10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

        For the quarterly period ended March 31, 2016

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.,	30319
Atlanta, Georgia	(Zip Code)
(Address of principal executive offices)

(404) 266-5500

(Registrant’s telephone number, including area code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☑  No ☐

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

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

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 May 9, 2016 was 20,419,486.

ATLANTIC AMERICAN CORPORATION

TABLE OF CONTENTS

Part I.         Financial Information		Page No.
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015	2
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015	4
	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2016 and 2015	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 4.	Controls and Procedures	24
Part II.       Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 6.	Exhibits	25
Signatures		26

PART I.  FINANCIAL INFORMATION

Item 1.    Financial Statements

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

ASSETS

	Unaudited March 31, 2016		December 31, 2015
Cash and cash equivalents	$	10,784	$	15,622
Investments:
Fixed maturities (cost: $206,819 and $210,450)		206,461		205,324
Common and non-redeemable preferred stocks (cost: $11,453 and $10,953)		20,367		23,131
Other invested assets (cost: $5,719 and $6,454)		5,719		6,454
Policy loans		2,204		2,200
Real estate		38		38
Investment in unconsolidated trusts		1,238		1,238
Total investments		236,027		238,385
Receivables:
Reinsurance		9,035		11,759
Insurance premiums and other (net of allowance for doubtful accounts: $521 and $528)		8,416		11,988
Deferred income taxes, net		-		829
Deferred acquisition costs		27,669		27,866
Other assets		5,658		5,610
Intangibles		2,544		2,544
Total assets	$	300,133	$	314,603
LIABILITIES AND SHAREHOLDERS’ EQUITY

Insurance reserves and policyholder funds:
Future policy benefits	$	72,468		$	72,136
Unearned premiums		17,533			25,348
Losses and claims		57,673			63,870
Other policy liabilities		1,464			1,991
Total insurance reserves and policyholder funds		149,138			163,345
Accounts payable and accrued expenses		13,258			15,028
Deferred income taxes, net		175			-
Junior subordinated debenture obligations, net		33,738			33,738
Total liabilities		196,309			212,111
Commitments and contingencies (Note 7)
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: 20,391,363 and 20,426,536		22,401			22,401
Additional paid-in capital		56,633			56,623
Retained earnings		25,834			25,443
Accumulated other comprehensive income		5,561			4,584
Unearned stock grant compensation		(154	)		(273	)
Treasury stock, at cost: 2,009,531 and 1,974,358 shares		(6,506	)		(6,341	)
Total shareholders’ equity		103,824			102,492
Total liabilities and shareholders’ equity	$	300,133		$	314,603

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

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ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Dollars in thousands, except per share data)

	Three Months Ended March 31,
	2016			2015
Revenue:
Insurance premiums	$	38,458		$	37,386
Investment income		2,507			2,597
Realized investment gains, net		752			951
Other income		30			15
Total revenue		41,747			40,949
Benefits and expenses:
Insurance benefits and losses incurred		24,825			25,241
Commissions and underwriting expenses		11,827			10,721
Interest expense		373			349
Other expense		3,346			3,628
Total benefits and expenses		40,371			39,939
Income before income taxes		1,376			1,010
Income tax expense		478			319
Net income		898			691
Preferred stock dividends		(99	)		(99	)
Net income applicable to common shareholders	$	799		$	592
Earnings per common share (basic and diluted)	$	.04		$	.03

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

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ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; Dollars in thousands)

	Three Months Ended March 31,
	2016			2015
Net income	$	898		$	691
Other comprehensive income:
Available-for-sale securities:
Gross unrealized holding gain arising in the period		2,256			5,721
Related income tax effect		(790	)		(2,003	)
Less: reclassification adjustment for net realized gains included in net income (1)		(752	)		(951	)
Related income tax effect (2)		263			333
Total other comprehensive income, net of tax		977			3,100
Total comprehensive income	$	1,875		$	3,791

⁽¹⁾ Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying condensed consolidated statements of operations.

⁽²⁾ Income tax effect on reclassification adjustment for net realized gains included in income tax expense on the accompanying condensed consolidated statements of operations.

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

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ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited; Dollars in thousands)

Three Months Ended March 31, 2016	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income		Unearned Stock Grant Compensation			Treasury Stock			Total
Balance, December 31, 2015	$	55	$	22,401	$	56,623	$	25,443		$	4,584	$	(273	)	$	(6,341	)	$	102,492
Net income		-		-		-		898			-		-			-			898
Other comprehensive income, net of tax		-		-		-		-			977		-			-			977
Dividends declared on common stock		-		-		-		(408	)		-		-			-			(408	)
Dividends accrued on preferred stock		-		-		-		(99	)		-		-			-			(99	)
Amortization of unearned compensation		-		-		-		-			-		119			-			119
Purchase of shares for treasury		-		-		-		-			-		-			(170	)		(170	)
Issuance of shares under stock plans		-		-		10		-			-		-			5			15
Balance, March 31, 2016	$	55	$	22,401	$	56,633	$	25,834		$	5,561	$	(154	)	$	(6,506	)	$	103,824
Three Months Ended March 31, 2015
Balance, December 31, 2014	$	55	$	22,401	$	56,491	$	21,866		$	9,279	$	(460	)	$	(5,437	)	$	104,195
Net income		-		-		-		691			-		-			-			691
Other comprehensive income, net of tax		-		-		-		-			3,100		-			-			3,100
Dividends declared on common stock		-		-		-		(412	)		-		-			-			(412	)
Dividends accrued on preferred stock		-		-		-		(99	)		-		-			-			(99	)
Amortization of unearned compensation		-		-		-		-			-		65			-			65
Purchase of shares for treasury		-		-		-		-			-		-			(94	)		(94	)
Issuance of shares under stock plans		-		-		7		-			-		-			4			11
Balance, March 31, 2015	$	55	$	22,401	$	56,498	$	22,046		$	12,379	$	(395	)	$	(5,527	)	$	107,457

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

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ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)

	Three Months Ended March 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	898		$	691
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of deferred acquisition costs		2,492			2,961
Acquisition costs deferred		(2,295	)		(2,780	)
Realized investment gains, net		(752	)		(951	)
Decrease in insurance reserves		(14,207	)		(8,284	)
Compensation expense related to share awards		119			65
Depreciation and amortization		291			283
Deferred income tax expense		478			308
Decrease in receivables, net		8,304			4,690
Decrease in other liabilities		(2,277	)		(1,289	)
Other, net		(8	)		65
Net cash used in operating activities		(6,957	)		(4,241	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured		18,657			28,049
Investments purchased		(16,157	)		(20,338	)
Additions to property and equipment		(226	)		(67	)
Net cash provided by investing activities		2,274			7,644
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued under stock plans		15			11
Purchase of shares for treasury		(170	)		(94	)
Net cash used in financing activities		(155	)		(83	)
Net (decrease) increase in cash and cash equivalents		(4,838	)		3,320
Cash and cash equivalents at beginning of period		15,622			16,375
Cash and cash equivalents at end of period	$	10,784		$	19,695
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	367		$	351
Cash paid for income taxes	$	-		$	215

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

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 ATLANTIC AMERICAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited; Dollars in thousands, except per share amounts)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).  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, 2015.  The Company’s financial condition and results of operations as of and for the three month period ended March 31, 2016 are not necessarily indicative of the financial condition or results of operations that may be expected for the year ending December 31, 2016 or for any other future period.

The Company’s significant accounting policies have not changed materially from those set out in the Company’s 2015 Annual Report.

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.

Note 2. Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This guidance applies to all entities that issue share-based payment awards to their employees and is designed to simplify several areas of the accounting for share-based payment transactions.  The areas for simplification include income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows.  In addition, ASU 2016-09 eliminates the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment.  ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of ASU 2016-09 to have a material impact on its financial condition or results of operations.

In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). This guidance eliminates the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the use of the equity method as a result of an increase in the level of ownership or degree of influence.  In contrast, the equity method entity or investor is required to add the cost of acquiring the additional interest in the investee to the current basis of the previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.   ASU 2016-07 is effective for interim and annual reporting periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its financial condition or results of operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the expected impact on its consolidated financial statements upon the adoption of this guidance.

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In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10) (“ASU 2016-01”).  ASU 2016-01 provides updated guidance for the recognition and measurement of financial instruments. The new guidance will require investments in equity securities to be measured at fair value with changes in fair value reported in net income except for those equity securities that result in consolidation or are accounted for under the equity method of accounting.  Under existing guidance, the Company measures investments in equity securities, available-for-sale, at fair value with changes in fair value reported in accumulated other comprehensive income.  The Company is required to adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed.  The impact on the Company’s consolidated financial statements will depend on the composition of the Company’s investment portfolio on the date of adoption.  As of March 31, 2016, equity securities available-for-sale totaled $20,367, with unrealized gains, net of tax, of $5,794 in accumulated other comprehensive income that would have been classified in retained earnings.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This amendment defers the effective date of the previously issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), until the interim and annual reporting periods beginning after December 15, 2017. Earlier adoption is permitted for interim and annual reporting periods beginning after December 15, 2016. ASU 2014-09 provides updated guidance for recognizing revenue. The guidance excludes insurance contracts and financial instruments. Revenue is to be recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to be entitled in exchange for those goods or services. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this guidance.

In May 2015, the FASB issued ASU No. 2015-09, Financial Services – Insurance (Topic 944): Disclosures about Short-Duration Contracts (“ASU 2015-09”). The main objective of ASU 2015-09 is to enhance disclosures about the liability for unpaid claims and claim adjustment expenses, specifically the development of claims, the frequency and severity of claims, and expanded disclosures about reserves that are discounted.  ASU 2015-09 will also require insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and effects on the financial statements.  The amendments in ASU 2015-09 are effective for annual reporting periods beginning after December 15, 2015, and interim reporting periods within annual reporting periods beginning after December 15, 2016. Since ASU 2015-09 is a disclosure only update, the Company does not expect the adoption to have an impact on its financial condition or results of operations.

Note 3. Segment Information

The Company’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) operate in two principal business units, each focusing on specific products.  American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.  Each business unit is managed independently and is evaluated on its individual performance.  The following sets forth the revenue and income before income taxes for each business unit for the three month periods ended March 31, 2016 and 2015.

Revenues	Three Months Ended March 31,
	2016		2015
American Southern	$	14,811	$	14,772
Bankers Fidelity		26,839		26,070
Corporate and Other		97		107
Total revenue	$	41,747	$	40,949

Income Before Income Taxes	Three Months Ended March 31,
	2016			2015
American Southern	$	2,231		$	1,849
Bankers Fidelity		998			1,190
Corporate and Other		(1,853	)		(2,029	)
Income before income taxes	$	1,376		$	1,010

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Note 4. Junior Subordinated Debentures

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

The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2016 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance March 31, 2016	$	18,042	$	23,196
Less: Treasury debt (3)		-		(7,500	)
Net balance March 31, 2016	$	18,042	$	15,696
Net balance December 31, 2015	$	18,042	$	15,696
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Interest payable		Quarterly		Quarterly
Maturity date		December 4, 2032		May 15, 2033
Redeemable by issuer		Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date		December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value	$	17,500	$	22,500
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable		Quarterly		Quarterly
Distribution guaranteed by (4)		Atlantic American Corporation		Atlantic American Corporation

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

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

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

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

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Note 5. Earnings Per Common Share

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

	Three Months Ended March 31, 2016
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	898			20,406
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	799			20,406	$	.04

	Three Months Ended March 31, 2015
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	691			20,591
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	592			20,591	$	.03

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings per common share calculation for all periods presented since its impact would have been antidilutive.

Note 6. Income Taxes

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

	Three Months Ended March 31,
	2016			2015
Federal income tax provision at statutory rate of 35%	$	482		$	354
Dividends-received deduction		(22	)		(27	)
Small life insurance company deduction		-			(18	)
Other permanent differences		18			10
Income tax expense	$	478		$	319

The components of income tax expense were:

	Three Months Ended March 31,
	2016		2015
Current – Federal	$	-	$	11
Deferred – Federal		478		308
Total	$	478	$	319

The primary difference between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2016 resulted from the dividends-received deduction (“DRD”).  The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.

-10-

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2015 resulted from the DRD and the small life insurance company deduction (“SLD”).  The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000. 

Note 7. Commitments and Contingencies

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

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Note 8. Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of March 31, 2016 and December 31, 2015.

Investments were comprised of the following:

	March 31, 2016
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	449	$	11	$	18,007
Obligations of states and political subdivisions		18,046		814		36		17,268
Corporate securities:
Utilities and telecom		17,617		1,794		613		16,436
Financial services		57,648		2,464		1,392		56,576
Other business – diversified		66,390		1,572		5,036		69,854
Other consumer – diversified		27,867		603		972		28,236
Total corporate securities		169,522		6,433		8,013		171,102
Redeemable preferred stocks:
Financial services		256		6		-		250
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		448		6		-		442
Total fixed maturities		206,461		7,702		8,060		206,819
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,622		658		-		964
Financial services		5,672		844		-		4,828
Other business – diversified		213		166		-		47
Other consumer – diversified		12,860		7,246		-		5,614
Total equity securities		20,367		8,914		-		11,453
Other invested assets		5,719		-		-		5,719
Policy loans		2,204		-		-		2,204
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	236,027	$	16,616	$	8,060	$	227,471

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	December 31, 2015
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	22,234	$	290	$	175	$	22,119
Obligations of states and political subdivisions		25,479		621		552		25,410
Corporate securities:
Utilities and telecom		17,589		1,357		692		16,924
Financial services		54,035		1,797		1,351		53,589
Other business – diversified		60,960		729		5,898		66,129
Other consumer – diversified		24,581		136		1,391		25,836
Total corporate securities		157,165		4,019		9,332		162,478
Redeemable preferred stocks:
Financial services		253		3		-		250
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		446		3		-		443
Total fixed maturities		205,324		4,933		10,059		210,450
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,386		422		-		964
Financial services		5,175		847		-		4,328
Other business – diversified		198		151		-		47
Other consumer – diversified		16,372		10,758		-		5,614
Total equity securities		23,131		12,178		-		10,953
Other invested assets		6,454		-		-		6,454
Policy loans		2,200		-		-		2,200
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	238,385	$	17,111	$	10,059	$	231,333

Bonds having an amortized cost of $11,159 and $11,259 and included in the tables above were on deposit with insurance regulatory authorities at March 31, 2016 and December 31, 2015, respectively, in accordance with statutory requirements.

The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2016 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016
	Carrying Value		Amortized Cost
Due in one year or less	$	2,465	$	2,441
Due after one year through five years		21,162		20,941
Due after five years through ten years		110,924		111,976
Due after ten years		70,751		70,465
Varying maturities		1,159		996
Totals	$	206,461	$	206,819

-13-

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2016 and December 31, 2015.

	March 31, 2016							December 31, 2015
	Carrying Value		Amortized Cost		Unrealized Gains (Losses)			Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	18,007	$	438		$	22,234	$	22,119	$	115
Obligations of states and political subdivisions		18,046		17,268		778			25,479		25,410		69
Utilities and telecom		19,239		17,400		1,839			18,975		17,888		1,087
Financial services		63,576		61,654		1,922			59,463		58,167		1,296
Other business – diversified		66,603		69,901		(3,298	)		61,158		66,176		(5,018	)
Other consumer – diversified		40,919		34,042		6,877			41,146		31,643		9,503
Other investments		9,199		9,199		-			9,930		9,930		-
Investments	$	236,027	$	227,471	$	8,556		$	238,385	$	231,333	$	7,052

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of March 31, 2016 and December 31, 2015.

	March 31, 2016
	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	$	2,626	$	10	$	501	$	1	$	3,127	$	11
Obligations of states and political subdivisions		-		-		5,010		36		5,010		36
Corporate securities		38,092		1,821		25,402		6,192		63,494		8,013
Total temporarily impaired securities	$	40,718	$	1,831	$	30,913	$	6,229	$	71,631	$	8,060

-14-

	December 31, 2015
	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	$	9,209	$	120	$	2,243	$	55	$	11,452	$	175
Obligations of states and political subdivisions		16,079		552		-		-		16,079		552
Corporate securities		79,482		4,284		16,131		5,048		95,613		9,332
Total temporarily impaired securities	$	104,770	$	4,956	$	18,374	$	5,103	$	123,144	$	10,059

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

As of March 31, 2016, there were fifty-one securities in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer, utilities and telecom and financial services sectors. Securities in an unrealized loss position reported in the other diversified business sector included gross unrealized losses of $3,856 related to investments in fixed maturities of twelve different issuers, all related to the oil and gas industry. The oil and gas investee companies represent a diversified group of businesses which include, among others, refiners, pipeline owners and operators, deep water offshore rig owners and operators, all of which we believe are in continuing stages of rationalizing their current investments, future capital expenditures and assessing capital and liquidity requirements.  To our knowledge, the companies are continuing to assess and revise short-term, intermediate and long-term business plans in response to the current trends in oil and gas markets.  While these companies have generally experienced credit downgrades or may be currently under credit rating review, the Company believes that many of the downgrades are in response to external market forces and not necessarily specific credit events of any obligor which would currently indicate that an other than temporary impairment need be recorded.  All of the investees have continued to make regular interest payments on their debt when and as due and the Company continues to perform in-depth analysis of the financial disclosures of each of the investees on a regular basis.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of March 31, 2016.

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

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

Level 2 Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly all of its fixed maturities, which consist of U.S. Treasury securities and 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 using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers, in establishing the fair value of its fixed maturities and non-redeemable preferred stocks.  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 a matrix pricing concept, which is a mathematical technique used widely in the industry to value debt securities based on various relationships to other benchmark quoted prices.

-15-

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. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of March 31, 2016 and December 31, 2015, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,300 and $2,237, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of March 31, 2016, 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	$	-	$	204,161		$	2,300	(1)	$	206,461
Equity securities		14,945		5,422	(1)		-			20,367
Cash equivalents		10,784		-			-			10,784
Total	$	25,729	$	209,583		$	2,300		$	237,612

⁽¹⁾ All underlying securities are financial service industry related.

     As of December 31, 2015, 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	$	-	$	203,087		$	2,237	(1)	$	205,324
Equity securities		18,245		4,886	(1)		-			23,131
Cash equivalents		13,772		-			-			13,772
Total	$	32,017	$	207,973		$	2,237		$	242,227

⁽¹⁾ All underlying securities are financial service industry related.

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2016.

	Fixed Maturities
Balance, December 31, 2015	$	2,237
Total unrealized gains included in other comprehensive income		63
Balance, March 31, 2016	$	2,300

-16-

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest.  There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal.  Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.

Note 9. 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 table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2016 and December 31, 2015.

			March 31, 2016				December 31, 2015
	Level in Fair Value  Hierarchy (1)		Carrying Amount		Estimated  Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	10,784	$	10,784	$	15,622	$	15,622
Fixed maturities		(1)		206,461		206,461		205,324		205,324
Equity securities		(1)		20,367		20,367		23,131		23,131
Other invested assets	Level 3			5,719		5,719		6,454		7,070
Policy loans	Level 2			2,204		2,204		2,200		2,200
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior Subordinated Debentures, net	Level 2			33,738		33,738		33,738		33,738

⁽¹⁾ See Note 8 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

There have not been any transfers between Level 1, Level 2 and Level 3 during the periods presented in these condensed consolidated financial statements.

Note 10. Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of March 31, 2016 and December 31, 2015, and the changes in the balance of each component thereof during the three month period ended March 31, 2016, net of taxes.

	Unrealized Gains on Available-for- Sale Securities
Balance, December 31, 2015	$	4,584
Other comprehensive income before reclassifications		1,466
Amounts reclassified from accumulated other comprehensive income		(489	)
Net current period other comprehensive income		977
Balance, March 31, 2016	$	5,561

-17-

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

 AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”) as of and for the three month period ended March 31, 2016. 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, 2015.

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

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 Company’s Annual Report on Form 10-K for the year ended December 31, 2015. During the three month period ended March 31, 2016, there were no changes to the critical accounting policies or related estimates from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income for the three month period ended March 31, 2016 and the comparable period in 2015:

	Three Months Ended March 31,
	2016		2015
	(In thousands)
Insurance premiums	$	38,458	$	37,386
Investment income		2,507		2,597
Realized investment gains, net		752		951
Other income		30		15
Total revenue		41,747		40,949
Insurance benefits and losses incurred		24,825		25,241
Commissions and underwriting expenses		11,827		10,721
Other expense		3,346		3,628
Interest expense		373		349
Total benefits and expenses		40,371		39,939
Income before income taxes	$	1,376	$	1,010
Net income	$	898	$	691

-18-

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

A reconciliation of net income to operating income for the three month period ended March 31, 2016 and the comparable period in 2015 is as follows:

	Three Months Ended March 31,
Reconciliation of Net Income to non-GAAP Measurement	2016			2015
	(In thousands)
Net income	$	898		$	691
Income tax expense		478			319
Realized investment gains, net		(752	)		(951	)
Operating income	$	624		$	59

On a consolidated basis, the Company had net income of $0.9 million, or $0.04 per diluted share, for the three month period ended March 31, 2016, compared to net income of $0.7 million, or $0.03 per diluted share, for the three month period ended March 31, 2015. Premium revenue for the three month period ended March 31, 2016 increased $1.1 million, or 2.9%, to $38.5 million. The increase in premium revenue was primarily due to increases in both the Medicare supplement business in the life and health operations and automobile liability and surety business in the property and casualty operations.  Operating income increased to $0.6 million in the three month period ended March 31, 2016 from $0.1 million in the comparable period of 2015.  The increase in operating income for the three month period ended March 31, 2016 was primarily attributable to more favorable loss experience in the property and casualty operations as well as a decrease in other expense of $0.6 million due to decreased legal and consulting fees.  Partially offsetting the increase in operating income for the three month period ended March 31, 2016 was a decrease in profitability in the life and health operations as well as a decrease in investment income resulting from a decline in the average yield on the Company’s investments in fixed maturities.

A more detailed analysis of the individual operating companies and other corporate activities is provided below.

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2016 and the comparable period in 2015:

	Three Months Ended March 31,
	2016			2015
	(Dollars in thousands)
Gross written premiums	$	6,537		$	8,585
Ceded premiums		(1,177	)		(1,435	)
Net written premiums	$	5,360		$	7,150
Net earned premiums	$	13,725		$	13,263
Net loss and loss adjustment expenses		7,914			8,488
Underwriting expenses		4,666			4,436
Underwriting income	$	1,145		$	339
Loss ratio		57.7	%		64.0	%
Expense ratio		34.0			33.4
Combined ratio		91.7	%		97.4	%

-19-

Gross written premiums at American Southern decreased $2.0 million, or 23.9%, during the three month period ended March 31, 2016 from the comparable period in 2015.  The decrease in gross written premiums was primarily attributable to a decrease of $1.6 million in automobile physical damage written premiums resulting from both the cancellation of an agency in the fourth quarter of 2015 and a decrease in business writings from existing agencies.  Also contributing to the decrease in gross written premiums was a returned premium of $0.5 million in the automobile liability line of business.

Ceded premiums decreased $0.3 million, or 18.0%, during the three month period ended March 31, 2016 from the comparable period in 2015.  American Southern’s ceded premiums are determined as a percentage of earned premiums and generally increase or decrease when earned premiums increase or decrease.  However, the change in ceded premiums was disproportionate to the increase in earned premiums due to the cancellation of a separate reinsurance agreement to specifically reinsure the automobile liability business in a state contract.

The following presents American Southern’s net earned premiums by line of business for the three month period ended March 31, 2016 and the comparable period in 2015:

	Three Months Ended March 31,
	2016		2015
	(In thousands)
Automobile liability	$	6,802	$	5,725
Automobile physical damage		2,671		3,675
General liability		770		767
Surety		2,488		2,100
Other lines		994		996
Total	$	13,725	$	13,263

Net earned premiums increased $0.5 million, or 3.5%, during the three month period ended March 31, 2016 over the comparable period in 2015.  The increase in net earned premiums was primarily attributable to increases in automobile liability and surety earned premiums from existing programs.  Partially offsetting the increase was the decrease in automobile physical damage earned premiums due primarily to an agency cancellation and decreased business writings discussed previously. Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies written during both the current year and immediately preceding year.

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

Net loss and loss adjustment expenses at American Southern decreased $0.6 million, or 6.8%, during the three month period ended March 31, 2016 from the comparable period in 2015.  As a percentage of earned premiums, net loss and loss adjustment expenses were 57.7% in the three month period ended March 31, 2016, compared to 64.0% in the three month period ended March 31, 2015.  The decrease in the loss ratio was primarily due to a $0.5 million loss recovery in the surety line of business and more favorable loss experience in the general liability line of business.

Underwriting expenses increased $0.2 million, or 5.2%, during the three month period ended March 31, 2016 over the comparable period in 2015.  As a percentage of earned premiums, underwriting expenses were 34.0% in the three month period ended March 31, 2016, compared to 33.4% in the three month period ended March 31, 2015.  The slight increase in the expense ratio was primarily due to American Southern’s variable commission structure, which compensates the company’s agents in relation to the loss ratios of the business they write.  During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease. During the three month period ended March 31, 2016, these commissions at American Southern increased $0.1 million from the comparable period in 2015 due to more favorable loss experience.

-20-

Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2016 and the comparable period in 2015:

	Three Months Ended March 31,
	2016			2015
	(Dollars in thousands)
Medicare supplement	$	20,904		$	20,369
Other health products		1,369			1,198
Life insurance		2,460			2,556
Total earned premiums		24,733			24,123
Insurance benefits and losses		16,911			16,753
Underwriting expenses		8,930			8,127
Total expenses		25,841			24,880
Underwriting loss	$	(1,108	)	$	(757	)
Loss ratio		68.4	%		69.4	%
Expense ratio		36.1			33.7
Combined ratio		104.5	%		103.1	%

Premium revenue at Bankers Fidelity increased $0.6 million, or 2.5%, during the three month period ended March 31, 2016 over the comparable period in 2015.  Premiums from the Medicare supplement line of business increased $0.5 million, or 2.6%, during the three month period ended March 31, 2016, due primarily to new business generated from both new and existing producers.  Other health product premiums increased $0.2 million, or 14.3%, during the same comparable period, primarily as a result of new sales of the company’s group health products. Premiums from the life insurance line of business decreased $0.1 million, or 3.8%, during the three month period ended March 31, 2016 due to the redemption and settlement of existing policy obligations exceeding the level of new sales activity.

Benefits and losses increased $0.2 million, or 0.9%, during the three month period ended March 31, 2016 over the comparable period in 2015.  As a percentage of earned premiums, benefits and losses were 68.4% in the three month period ended March 31, 2016, compared to 69.4% in the three month period ended March 31, 2015.  The slight decrease in the loss ratio was primarily attributable to more favorable loss experience in both the other health and life insurance lines of business.

Underwriting expenses increased $0.8 million, or 9.9%, during the three month period ended March 31, 2016 over the comparable period in 2015.  As a percentage of earned premiums, underwriting expenses were 36.1% in the three month period ended March 31, 2016, compared to 33.7% in the three month period ended March 31, 2015.  The increase in the expense ratio was primarily due to increases in compensation related expenses including higher utilization of temporary staffing.

INVESTMENT INCOME AND REALIZED GAINS

Investment income decreased $0.1 million, or 3.5%, during the three month period ended March 31, 2016 from the comparable period in 2015.  The decrease in investment income was primarily attributable to a decrease in the average yield on the Company’s investments in fixed maturities.

The Company had net realized investment gains of $0.8 million during the three month period ended March 31, 2016, compared to net realized investment gains of $1.0 million in the three month period ended March 31, 2015.   The net realized investment gains in the three month period ended March 31, 2016 was primarily due to a $0.6 million gain from the sale of property held within one of the Company’s real estate partnership investments.  The net realized investment gains in the three month period ended March 31, 2015 resulted from the disposition of several of the Company’s investments in fixed maturities.  Management continually evaluates the Company’s investment portfolio and, as may be determined to be appropriate, makes adjustments for impairments and/or will divest investments.

-21-

INTEREST EXPENSE

Interest expense increased slightly during the three month period ended March 31, 2016 over the comparable period in 2015.  The increase in interest expense was due to an increase in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) are directly related to LIBOR.

OTHER EXPENSES

Other expenses (commissions, underwriting expenses, and other expenses) increased $0.8 million, or 5.7%, during the three month period ended March 31, 2016 over the comparable period in 2015.  The increase in other expenses was primarily due to increased commission and underwriting costs in the life and health operations associated with increased premiums.  Also contributing to the increase in other expenses were increased commission accruals at American Southern due to more favorable loss experience. During the three month period ended March 31, 2016, these commissions at American Southern increased $0.1 million from the comparable period in 2015.  The majority of American Southern’s business is structured in a way that agents are compensated based upon the loss ratios of the business they place with the company.  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.  Additionally, during the three month period ended March 31, 2016, incentive compensation accruals increased $0.2 million from the comparable 2015 period due to the Company’s recent operating performance.  Partially offsetting the increase in other expenses was a decrease in legal and consulting fees of $0.6 million. On a consolidated basis, as a percentage of earned premiums, other expenses increased to 39.5% in the three month period ended March 31, 2016 from 38.4% in the three month period ended March 31, 2015.  The increase in the expense ratio was primarily attributable to increases in commission accruals and other expenses both discussed previously.

INCOME TAXES

The primary difference between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2016 resulted from the dividends-received deduction (“DRD”).  The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2015 resulted from the DRD and the small life insurance company deduction (“SLD”).  The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3.0 million and is ultimately phased out at $15.0 million.

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 expenses as needed.

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries.  The principal cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time.  At March 31, 2016, the Parent had approximately $20.4 million of unrestricted cash and investments.

-22-

The Parent’s insurance subsidiaries reported statutory net income of $3.3 million for the three month period ended March 31, 2016 compared to statutory net income of $2.6 million for the three month period ended March 31, 2015.  Statutory results are impacted by the recognition of all costs of acquiring business.  In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined under GAAP.  Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes.  The Company’s life and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations.  Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries.  At March 31, 2016, American Southern had $38.1 million of statutory surplus and Bankers Fidelity had $35.3 million of statutory surplus. In 2016, dividend payments by the Parent’s insurance subsidiaries in excess of $6.1 million would require prior approval.

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

The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in Junior Subordinated Debentures.  The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of three-month LIBOR plus an applicable margin.  The margin ranges from 4.00% to 4.10%.  At March 31, 2016, the effective interest rate was 4.68%.  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.  The Company has not made such an election.

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

At March 31, 2016, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.  All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s controlling shareholder. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative.  In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option.  The Series D Preferred Stock is not currently convertible.  At March 31, 2016, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.1 million.

Cash and cash equivalents decreased from $15.6 million at December 31, 2015 to $10.8 million at March 31, 2016. The decrease in cash and cash equivalents during the three month period ended March 31, 2016 was primarily attributable to net cash used in operating activities of $7.0 million, primarily for the settlement of claims in the property and casualty operations, additions to property and equipment of $0.2 million and the purchase of shares for treasury for $0.2 million.  Partially offsetting the decrease in cash and cash equivalents was a $2.5 million increase resulting from the sale 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, 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.

-23-

Item 4.   Controls and Procedures

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

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains and references certain information that constitutes forward-looking statements as that term is defined in the federal securities laws.  Those statements, to the extent they are not historical facts, should be considered forward-looking statements, and are subject to various risks and uncertainties.  Such forward-looking statements are made based upon management’s current assessments of various risks and uncertainties, as well as assumptions made in accordance with the “safe harbor” provisions of the federal securities laws.  The Company’s actual results could differ materially from the results anticipated in these forward-looking statements as a result of such risks and uncertainties, including those identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, any subsequent quarterly reports on Form 10-Q and the other filings made by the Company from time to time with the Securities and Exchange Commission.  In addition, other risks and uncertainties not known by us, or that we currently determine to not be material, may materially adversely affect our financial condition, results of operations or cash flows. The Company undertakes no obligation to update any forward-looking statement as a result of subsequent developments, changes in underlying assumptions or facts, or otherwise.

-24-

PART II.  OTHER INFORMATION

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

On May 6, 2014, the Board of Directors of the Company approved a plan that allows for the repurchase of up to 750,000 shares of the Company's common stock (the "Repurchase Plan") on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company.  Any such repurchases can be made from time to time in accordance with applicable securities laws and other requirements.

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

The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended March 31, 2016.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of  Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum  Number of  Shares that May Yet be Purchased Under the Plans or Programs
January 1 – January 31, 2016		13,000	$	4.56		13,000		188,283
February 1 – February 29, 2016		14,801		4.43		14,801		173,482
March 1 – March 31, 2016		10,845		4.22		10,845		162,637
Total		38,646	$	4.41		38,646

Item 6.   Exhibits

3.2	Restated Bylaws of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the registrant’s Form 8-K filed on March 4, 2016].
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

-25-

SIGNATURES

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

ATLANTIC AMERICAN CORPORATION

(Registrant)

Date: May 12, 2016	By:	/s/ John G. Sample, Jr.
		John G. Sample, Jr.
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

-26-

EXHIBIT INDEX

Exhibit Number	Title
3.2	Restated Bylaws of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the registrant’s Form 8-K filed on March 4, 2016].
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hilton H. Howell, Jr., certify that:

1. I have reviewed this report on Form 10-Q of Atlantic American Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 12, 2016	/s/ Hilton H. Howell, Jr.
	Hilton H. Howell, Jr.
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John G. Sample, Jr., certify that:

1. I have reviewed this report on Form 10-Q of Atlantic American Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 12, 2016	/s/ John G. Sample, Jr.
	John G. Sample, Jr.
	Senior Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q of Atlantic American Corporation (the “Company”) for the quarterly period ended March 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: May 12, 2016	/s/ Hilton H. Howell, Jr.
	Hilton H. Howell, Jr.
	President and Chief Executive Officer
Date: May 12, 2016	/s/ John G. Sample, Jr.
	John G. Sample, Jr.
	Senior Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 09, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	ATLANTIC AMERICAN CORP
Entity Central Index Key	0000008177
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		20,419,486
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 10,784	$ 15,622
Investments:
Fixed maturities (cost: $206,819 and $210,450)	206,461	205,324
Common and non-redeemable preferred stocks (cost: $11,453 and $10,953)	20,367	23,131
Other invested assets (cost: $5,719 and $6,454)	5,719	6,454
Policy loans	2,204	2,200
Real estate	38	38
Investment in unconsolidated trusts	1,238	1,238
Total investments	236,027	238,385
Receivables:
Reinsurance	9,035	11,759
Insurance premiums and other (net of allowance for doubtful accounts: $521 and $528)	8,416	11,988
Deferred income taxes, net	0	829
Deferred acquisition costs	27,669	27,866
Other assets	5,658	5,610
Intangibles	2,544	2,544
Total assets	300,133	314,603
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits	72,468	72,136
Unearned premiums	17,533	25,348
Losses and claims	57,673	63,870
Other policy liabilities	1,464	1,991
Total insurance reserves and policyholder funds	149,138	163,345
Accounts payable and accrued expenses	13,258	15,028
Deferred income taxes, net	175	0
Junior subordinated debenture obligations, net	33,738	33,738
Total liabilities	$ 196,309	$ 212,111
Commitments and contingencies (Note 7)
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: 20,391,363 and 20,426,536	22,401	22,401
Additional paid-in capital	56,633	56,623
Retained earnings	25,834	25,443
Accumulated other comprehensive income	5,561	4,584
Unearned stock grant compensation	(154)	(273)
Treasury stock, at cost: 2,009,531 and 1,974,358 shares	(6,506)	(6,341)
Total shareholders' equity	103,824	102,492
Total liabilities and shareholders' equity	$ 300,133	$ 314,603

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Investments:
Fixed maturities, cost	$ 206,819	$ 210,450
Common and non-redeemable preferred stocks, cost	11,453	10,953
Other invested assets, cost	5,719	6,454
Receivables:
Insurance premiums and other, allowance for doubtful accounts	$ 521	$ 528
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	4,000,000	4,000,000
Preferred stock, shares issued (in shares)	55,000	55,000
Preferred stock, shares outstanding (in shares)	55,000	55,000
Preferred stock, redemption value	$ 5,500	$ 5,500
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	22,400,894	22,400,894
Common stock, shares outstanding (in shares)	20,391,363	20,426,536
Treasury stock, at cost (in shares)	2,009,531	1,974,358

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenue:
Insurance premiums	$ 38,458	$ 37,386
Investment income	2,507	2,597
Realized investment gains, net	752	951
Other income	30	15
Total revenue	41,747	40,949
Benefits and expenses:
Insurance benefits and losses incurred	24,825	25,241
Commissions and underwriting expenses	11,827	10,721
Interest expense	373	349
Other expense	3,346	3,628
Total benefits and expenses	40,371	39,939
Income before income taxes	1,376	1,010
Income tax expense	478	319
Net income	898	691
Preferred stock dividends	(99)	(99)
Net income applicable to common shareholders	$ 799	$ 592
Earnings per common share (basic and diluted) (in dollars per share)	$ 0.04	$ 0.03

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract]
Net income		$ 898	$ 691
Available-for-sale securities:
Gross unrealized holding gain arising in the period		2,256	5,721
Related income tax effect		(790)	(2,003)
Less: reclassification adjustment for net realized gains included in net income	[1]	(752)	(951)
Related income tax effect	[2]	263	333
Total other comprehensive income, net of tax		977	3,100
Total comprehensive income		$ 1,875	$ 3,791

[1] Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying condensed consolidated statements of operations.

[2] Income tax effect on reclassification adjustment for net realized gains included in income tax expense on the accompanying condensed consolidated statements of operations.

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Unearned Stock Grant Compensation [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2014	$ 55	$ 22,401	$ 56,491	$ 21,866	$ 9,279	$ (460)	$ (5,437)	$ 104,195
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	691	0	0	0	691
Other comprehensive income, net of tax	0	0	0	0	3,100	0	0	3,100
Dividends declared on common stock	0	0	0	(412)	0	0	0	(412)
Dividends accrued on preferred stock	0	0	0	(99)	0	0	0	(99)
Amortization of unearned compensation	0	0	0	0	0	65	0	65
Purchase of shares for treasury	0	0	0	0	0	0	(94)	(94)
Issuance of shares under stock plans	0	0	7	0	0	0	4	11
Balance at Mar. 31, 2015	55	22,401	56,498	22,046	12,379	(395)	(5,527)	107,457
Balance at Dec. 31, 2015	55	22,401	56,623	25,443	4,584	(273)	(6,341)	102,492
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	898	0	0	0	898
Other comprehensive income, net of tax	0	0	0	0	977	0	0	977
Dividends declared on common stock	0	0	0	(408)	0	0	0	(408)
Dividends accrued on preferred stock	0	0	0	(99)	0	0	0	(99)
Amortization of unearned compensation	0	0	0	0	0	119	0	119
Purchase of shares for treasury	0	0	0	0	0	0	(170)	(170)
Issuance of shares under stock plans	0	0	10	0	0	0	5	15
Balance at Mar. 31, 2016	$ 55	$ 22,401	$ 56,633	$ 25,834	$ 5,561	$ (154)	$ (6,506)	$ 103,824

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 898	$ 691
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of deferred acquisition costs	2,492	2,961
Acquisition costs deferred	(2,295)	(2,780)
Realized investment gains, net	(752)	(951)
Decrease in insurance reserves	(14,207)	(8,284)
Compensation expense related to share awards	119	65
Depreciation and amortization	291	283
Deferred income tax expense	478	308
Decrease in receivables, net	8,304	4,690
Decrease in other liabilities	(2,277)	(1,289)
Other, net	(8)	65
Net cash used in operating activities	(6,957)	(4,241)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured	18,657	28,049
Investments purchased	(16,157)	(20,338)
Additions to property and equipment	(226)	(67)
Net cash provided by investing activities	2,274	7,644
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued under stock plans	15	11
Purchase of shares for treasury	(170)	(94)
Net cash used in financing activities	(155)	(83)
Net (decrease) increase in cash and cash equivalents	(4,838)	3,320
Cash and cash equivalents at beginning of period	15,622	16,375
Cash and cash equivalents at end of period	10,784	19,695
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	367	351
Cash paid for income taxes	$ 0	$ 215

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2016

Basis of Presentation [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).  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, 2015.  The Company’s financial condition and results of operations as of and for the three month period ended March 31, 2016 are not necessarily indicative of the financial condition or results of operations that may be expected for the year ending December 31, 2016 or for any other future period.

The Company’s significant accounting policies have not changed materially from those set out in the Company’s 2015 Annual Report.

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.

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Recently Issued Accounting Standards

3 Months Ended

Mar. 31, 2016

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards

Note 2. Recently Issued Accounting Standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This guidance applies to all entities that issue share-based payment awards to their employees and is designed to simplify several areas of the accounting for share-based payment transactions.  The areas for simplification include income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows.  In addition, ASU 2016-09 eliminates the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment.  ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016.  The Company does not expect the adoption of ASU 2016-09 to have a material impact on its financial condition or results of operations.

In March 2016, the FASB issued ASU No. 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). This guidance eliminates the requirement to retroactively adopt the equity method of accounting when an investment qualifies for the use of the equity method as a result of an increase in the level of ownership or degree of influence.  In contrast, the equity method entity or investor is required to add the cost of acquiring the additional interest in the investee to the current basis of the previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.   ASU 2016-07 is effective for interim and annual reporting periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its financial condition or results of operations.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the expected impact on its consolidated financial statements upon the adoption of this guidance.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10) (“ASU 2016-01”).  ASU 2016-01 provides updated guidance for the recognition and measurement of financial instruments. The new guidance will require investments in equity securities to be measured at fair value with changes in fair value reported in net income except for those equity securities that result in consolidation or are accounted for under the equity method of accounting.  Under existing guidance, the Company measures investments in equity securities, available-for-sale, at fair value with changes in fair value reported in accumulated other comprehensive income.  The Company is required to adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed.  The impact on the Company’s consolidated financial statements will depend on the composition of the Company’s investment portfolio on the date of adoption.  As of March 31, 2016, equity securities available-for-sale totaled $20,367, with unrealized gains, net of tax, of $5,794 in accumulated other comprehensive income that would have been classified in retained earnings.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. This amendment defers the effective date of the previously issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), until the interim and annual reporting periods beginning after December 15, 2017. Earlier adoption is permitted for interim and annual reporting periods beginning after December 15, 2016. ASU 2014-09 provides updated guidance for recognizing revenue. The guidance excludes insurance contracts and financial instruments. Revenue is to be recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to be entitled in exchange for those goods or services. The Company is currently evaluating the impact on its consolidated financial statements upon the adoption of this guidance.

In May 2015, the FASB issued ASU No. 2015-09, Financial Services – Insurance (Topic 944): Disclosures about Short-Duration Contracts (“ASU 2015-09”). The main objective of ASU 2015-09 is to enhance disclosures about the liability for unpaid claims and claim adjustment expenses, specifically the development of claims, the frequency and severity of claims, and expanded disclosures about reserves that are discounted.  ASU 2015-09 will also require insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and effects on the financial statements.  The amendments in ASU 2015-09 are effective for annual reporting periods beginning after December 15, 2015, and interim reporting periods within annual reporting periods beginning after December 15, 2016. Since ASU 2015-09 is a disclosure only update, the Company does not expect the adoption to have an impact on its financial condition or results of operations.

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Segment Information

3 Months Ended

Mar. 31, 2016

Segment Information [Abstract]

Segment Information

Note 3. Segment Information

The Company’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) operate in two principal business units, each focusing on specific products.  American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.  Each business unit is managed independently and is evaluated on its individual performance.  The following sets forth the revenue and income before income taxes for each business unit for the three month periods ended March 31, 2016 and 2015.

Revenues	Three Months Ended March 31,
	2016		2015
American Southern	$	14,811	$	14,772
Bankers Fidelity		26,839		26,070
Corporate and Other		97		107
Total revenue	$	41,747	$	40,949

Income Before Income Taxes	Three Months Ended March 31,
	2016			2015
American Southern	$	2,231		$	1,849
Bankers Fidelity		998			1,190
Corporate and Other		(1,853	)		(2,029	)
Income before income taxes	$	1,376		$	1,010

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Junior Subordinated Debentures

3 Months Ended

Mar. 31, 2016

Junior Subordinated Debentures [Abstract]

Junior Subordinated Debentures

Note 4. Junior Subordinated Debentures

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

The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2016 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance March 31, 2016	$	18,042	$	23,196
Less: Treasury debt (3)		-		(7,500	)
Net balance March 31, 2016	$	18,042	$	15,696
Net balance December 31, 2015	$	18,042	$	15,696
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Interest payable		Quarterly		Quarterly
Maturity date		December 4, 2032		May 15, 2033
Redeemable by issuer		Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date		December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value	$	17,500	$	22,500
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable		Quarterly		Quarterly
Distribution guaranteed by (4)		Atlantic American Corporation		Atlantic American Corporation

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

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

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

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

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2016

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Note 5. Earnings Per Common Share

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

	Three Months Ended March 31, 2016
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	898			20,406
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	799			20,406	$	.04

	Three Months Ended March 31, 2015
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	691			20,591
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	592			20,591	$	.03

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings per common share calculation for all periods presented since its impact would have been antidilutive.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Taxes [Abstract]

Income Taxes

Note 6. Income Taxes

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

	Three Months Ended March 31,
	2016			2015
Federal income tax provision at statutory rate of 35%	$	482		$	354
Dividends-received deduction		(22	)		(27	)
Small life insurance company deduction		-			(18	)
Other permanent differences		18			10
Income tax expense	$	478		$	319

The components of income tax expense were:

	Three Months Ended March 31,
	2016		2015
Current – Federal	$	-	$	11
Deferred – Federal		478		308
Total	$	478	$	319

The primary difference between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2016 resulted from the dividends-received deduction (“DRD”).  The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2015 resulted from the DRD and the small life insurance company deduction (“SLD”).  The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000. 

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 7. Commitments and Contingencies

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

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Investments

3 Months Ended

Mar. 31, 2016

Investments [Abstract ]

Investments

Note 8. Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of March 31, 2016 and December 31, 2015.

Investments were comprised of the following:

	March 31, 2016
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	449	$	11	$	18,007
Obligations of states and political subdivisions		18,046		814		36		17,268
Corporate securities:
Utilities and telecom		17,617		1,794		613		16,436
Financial services		57,648		2,464		1,392		56,576
Other business – diversified		66,390		1,572		5,036		69,854
Other consumer – diversified		27,867		603		972		28,236
Total corporate securities		169,522		6,433		8,013		171,102
Redeemable preferred stocks:
Financial services		256		6		-		250
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		448		6		-		442
Total fixed maturities		206,461		7,702		8,060		206,819
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,622		658		-		964
Financial services		5,672		844		-		4,828
Other business – diversified		213		166		-		47
Other consumer – diversified		12,860		7,246		-		5,614
Total equity securities		20,367		8,914		-		11,453
Other invested assets		5,719		-		-		5,719
Policy loans		2,204		-		-		2,204
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	236,027	$	16,616	$	8,060	$	227,471

	December 31, 2015
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	22,234	$	290	$	175	$	22,119
Obligations of states and political subdivisions		25,479		621		552		25,410
Corporate securities:
Utilities and telecom		17,589		1,357		692		16,924
Financial services		54,035		1,797		1,351		53,589
Other business – diversified		60,960		729		5,898		66,129
Other consumer – diversified		24,581		136		1,391		25,836
Total corporate securities		157,165		4,019		9,332		162,478
Redeemable preferred stocks:
Financial services		253		3		-		250
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		446		3		-		443
Total fixed maturities		205,324		4,933		10,059		210,450
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,386		422		-		964
Financial services		5,175		847		-		4,328
Other business – diversified		198		151		-		47
Other consumer – diversified		16,372		10,758		-		5,614
Total equity securities		23,131		12,178		-		10,953
Other invested assets		6,454		-		-		6,454
Policy loans		2,200		-		-		2,200
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	238,385	$	17,111	$	10,059	$	231,333

Bonds having an amortized cost of $11,159 and $11,259 and included in the tables above were on deposit with insurance regulatory authorities at March 31, 2016 and December 31, 2015, respectively, in accordance with statutory requirements.

The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2016 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016
	Carrying Value		Amortized Cost
Due in one year or less	$	2,465	$	2,441
Due after one year through five years		21,162		20,941
Due after five years through ten years		110,924		111,976
Due after ten years		70,751		70,465
Varying maturities		1,159		996
Totals	$	206,461	$	206,819

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2016 and December 31, 2015.

	March 31, 2016							December 31, 2015
	Carrying Value		Amortized Cost		Unrealized Gains (Losses)			Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	18,007	$	438		$	22,234	$	22,119	$	115
Obligations of states and political subdivisions		18,046		17,268		778			25,479		25,410		69
Utilities and telecom		19,239		17,400		1,839			18,975		17,888		1,087
Financial services		63,576		61,654		1,922			59,463		58,167		1,296
Other business – diversified		66,603		69,901		(3,298	)		61,158		66,176		(5,018	)
Other consumer – diversified		40,919		34,042		6,877			41,146		31,643		9,503
Other investments		9,199		9,199		-			9,930		9,930		-
Investments	$	236,027	$	227,471	$	8,556		$	238,385	$	231,333	$	7,052

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of March 31, 2016 and December 31, 2015.

	March 31, 2016
	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	$	2,626	$	10	$	501	$	1	$	3,127	$	11
Obligations of states and political subdivisions		-		-		5,010		36		5,010		36
Corporate securities		38,092		1,821		25,402		6,192		63,494		8,013
Total temporarily impaired securities	$	40,718	$	1,831	$	30,913	$	6,229	$	71,631	$	8,060

	December 31, 2015
	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	$	9,209	$	120	$	2,243	$	55	$	11,452	$	175
Obligations of states and political subdivisions		16,079		552		-		-		16,079		552
Corporate securities		79,482		4,284		16,131		5,048		95,613		9,332
Total temporarily impaired securities	$	104,770	$	4,956	$	18,374	$	5,103	$	123,144	$	10,059

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

As of March 31, 2016, there were fifty-one securities in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer, utilities and telecom and financial services sectors. Securities in an unrealized loss position reported in the other diversified business sector included gross unrealized losses of $3,856 related to investments in fixed maturities of twelve different issuers, all related to the oil and gas industry. The oil and gas investee companies represent a diversified group of businesses which include, among others, refiners, pipeline owners and operators, deep water offshore rig owners and operators, all of which we believe are in continuing stages of rationalizing their current investments, future capital expenditures and assessing capital and liquidity requirements.  To our knowledge, the companies are continuing to assess and revise short-term, intermediate and long-term business plans in response to the current trends in oil and gas markets.  While these companies have generally experienced credit downgrades or may be currently under credit rating review, the Company believes that many of the downgrades are in response to external market forces and not necessarily specific credit events of any obligor which would currently indicate that an other than temporary impairment need be recorded.  All of the investees have continued to make regular interest payments on their debt when and as due and the Company continues to perform in-depth analysis of the financial disclosures of each of the investees on a regular basis.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of March 31, 2016.

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

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

Level 2 Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly all of its fixed maturities, which consist of U.S. Treasury securities and 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 using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers, in establishing the fair value of its fixed maturities and non-redeemable preferred stocks.  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 a matrix pricing concept, which is a mathematical technique used widely in the industry to value debt securities based on various relationships to other benchmark quoted prices.

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. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of March 31, 2016 and December 31, 2015, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,300 and $2,237, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of March 31, 2016, 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	$	-	$	204,161		$	2,300	(1)	$	206,461
Equity securities		14,945		5,422	(1)		-			20,367
Cash equivalents		10,784		-			-			10,784
Total	$	25,729	$	209,583		$	2,300		$	237,612

⁽¹⁾ All underlying securities are financial service industry related.

     As of December 31, 2015, 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	$	-	$	203,087		$	2,237	(1)	$	205,324
Equity securities		18,245		4,886	(1)		-			23,131
Cash equivalents		13,772		-			-			13,772
Total	$	32,017	$	207,973		$	2,237		$	242,227

⁽¹⁾ All underlying securities are financial service industry related.

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2016.

	Fixed Maturities
Balance, December 31, 2015	$	2,237
Total unrealized gains included in other comprehensive income		63
Balance, March 31, 2016	$	2,300

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest.  There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal.  Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.

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Fair Values of Financial Instruments

3 Months Ended

Mar. 31, 2016

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

Note 9. 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 table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2016 and December 31, 2015.

			March 31, 2016				December 31, 2015
	Level in Fair Value  Hierarchy (1)		Carrying Amount		Estimated  Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	10,784	$	10,784	$	15,622	$	15,622
Fixed maturities		(1)		206,461		206,461		205,324		205,324
Equity securities		(1)		20,367		20,367		23,131		23,131
Other invested assets	Level 3			5,719		5,719		6,454		7,070
Policy loans	Level 2			2,204		2,204		2,200		2,200
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior Subordinated Debentures, net	Level 2			33,738		33,738		33,738		33,738

⁽¹⁾ See Note 8 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

There have not been any transfers between Level 1, Level 2 and Level 3 during the periods presented in these condensed consolidated financial statements.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note 10. Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of March 31, 2016 and December 31, 2015, and the changes in the balance of each component thereof during the three month period ended March 31, 2016, net of taxes.

	Unrealized Gains on Available-for- Sale Securities
Balance, December 31, 2015	$	4,584
Other comprehensive income before reclassifications		1,466
Amounts reclassified from accumulated other comprehensive income		(489	)
Net current period other comprehensive income		977
Balance, March 31, 2016	$	5,561

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2016

Segment Information [Abstract]

Revenue and income before income taxes for each business unit

The following sets forth the revenue and income before income taxes for each business unit for the three month periods ended March 31, 2016 and 2015.

Revenues	Three Months Ended March 31,
	2016		2015
American Southern	$	14,811	$	14,772
Bankers Fidelity		26,839		26,070
Corporate and Other		97		107
Total revenue	$	41,747	$	40,949

Income Before Income Taxes	Three Months Ended March 31,
	2016			2015
American Southern	$	2,231		$	1,849
Bankers Fidelity		998			1,190
Corporate and Other		(1,853	)		(2,029	)
Income before income taxes	$	1,376		$	1,010

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Junior Subordinated Debentures (Tables)

3 Months Ended

Mar. 31, 2016

Junior Subordinated Debentures [Abstract]

Financial structure of statutory business trusts

The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2016 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance March 31, 2016	$	18,042	$	23,196
Less: Treasury debt (3)		-		(7,500	)
Net balance March 31, 2016	$	18,042	$	15,696
Net balance December 31, 2015	$	18,042	$	15,696
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Interest payable		Quarterly		Quarterly
Maturity date		December 4, 2032		May 15, 2033
Redeemable by issuer		Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date		December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value	$	17,500	$	22,500
Coupon rate		LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable		Quarterly		Quarterly
Distribution guaranteed by (4)		Atlantic American Corporation		Atlantic American Corporation

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

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

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

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

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Common Share [Abstract]

Reconciliation of numerator and denominator used in earnings per common share calculations

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

	Three Months Ended March 31, 2016
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	898			20,406
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	799			20,406	$	.04

	Three Months Ended March 31, 2015
	Income			Shares (In thousands)			Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	691			20,591
Less preferred stock dividends		(99	)		-
Net income applicable to common shareholders	$	592			20,591	$	.03

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2016

Income Taxes [Abstract]

Reconciliation of income tax expense

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

	Three Months Ended March 31,
	2016			2015
Federal income tax provision at statutory rate of 35%	$	482		$	354
Dividends-received deduction		(22	)		(27	)
Small life insurance company deduction		-			(18	)
Other permanent differences		18			10
Income tax expense	$	478		$	319

Components of income tax expense

The components of income tax expense were:

	Three Months Ended March 31,
	2016		2015
Current – Federal	$	-	$	11
Deferred – Federal		478		308
Total	$	478	$	319

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Investments (Tables)

3 Months Ended

Mar. 31, 2016

Investments [Abstract ]

Schedule of investments aggregated by type and industry

	March 31, 2016
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	449	$	11	$	18,007
Obligations of states and political subdivisions		18,046		814		36		17,268
Corporate securities:
Utilities and telecom		17,617		1,794		613		16,436
Financial services		57,648		2,464		1,392		56,576
Other business – diversified		66,390		1,572		5,036		69,854
Other consumer – diversified		27,867		603		972		28,236
Total corporate securities		169,522		6,433		8,013		171,102
Redeemable preferred stocks:
Financial services		256		6		-		250
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		448		6		-		442
Total fixed maturities		206,461		7,702		8,060		206,819
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,622		658		-		964
Financial services		5,672		844		-		4,828
Other business – diversified		213		166		-		47
Other consumer – diversified		12,860		7,246		-		5,614
Total equity securities		20,367		8,914		-		11,453
Other invested assets		5,719		-		-		5,719
Policy loans		2,204		-		-		2,204
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	236,027	$	16,616	$	8,060	$	227,471

	December 31, 2015
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	22,234	$	290	$	175	$	22,119
Obligations of states and political subdivisions		25,479		621		552		25,410
Corporate securities:
Utilities and telecom		17,589		1,357		692		16,924
Financial services		54,035		1,797		1,351		53,589
Other business – diversified		60,960		729		5,898		66,129
Other consumer – diversified		24,581		136		1,391		25,836
Total corporate securities		157,165		4,019		9,332		162,478
Redeemable preferred stocks:
Financial services		253		3		-		250
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		446		3		-		443
Total fixed maturities		205,324		4,933		10,059		210,450
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,386		422		-		964
Financial services		5,175		847		-		4,328
Other business – diversified		198		151		-		47
Other consumer – diversified		16,372		10,758		-		5,614
Total equity securities		23,131		12,178		-		10,953
Other invested assets		6,454		-		-		6,454
Policy loans		2,200		-		-		2,200
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	238,385	$	17,111	$	10,059	$	231,333

Amortized cost and carrying value of fixed maturities by contractual maturity

The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2016 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016
	Carrying Value		Amortized Cost
Due in one year or less	$	2,465	$	2,441
Due after one year through five years		21,162		20,941
Due after five years through ten years		110,924		111,976
Due after ten years		70,751		70,465
Varying maturities		1,159		996
Totals	$	206,461	$	206,819

Schedule of investments aggregated by industry

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2016 and December 31, 2015.

	March 31, 2016							December 31, 2015
	Carrying Value		Amortized Cost		Unrealized Gains (Losses)			Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	18,445	$	18,007	$	438		$	22,234	$	22,119	$	115
Obligations of states and political subdivisions		18,046		17,268		778			25,479		25,410		69
Utilities and telecom		19,239		17,400		1,839			18,975		17,888		1,087
Financial services		63,576		61,654		1,922			59,463		58,167		1,296
Other business – diversified		66,603		69,901		(3,298	)		61,158		66,176		(5,018	)
Other consumer – diversified		40,919		34,042		6,877			41,146		31,643		9,503
Other investments		9,199		9,199		-			9,930		9,930		-
Investments	$	236,027	$	227,471	$	8,556		$	238,385	$	231,333	$	7,052

Schedule of investment securities with continuous unrealized loss position

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of March 31, 2016 and December 31, 2015.

	March 31, 2016
	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	$	2,626	$	10	$	501	$	1	$	3,127	$	11
Obligations of states and political subdivisions		-		-		5,010		36		5,010		36
Corporate securities		38,092		1,821		25,402		6,192		63,494		8,013
Total temporarily impaired securities	$	40,718	$	1,831	$	30,913	$	6,229	$	71,631	$	8,060

	December 31, 2015
	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	$	9,209	$	120	$	2,243	$	55	$	11,452	$	175
Obligations of states and political subdivisions		16,079		552		-		-		16,079		552
Corporate securities		79,482		4,284		16,131		5,048		95,613		9,332
Total temporarily impaired securities	$	104,770	$	4,956	$	18,374	$	5,103	$	123,144	$	10,059

Financial instruments carried at fair value measured on a recurring basis

As of March 31, 2016, 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	$	-	$	204,161		$	2,300	(1)	$	206,461
Equity securities		14,945		5,422	(1)		-			20,367
Cash equivalents		10,784		-			-			10,784
Total	$	25,729	$	209,583		$	2,300		$	237,612

⁽¹⁾ All underlying securities are financial service industry related.

     As of December 31, 2015, 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	$	-	$	203,087		$	2,237	(1)	$	205,324
Equity securities		18,245		4,886	(1)		-			23,131
Cash equivalents		13,772		-			-			13,772
Total	$	32,017	$	207,973		$	2,237		$	242,227

⁽¹⁾ All underlying securities are financial service industry related.

Roll-forward of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2016.

	Fixed Maturities
Balance, December 31, 2015	$	2,237
Total unrealized gains included in other comprehensive income		63
Balance, March 31, 2016	$	2,300

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Fair Values of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2016

Fair Values of Financial Instruments [Abstract]

Carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2016 and December 31, 2015.

			March 31, 2016				December 31, 2015
	Level in Fair Value  Hierarchy (1)		Carrying Amount		Estimated  Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	10,784	$	10,784	$	15,622	$	15,622
Fixed maturities		(1)		206,461		206,461		205,324		205,324
Equity securities		(1)		20,367		20,367		23,131		23,131
Other invested assets	Level 3			5,719		5,719		6,454		7,070
Policy loans	Level 2			2,204		2,204		2,200		2,200
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior Subordinated Debentures, net	Level 2			33,738		33,738		33,738		33,738

⁽¹⁾ See Note 8 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2016

Accumulated Other Comprehensive Income [Abstract]

Changes in balances of each component of accumulated other comprehensive income, net of taxes

The following table sets forth the balance of each component of accumulated other comprehensive income as of March 31, 2016 and December 31, 2015, and the changes in the balance of each component thereof during the three month period ended March 31, 2016, net of taxes.

	Unrealized Gains on Available-for- Sale Securities
Balance, December 31, 2015	$	4,584
Other comprehensive income before reclassifications		1,466
Amounts reclassified from accumulated other comprehensive income		(489	)
Net current period other comprehensive income		977
Balance, March 31, 2016	$	5,561

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Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Recently Issued Accounting Standards [Abstract]
Equity securities available-for-sale	$ 20,367	$ 23,131
Equity securities unrealized gains, net of tax	$ 5,794

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Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) Segment	Mar. 31, 2015 USD ($)
Segment Information [Abstract]
Number of business units | Segment	2
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	$ 41,747	$ 40,949
Income before income taxes	1,376	1,010
Corporate and Other [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	97	107
Income before income taxes	(1,853)	(2,029)
American Southern [Member] | Operating Segments [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	14,811	14,772
Income before income taxes	2,231	1,849
Bankers Fidelity [Member] | Operating Segments [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	26,839	26,070
Income before income taxes	$ 998	$ 1,190

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Junior Subordinated Debentures (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) Trust Quarter $ / shares shares
Debt Instrument [Line Items]
Number of Connecticut statutory business trusts | Trust	2
Financial structure of statutory business trusts [Abstract]
Net balance March 31, 2016	$ 33,738
Net balance December 31, 2015	$ 33,738
Junior Subordinated Debentures [Member]
Financial structure of statutory business trusts [Abstract]
Number of consecutive quarters for which interest payments can be deferred | Quarter	20
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member]
Financial structure of statutory business trusts [Abstract]
Principal amount owed	$ 18,042	[1],[2]
Balance March 31, 2016	18,042	[1],[2]
Less: Treasury debt	0	[1],[2],[3]
Net balance March 31, 2016	18,042	[1],[2]
Net balance December 31, 2015	$ 18,042	[1],[2]
Coupon rate	LIBOR + 4.00%	[1],[2]
Interest payable	Quarterly	[1],[2]
Maturity date	Dec. 04, 2032	[1],[2]
Redeemable by issuer	Yes	[1],[2]
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate	4.00%
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member]
Financial structure of statutory business trusts [Abstract]
Coupon rate	LIBOR + 4.00%
Issuance date	Dec. 04, 2002
Securities issued (in shares) | shares	17,500
Liquidation preference per security (in dollars per share) | $ / shares	$ 1
Liquidation value	$ 17,500
Distribution payable	Quarterly
Distribution guaranteed by	Atlantic American Corporation	[4]
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate	4.00%
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member]
Financial structure of statutory business trusts [Abstract]
Principal amount owed	$ 23,196	[1],[2]
Balance March 31, 2016	23,196	[1],[2]
Less: Treasury debt	(7,500)	[1],[2],[3]
Net balance March 31, 2016	15,696	[1],[2]
Net balance December 31, 2015	$ 15,696	[1],[2]
Coupon rate	LIBOR + 4.10%	[1],[2]
Interest payable	Quarterly	[1],[2]
Maturity date	May 15, 2033	[1],[2]
Redeemable by issuer	Yes	[1],[2]
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate	4.10%
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member]
Financial structure of statutory business trusts [Abstract]
Coupon rate	LIBOR + 4.10%
Issuance date	May 15, 2003
Securities issued (in shares) | shares	22,500
Liquidation preference per security (in dollars per share) | $ / shares	$ 1
Liquidation value	$ 22,500
Distribution payable	Quarterly
Distribution guaranteed by	Atlantic American Corporation	[4]
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate	4.10%

[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.

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income [Abstract]
Net income	$ 898	$ 691
Less preferred stock dividends	(99)	(99)
Net income applicable to common shareholders	$ 799	$ 592
Shares [Abstract]
Weighted average shares outstanding (in shares)	20,406	20,591
Per Share Amount [Abstract]
Net income applicable to common shareholders (in dollars per share)	$ 0.04	$ 0.03

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Reconciliation of income tax (benefit) expense [Abstract]
Federal income tax provision at statutory rate of 35%	$ 482	$ 354
Dividends-received deduction	(22)	(27)
Small life insurance company deduction	0	(18)
Other permanent differences	18	10
Income tax expense	$ 478	319
Federal statutory income tax rate	35.00%
Components of income tax expense [Abstract]
Current - Federal	$ 0	11
Deferred - Federal	478	308
Income tax expense	$ 478	$ 319
SLD as percentage of life insurance company taxable income	60.00%
Percentage of reduction in SLD	15.00%
Minimum tentative amount of LICTI	$ 3,000
Maximum tentative amount of LICTI	$ 15,000

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Investments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) Securities Issuer	Dec. 31, 2015 USD ($)
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	$ 236,027	$ 238,385
Gross Unrealized Gains	16,616	17,111
Gross Unrealized Losses	8,060	10,059
Amortized Cost	227,471	231,333
Amortized cost of bonds on deposit with insurance regulatory authorities	$ 11,159	11,259
Number of securities in unrealized loss position | Securities	51
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	$ 18,445	22,234
Amortized Cost	18,007	22,119
Obligations of States and Political Subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	18,046	25,479
Amortized Cost	17,268	25,410
Utilities and Telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	19,239	18,975
Amortized Cost	17,400	17,888
Financial Services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	63,576	59,463
Amortized Cost	61,654	58,167
Other Business - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	66,603	61,158
Amortized Cost	69,901	66,176
Other Consumer - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	40,919	41,146
Amortized Cost	34,042	31,643
Fixed Maturities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	206,461	205,324
Gross Unrealized Gains	7,702	4,933
Gross Unrealized Losses	8,060	10,059
Amortized Cost	206,819	210,450
Fixed Maturities [Member] | Oil and Gas Properties [Member]
Schedule of investments aggregated by type and industry [Abstract]
Gross Unrealized Losses	$ 3,856
Fixed maturity investments, number of issuers | Issuer	12
Fixed Maturities [Member] | Bonds [Member] | U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	$ 18,445	22,234
Gross Unrealized Gains	449	290
Gross Unrealized Losses	11	175
Amortized Cost	18,007	22,119
Fixed Maturities [Member] | Bonds [Member] | Obligations of States and Political Subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	18,046	25,479
Gross Unrealized Gains	814	621
Gross Unrealized Losses	36	552
Amortized Cost	17,268	25,410
Fixed Maturities [Member] | Corporate Securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	169,522	157,165
Gross Unrealized Gains	6,433	4,019
Gross Unrealized Losses	8,013	9,332
Amortized Cost	171,102	162,478
Fixed Maturities [Member] | Corporate Securities [Member] | Utilities and Telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	17,617	17,589
Gross Unrealized Gains	1,794	1,357
Gross Unrealized Losses	613	692
Amortized Cost	16,436	16,924
Fixed Maturities [Member] | Corporate Securities [Member] | Financial Services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	57,648	54,035
Gross Unrealized Gains	2,464	1,797
Gross Unrealized Losses	1,392	1,351
Amortized Cost	56,576	53,589
Fixed Maturities [Member] | Corporate Securities [Member] | Other Business - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	66,390	60,960
Gross Unrealized Gains	1,572	729
Gross Unrealized Losses	5,036	5,898
Amortized Cost	69,854	66,129
Fixed Maturities [Member] | Corporate Securities [Member] | Other Consumer - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	27,867	24,581
Gross Unrealized Gains	603	136
Gross Unrealized Losses	972	1,391
Amortized Cost	28,236	25,836
Fixed Maturities [Member] | Redeemable Preferred Stocks [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	448	446
Gross Unrealized Gains	6	3
Gross Unrealized Losses	0	0
Amortized Cost	442	443
Fixed Maturities [Member] | Redeemable Preferred Stocks [Member] | Financial Services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	256	253
Gross Unrealized Gains	6	3
Gross Unrealized Losses	0	0
Amortized Cost	250	250
Fixed Maturities [Member] | Redeemable Preferred Stocks [Member] | Other Consumer - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	192	193
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	192	193
Equity Securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	20,367	23,131
Gross Unrealized Gains	8,914	12,178
Gross Unrealized Losses	0	0
Amortized Cost	11,453	10,953
Equity Securities [Member] | Common and Non-Redeemable Preferred Stocks [Member] | Utilities and Telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	1,622	1,386
Gross Unrealized Gains	658	422
Gross Unrealized Losses	0	0
Amortized Cost	964	964
Equity Securities [Member] | Common and Non-Redeemable Preferred Stocks [Member] | Financial Services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	5,672	5,175
Gross Unrealized Gains	844	847
Gross Unrealized Losses	0	0
Amortized Cost	4,828	4,328
Equity Securities [Member] | Common and Non-Redeemable Preferred Stocks [Member] | Other Business - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	213	198
Gross Unrealized Gains	166	151
Gross Unrealized Losses	0	0
Amortized Cost	47	47
Equity Securities [Member] | Common and Non-Redeemable Preferred Stocks [Member] | Other Consumer - Diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	12,860	16,372
Gross Unrealized Gains	7,246	10,758
Gross Unrealized Losses	0	0
Amortized Cost	5,614	5,614
Other Invested Assets [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	5,719	6,454
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	5,719	6,454
Policy Loans [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,204	2,200
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	2,204	2,200
Real Estate [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	38	38
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	38	38
Investments in Unconsolidated Trusts [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	1,238	1,238
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	$ 1,238	$ 1,238

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Investments, Part II (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Carrying Value [Abstract]
Due in one year or less	$ 2,465
Due after one year through five years	21,162
Due after five years through ten years	110,924
Due after ten years	70,751
Varying maturities	1,159
Totals	206,461	$ 205,324
Amortized Cost [Abstract]
Due in one year or less	2,441
Due after one year through five years	20,941
Due after five years through ten years	111,976
Due after ten years	70,465
Varying maturities	996
Totals	$ 206,819	$ 210,450

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Investments, Part III (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of investments aggregated by industry [Abstract]
Carrying Value	$ 236,027	$ 238,385
Amortized Cost	227,471	231,333
Unrealized Gains (Losses)	8,556	7,052
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	40,718	104,770
12 months or longer	30,913	18,374
Total	71,631	123,144
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	1,831	4,956
12 months or longer	6,229	5,103
Total	8,060	10,059
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	18,445	22,234
Amortized Cost	18,007	22,119
Unrealized Gains (Losses)	438	115
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	2,626	9,209
12 months or longer	501	2,243
Total	3,127	11,452
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	10	120
12 months or longer	1	55
Total	11	175
Obligations of States and Political Subdivisions [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	18,046	25,479
Amortized Cost	17,268	25,410
Unrealized Gains (Losses)	778	69
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	0	16,079
12 months or longer	5,010	0
Total	5,010	16,079
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	0	552
12 months or longer	36	0
Total	36	552
Utilities and Telecom [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	19,239	18,975
Amortized Cost	17,400	17,888
Unrealized Gains (Losses)	1,839	1,087
Financial Services [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	63,576	59,463
Amortized Cost	61,654	58,167
Unrealized Gains (Losses)	1,922	1,296
Other Business - Diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	66,603	61,158
Amortized Cost	69,901	66,176
Unrealized Gains (Losses)	(3,298)	(5,018)
Other Consumer - Diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	40,919	41,146
Amortized Cost	34,042	31,643
Unrealized Gains (Losses)	6,877	9,503
Other Investment [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	9,199	9,930
Amortized Cost	9,199	9,930
Unrealized Gains (Losses)	0	0
Corporate Securities [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	38,092	79,482
12 months or longer	25,402	16,131
Total	63,494	95,613
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]
Less than 12 months	1,821	4,284
12 months or longer	6,192	5,048
Total	$ 8,013	$ 9,332

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Investments, Part IV (Details) - Recurring [Member] - USD ($) $ in Thousands		Mar. 31, 2016	Dec. 31, 2015
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		$ 237,612	$ 242,227
Fixed Maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		206,461	205,324
Equity Securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		20,367	23,131
Cash Equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		10,784	13,772
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		25,729	32,017
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed Maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity Securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		14,945	18,245
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash Equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		10,784	13,772
Significant Other Observable Inputs (Level 2) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		209,583	207,973
Significant Other Observable Inputs (Level 2) [Member] | Fixed Maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		204,161	203,087
Significant Other Observable Inputs (Level 2) [Member] | Equity Securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	[1]	5,422	4,886
Significant Other Observable Inputs (Level 2) [Member] | Cash Equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		0	0
Significant Unobservable Inputs (Level 3) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		2,300	2,237
Significant Unobservable Inputs (Level 3) [Member] | Fixed Maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	[1]	2,300	2,237
Significant Unobservable Inputs (Level 3) [Member] | Equity Securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		0	0
Significant Unobservable Inputs (Level 3) [Member] | Cash Equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value		$ 0	$ 0

[1] All underlying securities are financial service industry related.

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Investments, Part V (Details) - Fixed Maturities [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Assets measured at fair value on a recurring basis [Abstract]
Balance, beginning of period	$ 2,237
Total unrealized gains included in other comprehensive income	63
Balance, end of period	$ 2,300

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Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands		Mar. 31, 2016	Dec. 31, 2015
Carrying Amount [Member]
Assets [Abstract]
Fixed maturities	[1]	$ 206,461	$ 205,324
Equity securities	[1]	20,367	23,131
Carrying Amount [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents		10,784	15,622
Carrying Amount [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans		2,204	2,200
Real estate		38	38
Investment in unconsolidated trusts		1,238	1,238
Liabilities [Abstract]
Junior subordinated debentures, net		33,738	33,738
Carrying Amount [Member] | Level 3 [Member]
Assets [Abstract]
Other invested assets		5,719	6,454
Estimated Fair Value [Member]
Assets [Abstract]
Fixed maturities	[1]	206,461	205,324
Equity securities	[1]	20,367	23,131
Estimated Fair Value [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents		10,784	15,622
Estimated Fair Value [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans		2,204	2,200
Real estate		38	38
Investment in unconsolidated trusts		1,238	1,238
Liabilities [Abstract]
Junior subordinated debentures, net		33,738	33,738
Estimated Fair Value [Member] | Level 3 [Member]
Assets [Abstract]
Other invested assets		$ 5,719	$ 7,070

[1] See Note 8 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance	$ 4,584
Net current period other comprehensive income	977	$ 3,100
Ending balance	5,561
AOCI Attributable to Parent [Member]
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Net current period other comprehensive income	977	$ 3,100
Unrealized Gains on Available-for-Sale Securities [Member]
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance	4,584
Other comprehensive income before reclassifications	1,466
Amounts reclassified from accumulated other comprehensive income	(489)
Net current period other comprehensive income	977
Ending balance	$ 5,561