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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
1
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
2
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
3
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.
4
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.
5
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.
6
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.
7
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.
8
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.
9
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.
10
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.
11
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.
12
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:
13
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.
14
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.
15
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 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
16
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 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
17
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 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
18
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 | ||
19
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 | ||||||
20
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 | ||||||
21
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 | ||
22
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.
23
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.
24
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.
25
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 | ||||||||||||
26
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 | ||||||||
27
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 | ||||
28
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 | ||||||||
29
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 | ||||||||||||||||||
30
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 | ||||||||||||||||||
31
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 | ||||||||||||
32
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).
33
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.
34
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.
35
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.
36
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 | ||||
37
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.
38
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 | |||||||||
39
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 | ||||||||
40
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.
41
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. |
42
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 | ||||||||
43
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.
44
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.
45
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 | |||||||||||||||
46
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 | |||||||||||||||
47
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 | ||||||||||
48
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.
49
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 | |||||||
50
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.
51
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 | ||||||
52
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 | ||||
53
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 | ||||
54
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.
55
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.
56
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.
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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.
58
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.
59
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.
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