UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2017
or
| o | 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)
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Georgia
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58-1027114
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4370 Peachtree Road, N.E.,
Atlanta, Georgia |
30319
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code) (404) 266-5500
Securities registered pursuant to section 12(b) of the Act:
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Title of each class
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Name of exchange
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Common Stock, par value
$1.00 per share |
NASDAQ Global Market
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Securities registered pursuant to Section 12(g) of the Act:
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None
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ☒
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 o
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company ☒
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(Do not check if a smaller reporting company)
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Emerging growth company o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No ☒
The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, was $15,787,219. For purposes hereof, beneficial ownership is determined under rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934, and the foregoing excludes value ascribed to common stock that may be deemed beneficially owned by the directors and executive officers, and 10% or greater stockholders, of the registrant, some of whom may not be deemed to be affiliates upon judicial determination. On March 14, 2018 there were 20,402,029 shares of the registrant’s common stock, par value $1.00 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the registrant’s Proxy Statement for the 2018 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year end, have been incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K.
PART I
| Item 1. | Business |
Atlantic American Corporation, a Georgia corporation incorporated in 1968 (the “Parent” or “Company”), is a holding company that operates through its subsidiaries in well-defined specialty markets within the life and health and property and casualty insurance industries. The Parent’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) within the property and casualty insurance industry and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) within the life and health insurance industry. Each of American Southern and Bankers Fidelity is managed separately based upon the type of products it offers, and is evaluated on its individual performance. The Company’s strategy is to focus on well-defined geographic, demographic and/or product niches within the insurance marketplace. Each of American Southern and Bankers Fidelity operates with relative autonomy, which structure is designed to allow for quick reaction to market opportunities.
The Parent has no significant business operations of its own and relies on fees, dividends and other distributions from its operating subsidiaries as the principal source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of the Parent can be found in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Property and Casualty Operations
American Southern comprises the Company’s property and casualty operations and its primary product lines are as follows:
Business Automobile Insurance policies provide bodily injury and/or property damage liability coverage, uninsured motorist coverage and physical damage coverage for commercial accounts.
General Liability Insurance policies cover bodily injury and property damage liability for both premises and completed operations exposures for general classes of business.
Surety Bonds are contracts under which one party, the insurance company issuing the surety bond, guarantees to a third party that the primary party will fulfill an obligation in accordance with a contractual agreement. This obligation may involve meeting a contractual commitment, paying a debt or performing certain duties.
American Southern provides tailored business automobile insurance coverage, on a multi-year contract basis, to state governments, local municipalities and other large motor pools and fleets (“block accounts”) that can be specifically rated and underwritten. The size of the block accounts insured by American Southern are generally such that individual class experience can be determined, which allows for customized policy terms and rates. American Southern is licensed to do business in 32 states and the District of Columbia. While the majority of American Southern’s premiums are derived from its automobile lines of business, American Southern also offers inland marine and general liability coverages. Additionally, American Southern directly provides surety bond coverage for school bus transportation and subdivision construction, as well as performance and payment bonds.
1
The following table summarizes, for the periods indicated, the allocation of American Southern’s net earned premiums from each of its principal product lines:
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Year Ended December 31,
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|||||
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2017
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2016
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||||
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(In thousands)
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|||||
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Automobile liability
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$
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29,370
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$
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28,219
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Automobile physical damage
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9,972
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10,192
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General liability
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2,953
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3,009
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Surety
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8,441
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8,999
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Other lines
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2,925
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3,344
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Total
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$
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53,661
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$
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53,763
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Life and Health Operations
Bankers Fidelity comprises the life and health operations of the Company and offers a variety of life and supplemental health products. Products offered by Bankers Fidelity include ordinary and term life insurance, Medicare supplement and other accident and health insurance products. Health insurance products, primarily Medicare supplement insurance, accounted for 91% of Bankers Fidelity’s net earned premiums in 2017 while life insurance, including both whole and term life insurance policies, accounted for the balance. In terms of the number of policies written in 2017, 97% were health insurance policies and 3% were life insurance policies.
The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines followed by a brief description of the principal products:
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Year Ended December 31,
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2017
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2016
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(In thousands)
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|||||
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Life insurance
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$
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9,574
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$
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9,974
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Medicare supplement
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93,652
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84,107
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Other accident and health
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6,440
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5,621
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Total health insurance
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100,092
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89,728
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Total
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$
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109,666
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$
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99,702
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Life Insurance products include non-participating individual term and whole life insurance policies with a variety of riders and options. Policy premiums are dependent upon a number of factors, including issue age, level of coverage and selected riders or options.
Medicare Supplement Insurance includes 8 of the 11 standardized Medicare supplement policies created under the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), which are designed to provide insurance coverage for certain expenses not covered by the Medicare program, including copayments and deductibles.
Other Accident and Health Insurance coverages include several policies providing for the payment of standard benefits in connection with the treatment of diagnosed cancer and other critical illnesses, as well as a number of other policies providing nursing facility care, accident expense, hospital indemnity and disability coverages.
Property and Casualty Operations
A portion of American Southern’s business is marketed through a small number of specialized, experienced independent agents. American Southern’s agent selection process is actively managed by internal marketing personnel with oversight from management. Senior management carefully reviews all new programs prior to acceptance. Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions by participating in a profit sharing arrangement that is directly linked to the profitability
2
of the underlying business. American Southern also solicits business from governmental entities. As an experienced writer of insurance policies for certain governmental programs, the company actively pursues this market on a direct basis. Much of this business is priced by means of competitive bid situations and there can be no assurance with respect to ultimate profitability or that the company can obtain or retain such business at the time of a specific contract renewal.
Life and Health Operations
Bankers Fidelity markets its policies through three distribution channels all of which utilize commissioned, independent agents. The three channels utilized are traditional independent agents, broker-agents typically interested in a specific product of Bankers Fidelity and special market agents who promote workplace, association and/or branded products.
Bankers Fidelity utilizes an agent qualification process and had 7,423 licensed agents as of December 31, 2017. The agents generally concentrate their sales activities in both the accident and health or life insurance product lines. During 2017, approximately 2,337 of the licensed agents wrote policies on behalf of Bankers Fidelity.
Bankers Fidelity, in an effort to motivate all of its licensed agents to market its products, offers the following: competitive products and commission structures, efficient claims service, prompt payment of commissions that vest immediately, simplified policy issuance procedures, periodic sales incentive programs and, as described below, for traditional independent agents, protected sales territories determined based on specific counties and/or zip codes.
In the traditional independent agent arrangement, Bankers Fidelity enters into contractual arrangements with various field marketing groups, regional sales directors and general agents responsible for marketing and other sales activities, who may also, in turn, recommend appointment of other independent agents. The standard agreements set forth the commission arrangements and are terminable without cause by either party upon notice. Regional sales directors and general agents receive an override commission on sales made by their sponsored agents. Management believes utilizing experienced agents, as well as independent general agents who recruit and train their own agents, is cost effective. All independent agents are compensated primarily on a commission basis. Using independent agents also enables Bankers Fidelity to effectively expand or contract its sales force without incurring significant expense.
With traditional independent agents, the company utilizes a lead generation system that rewards qualified agents with leads in accordance with certain production criteria. In addition, a protected territory is established for qualified agents, which entitles them to all leads produced within that territory. The territories are zip code or county based and encompass sufficient geographic territory designed to produce an economically serviceable senior population. The Company believes that offering a lead generation system solves an agent’s most important dilemma—prospecting—and allows Bankers Fidelity to build long-term relationships with agents who view Bankers Fidelity as their primary company. In addition, management believes that Bankers Fidelity’s product line is less sensitive to competitor pricing and commissions because of the perceived value of the protected territory and the lead generation system. In protected geographical areas, production per agent has historically compared favorably to unprotected areas served by the general brokerage division.
Products of Bankers Fidelity compete directly with products offered by other insurance companies, and agents may represent multiple insurance companies. Broker-agents generally are not interested in developing relationships with any one particular insurance company but are more interested in matching a specific product with the specific needs of their clients. These agents, while a source of business, do not participate in the company’s lead generation system, but can qualify for other incentives that Bankers Fidelity offers to traditional independent agents.
Bankers Fidelity also has a number of agents, some of whom belong to marketing organizations that solicit business from various groups including employers, trade associations and/or other organizations. Depending on the group’s needs, these agents may target one specific product or a group of Bankers Fidelity’s products to market to a group’s members. These agents also do not participate in the company’s lead generation system, but can also qualify for other incentives that Bankers Fidelity offers to its traditional independent agents.
3
Property and Casualty Operations
American Southern specializes in underwriting various risks that are sufficiently large enough to establish separate class experience, relying upon the underwriting expertise of its agents.
During the course of the policy life, extensive use is made of risk management representatives to assist commercial underwriters in identifying and correcting potential loss exposures and to physically inspect new accounts. The underwriting results from each insured are reviewed on an individual basis periodically. When results are below expectations, management takes corrective action which may include adjusting rates, revising underwriting standards, adjusting commissions paid to agents, and/or altering or declining to renew accounts at expiration.
Life and Health Operations
Bankers Fidelity issues a variety of products that span from the worksite markets to the senior markets for both life and health insurance. Products offered by Bankers Fidelity include life insurance, typically with small face amounts, Medicare supplement and other accident and health insurance. Bankers Fidelity also provides an array of worksite products such as accident, cancer, critical illness, hospital indemnity and life insurance that is offered to employers who are looking to provide coverage for their employees and have the related premiums deducted through payroll deductions.
The majority of the products are underwritten on a non-medical basis using a simplified issue approach by which an application containing a variety of health related questions is submitted. Applications for insurance are reviewed to determine the face amount, age, medical history and any other necessary information. Bankers Fidelity utilizes information obtained directly from the insured, the Medical Information Bureau, prescription utilization reports as well as telephone interviews to determine whether an applicant meets the company’s underwriting criteria. Bankers Fidelity may also utilize medical records and investigative services to supplement and substantiate information, as necessary.
Policyholder and Claims Services
The Company believes that prompt, efficient policyholder and claims services are essential to its continued success in marketing its insurance products (see “Competition”). Additionally, the Company believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries. Accordingly, the Company’s policyholder and claims services seek to offer expeditious disposition of service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts. The Company also utilizes an automatic call distribution system to ensure that inbound calls to customer service support groups are processed efficiently. Operational data generated from this system allows management to further refine ongoing client service programs and service representative training modules.
Property and Casualty Operations
American Southern controls its claims costs by utilizing an in-house staff of claims supervisors to investigate, verify, negotiate and settle claims. Upon notification of an occurrence purportedly giving rise to a claim, a claim file is established. The claims department then conducts a preliminary investigation, determines whether an insurable event has occurred and, if so, updates the file for the findings and any required reserve adjustments. Frequently, independent adjusters and appraisers are utilized to service claims which require on-site inspections.
Life and Health Operations
Insureds may obtain claim forms by calling the claims department customer service group or through Bankers Fidelity’s website. To shorten claim processing time, a letter detailing all supporting documents that are required to complete a claim for a particular policy is sent to the customer along with the correct claim form. With respect to life policies, the claim is entered into Bankers Fidelity’s claims system when the proper documentation is received. Properly documented claims are generally paid within five business days of receipt. With regard to Medicare supplement policies, the claim is either directly billed to Bankers Fidelity by the provider or sent electronically through a Medicare clearing house.
4
The following table sets forth information concerning the Company’s reserves for losses and claims and reserves for loss adjustment expenses (“LAE”) for the periods indicated:
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2017
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2016
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||||
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(In thousands)
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|||||
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Balance at January 1
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$
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62,562
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$
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63,870
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Less: Reinsurance recoverable on unpaid losses
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(10,796
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)
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(11,741
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)
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Net balance at January 1
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51,766
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52,129
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Incurred related to:
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Current year
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114,099
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103,252
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Prior years(1)
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(1,765
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)
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(3,377
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)
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Total incurred
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112,334
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99,875
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Paid related to:
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Current year
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82,092
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|
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71,980
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Prior years
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28,287
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|
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28,258
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Total paid
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110,379
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|
|
100,238
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Net balance at December 31
|
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53,721
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|
|
51,766
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Plus: Reinsurance recoverable on unpaid losses
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11,968
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|
|
10,796
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Balance at December 31
|
$
|
65,689
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|
$
|
62,562
|
|
| (1) | Prior years’ development was primarily the result of better than expected development on prior years reserves for certain lines of business in the property and casualty operations. See Note 3 of Notes to Consolidated Financial Statements. |
Reserves are set by line of business within each of the subsidiaries. At December 31, 2017, approximately 73% of the reserves related to property and casualty losses and approximately 27% related to life and health losses. The Company’s property and casualty operations incur losses which may take extended periods of time to evaluate and settle. Issues with respect to legal liability, actual loss quantification, legal discovery and ultimate subrogation, among other factors, may influence the initial and subsequent estimates of loss. In the property and casualty operations, the Company’s general practice is to reserve at the higher end of the determined reasonable range of loss if no other value within the range is determined to be more probable. The Company’s life and health operations generally incur losses which are more readily quantified. Medical claims received are recorded in case reserves based on contractual terms using the submitted billings as a basis for determination. Life claims are recorded based on contract value at the time of notification to the Company; although policy reserves related to such contracts have been previously established. Individual case reserves are established by a claims processor on each individual claim and are periodically reviewed and adjusted as new information becomes known during the course of handling a claim. Regular internal periodic reviews are also performed by management to ensure that loss reserves are established and revised timely relative to the receipt of new or additional information. Lines of business for which loss data (e.g. paid losses and case reserves) emerge over a long period of time are referred to as long-tail lines of business. Lines of business for which loss data emerge more quickly are referred to as short-tail lines of business. The Company’s long-tail line of business generally consists of its general liability coverage while the short-tail lines of business generally consist of property and automobile coverages.
The Company’s actuaries regularly review reserves for both current and prior accident years using the most current claims data. These reviews incorporate a variety of actuarial methods (discussed in Critical Accounting Policies) and judgments and involve a disciplined analysis. For most lines of business, certain actuarial methods and specific assumptions are deemed more appropriate based on the current circumstances affecting that line of business. These selections incorporate input from claims personnel and operating management on reported loss cost trends and other factors that could affect the reserve estimates.
For long-tail lines of business, the emergence of paid losses and case reserves is less credible in the early periods, and accordingly may not be indicative of ultimate losses. For these lines, methods which incorporate a development pattern assumption are given less weight in calculating incurred but not reported (“IBNR”) reserves
5
for the early periods of loss emergence because such a low percentage of ultimate losses are reported in that time frame. Accordingly, for any given accident year, the rate at which losses on long-tail lines of business emerge in the early periods is generally not as reliable an indication of ultimate losses as it would be for shorter-tail lines of business. The estimation of reserves for these lines of business in the early periods of loss emergence is therefore largely influenced by statistical analyses and application of prior accident years’ loss ratios, after considering changes to earned pricing, loss costs, mix of business, ceded reinsurance and other factors that are expected to affect the estimated ultimate losses. For later periods of loss emergence, methods which incorporate a development pattern assumption are given more weight in estimating ultimate losses. For short-tail lines of business, the emergence of paid loss and case reserves is more credible in the early periods and is more likely to be indicative of ultimate losses. The method used to set reserves for these lines of business is based upon utilization of a historical development pattern for reported losses. IBNR reserves for the current year are set as the difference between the estimated fully developed ultimate losses for each year, less the established, related case reserves and cumulative related payments. IBNR reserves for prior accident years are similarly determined, again relying on an indicated, historical development pattern for reported losses.
Based on the results of regular reserve estimate reviews, the Company determines the appropriate reserve adjustment, if any, to record in each period. If necessary, recorded reserve estimates are changed after consideration of numerous factors, including, but not limited to, the magnitude of the difference between the actuarial indication and the recorded reserves, improvement or deterioration of actuarial indication in the period, the maturity of the accident year, trends observed over the recent past and the level of volatility within a particular line of business. In general, changes are made more quickly to recognize changes in estimates to ultimate losses in mature accident years and less volatile lines of business.
Estimating case reserves and ultimate losses involves various considerations which differ according to the line of business. In addition, changes in legislative and regulatory environments may impact loss estimates. General liability claims may have a long pattern of loss emergence. Given the broad nature of potential general liability coverages, investigative time periods may be extended and questions of coverage may exist. Such uncertainties create greater imprecision in estimating required levels of loss reserves. The property and automobile lines of business generally have less variable reserve estimates than other lines. This is largely due to the coverages having relatively shorter periods of loss emergence. Estimates, however, can still vary due to a number of factors, including interpretations of frequency and severity trends. Severity trends can be impacted by changes in internal claim handling and reserving practices in addition to changes in the external environment. These changes in claim practices increase the uncertainty in the interpretation of case reserve data, which increases the uncertainty in recorded reserve levels.
The Company’s policy is to record reserves for losses and claims in amounts which approximate actuarial best estimates of ultimate values. Actuarial best estimates do not necessarily represent the midpoint value determined using the various actuarial methods; however, such estimates will fall between the estimated low and high end reserve values. The range of estimates developed in connection with the December 31, 2017 actuarial review indicated that reserves could be as much as 8.5% lower or as much as 10.1% higher. In the opinion of management, recorded reserves represent the best estimate of outstanding losses, although significant judgments are made in the derivation of reserve estimates and revisions to such estimates are expected to be made in future periods. Any such revisions could be material, and may materially adversely affect the Company’s financial condition and results of operations in any future period.
6
Property and Casualty Operations
American Southern maintains loss reserves representing estimates of amounts necessary for payment of losses and LAE, and which are not discounted. IBNR reserves are also maintained for future development. These loss reserves are estimates, based on known facts and circumstances at a given date, of amounts the Company expects to pay on incurred claims. All balances are reviewed periodically by the Company’s independent consulting actuary. Reserves for LAE are intended to cover the ultimate costs of settling claims, including investigation and defense of any lawsuits resulting from such claims. Loss reserves for reported claims are based on a case-by-case evaluation of the type of claim involved, the circumstances surrounding the claim, and the policy provisions relating to the type of loss along with anticipated future development. The LAE for claims reported and claims not reported is based on historical statistical data and anticipated future development. Inflation and other factors which may affect claim payments are implicitly reflected in the reserving process through analysis and consideration of cost trends and reviews of historical reserve results.
American Southern establishes reserves for claims based upon: (a) management’s estimate of ultimate liability and claims adjusters’ evaluations of unpaid claims reported prior to the close of the accounting period, (b) estimates of IBNR claims based on past experience, and (c) estimates of LAE. If no value is determined to be more probable in estimating a loss after considering all factors, the Company’s general practice is to reserve at the higher end of the determined reasonable range of loss. The estimated liability is periodically reviewed and updated, and changes to the estimated liability are recorded in the statement of operations in the period in which such changes become known.
The following table sets forth the development of reserves for unpaid losses and claims determined using generally accepted accounting principles of American Southern’s insurance lines from 2007 through 2017. Specifically excluded from the table are the life and health division’s claims reserves, which are included in the consolidated loss and claims reserves. The top line of the table represents the estimated cumulative amount of losses and LAE for claims arising in all prior years that were unpaid at the balance sheet date for each of the indicated periods, including an estimate of IBNR losses at the applicable date. The amounts represent initial reserve estimates at the respective balance sheet dates for the current and all prior years. The next portion of the table shows the cumulative amounts paid with respect to claims in each succeeding year. The lower portion of the table shows the re-estimated amounts of previously recorded reserves based on experience as of the end of each succeeding year.
7
The reserve estimates are modified as more information becomes known about the frequency and severity of claims for individual years. The “cumulative redundancy (deficiency)” for each year represents the aggregate change in such year’s estimates through the end of 2017. Furthermore, the amount of the redundancy (deficiency) for any year represents the cumulative amount of the changes from initial reserve estimates for such year. Operations for any year may be affected, favorably or unfavorably, by the amount of the change in the estimate for such years; however, because such analysis is based on the reserves for unpaid losses and claims, before consideration of reinsurance, the total indicated redundancies (deficiencies) may not ultimately be reflected in the Company’s net income. Further, conditions and trends that have affected development of reserves in the past may not necessarily occur in the future and there could be future events or actions that impact future development which have not existed in the past. Accordingly, the accurate prediction of future redundancies (deficiencies) based on the data in the following table is not possible.
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Year Ended December 31,
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||||||||||||||||||||||||||||||||
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2017
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2016
|
2015
|
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||||||||
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(Dollars In thousands)
|
||||||||||||||||||||||||||||||||
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Reserve for Losses and LAE
|
$
|
47,997
|
|
$
|
49,556
|
|
$
|
51,200
|
|
$
|
55,017
|
|
$
|
51,200
|
|
$
|
52,764
|
|
$
|
49,478
|
|
$
|
46,092
|
|
$
|
42,248
|
|
$
|
44,928
|
|
$
|
43,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative paid as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
One year later
|
|
|
|
|
21,671
|
|
|
22,555
|
|
|
26,289
|
|
|
21,577
|
|
|
25,352
|
|
|
18,959
|
|
|
15,183
|
|
|
10,486
|
|
|
13,627
|
|
|
11,630
|
|
|
Two years later
|
|
|
|
|
|
|
|
35,171
|
|
|
40,440
|
|
|
37,022
|
|
|
37,128
|
|
|
34,805
|
|
|
25,333
|
|
|
17,462
|
|
|
19,003
|
|
|
21,187
|
|
|
Three years later
|
|
|
|
|
|
|
|
|
|
|
48,806
|
|
|
45,659
|
|
|
44,473
|
|
|
41,967
|
|
|
34,266
|
|
|
23,231
|
|
|
22,197
|
|
|
23,993
|
|
|
Four years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,395
|
|
|
48,338
|
|
|
46,715
|
|
|
37,720
|
|
|
29,254
|
|
|
24,016
|
|
|
25,733
|
|
|
Five years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,508
|
|
|
49,129
|
|
|
40,241
|
|
|
31,125
|
|
|
28,898
|
|
|
27,160
|
|
|
Six years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,135
|
|
|
41,787
|
|
|
32,488
|
|
|
30,286
|
|
|
31,659
|
|
|
Seven years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,867
|
|
|
33,847
|
|
|
31,462
|
|
|
32,489
|
|
|
Eight years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,576
|
|
|
31,858
|
|
|
33,616
|
|
|
Nine years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,544
|
|
|
33,953
|
|
|
Ten years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ultimate losses and LAE
reestimated as of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
End of year
|
$
|
47,997
|
|
$
|
49,556
|
|
$
|
51,200
|
|
$
|
55,017
|
|
$
|
51,200
|
|
$
|
52,764
|
|
$
|
49,478
|
|
$
|
46,092
|
|
$
|
42,248
|
|
$
|
44,928
|
|
$
|
43,994
|
|
|
One year later
|
|
|
|
|
44,413
|
|
|
44,638
|
|
|
50,729
|
|
|
47,169
|
|
|
47,639
|
|
|
44,180
|
|
|
39,999
|
|
|
32,563
|
|
|
31,649
|
|
|
33,663
|
|
|
Two years later
|
|
|
|
|
|
|
|
47,626
|
|
|
51,853
|
|
|
49,927
|
|
|
49,966
|
|
|
46,109
|
|
|
38,859
|
|
|
30,562
|
|
|
28,386
|
|
|
29,903
|
|
|
Three years later
|
|
|
|
|
|
|
|
|
|
|
54,755
|
|
|
50,163
|
|
|
50,142
|
|
|
48,386
|
|
|
39,153
|
|
|
30,288
|
|
|
27,570
|
|
|
29,077
|
|
|
Four years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,840
|
|
|
49,692
|
|
|
49,361
|
|
|
41,339
|
|
|
31,798
|
|
|
28,169
|
|
|
29,162
|
|
|
Five years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,512
|
|
|
50,254
|
|
|
42,273
|
|
|
33,508
|
|
|
30,883
|
|
|
30,156
|
|
|
Six years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,881
|
|
|
42,393
|
|
|
34,331
|
|
|
31,696
|
|
|
33,091
|
|
|
Seven years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,324
|
|
|
34,286
|
|
|
32,073
|
|
|
33,804
|
|
|
Eight years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,009
|
|
|
32,269
|
|
|
34,184
|
|
|
Nine years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,942
|
|
|
34,278
|
|
|
Ten years later
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative redundancy
(deficiency) |
|
|
|
$
|
5,143
|
|
$
|
3,574
|
|
$
|
262
|
|
$
|
(640
|
)
|
$
|
1,252
|
|
$
|
(2,403
|
)
|
$
|
2,768
|
|
$
|
7,239
|
|
$
|
11,986
|
|
$
|
9,258
|
|
|
|
|
|
|
|
10.4
|
%
|
|
7.0
|
%
|
|
0.5
|
%
|
|
-1.3
|
%
|
|
2.4
|
%
|
|
-4.9
|
%
|
|
6.0
|
%
|
|
17.1
|
%
|
|
26.7
|
%
|
|
21.0
|
%
|
Note: This analysis is based on reserves for unpaid losses and claims, before consideration of reinsurance; therefore the total indicated redundancy (deficiency) may not ultimately be reflected in the Company’s net income.
See Note 3 of Notes to Consolidated Financial Statements for historical loss development data on significant lines of business.
Life and Health Operations
Bankers Fidelity establishes liabilities for future policy benefits to meet projected future obligations under outstanding policies. These reserves are calculated to satisfy policy and contract obligations as they mature. The amount of reserves for insurance policies is calculated using assumptions for interest rates, mortality and
8
morbidity rates, expenses, and withdrawals. Reserves are adjusted periodically based on published actuarial tables with modifications to reflect actual experience. The use of significantly different assumptions, or actual results that differ significantly from our estimates, could materially adversely affect our liquidity, results of operations or financial condition. See Note 3 of Notes to Consolidated Financial Statements.
The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement.
Property and Casualty Operations
American Southern’s basic reinsurance treaties generally cover all claims in excess of specified per occurrence limitations. Limits per occurrence within the reinsurance treaties are as follows: Inland marine and commercial automobile physical damage - $175,000 excess of $75,000 retention; and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $100,000 to $200,000 depending on the account. American Southern maintains a property catastrophe treaty with a $5.7 million limit excess of $300,000 retention. American Southern also issues individual surety bonds with face amounts generally up to $1.5 million, and limited to $5.0 million in aggregate per account, that are not reinsured.
Life and Health Operations
Bankers Fidelity has entered into reinsurance contracts ceding the excess of its life retention to several primary reinsurers. Maximum retention by Bankers Fidelity on any one individual in the case of life insurance policies is $100,000. At December 31, 2017, $14.9 million of the $255.4 million of life insurance in force at Bankers Fidelity was reinsured under a mix of coinsurance and yearly renewable term agreements. Certain prior year reinsurance agreements also remain in force although they no longer provide reinsurance for new business.
Bankers Fidelity has also entered into a reinsurance contract ceding excess new Medicare supplement business to General Re Life Corporation. Ceding thresholds are set annually. At December 31, 2017, the 2017 retention threshold was $15.0 million of annualized premium; accordingly $39.1 million of the company’s $54.1 million of new annualized Medicare supplement premium was ceded to a reinsurer.
Competition for insurance products is based on many factors including premiums charged, terms and conditions of coverage, service provided, financial ratings assigned by independent rating agencies, claims services, reputation, perceived financial strength and the experience of the organization in the line of business being written.
Property and Casualty Operations
The businesses in which American Southern engages are highly competitive. The principal areas of competition are pricing and service. Many competing property and casualty companies, which have been in business longer than American Southern, offer more diversified lines of insurance and have substantially greater financial resources. Management believes, however, that the policies it sells are competitive with those providing similar benefits offered by other insurers doing business in the states in which American Southern operates. American Southern attempts to develop strong relationships with its agents and, consequently, believes it is better positioned for new opportunities and programs with those agents.
Life and Health Operations
The life and health insurance business also remains highly competitive and includes a large number of insurance companies, many of which have substantially greater financial resources than Bankers Fidelity or the Company. Bankers Fidelity offers life insurance products, Medicare supplement and other accident and health
9
insurance products. Bankers Fidelity believes that its primary competitors are Americo Life, GTL, Lincoln Heritage, Medico, Monumental, Mutual of Omaha, New Era, Standard Life, Transamerica and United Healthcare. Bankers Fidelity competes with these as well as other insurers on the basis of premium rates, policy benefits and service to policyholders. Bankers Fidelity also competes with other insurers to attract and retain the allegiance of its independent agents through commission and sales incentive arrangements, accessibility and marketing assistance, lead programs, reputation, and market expertise. In order to better compete, Bankers Fidelity actively seeks opportunities in niche markets, developing long-term relationships with a select number of independent marketing organizations promoting worksite marketing and selective association endorsements. Bankers Fidelity has a track record of successfully competing in its chosen markets by establishing relationships with independent agents and providing proprietary marketing initiatives as well as providing outstanding service to policyholders. Bankers Fidelity believes that it competes effectively on the bases of policy benefits, services and market segmentation.
Ratings of insurance companies are not designed for investors and do not constitute recommendations to buy, sell, or hold any security. Ratings are important measures within the insurance industry, and higher ratings should have a favorable impact on the ability of a company to compete in the marketplace.
Each year A.M. Best Company, Inc. (“A.M. Best”) publishes Best’s Insurance Reports, which includes assessments and ratings of all insurance companies. A.M. Best’s ratings, which may be revised quarterly, fall into fifteen categories ranging from A++ (Superior) to F (in liquidation). A.M. Best’s ratings are based on a detailed analysis of the statutory financial condition and operations of an insurance company compared to the industry in general.
American Southern. American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this report, rated “A” (Excellent) by A.M. Best.
Bankers Fidelity. Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M. Best.
In common with all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business. Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners. The method of such regulation varies, but regulation relates generally to the licensing of insurers and their agents, the nature of and limitations on investments, approval of policy forms, reserve requirements, the standards of solvency to be met and maintained, deposits of securities for the benefit of policyholders, and periodic examinations of insurers and trade practices, among other things. The Company’s products generally are subject to rate regulation by state insurance commissions, which require that certain minimum loss ratios be maintained. Certain states also have insurance holding company laws which require registration and periodic reporting by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions. The Company’s insurance subsidiaries are subject to such legislation and are registered as controlled insurers in those jurisdictions in which such registration is required. Such laws vary from state to state, but typically require periodic disclosure concerning the corporation which controls the registered insurers and all subsidiaries of such corporations, as well as prior notice to, or approval by, the state insurance commissioners of intercorporate transfers of assets (including payments of dividends by the insurance subsidiaries in excess of specified amounts) within the holding company system. The Company believes it is in compliance with all such requirements.
Most states require that rate schedules and other information be filed with the state’s insurance regulatory authority, either directly or through a ratings organization with which the insurer is affiliated. The regulatory authority may disapprove a rate filing if it determines that the rates are inadequate, excessive, or discriminatory. The Company has historically experienced no significant regulatory resistance to its applications for rate adjustments; however, the Company cannot provide any assurance that it will not receive any objections to any applications in the future.
A state may require that acceptable securities be deposited for the protection either of policyholders located in those states or of all policyholders. As of December 31, 2017, the Company was in compliance with all such
10
requirements, and securities with an amortized cost of $11.2 million were on deposit either directly with various state authorities or with third parties pursuant to various custodial agreements on behalf of the Company’s insurance subsidiaries.
Virtually all of the states in which the Company’s insurance subsidiaries are licensed to transact business require participation in their respective guaranty funds designed to cover claims against insolvent insurers. Insurers authorized to transact business in these jurisdictions are generally subject to assessments of up to 4% of annual direct premiums written in that jurisdiction to pay such claims, if any. The likelihood and amount of any future assessments cannot be estimated until an insolvency has occurred.
The National Association of Insurance Commissioners (the “NAIC”) was established to, among other things, provide guidelines to assess the financial strength of insurance companies for state regulatory purposes. The NAIC conducts annual reviews of the financial data of insurance companies primarily through the application of twelve financial ratios prepared on a statutory basis. Annual statements are required to be submitted to state insurance departments to assist them in monitoring insurance companies in their state and to allow such states to determine a desirable range for each such ratio with which companies should comply.
The NAIC suggests that insurance companies which fall outside of the “usual” range in four or more financial ratios are those most likely to require analysis by state regulators. However, according to the NAIC, it may not be unusual for a financially sound company to have several ratios outside the “usual” range.
For the Year Ended December 31, 2017, less than four of the total of twelve ratios required to be calculated by the Company’s insurance subsidiaries were outside of the “usual” range and, as a result, such subsidiaries are not likely to require analysis by state regulators.
Risk-based capital (“RBC”) is a metric used by ratings agencies and regulators as an early warning tool to identify weakly capitalized companies for the purpose of initiating further regulatory action. The RBC calculation determines the amount of adjusted capital needed by a company to avoid regulatory action. “Authorized Control Level Risk-Based Capital” (“ACL”) is calculated, and if a company’s adjusted capital is 200% or lower than ACL, it is subject to regulatory action. At December 31, 2017, the Company’s insurance subsidiaries, RBC levels exceeded the required regulatory levels.
Investment income represents a significant portion of the Company’s operating and total income. Insurance company investments are subject to state insurance laws and regulations which limit the concentration and types of investments. The following table provides information on the Company’s investments as of the dates indicated.
|
|
December 31,
|
|||||||||||
|
|
2017
|
2016
|
||||||||||
|
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||||
|
|
(Dollars in thousands)
|
|||||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
|
$
|
31,155
|
|
|
12.6
|
%
|
$
|
31,102
|
|
|
12.7
|
%
|
|
States, municipalities and political subdivisions
|
|
10,809
|
|
|
4.4
|
|
|
17,572
|
|
|
7.2
|
|
|
Public utilities
|
|
14,935
|
|
|
6.0
|
|
|
11,216
|
|
|
4.6
|
|
|
All other corporate bonds
|
|
158,017
|
|
|
63.8
|
|
|
150,588
|
|
|
61.7
|
|
|
Redeemable preferred stock
|
|
192
|
|
|
0.1
|
|
|
192
|
|
|
0.1
|
|
|
Total fixed maturities(1)
|
|
215,108
|
|
|
86.9
|
|
|
210,670
|
|
|
86.3
|
|
|
Common and non-redeemable preferred stocks(2)
|
|
23,355
|
|
|
9.4
|
|
|
20,257
|
|
|
8.3
|
|
|
Policy loans(3)
|
|
2,146
|
|
|
0.9
|
|
|
2,265
|
|
|
0.9
|
|
|
Other invested assets(4)
|
|
5,626
|
|
|
2.3
|
|
|
9,709
|
|
|
4.0
|
|
|
Real estate
|
|
38
|
|
|
0.0
|
|
|
38
|
|
|
0.0
|
|
|
Investments in unconsolidated trusts
|
|
1,238
|
|
|
0.5
|
|
|
1,238
|
|
|
0.5
|
|
|
Total investments
|
$
|
247,511
|
|
|
100.0
|
%
|
$
|
244,177
|
|
|
100.0
|
%
|
| (1) | Fixed maturities are carried on the balance sheet at estimated fair value. Certain fixed maturities do not have publicly quoted prices, and are carried at estimated fair value as determined by management. Total adjusted cost of fixed maturities was $212.5 million as of December 31, 2017 and $210.5 million as of December 31, 2016. |
11
| (2) | Equity securities are carried on the balance sheet at estimated fair value. Total adjusted cost of equity securities was $10.9 million as of December 31, 2017 and $11.5 million as of December 31, 2016. |
| (3) | Policy loans are valued at historical cost. |
| (4) | Other invested assets are accounted for using the equity method. Total adjusted cost of other invested assets was $5.6 million as of December 31, 2017 and $9.7 million as of December 31, 2016. |
Estimated fair values are determined as discussed in Note 1 of Notes to Consolidated Financial Statements.
Results of the Company’s investment portfolio for periods shown were as follows:
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands)
|
|||||
|
Average investments(1)
|
$
|
247,739
|
|
$
|
243,174
|
|
|
Net investment income
|
|
7,707
|
|
|
9,307
|
|
|
Average yield on investments
|
|
3.1
|
%
|
|
3.8
|
%
|
|
Realized investment gains, net
|
|
9,168
|
|
|
2,595
|
|
| (1) | Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters. |
Management’s recent investment strategy has been a continued focus on quality, diversification and higher yielding corporate bonds and preferred stocks; but at the same time shortening up on maturities to give recognition to the rise and potential future increases in longer-term interest rates.
The Company and its subsidiaries employed 159 people at December 31, 2017. Of the 159 people employed at December 31, 2017, 154 were full-time.
Financial Information by Industry Segment
Each of American Southern and Bankers Fidelity operate with relative autonomy and each company is evaluated on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income. Substantially all revenue other than that in the corporate and other segment is from external sources. See Note 13 of Notes to Consolidated Financial Statements.
The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other information with the Securities and Exchange Commission (the “SEC”). The public can read and obtain copies of those materials by visiting the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers like the Company that file electronically with the SEC. The address of the SEC’s web site is www.sec.gov. In addition, as soon as reasonably practicable after such materials are filed with or furnished to the SEC by the Company, the Company makes copies available to the public, free of charge, on or through its web site at www.atlam.com. Neither the Company’s website, nor the information appearing on the website, is included, incorporated into, or a part of, this report.
12
Executive Officers of the Registrant
The table below and the information following the table set forth, for each executive officer of the Company as of December 31, 2017, his name, age, positions with the Company and business experience for the past five years, as well as any prior service to the Company.
|
Name
|
Age
|
Positions with the Company
|
Director or
Officer Since |
||||
|
Hilton H. Howell, Jr.
|
|
55
|
|
Chairman of the Board, President & CEO
|
|
1992
|
|
|
J. Ross Franklin
|
|
40
|
|
Vice President, CFO and Corporate Secretary
|
|
2017
|
|
Officers are elected annually and serve at the discretion of the board of directors.
Mr. Howell has been President and Chief Executive Officer of the Company since May 1995, and prior thereto served as Executive Vice President of the Company from October 1992 to May 1995. He has been a Director of the Company since October 1992 and effective February 24, 2009, began serving as Chairman of the board of directors. He is also a chairman of the board, and serves as president and chief executive officer, of Gray Television, Inc.
Mr. Franklin has been Vice President, Chief Financial Officer and Corporate Secretary of the Company since November 2017, and prior thereto served as Interim Chief Financial Officer from August 2017 to November 2017. Since 2000 he has held various roles of increasing responsibility with Atlantic American and its subsidiaries, previously serving as Vice President, Accounting and Treasurer of Bankers Fidelity since 2009.
Certain of the statements contained or incorporated by reference herein are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Exchange Act of 1933, and Section 21E of the Securities Act of 1934, and include estimates and assumptions related to, among other things, general economic, competitive, operational and legislative developments. Forward-looking statements are subject to changes and uncertainties which are, in many instances, beyond the Company’s control and have been made based upon management’s current expectations and beliefs concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Actual results could differ materially from those expected by the Company, depending on the occurrence or outcome of various factors. These factors include, among others: significant changes in general economic conditions; the possible occurrence of terrorist attacks; unexpected developments in the health care or insurance industries affecting providers or individuals, including the cost or availability of services, or the tax consequences related thereto; disruption to the financial markets; unanticipated increases in the rate, number and amounts of claims outstanding; the level of performance of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses; changes in the stock markets, interest rates or other financial markets, including the potential effect on the Company’s statutory capital levels; the uncertain effect on the Company of regulatory and market-driven changes in practices relating to the payment of incentive compensation to brokers, agents and other producers; the incidence and severity of catastrophes, both natural and man-made; stronger than anticipated competitive activity; unfavorable judicial or legislative developments; the potential effect of regulatory developments, including those which could increase the Company’s business costs and required capital levels; the Company’s ability to distribute its products through distribution channels, both current and future; the uncertain effect of emerging claim and coverage issues; the effect of assessments and other surcharges for guaranty funds and other mandatory pooling arrangements; and risks related to cybersecurity matters, such as breaches of our computer network or the loss of unauthorized access to the data we maintain. Many of such factors are beyond the Company’s ability to control or predict. As a result, the Company’s actual financial condition and results of operations could differ materially from those expressed in any forward-looking statements made by the Company. Undue reliance should not be placed upon forward-looking statements. The Company does not intend to publicly update any forward-looking statements that may be made from time to time by, or on behalf of, the Company.
13
| Item 1A. | Risk Factors |
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K (a “smaller reporting company”), we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
| Item 1B. | Unresolved Staff Comments |
Not applicable.
| Item 2. | Properties |
Leased Properties. The Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia, from Delta Life Insurance Company under a lease which continues until either party provides written notice of cancellation at least twelve months in advance of the actual termination date. The lease, which commenced on November 1, 2007, provides for rent adjustments on every fifth anniversary of the commencement date. Under the current terms of the lease, the Company occupies approximately 49,586 square feet of office space. Delta Life Insurance Company, the owner of the building, is controlled by an affiliate of the Company. The terms of the lease are believed by Company management to be comparable to terms which could be obtained by the Company from unrelated parties for comparable rental property.
American Southern leases space for its office in a building located in Atlanta, Georgia. The lease term expires September 30, 2026. Under the terms of the lease, American Southern occupies approximately 17,014 square feet.
The Company believes that its current properties are in good condition, and are sufficient for the operations of its business.
| Item 3. | Legal Proceedings |
From time to time, the Company and its subsidiaries are, and expect to continue to be, involved in various claims and lawsuits arising in the ordinary course of business, both as a liability insurer defending third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The Company accounts for such exposures through the establishment of loss and loss adjustment expense reserves. We do not expect that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for probable losses and costs of defense, will be material to the Company’s consolidated financial condition, although the results of such litigation could be material to the consolidated results of operations for any given period.
| Item 4. | Mine Safety Disclosures |
Not applicable.
14
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
The Company’s common stock is quoted on the Nasdaq Global Market (Symbol: AAME). As of February 21, 2018, there were 2,727 shareholders of record. The following table sets forth, for the periods indicated, the high and low sales prices of the Company’s common stock as reported on the Nasdaq Global Market.
|
Year Ended December 31,
|
High
|
Low
|
||||
|
2017
|
|
|
|
|
|
|
|
1st quarter
|
$
|
4.35
|
|
$
|
3.40
|
|
|
2nd quarter
|
|
4.03
|
|
|
3.50
|
|
|
3rd quarter
|
|
3.75
|
|
|
3.15
|
|
|
4th quarter
|
|
4.00
|
|
|
3.00
|
|
|
2016
|
|
|
|
|
|
|
|
1st quarter
|
$
|
4.99
|
|
$
|
3.39
|
|
|
2nd quarter
|
|
5.00
|
|
|
3.21
|
|
|
3rd quarter
|
|
4.30
|
|
|
3.06
|
|
|
4th quarter
|
|
4.65
|
|
|
3.21
|
|
In each year since 2012, the Company has paid an annual cash dividend of $0.02 per share. In addition, on March 20, 2018, the Company’s board of directors declared an annual cash dividend of $0.02 per share that is payable to shareholders of record as of the close of business on April 23, 2018. Payment of dividends in the future will be at the discretion of the Company’s board of directors and will depend upon the financial condition, capital requirements, earnings of the Company, any restrictions contained in any agreements by which the Company is bound, as well as other factors as the board of directors may deem relevant. The Company’s primary recurring source of cash for the payment of dividends is dividends from its subsidiaries; although as of December 31, 2017, the Parent held unrestricted cash and investment balances of approximately $25.8 million. Under the insurance code of the state in which each insurance subsidiary is domiciled, dividend payments to the Company by its insurance subsidiaries are subject to certain limitations without the prior approval of the applicable state’s Insurance Commissioner. In 2018, dividend payments to the Parent by the insurance subsidiaries in excess of $4.8 million would require prior approval.
Issuer Purchases of Equity Securities
On October 31, 2016, the Board of Directors of the Company approved a plan that allows for the repurchase of up to 750,000 shares of the Company’s common stock (the “Repurchase Plan”) on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company. Any such repurchases can be made from time to time in accordance with applicable securities laws and other requirements.
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 December 31, 2017.
|
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 |
||||||||
|
October 1 – October 31, 2017
|
|
11,708
|
|
$
|
3.39
|
|
|
11,708
|
|
|
573,779
|
|
|
November 1 – November 30, 2017
|
|
10,186
|
|
|
3.75
|
|
|
10,186
|
|
|
563,593
|
|
|
December 1 – December 31, 2017
|
|
19,151
|
|
|
3.56
|
|
|
19,151
|
|
|
544,442
|
|
|
Total
|
|
41,045
|
|
$
|
3.56
|
|
|
41,045
|
|
|
|
|
15
Stock Performance Graph
As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
| Item 6. | Selected Financial Data |
As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
| Item 7. | 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”) for the years ended December 31, 2017 and 2016. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein.
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”) in the property and casualty insurance industry, and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) in the life and health insurance industry. Each operating company is managed separately, offers different products and is evaluated on its individual performance.
Critical Accounting Policies
The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and, in management’s belief, conform to general practices within the insurance industry. The following is an explanation of the Company’s accounting policies and the resultant estimates considered most significant by management. These accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management’s estimates determined using these policies. Atlantic American does not expect that changes in the estimates determined using these policies will have a material effect on the Company’s financial condition or liquidity, although changes could have a material effect on its consolidated results of operations.
Unpaid loss and loss adjustment expenses comprised 29% of the Company’s total liabilities at December 31, 2017. This liability includes estimates for: 1) unpaid losses on claims reported prior to December 31, 2017, 2) future development on those reported claims, 3) unpaid ultimate losses on claims incurred prior to December 31, 2017 but not yet reported and 4) unpaid loss adjustment expenses for reported and unreported claims incurred prior to December 31, 2017. Quantification of loss estimates for each of these components involves a significant degree of judgment and estimates may vary, materially, from period to period. Estimated unpaid losses on reported claims are developed based on historical experience with similar claims by the Company. Development on reported claims, estimates of unpaid ultimate losses on claims incurred prior to December 31, 2017 but not yet reported, and estimates of unpaid loss adjustment expenses are developed based on the Company’s historical experience, using actuarial methods to assist in the analysis. The Company’s actuaries develop ranges of estimated development on reported and unreported claims as well as loss adjustment expenses using various methods, including the paid-loss development method, the reported-loss development method, the paid Bornhuetter-Ferguson method and the reported Bornhuetter-Ferguson method. Any single method used to estimate ultimate losses has inherent advantages and disadvantages due to the trends and changes affecting the business environment and the Company’s administrative policies. Further, external factors, such as legislative changes, medical cost inflation, and others may directly or indirectly impact the relative adequacy of liabilities for unpaid losses and loss adjustment expenses. The Company’s approach is to select an estimate of ultimate losses based on comparing results of a variety of reserving methods, as opposed to total reliance on any single method. Unpaid loss and loss adjustment expenses are reviewed periodically for significant lines of business, and when current results differ from the original assumptions used to develop such estimates, the amount of the Company’s recorded liability for unpaid loss and loss adjustment expenses is adjusted. In the event the Company’s actual reported losses in any period are materially in excess of the previously estimated amounts, such losses, to the extent reinsurance coverage does not exist, could have a material adverse effect on the Company’s results of operations.
16
Future policy benefits comprised 36% of the Company’s total liabilities at December 31, 2017. These liabilities relate primarily to life insurance products and are based upon assumed future investment yields, mortality rates, and withdrawal rates after giving effect to possible risks of adverse deviation. The assumed mortality and withdrawal rates are based upon the Company’s experience. If actual results differ from the initial assumptions, the amount of the Company’s recorded liability could require adjustment.
Deferred acquisition costs comprised 10% of the Company’s total assets at December 31, 2017. Deferred acquisition costs are commissions, premium taxes, and other incremental direct costs of contract acquisition that results directly from and are essential to the contract transaction(s) and would not have been incurred by the Company had the contract transaction(s) not occurred. The deferred amounts are recorded as an asset on the balance sheet and amortized to expense in a systematic manner. Traditional life insurance and long-duration health insurance deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the related liability for policy benefit reserves. Deferred acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies. Deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums (for traditional life and long-duration health insurance) and from the related unearned premiums and investment income (for property and casualty and short-duration health insurance). Assessments of recoverability for property and casualty and short-duration health insurance are extremely sensitive to the estimates of a subsequent year’s projected losses related to the unearned premiums. Projected loss estimates for a current block of business for which unearned premiums remain to be earned may vary significantly from the indicated losses incurred in any previous calendar year.
Receivables are amounts due from reinsurers, insureds and agents, and any sales of investment securities not yet settled, and comprised 9% of the Company’s total assets at December 31, 2017. Insured and agent balances are evaluated periodically for collectibility. Annually, the Company performs an analysis of the creditworthiness of the reinsurers with whom the Company contracts using various data sources. Failure of reinsurers to meet their obligations due to insolvencies, disputes or otherwise could result in uncollectible amounts and losses to the Company. Allowances for uncollectible amounts are established, as and when a loss has been determined probable, against the related receivable. Losses are recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical experience.
Cash and investments comprised 79% of the Company’s total assets at December 31, 2017. Substantially all of the Company’s investments are in bonds and common and preferred stocks, the values of which are subject to significant market fluctuations. The Company carries all fixed maturities, which includes bonds and redeemable preferred stocks, and equity securities, which includes common and non-redeemable preferred stocks, as available for sale and, accordingly, at their estimated fair values. The Company owns certain fixed maturities that do not have publicly quoted values, but had an estimated fair value as determined by management of $1.4 million at December 31, 2017. Such values inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market values. On occasion, the value of an investment may decline to a value below its amortized purchase price and remain at such value for an extended period of time. When an investment’s indicated fair value has declined below its cost basis for a period of time, the Company evaluates such investment for an other than temporary impairment. 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. If an other than temporary impairment is deemed to exist, then the Company will write down the amortized cost basis of the investment to its estimated fair value. While any such write down does not impact the reported value of the investment in the Company’s balance sheet, it is reflected as a realized investment loss in the Company’s consolidated statements of operations in the period incurred.
17
The Company determines the fair values of certain financial instruments based on the fair value hierarchy established in Accounting Standards Codification (“ASC”) 820-10-20, Fair Value Measurements and Disclosures (“ASC 820-10-20”). The fair values of fixed maturities and equity securities are largely determined by either independent methods prescribed by the National Association of Insurance Commissioners, which do not differ materially from nationally quoted market prices, when available, or independent broker quotations. See Note 2 and Note 14 of Notes to Consolidated Financial Statements with respect to assets and liabilities carried at fair value and information about the inputs used to value those financial instruments, by hierarchy level, in accordance with ASC 820-10-20.
Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for tax purposes. These deferred income taxes are measured by applying currently enacted tax laws and rates. Valuation allowances are recognized to reduce the deferred tax asset to the amount that is deemed more likely than not to be realized. In assessing the likelihood of realization, management considers estimates of future taxable income and tax planning strategies.
Refer to Note 1 of “Notes to Consolidated Financial Statements” for details regarding the Company’s significant accounting policies.
Overall Corporate Results
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
Revenue
|
|
|
|
|
|
|
|
Property and Casualty:
|
|
|
|
|
|
|
|
American Southern
|
$
|
59,485
|
|
$
|
58,159
|
|
|
Life and Health:
|
|
|
|
|
|
|
|
Bankers Fidelity
|
|
117,495
|
|
|
107,505
|
|
|
Corporate and Other
|
|
4,134
|
|
|
413
|
|
|
Total revenue
|
$
|
181,114
|
|
$
|
166,077
|
|
|
Income before income taxes
|
|
|
|
|
|
|
|
Property and Casualty:
|
|
|
|
|
|
|
|
American Southern
|
$
|
8,567
|
|
$
|
7,314
|
|
|
Life and Health:
|
|
|
|
|
|
|
|
Bankers Fidelity
|
|
(268
|
)
|
|
2,950
|
|
|
Corporate and Other
|
|
(2,943
|
)
|
|
(6,740
|
)
|
|
Income before income taxes
|
$
|
5,356
|
|
$
|
3,524
|
|
|
Net income
|
$
|
4,528
|
|
$
|
2,636
|
|
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 a limited extent, subject to discretion in terms of timing of realization).
18
A reconciliation of net income to operating income is as follows:
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
Reconciliation of Non-GAAP Financial Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4,528
|
|
$
|
2,636
|
|
|
Income tax expense
|
|
828
|
|
|
888
|
|
|
Realized investment gains, net
|
|
(9,168
|
)
|
|
(2,595
|
)
|
|
Operating income (loss)
|
$
|
(3,812
|
)
|
$
|
929
|
|
On a consolidated basis, the Company had net income of $4.5 million, or $0.20 per diluted share, in 2017, compared to $2.6 million, or $0.11 per diluted share, in 2016. Operating loss was $3.8 million in 2017 as compared to operating income of $0.9 million in 2016. The decrease in operating income was primarily due to unfavorable loss experience in the life and health operations. Also contributing to the decrease in operating income was a decrease in investment income attributable to a decrease in the average yield on the Company’s investments in fixed maturities and losses from the equity in earnings from investments in real estate partnerships.
Total revenue was $181.1 million in 2017 as compared to $166.1 million in 2016. Premium revenue increased to $163.3 million in 2017 from $153.5 million in 2016. The increase in premium revenue was primarily due to an increase in Medicare supplement business in the life and health operations. Also included in total revenue were net realized investment gains of $9.2 million in 2017 compared to $2.6 million in 2016. The magnitude of realized investment gains and losses in any year is a function of the timing of trades of investments relative to the markets themselves as well as the recognition of any other than temporary impairments on investments.
Total expenses were $175.8 million in 2017 as compared to $162.6 million in 2016. As a percentage of premiums, insurance benefits and losses incurred and commissions and underwriting expenses were 98.6% in 2017 and 96.4% in 2016.
A more detailed analysis of the operating companies and other corporate activities follows.
19
UNDERWRITING RESULTS
American Southern
The following table summarizes, for the periods indicated, American Southern’s premiums, losses, expenses and underwriting ratios:
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands)
|
|||||
|
Gross written premiums
|
$
|
58,149
|
|
$
|
56,131
|
|
|
Ceded premiums
|
|
(4,787
|
)
|
|
(4,654
|
)
|
|
Net written premiums
|
$
|
53,362
|
|
$
|
51,477
|
|
|
Net earned premiums
|
$
|
53,661
|
|
$
|
53,763
|
|
|
Net losses and loss adjustment expenses
|
|
34,486
|
|
|
34,408
|
|
|
Underwriting expenses
|
|
16,432
|
|
|
16,437
|
|
|
Underwriting income
|
$
|
2,743
|
|
$
|
2,918
|
|
|
Loss ratio
|
|
64.3
|
%
|
|
64.0
|
%
|
|
Expense ratio
|
|
30.6
|
|
|
30.6
|
|
|
Combined ratio
|
|
94.9
|
%
|
|
94.6
|
%
|
Gross written premiums at American Southern increased $2.0 million, or 3.6%, during 2017 as compared to 2016. The increase in gross written premiums was primarily attributable to an increase in automobile liability written premiums from existing programs. Also contributing to the increase in gross written premiums were increases in the automobile physical damage and surety lines of business from two new agencies.
Ceded premiums increased $0.1 million, or 2.9%, during 2017 as compared to 2016. The increase in ceded premiums was primarily due to a reinsurance rate increase in the automobile liability line of business.
The following table summarizes, for the periods indicated, American Southern’s net earned premiums by line of business:
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
Automobile liability
|
$
|
29,370
|
|
$
|
28,219
|
|
|
Automobile physical damage
|
|
9,972
|
|
|
10,192
|
|
|
General liability
|
|
2,953
|
|
|
3,009
|
|
|
Surety
|
|
8,441
|
|
|
8,999
|
|
|
Other lines
|
|
2,925
|
|
|
3,344
|
|
|
Total
|
$
|
53,661
|
|
$
|
53,763
|
|
Net earned premiums decreased slightly during 2017 as compared to 2016. The decrease in net earned premiums was primarily attributable to decreases in automobile physical damage and surety net earned premiums resulting from decreased business writings in 2016. 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).
20
Net losses and loss adjustment expenses at American Southern increased slightly during 2017 as compared to 2016. As a percentage of premiums, net losses and loss adjustment expenses were 64.3% in 2017 compared to 64.0% in 2016. The slight increase in the loss ratio was primarily attributable to less favorable loss experience in the general liability and surety lines of business during 2017 as compared to 2016.
Underwriting expenses decreased slightly during 2017 as compared to 2016. As a percentage of premiums, underwriting expenses were 30.6% in 2017 and 2016. The nominal increase in the expense ratio was primarily due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write. In 2017, variable commissions at American Southern increased $0.2 million as compared to 2016 due to more favorable loss experience from certain accounts subject to variable commissions.
In establishing reserves, American Southern initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. However, as a result, American Southern generally experiences reserve redundancies when analyzing the development of prior year losses in a current period. At December 31, 2017, the range of estimates developed in connection with the loss reserves for American Southern indicated that reserves could be as much as 9.7% lower or as much as 12.1% higher. Development from prior years’ reserves has historically reduced the current year loss ratio; however, such reduction in the current year loss ratio is generally offset by the reserves established in the current year for current period losses. American Southern’s estimated net reserve redundancies for the years ended December 31, 2017 and 2016 were $2.5 million and $2.1 million, respectively. To the extent reserve redundancies vary between years, there is an incremental impact on the results of operations of American Southern and the Company. The indicated redundancy in 2017 was $0.4 million more than in 2016. After considering the impact on contingent commissions and other related accruals, the $0.4 million increase in the redundancy resulted in an estimated increase in income from operations before tax of approximately $0.2 million in 2017 as compared to 2016. Management believes that such differences will continue in future periods but is unable to determine if or when incremental redundancies will increase or decrease, until the underlying losses are ultimately settled.
Contingent commissions, if contractually applicable, are ultimately payable to participating agents based on the underlying profitability of a particular insurance contract or a group of insurance contracts, and are periodically evaluated and accrued as earned. In 2017, approximately 51% of American Southern’s earned premium provides for contractual commission arrangements which compensate the company’s agents in relation to the loss ratios of the business they write, compared to 52% in 2016. By structuring its business in this manner, American Southern provides its agents with an economic incentive to place profitable business with American Southern. In periods in which loss reserves reflect favorable development from prior years’ reserves, there is generally a highly correlated increase in commission expense also related to the prior year business. Accordingly, favorable loss development from prior years, while anticipated to continue in future periods, is not an indicator of significant additional profitability in the current year.
21
Bankers Fidelity
The following summarizes, for the periods indicated, Bankers Fidelity’s premiums, losses and expenses:
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands)
|
|||||
|
Medicare supplement
|
$
|
93,652
|
|
$
|
84,107
|
|
|
Other health products
|
|
6,440
|
|
|
5,621
|
|
|
Life insurance
|
|
9,574
|
|
|
9,974
|
|
|
Total earned premiums
|
|
109,666
|
|
|
99,702
|
|
|
|
|
|
|
|
|
|
|
Insurance benefits and losses
|
|
83,029
|
|
|
68,789
|
|
|
Underwriting expenses
|
|
34,734
|
|
|
35,766
|
|
|
Total expenses
|
|
117,763
|
|
|
104,555
|
|
|
Underwriting loss
|
$
|
(8,097
|
)
|
$
|
(4,853
|
)
|
|
Loss ratio
|
|
75.7
|
%
|
|
69.0
|
%
|
|
Expense ratio
|
|
31.7
|
|
|
35.9
|
|
|
Combined ratio
|
|
107.4
|
%
|
|
104.9
|
%
|
Premium revenue at Bankers Fidelity increased $10.0 million, or 10.0%, during 2017 as compared to 2016. Premiums from the Medicare supplement line of business increased $9.5 million, or 11.3%, in 2017 as compared to 2016, due primarily to the successful execution of new business generating strategies with both new and existing agents. Other health product premiums increased $0.8 million, or 14.6%, during 2017 as compared to 2016, primarily as a result of new sales of the company’s disability income and group health products. Premiums from the life insurance line of business decreased $0.4 million, or 4.0%, in 2017 from 2016 due to the redemption and settlement of existing policy obligations exceeding the level of new sales activity. Medicare supplement premiums ceded under the reinsurance agreement in 2017 and 2016 were approximately $32.5 million and $5.3 million, respectively.
Benefits and losses increased $14.2 million, or 20.7%, during 2017 as compared to 2016. As a percentage of premiums, benefits and losses were 75.7% in 2017 compared to 69.0% in 2016. The increase in the loss ratio was primarily attributable to unfavorable loss experience in the Medicare supplement line. Further, beginning late in 2016 and continuing throughout the first quarter of 2017, Bankers Fidelity experienced significantly increased levels of mortality and morbidity across all lines of business which had an unfavorable effect on the company’s loss patterns and increased the resultant 2017 loss ratio.
Underwriting expenses decreased $1.0 million, or 2.9%, during 2017 as compared to 2016. As a percentage of earned premiums, these expenses were 31.7% in 2017 compared to 35.9% in 2016. The decrease in the expense ratio was primarily due to the increase in earned premiums coupled with a relatively consistent level of fixed general and administrative expenses. Also contributing to the decrease in the expense ratio was a reinsurance expense-reimbursement allowance associated with the Company’s reinsurance agreement, which reimbursed the company for a portion of its indirect underwriting expenses.
Investment Income and Realized Gains
Investment income decreased $1.4 million, or 14.0%, in 2017 as compared to 2016. The decrease in investment income was primarily attributable to a decrease in the average yield on the Company’s investments in fixed maturities and losses from the equity in earnings from investments in real estate partnerships.
The Company had net realized investment gains of $9.2 million in 2017 compared to net realized investment gains of $2.6 million in 2016. The net realized investment gains in 2017 and 2016 were primarily attributable to gains of $6.0 million and $1.6 million, respectively, from the sale of property held within the Company’s real estate partnership investments as well as gains from the sale of a number 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. See Note 2 of Notes to Consolidated Financial Statements.
22
Interest Expense
Interest expense increased $0.2 million, or 10.3%, in 2017 as compared to 2016 due to an increase during the year 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) decreased $1.3 million, or 2.2%, in 2017 as compared to 2016. The decrease in other expenses was primarily attributable to a reinsurance expense-reimbursement allowance associated with the reinsurance agreement in the life and health operations, which reimbursed a portion of the Company’s indirect underwriting expenses. Partially offsetting the decrease in other expenses was the $0.2 million increase in variable commission accruals at American Southern due to favorable loss experience from certain accounts subject to variable commissions. American Southern’s variable commission structure compensates the participating agents in relation to the loss ratios of the business they write. As a percentage of earned premiums, other expenses were 34.6% in 2017 as compared with 37.7% in 2016. The decrease in the expense ratio was primarily attributable to the increase in earned premiums coupled with a lower level of general and administrative expenses.
Income Taxes
The primary differences between the effective tax rate and the federal statutory income tax rate for 2017 and 2016 resulted from the dividends-received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the remeasurement of deferred taxes. 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 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. The remeasurement of deferred taxes resulted from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment.
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 December 31, 2017, the Parent had approximately $25.8 million of unrestricted cash and investments.
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 December 31, 2017, the Parent’s insurance subsidiaries had an aggregate statutory surplus of $77.5 million. Dividends were paid to Atlantic American by its subsidiaries totaling $4.9 million and $5.5 million in 2017 and 2016, respectively.
The Parent provides certain administrative, purchasing and other services to each of its subsidiaries. The amount charged to and paid by the subsidiaries for these services was $7.7 million and $7.4 million in 2017 and 2016, respectively. In addition, the Parent has a formal tax-sharing agreement with each of its insurance subsidiaries. A net total of $2.7 million and $2.8 million were paid to the Parent under the tax sharing agreement in 2017 and 2016, respectively.
23
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 December 31, 2017, the effective interest rate was 5.50%. 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 December 31, 2017, 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. The Company had accrued, but unpaid, dividends, on the Series D Preferred Stock of $17,722 at December 31, 2017 and 2016. During each of 2017 and 2016, the Company paid Series D Preferred Stock dividends of $0.4 million.
Cash and cash equivalents increased from $13.3 million at December 31, 2016 to $24.5 million at December 31, 2017. The increase in cash and cash equivalents during 2017 was primarily attributable to the sale and maturity of securities exceeding investment purchases, as well as the net cash provided by operations of $2.6 million during 2017. Partially offsetting the increase were additions to property and equipment of $0.1 million, dividends paid on the Company’s common stock and Series D Preferred Stock of $0.8 million, and the purchase of shares for treasury for $0.7 million.
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.
New Accounting Pronouncements
See “Recently Issued Accounting Standards” in Note 1 of Notes to Consolidated Financial Statements.
Impact of Inflation
Insurance premiums are established before the amount of losses and loss adjustment expenses, or the extent to which inflation may affect such losses and expenses, are known. Consequently, the Company attempts, in establishing its premiums, to anticipate the potential impact of inflation. If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by the Company. Inflation also affects the rate of investment return on the Company’s investment portfolio with a corresponding effect on investment income. To date, inflation has not had a material effect on the Company’s results of operations in any of the periods presented.
24
Off-Balance Sheet Arrangements
In the normal course of business, the Company has structured borrowings that, in accordance with accounting principles generally accepted in the United States of America, are recorded on the Company’s balance sheet at an amount that differs from the ultimate contractual obligation. See Note 6 of Notes to Consolidated Financial Statements.
Contractual Obligations
As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the table of contractual obligations required by this Item.
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
25
| Item 8. | Financial Statements and Supplementary Data |
INDEX TO FINANCIAL STATEMENTS
|
|
Page
|
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|
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26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Atlantic American Corporation
Atlanta, Georgia
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Atlantic American Corporation (the “Company”) and subsidiaries as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2017, and the related notes and schedules (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and subsidiaries at December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BDO USA, LLP
We have served as the Company’s auditor since 2008
Atlanta, Georgia, United States
March 26, 2018
27
ATLANTIC AMERICAN CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands,
except per share data) |
|||||
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
24,547
|
|
$
|
13,252
|
|
|
Investments:
|
|
|
|
|
|
|
|
Fixed maturities (cost: $212,544 and $210,505)
|
|
215,108
|
|
|
210,670
|
|
|
Common and non-redeemable preferred stocks (cost: $10,918 and $11,453)
|
|
23,355
|
|
|
20,257
|
|
|
Other invested assets (cost: $5,626 and $9,709)
|
|
5,626
|
|
|
9,709
|
|
|
Policy loans
|
|
2,146
|
|
|
2,265
|
|
|
Real estate
|
|
38
|
|
|
38
|
|
|
Investment in unconsolidated trusts
|
|
1,238
|
|
|
1,238
|
|
|
Total investments
|
|
247,511
|
|
|
244,177
|
|
|
Receivables:
|
|
|
|
|
|
|
|
Reinsurance
|
|
17,613
|
|
|
11,703
|
|
|
Insurance premiums and other, net of allowance for doubtful accounts of $209 and $280 in 2017 and 2016, respectively
|
|
13,241
|
|
|
12,581
|
|
|
Deferred income taxes, net
|
|
—
|
|
|
160
|
|
|
Deferred acquisition costs
|
|
32,694
|
|
|
28,975
|
|
|
Other assets
|
|
5,089
|
|
|
5,208
|
|
|
Intangibles
|
|
2,544
|
|
|
2,544
|
|
|
Total assets
|
$
|
343,239
|
|
$
|
318,600
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Insurance reserves and policyholder funds
|
$
|
173,583
|
|
$
|
162,679
|
|
|
Accounts payable and accrued expenses
|
|
22,342
|
|
|
16,677
|
|
|
Deferred income taxes, net
|
|
593
|
|
|
—
|
|
|
Junior subordinated debenture obligations, net
|
|
33,738
|
|
|
33,738
|
|
|
Total liabilities
|
|
230,256
|
|
|
213,094
|
|
|
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;
22,400,894 shares issued; 20,449,531 and 20,446,705 shares outstanding in 2017 and 2016, respectively |
|
22,401
|
|
|
22,401
|
|
|
Additional paid-in capital
|
|
57,495
|
|
|
57,114
|
|
|
Retained earnings
|
|
30,993
|
|
|
27,272
|
|
|
Accumulated other comprehensive income
|
|
9,751
|
|
|
5,830
|
|
|
Unearned stock grant compensation
|
|
(579
|
)
|
|
(428
|
)
|
|
Treasury stock, at cost, 1,951,363 and 1,954,189 shares in 2017 and 2016, respectively
|
|
(7,133
|
)
|
|
(6,738
|
)
|
|
Total shareholders’ equity
|
|
112,983
|
|
|
105,506
|
|
|
Total liabilities and shareholders’ equity
|
$
|
343,239
|
|
$
|
318,600
|
|
The accompanying notes are an integral part of these consolidated financial statements.
28
ATLANTIC AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands,
except per share data) |
|||||
|
Revenue:
|
|
|
|
|
|
|
|
Insurance premiums
|
$
|
163,327
|
|
$
|
153,465
|
|
|
Investment income
|
|
8,496
|
|
|
9,884
|
|
|
Realized investment gains, net
|
|
9,168
|
|
|
2,595
|
|
|
Other income
|
|
123
|
|
|
133
|
|
|
Total revenue
|
|
181,114
|
|
|
166,077
|
|
|
|
|
|
|
|
|
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
Insurance benefits and losses incurred
|
|
117,515
|
|
|
103,197
|
|
|
Commissions and underwriting expenses
|
|
43,446
|
|
|
44,797
|
|
|
Interest expense
|
|
1,723
|
|
|
1,562
|
|
|
Other expense
|
|
13,074
|
|
|
12,997
|
|
|
Total benefits and expenses
|
|
175,758
|
|
|
162,553
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
5,356
|
|
|
3,524
|
|
|
Income tax expense
|
|
828
|
|
|
888
|
|
|
Net income
|
|
4,528
|
|
|
2,636
|
|
|
Preferred stock dividends
|
|
(399
|
)
|
|
(399
|
)
|
|
Net income applicable to common shareholders
|
$
|
4,129
|
|
$
|
2,237
|
|
|
Earnings per common share (basic and diluted)
|
$
|
.20
|
|
$
|
.11
|
|
The accompanying notes are an integral part of these consolidated financial statements.
29
ATLANTIC AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands)
|
|||||
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4,528
|
|
$
|
2,636
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
Gross unrealized holding gain arising in the period
|
|
15,200
|
|
|
4,512
|
|
|
Related income tax effect
|
|
(5,320
|
)
|
|
(1,579
|
)
|
|
Less: reclassification adjustment for net realized gains included in net income(1)
|
|
(9,168
|
)
|
|
(2,595
|
)
|
|
Related income tax effect(2)
|
|
3,209
|
|
|
908
|
|
|
Total other comprehensive income, net of tax
|
|
3,921
|
|
|
1,246
|
|
|
Total comprehensive income
|
$
|
8,449
|
|
$
|
3,882
|
|
| (1) | Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying consolidated statements of operations. |
| (2) | Income tax effect on reclassification adjustment for net realized gains included in income tax expense on the accompanying consolidated statements of operations. |
The accompanying notes are an integral part of these consolidated financial statements.
30
ATLANTIC AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
|
|
Preferred
Stock |
Common
Stock |
Additional
Paid-In Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Income |
Unearned
Stock Grant Compensation |
Treasury
Stock |
Total
|
||||||||||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||||||
|
Balance, December 31, 2015
|
$
|
55
|
|
$
|
22,401
|
|
$
|
56,623
|
|
$
|
25,443
|
|
$
|
4,584
|
|
$
|
(273
|
)
|
$
|
(6,341
|
)
|
$
|
102,492
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,636
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,636
|
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,246
|
|
|
—
|
|
|
—
|
|
|
1,246
|
|
|
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(408
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(408
|
)
|
|
Dividends on preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
Restricted stock grants
|
|
—
|
|
|
—
|
|
|
461
|
|
|
—
|
|
|
—
|
|
|
(741
|
)
|
|
280
|
|
|
—
|
|
|
Amortization of unearned compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
586
|
|
|
—
|
|
|
586
|
|
|
Purchase of 173,008 shares for treasury
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(698
|
)
|
|
(698
|
)
|
|
Issuance of 13,177 shares under stock plans
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
51
|
|
|
Balance, December 31, 2016
|
|
55
|
|
|
22,401
|
|
|
57,114
|
|
|
27,272
|
|
|
5,830
|
|
|
(428
|
)
|
|
(6,738
|
)
|
|
105,506
|
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,528
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,528
|
|
|
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,921
|
|
|
—
|
|
|
—
|
|
|
3,921
|
|
|
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(408
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(408
|
)
|
|
Dividends on preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(399
|
)
|
|
Restricted stock grants
|
|
—
|
|
|
—
|
|
|
363
|
|
|
—
|
|
|
—
|
|
|
(646
|
)
|
|
283
|
|
|
—
|
|
|
Amortization of unearned compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
495
|
|
|
—
|
|
|
495
|
|
|
Purchase of 188,066 shares for treasury
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(692
|
)
|
|
(692
|
)
|
|
Issuance of 8,892 shares under stock plans
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
32
|
|
|
Balance, December 31, 2017
|
$
|
55
|
|
$
|
22,401
|
|
$
|
57,495
|
|
$
|
30,993
|
|
$
|
9,751
|
|
$
|
(579
|
)
|
$
|
(7,133
|
)
|
$
|
112,983
|
|
The accompanying notes are an integral part of these consolidated financial statements.
31
ATLANTIC AMERICAN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(Dollars in thousands)
|
|||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
4,528
|
|
$
|
2,636
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Amortization of deferred acquisition costs
|
|
10,630
|
|
|
11,884
|
|
|
Acquisition costs deferred
|
|
(14,349
|
)
|
|
(12,993
|
)
|
|
Realized investment gains, net
|
|
(9,168
|
)
|
|
(2,595
|
)
|
|
Compensation expense related to share awards
|
|
495
|
|
|
586
|
|
|
Depreciation and amortization
|
|
1,438
|
|
|
1,205
|
|
|
Deferred income tax benefit
|
|
(1,358
|
)
|
|
(2
|
)
|
|
Increase in receivables, net
|
|
(6,185
|
)
|
|
(407
|
)
|
|
Increase (decrease) in insurance reserves and policyholder funds
|
|
10,904
|
|
|
(666
|
)
|
|
Increase in other liabilities
|
|
5,665
|
|
|
1,649
|
|
|
Other, net
|
|
34
|
|
|
19
|
|
|
Net cash provided by operating activities
|
|
2,634
|
|
|
1,316
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Proceeds from investments sold
|
|
83,992
|
|
|
62,361
|
|
|
Proceeds from investments matured, called or redeemed
|
|
10,791
|
|
|
10,874
|
|
|
Investments purchased
|
|
(84,552
|
)
|
|
(75,071
|
)
|
|
Additions to property and equipment
|
|
(103
|
)
|
|
(396
|
)
|
|
Net cash provided by (used in) investing activities
|
|
10,128
|
|
|
(2,232
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Payment of dividends on Series D preferred stock
|
|
(399
|
)
|
|
(399
|
)
|
|
Payment of dividends on common stock
|
|
(408
|
)
|
|
(408
|
)
|
|
Proceeds from shares issued under stock plans
|
|
32
|
|
|
51
|
|
|
Purchases of shares for treasury
|
|
(692
|
)
|
|
(698
|
)
|
|
Net cash used in financing activities
|
|
(1,467
|
)
|
|
(1,454
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
11,295
|
|
|
(2,370
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
13,252
|
|
|
15,622
|
|
|
Cash and cash equivalents at end of year
|
$
|
24,547
|
|
$
|
13,252
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
Cash paid for interest
|
$
|
1,705
|
|
$
|
1,544
|
|
|
Cash paid for income taxes
|
$
|
1,400
|
|
$
|
675
|
|
The accompanying notes are an integral part of these consolidated financial statements.
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
| Note 1. | Summary of Significant Accounting Policies |
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which, for insurance companies, differ in some respects from the statutory accounting practices prescribed or permitted by regulatory authorities. These financial statements include the accounts of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Operating results achieved in any historical period are not necessarily indicative of results to be expected in any future period.
At December 31, 2017, the Parent owned four insurance subsidiaries, Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), and American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company (together known as “American Southern”), in addition to one non-insurance subsidiary, xCalibre Risk Services, Inc. The Parent has issued a guarantee of all liabilities of Bankers Fidelity.
Premium Revenue and Cost Recognition
Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided. Losses, benefits and expenses are accrued as incurred and are associated with premiums as they are earned so as to result in recognition of profits over the lives of the contracts. For traditional life insurance and long-duration health insurance, this association is accomplished by the provision of a future policy benefits reserve and the deferral and subsequent amortization of the costs of acquiring business, which are referred to as “deferred policy acquisition costs” (principally commissions, premium taxes, and other incremental direct costs of issuing policies). Deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the policy benefits reserve. The Company provides for insurance benefits and losses on accident, health, and property-casualty claims based upon estimates of projected ultimate losses. Deferred policy acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies. Contingent commissions, if contractually applicable, are ultimately payable to agents based on the underlying profitability of a particular insurance contract or a group of insurance contracts, and are periodically evaluated and accrued as earned. In periods in which revisions are made to the estimated loss reserves related to the particular insurance contract or group of insurance contracts subject to such commissions, corresponding adjustments are also made to the related accruals. Deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums (for traditional life and long-duration health insurance) and from the related unearned premiums and investment income (for property and casualty and short-duration health insurance).
Intangibles
Intangibles consist of goodwill and other indefinite-lived intangible assets. Goodwill represents the excess of cost over the fair value of net assets acquired and is not amortized. Other indefinite-lived intangibles represent the value of licenses and are not amortized. The Company periodically reviews its goodwill and other indefinite-lived intangibles to determine if any adverse conditions exist that could indicate impairment. Conditions that could trigger impairment include, but are not limited to, a significant change in business climate that could affect the value of the related asset, an adverse action, or an assessment by a regulator. No impairment of the Company’s recorded intangibles was identified during any of the periods presented.
Investments
The Company’s investments in both fixed maturities, which include bonds and redeemable preferred stocks, and equity securities, which include common and non-redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost,
33
as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The fair values of fixed maturities and equity securities are largely determined by either independent methods prescribed by the National Association of Insurance Commissioners (“NAIC”), which do not differ materially from publicly quoted market prices, when available, or independent broker quotations. The Company owns certain fixed maturities that do not have publicly quoted market values, but had an estimated fair value as determined by management of $1,369 and $1,264 at December 31, 2017 and 2016, respectively. Such values inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market values. Policy loans and real estate are carried at historical cost. Other invested assets are comprised of investments in limited partnerships, limited liability companies, and real estate joint ventures, and are accounted for using the equity method. If the value of a common stock, preferred stock, other invested asset, or publicly traded bond declines below its cost or amortized cost, as applicable, and the decline is considered to be other than temporary, a realized loss is recorded to reduce the carrying value of the investment to its estimated fair value, which becomes the new cost basis. 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. Premiums and discounts related to investments are amortized or accreted over the life of the related investment as an adjustment to yield using the effective interest method. Dividends and interest income are recognized when earned or declared. The cost of securities sold is based on specific identification. Unrealized gains (losses) in the value of invested assets are accounted for as a direct increase (decrease) in accumulated other comprehensive income in shareholders’ equity, net of deferred tax and, accordingly, have no effect on net income.
Income Taxes
Deferred income taxes represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. They arise from differences between the financial reporting and tax basis of assets and liabilities and are adjusted for changes in tax laws and tax rates as those changes are enacted. The provision for income taxes represents the total amount of income taxes due related to the current year, plus the change in deferred income taxes during the year. A valuation allowance is recognized if, based on management’s assessment of the relevant facts, it is more likely than not that some portion of a deferred tax asset will not be realized.
Earnings Per Common Share
Basic earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period. Diluted earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period, plus options outstanding, if applicable, using the treasury stock method and the assumed conversion of the Series D preferred stock, if dilutive. Unless otherwise indicated, earnings per common share amounts are presented on a diluted basis.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and investments in short-term, highly liquid securities with original maturities of three months or less from date of purchase.
Recently Issued Accounting Standards
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The FASB issued this guidance for the effect on deferred tax assets and liabilities related to items recorded in
34
accumulated other comprehensive income (“AOCI”) resulting from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment. Under current GAAP, the Company recorded the total effect of the change in enacted tax rates on deferred tax balances in the income tax expense component of net income. ASU 2018-02 permits the Company to reclassify out of AOCI and into retained earnings the “stranded” tax effects that resulted from recording the tax effects of unrealized investment gains at a 35% tax rate because the 14 point reduction in tax rate was recognized in net income instead of other comprehensive income. The Company will adopt the new guidance as of January 1, 2018. As a result of the reclassification, on January 1, 2018, the Company will reclassify $2,100 of stranded tax effects related to continuing operations which will have the effect of reducing AOCI and increasing retained earnings.
In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. Under current GAAP, premiums and discounts on callable securities generally are amortized to the maturity date. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 is intended to simplify the evaluation of goodwill. The updated guidance requires recognition and measurement of goodwill impairment based on the excess of the carrying value of the reporting unit compared to its estimated fair value, with the amount of the impairment not to exceed the carrying value of the reporting unit’s goodwill. Under existing guidance, if the reporting unit’s carrying value exceeds its estimated fair value, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. An impairment loss is then recognized for the excess, if any, of the carrying value of the reporting unit’s goodwill compared to the implied goodwill value. The amendments in ASU 2017-04 are effective for interim and annual reporting periods beginning after December 15, 2019. The Company expects to adopt the updated guidance January 1, 2020 on a prospective basis as required, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in ASU 2016-15 are: 1) debt prepayment or debt extinguishment costs, 2) settlement of zero-coupon debt instruments, 3) contingent consideration payments made after a business combination, 4) proceeds from the settlement of insurance claims, 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions and 8) separately identifiable cash flows and application of the predominance principle. The amendments in ASU 2016-15 are effective for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have an impact on its consolidated statements of cash flows.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Under current GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. ASU 2016-13 will remove all recognition thresholds and will require entities to recognize an allowance for credit losses equal to the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the entity expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale (“AFS”) debt securities and beneficial interests in securitized financial assets. Credit losses on AFS debt securities carried at fair value will continue to be measured as other-than-temporary impairments (“OTTI”) when incurred; however, the losses will be recognized through an allowance and no longer as an adjustment to the cost basis. Recoveries of OTTI will be recognized as reversals of valuation
35
allowances and no longer accreted as investment income through an adjustment to the investment yield. The allowance on AFS debt securities cannot cause the net carrying value to be below fair value and, therefore, it is possible that increases in fair value due to decreases in market interest rates could cause the reversal of a valuation allowance and increase net income. The new guidance will also require purchased financial assets with a more-than-insignificant amount of credit deterioration since original issuance to be recorded based on contractual amounts due and an initial allowance recorded at the date of purchase. For the Company, the amendments in ASU 2016-13 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the timing of adoption. Implementation matters yet to be addressed include determining the impact of valuation allowances on the effective interest method for recognizing interest income from AFS debt securities as well as updating our investment accounting system functionality to adjust valuation allowances based on changes in fair value. The estimated effect on the Company’s financial statements can only be estimated based on the current investment portfolio at any given point in time, and accordingly, has not currently been determined.
In March 2016, the FASB issued 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, including income tax consequences, forfeitures, classification of awards as either equity or liabilities and related classification on the statement of cash flows. ASU 2016-09 requires the excess tax benefit or deficiency on vesting or settlement of awards to be recognized in earnings as an income tax benefit or expense, respectively. The Company adopted ASU 2016-09 as of January 1, 2017. Adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.
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. Under ASU 2016-07, the equity method 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. The Company adopted ASU 2016-07 as of January 1, 2017. Adoption of ASU 2016-07 did not have an impact on the Company’s consolidated financial statements.
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. Under ASU 2016-02, 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. Under the new guidance, lessees with operating leases will be required to recognize a liability for the present value of future minimum lease payments with a corresponding asset for the right of use of the property. Under existing guidance, future minimum lease payments on operating leases are commitments that are not recognized as liabilities on the balance sheet. 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 does not expect the adoption of ASU 2016-02 to have a material impact on its consolidated financial statements; however, it is expected that assets and liabilities will increase based on the present value of remaining lease payments for the minor number of leases which will be in place at the adoption date.
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 any changes in valuation reported in net income except for investments that are consolidated or are accounted for under the equity method of accounting. The new guidance will also require a deferred tax asset resulting from net unrealized losses on available-for-sale (AFS) fixed maturities that are recognized in AOCI to be evaluated for recoverability in combination with the Company’s other deferred tax assets. Under existing guidance, the Company measures investments in equity securities, AFS at fair value with changes in fair value reported in
36
other comprehensive income. As required, the Company will adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed. The impact to the Company will be increased volatility in net income beginning in 2018. Any difference in the evaluation of deferred tax assets may also affect shareholders’ equity. Cash flows will not be affected. The impact will depend on the composition of the Company’s investment portfolio in the future and changes in fair value of the Company’s investments. As of January 1, 2018, the Company will reclassify from AOCI to retained earnings net unrealized gains of $9,825, after tax, related to equity securities, AFS having a fair value of $23,355. Had the new accounting guidance been in place since the beginning of 2017, the Company would have recognized mark-to-market gains of $2,361 after-tax in net income for the Year Ended December 31, 2017.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 as modified provides 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. This guidance is effective retrospectively on January 1, 2018, with a choice of restating prior periods or recognizing a cumulative effect for contracts in place as of adoption. The Company will adopt ASU 2014-09 on January 1, 2018. Based on current evaluations, the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant estimates and assumptions are used in developing and evaluating deferred income taxes, deferred acquisition costs, insurance reserves, investments, and receivables, among others, and actual results could differ materially from management’s estimates.
37
| Note 2. | Investments |
The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments, aggregated by type and industry, as of December 31, 2017 and December 31, 2016.
Investments were comprised of the following:
|
|
2017
|
|||||||||||
|
|
Carrying
Value |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Cost or
Amortized Cost |
||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
|
$
|
31,155
|
|
$
|
149
|
|
$
|
511
|
|
$
|
31,517
|
|
|
Obligations of states and political subdivisions
|
|
10,809
|
|
|
630
|
|
|
1
|
|
|
10,180
|
|
|
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities and telecom
|
|
21,882
|
|
|
1,709
|
|
|
130
|
|
|
20,303
|
|
|
Financial services
|
|
53,686
|
|
|
2,049
|
|
|
453
|
|
|
52,090
|
|
|
Other business – diversified
|
|
44,184
|
|
|
1,024
|
|
|
1,349
|
|
|
44,509
|
|
|
Other consumer – diversified
|
|
53,200
|
|
|
924
|
|
|
1,477
|
|
|
53,753
|
|
|
Total corporate securities
|
|
172,952
|
|
|
5,706
|
|
|
3,409
|
|
|
170,655
|
|
|
Redeemable preferred stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer – diversified
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
Total redeemable preferred stocks
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
Total fixed maturities
|
|
215,108
|
|
|
6,485
|
|
|
3,921
|
|
|
212,544
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and non-redeemable preferred stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities and telecom
|
|
1,588
|
|
|
624
|
|
|
—
|
|
|
964
|
|
|
Financial services
|
|
5,634
|
|
|
851
|
|
|
—
|
|
|
4,783
|
|
|
Other business – diversified
|
|
297
|
|
|
250
|
|
|
—
|
|
|
47
|
|
|
Other consumer – diversified
|
|
15,836
|
|
|
10,712
|
|
|
—
|
|
|
5,124
|
|
|
Total equity securities
|
|
23,355
|
|
|
12,437
|
|
|
—
|
|
|
10,918
|
|
|
Other invested assets
|
|
5,626
|
|
|
—
|
|
|
—
|
|
|
5,626
|
|
|
Policy loans
|
|
2,146
|
|
|
—
|
|
|
—
|
|
|
2,146
|
|
|
Real estate
|
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
Investments in unconsolidated trusts
|
|
1,238
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
|
Total investments
|
$
|
247,511
|
|
$
|
18,922
|
|
$
|
3,921
|
|
$
|
232,510
|
|
38
|
|
2016
|
|||||||||||
|
|
Carrying
Value |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Cost or
Amortized Cost |
||||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
|
$
|
31,102
|
|
$
|
197
|
|
$
|
553
|
|
$
|
31,458
|
|
|
Obligations of states and political subdivisions
|
|
17,572
|
|
|
625
|
|
|
308
|
|
|
17,255
|
|
|
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities and telecom
|
|
18,034
|
|
|
1,462
|
|
|
88
|
|
|
16,660
|
|
|
Financial services
|
|
57,282
|
|
|
1,880
|
|
|
911
|
|
|
56,313
|
|
|
Other business – diversified
|
|
57,419
|
|
|
1,071
|
|
|
2,337
|
|
|
58,685
|
|
|
Other consumer – diversified
|
|
29,069
|
|
|
471
|
|
|
1,344
|
|
|
29,942
|
|
|
Total corporate securities
|
|
161,804
|
|
|
4,884
|
|
|
4,680
|
|
|
161,600
|
|
|
Redeemable preferred stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer – diversified
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
Total redeemable preferred stocks
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|
Total fixed maturities
|
|
210,670
|
|
|
5,706
|
|
|
5,541
|
|
|
210,505
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and non-redeemable preferred stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities and telecom
|
|
1,601
|
|
|
637
|
|
|
—
|
|
|
964
|
|
|
Financial services
|
|
5,402
|
|
|
574
|
|
|
—
|
|
|
4,828
|
|
|
Other business – diversified
|
|
244
|
|
|
197
|
|
|
—
|
|
|
47
|
|
|
Other consumer – diversified
|
|
13,010
|
|
|
7,396
|
|
|
—
|
|
|
5,614
|
|
|
Total equity securities
|
|
20,257
|
|
|
8,804
|
|
|
—
|
|
|
11,453
|
|
|
Other invested assets
|
|
9,709
|
|
|
—
|
|
|
—
|
|
|
9,709
|
|
|
Policy loans
|
|
2,265
|
|
|
—
|
|
|
—
|
|
|
2,265
|
|
|
Real estate
|
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
Investments in unconsolidated trusts
|
|
1,238
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
|
Total investments
|
$
|
244,177
|
|
$
|
14,510
|
|
$
|
5,541
|
|
$
|
235,208
|
|
Bonds having an amortized cost of $11,178 and $11,435 and included in the tables above were on deposit with insurance regulatory authorities at December 31, 2017 and 2016, respectively, in accordance with statutory requirements.
39
The following table sets forth the carrying value, cost or amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of December 31, 2017 and 2016.
|
|
2017
|
2016
|
||||||||||||||||
|
|
Carrying
Value |
Cost or
Amortized Cost |
Unrealized
Gains (Losses) |
Carrying
Value |
Cost or
Amortized Cost |
Unrealized
Gains (Losses) |
||||||||||||
|
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
|
$
|
31,155
|
|
$
|
31,517
|
|
$
|
(362
|
)
|
$
|
31,102
|
|
$
|
31,458
|
|
$
|
(356
|
)
|
|
Obligations of states and political subdivisions
|
|
10,809
|
|
|
10,180
|
|
|
629
|
|
|
17,572
|
|
|
17,255
|
|
|
317
|
|
|
Utilities and telecom
|
|
23,470
|
|
|
21,267
|
|
|
2,203
|
|
|
19,635
|
|
|
17,624
|
|
|
2,011
|
|
|
Financial services
|
|
59,320
|
|
|
56,873
|
|
|
2,447
|
|
|
62,684
|
|
|
61,141
|
|
|
1,543
|
|
|
Other business – diversified
|
|
44,481
|
|
|
44,556
|
|
|
(75
|
)
|
|
57,663
|
|
|
58,732
|
|
|
(1,069
|
)
|
|
Other consumer – diversified
|
|
69,228
|
|
|
59,069
|
|
|
10,159
|
|
|
42,271
|
|
|
35,748
|
|
|
6,523
|
|
|
Other investments
|
|
9,048
|
|
|
9,048
|
|
|
—
|
|
|
13,250
|
|
|
13,250
|
|
|
—
|
|
|
Total investments
|
$
|
247,511
|
|
$
|
232,510
|
|
$
|
15,001
|
|
$
|
244,177
|
|
$
|
235,208
|
|
$
|
8,969
|
|
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 December 31, 2017 and 2016.
|
|
2017
|
|||||||||||||||||
|
|
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
|
$
|
12,175
|
|
$
|
162
|
|
$
|
12,737
|
|
$
|
349
|
|
$
|
24,912
|
|
$
|
511
|
|
|
Obligations of states and political subdivisions
|
|
999
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
999
|
|
|
1
|
|
|
Corporate securities
|
|
40,108
|
|
|
653
|
|
|
32,667
|
|
|
2,756
|
|
|
72,775
|
|
|
3,409
|
|
|
Total temporarily impaired securities
|
$
|
53,282
|
|
$
|
816
|
|
$
|
45,404
|
|
$
|
3,105
|
|
$
|
98,686
|
|
$
|
3,921
|
|
|
|
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
|
$
|
23,494
|
|
$
|
553
|
|
$
|
—
|
|
$
|
—
|
|
$
|
23,494
|
|
$
|
553
|
|
|
Obligations of states and political subdivisions
|
|
8,747
|
|
|
308
|
|
|
—
|
|
|
—
|
|
|
8,747
|
|
|
308
|
|
|
Corporate securities
|
|
59,404
|
|
|
2,124
|
|
|
20,587
|
|
|
2,556
|
|
|
79,991
|
|
|
4,680
|
|
|
Total temporarily impaired securities
|
$
|
91,645
|
|
$
|
2,985
|
|
$
|
20,587
|
|
$
|
2,556
|
|
$
|
112,232
|
|
$
|
5,541
|
|
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.
40
As of December 31, 2017 and 2016, there were sixty-nine and seventy-seven securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the other diversified business and other diversified consumer sectors. Securities in an unrealized loss position reported in the other diversified business sector included gross unrealized losses of $906 related to investments in fixed maturities of four different issuers, all related to the oil and gas industry. These issuers represent a diversified group of businesses which include, among others, exploration and production, pipeline owners and operators, deep water offshore rig owners and operators, all of which we believe are in continuing stages of rationalizing their current operations, investments, future capital expenditures and carefully managing and modifying their capital and liquidity positions. Based on publicly available information, 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. 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 analyses of the publicly available 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 December 31, 2017.
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 of its fixed maturities and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers. Prices for the majority of the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize 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 December 31, 2017 and December 31, 2016, the value of the Company’s fixed maturities valued using Level 3 criteria was $1,369 and $1,264, respectively. The use of different criteria or assumptions regarding data may have yielded materially different valuations. |
41
As of December 31, 2017, financial instruments carried at fair value were measured on a recurring basis as summarized below:
|
Assets:
|
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
Total
|
||||||||
|
Fixed maturities
|
$
|
—
|
|
$
|
213,739
|
|
$
|
1,369
|
(1)
|
$
|
215,108
|
|
|
Equity securities
|
|
17,973
|
|
|
5,382
|
(1)
|
|
—
|
|
|
23,355
|
|
|
Cash equivalents
|
|
13,855
|
|
|
—
|
|
|
—
|
|
|
13,855
|
|
|
Total
|
$
|
31,828
|
|
$
|
219,121
|
|
$
|
1,369
|
|
$
|
252,318
|
|
| (1) | All underlying securities are financial service industry related. |
As of December 31, 2016, financial instruments carried at fair value were measured on a recurring basis as summarized below:
|
Assets:
|
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
Total
|
||||||||
|
Fixed maturities
|
$
|
—
|
|
$
|
209,406
|
|
$
|
1,264
|
(1)
|
$
|
210,670
|
|
|
Equity securities
|
|
15,153
|
|
|
5,104
|
(1)
|
|
—
|
|
|
20,257
|
|
|
Cash equivalents
|
|
9,811
|
|
|
—
|
|
|
—
|
|
|
9,811
|
|
|
Total
|
$
|
24,964
|
|
$
|
214,510
|
|
$
|
1,264
|
|
$
|
240,738
|
|
| (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) from January 1, 2016 to December 31, 2017.
|
|
Fixed
Maturities |
||
|
Balance, January 1, 2016
|
$
|
2,237
|
|
|
Total realized gains included in earnings
|
|
57
|
|
|
Total unrealized losses included in other comprehensive income
|
|
(30
|
)
|
|
Settlements
|
|
(1,000
|
)
|
|
Balance, December 31, 2016
|
|
1,264
|
|
|
Total unrealized gains included in other comprehensive income
|
|
105
|
|
|
Balance, December 31, 2017
|
$
|
1,369
|
|
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.
42
The carrying value and amortized cost of the Company’s investments in fixed maturities at December 31, 2017 and 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.
|
|
2017
|
2016
|
||||||||||
|
|
Carrying
Value |
Amortized
Cost |
Carrying
Value |
Amortized
Cost |
||||||||
|
Due in one year or less
|
$
|
1,653
|
|
$
|
1,655
|
|
$
|
2,544
|
|
$
|
2,507
|
|
|
Due after one year through five years
|
|
13,738
|
|
|
14,056
|
|
|
20,278
|
|
|
20,038
|
|
|
Due after five years through ten years
|
|
112,847
|
|
|
112,116
|
|
|
90,667
|
|
|
90,926
|
|
|
Due after ten years
|
|
67,328
|
|
|
64,928
|
|
|
80,099
|
|
|
79,627
|
|
|
Varying maturities
|
|
19,542
|
|
|
19,789
|
|
|
17,082
|
|
|
17,407
|
|
|
Totals
|
$
|
215,108
|
|
$
|
212,544
|
|
$
|
210,670
|
|
$
|
210,505
|
|
Investment income was earned from the following sources:
|
|
2017
|
2016
|
||||
|
Fixed maturities
|
$
|
8,297
|
|
$
|
9,122
|
|
|
Equity securities
|
|
467
|
|
|
491
|
|
|
Other
|
|
(268
|
)
|
|
271
|
|
|
Total investment income
|
|
8,496
|
|
|
9,884
|
|
|
Less investment expenses, included in other expenses
|
|
(789
|
)
|
|
(577
|
)
|
|
Net investment income
|
$
|
7,707
|
|
$
|
9,307
|
|
A summary of realized investment gains (losses) follows:
|
|
2017
|
|||||||||||
|
|
Fixed
Maturities |
Equity
Securities |
Other
Invested Assets |
Total
|
||||||||
|
Gains
|
$
|
2,226
|
|
$
|
1,044
|
|
$
|
6,040
|
|
$
|
9,310
|
|
|
Losses
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
Realized investment gains, net
|
$
|
2,084
|
|
$
|
1,044
|
|
$
|
6,040
|
|
$
|
9,168
|
|
|
|
2016
|
|||||||||||
|
|
Fixed
Maturities |
Equity
Securities |
Other
Invested Assets |
Total
|
||||||||
|
Gains
|
$
|
1,119
|
|
$
|
—
|
|
$
|
1,565
|
|
$
|
2,684
|
|
|
Losses
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
Realized investment gains, net
|
$
|
1,030
|
|
$
|
—
|
|
$
|
1,565
|
|
$
|
2,595
|
|
Proceeds from the sales of investments were as follows:
|
|
2017
|
2016
|
||||
|
Fixed maturities
|
$
|
72,760
|
|
$
|
59,072
|
|
|
Equity securities
|
|
1,579
|
|
|
—
|
|
|
Other investments
|
|
9,653
|
|
|
3,289
|
|
|
Total proceeds
|
$
|
83,992
|
|
$
|
62,361
|
|
The Company’s bond portfolio included 92% investment grade securities, as defined by the NAIC, at December 31, 2017.
43
| Note 3. | Insurance Reserves and Policyholder Funds |
The following table presents the Company’s reserves for life, accident and health, and property and casualty losses, claims and loss adjustment expenses at December 31, 2017 and 2016.
|
|
|
|
Amount of Insurance
In Force, Net |
|||||||||
|
|
2017
|
2016
|
2017
|
2016
|
||||||||
|
Future policy benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance policies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary
|
$
|
54,752
|
|
$
|
54,554
|
|
$
|
238,534
|
|
$
|
245,017
|
|
|
Mass market
|
|
1,693
|
|
|
2,003
|
|
|
2,070
|
|
|
2,463
|
|
|
Individual annuities
|
|
50
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
|
|
56,495
|
|
|
56,641
|
|
$
|
240,604
|
|
$
|
247,480
|
|
|
Accident and health insurance policies
|
|
25,940
|
|
|
18,202
|
|
|
|
|
|
|
|
|
|
|
82,435
|
|
|
74,843
|
|
|
|
|
|
|
|
|
Unearned premiums
|
|
23,449
|
|
|
23,208
|
|
|
|
|
|
|
|
|
Losses, claims and loss adjustment expenses
|
|
65,689
|
|
|
62,562
|
|
|
|
|
|
|
|
|
Other policy liabilities
|
|
2,010
|
|
|
2,066
|
|
|
|
|
|
|
|
|
Total insurance reserves and policyholder funds
|
$
|
173,583
|
|
$
|
162,679
|
|
|
|
|
|
|
|
Annualized premiums for accident and health insurance policies were $105,422 and $95,956 at December 31, 2017 and 2016, respectively.
Future Policy Benefits
Liabilities for life insurance future policy benefits are based upon assumed future investment yields, mortality rates, and withdrawal rates after giving effect to possible risks of unexpected claim experience. The assumed mortality and withdrawal rates are based upon the Company’s experience. The interest rates assumed for life, accident and health future policy benefits are generally: (i) 2.5% to 5.5% for issues prior to 1977, (ii) 7% graded to 5.5% for 1977 through 1979 issues, (iii) 9% for 1980 through 1987 issues, (iv) 5% to 7% for 1988 through 2009 issues, (v) 4% for 2010 through 2012 issues, and (vi) 3.5% to 4.0% for 2013 through 2017 issues.
Loss and Claim Reserves
Loss and claim reserves represent estimates of projected ultimate losses and are based upon: (a) management’s estimate of ultimate liability and claims adjusters’ evaluations for unpaid claims reported prior to the close of the accounting period, (b) estimates of incurred but not reported (“IBNR”) claims based on past experience, and (c) estimates of loss adjustment expenses. The estimated liability is periodically reviewed by management and updated, with changes to the estimated liability recorded in the statement of operations in the year in which such changes are known.
44
Activity in the liability for unpaid loss and claim reserves is summarized as follows:
|
|
2017
|
2016
|
||||
|
Balance at January 1
|
$
|
62,562
|
|
$
|
63,870
|
|
|
Less: Reinsurance recoverable on unpaid losses
|
|
(10,796
|
)
|
|
(11,741
|
)
|
|
Net balance at January 1
|
|
51,766
|
|
|
52,129
|
|
|
|
|
|
|
|
|
|
|
Incurred related to:
|
|
|
|
|
|
|
|
Current year
|
|
114,099
|
|
|
103,252
|
|
|
Prior years
|
|
(1,765
|
)
|
|
(3,377
|
)
|
|
Total incurred
|
|
112,334
|
|
|
99,875
|
|
|
|
|
|
|
|
|
|
|
Paid related to:
|
|
|
|
|
|
|
|
Current year
|
|
82,092
|
|
|
71,980
|
|
|
Prior years
|
|
28,287
|
|
|
28,258
|
|
|
Total paid
|
|
110,379
|
|
|
100,238
|
|
|
Net balance at December 31
|
|
53,721
|
|
|
51,766
|
|
|
Plus: Reinsurance recoverable on unpaid losses
|
|
11,968
|
|
|
10,796
|
|
|
Balance at December 31
|
$
|
65,689
|
|
$
|
62,562
|
|
Prior years’ development was primarily the result of better than expected development on prior years loss and claim reserves for certain lines of business in American Southern.
Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
|
|
2017
|
2016
|
||||
|
Total incurred losses
|
$
|
112,334
|
|
$
|
99,875
|
|
|
Cash surrender value and matured endowments
|
|
1,442
|
|
|
1,278
|
|
|
Benefit reserve changes
|
|
3,739
|
|
|
2,044
|
|
|
Total insurance benefits and losses incurred
|
$
|
117,515
|
|
$
|
103,197
|
|
45
Liability for Unpaid Losses, Claims and Loss Adjustment Expenses
The following is information, by significant product lines, about incurred and paid claims development as of December 31, 2017, net of reinsurance, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included within the net incurred claims amounts.
The information about incurred and paid claims development for the years ended December 31, 2008 to 2017 is presented as supplementary information.
Medicare Supplement
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
As of December 31, 2017
|
||||||||||||||||||||||||||||||||||
|
|
Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance |
IBNR
Reserves |
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||||||||
|
2008
|
$
|
29,344
|
|
$
|
28,698
|
|
$
|
28,721
|
|
$
|
28,712
|
|
$
|
28,688
|
|
$
|
28,687
|
|
$
|
28,683
|
|
$
|
28,683
|
|
$
|
28,682
|
|
$
|
28,682
|
|
$
|
—
|
|
|
533,112
|
|
|
2009
|
|
|
|
|
31,124
|
|
|
30,455
|
|
|
30,481
|
|
|
30,447
|
|
|
30,438
|
|
|
30,432
|
|
|
30,431
|
|
|
30,430
|
|
|
30,430
|
|
|
—
|
|
|
560,430
|
|
|
2010
|
|
|
|
|
|
|
|
34,849
|
|
|
34,328
|
|
|
34,323
|
|
|
34,303
|
|
|
34,282
|
|
|
34,272
|
|
|
34,268
|
|
|
34,265
|
|
|
—
|
|
|
625,695
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
38,188
|
|
|
38,296
|
|
|
38,360
|
|
|
38,327
|
|
|
38,316
|
|
|
38,302
|
|
|
38,299
|
|
|
—
|
|
|
664,049
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,021
|
|
|
50,996
|
|
|
51,021
|
|
|
50,998
|
|
|
50,989
|
|
|
50,987
|
|
|
—
|
|
|
867,047
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,974
|
|
|
56,970
|
|
|
57,034
|
|
|
57,023
|
|
|
57,021
|
|
|
—
|
|
|
957,350
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,179
|
|
|
56,938
|
|
|
56,981
|
|
|
56,981
|
|
|
—
|
|
|
939,444
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,482
|
|
|
54,939
|
|
|
54,993
|
|
|
—
|
|
|
898,270
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,849
|
|
|
59,851
|
|
|
100
|
|
|
1,034,900
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,960
|
|
|
9,822
|
|
|
1,303,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
479,469
|
|
|
|
|
|
|
|
|
|
Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||
|
2008
|
$
|
24,055
|
|
$
|
28,698
|
|
$
|
28,721
|
|
$
|
28,712
|
|
$
|
28,688
|
|
$
|
28,687
|
|
$
|
28,683
|
|
$
|
28,683
|
|
$
|
28,682
|
|
$
|
28,682
|
|
|
2009
|
|
|
|
|
29,866
|
|
|
30,455
|
|
|
30,481
|
|
|
30,447
|
|
|
30,438
|
|
|
30,432
|
|
|
30,431
|
|
|
30,430
|
|
|
30,430
|
|
|
2010
|
|
|
|
|
|
|
|
29,127
|
|
|
34,328
|
|
|
34,323
|
|
|
34,303
|
|
|
34,282
|
|
|
34,272
|
|
|
34,268
|
|
|
34,265
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
31,720
|
|
|
38,296
|
|
|
38,360
|
|
|
38,327
|
|
|
38,316
|
|
|
38,302
|
|
|
38,299
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,267
|
|
|
50,996
|
|
|
51,021
|
|
|
50,998
|
|
|
50,989
|
|
|
50,987
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,770
|
|
|
56,970
|
|
|
57,034
|
|
|
57,023
|
|
|
57,021
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,024
|
|
|
56,938
|
|
|
56,981
|
|
|
56,981
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,430
|
|
|
54,876
|
|
|
54,993
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,165
|
|
|
59,747
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
469,101
|
|
|
|
|
|
|
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance
|
$
|
10,368
|
|
|||||||||||||||||||||||
The cumulative number of reported claims for the Medicare Supplement line of business is the number of distinct claims incurred and submitted to Medicare for payment in the given year. Multiple payments on the same claim are not counted in the frequency information. Estimated ultimate claims incurred, using claims data reported during each month of any given year, are calculated using the chain ladder method modified to use seasonality and trend-adjusted expected claims for the final two months. Additional adjustments to the estimated ultimate claims incurred are then applied to account for seasonal changes in billing and payment frequencies. The IBNR reserve is calculated as estimated ultimate claims less paid claims and claims in course of settlement. Thirty-six months of loss data are used to develop the estimated ultimate incurred claims. Similar approaches are used for other less significant health products, subject to modifications to account for unique aspects of the product.
46
Automobile Liability
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
As of December 31, 2017
|
||||||||||||||||||||||||||||||||||
|
|
Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance |
IBNR
Reserves |
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||||||||
|
2008
|
$
|
9,723
|
|
$
|
7,011
|
|
$
|
6,627
|
|
$
|
6,374
|
|
$
|
6,124
|
|
$
|
6,112
|
|
$
|
6,106
|
|
$
|
6,104
|
|
$
|
6,105
|
|
$
|
6,105
|
|
$
|
—
|
|
|
1,534
|
|
|
2009
|
|
|
|
|
10,817
|
|
|
8,891
|
|
|
8,659
|
|
|
8,558
|
|
|
8,245
|
|
|
8,123
|
|
|
8,155
|
|
|
8,154
|
|
|
8,153
|
|
|
—
|
|
|
1,755
|
|
|
2010
|
|
|
|
|
|
|
|
10,752
|
|
|
10,818
|
|
|
10,547
|
|
|
9,937
|
|
|
10,068
|
|
|
10,185
|
|
|
10,202
|
|
|
10,201
|
|
|
—
|
|
|
1,947
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
12,263
|
|
|
13,802
|
|
|
13,235
|
|
|
13,289
|
|
|
13,281
|
|
|
13,495
|
|
|
13,385
|
|
|
30
|
|
|
2,132
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,980
|
|
|
15,007
|
|
|
14,108
|
|
|
13,707
|
|
|
13,313
|
|
|
13,343
|
|
|
22
|
|
|
3,340
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,664
|
|
|
20,702
|
|
|
21,096
|
|
|
21,823
|
|
|
21,352
|
|
|
162
|
|
|
3,260
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,812
|
|
|
21,881
|
|
|
22,041
|
|
|
22,353
|
|
|
816
|
|
|
3,536
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,521
|
|
|
19,857
|
|
|
20,017
|
|
|
1,904
|
|
|
3,492
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,549
|
|
|
21,275
|
|
|
3,049
|
|
|
3,755
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,179
|
|
|
7,311
|
|
|
3,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
158,363
|
|
|
|
|
|
|
|
|
|
Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||
|
2008
|
$
|
2,426
|
|
$
|
4,202
|
|
$
|
5,077
|
|
$
|
5,695
|
|
$
|
5,839
|
|
$
|
6,065
|
|
$
|
6,104
|
|
$
|
6,104
|
|
$
|
6,105
|
|
$
|
6,105
|
|
|
2009
|
|
|
|
|
3,250
|
|
|
5,208
|
|
|
6,353
|
|
|
7,502
|
|
|
7,995
|
|
|
8,123
|
|
|
8,155
|
|
|
8,154
|
|
|
8,153
|
|
|
2010
|
|
|
|
|
|
|
|
3,211
|
|
|
6,274
|
|
|
8,291
|
|
|
9,382
|
|
|
9,725
|
|
|
10,056
|
|
|
10,090
|
|
|
10,206
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
4,205
|
|
|
7,934
|
|
|
9,858
|
|
|
12,071
|
|
|
13,039
|
|
|
13,106
|
|
|
13,199
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,627
|
|
|
8,791
|
|
|
11,507
|
|
|
12,932
|
|
|
13,197
|
|
|
13,211
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,144
|
|
|
12,193
|
|
|
16,782
|
|
|
19,407
|
|
|
20,382
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,822
|
|
|
13,807
|
|
|
17,554
|
|
|
20,177
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,226
|
|
|
11,878
|
|
|
14,938
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,796
|
|
|
13,141
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
126,913
|
|
|
|
|
|
|
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance
|
$
|
31,450
|
|
|||||||||||||||||||||||
47
Automobile Physical Damage
|
|
For the Years Ended December 31,
|
|
|
||||||||||||||||||
|
|
(Unaudited)
|
As of December 31, 2017
|
|||||||||||||||||||
|
|
Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance |
IBNR
Reserves |
Cumulative
Number of Reported Claims |
||||||||||||||||||
|
Accident Year
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||
|
2013
|
$
|
6,039
|
|
$
|
5,515
|
|
$
|
5,536
|
|
$
|
5,599
|
|
$
|
5,599
|
|
$
|
—
|
|
|
1,598
|
|
|
2014
|
|
|
|
|
8,079
|
|
|
7,657
|
|
|
7,583
|
|
|
7,562
|
|
|
—
|
|
|
1,635
|
|
|
2015
|
|
|
|
|
|
|
|
8,287
|
|
|
7,955
|
|
|
7,887
|
|
|
—
|
|
|
1,588
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
6,877
|
|
|
6,386
|
|
|
3
|
|
|
1,261
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,257
|
|
|
105
|
|
|
1,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
33,691
|
|
|
|
|
|
|
|
|
|
Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
||||||||||||||
|
Accident Year
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||
|
2013
|
$
|
4,778
|
|
$
|
5,486
|
|
$
|
5,466
|
|
$
|
5,599
|
|
$
|
5,599
|
|
|
2014
|
|
|
|
|
6,437
|
|
|
7,619
|
|
|
7,570
|
|
|
7,562
|
|
|
2015
|
|
|
|
|
|
|
|
6,745
|
|
|
7,937
|
|
|
7,885
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
5,804
|
|
|
6,353
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,614
|
|
|
|
All outstanding liabilities before 2013, net of reinsurance
|
|
33
|
|
|||||||||||
|
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance
|
$
|
1,110
|
|
||||||||||||
48
General Liability
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
As of December 31, 2017
|
||||||||||||||||||||||||||||||||||
|
|
Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance |
IBNR
Reserves |
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||||||||
|
2008
|
$
|
5,386
|
|
$
|
4,359
|
|
$
|
2,858
|
|
$
|
2,685
|
|
$
|
2,479
|
|
$
|
2,489
|
|
$
|
2,507
|
|
$
|
2,548
|
|
$
|
2,647
|
|
$
|
2,853
|
|
$
|
23
|
|
|
393
|
|
|
2009
|
|
|
|
|
3,392
|
|
|
2,215
|
|
|
1,944
|
|
|
1,730
|
|
|
1,702
|
|
|
1,727
|
|
|
1,828
|
|
|
1,832
|
|
|
1,888
|
|
|
8
|
|
|
290
|
|
|
2010
|
|
|
|
|
|
|
|
4,114
|
|
|
2,699
|
|
|
2,269
|
|
|
2,337
|
|
|
2,258
|
|
|
2,400
|
|
|
2,423
|
|
|
2,473
|
|
|
4
|
|
|
289
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
3,022
|
|
|
1,723
|
|
|
1,452
|
|
|
1,338
|
|
|
1,174
|
|
|
1,242
|
|
|
1,327
|
|
|
11
|
|
|
201
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,055
|
|
|
1,305
|
|
|
1,269
|
|
|
1,270
|
|
|
1,214
|
|
|
1,333
|
|
|
26
|
|
|
157
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,461
|
|
|
728
|
|
|
926
|
|
|
817
|
|
|
865
|
|
|
18
|
|
|
187
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,744
|
|
|
501
|
|
|
557
|
|
|
476
|
|
|
40
|
|
|
192
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,421
|
|
|
1,037
|
|
|
1,227
|
|
|
348
|
|
|
143
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,119
|
|
|
1,148
|
|
|
440
|
|
|
81
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,490
|
|
|
1,241
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,080
|
|
|
|
|
|
|
|
|
|
Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||
|
2008
|
$
|
534
|
|
$
|
1,091
|
|
$
|
1,637
|
|
$
|
1,861
|
|
$
|
2,023
|
|
$
|
2,123
|
|
$
|
2,418
|
|
$
|
2,506
|
|
$
|
2,564
|
|
$
|
2,755
|
|
|
2009
|
|
|
|
|
476
|
|
|
941
|
|
|
1,082
|
|
|
1,410
|
|
|
1,629
|
|
|
1,662
|
|
|
1,796
|
|
|
1,816
|
|
|
1,855
|
|
|
2010
|
|
|
|
|
|
|
|
284
|
|
|
678
|
|
|
1,374
|
|
|
1,542
|
|
|
2,037
|
|
|
2,368
|
|
|
2,382
|
|
|
2,457
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
295
|
|
|
412
|
|
|
582
|
|
|
835
|
|
|
1,161
|
|
|
1,169
|
|
|
1,278
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371
|
|
|
707
|
|
|
847
|
|
|
1,034
|
|
|
1,113
|
|
|
1,219
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
339
|
|
|
579
|
|
|
811
|
|
|
791
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171
|
|
|
299
|
|
|
331
|
|
|
369
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
|
|
|
259
|
|
|
464
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
|
|
|
203
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,466
|
|
|
All outstanding liabilities before 2008, net of reinsurance
|
|
288
|
|
|||||||||||||||||||||||||||
|
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance
|
$
|
3,902
|
|
|||||||||||||||||||||||||||
49
Surety
|
|
For the Years Ended December 31,
|
|
|
|||||||||||||||||||||||||||||||||
|
|
(Unaudited)
|
As of December 31, 2017
|
||||||||||||||||||||||||||||||||||
|
|
Incurred Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance |
IBNR
Reserves |
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||||||||
|
2008
|
$
|
3,883
|
|
$
|
2,098
|
|
$
|
2,420
|
|
$
|
2,312
|
|
$
|
2,312
|
|
$
|
2,360
|
|
$
|
2,360
|
|
$
|
2,324
|
|
$
|
2,324
|
|
$
|
2,324
|
|
$
|
—
|
|
|
62
|
|
|
2009
|
|
|
|
|
4,920
|
|
|
5,025
|
|
|
4,239
|
|
|
3,951
|
|
|
3,616
|
|
|
4,636
|
|
|
4,916
|
|
|
4,664
|
|
|
4,667
|
|
|
—
|
|
|
83
|
|
|
2010
|
|
|
|
|
|
|
|
3,995
|
|
|
4,624
|
|
|
3,618
|
|
|
3,396
|
|
|
3,607
|
|
|
3,549
|
|
|
3,563
|
|
|
3,534
|
|
|
—
|
|
|
95
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
4,422
|
|
|
4,786
|
|
|
5,080
|
|
|
5,092
|
|
|
4,966
|
|
|
5,031
|
|
|
5,112
|
|
|
—
|
|
|
126
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,979
|
|
|
4,767
|
|
|
5,396
|
|
|
5,345
|
|
|
4,869
|
|
|
4,880
|
|
|
—
|
|
|
87
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,060
|
|
|
2,007
|
|
|
2,743
|
|
|
2,947
|
|
|
2,866
|
|
|
13
|
|
|
57
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,214
|
|
|
3,130
|
|
|
2,990
|
|
|
2,760
|
|
|
4
|
|
|
51
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,902
|
|
|
1,630
|
|
|
1,400
|
|
|
78
|
|
|
49
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,314
|
|
|
1,812
|
|
|
39
|
|
|
45
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,677
|
|
|
2,043
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
34,032
|
|
|
|
|
|
|
|
|
|
Cumulative Paid Losses, Claims and Allocated Loss Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
Accident Year
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||||||||||||
|
2008
|
$
|
503
|
|
$
|
1,369
|
|
$
|
2,261
|
|
$
|
2,232
|
|
$
|
2,311
|
|
$
|
2,359
|
|
$
|
2,360
|
|
$
|
2,324
|
|
$
|
2,324
|
|
$
|
2,324
|
|
|
2009
|
|
|
|
|
103
|
|
|
1,595
|
|
|
2,640
|
|
|
3,205
|
|
|
3,410
|
|
|
3,760
|
|
|
3,757
|
|
|
4,663
|
|
|
4,666
|
|
|
2010
|
|
|
|
|
|
|
|
928
|
|
|
2,193
|
|
|
2,780
|
|
|
2,943
|
|
|
3,252
|
|
|
3,545
|
|
|
3,560
|
|
|
3,534
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
1,031
|
|
|
3,207
|
|
|
4,622
|
|
|
4,748
|
|
|
4,939
|
|
|
5,022
|
|
|
5,109
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,257
|
|
|
4,581
|
|
|
4,856
|
|
|
5,331
|
|
|
4,869
|
|
|
4,880
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
1,010
|
|
|
1,369
|
|
|
2,763
|
|
|
2,789
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,331
|
|
|
2,327
|
|
|
2,727
|
|
|
2,739
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641
|
|
|
856
|
|
|
1,127
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,054
|
|
|
1,732
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,871
|
|
|
Liabilities for losses, claims and loss adjustment expenses, net of reinsurance
|
$
|
3,161
|
|
|||||||||||||||||||||||||||
For the property and casualty lines of business, the number of claims presented above equals the number of occurrences by type of claim reported to the Company. The number of claims reported during a given year corresponds to the number of claims records opened during the year. Frequency information is maintained on a cumulative basis by accident year by line of business. For automobile claims, a claim count is separately maintained for bodily injury, property damage and physical damage claims. The Company has consistently monitored claim frequency on this basis, and believes this provides more meaningful information than using claimant count which can change over the course of settling a claim.
In general, when a claim is reported, claims representatives establish a “case reserve” for the estimated amount of the ultimate payment based on the known information of the claim at that time. Claims managers review and monitor all property and casualty claims in excess of $25,000. As new information becomes available or payments are made on a claim, the case reserve is adjusted to reflect the revised estimate of the ultimate amount to be paid out. Estimates and assumptions pertaining to individual claims are based on complex and subjective judgments and subject to change at any time as new information becomes available.
In addition to case reserves, IBNR reserves are established to provide for claims which have not been reported to the Company as of the reporting date as well as potential adverse development on known case reserves. IBNR reserve estimates are derived through a number of analytical techniques. Actuarial data is analyzed by line of business, coverage and accident year. Qualitative factors are also considered in determining IBNR reserves and include such factors as judicial decisions, general economic trends such as inflation, changes in policy forms, and underwriting changes. Reserves are reviewed quarterly and any indicated adjustments are made.
50
Because of the inherent uncertainties in establishing both case and IBNR reserves, ultimate loss experience may prove better or worse than indicated by the combined claim reserves. Adjustments to claim reserves are reflected in the period recognized and could increase or decrease earnings for the period.
The following is supplementary information about average historical claims duration as of December 31, 2017.
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Unaudited) |
||||||||||||||||||||||||||||||
|
Reserve Line
|
1st Year
|
2nd Year
|
3rd Year
|
4th Year
|
5th Year
|
6th Year
|
7th Year
|
8th Year
|
9th Year
|
10th Year
|
||||||||||||||||||||
|
Medicare Supplement
|
|
83.7
|
%
|
|
16.4
|
%
|
|
0.1
|
%
|
|
-0.1
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
Automobile Liability
|
|
32.8
|
%
|
|
29.4
|
%
|
|
17.1
|
%
|
|
12.3
|
%
|
|
4.3
|
%
|
|
1.8
|
%
|
|
0.5
|
%
|
|
0.4
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
Automobile Physical Damage
|
|
86.0
|
%
|
|
13.0
|
%
|
|
-0.6
|
%
|
|
1.1
|
%
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Liability
|
|
17.7
|
%
|
|
18.8
|
%
|
|
16.2
|
%
|
|
14.3
|
%
|
|
10.9
|
%
|
|
5.4
|
%
|
|
6.6
|
%
|
|
2.4
|
%
|
|
2.0
|
%
|
|
6.7
|
%
|
|
Surety
|
|
32.2
|
%
|
|
34.2
|
%
|
|
19.6
|
%
|
|
11.0
|
%
|
|
2.0
|
%
|
|
3.9
|
%
|
|
0.5
|
%
|
|
5.7
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
The reconciliation of the net incurred and paid claims development tables to the liability for losses, claims and loss adjustment expenses is as follows:
|
|
December 31,
2017 |
||
|
Net outstanding liabilities:
|
|
|
|
|
Medicare Supplement
|
$
|
10,368
|
|
|
Automobile Liability
|
|
31,450
|
|
|
Automobile Physical Damage
|
|
1,110
|
|
|
General Liability
|
|
3,902
|
|
|
Surety
|
|
3,161
|
|
|
Other short-duration insurance lines
|
|
2,004
|
|
|
Liabilities for unpaid losses, claims and loss adjustment expenses, net of reinsurance
|
|
51,995
|
|
|
|
|
|
|
|
Reinsurance recoverable on unpaid losses:
|
|
|
|
|
Medicare Supplement
|
|
4,748
|
|
|
Automobile Liability
|
|
5,245
|
|
|
Automobile Physical Damage
|
|
116
|
|
|
General Liability
|
|
1,859
|
|
|
Total reinsurance recoverable on unpaid losses
|
|
11,968
|
|
|
|
|
|
|
|
Unallocated claims adjustment expenses
|
|
1,726
|
|
|
|
|
|
|
|
Total gross liability for unpaid losses, claims and loss adjustment expenses
|
$
|
65,689
|
|
| Note 4. | Reinsurance |
In accordance with general practice in the insurance industry, portions of the life, property and casualty insurance written by the Company are reinsured; however, the Company remains liable with respect to reinsurance ceded should any reinsurer be unable or unwilling to meet its obligations. Approximately 99% of the Company’s reinsurance recoverables were due from two reinsurers as of December 31, 2017. Reinsurance recoverables of $60 were due from Swiss Reinsurance Corporation, rated “AA-” by Standard & Poor’s and “A+” (Superior) by A.M. Best and $17,449 were due from General Re Life Corporation, rated “AA+” by Standard & Poor’s and “A++” (Superior) by A.M. Best. Allowances for uncollectible amounts are established against reinsurance recoverables, if appropriate.
51
The effects of reinsurance on premiums written, premiums earned and insurance benefits and losses incurred were as follows:
|
|
2017
|
2016
|
||||
|
Direct premiums written
|
$
|
181,568
|
|
$
|
142,200
|
|
|
Assumed premiums written
|
|
19,373
|
|
|
19,123
|
|
|
Ceded premiums written
|
|
(38,019
|
)
|
|
(10,225
|
)
|
|
Net premiums written
|
$
|
162,922
|
|
$
|
151,098
|
|
|
|
|
|
|
|
|
|
|
Direct premiums earned
|
$
|
181,458
|
|
$
|
144,339
|
|
|
Assumed premiums earned
|
|
19,241
|
|
|
19,124
|
|
|
Ceded premiums earned
|
|
(37,372
|
)
|
|
(9,998
|
)
|
|
Net premiums earned
|
$
|
163,327
|
|
$
|
153,465
|
|
|
|
|
|
|
|
|
|
|
Provision for benefits and losses incurred
|
$
|
147,444
|
|
$
|
109,616
|
|
|
Reinsurance loss recoveries
|
|
(29,929
|
)
|
|
(6,419
|
)
|
|
Insurance benefits and losses incurred
|
$
|
117,515
|
|
$
|
103,197
|
|
Components of reinsurance recoverables at December 31, 2017 and 2016 were as follows:
|
|
2017
|
2016
|
||||
|
Recoverable on unpaid losses
|
$
|
11,968
|
|
$
|
10,796
|
|
|
Recoverable on unpaid benefits
|
|
4,403
|
|
|
655
|
|
|
Ceded unearned premiums
|
|
874
|
|
|
227
|
|
|
Ceded advanced premiums
|
|
368
|
|
|
25
|
|
|
Total reinsurance recoverables
|
$
|
17,613
|
|
$
|
11,703
|
|
| Note 5. | Income Taxes |
Total income taxes were allocated as follows:
|
|
2017
|
2016
|
||||
|
Total tax expense on income
|
$
|
828
|
|
$
|
888
|
|
|
|
|
|
|
|
|
|
|
Tax expense on components of shareholders’ equity:
|
|
|
|
|
|
|
|
Net unrealized gains on investment securities
|
|
2,111
|
|
|
671
|
|
|
Total tax expense
|
$
|
2,939
|
|
$
|
1,559
|
|
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax expense is as follows:
|
|
2017
|
2016
|
||||
|
Federal income tax provision at statutory rate of 35%
|
$
|
1,875
|
|
$
|
1,233
|
|
|
Dividends-received deduction
|
|
(92
|
)
|
|
(95
|
)
|
|
Small life insurance company deduction
|
|
(613
|
)
|
|
(376
|
)
|
|
Other
|
|
72
|
|
|
55
|
|
|
Remeasurement of deferred taxes due to tax reform enactment
|
|
(395
|
)
|
|
—
|
|
|
Adjustment for prior years’ estimates to actual
|
|
(19
|
)
|
|
71
|
|
|
Income tax expense
|
$
|
828
|
|
$
|
888
|
|
|
Effective tax rate
|
|
15.5
|
%
|
|
25.2
|
%
|
The primary differences between the effective tax rate and the federal statutory income tax rate for 2017 and 2016 resulted from the dividends-received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the remeasurement of deferred taxes. 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
52
the amount of the Company’s taxable income. 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. The remeasurement of deferred taxes resulted from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment.
Deferred tax liabilities and assets at December 31, 2017 and 2016 were comprised of the following:
|
|
2017
|
2016
|
||||
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Deferred acquisition costs
|
$
|
(1,200
|
)
|
$
|
(2,345
|
)
|
|
Deferred and uncollected premiums
|
|
(377
|
)
|
|
(654
|
)
|
|
Net unrealized investment gains
|
|
(3,150
|
)
|
|
(3,140
|
)
|
|
Other
|
|
(331
|
)
|
|
(666
|
)
|
|
Total deferred tax liabilities
|
|
(5,058
|
)
|
|
(6,805
|
)
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Insurance reserves
|
|
3,216
|
|
|
4,589
|
|
|
Impaired assets
|
|
869
|
|
|
1,454
|
|
|
Alternative minimum tax credit
|
|
—
|
|
|
282
|
|
|
Bad debts and other
|
|
380
|
|
|
640
|
|
|
Total deferred tax assets
|
|
4,465
|
|
|
6,965
|
|
|
Net deferred tax asset (liability)
|
$
|
(593
|
)
|
$
|
160
|
|
The components of income tax expense were:
|
|
2017
|
2016
|
||||
|
Current - Federal
|
$
|
2,186
|
|
$
|
890
|
|
|
Deferred - Federal
|
|
(1,358
|
)
|
|
(2
|
)
|
|
Total
|
$
|
828
|
|
$
|
888
|
|
The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries. Tax years prior to 2012 have been audited by the Internal Revenue Service and are closed.
53
| Note 6. | 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 December 31, 2017 and 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 December 31, 2017
|
$18,042
|
$23,196
|
||||
|
Less: Treasury debt(3)
|
|
(7,500)
|
||||
|
Net balance December 31, 2017
|
$18,042
|
$15,696
|
||||
|
Net balance December 31, 2016
|
$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) | In 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. |
54
| Note 7. | Commitments and Contingencies |
Litigation
From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its business. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.
Operating Lease Commitments
The Company’s rental expense, including common area charges, for operating leases was $1,306 and $1,277 in 2017 and 2016, respectively. The Company’s future minimum base lease obligations under non-cancelable operating leases are as follows:
|
Year Ending December 31,
|
|
||
|
2018
|
$
|
928
|
|
|
2019
|
|
495
|
|
|
2020
|
|
528
|
|
|
Thereafter
|
|
3,785
|
|
|
Total
|
$
|
5,736
|
|
| Note 8. | Benefit Plans |
Equity Incentive Plan
On May 1, 2012, the Company’s shareholders approved the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan authorizes the grant of up to 2,000,000 stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units and other awards for the purpose of providing the Company’s non-employee directors, consultants, officers and other employees incentives and rewards for superior performance. In 2017, a total of 182,000 restricted shares, with an estimated fair value of $646, were issued under the 2012 Plan. In 2016, a total of 180,000 restricted shares, with an estimated fair value of $741, were issued under the 2012 Plan. The estimated fair value of the restricted shares issued under the 2012 Plan for 2017 and 2016 was based on the common stock price at date of grant. Vesting of restricted shares generally occurs after a one to three year period. There were no stock options granted or outstanding under the 2012 Plan in 2017 or 2016. Shares available for future grant at December 31, 2017 and 2016 were 1,241,200 and 1,423,200, respectively.
401(k) Plan
The Company initiated an employees’ savings plan (the “Plan”) qualified under Section 401(k) of the Internal Revenue Code in May 1995. The Plan covers substantially all of the Company’s employees. Effective January 1, 2009, the Company modified the Plan such that the Plan would operate on a safe harbor basis. Under the Plan, employees may defer up to 50% of their compensation, not to exceed the annual deferral limit. The Company’s total matching contribution for 2017 and 2016 was $237 and $223, respectively, and consisted of a contribution equal to 35% of up to the first 6% of each participant’s contributions. In addition to the matching contribution, the Company also provided a 3% safe harbor non-elective contribution in 2017 and 2016 of $450 and $433, respectively. All contributions were made in cash. Participants are 100% vested in their own contributions and the vested percentage attributable to certain employer contributions is based on a five year graded schedule.
Agent Stock Purchase Plan
The Company initiated a nonqualified stock purchase plan (the “Agent Stock Purchase Plan”) in May 2012. The purpose of the Agent Stock Purchase Plan is to promote and advance the interests of the Company and its shareholders by providing independent agents who qualify as participants with an opportunity to purchase the common stock of the Company. Under the Agent Stock Purchase Plan, payment for shares of common stock of the Company is made by either deduction from an agent’s commission payment or a direct cash payment. Stock purchases are made at the end of each calendar quarter at the then current market value.
55
| Note 9. | Preferred Stock |
The Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding at December 31, 2017 and 2016, respectively. 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. The Company had accrued, but unpaid, dividends, on the Series D Preferred Stock of $18 at December 31, 2017 and 2016. During each of 2017 and 2016, the Company paid Series D Preferred Stock dividends of $399.
| Note 10. | Earnings Per Common Share |
A reconciliation of the numerator and denominator of the earnings per common share calculations is as follows:
|
|
For the Year Ended December 31, 2017
|
||||||||
|
|
Income
|
Shares
(In thousands) |
Per Share
Amount |
||||||
|
Basic and Diluted Earnings Per Common Share
|
|
|
|
|
|
|
|
|
|
|
Net income before preferred stock dividends
|
$
|
4,528
|
|
|
20,431
|
|
|
|
|
|
Less preferred stock dividends
|
|
(399
|
)
|
|
—
|
|
|
|
|
|
Net income applicable to common shareholders
|
$
|
4,129
|
|
|
20,431
|
|
$
|
.20
|
|
|
|
For the Year Ended December 31, 2016
|
||||||||
|
|
Income
|
Shares
(In thousands) |
Per Share
Amount |
||||||
|
Basic and Diluted Earnings Per Common Share
|
|
|
|
|
|
|
|
|
|
|
Net income before preferred stock dividends
|
$
|
2,636
|
|
|
20,445
|
|
|
|
|
|
Less preferred stock dividends
|
|
(399
|
)
|
|
—
|
|
|
|
|
|
Net income applicable to common shareholders
|
$
|
2,237
|
|
|
20,445
|
|
$
|
.11
|
|
The assumed conversion of the Company’s Series D Preferred Stock was excluded from the earnings per common share calculation for 2017 and 2016 since its impact would have been antidilutive.
| Note 11. | Statutory Reporting |
The assets, liabilities and results of operations have been reported on the basis of GAAP, which varies in some respects from statutory accounting practices (“SAP”) prescribed or permitted by insurance regulatory authorities. The principal differences between SAP and GAAP are that under SAP: (i) certain assets that are non-admitted assets are eliminated from the balance sheet; (ii) acquisition costs for policies are expensed as incurred, while they are deferred and amortized over the estimated life of the policies under GAAP; (iii) the provision that is made for deferred income taxes is different than under GAAP; (iv) the timing of establishing certain reserves is different than under GAAP; and (v) certain valuation allowances attributable to certain investments are different.
56
The amount of reported statutory net income and surplus (shareholders’ equity) for the Parent’s insurance subsidiaries for the years ended December 31 was as follows:
|
|
2017
|
2016
|
||||
|
Life and Health, net income (loss)
|
$
|
(2,880
|
)
|
$
|
1,133
|
|
|
Property and Casualty, net income
|
|
6,647
|
|
|
6,470
|
|
|
Statutory net income
|
$
|
3,767
|
|
$
|
7,603
|
|
|
|
|
|
|
|
|
|
|
Life and Health, surplus
|
$
|
34,135
|
|
$
|
33,430
|
|
|
Property and Casualty, surplus
|
|
43,348
|
|
|
41,489
|
|
|
Statutory surplus
|
$
|
77,483
|
|
$
|
74,919
|
|
Under the insurance code of the state in which each insurance subsidiary is domiciled, dividend payments to the Parent by its insurance subsidiaries are subject to certain limitations without the prior approval of the applicable state’s Insurance Commissioner. The Parent received dividends of $4,850 and $5,508 in 2017 and 2016, respectively, from its subsidiaries. In 2018, dividend payments to the Parent by the insurance subsidiaries in excess of $4,761 would require prior approval.
| Note 12. | Related Party Transactions |
In the normal course of business the Company has engaged in transactions with entities affiliated with the controlling shareholder of the Company. These transactions include the leasing of office space as well as certain investing and financing activities. At December 31, 2017, two members of the Company’s board of directors, including our chairman, president and chief executive officer, were considered to be affiliates of the majority shareholder.
The Company leases approximately 49,586 square feet of office and covered garage space from one such controlled entity. During the years ended December 31, 2017 and 2016, the Company paid $866 and $882, respectively, under this lease.
Certain financing for the Company has also been provided by this entity in the form of an investment in the Series D Preferred Stock (See Note 9). During the years ended December 31, 2017 and 2016, the Company paid this entity $399 in dividends on the Series D Preferred Stock.
Certain members of the Company’s management and board of directors are shareholders and on the board of directors of Gray Television, Inc. (“Gray”). As of December 31, 2017 and 2016, the Company owned 880,272 shares of Gray Class A common stock and 106,000 shares of Gray common stock. The aggregate carrying value of these investments in Gray at December 31, 2017 and 2016 was $14,407 and $10,305, respectively.
During the years ended December 31, 2017 and 2016, the Company paid approximately $54 and $215, respectively, to a digital marketing services organization, which is an affiliate of Gray. Services purchased primarily included assistance with website marketing initiatives on behalf of the Company’s life and health operations.
During the years ended December 31, 2017 and 2016, Gray paid the Company approximately $597 and $478, respectively, in employer paid insurance premiums related to a group accident plan.
57
| Note 13. | Segment Information |
The Parent’s primary insurance subsidiaries operate with relative autonomy and each company is evaluated based on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income. Substantially all revenue other than that in the corporate and other segment is from external sources.
|
|
For the Year Ended December 31, 2017
|
||||||||||||||
|
|
American
Southern |
Bankers
Fidelity |
Corporate
& Other |
Adjustments
& Eliminations |
Consolidated
|
||||||||||
|
Insurance premiums
|
$
|
53,661
|
|
$
|
109,666
|
|
$
|
—
|
|
$
|
—
|
|
$
|
163,327
|
|
|
Insurance benefits and losses incurred
|
|
34,486
|
|
|
83,029
|
|
|
—
|
|
|
—
|
|
|
117,515
|
|
|
Expenses deferred
|
|
(8,062
|
)
|
|
(6,287
|
)
|
|
—
|
|
|
—
|
|
|
(14,349
|
)
|
|
Amortization and depreciation expense
|
|
8,543
|
|
|
2,825
|
|
|
712
|
|
|
—
|
|
|
12,080
|
|
|
Other expenses
|
|
15,951
|
|
|
38,196
|
|
|
16,191
|
|
|
(9,826
|
)
|
|
60,512
|
|
|
Total expenses
|
|
50,918
|
|
|
117,763
|
|
|
16,903
|
|
|
(9,826
|
)
|
|
175,758
|
|
|
Underwriting income (loss)
|
|
2,743
|
|
|
(8,097
|
)
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
3,332
|
|
|
5,021
|
|
|
2,267
|
|
|
(2,124
|
)
|
|
8,496
|
|
|
Other income
|
|
11
|
|
|
8
|
|
|
7,806
|
|
|
(7,702
|
)
|
|
123
|
|
|
Operating income (loss)
|
|
6,086
|
|
|
(3,068
|
)
|
|
(6,830
|
)
|
|
—
|
|
|
(3,812
|
)
|
|
Net realized gains
|
|
2,481
|
|
|
2,800
|
|
|
3,887
|
|
|
—
|
|
|
9,168
|
|
|
Income (loss) before income taxes
|
$
|
8,567
|
|
$
|
(268
|
)
|
$
|
(2,943
|
)
|
$
|
—
|
|
$
|
5,356
|
|
|
Total revenues
|
$
|
59,485
|
|
$
|
117,495
|
|
$
|
13,960
|
|
$
|
(9,826
|
)
|
$
|
181,114
|
|
|
Intangibles
|
$
|
1,350
|
|
$
|
1,194
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,544
|
|
|
Total assets
|
$
|
126,313
|
|
$
|
185,624
|
|
$
|
147,653
|
|
$
|
(116,351
|
)
|
$
|
343,239
|
|
|
|
For the Year Ended December 31, 2016
|
||||||||||||||
|
|
American
Southern |
Bankers
Fidelity |
Corporate
& Other |
Adjustments
& Eliminations |
Consolidated
|
||||||||||
|
Insurance premiums
|
$
|
53,763
|
|
$
|
99,702
|
|
$
|
—
|
|
$
|
—
|
|
$
|
153,465
|
|
|
Insurance benefits and losses incurred
|
|
34,408
|
|
|
68,789
|
|
|
—
|
|
|
—
|
|
|
103,197
|
|
|
Expenses deferred
|
|
(7,834
|
)
|
|
(5,159
|
)
|
|
—
|
|
|
—
|
|
|
(12,993
|
)
|
|
Amortization and depreciation expense
|
|
8,709
|
|
|
3,667
|
|
|
713
|
|
|
—
|
|
|
13,089
|
|
|
Other expenses
|
|
15,562
|
|
|
37,258
|
|
|
15,761
|
|
|
(9,321
|
)
|
|
59,260
|
|
|
Total expenses
|
|
50,845
|
|
|
104,555
|
|
|
16,474
|
|
|
(9,321
|
)
|
|
162,553
|
|
|
Underwriting income (loss)
|
|
2,918
|
|
|
(4,853
|
)
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
3,868
|
|
|
5,725
|
|
|
2,217
|
|
|
(1,926
|
)
|
|
9,884
|
|
|
Other income
|
|
—
|
|
|
10
|
|
|
7,518
|
|
|
(7,395
|
)
|
|
133
|
|
|
Operating income (loss)
|
|
6,786
|
|
|
882
|
|
|
(6,739
|
)
|
|
—
|
|
|
929
|
|
|
Net realized gains (losses)
|
|
528
|
|
|
2,068
|
|
|
(1
|
)
|
|
—
|
|
|
2,595
|
|
|
Income (loss) before income taxes
|
$
|
7,314
|
|
$
|
2,950
|
|
$
|
(6,740
|
)
|
$
|
—
|
|
$
|
3,524
|
|
|
Total revenues
|
$
|
58,159
|
|
$
|
107,505
|
|
$
|
9,734
|
|
$
|
(9,321
|
)
|
$
|
166,077
|
|
|
Intangibles
|
$
|
1,350
|
|
$
|
1,194
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,544
|
|
|
Total assets
|
$
|
123,721
|
|
$
|
168,657
|
|
$
|
138,694
|
|
$
|
(112,472
|
)
|
$
|
318,600
|
|
58
| Note 14. | Disclosures About Fair Value 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 December 31, 2017 and 2016.
|
|
Level in Fair
Value Hierarchy(1) |
2017
|
2016
|
||||||||||||
|
|
Carrying
Amount |
Estimated
Fair Value |
Carrying
Amount |
Estimated
Fair Value |
|||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
Level 1
|
$
|
24,547
|
|
$
|
24,547
|
|
$
|
13,252
|
|
$
|
13,252
|
|
||
|
Fixed maturities
|
(1)
|
|
215,108
|
|
|
215,108
|
|
|
210,670
|
|
|
210,670
|
|
||
|
Equity securities
|
(1)
|
|
23,355
|
|
|
23,355
|
|
|
20,257
|
|
|
20,257
|
|
||
|
Other invested assets
|
Level 3
|
|
5,626
|
|
|
5,626
|
|
|
9,709
|
|
|
9,709
|
|
||
|
Policy loans
|
Level 2
|
|
2,146
|
|
|
2,146
|
|
|
2,265
|
|
|
2,265
|
|
||
|
Real estate
|
Level 2
|
|
38
|
|
|
38
|
|
|
38
|
|
|
38
|
|
||
|
Investments 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 2 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets. |
The following describes the methods and assumptions used by the Company in estimating fair values:
Cash and Cash Equivalents
The carrying amount approximates fair value due to the short-term nature of the instruments.
Fixed Maturities and Common and Non-Redeemable Preferred Stocks
The carrying amount is determined in accordance with methods prescribed by the NAIC, which do not differ materially from publicly quoted market prices. Certain fixed maturities do not have publicly quoted values and 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 discounted at reasonable estimated rates of interest. Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.
Non-publicly Traded Invested Assets
The fair value of investments in certain limited partnerships which are included in other invested assets on the consolidated balance sheet were determined by officers of those limited partnerships.
Junior Subordinated Debentures
The fair value is estimated based on the quoted market prices for similar issues and the current rates offered for debt having similar returns and remaining maturities.
59
| Note 15. | Accumulated Other Comprehensive Income |
The following table sets forth the balance of the only component of accumulated other comprehensive income as of December 31, 2017 and 2016, and the changes in the balance of that component during 2017.
|
|
Unrealized
Gains on Available-for- Sale Securities |
||
|
Balance, December 31, 2016
|
$
|
5,830
|
|
|
Other comprehensive income before reclassifications
|
|
9,880
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
|
(5,959
|
)
|
|
Net current period other comprehensive income
|
|
3,921
|
|
|
Balance, December 31, 2017
|
$
|
9,751
|
|
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
None.
| Item 9A. | Controls and Procedures |
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of that date.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control over financial reporting system has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management recognizes that there are inherent limitations in the effectiveness of any internal control system. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Furthermore, the application of any evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the updated 2013 Internal Control – Integrated Framework. Based on that evaluation, management believes that internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f) was effective as of December 31, 2017.
There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to certain rules of the Securities and Exchange Commission that exempt smaller reporting companies, including the Company, from such requirement.
| Item 9B. | Other Information |
None.
60
With the exception of certain information relating to the Executive Officers of the Company, which is provided in Part I hereof, the information relating to securities authorized for issuance under equity compensation plans and the information relating to the Company’s Code of Business Conduct and Ethics, each of which is included below, all information required by Part III (Items 10, 11, 12, 13 and 14 of Form 10-K) is incorporated by reference to the sections entitled “Election of Directors,” “Security Ownership of Certain Beneficial Owners and Management,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Executive Compensation,” “Certain Relationships and Related Transactions, and Director Independence” and “Ratification of Independent Registered Public Accounting Firm” to be contained in the Company’s definitive proxy statement in connection with the Company’s Annual Meeting of Shareholders to be held on May 1, 2018, to be filed with the SEC within 120 days of the Company’s fiscal year end.
Equity Compensation Plan Information
The following table sets forth, as of December 31, 2017, the number of securities issuable upon exercise of outstanding options, warrants and rights, the weighted average exercise price thereof and the number of securities remaining available for future issuance under the Company’s equity compensation plans:
|
Plan Category
|
Number of
Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights |
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) |
||||||
|
Equity compensation plans approved by security holders
|
|
—
|
|
$
|
—
|
|
|
1,241,200
|
|
|
Equity compensation plans not approved by security holders(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
—
|
|
$
|
—
|
|
|
1,241,200
|
|
| (1) | All the Company’s equity compensation plans have been approved by the Company’s shareholders. |
The Company has adopted a Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, as well as its directors and other employees. A copy of this Code of Business Conduct and Ethics has been filed as an exhibit to this annual report on Form 10-K.
61
PART IV
| Item 15. | Exhibits and Financial Statement Schedules |
(a) List of documents filed as part of this report:
| 1. | Financial Statements: |
See Index to Financial Statements contained in Item 8 hereof.
| 2. | Financial Statement Schedules: |
Schedule II - Condensed financial information of the registrant
Schedule III - Supplementary insurance information of the registrant
Schedule IV - Reinsurance information for the registrant
Schedule VI - Supplemental information concerning property-casualty insurance operations of the registrant
Schedules other than those listed above are omitted as they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable.
| 3. | Exhibits *: |
|
|
-
|
|
Restated Articles of Incorporation of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the registrant’s Form 10-K for the Year Ended December 31, 2008].
|
|
|
|
-
|
|
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].
|
|
|
10.01
|
|
-
|
|
Management Agreement between the registrant and Atlantic American Life Insurance Company and Bankers Fidelity Life Insurance Company dated July 1, 1993 [incorporated by reference to Exhibit 10.41 to the registrant’s Form 10-Q for the quarter ended September 30, 1993].
|
|
|
-
|
|
Tax allocation agreement dated January 4, 2016, between registrant and registrant’s subsidiaries.
|
|
|
|
-
|
|
Atlantic American Corporation 2012 Nonqualified Stock Purchase Plan [incorporated by reference to Exhibit 99.1 to the registrant’s Form S-8 (File No. 333-183207) filed on August 10, 2012].
|
|
|
|
-
|
|
Atlantic American Corporation 2012 Equity Incentive Plan [incorporated by reference to Exhibit 10.1 to the registrant’s Form 10-Q for the quarter ended March 31, 2013].
|
|
|
|
-
|
|
Lease Agreement between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life Insurance Company dated as of November 1, 2007 [incorporated by reference to Exhibit 10.10 to the registrant’s Form 10-K for the Year Ended December 31, 2007].
|
|
|
|
-
|
|
First Amendment to Lease Agreement between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life Insurance Company dated as of March 31, 2008 [incorporated by reference to Exhibit 10.2 to the registrant’s Form 10-Q for the quarter ended March 31, 2008].
|
|
|
|
-
|
|
Employment and Transition Agreement by and between John G. Sample, Jr. and Atlantic American Corporation, dated as of June 14, 2017.
|
|
|
|
-
|
|
Code of Business Conduct and Ethics [incorporated by reference to Exhibit 14.1 to the registrant’s Form 10-K for the Year Ended December 31, 2003].
|
|
|
|
-
|
|
Subsidiaries of the registrant [incorporated by reference to Exhibit 21.1 to the registrant’s Form 10-K for the Year Ended December 31, 2015].
|
|
|
|
-
|
|
Consent of BDO USA, LLP, Independent Registered Public Accounting Firm.
|
|
|
|
-
|
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
-
|
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
-
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
62
|
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.
|
| * | The registrant agrees to furnish to the Commission upon request a copy of any instruments defining the rights of security holders of the registrant that may be omitted from filing in accordance with the Commission’s rules and regulations. |
| ** | Management contract, compensatory plan or arrangement required to be filed pursuant to Part IV, Item 15(c) of Form 10-K and Item 601 of Regulation S-K. |
| Item 16. | Form 10-K Summary |
None.
63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
|
|
|
|
|
|
|
By:
|
/s/ J. Ross Franklin
|
|
|
|
J. Ross Franklin
|
|
|
|
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
Date: March 26, 2018
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
|
|
|
|
|
/s/ Hilton H. Howell, Jr.
|
President, Chief Executive Officer and
Chairman of the Board (Principal Executive Officer) |
March 26, 2018
|
|
HILTON H. HOWELL, JR.
|
||
|
|
|
|
|
/s/ J. Ross Franklin
|
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
March 26, 2018
|
|
J. ROSS FRANKLIN
|
||
|
|
|
|
|
/s/ Robin R. Howell
|
Director
|
March 26, 2018
|
|
ROBIN R. HOWELL
|
||
|
|
|
|
|
/s/ Mark E. Preisinger
|
Director
|
March 26, 2018
|
|
MARK E. PREISINGER
|
||
|
|
|
|
|
/s/ Joseph M. Scheerer
|
Director
|
March 26, 2018
|
|
JOSEPH M. SCHEERER
|
||
|
|
|
|
|
/s/ Scott G. Thompson
|
Director
|
March 26, 2018
|
|
SCOTT G. THOMPSON
|
||
|
|
|
|
|
/s/ D. Keehln Wheeler
|
Director
|
March 26, 2018
|
|
D. KEEHLN WHEELER
|
64
Schedule II
Page 1 of 3
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ATLANTIC AMERICAN CORPORATION
(Parent Company Only)
BALANCE SHEETS
ASSETS
|
|
December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
9,732
|
|
$
|
4,308
|
|
|
Investments
|
|
16,097
|
|
|
16,160
|
|
|
Investment in subsidiaries
|
|
116,351
|
|
|
112,472
|
|
|
Investments in unconsolidated trusts
|
|
1,238
|
|
|
1,238
|
|
|
Income taxes receivable from subsidiaries
|
|
2,879
|
|
|
2,961
|
|
|
Other assets
|
|
3,762
|
|
|
4,554
|
|
|
Total assets
|
$
|
150,059
|
|
$
|
141,693
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||
|
|
|
|
|
|
|
|
|
Deferred tax liability, net
|
$
|
1,253
|
|
$
|
500
|
|
|
Other payables
|
|
2,085
|
|
|
1,949
|
|
|
Junior subordinated debentures
|
|
33,738
|
|
|
33,738
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
37,076
|
|
|
36,187
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
112,983
|
|
|
105,506
|
|
|
Total liabilities and shareholders’ equity
|
$
|
150,059
|
|
$
|
141,693
|
|
See accompanying report of independent registered public accounting firm.
II-1
Schedule II
Page 2 of 3
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ATLANTIC AMERICAN CORPORATION
(Parent Company Only)
STATEMENTS OF OPERATIONS
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
REVENUE
|
|
|
|
|
|
|
|
Fee income from subsidiaries
|
$
|
7,702
|
|
$
|
7,395
|
|
|
Distributed earnings from subsidiaries
|
|
4,850
|
|
|
5,508
|
|
|
Other
|
|
4,130
|
|
|
408
|
|
|
Total revenue
|
|
16,682
|
|
|
13,311
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
13,015
|
|
|
12,858
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE
|
|
1,723
|
|
|
1,562
|
|
|
|
|
1,944
|
|
|
(1,109
|
)
|
|
INCOME TAX BENEFIT(1)
|
|
(2,553
|
)
|
|
(1,837
|
)
|
|
|
|
4,497
|
|
|
728
|
|
|
EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES, NET
|
|
31
|
|
|
1,908
|
|
|
NET INCOME
|
$
|
4,528
|
|
$
|
2,636
|
|
| (1) | Under the terms of a tax-sharing agreement, income tax provisions for the subsidiary companies are computed on a separate company basis. Accordingly, the Company’s income tax benefit results from the utilization of the Parent’s separate return loss to reduce the consolidated taxable income of the Company. |
See accompanying report of independent registered public accounting firm.
II-2
Schedule II
Page 3 of 3
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ATLANTIC AMERICAN CORPORATION
(Parent Company Only)
STATEMENTS OF CASH FLOWS
|
|
Year Ended December 31,
|
|||||
|
|
2017
|
2016
|
||||
|
|
(In thousands)
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income
|
$
|
4,528
|
|
$
|
2,636
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
Realized investment (gains) losses, net
|
|
(3,891
|
)
|
|
1
|
|
|
Depreciation and amortization
|
|
712
|
|
|
713
|
|
|
Compensation expense related to share awards
|
|
495
|
|
|
586
|
|
|
Equity in undistributed earnings of consolidated subsidiaries
|
|
(31
|
)
|
|
(1,908
|
)
|
|
Decrease (increase) in intercompany taxes
|
|
82
|
|
|
(815
|
)
|
|
Deferred income tax benefit
|
|
(1,358
|
)
|
|
(2
|
)
|
|
Increase (decrease) in other liabilities
|
|
136
|
|
|
(224
|
)
|
|
Other, net
|
|
295
|
|
|
(221
|
)
|
|
Net cash provided by operating activities
|
|
968
|
|
|
766
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from investments sold, called or matured
|
|
6,014
|
|
|
1,979
|
|
|
Investments purchased
|
|
—
|
|
|
(1,000
|
)
|
|
Capital contribution to subsidiaries
|
|
—
|
|
|
(75
|
)
|
|
Additions to property and equipment
|
|
(91
|
)
|
|
(371
|
)
|
|
Net cash provided by investing activities
|
|
5,923
|
|
|
533
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Payment of dividends on Series D preferred stock
|
|
(399
|
)
|
|
(399
|
)
|
|
Payment of dividends on common stock
|
|
(408
|
)
|
|
(408
|
)
|
|
Proceeds from shares issued under stock plans
|
|
32
|
|
|
51
|
|
|
Purchases of shares for treasury
|
|
(692
|
)
|
|
(698
|
)
|
|
Net cash used in financing activities
|
|
(1,467
|
)
|
|
(1,454
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
5,424
|
|
|
(155
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
4,308
|
|
|
4,463
|
|
|
Cash and cash equivalents at end of year
|
$
|
9,732
|
|
$
|
4,308
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure:
|
|
|
|
|
|
|
|
Cash paid for interest
|
$
|
1,705
|
|
$
|
1,544
|
|
|
Cash paid for income taxes
|
$
|
1,400
|
|
$
|
675
|
|
|
Intercompany tax settlement from subsidiaries
|
$
|
2,676
|
|
$
|
2,845
|
|
See accompanying report of independent registered public accounting firm.
II-3
Schedule III
Page 1 of 2
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
|
Segment
|
Deferred
Acquisition Costs |
Future Policy
Benefits, Losses, Claims and Loss Reserves |
Unearned
Premiums |
Other Policy
Claims and Benefits Payable |
||||||||
|
|
(In thousands)
|
|||||||||||
|
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
30,619
|
|
$
|
100,127
|
|
$
|
4,271
|
|
$
|
2,010
|
|
|
American Southern
|
|
2,075
|
|
|
47,997
|
|
|
19,178
|
|
|
—
|
|
|
|
$
|
32,694
|
|
$
|
148,124
|
(1)
|
$
|
23,449
|
|
$
|
2,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
26,791
|
|
$
|
87,849
|
|
$
|
3,731
|
|
$
|
2,066
|
|
|
American Southern
|
|
2,184
|
|
|
49,556
|
|
|
19,477
|
|
|
—
|
|
|
|
$
|
28,975
|
|
$
|
137,405
|
(2)
|
$
|
23,208
|
|
$
|
2,066
|
|
| (1) | Includes future policy benefits of $82,435 and losses and claims of $65,689. |
| (2) | Includes future policy benefits of $74,843 and losses and claims of $62,562. |
See accompanying report of independent registered public accounting firm.
III-1
Schedule III
Page 2 of 2
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
|
Segment
|
Premium
Revenue |
Net
Investment Income |
Benefits,
Claims, Losses and Settlement Expenses |
Amortization
of Deferred Acquisition Costs |
Other
Operating Expenses |
Casualty
Premiums Written |
||||||||||||
|
|
(In thousands)
|
|||||||||||||||||
|
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
109,666
|
|
$
|
4,257
|
|
$
|
83,029
|
|
$
|
2,460
|
|
$
|
32,274
|
|
$
|
—
|
|
|
American Southern
|
|
53,661
|
|
|
3,307
|
|
|
34,486
|
|
|
8,170
|
|
|
8,262
|
|
|
53,362
|
|
|
Other
|
|
—
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
7,077
|
|
|
—
|
|
|
|
$
|
163,327
|
|
$
|
7,707
|
|
$
|
117,515
|
|
$
|
10,630
|
|
$
|
47,613
|
|
$
|
53,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
99,702
|
|
$
|
5,172
|
|
$
|
68,789
|
|
$
|
3,401
|
|
$
|
32,365
|
|
$
|
—
|
|
|
American Southern
|
|
53,763
|
|
|
3,844
|
|
|
34,408
|
|
|
8,483
|
|
|
7,954
|
|
|
51,477
|
|
|
Other
|
|
—
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|
7,153
|
|
|
—
|
|
|
|
$
|
153,465
|
|
$
|
9,307
|
|
$
|
103,197
|
|
$
|
11,884
|
|
$
|
47,472
|
|
$
|
51,477
|
|
See accompanying report of independent registered public accounting firm.
III-2
Schedule IV
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
REINSURANCE
|
|
Direct
Amount |
Ceded To
Other Companies |
Assumed
From Other Companies |
Net
Amounts |
Percentage of
Amount Assumed To Net |
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
|
Year Ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance in force
|
$
|
255,506
|
|
$
|
(14,902
|
)
|
$
|
—
|
|
$
|
240,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
142,210
|
|
$
|
(32,585
|
)
|
$
|
41
|
|
$
|
109,666
|
|
|
0.0
|
%
|
|
American Southern
|
|
39,248
|
|
|
(4,787
|
)
|
|
19,200
|
|
|
53,661
|
|
|
35.8
|
%
|
|
Total premiums
|
$
|
181,458
|
|
$
|
(37,372
|
)
|
$
|
19,241
|
|
$
|
163,327
|
|
|
11.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance in force
|
$
|
263,567
|
|
$
|
(16,087
|
)
|
$
|
—
|
|
$
|
247,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bankers Fidelity
|
$
|
104,996
|
|
$
|
(5,344
|
)
|
$
|
50
|
|
$
|
99,702
|
|
|
0.1
|
%
|
|
American Southern
|
|
39,343
|
|
|
(4,654
|
)
|
|
19,074
|
|
|
53,763
|
|
|
35.5
|
%
|
|
Total premiums
|
$
|
144,339
|
|
$
|
(9,998
|
)
|
$
|
19,124
|
|
$
|
153,465
|
|
|
12.5
|
%
|
See accompanying report of independent registered public accounting firm.
IV-1
Schedule VI
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION CONCERNING
PROPERTY-CASUALTY INSURANCE OPERATIONS
|
Year Ended
|
Deferred
Policy Acquisition Costs |
Reserves
|
Unearned
Premiums |
Earned
Premiums |
Net
Investment Income |
Claims and Claim
Adjustment Expenses Incurred Related To |
Amortization
of Deferred Acquisition Costs |
Paid Claims
and Claim Adjustment Expenses |
Premiums
Written |
|||||||||||||||||||||
|
Current
Year |
Prior
Years |
|||||||||||||||||||||||||||||
|
|
(In thousands)
|
|||||||||||||||||||||||||||||
|
December 31, 2017
|
$
|
2,075
|
|
$
|
47,997
|
|
$
|
19,178
|
|
$
|
53,661
|
|
$
|
3,307
|
|
$
|
37,016
|
|
$
|
(2,530
|
)
|
$
|
8,170
|
|
$
|
33,459
|
|
$
|
53,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
$
|
2,184
|
|
$
|
49,556
|
|
$
|
19,477
|
|
$
|
53,763
|
|
$
|
3,844
|
|
$
|
36,541
|
|
$
|
(2,133
|
)
|
$
|
8,483
|
|
$
|
34,219
|
|
$
|
51,477
|
|
See accompanying report of independent registered public accounting firm.
VI-1
|
By:
|
/s/ John G. Sample, Jr
|
Date
|
January 4, 2016 | |
|
JOHN G. SAMPLE, JR.
|
||||
|
By:
|
/s/ Robert Knight
|
Date:
|
January 4, 2016 | |
|
ROBERT KNIGHT
|
||||
|
By:
|
/s/ Robert Knight
|
Date:
|
January 4, 2016 | |
|
ROBERT KNIGHT
|
||||
|
By:
|
/s/ Jeffrey Ross Franklin
|
Date:
|
January 4, 2016 | |
|
JEFFREY ROSS FRANKLIN
|
||||
|
By:
|
/s/ Philip Adams
|
Date:
|
January 4, 2016 | |
|
PHILIP ADAMS
|
||||
|
By:
|
/s/ Barbara Snyder
|
Date:
|
January 4, 2016 | |
|
BARBARA SNYDER
|
||||
|
1.
|
Employment. Employee hereby retires as Senior Vice President, Chief Financial Officer and Secretary effective at the close of business on July 31, 2017 (the “Retirement Effective Date”). As of the Retirement Effective Date, Employee also hereby resigns as an officer of Company and further resigns from all directorships, officerships and other positions he holds with Company. Employee will promptly execute any other documents to effectuate such resignations, as requested by Company. Notwithstanding the foregoing, Employee’s employment by Company, including its successors and assigns, will continue through June 30, 2021, except as otherwise provided for herein in Paragraph 3, at which time Employee’s employment will terminate (the “Termination Date”). From and after the Retirement Effective Date and continuing through the term of this Agreement, Employee shall perform such tasks and duties only as may be assigned to him on special projects as designated by the Chief Executive Officer (“CEO”). Employee shall diligently and efficiently perform such duties to the best of his ability and in compliance with all applicable laws or regulations and any applicable rules, business standards, code of conduct or ethics or Company policies and procedures applicable to employees of Company. Employee shall also make himself reasonably available to provide such assistance and cooperation to Company, and its senior management team (including any interim or permanent successor to Employee’s former Chief Financial Officer position at Company) as Company shall reasonably request in order to transition Employee’s former responsibilities to his successor and provide such assistance as may be reasonably requested from time to time. Company agrees it will make all reasonable efforts to allow Executive to perform the above described duties from a location that is mutually convenient to Company and Employee, which may include a location other than Company’s offices and outside of the state of Georgia. However, in situations where Employee must be present at Company’s offices, or at another location designated by Company, Company agrees to reimburse Employee for his out-of-pocket expenses reasonably and necessarily incurred in accordance with Company’s standard expense reimbursement policy.
|
|
2.
|
Consideration. In exchange for Employee’s execution of this Agreement, and the Reaffirmations required under Paragraph 7, and provided that Employee continues to comply with the terms and conditions hereof, Company shall provide the following benefits to Employee during the term of this Agreement:
|
|
(a)
|
Salary. Company will pay Employee a gross amount of Two Hundred Seventy-Five Thousand and 00/100 Dollars ($275,000.00) for each twelve month period in the period between the effective date of this Agreement and the Termination Date, or the applicable pro rata portion thereof. The payments shall be payable in installments each year corresponding with Company’s ordinary pay dates commencing on the first pay date following the Effective Date of this Agreement and concluding on or by the Termination Date. Employee’s salary paid under this Paragraph 2(a) will be subject to all applicable statutory tax withholdings or other deductions as required by law.
|
|
(b)
|
Other Time. In connection with this Agreement, Company is granting the Employee certain schedule and location flexibility not afforded to all employees. Accordingly, the Employee acknowledges that effective with the date of this Agreement, he shall not accrue any holiday, vacation, sick and/or any other types of paid time off (collectively termed “PTO”) in connection with Company’s customary employment practices.
|
|
(c)
|
Unused Paid Time Off. One business day prior to the Retirement Effective Date, Company will make a determination of the Employee’s earned but unused PTO as of the Retirement Effective Date as reflected in Company’s payroll system, in accordance with Company policy. Payment for such amount, subject to all applicable statutory tax withholdings or other deductions as required by law or authorized by the Employee, will be distributed as one lump sum in the next pay period subsequent to the Effective Date.
|
|
(d)
|
Benefit Continuation. Company will provide the Employee continuation on the same terms as any other active employee of medical, dental, health savings account and 401(K) benefits that Employee would otherwise be eligible to receive as an active employee of Company until the Termination Date. Apart from the benefits listed in this Paragraph 2, Employee acknowledges and agrees that he will not receive any other benefits from Company during the term of this Agreement.
|
|
(e)
|
Company agrees to repurchase 78,300 shares of AAME common stock at a per share price equal to the average closing price per share for such stock during the thirty (30 trading days immediately preceding the Retirement Effective Date of this Agreement. This purchase will be executed as soon as reasonably possible subsequent to the Retirement Effective Date and payable upon the receipt by Company of such shares into its treasury stock account at Continental Stock Transfer & Trust Company.
|
|
(f)
|
Employee admits and acknowledges that but for the promises contained in this Agreement, Employee would not be entitled to the consideration set forth in this Paragraph 2. The foregoing payments and benefits provided under this Paragraph 2 shall be in lieu of and discharge any and all other obligations of Company to Employee for any rights or claims of any type, including but not limited to, any and all rights that Employee may have arising out of any plan, agreement, offer letter, contract or arrangement of any type, or any other expectation of remuneration or benefit on the part of Employee.
|
|
(g)
|
Employee expressly understands and acknowledges that Company agrees to provide the above-stated payments and benefits in exchange for Employee’s compliance with the terms set out in this Agreement.
|
|
3.
|
Termination of Employment.
|
|
(a)
|
Employee acknowledges that this Agreement shall automatically terminate on: (i) the Termination Date or (ii) on the last day of the month in which Employee dies.
|
|
(b)
|
Company may immediately terminate this Agreement upon delivery of notice that the Company’s Audit Committee, in its sole discretion and acting in good faith, has reasonably determined that Employee, subsequent to the Retirement Effective Date, has: (i) materially breached the terms of this Agreement; or (ii) violated in a material respect any Company policy or similar guidelines; provided, however, that if the Company's Audit Committee, in its sole discretion and acting in good faith, determines that Employee's breaches or violations are subject to cure without harm, embarrassment or cost to the Company, the Company will provide Employee with ten (10) business days to cure any identified breaches or violations before a termination under this provision is effective.
|
|
(c)
|
In the case of early termination of the Agreement under this Paragraph 3, Employee shall be entitled to receive the payments and benefits listed in Paragraph 2 onlythrough the last day of his employment. Employee further understands and agrees if any payments are made to Employee under this Agreement, but are ended as a result of an early termination of the Agreement, then the payments and benefits made to Employee are satisfactory and adequate consideration for the covenants and releases made by Employee herein
|
|
4.
|
Release and Waiver. Employee, on behalf of himself and his heirs, personal representatives and assigns, knowingly, willingly, and voluntarily releases and waives all rights, claims, damages (including, but not limited to, back pay, front pay, liquidated damages, compensatory damages, or punitive damages, attorneys’ fees and litigation costs), and demands against Company, its parent, subsidiary and affiliate companies and each of Company’s former and current directors, officers, employees, agents, successors in interest and assigns, and all other persons acting by, through, under, or in concert with Company (collective the “Released Parties”), whether brought individually, as a member or representative of a class, or derivatively on behalf of Company or shareholders of Company, arising prior to the Effective Date, which Executive now has or ever had against the Released Parties (collectively the “Claims)”, including, but not limited to, any and all matters related in any way to Executive’s employment with Company, Executive's ownership of Company stock, and any other events occurring prior to, and including, the Effective Date of this Agreement. These rights and claims include, but are not limited to, rights or claims under, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, Title VII of the Civil Rights Act of 1964, the Pregnancy Discrimination Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Civil Rights Act of 1866, the Family and Medical Leave Act, 42 U.S.C. § 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11141, Executive Order 11246, the Rehabilitation Act of 1973, the Vietnam Era Veteran’s Readjustment Act of 1974, the Uniformed Services Employment and Reemployment Rights Act, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act of 1988, the Genetic Information Nondiscrimination Act of 2008, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; tortious interference with business expectations or contract, breach of contract, and any or all claims for employment discrimination, retaliation, wrongful discharge, tortious discharge, breach of implied employment contract, promissory estoppel, invasion of privacy, negligence, defamation, fraud, outrageous conduct, intentional or negligent infliction of emotional distress, and any or all rights or claims under any other federal, state, county, city, or local statutes, or under common law.
|
|
5.
|
Non-Litigation. Employee represents and warrants that he has not made, filed or lodged any complaints, charges or lawsuits or otherwise directly or indirectly commenced any proceeding against Company and/or any Released Parties with any governmental agency, department or official; any regulatory authority, court, or other tribunal; and/or any other dispute resolution body. Nothing in this Agreement prevents the Employee from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations. Employee understands and agrees that he is waiving the right to any monetary recovery in connection with any complaint or charge that Employee may file with an administrative agency, except with respect to any monetary recovery under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002.
|
|
6.
|
Other Promises. With the exception of employment prior to the Retirement Effective Date and as set forth in Paragraph 1 and the consideration set forth in Paragraph 2, Employee hereby warrants and represents that, as of the effective date of this Agreement:
|
|
(a)
|
Employee does not have any claims against Company and/or Released Party of any type, including those types of claims set forth above, and including any claims under the Fair Labor Standards Act (wage and hour law) or its state law equivalent. Moreover, Employee warrants and represents that he does not have any unasserted claims pursuant to a qualified employee retirement or other benefit plan.
|
|
(b)
|
With the exception of any vested amounts in Company’s defined contribution and/or 401 (k) plan, Employee specifically acknowledges that Employee is not entitled to any other additional form of compensation, bonuses, equity, incentives, benefits, allowance, vacation, paid time off, severance or payment other than that filed in this Agreement, and that this Agreement is the full, final, and complete settlement of any claims between Employee and Company.
|
|
7.
|
Reaffirmations. Employee understands and agrees that Company shall not provide any of the consideration set forth in this Agreement (including without limitation the payments or benefits listed in this Paragraph 2) until after the Retirement Effective Date and only after Employee’s execution, and expiration of any revocation period without revocation, of an additional release entered into no earlier than the Retirement Effective Date and covering the period from the date of this Agreement through the Retirement Effective Date (which Reaffirmation is attached hereto as Exhibit A). On or after the Termination Date, Employee agrees to execute and not revoke an additional general release and waiver covering the period between the Retirement Effective Date and the Termination Date in a form acceptable to Company and substantially similar to Exhibit A, without which Employee understands and agrees that Company will not pay the final payment provided for in Paragraph 2(a).
|
|
8.
|
Confidentiality and Non-Communication.
|
|
(a)
|
Employee agrees that he will keep the terms of this Agreement confidential and will not disclose such terms and contents of this Agreement (except solely to the extent that such agreement, terms and conditions have been disclosed by the Company if required by law) or any discussions between Employee and Company related to the Agreement or the circumstances surrounding Executive’s employment with Company, except as required by law, or for tax, accounting or financial purposes. However, Employee understands that he may discuss this Agreement with his attorney. If a disclosure by Employee is required for an appropriate tax or accounting purpose or to Employee’s spouse, Employee will communicate the confidentiality provisions of this Agreement to any person to whom such disclosure is made, and any further disclosure by such person to any individual or entity shall be deemed a disclosure by Employee.
|
|
(b)
|
Employee agrees to keep confidential any and all non-public information relating to Company or the Released Parties to which Employee has or previously had access during Employee’s employment with Company or as a result of Employee’s dealings with Company. Employee agrees to keep all non-public information confidential unless ordered otherwise by court direction, order, subpoena or otherwise required by law.
|
|
(c)
|
Employee agrees that he will not make, utter or issue, or procure any person, firm, or entity to make, utter or issue, any statement in any form, including written, oral and electronic communications of any kind, regarding Company, the Released Parties, their business, their actions or their officers, directors, shareholders or employees, including, without limitation, any statement which conveys any information or expresses any opinions concerning Company, the Released Parties, their business, their actions or their officers, directors or employees, to any person or entity (including, without limitation, Company employees, independent contractors, investors, shareholders, lenders, bankers, etc.), regardless of the truth or falsity of such statement.
|
|
(d)
|
Employee expressly acknowledges and agrees that this promise of confidentiality and non-communication is made as a material inducement to Company to enter into this Agreement, that the value of this Agreement to Company is, in significant part, predicated upon compliance, and that strict compliance with Paragraph 8(a)-(d) is therefore a material element of this Agreement. A violation by Employee of the terms set forth in Paragraph 8(a)-(d) will be deemed a material breach of this Agreement.
|
|
(e)
|
In the event of a breach or a threatened breach by Employee of this Paragraph 8 of this Agreement, Company shall be entitled to an injunction restraining Employee from such breach or threatened breach, as well as recovery of its costs and reasonable attorneys’ fees. Nothing herein shall be construed as prohibiting Company from pursuing any other remedies available to it for such breach or threatened breach including the recovery of damages from Employee. In the event that Company should seek an injunction hereunder, Employee waives any requirements that Company post a bond or any other security.
|
|
(f)
|
Nothing in this Agreement prevents the Employee from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations.
|
|
9.
|
Company Property and Systems. Employee acknowledges and agrees that, as of the Retirement Effective Date, he will no longer have access to any and all Company property, systems (including but limited to email), documents or other materials of any kind. To the extent Employee’s assigned duties under Paragraph 1 require access to Company property or systems, Company shall provide such access as required for the duration of such special project or projects. Within 10 calendar days following the Retirement Effective Date, and within 10 days after the end of any limited access provided to Employee related to his work on a special project under Paragraph 1, Employee further agrees to return to Company all materials, papers, books, records, customer information and lists, marketing information, data, memoranda, documents, diskettes, tapes, computer software and programs, identification cards, credit cards, parking cards, keys, computers, computer and/or access keys, fax machines, beepers, phones, files and bank, brokerage or other account information, statements and access codes (including any copies thereof) relating to Company and all other property of Company.
|
|
10.
|
Consideration Period.
|
|
(a)
|
Employee understands and acknowledges that he has been offered a period of at least twenty-one (21) calendar days to consider the terms of this Agreement. Employee may sign the Agreement at any time during this twenty-one (21) day consideration period; however Employee acknowledges that by doing so, Employee is voluntarily waiving Employee’s right to consider this Agreement for twenty-one (21) days.
|
|
(b)
|
Company advised Employee of his right to consult with an attorney prior to signing this Agreement.
|
|
(c)
|
Employee agrees that if Employee does not sign this Agreement within the twenty-one (21) day consideration period, it will not be effective or enforceable, and he will not receive the consideration set forth in Paragraph 2 herein.
|
|
11.
|
Revocation Period. After signing this Agreement, Employee shall have seven (7) calendar days during which Employee is entitled to change his mind and revoke the Agreement. The Agreement will not be effective or enforceable until the eighth day following Employee’s execution of the Agreement (the “Effective Date”). To revoke this Agreement, Employee must deliver written notice of revocation by 5:00 p.m. on the seventh calendar day after he signs the Agreement, by electronic and first class mail, to the following address: Atlantic American Corporation, 4370 Peachtree Rd., NE, Atlanta, GA 30319 (Attn: Chief Executive Officer), with a copy to Jones Day, 1420 Peachtree Street, N.E., Suite 800, Atlanta, GA 30309-3053 (Attn: Mark L. Hanson, Esq.). Employee agrees that if Employee revokes the Agreement, it will not be effective or enforceable, and Employee will not receive the consideration set forth in Paragraph 2.
|
|
12.
|
Entire Agreement, Governing Law and Binding Effect.
|
|
(a)
|
This Agreement and its various rights and obligations hereunder are binding upon Employee and Company and their respective attorneys, heirs, executors, successors, administrators, and assigns. Employee may not assign Employee’s rights or obligations under this Agreement without the prior written consent of Company.
|
|
(b)
|
Employee and Company expressly acknowledge and agree that there are no other agreements between them; and that there is no written or oral understanding or agreement between the parties that is not recited herein. This Agreement may be amended, modified, or changed only by an agreement in writing that is signed by both parties.
|
|
(c)
|
Employee and Company agree that that the validity, effect and operation of this Agreement shall be determined by the laws of the State of Georgia; and that any controversy or claim arising out of or relating to this Agreement, including any claimed breach of the Agreement, or any other dispute between the Parties of any nature, shall be submitted to and settled exclusively before a single arbitrator in the forum of JAMS located in Atlanta, Georgia and conducted in accordance with the National Rules for the Resolution of Employment Disputes. Should either party file an action to enforce the terms of this Agreement, the prevailing party in such action shall be awarded reasonable attorneys’ fees and costs incurred in bringing such action, in addition to any other remedies available in law or in equity.
|
|
13.
|
Severability. Should any term, section, or portion of this Agreement be held unreasonable or unenforceable by any court, the decision of the court will apply only to the specific term, section, or portion involved, and it will not invalidate the remaining sections or portions of this Agreement.
|
|
14.
|
Acknowledgment of Knowing and Voluntary Waiver.
|
|
(a)
|
I HAVE READ AND UNDERSTAND THIS AGREEMENT. I AM ENTERING INTO THIS AGREEMENT VOLUNTARILY. I WAS NOT COERCED, THREATENED OR OTHERWISE FORCED TO SIGN THIS AGREEMENT. IN SIGNING THIS AGREEMENT I AM GIVING UP RIGHTS THAT I MAY HAVE. I DO NOT HAVE TO SIGN THIS AGREEMENT.
|
|
(b)
|
I WAS PROVIDED UP TO TWENTY-ONE (21) DAYS FROM THE PRESENTATION DATE HEREOF TO REVIEW AND CONSIDER THIS AGREEMENT BEFORE SIGNING IT. I ACKNOWLEDGE THAT TWENTY- ONE (21) DAYS IS A REASONABLE AMOUNT OF TIME FOR ME TO DECIDE WHETHER TO SIGN THE AGREEMENT. IN THE EVENT I SIGN THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE TWENTY-ONE (21) DAY CONSIDERATION PERIOD, I ACKNOWLEDGE THAT I KNOWINGLY AND VOLUNTARILY WAIVED THE RIGHT TO CONSIDER SIGNING THE AGREEMENT FOR THE FULL TWENTY-ONE (21) DAY CONSIDERATION PERIOD.
|
|
(c)
|
I WAS PROVIDED SEVEN (7) DAYS AFTER SIGNING THIS AGREEMENT TO CHANGE MY MIND AND REVOKE THE AGREEMENT;
|
|
(d)
|
I HAVE BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY AND ANY OTHER ADVISOR OF MY CHOOSING PRIOR TO SIGNING THIS AGREEMENT. I WAS PROVIDED SUFFICIENT TIME TO DO SO.
|
|
(e)
|
IN SIGNING THIS AGREEMENT, I AM NOT RELYING ON ANY REPRESENTATION OR STATEMENT (WRITTEN OR ORAL) BY COMPANY OR ITS REPRESENTATIVES NOT SPECIFICALLY SET FORTH HEREIN.
|
|
(f)
|
THIS AGREEMENT INCLUDES A RELEASE OF CLAIMS INCLUDING BUT NOT LIMITED TO CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. I ACKNOWLEDGE THAT I AM NOT WAIVING ANY RIGHTS OR CLAIMS THAT MAY ARISE AFTER I EXECUTE THIS AGREEMENT.
|
|
(g)
|
I ACKNOWLEDGE THAT I HAVE RECEIVED CONSIDERATION UNDER THIS AGREEMENT THAT EXCEEDS ANYTHING OF VALUE TO WHICH I AM ALREADY ENTITLED.
|
|
JOHN G. SAMPLE, JR
/s/ John G. Sample, Jr.
|
|||
|
This 14th day of June, 2017.
|
|||
|
ATLANTIC AMERICAN
CORPORATION
|
|||
| By: | /s/ Hilton H. Howell, Jr. | ||
|
|
|||
| Its: | |||
|
|
|||
| This 14th day of June, 2017. | |||
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-183207 and 333-183210) of Atlantic American Corporation of our report dated March 26, 2018, relating to the consolidated financial statements and financial statement schedules of Atlantic American Corporation which appears in this Form 10-K.
/s/ BDO USA, LLP
Atlanta, Georgia
March 26, 2018
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 annual report on Form 10-K 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: March 26, 2018
|
/s/ Hilton H. Howell, Jr.
|
|
|
Hilton H. Howell, Jr.
|
|
|
President and Chief Executive Officer
|
EXHIBIT 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, J. Ross Franklin, certify that:
| 1. | I have reviewed this annual report on Form 10-K 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. |
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Date: March 26, 2018
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/s/ J. Ross Franklin
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J. Ross Franklin
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Vice President and
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Chief Financial Officer
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EXHIBIT 32.1
Certifications Pursuant to §906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Annual Report on Form 10-K of Atlantic American Corporation (the “Company”) for the year ended December 31, 2017, 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. |
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Date: March 26, 2018
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/s/ Hilton H. Howell, Jr.
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Hilton H. Howell, Jr.
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President and Chief Executive Officer
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Date: March 26, 2018
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/s/ J. Ross Franklin
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J. Ross Franklin
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Vice President and Chief Financial Officer
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A signed original 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.
Document and Entity Information - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Mar. 14, 2018 |
Jun. 30, 2017 |
|
| 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 Public Float | $ 15,787,219 | ||
| Entity Common Stock, Shares Outstanding | 20,402,029 | ||
| Document Fiscal Year Focus | 2017 | ||
| Document Fiscal Period Focus | FY | ||
| Document Type | 10-K | ||
| Amendment Flag | false | ||
| Document Period End Date | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Investments: | ||
| Fixed maturities, cost | $ 212,544 | $ 210,505 |
| Common and non-redeemable preferred stocks, cost | 10,918 | 11,453 |
| Other invested assets, cost | 5,626 | 9,709 |
| Receivables: | ||
| Insurance premiums and other, allowance for doubtful accounts | $ 209 | $ 280 |
| 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) | 20,449,531 | 20,446,705 |
| Treasury stock, at cost (in shares) | 1,951,363 | 1,954,189 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Revenue: | ||
| Insurance premiums | $ 163,327 | $ 153,465 |
| Investment income | 8,496 | 9,884 |
| Realized investment gains, net | 9,168 | 2,595 |
| Other income | 123 | 133 |
| Total revenue | 181,114 | 166,077 |
| Benefits and expenses: | ||
| Insurance benefits and losses incurred | 117,515 | 103,197 |
| Commissions and underwriting expenses | 43,446 | 44,797 |
| Interest expense | 1,723 | 1,562 |
| Other expense | 13,074 | 12,997 |
| Total benefits and expenses | 175,758 | 162,553 |
| Income before income taxes | 5,356 | 3,524 |
| Income tax expense | 828 | 888 |
| Net income | 4,528 | 2,636 |
| Preferred stock dividends | (399) | (399) |
| Net income applicable to common shareholders | $ 4,129 | $ 2,237 |
| Earnings per common share (basic and diluted) (in dollars per share) | $ 0.20 | $ 0.11 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||||||
| Net income | $ 4,528 | $ 2,636 | |||||
| Available-for-sale securities: | |||||||
| Gross unrealized holding gain arising in the period | 15,200 | 4,512 | |||||
| Related income tax effect | (5,320) | (1,579) | |||||
| Less: reclassification adjustment for net realized gains included in net income | [1] | (9,168) | (2,595) | ||||
| Related income tax effect | [2] | 3,209 | 908 | ||||
| Total other comprehensive income, net of tax | 3,921 | 1,246 | |||||
| Total comprehensive income | $ 8,449 | $ 3,882 | |||||
| |||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 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 |
|---|---|---|---|---|---|---|---|---|
| Beginning 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 | 2,636 | 0 | 0 | 0 | 2,636 |
| Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 1,246 | 0 | 0 | 1,246 |
| Dividends on common stock | 0 | 0 | 0 | (408) | 0 | 0 | 0 | (408) |
| Dividends on preferred stock | 0 | 0 | 0 | (399) | 0 | 0 | 0 | (399) |
| Restricted stock grants | 0 | 0 | 461 | 0 | 0 | (741) | 280 | 0 |
| Amortization of unearned compensation | 0 | 0 | 0 | 0 | 0 | 586 | 0 | 586 |
| Purchase of shares for treasury | 0 | 0 | 0 | 0 | 0 | 0 | (698) | (698) |
| Issuance of shares under stock plans | 0 | 0 | 30 | 0 | 0 | 0 | 21 | 51 |
| Ending Balance at Dec. 31, 2016 | 55 | 22,401 | 57,114 | 27,272 | 5,830 | (428) | (6,738) | 105,506 |
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
| Net income | 0 | 0 | 0 | 4,528 | 0 | 0 | 0 | 4,528 |
| Other comprehensive income, net of tax | 0 | 0 | 0 | 0 | 3,921 | 0 | 0 | 3,921 |
| Dividends on common stock | 0 | 0 | 0 | (408) | 0 | 0 | 0 | (408) |
| Dividends on preferred stock | 0 | 0 | 0 | (399) | 0 | 0 | 0 | (399) |
| Restricted stock grants | 0 | 0 | 363 | 0 | 0 | (646) | 283 | 0 |
| Amortization of unearned compensation | 0 | 0 | 0 | 0 | 0 | 495 | 0 | 495 |
| Purchase of shares for treasury | 0 | 0 | 0 | 0 | 0 | 0 | (692) | (692) |
| Issuance of shares under stock plans | 0 | 0 | 18 | 0 | 0 | 0 | 14 | 32 |
| Ending Balance at Dec. 31, 2017 | $ 55 | $ 22,401 | $ 57,495 | $ 30,993 | $ 9,751 | $ (579) | $ (7,133) | $ 112,983 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
| Treasury shares purchased (in shares) | 188,066 | 173,008 |
| Shares issued under stock plans (in shares) | 8,892 | 13,177 |
Summary of Significant Accounting Policies |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2017 | ||||
| Summary of Significant Accounting Policies [Abstract] | ||||
| Summary of Significant Accounting Policies |
Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which, for insurance companies, differ in some respects from the statutory accounting practices prescribed or permitted by regulatory authorities. These financial statements include the accounts of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Operating results achieved in any historical period are not necessarily indicative of results to be expected in any future period. At December 31, 2017, the Parent owned four insurance subsidiaries, Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), and American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company (together known as “American Southern”), in addition to one non-insurance subsidiary, xCalibre Risk Services, Inc. The Parent has issued a guarantee of all liabilities of Bankers Fidelity. Premium Revenue and Cost Recognition Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided. Losses, benefits and expenses are accrued as incurred and are associated with premiums as they are earned so as to result in recognition of profits over the lives of the contracts. For traditional life insurance and long-duration health insurance, this association is accomplished by the provision of a future policy benefits reserve and the deferral and subsequent amortization of the costs of acquiring business, which are referred to as “deferred policy acquisition costs” (principally commissions, premium taxes, and other incremental direct costs of issuing policies). Deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the policy benefits reserve. The Company provides for insurance benefits and losses on accident, health, and property-casualty claims based upon estimates of projected ultimate losses. Deferred policy acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies. Contingent commissions, if contractually applicable, are ultimately payable to agents based on the underlying profitability of a particular insurance contract or a group of insurance contracts, and are periodically evaluated and accrued as earned. In periods in which revisions are made to the estimated loss reserves related to the particular insurance contract or group of insurance contracts subject to such commissions, corresponding adjustments are also made to the related accruals. Deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums (for traditional life and long-duration health insurance) and from the related unearned premiums and investment income (for property and casualty and short-duration health insurance). Intangibles Intangibles consist of goodwill and other indefinite-lived intangible assets. Goodwill represents the excess of cost over the fair value of net assets acquired and is not amortized. Other indefinite-lived intangibles represent the value of licenses and are not amortized. The Company periodically reviews its goodwill and other indefinite-lived intangibles to determine if any adverse conditions exist that could indicate impairment. Conditions that could trigger impairment include, but are not limited to, a significant change in business climate that could affect the value of the related asset, an adverse action, or an assessment by a regulator. No impairment of the Company’s recorded intangibles was identified during any of the periods presented. Investments The Company’s investments in both fixed maturities, which include bonds and redeemable preferred stocks, and equity securities, which include common and non-redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The fair values of fixed maturities and equity securities are largely determined by either independent methods prescribed by the National Association of Insurance Commissioners (“NAIC”), which do not differ materially from publicly quoted market prices, when available, or independent broker quotations. The Company owns certain fixed maturities that do not have publicly quoted market values, but had an estimated fair value as determined by management of $1,369 and $1,264 at December 31, 2017 and 2016, respectively. Such values inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market values. Policy loans and real estate are carried at historical cost. Other invested assets are comprised of investments in limited partnerships, limited liability companies, and real estate joint ventures, and are accounted for using the equity method. If the value of a common stock, preferred stock, other invested asset, or publicly traded bond declines below its cost or amortized cost, as applicable, and the decline is considered to be other than temporary, a realized loss is recorded to reduce the carrying value of the investment to its estimated fair value, which becomes the new cost basis. 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. Premiums and discounts related to investments are amortized or accreted over the life of the related investment as an adjustment to yield using the effective interest method. Dividends and interest income are recognized when earned or declared. The cost of securities sold is based on specific identification. Unrealized gains (losses) in the value of invested assets are accounted for as a direct increase (decrease) in accumulated other comprehensive income in shareholders’ equity, net of deferred tax and, accordingly, have no effect on net income. Income Taxes Deferred income taxes represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. They arise from differences between the financial reporting and tax basis of assets and liabilities and are adjusted for changes in tax laws and tax rates as those changes are enacted. The provision for income taxes represents the total amount of income taxes due related to the current year, plus the change in deferred income taxes during the year. A valuation allowance is recognized if, based on management’s assessment of the relevant facts, it is more likely than not that some portion of a deferred tax asset will not be realized. Earnings Per Common Share Basic earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period. Diluted earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period, plus options outstanding, if applicable, using the treasury stock method and the assumed conversion of the Series D preferred stock, if dilutive. Unless otherwise indicated, earnings per common share amounts are presented on a diluted basis. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and investments in short-term, highly liquid securities with original maturities of three months or less from date of purchase. Recently Issued Accounting Standards In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The FASB issued this guidance for the effect on deferred tax assets and liabilities related to items recorded in accumulated other comprehensive income (“AOCI”) resulting from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment. Under current GAAP, the Company recorded the total effect of the change in enacted tax rates on deferred tax balances in the income tax expense component of net income. ASU 2018-02 permits the Company to reclassify out of AOCI and into retained earnings the “stranded” tax effects that resulted from recording the tax effects of unrealized investment gains at a 35% tax rate because the 14 point reduction in tax rate was recognized in net income instead of other comprehensive income. The Company will adopt the new guidance as of January 1, 2018. As a result of the reclassification, on January 1, 2018, the Company will reclassify $2,100 of stranded tax effects related to continuing operations which will have the effect of reducing AOCI and increasing retained earnings. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. Under current GAAP, premiums and discounts on callable securities generally are amortized to the maturity date. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 is intended to simplify the evaluation of goodwill. The updated guidance requires recognition and measurement of goodwill impairment based on the excess of the carrying value of the reporting unit compared to its estimated fair value, with the amount of the impairment not to exceed the carrying value of the reporting unit’s goodwill. Under existing guidance, if the reporting unit’s carrying value exceeds its estimated fair value, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. An impairment loss is then recognized for the excess, if any, of the carrying value of the reporting unit’s goodwill compared to the implied goodwill value. The amendments in ASU 2017-04 are effective for interim and annual reporting periods beginning after December 15, 2019. The Company expects to adopt the updated guidance January 1, 2020 on a prospective basis as required, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in ASU 2016-15 are: 1) debt prepayment or debt extinguishment costs, 2) settlement of zero-coupon debt instruments, 3) contingent consideration payments made after a business combination, 4) proceeds from the settlement of insurance claims, 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions and 8) separately identifiable cash flows and application of the predominance principle. The amendments in ASU 2016-15 are effective for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have an impact on its consolidated statements of cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Under current GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. ASU 2016-13 will remove all recognition thresholds and will require entities to recognize an allowance for credit losses equal to the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the entity expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale (“AFS”) debt securities and beneficial interests in securitized financial assets. Credit losses on AFS debt securities carried at fair value will continue to be measured as other-than-temporary impairments (“OTTI”) when incurred; however, the losses will be recognized through an allowance and no longer as an adjustment to the cost basis. Recoveries of OTTI will be recognized as reversals of valuation allowances and no longer accreted as investment income through an adjustment to the investment yield. The allowance on AFS debt securities cannot cause the net carrying value to be below fair value and, therefore, it is possible that increases in fair value due to decreases in market interest rates could cause the reversal of a valuation allowance and increase net income. The new guidance will also require purchased financial assets with a more-than-insignificant amount of credit deterioration since original issuance to be recorded based on contractual amounts due and an initial allowance recorded at the date of purchase. For the Company, the amendments in ASU 2016-13 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the timing of adoption. Implementation matters yet to be addressed include determining the impact of valuation allowances on the effective interest method for recognizing interest income from AFS debt securities as well as updating our investment accounting system functionality to adjust valuation allowances based on changes in fair value. The estimated effect on the Company’s financial statements can only be estimated based on the current investment portfolio at any given point in time, and accordingly, has not currently been determined. In March 2016, the FASB issued 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, including income tax consequences, forfeitures, classification of awards as either equity or liabilities and related classification on the statement of cash flows. ASU 2016-09 requires the excess tax benefit or deficiency on vesting or settlement of awards to be recognized in earnings as an income tax benefit or expense, respectively. The Company adopted ASU 2016-09 as of January 1, 2017. Adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements. 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. Under ASU 2016-07, the equity method 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. The Company adopted ASU 2016-07 as of January 1, 2017. Adoption of ASU 2016-07 did not have an impact on the Company’s consolidated financial statements. 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. Under ASU 2016-02, 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. Under the new guidance, lessees with operating leases will be required to recognize a liability for the present value of future minimum lease payments with a corresponding asset for the right of use of the property. Under existing guidance, future minimum lease payments on operating leases are commitments that are not recognized as liabilities on the balance sheet. 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 does not expect the adoption of ASU 2016-02 to have a material impact on its consolidated financial statements; however, it is expected that assets and liabilities will increase based on the present value of remaining lease payments for the minor number of leases which will be in place at the adoption date. 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 any changes in valuation reported in net income except for investments that are consolidated or are accounted for under the equity method of accounting. The new guidance will also require a deferred tax asset resulting from net unrealized losses on available-for-sale (AFS) fixed maturities that are recognized in AOCI to be evaluated for recoverability in combination with the Company’s other deferred tax assets. Under existing guidance, the Company measures investments in equity securities, AFS at fair value with changes in fair value reported in other comprehensive income. As required, the Company will adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed. The impact to the Company will be increased volatility in net income beginning in 2018. Any difference in the evaluation of deferred tax assets may also affect shareholders’ equity. Cash flows will not be affected. The impact will depend on the composition of the Company’s investment portfolio in the future and changes in fair value of the Company’s investments. As of January 1, 2018, the Company will reclassify from AOCI to retained earnings net unrealized gains of $9,825, after tax, related to equity securities, AFS having a fair value of $23,355. Had the new accounting guidance been in place since the beginning of 2017, the Company would have recognized mark-to-market gains of $2,361 after-tax in net income for the year ended December 31, 2017. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 as modified provides 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. This guidance is effective retrospectively on January 1, 2018, with a choice of restating prior periods or recognizing a cumulative effect for contracts in place as of adoption. The Company will adopt ASU 2014-09 on January 1, 2018. Based on current evaluations, the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant estimates and assumptions are used in developing and evaluating deferred income taxes, deferred acquisition costs, insurance reserves, investments, and receivables, among others, and actual results could differ materially from management’s estimates. |
Investments |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments [Abstract ] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments |
The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments, aggregated by type and industry, as of December 31, 2017 and December 31, 2016. Investments were comprised of the following:
Bonds having an amortized cost of $11,178 and $11,435 and included in the tables above were on deposit with insurance regulatory authorities at December 31, 2017 and 2016, respectively, in accordance with statutory requirements. The following table sets forth the carrying value, cost or amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of December 31, 2017 and 2016.
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 December 31, 2017 and 2016.
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 December 31, 2017 and 2016, there were sixty-nine and seventy-seven securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the other diversified business and other diversified consumer sectors. Securities in an unrealized loss position reported in the other diversified business sector included gross unrealized losses of $906 related to investments in fixed maturities of four different issuers, all related to the oil and gas industry. These issuers represent a diversified group of businesses which include, among others, exploration and production, pipeline owners and operators, deep water offshore rig owners and operators, all of which we believe are in continuing stages of rationalizing their current operations, investments, future capital expenditures and carefully managing and modifying their capital and liquidity positions. Based on publicly available information, 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. 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 analyses of the publicly available 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 December 31, 2017. 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.
As of December 31, 2017, financial instruments carried at fair value were measured on a recurring basis as summarized below:
As of December 31, 2016, financial instruments carried at fair value were measured on a recurring basis as summarized below:
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) from January 1, 2016 to December 31, 2017.
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. The carrying value and amortized cost of the Company’s investments in fixed maturities at December 31, 2017 and 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.
Investment income was earned from the following sources:
A summary of realized investment gains (losses) follows:
Proceeds from the sales of investments were as follows:
The Company’s bond portfolio included 92% investment grade securities, as defined by the NAIC, at December 31, 2017. |
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Insurance Reserves and Policyholder Funds |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Reserves and Policyholder Funds |
The following table presents the Company’s reserves for life, accident and health, and property and casualty losses, claims and loss adjustment expenses at December 31, 2017 and 2016.
Annualized premiums for accident and health insurance policies were $105,422 and $95,956 at December 31, 2017 and 2016, respectively. Future Policy Benefits Liabilities for life insurance future policy benefits are based upon assumed future investment yields, mortality rates, and withdrawal rates after giving effect to possible risks of unexpected claim experience. The assumed mortality and withdrawal rates are based upon the Company’s experience. The interest rates assumed for life, accident and health future policy benefits are generally: (i) 2.5% to 5.5% for issues prior to 1977, (ii) 7% graded to 5.5% for 1977 through 1979 issues, (iii) 9% for 1980 through 1987 issues, (iv) 5% to 7% for 1988 through 2009 issues, (v) 4% for 2010 through 2012 issues, and (vi) 3.5% to 4.0% for 2013 through 2017 issues. Loss and Claim Reserves Loss and claim reserves represent estimates of projected ultimate losses and are based upon: (a) management’s estimate of ultimate liability and claims adjusters’ evaluations for unpaid claims reported prior to the close of the accounting period, (b) estimates of incurred but not reported (“IBNR”) claims based on past experience, and (c) estimates of loss adjustment expenses. The estimated liability is periodically reviewed by management and updated, with changes to the estimated liability recorded in the statement of operations in the year in which such changes are known. Activity in the liability for unpaid loss and claim reserves is summarized as follows:
Prior years’ development was primarily the result of better than expected development on prior years loss and claim reserves for certain lines of business in American Southern. Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
Liability for Unpaid Losses, Claims and Loss Adjustment Expenses The following is information, by significant product lines, about incurred and paid claims development as of December 31, 2017, net of reinsurance, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included within the net incurred claims amounts. The information about incurred and paid claims development for the years ended December 31, 2008 to 2017 is presented as supplementary information. Medicare Supplement
The cumulative number of reported claims for the Medicare Supplement line of business is the number of distinct claims incurred and submitted to Medicare for payment in the given year. Multiple payments on the same claim are not counted in the frequency information. Estimated ultimate claims incurred, using claims data reported during each month of any given year, are calculated using the chain ladder method modified to use seasonality and trend-adjusted expected claims for the final two months. Additional adjustments to the estimated ultimate claims incurred are then applied to account for seasonal changes in billing and payment frequencies. The IBNR reserve is calculated as estimated ultimate claims less paid claims and claims in course of settlement. Thirty-six months of loss data are used to develop the estimated ultimate incurred claims. Similar approaches are used for other less significant health products, subject to modifications to account for unique aspects of the product. Automobile Liability
Automobile Physical Damage
General Liability
Surety
For the property and casualty lines of business, the number of claims presented above equals the number of occurrences by type of claim reported to the Company. The number of claims reported during a given year corresponds to the number of claims records opened during the year. Frequency information is maintained on a cumulative basis by accident year by line of business. For automobile claims, a claim count is separately maintained for bodily injury, property damage and physical damage claims. The Company has consistently monitored claim frequency on this basis, and believes this provides more meaningful information than using claimant count which can change over the course of settling a claim. In general, when a claim is reported, claims representatives establish a “case reserve” for the estimated amount of the ultimate payment based on the known information of the claim at that time. Claims managers review and monitor all property and casualty claims in excess of $25,000. As new information becomes available or payments are made on a claim, the case reserve is adjusted to reflect the revised estimate of the ultimate amount to be paid out. Estimates and assumptions pertaining to individual claims are based on complex and subjective judgments and subject to change at any time as new information becomes available. In addition to case reserves, IBNR reserves are established to provide for claims which have not been reported to the Company as of the reporting date as well as potential adverse development on known case reserves. IBNR reserve estimates are derived through a number of analytical techniques. Actuarial data is analyzed by line of business, coverage and accident year. Qualitative factors are also considered in determining IBNR reserves and include such factors as judicial decisions, general economic trends such as inflation, changes in policy forms, and underwriting changes. Reserves are reviewed quarterly and any indicated adjustments are made. Because of the inherent uncertainties in establishing both case and IBNR reserves, ultimate loss experience may prove better or worse than indicated by the combined claim reserves. Adjustments to claim reserves are reflected in the period recognized and could increase or decrease earnings for the period. The following is supplementary information about average historical claims duration as of December 31, 2017.
The reconciliation of the net incurred and paid claims development tables to the liability for losses, claims and loss adjustment expenses is as follows:
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Reinsurance |
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| Reinsurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance |
In accordance with general practice in the insurance industry, portions of the life, property and casualty insurance written by the Company are reinsured; however, the Company remains liable with respect to reinsurance ceded should any reinsurer be unable or unwilling to meet its obligations. Approximately 99% of the Company’s reinsurance recoverables were due from two reinsurers as of December 31, 2017. Reinsurance recoverables of $60 were due from Swiss Reinsurance Corporation, rated “AA-” by Standard & Poor’s and “A+” (Superior) by A.M. Best and $17,449 were due from General Re Life Corporation, rated “AA+” by Standard & Poor’s and “A++” (Superior) by A.M. Best. Allowances for uncollectible amounts are established against reinsurance recoverables, if appropriate. The effects of reinsurance on premiums written, premiums earned and insurance benefits and losses incurred were as follows:
Components of reinsurance recoverables at December 31, 2017 and 2016 were as follows:
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Income Taxes |
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| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes |
Total income taxes were allocated as follows:
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax expense is as follows:
The primary differences between the effective tax rate and the federal statutory income tax rate for 2017 and 2016 resulted from the dividends-received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the remeasurement of deferred taxes. 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 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. The remeasurement of deferred taxes resulted from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment. Deferred tax liabilities and assets at December 31, 2017 and 2016 were comprised of the following:
The components of income tax expense were:
The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries. Tax years prior to 2012 have been audited by the Internal Revenue Service and are closed. |
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Junior Subordinated Debentures |
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| Junior Subordinated Debentures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 December 31, 2017 and 2016, was as follows:
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Commitments and Contingencies |
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Dec. 31, 2017 | ||||||||||||||||||||||||||||
| Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||
| Commitments and Contingencies |
Litigation From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its business. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company. Operating Lease Commitments The Company’s rental expense, including common area charges, for operating leases was $1,306 and $1,277 in 2017 and 2016, respectively. The Company’s future minimum base lease obligations under non-cancelable operating leases are as follows:
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Benefit Plans |
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Dec. 31, 2017 | ||||
| Benefit Plans [Abstract] | ||||
| Benefit Plans |
Equity Incentive Plan On May 1, 2012, the Company’s shareholders approved the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan authorizes the grant of up to 2,000,000 stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units and other awards for the purpose of providing the Company’s non-employee directors, consultants, officers and other employees incentives and rewards for superior performance. In 2017, a total of 182,000 restricted shares, with an estimated fair value of $646, were issued under the 2012 Plan. In 2016, a total of 180,000 restricted shares, with an estimated fair value of $741, were issued under the 2012 Plan. The estimated fair value of the restricted shares issued under the 2012 Plan for 2017 and 2016 was based on the common stock price at date of grant. Vesting of restricted shares generally occurs after a one to three year period. There were no stock options granted or outstanding under the 2012 Plan in 2017 or 2016. Shares available for future grant at December 31, 2017 and 2016 were 1,241,200 and 1,423,200, respectively. 401(k) Plan The Company initiated an employees’ savings plan (the “Plan”) qualified under Section 401(k) of the Internal Revenue Code in May 1995. The Plan covers substantially all of the Company’s employees. Effective January 1, 2009, the Company modified the Plan such that the Plan would operate on a safe harbor basis. Under the Plan, employees may defer up to 50% of their compensation, not to exceed the annual deferral limit. The Company’s total matching contribution for 2017 and 2016 was $237 and $223, respectively, and consisted of a contribution equal to 35% of up to the first 6% of each participant’s contributions. In addition to the matching contribution, the Company also provided a 3% safe harbor non-elective contribution in 2017 and 2016 of $450 and $433, respectively. All contributions were made in cash. Participants are 100% vested in their own contributions and the vested percentage attributable to certain employer contributions is based on a five year graded schedule. Agent Stock Purchase Plan The Company initiated a nonqualified stock purchase plan (the “Agent Stock Purchase Plan”) in May 2012. The purpose of the Agent Stock Purchase Plan is to promote and advance the interests of the Company and its shareholders by providing independent agents who qualify as participants with an opportunity to purchase the common stock of the Company. Under the Agent Stock Purchase Plan, payment for shares of common stock of the Company is made by either deduction from an agent’s commission payment or a direct cash payment. Stock purchases are made at the end of each calendar quarter at the then current market value. |
Preferred Stock |
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Dec. 31, 2017 | ||||
| Preferred Stock [Abstract] | ||||
| Preferred Stock |
The Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding at December 31, 2017 and 2016, respectively. 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. The Company had accrued, but unpaid, dividends, on the Series D Preferred Stock of $18 at December 31, 2017 and 2016. During each of 2017 and 2016, the Company paid Series D Preferred Stock dividends of $399. |
Earnings Per Common Share |
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| Earnings Per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Common Share |
A reconciliation of the numerator and denominator of the earnings per common share calculations is as follows:
The assumed conversion of the Company’s Series D Preferred Stock was excluded from the earnings per common share calculation for 2017 and 2016 since its impact would have been antidilutive. |
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Statutory Reporting |
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| Statutory Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Statutory Reporting |
The assets, liabilities and results of operations have been reported on the basis of GAAP, which varies in some respects from statutory accounting practices (“SAP”) prescribed or permitted by insurance regulatory authorities. The principal differences between SAP and GAAP are that under SAP: (i) certain assets that are non-admitted assets are eliminated from the balance sheet; (ii) acquisition costs for policies are expensed as incurred, while they are deferred and amortized over the estimated life of the policies under GAAP; (iii) the provision that is made for deferred income taxes is different than under GAAP; (iv) the timing of establishing certain reserves is different than under GAAP; and (v) certain valuation allowances attributable to certain investments are different. The amount of reported statutory net income and surplus (shareholders’ equity) for the Parent’s insurance subsidiaries for the years ended December 31 was as follows:
Under the insurance code of the state in which each insurance subsidiary is domiciled, dividend payments to the Parent by its insurance subsidiaries are subject to certain limitations without the prior approval of the applicable state’s Insurance Commissioner. The Parent received dividends of $4,850 and $5,508 in 2017 and 2016, respectively, from its subsidiaries. In 2018, dividend payments to the Parent by the insurance subsidiaries in excess of $4,761 would require prior approval. |
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Related Party Transactions |
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Dec. 31, 2017 | ||||
| Related Party Transactions [Abstract] | ||||
| Related Party Transactions |
In the normal course of business the Company has engaged in transactions with entities affiliated with the controlling shareholder of the Company. These transactions include the leasing of office space as well as certain investing and financing activities. At December 31, 2017, two members of the Company’s board of directors, including our chairman, president and chief executive officer, were considered to be affiliates of the majority shareholder. The Company leases approximately 49,586 square feet of office and covered garage space from one such controlled entity. During the years ended December 31, 2017 and 2016, the Company paid $866 and $882, respectively, under this lease. Certain financing for the Company has also been provided by this entity in the form of an investment in the Series D Preferred Stock (See Note 9). During the years ended December 31, 2017 and 2016, the Company paid this entity $399 in dividends on the Series D Preferred Stock. Certain members of the Company’s management and board of directors are shareholders and on the board of directors of Gray Television, Inc. (“Gray”). As of December 31, 2017 and 2016, the Company owned 880,272 shares of Gray Class A common stock and 106,000 shares of Gray common stock. The aggregate carrying value of these investments in Gray at December 31, 2017 and 2016 was $14,407 and $10,305, respectively. During the years ended December 31, 2017 and 2016, the Company paid approximately $54 and $215, respectively, to a digital marketing services organization, which is an affiliate of Gray. Services purchased primarily included assistance with website marketing initiatives on behalf of the Company’s life and health operations. During the years ended December 31, 2017 and 2016, Gray paid the Company approximately $597 and $478, respectively, in employer paid insurance premiums related to a group accident plan. |
Segment Information |
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| Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information |
The Parent’s primary insurance subsidiaries operate with relative autonomy and each company is evaluated based on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income. Substantially all revenue other than that in the corporate and other segment is from external sources.
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Disclosures About Fair Value of Financial Instruments |
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| Disclosures About Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosures About Fair Value 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 December 31, 2017 and 2016.
The following describes the methods and assumptions used by the Company in estimating fair values: Cash and Cash Equivalents The carrying amount approximates fair value due to the short-term nature of the instruments. Fixed Maturities and Common and Non-Redeemable Preferred Stocks The carrying amount is determined in accordance with methods prescribed by the NAIC, which do not differ materially from publicly quoted market prices. Certain fixed maturities do not have publicly quoted values and 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 discounted at reasonable estimated rates of interest. Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable. Non-publicly Traded Invested Assets The fair value of investments in certain limited partnerships which are included in other invested assets on the consolidated balance sheet were determined by officers of those limited partnerships. Junior Subordinated Debentures The fair value is estimated based on the quoted market prices for similar issues and the current rates offered for debt having similar returns and remaining maturities. |
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Accumulated Other Comprehensive Income |
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| Accumulated Other Comprehensive Income [Abstract] | ||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income |
The following table sets forth the balance of the only component of accumulated other comprehensive income as of December 31, 2017 and 2016, and the changes in the balance of that component during 2017.
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Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT |
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| Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT | CONDENSED FINANCIAL INFORMATION OF REGISTRANT ATLANTIC AMERICAN CORPORATION (Parent Company Only) BALANCE SHEETS ASSETS
CONDENSED FINANCIAL INFORMATION OF REGISTRANT ATLANTIC AMERICAN CORPORATION (Parent Company Only) STATEMENTS OF OPERATIONS
CONDENSED FINANCIAL INFORMATION OF REGISTRANT ATLANTIC AMERICAN CORPORATION (Parent Company Only) STATEMENTS OF CASH FLOWS
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Schedule III SUPPLEMENTARY INSURANCE INFORMATION |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule III SUPPLEMENTARY INSURANCE INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule III SUPPLEMENTARY INSURANCE INFORMATION | ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION
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Schedule IV REINSURANCE |
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| Schedule IV REINSURANCE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule IV REINSURANCE | ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES REINSURANCE
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Schedule VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS |
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| Schedule VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS | ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
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Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2017 | |
| Summary of Significant Accounting Policies [Abstract] | |
| Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which, for insurance companies, differ in some respects from the statutory accounting practices prescribed or permitted by regulatory authorities. These financial statements include the accounts of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. Operating results achieved in any historical period are not necessarily indicative of results to be expected in any future period. At December 31, 2017, the Parent owned four insurance subsidiaries, Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), and American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company (together known as “American Southern”), in addition to one non-insurance subsidiary, xCalibre Risk Services, Inc. The Parent has issued a guarantee of all liabilities of Bankers Fidelity. |
| Premium Revenue and Cost Recognition | Premium Revenue and Cost Recognition Life insurance premiums are recognized as revenue when due; accident and health insurance premiums are recognized as revenue over the premium paying period and property and casualty insurance premiums are recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided. Losses, benefits and expenses are accrued as incurred and are associated with premiums as they are earned so as to result in recognition of profits over the lives of the contracts. For traditional life insurance and long-duration health insurance, this association is accomplished by the provision of a future policy benefits reserve and the deferral and subsequent amortization of the costs of acquiring business, which are referred to as “deferred policy acquisition costs” (principally commissions, premium taxes, and other incremental direct costs of issuing policies). Deferred policy acquisition costs are amortized over the estimated premium-paying period of the related policies using assumptions consistent with those used in computing the policy benefits reserve. The Company provides for insurance benefits and losses on accident, health, and property-casualty claims based upon estimates of projected ultimate losses. Deferred policy acquisition costs for property and casualty insurance and short-duration health insurance are amortized over the effective period of the related insurance policies. Contingent commissions, if contractually applicable, are ultimately payable to agents based on the underlying profitability of a particular insurance contract or a group of insurance contracts, and are periodically evaluated and accrued as earned. In periods in which revisions are made to the estimated loss reserves related to the particular insurance contract or group of insurance contracts subject to such commissions, corresponding adjustments are also made to the related accruals. Deferred policy acquisition costs are expensed when such costs are deemed not to be recoverable from future premiums (for traditional life and long-duration health insurance) and from the related unearned premiums and investment income (for property and casualty and short-duration health insurance). |
| Intangibles | Intangibles Intangibles consist of goodwill and other indefinite-lived intangible assets. Goodwill represents the excess of cost over the fair value of net assets acquired and is not amortized. Other indefinite-lived intangibles represent the value of licenses and are not amortized. The Company periodically reviews its goodwill and other indefinite-lived intangibles to determine if any adverse conditions exist that could indicate impairment. Conditions that could trigger impairment include, but are not limited to, a significant change in business climate that could affect the value of the related asset, an adverse action, or an assessment by a regulator. No impairment of the Company’s recorded intangibles was identified during any of the periods presented. |
| Investments | Investments The Company’s investments in both fixed maturities, which include bonds and redeemable preferred stocks, and equity securities, which include common and non-redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The fair values of fixed maturities and equity securities are largely determined by either independent methods prescribed by the National Association of Insurance Commissioners (“NAIC”), which do not differ materially from publicly quoted market prices, when available, or independent broker quotations. The Company owns certain fixed maturities that do not have publicly quoted market values, but had an estimated fair value as determined by management of $1,369 and $1,264 at December 31, 2017 and 2016, respectively. Such values inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market values. Policy loans and real estate are carried at historical cost. Other invested assets are comprised of investments in limited partnerships, limited liability companies, and real estate joint ventures, and are accounted for using the equity method. If the value of a common stock, preferred stock, other invested asset, or publicly traded bond declines below its cost or amortized cost, as applicable, and the decline is considered to be other than temporary, a realized loss is recorded to reduce the carrying value of the investment to its estimated fair value, which becomes the new cost basis. 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. Premiums and discounts related to investments are amortized or accreted over the life of the related investment as an adjustment to yield using the effective interest method. Dividends and interest income are recognized when earned or declared. The cost of securities sold is based on specific identification. Unrealized gains (losses) in the value of invested assets are accounted for as a direct increase (decrease) in accumulated other comprehensive income in shareholders’ equity, net of deferred tax and, accordingly, have no effect on net income. |
| Income Taxes | Income Taxes Deferred income taxes represent the expected future tax consequences when the reported amounts of assets and liabilities are recovered or paid. They arise from differences between the financial reporting and tax basis of assets and liabilities and are adjusted for changes in tax laws and tax rates as those changes are enacted. The provision for income taxes represents the total amount of income taxes due related to the current year, plus the change in deferred income taxes during the year. A valuation allowance is recognized if, based on management’s assessment of the relevant facts, it is more likely than not that some portion of a deferred tax asset will not be realized. |
| Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period. Diluted earnings per common share are based on the weighted average number of common and participating shares outstanding during the relevant period, plus options outstanding, if applicable, using the treasury stock method and the assumed conversion of the Series D preferred stock, if dilutive. Unless otherwise indicated, earnings per common share amounts are presented on a diluted basis. |
| Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and investments in short-term, highly liquid securities with original maturities of three months or less from date of purchase. |
| Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The FASB issued this guidance for the effect on deferred tax assets and liabilities related to items recorded in accumulated other comprehensive income (“AOCI”) resulting from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment. Under current GAAP, the Company recorded the total effect of the change in enacted tax rates on deferred tax balances in the income tax expense component of net income. ASU 2018-02 permits the Company to reclassify out of AOCI and into retained earnings the “stranded” tax effects that resulted from recording the tax effects of unrealized investment gains at a 35% tax rate because the 14 point reduction in tax rate was recognized in net income instead of other comprehensive income. The Company will adopt the new guidance as of January 1, 2018. As a result of the reclassification, on January 1, 2018, the Company will reclassify $2,100 of stranded tax effects related to continuing operations which will have the effect of reducing AOCI and increasing retained earnings. In March 2017, the FASB issued ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. Under current GAAP, premiums and discounts on callable securities generally are amortized to the maturity date. ASU 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2018, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 is intended to simplify the evaluation of goodwill. The updated guidance requires recognition and measurement of goodwill impairment based on the excess of the carrying value of the reporting unit compared to its estimated fair value, with the amount of the impairment not to exceed the carrying value of the reporting unit’s goodwill. Under existing guidance, if the reporting unit’s carrying value exceeds its estimated fair value, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. An impairment loss is then recognized for the excess, if any, of the carrying value of the reporting unit’s goodwill compared to the implied goodwill value. The amendments in ASU 2017-04 are effective for interim and annual reporting periods beginning after December 15, 2019. The Company expects to adopt the updated guidance January 1, 2020 on a prospective basis as required, although earlier adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in ASU 2016-15 are: 1) debt prepayment or debt extinguishment costs, 2) settlement of zero-coupon debt instruments, 3) contingent consideration payments made after a business combination, 4) proceeds from the settlement of insurance claims, 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions and 8) separately identifiable cash flows and application of the predominance principle. The amendments in ASU 2016-15 are effective for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have an impact on its consolidated statements of cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires entities to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. Under current GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. ASU 2016-13 will remove all recognition thresholds and will require entities to recognize an allowance for credit losses equal to the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the entity expects to collect over the instrument’s contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale (“AFS”) debt securities and beneficial interests in securitized financial assets. Credit losses on AFS debt securities carried at fair value will continue to be measured as other-than-temporary impairments (“OTTI”) when incurred; however, the losses will be recognized through an allowance and no longer as an adjustment to the cost basis. Recoveries of OTTI will be recognized as reversals of valuation allowances and no longer accreted as investment income through an adjustment to the investment yield. The allowance on AFS debt securities cannot cause the net carrying value to be below fair value and, therefore, it is possible that increases in fair value due to decreases in market interest rates could cause the reversal of a valuation allowance and increase net income. The new guidance will also require purchased financial assets with a more-than-insignificant amount of credit deterioration since original issuance to be recorded based on contractual amounts due and an initial allowance recorded at the date of purchase. For the Company, the amendments in ASU 2016-13 will be effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the timing of adoption. Implementation matters yet to be addressed include determining the impact of valuation allowances on the effective interest method for recognizing interest income from AFS debt securities as well as updating our investment accounting system functionality to adjust valuation allowances based on changes in fair value. The estimated effect on the Company’s financial statements can only be estimated based on the current investment portfolio at any given point in time, and accordingly, has not currently been determined. In March 2016, the FASB issued 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, including income tax consequences, forfeitures, classification of awards as either equity or liabilities and related classification on the statement of cash flows. ASU 2016-09 requires the excess tax benefit or deficiency on vesting or settlement of awards to be recognized in earnings as an income tax benefit or expense, respectively. The Company adopted ASU 2016-09 as of January 1, 2017. Adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements. 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. Under ASU 2016-07, the equity method 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. The Company adopted ASU 2016-07 as of January 1, 2017. Adoption of ASU 2016-07 did not have an impact on the Company’s consolidated financial statements. 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. Under ASU 2016-02, 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. Under the new guidance, lessees with operating leases will be required to recognize a liability for the present value of future minimum lease payments with a corresponding asset for the right of use of the property. Under existing guidance, future minimum lease payments on operating leases are commitments that are not recognized as liabilities on the balance sheet. 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 does not expect the adoption of ASU 2016-02 to have a material impact on its consolidated financial statements; however, it is expected that assets and liabilities will increase based on the present value of remaining lease payments for the minor number of leases which will be in place at the adoption date. 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 any changes in valuation reported in net income except for investments that are consolidated or are accounted for under the equity method of accounting. The new guidance will also require a deferred tax asset resulting from net unrealized losses on available-for-sale (AFS) fixed maturities that are recognized in AOCI to be evaluated for recoverability in combination with the Company’s other deferred tax assets. Under existing guidance, the Company measures investments in equity securities, AFS at fair value with changes in fair value reported in other comprehensive income. As required, the Company will adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed. The impact to the Company will be increased volatility in net income beginning in 2018. Any difference in the evaluation of deferred tax assets may also affect shareholders’ equity. Cash flows will not be affected. The impact will depend on the composition of the Company’s investment portfolio in the future and changes in fair value of the Company’s investments. As of January 1, 2018, the Company will reclassify from AOCI to retained earnings net unrealized gains of $9,825, after tax, related to equity securities, AFS having a fair value of $23,355. Had the new accounting guidance been in place since the beginning of 2017, the Company would have recognized mark-to-market gains of $2,361 after-tax in net income for the year ended December 31, 2017. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 as modified provides 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. This guidance is effective retrospectively on January 1, 2018, with a choice of restating prior periods or recognizing a cumulative effect for contracts in place as of adoption. The Company will adopt ASU 2014-09 on January 1, 2018. Based on current evaluations, the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements. |
| Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Significant estimates and assumptions are used in developing and evaluating deferred income taxes, deferred acquisition costs, insurance reserves, investments, and receivables, among others, and actual results could differ materially from management’s estimates. |
Investments (Tables) |
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| Investments [Abstract ] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments aggregated by type and industry | Investments were comprised of the following:
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| Investments aggregated by industry | The following table sets forth the carrying value, cost or amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of December 31, 2017 and 2016.
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| 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 December 31, 2017 and 2016.
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| Financial instruments carried at fair value measured on a recurring basis | As of December 31, 2017, financial instruments carried at fair value were measured on a recurring basis as summarized below:
As of December 31, 2016, financial instruments carried at fair value were measured on a recurring basis as summarized below:
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| 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) from January 1, 2016 to December 31, 2017.
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| 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 December 31, 2017 and 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.
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| Investment income earned | Investment income was earned from the following sources:
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| Summary of realized investment gains (losses) | A summary of realized investment gains (losses) follows:
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| Proceeds from sales of investments | Proceeds from the sales of investments were as follows:
The Company’s bond portfolio included 92% investment grade securities, as defined by the NAIC, at December 31, 2017. |
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Insurance Reserves and Policyholder Funds (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reserves for life, accident, health and property and casualty losses, including loss adjustment expenses | The following table presents the Company’s reserves for life, accident and health, and property and casualty losses, claims and loss adjustment expenses at December 31, 2017 and 2016.
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| Summary of activity in liabilities for unpaid loss and claim reserved | Activity in the liability for unpaid loss and claim reserves is summarized as follows:
|
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| Reconciliation of total incurred losses to total insurance benefits and losses | Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
|
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| Information about incurred and paid claims development | The following is information, by significant product lines, about incurred and paid claims development as of December 31, 2017, net of reinsurance, as well as the cumulative number of reported claims and the total of IBNR reserves plus expected development on reported claims included within the net incurred claims amounts. Medicare Supplement
Automobile Liability
Automobile Physical Damage
General Liability
Surety
|
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| Supplementary information about average historical claims duration | The following is supplementary information about average historical claims duration as of December 31, 2017.
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| Reconciliation of net incurred and paid claims development | The reconciliation of the net incurred and paid claims development tables to the liability for losses, claims and loss adjustment expenses is as follows:
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Reinsurance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of reinsurance on premiums written, premiums earned and insurance benefits and losses incurred | The effects of reinsurance on premiums written, premiums earned and insurance benefits and losses incurred were as follows:
|
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| Components of reinsurance recoverables | Components of reinsurance recoverables at December 31, 2017 and 2016 were as follows:
|
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allocation of total income taxes | Total income taxes were allocated as follows:
|
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| Reconciliation of income tax expense | A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax expense is as follows:
|
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| Deferred tax liabilities and assets | Deferred tax liabilities and assets at December 31, 2017 and 2016 were comprised of the following:
|
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| Components of income tax expense | The components of income tax expense were:
|
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Junior Subordinated Debentures (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 December 31, 2017 and 2016, was as follows:
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||
| Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||
| Operating lease commitments | The Company’s future minimum base lease obligations under non-cancelable operating leases are as follows:
|
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Earnings Per Common Share (Tables) |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of numerator and denominator used in earnings per common share calculations | A reconciliation of the numerator and denominator of the earnings per common share calculations is as follows:
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Statutory Reporting (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Statutory Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reported statutory net income and surplus for the Parent's insurance subsidiaries | The amount of reported statutory net income and surplus (shareholders’ equity) for the Parent’s insurance subsidiaries for the years ended December 31 was as follows:
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Segment Information (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue and income before income taxes for each business unit | The Parent’s primary insurance subsidiaries operate with relative autonomy and each company is evaluated based on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income. Substantially all revenue other than that in the corporate and other segment is from external sources.
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Disclosures About Fair Value of Financial Instruments (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosures About Fair Value 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 December 31, 2017 and 2016.
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Accumulated Other Comprehensive Income (Tables) |
12 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||
| 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 the only component of accumulated other comprehensive income as of December 31, 2017 and 2016, and the changes in the balance of that component during 2017.
|
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Investments, Roll-forward of Financial Instruments Measured at Fair Value (Details) - Fixed Maturities [Member] - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Assets measured at fair value on a recurring basis [Abstract] | ||
| Balance, beginning of period | $ 1,264 | $ 2,237 |
| Total realized gains included in earnings | 57 | |
| Total unrealized losses included in other comprehensive income | 105 | (30) |
| Settlements | (1,000) | |
| Balance, end of period | $ 1,369 | $ 1,264 |
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Carrying Value [Abstract] | ||
| Due in one year or less | $ 1,653 | $ 2,544 |
| Due after one year through five years | 13,738 | 20,278 |
| Due after five years through ten years | 112,847 | 90,667 |
| Due after ten years | 67,328 | 80,099 |
| Varying maturities | 19,542 | 17,082 |
| Totals | 215,108 | 210,670 |
| Amortized Cost [Abstract] | ||
| Due in one year or less | 1,655 | 2,507 |
| Due after one year through five years | 14,056 | 20,038 |
| Due after five years through ten years | 112,116 | 90,926 |
| Due after ten years | 64,928 | 79,627 |
| Varying maturities | 19,789 | 17,407 |
| Cost or amortized cost | $ 212,544 | $ 210,505 |
Investments, Income Earned (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Investment income earned [Abstract] | ||
| Total investment income | $ 8,496 | $ 9,884 |
| Less investment expenses, included in other expenses | (789) | (577) |
| Net investment income | 7,707 | 9,307 |
| Fixed Maturities [Member] | ||
| Investment income earned [Abstract] | ||
| Total investment income | 8,297 | 9,122 |
| Equity Securities [Member] | ||
| Investment income earned [Abstract] | ||
| Total investment income | 467 | 491 |
| Other Investments [Member] | ||
| Investment income earned [Abstract] | ||
| Total investment income | $ (268) | $ 271 |
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Summary of realized investment gains (losses) [Abstract] | ||
| Gains | $ 9,310 | $ 2,684 |
| Losses | (142) | (89) |
| Realized investment gains, net | 9,168 | 2,595 |
| Proceeds from sales of investments [Abstract] | ||
| Total proceeds | $ 83,992 | 62,361 |
| Percentage of investment grade securities in bond portfolio | 92.00% | |
| Fixed Maturities [Member] | ||
| Summary of realized investment gains (losses) [Abstract] | ||
| Gains | $ 2,226 | 1,119 |
| Losses | (142) | (89) |
| Realized investment gains, net | 2,084 | 1,030 |
| Proceeds from sales of investments [Abstract] | ||
| Total proceeds | 72,760 | 59,072 |
| Equity Securities [Member] | ||
| Summary of realized investment gains (losses) [Abstract] | ||
| Gains | 1,044 | 0 |
| Losses | 0 | 0 |
| Realized investment gains, net | 1,044 | 0 |
| Proceeds from sales of investments [Abstract] | ||
| Total proceeds | 1,579 | 0 |
| Other Investments [Member] | ||
| Summary of realized investment gains (losses) [Abstract] | ||
| Gains | 6,040 | 1,565 |
| Losses | 0 | 0 |
| Realized investment gains, net | 6,040 | 1,565 |
| Proceeds from sales of investments [Abstract] | ||
| Total proceeds | $ 9,653 | $ 3,289 |
Insurance Reserves and Policyholder Funds (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | $ 82,435 | $ 74,843 | ||
| Amount of Insurance In Force, Net | 240,604 | 247,480 | ||
| Unearned premiums | 23,449 | 23,208 | ||
| Losses, claims and loss adjustment expenses | $ 65,689 | $ 62,562 | 65,689 | 62,562 |
| Other policy liabilities | 2,010 | 2,066 | ||
| Total insurance reserves and policyholder funds | 173,583 | 162,679 | ||
| Annualized premiums for accident and health insurance policies | 105,422 | 95,956 | ||
| Summary of activity in liability for unpaid loss and claim reserves [Roll Forward] | ||||
| Balance at January 1 | 62,562 | 63,870 | ||
| Less: Reinsurance recoverable on unpaid losses | (10,796) | (11,741) | ||
| Net balance at January 1 | 51,766 | 52,129 | ||
| Incurred related to [Abstract] | ||||
| Current year | 114,099 | 103,252 | ||
| Prior years | (1,765) | (3,377) | ||
| Total incurred | 112,334 | 99,875 | ||
| Paid related to [Abstract] | ||||
| Current year | 82,092 | 71,980 | ||
| Prior years | 28,287 | 28,258 | ||
| Total paid | 110,379 | 100,238 | ||
| Net balance at December 31 | 53,721 | 51,766 | ||
| Plus: Reinsurance recoverable on unpaid losses | 11,968 | 10,796 | ||
| Balance at December 31 | 65,689 | 62,562 | ||
| Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract] | ||||
| Total incurred losses | 112,334 | 99,875 | ||
| Cash surrender value and matured endowments | 1,442 | 1,278 | ||
| Benefit reserve changes | 3,739 | 2,044 | ||
| Total insurance benefits and losses incurred | $ 117,515 | $ 103,197 | ||
| Ordinary [Member] | ||||
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | 54,752 | 54,554 | ||
| Amount of Insurance In Force, Net | 238,534 | 245,017 | ||
| Mass market [Member] | ||||
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | 1,693 | 2,003 | ||
| Amount of Insurance In Force, Net | 2,070 | 2,463 | ||
| Individual annuities [Member] | ||||
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | 50 | 84 | ||
| Amount of Insurance In Force, Net | 0 | 0 | ||
| Life insurance segment [Member] | ||||
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | 56,495 | 56,641 | ||
| Amount of Insurance In Force, Net | 240,604 | 247,480 | ||
| Accident and health insurance [Member] | ||||
| Reserves for life, accident and health [Abstract] | ||||
| Future policy benefits | $ 25,940 | $ 18,202 | ||
| Life, accident and health insurance [Member] | Prior to 1977 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Policy issue range for future benefits assumptions | prior to 1977 | |||
| Life, accident and health insurance [Member] | Prior to 1977 [Member] | Minimum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 2.50% | |||
| Life, accident and health insurance [Member] | Prior to 1977 [Member] | Maximum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 5.50% | |||
| Life, accident and health insurance [Member] | 1977 through 1979 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Policy issue range for future benefits assumptions | 1977 through 1979 | |||
| Life, accident and health insurance [Member] | 1977 through 1979 [Member] | Minimum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 5.50% | |||
| Life, accident and health insurance [Member] | 1977 through 1979 [Member] | Maximum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 7.00% | |||
| Life, accident and health insurance [Member] | 1980 through 1987 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 9.00% | |||
| Policy issue range for future benefits assumptions | 1980 through 1987 | |||
| Life, accident and health insurance [Member] | 1988 through 2009 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Policy issue range for future benefits assumptions | 1988 through 2009 | |||
| Life, accident and health insurance [Member] | 1988 through 2009 [Member] | Minimum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 5.00% | |||
| Life, accident and health insurance [Member] | 1988 through 2009 [Member] | Maximum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 7.00% | |||
| Life, accident and health insurance [Member] | 2010 through 2012 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 4.00% | |||
| Policy issue range for future benefits assumptions | 2010 through 2012 issues | |||
| Life, accident and health insurance [Member] | 2013 through 2017 [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Policy issue range for future benefits assumptions | 2013 through 2017 issues | |||
| Life, accident and health insurance [Member] | 2013 through 2017 [Member] | Minimum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 3.50% | |||
| Life, accident and health insurance [Member] | 2013 through 2017 [Member] | Maximum [Member] | ||||
| Future policy benefits [Abstract] | ||||
| Interest rates assumed for future policy benefits | 4.00% | |||
Insurance Reserves and Policyholder Funds, Liability for Unpaid Losses, Claims and Loss Adjustment Expenses (Details) $ in Thousands |
12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2017
USD ($)
Claim
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Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2011
USD ($)
|
Dec. 31, 2010
USD ($)
|
Dec. 31, 2009
USD ($)
|
Dec. 31, 2008
USD ($)
|
|
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | $ 51,995 | |||||||||
| Duration required for loss data to develop the estimated ultimate incurred claims | 36 months | |||||||||
| Minimum [Member] | ||||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Property and casualty claim threshold amount required for review | $ 25,000 | |||||||||
| Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 479,469 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | 469,101 | |||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 10,368 | |||||||||
| Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 158,363 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | 126,913 | |||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 31,450 | |||||||||
| Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 33,691 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | 32,614 | |||||||||
| All outstanding liabilities prior period net of reinsurance | 33 | |||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 1,110 | |||||||||
| General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 15,080 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | 11,466 | |||||||||
| All outstanding liabilities prior period net of reinsurance | 288 | |||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 3,902 | |||||||||
| Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 34,032 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | 30,871 | |||||||||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 3,161 | |||||||||
| Accident Year 2008 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 28,682 | $ 28,682 | $ 28,683 | $ 28,683 | $ 28,687 | $ 28,688 | $ 28,712 | $ 28,721 | $ 28,698 | $ 29,344 |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 533,112 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 28,682 | 28,682 | 28,683 | 28,683 | 28,687 | 28,688 | 28,712 | 28,721 | 28,698 | 24,055 |
| Accident Year 2008 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 6,105 | 6,105 | 6,104 | 6,106 | 6,112 | 6,124 | 6,374 | 6,627 | 7,011 | 9,723 |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,534 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 6,105 | 6,105 | 6,104 | 6,104 | 6,065 | 5,839 | 5,695 | 5,077 | 4,202 | 2,426 |
| Accident Year 2008 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 2,853 | 2,647 | 2,548 | 2,507 | 2,489 | 2,479 | 2,685 | 2,858 | 4,359 | 5,386 |
| IBNR Reserves | $ 23 | |||||||||
| Cumulative number of reported claims | Claim | 393 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 2,755 | 2,564 | 2,506 | 2,418 | 2,123 | 2,023 | 1,861 | 1,637 | 1,091 | 534 |
| Accident Year 2008 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 2,324 | 2,324 | 2,324 | 2,360 | 2,360 | 2,312 | 2,312 | 2,420 | 2,098 | 3,883 |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 62 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 2,324 | 2,324 | 2,324 | 2,360 | 2,359 | 2,311 | 2,232 | 2,261 | 1,369 | $ 503 |
| Accident Year 2009 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 30,430 | 30,430 | 30,431 | 30,432 | 30,438 | 30,447 | 30,481 | 30,455 | 31,124 | |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 560,430 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 30,430 | 30,430 | 30,431 | 30,432 | 30,438 | 30,447 | 30,481 | 30,455 | 29,866 | |
| Accident Year 2009 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 8,153 | 8,154 | 8,155 | 8,123 | 8,245 | 8,558 | 8,659 | 8,891 | 10,817 | |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,755 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 8,153 | 8,154 | 8,155 | 8,123 | 7,995 | 7,502 | 6,353 | 5,208 | 3,250 | |
| Accident Year 2009 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,888 | 1,832 | 1,828 | 1,727 | 1,702 | 1,730 | 1,944 | 2,215 | 3,392 | |
| IBNR Reserves | $ 8 | |||||||||
| Cumulative number of reported claims | Claim | 290 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,855 | 1,816 | 1,796 | 1,662 | 1,629 | 1,410 | 1,082 | 941 | 476 | |
| Accident Year 2009 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 4,667 | 4,664 | 4,916 | 4,636 | 3,616 | 3,951 | 4,239 | 5,025 | 4,920 | |
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 83 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 4,666 | 4,663 | 3,757 | 3,760 | 3,410 | 3,205 | 2,640 | 1,595 | $ 103 | |
| Accident Year 2010 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 34,265 | 34,268 | 34,272 | 34,282 | 34,303 | 34,323 | 34,328 | 34,849 | ||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 625,695 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 34,265 | 34,268 | 34,272 | 34,282 | 34,303 | 34,323 | 34,328 | 29,127 | ||
| Accident Year 2010 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 10,201 | 10,202 | 10,185 | 10,068 | 9,937 | 10,547 | 10,818 | 10,752 | ||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,947 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 10,206 | 10,090 | 10,056 | 9,725 | 9,382 | 8,291 | 6,274 | 3,211 | ||
| Accident Year 2010 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 2,473 | 2,423 | 2,400 | 2,258 | 2,337 | 2,269 | 2,699 | 4,114 | ||
| IBNR Reserves | $ 4 | |||||||||
| Cumulative number of reported claims | Claim | 289 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 2,457 | 2,382 | 2,368 | 2,037 | 1,542 | 1,374 | 678 | 284 | ||
| Accident Year 2010 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 3,534 | 3,563 | 3,549 | 3,607 | 3,396 | 3,618 | 4,624 | 3,995 | ||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 95 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 3,534 | 3,560 | 3,545 | 3,252 | 2,943 | 2,780 | 2,193 | $ 928 | ||
| Accident Year 2011 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 38,299 | 38,302 | 38,316 | 38,327 | 38,360 | 38,296 | 38,188 | |||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 664,049 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 38,299 | 38,302 | 38,316 | 38,327 | 38,360 | 38,296 | 31,720 | |||
| Accident Year 2011 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 13,385 | 13,495 | 13,281 | 13,289 | 13,235 | 13,802 | 12,263 | |||
| IBNR Reserves | $ 30 | |||||||||
| Cumulative number of reported claims | Claim | 2,132 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 13,199 | 13,106 | 13,039 | 12,071 | 9,858 | 7,934 | 4,205 | |||
| Accident Year 2011 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,327 | 1,242 | 1,174 | 1,338 | 1,452 | 1,723 | 3,022 | |||
| IBNR Reserves | $ 11 | |||||||||
| Cumulative number of reported claims | Claim | 201 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,278 | 1,169 | 1,161 | 835 | 582 | 412 | 295 | |||
| Accident Year 2011 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 5,112 | 5,031 | 4,966 | 5,092 | 5,080 | 4,786 | 4,422 | |||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 126 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 5,109 | 5,022 | 4,939 | 4,748 | 4,622 | 3,207 | $ 1,031 | |||
| Accident Year 2012 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 50,987 | 50,989 | 50,998 | 51,021 | 50,996 | 50,021 | ||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 867,047 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 50,987 | 50,989 | 50,998 | 51,021 | 50,996 | 42,267 | ||||
| Accident Year 2012 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 13,343 | 13,313 | 13,707 | 14,108 | 15,007 | 12,980 | ||||
| IBNR Reserves | $ 22 | |||||||||
| Cumulative number of reported claims | Claim | 3,340 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 13,211 | 13,197 | 12,932 | 11,507 | 8,791 | 4,627 | ||||
| Accident Year 2012 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,333 | 1,214 | 1,270 | 1,269 | 1,305 | 4,055 | ||||
| IBNR Reserves | $ 26 | |||||||||
| Cumulative number of reported claims | Claim | 157 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,219 | 1,113 | 1,034 | 847 | 707 | 371 | ||||
| Accident Year 2012 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 4,880 | 4,869 | 5,345 | 5,396 | 4,767 | 4,979 | ||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 87 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 4,880 | 4,869 | 5,331 | 4,856 | 4,581 | $ 2,257 | ||||
| Accident Year 2013 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 57,021 | 57,023 | 57,034 | 56,970 | 56,974 | |||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 957,350 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 57,021 | 57,023 | 57,034 | 56,970 | 47,770 | |||||
| Accident Year 2013 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 21,352 | 21,823 | 21,096 | 20,702 | 18,664 | |||||
| IBNR Reserves | $ 162 | |||||||||
| Cumulative number of reported claims | Claim | 3,260 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 20,382 | 19,407 | 16,782 | 12,193 | 5,144 | |||||
| Accident Year 2013 [Member] | Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 5,599 | 5,599 | 5,536 | 5,515 | 6,039 | |||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,598 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 5,599 | 5,599 | 5,466 | 5,486 | 4,778 | |||||
| Accident Year 2013 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 865 | 817 | 926 | 728 | 3,461 | |||||
| IBNR Reserves | $ 18 | |||||||||
| Cumulative number of reported claims | Claim | 187 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 791 | 811 | 579 | 339 | 104 | |||||
| Accident Year 2013 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 2,866 | 2,947 | 2,743 | 2,007 | 3,060 | |||||
| IBNR Reserves | $ 13 | |||||||||
| Cumulative number of reported claims | Claim | 57 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 2,789 | 2,763 | 1,369 | 1,010 | $ 323 | |||||
| Accident Year 2014 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 56,981 | 56,981 | 56,938 | 57,179 | ||||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 939,444 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 56,981 | 56,981 | 56,938 | 48,024 | ||||||
| Accident Year 2014 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 22,353 | 22,041 | 21,881 | 20,812 | ||||||
| IBNR Reserves | $ 816 | |||||||||
| Cumulative number of reported claims | Claim | 3,536 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 20,177 | 17,554 | 13,807 | 6,822 | ||||||
| Accident Year 2014 [Member] | Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 7,562 | 7,583 | 7,657 | 8,079 | ||||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,635 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 7,562 | 7,570 | 7,619 | 6,437 | ||||||
| Accident Year 2014 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 476 | 557 | 501 | 3,744 | ||||||
| IBNR Reserves | $ 40 | |||||||||
| Cumulative number of reported claims | Claim | 192 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 369 | 331 | 299 | 171 | ||||||
| Accident Year 2014 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 2,760 | 2,990 | 3,130 | 3,214 | ||||||
| IBNR Reserves | $ 4 | |||||||||
| Cumulative number of reported claims | Claim | 51 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 2,739 | 2,727 | 2,327 | $ 1,331 | ||||||
| Accident Year 2015 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 54,993 | 54,939 | 55,482 | |||||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 898,270 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 54,993 | 54,876 | 45,430 | |||||||
| Accident Year 2015 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 20,017 | 19,857 | 18,521 | |||||||
| IBNR Reserves | $ 1,904 | |||||||||
| Cumulative number of reported claims | Claim | 3,492 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 14,938 | 11,878 | 6,226 | |||||||
| Accident Year 2015 [Member] | Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 7,887 | 7,955 | 8,287 | |||||||
| IBNR Reserves | $ 0 | |||||||||
| Cumulative number of reported claims | Claim | 1,588 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 7,885 | 7,937 | 6,745 | |||||||
| Accident Year 2015 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,227 | 1,037 | 4,421 | |||||||
| IBNR Reserves | $ 348 | |||||||||
| Cumulative number of reported claims | Claim | 143 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 464 | 259 | 98 | |||||||
| Accident Year 2015 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,400 | 1,630 | 1,902 | |||||||
| IBNR Reserves | $ 78 | |||||||||
| Cumulative number of reported claims | Claim | 49 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,127 | 856 | $ 641 | |||||||
| Accident Year 2016 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 59,851 | 58,849 | ||||||||
| IBNR Reserves | $ 100 | |||||||||
| Cumulative number of reported claims | Claim | 1,034,900 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 59,747 | 49,165 | ||||||||
| Accident Year 2016 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 21,275 | 20,549 | ||||||||
| IBNR Reserves | $ 3,049 | |||||||||
| Cumulative number of reported claims | Claim | 3,755 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 13,141 | 6,796 | ||||||||
| Accident Year 2016 [Member] | Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 6,386 | 6,877 | ||||||||
| IBNR Reserves | $ 3 | |||||||||
| Cumulative number of reported claims | Claim | 1,261 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 6,353 | 5,804 | ||||||||
| Accident Year 2016 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,148 | 3,119 | ||||||||
| IBNR Reserves | $ 440 | |||||||||
| Cumulative number of reported claims | Claim | 81 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 203 | 116 | ||||||||
| Accident Year 2016 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,812 | 3,314 | ||||||||
| IBNR Reserves | $ 39 | |||||||||
| Cumulative number of reported claims | Claim | 45 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,732 | $ 1,054 | ||||||||
| Accident Year 2017 [Member] | Medicare Supplement Insurance [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 67,960 | |||||||||
| IBNR Reserves | $ 9,822 | |||||||||
| Cumulative number of reported claims | Claim | 1,303,865 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 57,696 | |||||||||
| Accident Year 2017 [Member] | Automobile Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 22,179 | |||||||||
| IBNR Reserves | $ 7,311 | |||||||||
| Cumulative number of reported claims | Claim | 3,385 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 7,401 | |||||||||
| Accident Year 2017 [Member] | Automobile Physical Damage [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 6,257 | |||||||||
| IBNR Reserves | $ 105 | |||||||||
| Cumulative number of reported claims | Claim | 1,238 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 5,215 | |||||||||
| Accident Year 2017 [Member] | General Liability [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 1,490 | |||||||||
| IBNR Reserves | $ 1,241 | |||||||||
| Cumulative number of reported claims | Claim | 58 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 75 | |||||||||
| Accident Year 2017 [Member] | Surety [Member] | ||||||||||
| Incurred Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Incurred claims and allocated claim adjustment expenses, net of reinsurance | 4,677 | |||||||||
| IBNR Reserves | $ 2,043 | |||||||||
| Cumulative number of reported claims | Claim | 52 | |||||||||
| Cumulative Paid Claims Development, Net of Reinsurance [Abstract] | ||||||||||
| Cumulative paid claims and allocated claim adjustment expense, net of reinsurance. | $ 1,971 |
Insurance Reserves and Policyholder Funds, Average Historical Claims Duration (Details) |
Dec. 31, 2017 |
|---|---|
| Medicare Supplement Insurance [Member] | |
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited) [Abstract] | |
| 1st Year | 83.70% |
| 2nd Year | 16.40% |
| 3rd Year | 0.10% |
| 4th Year | (0.10%) |
| 5th Year | 0.00% |
| 6th Year | 0.00% |
| 7th Year | 0.00% |
| 8th Year | 0.00% |
| 9th Year | 0.00% |
| 10th Year | 0.00% |
| Automobile Liability [Member] | |
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited) [Abstract] | |
| 1st Year | 32.80% |
| 2nd Year | 29.40% |
| 3rd Year | 17.10% |
| 4th Year | 12.30% |
| 5th Year | 4.30% |
| 6th Year | 1.80% |
| 7th Year | 0.50% |
| 8th Year | 0.40% |
| 9th Year | 0.00% |
| 10th Year | 0.00% |
| Automobile Physical Damage [Member] | |
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited) [Abstract] | |
| 1st Year | 86.00% |
| 2nd Year | 13.00% |
| 3rd Year | (0.60%) |
| 4th Year | 1.10% |
| 5th Year | 0.00% |
| General Liability [Member] | |
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited) [Abstract] | |
| 1st Year | 17.70% |
| 2nd Year | 18.80% |
| 3rd Year | 16.20% |
| 4th Year | 14.30% |
| 5th Year | 10.90% |
| 6th Year | 5.40% |
| 7th Year | 6.60% |
| 8th Year | 2.40% |
| 9th Year | 2.00% |
| 10th Year | 6.70% |
| Surety [Member] | |
| Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (unaudited) [Abstract] | |
| 1st Year | 32.20% |
| 2nd Year | 34.20% |
| 3rd Year | 19.60% |
| 4th Year | 11.00% |
| 5th Year | 2.00% |
| 6th Year | 3.90% |
| 7th Year | 0.50% |
| 8th Year | 5.70% |
| 9th Year | 0.00% |
| 10th Year | 0.00% |
Insurance Reserves and Policyholder Funds, Incurred Paid Claims Reconciliation (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|---|---|---|---|
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | $ 51,995 | ||
| Reinsurance Recoverable on Unpaid Claims [Abstract] | |||
| Total reinsurance recoverable on unpaid losses | 11,968 | $ 10,796 | |
| Unallocated claims adjustment expenses | 1,726 | ||
| Total gross liability for unpaid losses, claims and loss adjustment expenses | 65,689 | $ 62,562 | $ 63,870 |
| Medicare Supplement Insurance [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 10,368 | ||
| Reinsurance Recoverable on Unpaid Claims [Abstract] | |||
| Total reinsurance recoverable on unpaid losses | 4,748 | ||
| Automobile Liability [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 31,450 | ||
| Reinsurance Recoverable on Unpaid Claims [Abstract] | |||
| Total reinsurance recoverable on unpaid losses | 5,245 | ||
| Automobile Physical Damage [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 1,110 | ||
| Reinsurance Recoverable on Unpaid Claims [Abstract] | |||
| Total reinsurance recoverable on unpaid losses | 116 | ||
| General Liability [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 3,902 | ||
| Reinsurance Recoverable on Unpaid Claims [Abstract] | |||
| Total reinsurance recoverable on unpaid losses | 1,859 | ||
| Surety [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | 3,161 | ||
| Other Short-Duration Insurance Lines [Member] | |||
| Net Outstanding Liabilities [Abstract] | |||
| Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance | $ 2,004 |
Reinsurance (Details) $ in Thousands |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2017
USD ($)
Reinsurer
|
Dec. 31, 2016
USD ($)
|
|
| Ceded Credit Risk [Line Items] | ||
| Percentage of reinsurance recoverables due from reinsurers | 99.00% | |
| Number of reinsurers | Reinsurer | 2 | |
| Summary reconciliation of premiums written and premiums earned [Abstract] | ||
| Direct premiums written | $ 181,568 | $ 142,200 |
| Assumed premiums written | 19,373 | 19,123 |
| Ceded premiums written | (38,019) | (10,225) |
| Net premiums written | 162,922 | 151,098 |
| Direct premiums earned | 181,458 | 144,339 |
| Assumed premiums earned | 19,241 | 19,124 |
| Ceded premiums earned | (37,372) | (9,998) |
| Net premiums earned | 163,327 | 153,465 |
| Provision for benefits and losses incurred | 147,444 | 109,616 |
| Reinsurance loss recoveries | (29,929) | (6,419) |
| Total insurance benefits and losses incurred | 117,515 | 103,197 |
| Components of reinsurance recoverables [Abstract] | ||
| Recoverable on unpaid losses | 11,968 | 10,796 |
| Recoverable on unpaid benefits | 4,403 | 655 |
| Ceded unearned premiums | 874 | 227 |
| Ceded advanced premiums | 368 | 25 |
| Total reinsurance recoverables | 17,613 | $ 11,703 |
| Swiss Reinsurance Corporation [Member] | ||
| Ceded Credit Risk [Line Items] | ||
| Reinsurance recoverables due | 60 | |
| General Re Life Corporation [Member] | ||
| Ceded Credit Risk [Line Items] | ||
| Reinsurance recoverables due | $ 17,449 | |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Allocation of total income taxes [Abstract] | |||
| Total tax expense on income | $ 828 | $ 888 | |
| Tax expense on components of shareholders' equity [Abstract] | |||
| Net unrealized gains on investment securities | 2,111 | 671 | |
| Total tax expense | 2,939 | 1,559 | |
| Reconciliation of income tax expense (benefit) [Abstract] | |||
| Federal income tax provision at statutory rate of 35% | 1,875 | 1,233 | |
| Dividends-received deduction | (92) | (95) | |
| Small life insurance company deduction | (613) | (376) | |
| Other | 72 | 55 | |
| Remeasurement of deferred taxes due to tax reform enactment | (395) | 0 | |
| Adjustment for prior years' estimates to actual | (19) | 71 | |
| Income tax expense | $ 828 | $ 888 | |
| Effective tax rate | 15.50% | 25.20% | |
| Federal statutory income tax rate | 35.00% | ||
| SLD as percentage of life insurance company taxable income | 60.00% | ||
| Percentage of reduction in SLD | 15.00% | ||
| Tentative amount of LICTI to reduction of SLD | $ 3,000 | ||
| Tentative amount of LICTI to phase out of SLD | 15,000 | ||
| Deferred tax liabilities [Abstract] | |||
| Deferred acquisition costs | (1,200) | $ (2,345) | |
| Deferred and uncollected premiums | (377) | (654) | |
| Net unrealized investment gains | (3,150) | (3,140) | |
| Other | (331) | (666) | |
| Total deferred tax liabilities | (5,058) | (6,805) | |
| Deferred tax assets [Abstract] | |||
| Insurance reserves | 3,216 | 4,589 | |
| Impaired assets | 869 | 1,454 | |
| Alternative minimum tax credit | 0 | 282 | |
| Bad debts and other | 380 | 640 | |
| Total deferred tax assets | 4,465 | 6,965 | |
| Net deferred tax liability | (593) | 0 | |
| Net deferred tax asset | 0 | 160 | |
| Components of income tax expense [Abstract] | |||
| Current - Federal | 2,186 | 890 | |
| Deferred - Federal | (1,358) | (2) | |
| Income tax expense | $ 828 | $ 888 | |
| Plan [Member] | |||
| Reconciliation of income tax expense (benefit) [Abstract] | |||
| Federal statutory income tax rate | 21.00% | ||
Junior Subordinated Debentures (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 31, 2017
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 December 31, 2017 | $ 33,738 | |||||||||
| Net balance December 31, 2016 | $ 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 December 31, 2017 | 18,042 | [1],[2] | ||||||||
| Less: Treasury debt | 0 | [1],[2],[3] | ||||||||
| Net balance December 31, 2017 | 18,042 | [1],[2] | ||||||||
| Net balance December 31, 2016 | $ 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 December 31, 2017 | 23,196 | [1],[2] | ||||||||
| Less: Treasury debt | (7,500) | [1],[2],[3] | ||||||||
| Net balance December 31, 2017 | 15,696 | [1],[2] | ||||||||
| Net balance December 31, 2016 | $ 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% | |||||||||
| ||||||||||
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Commitments and Contingencies [Abstract] | ||
| Rental expense for operating leases | $ 1,306 | $ 1,277 |
| Future minimum base lease obligations under non-cancelable operating leases [Abstract] | ||
| 2018 | 928 | |
| 2019 | 495 | |
| 2020 | 528 | |
| Thereafter | 3,785 | |
| Total | $ 5,736 | |
Benefit Plans (Details) - 2012 Plan [Member] - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Share Awards [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Number of shares authorized for issuance (in shares) | 2,000,000 | |
| Shares available for future grant (in shares) | 1,241,200 | 1,423,200 |
| Stock Options [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Options granted (in shares) | 0 | 0 |
| Options outstanding (in shares) | 0 | 0 |
| Restricted Stock [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Restricted shares issued (in shares) | 182,000 | 180,000 |
| Estimated fair value of shares issued | $ 646 | $ 741 |
| Restricted Stock [Member] | Minimum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Vesting period | 1 year | |
| Restricted Stock [Member] | Maximum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Vesting period | 3 years | |
Benefit Plans, 401(k) Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| 401(k) Plan [Abstract] | ||
| Maximum percentage of compensation employees may defer | 50.00% | |
| Total matching contribution | $ 237 | $ 223 |
| Employer maximum contribution to plan | 35.00% | 35.00% |
| Percentage of participants contribution | 6.00% | 6.00% |
| Safe harbor non-elective contribution | 3.00% | 3.00% |
| Safe harbor non-elective contribution | $ 450 | $ 433 |
Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Class of Stock [Line Items] | ||
| Series D Preferred Stock, outstanding (in shares) | 55,000 | 55,000 |
| Dividends paid for Series D Preferred Stock | $ 399 | $ 399 |
| Series D Preferred Stock [Member] | ||
| Class of Stock [Line Items] | ||
| Series D Preferred Stock, outstanding (in shares) | 55,000 | 55,000 |
| Preferred stock, par value (in dollars per share) | $ 100 | $ 100 |
| Accrued annual dividends rate (in dollars per share) | $ 7.25 | $ 7.25 |
| Number of preferred stock shares convertible to common shares (in shares) | 1,378,000 | |
| Maximum number of common stock issuable from conversion of preference shares, without obtaining prior shareholder approval (in shares) | 2,703,000 | |
| Dividends accrued but unpaid | $ 18 | $ 18 |
| Dividends paid for Series D Preferred Stock | $ 399 | $ 399 |
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Income [Abstract] | ||
| Net income before preferred stock dividends | $ 4,528 | $ 2,636 |
| Less: preferred stock dividends | (399) | (399) |
| Net income applicable to common shareholders | $ 4,129 | $ 2,237 |
| Shares [Abstract] | ||
| Weighted average shares outstanding (in shares) | 20,431 | 20,445 |
| Per Share Amount [Abstract] | ||
| Net income applicable to common shareholders (in dollars per share) | $ 0.20 | $ 0.11 |
Statutory Reporting (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Statutory Accounting Practices [Line Items] | ||
| Dividends received from its subsidiaries | $ 4,850 | $ 5,508 |
| Maximum dividend payments by insurance subsidiaries without requiring prior approval | 4,761 | |
| Statutory accounting practices [Member] | ||
| Statutory Accounting Practices [Line Items] | ||
| Statutory net income (loss) | 3,767 | 7,603 |
| Statutory surplus | 77,483 | 74,919 |
| Statutory accounting practices [Member] | Life and Health [Member] | ||
| Statutory Accounting Practices [Line Items] | ||
| Statutory net income (loss) | (2,880) | 1,133 |
| Statutory surplus | 34,135 | 33,430 |
| Statutory accounting practices [Member] | Property and Casualty [Member] | ||
| Statutory Accounting Practices [Line Items] | ||
| Statutory net income (loss) | 6,647 | 6,470 |
| Statutory surplus | $ 43,348 | $ 41,489 |
Related Party Transactions (Details) $ in Thousands |
12 Months Ended | |
|---|---|---|
|
Dec. 31, 2017
USD ($)
ft²
Director
shares
|
Dec. 31, 2016
USD ($)
shares
|
|
| Related Party Transaction [Line Items] | ||
| Number of board of directors | Director | 2 | |
| Rental expense for operating leases | $ 1,306 | $ 1,277 |
| Payment of dividends on Series D Preferred Stock | 399 | 399 |
| Series D Preferred Stock [Member] | ||
| Related Party Transaction [Line Items] | ||
| Payment of dividends on Series D Preferred Stock | $ 399 | 399 |
| Affiliated Entity [Member] | ||
| Related Party Transaction [Line Items] | ||
| Office and covered garage space leased | ft² | 49,586 | |
| Rental expense for operating leases | $ 866 | 882 |
| Services purchased from related party | 54 | 215 |
| Members of Management [Member] | ||
| Related Party Transaction [Line Items] | ||
| Aggregate carrying value of investments in Gray | 14,407 | 10,305 |
| Premiums paid by Gray for group accident plan | $ 597 | $ 478 |
| Members of Management [Member] | Class A common stock [Member] | ||
| Related Party Transaction [Line Items] | ||
| Shares of Gray common stock owned (in shares) | shares | 880,272 | 880,272 |
| Members of Management [Member] | Common Stock [Member] | ||
| Related Party Transaction [Line Items] | ||
| Shares of Gray common stock owned (in shares) | shares | 106,000 | 106,000 |
Segment Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Revenue and income (loss) before income taxes for each business unit [Abstract] | ||
| Insurance premiums | $ 163,327 | $ 153,465 |
| Insurance benefits and losses incurred | 117,515 | 103,197 |
| Expenses deferred | (14,349) | (12,993) |
| Amortization and depreciation expense | 12,080 | 13,089 |
| Other expenses | 60,512 | 59,260 |
| Total benefits and expenses | 175,758 | 162,553 |
| Investment income | 8,496 | 9,884 |
| Other income | 123 | 133 |
| Operating income (loss) | (3,812) | 929 |
| Net realized gains (losses) | 9,168 | 2,595 |
| Income before income taxes | 5,356 | 3,524 |
| Total revenues | 181,114 | 166,077 |
| Intangibles | 2,544 | 2,544 |
| Total assets | 343,239 | 318,600 |
| Operating Segments [Member] | American Southern [Member] | ||
| Revenue and income (loss) before income taxes for each business unit [Abstract] | ||
| Insurance premiums | 53,661 | 53,763 |
| Insurance benefits and losses incurred | 34,486 | 34,408 |
| Expenses deferred | (8,062) | (7,834) |
| Amortization and depreciation expense | 8,543 | 8,709 |
| Other expenses | 15,951 | 15,562 |
| Total benefits and expenses | 50,918 | 50,845 |
| Underwriting income (loss) | 2,743 | 2,918 |
| Investment income | 3,332 | 3,868 |
| Other income | 11 | 0 |
| Operating income (loss) | 6,086 | 6,786 |
| Net realized gains (losses) | 2,481 | 528 |
| Income before income taxes | 8,567 | 7,314 |
| Total revenues | 59,485 | 58,159 |
| Intangibles | 1,350 | 1,350 |
| Total assets | 126,313 | 123,721 |
| Operating Segments [Member] | Bankers Fidelity [Member] | ||
| Revenue and income (loss) before income taxes for each business unit [Abstract] | ||
| Insurance premiums | 109,666 | 99,702 |
| Insurance benefits and losses incurred | 83,029 | 68,789 |
| Expenses deferred | (6,287) | (5,159) |
| Amortization and depreciation expense | 2,825 | 3,667 |
| Other expenses | 38,196 | 37,258 |
| Total benefits and expenses | 117,763 | 104,555 |
| Underwriting income (loss) | (8,097) | (4,853) |
| Investment income | 5,021 | 5,725 |
| Other income | 8 | 10 |
| Operating income (loss) | (3,068) | 882 |
| Net realized gains (losses) | 2,800 | 2,068 |
| Income before income taxes | (268) | 2,950 |
| Total revenues | 117,495 | 107,505 |
| Intangibles | 1,194 | 1,194 |
| Total assets | 185,624 | 168,657 |
| Corporate and Other [Member] | ||
| Revenue and income (loss) before income taxes for each business unit [Abstract] | ||
| Insurance premiums | 0 | 0 |
| Insurance benefits and losses incurred | 0 | 0 |
| Expenses deferred | 0 | 0 |
| Amortization and depreciation expense | 712 | 713 |
| Other expenses | 16,191 | 15,761 |
| Total benefits and expenses | 16,903 | 16,474 |
| Investment income | 2,267 | 2,217 |
| Other income | 7,806 | 7,518 |
| Operating income (loss) | (6,830) | (6,739) |
| Net realized gains (losses) | 3,887 | (1) |
| Income before income taxes | (2,943) | (6,740) |
| Total revenues | 13,960 | 9,734 |
| Intangibles | 0 | 0 |
| Total assets | 147,653 | 138,694 |
| Adjustments & Eliminations [Member] | ||
| Revenue and income (loss) before income taxes for each business unit [Abstract] | ||
| Insurance premiums | 0 | 0 |
| Insurance benefits and losses incurred | 0 | 0 |
| Expenses deferred | 0 | 0 |
| Amortization and depreciation expense | 0 | 0 |
| Other expenses | (9,826) | (9,321) |
| Total benefits and expenses | (9,826) | (9,321) |
| Investment income | (2,124) | (1,926) |
| Other income | (7,702) | (7,395) |
| Operating income (loss) | 0 | 0 |
| Net realized gains (losses) | 0 | 0 |
| Income before income taxes | 0 | 0 |
| Total revenues | (9,826) | (9,321) |
| Intangibles | 0 | 0 |
| Total assets | $ (116,351) | $ (112,472) |
Disclosures About Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||
|---|---|---|---|---|---|
| Carrying Amount [Member] | |||||
| Assets [Abstract] | |||||
| Fixed maturities | [1] | $ 215,108 | $ 210,670 | ||
| Equity securities | [1] | 23,355 | 20,257 | ||
| Carrying Amount [Member] | Level 1 [Member] | |||||
| Assets [Abstract] | |||||
| Cash and cash equivalents | 24,547 | 13,252 | |||
| Carrying Amount [Member] | Level 2 [Member] | |||||
| Assets [Abstract] | |||||
| Policy loans | 2,146 | 2,265 | |||
| 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 | 5,626 | 9,709 | |||
| Estimated Fair Value [Member] | |||||
| Assets [Abstract] | |||||
| Fixed maturities | [1] | 215,108 | 210,670 | ||
| Equity securities | [1] | 23,355 | 20,257 | ||
| Estimated Fair Value [Member] | Level 1 [Member] | |||||
| Assets [Abstract] | |||||
| Cash and cash equivalents | 24,547 | 13,252 | |||
| Estimated Fair Value [Member] | Level 2 [Member] | |||||
| Assets [Abstract] | |||||
| Policy loans | 2,146 | 2,265 | |||
| 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 | $ 5,626 | $ 9,709 | |||
| |||||
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward] | ||
| Beginning Balance | $ 105,506 | $ 102,492 |
| Total other comprehensive income, net of tax | 3,921 | 1,246 |
| Ending Balance | 112,983 | 105,506 |
| AOCI Attributable to Parent [Member] | ||
| Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward] | ||
| Beginning Balance | 5,830 | 4,584 |
| Total other comprehensive income, net of tax | 3,921 | 1,246 |
| Ending Balance | 9,751 | 5,830 |
| 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 | 5,830 | |
| Other comprehensive income before reclassifications | 9,880 | |
| Amounts reclassified from accumulated other comprehensive income | (5,959) | |
| Total other comprehensive income, net of tax | 3,921 | |
| Ending Balance | $ 9,751 | $ 5,830 |
Schedule II CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|||
| ASSETS [Abstract] | |||||||
| Cash and cash equivalents | $ 13,252 | $ 13,252 | $ 24,547 | $ 13,252 | $ 15,622 | ||
| Investments | 247,511 | 244,177 | |||||
| Investments in unconsolidated trusts | 1,238 | 1,238 | |||||
| Other assets | 5,089 | 5,208 | |||||
| Total assets | 343,239 | 318,600 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract] | |||||||
| Deferred tax liability, net | 593 | 0 | |||||
| Junior subordinated debentures | 33,738 | 33,738 | |||||
| Total liabilities | 230,256 | 213,094 | |||||
| Shareholders' equity | 112,983 | 105,506 | 102,492 | ||||
| Total liabilities and shareholders' equity | 343,239 | 318,600 | |||||
| REVENUE [Abstract] | |||||||
| Other | 123 | 133 | |||||
| Total revenue | 181,114 | 166,077 | |||||
| INTEREST EXPENSE | 1,723 | 1,562 | |||||
| INCOME TAX BENEFIT | (828) | (888) | |||||
| Net income | 4,528 | 2,636 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES [Abstract] | |||||||
| Net income | 4,528 | 2,636 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities [Abstract] | |||||||
| Realized investment losses (gains), net | (9,168) | (2,595) | |||||
| Depreciation and amortization | 1,438 | 1,205 | |||||
| Compensation expense related to share awards | 495 | 586 | |||||
| Deferred income tax benefit | (1,358) | (2) | |||||
| Increase (decrease) in other liabilities | 5,665 | 1,649 | |||||
| Other, net | 34 | 19 | |||||
| Net cash provided by operating activities | 2,634 | 1,316 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES [Abstract] | |||||||
| Proceeds from investments sold, called or matured | 10,791 | 10,874 | |||||
| Investments purchased | (84,552) | (75,071) | |||||
| Additions to property and equipment | (103) | (396) | |||||
| Net cash provided by (used in) investing activities | 10,128 | (2,232) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES [Abstract] | |||||||
| Payment of dividends on Series D preferred stock | (399) | (399) | |||||
| Payment of dividends on common stock | (408) | (408) | |||||
| Proceeds from shares issued under stock plans | 32 | 51 | |||||
| Purchase of shares for treasury | (692) | (698) | |||||
| Net cash used in financing activities | (1,467) | (1,454) | |||||
| Net increase (decrease) in cash | 11,295 | (2,370) | |||||
| Cash and cash equivalents at beginning of year | 13,252 | 15,622 | |||||
| Cash and cash equivalents at end of year | 24,547 | 13,252 | |||||
| Supplemental disclosure [Abstract] | |||||||
| Cash paid for interest | 1,705 | 1,544 | |||||
| Cash paid for income taxes | 1,400 | 675 | |||||
| Parent Company [Member] | |||||||
| ASSETS [Abstract] | |||||||
| Cash and cash equivalents | 4,308 | 4,308 | 9,732 | 4,308 | $ 4,463 | ||
| Investments | 16,097 | 16,160 | |||||
| Investment in subsidiaries | 116,351 | 112,472 | |||||
| Investments in unconsolidated trusts | 1,238 | 1,238 | |||||
| Income taxes receivable from subsidiaries | 2,879 | 2,961 | |||||
| Other assets | 3,762 | 4,554 | |||||
| Total assets | 150,059 | 141,693 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract] | |||||||
| Deferred tax liability, net | 1,253 | 500 | |||||
| Other payables | 2,085 | 1,949 | |||||
| Junior subordinated debentures | 33,738 | 33,738 | |||||
| Total liabilities | 37,076 | 36,187 | |||||
| Shareholders' equity | 112,983 | 105,506 | |||||
| Total liabilities and shareholders' equity | $ 150,059 | $ 141,693 | |||||
| REVENUE [Abstract] | |||||||
| Fee income from subsidiaries | 7,702 | 7,395 | |||||
| Distributed earnings from subsidiaries | 4,850 | 5,508 | |||||
| Other | 4,130 | 408 | |||||
| Total revenue | 16,682 | 13,311 | |||||
| GENERAL AND ADMINISTRATIVE EXPENSES | 13,015 | 12,858 | |||||
| INTEREST EXPENSE | 1,723 | 1,562 | |||||
| Earnings before tax and equity in undistributed earnings (losses) of subsidiaries | 1,944 | (1,109) | |||||
| INCOME TAX BENEFIT | [1] | (2,553) | (1,837) | ||||
| Earnings after tax but before equity in undistributed earnings (losses) of subsidiaries | 4,497 | 728 | |||||
| EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES, NET | 31 | 1,908 | |||||
| Net income | 4,528 | 2,636 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES [Abstract] | |||||||
| Net income | 4,528 | 2,636 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities [Abstract] | |||||||
| Realized investment losses (gains), net | (3,891) | 1 | |||||
| Depreciation and amortization | 712 | 713 | |||||
| Compensation expense related to share awards | 495 | 586 | |||||
| Equity in undistributed earnings of consolidated subsidiaries | (31) | (1,908) | |||||
| Decrease (increase) in intercompany taxes | 82 | (815) | |||||
| Deferred income tax benefit | (1,358) | (2) | |||||
| Increase (decrease) in other liabilities | 136 | (224) | |||||
| Other, net | 295 | (221) | |||||
| Net cash provided by operating activities | 968 | 766 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES [Abstract] | |||||||
| Proceeds from investments sold, called or matured | 6,014 | 1,979 | |||||
| Investments purchased | 0 | (1,000) | |||||
| Capital contribution to subsidiaries | 0 | (75) | |||||
| Additions to property and equipment | (91) | (371) | |||||
| Net cash provided by (used in) investing activities | 5,923 | 533 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES [Abstract] | |||||||
| Payment of dividends on Series D preferred stock | (399) | (399) | |||||
| Payment of dividends on common stock | (408) | (408) | |||||
| Proceeds from shares issued under stock plans | 32 | 51 | |||||
| Purchase of shares for treasury | (692) | (698) | |||||
| Net cash used in financing activities | (1,467) | (1,454) | |||||
| Net increase (decrease) in cash | 5,424 | (155) | |||||
| Cash and cash equivalents at beginning of year | 4,308 | 4,463 | |||||
| Cash and cash equivalents at end of year | 9,732 | 4,308 | |||||
| Supplemental disclosure [Abstract] | |||||||
| Cash paid for interest | 1,705 | 1,544 | |||||
| Cash paid for income taxes | 1,400 | 675 | |||||
| Intercompany tax settlement from subsidiaries | $ 2,676 | $ 2,845 | |||||
| |||||||
Schedule III SUPPLEMENTARY INSURANCE INFORMATION (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|||||||
| Supplementary Insurance Information, by Segment [Line Items] | |||||||||
| Deferred Acquisition Costs | $ 32,694 | $ 28,975 | |||||||
| Future Policy Benefits, Losses, Claims and Loss Reserves | 148,124 | [1] | 137,405 | [2] | |||||
| Unearned Premiums | 23,449 | 23,208 | |||||||
| Other Policy Claims and Benefits Payable | 2,010 | 2,066 | |||||||
| Liability for future policy benefits | 82,435 | 74,843 | |||||||
| Losses and claims | 65,689 | 62,562 | $ 63,870 | ||||||
| Premium Revenue | 163,327 | 153,465 | |||||||
| Net Investment Income | 7,707 | 9,307 | |||||||
| Benefits, Claims, Losses and Settlement Expenses | 117,515 | 103,197 | |||||||
| Amortization of Deferred Acquisition Costs | 10,630 | 11,884 | |||||||
| Other Operating Expenses | 47,613 | 47,472 | |||||||
| Casualty Premiums Written | 53,362 | 51,477 | |||||||
| Bankers Fidelity [Member] | |||||||||
| Supplementary Insurance Information, by Segment [Line Items] | |||||||||
| Deferred Acquisition Costs | 30,619 | 26,791 | |||||||
| Future Policy Benefits, Losses, Claims and Loss Reserves | 100,127 | 87,849 | |||||||
| Unearned Premiums | 4,271 | 3,731 | |||||||
| Other Policy Claims and Benefits Payable | 2,010 | 2,066 | |||||||
| Premium Revenue | 109,666 | 99,702 | |||||||
| Net Investment Income | 4,257 | 5,172 | |||||||
| Benefits, Claims, Losses and Settlement Expenses | 83,029 | 68,789 | |||||||
| Amortization of Deferred Acquisition Costs | 2,460 | 3,401 | |||||||
| Other Operating Expenses | 32,274 | 32,365 | |||||||
| Casualty Premiums Written | 0 | 0 | |||||||
| American Southern [Member] | |||||||||
| Supplementary Insurance Information, by Segment [Line Items] | |||||||||
| Deferred Acquisition Costs | 2,075 | 2,184 | |||||||
| Future Policy Benefits, Losses, Claims and Loss Reserves | 47,997 | 49,556 | |||||||
| Unearned Premiums | 19,178 | 19,477 | |||||||
| Other Policy Claims and Benefits Payable | 0 | 0 | |||||||
| Premium Revenue | 53,661 | 53,763 | |||||||
| Net Investment Income | 3,307 | 3,844 | |||||||
| Benefits, Claims, Losses and Settlement Expenses | 34,486 | 34,408 | |||||||
| Amortization of Deferred Acquisition Costs | 8,170 | 8,483 | |||||||
| Other Operating Expenses | 8,262 | 7,954 | |||||||
| Casualty Premiums Written | 53,362 | 51,477 | |||||||
| Other [Member] | |||||||||
| Supplementary Insurance Information, by Segment [Line Items] | |||||||||
| Premium Revenue | 0 | 0 | |||||||
| Net Investment Income | 143 | 291 | |||||||
| Benefits, Claims, Losses and Settlement Expenses | 0 | 0 | |||||||
| Amortization of Deferred Acquisition Costs | 0 | 0 | |||||||
| Other Operating Expenses | 7,077 | 7,153 | |||||||
| Casualty Premiums Written | $ 0 | $ 0 | |||||||
| |||||||||
Schedule IV REINSURANCE (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Life Insurance in Force [Abstract] | ||
| Direct Amount | $ 255,506 | $ 263,567 |
| Ceded To Other Companies | (14,902) | (16,087) |
| Assumed From Other Companies | 0 | 0 |
| Net Amounts | 240,604 | 247,480 |
| Premiums [Abstract] | ||
| Direct Amount | 181,458 | 144,339 |
| Ceded To Other Companies | (37,372) | (9,998) |
| Assumed From Other Companies | 19,241 | 19,124 |
| Net premiums earned | $ 163,327 | $ 153,465 |
| Percentage of Amount Assumed to Net | 11.80% | 12.50% |
| Bankers Fidelity [Member] | ||
| Premiums [Abstract] | ||
| Direct Amount | $ 142,210 | $ 104,996 |
| Ceded To Other Companies | (32,585) | (5,344) |
| Assumed From Other Companies | 41 | 50 |
| Net premiums earned | $ 109,666 | $ 99,702 |
| Percentage of Amount Assumed to Net | 0.00% | 0.10% |
| American Southern [Member] | ||
| Premiums [Abstract] | ||
| Direct Amount | $ 39,248 | $ 39,343 |
| Ceded To Other Companies | (4,787) | (4,654) |
| Assumed From Other Companies | 19,200 | 19,074 |
| Net premiums earned | $ 53,661 | $ 53,763 |
| Percentage of Amount Assumed to Net | 35.80% | 35.50% |
Schedule VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Schedule VI SUPPLEMENTAL INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS [Abstract] | ||
| Deferred Policy Acquisition Costs | $ 2,075 | $ 2,184 |
| Reserves | 47,997 | 49,556 |
| Unearned Premiums | 19,178 | 19,477 |
| Earned Premiums | 53,661 | 53,763 |
| Net Investment Income | 3,307 | 3,844 |
| Claims and Claim Adjustment Expenses Incurred Related To Current Year | 37,016 | 36,541 |
| Claims and Claim Adjustment Expenses Incurred Related To Prior Years | (2,530) | (2,133) |
| Amortization of Deferred Acquisition Costs | 8,170 | 8,483 |
| Paid Claims and Claim Adjustment Expenses | 33,459 | 34,219 |
| Premiums Written | $ 53,362 | $ 51,477 |