Atlantic American(AAME) - 2025 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2025, net income was $0.6 million, or $0.02 per diluted share, compared to a net loss of $2.0 million, or $(0.10) per diluted share, for the same period in 2024[95]. - For the nine months ended September 30, 2025, net income was $4.7 million, or $0.22 per diluted share, compared to a net loss of $4.7 million, or $(0.24) per diluted share, for the same period in 2024[95]. - Operating income increased by $2.3 million for the three months ended September 30, 2025, compared to the same period in 2024[97]. Revenue Growth - Premium revenue increased by $8.2 million, or 18.7%, to $52.0 million for the three months ended September 30, 2025, compared to $43.8 million in the same period in 2024[96]. - The increase in premium revenue was primarily driven by the automobile liability, inland marine, and automobile physical damage lines of business[96]. - Gross earned premiums increased by $4.7 million, or 11.6%, to $45.6 million for the three months ended September 30, 2025, and by $10.8 million, or 8.9%, to $132.0 million for the nine months ended September 30, 2025, compared to the same periods in 2024[106]. - Net earned premiums increased by $6.3 million, or 38.8%, during the three months ended September 30, 2025, compared to the same period in 2024[102]. - Net earned premiums rose by $1.9 million, or 6.9%, to $29.5 million for the three months ended September 30, 2025, and by $5.4 million, or 6.6%, to $87.1 million for the nine months ended September 30, 2025, over the comparable periods in 2024[108]. Loss and Expense Management - Insurance benefits and losses incurred at American Southern increased by $4.0 million, or 28.4%, for the three months ended September 30, 2025, compared to the same period in 2024[104]. - The loss ratio for American Southern decreased to 79.8% for the three months ended September 30, 2025, from 86.2% in the same period in 2024[104]. - The loss ratio improved to 59.4% for the three months ended September 30, 2025, down from 60.9% in the same period of 2024, and decreased to 60.3% from 65.5% for the nine months ended September 30, 2025[109]. - Commissions and underwriting expenses increased by $0.8 million, or 8.5%, to $10.8 million for the three months ended September 30, 2025, and by $0.4 million, or 1.3%, to $31.2 million for the nine months ended September 30, 2025, compared to the same periods in 2024[110]. Combined Ratio - The combined ratio for American Southern improved to 97.9% for the three months ended September 30, 2025, from 109.8% in the same period in 2024[99]. - The combined ratio remained stable at 96.1% for the three months ended September 30, 2025, compared to the same period in 2024, and improved from 103.1% to 97.1% for the nine months ended September 30, 2025[106]. Investment and Financing - Investment income increased by $0.2 million, or 6.3%, during the three months ended September 30, 2025, while remaining constant for the nine months ended September 30, 2025, compared to the same periods in 2024[112]. - The Company recognized net unrealized losses on equity securities of $0.8 million during the three months ended September 30, 2025, and net unrealized gains of $2.5 million during the nine months ended September 30, 2025[114]. - Interest expense decreased by $0.1 million, or 10.4%, during the three months ended September 30, 2025, and by $0.3 million, or 10.2%, during the nine months ended September 30, 2025, compared to the same periods in 2024[115]. Capital and Liquidity - As of September 30, 2025, the Company had 55,000 shares of Series D Preferred Stock outstanding, with a stated value of $100 per share and annual dividends accruing at a rate of $7.25 per share[124]. - The Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million as of September 30, 2025[124]. - Bankers Fidelity Life Insurance Company has access to credit availability of approximately $9.0 million from the Federal Home Loan Bank of Atlanta as of September 30, 2025[125]. - The Company entered into a Revolving Credit Agreement providing for an unsecured $10.0 million revolving credit facility, which was amended to extend the maturity date to March 22, 2027[126]. - The Credit Agreement requires the Company to maintain a consolidated net worth of not less than $64.2 million[126]. - As of September 30, 2025, the Company had outstanding borrowings of $4.0 million under the Credit Agreement, including accrued interest[127]. - Cash and cash equivalents decreased from $35.6 million at December 31, 2024, to $34.4 million at September 30, 2025, primarily due to net cash used in investing activities of $15.9 million[128]. - Net cash provided by operating activities was $15.2 million during the nine-month period ended September 30, 2025[128]. - The Company believes existing cash balances and expected dividends will enable it to meet liquidity requirements for the foreseeable future[129].