UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

or

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-3722

ATLANTIC AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)

Georgia
  
58-1027114
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)

4370 Peachtree Road, N.E.,
Atlanta, Georgia
  
30319
(Address of principal executive offices)
  
(Zip Code)

(404) 266-5500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
  
Trading Symbol(s)
  
Name of each exchange on which registered
Common Stock, par value $1.00 per share
  
AAME
  
NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☑   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☑   No  ☐

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

Large accelerated filer  ☐   Accelerated filer  ☐   Non-accelerated filer  ☑  Smaller reporting company  ☑   Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐   No  ☑

The total number of shares of the registrant’s Common Stock, $1 par value, outstanding on July 31, 2023 was 20,402,288.
 
ATLANTIC AMERICAN CORPORATION

TABLE OF CONTENTS

 
2
     
Part I.
Financial Information
  
     
Item 1.
 Financial Statements:
3
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
8
     
Item 2.
22
     
Item 4.
28
     
Part II.
Other Information
  
     
Item 2.
30
     
Item 5.
30
     
Item 6.
30
     
 
31

FORWARD-LOOKING STATEMENTS

This report contains and references certain information that constitutes forward-looking statements as that term is defined in the federal securities laws. Forward-looking statements are all statements other than those of historical fact. Such forward-looking statements are made based upon management’s current assessments of various risks and uncertainties, as well as assumptions made in accordance with the “safe harbor” provisions of the federal securities laws. Forward-looking statements are inherently subject to various risks and uncertainties and the Company’s actual results could differ materially from the results expressed in or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other subsequent filings made by the Company from time to time with the Securities and Exchange Commission. In addition, other risks and uncertainties not known by us, or that we currently determine to not be material, may materially adversely affect our financial condition, results of operations or cash flows. The Company undertakes no obligation to update any forward-looking statement as a result of subsequent developments, changes in underlying assumptions or facts, or otherwise, except as may be required by law.

2
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

   
Unaudited
June 30,
2023
    
December 31,
2022
  
ASSETS
  
Cash and cash equivalents
  
$
24,247
    
$
28,863
  
Investments:
                
Fixed maturities, available-for-sale, at fair value (amortized cost: $235,013 and $236,766; no allowance for credit losses)
    
208,472
      
208,729
  
Equity securities, at fair value (cost: $4,905 and $4,907)
    
9,679
      
11,562
  
Other invested assets (cost: $6,982 and $5,628)
    
6,724
      
5,386
  
Policy loans
    
1,811
      
1,759
  
Real estate
    
38
      
38
  
Investment in unconsolidated trusts
    
1,238
      
1,238
  
Total investments
    
227,962
      
228,712
  
Receivables:
                
Reinsurance (net of allowance for uncollectible reinsurance of $66 and $0)
    
22,261
      
25,913
  
Insurance premiums and other (net of allowance for expected credit losses $213 and net of allowance for doubtful accounts $177)
    
30,825
      
15,386
  
Deferred income taxes, net
    
15,149
      
14,163
  
Deferred acquisition costs
    
41,211
      
42,281
  
Other assets
    
8,756
      
9,202
  
Intangibles
    
2,544
      
2,544
  
Total assets
  
$
372,955
    
$
367,064
  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Insurance reserves and policyholder funds:
                
Future policy benefits
  
$
84,506
    
$
85,564
  
Unearned premiums
    
37,875
      
28,348
  
Losses and claims
    
85,984
      
87,484
  
Other policy liabilities
    
939
      
1,255
  
Total insurance reserves and policyholder funds
    
209,304
      
202,651
  
Accounts payable and accrued expenses
    
23,427
      
26,473
  
Revolving credit facility
     3,000       2,009  
Junior subordinated debenture obligations, net
    
33,738
      
33,738
  
Total liabilities
    
269,469
      
264,871
  
                 
Commitments and contingencies (Note 11)            
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: 20,402,288 and 20,407,229
    
22,401
      
22,401
  
Additional paid-in capital
    
57,425
      
57,425
  
Retained earnings
    
52,006
      
51,982
  
Accumulated other comprehensive income
    
(20,967
)
    
(22,149
)
Unearned stock grant compensation
    
(33
)
    
(132
)
Treasury stock, at cost: 1,998,606 and 1,993,665 shares
    
(7,401
)
    
(7,389
)
Total shareholders’ equity
    
103,486
      
102,193
  
Total liabilities and shareholders’ equity
  
$
372,955
    
$
367,064
  

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

3
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Dollars in thousands, except per share data)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
     2023     2022  
Revenue:
                        
Insurance premiums, net
  
$
46,060
    
$
47,065
     $ 92,160     $ 94,146  
Net investment income
    
2,559
      
2,529
       5,100       4,869  
Realized investment gains (losses), net
    
70
      
(62
)
     70       (72 )
Unrealized gains (losses) on equity securities, net
    
494
      
(4,866
)
     (1,881 )     (2,673 )
Other income
    
5
      
3
       8       7  
Total revenue
    
49,188
      
44,669
       95,457       96,277  
                                 
Benefits and expenses:
                                
Insurance benefits and losses incurred
    
29,365
      
32,753
       59,825       63,922  
Commissions and underwriting expenses
    
12,848
      
10,215
       25,766       23,051  
Interest expense
    
807
      
414
       1,557       768  
Other expense
    
3,951
      
3,402
       7,910       6,855  
Total benefits and expenses
    
46,971
      
46,784
       95,058       94,596  
Income (loss) before income taxes
    
2,217
      
(2,115
)
     399       1,681  
Income tax expense (benefit)
    
473
      
(436
)
     101       518  
Net income (loss)
    
1,744
      
(1,679
)
     298       1,163  
Preferred stock dividends
    
(100
)
    
(100
)
     (199 )     (199 )
Net income (loss) applicable to common shareholders
  
$
1,644
    
$
(1,779
)
   $ 99     $ 964  
Earnings (loss) per common share (basic)
  $
0.08     $
(0.09 )   $
—     $
0.05  
Earnings (loss) per common share (diluted)
   $ 0.08     $ (0.09 )   $ —     $ 0.05  

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
4
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited; Dollars in thousands)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
     2023     2022  
Net income (loss)
  
$
1,744
    
$
(1,679
)
   $ 298     $ 1,163  
Other comprehensive income (loss):                                
Available-for-sale fixed maturity securities:
                                
Gross unrealized holding gains (losses) arising in the period
    
(3,167
)
    
(19,748
)
     1,566       (41,561 )
Related income tax effect
    
665
      
4,147
       (329 )     8,728  
Subtotal
    
(2,502
)
    
(15,601
)
     1,237       (32,833 )
Less: reclassification adjustment for net realized gains (losses) included in net income (loss)
    
(70
)
    
43
       (70 )     53  
Related income tax effect
    
15
      
(8
)
     15       (11 )
Subtotal
    
(55
)
    
35
       (55 )     42  
Total other comprehensive income (loss), net of tax
    
(2,557
)
    
(15,566
)
     1,182       (32,791 )
Total comprehensive income (loss)  
$
(813
)
  
$
(17,245
)
   $ 1,480     $ (31,628 )

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

5
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited; Dollars in thousands except share data)

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
     2023     2022  
Preferred stock:
                        
Balance, beginning of period
  
$
55
    
$
55
     $ 55     $ 55  
Balance, end of period
    
55
      
55
       55       55  
Common stock:
                                
Balance, beginning of period
    
22,401
      
22,401
       22,401       22,401  
Balance, end of period
    
22,401
      
22,401
       22,401       22,401  
Additional paid-in capital:
                                
Balance, beginning of period
    
57,425
      
57,443
       57,425       57,441  
Restricted stock grants, net of forfeitures
    
—
      
—
       —       2  
Balance, end of period
    
57,425
      
57,443
       57,425       57,443  
Retained earnings:
                                
Balance, beginning of period
    
50,362
      
53,599
       51,982       51,264  
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2023
     —       —       (75 )     —  
Net income (loss)
    
1,744
      
(1,679
)
     298       1,163  
Dividends on common stock
    
—
      
—
       —       (408 )
Dividends accrued on preferred stock
    
(100
)
    
(100
)
     (199 )     (199 )
Balance, end of period
    
52,006
      
51,820
       52,006       51,820  
Accumulated other comprehensive income (loss):
                                
Balance, beginning of period
    
(18,410
)
    
463
       (22,149 )     17,688  
Other comprehensive income (loss), net of tax
    
(2,557
)
    
(15,566
)
     1,182       (32,791 )
Balance, end of period
    
(20,967
)
    
(15,103
)
     (20,967 )     (15,103 )
Unearned stock grant compensation:
                                
Balance, beginning of period
    
(59
)
    
(117
)
     (132 )     (73 )
Restricted stock grants, net of forfeitures
    
—
      
—
       —       (71 )
Amortization of unearned compensation
    
26
      
38
       99       65  
Balance, end of period
    
(33
)
    
(79
)
     (33 )     (79 )
Treasury stock:
                                
Balance, beginning of period
    
(7,395
)
    
(7,421
)
     (7,389 )     (7,490 )
Restricted stock grants, net of forfeitures
    
—
      
—
       —       69  
Net shares acquired related to employee share-based compensation plans
     (6 )     (15 )     (12 )     (15 )
Balance, end of period
    
(7,401
)
    
(7,436
)
     (7,401 )     (7,436 )
                                 
Total shareholders’ equity
  
$
103,486
    
$
109,101
     $ 103,486     $ 109,101  
Dividends declared on common stock per share
  
$
—
    
$
—
     $ —     $ 0.02  
                                 
Common shares outstanding:
                                
Balance, beginning of period
     20,404,699       20,403,576       20,407,229       20,378,576  
Net shares acquired under employee share-based compensation plans     (2,411 )     (5,079 )     (4,941 )     (5,079 )
Restricted stock grants, net of forfeitures
     —       —       —       25,000  
Balance, end of period     20,402,288       20,398,497       20,402,288       20,398,497  

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

6
ATLANTIC AMERICAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; In thousands)

   
Six Months Ended
June 30,
  
   
2023
    
2022
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
298
    
$
1,163
  
Adjustments to reconcile net income to net cash used in operating activities:
                
Amortization of (additions to) acquisition costs, net
    
1,070
      
(3,546
)
Realized investment (gains) losses, net
    
(70
)
    
72
  
Unrealized losses on equity securities, net
    
1,881
      
2,673
  
Losses from equity method investees
     16       18  
Compensation expense related to share awards
    
99
      
65
  
Depreciation and amortization
    
357
      
465
  
Deferred income tax benefit
    
(1,300
)
    
(694
)
Increase in receivables, net
     (11,787 )    
(12,729
)
Increase in insurance reserves and policyholder funds
    
6,653
      
10,077
  
Decrease in accounts payable and accrued expenses
    
(3,246
)
    
(2,104
)
Other, net
    
1,133
      
124
  
Net cash used in operating activities
    
(4,896
)
    
(4,416
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from investments sold
    
3,685
      
221
  
Proceeds from investments matured, called or redeemed
    
7,675
      
6,241
  
Investments purchased
    
(12,000
)
    
(11,398
)
Additions to property and equipment
    
(68
)
    
(68
)
Net cash used in investing activities
    
(708
)
    
(5,004
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Payment of dividends on common stock
     —       (408 )
Treasury stock acquired — net employee share-based compensation
     (12 )     (15 )
Proceeds from revolving credit facility, net
     1,000       1,000  
Net cash provided by financing activities
    
988
      
577
  
                 
Net decrease in cash and cash equivalents
    
(4,616
)
    
(8,843
)
Cash and cash equivalents at beginning of period
    
28,863
      
24,753
  
Cash and cash equivalents at end of period
  
$
24,247
    
$
15,910
  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
                
Cash paid for interest
  
$
1,547
    
$
726
  
Cash paid for income taxes
   $
776     $
 899  

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

7
ATLANTIC AMERICAN CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; Dollars in thousands, except per share amounts)
Note 1.
Basis of Presentation and Significant Accounting Policies


The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). 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, Bankers Fidelity Assurance Company and Atlantic Capital Life 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 condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month and six month periods ended June 30, 2023 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, 2023 or for any other future period.



The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Note 2.
Recently Issued Accounting Standards


Adoption of New Accounting Standards



Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This guidance provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. Along with the optional expedients, the amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination. Additionally, a company may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. This standard may be elected over time through December 31, 2024 as reference rate reform activities occur. The Company adopted the guidance as of June 30, 2023. The adoption of the guidance had no significant impact on the Company’s financial condition and results of operations.



Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.



The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.



The Company adopted the updated guidance as of January 1, 2023. The updated guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption. The adoption of this guidance resulted in the recognition of an after-tax cumulative effect adjustment of $0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred credit losses recognized under the previous guidance. This adjustment is primarily associated with reinsurance recoverables, premium and other receivables. The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and increased the allowance for estimated uncollectible reinsurance.


8

Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023.

   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(9
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
22,261
    
$
66
  



Insurance Premium and Other Receivables



The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023.


   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
36
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
30,825
    
$
213
  



Future Adoption of New Accounting Standards



For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2022 Annual Report.



Accounting Policies



The following accounting policies have been updated to reflect the Company’s adoption of Financial Instruments - Credit Losses, as described above.



Credit Impairments of Fixed Maturities



The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The Company’s equity securities, which include common and non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income. The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or independent broker quotations. Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market prices.



Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI.


9

On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI.



Reinsurance Recoverables



The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement.



Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.



Insurance Premiums and Other Receivables



Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.

Note 3.
Investments
   

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, ACL and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2023 and December 31, 2022.
  

Fixed maturities were comprised of the following:
 
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Allowance
for
Credit Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                              
Bonds:
                              
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
48,880
    
$
1
    
$
5,948
     $ —    
$
54,827
  
Obligations of states and political subdivisions
     8,148
       —
       1,370
       —       9,518
  
Corporate securities:
                                        
Utilities and telecom
     20,195
       86
       3,146
       —       23,255
  
Financial services
     57,242
       439
       6,948
       —       63,751
  
Other business – diversified
     31,871
       173
       4,107
       —       35,805
  
Other consumer – diversified
     41,909
       42
       5,797
       —       47,664
  
Total corporate securities
     151,217
       740
       19,998
       —       170,475
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     227
       34
       —
       —       193
  
Total redeemable preferred stocks
     227
       34
       —
       —       193
  
Total fixed maturities
   $ 208,472     $ 775     $ 27,316     $ —     $ 235,013  
 
10
   
December 31, 2022
  
   
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
  
$
44,412
    
$
5
    
$
5,926
    
$
50,333
  
Obligations of states and political subdivisions
     9,187       4
       1,702
       10,885  
Corporate securities:
                                
Utilities and telecom
     22,090       120       3,299       25,269  
Financial services
     59,054       397       7,085       65,742  
Other business – diversified
     31,058       161       4,689       35,586  
Other consumer – diversified
     42,705       35       6,089       48,759  
Total corporate securities
     154,907       713       21,162       175,356  
Redeemable preferred stocks:
                                
Other consumer – diversified
     223       31       —       192  
Total redeemable preferred stocks
     223       31       —       192  
Total fixed maturities
   $ 208,729     $ 753     $ 28,790     $ 236,766  
  

Bonds having an amortized cost of $11,766 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $7,548 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 842     $ 570     $ —     $ 272  
Other business – diversified
     8,837
       4,204
       —
       4,633
  
Total equity securities
   $ 9,679     $ 4,774     $ —     $ 4,905  

   
December 31, 2022
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 790     $ 516     $ —     $ 274  
Other business – diversified
     10,772
       6,139
       —
       4,633  
Total equity securities
   $ 11,562     $ 6,655     $ —     $ 4,907  
    

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2023 and December 31, 2022 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.
  
   
June 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 123     $ 125     $ 3,776     $ 3,797  
Due after one year through five years
     56,828
       59,924
       40,150
       42,174
  
Due after five years through ten years
     35,227
       39,835
       44,044
       49,711
  
Due after ten years
     81,244
       95,113
       87,719
       103,095
  
Asset backed securities
     35,050
       40,016
       33,040
       37,989
  
Totals
   $ 208,472     $ 235,013     $ 208,729     $ 236,766  
    
11

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 June 30, 2023 and December 31, 2022.
 
   
June 30, 2023
  
   
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
   $ 11,404     $ 287     $ 36,608     $ 5,661     $ 48,012     $ 5,948  
Obligations of states and political subdivisions
     2,143       18       6,005       1,352       8,148       1,370  
Corporate securities
     16,587
       554
       126,125
       19,444
       142,712
       19,998
  
Total temporarily impaired securities
   $ 30,134     $ 859     $ 168,738     $ 26,457     $ 198,872     $ 27,316  
  
   
December 31, 2022
  
   
Less than 12 months
    
12 months or longer
    
Total
  
   
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
  
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
   $ 23,763     $ 2,410     $ 19,259     $ 3,516     $ 43,022     $ 5,926  
Obligations of states and political subdivisions     8,183       1,702       —       —       8,183       1,702  
Corporate securities
     127,928
       16,214
       14,514
       4,948
       142,442
       21,162
  
Total temporarily impaired securities
   $ 159,874     $ 20,326     $ 33,773     $ 8,464     $ 193,647     $ 28,790  
    

Analysis of Securities in Unrealized Loss Positions
 

As of June 30, 2023 and December 31, 2022, there were 248 and 237 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors. The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.



For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile.



For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.



Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company, and the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.



However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated.  The Company had no ACL on its available-for-sale fixed maturities as of June 30, 2023.


12
    

The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2023 and 2022.
   
   
Three Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
     —       —       —       —  
Realized investment losses, net
  
$
70
    
$
—
    
$
—
    
$
70
  
 
   
Three Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
    
(43
)
    
—
      
(19
)
    
(62
)
Realized investment gains, net
  
$
(43
)
  
$
—
    
$
(19
)
  
$
(62
)

   
Six Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
    
—
      
—
      
—
      
—
  
Realized investment gains, net
  
$
70
    
$
—
    
$
—
    
$
70
  

   
Six Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ —     $ —     $ —     $ —  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains, net
  
$
(53
)
  
$
—
    
$
(19
)
  
$
(72
)


The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2023 and 2022.

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized gains (losses) recognized during the period on equity securities
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized gains (losses) recognized during the reporting period on equity securities, net
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
  

Variable Interest Entities
 

The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance. The Company’s VIE interests principally consist of interests in limited liability companies formed for the purpose of achieving diversified equity returns. The Company’s VIE interests, carried as a part of other invested assets, totaled $6,724 and $5,386 as of June 30, 2023 and December 31, 2022, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2023 and December 31, 2022.


The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, the Company has not consolidated these VIEs. The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE. The Company has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $7,962 and $6,624, as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $4,518 and $5,872, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

13
Note 4.
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 describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

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

Level 2
Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly most of its fixed maturities, which consist of U.S. Treasury securities, 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 models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

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. With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company’s financial instruments valued using Level 3 criteria consist of one equity security.  As of June 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $154 and $156, respectively. The equity security is not traded and is valued at cost. The use of different criteria or assumptions regarding data may have yielded materially different valuations.


As of June 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below:

   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,472
    
$
—
    
$
208,472
  
Equity securities
    
9,525
      
—
      
154
      
9,679
  
Cash equivalents
    
15,051
      
—
      
—
      
15,051
  
Total
  
$
24,576
    
$
208,472
    
$
154
    
$
233,202
  


As of December 31, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below:

   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,729
    
$
—
    
$
208,729
  
Equity securities
    
11,406
      
—
      
156
      
11,562
  
Cash equivalents
    
18,861
      
—
      
—
      
18,861
  
Total
  
$
30,267
    
$
208,729
    
$
156
    
$
239,152
  

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 June 30, 2023 and December 31, 2022.

       
June 30, 2023
    
December 31, 2022
  
 
Level in Fair
Value
Hierarchy (1)
 
Carrying
Amount
    
Estimated
Fair Value
    
Carrying
Amount
    
Estimated
Fair Value
  
Assets:
                            
Cash and cash equivalents
Level 1
    
$
24,247
    
$
24,247
    
$
28,863
    
$
28,863
  
Fixed maturities
 (1
)    
208,472
      
208,472
      
208,729
      
208,729
  
Equity securities
 (1 )    
9,679
      
9,679
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,724
      
6,724
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,811
      
1,811
      
1,759
      
1,759
  
Investment in unconsolidated trusts
Level 2
      
1,238
      
1,238
      
1,238
      
1,238
  
                                     
Liabilities:
                                    
Junior subordinated debentures, net
Level 2
      
33,738
      
32,724
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,000       3,000       2,009       2,009  

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

Note 5.
Internal-Use Software


On March 3, 2021, the Company entered into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services.  The software is managed, hosted, supported, and delivered as a cloud-based software service product offering (software-as-a-service).  The initial term of the arrangement is five years from the effective date with a renewal term of an additional five years.


Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred.  Implementation expenses incurred related to third party professional and consulting services have been capitalized.  The Company will begin amortizing, on a straight-line basis over the expected ten year term of the hosting arrangement, when the software is substantially ready for its intended use.  The Company incurred and capitalized implementation costs of $628 and $958 during the six months ended June 30, 2023 and 2022, respectively.  As a result, the Company has capitalized $3,650 in implementation costs in other assets within its condensed consolidated balance sheet as of June 30, 2023.  The Company expects the software will be substantially ready for its intended use in the three months ended September 30, 2023.  Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the six months ended June 30, 2023.

Note 6.
Insurance Reserves for Losses and Claims


The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2023 and 2022 is as follows:

   
Six Months Ended
June 30,
  
   
2023
   
2022
 
Beginning insurance reserves for losses and claims, gross  
$
87,484
    
$
85,620
  
Less: Reinsurance recoverable on unpaid losses
    
(17,647
)
    
(17,690
)
Beginning insurance reserves for losses and claims, net
    
69,837
      
67,930
  
                 
Incurred related to:
                
Current accident year
    
57,320
      
66,260
  
Prior accident year development (1)
     1,636 (2)    
(3,195
)(3)
Total incurred
    
58,956
      
63,065
  
                 
Paid related to:
                
Current accident year
    
25,834
      
32,630
  
Prior accident years
    
33,019
      
28,754
  
Total paid
    
58,853
      
61,384
  
Ending insurance reserves for losses and claims, net
    
69,940
      
69,611
  
Plus: Reinsurance recoverable on unpaid losses
    
16,044
      
17,487
  
Ending insurance reserves for losses and claims, gross
  
$
85,984
    
$
87,098
  

(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.

(2)
Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors.

(3)
Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations.

15

Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:

   
Six Months Ended
June 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
58,956
    
$
63,065
  
Cash surrender value and matured endowments
    
812
      
1,154
  
Benefit reserve changes
    
57
      
(297
)
Total insurance benefits and losses incurred
  
$
59,825
    
$
63,922
  

Note 7.
Credit Arrangements



As expected, discontinuation of LIBOR occurred on June 30, 2023 (“LIBOR Cessation Date”) and will affect the rates used in the Company’s Credit Arrangements after that date. On March 15, 2022, the U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the “LIBOR Act”) to address LIBOR’s cessation and to establish a clear and uniform process for replacing the overnight and one-, three-, six- and 12-month tenors of USD LIBOR in existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate (“tough legacy contracts”).  Further, the Board of Governors of the Federal Reserve System (the “Board”) has issued regulations, 12 C.F.R. Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which relates to the LIBOR transition.



Bank Debt



On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10,000 revolving credit facility that matures on April 12, 2024. Under the Credit Agreement, the Company will pay interest on the unpaid principal balance of outstanding revolving loans at the LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%.



On June 28, 2023, the Company received a LIBOR cessation notice from the Lender detailing the replacement rates that would be used effective immediately after the LIBOR Cessation Date of June 30, 2023, as provided for in the Credit Agreement. The use of an alternate benchmark rate selected by the Lender (“Benchmark Replacement”) in place of LIBOR will not be used until the first reset date under the terms of the Credit Agreement following the LIBOR Cessation Date. The Benchmark Replacement that will be used is the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”) and provides an indicative, forward-looking measurement of the SOFR based on market expectations implied from leading derivatives markets.



The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of June 30, 2023, the Company had outstanding borrowings of $3,000 under the Credit Agreement.



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 the Company; and (iii) engaging in those activities necessary or incidental thereto.


16

On May 1, 2023, the Company received notice from its trustee and administrator of the statutory business trusts, that Federal LIBOR Legislation (discussed above) provides that the benchmark rate for tough legacy contracts, such as the statutory trusts contracts, will be replaced by operation of law on the first London banking day after June 30, 2023 with a benchmark replacement selected by the Board, as adjusted by the applicable spread adjustment recommended by the Board. The trustee and administrator has determined that our contracts will be replaced with 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent.



The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2023 was as follows:

   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed June 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance June 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
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 8.
Earnings (Loss) Per Common Share



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


   
Three Months Ended
June 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,744       20,404
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,644       20,404
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,744       21,782     $ 0.08  


17
   
Three Months Ended
June 30, 2022
  
    Income    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (1,679 )     20,402        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (1,779 )     20,402
     $ (0.09 )

   
Six Months Ended
June 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 298       20,406
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 99       20,406
     $ —  

   
Six Months Ended
June 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 1,163     20,391
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 964     20,391
     $ 0.05


The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for all periods presented, except for the three month period ended June 30, 2023, since its impact would have been antidilutive.

Note 9.
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:


   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
466
 
$
(444
)
  
$
84
    
$
353
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(17
)
    
(12
)
Meals and entertainment
    
11
      
10
      
23
      
20
  
Vested stock and club dues
     2     —     3     —
Parking disallowance
    
4
      
4
      
8
      
8
  
Penalties and fines
     —       —       —       149  
Income tax expense (benefit)
  
$
473
 
$
(436
)
  
$
101
    
$
518
  



The components of income tax expense (benefit) were:


   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
1,221
    
$
1,144
    
$
1,401
    
$
1,212
  
Deferred – Federal
    
(748
)
    
(1,580
)
    
(1,300
)
    
(694
)
Total
  
$
473
    
$
(436
)
  
$
101
    
$
518
  

18
Note 10.
Leases


The Company has two operating lease agreements, each for the use of office space in the ordinary course of business. The first lease renews annually on an automatic basis and based on original assumptions, management is reasonably certain to exercise the renewal option through 2026. The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years, with a termination date on September 30, 2026. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.



These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for the six months ended June 30, 2023 and June 30, 2022 was $507.



Additional information regarding the Company’s real estate operating leases is as follows:

   
Six Months Ended
June 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
520
    
$
512
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
3,016
      
3,781
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.4 years
    
4.4 years
  


The following table presents maturities and present value of the Company’s lease liabilities:

    Lease Liability
 
Remainder of 2023
  
$
528
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,618
  
Less: present value adjustment
    
397
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,221
  


As of June 30, 2023, the Company has no operating leases that have not yet commenced.

Note 11.
Commitments and Contingencies

Litigation



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



Regulatory Matters



Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business.  Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners.  From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various matters. In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company.

19
Note 12.
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 assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022.
 
Assets
  
June 30,
2023
    
December 31,
2022
  
American Southern
  
$
151,902
    
$
144,455
  
Bankers Fidelity
    
192,456
      
195,028
  
Corporate and Other
    
28,597
      
27,581
  
Total assets
  
$
372,955
    
$
367,064
  


Revenues
  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
18,965
    
$
19,496
     $ 37,165     $ 38,002  
Bankers Fidelity
    
30,193
      
25,569
       58,383       58,458  
Corporate and Other
    
30
      
(396
)
     (91 )     (183 )
Total revenue
  
$
49,188
    
$
44,669
     $ 95,457     $ 96,277  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
2,716
    
$
682
     $ 2,386     $ 2,767  
Bankers Fidelity
    
1,851
      
(517
)
     3,203       2,934  
Corporate and Other
    
(2,350
)
    
(2,280
)
     (5,190 )     (4,020 )
Income (loss) before income taxes
  
$
2,217
    
$
(2,115
)
   $ 399     $ 1,681  
20
Note 13.
Subsequent Events


On August 8, 2023, the Company’s board of directors declared an annual cash dividend of $0.02 per share of common stock that is payable to shareholders of record as of the close of business on August 22, 2023.

21
Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”) as of and for the three month and six month periods ended June 30, 2023. This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”).

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

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ significantly from those estimates. The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability. The Company’s critical accounting policies and the resultant estimates considered most significant by management are disclosed in the 2022 Annual Report. Except as disclosed in Note 2 of Notes to Condensed Consolidated Financial Statements, the Company’s critical accounting policies are consistent with those disclosed in the 2022 Annual Report.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income (loss) for the three month and six month periods ended June 30, 2023 and the comparable periods in 2022:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
                         
Insurance premiums, net
  
$
46,060
    
$
47,065
    
$
92,160
    
$
94,146
  
Net investment income
    
2,559
      
2,529
      
5,100
      
4,869
  
Realized investment gains (losses), net
    
70
      
(62
)
    
70
      
(72
)
Unrealized gains (losses) on equity securities, net
    
494
      
(4,866
)
    
(1,881
)
    
(2,673
)
Other income
    
5
      
3
      
8
      
7
  
Total revenue
    
49,188
      
44,669
      
95,457
      
96,277
  
Insurance benefits and losses incurred
    
29,365
      
32,753
      
59,825
      
63,922
  
Commissions and underwriting expenses
    
12,848
      
10,215
      
25,766
      
23,051
  
Interest expense
    
807
      
414
      
1,557
      
768
  
Other expense
    
3,951
      
3,402
      
7,910
      
6,855
  
Total benefits and expenses
    
46,971
      
46,784
      
95,058
      
94,596
  
Income (loss) before income taxes
  
$
2,217
    
$
(2,115
)
  
$
399
    
$
1,681
  
Net income (loss)
  
$
1,744
    
$
(1,679
)
  
$
298
    
$
1,163
  

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

22
A reconciliation of net income (loss) to operating income for the three month and six month periods ended June 30, 2023 and the comparable periods in 2022 is as follows:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
Reconciliation of Non-GAAP Financial Measure
  
2023
    
2022
    
2023
    
2022
  
   
(In thousands)
  
Net income (loss)
  
$
1,744
    
$
(1,679
)
  
$
298
    
$
1,163
  
Income tax expense (benefit)
    
473
      
(436
)
    
101
      
518
  
Realized investment gains (losses), net
    
(70
)
    
62
      
(70
)
    
72
  
Unrealized (gains) losses on equity securities, net
    
(494
)
    
4,866
      
1,881
      
2,673
  
Non-GAAP operating income
  
$
1,653
    
$
2,813
    
$
2,210
    
$
4,426
  

On a consolidated basis, the Company had net income of $1.7 million, or $0.08 per diluted share, for the three month period ended June 30, 2023, compared to net loss of $1.7 million, or $0.09 per diluted share, for the three month period ended June 30, 2022.  The Company had net income of $0.3 million, or $0.00 per diluted share, for the six month period ended June 30, 2023, compared to net income of $1.2 million, or $0.05 per diluted share, for the six month period ended June 30, 2022.  The increase in net income for the three month period ended June 30, 2023  was primarily the result of a $5.4 million increase in unrealized gains on equity securities due to fluctuations in market values in addition to more favorable loss experience in the life and health operations, from the comparable period in 2022. The decrease in net income for the six month period ended June 30, 2023 was primarily attributable to ancillary costs related to the new actuarial valuation system, coupled with an increase in administrative costs related to the growth in the group lines of business within the life and health operations.

For the three month period ended June 30, 2023, premium revenue decreased $1.0 million, or 2.1%, to $46.1 million from $47.1 million in the comparable period in 2022.  For the six month period ended June 30, 2023, premium revenue decreased $2.0 million, or 2.1%, to $92.2 million from $94.1 million in the comparable period in 2022.  The decrease in premium revenue was primarily attributable to a decrease in premium revenue in the automobile physical damage line of business in the property and casualty operations. Also contributing to this decrease was a decrease in the Medicare supplement insurance premiums in the life and health operations.

Operating income decreased $1.2 million in the three month period ended June 30, 2023 from the three month period ended June 30, 2022.  For the six month period ended June 30, 2023, operating income decreased $2.2 million from the comparable period in 2022.  The decrease in operating income for the three and six month periods ended June 30, 2023 was primarily attributable to ancillary costs related to the new actuarial valuation system, coupled with an increase in administrative costs related to the growth in the group lines of business within the life and health operations, as mentioned above.

A more detailed analysis of the individual operating segments and other corporate activities follows.

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2023 and the comparable periods in 2022:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(Dollars in thousands)
  
Gross written premiums
  
$
38,075
    
$
39,600
    
$
47,505
    
$
51,158
  
Ceded premiums
    
(1,478
)
    
(1,722
)
    
(2,975
)
    
(3,339
)
Net written premiums
  
$
36,597
    
$
37,878
    
$
44,530
    
$
47,819
  
Net earned premiums
  
$
17,880
    
$
18,769
    
$
35,091
    
$
36,112
  
Insurance benefits and losses incurred
    
13,548
      
14,040
      
26,208
      
24,518
  
Commissions and underwriting expenses
    
4,382
      
4,774
      
8,571
      
10,717
  
Underwriting income (loss)
  
$
(50
)
  
$
(45
)
  
$
312
    
$
877
  
Loss ratio
    
75.8
%
    
74.8
%
    
74.7
%
    
67.9
%
Expense ratio
    
24.5
      
25.4
      
24.4
      
29.7
  
Combined ratio
    
100.3
%
    
100.2
%
    
99.1
%
    
97.6
%

Gross written premiums at American Southern decreased $1.5 million, or 3.9%, during the three month period ended June 30, 2023 and decreased $3.7 million, or 7.1%, during the six month period ended June 30, 2023, from the comparable periods in 2022. The decrease in gross written premiums during the three month and six month periods ended June 30, 2023 was primarily attributable to the decrease in premiums written in the automobile physical damage line of business due to a reduction in the number of agencies.  Partially offsetting the decrease in gross written premiums was an increase in premiums written in the automobile liability line of business due to price increases in certain programs.

Ceded premiums decreased $0.2 million, or 14.2%, during the three month period ended June 30, 2023 and decreased $0.4 million, or 10.9%, during the six month period ended June 30, 2023, from the comparable periods in 2022. American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally increase or decrease as earned premiums increase or decrease.

23
The following presents American Southern’s net earned premiums by line of business for the three month and six month periods ended June 30, 2023 and the comparable periods in 2022:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(In thousands)
  
Automobile liability
  
$
10,495
    
$
8,560
    
$
19,815
    
$
16,185
  
Automobile physical damage
    
3,793
      
6,447
      
8,040
      
12,470
  
General liability
    
1,419
      
1,430
      
2,851
      
2,859
  
Surety
    
1,539
      
1,503
      
3,104
      
2,968
  
Other lines
    
634
      
829
      
1,281
      
1,630
  
Total
  
$
17,880
    
$
18,769
    
$
35,091
    
$
36,112
  

Net earned premiums decreased $0.9 million, or 4.7%, during the three month period ended June 30, 2023, and $1.0 million, or 2.8%, during the six month period ended June 30, 2023, over the comparable periods in 2022. The decrease in net earned premiums was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a reduction in the number of agencies as previously mentioned, partially offset by the increase in the automobile liability line of business.  Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies written during both the current year and immediately preceding year.

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

Insurance benefits and losses incurred at American Southern decreased $0.5 million, or 3.5%, during the three month period ended June 30, 2023, and increased $1.7 million, or 6.9%, during the six month period ended June 30, 2023, over the comparable periods in 2022. As a percentage of earned premiums, insurance benefits and losses incurred were 75.8% in the three month period ended June 30, 2023, compared to 74.8% in the three month period ended June 30, 2022.  For the six month period ended June 30, 2023, this ratio increased to 74.7% from 67.9% in the comparable period in 2022.  The increase in the loss ratio during the three month and six month periods ended June 30, 2023 was mainly due to an increase in the frequency and severity of claims in the automobile liability line of business, as well as in the surety line of business.  Partially offsetting the increase in the loss ratio was a decrease in losses related to the automobile physical damage line of business due to a decrease in exposure.

Commissions and underwriting expenses decreased $0.4 million, or 8.2%, during the three month period ended June 30, 2023, and $2.1 million, or 20.0% during the six month period ended June 30, 2023, over the comparable periods in 2022. As a percentage of earned premiums, underwriting expenses were 24.5% in the three month period ended June 30, 2023, compared to 25.4% in the three month period ended June 30, 2022. For the six month period ended June 30, 2023, this ratio decreased to 24.4% from 29.7% in the comparable period in 2022.  The decrease in the expense ratio during the three month and six month periods ended June 30, 2023 was primarily due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write. During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.

24
Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2023 and the comparable periods in 2022:

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(Dollars in thousands)
  
Medicare supplement
  
$
33,606
    
$
37,276
    
$
67,858
    
$
75,247
  
Other health products
    
4,104
      
2,949
      
7,382
      
5,922
  
Life insurance
    
4,504
      
3,570
      
10,072
      
8,087
  
Gross earned premiums
    
42,214
      
43,795
      
85,312
      
89,256
  
Ceded premiums
    
(14,034
)
    
(15,499
)
    
(28,243
)
    
(31,222
)
Net earned premiums
    
28,180
      
28,296
      
57,069
      
58,034
  
Insurance benefits and losses incurred
    
15,817
      
18,713
      
33,617
      
39,404
  
Commissions and underwriting expenses
    
10,843
      
7,373
      
21,563
      
16,119
  
Total expenses
    
26,660
      
26,086
      
55,180
      
55,523
  
Underwriting income
  
$
1,520
    
$
2,210
    
$
1,889
    
$
2,511
  
Loss ratio
    
56.1
%
    
66.1
%
    
58.9
%
    
67.9
%
Expense ratio
    
38.5
      
26.1
      
37.8
      
27.8
  
Combined ratio
    
94.6
%
    
92.2
%
    
96.7
%
    
95.7
%

Net earned premium revenue at Bankers Fidelity decreased $0.1 million, or 0.4%, during the three month period ended June 30, 2023, and $1.0 million, or 1.7%, during the six month period ended June 30, 2023, from the comparable periods in 2022. Gross earned premiums from the Medicare supplement line of business decreased $3.7 million, or 9.8%, during the three month period ended June 30, 2023, and $7.4 million, or 9.8%, during the six month period ended June 30, 2023, due primarily to non-renewals exceeding the level of new business writings. Other health product premiums increased $1.2 million, or 39.2%, during the three month period ended June 30, 2023, and $1.5 million, or 24.7%, during the six month period ended June 30, 2023, over the comparable periods in 2022, primarily as a result of new sales of the company’s group health and individual cancer  products. Gross earned premiums from the life insurance line of business increased $0.9 million, or 26.2%, during the three month period ended June 30, 2023, and increased $2.0 million, or 24.5%, during the six month period ended June 30, 2023, over the comparable periods in 2022, primarily due to an increase in the group life products premium.  Partially offsetting this increase was a decrease in individual life products premium, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales.  Premiums ceded decreased $1.5 million, or 9.5%, during the three month period ended June 30, 2023 and $3.0 million, or 9.5%, during the six month period ended June 30, 2023, from the comparable periods in 2022.  The decrease in ceded premiums for the three month and six month periods ended June 30, 2023 was due to a decrease in Medicare supplement premiums subject to reinsurance.

Insurance benefits and losses incurred decreased $2.9 million, or 15.5%, during the three month period ended June 30, 2023, and $5.8 million, or 14.7%, during the six month period ended June 30, 2023, from the comparable periods in 2022.  As a percentage of earned premiums, benefits and losses were 56.1% in the three month period ended June 30, 2023, compared to 66.1% in the three month period ended June 30, 2022.  For the six month period ended June 30, 2023, this ratio decreased to 58.9% from 67.9% in the comparable period in 2022.  The decrease in the loss ratio for the three month and six month periods ended June 30, 2023 was primarily due to improved rate adequacy and a decrease in the number of incurred claims within the Medicare supplement line of business.  This decrease was marginally offset by increased loss ratios on the other health lines of business.

Commissions and underwriting expenses increased $3.5 million, or 47.1%, during the three month period ended June 30, 2023, and $5.4 million, or 33.8%, during the six month period ended June 30, 2023, over the comparable periods in 2022.  As a percentage of earned premiums, underwriting expenses were 38.5% in the three month period ended June 30, 2023, compared to 26.1% in the three month period ended June 30, 2022.  For the six month period ended June 30, 2023, this ratio increased to 37.8% from 27.8% in the comparable period in 2022. The increase in the expense ratio for the three and six month periods ended June 30, 2023 was primarily due to an increase in administrative costs related to the growth in the group lines of business, coupled with increased Medicare supplement servicing costs.

Net Investment Income and Realized Gains (Losses)

Investment income remained consistent during the three month period ended June 30, 2023, and increased $0.2 million, or 4.7%, during the six month period ended June 30, 2023, over the comparable period in 2022. The increase in investment income in the six month period ended June 30, 2023, from the comparable periods in 2022, was primarily attributable to a rising interest rate environment which has contributed to an increase in income received within the investment portfolio.

The Company had net realized investment gains of $0.1 million during the three month period ended June 30, 2023, compared to net realized investment losses of $0.1 million during the three month period ended June 30, 2022.  The Company had net realized investment gains of $0.1 during the six month period ended June 30, 2023 and net realized investment losses of $0.1 million during the six month period ended June 30, 2022.  The net realized investment gains during the three month and six month periods ended June 30, 2023 resulted primarily from the disposition of several of the Company’s investments in fixed maturity securities. The net realized investment losses during the three month and six month periods ended June 30, 2022 resulted from the redemption of several of the Company’s investments in fixed maturity securities. Management continually evaluates the Company’s investment portfolio and makes adjustments for impairments and/or divests investments as may be determined to be appropriate.

Unrealized Gains (Losses) on Equity Securities

Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period, with certain exceptions. The Company recognized net unrealized gains on equity securities of $0.5 million during the three month period ended June 30, 2023 and unrealized losses on equity securities of $4.9 million during the three month period ended June 30, 2022.  The Company recognized net unrealized losses on equity securities of $1.9 million during the six month period ended June 30, 2023 and unrealized losses on equity securities of $2.7 million during the six month period ended June 30, 2022.  Changes in unrealized gains on equity securities for the applicable periods are primarily the result of fluctuations in the market value of certain of the Company’s equity securities.

25
Interest Expense

Interest expense increased $0.4 million, or 94.9%, during the three month period ended June 30, 2023, and $0.8 million, or 102.7%, during the six month period ended June 30, 2023, from the comparable periods in 2022. Changes in interest expense were primarily due to changes in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility are directly related to LIBOR.  As expected, discontinuation of LIBOR occurred on June 30, 2023, which will affect the rates used in the Company’s credit arrangements after that date. The U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the “LIBOR Act”) to address LIBOR’s cessation and the Board of Governors of the Federal Reserve System (the “Board”) has issued regulations, 12 C.F.R. Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which relates to the LIBOR transition. The trustee and administrator of the Junior Subordinated Debentures has informed the Company that according to these laws, they have replaced the LIBOR rate for the debentures with a benchmark replacement rate and applicable spread adjustment recommended by the Board. For more details about the LIBOR transition see Note 7 (Credit Arrangements).

Liquidity and Capital Resources

The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements. Current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges. The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets. The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed for the next 12 months and beyond.

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries. The principal cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time. At June 30, 2023, the Parent had approximately $5.3 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $4.1 million for the six month period ended June 30, 2023, compared to statutory net income of $2.2 million for the six month period ended June 30, 2022. Statutory results are impacted by the recognition of all costs of acquiring business. In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined under GAAP. Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes. The Company’s life and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations. Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries. At June 30, 2023, American Southern had $52.0 million of statutory capital and surplus and Bankers Fidelity had $35.7 million of statutory capital and surplus. In 2023, dividend payments by the Parent’s insurance subsidiaries in excess of $8.7 million would require prior approval. Through June 30, 2023, the Parent received dividends of $3.6 million from its subsidiaries.

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

The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in Junior Subordinated Debentures. The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of three-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. At June 30, 2023, the effective interest rate was 9.45%. As previously discussed, in Footnote 7 (Credit Arrangements) and in the Interest Expense section above, LIBOR was discontinued on June 30, 2023 and a new benchmark rate to be used after June 30, 2023, has been determined by the trustee and administrator of the statutory trusts based on a benchmark replacement selected by the Board. The Benchmark Replacement that will be used is the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”) and provides an indicative, forward-looking measurement of the SOFR based on market expectations implied from leading derivatives markets. It has been determined that our contracts will be replaced with 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities. Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities. As of June 30, 2023, the Company has not made such an election.

26
The Company intends to pay its obligations under the Junior Subordinated Debentures using existing cash balances, dividend and tax-sharing payments from the operating subsidiaries, or from existing or potential future financing arrangements.

At June 30, 2023, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding. All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s controlling shareholder. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative. In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option. The Series D Preferred Stock is not currently convertible. At June 30, 2023, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.2 million.

Bankers Fidelity Life Insurance Company (‘‘BFLIC”) is a member of the Federal Home Loan Bank of Atlanta (“FHLB”), for the primary purpose of enhancing financial flexibility. As a member, BFLIC can obtain access to low-cost funding and also receive dividends on FHLB stock. The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $7.8 million, as of June 30, 2023. Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB.  As of June 30, 2023, BFLIC has pledged bonds having an amortized cost of $7.5 million to the FHLB.  BFLIC may be required to post additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB.  As of June 30, 2023, BFLIC does not have any outstanding borrowings from the FHLB.

On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10.0 million revolving credit facility that matures on April 12, 2024. Under the Credit Agreement, the Company paid interest on the unpaid principal balance of outstanding revolving loans at the LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%. On June 28, 2023, the Company received notification from the Lender detailing replacement rates that would be used after the LIBOR cessation date of June 30, 2023, as provided in the Credit Agreement. Please see Note 7 (Credit Agreements) for more details about the LIBOR replacement.

The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.  As of June 30, 2023, the Company had outstanding borrowings of $3.0 million under the Credit Agreement.

Cash and cash equivalents decreased from $28.9 million at December 31, 2022 to $24.2 million at June 30, 2023. The decrease in cash and cash equivalents during the six month period ended June 30, 2023 was primarily attributable to net cash used in operating activities of $4.9 million. Also contributing to the decrease in cash and cash equivalents was net cash used in investing activities of $0.7 million primarily as a result of investment purchases exceeding investment sales and maturity of securities. Partially offsetting the decrease in cash and cash equivalents was net cash provided by financing activities of $1.0 million primarily as a result of proceeds from bank financing.

The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it expects to receive from its subsidiaries and, if needed, borrowings under its credit facilities or additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the foreseeable future. Management is not aware of any current recommendations by regulatory authorities, which, if implemented, would have a material adverse effect on the Company’s liquidity, capital resources or operations.

27
Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of that date due to a material weakness in internal control over financial reporting described below.

Material Weakness in Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting system has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management recognizes that there are inherent limitations in the effectiveness of any internal control system. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Furthermore, the application of any evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

As previously disclosed in Part II, Item 9A. “Controls and Procedures” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, we identified certain deficiencies in internal control that we believe rise to the level of a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, management determined that certain process controls over the development, testing, and implementation of our actuarial models used to estimate certain values in the Medicare supplement line of business within our life and health segment were not effective and the related management review controls did not operate at an appropriate level of precision to identify anomalies in results timely enough to allow management to respond without delays in our financial reporting process for the quarter and year ended December 31, 2022 and the quarter ended March 31, 2023.  Notwithstanding these deficiencies, management believes that, as a result of the actions taken by management to address and correct these deficiencies prior to the completion and filing of the relevant periodic reports for those periods, and the effective operation of other internal controls over financial reporting, the material weakness did not result in any identified material misstatements to our financial statements.  As a result, there were no changes to any of our previously-released financial statements.

Changes in Internal Control Over Financial Reporting

The Company has implemented changes in processes that include enhanced controls over the development, testing, and implementation of actuarial models, and additional controls over the reporting of the financial information that is obtained from these models.  Specifically, the Company has taken the following actions:


 •
Developed enhanced documentation of the product parameters and assumptions used in actuarial models and enhanced controls over their testing and implementation in the models.

•
Improved reconciliations of the policyholder data between the source administrative systems and the actuarial models.

•
Implemented additional controls over the reporting processes, including enhanced analytical procedures and establishing a second independent reviewer.

•
Hired additional actuarial staff to assist with actuarial model implementation and actuarial valuation.

28
Except for the changes described above, which were initiated during the quarter ended December 31, 2022, and continued into the six months ending June 30, 2023, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives of the system of controls are met.  Furthermore, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud within a company have been detected.

29
PART II. OTHER INFORMATION

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

On October 31, 2016, the Board of Directors of the Company approved a plan that allows for the repurchase of up to 750,000 shares of the Company’s common stock (the “Repurchase Plan”) on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company. Any such repurchases can be made from time to time in accordance with applicable securities laws and other requirements.

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

The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended June 30, 2023.

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
  
April 1 – April 30, 2023
    
—
    
$
—
      
—
      
325,129
  
May 1 – May 31, 2023
    
—
      
—
      
—
      
325,129
  
June 1 – June 30, 2023
    
—
      
—
      
—
      
325,129
  
Total
    
—
    
$
—
      
—
          

Item 5. Other Information

None of the Company’s directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2023, as such terms are defined under Item 408(a) of Regulation S-K.

Item 6. Exhibits

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
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
   
101. SCH
Inline XBRL Taxonomy Extension Schema Document.
   
101. CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
   
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
   
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
   
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
   
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

30
SIGNATURES

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

 
ATLANTIC AMERICAN CORPORATION
 
(Registrant)
  
       
Date: August 8, 2023
By:
/s/ J. Ross Franklin
  
   
J. Ross Franklin
   
Vice President and Chief Financial Officer
   
(Principal Financial and Accounting Officer)


31
EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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


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


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


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


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


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


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

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


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

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


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


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

Date: August 8, 2023
/s/ Hilton H. Howell, Jr.
 
Hilton H. Howell, Jr.
 
President and Chief Executive Officer


EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Ross Franklin, certify that:


 1.
I have reviewed this 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: August 8, 2023
/s/ J. Ross Franklin
 
J. Ross Franklin
 
Vice President and
 
Chief Financial Officer


EXHIBIT 32.1

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

Pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q of Atlantic American Corporation (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, that, to such officer’s knowledge:

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

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

Date: August 8, 2023
/s/ Hilton H. Howell, Jr.
  
 
Hilton H. Howell, Jr.
  
 
President and Chief Executive Officer
  
     
Date: August 8, 2023
/s/ J. Ross Franklin
  
 
J. Ross Franklin
  
 
Vice President and
  
 
Chief Financial Officer
  

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


v3.23.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2023
Jul. 31, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2023  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q2  
Document Transition Report false  
Entity File Number 0-3722  
Entity Registrant Name ATLANTIC AMERICAN CORP  
Entity Central Index Key 0000008177  
Entity Incorporation, State or Country Code GA  
Entity Tax Identification Number 58-1027114  
Entity Address, Address Line One 4370 Peachtree Road, N.E.  
Entity Address, City or Town Atlanta  
Entity Address, State or Province GA  
Entity Address, Postal Zip Code 30319  
City Area Code 404  
Local Phone Number 266-5500  
Title of 12(b) Security Common Stock, par value $1.00 per share  
Trading Symbol AAME  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   20,402,288
v3.23.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
ASSETS    
Cash and cash equivalents $ 24,247 $ 28,863
Investments:    
Fixed maturities, available-for-sale, at fair value (amortized cost: $235,013 and $236,766; no allowance for credit losses) 208,472 208,729
Equity securities, at fair value (cost: $4,905 and $4,907) 9,679 11,562
Other invested assets (cost: $6,982 and $5,628) 6,724 5,386
Policy loans 1,811 1,759
Real estate 38 38
Investment in unconsolidated trusts 1,238 1,238
Total investments 227,962 228,712
Receivables:    
Reinsurance (net of allowance for uncollectible reinsurance of $66 and $0) 22,261 25,913
Insurance premiums and other (net of allowance for expected credit losses $213 and net of allowance for doubtful accounts $177) 30,825 15,386
Deferred income taxes, net 15,149 14,163
Deferred acquisition costs 41,211 42,281
Other assets 8,756 9,202
Intangibles 2,544 2,544
Total assets 372,955 367,064
Insurance reserves and policyholder funds:    
Future policy benefits 84,506 85,564
Unearned premiums 37,875 28,348
Losses and claims 85,984 87,484
Other policy liabilities 939 1,255
Total insurance reserves and policyholder funds 209,304 202,651
Accounts payable and accrued expenses 23,427 26,473
Revolving credit facility 3,000 2,009
Junior subordinated debenture obligations, net 33,738 33,738
Total liabilities 269,469 264,871
Commitments and contingencies (Note 11)
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: 20,402,288 and 20,407,229 22,401 22,401
Additional paid-in capital 57,425 57,425
Retained earnings 52,006 51,982
Accumulated other comprehensive income (20,967) (22,149)
Unearned stock grant compensation (33) (132)
Treasury stock, at cost: 1,998,606 and 1,993,665 shares (7,401) (7,389)
Total shareholders' equity 103,486 102,193
Total liabilities and shareholders' equity $ 372,955 $ 367,064
v3.23.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Investments:    
Fixed maturities, cost $ 235,013 $ 236,766
Allowance for credit losses 0 0
Equity securities, cost 4,905 4,907
Other invested assets, cost 6,982 5,628
Receivables:    
Reinsurance, allowance for uncollectible reinsurance 66 0
Insurance premiums and other, allowance for expected credit losses/allowance for doubtful accounts $ 213 $ 177
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) 20,402,288 20,407,229
Treasury stock, at cost (in shares) 1,998,606 1,993,665
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Revenue:        
Insurance premiums, net $ 46,060 $ 47,065 $ 92,160 $ 94,146
Net investment income 2,559 2,529 5,100 4,869
Realized investment gains (losses), net 70 (62) 70 (72)
Unrealized gains (losses) on equity securities, net 494 (4,866) (1,881) (2,673)
Other income 5 3 8 7
Total revenue 49,188 44,669 95,457 96,277
Benefits and expenses:        
Insurance benefits and losses incurred 29,365 32,753 59,825 63,922
Commissions and underwriting expenses 12,848 10,215 25,766 23,051
Interest expense 807 414 1,557 768
Other expense 3,951 3,402 7,910 6,855
Total benefits and expenses 46,971 46,784 95,058 94,596
Income (loss) before income taxes 2,217 (2,115) 399 1,681
Income tax expense (benefit) 473 (436) 101 518
Net income (loss) 1,744 (1,679) 298 1,163
Preferred stock dividends (100) (100) (199) (199)
Net income (loss) applicable to common shareholders $ 1,644 $ (1,779) $ 99 $ 964
Earnings (loss) per common share (basic) (in dollars per share) $ 0.08 $ (0.09) $ 0 $ 0.05
Earnings (loss) per common share (diluted) (in dollars per share) $ 0.08 $ (0.09) $ 0 $ 0.05
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]        
Net income (loss) $ 1,744 $ (1,679) $ 298 $ 1,163
Available-for-sale fixed maturity securities:        
Gross unrealized holding gains (losses) arising in the period (3,167) (19,748) 1,566 (41,561)
Related income tax effect 665 4,147 (329) 8,728
Subtotal (2,502) (15,601) 1,237 (32,833)
Less: reclassification adjustment for net realized gains (losses) included in net income (loss) (70) 43 (70) 53
Related income tax effect 15 (8) 15 (11)
Subtotal (55) 35 (55) 42
Total other comprehensive income (loss), net of tax (2,557) (15,566) 1,182 (32,791)
Total comprehensive income (loss) $ (813) $ (17,245) $ 1,480 $ (31,628)
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Retained Earnings [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Unearned Stock Grant Compensation [Member]
Treasury Stock [Member]
Total
Balance, beginning of period at Dec. 31, 2021 $ 55 $ 22,401 $ 57,441 $ 51,264   $ 17,688 $ (73) $ (7,490)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income (loss)       1,163         $ 1,163
Other comprehensive income (loss), net of tax           (32,791)     (32,791)
Dividends on common stock       (408)          
Dividends accrued on preferred stock       (199)          
Restricted stock grants, net of forfeitures     2       (71) 69  
Amortization of unearned compensation             65    
Net shares acquired related to employee share-based compensation plans               (15)  
Balance, end of period at Jun. 30, 2022 55 $ 22,401 57,443 51,820   (15,103) (79) (7,436) $ 109,101
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Dividends declared on common stock per share (in dollars per share)                 $ 0.02
Balance, beginning of period (in shares) at Dec. 31, 2021   20,378,576              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   (5,079)              
Restricted stock grants, net of forfeitures (in shares)   25,000              
Balance, end of period (in shares) at Jun. 30, 2022   20,398,497              
Balance, beginning of period at Mar. 31, 2022 55 $ 22,401 57,443 53,599   463 (117) (7,421)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income (loss)       (1,679)         $ (1,679)
Other comprehensive income (loss), net of tax           (15,566)     (15,566)
Dividends on common stock       0          
Dividends accrued on preferred stock       (100)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             38    
Net shares acquired related to employee share-based compensation plans               (15)  
Balance, end of period at Jun. 30, 2022 55 $ 22,401 57,443 51,820   (15,103) (79) (7,436) $ 109,101
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Dividends declared on common stock per share (in dollars per share)                 $ 0
Balance, beginning of period (in shares) at Mar. 31, 2022   20,403,576              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   (5,079)              
Restricted stock grants, net of forfeitures (in shares)   0              
Balance, end of period (in shares) at Jun. 30, 2022   20,398,497              
Balance, beginning of period at Dec. 31, 2022 55 $ 22,401 57,425 51,982 $ (75) (22,149) (132) (7,389) $ 102,193
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Accounting Standards Update [Extensible Enumeration]         ASU 2016-13 [Member]        
Net income (loss)       298         298
Other comprehensive income (loss), net of tax           1,182     1,182
Dividends on common stock       0          
Dividends accrued on preferred stock       (199)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             99    
Net shares acquired related to employee share-based compensation plans               (12)  
Balance, end of period at Jun. 30, 2023 55 $ 22,401 57,425 52,006   (20,967) (33) (7,401) $ 103,486
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Dividends declared on common stock per share (in dollars per share)                 $ 0
Balance, beginning of period (in shares) at Dec. 31, 2022   20,407,229             20,407,229
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   (4,941)              
Restricted stock grants, net of forfeitures (in shares)   0              
Balance, end of period (in shares) at Jun. 30, 2023   20,402,288             20,402,288
Balance, beginning of period at Mar. 31, 2023 55 $ 22,401 57,425 50,362   (18,410) (59) (7,395)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income (loss)       1,744         $ 1,744
Other comprehensive income (loss), net of tax           (2,557)     (2,557)
Dividends on common stock       0          
Dividends accrued on preferred stock       (100)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             26    
Net shares acquired related to employee share-based compensation plans               (6)  
Balance, end of period at Jun. 30, 2023 $ 55 $ 22,401 $ 57,425 $ 52,006   $ (20,967) $ (33) $ (7,401) $ 103,486
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Dividends declared on common stock per share (in dollars per share)                 $ 0
Balance, beginning of period (in shares) at Mar. 31, 2023   20,404,699              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   (2,411)              
Restricted stock grants, net of forfeitures (in shares)   0              
Balance, end of period (in shares) at Jun. 30, 2023   20,402,288             20,402,288
v3.23.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 298 $ 1,163
Adjustments to reconcile net income to net cash used in operating activities:    
Amortization of (additions to) acquisition costs, net 1,070 (3,546)
Realized investment (gains) losses, net (70) 72
Unrealized losses on equity securities, net 1,881 2,673
Losses from equity method investees 16 18
Compensation expense related to share awards 99 65
Depreciation and amortization 357 465
Deferred income tax benefit (1,300) (694)
Increase in receivables, net (11,787) (12,729)
Increase in insurance reserves and policyholder funds 6,653 10,077
Decrease in accounts payable and accrued expenses (3,246) (2,104)
Other, net 1,133 124
Net cash used in operating activities (4,896) (4,416)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from investments sold 3,685 221
Proceeds from investments matured, called or redeemed 7,675 6,241
Investments purchased (12,000) (11,398)
Additions to property and equipment (68) (68)
Net cash used in investing activities (708) (5,004)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payment of dividends on common stock 0 (408)
Treasury stock acquired - net employee share-based compensation (12) (15)
Proceeds from revolving credit facility, net 1,000 1,000
Net cash provided by financing activities 988 577
Net decrease in cash and cash equivalents (4,616) (8,843)
Cash and cash equivalents at beginning of period 28,863 24,753
Cash and cash equivalents at end of period 24,247 15,910
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for interest 1,547 726
Cash paid for income taxes $ 776 $ 899
v3.23.2
Basis of Presentation and Significant Accounting Policies
 6 Months Ended
Jun. 30, 2023
Basis of Presentation and Significant Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies
Note 1.
Basis of Presentation and Significant Accounting Policies


The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). 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, Bankers Fidelity Assurance Company and Atlantic Capital Life 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 condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month and six month periods ended June 30, 2023 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, 2023 or for any other future period.

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.
v3.23.2
Recently Issued Accounting Standards
 6 Months Ended
Jun. 30, 2023
Recently Issued Accounting Standards [Abstract]  
Recently Issued Accounting Standards
Note 2.
Recently Issued Accounting Standards


Adoption of New Accounting Standards



Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This guidance provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. Along with the optional expedients, the amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination. Additionally, a company may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. This standard may be elected over time through December 31, 2024 as reference rate reform activities occur. The Company adopted the guidance as of June 30, 2023. The adoption of the guidance had no significant impact on the Company’s financial condition and results of operations.



Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.



The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.



The Company adopted the updated guidance as of January 1, 2023. The updated guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption. The adoption of this guidance resulted in the recognition of an after-tax cumulative effect adjustment of $0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred credit losses recognized under the previous guidance. This adjustment is primarily associated with reinsurance recoverables, premium and other receivables. The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and increased the allowance for estimated uncollectible reinsurance.



Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023.

   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(9
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
22,261
    
$
66
  



Insurance Premium and Other Receivables



The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023.


   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
36
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
30,825
    
$
213
  



Future Adoption of New Accounting Standards



For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2022 Annual Report.



Accounting Policies



The following accounting policies have been updated to reflect the Company’s adoption of Financial Instruments - Credit Losses, as described above.



Credit Impairments of Fixed Maturities



The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The Company’s equity securities, which include common and non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income. The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or independent broker quotations. Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market prices.



Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI.



On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI.



Reinsurance Recoverables



The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement.



Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.



Insurance Premiums and Other Receivables



Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.
v3.23.2
Investments
 6 Months Ended
Jun. 30, 2023
Investments [Abstract]  
Investments
Note 3.
Investments
   

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, ACL and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2023 and December 31, 2022.
  

Fixed maturities were comprised of the following:
 
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Allowance
for
Credit Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                              
Bonds:
                              
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
48,880
    
$
1
    
$
5,948
     $ —    
$
54,827
  
Obligations of states and political subdivisions
     8,148
       —
       1,370
       —       9,518
  
Corporate securities:
                                        
Utilities and telecom
     20,195
       86
       3,146
       —       23,255
  
Financial services
     57,242
       439
       6,948
       —       63,751
  
Other business – diversified
     31,871
       173
       4,107
       —       35,805
  
Other consumer – diversified
     41,909
       42
       5,797
       —       47,664
  
Total corporate securities
     151,217
       740
       19,998
       —       170,475
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     227
       34
       —
       —       193
  
Total redeemable preferred stocks
     227
       34
       —
       —       193
  
Total fixed maturities
   $ 208,472     $ 775     $ 27,316     $ —     $ 235,013  
 
   
December 31, 2022
  
   
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
  
$
44,412
    
$
5
    
$
5,926
    
$
50,333
  
Obligations of states and political subdivisions
     9,187       4
       1,702
       10,885  
Corporate securities:
                                
Utilities and telecom
     22,090       120       3,299       25,269  
Financial services
     59,054       397       7,085       65,742  
Other business – diversified
     31,058       161       4,689       35,586  
Other consumer – diversified
     42,705       35       6,089       48,759  
Total corporate securities
     154,907       713       21,162       175,356  
Redeemable preferred stocks:
                                
Other consumer – diversified
     223       31       —       192  
Total redeemable preferred stocks
     223       31       —       192  
Total fixed maturities
   $ 208,729     $ 753     $ 28,790     $ 236,766  
  

Bonds having an amortized cost of $11,766 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $7,548 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 842     $ 570     $ —     $ 272  
Other business – diversified
     8,837
       4,204
       —
       4,633
  
Total equity securities
   $ 9,679     $ 4,774     $ —     $ 4,905  

   
December 31, 2022
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 790     $ 516     $ —     $ 274  
Other business – diversified
     10,772
       6,139
       —
       4,633  
Total equity securities
   $ 11,562     $ 6,655     $ —     $ 4,907  
    

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2023 and December 31, 2022 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.
  
   
June 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 123     $ 125     $ 3,776     $ 3,797  
Due after one year through five years
     56,828
       59,924
       40,150
       42,174
  
Due after five years through ten years
     35,227
       39,835
       44,044
       49,711
  
Due after ten years
     81,244
       95,113
       87,719
       103,095
  
Asset backed securities
     35,050
       40,016
       33,040
       37,989
  
Totals
   $ 208,472     $ 235,013     $ 208,729     $ 236,766  
    

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 June 30, 2023 and December 31, 2022.
 
   
June 30, 2023
  
   
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
   $ 11,404     $ 287     $ 36,608     $ 5,661     $ 48,012     $ 5,948  
Obligations of states and political subdivisions
     2,143       18       6,005       1,352       8,148       1,370  
Corporate securities
     16,587
       554
       126,125
       19,444
       142,712
       19,998
  
Total temporarily impaired securities
   $ 30,134     $ 859     $ 168,738     $ 26,457     $ 198,872     $ 27,316  
  
   
December 31, 2022
  
   
Less than 12 months
    
12 months or longer
    
Total
  
   
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
  
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
   $ 23,763     $ 2,410     $ 19,259     $ 3,516     $ 43,022     $ 5,926  
Obligations of states and political subdivisions     8,183       1,702       —       —       8,183       1,702  
Corporate securities
     127,928
       16,214
       14,514
       4,948
       142,442
       21,162
  
Total temporarily impaired securities
   $ 159,874     $ 20,326     $ 33,773     $ 8,464     $ 193,647     $ 28,790  
    

Analysis of Securities in Unrealized Loss Positions
 

As of June 30, 2023 and December 31, 2022, there were 248 and 237 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors. The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.



For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile.



For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.



Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company, and the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.



However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated.  The Company had no ACL on its available-for-sale fixed maturities as of June 30, 2023.


    

The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2023 and 2022.
   
   
Three Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
     —       —       —       —  
Realized investment losses, net
  
$
70
    
$
—
    
$
—
    
$
70
  
 
   
Three Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
    
(43
)
    
—
      
(19
)
    
(62
)
Realized investment gains, net
  
$
(43
)
  
$
—
    
$
(19
)
  
$
(62
)

   
Six Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
    
—
      
—
      
—
      
—
  
Realized investment gains, net
  
$
70
    
$
—
    
$
—
    
$
70
  

   
Six Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ —     $ —     $ —     $ —  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains, net
  
$
(53
)
  
$
—
    
$
(19
)
  
$
(72
)


The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2023 and 2022.

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized gains (losses) recognized during the period on equity securities
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized gains (losses) recognized during the reporting period on equity securities, net
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
  

Variable Interest Entities
 

The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance. The Company’s VIE interests principally consist of interests in limited liability companies formed for the purpose of achieving diversified equity returns. The Company’s VIE interests, carried as a part of other invested assets, totaled $6,724 and $5,386 as of June 30, 2023 and December 31, 2022, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2023 and December 31, 2022.


The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, the Company has not consolidated these VIEs. The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE. The Company has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $7,962 and $6,624, as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $4,518 and $5,872, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.
v3.23.2
Fair Values of Financial Instruments
 6 Months Ended
Jun. 30, 2023
Fair Values of Financial Instruments [Abstract]  
Fair Values of Financial Instruments
Note 4.
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 describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

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

Level 2
Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly most of its fixed maturities, which consist of U.S. Treasury securities, 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 models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data.

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. With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company’s financial instruments valued using Level 3 criteria consist of one equity security.  As of June 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $154 and $156, respectively. The equity security is not traded and is valued at cost. The use of different criteria or assumptions regarding data may have yielded materially different valuations.


As of June 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below:
   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,472
    
$
—
    
$
208,472
  
Equity securities
    
9,525
      
—
      
154
      
9,679
  
Cash equivalents
    
15,051
      
—
      
—
      
15,051
  
Total
  
$
24,576
    
$
208,472
    
$
154
    
$
233,202
  


As of December 31, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below:
   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,729
    
$
—
    
$
208,729
  
Equity securities
    
11,406
      
—
      
156
      
11,562
  
Cash equivalents
    
18,861
      
—
      
—
      
18,861
  
Total
  
$
30,267
    
$
208,729
    
$
156
    
$
239,152
  


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 June 30, 2023 and December 31, 2022.
       
June 30, 2023
    
December 31, 2022
  
 
Level in Fair
Value
Hierarchy (1)
 
Carrying
Amount
    
Estimated
Fair Value
    
Carrying
Amount
    
Estimated
Fair Value
  
Assets:
                            
Cash and cash equivalents
Level 1
    
$
24,247
    
$
24,247
    
$
28,863
    
$
28,863
  
Fixed maturities
 (1
)    
208,472
      
208,472
      
208,729
      
208,729
  
Equity securities
 (1 )    
9,679
      
9,679
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,724
      
6,724
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,811
      
1,811
      
1,759
      
1,759
  
Investment in unconsolidated trusts
Level 2
      
1,238
      
1,238
      
1,238
      
1,238
  
                                     
Liabilities:
                                    
Junior subordinated debentures, net
Level 2
      
33,738
      
32,724
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,000       3,000       2,009       2,009  

(1)
See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.2
Internal-Use Software
 6 Months Ended
Jun. 30, 2023
Internal-Use Software [Abstract]  
Internal-Use Software
Note 5.
Internal-Use Software


On March 3, 2021, the Company entered into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services.  The software is managed, hosted, supported, and delivered as a cloud-based software service product offering (software-as-a-service).  The initial term of the arrangement is five years from the effective date with a renewal term of an additional five years.


Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred.  Implementation expenses incurred related to third party professional and consulting services have been capitalized.  The Company will begin amortizing, on a straight-line basis over the expected ten year term of the hosting arrangement, when the software is substantially ready for its intended use.  The Company incurred and capitalized implementation costs of $628 and $958 during the six months ended June 30, 2023 and 2022, respectively.  As a result, the Company has capitalized $3,650 in implementation costs in other assets within its condensed consolidated balance sheet as of June 30, 2023.  The Company expects the software will be substantially ready for its intended use in the three months ended September 30, 2023.  Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the six months ended June 30, 2023.
v3.23.2
Insurance Reserves for Losses and Claims
 6 Months Ended
Jun. 30, 2023
Insurance Reserves for Losses and Claims [Abstract]  
Insurance Reserves for Losses and Claims
Note 6.
Insurance Reserves for Losses and Claims


The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2023 and 2022 is as follows:
   
Six Months Ended
June 30,
  
   
2023
   
2022
 
Beginning insurance reserves for losses and claims, gross  
$
87,484
    
$
85,620
  
Less: Reinsurance recoverable on unpaid losses
    
(17,647
)
    
(17,690
)
Beginning insurance reserves for losses and claims, net
    
69,837
      
67,930
  
                 
Incurred related to:
                
Current accident year
    
57,320
      
66,260
  
Prior accident year development (1)
     1,636 (2)    
(3,195
)(3)
Total incurred
    
58,956
      
63,065
  
                 
Paid related to:
                
Current accident year
    
25,834
      
32,630
  
Prior accident years
    
33,019
      
28,754
  
Total paid
    
58,853
      
61,384
  
Ending insurance reserves for losses and claims, net
    
69,940
      
69,611
  
Plus: Reinsurance recoverable on unpaid losses
    
16,044
      
17,487
  
Ending insurance reserves for losses and claims, gross
  
$
85,984
    
$
87,098
  

(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.

(2)
Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors.

(3)
Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations.


Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
   
Six Months Ended
June 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
58,956
    
$
63,065
  
Cash surrender value and matured endowments
    
812
      
1,154
  
Benefit reserve changes
    
57
      
(297
)
Total insurance benefits and losses incurred
  
$
59,825
    
$
63,922
  
v3.23.2
Credit Arrangements
 6 Months Ended
Jun. 30, 2023
Credit Arrangements [Abstract]  
Credit Arrangements
Note 7.
Credit Arrangements



As expected, discontinuation of LIBOR occurred on June 30, 2023 (“LIBOR Cessation Date”) and will affect the rates used in the Company’s Credit Arrangements after that date. On March 15, 2022, the U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the “LIBOR Act”) to address LIBOR’s cessation and to establish a clear and uniform process for replacing the overnight and one-, three-, six- and 12-month tenors of USD LIBOR in existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate (“tough legacy contracts”).  Further, the Board of Governors of the Federal Reserve System (the “Board”) has issued regulations, 12 C.F.R. Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which relates to the LIBOR transition.



Bank Debt



On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10,000 revolving credit facility that matures on April 12, 2024. Under the Credit Agreement, the Company will pay interest on the unpaid principal balance of outstanding revolving loans at the LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%.

On June 28, 2023, the Company received a LIBOR cessation notice from the Lender detailing the replacement rates that would be used effective immediately after the LIBOR Cessation Date of June 30, 2023, as provided for in the Credit Agreement. The use of an alternate benchmark rate selected by the Lender (“Benchmark Replacement”) in place of LIBOR will not be used until the first reset date under the terms of the Credit Agreement following the LIBOR Cessation Date. The Benchmark Replacement that will be used is the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”) and provides an indicative, forward-looking measurement of the SOFR based on market expectations implied from leading derivatives markets.



The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of June 30, 2023, the Company had outstanding borrowings of $3,000 under the Credit Agreement.

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 the Company; and (iii) engaging in those activities necessary or incidental thereto.



On May 1, 2023, the Company received notice from its trustee and administrator of the statutory business trusts, that Federal LIBOR Legislation (discussed above) provides that the benchmark rate for tough legacy contracts, such as the statutory trusts contracts, will be replaced by operation of law on the first London banking day after June 30, 2023 with a benchmark replacement selected by the Board, as adjusted by the applicable spread adjustment recommended by the Board. The trustee and administrator has determined that our contracts will be replaced with 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent.



The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2023 was as follows:
   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed June 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance June 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
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.
v3.23.2
Earnings (Loss) Per Common Share
 6 Months Ended
Jun. 30, 2023
Earnings (Loss) Per Common Share [Abstract]  
Earnings (Loss) Per Common Share
Note 8.
Earnings (Loss) Per Common Share



A reconciliation of the numerator and denominator used in the earnings (loss) per common share calculations is as follows:
   
Three Months Ended
June 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,744       20,404
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,644       20,404
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,744       21,782     $ 0.08  


   
Three Months Ended
June 30, 2022
  
    Income    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (1,679 )     20,402        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (1,779 )     20,402
     $ (0.09 )

   
Six Months Ended
June 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 298       20,406
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 99       20,406
     $ —  

   
Six Months Ended
June 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 1,163     20,391
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 964     20,391
     $ 0.05


The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for all periods presented, except for the three month period ended June 30, 2023, since its impact would have been antidilutive.
v3.23.2
Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Taxes [Abstract]  
Income Taxes
Note 9.
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:
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
466
 
$
(444
)
  
$
84
    
$
353
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(17
)
    
(12
)
Meals and entertainment
    
11
      
10
      
23
      
20
  
Vested stock and club dues
     2     —     3     —
Parking disallowance
    
4
      
4
      
8
      
8
  
Penalties and fines
     —       —       —       149  
Income tax expense (benefit)
  
$
473
 
$
(436
)
  
$
101
    
$
518
  



The components of income tax expense (benefit) were:
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
1,221
    
$
1,144
    
$
1,401
    
$
1,212
  
Deferred – Federal
    
(748
)
    
(1,580
)
    
(1,300
)
    
(694
)
Total
  
$
473
    
$
(436
)
  
$
101
    
$
518
  
v3.23.2
Leases
 6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Leases
Note 10.
Leases


The Company has two operating lease agreements, each for the use of office space in the ordinary course of business. The first lease renews annually on an automatic basis and based on original assumptions, management is reasonably certain to exercise the renewal option through 2026. The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years, with a termination date on September 30, 2026. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.



These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for the six months ended June 30, 2023 and June 30, 2022 was $507.



Additional information regarding the Company’s real estate operating leases is as follows:
   
Six Months Ended
June 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
520
    
$
512
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
3,016
      
3,781
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.4 years
    
4.4 years
  


The following table presents maturities and present value of the Company’s lease liabilities:
    Lease Liability
 
Remainder of 2023
  
$
528
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,618
  
Less: present value adjustment
    
397
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,221
  


As of June 30, 2023, the Company has no operating leases that have not yet commenced.
v3.23.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2023
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
Note 11.
Commitments and Contingencies

Litigation



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

Regulatory Matters

Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business.  Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners.  From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various matters. In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company.
v3.23.2
Segment Information
 6 Months Ended
Jun. 30, 2023
Segment Information [Abstract]  
Segment Information
Note 12.
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 assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022.
 
Assets
  
June 30,
2023
    
December 31,
2022
  
American Southern
  
$
151,902
    
$
144,455
  
Bankers Fidelity
    
192,456
      
195,028
  
Corporate and Other
    
28,597
      
27,581
  
Total assets
  
$
372,955
    
$
367,064
  


Revenues
  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
18,965
    
$
19,496
     $ 37,165     $ 38,002  
Bankers Fidelity
    
30,193
      
25,569
       58,383       58,458  
Corporate and Other
    
30
      
(396
)
     (91 )     (183 )
Total revenue
  
$
49,188
    
$
44,669
     $ 95,457     $ 96,277  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
2,716
    
$
682
     $ 2,386     $ 2,767  
Bankers Fidelity
    
1,851
      
(517
)
     3,203       2,934  
Corporate and Other
    
(2,350
)
    
(2,280
)
     (5,190 )     (4,020 )
Income (loss) before income taxes
  
$
2,217
    
$
(2,115
)
   $ 399     $ 1,681  
v3.23.2
Subsequent Events
 6 Months Ended
Jun. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events
Note 13.
Subsequent Events


On August 8, 2023, the Company’s board of directors declared an annual cash dividend of $0.02 per share of common stock that is payable to shareholders of record as of the close of business on August 22, 2023.
v3.23.2
Recently Issued Accounting Standards (Policies)
 6 Months Ended
Jun. 30, 2023
Recently Issued Accounting Standards [Abstract]  
Adoption of New Accounting Standards

Adoption of New Accounting Standards



Reference Rate Reform. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This guidance provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. Along with the optional expedients, the amendments include a general principle that permits an entity to consider contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination. Additionally, a company may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020. This standard may be elected over time through December 31, 2024 as reference rate reform activities occur. The Company adopted the guidance as of June 30, 2023. The adoption of the guidance had no significant impact on the Company’s financial condition and results of operations.



Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.



The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.



The Company adopted the updated guidance as of January 1, 2023. The updated guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption. The adoption of this guidance resulted in the recognition of an after-tax cumulative effect adjustment of $0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred credit losses recognized under the previous guidance. This adjustment is primarily associated with reinsurance recoverables, premium and other receivables. The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and increased the allowance for estimated uncollectible reinsurance.



Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023.

   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(9
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
22,261
    
$
66
  



Insurance Premium and Other Receivables



The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023.


   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
36
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
30,825
    
$
213
  



Future Adoption of New Accounting Standards



For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2022 Annual Report.
Credit Impairments of Fixed Maturities

Credit Impairments of Fixed Maturities



The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The Company’s equity securities, which include common and non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income. The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or independent broker quotations. Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market prices.



Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI.



On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI.
Reinsurance Recoverables

Reinsurance Recoverables



The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement.



Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.
Insurance Premiums and Other Receivables

Insurance Premiums and Other Receivables



Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.
v3.23.2
Recently Issued Accounting Standards (Tables)
 6 Months Ended
Jun. 30, 2023
Recently Issued Accounting Standards [Abstract]  
Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023.

   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(9
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
22,261
    
$
66
  
Insurance Premium and Other Receivables

The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023.


   
At and for the six months ended June 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
36
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
30,825
    
$
213
  
v3.23.2
Investments (Tables)
 6 Months Ended
Jun. 30, 2023
Investments [Abstract]  
Investments Aggregated by Type and Industry

Fixed maturities were comprised of the following:
 
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Allowance
for
Credit Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                              
Bonds:
                              
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
48,880
    
$
1
    
$
5,948
     $ —    
$
54,827
  
Obligations of states and political subdivisions
     8,148
       —
       1,370
       —       9,518
  
Corporate securities:
                                        
Utilities and telecom
     20,195
       86
       3,146
       —       23,255
  
Financial services
     57,242
       439
       6,948
       —       63,751
  
Other business – diversified
     31,871
       173
       4,107
       —       35,805
  
Other consumer – diversified
     41,909
       42
       5,797
       —       47,664
  
Total corporate securities
     151,217
       740
       19,998
       —       170,475
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     227
       34
       —
       —       193
  
Total redeemable preferred stocks
     227
       34
       —
       —       193
  
Total fixed maturities
   $ 208,472     $ 775     $ 27,316     $ —     $ 235,013  
 
   
December 31, 2022
  
   
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
  
$
44,412
    
$
5
    
$
5,926
    
$
50,333
  
Obligations of states and political subdivisions
     9,187       4
       1,702
       10,885  
Corporate securities:
                                
Utilities and telecom
     22,090       120       3,299       25,269  
Financial services
     59,054       397       7,085       65,742  
Other business – diversified
     31,058       161       4,689       35,586  
Other consumer – diversified
     42,705       35       6,089       48,759  
Total corporate securities
     154,907       713       21,162       175,356  
Redeemable preferred stocks:
                                
Other consumer – diversified
     223       31       —       192  
Total redeemable preferred stocks
     223       31       —       192  
Total fixed maturities
   $ 208,729     $ 753     $ 28,790     $ 236,766  
  

Bonds having an amortized cost of $11,766 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $7,548 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
June 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 842     $ 570     $ —     $ 272  
Other business – diversified
     8,837
       4,204
       —
       4,633
  
Total equity securities
   $ 9,679     $ 4,774     $ —     $ 4,905  

   
December 31, 2022
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 790     $ 516     $ —     $ 274  
Other business – diversified
     10,772
       6,139
       —
       4,633  
Total equity securities
   $ 11,562     $ 6,655     $ —     $ 4,907  
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 June 30, 2023 and December 31, 2022 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.
  
   
June 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 123     $ 125     $ 3,776     $ 3,797  
Due after one year through five years
     56,828
       59,924
       40,150
       42,174
  
Due after five years through ten years
     35,227
       39,835
       44,044
       49,711
  
Due after ten years
     81,244
       95,113
       87,719
       103,095
  
Asset backed securities
     35,050
       40,016
       33,040
       37,989
  
Totals
   $ 208,472     $ 235,013     $ 208,729     $ 236,766  
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 June 30, 2023 and December 31, 2022.
 
   
June 30, 2023
  
   
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
   $ 11,404     $ 287     $ 36,608     $ 5,661     $ 48,012     $ 5,948  
Obligations of states and political subdivisions
     2,143       18       6,005       1,352       8,148       1,370  
Corporate securities
     16,587
       554
       126,125
       19,444
       142,712
       19,998
  
Total temporarily impaired securities
   $ 30,134     $ 859     $ 168,738     $ 26,457     $ 198,872     $ 27,316  
  
   
December 31, 2022
  
   
Less than 12 months
    
12 months or longer
    
Total
  
   
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
    
Fair
Value
    
Unrealized
Losses
  
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
   $ 23,763     $ 2,410     $ 19,259     $ 3,516     $ 43,022     $ 5,926  
Obligations of states and political subdivisions     8,183       1,702       —       —       8,183       1,702  
Corporate securities
     127,928
       16,214
       14,514
       4,948
       142,442
       21,162
  
Total temporarily impaired securities
   $ 159,874     $ 20,326     $ 33,773     $ 8,464     $ 193,647     $ 28,790  
Summary of Realized Investment Gains (Losses)

The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2023 and 2022.
   
   
Three Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
     —       —       —       —  
Realized investment losses, net
  
$
70
    
$
—
    
$
—
    
$
70
  
 
   
Three Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
    
(43
)
    
—
      
(19
)
    
(62
)
Realized investment gains, net
  
$
(43
)
  
$
—
    
$
(19
)
  
$
(62
)

   
Six Months Ended
June 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
70
    
$
—
    
$
—
    
$
70
  
Losses
    
—
      
—
      
—
      
—
  
Realized investment gains, net
  
$
70
    
$
—
    
$
—
    
$
70
  

   
Six Months Ended
June 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ —     $ —     $ —     $ —  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains, net
  
$
(53
)
  
$
—
    
$
(19
)
  
$
(72
)
Unrealized Gains (Losses) on Equity Securities

The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2023 and 2022.

   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized gains (losses) recognized during the period on equity securities
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized gains (losses) recognized during the reporting period on equity securities, net
  
$
494
    
$
(4,866
)
   $ (1,881 )   $ (2,673 )
v3.23.2
Fair Values of Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2023
Fair Values of Financial Instruments [Abstract]  
Financial Instruments Carried at Fair Value Measured on a Recurring Basis

As of June 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below:
   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,472
    
$
—
    
$
208,472
  
Equity securities
    
9,525
      
—
      
154
      
9,679
  
Cash equivalents
    
15,051
      
—
      
—
      
15,051
  
Total
  
$
24,576
    
$
208,472
    
$
154
    
$
233,202
  


As of December 31, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below:
   
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
    
Significant
Other
Observable
Inputs
(Level 2)
    
Significant
Unobservable
Inputs
(Level 3)
    
Total
  
Assets:
                        
Fixed maturities
  
$
—
    
$
208,729
    
$
—
    
$
208,729
  
Equity securities
    
11,406
      
—
      
156
      
11,562
  
Cash equivalents
    
18,861
      
—
      
—
      
18,861
  
Total
  
$
30,267
    
$
208,729
    
$
156
    
$
239,152
  
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 June 30, 2023 and December 31, 2022.
       
June 30, 2023
    
December 31, 2022
  
 
Level in Fair
Value
Hierarchy (1)
 
Carrying
Amount
    
Estimated
Fair Value
    
Carrying
Amount
    
Estimated
Fair Value
  
Assets:
                            
Cash and cash equivalents
Level 1
    
$
24,247
    
$
24,247
    
$
28,863
    
$
28,863
  
Fixed maturities
 (1
)    
208,472
      
208,472
      
208,729
      
208,729
  
Equity securities
 (1 )    
9,679
      
9,679
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,724
      
6,724
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,811
      
1,811
      
1,759
      
1,759
  
Investment in unconsolidated trusts
Level 2
      
1,238
      
1,238
      
1,238
      
1,238
  
                                     
Liabilities:
                                    
Junior subordinated debentures, net
Level 2
      
33,738
      
32,724
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,000       3,000       2,009       2,009  

(1)
See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.2
Insurance Reserves for Losses and Claims (Tables)
 6 Months Ended
Jun. 30, 2023
Insurance Reserves for Losses and Claims [Abstract]  
Roll-forward of Insurance Reserves for Losses and Claims

The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2023 and 2022 is as follows:
   
Six Months Ended
June 30,
  
   
2023
   
2022
 
Beginning insurance reserves for losses and claims, gross  
$
87,484
    
$
85,620
  
Less: Reinsurance recoverable on unpaid losses
    
(17,647
)
    
(17,690
)
Beginning insurance reserves for losses and claims, net
    
69,837
      
67,930
  
                 
Incurred related to:
                
Current accident year
    
57,320
      
66,260
  
Prior accident year development (1)
     1,636 (2)    
(3,195
)(3)
Total incurred
    
58,956
      
63,065
  
                 
Paid related to:
                
Current accident year
    
25,834
      
32,630
  
Prior accident years
    
33,019
      
28,754
  
Total paid
    
58,853
      
61,384
  
Ending insurance reserves for losses and claims, net
    
69,940
      
69,611
  
Plus: Reinsurance recoverable on unpaid losses
    
16,044
      
17,487
  
Ending insurance reserves for losses and claims, gross
  
$
85,984
    
$
87,098
  

(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.

(2)
Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors.

(3)
Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations.
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:
   
Six Months Ended
June 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
58,956
    
$
63,065
  
Cash surrender value and matured endowments
    
812
      
1,154
  
Benefit reserve changes
    
57
      
(297
)
Total insurance benefits and losses incurred
  
$
59,825
    
$
63,922
  
v3.23.2
Credit Arrangements (Tables)
 6 Months Ended
Jun. 30, 2023
Credit Arrangements [Abstract]  
Financial Structure of Statutory Business Trusts

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2023 was as follows:
   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed June 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance June 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
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.
v3.23.2
Earnings (Loss) Per Common Share (Tables)
 6 Months Ended
Jun. 30, 2023
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:
   
Three Months Ended
June 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,744       20,404
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,644       20,404
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,744       21,782     $ 0.08  


   
Three Months Ended
June 30, 2022
  
    Income    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (1,679 )     20,402        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (1,779 )     20,402
     $ (0.09 )

   
Six Months Ended
June 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 298       20,406
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 99       20,406
     $ —  

   
Six Months Ended
June 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 1,163     20,391
      
 
Less preferred stock dividends
     (199 )     —
          
Net income applicable to common shareholders
   $ 964     20,391
     $ 0.05
v3.23.2
Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2023
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:
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
466
 
$
(444
)
  
$
84
    
$
353
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(17
)
    
(12
)
Meals and entertainment
    
11
      
10
      
23
      
20
  
Vested stock and club dues
     2     —     3     —
Parking disallowance
    
4
      
4
      
8
      
8
  
Penalties and fines
     —       —       —       149  
Income tax expense (benefit)
  
$
473
 
$
(436
)
  
$
101
    
$
518
  
Components of Income Tax Expense

The components of income tax expense (benefit) were:
   
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
1,221
    
$
1,144
    
$
1,401
    
$
1,212
  
Deferred – Federal
    
(748
)
    
(1,580
)
    
(1,300
)
    
(694
)
Total
  
$
473
    
$
(436
)
  
$
101
    
$
518
  
v3.23.2
Leases (Tables)
 6 Months Ended
Jun. 30, 2023
Leases [Abstract]  
Additional Information of Operating Leases

Additional information regarding the Company’s real estate operating leases is as follows:
   
Six Months Ended
June 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
520
    
$
512
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
3,016
      
3,781
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.4 years
    
4.4 years
  
Maturities and Present Value of Lease Liabilities

The following table presents maturities and present value of the Company’s lease liabilities:
    Lease Liability
 
Remainder of 2023
  
$
528
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,618
  
Less: present value adjustment
    
397
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,221
  
v3.23.2
Segment Information (Tables)
 6 Months Ended
Jun. 30, 2023
Segment Information [Abstract]  
Assets, Revenue Loss Before Income Taxes for Each Business Unit The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022.
 
Assets
  
June 30,
2023
    
December 31,
2022
  
American Southern
  
$
151,902
    
$
144,455
  
Bankers Fidelity
    
192,456
      
195,028
  
Corporate and Other
    
28,597
      
27,581
  
Total assets
  
$
372,955
    
$
367,064
  


Revenues
  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
18,965
    
$
19,496
     $ 37,165     $ 38,002  
Bankers Fidelity
    
30,193
      
25,569
       58,383       58,458  
Corporate and Other
    
30
      
(396
)
     (91 )     (183 )
Total revenue
  
$
49,188
    
$
44,669
     $ 95,457     $ 96,277  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
2,716
    
$
682
     $ 2,386     $ 2,767  
Bankers Fidelity
    
1,851
      
(517
)
     3,203       2,934  
Corporate and Other
    
(2,350
)
    
(2,280
)
     (5,190 )     (4,020 )
Income (loss) before income taxes
  
$
2,217
    
$
(2,115
)
   $ 399     $ 1,681  
v3.23.2
Basis of Presentation and Significant Accounting Policies (Details)
 6 Months Ended
Jun. 30, 2023
Segment
Basis of Presentation and Significant Accounting Policies [Abstract]  
Number of business units 2
v3.23.2
Recently Issued Accounting Standards, Reinsurance Recoverables (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Financial Instruments - Credit Losses [Abstract]  
Allowance for credit losses $ 66
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 25,913
Balance, end of period 22,261
Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 0
Current period change for estimated uncollectible reinsurance (9)
Write-offs of uncollectible reinsurance recoverables 0
Balance, end of period 66
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]  
Financial Instruments - Credit Losses [Abstract]  
Allowance for credit losses  
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 0
Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period $ 75
v3.23.2
Recently Issued Accounting Standards, Insurance Premium and Other Receivables (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract]  
Balance, beginning of period $ 15,386
Balance, end of period 30,825
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract]  
Balance, beginning of period 177
Current period change for expected credit losses 36
Write-offs of uncollectible insurance premiums and other receivables 0
Balance, end of period 213
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]  
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract]  
Balance, beginning of period 0
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract]  
Balance, beginning of period $ 0
v3.23.2
Investments, Aggregated by Type and Industry (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Investments aggregated by type and industry [Abstract]    
Estimated fair value $ 208,472 $ 208,729
Allowance for credit losses 0 0
Amortized cost total 235,013 236,766
Estimated fair value 9,679 11,562
Cost 4,905 4,907
Amortized cost of bonds on deposit with insurance regulatory authorities 11,766 12,333
Bonds Pledged as Collateral [Member] | FHLB Advances [Member]    
Investments aggregated by type and industry [Abstract]    
Amortized cost pledged as collateral to FHLB 7,548 7,221
Fixed Maturities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 208,472 208,729
Gross unrealized gains 775 753
Gross unrealized losses 27,316 28,790
Allowance for credit losses 0  
Amortized cost total 235,013 236,766
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 48,880 44,412
Gross unrealized gains 1 5
Gross unrealized losses 5,948 5,926
Allowance for credit losses 0  
Amortized cost total 54,827 50,333
Obligations of States and Political Subdivisions [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 8,148 9,187
Gross unrealized gains 0 4
Gross unrealized losses 1,370 1,702
Allowance for credit losses 0  
Amortized cost total 9,518 10,885
Corporate Securities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 151,217 154,907
Gross unrealized gains 740 713
Gross unrealized losses 19,998 21,162
Allowance for credit losses 0  
Amortized cost total 170,475 175,356
Corporate Securities [Member] | Utilities and Telecom [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 20,195 22,090
Gross unrealized gains 86 120
Gross unrealized losses 3,146 3,299
Allowance for credit losses 0  
Amortized cost total 23,255 25,269
Corporate Securities [Member] | Financial Services [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 57,242 59,054
Gross unrealized gains 439 397
Gross unrealized losses 6,948 7,085
Allowance for credit losses 0  
Amortized cost total 63,751 65,742
Corporate Securities [Member] | Other Business - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 31,871 31,058
Gross unrealized gains 173 161
Gross unrealized losses 4,107 4,689
Allowance for credit losses 0  
Amortized cost total 35,805 35,586
Corporate Securities [Member] | Other Consumer - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 41,909 42,705
Gross unrealized gains 42 35
Gross unrealized losses 5,797 6,089
Allowance for credit losses 0  
Amortized cost total 47,664 48,759
Redeemable Preferred Stocks [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 227 223
Gross unrealized gains 34 31
Gross unrealized losses 0 0
Allowance for credit losses 0  
Amortized cost total 193  
Redeemable Preferred Stocks [Member] | Other Consumer - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 227 223
Gross unrealized gains 34 31
Gross unrealized losses 0 0
Allowance for credit losses 0  
Amortized cost total 193 192
Equity Securities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 9,679 11,562
Gross unrealized gains 4,774 6,655
Gross unrealized losses 0 0
Cost 4,905 4,907
Common and Non-redeemable Preferred Stocks [Member] | Financial Services [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 842 790
Gross unrealized gains 570 516
Gross unrealized losses 0 0
Cost 272 274
Common and Non-redeemable Preferred Stocks [Member] | Other Business - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 8,837 10,772
Gross unrealized gains 4,204 6,139
Gross unrealized losses 0 0
Cost $ 4,633 $ 4,633
v3.23.2
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Carrying Value [Abstract]    
Due in one year or less $ 123 $ 3,776
Due after one year through five years 56,828 40,150
Due after five years through ten years 35,227 44,044
Due after ten years 81,244 87,719
Asset backed securities 35,050 33,040
Carrying value total 208,472 208,729
Amortized Cost [Abstract]    
Due in one year or less 125 3,797
Due after one year through five years 59,924 42,174
Due after five years through ten years 39,835 49,711
Due after ten years 95,113 103,095
Asset backed securities 40,016 37,989
Amortized cost total $ 235,013 $ 236,766
v3.23.2
Investments, Securities with Continuous Unrealized Loss Position (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Securities
Dec. 31, 2022
USD ($)
Securities
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]    
Less than 12 months $ 30,134 $ 159,874
12 months or longer 168,738 33,773
Total 198,872 193,647
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 859 20,326
12 months or longer 26,457 8,464
Total $ 27,316 $ 28,790
Number of securities in unrealized loss position | Securities 248 237
Allowance for expected credit losses on available-for-sale fixed maturities $ 0 $ 0
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]    
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]    
Less than 12 months 11,404 23,763
12 months or longer 36,608 19,259
Total 48,012 43,022
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 287 2,410
12 months or longer 5,661 3,516
Total 5,948 5,926
Allowance for expected credit losses on available-for-sale fixed maturities 0  
Obligations of States and Political Subdivisions [Member]    
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]    
Less than 12 months 2,143 8,183
12 months or longer 6,005 0
Total 8,148 8,183
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 18 1,702
12 months or longer 1,352 0
Total 1,370 1,702
Allowance for expected credit losses on available-for-sale fixed maturities 0  
Corporate Securities [Member]    
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]    
Less than 12 months 16,587 127,928
12 months or longer 126,125 14,514
Total 142,712 142,442
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 554 16,214
12 months or longer 19,444 4,948
Total 19,998 $ 21,162
Allowance for expected credit losses on available-for-sale fixed maturities $ 0  
v3.23.2
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Summary of realized investment gains (losses) [Abstract]        
Gains $ 70 $ 0 $ 70 $ 0
Losses 0 (62) 0 (72)
Realized investment losses (gains), net 70 (62) 70 (72)
Fixed Maturities [Member]        
Summary of realized investment gains (losses) [Abstract]        
Gains 70 0 70 0
Losses 0 (43) 0 (53)
Realized investment losses (gains), net 70 (43) 70 (53)
Equity Securities [Member]        
Summary of realized investment gains (losses) [Abstract]        
Gains 0 0 0 0
Losses 0 0 0 0
Realized investment losses (gains), net 0 0 0 0
Other Invested Assets [Member]        
Summary of realized investment gains (losses) [Abstract]        
Gains 0 0 0 0
Losses 0 (19) 0 (19)
Realized investment losses (gains), net $ 0 $ (19) $ 0 $ (19)
v3.23.2
Investments, Unrealized Gains (Losses) on Equity Securities (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Investments [Abstract]        
Net realized and unrealized gains (losses) recognized during the period on equity securities $ 494 $ (4,866) $ (1,881) $ (2,673)
Less: Net realized gains recognized during the period on equity securities sold during the period 0 0 0 0
Unrealized gains (losses) recognized during the reporting period on equity securities, net $ 494 $ (4,866) $ (1,881) $ (2,673)
v3.23.2
Investments, Variable Interest Entities (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Variable Interest Entities [Abstract]    
Carrying amount of interest $ 6,724 $ 5,386
Investment in unconsolidated trusts 1,238 1,238
VIE, Not Primary Beneficiary [Member] | Other Invested Assets [Member]    
Variable Interest Entities [Abstract]    
Carrying amount of interest 6,724 5,386
Investment in unconsolidated trusts 1,238 1,238
Maximum loss exposure 7,962 6,624
Outstanding commitments $ 4,518 $ 5,872
v3.23.2
Fair Values of Financial Instruments, Measured on a Recurring Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities $ 208,472 $ 208,729
Equity securities 9,679 11,562
Recurring [Member]    
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities 208,472 208,729
Equity securities 9,679 11,562
Cash equivalents 15,051 18,861
Assets at fair value 233,202 239,152
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]    
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities 0 0
Equity securities 9,525 11,406
Cash equivalents 15,051 18,861
Assets at fair value 24,576 30,267
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities 208,472 208,729
Equity securities 0 0
Cash equivalents 0 0
Assets at fair value 208,472 208,729
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities 0 0
Equity securities 154 156
Cash equivalents 0 0
Assets at fair value $ 154 $ 156
v3.23.2
Fair Values of Financial Instruments, Estimated Fair Value and Level (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Assets [Abstract]    
Fixed maturities $ 208,472 $ 208,729
Equity securities 9,679 11,562
Carrying Amount [Member]    
Assets [Abstract]    
Fixed maturities [1] 208,472 208,729
Equity securities [1] 9,679 11,562
Carrying Amount [Member] | Level 1 [Member]    
Assets [Abstract]    
Cash and cash equivalents 24,247 28,863
Carrying Amount [Member] | Level 2 [Member]    
Assets [Abstract]    
Policy loans 1,811 1,759
Investment in unconsolidated trusts 1,238 1,238
Liabilities [Abstract]    
Junior subordinated debentures, net 33,738 33,738
Revolving credit facility 3,000 2,009
Carrying Amount [Member] | Level 3 [Member]    
Assets [Abstract]    
Other invested assets 6,724 5,386
Estimated Fair Value [Member]    
Assets [Abstract]    
Fixed maturities [1] 208,472 208,729
Equity securities [1] 9,679 11,562
Estimated Fair Value [Member] | Level 1 [Member]    
Assets [Abstract]    
Cash and cash equivalents 24,247 28,863
Estimated Fair Value [Member] | Level 2 [Member]    
Assets [Abstract]    
Policy loans 1,811 1,759
Investment in unconsolidated trusts 1,238 1,238
Liabilities [Abstract]    
Junior subordinated debentures, net 32,724 33,810
Revolving credit facility 3,000 2,009
Estimated Fair Value [Member] | Level 3 [Member]    
Assets [Abstract]    
Other invested assets $ 6,724 $ 5,386
[1] See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.2
Internal-Use Software (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Internal Use Software [Abstract]    
Period of initial terms of arrangement 5 years  
Period of additional renewal term 5 years  
Incurred and capitalized implementation costs $ 628 $ 958
Capitalized implementation costs 3,650  
Amortization expense $ 0  
Software Capitalized Implementation Costs [Member]    
Internal Use Software [Abstract]    
Amortization period 10 years  
v3.23.2
Insurance Reserves for Losses and Claims (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Insurance Reserves for Losses and Claims [Roll Forward]        
Beginning insurance reserves for losses and claims, gross     $ 87,484 $ 85,620
Less: Reinsurance recoverable on unpaid losses     (17,647) (17,690)
Beginning insurance reserves for losses and claims, net     69,837 67,930
Incurred related to [Abstract]        
Current accident year     57,320 66,260
Prior accident year development [1]     1,636 [2] (3,195) [3]
Total incurred     58,956 63,065
Paid related to [Abstract]        
Current accident year     25,834 32,630
Prior accident years     33,019 28,754
Total paid     58,853 61,384
Ending insurance reserves for losses and claims, net $ 69,940 $ 69,611 69,940 69,611
Plus: Reinsurance recoverable on unpaid losses 16,044 17,487 16,044 17,487
Ending insurance reserves for losses and claims, gross 85,984 87,098 85,984 87,098
Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract]        
Total incurred losses     58,956 63,065
Cash surrender value and matured endowments     812 1,154
Benefit reserve changes     57 (297)
Total insurance benefits and losses incurred $ 29,365 $ 32,753 $ 59,825 $ 63,922
[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.
[2] Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors.
[3] Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations.
v3.23.2
Credit Arrangements, Bank Debt (Details) - Revolving Credit Facility [Member]
$ in Thousands
 6 Months Ended
May 12, 2021
USD ($)
Jun. 30, 2023
USD ($)
Bank Debt [Abstract]    
Unsecured credit facility $ 10,000  
Maturity date   Apr. 12, 2024
Outstanding borrowings   $ 3,000
Minimum [Member]    
Bank Debt [Abstract]    
Indebtedness capital ratio   0.35
LIBOR [Member]    
Bank Debt [Abstract]    
Basis spread on variable rate 2.00%  
Interest rate floor 1.00%  
v3.23.2
Credit Arrangements, Junior Subordinated Debentures (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
 6 Months Ended
Jun. 30, 2023
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 June 30, 2023 $ 33,738
Net balance December 31, 2022 $ 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
Junior Subordinated Debentures [Member] | SOFR [Member]  
Financial structure of statutory business trusts [Abstract]  
Basis spread on variable rate 0.26161%
Variable rate term 3-month
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member]  
Financial structure of statutory business trusts [Abstract]  
Principal amount owed June 30, 2023 $ 18,042 [1],[2]
Less: Treasury debt 0 [1],[2],[3]
Net balance June 30, 2023 18,042 [1],[2]
Net balance December 31, 2022 $ 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 June 30, 2023 $ 23,196 [1],[2]
Less: Treasury debt (7,500) [1],[2],[3]
Net balance June 30, 2023 15,696 [1],[2]
Net balance December 31, 2022 $ 15,696 [1],[2]
Coupon rate LIBOR + 4.10% [1],[2]
Interest payable Quarterly [1],[2]
Maturity date May 15, 2033 [1],[2]
Redeemable by issuer Yes [1],[2]
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member]  
Financial structure of statutory business trusts [Abstract]  
Basis spread on variable rate 4.10%
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member]  
Financial structure of statutory business trusts [Abstract]  
Coupon rate LIBOR + 4.10%
Issuance date May 15, 2003
Securities issued (in shares) | shares 22,500
Liquidation preference per security (in dollars per share) | $ / shares $ 1
Liquidation value $ 22,500
Distribution payable Quarterly
Distribution guaranteed by Atlantic American Corporation [4]
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member] | LIBOR [Member]  
Financial structure of statutory business trusts [Abstract]  
Basis spread on variable rate 4.10%
[1] For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.
[2] The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.
[3] On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.
[4] The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
v3.23.2
Earnings (Loss) Per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Basic Earnings (Loss) Per Common Share [Abstract]        
Net income (loss) $ 1,744 $ (1,679) $ 298 $ 1,163
Less: preferred stock dividends (100) (100) (199) (199)
Net income (loss) applicable to common shareholders 1,644 (1,779) 99 964
Diluted Earnings (Loss) Per Common Share [Abstract]        
Effect of Series D preferred stock 100      
Net income (loss) applicable to common shareholders $ 1,744 $ (1,779) $ 99 $ 964
Weighted Average Shares [Abstract]        
Weighted average shares outstanding, Basic (in shares) 20,404 20,402 20,406 20,391
Effect of Series D preferred stock (in shares) 1,378      
Weighted average shares outstanding, Diluted (in shares) 21,782 20,402 20,406 20,391
Per Share Amount, Basic [Abstract]        
Net income (loss) applicable to common shareholders, Basic (in dollars per share) $ 0.08 $ (0.09) $ 0 $ 0.05
Per Share Amount, Diluted [Abstract]        
Net income (loss) applicable to common shareholders, Diluted (in dollars per share) $ 0.08 $ (0.09) $ 0 $ 0.05
v3.23.2
Income Taxes (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Reconciliation of income tax expense (benefit) [Abstract]        
Federal income tax provision at statutory rate of 21% $ 466 $ (444) $ 84 $ 353
Dividends-received deduction (10) (6) (17) (12)
Meals and entertainment 11 10 23 20
Vested stock and club dues 2 0 3 0
Parking disallowance 4 4 8 8
Penalties and fines 0 0 0 149
Income tax expense (benefit) 473 (436) $ 101 518
Federal statutory income tax rate     21.00%  
Components of income tax expense (benefit) [Abstract]        
Current - Federal 1,221 1,144 $ 1,401 1,212
Deferred - Federal (748) (1,580) (1,300) (694)
Income tax expense (benefit) $ 473 $ (436) $ 101 $ 518
v3.23.2
Leases (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Lease
Jun. 30, 2022
USD ($)
Lease description [Abstract]    
Number of operating lease agreements | Lease 2  
Lease expense $ 507 $ 507
Other information on operating leases [Abstract]    
Cash payments included in the measurement of lease liabilities reported in operating cash flows 520 512
Right-of-use assets included in other assets on the condensed consolidated balance sheet $ 3,016 $ 3,781
Weighted average discount rate 6.80% 6.80%
Weighted average remaining lease term in years 3 years 4 months 24 days 4 years 4 months 24 days
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] Other Assets Other Assets
Maturities and present value of lease liabilities [Abstract]    
Remainder of 2023 $ 528  
2024 1,065  
2025 1,083  
2026 942  
Thereafter 0  
Total undiscounted lease payments 3,618  
Less: present value adjustment 397  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet $ 3,221  
Operating Lease, Liability, Statement of Financial Position [Extensible List] Accounts Payable and Accrued Liabilities  
Second Lease [Member]    
Lease description [Abstract]    
Lease term 10 years  
Renewal option period 7 years  
v3.23.2
Segment Information (Details)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
USD ($)
Jun. 30, 2022
USD ($)
Jun. 30, 2023
USD ($)
Segment
Jun. 30, 2022
USD ($)
Dec. 31, 2022
USD ($)
Segment Information [Abstract]          
Number of business units | Segment     2    
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets $ 372,955   $ 372,955   $ 367,064
Revenues 49,188 $ 44,669 95,457 $ 96,277  
Income (loss) before income taxes 2,217 (2,115) 399 1,681  
Operating Segments [Member] | American Southern [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 151,902   151,902   144,455
Revenues 18,965 19,496 37,165 38,002  
Income (loss) before income taxes 2,716 682 2,386 2,767  
Operating Segments [Member] | Bankers Fidelity [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 192,456   192,456   195,028
Revenues 30,193 25,569 58,383 58,458  
Income (loss) before income taxes 1,851 (517) 3,203 2,934  
Corporate and Other [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 28,597   28,597   $ 27,581
Revenues 30 (396) (91) (183)  
Income (loss) before income taxes $ (2,350) $ (2,280) $ (5,190) $ (4,020)  
v3.23.2
Subsequent Events (Details) - Subsequent Events [Member]
Aug. 08, 2023
$ / shares
Subsequent Event [Line Items]  
Dividend declared Aug. 08, 2023
Cash dividend declared (in dollars per share) $ 0.02
Dividend payable Aug. 22, 2023
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