Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | ATLANTIC AMERICAN CORP | |
Entity Central Index Key | 0000008177 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 20,454,001 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Address, State or Province | GA |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 16,354 | $ 12,893 |
Investments: | ||
Fixed maturities, available-for-sale, at fair value (amortized cost: $214,080 and $219,233) | 236,187 | 232,472 |
Equity securities, at fair value (cost: $7,311 and $7,168) | 15,965 | 22,922 |
Other invested assets (cost: $11,905 and $9,908) | 11,454 | 9,960 |
Policy loans | 2,018 | 2,007 |
Real estate | 38 | 38 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
Total investments | 266,900 | 268,637 |
Receivables: | ||
Reinsurance | 27,562 | 32,135 |
Insurance premiums and other (net of allowance for doubtful accounts: $197 and $183) | 23,785 | 13,134 |
Deferred income taxes, net | 1,144 | 314 |
Deferred acquisition costs | 39,148 | 38,861 |
Other assets | 8,300 | 9,108 |
Intangibles | 2,544 | 2,544 |
Total assets | 385,737 | 377,626 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Future policy benefits | 91,927 | 92,490 |
Unearned premiums | 35,091 | 26,035 |
Losses and claims | 76,498 | 81,448 |
Other policy liabilities | 1,195 | 1,933 |
Total insurance reserves and policyholder funds | 204,711 | 201,906 |
Accounts payable and accrued expenses | 23,394 | 23,588 |
Junior subordinated debenture obligations, net | 33,738 | 33,738 |
Total liabilities | 261,843 | 259,232 |
Commitments and contingencies (Note 10) | ||
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: 20,454,001 and 20,472,162 | 22,401 | 22,401 |
Additional paid-in capital | 57,435 | 57,820 |
Retained earnings | 34,266 | 36,020 |
Accumulated other comprehensive income | 17,464 | 10,459 |
Unearned stock grant compensation | (466) | (781) |
Treasury stock, at cost: 1,946,893 and 1,928,732 shares | (7,261) | (7,580) |
Total shareholders' equity | 123,894 | 118,394 |
Total liabilities and shareholders' equity | $ 385,737 | $ 377,626 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investments: | ||
Fixed maturities, cost | $ 214,080 | $ 219,233 |
Equity securities, cost | 7,311 | 7,168 |
Other invested assets, cost | 11,905 | 9,908 |
Receivables: | ||
Insurance premiums and other, allowance for doubtful accounts | $ 197 | $ 183 |
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) | 20,454,001 | 20,472,162 |
Treasury stock, at cost (in shares) | 1,946,893 | 1,928,732 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | ||||
Insurance premiums, net | $ 46,499 | $ 45,469 | $ 92,049 | $ 90,251 |
Net investment income | 1,850 | 2,313 | 3,889 | 4,647 |
Realized investment gains, net | 0 | 610 | 249 | 1,995 |
Unrealized gains (losses) on equity securities, net | 1,355 | (5,337) | (7,100) | 1,152 |
Other income | 33 | 72 | 60 | 100 |
Total revenue | 49,737 | 43,127 | 89,147 | 98,145 |
Benefits and expenses: | ||||
Insurance benefits and losses incurred | 27,076 | 34,151 | 60,659 | 69,458 |
Commissions and underwriting expenses | 10,854 | 11,509 | 23,480 | 22,524 |
Interest expense | 414 | 545 | 890 | 1,091 |
Other expense | 3,112 | 2,511 | 6,064 | 5,376 |
Total benefits and expenses | 41,456 | 48,716 | 91,093 | 98,449 |
Income (loss) before income taxes | 8,281 | (5,589) | (1,946) | (304) |
Income tax expense (benefit) | 1,749 | (1,163) | (391) | (40) |
Net income (loss) | 6,532 | (4,426) | (1,555) | (264) |
Preferred stock dividends | (100) | (100) | (199) | (199) |
Net income (loss) applicable to common shareholders | $ 6,432 | $ (4,526) | $ (1,754) | $ (463) |
Earnings (loss) per common share (basic) (in dollars per share) | $ 0.31 | $ (0.22) | $ (0.09) | $ (0.02) |
Earnings (loss) per common share (diluted) (in dollars per share) | $ 0.30 | $ (0.22) | $ (0.09) | $ (0.02) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||||
Net income (loss) | $ 6,532 | $ (4,426) | $ (1,555) | $ (264) |
Available-for-sale fixed maturity securities: | ||||
Gross unrealized holding gain arising in the period | 19,997 | 7,964 | 9,117 | 16,404 |
Related income tax effect | (4,200) | (1,673) | (1,915) | (3,445) |
Subtotal | 15,797 | 6,291 | 7,202 | 12,959 |
Less: reclassification adjustment for net realized gains included in net income (loss) | 0 | (610) | (249) | (882) |
Related income tax effect | 0 | 128 | 52 | 185 |
Subtotal | 0 | (482) | (197) | (697) |
Total other comprehensive income, net of tax | 15,797 | 5,809 | 7,005 | 12,262 |
Total comprehensive income | $ 22,329 | $ 1,383 | $ 5,450 | $ 11,998 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Unearned Stock Grant Compensation [Member] | Treasury Stock [Member] | Total |
Balance, beginning of period at Dec. 31, 2018 | $ 55 | $ 22,401 | $ 57,414 | $ 37,208 | $ (7,535) | $ (186) | $ (7,985) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (264) | $ (264) | ||||||
Other comprehensive income, net of tax | 12,262 | 12,262 | ||||||
Dividends on common stock | (403) | |||||||
Dividends accrued on preferred stock | (199) | |||||||
Restricted stock grants, net of forfeitures | 24 | (71) | 47 | |||||
Amortization of unearned compensation | 107 | |||||||
Purchase of shares for treasury | (71) | |||||||
Net shares acquired related to employee share-based compensation plans | (49) | |||||||
Issuance of shares under stock plans | 6 | 9 | ||||||
Balance, end of period at Jun. 30, 2019 | 55 | 22,401 | 57,444 | 36,342 | 4,727 | (150) | (8,049) | $ 112,770 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Dividends declared on common stock (in dollars per share) | $ (0.02) | |||||||
Balance, beginning of period at Mar. 31, 2019 | 55 | 22,401 | 57,417 | 40,868 | (1,082) | (128) | (8,044) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (4,426) | $ (4,426) | ||||||
Other comprehensive income, net of tax | 5,809 | 5,809 | ||||||
Dividends on common stock | 0 | |||||||
Dividends accrued on preferred stock | (100) | |||||||
Restricted stock grants, net of forfeitures | 24 | (71) | 47 | |||||
Amortization of unearned compensation | 49 | |||||||
Purchase of shares for treasury | (22) | |||||||
Net shares acquired related to employee share-based compensation plans | (35) | |||||||
Issuance of shares under stock plans | 3 | 5 | ||||||
Balance, end of period at Jun. 30, 2019 | 55 | 22,401 | 57,444 | 36,342 | 4,727 | (150) | (8,049) | $ 112,770 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Dividends declared on common stock (in dollars per share) | $ 0 | |||||||
Balance, beginning of period at Dec. 31, 2019 | 55 | 22,401 | 57,820 | 36,020 | 10,459 | (781) | (7,580) | $ 118,394 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (1,555) | (1,555) | ||||||
Other comprehensive income, net of tax | 7,005 | 7,005 | ||||||
Dividends on common stock | 0 | |||||||
Dividends accrued on preferred stock | (199) | |||||||
Restricted stock grants, net of forfeitures | (377) | 61 | 316 | |||||
Amortization of unearned compensation | 254 | |||||||
Purchase of shares for treasury | 0 | |||||||
Net shares acquired related to employee share-based compensation plans | (10) | |||||||
Issuance of shares under stock plans | (8) | 13 | ||||||
Balance, end of period at Jun. 30, 2020 | 55 | 22,401 | 57,435 | 34,266 | 17,464 | (466) | (7,261) | $ 123,894 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Dividends declared on common stock (in dollars per share) | $ 0 | |||||||
Balance, beginning of period at Mar. 31, 2020 | 55 | 22,401 | 57,777 | 27,834 | 1,667 | (584) | (7,632) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 6,532 | $ 6,532 | ||||||
Other comprehensive income, net of tax | 15,797 | 15,797 | ||||||
Dividends on common stock | 0 | |||||||
Dividends accrued on preferred stock | (100) | |||||||
Restricted stock grants, net of forfeitures | (333) | (37) | 370 | |||||
Amortization of unearned compensation | 155 | |||||||
Purchase of shares for treasury | 0 | |||||||
Net shares acquired related to employee share-based compensation plans | (10) | |||||||
Issuance of shares under stock plans | (9) | 11 | ||||||
Balance, end of period at Jun. 30, 2020 | $ 55 | $ 22,401 | $ 57,435 | $ 34,266 | $ 17,464 | $ (466) | $ (7,261) | $ 123,894 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Dividends declared on common stock (in dollars per share) | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Treasury shares purchased (in shares) | 0 | 26,210 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,555) | $ (264) |
Adjustments to reconcile loss to net cash used in operating activities: | ||
Additions to acquisition costs, net | (287) | (1,050) |
Realized investment gains, net | (249) | (1,995) |
Unrealized losses (gains) on equity securities, net | 7,100 | (1,152) |
Distributions received from equity method investees | 0 | 106 |
Compensation expense related to share awards | 254 | 107 |
Depreciation and amortization | 503 | 337 |
Deferred income tax benefit | (2,693) | (612) |
Increase in receivables, net | (6,078) | (13,393) |
Increase in insurance reserves and policyholder funds | 2,805 | 13,493 |
(Decrease) increase in accounts payable and accrued expenses | (393) | 2,366 |
Other, net | 1,151 | (5,162) |
Net cash provided by (used in) operating activities | 558 | (7,219) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from investments sold | 7,448 | 70,171 |
Proceeds from investments matured, called or redeemed | 3,031 | 3,628 |
Investments purchased | (7,411) | (67,220) |
Additions to property and equipment | (160) | (32) |
Net cash provided by investing activities | 2,908 | 6,547 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of dividends on common stock | 0 | (403) |
Proceeds from shares issued under stock plans | 5 | 15 |
Treasury stock acquired - share repurchase authorization | 0 | (71) |
Treasury stock acquired - net employee share-based compensation | (10) | (49) |
Net cash used in financing activities | (5) | (508) |
Net increase (decrease) in cash and cash equivalents | 3,461 | (1,180) |
Cash and cash equivalents at beginning of period | 12,893 | 12,630 |
Cash and cash equivalents at end of period | 16,354 | 11,450 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 944 | 1,100 |
Cash paid for income taxes | $ 0 | $ 850 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited 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, 2019 (the “2019 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, 2020 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, 2020 or for any other future period. The Company’s significant accounting policies have not changed materially from those set out in the 2019 Annual Report, except as noted below for the adoption of new accounting standards. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. On March 11, 2020, the World Health Organization declared the Novel Coronavirus (“COVID-19”) outbreak a global pandemic. The impact of COVID-19 and related actions to attempt to control its spread began to impact the Company’s business operations in March 2020, and we expect that the pandemic, actions that have been or will be taken in response to it and its overall impact on the economy, will continue to have an effect on our business operations and our operating results. The Company’s insurance subsidiaries may experience difficulties collecting premiums from some policyholders, and policyholders with financial difficulties may decide not to renew insurance policies with the Company. Although it cannot be predicted with certainty at this time, the Company’s insurance subsidiaries do not expect a direct material impact from the outbreak of COVID-19 in terms of increased claims and losses, but that may change as more information becomes available. In addition, economic uncertainty related to COVID-19 has led to a decline in the investment markets, and may continue to create increased volatility. The impact of COVID-19 on the economy and on the Company is evolving and its future effects are uncertain. The Company is closely monitoring the effects and risks of COVID-19 to assess its impact on the Company’s business, financial condition, results of operations, liquidity and capital position. On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is intended to provide fast and direct economic assistance for American workers and families, small businesses, and to preserve jobs in American industries. The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The Company does not qualify as a small business under the CARES Act and therefore did not apply for any of the government loan programs; however, the Company intends to monitor and assess the availability of resources and other benefits that might be available to the Company under the CARES Act and through other programs. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2020 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | Note 2. Recently Issued Accounting Standards Adoption of New Accounting Standards Fair Value Measurement – Changes to the Disclosure Requirements for Fair Value Measurement. Goodwill. Future Adoption of New Accounting Standards Reference Rate Reform Investments – Equity Securities. For more information regarding other 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 2019 Annual Report. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments [Abstract] | |
Investments | Note 3. Investments The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2020 and December 31, 2019. Fixed maturities were comprised of the following: June 30, 2020 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 $ 20,461 $ 1,739 $ 25 $ 18,747 Obligations of states and political subdivisions 11,520 910 - 10,610 Corporate securities: Utilities and telecom 28,886 4,118 - 24,768 Financial services 73,151 6,050 132 67,233 Other business – diversified 41,739 3,331 945 39,353 Other consumer – diversified 60,180 7,407 404 53,177 Total corporate securities 203,956 20,906 1,481 184,531 Redeemable preferred stocks: Other consumer – diversified 250 58 — 192 Total redeemable preferred stocks 250 58 — 192 Total fixed maturities $ 236,187 $ 23,613 $ 1,506 $ 214,080 December 31, 2019 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 $ 20,259 $ 467 $ 53 $ 19,845 Obligations of states and political subdivisions 11,940 371 53 11,622 Corporate securities: Utilities and telecom 26,648 2,404 32 24,276 Financial services 73,917 4,249 57 69,725 Other business – diversified 41,706 2,335 98 39,469 Other consumer – diversified 57,752 3,702 54 54,104 Total corporate securities 200,023 12,690 241 187,574 Redeemable preferred stocks: Other consumer – diversified 250 58 - 192 Total redeemable preferred stocks 250 58 - 192 Total fixed maturities $ 232,472 $ 13,586 $ 347 $ 219,233 Bonds having an amortized cost of $10,444 and $10,669 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2020 and December 31, 2019, respectively, in accordance with statutory requirements. Equity securities were comprised of the following: June 30, 2020 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 3,061 $ 384 $ 1 $ 2,678 Other business – diversified 12,904 8,271 - 4,633 Total equity securities $ 15,965 $ 8,655 $ 1 $ 7,311 December 31, 2019 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 3,159 $ 624 $ - $ 2,535 Other business – diversified 19,763 15,130 - 4,633 Total equity securities $ 22,922 $ 15,754 $ - $ 7,168 The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2020 and December 31, 2019 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, 2020 December 31, 2019 Carrying Value Amortized Cost Carrying Value Amortized Cost Due in one year or less $ 509 $ 500 $ - $ - Due after one year through five years 19,923 19,012 14,664 14,280 Due after five years through ten years 85,121 78,583 77,934 73,521 Due after ten years 122,141 107,964 130,680 122,321 Asset backed securities 8,493 8,021 9,194 9,111 Totals $ 236,187 $ 214,080 $ 232,472 $ 219,233 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, 2020 and December 31, 2019. June 30, 2020 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 $ 887 $ 25 $ - $ - $ 887 $ 25 Corporate securities 22,512 1,481 - - 22,512 1,481 Total temporarily impaired securities $ 23,399 $ 1,506 $ - $ - $ 23,399 $ 1,506 December 31, 2019 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 3,432 $ 22 $ 3,533 $ 31 $ 6,965 $ 53 Obligations of states and political subdivisions 3,106 53 - - 3,106 53 Corporate securities 23,245 145 2,504 96 25,749 241 Total temporarily impaired securities $ 29,783 $ 220 $ 6,037 $ 127 $ 35,820 $ 347 The evaluation for an other than temporary impairment (“OTTI”) is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold the securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status. There were no OTTI charges recorded during the three month and six month periods ended June 30, 2020 and 2019. As of June 30, 2020 and December 31, 2019, there were seventeen and thirty securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the financial services, other diversified business and other diversified consumer sectors. The decrease in the number of securities in an unrealized loss position during the six month period ended June 30, 2020, was primarily attributable to improvement in market values in certain of the Company’s fixed maturity securities as a result of a declining interest rate environment. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of June 30, 2020. There were no realized investments gains (losses) in the three month period ended June 30, 2020. The following tables summarize realized investment gains (losses) for the three month period ended June 30, 2019 and the six month periods ended June 30, 2020 and June 30, 2019. Three Months Ended June 30, 2019 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 610 $ — $ — $ 610 Losses — — — — Realized investment gains, net $ 610 $ — $ — $ 610 Six Months Ended June 30, 2020 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 249 $ — $ — $ 249 Losses — — — — Realized investment gains, net $ 249 $ — $ — $ 249 Six Months Ended June 30, 2019 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 882 $ 1,113 $ — $ 1,995 Losses — — — — Realized investment gains, net $ 882 $ 1,113 $ — $ 1,995 The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2020 and 2019. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net realized and unrealized gains (losses) recognized during the period on equity securities $ 1,355 $ (5,337 ) $ (7,100 ) $ 2,265 Less: Net realized gains (losses) recognized during the period on equity securities sold during the period - - - 1,113 Unrealized gains (losses) recognized during the reporting period on equity securities, net $ 1,355 $ (5,337 ) $ (7,100 ) $ 1,152 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 partnerships and 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 $11,454 and $9,960 as of June 30, 2020 and December 31, 2019, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2020 and December 31, 2019. 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 $12,692 and $11,198, as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, the Company had no outstanding commitments and as of December 31, 2019, the Company had outstanding commitments totaling $1,997, 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. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
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. As of June 30, 2020, 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 $ 250 $ 235,937 $ — $ 236,187 Equity securities 15,822 — 143 15,965 Cash equivalents 8,429 — — 8,429 Total $ 24,501 $ 235,937 $ 143 $ 260,581 As of December 31, 2019, 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 $ — $ 232,472 $ — $ 232,472 Equity securities 22,922 — — 22,922 Cash equivalents 7,173 — — 7,173 Total $ 30,095 $ 232,472 $ — $ 262,567 The Company does not have any fixed maturities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2020 and December 31, 2019. 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, 2020 and December 31, 2019. June 30, 2020 December 31, 2019 Level in Fair Value Hierarchy (1) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and cash equivalents Level 1 $ 16,354 $ 16,354 $ 12,893 $ 12,893 Fixed maturities (1) 236,187 236,187 232,472 232,472 Equity securities (1) 15,965 15,965 22,922 22,922 Other invested assets Level 3 11,454 11,454 9,960 9,960 Policy loans Level 2 2,018 2,018 2,007 2,007 Real estate Level 2 38 38 38 38 Investment in unconsolidated trusts Level 2 1,238 1,238 1,238 1,238 Liabilities: Junior subordinated debentures, net Level 2 33,738 30,321 33,738 35,977 (1) See the aforementioned information for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets. |
Liabilities for Unpaid Losses,
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | |
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | Note 5. Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses for the six months ended June 30, 2020 and 2019 is as follows: Six Months Ended June 30, 2020 2019 Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross $ 81,448 $ 72,612 Less: Reinsurance recoverable on unpaid losses (18,339 ) (14,354 ) Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net 63,109 58,258 Incurred related to: Current accident year 62,262 68,157 Prior accident year development (1) (2,302 ) (2) 103 Total incurred 59,960 68,260 Paid related to: Current accident year 33,911 38,875 Prior accident years 29,587 28,576 Total paid 63,498 67,451 Ending liabilities for unpaid losses, claims and loss adjustment expenses, net 59,571 59,067 Plus: Reinsurance recoverable on unpaid losses 16,927 16,088 Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross $ 76,498 $ 75,155 (1) In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Accordingly, the Company generally experiences reserve redundancies when analyzing the development of prior year losses in a current period. (2) Prior years’ development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity. Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred: Six Months Ended June 30, 2020 2019 Total incurred losses $ 59,960 $ 68,260 Cash surrender value and matured endowments 697 588 Benefit reserve changes 2 610 Total insurance benefits and losses incurred $ 60,659 $ 69,458 |
Junior Subordinated Debentures
Junior Subordinated Debentures | 6 Months Ended |
Jun. 30, 2020 | |
Junior Subordinated Debentures [Abstract] | |
Junior Subordinated Debentures | Note 6. Junior Subordinated Debentures The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of Atlantic American; and (iii) engaging in those activities necessary or incidental thereto. The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2020 was as follows: Atlantic American Statutory Trust I Atlantic American Statutory Trust II JUNIOR SUBORDINATED DEBENTURES (1) (2) Principal amount owed June 30, 2020 $ 18,042 $ 23,196 Less: Treasury debt (3) — (7,500 ) Net balance June 30, 2020 $ 18,042 $ 15,696 Net balance December 31, 2019 $ 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. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings (Loss) Per Common Share [Abstract] | |
Earnings (Loss) Per Common Share | Note 7. 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, 2020 Income Weighted Average Shares (In thousands) Per Share Amount Basic Earnings Per Common Share: Net income $ 6,532 20,440 Less preferred stock dividends (100 ) — Net income applicable to common shareholders 6,432 20,440 $ .31 Diluted Earnings Per Common Share: Effect of Series D preferred stock 100 1,378 Net income applicable to common shareholders $ 6,532 21,818 $ .30 Three Months Ended June 30, 2019 Loss Weighted Average Shares (In thousands) Basic and Diluted Loss Per Common Share: Net loss $ (4,426 ) 20,146 Less preferred stock dividends (100 ) — Net loss applicable to common shareholders $ (4,526 ) 20,146 $ (.22 ) Six Months Ended June 30, 2020 Loss Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Loss Per Common Share: Net loss $ (1,555 ) 20,455 Less preferred stock dividends (199 ) — Net loss applicable to common shareholders $ (1,754 ) 20,455 $ (.09 ) Six Months Ended June 30, 2019 Loss Weighted Average Shares (In thousands) Basic and Diluted Loss Per Common Share: Net loss $ (264 ) 20,152 Less preferred stock dividends (199 ) — Net loss applicable to common shareholders $ (463 ) 20,152 $ (.02 ) 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, 2020, since its impact would have been antidilutive. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes [Abstract] | |
Income Taxes | Note 8. 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, 2020 2019 2020 2019 Federal income tax provision at statutory rate of 21% $ 1,739 $ (1,174 ) $ (409 ) $ (64 ) Dividends-received deduction (3 ) (5 ) (6 ) (14 ) Other permanent differences 13 16 24 38 Income tax expense (benefit) $ 1,749 $ (1,163 ) $ (391 ) $ (40 ) The components of income tax benefit were: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Current – Federal $ 2,173 $ 572 $ 2,302 $ 572 Deferred – Federal (424 ) (1,735 ) (2,693 ) (612 ) Total $ 1,749 $ (1,163 ) $ (391 ) $ (40 ) In addition, the Company determined there were no significant tax implications as a result of the CARES Act. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 9. Leases The Company has identified 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 for an additional eight years from the January 1, 2019 effective date of the new lease guidance. 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, 2020 and June 30, 2019 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: 2020 2019 Cash payments included in the measurement of lease liabilities reported in operating cash flows $ 475 $ 450 Right-of-use assets included in other assets on the condensed consolidated balance sheet 5,159 5,785 Weighted average discount rate 6.8 % 6.8 % Weighted average remaining lease term in years 6.4 years 7.4 years The following table presents maturities and present value of the Company’s lease liabilities: Lease Liability Remainder of 2020 $ 503 2021 1,015 2022 1,031 2023 1,048 2024 1,065 Thereafter 2,025 Total undiscounted lease payments 6,687 Less: present value adjustment 1,297 Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet $ 5,390 As of June 30, 2020, the Company has no operating leases that have not yet commenced. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its businesses. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information [Abstract] | |
Segment Information | Note 11. 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 2020 and 2019. Assets June 30, 2020 December 31, 2019 American Southern $ 153,632 $ 141,524 Bankers Fidelity 220,111 224,122 Corporate and Other 11,994 11,980 Total assets $ 385,737 $ 377,626 Revenues Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 American Southern $ 16,896 $ 15,740 $ 32,123 $ 30,975 Bankers Fidelity 32,871 31,244 57,744 65,620 Corporate and Other (30 ) (3,857 ) (720 ) 1,550 Total revenue $ 49,737 $ 43,127 $ 89,147 $ 98,145 Income (Loss) Before Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 American Southern $ 2,087 $ 1,396 $ 2,965 $ 3,378 Bankers Fidelity 8,039 (1,998 ) (742 ) (2,494 ) Corporate and Other (1,845 ) (4,987 ) (4,169 ) (1,188 ) Income (loss) before income taxes $ 8,281 $ (5,589 ) $ (1,946 ) $ (304 ) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12. Related Party Transactions During the six month period ended June 30, 2019, the Company transferred its remaining fractional interest in an aircraft arrangement to Gray Television, Inc., a related party, for $151. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events Since June 30, 2020, the COVID-19 pandemic continues to cause material disruption to financial markets and the economy. As a result of the pandemic, the Company could experience future losses in its investment portfolio as a result of the weakened and volatile markets. Additionally, the Company can experience increased risk of loss any time unforeseen infectious diseases impact large portions of a population. Specifically, the Company’s life and health business could experience significant loss due to increased claims volume arising from COVID-19. The duration and impact of the COVID-19 pandemic is unknown at this time and it is not possible to reliably estimate the impact on the financial condition, operating results or liquidity of the Company and its operating subsidiaries in future periods. |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Recently Issued Accounting Standards [Abstract] | |
Adoption of New Accounting Standards | Adoption of New Accounting Standards Fair Value Measurement – Changes to the Disclosure Requirements for Fair Value Measurement. Goodwill. Future Adoption of New Accounting Standards Reference Rate Reform Investments – Equity Securities. For more information regarding other 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 2019 Annual Report. |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments [Abstract] | |
Investments Aggregated by Type and Industry | Fixed maturities were comprised of the following: June 30, 2020 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 $ 20,461 $ 1,739 $ 25 $ 18,747 Obligations of states and political subdivisions 11,520 910 - 10,610 Corporate securities: Utilities and telecom 28,886 4,118 - 24,768 Financial services 73,151 6,050 132 67,233 Other business – diversified 41,739 3,331 945 39,353 Other consumer – diversified 60,180 7,407 404 53,177 Total corporate securities 203,956 20,906 1,481 184,531 Redeemable preferred stocks: Other consumer – diversified 250 58 — 192 Total redeemable preferred stocks 250 58 — 192 Total fixed maturities $ 236,187 $ 23,613 $ 1,506 $ 214,080 December 31, 2019 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 $ 20,259 $ 467 $ 53 $ 19,845 Obligations of states and political subdivisions 11,940 371 53 11,622 Corporate securities: Utilities and telecom 26,648 2,404 32 24,276 Financial services 73,917 4,249 57 69,725 Other business – diversified 41,706 2,335 98 39,469 Other consumer – diversified 57,752 3,702 54 54,104 Total corporate securities 200,023 12,690 241 187,574 Redeemable preferred stocks: Other consumer – diversified 250 58 - 192 Total redeemable preferred stocks 250 58 - 192 Total fixed maturities $ 232,472 $ 13,586 $ 347 $ 219,233 Bonds having an amortized cost of $10,444 and $10,669 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2020 and December 31, 2019, respectively, in accordance with statutory requirements. Equity securities were comprised of the following: June 30, 2020 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 3,061 $ 384 $ 1 $ 2,678 Other business – diversified 12,904 8,271 - 4,633 Total equity securities $ 15,965 $ 8,655 $ 1 $ 7,311 December 31, 2019 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 3,159 $ 624 $ - $ 2,535 Other business – diversified 19,763 15,130 - 4,633 Total equity securities $ 22,922 $ 15,754 $ - $ 7,168 |
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, 2020 and December 31, 2019 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, 2020 December 31, 2019 Carrying Value Amortized Cost Carrying Value Amortized Cost Due in one year or less $ 509 $ 500 $ - $ - Due after one year through five years 19,923 19,012 14,664 14,280 Due after five years through ten years 85,121 78,583 77,934 73,521 Due after ten years 122,141 107,964 130,680 122,321 Asset backed securities 8,493 8,021 9,194 9,111 Totals $ 236,187 $ 214,080 $ 232,472 $ 219,233 |
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, 2020 and December 31, 2019. June 30, 2020 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 $ 887 $ 25 $ - $ - $ 887 $ 25 Corporate securities 22,512 1,481 - - 22,512 1,481 Total temporarily impaired securities $ 23,399 $ 1,506 $ - $ - $ 23,399 $ 1,506 December 31, 2019 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 3,432 $ 22 $ 3,533 $ 31 $ 6,965 $ 53 Obligations of states and political subdivisions 3,106 53 - - 3,106 53 Corporate securities 23,245 145 2,504 96 25,749 241 Total temporarily impaired securities $ 29,783 $ 220 $ 6,037 $ 127 $ 35,820 $ 347 |
Summary of Realized Investment Gains (Losses) | The following tables summarize realized investment gains (losses) for the three month period ended June 30, 2019 and the six month periods ended June 30, 2020 and June 30, 2019. Three Months Ended June 30, 2019 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 610 $ — $ — $ 610 Losses — — — — Realized investment gains, net $ 610 $ — $ — $ 610 Six Months Ended June 30, 2020 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 249 $ — $ — $ 249 Losses — — — — Realized investment gains, net $ 249 $ — $ — $ 249 Six Months Ended June 30, 2019 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 882 $ 1,113 $ — $ 1,995 Losses — — — — Realized investment gains, net $ 882 $ 1,113 $ — $ 1,995 |
Unrealized Gains (Losses) on Equity Securities | The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2020 and 2019. Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net realized and unrealized gains (losses) recognized during the period on equity securities $ 1,355 $ (5,337 ) $ (7,100 ) $ 2,265 Less: Net realized gains (losses) recognized during the period on equity securities sold during the period - - - 1,113 Unrealized gains (losses) recognized during the reporting period on equity securities, net $ 1,355 $ (5,337 ) $ (7,100 ) $ 1,152 |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Values of Financial Instruments [Abstract] | |
Financial Instruments Carried at Fair Value Measured on a Recurring Basis | As of June 30, 2020, 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 $ 250 $ 235,937 $ — $ 236,187 Equity securities 15,822 — 143 15,965 Cash equivalents 8,429 — — 8,429 Total $ 24,501 $ 235,937 $ 143 $ 260,581 As of December 31, 2019, 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 $ — $ 232,472 $ — $ 232,472 Equity securities 22,922 — — 22,922 Cash equivalents 7,173 — — 7,173 Total $ 30,095 $ 232,472 $ — $ 262,567 |
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, 2020 and December 31, 2019. June 30, 2020 December 31, 2019 Level in Fair Value Hierarchy (1) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and cash equivalents Level 1 $ 16,354 $ 16,354 $ 12,893 $ 12,893 Fixed maturities (1) 236,187 236,187 232,472 232,472 Equity securities (1) 15,965 15,965 22,922 22,922 Other invested assets Level 3 11,454 11,454 9,960 9,960 Policy loans Level 2 2,018 2,018 2,007 2,007 Real estate Level 2 38 38 38 38 Investment in unconsolidated trusts Level 2 1,238 1,238 1,238 1,238 Liabilities: Junior subordinated debentures, net Level 2 33,738 30,321 33,738 35,977 (1) See the aforementioned information for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets. |
Liabilities for Unpaid Losses_2
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Abstract] | |
Roll-forward of Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses | The roll-forward of liabilities for unpaid losses, claims and loss adjustment expenses for the six months ended June 30, 2020 and 2019 is as follows: Six Months Ended June 30, 2020 2019 Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross $ 81,448 $ 72,612 Less: Reinsurance recoverable on unpaid losses (18,339 ) (14,354 ) Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net 63,109 58,258 Incurred related to: Current accident year 62,262 68,157 Prior accident year development (1) (2,302 ) (2) 103 Total incurred 59,960 68,260 Paid related to: Current accident year 33,911 38,875 Prior accident years 29,587 28,576 Total paid 63,498 67,451 Ending liabilities for unpaid losses, claims and loss adjustment expenses, net 59,571 59,067 Plus: Reinsurance recoverable on unpaid losses 16,927 16,088 Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross $ 76,498 $ 75,155 (1) In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Accordingly, the Company generally experiences reserve redundancies when analyzing the development of prior year losses in a current period. (2) Prior years’ development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity. |
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, 2020 2019 Total incurred losses $ 59,960 $ 68,260 Cash surrender value and matured endowments 697 588 Benefit reserve changes 2 610 Total insurance benefits and losses incurred $ 60,659 $ 69,458 |
Junior Subordinated Debentures
Junior Subordinated Debentures (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Junior Subordinated Debentures [Abstract] | |
Financial Structure of Statutory Business Trusts | The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2020 was as follows: Atlantic American Statutory Trust I Atlantic American Statutory Trust II JUNIOR SUBORDINATED DEBENTURES (1) (2) Principal amount owed June 30, 2020 $ 18,042 $ 23,196 Less: Treasury debt (3) — (7,500 ) Net balance June 30, 2020 $ 18,042 $ 15,696 Net balance December 31, 2019 $ 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. |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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, 2020 Income Weighted Average Shares (In thousands) Per Share Amount Basic Earnings Per Common Share: Net income $ 6,532 20,440 Less preferred stock dividends (100 ) — Net income applicable to common shareholders 6,432 20,440 $ .31 Diluted Earnings Per Common Share: Effect of Series D preferred stock 100 1,378 Net income applicable to common shareholders $ 6,532 21,818 $ .30 Three Months Ended June 30, 2019 Loss Weighted Average Shares (In thousands) Basic and Diluted Loss Per Common Share: Net loss $ (4,426 ) 20,146 Less preferred stock dividends (100 ) — Net loss applicable to common shareholders $ (4,526 ) 20,146 $ (.22 ) Six Months Ended June 30, 2020 Loss Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Loss Per Common Share: Net loss $ (1,555 ) 20,455 Less preferred stock dividends (199 ) — Net loss applicable to common shareholders $ (1,754 ) 20,455 $ (.09 ) Six Months Ended June 30, 2019 Loss Weighted Average Shares (In thousands) Basic and Diluted Loss Per Common Share: Net loss $ (264 ) 20,152 Less preferred stock dividends (199 ) — Net loss applicable to common shareholders $ (463 ) 20,152 $ (.02 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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, 2020 2019 2020 2019 Federal income tax provision at statutory rate of 21% $ 1,739 $ (1,174 ) $ (409 ) $ (64 ) Dividends-received deduction (3 ) (5 ) (6 ) (14 ) Other permanent differences 13 16 24 38 Income tax expense (benefit) $ 1,749 $ (1,163 ) $ (391 ) $ (40 ) |
Components of Income Tax Expense | The components of income tax benefit were: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Current – Federal $ 2,173 $ 572 $ 2,302 $ 572 Deferred – Federal (424 ) (1,735 ) (2,693 ) (612 ) Total $ 1,749 $ (1,163 ) $ (391 ) $ (40 ) |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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: 2020 2019 Cash payments included in the measurement of lease liabilities reported in operating cash flows $ 475 $ 450 Right-of-use assets included in other assets on the condensed consolidated balance sheet 5,159 5,785 Weighted average discount rate 6.8 % 6.8 % Weighted average remaining lease term in years 6.4 years 7.4 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 2020 $ 503 2021 1,015 2022 1,031 2023 1,048 2024 1,065 Thereafter 2,025 Total undiscounted lease payments 6,687 Less: present value adjustment 1,297 Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet $ 5,390 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information [Abstract] | |
Assets, Revenue and Income (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 2020 and 2019. Assets June 30, 2020 December 31, 2019 American Southern $ 153,632 $ 141,524 Bankers Fidelity 220,111 224,122 Corporate and Other 11,994 11,980 Total assets $ 385,737 $ 377,626 Revenues Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 American Southern $ 16,896 $ 15,740 $ 32,123 $ 30,975 Bankers Fidelity 32,871 31,244 57,744 65,620 Corporate and Other (30 ) (3,857 ) (720 ) 1,550 Total revenue $ 49,737 $ 43,127 $ 89,147 $ 98,145 Income (Loss) Before Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 American Southern $ 2,087 $ 1,396 $ 2,965 $ 3,378 Bankers Fidelity 8,039 (1,998 ) (742 ) (2,494 ) Corporate and Other (1,845 ) (4,987 ) (4,169 ) (1,188 ) Income (loss) before income taxes $ 8,281 $ (5,589 ) $ (1,946 ) $ (304 ) |
Basis of Presentation (Details)
Basis of Presentation (Details) | 6 Months Ended |
Jun. 30, 2020Segment | |
Basis of Presentation [Abstract] | |
Number of business units | 2 |
Investments, Aggregated by Type
Investments, Aggregated by Type and Industry (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | $ 236,187 | $ 232,472 |
Gross unrealized gains | 23,613 | 13,586 |
Gross unrealized losses | 1,506 | 347 |
Amortized cost | 214,080 | 219,233 |
Estimated fair value | 15,965 | 22,922 |
Gross unrealized gains | 8,655 | 15,754 |
Gross unrealized losses | 1 | 0 |
Cost | 7,311 | 7,168 |
Amortized cost of bonds on deposit with insurance regulatory authorities | 10,444 | 10,669 |
Fixed Maturities [Member] | U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 20,461 | 20,259 |
Gross unrealized gains | 1,739 | 467 |
Gross unrealized losses | 25 | 53 |
Amortized cost | 18,747 | 19,845 |
Fixed Maturities [Member] | Obligations of States and Political Subdivisions [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 11,520 | 11,940 |
Gross unrealized gains | 910 | 371 |
Gross unrealized losses | 0 | 53 |
Amortized cost | 10,610 | 11,622 |
Fixed Maturities [Member] | Corporate Securities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 203,956 | 200,023 |
Gross unrealized gains | 20,906 | 12,690 |
Gross unrealized losses | 1,481 | 241 |
Amortized cost | 184,531 | 187,574 |
Fixed Maturities [Member] | Corporate Securities [Member] | Utilities and Telecom [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 28,886 | 26,648 |
Gross unrealized gains | 4,118 | 2,404 |
Gross unrealized losses | 0 | 32 |
Amortized cost | 24,768 | 24,276 |
Fixed Maturities [Member] | Corporate Securities [Member] | Financial Services [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 73,151 | 73,917 |
Gross unrealized gains | 6,050 | 4,249 |
Gross unrealized losses | 132 | 57 |
Amortized cost | 67,233 | 69,725 |
Fixed Maturities [Member] | Corporate Securities [Member] | Other Business - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 41,739 | 41,706 |
Gross unrealized gains | 3,331 | 2,335 |
Gross unrealized losses | 945 | 98 |
Amortized cost | 39,353 | 39,469 |
Fixed Maturities [Member] | Corporate Securities [Member] | Other Consumer - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 60,180 | 57,752 |
Gross unrealized gains | 7,407 | 3,702 |
Gross unrealized losses | 404 | 54 |
Amortized cost | 53,177 | 54,104 |
Fixed Maturities [Member] | Redeemable Preferred Stocks [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 250 | 250 |
Gross unrealized gains | 58 | 58 |
Gross unrealized losses | 0 | 0 |
Amortized cost | 192 | 192 |
Fixed Maturities [Member] | Redeemable Preferred Stocks [Member] | Other Consumer - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 250 | 250 |
Gross unrealized gains | 58 | 58 |
Gross unrealized losses | 0 | 0 |
Amortized cost | 192 | 192 |
Equity Securities [Member] | Common and Non-redeemable Preferred Stocks [Member] | Financial Services [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 3,061 | 3,159 |
Gross unrealized gains | 384 | 624 |
Gross unrealized losses | 1 | 0 |
Cost | 2,678 | 2,535 |
Equity Securities [Member] | Common and Non-redeemable Preferred Stocks [Member] | Other Business - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 12,904 | 19,763 |
Gross unrealized gains | 8,271 | 15,130 |
Gross unrealized losses | 0 | 0 |
Cost | $ 4,633 | $ 4,633 |
Investments, Fixed Maturities b
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Carrying Value [Abstract] | ||
Due in one year or less | $ 509 | $ 0 |
Due after one year through five years | 19,923 | 14,664 |
Due after five years through ten years | 85,121 | 77,934 |
Due after ten years | 122,141 | 130,680 |
Asset backed securities | 8,493 | 9,194 |
Totals | 236,187 | 232,472 |
Amortized Cost [Abstract] | ||
Due in one year or less | 500 | 0 |
Due after one year through five years | 19,012 | 14,280 |
Due after five years through ten years | 78,583 | 73,521 |
Due after ten years | 107,964 | 122,321 |
Asset backed securities | 8,021 | 9,111 |
Amortized cost | $ 214,080 | $ 219,233 |
Investments, Securities with Co
Investments, Securities with Continuous Unrealized Loss Position (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($)Securities | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Securities | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)Securities | |
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | |||||
Less than 12 months | $ 23,399 | $ 23,399 | $ 29,783 | ||
12 months or longer | 0 | 0 | 6,037 | ||
Total | 23,399 | 23,399 | 35,820 | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | |||||
Less than 12 months | 1,506 | 1,506 | 220 | ||
12 months or longer | 0 | 0 | 127 | ||
Total | 1,506 | 1,506 | $ 347 | ||
Gross OTTI losses charged to realized gains | $ 0 | $ 0 | $ 0 | $ 0 | |
Number of securities in unrealized loss position | Securities | 17 | 17 | 30 | ||
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 | $ 887 | $ 887 | $ 3,432 | ||
12 months or longer | 0 | 0 | 3,533 | ||
Total | 887 | 887 | 6,965 | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | |||||
Less than 12 months | 25 | 25 | 22 | ||
12 months or longer | 0 | 0 | 31 | ||
Total | 25 | 25 | 53 | ||
Obligations of States and Political Subdivisions [Member] | |||||
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | |||||
Less than 12 months | 3,106 | ||||
12 months or longer | 0 | ||||
Total | 3,106 | ||||
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | |||||
Less than 12 months | 53 | ||||
12 months or longer | 0 | ||||
Total | 53 | ||||
Corporate Securities [Member] | |||||
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | |||||
Less than 12 months | 22,512 | 22,512 | 23,245 | ||
12 months or longer | 0 | 0 | 2,504 | ||
Total | 22,512 | 22,512 | 25,749 | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | |||||
Less than 12 months | 1,481 | 1,481 | 145 | ||
12 months or longer | 0 | 0 | 96 | ||
Total | $ 1,481 | $ 1,481 | $ 241 |
Investments, Summary of Realize
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | $ 610 | $ 249 | $ 1,995 | |
Losses | 0 | 0 | 0 | |
Realized investment gains, net | $ 0 | 610 | 249 | 1,995 |
Fixed Maturities [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 610 | 249 | 882 | |
Losses | 0 | 0 | 0 | |
Realized investment gains, net | 610 | 249 | 882 | |
Equity Securities [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 0 | 0 | 1,113 | |
Losses | 0 | 0 | 0 | |
Realized investment gains, net | 0 | 0 | 1,113 | |
Other Invested Assets [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 0 | 0 | 0 | |
Losses | 0 | 0 | 0 | |
Realized investment gains, net | $ 0 | $ 0 | $ 0 |
Investments, Unrealized Gains (
Investments, Unrealized Gains (Losses) on Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Investments [Abstract] | ||||
Net realized and unrealized gains (losses) recognized during the period on equity securities | $ 1,355 | $ (5,337) | $ (7,100) | $ 2,265 |
Less: Net realized gains (losses) recognized during the period on equity securities sold during the period | 0 | 0 | 0 | 1,113 |
Unrealized gains (losses) recognized during the reporting period on equity securities, net | $ 1,355 | $ (5,337) | $ (7,100) | $ 1,152 |
Investments, Variable Interest
Investments, Variable Interest Entities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entities [Abstract] | ||
Carrying amount of interest | $ 11,454 | $ 9,960 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
VIE, Not Primary Beneficiary [Member] | ||
Variable Interest Entities [Abstract] | ||
Carrying amount of interest | 11,454 | 9,960 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
Maximum loss exposure | 12,692 | 11,198 |
Outstanding commitments | $ 0 | $ 1,997 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments, Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | $ 236,187 | $ 232,472 |
Equity securities | 15,965 | 22,922 |
Recurring [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 236,187 | 232,472 |
Equity securities | 15,965 | 22,922 |
Cash equivalents | 8,429 | 7,173 |
Assets at fair value | 260,581 | 262,567 |
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 | 250 | 0 |
Equity securities | 15,822 | 22,922 |
Cash equivalents | 8,429 | 7,173 |
Assets at fair value | 24,501 | 30,095 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 235,937 | 232,472 |
Equity securities | 0 | 0 |
Cash equivalents | 0 | 0 |
Assets at fair value | 235,937 | 232,472 |
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 | 143 | 0 |
Cash equivalents | 0 | 0 |
Assets at fair value | $ 143 | $ 0 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments, Estimated Fair Value and Level (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | |
Assets [Abstract] | |||
Fixed maturities | $ 236,187 | $ 232,472 | |
Equity securities | 15,965 | 22,922 | |
Carrying Amount [Member] | |||
Assets [Abstract] | |||
Fixed maturities | [1] | 236,187 | 232,472 |
Equity securities | [1] | 15,965 | 22,922 |
Carrying Amount [Member] | Level 1 [Member] | |||
Assets [Abstract] | |||
Cash and cash equivalents | 16,354 | 12,893 | |
Carrying Amount [Member] | Level 2 [Member] | |||
Assets [Abstract] | |||
Policy loans | 2,018 | 2,007 | |
Real estate | 38 | 38 | |
Investment in unconsolidated trusts | 1,238 | 1,238 | |
Liabilities [Abstract] | |||
Junior subordinated debentures, net | 33,738 | 33,738 | |
Carrying Amount [Member] | Level 3 [Member] | |||
Assets [Abstract] | |||
Other invested assets | 11,454 | 9,960 | |
Estimated Fair Value [Member] | |||
Assets [Abstract] | |||
Fixed maturities | [1] | 236,187 | 232,472 |
Equity securities | [1] | 15,965 | 22,922 |
Estimated Fair Value [Member] | Level 1 [Member] | |||
Assets [Abstract] | |||
Cash and cash equivalents | 16,354 | 12,893 | |
Estimated Fair Value [Member] | Level 2 [Member] | |||
Assets [Abstract] | |||
Policy loans | 2,018 | 2,007 | |
Real estate | 38 | 38 | |
Investment in unconsolidated trusts | 1,238 | 1,238 | |
Liabilities [Abstract] | |||
Junior subordinated debentures, net | 30,321 | 35,977 | |
Estimated Fair Value [Member] | Level 3 [Member] | |||
Assets [Abstract] | |||
Other invested assets | $ 11,454 | $ 9,960 | |
[1] | See the aforementioned information for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets. |
Liabilities for Unpaid Losses_3
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |||
Liabilities for Unpaid Losses, Claims and Loss Adjustment Expenses [Roll Forward] | ||||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, gross | $ 81,448 | $ 72,612 | ||||
Less: Reinsurance recoverable on unpaid losses | (18,339) | (14,354) | ||||
Beginning liabilities for unpaid losses, claims and loss adjustment expenses, net | 63,109 | 58,258 | ||||
Incurred related to [Abstract] | ||||||
Current accident year | 62,262 | 68,157 | ||||
Prior accident year development | [1] | (2,302) | [2] | 103 | ||
Total incurred | 59,960 | 68,260 | ||||
Paid related to [Abstract] | ||||||
Current accident year | 33,911 | 38,875 | ||||
Prior accident years | 29,587 | 28,576 | ||||
Total paid | 63,498 | 67,451 | ||||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, net | $ 59,571 | $ 59,067 | 59,571 | 59,067 | ||
Plus: Reinsurance recoverable on unpaid losses | 16,927 | 16,088 | 16,927 | 16,088 | ||
Ending liabilities for unpaid losses, claims and loss adjustment expenses, gross | 76,498 | 75,155 | 76,498 | 75,155 | ||
Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract] | ||||||
Total incurred losses | 59,960 | 68,260 | ||||
Cash surrender value and matured endowments | 697 | 588 | ||||
Benefit reserve changes | 2 | 610 | ||||
Total insurance benefits and losses incurred | $ 27,076 | $ 34,151 | $ 60,659 | $ 69,458 | ||
[1] | In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Accordingly, the Company generally experiences reserve redundancies when analyzing the development of prior year losses in a current period. | |||||
[2] | Prior years' development was primarily the result of favorable development in the loss and claim reserves for the Medicare supplement line of business in Bankers Fidelity. |
Junior Subordinated Debenture_2
Junior Subordinated Debentures (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2020USD ($)TrustQuarter$ / sharesshares | ||
Debt Instruments [Abstract] | ||
Number of Connecticut statutory business trusts | Trust | 2 | |
Financial structure of statutory business trusts [Abstract] | ||
Net balance June 30, 2020 | $ 33,738 | |
Net balance December 31, 2019 | $ 33,738 | |
Junior Subordinated Debentures [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Number of consecutive quarters for which interest payments can be deferred | Quarter | 20 | |
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Principal amount owed June 30, 2020 | $ 18,042 | [1],[2] |
Less: Treasury debt | 0 | [1],[2],[3] |
Net balance June 30, 2020 | 18,042 | [1],[2] |
Net balance December 31, 2019 | $ 18,042 | [1],[2] |
Coupon rate | LIBOR + 4.00% | [1],[2] |
Interest payable | Quarterly | [1],[2] |
Maturity date | Dec. 4, 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. 4, 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, 2020 | $ 23,196 | [1],[2] |
Less: Treasury debt | (7,500) | [1],[2],[3] |
Net balance June 30, 2020 | 15,696 | [1],[2] |
Net balance December 31, 2019 | $ 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 $7,500 of the Junior Subordinated Debentures. | |
[4] | The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation. |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income (Loss) [Abstract] | ||||
Net income (loss) | $ 6,532 | $ (4,426) | $ (1,555) | $ (264) |
Less: preferred stock dividends | (100) | (100) | (199) | (199) |
Net income (loss) applicable to common shareholders | 6,432 | $ (4,526) | $ (1,754) | $ (463) |
Diluted Earnings Per Common Share [Abstract] | ||||
Net income (loss) applicable to common shareholders, Diluted | $ 6,532 | |||
Weighted Average Shares [Abstract] | ||||
Weighted average shares outstanding, Basic and Diluted (in shares) | 20,146 | 20,455 | 20,152 | |
Weighted average shares outstanding, Basic (in shares) | 20,440 | |||
Weighted average shares outstanding, Diluted (in shares) | 21,818 | |||
Per Share Amount [Abstract] | ||||
Net income (loss) applicable to common shareholders, Basic and Diluted (in dollars per share) | $ (0.22) | $ (0.09) | $ (0.02) | |
Net income (loss) applicable to common shareholders, Basic (in dollars per share) | $ 0.31 | (0.22) | (0.09) | (0.02) |
Net income (loss) applicable to common shareholders, Diluted (in dollars per share) | $ 0.30 | $ (0.22) | $ (0.09) | $ (0.02) |
Series D Preferred Stock [Member] | ||||
Diluted Earnings Per Common Share [Abstract] | ||||
Effect of Series D preferred stock | $ 100 | |||
Weighted Average Shares [Abstract] | ||||
Effect of Series D preferred stock (in shares) | 1,378 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reconciliation of income tax expense (benefit) [Abstract] | ||||
Federal income tax provision at statutory rate of 21% | $ 1,739 | $ (1,174) | $ (409) | $ (64) |
Dividends-received deduction | (3) | (5) | (6) | (14) |
Other permanent differences | 13 | 16 | 24 | 38 |
Income tax expense (benefit) | 1,749 | (1,163) | $ (391) | (40) |
Federal statutory income tax rate | 21.00% | |||
Components of income tax expense [Abstract] | ||||
Current - Federal | 2,173 | 572 | $ 2,302 | 572 |
Deferred - Federal | (424) | (1,735) | (2,693) | (612) |
Income tax expense (benefit) | $ 1,749 | $ (1,163) | $ (391) | $ (40) |
Leases (Details)
Leases (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020USD ($)Lease | Jun. 30, 2019USD ($) | |
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 | 475 | 450 |
Right-of-use assets included in other assets on balance sheet | $ 5,159 | $ 5,785 |
Weighted average discount rate | 6.80% | 6.80% |
Weighted average remaining lease term in years | 6 years 4 months 24 days | 7 years 4 months 24 days |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssets | |
Maturities and present value of lease liabilities [Abstract] | ||
Remainder of 2020 | $ 503 | |
2021 | 1,015 | |
2022 | 1,031 | |
2023 | 1,048 | |
2024 | 1,065 | |
Thereafter | 2,025 | |
Total undiscounted lease payments | 6,687 | |
Less: present value adjustment | 1,297 | |
Operating lease liability | $ 5,390 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent | |
First Lease [Member] | ||
Lease description [Abstract] | ||
Renewal option period | 8 years | |
Second Lease [Member] | ||
Lease description [Abstract] | ||
Renewal option period | 7 years | |
Lease term | 10 years |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Segment | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Information [Abstract] | |||||
Number of business units | Segment | 2 | ||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | $ 385,737 | $ 385,737 | $ 377,626 | ||
Revenue | 49,737 | $ 43,127 | 89,147 | $ 98,145 | |
Income (loss) before income taxes | 8,281 | (5,589) | (1,946) | (304) | |
Operating Segments [Member] | American Southern [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 153,632 | 153,632 | 141,524 | ||
Revenue | 16,896 | 15,740 | 32,123 | 30,975 | |
Income (loss) before income taxes | 2,087 | 1,396 | 2,965 | 3,378 | |
Operating Segments [Member] | Bankers Fidelity [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 220,111 | 220,111 | 224,122 | ||
Revenue | 32,871 | 31,244 | 57,744 | 65,620 | |
Income (loss) before income taxes | 8,039 | (1,998) | (742) | (2,494) | |
Corporate and Other [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 11,994 | 11,994 | $ 11,980 | ||
Revenue | (30) | (3,857) | (720) | 1,550 | |
Income (loss) before income taxes | $ (1,845) | $ (4,987) | $ (4,169) | $ (1,188) |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Gray Television, Inc [Member] | |
Related Party Transaction [Abstract] | |
Remaining fractional interest in aircraft arrangement transferred to related party | $ 151 |