable variability is inherent in such estimates, management believes that the reserves for unpaid claims are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations.

 

Separate Accounts

 

Separate account assets and liabilities reported in the accompanying combined statutory-basis balance sheets represent funds that are separately administered, principally for the benefit of certain policyholders and contract-holders as well as retirement benefits of employees of affiliated companies and for which the contract-holder, rather than the Company, bears the investment risk. Separate account assets are reported at fair value. The operations of the separate accounts are not included in the accompanying combined statutory-basis financial statements.

 

As of December 31, 2025 and 2024, the Company’s separate account statement included legally insulated assets of $51,927,000 and $50,670,000, respectively. A certain variable annuity product contains a mortality guarantee backed by the general account. In accordance with the guarantee, if there is a deficiency in the invested funds underlying the separate account contract reserves, the general account will fund the deficiency. The separate account does not pay risk charges to the general account for guarantees. The general account of the Company paid $51,000 and received $208,000 toward separate account guarantees in 2025 and 2024, respectively.

 

Fair Value of Financial Instruments

 

The carrying value of the Company’s financial instruments approximates their fair value except for bonds, stocks, policy loans, and mortgage loans. The carrying value and the fair value of bonds, stocks, policy loans, and mortgage loans are disclosed in Note 3. The carrying value and fair value of annuities and deposit funds are disclosed in Note 2.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Admitted disallowed Interest Maintenance Reserve (IMR)

 

In August 2023, the NAIC issued interpretation INT 23-01 Net Negative (Disallowed) IMR which provides a limited-time, optional, statutory accounting guidance, as an exception to the existing guidance detailed in SSAP No. 7—Asset Valuation Reserve and Interest Maintenance Reserve and the annual statement instructions that requires nonadmittance of net negative (disallowed) IMR as a short-term solution. The admitted disallowed IMR is: 1) limited up to 10% of the Company’s adjusted capital and surplus, 2) allowed if the Company maintains a risk-based capital greater than 300% authorized control level after an adjustment to total adjusted capital that reflects a reduction to remove any net positive goodwill, electronic data processing equipment and operating system software, net deferred tax assets and admitted disallowed IMR, and 3) shall not include losses from derivatives that were reported at fair value prior to derivative termination unless the reporting entity has historically followed the same process for interest-rate hedging derivatives that were terminated in a gain position. This interpretation was permitted as a short-term solution until December 31, 2025, and was set to automatically nullify on January 1, 2026. In August 2025, INT 23-01 was extended to be automatically nullified on January 1, 2027.

 

Utilizing INT 23-01 , the Company elected to admit the maximum admitted disallowed IMR for the year ended December 31, 2024 and 2025. Accordingly, admitted disallowed IMR of $169,881,000 and $160,025,000 was reported in the general account as an admitted asset with a corresponding Special surplus fund, of the same amount, for the year ended December 31, 2025 and 2024, respectively.

 

The calculation for the admitted disallowed IMR was done on an individual company basis and reported as such in the individual NAIC Annual Statements and not on a combined basis. The calculated adjusted capital and surplus for COUNTRY Life for the years ended December 31, 2025 and 2024 were $1,627,008,000 and $1,527,245,000, respectively, and the balance appropriated to the special surplus fund represents 10% and 10% of adjusted capital and surplus, which is all admitted in the general account. The calculated adjusted capital and surplus for COUNTRY Investors for the years ended December 31, 2025 and 2024 were $232,121,000 and $225,941,000, respectively, and the balance appropriated to the special surplus fund represents 3% and 3% of adjusted capital and surplus, respectively, which is all admitted in the general account.

 

All fixed income investments generating IMR losses complied with the Company’s Investment Policy and none of the losses were a result of derivative investments. All losses incurred in the normal course of business and not compelled by liquidity pressures.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

2. Significant Accounting Policies (continued)

 

Recently Issued Accounting Pronouncements

 

The NAIC’s Principles-Based Bond Project revises statutory accounting by establishing a principles-based bond definition in SSAP No. 26, Bonds, that focuses on whether an instrument represents a substantive creditor relationship, rather than relying primarily on legal form. Under the revised framework, instruments that qualify as bonds are classified as either Issuer Credit Obligations (accounted for under SSAP 26) or Asset-Backed Securities (accounted for under SSAP No. 43., Loan-Backed and Structured Securities), while debt instruments that do not meet the bond definition—such as certain residual, equity-like, or first-loss positions—are reported under SSAP No. 21, Other Admitted Assets. The changes also introduce updated reporting, separating issuer credit bonds from asset-backed securities, and require insurers to reassess existing holdings, reclassify affected investments, and provide transition disclosures as part of implementation. The revisions were effective January 1, 2025 and did not have a material impact on the statutory financial statements.

 

As a result of implementation and transition to new guidance under the principles-based bond definition, securities with an aggregate book adjusted carrying value of $45,948,000 were reclassified from Bonds to Other invested assets in the first quarter 2025 financial statements. After transition to Other invested assets, there was no change in the measurement basis and securities were carried with an aggregate book adjusted carrying value of $45,948,000. There was no surplus impact related to these reclassifications from Bonds to Other invested assets for the Company.

 

As a result of implementation and transition to new guidance under the principles-based bond definition, securities with an aggregate book adjusted carrying value of $27,110,000 were reclassified from Bonds to Preferred Stocks in the 2025 financial statements. After transition to Preferred Stocks, there was a change in the valuation basis and securities were carried at fair value resulting in a new book adjusted carrying value of $26,803,000. The surplus impact from this change resulted in a $307,000 unrealized loss.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments

 

The carrying value and fair value of investments in bonds are summarized as follows:

 

						Gross				Gross
		Carrying				Unrealized				Unrealized				Fair
		Value				Gains				Losses				Value
		(In Thousands)
At December 31, 2025
Issuer credit obligations
U.S. Government Obligations		$	210,361			$	402			$	3,023			$	207,740
Other U.S. Government Obligations			96,731				1,108				3,583				94,256
Non-U.S. Sovereign Jurisdiction Securities			19,974				200				1,582				18,592
Municipal Bonds - General Obligations (Direct & Guaranteed)			314,862				10,154				4,054				320,962
Municipal Bonds - Special Revenue			699,666				12,644				25,532				686,778
Project Finance Bonds Issued by Operating Entities (Unaffiliated)			92,600				558				4,401				88,757
Corporate Bonds (Unaffiliated)			3,895,013				69,836				190,490				3,774,359
Single Entity Backed Obligations (Unaffiliated)			462,858				1,922				5,532				459,248
SVO-Identified Bond Exchange Traded Funds - Fair Value			48,532				-				-				48,532
Bonds Issued from SEC-Registered Business Development Corps, Closed End Funds & REITS (Unaffiliated)			10,000				-				-				10,000
Other Issuer Credit Obligations (Unaffiliated)			2,322				112				-				2,434
Total - Issuer Credit Obligations			5,852,919				96,936				238,197				5,711,658

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

Asset-Backed Securities		Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
Financial Asset-Backed Securities - Self-Liquidating		(In Thousands)
Agency Residential Mortgage Backed Securities - Guaranteed		$	151,800			$	5,397			$	723			$	156,474
Agency Commercial Mortgage Backed Securities - Guaranteed			280,119				5,713				2,389				283,443
Agency Residential Mortgage Backed Securities - Not/Partially Guaranteed			90,406				2,369				1,319				91,456
Agency Commercial Mortgage Backed Securities - Not/Partially Guaranteed			64,300				90				8,201				56,189
Non-Agency Residential Mortgage Backed Securities (Unaffiliated)			511,508				12,088				13,671				509,925
Non-Agency Commercial Mortgage Backed Securities (Unaffiliated)			262,149				4,512				6,739				259,922
Non-Agency CLOs/CBOs/CDOs (Unaffiliated)			355,589				1,145				116				356,618
Other Financial Asset-Backed Securities - Self-Liquidating (Unaffiliated)			117,242				2,227				2,807				116,662
Subtotals - Financial Asset-Backed Securities - Self-Liquidating			1,833,113				33,541				35,965				1,830,689
Non-Financial Asset-Backed Securities - Practical Expedient Lease Backed Transactions
(Practical Expedient) (Unaffiliated)			132,492				1,848				2,286				132,054
Other Non-Financial Asset-Backed Securities
(Practical Expedient) (Unaffiliated)			228,328				3,162				3,150				228,340
Subtotals - Non-Financial Asset-Backed Securities - Practical Expedient			360,820				5,010				5,436				360,394
Total - Asset Backed Securities			2,193,933				38,551				41,401				2,191,083
Total Long-Term Bonds (Issuer Credit Obligations and Asset-Backed Securities)		$	8,046,852			$	135,487			$	279,598			$	7,902,741

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

  

		Carrying Value				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(In Thousands)
At December 31, 2024
U.S. government and its agencies		$	38,944			$	3			$	3,874			$	35,073
States and political subdivisions			1,245,322				14,177				54,617				1,204,882
Corporate securities			4,288,258				41,844				276,122				4,053,980
Residential mortgage-backed securities			725,263				8,632				31,543				702,352
Commercial mortgage-backed securities			473,454				4,353				21,497				456,310
Other asset-backed securities			1,178,529				6,861				25,624				1,159,766
SVO identified funds			46,756				-				-				46,756
Total bonds		$	7,996,526			$	75,870			$	413,277			$	7,659,119

 

Fair values generally represent quoted market value prices for securities traded in the public marketplace or analytically determined values using bid or closing prices for securities not traded in the public marketplace.

 

The carrying value and fair value of investments in bonds at December 31, 2025, by contractual maturity, are shown in the following table. Expected maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

 

		Carrying Value				Fair Value
At December 31, 2025		(In Thousands)
Maturity:
In 2026		$	181,069			$	181,022
In 2027–2030			860,497				863,500
In 2031–2035			1,314,429				1,324,570
After 2035			3,496,924				3,342,567
Financial Asset-Backed Securities - Self-Liquidating			1,833,113				1,830,688
Non-Financial Asset-Backed Securities - Practical Expedient			360,820				360,394
Total bonds		$	8,046,852			$	7,902,741

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

Proceeds from sales of investments in bonds were $366,131,000 and $468,599,000 during 2025 and 2024, respectively. Gross gains of $3,864,000 and $764,000 and gross losses of $32,712,000 and $77,435,000 were realized on those sales in 2025 and 2024, respectively.

 

Bonds with a statement value of $12,726,000 and $12,713,000 at December 31, 2025 and 2024, respectively, were restricted and on deposit with government authorities and reinsurers as required by law or contract.

 

The amortized cost, gross unrealized gains and losses, and fair value of investments in stocks are as follows:

 

		Cost or Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
		(In Thousands)
At December 31, 2025
Preferred stocks – unaffiliated		$	33,943			$	1,876			$	1,641			$	34,178
Common stocks – unaffiliated			342,189				212,199				9,651				544,737
Common stocks – affiliated			23,278				13,709				-				36,987
Total stocks		$	399,410			$	227,784			$	11,292			$	615,902
At December 31, 2024
Preferred stocks – unaffiliated		$	20,965			$	1,060			$	2,570			$	19,455
Common stocks – unaffiliated			274,147				166,552				3,878				436,821
Common stocks – affiliated			23,278				12,868				-				36,146
Total stocks		$	318,390			$	180,480			$	6,448			$	492,422

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

The following tables illustrate fair values and gross unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position:

 

		Less Than 12 Months								12 Months or More								Total
		Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses
		(In Thousands)
At December 31, 2025
Issuer credit obligations
U.S. Government Obligations		$	98,596			$	693			$	30,517			$	2,330			$	129,113			$	3,023
Other U.S. Government Obligations			-				-				47,284				3,583				47,284				3,583
Non-U.S. Sovereign Jurisdiction Securities			-				-				16,376				1,582				16,376				1,582
Municipal Bonds - General Obligations (Direct & Guaranteed)			5,866				79				74,868				3,975				80,734				4,054
Municipal Bonds - Special Revenue			22,839				577				278,599				24,955				301,438				25,532
Project Finance Bonds Issued by Operating Entities (Unaffiliated)			-				-				64,221				4,401				64,221				4,401
Corporate Bonds (Unaffiliated)			136,123				3,890				1,714,370				186,600				1,850,493				190,490
Single Entity Backed Obligations (Unaffiliated)			17,393				221				164,366				5,311				181,759				5,532
SVO-Identified Bond Exchange Traded Funds - Fair Value			48,532				-				-				-				48,532				-
Total - Issuer Credit Obligations (Unaffiliated)			329,349				5,460				2,390,601				232,737				2,719,950				238,197

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

		Less Than 12 Months								12 Months or More								Total
						Gross								Gross								Gross
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
		(In Thousands)
Asset-Backed Securities Agency Residential Mortgage Backed
Securities - Guaranteed			923				38				11,295				685				12,218				723
Agency Commercial Mortgage Backed
Securities - Guaranteed			43,873				496				49,352				1,893				93,225				2,389
Agency Residential Mortgage Backed
Securities - Not/Partially Guaranteed			-				-				19,466				1,319				19,466				1,319
Agency Commercial Mortgage Backed
Securities - Not/Partially Guaranteed			5,942				25				37,977				8,176				43,919				8,201
Non-Agency Residential Mortgage Backed
Securities (Unaffiliated)			17,192				111				227,710				13,560				244,902				13,671
Non-Agency Commercial Mortgage Backed
Securities (Unaffiliated)			11,926				58				55,151				6,681				67,077				6,739
Non-Agency CLOs/CBOs/CDOs (Unaffiliated)			80,815				47				3,918				69				84,733				116
Other Financial Asset-Backed Securities -
Self-Liquidating (Unaffiliated)			12,877				18				50,300				2,789				63,177				2,807
Subtotals - Financial Asset-Backed Securities -
Self-Liquidating			173,548				793				455,169				35,172				628,717				35,965

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

		Less Than 12 Months								12 Months or More								Total
						Gross								Gross								Gross
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
		(In Thousands)
Non-Financial Asset-Backed
Securities - Practical
Expedient
Lease Backed Transactions
(Practical Expedient)
(Unaffiliated)			13,869				112				32,558				2,174				46,427				2,286
Other Non-Financial Asset-Backed Securities
(Practical Expedient)
(Unaffiliated)			30,601				148				79,836				3,002				110,437				3,150
Subtotals - Non-Financial Asset-Backed Securities - Practical Expedient			44,470				260				112,394				5,176				156,864				5,436
Total - Asset Backed Securities			218,018				1,053				567,563				40,348				785,581				41,401
Total Long-Term Bonds (Issuer Credit Obligations and Asset-Backed Securities			547,367				6,513				2,958,164				273,085				3,505,531				279,598
Stocks:
Preferred stocks - unaffiliated			-				-				15,096				1,641				15,096				1,641
Common stocks - unaffiliated			21,366				1,841				27,190				7,810				48,556				9,651
Total stocks			21,366				1,841				42,286				9,451				63,652				11,292
Total bonds and stocks		$	568,733			$	8,354			$	3,000,450			$	282,536			$	3,569,183			$	290,890

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

		Less Than 12 Months								12 Months or More								Total
						Gross								Gross								Gross
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
		(In Thousands)
At December 31, 2024
Bonds:
U.S. government and its agencies		$	3,882			$	172			$	29,055			$	3,702			$	32,937			$	3,874
States and political subdivisions			336,461				9,794				402,653				44,823				739,114				54,617
Corporate securities			627,281				25,853				1,897,642				250,269				2,524,923				276,122
Residential mortgage-backed securities			195,560				5,054				271,750				26,489				467,310				31,543
Commercial mortgage-backed securities			86,886				2,773				167,854				18,724				254,740				21,497
Other asset-backed securities			50,662				662				384,887				24,962				435,549				25,624
SVO identified funds			-				-				46,756				-				46,756				-
Total bonds			1,300,732				44,308				3,200,597				368,969				4,501,329				413,277
Stocks:
Preferred stocks - unaffiliated			-				-				17,061				2,570				17,061				2,570
Common stocks - unaffiliated			23,624				2,493				22,015				1,385				45,639				3,878
Total stocks			23,624				2,493				39,076				3,955				62,700				6,448
Total bonds and stocks		$	1,324,356			$	46,801			$	3,239,673			$	372,924			$	4,564,029			$	419,725

 

The Company believes that all unrealized losses on individual securities are a result of normal price fluctuations due to market conditions and are not an indication of OTTI. Market conditions include interest rate fluctuations, credit quality, and supply and demand. This determination is made in conjunction with the impairment criteria prescribed by NAIC standards. The Company has the intent and ability to hold these investments until maturity (for bonds) or until the fair value recovers above cost or amortized cost (for bonds and common stocks).

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

For the years ended December 31, 2025 and 2024, realized capital losses included $10,262,000 and $3,002,000, respectively, related to bonds and stocks that have experienced other-than-temporary declines in value.

 

For the years ended December 31, 2025 and 2024, there were zero realized capital losses related to mortgage loans that have experienced other-than-temporary declines in value.

 

For the years ended December 31, 2025 and 2024, realized capital losses included $780,000 and $1,637,000, respectively, related to other invested assets that have experienced other-than-temporary declines in value.

 

The Company owns 100% of COUNTRY Trust Bank and COUNTRY Capital Management Company. Summarized GAAP financial information for the noninsurance subsidiaries as of and for the years ended December 31 is as follows:

 

		COUNTRY Trust Bank								COUNTRY Capital Management Company
		2025				2024				2025				2024
						(In Thousands)
Total assets		$	37,677			$	34,490			$	6,628			$	7,027
Total stockholder’s equity			31,422				30,210				5,565				5,936
Total income			77,218				74,209				12,957				11,628
Total expenses			65,318				63,914				10,649				10,276
Net income			8,682				7,583				1,698				988

 

The carrying value of the Company’s investment in the common stock of its subsidiaries was $36,987,000 and $36,146,000 at December 31, 2025 and 2024, respectively. Included in the change in net unrealized gains and losses for the years ended December 31, 2025 and 2024, are unrealized gains of $841,000 and $1,689,000, respectively, related to the change in carrying values of the Company’s investments in its subsidiaries.

 

During 2025 and 2024, the Company received dividends of $8,500,000 and $6,800,000, respectively, from COUNTRY Trust Bank.

 

During 2025 and 2024, the Company received dividends of $2,000,000 and $0, respectively, from COUNTRY Capital Management Company.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

The carrying value of policy loans was $422,106,000 and $406,950,000 at December 31, 2025 and 2024 respectively. The fair value of policy loans was $420,581,000 and $405,879,000 at December 31, 2025 and 2024, respectively. The carrying value of mortgage loans was $545,107,000 and $422,216,000 at December 31, 2025 and 2024, respectively. The fair value of mortgage loans was $537,423,000 and $391,992,000 at December 31, 2025 and 2024, respectively.

 

The Company invests in mortgage loans principally involving commercial real estate. The Company’s investments in mortgage loans generally consist of first-mortgage liens on completed income-producing properties. The maximum percentage of any one loan to the value of security at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 70% for 2025 and 64% for 2024. The maximum and minimum interest rates of mortgage loans were 6.83% and 3.10%, and 6.83% and 3.10%, respectively, for 2025 and 2024. At December 31, 2025, 6%, or $32,787,000, of the Company’s mortgage loans were collateralized by properties located in Illinois. At December 31, 2024, 6%, or $24,746,000, of the Company’s mortgage loans were collateralized by properties located in Illinois. The Company monitors the credit quality of its mortgage loans using the debt service coverage ratio, which measures the mortgagor’s ability to make the scheduled payments. Loans below 1.10 debt service coverage are maintained on a watch list. The loans above and below the prescribed debt service coverage ratio were $479,651,000 and $65,456,000, respectively, at December 31, 2025, and $420,438,000 and $1,778,000 at December 31, 2024.

 

As of December 31, 2025 and 2024, 100% of Company's mortgage loans held were current, and there were no mortgage loans with interest past due. As of December 31, 2025 and 2024, respectively, the Company held ten mortgage loans with carrying values of $80,780,000 and eight mortgage loans with carrying values of $58,485,000 in which the Company was a participant or co-lender in a mortgage loan agreement. During 2025 and 2024, the Company foreclosed on no properties and transferred no mortgage loans to real estate. The Company recorded no impairments on mortgage loans as of December 31, 2025 and 2024, respectively.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

The components of real estate at December 31 are summarized as follows:

 

		2025				2024
		(In Thousands)
Home office properties:
Land		$	3,800			$	4,521
Buildings and improvements			11,014				30,271
Accumulated depreciation			(5,069	)			(25,921	)
Total home office properties			9,745				8,871
Held for sale properties:
Land		$	721			$	-
Buildings and improvements			21,502				-
Accumulated depreciation			(20,996	)			-
Total home office properties			1,227				-
Investment properties:
Land			-				227
Buildings			-				1,676
Accumulated depreciation			-				(538	)
Nonadmitted			-				(1,365	)
Total investment properties			-				-
Total real estate		$	10,972			$	8,871

 

During the third quarter of 2023, management enacted a plan to sell the GE Road Complex, which included the Office Building - IS Services and Office Building - Customer Services located in Bloomington, Illinois. In the third quarter of 2024, management secured a contract for the GE Road Complex with a closing date on the Office Building - IS Services of November 15, 2024 and a closing date on the Office Building - Customer Services scheduled for December 31, 2026. In December, 2025, the Office Building - Customer Services was reclassified from “Property Occupied by the company” to “Property held for sale” with the expectation of closing on or before December 31, 2026.

 

During the second quarter of 2025, management executed a plan to sell the Office Building - Peridot Parkway located in Stockbridge, Georgia. During the second quarter of 2025, management secured a contract for the property with the closing having taken place on July 31, 2025.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

Net realized capital gains (losses) for the years ended December 31 are summarized as follows:

 

		2025				2024
		(In Thousands)
Bonds:
Gross gains		$	5,488			$	1,869
Gross losses			(45,349	)			(85,315	)
Total bonds			(39,861	)			(83,446	)
Common stocks:
Gross gains			32,988				45,460
Gross losses			(4,915	)			(3,331	)
Total common stocks			28,073				42,129
Derivatives:
Gross gains			2,040				2,935
Gross losses			(211	)			(1,370	)
Total Derivatives			1,829				1,565
Other investments:
Preferred stocks			(1,635	)			35
Real estate			525				1,146
Other invested assets			(752	)			(3,085	)
Mutual Funds			3,546				-
Total other investments			1,684				(1,904	)
Amounts transferred to IMR, net			23,415				61,707
Net realized gains before federal income tax			15,140				20,051
Federal income tax benefit			1,323				(7,298	)
Net realized capital gains		$	13,817			$	27,349

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

Major categories of net investment income for the years ended December 31, 2025 and 2024, are summarized as follows:

 

		2025				2024
		(In Thousands)
Bonds		$	409,843			$	399,378
Preferred stocks – unaffiliated			2,428				1,141
Common stocks – unaffiliated			13,999				11,572
Common stocks – affiliated			10,500				6,800
Mortgage loans			22,456				18,655
Policy loans			22,394				21,639
Cash equivalents			6,573				7,619
Real estate			1,364				2,610
Other invested assets			34,289				28,638
Securities lending			32				117
Other Investment Income			62				-
Total investment income			523,940				498,169
Investment expenses			10,577				11,912
Net investment income		$	513,363			$	486,257

 

Real estate income includes amounts for the occupancy of home office properties of $1,261,000 and $2,156,000 in 2025 and 2024, respectively.

 

Securities were sold, redeemed or otherwise disposed of as a result of a callable feature which generated investment income. In 2025, there were twenty-six such securities, which generated investment income of $1,955,000. In 2024, there were fifty-one such securities, which generated investment income of $2,622,000.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

A summary of loan-backed securities, disclosed in the aggregate, classified on the basis for the OTTI as of December 31, 2025, is as follows:

 

		Amortized Cost				OTTI Recognized as Realized Loss				Fair Value
		(In Thousands)
At December 31, 2025
Intent to sell		$	-			$	-			$	-
Inability to recover amortized cost basis			-				-				-
Present value of cash flows expected			4,497				1,178				3,603

 

The loan-backed securities with a recognized OTTI for the year ended December 31, 2025, are as follows:

 

CUSIP		Amortized Cost Before OTTI				OTTI Recognized as Realized Loss				Amortized Cost After OTTI				Fair Value
						(In Thousands)
At December 31, 2025
57643QBP9		$	1,537			$	418			$	1,119			$	1,098
90342WAJ6			601				141				460				199
760985E72			418				137				281				309
90342WAJ6			597				137				460				184
90342WAJ6			607				146				461				734
90342WAJ6			627				166				461				1,003
576436AT6			110				33				77				76
		$	4,497			$	1,178			$	3,319			$	3,603

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

Prepayment assumptions were obtained from broker-dealer surveys, as reflected in industry sources such as IDC, or internal estimates. The Company has no significant concentrations of credit risk. The Company had no investments for which it was not practicable to estimate fair value.

 

Under the securities lending program, the Company requires a minimum percentage of 102% of the fair value of domestic securities loaned at the outset of the contract to be provided as collateral. At December 31, 2025 and 2024, bonds with a fair value of $5,197,000 and $13,273,000, respectively, were on loan under this program, while cash collateral held was $5,317,000 and $13,553,000, respectively. The Company receives collateral in the form of cash monies. All collateral is in an open position. The collateral is reinvested in a pool of funds with other security lender participants. Collateral is reinvested in a pool of high-quality securities, with an emphasis on liquidity and principal preservation.

 

The following table represents the Company’s reinvested collateral as a pro rata share of the investment pool as of December 31:

 

		2025								2024
		Amortized Cost				Fair Value				Amortized Cost				Fair Value
						(In Thousands)
30 days or less		$	5,389			$	5,318			$	13,980			$	13,552
31 to 60 days			-				-				-				-
61 to 90 days			-				-				-				-
91 to 120 days			-				-				-				-
121 to 180 days			-				-				-				-
181 to 365 days			-				-				-				-
Total collateral reinvested		$	5,389			$	5,318			$	13,980			$	13,552

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

3. Investments (continued)

 

The Company holds an interest in multiple limited partnerships formed to develop and operate solar energy projects that qualified for tax credits. The primary benefit of these investments are the receipt of tax credits. The financial position of these investments were impacted by a return of capital in the amount of $391,000. The Company also received $421,000 as ordinary income from these partnerships during 2025.

 

The aggregate schedule of tax credits expected over the remaining life of this investment is shown below, of which all are transferrable/certificated. There are no non-transferrable tax credits held as of both 2025 and 2024.

 

		2026				2027				2028				2029				2030 & Thereafter
MPC 2019 Energy Fund I, LLC			-				-				-				-				-
MPC 2020 Energy Fund I, LLC			-				-				-				-				-
MPC 2021 Energy Fund I, LLC			-				-				-				-				-

 

The balance of tax credit investments recognized in the Combined Balance Sheet as of December 31, 2025 and December 31, 2024, was $3,404,000 and $3,794,000, respectively. The Company recognized $0 and $75,000 in tax credits and other tax benefits during 2025 and 2024, respectively. Net Investment Income was impacted by income receipts of $421,000 during the year.

 

There are no additional commitments or contingent commitments related to the tax credit investments. No tax credit investments are currently subject to any regulatory reviews and there were no significant modifications or events that resulted in any change in the nature of the investment or a change in the relationship with the underlying projects for investments in scope. The Company does not have any tax credit investments with a recognized other-than temporary impairment.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments

 

Assets and liabilities recorded at fair value in the accompanying combined statutory-basis balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The hierarchy of inputs is as follows:

 

Level Input	Input Definition
Level 1	Inputs that are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

The following tables summarize fair value measurements by level, measured at fair value on a recurring basis:

 

		Level 1				Level 2				Level 3				Total
		(In Thousands)
At December 31, 2025
Assets at Fair Value:
Issuer credit obligations
Corporate Bonds (Unaffiliated)		$	-			$	-			$	44			$	44
Single Entity Backed Obligations (Unaffiliated)			-				-				4,983				4,983
SVO-Identified Bond Exchange Traded Funds - Fair Value			48,532				-				-				48,532
Total - Issuer Credit Obligations			48,532				-				5,027				53,559
Asset-Backed Securities
Non-Agency Residential Mortgage Backed Securities (Unaffiliated)			-				3,676				-				3,676
Subtotals - Financial Asset-Backed Securities - Self-Liquidating			-				3,676				-				3,676
Total - Asset Backed Securities			-				3,676				-				3,676
Total Long-Term Bonds (Issuer Credit Obligations and Asset-Backed Securities)			48,532				3,676				5,027				57,235
Preferred stocks – unaffiliated			6,083				27,588				-				33,671
Common stocks – unaffiliated			506,011				-				38,726				544,737
Cash equivalents			195,654				-				-				195,654
Derivatives			-				7,923				-				7,923
Securities lending reinvested collateral assets			-				5,318				-				5,318
Separate accounts			51,901				-				-				51,901
Total		$	808,181			$	44,505			$	43,753			$	896,439
Liabilities at Fair Value:
Deposit Type Contracts			803,659				239,929				-				1,043,588
Derivatives			-				3,013				-				3,013
Total		$	803,659			$	242,942			$	-			$	1,046,601

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

		Level 1				Level 2				Level 3				Total
		(In Thousands)
At December 31, 2024
Assets at Fair Value:
Bonds:
Corporate securities		$	-			$	-			$	-			$	-
Residential mortgage-backed securities			-				1,898				-				1,898
Other asset-backed securities			-				1,364				-				1,364
SVO identified funds			46,756				-				-				46,756
Total Bonds			46,756				3,262				-				50,018
Preferred stocks – unaffiliated			18,948				-				-				18,948
Common stocks – unaffiliated			404,915				-				31,906				436,821
Cash equivalents			210,867				-				-				210,867
Derivatives			-				4,064				-				4,064
Securities lending reinvested collateral assets			-				13,552				-				13,552
Separate accounts			50,644				-				-				50,644
Total		$	732,130			$	20,878			$	31,906			$	784,914
Liabilities at Fair Value:
Deposit Type Contracts		$	724,832			$	243,051			$	-			$	967,883
Derivatives			-				701				-				701
Total		$	724,832			$	243,752			$	-			$	968,584

 

There have been no changes in valuation techniques and inputs used in determining the fair values for Level 2 and Level 3 securities. Fair values for Level 2 securities are determined from prices obtained from various pricing sources. Fair values for Level 3 securities, since there are no observable inputs, are based on management’s judgment, based on information provided by the issuer, or based on information provided by a pricing service. The Company had no investments for which it was not practicable to estimate fair value.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

At the end of each reporting period, the Company evaluates whether or not any event has occurred or circumstances have changed that would cause an instrument to be transferred into or out of level 3. Transfers into Level 3 occur because the price provided by the pricing service, issuer, or management could not be supported by observable outputs. Transfers out of Level 3 occur because the price provided by the pricing service, issuer, or management could be supported by observable inputs.

 

The following table summarizes the changes in fair value during 2025 and 2024 for the Level 3 assets disclosed above:

 

		Beginning Balance				Transfers In (Out)				Net Gain (Loss) Included in Income/ Surplus				Net Purchases (Sales)				Ending Balance
		(In Thousands)
2025
Corporate Bonds		$	-			$	57			$	(13	)		$	-			$	44
Single Entity Backed Obligations (Unaffiliated)			-				12,102				(7,340	)			221				4,983
Common stocks – unaffiliated			31,906				-				-				6,820				38,726
Total		$	31,906			$	12,159			$	(7,353	)		$	7,041			$	43,753
2024
Corporate Bonds		$	17			$	-			$	(17	)		$	-			$	-
Preferred stocks – unaffiliated			155				-				-				(155	)			-
Common stocks – unaffiliated			18,898				-				-				13,008				31,906
Total		$	19,070			$	-			$	(17	)		$	12,853			$	31,906

 

Transfers to or from Level 3 are generally recognized at the end of the reporting period. Issuer Credit Obligations, 12498#AA8 CBD Ground Lease 2014-A, 12498*AA2 CBD Ground Lease SP 2014-A and 882918AA3, Thames Water Util Ltd, transferred into Level 3 during the period and is now carried at fair value.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

The tables below reflect the fair values and admitted values of all admitted assets that are financial instruments as of December 31, 2025 and 2024:

 

		Fair Value				Admitted Assets				Level 1				Level 2				Level 3
		(In Thousands)
At December 31, 2025
Issuer credit obligations
U.S. Government Obligations		$	207,740			$	210,361			$	-			$	207,740			$	-
Other U.S. Government Obligations			94,256				96,731				-				94,256				-
Non-U.S. Sovereign Jurisdiction Securities			18,592				19,974				-				18,592				-
Municipal Bonds - General Obligations (Direct & Guaranteed)			320,962				314,862				-				319,652				1,310
Municipal Bonds - Special Revenue			686,778				699,666				-				686,778				-
Project Finance Bonds Issued by Operating Entities (Unaffiliated)			88,757				92,600				-				51,702				37,055
Corporate Bonds (Unaffiliated)			3,774,359				3,895,013				-				2,583,389				1,190,970
Single Entity Backed Obligations (Unaffiliated)			459,248				462,858				-				33,065				426,183
SVO-Identified Bond Exchange Traded Funds - Fair Value			48,532				48,532				48,532				-				-
Bonds Issued from SEC-Registered Business Development Corps, Closed End Funds & REITS (Unaffiliated)			10,000				10,000				-				-				10,000
Other Issuer Credit Obligations (Unaffiliated)			2,434				2,322				-				2,434				-
Total - Issuer Credit Obligations			5,711,658				5,852,919				48,532				3,997,608				1,665,518

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

		Fair Value				Admitted Assets				Level 1				Level 2				Level 3
						(In Thousands)
Asset-Backed Securities
Agency Residential Mortgage Backed Securities - Guaranteed			156,474				151,800				-				156,474				-
Agency Commercial Mortgage Backed Securities - Guaranteed			283,443				280,119				-				283,443				-
Agency Residential Mortgage Backed Securities - Not/Partially Guaranteed			91,456				90,406				-				91,456				-
Agency Commercial Mortgage Backed Securities - Not/Partially Guaranteed			56,189				64,300				-				56,189				-
Non-Agency Residential Mortgage Backed Securities (Unaffiliated)			509,925				511,508				-				509,925				-
Non-Agency Commercial Mortgage Backed Securities (Unaffiliated)			259,922				262,149				-				253,915				6,007
Non-Agency CLOs/CBOs/CDOs (Unaffiliated)			356,618				355,589				-				356,618				-
Other Financial Asset-Backed Securities - Self-Liquidating (Unaffiliated)			116,662				117,242				-				116,662				-
Subtotals - Financial Asset-Backed Securities - Self-Liquidating			1,830,689				1,833,113				-				1,824,682				6,007

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

		Fair Value				Admitted Assets				Level 1				Level 2				Level 3
		(In Thousands)
Non-Financial Asset-Backed
Securities - Practical Expedient
Lease Backed Transactions (Practical Expedient) (Unaffiliated)			132,054				132,492				-				132,053				-
Other Non-Financial Asset-Backed
Securities (Practical Expedient) (Unaffiliated)			228,340				228,328				-				226,071				2,269
Subtotals - Non-Financial Asset-Backed
Securities - Practical Expedient			360,394				360,820				-				358,124				2,269
Total - Asset Backed Securities			2,191,083				2,193,933				-				2,182,806				8,276
Total Long-Term Bonds (Issuer Credit Obligations and Asset-Backed Securities			7,902,741				8,046,852				48,532				6,180,414				1,673,794
Preferred stocks - unaffiliated			34,178				34,178				6,083				27,588				507
Common stocks - unaffiliated			544,737				544,737				506,010				-				38,726
Mortgage loans			537,423				545,107				-				-				537,423
Cash equivalents			195,654				195,654				195,654				-				-
Short term investments			2,577				2,577				-				2,577				-
Other invested assets - unaffiliated			43,036				49,245				-				19,283				23,753
Other invested assets - affiliated			-				-				-				-				-
Derivatives			7,923				7,923				-				7,923				-
Securities lending reinvested collateral assets			5,318				5,318				-				5,318				-
Separate accounts			51,901				51,901				51,901				-				-
Total		$	9,325,488			$	9,483,492			$	808,180			$	6,243,103			$	2,274,203

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

4. Fair Value of Financial Instruments (continued)

 

		Fair Value				Admitted Assets				Level 1				Level 2				Level 3
		(In Thousands)
At December 31, 2024
U.S. government and its agencies		$	35,073			$	38,944			$	-			$	35,073			$	-
States and political subdivisions			1,204,882				1,245,322				-				1,203,160				1,722
Corporate securities			4,053,980				4,288,258				-				2,800,071				1,253,909
Residential mortgage-backed securities			702,352				725,263				-				702,352				-
Commercial mortgage-backed securities			456,310				473,454				-				447,505				8,805
Other asset-backed securities			1,159,766				1,178,529				-				731,925				427,841
SVO identified funds			46,756				46,756				46,756				-				-
Total bonds			7,659,119				7,996,526				46,756				5,920,086				1,692,277
Preferred stocks - unaffiliated			19,455				19,455				18,948				-				507
Common stocks - unaffiliated			436,820				436,821				404,914				-				31,906
Mortgage loans			391,992				422,216				-				-				391,992
Cash equivalents			210,867				210,867				210,867				-				-
Other invested assets - unaffiliated			12,342				135,950				-				12,342				-
Other invested assets - affiliated			74,392				74,392				-				-				74,392
Derivatives			4,064				4,064				-				4,064				-
Securities lending reinvested collateral assets			13,552				13,552				-				13,552				-
Separate accounts			50,644				50,644				50,644				-				-
Total		$	8,873,247			$	9,364,487			$	732,129			$	5,950,044			$	2,191,074

 

The Company has no investments for which it was not practicable to estimate fair value.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

5. Federal Income Taxes

 

COUNTRY Life and COUNTRY Investors will file a consolidated federal income tax return for 2025 with its parent, Illinois Agricultural Holding Company (IAHC) and subsidiaries. There was an amount due from IAHC for income taxes at December 31, 2025 of $24,605,000. The Company has a written agreement, which sets forth the manner in which the total combined federal income tax is allocated to each entity which is a party to the consolidation. As provided in Internal Revenue Service Regulation Section 1.1552-1(a)(2) as supplemented by the methodology in Section 1.1502-33(d)(3), allocation of the consolidated tax liability to each company of the consolidated group is based upon that company’s separate return liability provided however that intercompany transactions which are deferred under a consolidated return, as well as losses incurred and credits utilized by the consolidated group shall be recognized. Such provisions shall be applied taking into account the subgroup method set forth in Treasury Regulation Section 1.1502-47 and the related limitations on utilizing a loss from a life or nonlife subgroup, as applicable, against the income of the other subgroup. Intercompany tax balances are settled within 30 days of the filing of the applicable estimated or actual consolidated federal income tax return. At December 31, 2025, COUNTRY Life and COUNTRY Investors, the life company subgroup, has federal and state income taxes receivable of $743,000 for amended return periods prior to joining the IAHC consolidated group tax returns.

 

The Company has no operating loss, net capital loss, or tax credit carryforwards for 2025 and 2024.

 

The components of the net admitted DTAs at December 31 are as follows:

 

		2025				2024				Change
			(In Thousands)
Gross deferred tax assets:
Capital		$	7,526			$	6,889			$	637
Ordinary			173,833				169,529				4,304
Adjusted gross deferred tax assets:
Capital			7,526				6,889				637
Ordinary			173,833				169,529				4,304
Deferred tax liabilities:
Capital			79,100				70,891				8,209
Ordinary			31,564				34,293				(2,729	)
Net deferred tax assets			70,695				71,234				(539	)
Deferred tax assets nonadmitted:
Ordinary			25,843				27,777				(1,934	)
Net admitted deferred tax assets (liabilities):
Capital			(71,574	)			(64,002	)			(7,572	)
Ordinary			116,426				107,459				8,967
		$	44,852			$	43,457			$	1,395

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

5. Federal Income Taxes (continued)

 

Nonadmitted DTAs decreased $1,934,000 in 2025 and decreased $4,220,000 in 2024, respectively.

 

There were no unrecognized deferred tax liabilities in 2025 or 2024.

 

The Company has not utilized tax planning strategies in determining its admitted DTAs during 2025 or 2024.

 

The detailed amounts of each component of the calculation of SSAP No. 101 are as follows:

 

		December 31
		2025				2024
		(In Thousands)
FIT recoverable through carryback – capital		$	1,423			$	-
Gross DTAs allowed per limitation threshold – ordinary			37,551				37,502
Gross DTAs allowed per limitation threshold – capital			5,878				5,955
Gross DTAs offset by gross DTLs – ordinary			110,439				104,250
Gross DTAs offset by gross DTLs – capital			225				934
Total admitted DTA		$	155,516			$	148,641

 

The authorized control level risk-based capital (RBC) ratio used to determine the recovery period and threshold limitation was 1,276% and 1,333% in 2025 and 2024, respectively, and the amount of adjusted capital and surplus used to determine the recovery period and threshold limitation was $2,122,326,000 and $1,980,860,000 in 2025 and 2024, respectively. Using a 15% ratio, the threshold limitation was $318,349,000 and $297,129,000 in 2025 and 2024, respectively.

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

5. Federal Income Taxes (continued)

 

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:

 

		2025				2024				Change
		(In Thousands)
Deferred tax assets:
Ordinary
Discounting of unpaid losses		$	97,414			$	100,657			$	(3,243	)
Deferred acquisition costs			53,941				50,665				3,276
Policyholder dividend accrual			20,118				16,407				3,711
Section 807(f) adjustments			269				577				(308	)
Other (items less than $1,000,000)			2,091				1,223				868
Total ordinary deferred tax assets			173,833				169,529				4,304
Non-admitted deferred tax assets			(25,843	)			(27,777	)			1,934
Admitted ordinary deferred tax assets			147,990				141,752				6,238
Capital:
Investments			7,526				6,601				925
Real estate			-				1				(1	)
Other			-				287				(287	)
Total capital deferred tax assets			7,526				6,889				637
Non-admitted deferred tax assets			-				-				-
Admitted capital deferred tax assets			7,526				6,889				637
Admitted deferred tax assets			155,516				148,641				6,875
Deferred tax liabilities:
Ordinary
Deferred and uncollected premium			31,485				31,600				(115	)
TCJA reserves transition (2018-2025)			-				2,568				(2,568	)
Other			79				125				(46	)
Total ordinary deferred tax liabilities			31,564				34,293				(2,729	)
Capital:
Investments			78,427				70,630				7,797
Real estate			10				-				10
Other			663				261				402
Total capital deferred tax liabilities			79,100				70,891				8,209
Deferred tax liabilities			110,664				105,184				5,480
Net deferred tax assets		$	44,852			$	43,457			$	1,395

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

5. Federal Income Taxes (continued)

 

The components of income tax expense and the change in deferred tax assets and deferred tax liabilities for the years ended December 31 are as follows:

 

		2025				2024
		(In Thousands)
Change in deferred tax assets		$	(4,942	)		$	(6,297	)
Change in deferred tax liabilities			5,480				8,440
Net change in deferred taxes			538				2,143
Less unrealized gain			(11,242	)			(4,431	)
Net change in deferred taxes			(10,704	)			(2,288	)
Current income tax expense			34,812				35,591
Current income tax expense (benefit) on net capital gains			1,323				(7,299	)
Income tax expense and change in deferred taxes		$	25,431			$	26,004

 

 

The Company’s income tax expense and change in deferred taxes differ from the amount obtained by applying the federal statutory rate of 21% for 2025 and 2024 to income before federal income taxes for the following reasons:

 

		2025				2024
		(In Thousands)
Expected federal income tax expense		$	32,295			$	40,677
Tax-exempt income			(481	)			(520	)
Change in non-admitted assets			(1,603	)			(20	)
Release of IMR			(1,788	)			(10,966	)
Prior year true-ups			(607	)			(1,469	)
Dividends received deduction			(2,351	)			(1,708	)
Other, net			(34	)			10
Income tax expense and change in deferred taxes		$	25,431			$	26,004

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

5. Federal Income Taxes (continued)

 

The Company did not recognize any liability for uncertain tax benefits. COUNTRY Life files tax returns in the U.S. federal jurisdictions and several state jurisdictions. As of 2025, the tax years that remain subject to examination begin with 2016.

 

The Company recognizes interest and penalties related to unrecognized income tax benefits in its provision for income taxes. During the year, the Company recorded interest received of $1,099,000 and $1,000 in 2025 and 2024, respectively. The Company recorded no penalties in 2025 and 2024, respectively.

 

COUNTRY Life Insurance Company did not recognize any liability for unrecognized tax benefits and does not expect the unrecognized tax positions to change significantly over the next twelve months.

 

The Inflation Reduction Act was enacted on August 16, 2022. The Company has determined that it is not an applicable corporation for purposes of the Corporate Alternative Minimum Tax (CAMT) for 2025 and, therefore, its CAMT liability is zero.

 

6. Accident and Health Claim Reserves

 

The following table provides a reconciliation of the beginning and ending reserve balances for accident and health claim reserves included in policy reserves on the accompanying combined statutory-basis balance sheets as of December 31:

 

		2025				2024
		(In Thousands)
Claim reserve at beginning of year		$	112,833			$	115,491
Add provision for claims occurring in:
Current year			153,290				134,070
Prior years			(6,467	)			(7,396	)
Incurred losses during the current year			146,823				126,674
Deduct payments for claims occurring in:
Current year			112,840				99,901
Prior years			29,123				29,431
Claim payments during the current year			141,963				129,332
Claim reserve at end of year		$	117,693			$	112,833

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

7. Reinsurance

 

In the normal course of business, the Company assumes and cedes reinsurance with nonaffiliated insurance companies. Reinsurance provides greater diversification of business and limits the maximum net loss potential arising from large claims. Reinsurance does not discharge the Company from its primary liability to policyholders, and to the extent that a reinsurer would be unable to meet its obligations, the Company would be liable. A summary of the Company’s reinsurance with nonaffiliates as of and for the years ended December 31 is as follows:

 

		2025				2024
		(In Thousands)
Assumed:
Premiums earned		$	62,303			$	59,897
Benefits for policyholders and beneficiaries			66,987				57,210
Costs of servicing policyholders, administering insurance protection, and obtaining new insurance			2,094				2,044
Ceded:
Premiums earned			118,655				111,681
Benefits for policyholders and beneficiaries			158,031				149,585
Costs of servicing policyholders, administering insurance protection, and obtaining new insurance			9,954				10,217
Policy services			1,724,611				1,764,659
Policy and contract claims			7,348				8,419

 

8. Related Party Transactions

 

The Company is a member of an insurance holding company group that consists of six insurance companies in addition to several noninsurance entities. The ultimate controlling company is the IAA. Control among group members is maintained through a combination of factors, including common management, interlocking boards of directors, and stock ownership.

 

The Company is a party to a service agreement with CC Services, Inc., an affiliate, whereby CC Services, Inc. provides all necessary management and operational services required to run its business, market its products, and service its policyholders. Expenses incurred by CC Services, Inc. are then shared among the Company and other members of the insurance holding company group on a basis that management believes is fair and which is consistently applied according to statutory accounting guidance. The cost of services provided to the Company from CC Services, Inc. totaled $135,173,000 and $130,752,000 in 2025 and 2024, respectively.

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

8. Related Party Transactions (continued)

 

On December 18, 2017, the Company entered into a credit agreement with CC Services, Inc. (CCSI), whereby the Company agreed to provide access to loans in the aggregate of $100,000,000. On October 1, 2024 the credit agreement was amended and the aggregate loan amount was increased to from $100,000,000 to $200,000,000. The per annum rate at which interest is payable also increased from 1.50% to 2.00% and the maturity date was extended from December 18, 2027 to December 18, 2037. On February 27, 2025, CCSI borrowed an additional $40,000,000 from the Company. As of December 31, 2025 and December 31, 2024, $110,000,000 and $70,000,000, respectively, was lent to CCSI under the agreement. Interest is payable quarterly based on, one, the outstanding loan balances which accrue at 2.00% per annum plus variable rates based on the ten-year US Treasury rates, and, two, the daily unused portion of the $200,000,000 aggregate commitment which accrues at a set rate of 0.05%. Rates on the outstanding loan balance ranged from 6.12% to 6.57% in 2025. The Company has recorded $6,526,000 of interest income related to the credit agreement in 2025. The credit agreement is scheduled to end on December 18, 2037, at which time CCSI is required to repay to the Company the aggregate principal amount of all loans outstanding at that time.

 

In 2024, COUNTRY Life recorded bond acquisitions of $3,774,000 and bond disposals of $16,934,000 with an affiliate, COUNTRY Mutual Insurance Company. These transactions were processed through outside investment brokers in the normal course of business operations for the Company. No such transactions occurred in 2025.

 

9. Notes Payable

 

The Company is a member of the Federal Home Loan Bank of Chicago (FHLBC). This membership allows the Company to meet two separate strategies: first, to utilize a line of credit to meet short term operational cash needs; and second, to utilize borrowed funds to invest in higher yielding securities to maximize net investment income.

 

The Company has determined its maximum borrowing capacity as $1,350,055,000 based upon potential acquisition of FHLBC capital stock, as approved by the Company’s Board. The Company had Membership Stock – Class B of $1,596,000 and $1,553,000 as of December 31, 2025 and 2024. The Company had $25,040,000 and $21,506,000 of Activity Stock at December 31, 2025 and 2024. There was no Membership Stock – Class B eligible for redemption in 2025 or 2024.

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

9. Notes Payable (continued)

 

Under the FHLBC agreements, the Company is required to fund a collateral deposit account for the benefit of the lender. Securities, subject to valuation by the lender, in the collateral deposit account are required to be maintained in an amount at least equal to the outstanding loan principal.

 

The amount of collateral pledged as of December 31, 2025 is as follows:

 

		Fair				Carrying
		Value				Value
		(In Thousands)
Total collateral pledged		$	707,147			$	701,320
Maximum collateral pledged			707,147				701,320

 

The amount of collateral pledged as of December 31, 2024 is as follows:

 

		Fair				Carrying
		Value				Value
		(In Thousands)
Total collateral pledged		$	588,394			$	598,670
Maximum collateral pledged			588,394				598,670

 

As of December 31, 2025, the Company had outstanding loans with a carrying value and face value of $546,915,000 due to the FHLB (Spread Program). The outstanding loans were issued on October 22, 2020, February 25, 2021, March 9, 2021, March 30, 2021, April 21, 2021, April 28, 2021, May 5, 2021, July 28, 2021, August 20, 2021, September 23, 2021, October 19, 2021, October 20, 2021, October 22, 2021, October 27, 2021, January 19, 2022, January 26, 2022, March 1, 2022, March 24, 2022, April 27, 2022, June 15, 2022, June 16, 2022, October 27, 2022, November 17, 2022, June 9, 2023, October 20, 2023, February 15, 2024, April 24, 2024, May 16, 2024, June 6, 2024, July 2, 2024, July 30, 2024, August 29, 2024, October 9, 2024, October 16, 2024, November 15, 2024, December 17, 2024, December 19, 2024, January 22, 2025, February 13, 2025, February 18, 2025, March 28, 2025, April 15, 2025, July 16, 2025, July 17, 2025, August 14, 2025, October 2, 2025, October 8, 2025, October 15, 2025, October 22, 2025, November 12, 2025, November 20, 2025, November 25, 2025, December 16, 2025, December 19, 2025, and December 24, 2025. Interest of $24,346,000 was paid during 2025.

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

9. Notes Payable (continued)

 

As of December 31, 2024, the Company had outstanding loans with a carrying value and face value of $464,420,000, due to the FHLBC. The outstanding loans were issued on October 22, 2020, February 23, 2021, February 25, 2021, March 3, 2021, March 9, 2021, March 30, 2021, April 21, 2021, April 28, 2021, May 5, 2021, June 3, 2021, July 13, 2021, July 28, 2021, August 20, 2021, September 23, 2021, October 19, 2021, October 20, 2021, October 22, 2021, October 27, 2021, January 19, 2022, January 26, 2022, March 1, 2022, March 24, 2022, April 27, 2022, June 15, 2022, June 16, 2022, August 15, 2022, September 22, 2022, September 29, 2022, October 27, 2022, November 17, 2022, March 23, 2023, June 9, 2023, October 20, 2023, February 15, 2024, April 24, 2024, April 30, 2024, May 16, 2024, June 6, 2024, June 17, 2024, July 2, 2024, July 30, 2024, August 29, 2024, October 9, 2024, October 16, 2024, November 15, 2024, December 17, 2024, December 19, 2024. Interest of $24,722,000 was paid during 2024.

 

The Company also has a line of credit with FHLBC. At December 31, 2025 and 2024, the Company’s line of credit had a balance of $45,000,000 and $48,000,000, respectively. Interest of $1,530,000 and $1,554,000 was paid during 2025 and 2024, respectively. The effective annual interest rate, and the annual rate at which interest accrued on the loans and the line of credit was 1.01% to 5.20% during 2025 and 0.70% to 6.10% during 2024. As of December 31, 2025 and 2024 the Company had $63,452,000 and $26,085,000, respectively, of unused lines of credit with FHLBC.

 

The loans are classified as funding agreements under SSAP 52 and is subject to prepayment penalties. The line of credit is classified as debt under SSAP 15 and is not subject to prepayment penalties.

 

In order to minimize the impact of large dollar transactions and achieve efficiencies in the management of cash, the Company has established a revolving line of credit with its insurance affiliate Cotton States Life Insurance Company (Cotton States). At December 31, 2025 and 2024, the Company had an outstanding loan with a carrying value and face value of $0, due to Cotton States. Debt and related interest issued under this arrangement is settled within 30 days following the end of a quarter - March 31, June 30, September 30, December 31. Interest on the line of credit is calculated daily based on the ending loan balance. The effective annual interest rate, and the annual rate at which interest accrued, fluctuated between 4.19% and 4.22% during 2025 and 5.16% and 5.41% during 2024. No interest was paid during 2025 or 2024.

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

10. Benefit Plans

 

The Company provides certain health care and life insurance benefits (postretirement benefits) for retirees and fully eligible employees who reached retirement age while working for the Company, which are funded on a pay-as-you-go basis. Subsequent to providing this benefit, all the Company employees were transferred to CC Services, Inc., and future earned benefits are a part of the overall CC Services, Inc. cost allocation. Life insurance benefits are generally set at a fixed amount and are not significant to the Company’s statutory-basis financial statements.

 

The Company also sponsors a postretirement health plan (the Plan) that covers the Company’s retirees. The Plan provides medical benefits prior to and subsequent to Medicare eligibility. The Plan is contributory, with retiree contributions adjusted when the retiree or spouse becomes eligible for Medicare.

 

The postretirement benefit plan has an accumulated postretirement obligation of $800,000 and $833,000 at December 31, 2025 and 2024, respectively, and no plan assets at both December 31, 2025 and 2024. The plan is underfunded at December 31, 2025 and 2024.

 

The weighted-average assumptions used to determine net periodic benefit costs were 5.44% and 4.87% for the years ended December 31, 2025 and 2024, respectively. The weighted-average assumptions used to determine the projected benefit obligations were 4.97% and 5.44% for the years ended December 31, 2025 and 2024, respectively.

 

The Company does not have any regulatory contribution requirements for 2025 and currently does not intend to make voluntary contributions to the Plan for 2025 in the following calendar year.

 

11. Capital and Surplus

 

Life/health insurance companies are subject to certain RBC requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life/health insurance company is to be determined based on the various risk factors related to it. At December 31, 2025, the Company meets the RBC requirements.

 

The payment of dividends by the Company to IAHC is limited and can only be made from earned profits unless prior approval is received from the Department. The maximum amount of dividends that may be paid by the Company without prior approval of the Department is also subject to restrictions relating to statutory surplus and net income.

 

The Company paid dividends to IAHC totaling $32,000,000 and $21,200,000 on May 7, 2025 and May 7, 2024, respectively.

 

COUNTRY Life/Health Group

 

Notes to Combined Statutory-Basis Financial Statements (continued)

 

12. Commitments and Contingencies

 

In the normal course of business, the Company is involved in policy-related and non-policy-related litigation. In the opinion of the Company’s management, based on the advice of counsel, any potential settlements are either adequately provided for in the accompanying combined statutory-basis financial statements or would not have a material impact on the statutory-basis financial statements.

 

In accordance with the terms of its investments in certain joint ventures, the Company has given a commitment to provide $321,744,000 and $194,132,000 of additional capital contributions at December 31, 2025 and 2024, respectively.

 

In connection with the service agreement with CC Services, Inc., the Company has given a guarantee on credit agreements held by CC Services, Inc. from Commerce Bank for the total amount of extensions of credit outstanding at the time the request for payment is made, not to exceed the limit of $2,980,000.

 

13. Subsequent Events and Reconciliation to Statutory Annual Statement

 

The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the balance sheet dates. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Company is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made.

 

CC Services, Inc. gave notice to the Company of its intent to borrow $25,000,000 on its credit agreement with the Company on April 17, 2026. This was subsequently settled on April 21, 2026.

 

Management has evaluated subsequent events through the issuance of these financial statements on April 23, 2026, and has determined that there have been no other events or transactions that have occurred during this period that materially impacted the amounts or disclosures in the Company’s financial statements.