Atlantic American Corporation (Nasdaq: AAME) announced today that the Company has filed its Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Form 10-Q”).

As previously announced, the Company was unable to file its Form 10-K and Form 10-Q within the prescribed time periods because the Company required additional time to finalize its actuarial valuation procedures and related financial statement balances within the Company’s life and health segment, Bankers Fidelity. The need for additional time resulted from a change in the systems used to perform the actuarial valuations. Effective today, the Company is up-to-date on its filing of periodic financial reports with the Securities and Exchange Commission.

Quarter and Year Ended December 31, 2022The Company reported net income for the three month period ended December 31, 2022 of $1.0 million, or $0.05 per diluted share, as compared to net income of $2.7 million, or $0.12 per diluted share, for the comparable period in 2021. For the year ended December 31, 2022, the Company reported net income of $1.5 million, or $0.06 per diluted share, as compared to net income of $4.3 million, or $0.19 per diluted share for the comparable period in 2021. The decrease in net income during the fourth quarter of 2022 was primarily due to a $4.4 million decrease in realized gains, partially offset by a $2.5 million decrease in insurance benefits and losses incurred within the Company’s life and health operations. The decrease in net income for the year ended December 31, 2022 was primarily due to a $9.5 million decrease in unrealized gains on equity securities coupled with a $4.9 million decrease in realized gains, partially offset by an $11.0 million decrease in benefits and losses incurred within the Company’s life and health operations. As a percentage of premium, losses incurred within the Medicare supplement line of business decreased for the three month period and year ended December 31, 2022, primarily as a result of improved rate adequacy.

Operating income (Non-GAAP, as defined below) increased to $3.5 million in the three month period ended December 31, 2022 as compared to $2.6 million for the three month period ended December 31, 2021. For the year ended December 31, 2022, the Company reported operating income of $9.6 million compared to operating loss of $1.5 million for the comparable period in 2021. The increase in operating income for the three and twelve month periods was primarily due to a decrease in insurance benefits and losses in the Company’s life and health operations, as mentioned above, predominantly within the Medicare supplement line of business.

Quarter Ended March 31, 2023The Company reported net loss of $1.4 million, or $0.08 per common share, in the first quarter of 2023 compared to net income of $2.8 million, or $0.13 per common share, in the first quarter of 2022. The decrease in net income for the first quarter of 2023 is primarily the result of a $4.6 million decrease in unrealized gains on equity securities due to fluctuations in market values.

Operating income decreased to $0.6 million in the three month period ended March 31, 2023 compared to $1.6 million in the three month period ended March 31, 2022. The decrease in operating income was primarily due to unfavorable loss experience in the property and casualty operations due to an increase in the frequency and severity of claims within the automobile liability line of business.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “We are absolutely delighted to finally release our fourth quarter 2022 and first quarter 2023 results. It is unfortunate that the process of converting our valuation systems resulted in delays in filing our financial reports, but we are very pleased to report that this was one of our best years ever with $9.6 million in operating income for the Company during 2022. Each of our life, health, and property and casualty segments is performing quite well and we look forward to the balance of 2023 with optimism.”

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, Bankers Fidelity Assurance Company and Atlantic Capital Life 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). We define operating income (loss) as net income (loss) excluding: (i) income tax expense (benefit); (ii) realized investment gains, net; and (iii) unrealized (gains) losses on equity securities, net. 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 (benefit), 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, including the Company’s ability to remediate the identified material weakness in its internal control over financial reporting and those other risks and uncertainties detailed in statements and reports that Atlantic American Corporation files from time to time 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)   2022       2021       2022       2021  
Insurance premiums              
Life and health $ 28,391     $ 29,216     $ 115,164     $ 116,234  
Property and casualty   16,523       17,685       70,276       67,982  
Insurance premiums, net   44,914       46,901       185,440       184,216  
               
Net investment income   2,422       2,012       9,932       8,528  
Realized investment gains, net   1       4,383       30       4,903  
Unrealized gains (losses) on equity securities, net   (2,106 )     (3,564 )     (7,562 )     1,894  
Other income   -       -       11       13  
               
Total revenue   45,231       49,732       187,851       199,554  
               
Insurance benefits and losses incurred              
Life and health   18,278       20,798       76,281       87,261  
Property and casualty   10,626       10,876       47,175       44,433  
Commissions and underwriting expenses   10,819       10,826       46,713       47,496  
Interest expense   661       347       1,952       1,387  
Other expense   3,483       3,497       13,634       13,675  
               
Total benefits and expenses   43,867       46,344       185,755       194,252  
               
Income before income taxes   1,364       3,388       2,096       5,302  
Income tax expense   318       723       571       1,021  
               
Net income $ 1,046     $ 2,665     $ 1,525     $ 4,281  
               
Earnings per common share (basic) $ 0.05     $ 0.13     $ 0.06     $ 0.19  
Earnings per common share (diluted) $ 0.05     $ 0.12     $ 0.06     $ 0.19  
               
Reconciliation of Non-GAAP financial measure              
               
Net income $ 1,046     $ 2,665     $ 1,525     $ 4,281  
Income tax expense   318       723       571       1,021  
Realized investment gains, net   (1 )     (4,383 )     (30 )     (4,903 )
Unrealized (gains) losses on equity securities, net   2,106       3,564       7,562       (1,894 )
               
Non-GAAP operating income (loss) $ 3,469     $ 2,569     $ 9,628     $ (1,495 )
                       
  December 31,   December 31,        
Selected balance sheet data   2022       2021          
               
Total cash and investments $ 257,575     $ 308,195          
Insurance subsidiaries   251,378       302,302          
Parent and other   6,197       5,893          
Total assets   367,064       402,286          
Insurance reserves and policyholder funds   202,651       201,797          
Debt   35,747       33,738          
Total shareholders' equity   102,193       141,286          
Book value per common share   4.74       6.66          
Statutory capital and surplus              
Life and health   36,672       38,625          
Property and casualty   53,023       52,724          
               

Atlantic American CorporationFinancial Data

  Three Months Ended
  March 31,
(Unaudited; In thousands, except per share data)   2023       2022  
Insurance premiums      
Life and health $ 28,889     $ 29,738  
Property and casualty   17,211       17,343  
Insurance premiums, net   46,100       47,081  
       
Net investment income   2,541       2,340  
Realized investment losses, net   -       (10 )
Unrealized gains (losses) on equity securities, net   (2,375 )     2,193  
Other income   3       4  
       
Total revenue   46,269       51,608  
       
Insurance benefits and losses incurred      
Life and health   17,800       20,691  
Property and casualty   12,660       10,478  
Commissions and underwriting expenses   12,918       12,836  
Interest expense   750       354  
Other expense   3,959       3,453  
       
Total benefits and expenses   48,087       47,812  
       
Income (loss) before income taxes   (1,818 )     3,796  
Income tax expense (benefit)   (372 )     954  
       
Net income (loss) $ (1,446 )   $ 2,842  
       
Earnings (loss) per common share (basic & diluted) $ (0.08 )   $ 0.13  
       
Reconciliation of Non-GAAP financial measure      
       
Net income (loss) $ (1,446 )   $ 2,842  
Income tax expense (benefit)   (372 )     954  
Realized investment losses, net   -       10  
Unrealized (gains) losses on equity securities, net   2,375       (2,193 )
       
Non-GAAP operating income (loss) $ 557     $ 1,613  
               
  March 31,   December 31,
Selected balance sheet data   2023       2022  
       
Total cash and investments $ 249,207     $ 257,575  
Insurance subsidiaries   243,965       251,378  
Parent and other   5,242       6,197  
Total assets   353,595       367,064  
Insurance reserves and policyholder funds   191,243       202,651  
Debt   36,738       35,747  
Total shareholders' equity   104,379       102,193  
Book value per common share   4.85       4.74  
Statutory capital and surplus      
Life and health   32,426       36,672  
Property and casualty   53,302       53,023  
       
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