[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) This section provides essential identification details for Atlantic American Corporation's Quarterly Report on Form 10-Q, including stock listing, filing status, and common stock outstanding [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the essential identification details for Atlantic American Corporation's Quarterly Report on Form 10-Q for the period ended June 30, 2025, including its stock listing, filing status, and common stock outstanding - Registrant: ATLANTIC AMERICAN CORPORATION, incorporated in Georgia, with IRS Employer Identification No. **58-1027114**[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value $1.00 per share | AAME | NASDAQ Global Market | - The registrant is a Non-accelerated filer and a Smaller reporting company[4](index=4&type=chunk) - Total number of Common Stock shares outstanding on July 31, 2025, was **20,397,228**[4](index=4&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing that actual results may differ materially and the Company disclaims any obligation to update them [Disclaimer on Forward-Looking Statements](index=3&type=section&id=Disclaimer%20on%20Forward-Looking%20Statements) The report contains forward-looking statements subject to various risks and uncertainties, including macroeconomic conditions, industry developments, and regulatory changes. Actual results may differ materially, and the Company disclaims any obligation to update these statements - Forward-looking statements are subject to inherent risks and uncertainties, many beyond the Company's control, and actual results may differ materially[9](index=9&type=chunk) - Key risk factors include macroeconomic conditions, health care/insurance industry developments, financial market disruptions, claim rate increases, internal control weaknesses, reinsurance performance, and regulatory changes[9](index=9&type=chunk) - The Company undertakes no obligation to publicly update any forward-looking statements, except as required by law[9](index=9&type=chunk) [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents Atlantic American Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Atlantic American Corporation, including balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :------------------------------------ | :------------ | :---------------- | :-------------------- | | Total assets | $429,339 | $393,428 | +$35,911 | | Cash and cash equivalents | $46,423 | $35,570 | +$10,853 | | Total investments | $233,859 | $230,126 | +$3,733 | | Insurance premiums and other receivables | $50,242 | $27,458 | +$22,784 | | Total liabilities | $323,171 | $293,815 | +$29,356 | | Total insurance reserves and policyholder funds | $255,513 | $225,106 | +$30,407 | | Total shareholders' equity | $106,168 | $99,613 | +$6,555 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the Company's financial performance, reporting revenues, benefits, expenses, and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $55,290 | $47,668 | $105,415 | $94,665 | | Total benefits and expenses | $51,074 | $48,517 | $100,164 | $98,020 | | Income (loss) before income taxes | $4,216 | $(849) | $5,251 | $(3,355) | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Net income (loss) applicable to common shareholders | $3,216 | $(784) | $3,919 | $(2,881) | | Earnings (loss) per common share (basic) | $0.16 | $(0.04) | $0.19 | $(0.14) | | Earnings (loss) per common share (diluted) | $0.15 | $(0.04) | $0.19 | $(0.14) | - Total revenue increased by **$7.6 million (15.9%)** for the three months ended June 30, 2025, and by **$10.75 million (11.4%)** for the six months ended June 30, 2025, compared to the prior year periods[15](index=15&type=chunk) - The Company reported a net income of **$3.316 million** for the three months ended June 30, 2025, a significant improvement from a net loss of **$0.684 million** in the prior year period[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the Company's comprehensive income (loss), including net income and other comprehensive income (loss), for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Total other comprehensive income (loss), net of tax | $567 | $(1,348) | $3,045 | $(3,314) | | Total comprehensive income (loss) | $3,883 | $(2,032) | $7,163 | $(5,996) | - Total comprehensive income for the six months ended June 30, 2025, was **$7.163 million**, a substantial increase from a loss of $5.996 million in the comparable prior year period, driven by improved net income and positive other comprehensive income[18](index=18&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in shareholders' equity, including retained earnings, accumulated other comprehensive loss, and common stock transactions, for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Shareholders' Equity Highlights (In thousands) | Metric | Balance, beginning of period (Six Months Ended June 30, 2025) | Balance, end of period (Six Months Ended June 30, 2025) | Balance, beginning of period (Six Months Ended June 30, 2024) | Balance, end of period (Six Months Ended June 30, 2024) | | :------------------------------------ | :---------------------------------------------------------- | :-------------------------------------------------------- | :---------------------------------------------------------- | :-------------------------------------------------------- | | Retained earnings | $45,854 | $49,366 | $50,929 | $47,641 | | Accumulated other comprehensive loss | $(18,712) | $(15,667) | $(16,121) | $(19,435) | | Total shareholders' equity | $99,613 | $106,168 | $100,672 | $100,672 | | Dividends declared on common stock per share | $0.02 | $0.02 | $0.02 | $0.02 | | Common shares outstanding (end of period) | 20,399,758 | 20,397,228 | 20,402,288 | 20,399,758 | - Total shareholders' equity increased by **$6.555 million** from December 31, 2024, to June 30, 2025, primarily due to net income and an improvement in accumulated other comprehensive loss[13](index=13&type=chunk)[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $8,556 | $(4,903) | | Net cash provided by (used in) investing activities | $2,708 | $(2,771) | | Net cash (used in) provided by financing activities | $(411) | $586 | | Net increase (decrease) in cash and cash equivalents | $10,853 | $(7,088) | | Cash and cash equivalents at end of period | $46,423 | $21,213 | - Net cash provided by operating activities significantly improved to **$8.556 million** for the six months ended June 30, 2025, compared to a net cash used of **$4.903 million** in the prior year, driven by net income and an increase in insurance reserves[22](index=22&type=chunk) - Cash and cash equivalents increased by **$10.853 million**, reaching **$46.423 million** at June 30, 2025, primarily due to positive cash flows from operating and investing activities[22](index=22&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context and detail for the unaudited condensed consolidated financial statements, covering the basis of presentation, significant accounting policies, recent accounting standards, and specific financial instrument details, credit loss allowances, software capitalization, insurance reserves, credit arrangements, earnings per share, income taxes, leases, commitments, and segment information [Note 1. Basis of Presentation and Significant Accounting Policies](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes the basis of financial statement preparation, key accounting policies, and the Company's operating subsidiaries - The Company's primary operating subsidiaries are American Southern Insurance Company (property and casualty) and Bankers Fidelity Life Insurance Company (life and health)[23](index=23&type=chunk) - Financial statements are prepared in accordance with GAAP for interim financial information, with all adjustments considered necessary for fair presentation[23](index=23&type=chunk) - The One Big Beautiful Bill Act of 2025 (OBBBA), enacted July 4, 2025, is not expected to have a material impact on the Company's financials[25](index=25&type=chunk) [Note 2. Recently Issued Accounting Standards](index=9&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Standards) This note discusses the impact and expected adoption of new accounting standards, particularly ASU No. 2018-12, on the Company's financial statements - ASU No. 2018-12, 'Targeted Improvements to the Accounting for Long-Duration Contracts,' is effective for annual periods beginning after December 15, 2024, and interim periods beginning after December 15, 2025[26](index=26&type=chunk) - The Company expects its Life, Medicare supplement, and certain individual Accident and Health products to be within the scope of ASU 2018-12[26](index=26&type=chunk) - The Company has completed actuarial model development and is testing, expecting a **material impact** on consolidated financial statements upon adoption using the modified retrospective method[26](index=26&type=chunk) [Note 3. Investments](index=11&type=section&id=Note%203.%20Investments) This note provides detailed information on the Company's investment portfolio, including fixed maturities, equity securities, and unrealized gains/losses Fixed Maturities at Fair Value (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------ | :---------------- | | U.S. Treasury securities and obligations of U.S. Government agencies and authorities | $24,251 | $22,251 | | Loan backed and structured securities | $22,209 | $22,290 | | Obligations of states and political subdivisions | $7,318 | $7,623 | | Corporate securities | $159,339 | $160,261 | | Redeemable preferred stocks | $206 | $187 | | Total fixed maturities | $213,323 | $212,612 | Equity Securities at Fair Value (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Financial services | $1,240 | $1,149 | | Communications | $10,040 | $6,751 | | Total equity securities | $11,280 | $7,900 | - Unrealized losses on fixed maturity securities are primarily due to general market changes in interest rates and credit spreads, not specific credit concerns, and the Company does not intend to sell these before recovery of amortized cost[35](index=35&type=chunk)[38](index=38&type=chunk) - Net realized investment gains were **$16 thousand** for both the three and six months ended June 30, 2025, consistent with the prior year periods[41](index=41&type=chunk)[42](index=42&type=chunk) - The Company holds passive interests in Variable Interest Entities (VIEs) totaling **$7.562 million** as of June 30, 2025, with maximum loss exposure limited to carrying value and outstanding commitments of **$2.2 million**[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 4. Fair Values of Financial Instruments](index=15&type=section&id=Note%204.%20Fair%20Values%20of%20Financial%20Instruments) This note outlines the fair value hierarchy and categorization of financial instruments, detailing their measurement at fair value - The Company categorizes financial instruments measured at fair value into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Financial Instruments Carried at Fair Value (In thousands) | Asset Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :--------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Fixed maturities | $— | $213,323 | $— | $213,323 | | Equity securities | $11,087 | $— | $193 | $11,280 | | Cash equivalents | $28,421 | $— | $— | $28,421 | | Total | $39,508 | $213,323 | $193 | $253,024 | - The Company had no transfers into or out of Level 3 for the six months ended June 30, 2025, or the year ended December 31, 2024[51](index=51&type=chunk) [Note 5. Allowance for Expected Credit Losses](index=18&type=section&id=Note%205.%20Allowance%20for%20Expected%20Credit%20Losses) This note details the allowances for expected credit losses on reinsurance recoverables and insurance premiums and other receivables Reinsurance Recoverables Allowance for Expected Credit Losses (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance, beginning of period | $51 | $61 | | Current period change for expected credit losses | $(8) | $(7) | | Balance, end of period | $43 | $54 | Insurance Premiums and Other Receivables Allowance for Expected Credit Losses (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- |\n| Balance, beginning of period | $201 | $217 | | Current period change for expected credit losses | $(7) | $2 | | Balance, end of period | $194 | $219 | [Note 6. Internal-Use Software](index=20&type=section&id=Note%206.%20Internal-Use%20Software) This note describes the capitalization of internal-use software implementation costs and the expected timing of amortization - The Company renewed a cloud-based software service (SaaS) hosting arrangement in March 2024 for an additional five years[56](index=56&type=chunk) - Capitalized implementation costs for the software totaled **$4.714 million** as of June 30, 2025, with **$39 thousand** incurred during the six months ended June 30, 2025[57](index=57&type=chunk) - Amortization expense has not yet been recorded as the software is expected to be substantially ready for its intended use in the second half of 2025[57](index=57&type=chunk) [Note 7. Insurance Reserves for Losses and Claims](index=20&type=section&id=Note%207.%20Insurance%20Reserves%20for%20Losses%20and%20Claims) This note provides a roll-forward of insurance reserves for losses and claims, detailing incurred and paid amounts and prior accident year development Roll-forward of Insurance Reserves for Losses and Claims (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Beginning insurance reserves for losses and claims, net | $76,317 | $72,800 | | Total incurred | $60,803 | $59,680 | | Total paid | $52,313 | $59,421 | | Ending insurance reserves for losses and claims, net | $84,807 | $73,059 | | Ending insurance reserves for losses and claims, gross | $101,759 | $90,624 | - Prior accident year development was **favorable by $2.543 million** for the six months ended June 30, 2025, primarily due to the Medicare supplement line of business, partially offset by unfavorable development in automobile liability[58](index=58&type=chunk) - Total insurance benefits and losses incurred increased to **$65.560 million** for the six months ended June 30, 2025, from **$63.732 million** in the prior year[58](index=58&type=chunk) [Note 8. Credit Arrangements](index=21&type=section&id=Note%208.%20Credit%20Arrangements) This note details the Company's credit facilities, including the revolving credit agreement and junior subordinated debentures, and their associated terms - The Revolving Credit Agreement with Truist Bank was amended in March 2024, extending maturity to March 22, 2027, and updating interest rates to Adjusted Term SOFR plus 2.00%[59](index=59&type=chunk) - Outstanding borrowings under the revolving credit facility were **$4.021 million** as of June 30, 2025, with an effective interest rate of **6.43%**[60](index=60&type=chunk)[61](index=61&type=chunk) - Junior Subordinated Debentures totaling **$33.738 million** mature in 2032 and 2033, with interest rates based on 3-month SOFR plus applicable tenor spread and margin (effective rate **8.64%** at June 30, 2025)[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 9. Earnings (Loss) Per Common Share](index=23&type=section&id=Note%209.%20Earnings%20(Loss)%20Per%20Common%20Share) This note presents the calculation of basic and diluted earnings (loss) per common share for the reported periods Earnings (Loss) Per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net income (loss) applicable to common shareholders (in thousands) | $3,919 | $(2,881) | | Weighted average shares (in thousands) | 20,398 | 20,401 | | Basic EPS | $0.19 | $(0.14) | | Diluted EPS | $0.19 | $(0.14) | - The assumed conversion of Series D preferred stock was excluded from EPS calculation for the three and six months ended June 30, 2024, due to its antidilutive impact[69](index=69&type=chunk) [Note 10. Income Taxes](index=24&type=section&id=Note%2010.%20Income%20Taxes) This note details the Company's income tax expense (benefit), including federal tax provision and current/deferred components Income Tax Expense (Benefit) (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Federal income tax provision at statutory rate of 21% | $886 | $(179) | $1,103 | $(705) | | Income tax expense (benefit) | $900 | $(165) | $1,133 | $(673) | | Current – Federal | $273 | $— | $273 | $— | | Deferred – Federal | $627 | $(165) | $860 | $(673) | - The Company recorded an income tax expense of **$1.133 million** for the six months ended June 30, 2025, a significant change from a benefit of **$0.673 million** in the prior year[70](index=70&type=chunk) [Note 11. Leases](index=24&type=section&id=Note%2011.%20Leases) This note provides information on the Company's operating lease agreements, lease expense, and related right-of-use assets and liabilities - The Company has two operating lease agreements for office space, with one amended in December 2024 to increase base rent and provide for future adjustments[71](index=71&type=chunk) - Lease expense for the six months ended June 30, 2025, was **$569 thousand**, up from **$507 thousand** in the prior year[73](index=73&type=chunk) Lease Information (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :--------- | :--------- | | Right-of-use assets (in thousands) | $4,880 | $2,196 | | Weighted average discount rate | 7.9% | 6.8% | | Weighted average remaining lease term | 7.4 years | 2.4 years | - Total undiscounted lease payments amount to **$7.203 million**, resulting in an operating lease liability of **$4.983 million** as of June 30, 2025[74](index=74&type=chunk) [Note 12. Commitments and Contingencies](index=25&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note addresses the Company's commitments and contingencies, including litigation and regulatory matters - Management believes that current litigation and regulatory matters are not expected to have a **material effect** on the Company's financial condition or results of operations[75](index=75&type=chunk)[76](index=76&type=chunk) [Note 13. Segment Information](index=25&type=section&id=Note%2013.%20Segment%20Information) This note provides financial information by operating segment, including assets, revenue, and income (loss) before income taxes - The Company operates in two principal business units: American Southern (property and casualty) and Bankers Fidelity (life and health), each evaluated on individual performance[77](index=77&type=chunk) - The Chief Operating Decision Maker (CODM) reviews income (loss) before income taxes to assess segment profitability, with significant expenses including insurance benefits and losses incurred, and commissions and underwriting[78](index=78&type=chunk) Segment Assets (In thousands) | Segment | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | American Southern | $174,390 | $147,214 | | Bankers Fidelity | $222,696 | $210,819 | Segment Revenue (In thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | American Southern | $41,653 | $37,384 | | Bankers Fidelity | $63,590 | $57,374 | | Corporate, Other and Eliminations | $172 | $(93) | | Total revenue | $105,415 | $94,665 | Segment Income (Loss) Before Income Taxes (In thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | American Southern | $1,560 | $2,258 | | Bankers Fidelity | $8,307 | $(92) | | Corporate, Other and Eliminations | $(4,616) | $(5,521) | | Total income (loss) before income taxes | $5,251 | $(3,355) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition for the three and six months ended June 30, 2025, highlighting key revenue and expense drivers, segment-specific results, investment performance, and liquidity. It also includes a reconciliation of GAAP net income to non-GAAP operating income [Overview](index=28&type=section&id=Overview) This section provides an overview of Atlantic American Corporation's business structure and operating subsidiaries - Atlantic American Corporation is an insurance holding company operating through American Southern (property and casualty) and Bankers Fidelity (life and health) subsidiaries[84](index=84&type=chunk) - Each operating company is managed separately, offers different products, and is evaluated on its individual performance[84](index=84&type=chunk) [Critical Accounting Policies](index=28&type=section&id=Critical%20Accounting%20Policies) This section discusses the critical accounting policies and estimates used in preparing the financial statements - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures[85](index=85&type=chunk) - Critical accounting policies are consistent with those disclosed in the 2024 Annual Report, except as noted in Note 1 of the Condensed Consolidated Financial Statements[85](index=85&type=chunk) [Overall Corporate Results](index=28&type=section&id=Overall%20Corporate%20Results) This section summarizes the Company's overall financial performance, including total revenue, net income, and non-GAAP operating income Overall Corporate Financial Results (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $55,290 | $47,668 | $105,415 | $94,665 | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Non-GAAP operating income (loss) | $1,591 | $(1,105) | $1,859 | $(3,497) | - Net income for the three months ended June 30, 2025, was **$3.3 million** (**$0.15 diluted EPS**), a significant improvement from a net loss of **$0.7 million** (**$0.04 diluted EPS**) in the prior year[88](index=88&type=chunk) - Premium revenue increased by **$5.2 million (11.5%)** for the three months and **$7.5 million (8.4%)** for the six months ended June 30, 2025, driven by growth in inland marine, automobile physical damage, Medicare supplement, and group accident and health lines[89](index=89&type=chunk) - Operating income increased by **$2.7 million** for the three months and **$5.4 million** for the six months ended June 30, 2025, primarily due to increased premium revenue in key business lines[90](index=90&type=chunk) [American Southern Segment Analysis](index=30&type=section&id=American%20Southern%20Segment%20Analysis) This section analyzes the underwriting performance of the American Southern segment, including premiums, loss ratio, and expense ratio American Southern Underwriting Performance (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross written premiums | $52,285 | $36,499 | $61,621 | $44,969 | | Net earned premiums | $21,141 | $17,544 | $39,472 | $35,422 | | Underwriting income (loss) | $(216) | $(231) | $(621) | $296 | | Loss ratio | 75.7% | 81.1% | 77.5% | 76.3% | | Expense ratio | 25.3% | 20.2% | 24.0% | 22.8% | | Combined ratio | 101.0% | 101.3% | 101.5% | 99.1% | - Gross written premiums increased significantly by **43.3%** for the three months and **37.0%** for the six months ended June 30, 2025, driven by growth in automobile liability, inland marine, and automobile physical damage lines[93](index=93&type=chunk) - Net earned premiums increased by **20.5%** for the three months and **11.4%** for the six months ended June 30, 2025, primarily due to inland marine and automobile liability/physical damage[95](index=95&type=chunk) - The loss ratio decreased to **75.7%** for the three months ended June 30, 2025, due to premium growth exceeding incurred losses, but increased to **77.5%** for the six months due to higher losses in automobile physical damage and inland marine[97](index=97&type=chunk) - The expense ratio increased for both periods, primarily due to higher variable commissions resulting from favorable loss experience[98](index=98&type=chunk) [Bankers Fidelity Segment Analysis](index=33&type=section&id=Bankers%20Fidelity%20Segment%20Analysis) This section analyzes the underwriting performance of the Bankers Fidelity segment, including premiums, loss ratio, and expense ratio Bankers Fidelity Underwriting Performance (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross earned premiums | $43,774 | $40,554 | $86,418 | $80,357 | | Net earned premiums | $29,005 | $27,449 | $57,587 | $54,123 | | Underwriting income (loss) | $1,783 | $(560) | $2,304 | $(3,344) | | Loss ratio | 60.8% | 64.0% | 60.7% | 67.8% | | Expense ratio | 33.1% | 38.0% | 35.3% | 38.4% | | Combined ratio | 93.9% | 102.0% | 96.0% | 106.2% | - Gross earned premiums increased by **7.9%** for the three months and **7.5%** for the six months ended June 30, 2025, driven by new business in Medicare supplement and group accident and health[99](index=99&type=chunk) - Net earned premiums increased by **5.7%** for the three months and **6.4%** for the six months ended June 30, 2025, primarily from Medicare supplement, group accident and health, and other individual accident and health lines[101](index=101&type=chunk) - The loss ratio decreased for both periods (**60.8%** and **60.7%** respectively), primarily due to lower utilization within the Medicare supplement line of business[102](index=102&type=chunk) - The expense ratio decreased for both periods (**33.1%** and **35.3%** respectively), mainly due to premium growth coupled with lower variable expenses in group lines of business[103](index=103&type=chunk)[104](index=104&type=chunk) [Net Investment Income and Realized Gains](index=35&type=section&id=Net%20Investment%20Income%20and%20Realized%20Gains) This section details changes in net investment income and realized investment gains for the reported periods - Net investment income increased by **$0.1 million (4.1%)** for the three months ended June 30, 2025, primarily due to increased equity in earnings from limited partnerships and limited liability companies[105](index=105&type=chunk) - Net realized investment gains were **less than $0.1 million** for both the three and six months ended June 30, 2025, consistent with prior periods, resulting from sales and redemptions of fixed maturity securities[106](index=106&type=chunk) [Unrealized Gains on Equity Securities](index=35&type=section&id=Unrealized%20Gains%20on%20Equity%20Securities) This section discusses the recognition of net unrealized gains on equity securities due to market value fluctuations - The Company recognized net unrealized gains on equity securities of **$2.6 million** for the three months and **$3.4 million** for the six months ended June 30, 2025, significantly higher than the prior year periods[107](index=107&type=chunk) - These gains are attributed to fluctuations in the market value of the Company's equity securities[107](index=107&type=chunk) [Interest Expense](index=35&type=section&id=Interest%20Expense) This section explains the changes in interest expense related to the Company's credit arrangements - Interest expense decreased by **$0.1 million (10.8%)** for the three months and **$0.2 million (10.2%)** for the six months ended June 30, 2025[108](index=108&type=chunk) - The decrease is primarily due to changes in the Secured Overnight Financing Rate (SOFR), which is the reference rate for the Company's junior subordinated debentures and revolving credit facility[108](index=108&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's liquidity position, cash needs, funding sources, and capital resources - Primary cash needs are for claims, operating expenses, statutory capital, and debt service, funded by premiums, investment income, and asset sales[109](index=109&type=chunk) - The Parent's cash flows are derived from dividends, management fees, and tax-sharing payments from subsidiaries[110](index=110&type=chunk) - Statutory net income for insurance subsidiaries was **$4.7 million** for the six months ended June 30, 2025, compared to a **$0.4 million loss** in the prior year[111](index=111&type=chunk) - The Parent received **$4.2 million** in dividends from subsidiaries through June 30, 2025, with dividend payments in excess of **$6.3 million** requiring prior approval in 2025[112](index=112&type=chunk) - Cash and cash equivalents increased from **$35.6 million** at December 31, 2024, to **$46.4 million** at June 30, 2025, primarily due to **$8.6 million** from operating activities and **$2.7 million** from investing activities[120](index=120&type=chunk) - The Company believes existing cash, subsidiary payments, and credit facilities will meet liquidity requirements for the foreseeable future[121](index=121&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, remediation efforts for material weaknesses, and inherent limitations of internal controls [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to an unremediated material weakness in internal control over financial reporting - Disclosure controls and procedures were deemed **not effective** as of June 30, 2025, due to an unremediated material weakness[124](index=124&type=chunk) [Remediation of Material Weakness in Internal Control Over Financial Reporting](index=39&type=section&id=Remediation%20of%20Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) The Company is actively remediating a material weakness related to the design of controls for reviewing insurance reserves and deferred acquisition costs within its life and health segment. Significant progress has been made, including independent calculations and system development, with full implementation expected by September 30, 2025 - A material weakness was identified in the design of controls for reviewing insurance reserves and deferred acquisition costs in the life and health segment[126](index=126&type=chunk) - Remediation efforts are ongoing, including systematic review of underwriting income components and independent actuarial value calculations for Life and Medicare Supplement products[128](index=128&type=chunk) - A system to perform independent calculations and verify product parameters is being developed, with implementation for individual life and Medicare Supplement products completed in Q2 2025, and full operationalization for other product lines expected by **September 30, 2025**[129](index=129&type=chunk) - Despite deficiencies, management believes the material weakness did not result in any identified material misstatements to financial statements[127](index=127&type=chunk) [Changes in Internal Control Over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Aside from the ongoing remediation efforts for the identified material weakness, there were no other material changes to the Company's internal control over financial reporting during the quarter ended June 30, 2025 - No other changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the Company's internal control during the quarter ended June 30, 2025, beyond the described remediation efforts[130](index=130&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=40&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) The Company acknowledges that no system of controls can provide absolute assurance of meeting objectives or detecting all control issues and fraud, due to inherent limitations - No system of controls, regardless of design, can provide absolute assurance that all objectives are met or that all control issues and fraud are detected[131](index=131&type=chunk) [Part II. Other Information](index=41&type=section&id=Part%20II.%20Other%20Information) This part includes information on unregistered sales of equity securities, other disclosures, and a list of exhibits filed with the Form 10-Q [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company has an approved share repurchase plan, but no common stock was repurchased during the three months ended June 30, 2025 - The Board of Directors approved a plan on October 31, 2016, to repurchase up to **750,000 shares** of common stock[133](index=133&type=chunk) - No common stock was purchased under the Repurchase Plan during the three months ended June 30, 2025[134](index=134&type=chunk)[135](index=135&type=chunk) - As of June 30, 2025, **325,129 shares** may yet be purchased under the Repurchase Plan[134](index=134&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by the Company's directors or officers during the quarter ended June 30, 2025 - None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[136](index=136&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications required by the Sarbanes-Oxley Act and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[137](index=137&type=chunk) [Signatures](index=42&type=section&id=Signatures) This section contains the authorized signatures for the Form 10-Q report [Authorized Signatures](index=42&type=section&id=Authorized%20Signatures) The report is duly signed on behalf of Atlantic American Corporation by its Vice President and Chief Financial Officer, J. Ross Franklin - The report was signed on **August 12, 2025**, by J. Ross Franklin, Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Atlantic American Corporation[139](index=139&type=chunk)[140](index=140&type=chunk)

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Atlantic American Corporation shifted from net losses in 2024 to net income in Q2 and H1 2025, driven by increased premium revenue and unrealized gains on equity securities Consolidated Financial Performance (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss) (in millions)** | $3.3 | ($0.7) | $4.1 | ($2.7) | | **Diluted EPS (in dollars)** | $0.15 | ($0.04) | $0.19 | ($0.14) | Operating Income Growth (in millions) | Period | Increase in Operating Income (in millions) | | :--- | :--- | | **Three Months Ended June 30, 2025** | $2.7 | | **Six Months Ended June 30, 2025** | $5.4 | - The increase in net income was primarily the result of increases in premium revenue, coupled with an increase in unrealized gains on equity securities[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed satisfaction with strong earned premium growth across all segments, attributing success to new business and high retention, and anticipates sustained profitable growth - Both property & casualty and life & health segments delivered **strong earned premium growth**, supported by new business momentum and retention of existing contracts[4](index=4&type=chunk) - The company believes it is well-positioned to deliver **sustained, profitable growth** and drive **long-term value creation** for shareholders in the second half of the year[4](index=4&type=chunk) [Business Segment Performance](index=1&type=section&id=Business%20Segment%20Performance) Both Life & Health and Property & Casualty segments contributed to growth, with operating income driven by specific lines and significant year-over-year premium increases - Operating income growth was primarily driven by the inland marine line of business in property and casualty, and the Medicare supplement and group accident and health lines in life and health operations[3](index=3&type=chunk) Net Insurance Premiums by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Life and health (in thousands)** | $29,005 | $27,449 | $57,587 | $54,123 | | **Property and casualty (in thousands)** | $21,141 | $17,544 | $39,472 | $35,422 | | **Total (in thousands)** | **$50,146** | **$44,993** | **$97,059** | **$89,545** | [Detailed Financial Statements](index=3&type=section&id=Detailed%20Financial%20Statements) This section presents unaudited financial data for Q2 and H1 2025, including consolidated statements of operations, selected balance sheet data, and non-GAAP operating income reconciliation [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue increased to **$55.3 million**, driven by higher net insurance premiums and unrealized gains on equity securities, resulting in **$3.3 million** net income Q2 2025 vs Q2 2024 Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total Revenue (in thousands)** | $55,290 | $47,668 | | **Total Benefits and Expenses (in thousands)** | $51,074 | $48,517 | | **Income (Loss) Before Income Taxes (in thousands)** | $4,216 | ($849) | | **Net Income (Loss) (in thousands)** | $3,316 | ($684) | [Selected Balance Sheet Data](index=3&type=section&id=Selected%20Balance%20Sheet%20Data) As of June 30, 2025, the company's financial position strengthened with total assets at **$429.3 million** and book value per common share improving to **$4.94** Balance Sheet Highlights (in thousands, except per share data) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets (in thousands)** | $429,339 | $393,428 | | **Total Shareholders' Equity (in thousands)** | $106,168 | $99,613 | | **Book Value Per Common Share (in dollars)** | $4.94 | $4.61 | [Reconciliation of Non-GAAP Financial Measure](index=1&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measure) Non-GAAP operating income, used to assess core performance, significantly improved in Q2 2025 to **$1.6 million** from a **$1.1 million** loss in Q2 2024 - Operating income (loss) is a non-GAAP measure defined as net income (loss) excluding income tax, realized investment gains/losses, and unrealized gains/losses on equity securities[5](index=5&type=chunk) Reconciliation to Non-GAAP Operating Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss) (in thousands)** | $3,316 | ($684) | $4,118 | ($2,682) | | **Non-GAAP Operating Income (Loss) (in thousands)** | $1,591 | ($1,105) | $1,859 | ($3,497) | [Important Disclosures](index=1&type=section&id=Important%20Disclosures) This section provides crucial context, explaining the non-GAAP operating income measure and including a forward-looking statements disclaimer regarding potential risks and uncertainties - The company presents the non-GAAP measure of operating income (loss) to isolate 'core' operating results from items like taxes and investment gains/losses, which management believes are beyond its control or not part of primary operations[5](index=5&type=chunk) - The report contains forward-looking statements that are subject to risks and uncertainties, including macroeconomic conditions, regulatory changes, market disruption, cybersecurity matters, and other factors detailed in SEC filings[6](index=6&type=chunk)

Core Insights - Atlantic American Corporation reported a net income of $3.3 million, or $0.15 per diluted share, for Q2 2025, a significant improvement from a net loss of $0.7 million, or ($0.04) per diluted share, in Q2 2024 [1] - For the first half of 2025, the company achieved a net income of $4.1 million, or $0.19 per diluted share, compared to a net loss of $2.7 million, or ($0.14) per diluted share, in the same period of 2024 [1] - The increase in net income was primarily driven by higher premium revenue and unrealized gains on equity securities [1] Financial Performance - Operating income rose by $2.7 million in Q2 2025 compared to Q2 2024, and by $5.4 million for the first half of 2025 compared to the same period in 2024 [2] - The growth in operating income was attributed to increased premium revenue in the inland marine line of business and growth in Medicare supplement and group accident and health lines [2] - Total revenue for Q2 2025 was $55.29 million, up from $47.67 million in Q2 2024, while total revenue for the first half of 2025 was $105.42 million, compared to $94.67 million in the same period of 2024 [8] Business Segments - The property and casualty segment and life and health segment both experienced strong earned premium growth, supported by new business momentum and retention of existing contracts [3] - Insurance premiums for life and health increased to $29.01 million in Q2 2025 from $27.45 million in Q2 2024, and for property and casualty, premiums rose to $21.14 million from $17.54 million in the same period [8] - The company’s diversified product offerings contributed to the resilience of its business model and growth strategy [3] Balance Sheet Highlights - As of June 30, 2025, total assets were $429.34 million, up from $393.43 million at the end of 2024 [9] - Total cash and investments increased to $280.28 million from $265.70 million [9] - Total shareholders' equity rose to $106.17 million from $99.61 million, with a book value per common share of $4.94 compared to $4.61 [9]

Revenue and Income - For the three months ended March 31, 2025, total revenue increased to $50.1 million, up 4.8% from $47.0 million in the same period of 2024[79]. - Net income for the first quarter of 2025 was $0.8 million, or $0.03 per diluted share, compared to a net loss of $2.0 million, or $(0.10) per diluted share, in the first quarter of 2024[80]. - Premium revenue increased by $2.4 million, or 5.3%, to $46.9 million in Q1 2025, driven by growth in group accident and health, individual health, and Medicare supplement lines[81]. - Operating income rose by $2.7 million in Q1 2025, primarily due to increased premium revenue and favorable loss experience in life and health operations[82]. Premiums and Underwriting - American Southern's gross written premiums increased by $0.9 million, or 10.2%, to $9.3 million in Q1 2025, attributed to new programs in inland marine and automobile physical damage lines[84]. - Bankers Fidelity's gross earned premiums rose by $2.8 million, or 7.1%, to $42.6 million in Q1 2025, mainly from the Medicare supplement line due to new business writings[93]. - The loss ratio for Bankers Fidelity improved to 60.6% in Q1 2025, down from 71.7% in Q1 2024, reflecting lower utilization in the Medicare supplement line[96]. - American Southern's combined ratio was 102.2% in Q1 2025, indicating an underwriting loss, compared to 97.1% in Q1 2024[84]. - Commissions and underwriting expenses at American Southern decreased by $0.4 million, or 8.8%, to $4.1 million in Q1 2025, with an expense ratio of 22.6%[89]. - Net earned premium revenue at Bankers Fidelity increased by $1.9 million, or 7.2%, to $28.6 million in Q1 2025, driven by growth in group accident and health and Medicare supplement lines[95]. - Commissions and underwriting expenses increased by $0.4 million, or 3.9%, for the three-month period ended March 31, 2025, compared to the same period in 2024, with underwriting expenses as a percentage of earned premiums decreasing to 37.6% from 38.8%[97]. Investment and Financial Position - Net investment income decreased by $0.1 million, or 4.5%, during the three-month period ended March 31, 2025, primarily due to a decrease in equity earnings from limited partnerships[98]. - The Company recognized net unrealized gains on equity securities of $0.8 million for the three-month period ended March 31, 2025, compared to unrealized losses of $0.1 million for the same period in 2024[100]. - Interest expense decreased by $0.1 million, or 9.5%, for the three-month period ended March 31, 2025, due to changes in the Secured Overnight Financing Rate (SOFR)[101]. - The Parent's insurance subsidiaries reported statutory net income of $4.3 million for the three-month period ended March 31, 2025, compared to $1.6 million for the same period in 2024[105]. - At March 31, 2025, the Parent had approximately $3.5 million of unrestricted cash and investments[104]. - The Company had outstanding borrowings of $4.0 million under the Revolving Credit Agreement as of March 31, 2025[113]. - Cash and cash equivalents increased from $35.6 million at December 31, 2024, to $35.9 million at March 31, 2025, primarily due to net cash provided by investing activities of $1.1 million[114]. - The Company had $47.6 million of statutory capital and surplus at American Southern and $33.5 million at Bankers Fidelity as of March 31, 2025[106]. - The Company intends to pay obligations under Junior Subordinated Debentures using existing cash balances and potential future financing arrangements[109].

Financial Performance - Atlantic American Corporation reported net income of $0.8 million, or $0.03 per diluted share, for Q1 2025, compared to a net loss of ($2.0) million, or ($0.10) per diluted share, in Q1 2024, marking a significant turnaround [2]. - Premium revenue increased by $2.4 million, or 5.3%, to $46.9 million in Q1 2025 from $44.6 million in Q1 2024, driven by growth in life and health operations [2]. - Operating income for Q1 2025 was $0.3 million, a recovery from an operating loss of ($2.4) million in Q1 2024, attributed to improved premium revenue and favorable loss experience [3]. - Total revenue for Q1 2025 reached $50.1 million, up from $47.0 million in Q1 2024, reflecting a positive trend in overall financial performance [9]. Cost Management - Insurance benefits and losses incurred remained stable at $31.9 million in Q1 2025, slightly down from $31.9 million in Q1 2024, indicating effective cost management [9]. Asset Management - The company’s total assets decreased to $388.4 million as of March 31, 2025, from $393.4 million at the end of 2024, reflecting a strategic focus on asset management [9]. - Book value per common share increased to $4.80 in Q1 2025, up from $4.61 in Q4 2024, indicating improved shareholder equity [9]. - Atlantic American Corporation's total cash and investments rose to $268.4 million as of March 31, 2025, compared to $265.7 million at the end of 2024, showcasing liquidity strength [9]. Future Outlook - The company anticipates that recent rate adjustments in property and casualty operations will positively impact future results, highlighting a proactive approach to market conditions [4]. - The company remains confident in its long-term growth trajectory, particularly in the life and health segments, despite challenges in property and casualty operations [4].

Core Insights - Atlantic American Corporation reported a net income of $0.8 million, or $0.03 per diluted share, for Q1 2025, a significant improvement from a net loss of ($2.0) million, or ($0.10) per diluted share, in Q1 2024 [1][10] - The increase in net income was primarily driven by a $2.4 million, or 5.3%, rise in premium revenue, totaling $46.9 million compared to $44.6 million in the same period last year [1][9] - Operating income for Q1 2025 was $0.3 million, a turnaround from an operating loss of ($2.4) million in Q1 2024, attributed to the same factors of increased premium revenue and favorable loss experience [2][9] Financial Performance - Total revenue for Q1 2025 was $50.1 million, up from $47.0 million in Q1 2024 [9] - Insurance premiums from life and health segments increased to $28.6 million from $26.7 million, while property and casualty premiums rose to $18.3 million from $17.9 million [9] - Total benefits and expenses decreased slightly to $49.1 million from $49.5 million year-over-year [9] Management Commentary - The CEO expressed satisfaction with the quarterly results, highlighting improved profitability and growth in insurance premiums, particularly in life and health segments [3] - The company anticipates that recent rate adjustments in property and casualty operations will positively impact future results [3] - Management remains optimistic about long-term growth opportunities for the company [3] Balance Sheet Highlights - As of March 31, 2025, total cash and investments stood at $268.4 million, a slight increase from $265.7 million at the end of 2024 [10] - Total assets decreased to $388.4 million from $393.4 million [10] - Total shareholders' equity increased to $102.4 million from $99.6 million, with a book value per common share rising to $4.80 from $4.61 [10]

Premiums and Revenue - American Southern's net earned premiums for automobile liability increased to $39,788,000 in 2024 from $38,821,000 in 2023, reflecting a growth of 2.5%[16] - Total net earned premiums for Bankers Fidelity reached $111,042,000 in 2024, slightly up from $110,382,000 in 2023, indicating a growth of 0.6%[22] - Bankers Fidelity's Medicare supplement insurance accounted for 82% of its net earned premiums in 2024, while life insurance represented the remaining 18%[21] - Bankers Fidelity's group life insurance premiums increased to $14,700,000 in 2024 from $12,431,000 in 2023, marking a growth of 18.3%[22] Agent and Market Strategy - The number of licensed agents for Bankers Fidelity was approximately 6,243 as of December 31, 2024, with 1,429 agents actively writing policies during the year[25] - The company emphasizes a marketing strategy based on diversification, with unique product offerings such as Vantage Flex Plus® and Vantage Recovery®[28] - The company actively manages its agent selection process and offers profit-sharing arrangements linked to the profitability of the underlying business[23] Claims and Reserves - Approximately 72% of the losses and claims reserves at December 31, 2024, were related to property and casualty operations, while 28% were related to life and health[42] - Bankers Fidelity's claims processing is efficient, with properly documented claims generally paid within five business days of receipt[41] - The Company maintains loss reserves for claims based on known facts and circumstances, with periodic reviews by independent consulting actuaries[49] - The range of reserve estimates for December 31, 2024, indicated that reserves could be as much as 5.2% lower or as much as 25.0% higher than recorded amounts[48] - American Southern had one IRIS ratio outside the usual range due to adverse reserve developments on prior year claims in the commercial automobile liability line[74] Financial Performance - Bankers Fidelity experienced a net loss for the year, primarily due to federal income taxes, which decreased surplus levels[75] - Bankers Fidelity Life Insurance Company saw capital and surplus fall greater than 10% from 2023 to 2024, primarily due to an extraordinary dividend paid to its parent[76] - The Company's insurance subsidiaries' risk-based capital levels exceeded the required regulatory levels as of December 31, 2024[79] - The Company believes it is in compliance with all regulatory requirements concerning reserve levels and financial practices[67] Investments - Total investments decreased from $237,067 thousand in 2023 to $230,126 thousand in 2024, a decline of approximately 2.0%[81] - Average yield on investments slightly decreased from 3.6% in 2023 to 3.5% in 2024[84] - Net investment income decreased from $10,058 thousand in 2023 to $9,791 thousand in 2024, a decline of about 2.7%[84] - Total fixed maturities accounted for 92.4% of total investments in 2024, up from 92.0% in 2023[81] - The total amortized cost of fixed maturities was $236.3 million in 2024, down from $238.6 million in 2023[81] - The total cost of equity securities remained stable at $4.9 million for both 2024 and 2023[82] - Realized investment gains increased significantly from $70 thousand in 2023 to $1,210 thousand in 2024[84] - Other invested assets increased from $7,000 thousand in 2023 to $7,900 thousand in 2024, a growth of approximately 12.9%[82] - The company focuses on quality and diversification in its investment strategy to improve the risk versus return profile[85] Workforce - The company employed 156 people as of December 31, 2024, with 153 being full-time employees[86] Risk Management - American Southern is licensed to operate in 32 states and the District of Columbia, focusing on tailored commercial automobile insurance for large motor pools and fleets[15] - American Southern maintains a property catastrophe treaty with a limit of $5.5 million excess of $500,000 retention[56]

Financial Performance - Atlantic American Corporation reported a net income of $0.4 million, or $0.02 per diluted share, for Q4 2024, compared to a net loss of $2.2 million, or $(0.11) per diluted share, for Q4 2023[2]. - For the full year 2024, the company had a net loss of $4.3 million, or $(0.23) per diluted share, compared to a net loss of $0.2 million, or $(0.03) per diluted share, for 2023[2]. - The increase in net income for Q4 2024 was primarily due to favorable loss experience in life and health operations, particularly in group life and Medicare supplement lines[2]. - The company experienced unfavorable loss experience in property and casualty operations, particularly in the automobile liability line, contributing to the annual net loss[2]. - The non-GAAP operating loss for the year was $(4.958) million, compared to an operating income of $1.542 million in 2023[8]. Revenue and Premiums - Insurance premiums for life and health increased to $29.351 million in Q4 2024 from $26.138 million in Q4 2023, while property and casualty premiums decreased to $16.053 million from $16.781 million[8]. - Total revenue for Q4 2024 was $49.043 million, up from $46.745 million in Q4 2023, with total revenue for the year at $188.227 million compared to $186.793 million in 2023[8]. Dividends and Shareholder Equity - The company declared an annual dividend of $0.02 per share, payable on April 23, 2025, to shareholders of record as of April 9, 2025[3]. - The company's total shareholders' equity decreased to $99.613 million in 2024 from $107.275 million in 2023[8]. Assets - Total assets increased to $393.428 million as of December 31, 2024, compared to $381.265 million in 2023[8].

Financial Performance - Atlantic American Corporation reported a net income of $0.4 million, or $0.02 per diluted share, for the three months ended December 31, 2024, compared to a net loss of $2.2 million, or $(0.11) per diluted share, for the same period in 2023 [1] - For the year ended December 31, 2024, the company had a net loss of $4.3 million, or $(0.23) per diluted share, compared to a net loss of $0.2 million, or $(0.03) per diluted share, for the year ended December 31, 2023 [1] - The increase in net income for the fourth quarter was primarily due to favorable loss experience in life and health operations, particularly in group life and Medicare supplement lines [1] Business Segments - The company experienced exceptional new sales in its Medicare supplement business during the fourth quarter annual enrollment period, with strong momentum continuing into the new year [2] - Rising costs in the commercial automobile market have affected profitability, prompting the company to take steps to improve rates for that line of business [2] Revenue and Expenses - Total revenue for the three months ended December 31, 2024, was $49.043 million, compared to $46.745 million for the same period in 2023 [7] - Insurance premiums for life and health increased to $29.351 million in Q4 2024 from $26.138 million in Q4 2023, while property and casualty premiums decreased slightly from $16.781 million to $16.053 million [7] - Total benefits and expenses for the three months ended December 31, 2024, were $48.498 million, down from $49.847 million in the same period in 2023 [7] Dividends and Shareholder Value - The Board of Directors approved an annual dividend of $0.02 per share, payable on April 23, 2025, to shareholders of record as of April 9, 2025 [2] Balance Sheet Highlights - As of December 31, 2024, total assets were $393.428 million, an increase from $381.265 million in 2023 [8] - Total shareholders' equity decreased to $99.613 million from $107.275 million in the previous year [8] - The book value per common share was $4.61, down from $4.99 in 2023 [8]

Financial Performance - For the three-month period ended September 30, 2024, net income was a loss of $1.998 million, or $(0.10) per diluted share, compared to net income of $1.759 million, or $0.08 per diluted share for the same period in 2023[94]. - Total revenue for the three-month period was $44.519 million, slightly down from $44.591 million in the comparable period in 2023[92]. - The Parent's insurance subsidiaries reported statutory net income of $2.0 million for the nine-month period ended September 30, 2024, down from $8.9 million in the same period of 2023[115]. Revenue and Premiums - Premium revenue for the three-month period increased slightly to $43.782 million from $43.746 million in the comparable period in 2023, while for the nine-month period, it decreased by $2.6 million, or 1.9%, to $133.327 million from $135.906 million[95]. - Net earned premium revenue at Bankers Fidelity increased by $0.4 million, or 1.4%, during the three-month period ended September 30, 2024, but decreased by $2.6 million, or 3.0%, for the nine-month period[105]. - Gross earned premiums from the Medicare supplement line decreased by $1.7 million, or 5.2%, for the three-month period and by $7.4 million, or 7.3%, for the nine-month period ended September 30, 2024[105]. Expenses and Losses - Operating income decreased by $4.3 million for the three-month period and by $10.0 million for the nine-month period ended September 30, 2024, primarily due to unfavorable loss experience in life and health operations[96]. - Insurance benefits and losses incurred increased to $30.760 million for the three-month period ended September 30, 2024, compared to $26.818 million for the same period in 2023[92]. - Insurance benefits and losses incurred at American Southern increased by $2.1 million, or 17.7%, for the three-month period ended September 30, 2024, and by $2.9 million, or 7.7%, for the nine-month period[102]. Ratios and Underwriting - The combined ratio for American Southern was 109.8% for the three-month period ended September 30, 2024, indicating an underwriting loss, compared to 97.9% for the same period in 2023[98]. - The loss ratio for the three-month period ended September 30, 2024, was 86.2%, up from 71.7% in the same period of 2023, while for the nine-month period, it increased to 79.5% from 73.7%[102]. - Commissions and underwriting expenses decreased by $0.5 million, or 11.7%, for the three-month period and by $1.0 million, or 7.7%, for the nine-month period ended September 30, 2024[103]. Investments and Unrealized Losses - Unrealized losses on equity securities were $(1.746) million for the three-month period ended September 30, 2024, compared to $(1.486) million for the same period in 2023[92]. - The Company recognized net unrealized losses on equity securities of $1.7 million during the three-month period ended September 30, 2024, compared to $1.5 million in the same period of 2023[111]. - The Company had net realized investment gains of less than $0.1 million during the three-month period ended September 30, 2024, compared to no gains in the same period of 2023[109]. Cash and Liquidity - As of September 30, 2024, the Company had cash and cash equivalents of $23.0 million, down from $28.3 million at December 31, 2023, primarily due to net cash used in operating activities of $4.8 million[124]. - The Company believes existing cash balances and expected dividends will meet liquidity requirements for the foreseeable future[125]. - The Company has access to low-cost funding through its membership in the Federal Home Loan Bank of Atlanta, with credit availability of approximately $8.2 million as of September 30, 2024[121]. Debt and Borrowings - The Company had outstanding borrowings of $4.0 million under its Revolving Credit Agreement as of September 30, 2024, compared to $3.0 million as of December 31, 2023[123]. - The Company has accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million as of September 30, 2024[120]. - The Company has a Revolving Credit Agreement with a maturity date extended to March 22, 2027, and requires maintaining a consolidated net worth of not less than $64.2 million[122]. Internal Controls and Remediation - The Company is in the process of remediating a material weakness in internal control over financial reporting, with remediation efforts ongoing since March 31, 2024[132]. - The Company has implemented a systematic review of underwriting income components for its life products, which includes analytical reports to identify potential anomalies[132]. - The Company is developing a system to perform calculations independently of actuarial models, expected to be operational by December 31, 2024[133]. Stock Repurchase - No common stock purchases were made under the Repurchase Plan during the three-month period ending September 30, 2024, leaving a maximum of 325,129 shares that may yet be purchased[137].