Exhibit 99.5
PRO FORMA FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma condensed financial information has been
prepared to reflect the December 31, 1995 acquisition of 100% of the outstanding
common shares of American Southern Insurance Company ('American Southern"). The
pro forma information is presented as if the acquisition, accounted for as a
purchase, had taken place at the beginning of the periods presented, after
giving effect to the pro forma adjustments described below. The pro forma
information is not necessarily indicative of the financial position or results
of operations that would have occurred had the acquisition taken place at the
beginning of such periods. This information should be read in conjunction with
the audited consolidated financial statements and the notes thereto of Atlantic
American Corporation ("Atlantic American"), included in Atlantic American's Form
10-K for the year ended December 31, 1994 and the audited financial statements
of American Southern, included elsewhere herein.
The pro forma combined balance sheet as of September 30, 1995 combines the
balance sheets of Atlantic American as of September 30, 1995, and American
Southern as of September 30, 1995. Pro forma adjustments applied to the
historical financial statements include the following:
(a) Reflects the acquisition costs by Atlantic American
for the purchase of American Southern.
(b) Reflects excess of purchase price over market
value of assets.
(c) Reflects debt used to acquire American Southern.
The pro forma combined statement of income for the year ended December 31,
1994 combines the operations of Atlantic American for the year ended December
31, 1994 and American Southern for the year ended December 31, 1994. The pro
forma combined statement of income for the nine month period ended September 30,
1995 combines the operations of Atlantic American for the nine month period
ended September 30, 1995 and American Southern for the nine month period ended
September 30, 1995. Pro forma adjustments applied to the historical financial
statements include the following:
(a) Reflects an increase in interest expense on
funds incurred for the acquisition.
(b) Reflects the amortization of goodwill.
(c) Reflects Atlantic American's tax sharing
agreement with its subsidiaries.
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ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
09/30/95
(Unaudited)
(In thousands)
Actual
-----------------------
Atlantic American
American Southern Pro Forma Pro Forma
Corporation Insurance Adjustments Combined
Co.
-----------------------------------------------
ASSETS
Cash, including short-term
investments $ 8,975 $ 9,708 $ (236) (a) $ 18,447
Investments 105,853 59,408 - 165,261
Receivables:
Reinsurance 12,766 10,884 - 23,650
Other 11,875 9,944 - 21,819
Deferred acquisition costs 13,220 2,331 - 15,551
Other assets 2,900 1,420 - 4,320
Goodwill - - 3,058 (b) 3,058
Net assets of discontinued
operations 4,569 - - 4,569
-------- ------- ------ --------
Total assets $160,158 $93,695 $2,822 $256,675
======== ======= ====== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Insurance reserves and policy
funds $ 91,577 $59,765 $ - $151,342
Accounts payable and
accrued expenses 5,735 2,752 - 8,487
Long-term debt 4,594 - 34,000 (c) 38,594
Long-term debt payable
to affiliates 19,733 - - 19,733
Minority interest 1,210 - - 1,210
------- ------ ------ -------
Total liabilities 122,849 62,517 34,000 219,366
------- ------ ------ -------
Commitments and contingencies Shareholders' equity:
Preferred stock 3,000 - - 3,000
Other equity 34,309 31,178 (31,178) 34,309
------ ------ ------- ------
Total shareholders' equity 37,309 31,178 (31,178) 37,309
------ ------ ------- ------
Total liabilities and
shareholders' equity $160,158 $93,695 $ 2,822 $256,675
======== ======= ======== ========
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ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended 12/31/94
(In thousands, except per share data)
Actual
----------------------
American
Atlantic Southern
American Insurance Pro Forma ProForma
Corporation Co. Adjustments Combined
----------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
Revenue:
Insurance premiums $41,701 $36,989 $ - $ 78,690
Investment income 6,628 3,844 - 10,472
Realized investment gains, net 870 8 - 878
------ ------ ------ ------
Total revenue 49,199 40,841 - 90,040
------ ------ ------ ------
Benefits and expenses:
Insurance benefits and
losses incurred 21,955 25,599 - 47,554
Commissions and underwriting
expenses 13,355 9,105 - 22,460
Interest expense 1,968 - 2,499 (a) 4,467
Other 5,404 - 243 (b) 5,647
------ ------ ------ ------
Total benefits and
expenses 42,682 34,704 2,742 80,128
------ ------ ------ ------
Income before
income tax benefit,
(expense) 6,517 6,137 (2,742) 9,912
Income tax benefit,
(expense) 546 (1,615) 1,717 (c) 648
------ ------- ------ ------
Income from continuing
operations 7,063 4,522 (1,025) 10,560
Income from discontinued
operations 2,207 - - 2,207
------ ------ ------ ------
Income before
extraordinary gain 9,270 4,522 (1,025) 12,767
Extraordinary gain 100 - - 100
------ ------ ------ ------
Net income $ 9,370 $4,522 $(1,025) $12,867
========= ====== ======= =======
Operating results per common share:
Continuing operations $.37 $.56
Discontinued operations .12 .12
Extraordinary gain NIL NIL
------ ------
Net income per common
share $ .49 $.68
====== ======
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ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF INCOME
For the Nine Months Ended 09/30/95
(Unaudited)
(In thousands, except per share data)
Actual
----------------------
American
Atlantic Southern
American Insurance Pro Forma Pro Forma
Corporation Co. Adjustments Combined
------------------------------------------------
Revenue:
Insurance premiums $32,000 $29,533 $ - $61,533
Investment income 4,830 2,985 - 7,815
Realized investment gains,
net 1,441 203 - 1,644
------ ------ ------ ------
Total revenue 38,271 32,721 - 70,992
------ ------ ------ ------
Benefits and expenses:
Insurance benefits and
losses incurred 19,043 21,794 - 40,837
Commissions and underwriting
expenses 11,000 6,896 - 17,896
Interest expense 1,690 - 2,157 (a) 3,847
Other 4,380 - 153 4,533
------ ------ ------ ------
Total benefits and
expenses 36,113 28,690 2,310 67,113
------ ------ ------ ------
Income before income
tax (expense), benefit 2,158 4,031 (2,310) 3,879
Income tax (expense),
benefit (9) (972) 917 (c) (64)
------ ------ ------ ------
Income from continuing
operations 2,149 3,059 (1,393) 3,815
Income from discontinued
operations (4,384) - - (4,384)
------ ------ ------- ------
Net (loss) income ($2,235) $ 3,059 $(1,393) $ (569)
======= ======= ======= ======
Operating results per common share:
Continuing operations $.10 $.19
Discontinued operations (.23) (.23)
----- -----
Net loss per common share ($.13) $(.04)
===== =====
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