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ATLANTIC AMERICAN CORP - Quarter Report: 2020 March (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-3722

ATLANTIC AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)

Georgia
 
58-1027114
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

4370 Peachtree Road, N.E.,
Atlanta, Georgia
 
30319
(Address of principal executive offices)
 
(Zip Code)

(404) 266-5500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☑   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☑   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐   Accelerated filer  ☐   Non-accelerated filer  ☐  (Do not check if a smaller reporting company)  Smaller reporting company  ☑   Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐   No  ☑

The total number of shares of the registrant’s Common Stock, $1 par value, outstanding on March 31, 2020 was 20,438,366.



ATLANTIC AMERICAN CORPORATION
 
TABLE OF CONTENTS

Part I. Financial Information

Item 1.
2
     
 
2
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
Item 2.
19
     
Item 4.
25
     
Part II.
Other Information
 
     
Item 2.
26
     
Item 6.
26
     
 
27

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

ASSETS

   
Unaudited
March 31,
2020
   
December 31,
2019
 
Cash and cash equivalents
 
$
8,338
   
$
12,893
 
Investments:
               
Fixed maturities, available-for-sale, at fair value (amortized cost: $211,586 and $219,233)
   
213,696
     
232,472
 
Equity securities, at fair value (cost: $7,168 and $7,168)
   
14,467
     
22,922
 
Other invested assets (cost: $9,908 and $9,908)
   
9,775
     
9,960
 
Policy loans
   
2,011
     
2,007
 
Real estate
   
38
     
38
 
Investment in unconsolidated trusts
   
1,238
     
1,238
 
Total investments
   
241,225
     
268,637
 
Receivables:
               
Reinsurance
   
33,102
     
32,135
 
Insurance premiums and other (net of allowance for doubtful accounts: $192 and $183)
   
10,752
     
13,134
 
Deferred income taxes, net
   
4,920
     
314
 
Deferred acquisition costs
   
38,305
     
38,861
 
Other assets
   
8,675
     
9,108
 
Intangibles
   
2,544
     
2,544
 
Total assets
 
$
347,861
   
$
377,626
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Insurance reserves and policyholder funds:
               
Future policy benefits
 
$
92,037
   
$
92,490
 
Unearned premiums
   
19,276
     
26,035
 
Losses and claims
   
80,195
     
81,448
 
Other policy liabilities
   
1,338
     
1,933
 
Total insurance reserves and policyholder funds
   
192,846
     
201,906
 
Accounts payable and accrued expenses
   
19,759
     
23,588
 
Junior subordinated debenture obligations, net
   
33,738
     
33,738
 
Total liabilities
   
246,343
     
259,232
 
                 
Commitments and contingencies (Note 10)
               
Shareholders’ equity:
               
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, 55,000 shares issued and outstanding; $5,500 redemption value
   
55
     
55
 
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 20,438,366 and 20,472,162
   
22,401
     
22,401
 
Additional paid-in capital
   
57,777
     
57,820
 
Retained earnings
   
27,834
     
36,020
 
Accumulated other comprehensive income
   
1,667
     
10,459
 
Unearned stock grant compensation
   
(584
)
   
(781
)
Treasury stock, at cost: 1,962,528 and 1,928,732 shares
   
(7,632
)
   
(7,580
)
Total shareholders’ equity
   
101,518
     
118,394
 
Total liabilities and shareholders’ equity
 
$
347,861
   
$
377,626
 
 
The accompanying notes are an integral part of these consolidated financial statements.

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except per share data)

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Revenue:
           
Insurance premiums, net
 
$
45,550
   
$
44,782
 
Net investment income
   
2,039
     
2,334
 
Realized investment gains, net
   
249
     
1,385
 
Unrealized gains (losses) on equity securities, net
   
(8,455
)
   
6,489
 
Other income
   
27
     
28
 
Total revenue
   
39,410
     
55,018
 
                 
Benefits and expenses:
               
Insurance benefits and losses incurred
   
33,583
     
35,307
 
Commissions and underwriting expenses
   
12,626
     
11,015
 
Interest expense
   
476
     
546
 
Other expense
   
2,952
     
2,865
 
Total benefits and expenses
   
49,637
     
49,733
 
Income (loss) before income taxes
   
(10,227
)
   
5,285
 
Income tax expense (benefit)
   
(2,140
)
   
1,123
 
Net income (loss)
   
(8,087
)
   
4,162
 
Preferred stock dividends
   
(99
)
   
(99
)
Net income (loss) applicable to common shareholders
 
$
(8,186
)
 
$
4,063
 
                 
Earnings (loss) per common share (basic)
 
$
(0.40
)
 
$
0.20
 
Earnings (loss) per common share (diluted)
 
$
(0.40
)
 
$
0.19
 
 
The accompanying notes are an integral part of these consolidated financial statements.

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; Dollars in thousands)

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Net income (loss)
 
$
(8,087
)
 
$
4,162
 
Other comprehensive income (loss):
               
Available-for-sale fixed maturity securities:
               
Gross unrealized holding gain (loss) arising in the period
   
(10,880
)
   
8,440
 
Related income tax effect
   
2,285
     
(1,772
)
Subtotal
   
(8,595
)
   
6,668
 
                 
Less: reclassification adjustment for net realized gains included in net income (loss)
   
(249
)
   
(272
)
Related income tax effect
   
52
     
57
 
Subtotal
   
(197
)
   
(215
)
                 
Total other comprehensive income (loss), net of tax
   
(8,792
)
   
6,453
 
Total comprehensive income (loss)
 
$
(16,879
)
 
$
10,615
 
 
The accompanying notes are an integral part of these consolidated financial statements.

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited; Dollars in thousands)

   
Three Months Ended
March 31,
 
(Dollars in thousands, except per share data)
 
2020
   
2019
 
Preferred stock:
           
Balance, beginning of period
 
$
55
   
$
55
 
Balance, end of period
   
55
     
55
 
Common stock:
               
Balance, beginning of period
   
22,401
     
22,401
 
Balance, end of period
   
22,401
     
22,401
 
Additional paid-in capital:
               
Balance, beginning of period
   
57,820
     
57,414
 
Restricted stock grants, net of forfeitures
   
(44
)
   
-
 
Issuance of shares under stock plans
   
1
     
3
 
Balance, end of period
   
57,777
     
57,417
 
Retained earnings:
               
Balance, beginning of period
   
36,020
     
37,208
 
Net income (loss)
   
(8,087
)
   
4,162
 
Dividends on common stock
   
-
     
(403
)
Dividends accrued on preferred stock
   
(99
)
   
(99
)
Balance, end of period
   
27,834
     
40,868
 
Accumulated other comprehensive income (loss):
               
Balance, beginning of period
   
10,459
     
(7,535
)
Other comprehensive income (loss), net of tax
   
(8,792
)
   
6,453
 
Balance, end of period
   
1,667
     
(1,082
)
Unearned Stock Grant Compensation:
               
Balance, beginning of period
   
(781
)
   
(186
)
Restricted stock grants, net of forfeitures
   
98
     
-
 
Amortization of unearned compensation
   
99
     
58
 
Balance, end of period
   
(584
)
   
(128
)
Treasury Stock:
               
Balance, beginning of period
   
(7,580
)
   
(7,985
)
Restricted stock grants, net of forfeitures
   
(54
)
   
-
 
Purchase of 0 and 17,865 shares, as of 2020 and 2019, respectively, for treasury
   
-
     
(49
)
Net shares acquired related to employee share-based compensation plans
   
-
     
(14
)
Issuance of shares under stock plans
   
2
     
4
 
Balance, end of period
   
(7,632
)
   
(8,044
)
                 
Total shareholders’ equity
 
$
101,518
   
$
111,487
 
Dividends declared on common stock per share
 
$
-
   
$
(.02
)

The accompanying notes are an integral part of these consolidated financial statements.

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in thousands)

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss)
 
$
(8,087
)
 
$
4,162
 
Adjustments to reconcile income (loss) to net cash used in operating activities:
               
Amortization of (additions to) acquisition costs, net
   
556
     
(265
)
Realized investment gains, net
   
(249
)
   
(1,385
)
Unrealized (gains) losses on equity securities, net
   
8,455
     
(6,489
)
Compensation expense related to share awards
   
99
     
58
 
Depreciation and amortization
   
251
     
193
 
Deferred income tax (benefit) expense
   
(2,269
)
   
1,123
 
Decrease in receivables, net
   
3,218
     
3,936
 
Decrease in insurance reserves and policyholder funds
   
(9,060
)
   
(4,767
)
(Decrease) increase in accounts payable and accrued expenses
   
(3,928
)
   
2,100
 
Other, net
   
502
     
(5,612
)
Net cash used in operating activities
   
(10,512
)
   
(6,946
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Proceeds from investments sold
   
5,641
     
18,604
 
Proceeds from investments matured, called or redeemed
   
2,555
     
1,878
 
Investments purchased
   
(2,204
)
   
(17,470
)
Additions to property and equipment
   
(38
)
   
(26
)
Net cash provided by investing activities
   
5,954
     
2,986
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from shares issued under stock plans
   
3
     
7
 
Treasury stock acquired — share repurchase authorization
   
-
     
(49
)
Treasury stock acquired — net employee share-based compensation
   
-
     
(14
)
Net cash provided by (used in) financing activities
   
3
     
(56
)
                 
Net decrease in cash and cash equivalents
   
(4,555
)
   
(4,016
)
Cash and cash equivalents at beginning of period
   
12,893
     
12,630
 
Cash and cash equivalents at end of period
 
$
8,338
   
$
8,614
 
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
               
Cash paid for interest
 
$
491
   
$
552
 

The accompanying notes are an integral part of these consolidated financial statements.

ATLANTIC AMERICAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; Dollars in thousands, except per share amounts)

Note 1.
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month period ended March 31, 2020 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2020 or for any other future period.

The Company’s significant accounting policies have not changed materially from those set out in the 2019 Annual Report, except as noted below for the adoption of new accounting standards.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

On March 11, 2020, the World Health Organization declared the Novel Coronavirus (“COVID-19”) outbreak a global pandemic. The impact of COVID-19 and related actions to attempt to control its spread began to impact the Company’s business operations in March 2020, and we expect that the pandemic, actions that have been or will be taken in response to it and its overall impact on the economy, will continue to have an effect on our business operations and our operating results. The Company’s insurance subsidiaries may experience difficulties collecting premiums from some policyholders, and policyholders with financial difficulties may decide not to renew insurance policies with the Company.  Although it cannot be predicted with certainty at this time, the Company’s insurance subsidiaries do not expect a direct material impact from the outbreak of COVID-19 in terms of increased claims and losses, but that may change as more information becomes available.  In addition, economic uncertainty related to COVID-19 has led to a decline in the investment markets, and may continue to create increased volatility.  The impact of COVID-19 on the economy and on the Company is evolving and its future effects are uncertain. The Company is closely monitoring the effects and risks of COVID-19 to assess its impact on the Company's business, financial condition, results of operations, liquidity and capital position.
 
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is intended to provide fast and direct economic assistance for American workers and families, small businesses, and to preserve jobs in American industries. The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The Company does not qualify as a small business under the CARES Act and therefore did not apply for any of the government loan programs; however, the Company intends to monitor and assess the availability of resources and other benefits that might be available to the Company under the CARES Act and through other programs.
 
Note 2.
Recently Issued Accounting Standards

Adoption of New Accounting Standards

Fair Value Measurement – Changes to the Disclosure Requirements for Fair Value Measurement.  In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This guidance removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements.  This disclosure also includes the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.  The Company adopted ASU 2018-13 as of January 1, 2020. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

Goodwill.  In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”).  ASU 2017-04 is intended to simplify the evaluation of goodwill.  The updated guidance requires recognition and measurement of goodwill impairment based on the excess of the carrying value of the reporting unit compared to its estimated fair value, with the amount of the impairment not to exceed the carrying value of the reporting unit’s goodwill. Under the prior accounting guidance, if the reporting unit’s carrying value exceeds its estimated fair value, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. An impairment loss is then recognized for the excess, if any, of the carrying value of the reporting unit’s goodwill compared to the implied goodwill value.  The Company adopted ASU 2017-04 as of January 1, 2020. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

Future Adoption of New Accounting Standards

Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This guidance provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. Along with the optional expedients, the amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination. Additionally, a company may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. This standard may be elected over time through December 31, 2022 as reference rate reform activities occur. The Company is currently assessing the effect of adopting this guidance on the financial condition and results of operations.

Investments – Equity Securities. In January 2020, the FASB issued ASU No. 2020-01 (“ASU 2020-01”) Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This update, among others, clarifies the interaction of the accounting for equity securities under Topic 321 and investments under the equity method of accounting in Topic 323 when there is a change in level of ownership or degree of influence. ASU 2020-01 is effective for the Company beginning with the first quarter of 2021 and will be applied prospectively. Early adoption is permitted. This guidance will not have a material impact on the Company’s consolidated financial statements.

For information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2019 Annual Report.

Note 3.
Investments

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of March 31, 2020 and December 31, 2019.

Fixed maturities were comprised of the following:

   
March 31, 2020
 
   
Estimated
Fair Value
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Cost or
Amortized
Cost
 
Fixed maturities:
                       
Bonds:
                       
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
 
$
20,723
   
$
1,529
   
$
61
   
$
19,255
 
Obligations of states and political subdivisions
   
11,009
     
406
     
10
     
10,613
 
Corporate securities:
                               
Utilities and telecom
   
26,797
     
2,328
     
303
     
24,772
 
Financial services
   
65,655
     
1,899
     
2,342
     
66,098
 
Other business – diversified
   
36,186
     
1,512
     
3,797
     
38,471
 
Other consumer – diversified
   
53,076
     
2,517
     
1,626
     
52,185
 
Total corporate securities
   
181,714
     
8,256
     
8,068
     
181,526
 
Redeemable preferred stocks:
                               
Other consumer – diversified
   
250
     
58
     
     
192
 
Total redeemable preferred stocks
   
250
     
58
     
     
192
 
Total fixed maturities
 
$
213,696
   
$
10,249
   
$
8,139
   
$
211,586
 

   
December 31, 2019
 
   
Estimated
Fair Value
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Cost or
Amortized
Cost
 
Fixed maturities:
                       
Bonds:
                       
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
 
$
20,259
   
$
467
   
$
53
   
$
19,845
 
Obligations of states and political subdivisions
   
11,940
     
371
     
53
     
11,622
 
Corporate securities:
                               
Utilities and telecom
   
26,648
     
2,404
     
32
     
24,276
 
Financial services
   
73,917
     
4,249
     
57
     
69,725
 
Other business – diversified
   
41,706
     
2,335
     
98
     
39,469
 
Other consumer – diversified
   
57,752
     
3,702
     
54
     
54,104
 
Total corporate securities
   
200,023
     
12,690
     
241
     
187,574
 
Redeemable preferred stocks:
                               
Other consumer – diversified
   
250
     
58
     
-
     
192
 
Total redeemable preferred stocks
   
250
     
58
     
-
     
192
 
Total fixed maturities
 
$
232,472
   
$
13,586
   
$
347
   
$
219,233
 

Bonds having an amortized cost of $10,444 and $10,669 and included in the tables above were on deposit with insurance regulatory authorities as of March 31, 2020 and December 31, 2019, respectively, in accordance with statutory requirements.

Equity securities were comprised of the following:

   
March 31, 2020
 
   
Estimated
Fair Value
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Cost or
Amortized
Cost
 
Equity securities:
                       
Common and non-redeemable preferred stocks:
                       
Financial services
 
$
2,871
   
$
338
   
$
2
   
$
2,535
 
Other business – diversified
   
11,596
     
6,963
     
-
     
4,633
 
Total equity securities
 
$
14,467
   
$
7,301
   
$
2
   
$
7,168
 

   
December 31, 2019
 
   
Estimated
Fair Value
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
   
Cost or
Amortized
Cost
 
Equity securities:
                       
Common and non-redeemable preferred stocks:
                       
Financial services
 
$
3,159
     
624
     
-
     
2,535
 
Other business – diversified
   
19,763
     
15,130
     
-
     
4,633
 
Total equity securities
 
$
22,922
   
$
15,754
   
$
-
   
$
7,168
 

The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2020 and December 31, 2019 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

   
March 31, 2020
   
December 31, 2019
 
   
Carrying
Value
   
Amortized
Cost
   
Carrying
Value
   
Amortized
Cost
 
Due in one year or less
 
$
-
   
$
-
   
$
-
   
$
-
 
Due after one year through five years
   
16,300
     
16,078
     
14,664
     
14,280
 
Due after five years through ten years
   
74,840
     
76,041
     
77,934
     
73,521
 
Due after ten years
   
113,770
     
110,938
     
130,680
     
122,321
 
Asset backed securities
   
8,786
     
8,529
     
9,194
     
9,111
 
Totals
 
$
213,696
   
$
211,586
   
$
232,472
   
$
219,233
 

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of March 31, 2020 and December 31, 2019.

   
March 31, 2020
 
   
Less than 12 months
   
12 months or longer
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
 
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
 
$
1,858
   
$
61
   
$
-
   
$
-
   
$
1,858
   
$
61
 
Obligations of states and political subdivisions
   
4,153
     
10
     
-
     
-
     
4,153
     
10
 
Corporate securities
   
79,654
     
8,068
     
-
     
-
     
79,654
     
8,068
 
Total temporarily impaired securities
 
$
85,665
   
$
8,139
   
$
-
   
$
-
   
$
85,665
   
$
8,139
 


   
December 31, 2019
 
   
Less than 12 months
   
12 months or longer
   
Total
 
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
   
Fair
Value
   
Unrealized
Losses
 
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
 
$
3,432
   
$
22
   
$
3,533
   
$
31
   
$
6,965
   
$
53
 
Obligations of states and political subdivisions
   
3,106
     
53
     
-
     
-
     
3,106
     
53
 
Corporate securities
   
23,245
     
145
     
2,504
     
96
     
25,749
     
241
 
Total temporarily impaired securities
 
$
29,783
   
$
220
   
$
6,037
   
$
127
   
$
35,820
   
$
347
 

The evaluation for an other than temporary impairment (“OTTI”) is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold the securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

There were no OTTI charges recorded during the three month periods ended March 31, 2020 and 2019.

As of March 31, 2020 and December 31, 2019, there were sixty-nine and thirty securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the financial services, other diversified business and other diversified consumer sectors. The increase in the number and value of securities in an unrealized loss position during the three month period ended March 31, 2020, was primarily attributable to the volatility and weakening of the financial markets as a result of the COVID-19 pandemic.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of March 31, 2020.

The following table is a summary of realized investment gains (losses) for the three month periods ended March 31, 2020 and 2019.

   
Three Months Ended
March 31, 2020
 
   
Fixed
Maturities
   
Equity
Securities
   
Other
Invested
Assets
   
Total
 
Gains
 
$
249
   
$
-
   
$
   
$
249
 
Losses
   
     
     
     
 
Realized investment gains (losses), net
 
$
249
   
$
-
   
$
   
$
249
 

   
Three Months Ended
March 31, 2019
 
   
Fixed
Maturities
   
Equity
 Securities
   
Other
Invested
Assets
   
Total
 
Gains
 
$
272
   
$
1,113
   
$
   
$
1,385
 
Losses
   
     
     
     
 
Realized investment gains (losses), net
 
$
272
   
$
1,113
   
$
   
$
1,385
 

The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month periods ended March 31, 2020 and 2019.

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Net realized and unrealized gains (losses) recognized during the period on equity securities
 
$
(8,455
)
 
$
7,602
 
Less: Net realized gains (losses) recognized during the period on equity securities sold during the period
   
-
     
1,113
 
Unrealized gains (losses) recognized during the reporting period
               
Unrealized gains (losses) on equity securities, net
 
$
(8,455
)
 
$
6,489
 

Variable Interest Entities

The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance. The Company’s VIE interests principally consist of interests in limited partnerships and limited liability companies formed for the purpose of achieving diversified equity returns. The Company’s VIE interests, carried as a part of other invested assets, totaled $9,775 and $9,960 as of March 31, 2020 and December 31, 2019, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of March 31, 2020 and December 31, 2019.

The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, the Company has not consolidated these VIEs. The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE. The Company has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $11,013 and $11,198, as of March 31, 2020 and December 31, 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company has outstanding commitments totaling $1,997, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

Note 4.
Fair Values of Financial Instruments

The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.  However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Level 1
Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks.

Level 2
Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly most of its fixed maturities, which consist of U.S. Treasury securities, U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements of its fixed maturities and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers.  Prices for the majority of the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

Level 3
Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).  Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability.

As of March 31, 2020, financial instruments carried at fair value were measured on a recurring basis as summarized below:

   
Quoted Prices
 in Active
Markets
for Identical
Assets
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
   
Total
 
Assets:
                       
Fixed maturities
 
$
-
   
$
213,696
   
$
-
   
$
213,696
 
Equity securities
   
14,467
     
-
     
     
14,467
 
Cash equivalents
   
5,720
     
     
     
5,720
 
Total
 
$
20,187
   
$
213,696
   
$
-
   
$
233,883
 

As of December 31, 2019, financial instruments carried at fair value were measured on a recurring basis as summarized below:

   
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
   
Total
 
Assets:
                       
Fixed maturities
 
$
-
   
$
232,472
   
$
-
   
$
232,472
 
Equity securities
   
22,922
     
-
     
     
22,922
 
Cash equivalents
   
7,173
     
     
     
7,173
 
Total
 
$
30,095
   
$
232,472
   
$
-
   
$
262,567
 

The Company does not have any fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of March 31, 2020 and December 31, 2019.

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2020 and December 31, 2019.

         
March 31, 2020
   
December 31, 2019
 
   
Level in Fair
Value
Hierarchy (1)
   
Carrying
Amount
   
Estimated
Fair Value
   
Carrying
Amount
   
Estimated
Fair Value
 
Assets:
                             
Cash and cash equivalents
 
Level 1
   
$
8,338
   
$
8,338
   
$
12,893
   
$
12,893
 
Fixed maturities
   
(1)

   
213,696
     
213,696
     
232,472
     
232,472
 
Equity securities
   
(1)

   
14,467
     
14,467
     
22,922
     
22,922
 
Other invested assets
 
Level 3
     
9,775
     
9,775
     
9,960
     
9,960
 
Policy loans
 
Level 2
     
2,011
     
2,011
     
2,007
     
2,007
 
Real estate
 
Level 2
     
38
     
38
     
38
     
38
 
Investment in unconsolidated trusts
 
Level 2
     
1,238
     
1,238
     
1,238
     
1,238
 
                                         
Liabilities:
                                       
Junior subordinated debentures, net
 
Level 2
     
33,738
     
30,138
     
33,738
     
35,977
 


(1)
See the aforementioned information for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

Note 5.
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses

The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses for the three months ended March 31, 2020 and 2019 is as follows:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross
 
$
81,448
   
$
72,612
 
Less: Reinsurance recoverable on unpaid losses
   
(18,339
)
   
(14,354
)
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net
   
63,109
     
58,258
 
                 
Incurred related to:
               
Current accident year
   
35,985
     
34,364
 
Prior accident year development (1)
   
(2,583
)(2)
   
499
 
Total incurred
   
33,402
     
34,863
 
                 
Paid related to:
               
Current accident year
   
14,008
     
13,707
 
Prior accident years
   
20,856
     
19,877
 
Total paid
   
34,864
     
33,584
 
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net
   
61,647
     
59,537
 
Plus: Reinsurance recoverable on unpaid losses
   
18,548
     
15,176
 
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross
 
$
80,195
   
$
74,713
 


(1)
In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Accordingly, the Company generally experiences reserve redundancies when analyzing the development of prior year losses in a current period.


(2)
Prior years’ development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity.

Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Total incurred losses
 
$
33,402
   
$
34,863
 
Cash surrender value and matured endowments
   
368
     
360
 
Benefit reserve changes
   
(187
)
   
84
 
Total insurance benefits and losses incurred
 
$
33,583
   
$
35,307
 

Note 6.
Junior Subordinated Debentures

The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of Atlantic American; and (iii) engaging in those activities necessary or incidental thereto.

The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2020 was as follows:

   
Atlantic American
Statutory Trust I
   
Atlantic American
Statutory Trust II
 
JUNIOR SUBORDINATED DEBENTURES (1) (2)
           
Principal amount owed March 31, 2020
 
$
18,042
   
$
23,196
 
Less: Treasury debt (3)
   
     
(7,500
)
Net balance March 31, 2020
 
$
18,042
   
$
15,696
 
Net balance December 31, 2019
 
$
18,042
   
$
15,696
 
Coupon rate
 
LIBOR + 4.00
%  
LIBOR + 4.10
%
Interest payable
 
Quarterly
   
Quarterly
 
Maturity date
 
December 4, 2032
   
May 15, 2033
 
Redeemable by issuer
 
Yes
   
Yes
 
TRUST PREFERRED SECURITIES
               
Issuance date
 
December 4, 2002
   
May 15, 2003
 
Securities issued
   
17,500
     
22,500
 
Liquidation preference per security
 
$
1
   
$
1
 
Liquidation value
 
$
17,500
   
$
22,500
 
Coupon rate
 
LIBOR + 4.00
%  
LIBOR + 4.10
%
Distribution payable
 
Quarterly
   
Quarterly
 
Distribution guaranteed by (4)
 
Atlantic American
Corporation
   
Atlantic American
Corporation
 

(1)
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2)
The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3)
On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.

(4)
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.

Note 7.
Earnings (Loss) Per Common Share

A reconciliation of the numerator and denominator used in the earnings (loss) per common share calculations is as follows:

   
Three Months Ended
March 31, 2020
 
   
Loss
   
Weighted
Average
Shares
(In thousands)
   
Per Share
Amount
 
Basic and Diluted Loss Per Common Share:
                 
Net loss
 
$
(8,087
)
   
20,470
       
Less preferred stock dividends
   
(99
)
   
     
 
Net loss applicable to common shareholders
 
$
(8,186
)
   
20,470
   
$
(.40
)



 
Three Months Ended
March 31, 2019
 
   
Income
   
Weighted
Average
Shares
(In thousands)
   
Per Share
Amount
 
Basic Earnings Per Common Share:
                 
Net income
 
$
4,162
     
20,159
       
Less preferred stock dividends
   
(99
)
             
Net income applicable to common shareholders
   
4,063
     
20,159
   
$
.20
 
Diluted Earnings Per Common Share:
                       
Effect of Series D preferred stock
   
99
     
1,378
         
Net income applicable to common shareholders
 
$
4,162
     
21,537
   
$
.19
 

The assumed conversion of the Company’s Series D preferred stock was excluded from the diluted loss per common share calculation for the three month period ended March 31, 2020, since its impact would have been antidilutive.

Note 8.
Income Taxes

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Federal income tax provision at statutory rate of 21%
 
$
(2,148
)
 
$
1,110
 
Dividends-received deduction
   
(3
)
   
(9
)
Other permanent differences
   
11
     
22
 
Income tax expense (benefit)
 
$
(2,140
)
 
$
1,123
 

The components of income tax expense (benefit) were:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
Current – Federal
 
$
129
   
$
-
 
Deferred – Federal
   
(2,269
)
   
1,123
 
Total
 
$
(2,140
)
 
$
1,123
 

In addition, the Company determined there were no significant tax implications as a result of the CARES Act.

Note 9.
Leases

The Company has identified two operating lease agreements, each for the use of office space in the ordinary course of business.
The first lease renews annually on an automatic basis and based on original assumptions, management is reasonably certain to exercise the renewal option for an additional eight years from the January 1, 2019 effective date of the new lease guidance. The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years, with a termination date on September 30, 2026. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for the three months ended March 31, 2020 and March 31, 2019 was $254.

Additional information regarding the Company’s real estate operating leases is as follows:

   
Three Months Ended
March 31,
 
Other information on operating leases:
 
2020
   
2019
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
 
$
978
   
$
233
 
Right-of-use assets included in other assets on the condensed consolidated balance sheet
   
5,319
     
5,938
 
Weighted average discount rate
   
6.8
%
   
6.8
%
Weighted average remaining lease term in years
 
6.6 years
   
7.9 years
 

The following table presents maturities and present value of the Company’s lease liabilities:

   
Lease Liability
 
Remainder of 2020
 
$
753
 
2021
   
1,015
 
2022
   
1,031
 
2023
   
1,048
 
2024
   
1,065
 
Thereafter
   
2,025
 
Total undiscounted lease payments
   
6,937
 
Less: present value adjustment
   
1,391
 
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
 
$
5,546
 

As of March 31, 2020, the Company has no operating leases that have not yet commenced.

Note 10.
Commitments and Contingencies

From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its businesses. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.

Note 11.
Segment Information

The Parent’s primary insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing on specific products. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each business unit is managed independently and is evaluated on its individual performance. The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2020 and 2019.

Assets
 
March 31,
2020
   
December 31,
2019
 
American Southern
 
$
126,621
   
$
141,524
 
Bankers Fidelity
   
206,232
     
224,122
 
Corporate and Other
   
15,008
     
11,980
 
Total assets
 
$
347,861
   
$
377,626
 

Revenues
 
Three Months Ended
March 31,
 
   
2020
   
2019
 
American Southern
 
$
15,227
   
$
15,235
 
Bankers Fidelity
   
24,873
     
34,376
 
Corporate and Other
   
(690
)
   
5,407
 
Total revenue
 
$
39,410
   
$
55,018
 

Income (Loss) Before Income Taxes
 
Three Months Ended
March 31,
 
   
2020
   
2019
 
American Southern
 
$
878
   
$
1,982
 
Bankers Fidelity
   
(8,781
)
   
(496
)
Corporate and Other
   
(2,324
)
   
3,799
 
Income (loss) before income taxes
 
$
(10,227
)
 
$
5,285
 

Note 12.
Subsequent Events

Since March 31, 2020, the COVID-19 pandemic continues to cause material disruption to financial markets and the economy.  As a result of the pandemic, the Company could experience future losses in its investment portfolio as a result of the weakened and volatile markets.  Additionally, the Company can experience increased risk of loss any time unforeseen infectious diseases impact large portions of a population. Specifically, the Company’s life and health business could experience significant loss due to increased claims volume arising from COVID-19. The duration and impact of the COVID-19 pandemic is unknown at this time and it is not possible to reliably estimate the impact on the financial condition, operating results or liquidity of the Company and its operating subsidiaries in future periods.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”) as of and for the three month period ended March 31, 2020. This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”).

Atlantic American is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries: American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”). Each operating company is managed separately, offers different products and is evaluated on its individual performance.

Recent Events and Outlook

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic.  In March 2020, the impact of COVID-19 and related actions to attempt to control its spread began to impact our business operations, and we expect that the pandemic, actions that have been or will be taken in response to it and its overall impact on the economy, will continue to have an effect on our business operations and our operating results. See “Expected Impact of COVID-19 on the Company’s Financial Condition and Results of Operations.”

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ significantly from those estimates. The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability. The Company’s critical accounting policies and the resultant estimates considered most significant by management are disclosed in the 2019 Annual Report. Except as disclosed in Note 2 of Notes to Condensed Consolidated Financial Statements, the Company’s critical accounting policies are consistent with those disclosed in the 2019 Annual Report.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income (loss) for the three month period ended March 31, 2020 and the comparable period in 2019:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
   
(In thousands)
 
Insurance premiums
 
$
45,550
   
$
44,782
 
Net investment income
   
2,039
     
2,334
 
Realized investment gains, net
   
249
     
1,385
 
Unrealized gains (losses) on equity securities, net
   
(8,455
)
   
6,489
 
Other income
   
27
     
28
 
Total revenue
   
39,410
     
55,018
 
Insurance benefits and losses incurred
   
33,583
     
35,307
 
Commissions and underwriting expenses
   
12,626
     
11,015
 
Interest expense
   
476
     
546
 
Other expense
   
2,952
     
2,865
 
Total benefits and expenses
   
49,637
     
49,733
 
Income (loss) before income taxes
 
$
(10,227
)
 
$
5,285
 
Net income (loss)
 
$
(8,087
)
 
$
4,162
 

Management also considers and evaluates performance by analyzing the non-GAAP measure operating income (loss), and believes it is a useful metric for investors, potential investors, securities analysts and others because it isolates the “core” operating results of the Company before considering certain items that are either beyond the control of management (such as taxes, which are subject to timing, regulatory and rate changes depending on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized and unrealized investment gains, which are not a part of the Company’s primary operations and are, to a limited extent, subject to discretion in terms of timing of realization).

A reconciliation of net income (loss) to operating loss for the three month period ended March 31, 2020 and the comparable period in 2019 is as follows:

   
Three Months Ended
March 31,
 
Reconciliation of Non-GAAP Financial Measure
 
2020
   
2019
 
   
(In thousands)
 
Net income (loss)
 
$
(8,087
)
 
$
4,162
 
Income tax expense (benefit)
   
(2,140
)
   
1,123
 
Realized investment gains, net
   
(249
)
   
(1,385
)
Unrealized (gains) losses on equity securities, net
   
8,455
     
(6,489
)
Non-GAAP operating loss
 
$
(2,021
)
 
$
(2,589
)

On a consolidated basis, the Company had a net loss of $8.1 million, or $0.40 per diluted share, for the three month period ended March 31, 2020, compared to net income of $4.2 million, or $0.19 per diluted share, for the three month period ended March 31, 2019. Premium revenue for the three month period ended March 31, 2020 increased $0.8 million, or 1.7%, to $45.6 million. The increase in premium revenue was primarily attributable to an increase in the automobile physical damage line of business in the property and casualty operations. Operating loss decreased $0.6 million in the three month period ended March 31, 2020 over the comparable period of 2019. The decrease in operating loss was primarily due to favorable loss experience in the life and health operations.

A more detailed analysis of the individual operating segments and other corporate activities follows.

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2020 and the comparable period in 2019:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
   
(Dollars in thousands)
 
Gross written premiums
 
$
9,618
   
$
7,694
 
Ceded premiums
   
(1,394
)
   
(1,375
)
Net written premiums
 
$
8,224
   
$
6,319
 
Net earned premiums
 
$
14,922
   
$
13,806
 
Net loss and loss adjustment expenses
   
9,534
     
9,043
 
Commissions and underwriting expenses
   
4,814
     
4,210
 
Underwriting income
 
$
574
   
$
553
 
Loss ratio
   
63.9
%
   
65.5
%
Expense ratio
   
32.3
     
30.5
 
Combined ratio
   
96.2
%
   
96.0
%

Gross written premiums at American Southern increased $1.9 million, or 25.0%, during the three month period ended March 31, 2020 from the comparable period in 2019. The increase in gross written premiums was primarily attributable to an increase in premiums written in the automobile physical damage line of business due to a new agency that started in the second half of 2019 and increased writings from certain existing agencies.

Ceded premiums increased slightly during the three month period ended March 31, 2020 from the comparable period in 2019 due primarily to an increase in earned premiums in certain accounts within the automobile physical damage and general liability lines of business, which are subject to reinsurance.

The following presents American Southern’s net earned premiums by line of business for the three month period ended March 31, 2020 and the comparable period in 2019:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
   
(In thousands)
 
             
Automobile liability
 
$
7,140
   
$
7,024
 
Automobile physical damage
   
4,548
     
3,602
 
General liability
   
851
     
784
 
Surety
   
1,605
     
1,687
 
Other lines
   
778
     
709
 
Total
 
$
14,922
   
$
13,806
 

Net earned premiums increased $1.1 million, or 8.1%, during the three month period ended March 31, 2020 from the comparable period in 2019. The increase in net earned premiums was primarily attributable to an increase in automobile physical damage coverage resulting from the addition of an automobile account as previously mentioned. Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies written during both the current year and immediately preceding year.

The performance of an insurance company is often measured by its combined ratio. The combined ratio represents the percentage of losses, loss adjustment expenses and other expenses that are incurred for each dollar of premium earned by the company. A combined ratio of under 100% represents an underwriting profit while a combined ratio of over 100% indicates an underwriting loss. The combined ratio is divided into two components, the loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) and the expense ratio (the ratio of expenses incurred to premiums earned).

Net loss and loss adjustment expenses at American Southern increased $0.5 million, or 5.4%, during the three month period ended March 31, 2020 from the comparable period in 2019. As a percentage of earned premiums, net loss and loss adjustment expenses were 63.9% in the three month period ended March 31, 2020, compared to 65.5% in the three month period ended March 31, 2019. The decrease in the loss ratio was primarily due to a decrease in the severity of claims in the automobile liability line of business during the three month period ended March 31, 2020. Partially offsetting the decrease in the loss ratio during the three month period ended March 31, 2020 was less favorable loss experience in the automobile physical damage line of business due to an increase in frequency of claims from the new agency.

Commissions and underwriting expenses increased $0.6 million, or 14.3%, during the three month period ended March 31, 2020 from the comparable period in 2019. As a percentage of earned premiums, underwriting expenses were 32.3% in the three month period ended March 31, 2020, compared to 30.5% in the three month period ended March 31, 2019. The increase in the expense ratio was primarily due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write. During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.  During the three month period ended March 31, 2020, variable commissions at American Southern increased $0.1 million from the comparable period in 2019 due to favorable loss experience from accounts subject to variable commissions.

Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2020 and the comparable period in 2019:

   
Three Months Ended
March 31,
 
   
2020
   
2019
 
             
Medicare supplement
 
$
44,315
   
$
44,329
 
Other health products
   
2,184
     
1,990
 
Life insurance
   
2,257
     
2,142
 
Gross earned premiums
   
48,756
     
48,461
 
Ceded premiums
   
(18,128
)
   
(17,485
)
Net earned premiums
   
30,628
     
30,976
 
Insurance benefits and losses
   
24,049
     
26,264
 
Commissions and underwriting expenses
   
9,604
     
8,608
 
Total expenses
   
33,653
     
34,872
 
Underwriting loss
 
$
(3,025
)
 
$
(3,896
)
Loss ratio
   
78.5
%
   
84.8
%
Expense ratio
   
31.4
     
27.8
 
Combined ratio
   
109.9
%
   
112.6
%

Net earned premium revenue at Bankers Fidelity decreased $0.3 million, or 1.1%, during the three month period ended March 31, 2020 over the comparable period in 2019. Gross earned premiums from the Medicare supplement line of business decreased slightly during the three month period ended March 31, 2020, due primarily to non-renewals exceeding the level of new business writings. Other health product premiums increased $0.2 million, or 9.7%, during the same comparable period, primarily as a result of new sales of the company’s group health products. Gross earned premiums from the life insurance line of business increased $0.1 million, or 5.4%, during the three month period ended March 31, 2020 from the comparable period in 2019 due to an increase in the group life products premium. Partially offsetting the increase in gross earned premiums from the life insurance line was a decrease in individual life products premium, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales. Premiums ceded increased $0.6 million, or 3.7%, during the three month period ended March 31, 2020 over the comparable period in 2019. The increase in ceded premiums for the three month period ended March 31, 2020 was due to an increase in Medicare supplement premiums subject to reinsurance.

Benefits and losses decreased $2.2 million, or 8.4%, during the three month period ended March 31, 2020 over the comparable period in 2019. As a percentage of earned premiums, benefits and losses were 78.5% in the three month period ended March 31, 2020, compared to 84.8% in the three month period ended March 31, 2019. The decrease in the loss ratio for the three month period ended March 31, 2020 over the comparable period in 2019, was primarily attributable to favorable loss experience in the Medicare supplement line of business.

Commissions and underwriting expenses increased $1.0 million, or 11.6%, during the three month period ended March 31, 2020 from the comparable period in 2019. As a percentage of earned premiums, underwriting expenses were 31.4% in the three month period ended March 31, 2020, compared to 27.8% in the three month period ended March 31, 2019. The increase in the expense ratio for the three month period ended March 31, 2020 was primarily due to the amortization of deferred acquisition costs (“DAC”) exceeding the level of additions to DAC.  The increase in the net amortization of DAC during 2020 is primarily due to non-renewals exceeding the level of new business writings in the Medicare supplement line of business, as previously mentioned.  Also contributing to the increase in the expense ratio was an increase in expenses related to servicing the Medicare supplement line of business.

Net Investment Income and Realized Gains

Investment income decreased $0.3 million, or 12.6%, during the three month period ended March 31, 2020 over the comparable period in 2019. The decrease in investment income during the three month period ended March 31, 2020 was primarily attributable to a decrease in the equity in earnings from investments in real estate partnerships of $0.2 million over the comparable period in 2019.

The Company had net realized investment gains of $0.2 million during the three month period ended March 31, 2020, compared to net realized investment gains of $1.4 million in the three month period ended March 31, 2019. The net realized investment gains in the three month period ended March 31, 2020 resulted from the disposition of several of the Company’s investments in fixed maturities. The net realized investment gains in the three month period ended March 31, 2019 resulted primarily from the disposition of several of the Company’s investments in equity securities. Management continually evaluates the Company’s investment portfolio and makes adjustments for impairments and/or divests investments as may be determined to be appropriate.

Unrealized Gains (Losses) on Equity Securities

Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period, with certain exceptions. The Company recognized net unrealized losses on equity securities still held of $8.5 million during the three month period ended March 31, 2020 and unrealized gains on equity securities still held of $6.5 million during the three month period ended March 31, 2019.  Changes in unrealized gains on equity securities for the applicable periods are primarily the result of fluctuations in the market values of the Company’s equity investments.  The increase in the number and value of securities in an unrealized loss position during the three month period ended March 31, 2020, was primarily attributable to the volatility and weakening of the financial markets  as a result of COVID-19.

Interest Expense

Interest expense decreased $0.1 million, or 12.8%, during the three month period ended March 31, 2020 over the comparable period in 2019. Changes in interest expense were primarily due to changes in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) are directly related to LIBOR.

Liquidity and Capital Resources

The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements. Current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges. The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets. The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed.

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries. The principal cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time. At March 31, 2020, the Parent had approximately $4.5 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported a statutory net income of $0.2 million for the three month period ended March 31, 2020, compared to statutory net loss of $0.7 million for the three month period ended March 31, 2019. Statutory results are impacted by the recognition of all costs of acquiring business. In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined under GAAP. Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes. The Company’s life and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations. Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries. At March 31, 2020, American Southern had $42.0 million of statutory surplus and Bankers Fidelity had $27.5 million of statutory surplus. In 2020, dividend payments by the Parent’s insurance subsidiaries in excess of $4.6 million would require prior approval. Through March 31, 2020, the Parent received dividends of $0.9 million from its subsidiaries.

The Parent provides certain administrative and other services to each of its insurance subsidiaries. The amounts charged to and paid by the subsidiaries include reimbursements for various shared services and other expenses incurred directly on behalf of the subsidiaries by the Parent. In addition, there is in place a formal tax-sharing agreement between the Parent and its insurance subsidiaries. As a result of the Parent’s tax loss, it is anticipated that the tax-sharing agreement will continue to provide the Parent with additional funds from profitable subsidiaries to assist in meeting its cash flow obligations.

The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in Junior Subordinated Debentures. The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of three-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. At March 31, 2020, the effective interest rate was 5.56%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities. Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities. As of March 31, 2020, the Company has not made such an election.

The Company intends to pay its obligations under the Junior Subordinated Debentures using existing cash balances, dividend and tax-sharing payments from the operating subsidiaries, or from potential future financing arrangements.

At March 31, 2020, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding. All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s controlling shareholder. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative. In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option. The Series D Preferred Stock is not currently convertible. At March 31, 2020, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.1 million.

Cash and cash equivalents decreased from $12.9 million at December 31, 2019 to $8.3 million at March 31, 2020. The decrease in cash and cash equivalents during the three month period ended March 31, 2020 was primarily attributable to net cash used in operating activities of $10.5 million, partially offset by a $6.0 million increase resulting from investment sales and maturity of securities exceeding purchases of securities.

The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it expects to receive from its subsidiaries and, if needed, additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the foreseeable future. Management is not aware of any current recommendations by regulatory authorities, which, if implemented, would have a material adverse effect on the Company’s liquidity, capital resources or operations.

Expected Impact of COVID-19 on the Company’s Financial Condition and Results of Operations

The duration and impact of the COVID-19 pandemic is unknown at this time and it is not possible for us to reliably estimate the impact on the financial condition, operating results or liquidity of the Company and its operating subsidiaries in future periods.  However, we do not currently expect a significant decline in liquidity or operating results as a result of the disruption caused by the ongoing COVID-19 pandemic.  To date, the most significant impact of COVID-19 on the Company’s financial position is a decline in fair value of the Company’s fixed maturity and equity investments due to the weakened and volatile financial markets.  At this time, the Company believes the decline in market values are temporary in nature.

We expect that earned premiums could be adversely impacted by a weakened economy leading to a slowdown in new sales and reduced retention of insureds.  Additionally, a number of states have issued bulletins that either encourage or require premium leniency such as extension of grace periods or moratoriums on cancellation of policies for non-payment.  The Company does not expect a significant reduction or delay in payments and continues to monitor state required actions as they develop. 
 

For the Company’s property and casualty operations, the majority of premium revenue is derived from automobile liability and automobile physical damage lines of business written on a multi-year contract basis with state and local governments.  Although we cannot predict with certainty at this time, we do not expect a significant level of cancellations or non-renewals of our property and casualty contracts in the short term but recognize that a prolonged economic slowdown could adversely affect future results.

Benefits and losses in our property and casualty operations could be adversely impacted as a result of disruption caused by the COVID-19 pandemic.  However, due to the nature of our primary product lines, the impact is not currently expected to be material.  Additionally, we expect to see a reduction in frequency and severity of claims in the automobile lines of business as fewer miles are driven and less people are on the roads.  As a result, we do not currently expect a material adverse effect on operating results or liquidity in the property and casualty operations.

The majority of premium revenue in our life and health operations are derived from the senior market segment of the population, or those individuals age sixty-five and up, who maintain Medicare supplement and to a lesser extent, whole life insurance policies with the Company.  We expect that earned premiums could be adversely impacted by the rise in unemployment and economic slowdown, which could lead to a decline in new sales and reduced retention of insureds.  As a result, we currently anticipate that the life and health operations may experience a marginal decline in earned premiums although the actual impact cannot be predicted with certainty at this time.

Unforeseen infectious diseases that impact large portions of a population can have an adverse impact on mortality and morbidity, and resultant benefits and losses incurred by the Company’s life and health operations.  Accordingly, the Company does anticipate incurring higher costs, potentially similar to prior influenza seasons, as it relates to life insurance claims.  However, with much of the country sheltering in place over an extended period, the Company expects a decrease in non-medically necessary services being performed with many of the services deferred until a later date when these procedures are allowed to take place.  Additionally, the Company expects there will be some routine medical services that are deferred indefinitely.  As a result, and although the actual impact cannot be predicted with certainty at this time, the Company does not expect significant adverse development in total benefits and losses incurred in its life and health operations.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and, while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and may not be detected. An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains and references certain information that constitutes forward-looking statements as that term is defined in the federal securities laws. Statements, to the extent they are not statements of historical facts, should be considered forward-looking statements, and are subject to various risks and uncertainties. Such forward-looking statements are made based upon management’s current assessments of various risks and uncertainties, as well as assumptions made in accordance with the “safe harbor” provisions of the federal securities laws. The Company’s actual results could differ materially from the results anticipated in these forward-looking statements as a result of such risks and uncertainties, including those identified in filings made by the Company from time to time with the Securities and Exchange Commission. In addition, other risks and uncertainties not known by us, or that we currently determine to not be material, may materially adversely affect our financial condition, results of operations or cash flows. The Company undertakes no obligation to update any forward-looking statement as a result of subsequent developments, changes in underlying assumptions or facts, or otherwise.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On October 31, 2016, the Board of Directors of the Company approved a plan that allows for the repurchase of up to 750,000 shares of the Company’s common stock (the “Repurchase Plan”) on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company. Any such repurchases can be made from time to time in accordance with applicable securities laws and other requirements.

Other than pursuant to the Repurchase Plan, no purchases of common stock of the Company were made by or on behalf of the Company during the periods described below.

The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended March 31, 2020.

Period
 
Total Number
of Shares
Purchased
   
Average
Price Paid
per Share
   
Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
   
Maximum
Number of
Shares that
May Yet be
Purchased
Under the
Plans or
Programs
 
January 1 – January 31, 2020
   
-
   
$
-
     
-
     
325,129
 
February 1 – February 29, 2020
   
-
     
-
     
-
     
325,129
 
March 1 – March 31, 2020
   
-
     
-
     
-
     
325,129
 
Total
   
-
   
$
-
     
-
         

Item 6. Exhibits

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101. INS
XBRL Instance Document.
   
101. SCH
XBRL Taxonomy Extension Schema.
   
101. CAL
XBRL Taxonomy Extension Calculation Linkbase.
   
101.DEF
XBRL Taxonomy Extension Definition Linkbase.
   
101.LAB
XBRL Taxonomy Extension Label Linkbase.
   
101.PRE
XBRL Taxonomy Extension Presentation Linkbase.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
ATLANTIC AMERICAN CORPORATION
 
(Registrant)
   
Date: May 11, 2020
By:
/s/ J. Ross Franklin
   
J. Ross Franklin
   
Vice President and Chief Financial Officer
   
(Principal Financial and Accounting Officer)


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