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 June 30, 2025
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 ☑ 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 July 31, 2025 was 20,397,228.

ATLANTIC AMERICAN CORPORATION

TABLE OF CONTENTS

 
2
     
Part I.
Financial Information
     
Item 1.
3
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
8
     
Item 2.
21
     
Item 4.
27
     
Part II.
Other Information
  
     
Item 2.
29
     
Item 5.
29
     
Item 6.
29
     
 
30

Table Of Contents
FORWARD-LOOKING STATEMENTS

Certain of the statements contained herein are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are all statements other than those of historical fact. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, and include estimates and assumptions related to, among other things, general economic, competitive, operational and legislative developments, expectations and trends. Forward-looking statements are inherently subject to risks and uncertainties which are, in many instances, beyond the Company’s control and have been made based upon management’s current expectations and beliefs concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Actual results could differ materially from those expressed by forward-looking statements, depending on the occurrence or outcome of various factors. These factors include, among others: the effects of macroeconomic conditions and general economic uncertainty; unexpected developments in the health care or insurance industries affecting providers or individuals, including the cost or availability of services, or the tax consequences related thereto; disruption to the financial markets; unanticipated increases in the rate, number and amounts of claims outstanding; our ability to remediate the identified material weakness in our internal control over financial reporting; the level of performance of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses; changes in the stock markets, interest rates or other financial markets, including the potential effect on the Company’s statutory capital levels; the uncertain effect on the Company of regulatory and market-driven changes in practices relating to the payment of incentive compensation to brokers, agents and other producers; the potential impact of public health emergencies; the incidence and severity of catastrophes, both natural and man-made; the possible occurrence of terrorist attacks; stronger than anticipated competitive activity; unfavorable judicial or legislative developments; the potential effect of regulatory developments, including those which could increase the Company’s business costs and required capital levels; the Company’s ability to distribute its products through distribution channels, both current and future; the uncertain effect of emerging claim and coverage issues; the effect of assessments and other surcharges for guaranty funds and other mandatory pooling arrangements; information technology system failures or network disruptions; and risks related to cybersecurity matters, such as breaches of our computer network or those of other parties or the loss of or unauthorized access to the data we maintain. As a result, undue reliance should not be placed upon forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update any forward-looking statements as a result of subsequent developments, changes in underlying assumptions or facts or otherwise, except as may be required by law.

2
Table Of Contents
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

   
Unaudited
June 30,
2025
    
December 31,
2024
  
ASSETS
  
Cash and cash equivalents
  
$
46,423
    
$
35,570
  
Investments:
                
Fixed maturities, available-for-sale, at fair value (amortized cost: $233,156 and $236,299; no allowance for credit losses)
    
213,323
      
212,612
  
Equity securities, at fair value (cost: $4,943 and $4,939)
    
11,280
      
7,900
  
Other invested assets (cost: $7,946 and $7,946)
    
6,324
      
6,616
  
Policy loans
    
1,656
      
1,722
  
Real estate
    
38
      
38
  
Investment in unconsolidated trusts
    
1,238
      
1,238
  
    Total investments
    
233,859
      
230,126
  
Receivables:
                
Reinsurance (net of allowance for expected credit losses of $43 and $51)
    
22,369
      
22,942
  
Insurance premiums and other (net of allowance for expected credit losses $194 and $201)
    
50,242
      
27,458
  
Deferred income taxes, net
    
16,449
      
18,118
  
Deferred acquisition costs
    
45,285
      
44,842
  
Other assets
    
12,168
      
11,828
  
Intangibles
    
2,544
      
2,544
  
   Total assets
  
$
429,339
    
$
393,428
  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Insurance reserves and policyholder funds:
                
Future policy benefits
  
$
101,554
    
$
98,464
  
Unearned premiums
    
50,510
      
31,178
  
Losses and claims
    
101,759
      
93,707
  
Other policy liabilities
    
1,690
      
1,757
  
Total insurance reserves and policyholder funds
    
255,513
      
225,106
  
Accounts payable and accrued expenses
    
29,899
      
30,948
  
Revolving credit facility
    
4,021
      
4,023
  
Junior subordinated debenture obligations, net
    
33,738
      
33,738
  
Total liabilities
    
323,171
      
293,815
  
                 
Commitments and contingencies (Notes 3 and 12)
    
 
      
 
  
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: 20,397,228 and 20,399,758
    
22,401
      
22,401
  
Additional paid-in capital
    
57,425
      
57,425
  
Retained earnings
    
49,366
      
45,854
  
Accumulated other comprehensive loss
    
(15,667
)
    
(18,712
)
Unearned stock grant compensation
    
—
      
(2
)
Treasury stock, at cost: 2,003,666 and 2,001,136 shares
    
(7,412
)
    
(7,408
)
Total shareholders’ equity
    
106,168
      
99,613
  
Total liabilities and shareholders’ equity
  
$
429,339
    
$
393,428
  

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

3
Table Of Contents
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except per share data)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Revenue:
                        
Insurance premiums, net
  
$
50,146
    
$
44,993
    
$
97,059
    
$
89,545
  
Net investment income
    
2,516
      
2,416
      
4,958
      
4,972
  
Realized investment gains, net
    
16
      
13
      
16
      
13
  
Unrealized gains on equity securities, net
    
2,609
      
243
      
3,376
      
129
  
Other income
    
3
      
3
      
6
      
6
  
Total revenue
    
55,290
      
47,668
      
105,415
      
94,665
  
                                 
Benefits and expenses:
                                
Insurance benefits and losses incurred
    
33,647
      
31,807
      
65,560
      
63,732
  
Commissions and underwriting expenses
    
12,870
      
11,584
      
24,550
      
24,250
  
Interest expense
    
773
      
867
      
1,547
      
1,722
  
Other expense
    
3,784
      
4,259
      
8,507
      
8,316
  
Total benefits and expenses
    
51,074
      
48,517
      
100,164
      
98,020
  
Income (loss) before income taxes
    
4,216
      
(849
)
    
5,251
      
(3,355
)
Income tax expense (benefit)
    
900
      
(165
)
    
1,133
      
(673
)
Net income (loss)
    
3,316
      
(684
)
    
4,118
      
(2,682
)
Preferred stock dividends
    
(100
)
    
(100
)
    
(199
)
    
(199
)
Net income (loss) applicable to common shareholders
  
$
3,216
    
$
(784
)
  
$
3,919
    
$
(2,881
)
Earnings (loss) per common share (basic)
  
$
0.16
    
$
(0.04
)
  
$
0.19
    
$
(0.14
)
Earnings (loss) per common share (diluted)
  
$
0.15
    
$
(0.04
)
  
$
0.19
    
$
(0.14
)

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

4
Table Of Contents
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; Dollars in thousands)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Net income (loss)
  
$
3,316
    
$
(684
)
  
$
4,118
    
$
(2,682
)
Other comprehensive income (loss):
                                
Available-for-sale fixed maturity securities:
                                
Gross unrealized holding gains (losses) arising in the period
    
733
      
(1,694
)
    
3,870
      
(4,182
)
Related income tax effect
    
(153
)
    
356
      
(812
)
    
878
  
Subtotal
    
580
      
(1,338
)
    
3,058
      
(3,304
)
Less: reclassification adjustment for net realized gains included in net income (loss)
    
(16
)
    
(13
)
    
(16
)
    
(13
)
Related income tax effect
    
3
      
3
      
3
      
3
  
Subtotal
    
(13
)
    
(10
)
    
(13
)
    
(10
)
Total other comprehensive income (loss), net of tax
    
567
      
(1,348
)
    
3,045
      
(3,314
)
Total comprehensive income (loss)
  
$
3,883
    
$
(2,032
)
  
$
7,163
    
$
(5,996
)

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

5
Table Of Contents
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited; Dollars in thousands except share data)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Preferred stock:
                        
Balance, beginning of period
  
$
55
    
$
55
    
$
55
    
$
55
  
Balance, end of period
    
55
      
55
      
55
      
55
  
Common stock:
                                
Balance, beginning of period
    
22,401
      
22,401
      
22,401
      
22,401
  
Balance, end of period
    
22,401
      
22,401
      
22,401
      
22,401
  
Additional paid-in capital:
                                
Balance, beginning of period
    
57,425
      
57,425
      
57,425
      
57,425
  
Balance, end of period
    
57,425
      
57,425
      
57,425
      
57,425
  
Retained earnings:
                                
Balance, beginning of period
    
46,150
      
48,425
      
45,854
      
50,929
  
Net income (loss)
    
3,316
      
(684
)
    
4,118
      
(2,682
)
Dividends on common stock
    
—
      
—
      
(407
)
    
(407
)
Dividends accrued on preferred stock
    
(100
)
    
(100
)
    
(199
)
    
(199
)
Balance, end of period
    
49,366
      
47,641
      
49,366
      
47,641
  
Accumulated other comprehensive loss:
                                
Balance, beginning of period
    
(16,234
)
    
(18,087
)
    
(18,712
)
    
(16,121
)
Other comprehensive income (loss), net of tax
    
567
      
(1,348
)
    
3,045
      
(3,314
)
Balance, end of period
    
(15,667
)
    
(19,435
)
    
(15,667
)
    
(19,435
)
Unearned stock grant compensation:
                                
Balance, beginning of period
    
—
      
(8
)
    
(2
)
    
(13
)
Amortization of unearned compensation
    
—
      
1
      
2
      
6
  
Balance, end of period
    
—
      
(7
)
    
—
      
(7
)
Treasury stock:
                                
Balance, beginning of period
    
(7,412
)
    
(7,408
)
    
(7,408
)
    
(7,401
)
Net shares acquired related to employee share-based compensation plans
    
—
      
—
      
(4
)
    
(7
)
Balance, end of period
    
(7,412
)
    
(7,408
)
    
(7,412
)
    
(7,408
)
                                 
Total shareholders’ equity
  
$
106,168
    
$
100,672
    
$
106,168
    
$
100,672
  
Dividends declared on common stock per share
  
$
—
    
$
—
    
$
0.02
    
$
0.02
  
                                 
Common shares outstanding:
                                
Balance, beginning of period
    
20,397,228
      
20,399,758
      
20,399,758
      
20,402,288
  
Net shares acquired under employee share-based compensation plans
    
—
      
—
      
(2,530
)
    
(2,530
)
Balance, end of period
    
20,397,228
      
20,399,758
      
20,397,228
      
20,399,758
  

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

6
Table Of Contents
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In thousands)

   
Six Months Ended
June 30,
  
   
2025
    
2024
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income (loss)
  
$
4,118
    
$
(2,682
)
Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities:
                
(Additions to) amortization of acquisition costs, net
    
(443
)
    
13
  
Realized investment gains, net
    
(16
)
    
(13
)
Unrealized gains on equity securities
    
(3,376
)
    
(129
)
Losses from equity method investees
    
292
      
318
  
Compensation expense related to share awards
    
2
      
6
  
Benefit for credit losses
    
(15
)
    
(5
)
Depreciation and amortization
    
180
      
238
  
Deferred income tax expense (benefit)
    
860
      
(673
)
Increase in receivables, net
    
(22,196
)
    
(11,918
)
Increase in insurance reserves and policyholder funds
    
30,407
      
12,830
  
Decrease in accounts payable and accrued expenses
    
(1,248
)
    
(2,689
)
Other, net
    
(9
)
    
(199
)
Net cash provided by (used in) operating activities
    
8,556
      
(4,903
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from investments sold
    
6,869
      
—
  
Proceeds from investments matured, called or redeemed
    
9,304
      
5,935
  
Investments purchased
    
(13,031
)
    
(8,612
)
Additions to property and equipment
    
(434
)
    
(94
)
Net cash provided by (used in) investing activities
    
2,708
      
(2,771
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Payment of dividends on common stock
    
(407
)
    
(407
)
Treasury stock acquired — net employee share-based compensation
    
(4
)
    
(7
)
Proceeds from revolving credit facility, net
    
—
      
1,000
  
Net cash (used in) provided by financing activities
    
(411
)
    
586
  
                 
Net increase (decrease) in cash and cash equivalents
    
10,853
      
(7,088
)
Cash and cash equivalents at beginning of period
    
35,570
      
28,301
  
Cash and cash equivalents at end of period
  
$
46,423
    
$
21,213
  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
                
Cash paid for interest
  
$
1,559
    
$
1,723
  
Cash paid for income taxes
  
$
727
    
$
580
  

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

7
Table Of Contents
ATLANTIC AMERICAN CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)

Note 1.
Basis of Presentation and Significant Accounting Policies

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, Bankers Fidelity Assurance Company and Atlantic Capital Life 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, 2024 (the “2024 Annual Report”). For more information regarding Significant Accounting Policies, see the “Summary of Significant Accounting Policies” section of Note 1 of Notes to Consolidated Financial Statements in the 2024 Annual Report. The Company’s financial condition and operating results as of and for the three month and six month periods ended June 30, 2025 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, 2025 or for any other future period.

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. To the extent that the Company changes its accounting for, or presentation of, items in the financial statements, the presentation of such amounts in prior periods is changed to conform to the current period presentation, if appropriate, and disclosed, if material.

Enactment of the One Big Beautiful Bill Act of 2025

On July 4, 2025, the U.S. enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (OBBBA) which includes both tax and non-tax provisions. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Management does not believe this will have a material impact on the financials.

Note 2.
Recently Issued Accounting Standards

Future Adoption of New Accounting Standards

Accounting for Long-Duration Contracts. In August 2018, the FASB issued ASU No. 2018-12, Financial Services —Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”). This guidance (1) improves the timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future cash flows, by updating the assumptions used in measuring the liability for future policy benefits for these contracts at least annually rather than establishing them at contract inception and retaining them over the life of the contracts, which will improve the timeliness of recognizing changes in the liability that are caused by deviations in experience from the assumptions, and these deviations will be recognized and reflected in the liability for future benefits as they occur, (2) improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, (3) simplifies the amortization of deferred acquisition costs; amortization on a constant level basis will be used in place of a complex actuarial methodology that is in place under existing financial reporting standards, and (4) improves the effectiveness of the required disclosures, with additional disclosures required, including disaggregated rollforwards of deferred acquisition costs, liabilities for future policy benefits, market risk benefits and liability for policyholders’ account balances. ASU 2018-12 is effective for annual reporting periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025, although earlier adoption is permitted.  The Company has completed the development of the necessary actuarial models for the affected policies and is in the process of testing the models and developing procedures that are responsive to support the new valuation requirements that will be used to estimate the liability for future benefits for these policies. The Company expects its Life, Medicare supplement and certain individual Accident and Health products to fall within the scope of this standard. The Company has elected to use the modified retrospective method upon adoption. The disclosures under ASU 2018-12 will change significantly, and the impact on our consolidated financial statements is expected to be material.

For more 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 2024 Annual Report.

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Note 3.
Investments

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, allowance for credit losses and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2025 and December 31, 2024.

Fixed maturities were comprised of the following:

   
June 30, 2025
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Allowance for Credit Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                              
Bonds:
                              
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
24,251
    
$
153
    
$
1,818
    
$
—
    
$
25,916
  
Loan backed and structured securities
    
22,209
      
51
      
2,179
      
—
      
24,337
  
Obligations of states and political subdivisions
    
7,318
      
15
      
1,464
      
—
      
8,767
  
Corporate securities:
                                        
Utilities and telecom
    
22,280
      
86
      
2,828
      
—
      
25,022
  
Financial services
    
60,141
      
731
      
3,888
      
—
      
63,298
  
Other business – diversified
    
33,724
      
96
      
3,507
      
—
      
37,135
  
Other consumer – diversified
    
43,194
      
46
      
5,340
      
—
      
48,488
  
Total corporate securities
    
159,339
      
959
      
15,563
      
—
      
173,943
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
    
206
      
13
      
—
      
—
      
193
  
Total redeemable preferred stocks
    
206
      
13
      
—
      
—
      
193
  
Total fixed maturities
  
$
213,323
    
$
1,191
    
$
21,024
    
$
—
    
$
233,156
  

   
December 31, 2024
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Allowance for Credit Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                              
Bonds:
                              
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
22,251
    
$
24
    
$
2,144
    
$
—
    
$
24,371
  
Loan backed and structured securities
    
22,290
      
17
      
2,457
      
—
      
24,730
  
Obligations of states and political subdivisions
    
7,623
      
9
      
1,517
      
—
      
9,131
  
Corporate securities:
                                        
Utilities and telecom
    
24,623
      
108
      
3,206
      
—
      
27,721
  
Financial services
    
59,564
      
563
      
4,768
      
—
      
63,769
  
Other business – diversified
    
34,117
      
160
      
3,919
      
—
      
37,876
  
Other consumer – diversified
    
41,957
      
33
      
6,585
      
—
      
48,509
  
Total corporate securities
    
160,261
      
864
      
18,478
      
—
      
177,875
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
    
187
      
—
      
5
      
—
      
192
  
Total redeemable preferred stocks
    
187
      
—
      
5
      
—
      
192
  
Total fixed maturities
  
$
212,612
    
$
914
    
$
24,601
    
$
—
    
$
236,299
  

Bonds having an amortized cost of $14,898 and $15,065 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2025 and December 31, 2024, respectively, in accordance with statutory requirements. In addition, the Company maintains cash and cash equivalents on deposit with insurance regulatory authorities of $226 as of June 30, 2025 and December 31, 2024. Additionally, bonds having an amortized cost of $9,048 and $9,209 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2025 and December 31, 2024, respectively.

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Equity securities were comprised of the following:

   
June 30, 2025
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost or
Amortized
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
  
$
1,240
    
$
930
    
$
—
    
$
310
  
    Communications
    
10,040
      
5,407
      
—
      
4,633
  
Total equity securities
  
$
11,280
    
$
6,337
    
$
—
    
$
4,943
  

   
December 31, 2024
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost or
Amortized
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
  
$
1,149
    
$
843
    
$
—
    
$
306
  
Communications
    
6,751
      
2,118
      
—
      
4,633
  
Total equity securities
  
$
7,900
    
$
2,961
    
$
—
    
$
4,939
  

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2025 and December 31, 2024 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.

   
June 30, 2025
    
December 31, 2024
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
  
$
7,425
    
$
7,502
    
$
7,484
    
$
7,497
  
Due after one year through five years
    
66,745
      
68,104
      
62,722
      
64,703
  
Due after five years through ten years
    
25,966
      
27,395
      
32,820
      
35,552
  
Due after ten years
    
82,742
      
96,475
      
80,199
      
95,466
  
Asset backed securities
    
30,445
      
33,680
      
29,387
      
33,081
  
Totals
  
$
213,323
    
$
233,156
    
$
212,612
    
$
236,299
  

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 June 30, 2025 and December 31, 2024.

   
June 30, 2025
  
   
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
  
$
2,570
    
$
19
    
$
14,071
    
$
1,799
    
$
16,641
    
$
1,818
  
Loan backed and structured securities
    
543
      
3
      
15,392
      
2,176
      
15,935
      
2,179
  
Obligations of states and political subdivisions
    
—
      
—
      
5,891
      
1,464
      
5,891
      
1,464
  
Corporate securities
    
17,818
      
470
      
122,233
      
15,093
      
140,051
      
15,563
  
Total temporarily impaired securities
  
$
20,931
    
$
492
    
$
157,587
    
$
20,532
    
$
178,518
    
$
21,024
  

   
December 31, 2024
  
   
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
  
$
3,753
    
$
33
    
$
16,136
    
$
2,111
    
$
19,889
    
$
2,144
  
Loan backed and structured securities
    
1,010
      
5
      
16,069
      
2,452
      
17,079
      
2,457
  
Obligations of states and political subdivisions
    
—
      
—
      
5,839
      
1,517
      
5,839
      
1,517
  
Corporate securities
    
18,510
      
755
      
125,930
      
17,723
      
144,440
      
18,478
  
Redeemable preferred stocks
    
188
      
5
      
—
      
—
      
188
      
5
  
Total temporarily impaired securities
  
$
23,461
    
$
798
    
$
163,974
    
$
23,803
    
$
187,435
    
$
24,601
  

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 Analysis of Securities in Unrealized Loss Positions

As of June 30, 2025 and December 31, 2024, there were 198 and 213 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors. The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.

For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the elevated interest rate environment, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile.

For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all reasonably available sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations, as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.

Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company. In addition, the Company does not intend to sell the investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated. The Company had no allowance for credit losses (“ACL”) on its available-for-sale fixed maturities as of June 30, 2025 or December 31, 2024.

The following tables summarize realized investment gains for the three month and six month periods ended June 30, 2025 and 2024.

   
Three Months Ended
June 30, 2025
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
153
    
$
—
    
$
—
    
$
153
  
Losses
    
(137
)
    
—
      
—
      
(137
)
Realized investment gains, net
  
$
16
    
$
—
    
$
—
    
$
16
  

   
Three Months Ended
June 30, 2024
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
15
    
$
—
    
$
—
    
$
15
  
Losses
    
(2
)
    
—
      
—
      
(2
)
Realized investment gains, net
  
$
13
    
$
—
    
$
—
    
$
13
  

   
Six Months Ended
June 30, 2025
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
153
    
$
—
    
$
—
    
$
153
  
Losses
    
(137
)
    
—
      
—
      
(137
)
Realized investment gains, net
  
$
16
    
$
—
    
$
—
    
$
16
  

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Six Months Ended
June 30, 2024
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
15
    
$
—
    
$
—
    
$
15
  
Losses
    
(2
)
    
—
      
—
      
(2
)
Realized investment gains, net
  
$
13
    
$
—
    
$
—
    
$
13
  


The following table presents the change in unrealized gains related to equity securities still held for the three month and six month periods ended June 30, 2025 and 2024.

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Net realized and unrealized gains recognized during the period on equity securities
  
$
2,609
    
$
243
    
$
3,376
    
$
129
  
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
      
—
      
—
  
Unrealized gains recognized during the reporting period on equity securities, net
  
$
2,609
    
$
243
    
$
3,376
    
$
129
  

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 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 $6,324 and $6,616 as of June 30, 2025 and December 31, 2024, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2025 and December 31, 2024.

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’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 $7,562 and $7,854, as of June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025 and December 31, 2024, the Company had outstanding commitments totaling $2,200, respectively, 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 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 and loss severities) or can be corroborated by observable market data.

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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. The Company’s financial instruments valued using Level 3 criteria consist of one equity security. As of June 30, 2025 and December 31, 2024, the value of the equity security valued using Level 3 criteria was $193 and $189, respectively.

As of June 30, 2025, 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
  
$
—
    
$
213,323
    
$
—
    
$
213,323
  
Equity securities
    
11,087
      
—
      
193
      
11,280
  
Cash equivalents
    
28,421
      
—
      
—
      
28,421
  
Total
  
$
39,508
    
$
213,323
    
$
193
    
$
253,024
  

As of December 31, 2024, 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
  
$
—
    
$
212,612
    
$
—
    
$
212,612
  
Equity securities
    
7,711
      
—
      
189
      
7,900
  
Cash equivalents
    
14,948
      
—
      
—
      
14,948
  
Total
  
$
22,659
    
$
212,612
    
$
189
    
$
235,460
  

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 June 30, 2025 and December 31, 2024.

         
June 30, 2025
    
December 31, 2024
  
   
Level in Fair
Value
Hierarchy (1)
    
Carrying
Amount
    
Estimated
Fair Value
    
Carrying
Amount
    
Estimated
Fair Value
  
Assets:
                              
Cash and cash equivalents
  
Level 1
    
$
46,423
    
$
46,423
    
$
35,570
    
$
35,570
  
Fixed maturities
  
Level 2
      
213,323
      
213,323
      
212,612
      
212,612
  
Equity securities
    
(1) 
    
11,280
      
11,280
      
7,900
      
7,900
  
Policy loans
  
Level 3
      
1,656
      
1,656
      
1,722
      
1,722
  
                                       
Liabilities:
                                      
Junior subordinated debentures, net
  
Level 2
      
33,738
      
32,931
      
33,738
      
35,443
  
Revolving credit facility
  
Level 2
      
4,021
      
4,021
      
4,023
      
4,023
  

  (1)
See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets. The Company has one equity security valued at level 3 and all other equity securities are valued at level 1.

The Company had no transfers into or out of level 3 for the six months ended June 30, 2025 or the year ended December 31, 2024.

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Note 5.          Allowance for Expected Credit Losses

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for expected credit losses, at June 30, 2025 and 2024, and the changes in the allowance for expected credit losses for the three month and six month periods ended June 30, 2025 and 2024.

   
At and for the three months ended June 30, 2025
    
At and for the six months ended June 30, 2025
  
   
Reinsurance
Recoverables,
Net of Allowance
for Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
    
Reinsurance Recoverables,
Net of Allowance
for Expected Credit Losses
    
Allowance for Expected Credit Losses
  
Balance, beginning of period
  
$
23,829
    
$
45
    
$
22,942
    
$
51
  
Current period change for expected credit losses
            
(2
)
            
(8
)
Write-offs of uncollectible reinsurance recoverables
            
—
              
—
  
Balance, end of period
  
$
22,369
    
$
43
    
$
22,369
    
$
43
  

   
At and for the three months ended June 30, 2024
    
At and for the six months ended June 30, 2024
  
   
Reinsurance
Recoverables,
Net of Allowance
for Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
    
Reinsurance Recoverables,
Net of Allowance
for Expected Credit Losses
    
Allowance for Expected Credit Losses
  
Balance, beginning of period
  
$
20,935
    
$
56
    
$
21,103
    
$
61
  
Current period change for expected credit losses
            
(2
)
            
(7
)
Write-offs of uncollectible reinsurance recoverables
            
—
              
—
  
Balance, end of period
  
$
22,496
    
$
54
    
$
22,496
    
$
54
  

Insurance Premium and Other Receivables

The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at June 30, 2025 and 2024, and the changes in the allowance for expected credit losses for the three month and six month periods ended June 30, 2025 and 2024.

   
At and for the three months ended June 30, 2025
    
At and for the six months ended June 30, 2025
  
   
Insurance Premiums
and Other, Net of
Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
    
Insurance Premiums
and Other, Net of
Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
  
Balance, beginning of period
  
$
19,213
    
$
195
    
$
27,458
    
$
201
  
Current period change for expected credit losses
            
(1
)
            
(7
)
Write-offs of uncollectible insurance premiums and other receivables
            
—
              
—
  
Balance, end of period
  
$
50,242
    
$
194
    
$
50,242
    
$
194
  

   
At and for the three months ended June 30, 2024
    
At and for the six months ended June 30, 2024
  
   
Insurance Premiums
and Other, Net of
Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
    
Insurance Premiums
and Other, Net of
Expected Credit
Losses
    
Allowance for
Expected Credit
Losses
  
Balance, beginning of period
  
$
14,696
    
$
216
    
$
23,690
    
$
217
  
Current period change for expected credit losses
            
3
              
2
  
Write-offs of uncollectible insurance premiums and other receivables
            
—
              
—
  
Balance, end of period
  
$
34,220
    
$
219
    
$
34,220
    
$
219
  

14
Table Of Contents
Note 6.
Internal-Use Software

On March 3, 2021, the Company entered into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services. The software is managed, hosted, supported, and delivered as a cloud-based software service product offering (software-as-a-service). The initial term of the arrangement, as amended, was three years. The arrangement was renewed in March 2024 for an additional five years, with a subsequent renewal term of five years.

Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred. Implementation expenses incurred related to third party professional and consulting services have been capitalized. The Company will begin amortizing, on a straight-line basis over the expected remaining term of the hosting arrangement, when the software is substantially ready for its intended use. The Company incurred and capitalized implementation costs of $39 and $51 during the six months ended June 30, 2025 and 2024, respectively. As a result, the Company has capitalized $4,714 and $4,675 in implementation costs in other assets within its condensed consolidated balance sheet as of June 30, 2025 and December 31, 2024, respectively. The Company expects the software will be substantially ready for its intended use in the second half of 2025. Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the three months and six months ended June 30, 2025 and 2024.

Note 7.
Insurance Reserves for Losses and Claims

The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2025 and 2024 is as follows:

 
Six Months Ended
June 30,
  
 
2025
      
2024
  
Beginning insurance reserves for losses and claims, gross
$
93,707
      
$
87,478
  
Less: Reinsurance recoverable on unpaid losses
  
(17,390
)
      
(14,678
)
Beginning insurance reserves for losses and claims, net
  
76,317
        
72,800
  
                 
Incurred related to:
                
Current accident year
  
63,346
        
57,851
  
Prior accident year development
  
(2,543
)
(1) 
    
1,829
(2)
Total incurred
  
60,803
        
59,680
  
                 
Paid related to:
                
Current accident year
  
24,903
        
22,405
  
Prior accident years
  
27,410
        
37,016
  
Total paid
  
52,313
        
59,421
  
Ending insurance reserves for losses and claims, net
  
84,807
        
73,059
  
Plus: Reinsurance recoverable on unpaid losses
  
16,952
        
17,565
  
Ending insurance reserves for losses and claims, gross
$
101,759
      
$
90,624
  

(1)
Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, partially offset by unfavorable development in the property and casualty operations predominately in the automobile liability line of business.

(2)
Prior years’ development was primarily the result of unfavorable development in the property and casualty operations predominately in the automobile liability line of business due to inflationary factors.

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

   
Six Months Ended
June 30,
  
   
2025
    
2024
  
Total incurred losses
  
$
60,803
    
$
59,680
  
Cash surrender value and matured endowments
    
1,291
      
577
  
Benefit reserve changes
    
3,466
      
3,475
  
Total insurance benefits and losses incurred
  
$
65,560
    
$
63,732
  

15
Table Of Contents
Note 8.
Credit Arrangements

Bank Debt

On May 12, 2021, the Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”). The Revolving Credit Agreement provides for an unsecured $10,000 revolving credit facility that originally matured on April 12, 2024. On March 22, 2024, the Company entered into a First Amendment (the “Amendment”) to its Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender. The Amendment, among other things, (a) updates the interest rate provisions to memorialize that the Company pays interest on the unpaid principal balance of outstanding revolving loans at the Adjusted Term SOFR rate (as defined in the Credit Agreement), plus 2.00%, (b) extends the maturity date of the revolving credit facility to March 22, 2027, (c) requires the monthly payment of an unused commitment fee of 0.2% of the unused facility amount, and (d) requires that the Company maintain a consolidated net worth of not less than $64,200. Except as modified by the Amendment, the existing terms of the original Credit Agreement remain in effect.

The Credit Agreement requires the Company to comply with certain covenants, including a debt-to-capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of June 30, 2025, and December 31, 2024, the Company had outstanding borrowings including accrued interest of $4,021 and $4,023, respectively, under the Credit Agreement.

For the three months ended June 30, 2025 and 2024, the Company incurred $65 and $76 in interest expense, respectively, on the revolving credit facility borrowing. For the six months ended June 30, 2025 and 2024, the Company incurred $129 and $137, respectively, in interest expense. During the three month and six month periods ended June 30, 2025, the Company paid $3 and $6, respectively, in fees on the available unused amount of the revolving credit facility of $6,000. At June 30, 2025 and December 31, 2024, the effective interest rate was 6.43% and 6.67%, respectively.

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 the Company; and (iii) engaging in those activities necessary or incidental thereto.

The outstanding $18,042 and $15,696 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. Prior to July 1, 2023, the interest rate was based on 3-month LIBOR plus an applicable margin. Effective July 1, 2023, the interest rate is determined based on a reference rate of the 3-month SOFR plus applicable tenor spread of 0.26161% plus an applicable margin, ranging from 4.00% to 4.10%. At June 30, 2025 and December 31, 2024, the effective interest rate was 8.64% and 8.82%, respectively.

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2025 was as follows:

   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed June 30, 2025
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance June 30, 2025
  
$
18,042
    
$
15,696
  
Net balance December 31, 2024
  
$
18,042
    
$
15,696
  
Coupon rate
  
3-Month SOFR + 0.26161% spread adj + 4.00%
    
3-Month SOFR + 0.26161% spread adj + 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
  
3-Month SOFR + 0.26161% spread adj + 4.00%
    
3-Month SOFR + 0.26161% spread adj + 4.10%
  
Distribution payable
  
Quarterly
    
Quarterly
  
Distribution guaranteed by (4)
  
Atlantic American Corporation
    
Atlantic American Corporation
  

16
Table Of Contents
(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 9.
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
June 30, 2025
  
   
Earnings
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
  
$
3,316
      
20,397
        
Less preferred stock dividends
    
(100
)
    
—
        
  Net income applicable to common shareholders
  
$
3,216
      
20,397
    
$
0.16
  
Diluted Earnings Per Common Share:
                        
Effect of Series D preferred stock
    
100
      
1,378
          
  Net income applicable to common shareholders
  
$
3,316
      
21,775
    
$
0.15
  

   
Three Months Ended
June 30, 2024
  
   
Loss
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
  
$
(684
)
    
20,400
        
Less preferred stock dividends
    
(100
)
    
—
        
  Net loss applicable to common shareholders
  
$
(784
)
    
20,400
    
$
(0.04
)

   
Six Months Ended
June 30, 2025
  
   
Earnings
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
  
$
4,118
      
20,398
        
Less preferred stock dividends
    
(199
)
    
—
        
  Net income applicable to common shareholders
  
$
3,919
      
20,398
    
$
0.19
  
Diluted Earnings Per Common Share:
                        
Effect of Series D preferred stock
    
199
      
1,378
          
  Net income applicable to common shareholders
  
$
4,118
      
21,776
    
$
0.19
  

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Table Of Contents
   
Six Months Ended
June 30, 2024
  
   
Loss
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
  
$
(2,682
)
    
20,401
        
Less preferred stock dividends
    
(199
)
    
—
        
  Net loss applicable to common shareholders
  
$
(2,881
)
    
20,401
    
$
(0.14
)

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for the three month and six month periods ended June 30, 2024, since its impact would have been antidilutive.

Note 10.
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
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Federal income tax provision at statutory rate of 21%
  
$
886
    
$
(179
)
  
$
1,103
    
$
(705
)
Dividends-received deduction
    
(6
)
    
(6
)
    
(12
)
    
(12
)
Meals and entertainment
    
15
      
16
      
29
      
35
  
Vested stock and club dues
    
—
      
—
      
2
      
1
  
Parking disallowance
    
5
      
4
      
11
      
8
  
Income tax expense (benefit)
  
$
900
    
$
(165
)
  
$
1,133
    
$
(673
)

The components of income tax expense (benefit) were:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
Current – Federal
  
$
273
    
$
—
    
$
273
    
$
—
  
Deferred – Federal
    
627
      
(165
)
    
860
      
(673
)
Total
  
$
900
    
$
(165
)
  
$
1,133
    
$
(673
)

Note 11.
Leases

The Company has two operating lease agreements, each for the use of office space in the ordinary course of business. The original term of the first lease was to automatically renew on an annual basis and was amended on December 26, 2024, when the Company and its subsidiary, Bankers Fidelity Life Insurance Company, entered into a Second Amendment to the Lease Agreement (the “Second Amendment”) with 4370 Peachtree LLC. The Second Amendment amends the Lease Agreement, dated November 1, 2007, by and among the same parties (as previously amended, the “Lease Agreement”), pursuant to which the Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia. Pursuant to the Second Amendment, the Lease Agreement was modified to increase the base rent payable by the Company, beginning January 1, 2025. The Second Amendment also provides for rent adjustment on January 1, 2027, January 1, 2030 and each five years thereafter.

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 six months ended June 30, 2025 and June 30, 2024 was $569 and $507, respectively.

18
Table Of Contents
Additional information regarding the Company’s real estate operating leases is as follows:

   
Six Months Ended
June 30,
  
   
2025
    
2024
  
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
600
    
$
529
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
4,880
      
2,196
  
Weighted average discount rate
    
7.9
%
    
6.8
%
Weighted average remaining lease term in years
  
7.4 years
    
2.4 years
  

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

   
Lease Liability
  
Remainder of 2025
  
$
607
  
2026
    
1,066
  
2027
    
645
  
2028
    
645
  
2029
    
645
  
Thereafter
    
3,595
  
Total undiscounted lease payments
    
7,203
  
Less: present value adjustment
    
2,220
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
4,983
  

As of June 30, 2025, the Company has no operating leases that have not yet commenced.

Note 12.
Commitments and Contingencies

Litigation

From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and arising in the ordinary course of its business. 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.

Regulatory Matters

Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business. Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners. From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various matters. In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company.

Note 13.
Segment Information

The Parent’s primary insurance subsidiaries operate with relative autonomy and each company is evaluated based on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income. The Company’s strategy is to focus on well-defined geographic, demographic and/or product niches within the insurance marketplace. Substantially all revenue other than that in the corporate and other segment is from external sources.

The Company adopted ASU No. 2023-07, Segment Reporting- An Amendment for Improvements to Reportable Segment Disclosures (Topic 280) in December 2024. The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”). The Company’s CODM is the Chairman, President and Chief Executive Officer. The segment’s most significant expenses include insurance benefits and losses incurred and other expenses, such as commissions and underwriting. Interest expense at the segment level is insignificant. To assess profitability on a reportable segment basis, the CODM reviews income (loss) before income taxes.

The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2025 and 2024.

Assets
  
June 30,
2025
    
December 31,
2024
  
American Southern
  
$
174,390
    
$
147,214
  
Bankers Fidelity
    
222,696
      
210,819
  
Corporate, Other and Eliminations
    
32,253
      
35,395
  
Total assets
  
$
429,339
    
$
393,428
  

19
Table Of Contents
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Revenues
  
2025
    
2024
    
2025
    
2024
  
American Southern
  
$
22,232
    
$
18,526
    
$
41,653
    
$
37,384
  
Bankers Fidelity
    
33,092
      
29,203
      
63,590
      
57,374
  
Corporate, Other and Eliminations
    
(34
)
    
(61
)
    
172
      
(93
)
Total revenue
  
$
55,290
    
$
47,668
    
$
105,415
    
$
94,665
  

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Insurance benefits and losses incurred
  
2025
    
2024
    
2025
    
2024
  
American Southern
  
$
16,013
    
$
14,228
    
$
30,610
    
$
27,041
  
Bankers Fidelity
    
17,634
      
17,579
      
34,950
      
36,691
  
Corporate, Other and Eliminations
    
-
      
-
      
-
      
-
  
Total insurance benefits and losses incurred
  
$
33,647
    
$
31,807
    
$
65,560
    
$
63,732
  

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Commissions and underwriting
  
2025
    
2024
    
2025
    
2024
  
American Southern
  
$
5,311
    
$
3,511
    
$
9,416
    
$
8,018
  
Bankers Fidelity
    
9,588
      
10,430
      
20,333
      
20,776
  
Corporate, Other and Eliminations
    
(2,029
)
    
(2,357
)
    
(5,199
)
    
(4,544
)
Total commissions and underwriting
  
$
12,870
    
$
11,584
    
$
24,550
    
$
24,250
  

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Income (loss) Before Income Taxes
  
2025
    
2024
    
2025
    
2024
  
American Southern
  
$
875
    
$
751
    
$
1,560
    
$
2,258
  
Bankers Fidelity
    
5,870
      
1,195
      
8,307
      
(92
)
Corporate, Other and Eliminations
    
(2,529
)
    
(2,795
)
    
(4,616
)
    
(5,521
)
Income (loss) before income taxes
  
$
4,216
    
$
(849
)
  
$
5,251
    
$
(3,355
)

20
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 and six month periods ended June 30, 2025. 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, 2024 (the “2024 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, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”). Each operating company is managed separately, offers different products and is evaluated on its individual performance.

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 2024 Annual Report. Except as disclosed in Note 1 of Notes to Condensed Consolidated Financial Statements, the Company’s critical accounting policies are consistent with those disclosed in the 2024 Annual Report.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income (loss) for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
(In thousands)
                        
Insurance premiums, net
  
$
50,146
    
$
44,993
    
$
97,059
    
$
89,545
  
Net investment income
    
2,516
      
2,416
      
4,958
      
4,972
  
Realized investment gains, net
    
16
      
13
      
16
      
13
  
Unrealized gains on equity securities, net
    
2,609
      
243
      
3,376
      
129
  
Other income
    
3
      
3
      
6
      
6
  
Total revenue
    
55,290
      
47,668
      
105,415
      
94,665
  
Insurance benefits and losses incurred
    
33,647
      
31,807
      
65,560
      
63,732
  
Commissions and underwriting expenses
    
12,870
      
11,584
      
24,550
      
24,250
  
Interest expense
    
773
      
867
      
1,547
      
1,722
  
Other expense
    
3,784
      
4,259
      
8,507
      
8,316
  
Total benefits and expenses
    
51,074
      
48,517
      
100,164
      
98,020
  
Income (loss) before income taxes
  
$
4,216
    
$
(849
)
  
$
5,251
    
$
(3,355
)
Net income (loss)
  
$
3,316
    
$
(684
)
  
$
4,118
    
$
(2,682
)

In addition to measures of operating performance determined in accordance with GAAP, management also considers and evaluates performance by analyzing the non-GAAP measure operating income (loss). We define operating income (loss) as net income (loss) excluding: (i) income tax expense (benefit); (ii) realized investment (gains) losses, 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 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).

21
A reconciliation of net income (loss) to operating income (loss) for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024 is as follows:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Reconciliation of Non-GAAP Financial Measure
  
2025
    
2024
    
2025
    
2024
  
   
(In thousands)
  
Net income (loss)
  
$
3,316
    
$
(684
)
  
$
4,118
    
$
(2,682
)
Income tax expense (benefit)
    
900
      
(165
)
    
1,133
      
(673
)
Realized investment gains, net
    
(16
)
    
(13
)
    
(16
)
    
(13
)
Unrealized gains on equity securities, net
    
(2,609
)
    
(243
)
    
(3,376
)
    
(129
)
Non-GAAP operating income (loss)
  
$
1,591
    
$
(1,105
)
  
$
1,859
    
$
(3,497
)

On a consolidated basis, the Company had net income of $3.3 million, or $0.15 per diluted share, for the three month period ended June 30, 2025, compared to net loss of $0.7 million, or $(0.04) per diluted share, for the three month period ended June 30, 2024. The Company had net income of $4.1 million, or $0.19 per diluted share, for the six month period ended June 30, 2025, compared to net loss of $2.7 million, or $(0.14) per diluted share, for the six month period ended June 30, 2024. The increase in net income for the three month and six month periods ended June 30, 2025 was primarily the result of increases in premium revenue within the inland marine line of business in the property and casualty operations, as well as increases in the Medicare supplement and group accident and health lines of business within the life and health operations. Also contributing to the increase in net income was an increase in unrealized gains on equity securities during the three month and six month periods ended June 30, 2025. Also contributing to the increase in net income for the three month and six month periods ended June 30, 2025 was favorable development in the Medicare supplement line of business in the life and health operations.

For the three month period ended June 30, 2025, premium revenue increased $5.2 million, or 11.5%, to $50.1 million from $45.0 million in the comparable period in 2024. For the six month period ended June 30, 2025, premium revenue increased $7.5 million, or 8.4%, to $97.1 million from $89.5 million in the comparable period in 2024. The increase in premium revenue during the three month and six month periods ended June 30, 2025 was primarily attributable to increases in premium revenue in the inland marine line of business, as well as the automobile physical damage line of business, due to increases in premium writings in the property and casualty operations. Also contributing to the increase in premium revenue was increases in the Medicare supplement and group accident and health lines of business due to new sales within the life and health operations.

Operating income increased $2.7 million in the three month period ended June 30, 2025 from the three month period ended June 30, 2024. For the six month period ended June 30, 2025, operating income increased $5.4 million from the comparable period in 2024. The increase in operating income for the three month and six month periods ended June 30, 2025 was primarily the result of increases in premium revenue within the inland marine line of business in the property and casualty operations, as well as increases in the Medicare supplement and group accident and health lines of business within the life and health operations, as previously mentioned.

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 and six month periods ended June 30, 2025 and the comparable periods in 2024:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
   
(Dollars in thousands)
  
Gross written premiums
  
$
52,285
    
$
36,499
    
$
61,621
    
$
44,969
  
Ceded premiums
    
(1,495
)
    
(1,508
)
    
(3,077
)
    
(2,958
)
Net written premiums
  
$
50,790
    
$
34,991
    
$
58,544
    
$
42,011
  
Net earned premiums
  
$
21,141
    
$
17,544
    
$
39,472
    
$
35,422
  
Insurance benefits and losses incurred
    
16,013
      
14,228
      
30,610
      
27,041
  
Commissions and underwriting expenses
    
5,344
      
3,547
      
9,483
      
8,085
  
Underwriting income (loss)
  
$
(216
)
  
$
(231
)
  
$
(621
)
  
$
296
  
Loss ratio
    
75.7
%
    
81.1
%
    
77.5
%
    
76.3
%
Expense ratio
    
25.3
      
20.2
      
24.0
      
22.8
  
Combined ratio
    
101.0
%
    
101.3
%
    
101.5
%
    
99.1
%

22
Gross written premiums at American Southern increased $15.8 million, or 43.3%, during the three month period ended June 30, 2025 and $16.7 million, or 37.0%, during the six month period ended June 30, 2025, from the comparable periods in 2024. The increase in gross written premiums during the three month and six month periods ended June 30, 2025 was primarily attributable to an increase in premiums written in the automobile liability line of business due to the renewal of a program, which included a rate increase. Also contributing to the increase in gross written premiums were increases in premiums written in the inland marine line of business due to a new program written by an existing agency, as well as an increase in premiums written in the automobile physical damage line of business resulting from an increase in writings from existing agents.

Ceded premiums remained constant during the three month period ended June 30, 2025 and increased $0.1 million, or 4.0%, during the six month period ended June 30, 2025, from the comparable periods in 2024. American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally fluctuate as earned premiums subject to reinsurance increase or decrease or retentions levels change.

The following presents American Southern’s net earned premiums by line of business for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
   
(In thousands)
  
Automobile liability
  
$
12,160
    
$
10,728
    
$
21,999
    
$
21,652
  
Automobile physical damage
    
4,003
      
3,251
      
8,147
      
6,622
  
General liability
    
1,508
      
1,526
      
3,081
      
3,021
  
Surety
    
1,410
      
1,440
      
2,745
      
2,959
  
Inland marine
    
2,060
      
599
      
3,500
      
1,168
  
Total
  
$
21,141
    
$
17,544
    
$
39,472
    
$
35,422
  

Net earned premiums increased $3.6 million, or 20.5%, during the three month period ended June 30, 2025, and $4.1 million, or 11.4%, during the six month period ended June 30, 2025, over the comparable periods in 2024. The increase in net earned premiums during the three month period ended June 30, 2025 was mainly due to increases in earned premiums in the inland marine line of business, as well as the earning out of premium within the automobile liability line of business. The increase in net earned premiums during the six month period ended June 30, 2025 was primarily attributable to increases in earned premiums in the inland marine line of business, as well as the automobile physical damage line of business, due to increases in premium writings, 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).

Insurance benefits and losses incurred at American Southern increased $1.8 million, or 12.5%, during the three month period ended June 30, 2025, and $3.6 million, or 13.2%, during the six month period ended June 30, 2025, over the comparable periods in 2024. As a percentage of earned premiums, insurance benefits and losses incurred were 75.7% in the three month period ended June 30, 2025, compared to 81.1% in the three month period ended June 30, 2024. For the six month period ended June 30, 2025, this ratio increased to 77.5% from 76.3% in the comparable period in 2024. The decrease in the loss ratio during the three month period ended June 30, 2025 was due to an increase in premium growth exceeding the increase in insurance benefits and losses incurred. The increase in the loss ratio during the six month period ended June 30, 2025 was mainly due to an increase in losses within the automobile physical damage line of business and the inland marine line of business.

Commissions and underwriting expenses increased $1.8 million, or 50.7%, during the three month period ended June 30, 2025, and $1.4 million, or 17.3% during the six month period ended June 30, 2025, over the comparable periods in 2024. As a percentage of earned premiums, underwriting expenses were 25.3% in the three month period ended June 30, 2025, compared to 20.2% in the three month period ended June 30, 2024. For the six month period ended June 30, 2025, this ratio increased to 24.0% from 22.8% in the comparable period in 2024. The increase in the expense ratio during the three month and six month periods ended June 30, 2025 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 and six month periods ended June 30, 2025, variable commissions at American Southern increased by $1.2 million and $0.7 million, respectively, from the comparable periods in 2024 due to favorable loss experience from accounts subject to variable commissions.

23
Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
   
(Dollars in thousands)
  
Gross earned premiums
  
$
43,774
    
$
40,554
    
$
86,418
    
$
80,357
  
Ceded premiums
    
(14,769
)
    
(13,105
)
    
(28,831
)
    
(26,234
)
Net earned premiums
    
29,005
      
27,449
      
57,587
      
54,123
  
Insurance benefits and losses incurred
    
17,634
      
17,579
      
34,950
      
36,691
  
Commissions and underwriting expenses
    
9,588
      
10,430
      
20,333
      
20,776
  
Total expenses
    
27,222
      
28,009
      
55,283
      
57,467
  
Underwriting income (loss)
  
$
1,783
    
$
(560
)
  
$
2,304
    
$
(3,344
)
Loss ratio
    
60.8
%
    
64.0
%
    
60.7
%
    
67.8
%
Expense ratio
    
33.1
      
38.0
      
35.3
      
38.4
  
Combined ratio
    
93.9
%
    
102.0
%
    
96.0
%
    
106.2
%

Gross earned premiums increased $3.2 million, or 7.9%, during the three month period ended June 30, 2025, and $6.1 million, or 7.5%, during the six month period ended June 30, 2025, from the comparable periods in 2024. The increase in gross earned premiums was primarily attributable to the increase in gross earned premiums from the Medicare supplement line of business due primarily to the level of new business writings exceeding non-renewals, partially offset by lapses within the same line of business. Also contributing to the increase in gross earned premiums was an increase in gross earned premiums in the group accident and health line of business, resulting from new business sales.

Ceded premiums increased $1.7 million, or 12.7%, during the three month period ended June 30, 2025, and $2.6 million, or 9.9%, during the six month period ended June 30, 2025, from the comparable periods in 2024. The increase in ceded premiums was due to an increase in Medicare supplement premiums subject to reinsurance.

The following table summarizes, for the periods indicated, Bankers Fidelity’s net earned premiums by line of business:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2025
    
2024
    
2025
    
2024
  
   
(In thousands)
  
Medicare supplement
  
$
18,951
    
$
17,768
    
$
37,490
    
$
35,967
  
Group life
    
3,800
      
3,921
      
7,567
      
7,832
  
Individual life
    
1,331
      
1,465
      
2,904
      
2,875
  
Group accident and health
    
2,702
      
2,482
      
5,308
      
3,885
  
Other individual accident and health
    
2,221
      
1,813
      
4,318
      
3,564
  
Total
  
$
29,005
    
$
27,449
    
$
57,587
    
$
54,123
  

Net earned premium increased $1.6 million, or 5.7%, during the three month period ended June 30, 2025, and $3.5 million, or 6.4%, during the six month period ended June 30, 2025, over the comparable periods in 2024. The increase in net earned premiums was primarily attributable to increases in the Medicare supplement and group accident and health lines of business due to new sales as previously mentioned. Also contributing to the increase in net earned premiums was an increase in the other individual accident and health line of business due to new business growth.

Insurance benefits and losses incurred increased $0.1 million, or 0.3%, during the three month period ended June 30, 2025, and decreased $1.7 million, or 4.7%, during the six month period ended June 30, 2025, from the comparable periods in 2024. As a percentage of earned premiums, benefits and losses were 60.8% in the three month period ended June 30, 2025, compared to 64.0% in the three month period ended June 30, 2024. For the six month period ended June 30, 2025, this ratio decreased to 60.7% from 67.8% in the comparable period in 2024. The decrease in the loss ratio for the three month and six month periods ended June 30, 2025 was primarily due to lower utilization within the Medicare supplement line of business.

Commissions and underwriting expenses decreased $0.8 million, or 8.1%, during the three month period ended June 30, 2025, and $0.4 million, or 2.1%, during the six month period ended June 30, 2025, over the comparable periods in 2024.  As a percentage of earned premiums, underwriting expenses were 33.1% in the three month period ended June 30, 2025, compared to 38.0% in the three month period ended June 30, 2024.  For the six month period ended June 30, 2025, this ratio decreased to 35.3% from 38.4% in the comparable period in 2024. The decrease in the expense ratio for the three month and six month periods ended June 30, 2025 was mainly due to growth in premiums coupled with a decline in underwriting expenses, primarily from lower variable expenses related to the group lines of business.

24
Net Investment Income and Realized Gains

Investment income increased $0.1 million, or 4.1%, during the three month period ended June 30, 2025, and remained constant during the six month period ended June 30, 2025, over the comparable periods in 2024. The increase in investment income in the three month period ended June 30, 2025, from the comparable periods in 2024, was primarily attributable to an increase in the equity in earnings from investments in the Company’s limited partnerships and limited liability companies.

The Company had net realized investment gains of less than $0.1 million during each of the three month and six month periods ended June 30, 2025, compared to net realized investment gains of less than $0.1 million during each of the three month and six month periods ended June 30, 2024. The net realized investment gains during the three month and six month periods ended June 30, 2025 was due to the sale and redemption of several of the Company’s investments in fixed maturity securities. The net realized investment gains during the three month and six month periods ended June 30, 2024 resulted primarily from the redemption of several of the Company’s investments in fixed maturity securities. Management continually evaluates the Company’s investment portfolio and makes adjustments for credit losses and/or divests investments as may be determined to be appropriate.

Unrealized Gains 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. The Company recognized net unrealized gains on equity securities of $2.6 million during the three month period ended June 30, 2025 and unrealized gains on equity securities of $0.2 million during the three month period ended June 30, 2024. The Company recognized net unrealized gains on equity securities of $3.4 million during the six month period ended June 30, 2025 and unrealized gains on equity securities of $0.1 million during the six month period ended June 30, 2024. Changes in unrealized gains on equity securities for the applicable periods are the result of fluctuations in the market value of the Company’s equity securities.

Interest Expense

Interest expense decreased $0.1 million, or 10.8%, during the three month period ended June 30, 2025, and $0.2 million, or 10.2%, during the six month period ended June 30, 2025, from the comparable periods in 2024. Changes in interest expense were primarily due to changes in the Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited, as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility utilize SOFR as the reference rate.

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 June 30, 2025, the Parent had approximately $4.4 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $4.7 million for the six month period ended June 30, 2025, compared to statutory net loss of $0.4 million for the six month period ended June 30, 2024. 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 June 30, 2025, American Southern had $47.2 million of statutory capital and surplus and Bankers Fidelity had $34.6 million of statutory capital and surplus. In 2025, dividend payments by the Parent’s insurance subsidiaries in excess of $6.3 million would require prior approval. Through June 30, 2025, the Parent received dividends of $4.2 million from its subsidiaries.

25
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 3-month CME Term SOFR plus applicable tenor spread of 0.26161% plus an applicable margin. The margin ranges from 4.00% to 4.10%. At June 30, 2025, the effective interest rate was 8.64%. 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 June 30, 2025, 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 existing or potential future financing arrangements.

At June 30, 2025, 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 June 30, 2025, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.2 million.

Bankers Fidelity Life Insurance Company (‘‘BFLIC”) is a member of the Federal Home Loan Bank of Atlanta (“FHLB”), for the primary purpose of enhancing financial flexibility. As a member, BFLIC can obtain access to low-cost funding and also receive dividends on FHLB stock. The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.8 million, as of June 30, 2025. Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB. As of June 30, 2025, BFLIC has pledged bonds having an amortized cost of $9.0 million to the FHLB. BFLIC may be required to post additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB. As of June 30, 2025, BFLIC does not have any outstanding borrowings from the FHLB.

On May 12, 2021, the Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”). The Revolving Credit Agreement provides for an unsecured $10.0 million revolving credit facility that originally matured on April 12, 2024. On March 22, 2024, the Company entered into a First Amendment (the “Amendment”) to its Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender. The Amendment, among other things, (a) updates the interest rate provisions to memorialize that the Company pays interest on the unpaid principal balance of outstanding revolving loans at the Adjusted Term SOFR rate (as defined in the Credit Agreement), plus 2.00%, (b) extends the maturity date of the revolving credit facility to March 22, 2027, (c) requires the monthly payment of an unused commitment fee of 0.2% of the unused facility amount, and (d) requires that the Company maintain a consolidated net worth of not less than $64.2 million. Except as modified by the Amendment, the existing terms of the original Credit Agreement remain in effect.

The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of June 30, 2025 and December 31, 2024, the Company had outstanding borrowings, including accrued interest of $4.0 million in each of the respective periods, under the Credit Agreement.

Cash and cash equivalents increased from $35.6 million at December 31, 2024 to $46.4 million at June 30, 2025. The increase in cash and cash equivalents during the six month period ended June 30, 2025 was primarily attributable to net cash provided by operating activities of $8.6 million. Also contributing to the increase in cash and cash equivalents was net cash provided by investing activities of $2.7 million primarily as a result of investment sales and maturity of securities exceeding investment purchases.

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, borrowings under its credit facilities or 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.

26
Item 4. Controls and Procedures

Evaluation of Disclosure 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 Securities and Exchange Commission’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.

As of the end of the period covered by this report, 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 the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were not effective as of that date due to the previously identified and unremediated material weakness in internal control over financial reporting described below.

Remediation of Material Weakness in Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting system has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management recognizes that there are inherent limitations in the effectiveness of any internal control system. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Furthermore, the application of any evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

As initially disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, we have previously identified certain deficiencies in internal control that we believe rise to the level of a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, management determined that the design of the controls surrounding the process of reviewing insurance reserves and deferred acquisition costs within the Company’s life and health segment was not effective. This deficiency in design did not enable the timely detection of anomalies in these values at the level of precision necessary to detect misstated values that may be material.

Notwithstanding these deficiencies, management believes that, because of the actions taken by management in identifying, and the efforts that the Company has been taking to address and correct, these deficiencies prior to the completion and filing of relevant periodic reports, and the effective operation of other internal controls over financial reporting, the material weakness did not result in any identified material misstatements to our financial statements. Similarly, there were no changes to any of our historical financial statements.

The Company’s remediation efforts of the previously identified material weakness, which began in the quarter ended March 31, 2024, remained ongoing though the quarter ended June 30, 2025, and through the date hereof. The Company has made significant progress in its remediation efforts, and during the quarter ended June 30, 2025, management conducted a systematic review of the components of underwriting income for the Company’s Life and Medicare Supplement products. This review included independent calculations of actuarial values for these products using a comprehensive process that had been developed, tested, and implemented during the quarter ended December 31, 2024 for Life products, and implemented during the quarter ended June 20, 2025 for the Medicare Supplement product. Based on this review, management did not identify any material misstatement in the Company’s financial statements.

In furtherance of the remediation efforts, the Company has continued the development of a system to perform calculations independently of the actuarial models. This system is intended to verify that the product parameters and actuarial assumptions are properly reflected in the reported values. The Company’s whole life product has been implemented on the system, which was used to validate the actuarial values for this product as of December 31,2024. Implementation of the Company’s individual life products and its Medicare Supplement product was completed during the quarter ended June 30, 2025. The Company currently expects that extensions of this system to accommodate the other product lines the Company offers will be operational by September 30, 2025. Full development and implementation of this system has required more time than previously anticipated due to unforeseen complexities inherent in the actuarial software systems used to calculate and report the actuarial values. These complexities have required additional effort to understand and to replicate in this system, and to complete the remediation process.

27
Changes in Internal Control Over Financial Reporting

Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives of the system of controls are met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud within a company have been detected.

28
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.

During the three month period ending June 30, 2025 no purchases of common stock of the Company were made by or on behalf of the Company pursuant to the Repurchase Plan. The maximum number of shares that may yet be purchased under the Repurchase Plan was 325,129 as of June 30, 2025.

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 ending June 30, 2025.

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
  
April 1 – April 30, 2025
    
—
    
$
—
      
—
      
325,129
  
May 1 – May 31, 2025
    
—
      
—
      
—
      
325,129
  
June 1 – June 30, 2025
    
—
      
—
      
—
      
325,129
  
Total
    
—
    
$
—
      
—
          

Item 5. Other Information

None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025, as such terms are defined under Item 408(a) of Regulation S-K.

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
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
   
101. SCH
Inline XBRL Taxonomy Extension Schema Document.
   
101. CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
   
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
   
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
   
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
   
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

29
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: August 12, 2025
By:
/s/ J. Ross Franklin
  
   
J. Ross Franklin
   
Vice President and Chief Financial Officer
   
(Principal Financial and Accounting Officer)


30
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