Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

12 Months Ended

Dec. 31, 2013

Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT [Abstract]

Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

BALANCE SHEETS

ASSETS

	December 31,
	2013		2012
	(In thousands)
Cash and cash equivalents	$	13,936	$	13,306
Investments		18,043		14,122
Investment in subsidiaries		105,268		124,904
Investments in unconsolidated trusts		1,238		1,238
Income taxes receivable from subsidiaries		4,530		1,989
Other assets		2,676		559
Total assets	$	145,691	$	156,118
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deferred tax liability, net	$	297	$	7,824
Other payables		3,229		1,320
Junior subordinated debentures		41,238		41,238
Total liabilities		44,764		50,382
Shareholders’ equity		100,927		105,736
Total liabilities and shareholders’ equity	$	145,691	$	156,118

See accompanying report of independent registered public accounting firm.

Schedule II

Page 2 of 3

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2013			2012
	(In thousands)
REVENUE
Fee income from subsidiaries	$	6,271		$	5,605
Distributed earnings from subsidiaries		6,646			7,350
Other		1,330			844
Total revenue		14,247			13,799
GENERAL AND ADMINISTRATIVE EXPENSES		11,106			9,659
INTEREST EXPENSE		1,898			2,632
		1,243			1,508
INCOME TAX BENEFIT(1)		(4,504	)		(1,766	)
		5,747			3,274
EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES, NET		5,275			1,162
NET INCOME	$	11,022		$	4,436

⁽¹⁾ Under the terms of a tax-sharing agreement, income tax provisions for the subsidiary companies are computed on a separate company basis. Accordingly, the Company’s income tax benefit results from the utilization of the Parent’s separate return loss to reduce the consolidated taxable income of the Company.

See accompanying report of independent registered public accounting firm.

Schedule II

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CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2013			2012
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	11,022		$	4,436
Adjustments to reconcile net income to net cash provided by operating activities:
Realized investment gains, net		(644	)		-
Depreciation and amortization		117			75
Compensation expense related to share awards		219			-
Equity in undistributed earnings of consolidated subsidiaries		(5,275	)		(1,162	)
(Increase) decrease in intercompany taxes		(2,541	)		463
Deferred income tax benefit		(329	)		(97	)
Increase (decrease) in other liabilities		846			(746	)
Other, net		161			(251	)
Net cash provided by operating activities		3,576			2,718
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured		5,568			-
Investments purchased		(4,438	)		-
Capital contribution to subsidiaries		(200	)		(200	)
Additions to property and equipment		(1,192	)		(166	)
Net cash used in investing activities		(262	)		(366	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Series D preferred stock		(500	)		-
Payment of dividends on Series D preferred stock		(483	)		(1,015	)
Payment of dividends on common stock		(423	)		(1,486	)
Proceeds from shares issued under stock plans		138			297
Purchase of shares for treasury		(1,416	)		(607	)
Net cash used in financing activities		(2,684	)		(2,811	)
Net increase (decrease) in cash		630			(459	)
Cash and cash equivalents at beginning of year		13,306			13,765
Cash and cash equivalents at end of year	$	13,936		$	13,306
Supplemental disclosure:
Cash paid for interest	$	1,961		$	2,636
Cash paid for income taxes	$	536		$	405
Intercompany tax settlement from subsidiaries	$	2,574		$	2,132

See accompanying report of independent registered public accounting firm.