Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 31, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Transition Report | false | |
Entity File Number | 0-3722 | |
Entity Registrant Name | ATLANTIC AMERICAN CORP | |
Entity Central Index Key | 0000008177 | |
Entity Incorporation, State or Country Code | GA | |
Entity Tax Identification Number | 58-1027114 | |
Entity Address, Address Line One | 4370 Peachtree Road, N.E. | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30319 | |
City Area Code | 404 | |
Local Phone Number | 266-5500 | |
Title of 12(b) Security | Common Stock, par value $1.00 per share | |
Trading Symbol | AAME | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,402,288 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 24,247 | $ 28,863 |
Investments: | ||
Fixed maturities, available-for-sale, at fair value (amortized cost: $235,013 and $236,766; no allowance for credit losses) | 208,472 | 208,729 |
Equity securities, at fair value (cost: $4,905 and $4,907) | 9,679 | 11,562 |
Other invested assets (cost: $6,982 and $5,628) | 6,724 | 5,386 |
Policy loans | 1,811 | 1,759 |
Real estate | 38 | 38 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
Total investments | 227,962 | 228,712 |
Receivables: | ||
Reinsurance (net of allowance for uncollectible reinsurance of $66 and $0) | 22,261 | 25,913 |
Insurance premiums and other (net of allowance for expected credit losses $213 and net of allowance for doubtful accounts $177) | 30,825 | 15,386 |
Deferred income taxes, net | 15,149 | 14,163 |
Deferred acquisition costs | 41,211 | 42,281 |
Other assets | 8,756 | 9,202 |
Intangibles | 2,544 | 2,544 |
Total assets | 372,955 | 367,064 |
Insurance reserves and policyholder funds: | ||
Future policy benefits | 84,506 | 85,564 |
Unearned premiums | 37,875 | 28,348 |
Losses and claims | 85,984 | 87,484 |
Other policy liabilities | 939 | 1,255 |
Total insurance reserves and policyholder funds | 209,304 | 202,651 |
Accounts payable and accrued expenses | 23,427 | 26,473 |
Revolving credit facility | 3,000 | 2,009 |
Junior subordinated debenture obligations, net | 33,738 | 33,738 |
Total liabilities | 269,469 | 264,871 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity: | ||
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, 55,000 shares issued and outstanding; $5,500 redemption value | 55 | 55 |
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 20,402,288 and 20,407,229 | 22,401 | 22,401 |
Additional paid-in capital | 57,425 | 57,425 |
Retained earnings | 52,006 | 51,982 |
Accumulated other comprehensive income | (20,967) | (22,149) |
Unearned stock grant compensation | (33) | (132) |
Treasury stock, at cost: 1,998,606 and 1,993,665 shares | (7,401) | (7,389) |
Total shareholders' equity | 103,486 | 102,193 |
Total liabilities and shareholders' equity | $ 372,955 | $ 367,064 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Investments: | ||
Fixed maturities, cost | $ 235,013 | $ 236,766 |
Allowance for credit losses | 0 | 0 |
Equity securities, cost | 4,905 | 4,907 |
Other invested assets, cost | 6,982 | 5,628 |
Receivables: | ||
Reinsurance, allowance for uncollectible reinsurance | 66 | 0 |
Insurance premiums and other, allowance for expected credit losses/allowance for doubtful accounts | $ 213 | $ 177 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 4,000,000 | 4,000,000 |
Preferred stock, shares issued (in shares) | 55,000 | 55,000 |
Preferred stock, shares outstanding (in shares) | 55,000 | 55,000 |
Preferred stock, redemption value | $ 5,500 | $ 5,500 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 22,400,894 | 22,400,894 |
Common stock, shares outstanding (in shares) | 20,402,288 | 20,407,229 |
Treasury stock, at cost (in shares) | 1,998,606 | 1,993,665 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue: | ||||
Insurance premiums, net | $ 46,060 | $ 47,065 | $ 92,160 | $ 94,146 |
Net investment income | 2,559 | 2,529 | 5,100 | 4,869 |
Realized investment gains (losses), net | 70 | (62) | 70 | (72) |
Unrealized gains (losses) on equity securities, net | 494 | (4,866) | (1,881) | (2,673) |
Other income | 5 | 3 | 8 | 7 |
Total revenue | 49,188 | 44,669 | 95,457 | 96,277 |
Benefits and expenses: | ||||
Insurance benefits and losses incurred | 29,365 | 32,753 | 59,825 | 63,922 |
Commissions and underwriting expenses | 12,848 | 10,215 | 25,766 | 23,051 |
Interest expense | 807 | 414 | 1,557 | 768 |
Other expense | 3,951 | 3,402 | 7,910 | 6,855 |
Total benefits and expenses | 46,971 | 46,784 | 95,058 | 94,596 |
Income (loss) before income taxes | 2,217 | (2,115) | 399 | 1,681 |
Income tax expense (benefit) | 473 | (436) | 101 | 518 |
Net income (loss) | 1,744 | (1,679) | 298 | 1,163 |
Preferred stock dividends | (100) | (100) | (199) | (199) |
Net income (loss) applicable to common shareholders | $ 1,644 | $ (1,779) | $ 99 | $ 964 |
Earnings (loss) per common share (basic) (in dollars per share) | $ 0.08 | $ (0.09) | $ 0 | $ 0.05 |
Earnings (loss) per common share (diluted) (in dollars per share) | $ 0.08 | $ (0.09) | $ 0 | $ 0.05 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||||
Net income (loss) | $ 1,744 | $ (1,679) | $ 298 | $ 1,163 |
Available-for-sale fixed maturity securities: | ||||
Gross unrealized holding gains (losses) arising in the period | (3,167) | (19,748) | 1,566 | (41,561) |
Related income tax effect | 665 | 4,147 | (329) | 8,728 |
Subtotal | (2,502) | (15,601) | 1,237 | (32,833) |
Less: reclassification adjustment for net realized gains (losses) included in net income (loss) | (70) | 43 | (70) | 53 |
Related income tax effect | 15 | (8) | 15 | (11) |
Subtotal | (55) | 35 | (55) | 42 |
Total other comprehensive income (loss), net of tax | (2,557) | (15,566) | 1,182 | (32,791) |
Total comprehensive income (loss) | $ (813) | $ (17,245) | $ 1,480 | $ (31,628) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Unearned Stock Grant Compensation [Member] | Treasury Stock [Member] | Total |
Balance, beginning of period at Dec. 31, 2021 | $ 55 | $ 22,401 | $ 57,441 | $ 51,264 | $ 17,688 | $ (73) | $ (7,490) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | 1,163 | $ 1,163 | |||||||
Other comprehensive income (loss), net of tax | (32,791) | (32,791) | |||||||
Dividends on common stock | (408) | ||||||||
Dividends accrued on preferred stock | (199) | ||||||||
Restricted stock grants, net of forfeitures | 2 | (71) | 69 | ||||||
Amortization of unearned compensation | 65 | ||||||||
Net shares acquired related to employee share-based compensation plans | (15) | ||||||||
Balance, end of period at Jun. 30, 2022 | 55 | $ 22,401 | 57,443 | 51,820 | (15,103) | (79) | (7,436) | $ 109,101 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends declared on common stock per share (in dollars per share) | $ 0.02 | ||||||||
Balance, beginning of period (in shares) at Dec. 31, 2021 | 20,378,576 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net shares acquired under employee share-based compensation plans (in shares) | (5,079) | ||||||||
Restricted stock grants, net of forfeitures (in shares) | 25,000 | ||||||||
Balance, end of period (in shares) at Jun. 30, 2022 | 20,398,497 | ||||||||
Balance, beginning of period at Mar. 31, 2022 | 55 | $ 22,401 | 57,443 | 53,599 | 463 | (117) | (7,421) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (1,679) | $ (1,679) | |||||||
Other comprehensive income (loss), net of tax | (15,566) | (15,566) | |||||||
Dividends on common stock | 0 | ||||||||
Dividends accrued on preferred stock | (100) | ||||||||
Restricted stock grants, net of forfeitures | 0 | 0 | 0 | ||||||
Amortization of unearned compensation | 38 | ||||||||
Net shares acquired related to employee share-based compensation plans | (15) | ||||||||
Balance, end of period at Jun. 30, 2022 | 55 | $ 22,401 | 57,443 | 51,820 | (15,103) | (79) | (7,436) | $ 109,101 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends declared on common stock per share (in dollars per share) | $ 0 | ||||||||
Balance, beginning of period (in shares) at Mar. 31, 2022 | 20,403,576 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net shares acquired under employee share-based compensation plans (in shares) | (5,079) | ||||||||
Restricted stock grants, net of forfeitures (in shares) | 0 | ||||||||
Balance, end of period (in shares) at Jun. 30, 2022 | 20,398,497 | ||||||||
Balance, beginning of period at Dec. 31, 2022 | 55 | $ 22,401 | 57,425 | 51,982 | $ (75) | (22,149) | (132) | (7,389) | $ 102,193 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Accounting Standards Update [Extensible Enumeration] | ASU 2016-13 [Member] | ||||||||
Net income (loss) | 298 | 298 | |||||||
Other comprehensive income (loss), net of tax | 1,182 | 1,182 | |||||||
Dividends on common stock | 0 | ||||||||
Dividends accrued on preferred stock | (199) | ||||||||
Restricted stock grants, net of forfeitures | 0 | 0 | 0 | ||||||
Amortization of unearned compensation | 99 | ||||||||
Net shares acquired related to employee share-based compensation plans | (12) | ||||||||
Balance, end of period at Jun. 30, 2023 | 55 | $ 22,401 | 57,425 | 52,006 | (20,967) | (33) | (7,401) | $ 103,486 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends declared on common stock per share (in dollars per share) | $ 0 | ||||||||
Balance, beginning of period (in shares) at Dec. 31, 2022 | 20,407,229 | 20,407,229 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net shares acquired under employee share-based compensation plans (in shares) | (4,941) | ||||||||
Restricted stock grants, net of forfeitures (in shares) | 0 | ||||||||
Balance, end of period (in shares) at Jun. 30, 2023 | 20,402,288 | 20,402,288 | |||||||
Balance, beginning of period at Mar. 31, 2023 | 55 | $ 22,401 | 57,425 | 50,362 | (18,410) | (59) | (7,395) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | 1,744 | $ 1,744 | |||||||
Other comprehensive income (loss), net of tax | (2,557) | (2,557) | |||||||
Dividends on common stock | 0 | ||||||||
Dividends accrued on preferred stock | (100) | ||||||||
Restricted stock grants, net of forfeitures | 0 | 0 | 0 | ||||||
Amortization of unearned compensation | 26 | ||||||||
Net shares acquired related to employee share-based compensation plans | (6) | ||||||||
Balance, end of period at Jun. 30, 2023 | $ 55 | $ 22,401 | $ 57,425 | $ 52,006 | $ (20,967) | $ (33) | $ (7,401) | $ 103,486 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends declared on common stock per share (in dollars per share) | $ 0 | ||||||||
Balance, beginning of period (in shares) at Mar. 31, 2023 | 20,404,699 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net shares acquired under employee share-based compensation plans (in shares) | (2,411) | ||||||||
Restricted stock grants, net of forfeitures (in shares) | 0 | ||||||||
Balance, end of period (in shares) at Jun. 30, 2023 | 20,402,288 | 20,402,288 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 298 | $ 1,163 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization of (additions to) acquisition costs, net | 1,070 | (3,546) |
Realized investment (gains) losses, net | (70) | 72 |
Unrealized losses on equity securities, net | 1,881 | 2,673 |
Losses from equity method investees | 16 | 18 |
Compensation expense related to share awards | 99 | 65 |
Depreciation and amortization | 357 | 465 |
Deferred income tax benefit | (1,300) | (694) |
Increase in receivables, net | (11,787) | (12,729) |
Increase in insurance reserves and policyholder funds | 6,653 | 10,077 |
Decrease in accounts payable and accrued expenses | (3,246) | (2,104) |
Other, net | 1,133 | 124 |
Net cash used in operating activities | (4,896) | (4,416) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from investments sold | 3,685 | 221 |
Proceeds from investments matured, called or redeemed | 7,675 | 6,241 |
Investments purchased | (12,000) | (11,398) |
Additions to property and equipment | (68) | (68) |
Net cash used in investing activities | (708) | (5,004) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of dividends on common stock | 0 | (408) |
Treasury stock acquired - net employee share-based compensation | (12) | (15) |
Proceeds from revolving credit facility, net | 1,000 | 1,000 |
Net cash provided by financing activities | 988 | 577 |
Net decrease in cash and cash equivalents | (4,616) | (8,843) |
Cash and cash equivalents at beginning of period | 28,863 | 24,753 |
Cash and cash equivalents at end of period | 24,247 | 15,910 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 1,547 | 726 |
Cash paid for income taxes | $ 776 | $ 899 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation and Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month and six month periods ended June 30, 2023 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2023 or for any other future period. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2023 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | Note 2 Recently Issued Accounting Standards Adoption of New Accounting Standards Reference Rate Reform Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The Company adopted the updated guidance as of January 1, 2023. The updated guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption. The adoption of this guidance resulted in the recognition of an after-tax cumulative effect adjustment of $0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred credit losses recognized under the previous guidance. This adjustment is primarily associated with reinsurance recoverables, premium and other receivables. The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and increased the allowance for estimated uncollectible reinsurance. Impact of Adoption on Condensed Consolidated Balance Sheet Reinsurance Recoverables The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance Allowance for Estimated Uncollectible Reinsurance Balance, beginning of period $ 25,913 $ — Cumulative effect of adoption of updated accounting guidance for — 75 Current period change for estimated uncollectible reinsurance — (9 ) Write-offs of uncollectible reinsurance recoverables — — Balance, end of period $ 22,261 $ 66 Insurance Premium and Other Receivables The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Insurance Premiums and Other, Net of Expected Credit Losses Allowance for Doubtful Accounts/Expected Credit Losses Balance, beginning of period $ 15,386 $ 177 Cumulative effect of adoption of updated accounting guidance for — — Current period change for expected credit losses — 36 Write-offs of uncollectible insurance premiums and other receivables — — Balance, end of period $ 30,825 $ 213 Future Adoption of New Accounting Standards For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2022 Annual Report. Accounting Policies The following accounting policies have been updated to reflect the Company’s adoption of Financial Instruments - Credit Losses, as described above. Credit Impairments of Fixed Maturities The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The Company’s equity securities, which include common and non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income. The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or independent broker quotations. Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market prices. Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI. On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI. Reinsurance Recoverables The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement. Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance. Insurance Premiums and Other Receivables Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2023 | |
Investments [Abstract] | |
Investments | Note 3. Investments The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, ACL and cost or amortized cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2023 and December 31, 2022. Fixed maturities were comprised of the following: June 30, 2023 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Cost or Amortized Cost Fixed maturities: Bonds: U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 48,880 $ 1 $ 5,948 $ — $ 54,827 Obligations of states and political subdivisions 8,148 — 1,370 — 9,518 Corporate securities: Utilities and telecom 20,195 86 3,146 — 23,255 Financial services 57,242 439 6,948 — 63,751 Other business – diversified 31,871 173 4,107 — 35,805 Other consumer – diversified 41,909 42 5,797 — 47,664 Total corporate securities 151,217 740 19,998 — 170,475 Redeemable preferred stocks: Other consumer – diversified 227 34 — — 193 Total redeemable preferred stocks 227 34 — — 193 Total fixed maturities $ 208,472 $ 775 $ 27,316 $ — $ 235,013 December 31, 2022 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Fixed maturities: Bonds: U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 44,412 $ 5 $ 5,926 $ 50,333 Obligations of states and political subdivisions 9,187 4 1,702 10,885 Corporate securities: Utilities and telecom 22,090 120 3,299 25,269 Financial services 59,054 397 7,085 65,742 Other business – diversified 31,058 161 4,689 35,586 Other consumer – diversified 42,705 35 6,089 48,759 Total corporate securities 154,907 713 21,162 175,356 Redeemable preferred stocks: Other consumer – diversified 223 31 — 192 Total redeemable preferred stocks 223 31 — 192 Total fixed maturities $ 208,729 $ 753 $ 28,790 $ 236,766 Bonds having an amortized cost of $11,766 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $7,548 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2023 and December 31, 2022, respectively. Equity securities were comprised of the following: June 30, 2023 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 842 $ 570 $ — $ 272 Other business – diversified 8,837 4,204 — 4,633 Total equity securities $ 9,679 $ 4,774 $ — $ 4,905 December 31, 2022 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 790 $ 516 $ — $ 274 Other business – diversified 10,772 6,139 — 4,633 Total equity securities $ 11,562 $ 6,655 $ — $ 4,907 The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2023 and December 31, 2022 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties. June 30, 2023 December 31, 2022 Carrying Value Amortized Cost Carrying Value Amortized Cost Due in one year or less $ 123 $ 125 $ 3,776 $ 3,797 Due after one year through five years 56,828 59,924 40,150 42,174 Due after five years through ten years 35,227 39,835 44,044 49,711 Due after ten years 81,244 95,113 87,719 103,095 Asset backed securities 35,050 40,016 33,040 37,989 Totals $ 208,472 $ 235,013 $ 208,729 $ 236,766 The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2023 and December 31, 2022. June 30, 2023 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 11,404 $ 287 $ 36,608 $ 5,661 $ 48,012 $ 5,948 Obligations of states and political subdivisions 2,143 18 6,005 1,352 8,148 1,370 Corporate securities 16,587 554 126,125 19,444 142,712 19,998 Total temporarily impaired securities $ 30,134 $ 859 $ 168,738 $ 26,457 $ 198,872 $ 27,316 December 31, 2022 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 23,763 $ 2,410 $ 19,259 $ 3,516 $ 43,022 $ 5,926 Obligations of states and political subdivisions 8,183 1,702 — — 8,183 1,702 Corporate securities 127,928 16,214 14,514 4,948 142,442 21,162 Total temporarily impaired securities $ 159,874 $ 20,326 $ 33,773 $ 8,464 $ 193,647 $ 28,790 Analysis of Securities in Unrealized Loss Positions As of June 30, 2023 and December 31, 2022, there were 248 and 237 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors. The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal. For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile. For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal. Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company, and the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated. The Company had no ACL on its available-for-sale fixed maturities as of June 30, 2023. The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2023 and 2022. Three Months Ended June 30, 2023 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 70 $ — $ — $ 70 Losses — — — — Realized investment losses, net $ 70 $ — $ — $ 70 Three Months Ended June 30, 2022 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ — $ — $ — $ — Losses (43 ) — (19 ) (62 ) Realized investment gains, net $ (43 ) $ — $ (19 ) $ (62 ) Six Months Ended June 30, 2023 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 70 $ — $ — $ 70 Losses — — — — Realized investment gains, net $ 70 $ — $ — $ 70 Six Months Ended June 30, 2022 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ — $ — $ — $ — Losses (53 ) — (19 ) (72 ) Realized investment gains, net $ (53 ) $ — $ (19 ) $ (72 ) The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net realized and unrealized gains (losses) recognized during the period on equity securities $ 494 $ (4,866 ) $ (1,881 ) $ (2,673 ) Less: Net realized gains recognized during the period on equity securities sold during the period — — — — Unrealized gains (losses) recognized during the reporting period on equity securities, net $ 494 $ (4,866 ) $ (1,881 ) $ (2,673 ) Variable Interest Entities The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance. The Company’s VIE interests principally consist of interests in limited liability companies formed for the purpose of achieving diversified equity returns. The Company’s VIE interests, carried as a part of other invested assets, totaled $6,724 and $5,386 as of June 30, 2023 and December 31, 2022, respectively. The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $1,238 as of June 30, 2023 and December 31, 2022. The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the primary beneficiary. Therefore, the Company has not consolidated these VIEs. The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE. The Company has no arrangements with any of the VIEs to provide other financial support to or on behalf of the VIE. The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $7,962 and $6,624, as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $4,518 and $5,872, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Fair Values of Financial Instruments [Abstract] | |
Fair Values of Financial Instruments | Note 4. Fair Values of Financial Instruments The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates. However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels. Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks. Level 2 Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include significantly most of its fixed maturities, which consist of U.S. Treasury securities, U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements of its fixed maturities and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers. Prices for the majority of the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities) or can be corroborated by observable market data. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. The Company’s financial instruments valued using Level 3 criteria consist of one equity security. As of June 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $154 and $156, respectively. The equity security is not traded and is valued at cost. The use of different criteria or assumptions regarding data may have yielded materially different valuations. As of June 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Fixed maturities $ — $ 208,472 $ — $ 208,472 Equity securities 9,525 — 154 9,679 Cash equivalents 15,051 — — 15,051 Total $ 24,576 $ 208,472 $ 154 $ 233,202 As of December 31, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Fixed maturities $ — $ 208,729 $ — $ 208,729 Equity securities 11,406 — 156 11,562 Cash equivalents 18,861 — — 18,861 Total $ 30,267 $ 208,729 $ 156 $ 239,152 The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, 2022 Level in Fair Value Hierarchy (1) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and cash equivalents Level 1 $ 24,247 $ 24,247 $ 28,863 $ 28,863 Fixed maturities (1 ) 208,472 208,472 208,729 208,729 Equity securities (1 ) 9,679 9,679 11,562 11,562 Other invested assets Level 3 6,724 6,724 5,386 5,386 Policy loans Level 2 1,811 1,811 1,759 1,759 Investment in unconsolidated trusts Level 2 1,238 1,238 1,238 1,238 Liabilities: Junior subordinated debentures, net Level 2 33,738 32,724 33,738 33,810 Revolving credit facility Level 2 3,000 3,000 2,009 2,009 (1) See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets. |
Internal-Use Software
Internal-Use Software | 6 Months Ended |
Jun. 30, 2023 | |
Internal-Use Software [Abstract] | |
Internal-Use Software | Note 5. Internal-Use Software On March 3, 2021, the Company entered into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services. The software is managed, hosted, supported, and delivered as a cloud-based software service product offering (software-as-a-service). The initial term of the arrangement is five years from the effective date with a renewal term of an additional five years. Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred. Implementation expenses incurred related to third party professional and consulting services have been capitalized. The Company will begin amortizing, on a straight-line basis over the expected ten year term of the hosting arrangement, when the software is substantially ready for its intended use. The Company incurred and capitalized implementation costs of $628 and $958 during the six months ended June 30, 2023 and 2022, respectively. As a result, the Company has capitalized $3,650 in implementation costs in other assets within its condensed consolidated balance sheet as of June 30, 2023. The Company expects the software will be substantially ready for its intended use in the three months ended September 30, |
Insurance Reserves for Losses a
Insurance Reserves for Losses and Claims | 6 Months Ended |
Jun. 30, 2023 | |
Insurance Reserves for Losses and Claims [Abstract] | |
Insurance Reserves for Losses and Claims | Note 6. Insurance Reserves for Losses and Claims The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2023 and 2022 is as follows: Six Months Ended June 30, 2023 2022 Beginning insurance reserves for losses and claims, gross $ 87,484 $ 85,620 Less: Reinsurance recoverable on unpaid losses (17,647 ) (17,690 ) Beginning insurance reserves for losses and claims, net 69,837 67,930 Incurred related to: Current accident year 57,320 66,260 Prior accident year development (1) 1,636 (2) (3,195 ) (3) Total incurred 58,956 63,065 Paid related to: Current accident year 25,834 32,630 Prior accident years 33,019 28,754 Total paid 58,853 61,384 Ending insurance reserves for losses and claims, net 69,940 69,611 Plus: Reinsurance recoverable on unpaid losses 16,044 17,487 Ending insurance reserves for losses and claims, gross $ 85,984 $ 87,098 (1) In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. (2) Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors. (3) Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations. Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred: Six Months Ended June 30, 2023 2022 Total incurred losses $ 58,956 $ 63,065 Cash surrender value and matured endowments 812 1,154 Benefit reserve changes 57 (297 ) Total insurance benefits and losses incurred $ 59,825 $ 63,922 |
Credit Arrangements
Credit Arrangements | 6 Months Ended |
Jun. 30, 2023 | |
Credit Arrangements [Abstract] | |
Credit Arrangements | Note 7. Credit Arrangements As expected, discontinuation of LIBOR occurred on June 30, 2023 (“LIBOR Cessation Date”) and will affect the rates used in the Company’s Credit Arrangements after that date. On March 15, 2022, the U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the “LIBOR Act”) to address LIBOR’s cessation and to establish a clear and uniform process for replacing the overnight and one-, three-, six- and 12-month tenors of USD LIBOR in existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate (“tough legacy contracts”). Further, the Board of Governors of the Federal Reserve System (the “Board”) has issued regulations, 12 C.F.R. Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which relates to the LIBOR transition. Bank Debt On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10,000 revolving credit facility that matures on April 12, 2024. Under the Credit Agreement, the Company will pay interest on the unpaid principal balance of outstanding revolving loans at the LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%. On June 28, 2023, the Company received a LIBOR cessation notice from the Lender detailing the replacement rates that would be used effective immediately after the LIBOR Cessation Date of June 30, 2023, as provided for in the Credit Agreement. The use of an alternate benchmark rate selected by the Lender (“Benchmark Replacement”) in place of LIBOR will not be used until the first reset date under the terms of the Credit Agreement following the LIBOR Cessation Date. The Benchmark Replacement that will be used is the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”) and provides an indicative, forward-looking measurement of the SOFR based on market expectations implied from leading derivatives markets. The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of June 30, 2023, the Company had outstanding borrowings of $3,000 under the Credit Agreement. Junior Subordinated Debentures The On May 1, 2023, the Company received notice from its trustee and administrator of the statutory business trusts, that Federal LIBOR Legislation (discussed above) provides that the benchmark rate for tough legacy contracts, such as the statutory trusts contracts, will be replaced by operation of law on the first London banking day after June 30, 2023 with a benchmark replacement selected by the Board, as adjusted by the applicable spread adjustment recommended by the Board. The trustee and administrator has determined that our contracts will be replaced with 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent. The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2023 was as follows: Atlantic American Statutory Trust I Atlantic American Statutory Trust II JUNIOR SUBORDINATED DEBENTURES (1) (2) Principal amount owed June 30 2023 $ 18,042 $ 23,196 Less: Treasury debt (3) — (7,500 ) Net balance June 30 2023 $ 18,042 $ 15,696 Net balance December 31, 2022 $ 18,042 $ 15,696 Coupon rate LIBOR + LIBOR + 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 + LIBOR + 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, 2023 | |
Earnings (Loss) Per Common Share [Abstract] | |
Earnings (Loss) Per Common Share | Note 8 Earnings (Loss) Per Common Share A reconciliation of the numerator and denominator used in the earnings (loss) per common share calculations is as follows: Three Months Ended June 30 Income Weighted Average Shares (In thousands) Per Share Amount Basic Earnings Per Common Share: Net income $ 1,744 20,404 Less preferred stock dividends (100 ) — Net income applicable to common shareholders 1,644 20,404 0.08 Diluted Earnings Per Common Share: Effect of Series D preferred stock 100 1,378 Net income applicable to common shareholders $ 1,744 21,782 $ 0.08 Three Months Ended June 30 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Loss Per Common Share: Net loss $ (1,679 ) 20,402 Less preferred stock dividends (100 ) — Net loss applicable to common shareholders $ (1,779 ) 20,402 $ (0.09 ) Six Months Ended June 30, 2023 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Earnings Per Common Share: Net income $ 298 20,406 Less preferred stock dividends (199 ) — Net income applicable to common shareholders $ 99 20,406 $ — Six Months Ended June 30, 2022 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Earnings Per Common Share: Net income $ 1,163 20,391 Less preferred stock dividends (199 ) — Net income applicable to common shareholders $ 964 20,391 $ 0.05 The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for all periods presented, except for the three month period ended June 30, 2023, since its impact would have been antidilutive. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Taxes [Abstract] | |
Income Taxes | Note 9. Income Taxes A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Federal income tax provision at statutory rate of 21 $ 466 $ (444 ) $ 84 $ 353 Dividends-received deduction (10 ) (6 ) (17 ) (12 ) Meals and entertainment 11 10 23 20 Vested stock and club dues 2 — 3 — Parking disallowance 4 4 8 8 Penalties and fines — — — 149 Income tax expense (benefit) $ 473 $ (436 ) $ 101 $ 518 The components of income tax expense (benefit) were: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Current – Federal $ 1,221 $ 1,144 $ 1,401 $ 1,212 Deferred – Federal (748 ) (1,580 ) (1,300 ) (694 ) Total $ 473 $ (436 ) $ 101 $ 518 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 10. Leases The Company has two operating lease agreements, each for the use of office space in the ordinary course of business. The first lease renews annually on an automatic basis and based on original assumptions, management is reasonably certain to exercise the renewal option through 2026. The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years, with a termination date on September 30, 2026. The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for the six months ended June 30, 2023 and June 30, 2022 Additional information regarding the Company’s real estate operating leases is as follows: Six Months Ended June 30, Other information on operating leases: 2023 2022 Cash payments included in the measurement of lease liabilities reported in operating cash flows $ 520 $ 512 Right-of-use assets included in other assets 3,016 3,781 Weighted average discount rate 6.8 % 6.8 % Weighted average remaining lease term in years 3.4 years 4.4 years The following table presents maturities and present value of the Company’s lease liabilities: Lease Liability Remainder of 2023 $ 528 2024 1,065 2025 1,083 2026 942 Thereafter — Total undiscounted lease payments 3,618 Less: present value adjustment 397 Operating lease liability included in accounts payable and accrued expenses $ 3,221 As of June 30, 2023, the Company has no operating leases that have not yet commenced. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 11. Commitments and Contingencies Litigation From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its business. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company. Regulatory Matters Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business. Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners. From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various matters. In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information [Abstract] | |
Segment Information | Note 12. Segment Information The Parent’s primary insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing on specific products. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each business unit is managed independently and is evaluated on its individual performance. The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022. Assets June 30, 2023 December 31, 2022 American Southern $ 151,902 $ 144,455 Bankers Fidelity 192,456 195,028 Corporate and Other 28,597 27,581 Total assets $ 372,955 $ 367,064 Revenues Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 American Southern $ 18,965 $ 19,496 $ 37,165 $ 38,002 Bankers Fidelity 30,193 25,569 58,383 58,458 Corporate and Other 30 (396 ) (91 ) (183 ) Total revenue $ 49,188 $ 44,669 $ 95,457 $ 96,277 In come (Loss) Before Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 American Southern $ 2,716 $ 682 $ 2,386 $ 2,767 Bankers Fidelity 1,851 (517 ) 3,203 2,934 Corporate and Other (2,350 ) (2,280 ) (5,190 ) (4,020 ) Income (loss) before income taxes $ 2,217 $ (2,115 ) $ 399 $ 1,681 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events On August 8, 2023, the Company’s board of directors declared an annual cash dividend of $0.02 per share of common stock that is payable to shareholders of record as of the close of business on August 22, 2023. |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Recently Issued Accounting Standards [Abstract] | |
Adoption of New Accounting Standards | Adoption of New Accounting Standards Reference Rate Reform Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The Company adopted the updated guidance as of January 1, 2023. The updated guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption. The adoption of this guidance resulted in the recognition of an after-tax cumulative effect adjustment of $0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred credit losses recognized under the previous guidance. This adjustment is primarily associated with reinsurance recoverables, premium and other receivables. The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and increased the allowance for estimated uncollectible reinsurance. Impact of Adoption on Condensed Consolidated Balance Sheet Reinsurance Recoverables The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance Allowance for Estimated Uncollectible Reinsurance Balance, beginning of period $ 25,913 $ — Cumulative effect of adoption of updated accounting guidance for — 75 Current period change for estimated uncollectible reinsurance — (9 ) Write-offs of uncollectible reinsurance recoverables — — Balance, end of period $ 22,261 $ 66 Insurance Premium and Other Receivables The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Insurance Premiums and Other, Net of Expected Credit Losses Allowance for Doubtful Accounts/Expected Credit Losses Balance, beginning of period $ 15,386 $ 177 Cumulative effect of adoption of updated accounting guidance for — — Current period change for expected credit losses — 36 Write-offs of uncollectible insurance premiums and other receivables — — Balance, end of period $ 30,825 $ 213 Future Adoption of New Accounting Standards For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2022 Annual Report. |
Credit Impairments of Fixed Maturities | Credit Impairments of Fixed Maturities The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss. The Company’s equity securities, which include common and non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income. The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or independent broker quotations. Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly quoted market prices. Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI. On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI. |
Reinsurance Recoverables | Reinsurance Recoverables The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement. Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance. |
Insurance Premiums and Other Receivables | Insurance Premiums and Other Receivables Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience. |
Recently Issued Accounting St_3
Recently Issued Accounting Standards (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Recently Issued Accounting Standards [Abstract] | |
Reinsurance Recoverables | The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and June 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance Allowance for Estimated Uncollectible Reinsurance Balance, beginning of period $ 25,913 $ — Cumulative effect of adoption of updated accounting guidance for — 75 Current period change for estimated uncollectible reinsurance — (9 ) Write-offs of uncollectible reinsurance recoverables — — Balance, end of period $ 22,261 $ 66 |
Insurance Premium and Other Receivables | The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and June 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the six months ended June 30, 2023. At and for the six months ended June 30, 2023 (in thousands) Insurance Premiums and Other, Net of Expected Credit Losses Allowance for Doubtful Accounts/Expected Credit Losses Balance, beginning of period $ 15,386 $ 177 Cumulative effect of adoption of updated accounting guidance for — — Current period change for expected credit losses — 36 Write-offs of uncollectible insurance premiums and other receivables — — Balance, end of period $ 30,825 $ 213 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Investments [Abstract] | |
Investments Aggregated by Type and Industry | Fixed maturities were comprised of the following: June 30, 2023 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Cost or Amortized Cost Fixed maturities: Bonds: U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 48,880 $ 1 $ 5,948 $ — $ 54,827 Obligations of states and political subdivisions 8,148 — 1,370 — 9,518 Corporate securities: Utilities and telecom 20,195 86 3,146 — 23,255 Financial services 57,242 439 6,948 — 63,751 Other business – diversified 31,871 173 4,107 — 35,805 Other consumer – diversified 41,909 42 5,797 — 47,664 Total corporate securities 151,217 740 19,998 — 170,475 Redeemable preferred stocks: Other consumer – diversified 227 34 — — 193 Total redeemable preferred stocks 227 34 — — 193 Total fixed maturities $ 208,472 $ 775 $ 27,316 $ — $ 235,013 December 31, 2022 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost or Amortized Cost Fixed maturities: Bonds: U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 44,412 $ 5 $ 5,926 $ 50,333 Obligations of states and political subdivisions 9,187 4 1,702 10,885 Corporate securities: Utilities and telecom 22,090 120 3,299 25,269 Financial services 59,054 397 7,085 65,742 Other business – diversified 31,058 161 4,689 35,586 Other consumer – diversified 42,705 35 6,089 48,759 Total corporate securities 154,907 713 21,162 175,356 Redeemable preferred stocks: Other consumer – diversified 223 31 — 192 Total redeemable preferred stocks 223 31 — 192 Total fixed maturities $ 208,729 $ 753 $ 28,790 $ 236,766 Bonds having an amortized cost of $11,766 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $7,548 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2023 and December 31, 2022, respectively. Equity securities were comprised of the following: June 30, 2023 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 842 $ 570 $ — $ 272 Other business – diversified 8,837 4,204 — 4,633 Total equity securities $ 9,679 $ 4,774 $ — $ 4,905 December 31, 2022 Estimated Fair Value Gross Unrealized Gains Gross Unrealized Losses Cost Equity securities: Common and non-redeemable preferred stocks: Financial services $ 790 $ 516 $ — $ 274 Other business – diversified 10,772 6,139 — 4,633 Total equity securities $ 11,562 $ 6,655 $ — $ 4,907 |
Amortized Cost and Carrying Value of Fixed Maturities by Contractual Maturity | The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2023 and December 31, 2022 by contractual maturity were as follows. Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties. June 30, 2023 December 31, 2022 Carrying Value Amortized Cost Carrying Value Amortized Cost Due in one year or less $ 123 $ 125 $ 3,776 $ 3,797 Due after one year through five years 56,828 59,924 40,150 42,174 Due after five years through ten years 35,227 39,835 44,044 49,711 Due after ten years 81,244 95,113 87,719 103,095 Asset backed securities 35,050 40,016 33,040 37,989 Totals $ 208,472 $ 235,013 $ 208,729 $ 236,766 |
Investment Securities with Continuous Unrealized Loss Position | The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2023 and December 31, 2022. June 30, 2023 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 11,404 $ 287 $ 36,608 $ 5,661 $ 48,012 $ 5,948 Obligations of states and political subdivisions 2,143 18 6,005 1,352 8,148 1,370 Corporate securities 16,587 554 126,125 19,444 142,712 19,998 Total temporarily impaired securities $ 30,134 $ 859 $ 168,738 $ 26,457 $ 198,872 $ 27,316 December 31, 2022 Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 23,763 $ 2,410 $ 19,259 $ 3,516 $ 43,022 $ 5,926 Obligations of states and political subdivisions 8,183 1,702 — — 8,183 1,702 Corporate securities 127,928 16,214 14,514 4,948 142,442 21,162 Total temporarily impaired securities $ 159,874 $ 20,326 $ 33,773 $ 8,464 $ 193,647 $ 28,790 |
Summary of Realized Investment Gains (Losses) | The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2023 and 2022. Three Months Ended June 30, 2023 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 70 $ — $ — $ 70 Losses — — — — Realized investment losses, net $ 70 $ — $ — $ 70 Three Months Ended June 30, 2022 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ — $ — $ — $ — Losses (43 ) — (19 ) (62 ) Realized investment gains, net $ (43 ) $ — $ (19 ) $ (62 ) Six Months Ended June 30, 2023 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ 70 $ — $ — $ 70 Losses — — — — Realized investment gains, net $ 70 $ — $ — $ 70 Six Months Ended June 30, 2022 Fixed Maturities Equity Securities Other Invested Assets Total Gains $ — $ — $ — $ — Losses (53 ) — (19 ) (72 ) Realized investment gains, net $ (53 ) $ — $ (19 ) $ (72 ) |
Unrealized Gains (Losses) on Equity Securities | The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and six month periods ended June 30, 2023 and 2022. Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net realized and unrealized gains (losses) recognized during the period on equity securities $ 494 $ (4,866 ) $ (1,881 ) $ (2,673 ) Less: Net realized gains recognized during the period on equity securities sold during the period — — — — Unrealized gains (losses) recognized during the reporting period on equity securities, net $ 494 $ (4,866 ) $ (1,881 ) $ (2,673 ) |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Values of Financial Instruments [Abstract] | |
Financial Instruments Carried at Fair Value Measured on a Recurring Basis | As of June 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Fixed maturities $ — $ 208,472 $ — $ 208,472 Equity securities 9,525 — 154 9,679 Cash equivalents 15,051 — — 15,051 Total $ 24,576 $ 208,472 $ 154 $ 233,202 As of December 31, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Fixed maturities $ — $ 208,729 $ — $ 208,729 Equity securities 11,406 — 156 11,562 Cash equivalents 18,861 — — 18,861 Total $ 30,267 $ 208,729 $ 156 $ 239,152 |
Carrying Amount, Estimated Fair Value and Level within the Fair Value Hierarchy of Financial Instruments | The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2023 and December 31, 2022. June 30, 2023 December 31, 2022 Level in Fair Value Hierarchy (1) Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and cash equivalents Level 1 $ 24,247 $ 24,247 $ 28,863 $ 28,863 Fixed maturities (1 ) 208,472 208,472 208,729 208,729 Equity securities (1 ) 9,679 9,679 11,562 11,562 Other invested assets Level 3 6,724 6,724 5,386 5,386 Policy loans Level 2 1,811 1,811 1,759 1,759 Investment in unconsolidated trusts Level 2 1,238 1,238 1,238 1,238 Liabilities: Junior subordinated debentures, net Level 2 33,738 32,724 33,738 33,810 Revolving credit facility Level 2 3,000 3,000 2,009 2,009 (1) See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets. |
Insurance Reserves for Losses_2
Insurance Reserves for Losses and Claims (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Insurance Reserves for Losses and Claims [Abstract] | |
Roll-forward of Insurance Reserves for Losses and Claims | The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2023 and 2022 is as follows: Six Months Ended June 30, 2023 2022 Beginning insurance reserves for losses and claims, gross $ 87,484 $ 85,620 Less: Reinsurance recoverable on unpaid losses (17,647 ) (17,690 ) Beginning insurance reserves for losses and claims, net 69,837 67,930 Incurred related to: Current accident year 57,320 66,260 Prior accident year development (1) 1,636 (2) (3,195 ) (3) Total incurred 58,956 63,065 Paid related to: Current accident year 25,834 32,630 Prior accident years 33,019 28,754 Total paid 58,853 61,384 Ending insurance reserves for losses and claims, net 69,940 69,611 Plus: Reinsurance recoverable on unpaid losses 16,044 17,487 Ending insurance reserves for losses and claims, gross $ 85,984 $ 87,098 (1) In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. (2) Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors. (3) Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations. |
Reconciliation of Total Incurred Losses to Total Insurance Benefits and Losses | Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred: Six Months Ended June 30, 2023 2022 Total incurred losses $ 58,956 $ 63,065 Cash surrender value and matured endowments 812 1,154 Benefit reserve changes 57 (297 ) Total insurance benefits and losses incurred $ 59,825 $ 63,922 |
Credit Arrangements (Tables)
Credit Arrangements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Credit Arrangements [Abstract] | |
Financial Structure of Statutory Business Trusts | The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2023 was as follows: Atlantic American Statutory Trust I Atlantic American Statutory Trust II JUNIOR SUBORDINATED DEBENTURES (1) (2) Principal amount owed June 30 2023 $ 18,042 $ 23,196 Less: Treasury debt (3) — (7,500 ) Net balance June 30 2023 $ 18,042 $ 15,696 Net balance December 31, 2022 $ 18,042 $ 15,696 Coupon rate LIBOR + LIBOR + 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 + LIBOR + 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, 2023 | |
Earnings (Loss) Per Common Share [Abstract] | |
Reconciliation of Numerator and Denominator used in Earnings (Loss) per Common Share Calculations | A reconciliation of the numerator and denominator used in the earnings (loss) per common share calculations is as follows: Three Months Ended June 30 Income Weighted Average Shares (In thousands) Per Share Amount Basic Earnings Per Common Share: Net income $ 1,744 20,404 Less preferred stock dividends (100 ) — Net income applicable to common shareholders 1,644 20,404 0.08 Diluted Earnings Per Common Share: Effect of Series D preferred stock 100 1,378 Net income applicable to common shareholders $ 1,744 21,782 $ 0.08 Three Months Ended June 30 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Loss Per Common Share: Net loss $ (1,679 ) 20,402 Less preferred stock dividends (100 ) — Net loss applicable to common shareholders $ (1,779 ) 20,402 $ (0.09 ) Six Months Ended June 30, 2023 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Earnings Per Common Share: Net income $ 298 20,406 Less preferred stock dividends (199 ) — Net income applicable to common shareholders $ 99 20,406 $ — Six Months Ended June 30, 2022 Income Weighted Average Shares (In thousands) Per Share Amount Basic and Diluted Earnings Per Common Share: Net income $ 1,163 20,391 Less preferred stock dividends (199 ) — Net income applicable to common shareholders $ 964 20,391 $ 0.05 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Income Taxes [Abstract] | |
Reconciliation of Income Tax Expense (Benefit) | A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Federal income tax provision at statutory rate of 21 $ 466 $ (444 ) $ 84 $ 353 Dividends-received deduction (10 ) (6 ) (17 ) (12 ) Meals and entertainment 11 10 23 20 Vested stock and club dues 2 — 3 — Parking disallowance 4 4 8 8 Penalties and fines — — — 149 Income tax expense (benefit) $ 473 $ (436 ) $ 101 $ 518 |
Components of Income Tax Expense | The components of income tax expense (benefit) were: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Current – Federal $ 1,221 $ 1,144 $ 1,401 $ 1,212 Deferred – Federal (748 ) (1,580 ) (1,300 ) (694 ) Total $ 473 $ (436 ) $ 101 $ 518 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Additional Information of Operating Leases | Additional information regarding the Company’s real estate operating leases is as follows: Six Months Ended June 30, Other information on operating leases: 2023 2022 Cash payments included in the measurement of lease liabilities reported in operating cash flows $ 520 $ 512 Right-of-use assets included in other assets 3,016 3,781 Weighted average discount rate 6.8 % 6.8 % Weighted average remaining lease term in years 3.4 years 4.4 years |
Maturities and Present Value of Lease Liabilities | The following table presents maturities and present value of the Company’s lease liabilities: Lease Liability Remainder of 2023 $ 528 2024 1,065 2025 1,083 2026 942 Thereafter — Total undiscounted lease payments 3,618 Less: present value adjustment 397 Operating lease liability included in accounts payable and accrued expenses $ 3,221 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information [Abstract] | |
Assets, Revenue Loss Before Income Taxes for Each Business Unit | The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022. Assets June 30, 2023 December 31, 2022 American Southern $ 151,902 $ 144,455 Bankers Fidelity 192,456 195,028 Corporate and Other 28,597 27,581 Total assets $ 372,955 $ 367,064 Revenues Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 American Southern $ 18,965 $ 19,496 $ 37,165 $ 38,002 Bankers Fidelity 30,193 25,569 58,383 58,458 Corporate and Other 30 (396 ) (91 ) (183 ) Total revenue $ 49,188 $ 44,669 $ 95,457 $ 96,277 In come (Loss) Before Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 American Southern $ 2,716 $ 682 $ 2,386 $ 2,767 Bankers Fidelity 1,851 (517 ) 3,203 2,934 Corporate and Other (2,350 ) (2,280 ) (5,190 ) (4,020 ) Income (loss) before income taxes $ 2,217 $ (2,115 ) $ 399 $ 1,681 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2023 Segment | |
Basis of Presentation and Significant Accounting Policies [Abstract] | |
Number of business units | 2 |
Recently Issued Accounting St_4
Recently Issued Accounting Standards, Reinsurance Recoverables (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Financial Instruments - Credit Losses [Abstract] | |
Allowance for credit losses | $ 66 |
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract] | |
Balance, beginning of period | 25,913 |
Balance, end of period | 22,261 |
Allowance for Estimated Uncollectible Reinsurance [Abstract] | |
Balance, beginning of period | 0 |
Current period change for estimated uncollectible reinsurance | (9) |
Write-offs of uncollectible reinsurance recoverables | 0 |
Balance, end of period | 66 |
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | |
Financial Instruments - Credit Losses [Abstract] | |
Allowance for credit losses | |
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract] | |
Balance, beginning of period | 0 |
Allowance for Estimated Uncollectible Reinsurance [Abstract] | |
Balance, beginning of period | $ 75 |
Recently Issued Accounting St_5
Recently Issued Accounting Standards, Insurance Premium and Other Receivables (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract] | |
Balance, beginning of period | $ 15,386 |
Balance, end of period | 30,825 |
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract] | |
Balance, beginning of period | 177 |
Current period change for expected credit losses | 36 |
Write-offs of uncollectible insurance premiums and other receivables | 0 |
Balance, end of period | 213 |
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | |
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract] | |
Balance, beginning of period | 0 |
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract] | |
Balance, beginning of period | $ 0 |
Investments, Aggregated by Type
Investments, Aggregated by Type and Industry (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | $ 208,472 | $ 208,729 |
Allowance for credit losses | 0 | 0 |
Amortized cost total | 235,013 | 236,766 |
Estimated fair value | 9,679 | 11,562 |
Cost | 4,905 | 4,907 |
Amortized cost of bonds on deposit with insurance regulatory authorities | 11,766 | 12,333 |
Bonds Pledged as Collateral [Member] | FHLB Advances [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Amortized cost pledged as collateral to FHLB | 7,548 | 7,221 |
Fixed Maturities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 208,472 | 208,729 |
Gross unrealized gains | 775 | 753 |
Gross unrealized losses | 27,316 | 28,790 |
Allowance for credit losses | 0 | |
Amortized cost total | 235,013 | 236,766 |
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 48,880 | 44,412 |
Gross unrealized gains | 1 | 5 |
Gross unrealized losses | 5,948 | 5,926 |
Allowance for credit losses | 0 | |
Amortized cost total | 54,827 | 50,333 |
Obligations of States and Political Subdivisions [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 8,148 | 9,187 |
Gross unrealized gains | 0 | 4 |
Gross unrealized losses | 1,370 | 1,702 |
Allowance for credit losses | 0 | |
Amortized cost total | 9,518 | 10,885 |
Corporate Securities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 151,217 | 154,907 |
Gross unrealized gains | 740 | 713 |
Gross unrealized losses | 19,998 | 21,162 |
Allowance for credit losses | 0 | |
Amortized cost total | 170,475 | 175,356 |
Corporate Securities [Member] | Utilities and Telecom [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 20,195 | 22,090 |
Gross unrealized gains | 86 | 120 |
Gross unrealized losses | 3,146 | 3,299 |
Allowance for credit losses | 0 | |
Amortized cost total | 23,255 | 25,269 |
Corporate Securities [Member] | Financial Services [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 57,242 | 59,054 |
Gross unrealized gains | 439 | 397 |
Gross unrealized losses | 6,948 | 7,085 |
Allowance for credit losses | 0 | |
Amortized cost total | 63,751 | 65,742 |
Corporate Securities [Member] | Other Business - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 31,871 | 31,058 |
Gross unrealized gains | 173 | 161 |
Gross unrealized losses | 4,107 | 4,689 |
Allowance for credit losses | 0 | |
Amortized cost total | 35,805 | 35,586 |
Corporate Securities [Member] | Other Consumer - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 41,909 | 42,705 |
Gross unrealized gains | 42 | 35 |
Gross unrealized losses | 5,797 | 6,089 |
Allowance for credit losses | 0 | |
Amortized cost total | 47,664 | 48,759 |
Redeemable Preferred Stocks [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 227 | 223 |
Gross unrealized gains | 34 | 31 |
Gross unrealized losses | 0 | 0 |
Allowance for credit losses | 0 | |
Amortized cost total | 193 | |
Redeemable Preferred Stocks [Member] | Other Consumer - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 227 | 223 |
Gross unrealized gains | 34 | 31 |
Gross unrealized losses | 0 | 0 |
Allowance for credit losses | 0 | |
Amortized cost total | 193 | 192 |
Equity Securities [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 9,679 | 11,562 |
Gross unrealized gains | 4,774 | 6,655 |
Gross unrealized losses | 0 | 0 |
Cost | 4,905 | 4,907 |
Common and Non-redeemable Preferred Stocks [Member] | Financial Services [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 842 | 790 |
Gross unrealized gains | 570 | 516 |
Gross unrealized losses | 0 | 0 |
Cost | 272 | 274 |
Common and Non-redeemable Preferred Stocks [Member] | Other Business - Diversified [Member] | ||
Investments aggregated by type and industry [Abstract] | ||
Estimated fair value | 8,837 | 10,772 |
Gross unrealized gains | 4,204 | 6,139 |
Gross unrealized losses | 0 | 0 |
Cost | $ 4,633 | $ 4,633 |
Investments, Fixed Maturities b
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value [Abstract] | ||
Due in one year or less | $ 123 | $ 3,776 |
Due after one year through five years | 56,828 | 40,150 |
Due after five years through ten years | 35,227 | 44,044 |
Due after ten years | 81,244 | 87,719 |
Asset backed securities | 35,050 | 33,040 |
Carrying value total | 208,472 | 208,729 |
Amortized Cost [Abstract] | ||
Due in one year or less | 125 | 3,797 |
Due after one year through five years | 59,924 | 42,174 |
Due after five years through ten years | 39,835 | 49,711 |
Due after ten years | 95,113 | 103,095 |
Asset backed securities | 40,016 | 37,989 |
Amortized cost total | $ 235,013 | $ 236,766 |
Investments, Securities with Co
Investments, Securities with Continuous Unrealized Loss Position (Details) $ in Thousands | Jun. 30, 2023 USD ($) Securities | Dec. 31, 2022 USD ($) Securities |
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | ||
Less than 12 months | $ 30,134 | $ 159,874 |
12 months or longer | 168,738 | 33,773 |
Total | 198,872 | 193,647 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | ||
Less than 12 months | 859 | 20,326 |
12 months or longer | 26,457 | 8,464 |
Total | $ 27,316 | $ 28,790 |
Number of securities in unrealized loss position | Securities | 248 | 237 |
Allowance for expected credit losses on available-for-sale fixed maturities | $ 0 | $ 0 |
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member] | ||
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | ||
Less than 12 months | 11,404 | 23,763 |
12 months or longer | 36,608 | 19,259 |
Total | 48,012 | 43,022 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | ||
Less than 12 months | 287 | 2,410 |
12 months or longer | 5,661 | 3,516 |
Total | 5,948 | 5,926 |
Allowance for expected credit losses on available-for-sale fixed maturities | 0 | |
Obligations of States and Political Subdivisions [Member] | ||
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | ||
Less than 12 months | 2,143 | 8,183 |
12 months or longer | 6,005 | 0 |
Total | 8,148 | 8,183 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | ||
Less than 12 months | 18 | 1,702 |
12 months or longer | 1,352 | 0 |
Total | 1,370 | 1,702 |
Allowance for expected credit losses on available-for-sale fixed maturities | 0 | |
Corporate Securities [Member] | ||
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract] | ||
Less than 12 months | 16,587 | 127,928 |
12 months or longer | 126,125 | 14,514 |
Total | 142,712 | 142,442 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract] | ||
Less than 12 months | 554 | 16,214 |
12 months or longer | 19,444 | 4,948 |
Total | 19,998 | $ 21,162 |
Allowance for expected credit losses on available-for-sale fixed maturities | $ 0 |
Investments, Summary of Realize
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | $ 70 | $ 0 | $ 70 | $ 0 |
Losses | 0 | (62) | 0 | (72) |
Realized investment losses (gains), net | 70 | (62) | 70 | (72) |
Fixed Maturities [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 70 | 0 | 70 | 0 |
Losses | 0 | (43) | 0 | (53) |
Realized investment losses (gains), net | 70 | (43) | 70 | (53) |
Equity Securities [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 0 | 0 | 0 | 0 |
Losses | 0 | 0 | 0 | 0 |
Realized investment losses (gains), net | 0 | 0 | 0 | 0 |
Other Invested Assets [Member] | ||||
Summary of realized investment gains (losses) [Abstract] | ||||
Gains | 0 | 0 | 0 | 0 |
Losses | 0 | (19) | 0 | (19) |
Realized investment losses (gains), net | $ 0 | $ (19) | $ 0 | $ (19) |
Investments, Unrealized Gains (
Investments, Unrealized Gains (Losses) on Equity Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Investments [Abstract] | ||||
Net realized and unrealized gains (losses) recognized during the period on equity securities | $ 494 | $ (4,866) | $ (1,881) | $ (2,673) |
Less: Net realized gains recognized during the period on equity securities sold during the period | 0 | 0 | 0 | 0 |
Unrealized gains (losses) recognized during the reporting period on equity securities, net | $ 494 | $ (4,866) | $ (1,881) | $ (2,673) |
Investments, Variable Interest
Investments, Variable Interest Entities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Variable Interest Entities [Abstract] | ||
Carrying amount of interest | $ 6,724 | $ 5,386 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
VIE, Not Primary Beneficiary [Member] | Other Invested Assets [Member] | ||
Variable Interest Entities [Abstract] | ||
Carrying amount of interest | 6,724 | 5,386 |
Investment in unconsolidated trusts | 1,238 | 1,238 |
Maximum loss exposure | 7,962 | 6,624 |
Outstanding commitments | $ 4,518 | $ 5,872 |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments, Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | $ 208,472 | $ 208,729 |
Equity securities | 9,679 | 11,562 |
Recurring [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 208,472 | 208,729 |
Equity securities | 9,679 | 11,562 |
Cash equivalents | 15,051 | 18,861 |
Assets at fair value | 233,202 | 239,152 |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 0 | 0 |
Equity securities | 9,525 | 11,406 |
Cash equivalents | 15,051 | 18,861 |
Assets at fair value | 24,576 | 30,267 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 208,472 | 208,729 |
Equity securities | 0 | 0 |
Cash equivalents | 0 | 0 |
Assets at fair value | 208,472 | 208,729 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Financial instruments carried at fair value measured on a recurring basis [Abstract] | ||
Fixed maturities | 0 | 0 |
Equity securities | 154 | 156 |
Cash equivalents | 0 | 0 |
Assets at fair value | $ 154 | $ 156 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments, Estimated Fair Value and Level (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | |
Assets [Abstract] | |||
Fixed maturities | $ 208,472 | $ 208,729 | |
Equity securities | 9,679 | 11,562 | |
Carrying Amount [Member] | |||
Assets [Abstract] | |||
Fixed maturities | [1] | 208,472 | 208,729 |
Equity securities | [1] | 9,679 | 11,562 |
Carrying Amount [Member] | Level 1 [Member] | |||
Assets [Abstract] | |||
Cash and cash equivalents | 24,247 | 28,863 | |
Carrying Amount [Member] | Level 2 [Member] | |||
Assets [Abstract] | |||
Policy loans | 1,811 | 1,759 | |
Investment in unconsolidated trusts | 1,238 | 1,238 | |
Liabilities [Abstract] | |||
Junior subordinated debentures, net | 33,738 | 33,738 | |
Revolving credit facility | 3,000 | 2,009 | |
Carrying Amount [Member] | Level 3 [Member] | |||
Assets [Abstract] | |||
Other invested assets | 6,724 | 5,386 | |
Estimated Fair Value [Member] | |||
Assets [Abstract] | |||
Fixed maturities | [1] | 208,472 | 208,729 |
Equity securities | [1] | 9,679 | 11,562 |
Estimated Fair Value [Member] | Level 1 [Member] | |||
Assets [Abstract] | |||
Cash and cash equivalents | 24,247 | 28,863 | |
Estimated Fair Value [Member] | Level 2 [Member] | |||
Assets [Abstract] | |||
Policy loans | 1,811 | 1,759 | |
Investment in unconsolidated trusts | 1,238 | 1,238 | |
Liabilities [Abstract] | |||
Junior subordinated debentures, net | 32,724 | 33,810 | |
Revolving credit facility | 3,000 | 2,009 | |
Estimated Fair Value [Member] | Level 3 [Member] | |||
Assets [Abstract] | |||
Other invested assets | $ 6,724 | $ 5,386 | |
[1] See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets. |
Internal-Use Software (Details)
Internal-Use Software (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Internal Use Software [Abstract] | ||
Period of initial terms of arrangement | 5 years | |
Period of additional renewal term | 5 years | |
Incurred and capitalized implementation costs | $ 628 | $ 958 |
Capitalized implementation costs | 3,650 | |
Amortization expense | $ 0 | |
Software Capitalized Implementation Costs [Member] | ||
Internal Use Software [Abstract] | ||
Amortization period | 10 years |
Insurance Reserves for Losses_3
Insurance Reserves for Losses and Claims (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||||
Insurance Reserves for Losses and Claims [Roll Forward] | |||||||
Beginning insurance reserves for losses and claims, gross | $ 87,484 | $ 85,620 | |||||
Less: Reinsurance recoverable on unpaid losses | (17,647) | (17,690) | |||||
Beginning insurance reserves for losses and claims, net | 69,837 | 67,930 | |||||
Incurred related to [Abstract] | |||||||
Current accident year | 57,320 | 66,260 | |||||
Prior accident year development | [1] | 1,636 | [2] | (3,195) | [3] | ||
Total incurred | 58,956 | 63,065 | |||||
Paid related to [Abstract] | |||||||
Current accident year | 25,834 | 32,630 | |||||
Prior accident years | 33,019 | 28,754 | |||||
Total paid | 58,853 | 61,384 | |||||
Ending insurance reserves for losses and claims, net | $ 69,940 | $ 69,611 | 69,940 | 69,611 | |||
Plus: Reinsurance recoverable on unpaid losses | 16,044 | 17,487 | 16,044 | 17,487 | |||
Ending insurance reserves for losses and claims, gross | 85,984 | 87,098 | 85,984 | 87,098 | |||
Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract] | |||||||
Total incurred losses | 58,956 | 63,065 | |||||
Cash surrender value and matured endowments | 812 | 1,154 | |||||
Benefit reserve changes | 57 | (297) | |||||
Total insurance benefits and losses incurred | $ 29,365 | $ 32,753 | $ 59,825 | $ 63,922 | |||
[1] In establishing property and casualty reserves, the Company initially reserves for losses at the higher end of the reasonable range if no other value within the range is determined to be more probable. Selection of such an initial loss estimate is an attempt by management to give recognition that initial claims information received generally is not conclusive with respect to legal liability, is generally not comprehensive with respect to magnitude of loss and generally, based on historical experience, will develop more adversely as time passes and more information becomes available. Prior years’ development was primarily the result of unfavorable development in the property and casualty operations due to inflationary factors. Prior years’ development was primarily the result of favorable development in the property and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations. |
Credit Arrangements, Bank Debt
Credit Arrangements, Bank Debt (Details) - Revolving Credit Facility [Member] $ in Thousands | 6 Months Ended | |
May 12, 2021 USD ($) | Jun. 30, 2023 USD ($) | |
Bank Debt [Abstract] | ||
Unsecured credit facility | $ 10,000 | |
Maturity date | Apr. 12, 2024 | |
Outstanding borrowings | $ 3,000 | |
Minimum [Member] | ||
Bank Debt [Abstract] | ||
Indebtedness capital ratio | 0.35 | |
LIBOR [Member] | ||
Bank Debt [Abstract] | ||
Basis spread on variable rate | 2% | |
Interest rate floor | 1% |
Credit Arrangements, Junior Sub
Credit Arrangements, Junior Subordinated Debentures (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 USD ($) Trust Quarter $ / shares shares | ||
Debt Instruments [Abstract] | ||
Number of Connecticut statutory business trusts | Trust | 2 | |
Financial structure of statutory business trusts [Abstract] | ||
Net balance June 30, 2023 | $ 33,738 | |
Net balance December 31, 2022 | $ 33,738 | |
Junior Subordinated Debentures [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Number of consecutive quarters for which interest payments can be deferred | Quarter | 20 | |
Junior Subordinated Debentures [Member] | SOFR [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Basis spread on variable rate | 0.26161% | |
Variable rate term | 3-month | |
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Principal amount owed June 30, 2023 | $ 18,042 | [1],[2] |
Less: Treasury debt | 0 | [1],[2],[3] |
Net balance June 30, 2023 | 18,042 | [1],[2] |
Net balance December 31, 2022 | $ 18,042 | [1],[2] |
Coupon rate | LIBOR + 4.00% | [1],[2] |
Interest payable | Quarterly | [1],[2] |
Maturity date | Dec. 04, 2032 | [1],[2] |
Redeemable by issuer | Yes | [1],[2] |
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Basis spread on variable rate | 4% | |
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Coupon rate | LIBOR + 4.00% | |
Issuance date | Dec. 04, 2002 | |
Securities issued (in shares) | shares | 17,500 | |
Liquidation preference per security (in dollars per share) | $ / shares | $ 1 | |
Liquidation value | $ 17,500 | |
Distribution payable | Quarterly | |
Distribution guaranteed by | Atlantic American Corporation | [4] |
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member] | LIBOR [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Basis spread on variable rate | 4% | |
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Principal amount owed June 30, 2023 | $ 23,196 | [1],[2] |
Less: Treasury debt | (7,500) | [1],[2],[3] |
Net balance June 30, 2023 | 15,696 | [1],[2] |
Net balance December 31, 2022 | $ 15,696 | [1],[2] |
Coupon rate | LIBOR + 4.10% | [1],[2] |
Interest payable | Quarterly | [1],[2] |
Maturity date | May 15, 2033 | [1],[2] |
Redeemable by issuer | Yes | [1],[2] |
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Basis spread on variable rate | 4.10% | |
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Coupon rate | LIBOR + 4.10% | |
Issuance date | May 15, 2003 | |
Securities issued (in shares) | shares | 22,500 | |
Liquidation preference per security (in dollars per share) | $ / shares | $ 1 | |
Liquidation value | $ 22,500 | |
Distribution payable | Quarterly | |
Distribution guaranteed by | Atlantic American Corporation | [4] |
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member] | LIBOR [Member] | ||
Financial structure of statutory business trusts [Abstract] | ||
Basis spread on variable rate | 4.10% | |
[1] For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities. 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. On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures. The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation. |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Basic Earnings (Loss) Per Common Share [Abstract] | ||||
Net income (loss) | $ 1,744 | $ (1,679) | $ 298 | $ 1,163 |
Less: preferred stock dividends | (100) | (100) | (199) | (199) |
Net income (loss) applicable to common shareholders | 1,644 | (1,779) | 99 | 964 |
Diluted Earnings (Loss) Per Common Share [Abstract] | ||||
Effect of Series D preferred stock | 100 | |||
Net income (loss) applicable to common shareholders | $ 1,744 | $ (1,779) | $ 99 | $ 964 |
Weighted Average Shares [Abstract] | ||||
Weighted average shares outstanding, Basic (in shares) | 20,404 | 20,402 | 20,406 | 20,391 |
Effect of Series D preferred stock (in shares) | 1,378 | |||
Weighted average shares outstanding, Diluted (in shares) | 21,782 | 20,402 | 20,406 | 20,391 |
Per Share Amount, Basic [Abstract] | ||||
Net income (loss) applicable to common shareholders, Basic (in dollars per share) | $ 0.08 | $ (0.09) | $ 0 | $ 0.05 |
Per Share Amount, Diluted [Abstract] | ||||
Net income (loss) applicable to common shareholders, Diluted (in dollars per share) | $ 0.08 | $ (0.09) | $ 0 | $ 0.05 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Reconciliation of income tax expense (benefit) [Abstract] | ||||
Federal income tax provision at statutory rate of 21% | $ 466 | $ (444) | $ 84 | $ 353 |
Dividends-received deduction | (10) | (6) | (17) | (12) |
Meals and entertainment | 11 | 10 | 23 | 20 |
Vested stock and club dues | 2 | 0 | 3 | 0 |
Parking disallowance | 4 | 4 | 8 | 8 |
Penalties and fines | 0 | 0 | 0 | 149 |
Income tax expense (benefit) | 473 | (436) | $ 101 | 518 |
Federal statutory income tax rate | 21% | |||
Components of income tax expense (benefit) [Abstract] | ||||
Current - Federal | 1,221 | 1,144 | $ 1,401 | 1,212 |
Deferred - Federal | (748) | (1,580) | (1,300) | (694) |
Income tax expense (benefit) | $ 473 | $ (436) | $ 101 | $ 518 |
Leases (Details)
Leases (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 USD ($) Lease | Jun. 30, 2022 USD ($) | |
Lease description [Abstract] | ||
Number of operating lease agreements | Lease | 2 | |
Lease expense | $ 507 | $ 507 |
Other information on operating leases [Abstract] | ||
Cash payments included in the measurement of lease liabilities reported in operating cash flows | 520 | 512 |
Right-of-use assets included in other assets on the condensed consolidated balance sheet | $ 3,016 | $ 3,781 |
Weighted average discount rate | 6.80% | 6.80% |
Weighted average remaining lease term in years | 3 years 4 months 24 days | 4 years 4 months 24 days |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets | Other Assets |
Maturities and present value of lease liabilities [Abstract] | ||
Remainder of 2023 | $ 528 | |
2024 | 1,065 | |
2025 | 1,083 | |
2026 | 942 | |
Thereafter | 0 | |
Total undiscounted lease payments | 3,618 | |
Less: present value adjustment | 397 | |
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet | $ 3,221 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities | |
Second Lease [Member] | ||
Lease description [Abstract] | ||
Lease term | 10 years | |
Renewal option period | 7 years |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) Segment | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Segment Information [Abstract] | |||||
Number of business units | Segment | 2 | ||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | $ 372,955 | $ 372,955 | $ 367,064 | ||
Revenues | 49,188 | $ 44,669 | 95,457 | $ 96,277 | |
Income (loss) before income taxes | 2,217 | (2,115) | 399 | 1,681 | |
Operating Segments [Member] | American Southern [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 151,902 | 151,902 | 144,455 | ||
Revenues | 18,965 | 19,496 | 37,165 | 38,002 | |
Income (loss) before income taxes | 2,716 | 682 | 2,386 | 2,767 | |
Operating Segments [Member] | Bankers Fidelity [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 192,456 | 192,456 | 195,028 | ||
Revenues | 30,193 | 25,569 | 58,383 | 58,458 | |
Income (loss) before income taxes | 1,851 | (517) | 3,203 | 2,934 | |
Corporate and Other [Member] | |||||
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract] | |||||
Assets | 28,597 | 28,597 | $ 27,581 | ||
Revenues | 30 | (396) | (91) | (183) | |
Income (loss) before income taxes | $ (2,350) | $ (2,280) | $ (5,190) | $ (4,020) |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events [Member] | Aug. 08, 2023 $ / shares |
Subsequent Event [Line Items] | |
Dividend declared | Aug. 08, 2023 |
Cash dividend declared (in dollars per share) | $ 0.02 |
Dividend payable | Aug. 22, 2023 |