☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Georgia
|
58-1027114
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
4370 Peachtree Road, N.E.,
Atlanta, Georgia
|
30319
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Part I. Financial Information
|
Page No.
|
|
Item 1.
|
Financial Statements: | |
2
|
||
|
||
3
|
||
|
||
4
|
||
|
||
5
|
||
|
||
6
|
||
7
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21
|
Item 4.
|
Controls and Procedures |
29
|
Part II. Other Information
|
||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds |
30
|
Item 6.
|
Exhibits |
30
|
31
|
ASSETS
|
||||||||
Unaudited
September 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Cash and cash equivalents
|
$
|
10,038
|
$
|
24,547
|
||||
Investments:
|
||||||||
Fixed maturities, available-for-sale (cost: $215,698 and $212,544)
|
207,138
|
215,108
|
||||||
Equity securities (cost: $10,515 and $10,918)
|
23,705
|
23,355
|
||||||
Other invested assets
|
10,817
|
5,626
|
||||||
Policy loans
|
2,084
|
2,146
|
||||||
Real estate
|
38
|
38
|
||||||
Investment in unconsolidated trusts
|
1,238
|
1,238
|
||||||
Total investments
|
245,020
|
247,511
|
||||||
Receivables:
|
||||||||
Reinsurance
|
24,022
|
17,613
|
||||||
Insurance premiums and other (net of allowance for doubtful accounts: $216 and $209)
|
14,972
|
13,241
|
||||||
Deferred income taxes, net
|
3,077
|
-
|
||||||
Deferred acquisition costs
|
34,934
|
32,694
|
||||||
Other assets
|
4,942
|
5,089
|
||||||
Intangibles
|
2,544
|
2,544
|
||||||
Total assets
|
$
|
339,549
|
$
|
343,239
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Insurance reserves and policyholder funds:
|
||||||||
Future policy benefits
|
$
|
88,437
|
$
|
82,435
|
||||
Unearned premiums
|
26,272
|
23,449
|
||||||
Losses and claims
|
71,816
|
65,689
|
||||||
Other policy liabilities
|
1,288
|
2,010
|
||||||
Total insurance reserves and policyholder funds
|
187,813
|
173,583
|
||||||
Accounts payable and accrued expenses
|
15,880
|
22,342
|
||||||
Deferred income taxes, net
|
-
|
593
|
||||||
Junior subordinated debenture obligations, net
|
33,738
|
33,738
|
||||||
Total liabilities
|
237,431
|
230,256
|
||||||
Commitments and contingencies (Note 9)
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, 55,000 shares issued and
outstanding; $5,500 redemption value
|
55
|
55
|
||||||
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding:
20,218,836 and 20,449,531
|
22,401
|
22,401
|
||||||
Additional paid-in capital
|
57,419
|
57,495
|
||||||
Retained earnings
|
37,107
|
30,993
|
||||||
Accumulated other comprehensive income (loss)
|
(6,762
|
)
|
9,751
|
|||||
Unearned stock grant compensation
|
(252
|
)
|
(579
|
)
|
||||
Treasury stock, at cost: 2,182,058 and 1,951,363 shares
|
(7,850
|
)
|
(7,133
|
)
|
||||
Total shareholders’ equity
|
102,118
|
112,983
|
||||||
Total liabilities and shareholders’ equity
|
$
|
339,549
|
$
|
343,239
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenue:
|
||||||||||||||||
Insurance premiums
|
$
|
42,557
|
$
|
42,094
|
$
|
127,604
|
$
|
122,996
|
||||||||
Net investment income
|
2,215
|
2,136
|
7,111
|
6,380
|
||||||||||||
Realized investment gains, net
|
484
|
539
|
797
|
2,818
|
||||||||||||
Unrealized gains on equity securities, net
|
1,083
|
-
|
753
|
-
|
||||||||||||
Other income
|
31
|
29
|
88
|
95
|
||||||||||||
Total revenue
|
46,370
|
44,798
|
136,353
|
132,289
|
||||||||||||
Benefits and expenses:
|
||||||||||||||||
Insurance benefits and losses incurred
|
33,087
|
30,417
|
98,478
|
87,446
|
||||||||||||
Commissions and underwriting expenses
|
8,722
|
10,176
|
28,456
|
31,800
|
||||||||||||
Interest expense
|
529
|
440
|
1,497
|
1,273
|
||||||||||||
Other expense
|
2,960
|
3,134
|
9,168
|
9,301
|
||||||||||||
Total benefits and expenses
|
45,298
|
44,167
|
137,599
|
129,820
|
||||||||||||
Income (loss) before income taxes
|
1,072
|
631
|
(1,246
|
)
|
2,469
|
|||||||||||
Income tax expense (benefit)
|
138
|
(116
|
)
|
(341
|
)
|
483
|
||||||||||
Net income (loss)
|
934
|
747
|
(905
|
)
|
1,986
|
|||||||||||
Preferred stock dividends
|
(100
|
)
|
(100
|
)
|
(299
|
)
|
(299
|
)
|
||||||||
Net income (loss) applicable to common shareholders
|
$
|
834
|
$
|
647
|
$
|
(1,204
|
)
|
$
|
1,687
|
|||||||
Earnings (loss) per common share (basic and diluted)
|
$
|
.04
|
$
|
.03
|
$
|
(.06
|
)
|
$
|
.08
|
|||||||
Dividends per common share
|
$
|
-
|
$
|
-
|
$
|
.02
|
$
|
.02
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income (loss)
|
$
|
934
|
$
|
747
|
$
|
(905
|
)
|
$
|
1,986
|
|||||||
Other comprehensive income (loss):
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Gross unrealized holding gain (loss) arising in the period
|
63
|
2,852
|
(10,327
|
)
|
7,271
|
|||||||||||
Related income tax effect
|
(13
|
)
|
(997
|
)
|
2,169
|
(2,544
|
)
|
|||||||||
Subtotal
|
50
|
1,855
|
(8,158
|
)
|
4,727
|
|||||||||||
Less: reclassification adjustment for net realized losses included in net income (loss)
|
(484
|
)
|
(539
|
)
|
(797
|
)
|
(2,818
|
)
|
||||||||
Related income tax effect
|
101
|
188
|
167
|
986
|
||||||||||||
Subtotal
|
(383
|
)
|
(351
|
)
|
(630
|
)
|
(1,832
|
)
|
||||||||
Total other comprehensive income (loss), net of tax
|
(333
|
)
|
1,504
|
(8,788
|
)
|
2,895
|
||||||||||
Total comprehensive income (loss)
|
$
|
601
|
$
|
2,251
|
$
|
(9,693
|
)
|
$
|
4,881
|
Nine Months Ended September 30, 2018
|
Preferred
Stock
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Unearned
Stock Grant
Compensation
|
Treasury
Stock
|
Total
|
||||||||||||||||||||||||
Balance, December 31, 2017
|
$
|
55
|
$
|
22,401
|
$
|
57,495
|
$
|
30,993
|
$
|
9,751
|
$
|
(579
|
)
|
$
|
(7,133
|
)
|
$
|
112,983
|
||||||||||||||
Cumulative effect of adoption of accounting guidance for equity financial instruments at January 1, 2018
|
-
|
-
|
-
|
9,825
|
(9,825
|
)
|
-
|
-
|
-
|
|||||||||||||||||||||||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018
|
-
|
-
|
-
|
(2,100
|
)
|
2,100
|
-
|
-
|
-
|
|||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(905
|
)
|
-
|
-
|
-
|
(905
|
)
|
||||||||||||||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
-
|
(8,788
|
)
|
-
|
-
|
(8,788
|
)
|
||||||||||||||||||||||
Dividends on common stock
|
-
|
-
|
-
|
(407
|
)
|
-
|
-
|
-
|
(407
|
)
|
||||||||||||||||||||||
Dividends accrued on preferred stock
|
-
|
-
|
-
|
(299
|
)
|
-
|
-
|
-
|
(299
|
)
|
||||||||||||||||||||||
Restricted stock grants, net
|
-
|
-
|
(88
|
)
|
-
|
-
|
135
|
(47
|
)
|
-
|
||||||||||||||||||||||
Amortization of unearned compensation
|
-
|
-
|
-
|
-
|
-
|
192
|
-
|
192
|
||||||||||||||||||||||||
Purchase of shares for treasury
|
-
|
-
|
-
|
-
|
-
|
-
|
(463
|
)
|
(463
|
)
|
||||||||||||||||||||||
Net shares acquired related to employee share-based compensation plans
|
-
|
-
|
-
|
-
|
-
|
-
|
(223
|
)
|
(223
|
)
|
||||||||||||||||||||||
Issuance of shares under stock plans
|
-
|
-
|
12
|
-
|
-
|
-
|
16
|
28
|
||||||||||||||||||||||||
Balance, September 30, 2018
|
$
|
55
|
$
|
22,401
|
$
|
57,419
|
$
|
37,107
|
$
|
(6,762
|
)
|
$
|
(252
|
)
|
$
|
(7,850
|
)
|
$
|
102,118
|
|||||||||||||
Nine Months Ended September 30, 2017
|
||||||||||||||||||||||||||||||||
Balance, December 31, 2016
|
$
|
55
|
$
|
22,401
|
$
|
57,114
|
$
|
27,272
|
$
|
5,830
|
$
|
(428
|
)
|
$
|
(6,738
|
)
|
$
|
105,506
|
||||||||||||||
Net income
|
-
|
-
|
-
|
1,986
|
-
|
-
|
-
|
1,986
|
||||||||||||||||||||||||
Other comprehensive income, net of tax
|
-
|
-
|
-
|
-
|
2,895
|
-
|
-
|
2,895
|
||||||||||||||||||||||||
Dividends on common stock
|
-
|
-
|
-
|
(408
|
)
|
-
|
-
|
-
|
(408
|
)
|
||||||||||||||||||||||
Dividends accrued on preferred stock
|
-
|
-
|
-
|
(299
|
)
|
-
|
-
|
-
|
(299
|
)
|
||||||||||||||||||||||
Restricted stock grants
|
-
|
-
|
293
|
-
|
-
|
(522
|
)
|
229
|
-
|
|||||||||||||||||||||||
Amortization of unearned compensation
|
-
|
-
|
-
|
-
|
-
|
363
|
-
|
363
|
||||||||||||||||||||||||
Purchase of shares for treasury
|
-
|
-
|
-
|
-
|
-
|
-
|
(546
|
)
|
(546
|
)
|
||||||||||||||||||||||
Issuance of shares under stock plans
|
-
|
-
|
13
|
-
|
-
|
-
|
10
|
23
|
||||||||||||||||||||||||
Balance, September 30, 2017
|
$
|
55
|
$
|
22,401
|
$
|
57,420
|
$
|
28,551
|
$
|
8,725
|
$
|
(587
|
)
|
$
|
(7,045
|
)
|
$
|
109,520
|
Nine Months Ended
September 30,
|
||||||||
2018
|
2017
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net (loss) income
|
$
|
(905
|
)
|
$
|
1,986
|
|||
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
||||||||
Amortization of deferred acquisition costs
|
8,986
|
8,696
|
||||||
Acquisition costs deferred
|
(11,226
|
)
|
(11,880
|
)
|
||||
Realized investment gains, net
|
(797
|
)
|
(2,818
|
)
|
||||
Unrealized losses on equity securities, net
|
(753
|
)
|
-
|
|||||
Distributions received from equity method investees
|
725
|
58
|
||||||
Compensation expense related to share awards
|
192
|
363
|
||||||
Depreciation and amortization
|
783
|
1,149
|
||||||
Deferred income tax benefit
|
(1,335
|
)
|
(423
|
)
|
||||
Increase in receivables, net
|
(7,882
|
)
|
(8,289
|
)
|
||||
Increase in insurance reserves
|
14,230
|
12,513
|
||||||
Decrease in other liabilities
|
(6,760
|
)
|
(2,096
|
)
|
||||
Other, net
|
(377
|
)
|
(344
|
)
|
||||
Net cash used in operating activities
|
(5,119
|
)
|
(1,085
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from investments sold
|
28,177
|
52,702
|
||||||
Proceeds from investments matured, called or redeemed
|
4,577
|
8,982
|
||||||
Investments purchased
|
(40,827
|
)
|
(63,346
|
)
|
||||
Additions to property and equipment
|
(252
|
)
|
(101
|
)
|
||||
Net cash used in investing activities
|
(8,325
|
)
|
(1,763
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payment of dividends on common stock
|
(407
|
)
|
(408
|
)
|
||||
Proceeds from shares issued under stock plans
|
28
|
23
|
||||||
Treasury stock acquired — share repurchase authorization
|
(463
|
)
|
(546
|
)
|
||||
Treasury stock acquired — net employee share-based compensation
|
(223
|
)
|
-
|
|||||
Net cash used in financing activities
|
(1,065
|
)
|
(931
|
)
|
||||
Net decrease in cash and cash equivalents
|
(14,509
|
)
|
(3,779
|
)
|
||||
Cash and cash equivalents at beginning of period
|
24,547
|
13,252
|
||||||
Cash and cash equivalents at end of period
|
$
|
10,038
|
$
|
9,473
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
||||||||
Cash paid for interest
|
$
|
1,471
|
$
|
1,263
|
||||
Cash paid for income taxes
|
$
|
1,892
|
$
|
1,400
|
Note 1.
|
Basis of Presentation
|
Note 2.
|
Recently Issued Accounting Standards
|
Note 3.
|
Investments
|
September 30, 2018
|
||||||||||||||||
Estimated
Fair 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
|
$
|
26,240
|
$
|
7
|
$
|
1,449
|
$
|
27,682
|
||||||||
Obligations of states and political subdivisions
|
8,224
|
259
|
135
|
8,100
|
||||||||||||
Corporate securities:
|
||||||||||||||||
Utilities and telecom
|
18,891
|
855
|
756
|
18,792
|
||||||||||||
Financial services
|
51,517
|
1,031
|
2,142
|
52,628
|
||||||||||||
Other business – diversified
|
47,267
|
240
|
2,668
|
49,695
|
||||||||||||
Other consumer – diversified
|
54,807
|
87
|
3,889
|
58,609
|
||||||||||||
Total corporate securities
|
172,482
|
2,213
|
9,455
|
179,724
|
||||||||||||
Redeemable preferred stocks:
|
||||||||||||||||
Other consumer – diversified
|
192
|
-
|
-
|
192
|
||||||||||||
Total redeemable preferred stocks
|
192
|
-
|
-
|
192
|
||||||||||||
Total fixed maturities
|
$
|
207,138
|
$
|
2,479
|
$
|
11,039
|
$
|
215,698
|
December 31, 2017
|
||||||||||||||||
Estimated
Fair 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
|
September 30, 2018
|
||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Cost
|
|||||||||||||
Equity securities:
|
||||||||||||||||
Common and non-redeemable preferred stocks:
|
||||||||||||||||
Utilities and telecom
|
$
|
1,602
|
$
|
637
|
$
|
-
|
$
|
965
|
||||||||
Financial services
|
4,770
|
390
|
-
|
4,380
|
||||||||||||
Other business – diversified
|
320
|
273
|
-
|
47
|
||||||||||||
Other consumer – diversified
|
17,013
|
11,890
|
-
|
5,123
|
||||||||||||
Total equity securities
|
$
|
23,705
|
$
|
13,190
|
$
|
-
|
$
|
10,515
|
December 31, 2017
|
||||||||||||||||
Estimated
Fair Value
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Cost
|
|||||||||||||
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
|
September 30, 2018
|
December 31, 2017
|
|||||||||||||||
Carrying
Value
|
Amortized
Cost
|
Carrying
Value
|
Amortized
Cost
|
|||||||||||||
Due in one year or less
|
$
|
3,148
|
$
|
3,150
|
$
|
1,653
|
$
|
1,655
|
||||||||
Due after one year through five years
|
19,055
|
19,408
|
13,738
|
14,056
|
||||||||||||
Due after five years through ten years
|
126,581
|
131,961
|
112,847
|
112,116
|
||||||||||||
Due after ten years
|
42,251
|
43,970
|
67,328
|
64,928
|
||||||||||||
Varying maturities
|
16,103
|
17,209
|
19,542
|
19,789
|
||||||||||||
Totals
|
$
|
207,138
|
$
|
215,698
|
$
|
215,108
|
$
|
212,544
|
September 30, 2018
|
||||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
|
$
|
3,923
|
$
|
178
|
$
|
20,812
|
$
|
1,271
|
$
|
24,735
|
$
|
1,449
|
||||||||||||
Obligations of states and political subdivisions
|
4,402
|
135
|
-
|
-
|
4,402
|
135
|
||||||||||||||||||
Corporate securities
|
90,396
|
4,116
|
50,934
|
5,339
|
141,330
|
9,455
|
||||||||||||||||||
Total temporarily impaired securities
|
$
|
98,721
|
$
|
4,429
|
$
|
71,746
|
$
|
6,610
|
$
|
170,467
|
$
|
11,039
|
December 31, 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
|
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 September 30,
2018 and December 31, 2017, the value of the Company’s fixed maturities valued using Level 3 criteria was $1,018 and $1,369, respectively. The use of different criteria or assumptions regarding data may have yielded materially
different valuations.
|
Quoted Prices
in Active
Markets
for Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Fixed maturities
|
$
|
-
|
$
|
206,120
|
$
|
1,018
|
(1)
|
$
|
207,138
|
|||||||
Equity securities
|
19,155
|
4,550
|
(1)
|
-
|
23,705
|
|||||||||||
Cash equivalents
|
8,653
|
-
|
-
|
8,653
|
||||||||||||
Total
|
$
|
27,808
|
$
|
210,670
|
$
|
1,018
|
$
|
239,496
|
(1) |
All underlying securities are financial service industry related.
|
Quoted Prices
in Active
Markets
for Identical
Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
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.
|
Fixed
Maturities
|
||||
Balance, December 31, 2017
|
$
|
1,369
|
||
Total unrealized losses included in other comprehensive loss
|
(30
|
)
|
||
Balance, March 31, 2018
|
1,339
|
|||
Total unrealized gains included in other comprehensive loss
|
7
|
|||
Balance, June 30, 2018
|
1,346
|
|||
Total realized gains included in earnings
|
208
|
|||
Total unrealized losses included in other comprehensive loss
|
(53
|
)
|
||
Settlements
|
(483
|
)
|
||
Balance, September 30, 2018
|
$
|
1,018
|
Fixed
Maturities
|
||||
Balance, December 31, 2016
|
$
|
1,264
|
||
Total unrealized gains included in other comprehensive income
|
38
|
|||
Balance, March 31, 2017
|
1,302
|
|||
Total unrealized gains included in other comprehensive income
|
30
|
|||
Balance, June 30, 2017
|
1,332
|
|||
Total unrealized gains included in other comprehensive income
|
19
|
|||
Balance, September 30, 2017
|
$
|
1,351
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Gross gains
|
$
|
484
|
$
|
539
|
$
|
1,101
|
$
|
2,879
|
||||||||
Gross losses
|
-
|
-
|
(304
|
)
|
(61
|
)
|
||||||||||
Realized investment gains, net
|
$
|
484
|
$
|
539
|
$
|
797
|
$
|
2,818
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net gains recognized during the period on equity securities
|
$
|
1,355
|
$
|
-
|
$
|
1,025
|
$
|
-
|
||||||||
Less: Net losses recognized during the period on equity securities sold during the period
|
(272
|
)
|
-
|
(272
|
)
|
-
|
||||||||||
Net unrealized gains recognized during the reporting period on equity securities still held at the
reporting date
|
$
|
1,083
|
$
|
-
|
$
|
753
|
$
|
-
|
Note 4.
|
Fair Values of Financial Instruments
|
September 30, 2018
|
December 31, 2017
|
|||||||||||||||||||
Level in
Fair
Value
Hierarchy (1)
|
Carrying
Amount
|
Estimated
Fair Value
|
Carrying
Amount
|
Estimated
Fair Value
|
||||||||||||||||
Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
Level 1
|
$
|
10,038
|
$
|
10,038
|
$
|
24,547
|
$
|
24,547
|
|||||||||||
Fixed maturities
|
(1)
|
|
207,138
|
207,138
|
215,108
|
215,108
|
||||||||||||||
Equity securities
|
(1)
|
|
23,705
|
23,705
|
23,355
|
23,355
|
||||||||||||||
Other invested assets
|
Level 3
|
10,817
|
10,817
|
5,626
|
5,626
|
|||||||||||||||
Policy loans
|
Level 2
|
2,084
|
2,084
|
2,146
|
2,146
|
|||||||||||||||
Real estate
|
Level 2
|
38
|
38
|
38
|
38
|
|||||||||||||||
Investment in unconsolidated trusts
|
Level 2
|
1,238
|
1,238
|
1,238
|
1,238
|
|||||||||||||||
Liabilities:
|
||||||||||||||||||||
Junior subordinated debentures, net
|
Level 2
|
33,738
|
33,738
|
33,738
|
33,738
|
(1) |
See Note 3 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.
|
Note 5.
|
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses
|
Property and Casualty Insurance Products
|
Nine Months Ended
September 30,
|
|||||||
2018
|
2017
|
|||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
47,997
|
$
|
49,556
|
||||
Less: Reinsurance recoverable on unpaid losses
|
(7,220
|
)
|
(9,806
|
)
|
||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net
|
40,777
|
39,750
|
||||||
Incurred related to:
|
||||||||
Current accident year
|
30,339
|
27,359
|
||||||
Prior accident year development (1)
|
(1,795
|
)
|
(1,480
|
)
|
||||
Total incurred
|
28,544
|
25,879
|
||||||
Paid related to:
|
||||||||
Current accident year
|
10,716
|
9,858
|
||||||
Prior accident years
|
15,693
|
13,720
|
||||||
Total paid
|
26,409
|
23,578
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net
|
42,912
|
42,051
|
||||||
Plus: Reinsurance recoverable on unpaid losses
|
6,928
|
9,455
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
49,840
|
$
|
51,506
|
(1) |
In establishing property and casualty reserves, the Company 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. Accordingly, the Company generally
experiences reserve redundancies when analyzing the development of prior year losses in a current period.
|
Medicare Supplement Insurance Products
|
Nine Months Ended
September 30,
|
|||||||
2018
|
2017
|
|||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
15,859
|
$
|
11,263
|
||||
Less: Reinsurance recoverable on unpaid losses
|
(4,748
|
)
|
(990
|
)
|
||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net
|
11,111
|
10,273
|
||||||
Incurred related to:
|
||||||||
Current accident year
|
59,356
|
50,733
|
||||||
Prior accident year development
|
817
|
720
|
||||||
Total incurred
|
60,173
|
51,453
|
||||||
Paid related to:
|
||||||||
Current accident year
|
46,734
|
40,801
|
||||||
Prior accident years
|
11,594
|
10,445
|
||||||
Total paid
|
58,328
|
51,246
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net
|
12,956
|
10,480
|
||||||
Plus: Reinsurance recoverable on unpaid losses
|
7,340
|
3,640
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
20,296
|
$
|
14,120
|
Other Life and Health Insurance Products
|
Nine Months Ended
September 30,
|
|||||||
2018
|
2017
|
|||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
1,833
|
$
|
1,743
|
||||
Less: Reinsurance recoverable on unpaid losses
|
-
|
-
|
||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net
|
1,833
|
1,743
|
||||||
Incurred related to:
|
||||||||
Current accident year
|
6,729
|
6,226
|
||||||
Prior accident year development
|
(71
|
)
|
(104
|
)
|
||||
Total incurred
|
6,658
|
6,122
|
||||||
Paid related to:
|
||||||||
Current accident year
|
5,148
|
4,807
|
||||||
Prior accident years
|
1,663
|
1,500
|
||||||
Total paid
|
6,811
|
6,307
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net
|
1,680
|
1,558
|
||||||
Plus: Reinsurance recoverable on unpaid losses
|
-
|
-
|
||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross
|
$
|
1,680
|
$
|
1,558
|
Nine Months Ended
September 30,
|
||||||||
2018
|
2017
|
|||||||
Total incurred losses
|
$
|
95,375
|
$
|
83,454
|
||||
Cash surrender value and matured endowments
|
1,057
|
1,167
|
||||||
Benefit reserve changes
|
2,046
|
2,825
|
||||||
Total insurance benefits and losses incurred
|
$
|
98,478
|
$
|
87,446
|
Note 6.
|
Junior Subordinated Debentures
|
Atlantic American
Statutory Trust I
|
Atlantic American
Statutory Trust II
|
|||||||
JUNIOR SUBORDINATED DEBENTURES (1) (2)
|
||||||||
Principal amount owed September 30, 2018
|
$
|
18,042
|
$
|
23,196
|
||||
Less: Treasury debt (3)
|
-
|
(7,500
|
)
|
|||||
Net balance September 30, 2018
|
$
|
18,042
|
$
|
15,696
|
||||
Net balance December 31, 2017
|
$
|
18,042
|
$
|
15,696
|
||||
Coupon rate
|
LIBOR + 4.00%
|
LIBOR + 4.10%
|
||||||
Interest payable
|
Quarterly
|
Quarterly
|
||||||
Maturity date
|
December 4, 2032
|
May 15, 2033
|
||||||
Redeemable by issuer
|
Yes
|
Yes
|
||||||
TRUST PREFERRED SECURITIES
|
||||||||
Issuance date
|
December 4, 2002
|
May 15, 2003
|
||||||
Securities issued
|
17,500
|
22,500
|
||||||
Liquidation preference per security
|
$
|
1
|
$
|
1
|
||||
Liquidation value
|
$
|
17,500
|
$
|
22,500
|
||||
Coupon rate
|
LIBOR + 4.00%
|
LIBOR + 4.10%
|
||||||
Distribution payable
|
Quarterly
|
Quarterly
|
||||||
Distribution guaranteed by (4)
|
Atlantic American Corporation
|
Atlantic American Corporation
|
(1) |
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures
for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions
on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right
at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.
|
(2) |
The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to
all existing and future liabilities of its subsidiaries.
|
(3) |
On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.
|
(4) |
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any
accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
|
Note 7.
|
Earnings (Loss) Per Common Share
|
Three Months Ended
September 30, 2018
|
|||||||||||
Income
|
Weighted
Average
Shares
(In thousands)
|
Per Share
Amount
|
|||||||||
Basic and Diluted Earnings Per Common Share:
|
|||||||||||
Net income
|
$
|
934
|
20,420
|
||||||||
Less: preferred stock dividends
|
(100
|
)
|
-
|
||||||||
Net income applicable to common
shareholders
|
$
|
834
|
20,420
|
$ | .04 |
Three Months Ended
September 30, 2017
|
|||||||||||
Income
|
Weighted
Average
Shares
(In thousands)
|
Per Share
Amount
|
|||||||||
Basic and Diluted Earnings Per Common Share:
|
|||||||||||
Net income
|
$
|
747
|
20,440
|
||||||||
Less: preferred stock dividends
|
(100
|
)
|
-
|
||||||||
Net income applicable to common
shareholders
|
$
|
647
|
20,440
|
$
|
.03 |
Nine Months Ended
September 30, 2018
|
|||||||||||
Income
|
Weighted
Average
Shares
(In thousands)
|
Per Share
Amount
|
|||||||||
Basic and Diluted Loss Per Common Share:
|
|||||||||||
Net loss
|
$
|
(905
|
)
|
20,314
|
|||||||
Less: preferred stock dividends
|
(299
|
)
|
-
|
||||||||
Net loss applicable to common shareholders
|
$
|
(1,204
|
)
|
20,314
|
$
|
(.06) |
Nine Months Ended
September 30, 2017
|
|||||||||||
Income
|
Weighted
Average
Shares
(In thousands)
|
Per Share
Amount
|
|||||||||
Basic and Diluted Earnings Per Common Share:
|
|||||||||||
Net income
|
$
|
1,986
|
20,428
|
||||||||
Less: preferred stock dividends
|
(299
|
)
|
-
|
||||||||
Net income applicable to common
shareholders
|
$
|
1,687
|
20,428
|
$
|
.08 |
Note 8.
|
Income Taxes
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Federal income tax provision at statutory rate of 21% and 35% for 2018 and 2017, respectively
|
$
|
225
|
$
|
221
|
$
|
(262
|
)
|
$
|
864
|
|||||||
Dividends-received deduction
|
(10
|
)
|
(23
|
)
|
(30
|
)
|
(71
|
)
|
||||||||
Small life insurance company deduction
|
-
|
(313
|
)
|
-
|
(343
|
)
|
||||||||||
Other permanent differences
|
22
|
18
|
50
|
52
|
||||||||||||
Adjustment for prior years’ estimates to actual
|
(99
|
)
|
(19
|
)
|
(99
|
)
|
(19
|
)
|
||||||||
Income tax expense (benefit)
|
$
|
138
|
$
|
(116
|
)
|
$
|
(341
|
)
|
$
|
483
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Current - Federal
|
$
|
255
|
$
|
(157
|
)
|
$
|
994
|
$
|
906
|
|||||||
Deferred - Federal
|
(117
|
)
|
41
|
(1,335
|
)
|
(423
|
)
|
|||||||||
Total
|
$
|
138
|
$
|
(116
|
)
|
$
|
(341
|
)
|
$
|
483
|
Note 9.
|
Commitments and Contingencies
|
Note 10.
|
Segment Information
|
Revenues
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
American Southern
|
$
|
13,998
|
$
|
15,047
|
$
|
42,174
|
$
|
43,402
|
||||||||
Bankers Fidelity
|
31,196
|
29,661
|
92,950
|
87,757
|
||||||||||||
Corporate and Other
|
1,176
|
90
|
1,229
|
1,130
|
||||||||||||
Total revenue
|
$
|
46,370
|
$
|
44,798
|
$
|
136,353
|
$
|
132,289
|
Income (Loss) Before Income Taxes
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
American Southern
|
$
|
995
|
$
|
1,860
|
$
|
3,892
|
$
|
5,941
|
||||||||
Bankers Fidelity
|
512
|
402
|
(1,762
|
)
|
190
|
|||||||||||
Corporate and Other
|
(435
|
)
|
(1,631
|
)
|
(3,376
|
)
|
(3,662
|
)
|
||||||||
Income (loss) before income taxes
|
$
|
1,072
|
$
|
631
|
$
|
(1,246
|
)
|
$
|
2,469
|
Note 11.
|
Accumulated Other Comprehensive Income (Loss)
|
Unrealized Gains
on Available-for-
Sale Securities
|
||||
Balance, December 31, 2017
|
$
|
9,751
|
||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1,
2018
|
(9,825
|
)
|
||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018
|
2,100
|
|||
Total effect of adoption of updated accounting guidance at January 1, 2018
|
(7,725
|
)
|
||
Other comprehensive loss before reclassifications
|
(8,158
|
)
|
||
Amounts reclassified from accumulated other comprehensive loss
|
(630
|
)
|
||
Net current period other comprehensive loss
|
(8,788
|
)
|
||
Balance, September 30, 2018
|
$
|
(6,762
|
)
|
Note 12.
|
Related Party Transactions
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Insurance premiums
|
$
|
42,557
|
$
|
42,094
|
$
|
127,604
|
$
|
122,996
|
||||||||
Net investment income
|
2,215
|
2,136
|
7,111
|
6,380
|
||||||||||||
Realized investment gains, net
|
484
|
539
|
797
|
2,818
|
||||||||||||
Unrealized gains on equity securities, net
|
1,083
|
-
|
753
|
-
|
||||||||||||
Other income
|
31
|
29
|
88
|
95
|
||||||||||||
Total revenue
|
46,370
|
44,798
|
136,353
|
132,289
|
||||||||||||
Insurance benefits and losses incurred
|
33,087
|
30,417
|
98,478
|
87,446
|
||||||||||||
Commissions and underwriting expenses
|
8,722
|
10,176
|
28,456
|
31,800
|
||||||||||||
Interest expense
|
529
|
440
|
1,497
|
1,273
|
||||||||||||
Other expense
|
2,960
|
3,134
|
9,168
|
9,301
|
||||||||||||
Total benefits and expenses
|
45,298
|
44,167
|
137,599
|
129,820
|
||||||||||||
Income (loss) before income taxes
|
$
|
1,072
|
$
|
631
|
$
|
(1,246
|
)
|
$
|
2,469
|
|||||||
Net income (loss)
|
$
|
934
|
$
|
747
|
$
|
(905
|
)
|
$
|
1,986
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
Reconciliation of Non-GAAP Financial Measure
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
(In thousands)
|
||||||||||||||||
Net income (loss)
|
$
|
934
|
$
|
747
|
$
|
(905
|
)
|
$
|
1,986
|
|||||||
Income tax expense (benefit)
|
138
|
(116
|
)
|
(341
|
)
|
483
|
||||||||||
Realized investment gains, net
|
(484
|
)
|
(539
|
)
|
(797
|
)
|
(2,818
|
)
|
||||||||
Unrealized gains on equity securities, net
|
(1,083
|
)
|
-
|
(753
|
)
|
-
|
||||||||||
Operating income (loss)
|
$
|
(495
|
)
|
$
|
92
|
$
|
(2,796
|
)
|
$
|
(349
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Gross written premiums
|
$
|
9,250
|
$
|
9,520
|
$
|
44,592
|
$
|
46,505
|
||||||||
Ceded premiums
|
(1,238
|
)
|
(1,238
|
)
|
(3,669
|
)
|
(3,592
|
)
|
||||||||
Net written premiums
|
$
|
8,012
|
$
|
8,282
|
$
|
40,923
|
$
|
42,913
|
||||||||
Net earned premiums
|
$
|
13,050
|
$
|
14,046
|
$
|
39,299
|
$
|
40,268
|
||||||||
Net loss and loss adjustment expenses
|
10,672
|
9,663
|
28,544
|
25,879
|
||||||||||||
Underwriting expenses
|
2,331
|
3,525
|
9,737
|
11,583
|
||||||||||||
Underwriting income
|
$
|
47
|
$
|
858
|
$
|
1,018
|
$
|
2,806
|
||||||||
Loss ratio
|
81.8
|
%
|
68.8
|
%
|
72.6
|
%
|
64.3
|
%
|
||||||||
Expense ratio
|
17.9
|
25.1
|
24.8
|
28.7
|
||||||||||||
Combined ratio
|
99.7
|
%
|
93.9
|
%
|
97.4
|
%
|
93.0
|
%
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Automobile liability
|
$
|
6,878
|
$
|
7,971
|
$
|
21,123
|
$
|
22,103
|
||||||||
Automobile physical damage
|
3,013
|
2,424
|
8,365
|
7,297
|
||||||||||||
General liability
|
678
|
745
|
2,131
|
2,211
|
||||||||||||
Surety
|
1,729
|
2,091
|
5,441
|
6,418
|
||||||||||||
Other lines
|
752
|
815
|
2,239
|
2,239
|
||||||||||||
Total
|
$
|
13,050
|
$
|
14,046
|
$
|
39,299
|
$
|
40,268
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Medicare supplement
|
$
|
41,123
|
$
|
32,617
|
$
|
120,550
|
$
|
90,369
|
||||||||
Other health products
|
2,139
|
1,641
|
5,729
|
4,749
|
||||||||||||
Life insurance
|
2,306
|
2,413
|
6,879
|
7,384
|
||||||||||||
Gross earned premiums
|
45,568
|
36,671
|
133,158
|
102,502
|
||||||||||||
Ceded premiums
|
(16,061
|
)
|
(8,623
|
)
|
(44,853
|
)
|
(19,774
|
)
|
||||||||
Net earned Premiums
|
29,507
|
28,048
|
88,305
|
82,728
|
||||||||||||
Insurance benefits and losses
|
22,415
|
20,754
|
69,934
|
61,567
|
||||||||||||
Underwriting expenses
|
8,270
|
8,505
|
24,779
|
26,000
|
||||||||||||
Total expenses
|
30,685
|
29,259
|
94,713
|
87,567
|
||||||||||||
Underwriting loss
|
$
|
(1,178
|
)
|
$
|
(1,211
|
)
|
$
|
(6,408
|
)
|
$
|
(4,839
|
)
|
||||
Loss ratio
|
76.0
|
%
|
74.0
|
%
|
79.2
|
%
|
74.4
|
%
|
||||||||
Expense ratio
|
28.0
|
30.3
|
28.1
|
31.4
|
||||||||||||
Combined ratio
|
104.0
|
%
|
104.3
|
%
|
107.3
|
%
|
105.8
|
%
|
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
|
||||||||||||
July 1 – July 31, 2018
|
13,287
|
$
|
2.63
|
13,287
|
423,342
|
|||||||||||
August 1 – August 31, 2018
|
10,196
|
2.66
|
10,196
|
413,146
|
||||||||||||
September 1 – September 30, 2018
|
14,115
|
2.82
|
14,115
|
399,031
|
||||||||||||
Total
|
37,598
|
$
|
2.71
|
37,598
|
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
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.
|
ATLANTIC AMERICAN CORPORATION
|
||
(Registrant)
|
||
Date: November 13, 2018
|
By:
|
/s/ J. Ross Franklin
|
J. Ross Franklin
|
||
Vice President and Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
1. |
I have reviewed this report on Form 10-Q of Atlantic American Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: November 13, 2018
|
/s/ Hilton H. Howell, Jr.
|
||
Hilton H. Howell, Jr.
|
||||
President and Chief Executive Officer
|
1. |
I have reviewed this report on Form 10-Q of Atlantic American Corporation;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: November 13, 2018
|
/s/ J. Ross Franklin
|
||
J. Ross Franklin
|
||||
Vice President and Chief Financial Officer
|
(1) |
The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and
for the periods expressed in the Report.
|
Date: November 13, 2018
|
/s/ Hilton H. Howell, Jr.
|
|
Hilton H. Howell, Jr.
|
||
President and Chief Executive Officer
|
Date: November 13, 2018
|
/s/ J. Ross Franklin
|
|
J. Ross Franklin
|
||
Vice President and Chief Financial Officer
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ATLANTIC AMERICAN CORP | |
Entity Central Index Key | 0000008177 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 20,199,314 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments: | ||
Fixed maturities, cost | $ 215,698 | $ 212,544 |
Equity securities, cost | 10,515 | 10,918 |
Receivables: | ||
Insurance premiums and other, allowance for doubtful accounts | $ 216 | $ 209 |
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) | 20,218,836 | 20,449,531 |
Treasury stock, at cost (in shares) | 2,182,058 | 1,951,363 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue: | ||||
Insurance premiums | $ 42,557 | $ 42,094 | $ 127,604 | $ 122,996 |
Net investment income | 2,215 | 2,136 | 7,111 | 6,380 |
Realized investment gains, net | 484 | 539 | 797 | 2,818 |
Unrealized gains on equity securities, net | 1,083 | 0 | 753 | 0 |
Other income | 31 | 29 | 88 | 95 |
Total revenue | 46,370 | 44,798 | 136,353 | 132,289 |
Benefits and expenses: | ||||
Insurance benefits and losses incurred | 33,087 | 30,417 | 98,478 | 87,446 |
Commissions and underwriting expenses | 8,722 | 10,176 | 28,456 | 31,800 |
Interest expense | 529 | 440 | 1,497 | 1,273 |
Other expense | 2,960 | 3,134 | 9,168 | 9,301 |
Total benefits and expenses | 45,298 | 44,167 | 137,599 | 129,820 |
Income (loss) before income taxes | 1,072 | 631 | (1,246) | 2,469 |
Income tax expense (benefit) | 138 | (116) | (341) | 483 |
Net income (loss) | 934 | 747 | (905) | 1,986 |
Preferred stock dividends | (100) | (100) | (299) | (299) |
Net income (loss) applicable to common shareholders | $ 834 | $ 647 | $ (1,204) | $ 1,687 |
Earnings (loss) per common share (basic and diluted) (in dollars per share) | $ 0.04 | $ 0.03 | $ (0.06) | $ 0.08 |
Dividends per common share (in dollars per share) | $ 0 | $ 0 | $ 0.02 | $ 0.02 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) [Abstract] | ||||
Net income (loss) | $ 934 | $ 747 | $ (905) | $ 1,986 |
Available-for-sale securities: | ||||
Gross unrealized holding gain (loss) arising in the period | 63 | 2,852 | (10,327) | 7,271 |
Related income tax effect | (13) | (997) | 2,169 | (2,544) |
Subtotal | 50 | 1,855 | (8,158) | 4,727 |
Less: reclassification adjustment for net realized losses included in net income (loss) | (484) | (539) | (797) | (2,818) |
Related income tax effect | 101 | 188 | 167 | 986 |
Subtotal | (383) | (351) | (630) | (1,832) |
Total other comprehensive income (loss), net of tax | (333) | 1,504 | (8,788) | 2,895 |
Total comprehensive income (loss) | $ 601 | $ 2,251 | $ (9,693) | $ 4,881 |
Basis of Presentation |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 | |||
Basis of Presentation [Abstract] | |||
Basis of Presentation |
The accompanying unaudited consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month and nine month periods ended September 30, 2018 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2018 or for any other future period. The Company’s significant accounting policies have not changed materially from those set out in the Company’s 2017 Annual Report, except as noted below for the adoption of new accounting standards. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. |
Recently Issued Accounting Standards |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 | |||
Recently Issued Accounting Standards [Abstract] | |||
Recently Issued Accounting Standards |
Adoption of New 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. 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% reduction in tax rate was recognized in net income instead of other comprehensive income. The Company adopted ASU 2018-02 as of January 1, 2018. As a result, on January 1, 2018, the Company reclassified $2,100 of stranded tax effects related to continuing operations which increased AOCI and reduced retained earnings. 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 Company adopted ASU 2016-15 as of January 1, 2018, which impacted the classification of distributions from equity method investees. The Company made the election to use the nature of distributions approach. For the nine month period ended September 30, 2018, the Company classified distributions from equity method investees of $725 as cash flows from operating activities and reclassified $58 as cash flows from investing activities to cash flows from operating activities for the nine month period ended September 30, 2017, in its consolidated statements of cash flows. 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 guidance requires 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 guidance also requires 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 previous guidance, the Company measured investments in equity securities at fair value with any changes in fair value reported in other comprehensive income. The Company adopted ASU 2016-01 as of January 1, 2018. The adoption of this guidance resulted in the recognition of $9,825 of net after tax unrealized gains on equity securities as a cumulative effect adjustment that increased retained earnings as of January 1, 2018 and decreased AOCI by the same amount. The Company elected to report changes in the fair value of equity securities in a separate line item on the Company’s consolidated statements of operations. At December 31, 2017, equity securities were classified as AFS in the Company’s consolidated balance sheets. However, upon adoption, the updated guidance eliminated the AFS balance sheet classification for equity securities. 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 which excludes insurance contracts and financial instruments. Revenue is to be recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 as of January 1, 2018. For the nine months ended September 30, 2018, approximately $88, or less than one-tenth of 1% of the Company's total revenues, were within the scope of this updated guidance. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements. Future Adoption of New Accounting Standards In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This guidance removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. This disclosure also includes the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, 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 2018, the FASB issued ASU No. 2018-12, Financial Services —Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”). This guidance (1) improves the timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future cash flows, (2) simplifies and improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, (3) simplifies the amortization of deferred acquisition costs, and (4) improves the effectiveness of the required disclosures. ASU 2018-12 is effective for interim and annual reporting periods beginning after December 15, 2020, although earlier adoption is permitted. The Company has not yet determined the method or timing for adoption or estimated the impact on the Company’s consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). This guidance was issued to clarify the comparative reporting requirements for initial adoption and to provide an additional and optional transition method to adopt the new lease standard. The Company has not yet made an election on the optional transition method. See Note 1 – Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2017 Annual Report for more information on the future adoption of the new lease accounting standard. The Company does not expect the adoption of the new lease standard 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. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of September 30, 2018 and December 31, 2017. Fixed maturities were comprised of the following:
Bonds having an amortized cost of $9,896 and $11,178 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2018 and December 31, 2017, respectively, in accordance with statutory requirements. Equity securities were comprised of the following:
The carrying value and amortized cost of the Company’s investments in fixed maturities at September 30, 2018 and December 31, 2017 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.
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 September 30, 2018 and December 31, 2017.
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 September 30, 2018 and December 31, 2017, there were one hundred thirty-three and sixty-nine securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the financial services, other diversified business and other diversified consumer sectors. The increase in the number and value of securities in an unrealized loss position during the nine month period ended September 30, 2018, was primarily attributable to the rising interest rate environment. 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 September 30, 2018. 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 September 30, 2018, financial instruments carried at fair value were measured on a recurring basis as summarized below:
As of December 31, 2017, financial instruments carried at fair value were measured on a recurring basis as summarized below:
The following tables provide a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and nine month periods ended September 30, 2018 and 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 that are not actively traded. 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 following table is a summary of realized investment gains (losses) for the three month and nine month periods ended September 30, 2018 and 2017.
The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and nine month periods ended September 30, 2018 and 2017.
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Fair Values of Financial Instruments |
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Fair Values of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments |
The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates. However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of September 30, 2018 and December 31, 2017.
There have not been any transfers between Level 1, Level 2 and Level 3 during the periods presented in these consolidated financial statements. |
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses |
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Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses |
The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses, by major product, is as follows:
Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
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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 September 30, 2018 was as follows:
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Earnings (Loss) Per Common Share |
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Earnings (Loss) Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Common Share |
A reconciliation of the numerator and denominator used in the earnings (loss) 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 all periods presented since its impact would have been antidilutive. |
Income Taxes |
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Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows:
The components of income tax expense (benefit) were:
The primary difference between the effective tax rate and the federal statutory income tax rate for the three month and nine month periods ended September 30, 2018 resulted from provision-to-filed return adjustments, as described below, and the dividends-received deduction (“DRD”). The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income. The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and nine month periods ended September 30, 2017 resulted from the DRD and the small life insurance company deduction (“SLD”), which was subsequently repealed by tax reform enacted on December 22, 2017. Under the then-applicable tax rules, the SLD varied in amount and was determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”). The SLD for any taxable year was reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeded $3,000 and was ultimately phased out at $15,000. The provision-to-filed return adjustments are generally updated at the completion of the third quarter of each fiscal year and were $99 and $19 in the three month and nine month periods ended September 30, 2018 and 2017, respectively. |
Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | |||
Commitments and Contingencies |
From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its businesses. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company. |
Segment Information |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
The Parent’s primary insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing on specific products. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each business unit is managed independently and is evaluated on its individual performance. The following sets forth the revenue and income (loss) before income taxes for each business unit for the three month and nine month periods ended September 30, 2018 and 2017.
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) |
The following table sets forth the balance of the only component of accumulated other comprehensive income (loss) as of September 30, 2018 and December 31, 2017, and the changes in the balance of that component thereof during the nine month period ended September 30, 2018, net of taxes.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||
Related Party Transactions |
For the nine month periods ended September 30, 2018 and 2017, Gray Television, Inc., a related party, paid the Company approximately $306 and $448, respectively, in employer paid insurance premiums related to a group accident plan. |
Recently Issued Accounting Standards (Policies) |
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Sep. 30, 2018 | |
Recently Issued Accounting Standards [Abstract] | |
Adoption of New Accounting Standards | Adoption of New 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. 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% reduction in tax rate was recognized in net income instead of other comprehensive income. The Company adopted ASU 2018-02 as of January 1, 2018. As a result, on January 1, 2018, the Company reclassified $2,100 of stranded tax effects related to continuing operations which increased AOCI and reduced retained earnings. 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 Company adopted ASU 2016-15 as of January 1, 2018, which impacted the classification of distributions from equity method investees. The Company made the election to use the nature of distributions approach. For the nine month period ended September 30, 2018, the Company classified distributions from equity method investees of $725 as cash flows from operating activities and reclassified $58 as cash flows from investing activities to cash flows from operating activities for the nine month period ended September 30, 2017, in its consolidated statements of cash flows. 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 guidance requires 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 guidance also requires 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 previous guidance, the Company measured investments in equity securities at fair value with any changes in fair value reported in other comprehensive income. The Company adopted ASU 2016-01 as of January 1, 2018. The adoption of this guidance resulted in the recognition of $9,825 of net after tax unrealized gains on equity securities as a cumulative effect adjustment that increased retained earnings as of January 1, 2018 and decreased AOCI by the same amount. The Company elected to report changes in the fair value of equity securities in a separate line item on the Company’s consolidated statements of operations. At December 31, 2017, equity securities were classified as AFS in the Company’s consolidated balance sheets. However, upon adoption, the updated guidance eliminated the AFS balance sheet classification for equity securities. 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 which excludes insurance contracts and financial instruments. Revenue is to be recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to be entitled in exchange for those goods or services. The Company adopted ASU No. 2014-09 as of January 1, 2018. For the nine months ended September 30, 2018, approximately $88, or less than one-tenth of 1% of the Company's total revenues, were within the scope of this updated guidance. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements. Future Adoption of New Accounting Standards In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). This guidance removes the following disclosure requirements from Topic 820: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. This disclosure also includes the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, 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 2018, the FASB issued ASU No. 2018-12, Financial Services —Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”). This guidance (1) improves the timeliness of recognizing changes in the liability for future policy benefits and modifies the rate used to discount future cash flows, (2) simplifies and improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, (3) simplifies the amortization of deferred acquisition costs, and (4) improves the effectiveness of the required disclosures. ASU 2018-12 is effective for interim and annual reporting periods beginning after December 15, 2020, although earlier adoption is permitted. The Company has not yet determined the method or timing for adoption or estimated the impact on the Company’s consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). This guidance was issued to clarify the comparative reporting requirements for initial adoption and to provide an additional and optional transition method to adopt the new lease standard. The Company has not yet made an election on the optional transition method. See Note 1 – Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2017 Annual Report for more information on the future adoption of the new lease accounting standard. The Company does not expect the adoption of the new lease standard 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. |
Investments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Aggregated by Type and Industry | Fixed maturities were comprised of the following:
Bonds having an amortized cost of $9,896 and $11,178 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2018 and December 31, 2017, respectively, in accordance with statutory requirements. Equity securities were comprised of the following:
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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 September 30, 2018 and December 31, 2017 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 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 September 30, 2018 and December 31, 2017.
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Financial Instruments Carried at Fair Value Measured on a Recurring Basis | As of September 30, 2018, financial instruments carried at fair value were measured on a recurring basis as summarized below:
As of December 31, 2017, 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 tables provide a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and nine month periods ended September 30, 2018 and 2017.
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Summary of Realized Investment Gains (Losses) | The following table is a summary of realized investment gains (losses) for the three month and nine month periods ended September 30, 2018 and 2017.
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Unrealized Gains (Losses) Related to Equity Securities | The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and nine month periods ended September 30, 2018 and 2017.
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Fair Values of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount, Estimated Fair Value and Level within the Fair Value Hierarchy of Financial Instruments | The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of September 30, 2018 and December 31, 2017.
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Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Property and Casualty Insurance Products [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll-forward of Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses, by major product, is as follows:
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Medicare Supplement Insurance Products [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll-forward of Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses, by major product, is as follows:
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Other Life and Health Insurance Products [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll-forward of Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses, by major product, is as follows:
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Junior Subordinated Debentures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 September 30, 2018 was as follows:
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Earnings (Loss) Per Common Share (Tables) |
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Earnings (Loss) Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator used in Earnings (Loss) per Common Share Calculations | A reconciliation of the numerator and denominator used in the earnings (loss) per common share calculations is as follows:
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Income Tax Expense (Benefit) | A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows:
|
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Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) were:
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Income (Loss) Before Income Taxes for Each Business Unit | The following sets forth the revenue and income (loss) before income taxes for each business unit for the three month and nine month periods ended September 30, 2018 and 2017.
|
Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Changes in Balances of Each Component of Accumulated Other Comprehensive Income (Loss), Net of Taxes | The following table sets forth the balance of the only component of accumulated other comprehensive income (loss) as of September 30, 2018 and December 31, 2017, and the changes in the balance of that component thereof during the nine month period ended September 30, 2018, net of taxes.
|
Basis of Presentation (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
Segment
| |
Basis of Presentation [Abstract] | |
Number of business units | 2 |
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Carrying Value [Abstract] | ||
Due in one year or less | $ 3,148 | $ 1,653 |
Due after one year through five years | 19,055 | 13,738 |
Due after five years through ten years | 126,581 | 112,847 |
Due after ten years | 42,251 | 67,328 |
Varying maturities | 16,103 | 19,542 |
Totals | 207,138 | 215,108 |
Amortized Cost [Abstract] | ||
Due in one year or less | 3,150 | 1,655 |
Due after one year through five years | 19,408 | 14,056 |
Due after five years through ten years | 131,961 | 112,116 |
Due after ten years | 43,970 | 64,928 |
Varying maturities | 17,209 | 19,789 |
Cost or amortized cost | $ 215,698 | $ 212,544 |
Investments, Roll-forward of Financial Instruments Measured at Fair Value (Details) - Fixed Maturities [Member] - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
|
Assets measured at fair value on a recurring basis [Abstract] | ||||||
Balance, beginning of period | $ 1,346 | $ 1,339 | $ 1,369 | $ 1,332 | $ 1,302 | $ 1,264 |
Total realized gains included in earnings | 208 | |||||
Total unrealized gains (losses) included in other comprehensive income (loss) | (53) | 7 | (30) | 19 | 30 | 38 |
Settlements | (483) | |||||
Balance, end of period | $ 1,018 | $ 1,346 | $ 1,339 | $ 1,351 | $ 1,332 | $ 1,302 |
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Summary of realized investment gains (losses) [Abstract] | ||||
Gross gains | $ 484 | $ 539 | $ 1,101 | $ 2,879 |
Gross losses | 0 | 0 | (304) | (61) |
Realized investment gains, net | $ 484 | $ 539 | $ 797 | $ 2,818 |
Investments, Unrealized Gains (Losses) Related to Equity Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Investments [Abstract] | ||||
Net gains recognized during the period on equity securities | $ 1,355 | $ 0 | $ 1,025 | $ 0 |
Less: Net losses recognized during the period on equity securities sold during the period | (272) | 0 | (272) | 0 |
Net unrealized gains recognized during the reporting period on equity securities still held at the reporting date | $ 1,083 | $ 0 | $ 753 | $ 0 |
Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Assets [Abstract] | |||||
Fixed maturities | $ 207,138 | $ 215,108 | |||
Equity securities | 23,705 | 23,355 | |||
Carrying Amount [Member] | |||||
Assets [Abstract] | |||||
Fixed maturities | [1] | 207,138 | 215,108 | ||
Equity securities | [1] | 23,705 | 23,355 | ||
Carrying Amount [Member] | Level 1 [Member] | |||||
Assets [Abstract] | |||||
Cash and cash equivalents | 10,038 | 24,547 | |||
Carrying Amount [Member] | Level 2 [Member] | |||||
Assets [Abstract] | |||||
Policy loans | 2,084 | 2,146 | |||
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 | 10,817 | 5,626 | |||
Estimated Fair Value [Member] | |||||
Assets [Abstract] | |||||
Fixed maturities | [1] | 207,138 | 215,108 | ||
Equity securities | [1] | 23,705 | 23,355 | ||
Estimated Fair Value [Member] | Level 1 [Member] | |||||
Assets [Abstract] | |||||
Cash and cash equivalents | 10,038 | 24,547 | |||
Estimated Fair Value [Member] | Level 2 [Member] | |||||
Assets [Abstract] | |||||
Policy loans | 2,084 | 2,146 | |||
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 | $ 10,817 | $ 5,626 | |||
|
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Roll Forward] | ||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross | $ 65,689 | |||||
Paid related to [Abstract] | ||||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross | $ 71,816 | 71,816 | ||||
Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract] | ||||||
Total incurred losses | 95,375 | $ 83,454 | ||||
Cash surrender value and matured endowments | 1,057 | 1,167 | ||||
Benefit reserve changes | 2,046 | 2,825 | ||||
Total insurance benefits and losses incurred | 33,087 | $ 30,417 | 98,478 | 87,446 | ||
Property and Casualty Insurance Products [Member] | ||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Roll Forward] | ||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross | 47,997 | 49,556 | ||||
Less: Reinsurance recoverable on unpaid losses | (7,220) | (9,806) | ||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net | 40,777 | 39,750 | ||||
Incurred related to [Abstract] | ||||||
Current accident year | 30,339 | 27,359 | ||||
Prior accident year development | [1] | (1,795) | (1,480) | |||
Total incurred | 28,544 | 25,879 | ||||
Paid related to [Abstract] | ||||||
Current accident year | 10,716 | 9,858 | ||||
Prior accident years | 15,693 | 13,720 | ||||
Total paid | 26,409 | 23,578 | ||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net | 42,912 | 42,051 | 42,912 | 42,051 | ||
Plus: Reinsurance recoverable on unpaid losses | 6,928 | 9,455 | 6,928 | 9,455 | ||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross | 49,840 | 51,506 | 49,840 | 51,506 | ||
Medicare Supplement Insurance Products [Member] | ||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Roll Forward] | ||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross | 15,859 | 11,263 | ||||
Less: Reinsurance recoverable on unpaid losses | (4,748) | (990) | ||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net | 11,111 | 10,273 | ||||
Incurred related to [Abstract] | ||||||
Current accident year | 59,356 | 50,733 | ||||
Prior accident year development | 817 | 720 | ||||
Total incurred | 60,173 | 51,453 | ||||
Paid related to [Abstract] | ||||||
Current accident year | 46,734 | 40,801 | ||||
Prior accident years | 11,594 | 10,445 | ||||
Total paid | 58,328 | 51,246 | ||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net | 12,956 | 10,480 | 12,956 | 10,480 | ||
Plus: Reinsurance recoverable on unpaid losses | 7,340 | 3,640 | 7,340 | 3,640 | ||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross | 20,296 | 14,120 | 20,296 | 14,120 | ||
Other Life and Health Insurance Products [Member] | ||||||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Roll Forward] | ||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross | 1,833 | 1,743 | ||||
Less: Reinsurance recoverable on unpaid losses | 0 | 0 | ||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net | 1,833 | 1,743 | ||||
Incurred related to [Abstract] | ||||||
Current accident year | 6,729 | 6,226 | ||||
Prior accident year development | (71) | (104) | ||||
Total incurred | 6,658 | 6,122 | ||||
Paid related to [Abstract] | ||||||
Current accident year | 5,148 | 4,807 | ||||
Prior accident years | 1,663 | 1,500 | ||||
Total paid | 6,811 | 6,307 | ||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net | 1,680 | 1,558 | 1,680 | 1,558 | ||
Plus: Reinsurance recoverable on unpaid losses | 0 | 0 | 0 | 0 | ||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross | $ 1,680 | $ 1,558 | $ 1,680 | $ 1,558 | ||
|
Junior Subordinated Debentures (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
Trust
Quarter
$ / shares
shares
| ||||||||||
Debt Instruments [Abstract] | ||||||||||
Number of Connecticut statutory business trusts | Trust | 2 | |||||||||
Financial structure of statutory business trusts [Abstract] | ||||||||||
Net balance September 30, 2018 | $ 33,738 | |||||||||
Net balance December 31, 2017 | $ 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 September 30, 2018 | $ 18,042 | [1],[2] | ||||||||
Less: Treasury debt | 0 | [1],[2],[3] | ||||||||
Net balance September 30, 2018 | 18,042 | [1],[2] | ||||||||
Net balance December 31, 2017 | $ 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 September 30, 2018 | $ 23,196 | [1],[2] | ||||||||
Less: Treasury debt | (7,500) | [1],[2],[3] | ||||||||
Net balance September 30, 2018 | 15,696 | [1],[2] | ||||||||
Net balance December 31, 2017 | $ 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% | |||||||||
|
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income (Loss) [Abstract] | ||||
Net income (loss) | $ 934 | $ 747 | $ (905) | $ 1,986 |
Less: preferred stock dividends | (100) | (100) | (299) | (299) |
Net income (loss) applicable to common shareholders | $ 834 | $ 647 | $ (1,204) | $ 1,687 |
Weighted Average Shares [Abstract] | ||||
Weighted average shares outstanding (in shares) | 20,420 | 20,440 | 20,314 | 20,428 |
Per Share Amount [Abstract] | ||||
Net income (loss) applicable to common shareholders (in dollars per share) | $ 0.04 | $ 0.03 | $ (0.06) | $ 0.08 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Reconciliation of income tax expense (benefit) [Abstract] | |||||
Federal income tax provision at statutory rate of 21% and 35% for 2018 and 2017, respectively | $ 225 | $ 221 | $ (262) | $ 864 | |
Dividends-received deduction | (10) | (23) | (30) | (71) | |
Small life insurance company deduction | 0 | (313) | 0 | (343) | |
Other permanent differences | 22 | 18 | 50 | 52 | |
Adjustment for prior years' estimates to actual | (99) | (19) | (99) | (19) | |
Income tax expense (benefit) | 138 | (116) | $ (341) | $ 483 | |
Federal statutory income tax rate | 21.00% | 35.00% | 35.00% | ||
Components of income tax expense (benefit) [Abstract] | |||||
Current - Federal | 255 | (157) | $ 994 | $ 906 | |
Deferred - Federal | (117) | 41 | (1,335) | (423) | |
Income tax expense (benefit) | $ 138 | (116) | $ (341) | $ 483 | |
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 | $ 3,000 | |||
Tentative amount of LICTI to phase out of SLD | $ 15,000 | $ 15,000 |
Segment Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
Segment
|
Sep. 30, 2017
USD ($)
|
|
Segment Information [Abstract] | ||||
Number of business units | Segment | 2 | |||
Revenue and income (loss) before income taxes for each business unit [Abstract] | ||||
Revenue | $ 46,370 | $ 44,798 | $ 136,353 | $ 132,289 |
Income (loss) before income taxes | 1,072 | 631 | (1,246) | 2,469 |
Operating Segments [Member] | American Southern [Member] | ||||
Revenue and income (loss) before income taxes for each business unit [Abstract] | ||||
Revenue | 13,998 | 15,047 | 42,174 | 43,402 |
Income (loss) before income taxes | 995 | 1,860 | 3,892 | 5,941 |
Operating Segments [Member] | Bankers Fidelity [Member] | ||||
Revenue and income (loss) before income taxes for each business unit [Abstract] | ||||
Revenue | 31,196 | 29,661 | 92,950 | 87,757 |
Income (loss) before income taxes | 512 | 402 | (1,762) | 190 |
Corporate and Other [Member] | ||||
Revenue and income (loss) before income taxes for each business unit [Abstract] | ||||
Revenue | 1,176 | 90 | 1,229 | 1,130 |
Income (loss) before income taxes | $ (435) | $ (1,631) | $ (3,376) | $ (3,662) |
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Beginning Balance | $ 112,983 | $ 105,506 | ||
Total other comprehensive income (loss), net of tax | $ (333) | $ 1,504 | (8,788) | 2,895 |
Ending Balance | 102,118 | 109,520 | 102,118 | 109,520 |
ASU 2016-01 [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018 | 0 | |||
ASU 2018-02 [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018 | 0 | |||
AOCI Attributable to Parent [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Beginning Balance | 9,751 | 5,830 | ||
Total effect of adoption of updated accounting guidance at January 1, 2018 | (7,725) | |||
Total other comprehensive income (loss), net of tax | (8,788) | 2,895 | ||
Ending Balance | $ (6,762) | $ 8,725 | (6,762) | $ 8,725 |
AOCI Attributable to Parent [Member] | ASU 2016-01 [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Cumulative effect of adoption of updated accounting guidance for equity financial instruments at January 1, 2018 | (9,825) | |||
AOCI Attributable to Parent [Member] | ASU 2018-02 [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Reclassification of certain tax effects from accumulated other comprehensive income at January 1, 2018 | 2,100 | |||
Unrealized Gains on Available-for-Sale Securities [Member] | ||||
Changes in balances of each component of accumulated other comprehensive income (loss), net of taxes [Roll Forward] | ||||
Other comprehensive loss before reclassifications | (8,158) | |||
Amounts reclassified from accumulated other comprehensive loss | (630) | |||
Total other comprehensive income (loss), net of tax | $ (8,788) |
Related Party Transactions (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Members of Management [Member] | ||
Related Party Transaction [Abstract] | ||
Premiums paid by Gray for group accident plan | $ 306 | $ 448 |
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