Financial Performance - For the three-month period ended September 30, 2023, net income was $1.8 million, or $0.08 per diluted share, compared to a net loss of $0.7 million, or $(0.04) per diluted share, for the same period in 2022[104]. - Total revenue for the three-month period ended September 30, 2023, was $44.6 million, down from $46.3 million in the same period in 2022[101]. - Operating income increased by $1.9 million for the three-month period ended September 30, 2023, while it decreased by $0.3 million for the nine-month period compared to the same periods in 2022[106]. - The Parent's insurance subsidiaries reported statutory net income of $8.9 million for the nine-month period ended September 30, 2023, compared to $5.7 million for the same period in 2022[130]. Revenue and Premiums - Premium revenue decreased by $2.6 million, or 5.7%, to $43.7 million for the three-month period ended September 30, 2023, and decreased by $4.6 million, or 3.3%, to $135.9 million for the nine-month period[105]. - Net earned premiums decreased by $1.1 million, or 6.1%, during the three-month period ended September 30, 2023, and by $2.1 million, or 3.9%, during the nine-month period compared to the same periods in 2022[113]. - Gross written premiums at American Southern decreased by $1.5 million, or 12.4%, for the three-month period and by $5.2 million, or 8.2%, for the nine-month period ended September 30, 2023[109]. - Net earned premium revenue at Bankers Fidelity decreased by $1.6 million, or 5.4%, for the three-month period and by $2.5 million, or 2.9%, for the nine-month period ended September 30, 2023[119]. - Gross earned premiums from the Medicare supplement line decreased by $3.8 million, or 10.4%, for the three-month period and by $11.2 million, or 10.0%, for the nine-month period ended September 30, 2023[119]. Loss Ratios and Expenses - The loss ratio for American Southern was 71.7% for the three-month period ended September 30, 2023, compared to 68.2% for the same period in 2022[109]. - The loss ratio increased to 71.7% for the three-month period ended September 30, 2023, compared to 68.2% for the same period in 2022, and to 73.7% for the nine-month period from 68.0%[115]. - Insurance benefits and losses incurred were $26.8 million for the three-month period ended September 30, 2023, compared to $30.6 million for the same period in 2022[101]. - Insurance benefits and losses incurred at American Southern decreased by $0.2 million, or 1.2%, for the three-month period ended September 30, 2023, and increased by $1.5 million, or 4.2%, for the nine-month period[115]. - Commissions and underwriting expenses decreased by $0.3 million, or 6.1%, for the three-month period and by $2.4 million, or 15.8%, for the nine-month period ended September 30, 2023[116]. Ratios and Profitability - The combined ratio for American Southern was 97.9% for the three-month period ended September 30, 2023, indicating an underwriting profit[114]. - The combined ratio improved to 87.4% for the three-month period ended September 30, 2023, compared to 99.1% for the same period in 2022, and to 93.7% from 96.8% for the nine-month period[119]. Interest and Investment Income - Interest expense increased to $850,000 for the three-month period ended September 30, 2023, compared to $523,000 for the same period in 2022[101]. - Interest expense increased by $0.3 million, or 62.5%, for the three-month period and by $1.1 million, or 86.4%, for the nine-month period ended September 30, 2023[127]. - Investment income decreased by $0.3 million, or 12.0%, for the three-month period and by $0.1 million, or 1.1%, for the nine-month period ended September 30, 2023[122]. Cash and Debt Management - The Company reported a decrease in cash and cash equivalents from $28.9 million at December 31, 2022, to $23.9 million at September 30, 2023, primarily due to net cash used in operating activities of $3.5 million[139]. - The Company had outstanding borrowings of $3.0 million under a Revolving Credit Agreement as of September 30, 2023, with a total credit facility of $10.0 million[138]. - The Company has accrued but unpaid dividends on Series D Preferred Stock totaling $0.3 million as of September 30, 2023[135]. - The Company has access to approximately $8.0 million in credit availability from the Federal Home Loan Bank of Atlanta as of September 30, 2023[136]. - The Company has a debt to capital ratio covenant that restricts consolidated indebtedness to not exceed 35% of consolidated capitalization[138]. Internal Controls and Compliance - The Company successfully completed testing to conclude that a previously identified material weakness in internal control over financial reporting has been remediated[144]. - The Company intends to meet its obligations under the Junior Subordinated Debentures using existing cash balances and potential future financing arrangements[134]. - As of September 30, 2023, the Company had outstanding Junior Subordinated Debentures totaling $33.7 million, with an effective interest rate of 9.70%[133]. - The Company has pledged bonds with an amortized cost of $6.9 million to the Federal Home Loan Bank as of September 30, 2023[136]. - The Company has not made any purchases of common stock during the three-month period ended September 30, 2023, under its Repurchase Plan, which allows for the repurchase of up to 750,000 shares[148].
Atlantic American(AAME) - 2023 Q3 - Quarterly Report