Schedule II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

BALANCE SHEETS

ASSETS

	December 31,
	2020		2019
	(In thousands)
Cash and cash equivalents	$	2,090	$	2,068
Investments		2,598		3,267
Investment in subsidiaries		172,996		142,707
Investments in unconsolidated trusts		1,238		1,238
Income taxes receivable from subsidiaries		1,683		2,304
Other assets		4,311		5,126
Total assets	$	184,916	$	156,710

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deferred tax liability, net	$	1,765	$	346
Other payables		4,353		4,232
Junior subordinated debentures		33,738		33,738

Total liabilities		39,856		38,316

Shareholders’ equity		145,060		118,394
Total liabilities and shareholders’ equity	$	184,916	$	156,710

See accompanying report of independent registered public accounting firm.

Schedule II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2020			2019
	(In thousands)
REVENUE
Fee income from subsidiaries	$	6,745		$	7,210
Distributed earnings from subsidiaries		3,900			4,800
Unrealized gains (losses) on equity securities, net		(191	)		2,976
Other		(784	)		1,190
Total revenue		9,670			16,176

GENERAL AND ADMINISTRATIVE EXPENSES		11,521			11,731

INTEREST EXPENSE		1,610			2,130
		(3,461	)		2,315
INCOME TAX BENEFIT⁽¹⁾		(3,623	)		(2,035	)
		162			4,350
EQUITY IN UNDISTRIBUTED EARNINGS (LOSS) OF SUBSIDIARIES, NET		12,007			(4,736	)
NET INCOME (LOSS)	$	12,169		$	(386	)

(1)

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

See accompanying report of independent registered public accounting firm.

Schedule II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ATLANTIC AMERICAN CORPORATION

(Parent Company Only)

STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2020			2019
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$	12,169		$	(386	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Realized investment gains, net		—			(1,120	)
Unrealized losses (gains) on equity securities, net		191			(2,976	)
Depreciation and amortization		594			552
Compensation expense related to share awards		437			353
Distributions received from equity method investees		—			51
Equity in undistributed (earnings) loss of subsidiaries, net		(12,007	)		4,736
Decrease in intercompany taxes		622			551
Deferred income tax benefit		(2,446	)		(913	)
Increase in accounts payable and accrued expenses		121			2,360
Other, net		917			(2,314	)
Net cash provided by operating activities		598			894

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured		—			3,574
Investments purchased		—			(1,060	)
Capital contribution to subsidiaries		—			(3,500	)
Additions to property and equipment		(95	)		(44	)
Net cash used in investing activities		(95	)		(1,030	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends on Series D preferred stock		(399	)		(399	)
Payment of dividends on common stock		—			(403	)
Proceeds from shares issued under stock plans		9			27
Treasury stock acquired — share repurchase authorization		—			(71	)
Treasury stock acquired — net employee share-based compensation		(91	)		(92	)
Net cash used in financing activities		(481	)		(938	)

Net increase (decrease) in cash		22			(1,074	)
Cash and cash equivalents at beginning of year		2,068			3,142
Cash and cash equivalents at end of year	$	2,090		$	2,068

Supplemental disclosure:
Cash paid for interest	$	1,665		$	2,155
Cash paid for income taxes	$	3,883		$	1,662
Intercompany tax settlement from subsidiaries	$	1,798		$	3,335