Atlantic American Corporation (Nasdaq- AAME) today reported net income for the three month period ended December 31, 2020 of $11.8 million, or $0.54 per diluted share, as compared to net income of $1.3 million, or $0.06 per diluted share, for the comparable period in 2019. For the year ended December 31, 2020, the Company reported net income of $12.2 million, or $0.56 per diluted share, as compared to net loss of $0.4 million, or $0.04 per diluted share, for the comparable period in 2019. The increase in net income during the fourth quarter of 2020 was primarily due to a $7.0 million increase in realized gains coupled with a $5.1 million decrease in insurance benefits and losses incurred for the fourth quarter of 2020 as compared to the comparable quarter of 2019. The increase in net income for the year ended December 31, 2020 was primarily due to a $19.3 million decrease in insurance benefits and losses incurred and a $5.8 million increase in realized gains, somewhat offset by a decrease of $8.9 million of net unrealized gains and losses on equity securities during the year ended December 31, 2020 as compared to the comparable period in 2019. Changes in unrealized gains and losses on equity securities for the applicable periods are primarily the result of fluctuations in the market values of the Company’s equity investments.

Operating income (as defined below) increased to $3.6 million in the three month period ended December 31, 2020 as compared to a $1.8 million operating loss for the three month period ended December 31, 2019. For the year ended December 31, 2020, operating income increased to $11.5 million over an operating loss of $7.5 million for the comparable period in 2019. The increase in operating income for the three and twelve month periods was primarily due to improved loss experience in the Company’s life and health operations, resulting from a significant decrease in the number of incurred claims and improved rate adequacy within the Medicare supplement line of business. The decrease in the number of incurred claims was primarily attributable to lower utilization of medical services by our policyholders as a result of the COVID-19 pandemic.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “We are exceptionally encouraged by the strong operating results reported by our family of insurance companies. Despite the many uncertainties we were faced with in 2020 due to the COVID-19 pandemic and many of our employees shifting to a work-from-home environment, we overcame the challenges and have recently resumed in-person operations for the majority of our staff. Our insurance subsidiaries reported record financial results and we are excited about the prospects for this upcoming year. In recognition of an outstanding earnings report and our commitment to delivering value to our shareholders, we are pleased to announce our Board’s decision to reinstate the Company’s annual dividend in the amount of $0.02 per share, which is payable on April 27, 2021 to shareholders of record on April 13, 2021.”   Atlantic American Corporation is an insurance holding company involved through its subsidiary companies in specialty markets of the life, health, and property and casualty insurance industries. Its principal insurance subsidiaries are American Southern Insurance Company, American Safety Insurance Company, Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company.

Note regarding non-GAAP financial measure: Atlantic American Corporation presents its consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). However, from time to time, the Company may present, in its public statements, press releases and filings with the Securities and Exchange Commission, non-GAAP financial measures such as operating income (loss). Management believes operating income (loss) 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 income tax expense, which is 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 operating results (such as any realized and unrealized investment gains (losses), 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). The financial data attached includes a reconciliation of operating income (loss) to net income (loss), the most comparable GAAP financial measure. The Company’s definition of operating income (loss) may differ from similarly titled financial measures used by others. This non-GAAP financial measure should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

Note regarding Private Securities Litigation Reform Act: Except for historical information contained herein, this press release contains forward-looking statements that involve a number of risks and uncertainties. Actual results could differ materially from those indicated by such forward-looking statements due to a number of factors and risks detailed from time to time in statements and reports that Atlantic American Corporation files with the Securities and Exchange Commission.

For further information contact:    
J. Ross Franklin   Hilton H. Howell, Jr.
Chief Financial Officer   Chairman, President & CEO
Atlantic American Corporation   Atlantic American Corporation
404-266-5580   404-266-5505

Atlantic American CorporationFinancial Data

  Three Months Ended   Twelve Months Ended
  December 31,   December 31,
(Unaudited; In thousands, except per share data)   2020       2019       2020       2019  
Insurance premiums              
    Life and health $ 29,656     $ 31,024     $ 121,167     $ 123,245  
    Property and casualty   16,856       15,645       62,372       58,680  
        Insurance premiums, net   46,512       46,669       183,539       181,925  
               
Net investment income   2,027       2,145       7,744       8,979  
Realized investment gains, net   6,988       9       7,420       1,574  
Unrealized gains (losses) on equity securities, net   4,400       3,415       (3,431 )     5,511  
Other income   5       51       76       190  
               
Total revenue   59,932       52,289       195,348       198,179  
               
Insurance benefits and losses incurred              
    Life and health   19,345       23,853       80,537       99,684  
    Property and casualty   10,653       11,195       39,339       39,541  
Commissions and underwriting expenses   12,129       11,482       46,811       45,477  
Interest expense   357       506       1,610       2,130  
Other expense   2,432       3,612       11,548       11,754  
               
  Total benefits and expenses   44,916       50,648       179,845       198,586  
               
Income (loss) before income taxes   15,016       1,641       15,503       (407 )
Income tax expense (benefit)   3,168       371       3,334       (21 )
               
Net income (loss) $ 11,848     $ 1,270     $ 12,169     $ (386 )
               
Earnings (loss) per common share (basic) $ 0.58     $ 0.06     $ 0.58     $ (0.04 )
Earnings (loss) per common share (diluted) $ 0.54     $ 0.06     $ 0.56     $ (0.04 )
               
Reconciliation of Non-GAAP Financial Measure              
               
Net income (loss) $ 11,848     $ 1,270     $ 12,169     $ (386 )
Income tax expense (benefit)   3,168       371       3,334       (21 )
Realized investment gains, net   (6,988 )     (9 )     (7,420 )     (1,574 )
Unrealized (gains) losses on equity securities, net   (4,400 )     (3,415 )     3,431       (5,511 )
               
Non-GAAP Operating income (loss) $ 3,628     $ (1,783 )   $ 11,514     $ (7,492 )
                       
                     
  December 31,   December 31,        
Selected Balance Sheet Data   2020       2019          
               
Total cash and investments $ 298,630     $ 281,530          
    Insurance subsidiaries   292,478       274,730          
    Parent and other   6,152       6,800          
Total assets   405,187       377,626          
Insurance reserves and policyholder funds   198,676       201,906          
Debt   33,738       33,738          
Total shareholders' equity   145,060       118,394          
Book value per common share   6.84       5.51          
Statutory capital and surplus              
    Life and health   42,326       35,546          
    Property and casualty   50,194       45,827