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

FORM 10-Q

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

For the quarterly period ended September 30, 2023

or

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

Commission File Number 0-3722

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

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

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

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

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

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

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

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

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

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

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

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

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

TABLE OF CONTENTS

 
2
     
Part I.
Financial Information
  
     
Item 1.
 3
     
 
3
     
 
4
     
 
5
     
 
6
     
 
7
     
 
8
     
Item 2.
21
     
Item 4.
27
     
Part II.
Other Information
  
     
Item 2.
28
     
Item 5.
28
     
Item 6.
28
     
 
29

FORWARD-LOOKING STATEMENTS

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

2
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

   
Unaudited
September 30,
2023
    
December 31,
2022
  
ASSETS
  
Cash and cash equivalents
  
$
23,921
    
$
28,863
  
Investments:
                
Fixed maturities, available-for-sale, at fair value (amortized cost: $237,213 and $236,766; no allowance for credit losses)
    
203,068
      
208,729
  
Equity securities, at fair value (cost: $4,936 and $4,907)
    
8,224
      
11,562
  
Other invested assets (cost: $6,982 and $5,628)
    
6,398
      
5,386
  
Policy loans
    
1,822
      
1,759
  
Real estate
    
38
      
38
  
Investment in unconsolidated trusts
    
1,238
      
1,238
  
Total investments
    
220,788
      
228,712
  
Receivables:
                
Reinsurance (net of allowance for uncollectible reinsurance of $64 and $0)
    
21,839
      
25,913
  
Insurance premiums and other (net of allowance for expected credit losses $191 and net of allowance for doubtful accounts $177)
    
24,687
      
15,386
  
Deferred income taxes, net
    
17,156
      
14,163
  
Deferred acquisition costs
    
41,926
      
42,281
  
Other assets
    
8,759
      
9,202
  
Intangibles
    
2,544
      
2,544
  
Total assets
  
$
361,620
    
$
367,064
  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Insurance reserves and policyholder funds:
                
Future policy benefits
  
$
84,851
    
$
85,564
  
Unearned premiums
    
30,642
      
28,348
  
Losses and claims
    
85,679
      
87,484
  
Other policy liabilities
    
816
      
1,255
  
Total insurance reserves and policyholder funds
    
201,988
      
202,651
  
Accounts payable and accrued expenses
    
24,129
      
26,473
  
Revolving credit facility
     3,019       2,009  
Junior subordinated debenture obligations, net
    
33,738
      
33,738
  
Total liabilities
    
262,874
      
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
    
53,257
      
51,982
  
Accumulated other comprehensive income
    
(26,975
)
    
(22,149
)
Unearned stock grant compensation
    
(16
)
    
(132
)
Treasury stock, at cost: 1,998,606 and 1,993,665 shares
    
(7,401
)
    
(7,389
)
Total shareholders’ equity
    
98,746
      
102,193
  
Total liabilities and shareholders’ equity
  
$
361,620
    
$
367,064
  

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


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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
     2023     2022  
Revenue:
                        
Insurance premiums, net
  
$
43,746
    
$
46,380
     $ 135,906     $ 140,526  
Net investment income
    
2,325
      
2,641
       7,425       7,510  
Realized investment gains, net
    
—
      
101
       70       29  
Unrealized losses on equity securities, net
    
(1,486
)
    
(2,783
)
     (3,367 )     (5,456 )
Other income
    
6
      
4
       14       11  
Total revenue
    
44,591
      
46,343
       140,048       142,620  
                                 
Benefits and expenses:
                                
Insurance benefits and losses incurred
    
26,818
      
30,630
       86,643       94,552  
Commissions and underwriting expenses
    
11,064
      
12,843
       36,830       35,894  
Interest expense
    
850
      
523
       2,407       1,291  
Other expense
    
3,721
      
3,296
       11,631       10,151  
Total benefits and expenses
    
42,453
      
47,292
       137,511       141,888  
Income (loss) before income taxes
    
2,138
      
(949
)
     2,537       732  
Income tax expense (benefit)
    
379
      
(265
)
     480       253  
Net income (loss)
    
1,759
      
(684
)
     2,057       479  
Preferred stock dividends
    
(100
)
    
(100
)
     (299 )     (299 )
Net income (loss) applicable to common shareholders
  
$
1,659
    
$
(784
)
   $ 1,758     $ 180  
Earnings (loss) per common share (basic)
  $ 0.08     $ (0.04 )   $ 0.09     $ 0.01  
Earnings (loss) per common share (diluted)
   $ 0.08     $ (0.04 )   $ 0.09     $ 0.01  

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
     2023     2022  
Net income (loss)
  
$
1,759
    
$
(684
)
   $ 2,057     $ 479  
Other comprehensive loss:
                                
Available-for-sale fixed maturity securities:
                                
Gross unrealized holding losses arising in the period
    
(7,604
)
    
(12,987
)
     (6,038 )     (54,548 )
Related income tax effect
    
1,596
      
2,727
       1,267       11,455  
Subtotal
    
(6,008
)
    
(10,260
)
     (4,771 )     (43,093 )
Less: reclassification adjustment for net realized gains included in net income (loss)
    
—
      
(101
)
     (70 )     (48 )
Related income tax effect
    
—
      
21
       15       10  
Subtotal
    
—
      
(80
)
     (55 )     (38 )
Total other comprehensive loss, net of tax
    
(6,008
)
    
(10,340
)
     (4,826 )     (43,131 )
Total comprehensive loss  
$
(4,249
)
  
$
(11,024
)
   $ (2,769 )   $ (42,652 )

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

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
     2023     2022  
Preferred stock:
                        
Balance, beginning of period
  
$
55
    
$
55
     $ 55     $ 55  
Balance, end of period
    
55
      
55
       55       55  
Common stock:
                                
Balance, beginning of period
    
22,401
      
22,401
       22,401       22,401  
Balance, end of period
    
22,401
      
22,401
       22,401       22,401  
Additional paid-in capital:
                                
Balance, beginning of period
    
57,425
      
57,443
       57,425       57,441  
Restricted stock grants, net of forfeitures
    
—
      
—
       —       2  
Balance, end of period
    
57,425
      
57,443
       57,425       57,443  
Retained earnings:
                                
Balance, beginning of period
    
52,006
      
51,820
       51,982       51,264  
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2023
     —       —       (75 )     —  
Net income (loss)
    
1,759
      
(684
)
     2,057       479  
Dividends on common stock
    
(408
)
    
—
       (408 )     (408 )
Dividends accrued on preferred stock
    
(100
)
    
(100
)
     (299 )     (299 )
Balance, end of period
    
53,257
      
51,036
       53,257       51,036  
Accumulated other comprehensive loss:
                                
Balance, beginning of period
    
(20,967
)
    
(15,103
)
     (22,149 )     17,688  
Other comprehensive loss, net of tax
    
(6,008
)
    
(10,340
)
     (4,826 )     (43,131 )
Balance, end of period
    
(26,975
)
    
(25,443
)
     (26,975 )     (25,443 )
Unearned stock grant compensation:
                                
Balance, beginning of period
    
(33
)
    
(79
)
     (132 )     (73 )
Restricted stock grants, net of forfeitures
    
—
      
—
       —       (71 )
Amortization of unearned compensation
    
17
      
27
       116       92  
Balance, end of period
    
(16
)
    
(52
)
     (16 )     (52 )
Treasury stock:
                                
Balance, beginning of period
    
(7,401
)
    
(7,436
)
     (7,389 )     (7,490 )
Restricted stock grants, net of forfeitures
    
—
      
—
       —       69  
Net shares acquired related to employee share-based compensation plans
     —       (93 )     (12 )     (108 )
Balance, end of period
    
(7,401
)
    
(7,529
)
     (7,401 )     (7,529 )
                                 
Total shareholders’ equity
  
$
98,746
    
$
97,911
     $ 98,746     $ 97,911  
Dividends declared on common stock per share
  
$
0.02
    
$
—
     $ 0.02     $ 0.02  
                                 
Common shares outstanding:
                                
Balance, beginning of period
     20,402,288       20,398,497       20,407,229       20,378,576  
Net shares acquired under employee share-based compensation plans     —       (31,268 )     (4,941 )     (36,347 )
Restricted stock grants, net of forfeitures
     —       —       —       25,000  
Balance, end of period     20,402,288       20,367,229       20,402,288       20,367,229  

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

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

   
Nine Months Ended
September 30,
  
   
2023
    
2022
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
2,057
    
$
479
  
Adjustments to reconcile net income to net cash used in operating activities:
                
Amortization of (additions to) acquisition costs, net
    
355
      
(2,718
)
Realized investment gains, net
    
(70
)
    
(29
)
Unrealized losses on equity securities, net
    
3,367
      
5,456
  
Losses (earnings) from equity method investees
     343       (275 )
Compensation expense related to share awards
    
116
      
92
  
Depreciation and amortization
    
521
      
683
  
Deferred income tax benefit
    
(1,711
)
    
(1,394
)
Increase in receivables, net
     (5,227 )    
(4,783
)
(Decrease) increase in insurance reserves and policyholder funds
    
(663
)
    
2,492
  
Decrease in accounts payable and accrued expenses
    
(2,644
)
    
(2,350
)
Other, net
    
13
      
101
  
Net cash used in operating activities
    
(3,543
)
    
(2,246
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Proceeds from investments sold
    
5,038
      
3,871
  
Proceeds from investments matured, called or redeemed
    
8,000
      
8,997
  
Investments purchased
    
(14,942
)
    
(13,871
)
Additions to property and equipment
    
(75
)
    
(112
)
Net cash used in investing activities
    
(1,979
)
    
(1,115
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Payment of dividends on common stock
     (408 )     (408 )
Treasury stock acquired — net employee share-based compensation
     (12 )     (108 )
Proceeds from revolving credit facility, net
     1,000       1,000  
Net cash provided by financing activities
    
580
      
484
  
                 
Net decrease in cash and cash equivalents
    
(4,942
)
    
(2,877
)
Cash and cash equivalents at beginning of period
    
28,863
      
24,753
  
Cash and cash equivalents at end of period
  
$
23,921
    
$
21,876
  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
                
Cash paid for interest
  
$
2,370
    
$
1,200
  
Cash paid for income taxes
   $ 2,026     $ 2,164  

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

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


The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”). The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”). The Company’s financial condition and results of operations and cash flows as of and for the three month and nine month periods ended September 30, 2023 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2023 or for any other future period.



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

Note 2.
Recently Issued Accounting Standards


Adoption of New Accounting Standards



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



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



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



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


8

Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



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

   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(11
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
21,839
    
$
64
  



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 September 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the nine months ended September 30, 2023.


   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
14
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
24,687
    
$
191
  



Future Adoption of New Accounting Standards



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



Accounting Policies



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



Credit Impairments of Fixed Maturities



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



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


9

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



Reinsurance Recoverables



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



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



Insurance Premiums and Other Receivables



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

Note 3.
Investments
   

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

Fixed maturities were comprised of the following:
 
   
September 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
  
$
47,576
    
$
1
    
$
6,595
     $ —    
$
54,170
  
Obligations of states and political subdivisions
     7,570
       —
       1,947
       —       9,517
  
Corporate securities:
                                        
Utilities and telecom
     19,693
       —
       4,064
       —       23,757
  
Financial services
     55,897
       369
       8,212
       —       63,740
  
Other business – diversified
     31,035
       87
       5,524
       —       36,472
  
Other consumer – diversified
     41,073
       3
       8,294
       —       49,364
  
Total corporate securities
     147,698
       459
       26,094
       —       173,333
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     224
       31
       —
       —       193
  
Total redeemable preferred stocks
     224
       31
       —
       —       193
  
Total fixed maturities
   $ 203,068     $ 491     $ 34,636     $ —     $ 237,213  
 
10
   
December 31, 2022
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost or
Amortized
Cost
  
Fixed maturities:
                        
Bonds:
                        
U.S. Treasury securities and obligations of U.S. Government agencies and authorities
  
$
44,412
    
$
5
    
$
5,926
    
$
50,333
  
Obligations of states and political subdivisions
     9,187       4
       1,702
       10,885  
Corporate securities:
                                
Utilities and telecom
     22,090       120       3,299       25,269  
Financial services
     59,054       397       7,085       65,742  
Other business – diversified
     31,058       161       4,689       35,586  
Other consumer – diversified
     42,705       35       6,089       48,759  
Total corporate securities
     154,907       713       21,162       175,356  
Redeemable preferred stocks:
                                
Other consumer – diversified
     223       31       —       192  
Total redeemable preferred stocks
     223       31       —       192  
Total fixed maturities
   $ 208,729     $ 753     $ 28,790     $ 236,766  
  

Bonds having an amortized cost of $11,778 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $6,883 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at September 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
September 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 880     $ 577     $ —     $ 303  
Other business – diversified
     7,344
       2,711
       —
       4,633
  
Total equity securities
   $ 8,224     $ 3,288     $ —     $ 4,936  

   
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 September 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.
  
   
September 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 367     $ 375     $ 3,776     $ 3,797  
Due after one year through five years
     57,498
       61,209
       40,150
       42,174
  
Due after five years through ten years
     33,444
       38,759
       44,044
       49,711
  
Due after ten years
     77,744
       97,530
       87,719
       103,095
  
Asset backed securities
     34,015
       39,340
       33,040
       37,989
  
Totals
   $ 203,068     $ 237,213     $ 208,729     $ 236,766  
    
11

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022.
 
   
September 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
   $ 10,205     $ 264     $ 36,873     $ 6,331     $ 47,078     $ 6,595  
Obligations of states and political subdivisions
     2,121       39       5,449       1,908       7,570       1,947  
Corporate securities
     12,457
       748
       129,484
       25,346
       141,941
       26,094
  
Total temporarily impaired securities
   $ 24,783     $ 1,051     $ 171,806     $ 33,585     $ 196,589     $ 34,636  
  
   
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 September 30, 2023 and December 31, 2022, there were 251 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 increases 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. In addition, 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 September 30, 2023.


12
    

The following tables summarize realized investment gains for the three month and nine month periods ended September 30, 2023 and 2022.
   
   
Three Months Ended
September 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
     —       —       —       —  
Realized investment gains, net
  
$
—
    
$
—
    
$
—
    
$
—
  
 
   
Three Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
101
    
$
—
    
$
—
    
$
101
  
Losses
    
—
   
—
      
—
   
—
Realized investment gains, net
  
$
101
 
$
—
    
$
—
 
$
101

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

   
Nine Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ 101     $ —     $ —     $ 101  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains (losses), net
  
$
48
    
$
—
    
$
(19
)
  
$
29
  


The following table presents the change in unrealized losses related to equity securities still held for the three month and nine month periods ended September 30, 2023 and 2022.

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized losses recognized during the period on equity securities
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized losses recognized during the reporting period on equity securities, net
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
  

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 $6,398 and $5,386 as of September 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 September 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 $7,636 and $6,624, as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $4,518 and $5,872, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

13
Note 4.
Fair Values of Financial Instruments


The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates. However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.



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

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

Level 2
Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include 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 September 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $185 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 September 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
  
$
—
    
$
203,068
    
$
—
    
$
203,068
  
Equity securities
    
8,039
      
—
      
185
      
8,224
  
Cash equivalents
    
14,035
      
—
      
—
      
14,035
  
Total
  
$
22,074
    
$
203,068
    
$
185
    
$
225,327
  


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 September 30, 2023 and December 31, 2022.

       
September 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
    
$
23,921
    
$
23,921
    
$
28,863
    
$
28,863
  
Fixed maturities
 Level 2
   
203,068
      
203,068
      
208,729
      
208,729
  
Equity securities
 (1)
   
8,224
      
8,224
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,398
      
6,398
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,822
      
1,822
      
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
      
32,923
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,019       3,019       2,009       2,009  

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

Note 5.
Internal-Use Software


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


Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred.  Implementation expenses incurred related to third party professional and consulting services have been capitalized.  The Company will begin amortizing, on a straight-line basis over the expected ten year term of the hosting arrangement, when the software is substantially ready for its intended use.  The Company incurred and capitalized implementation costs of $1,218 and $1,357 during the nine months ended September 30, 2023 and 2022, respectively.  As a result, the Company has capitalized $4,240 in implementation costs in other assets within its condensed consolidated balance sheet as of September 30, 2023.  The Company expects the software will be substantially ready for its intended use in the first half of 2024. Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the three months and nine months ended September 30, 2023.

Note 6.
Insurance Reserves for Losses and Claims


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

   
Nine Months Ended
September 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
    
82,276
      
96,897
  
Prior accident year development
     2,706 (1)    
(3,544
)(2)
Total incurred
    
84,982
      
93,353
  
                 
Paid related to:
                
Current accident year
    
43,595
      
57,478
  
Prior accident years
    
41,634
      
34,647
  
Total paid
    
85,229
      
92,125
  
Ending insurance reserves for losses and claims, net
    
69,590
      
69,158
  
Plus: Reinsurance recoverable on unpaid losses
    
16,089
      
17,420
  
Ending insurance reserves for losses and claims, gross
  
$
85,679
    
$
86,578
  

(1)
Prior years’ development was primarily the result of unfavorable development in the automobile liability line of business in the property and casualty operations due to inflationary factors.

(2)
Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, as well as favorable development in the surety line of business in the property and casualty operations.

15

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

   
Nine Months Ended
September 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
84,982
    
$
93,353
  
Cash surrender value and matured endowments
    
1,063
      
1,326
  
Benefit reserve changes
    
598
      
(127
)
Total insurance benefits and losses incurred
  
$
86,643
    
$
94,552
  

Note 7.
Credit Arrangements



As expected, discontinuation of London Interbank Offered Rate (“LIBOR”) occurred on June 30, 2023 (“LIBOR Cessation Date”) and affected 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. Prior to July 1, 2023, the Company paid interest on the unpaid principal balance of outstanding revolving loans at the 1-month LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%. Effective July 1, 2023, the interest rate on the unpaid principal balance of outstanding revolving loans is determined based on a reference rate of the 1-month Term Secured Overnight Financing Rate (“SOFR”) published by Chicago Mercantile Exchange Group Benchmark Administration Limited (“CME”) (as defined in the Credit Agreement) plus a spread adjustment of 0.11448% plus 2.00%, subject to a SOFR floor rate of 1.00%.



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 September 30, 2023, the Company had outstanding borrowings including accrued interest of $3,019 under the Credit Agreement.



Junior Subordinated Debentures



The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company; and (iii) engaging in those activities necessary or incidental thereto.


16

The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company.  Prior to July 1, 2023, the interest rate was based on 3-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. Effective July 1, 2023, the interest rate is determined based on a reference rate of the 3-month SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin, ranging from 4.00% to 4.10%.



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

   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed September 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance September 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
18,042
    
$
15,696
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
    
3-Month SOFR + 0.26161 spread adj + 4.10%
  
Interest payable
  
Quarterly
    
Quarterly
  
Maturity date   December 4, 2032     May 15, 2033  
Redeemable by issuer
  
Yes
    
Yes
  
TRUST PREFERRED SECURITIES
                
Issuance date
  
December 4, 2002
    
May 15, 2003
  
Securities issued
    
17,500
      
22,500
  
Liquidation preference per security
  
$
1
    
$
1
  
Liquidation value
  
$
17,500
    
$
22,500
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
     3-Month SOFR + 0.26161 spread adj + 4.10%
  
Distribution payable
  
Quarterly
    
Quarterly
  
Distribution guaranteed by (4)
  
Atlantic American Corporation
    
Atlantic American Corporation
  

(1)
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2)
The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3)
On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.

(4)
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.


Note 8.
Earnings (Loss) Per Common Share



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


   
Three Months Ended
September 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,759       20,402
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,659       20,402
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,759       21,780     $ 0.08  


17
   
Three Months Ended
September 30, 2022
  
    Loss    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (684 )     20,389        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (784 )     20,389
     $ (0.04 )

   
Nine Months Ended
September 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 2,057       20,405
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 1,758       20,405
     $ 0.09  

   
Nine Months Ended
September 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 479     20,390
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 180     20,390
     $ 0.01


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 September 30, 2023, since its impact would have been antidilutive.

Note 9.
Income Taxes



A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense (benefit) is as follows:


   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
449
    
$
(199
)
  
$
533
    
$
154
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(27
)
    
(18
)
Meals and entertainment
    
9
      
29
      
32
      
49
  
Vested stock and club dues
     11       (7 )     14       (7 )
Parking disallowance
    
5
      
4
      
13
      
12
  
Penalties and fines
     —       —       —       149  
Adjustment for prior years’ estimates to actual
     (85 )     (86 )     (85 )     (86 )
Income tax expense (benefit)
  
$
379
    
$
(265
)
  
$
480
    
$
253
  



The components of income tax expense (benefit) were:


   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
790
    
$
435
    
$
2,191
    
$
1,647
  
Deferred – Federal
    
(411
)
    
(700
)
    
(1,711
)
    
(1,394
)
Total
  
$
379
    
$
(265
)
  
$
480
    
$
253
  

18
Note 10.
Leases


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



These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease. Lease expense reported for the nine months ended September 30, 2023 and September 30, 2022 was $761.



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

   
Nine Months Ended
September 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
784
    
$
772
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
2,817
      
3,595
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.1 years
    
4.1 years
  


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

    Lease Liability
 
Remainder of 2023
  
$
264
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,354
  
Less: present value adjustment
    
343
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,011
  


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

Note 11.
Commitments and Contingencies

Litigation



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



Regulatory Matters



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

19
Note 12.
Segment Information
   

The Parent’s primary insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing on specific products. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each business unit is managed independently and is evaluated on its individual performance. The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022.
 
Assets
  
September 30,
2023
    
December 31,
2022
  
American Southern
  
$
142,359
    
$
144,455
  
Bankers Fidelity
    
188,875
      
195,028
  
Corporate and Other
    
30,386
      
27,581
  
Total assets
  
$
361,620
    
$
367,064
  


Revenues
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
17,652
    
$
18,538
     $ 54,817     $ 56,540  
Bankers Fidelity
    
27,249
      
27,641
       85,632       86,099  
Corporate and Other
    
(310
)
    
164
       (401 )     (19 )
Total revenue
  
$
44,591
    
$
46,343
     $ 140,048     $ 142,620  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
1,437
    
$
1,892
     $ 3,823     $ 4,659  
Bankers Fidelity
    
3,502
      
(850
)
     6,705       2,084  
Corporate and Other
    
(2,801
)
    
(1,991
)
     (7,991 )     (6,011 )
Income (loss) before income taxes
  
$
2,138
    
$
(949
)
   $ 2,537     $ 732  
20
Item 2.

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

Overview

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

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

Critical Accounting Policies

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

Overall Corporate Results

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
                         
Insurance premiums, net
  
$
43,746
    
$
46,380
    
$
135,906
    
$
140,526
  
Net investment income
    
2,325
      
2,641
      
7,425
      
7,510
  
Realized investment gains, net
    
—
      
101
      
70
      
29
  
Unrealized losses on equity securities, net
    
(1,486
)
    
(2,783
)
    
(3,367
)
    
(5,456
)
Other income
    
6
      
4
      
14
      
11
  
Total revenue
    
44,591
      
46,343
      
140,048
      
142,620
  
Insurance benefits and losses incurred
    
26,818
      
30,630
      
86,643
      
94,552
  
Commissions and underwriting expenses
    
11,064
      
12,843
      
36,830
      
35,894
  
Interest expense
    
850
      
523
      
2,407
      
1,291
  
Other expense
    
3,721
      
3,296
      
11,631
      
10,151
  
Total benefits and expenses
    
42,453
      
47,292
      
137,511
      
141,888
  
Income (loss) before income taxes
  
$
2,138
    
$
(949
)
  
$
2,537
    
$
732
  
Net income (loss)
  
$
1,759
    
$
(684
)
  
$
2,057
    
$
479
  

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

21
A reconciliation of net income (loss) to operating income for the three month and nine month periods ended September 30, 2023 and the comparable periods in 2022 is as follows:

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
Reconciliation of Non-GAAP Financial Measure
  
2023
    
2022
    
2023
    
2022
  
   
(In thousands)
  
Net income (loss)
  
$
1,759
    
$
(684
)
  
$
2,057
    
$
479
  
Income tax expense (benefit)
    
379
      
(265
)
    
480
      
253
  
Realized investment gains, net
    
—
      
(101
)
    
(70
)
    
(29
)
Unrealized losses on equity securities, net
    
1,486
      
2,783
      
3,367
      
5,456
  
Non-GAAP operating income
  
$
3,624
    
$
1,733
    
$
5,834
    
$
6,159
  

On a consolidated basis, the Company had net income of $1.8 million, or $0.08 per diluted share, for the three month period ended September 30, 2023, compared to net loss of $0.7 million, or $(0.04) per diluted share, for the three month period ended September 30, 2022.  The Company had net income of $2.1 million, or $0.09 per diluted share, for the nine month period ended September 30, 2023, compared to net income of $0.5 million, or $0.01 per diluted share, for the nine month period ended September 30, 2022.  The increase in net income for the three month and nine periods ended September 30, 2023  was primarily the result of a  more favorable loss experience in the life and health operations, from the comparable periods in 2022, coupled with a decrease in unrealized losses on equity securities. Partially offsetting this increase in net income for the nine month period ended September 30, 2023 was an increase in ancillary costs related to the new actuarial valuation system, coupled with an increase in administrative costs related to the growth in the group and individual lines of business within the life and health operations.

For the three month period ended September 30, 2023, premium revenue decreased $2.6 million, or 5.7%, to $43.7 million from $46.4 million in the comparable period in 2022.  For the nine month period ended September 30, 2023, premium revenue decreased $4.6 million, or 3.3%, to $135.9 million from $140.5 million in the comparable period in 2022.  The decrease in premium revenue was primarily attributable to a decrease in the Medicare supplement insurance premiums in the life and health operations. Also contributing to this decrease was a decrease in premium revenue in the automobile physical damage line of business in the property and casualty operations.

Operating income increased $1.9 million in the three month period ended September 30, 2023 from the three month period ended September 30, 2022.  For the nine month period ended September 30, 2023, operating income decreased $0.3 million from the comparable period in 2022.  The increase in operating income for the three month period ended September 30, 2023 was primarily the result of a more favorable loss experience in the life and health operations, from the comparable period in 2022. The decrease in operating income for the nine month period ended September 30, 2023 was primarily attributable to ancillary costs related to the new actuarial valuation system, coupled with an increase in administrative costs related to the growth in the group and individual lines of business within the life and health operations, as mentioned above.

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

American Southern

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(Dollars in thousands)
  
Gross written premiums
  
$
10,860
    
$
12,400
    
$
58,365
    
$
63,558
  
Ceded premiums
    
(1,501
)
    
(1,583
)
    
(4,476
)
    
(4,922
)
Net written premiums
  
$
9,359
    
$
10,817
    
$
53,889
    
$
58,636
  
Net earned premiums
  
$
16,571
    
$
17,641
    
$
51,662
    
$
53,753
  
Insurance benefits and losses incurred
    
11,881
      
12,031
      
38,089
      
36,549
  
Commissions and underwriting expenses
    
4,335
      
4,615
      
12,906
      
15,332
  
Underwriting income
  
$
355
    
$
995
    
$
667
    
$
1,872
  
Loss ratio
    
71.7
%
    
68.2
%
    
73.7
%
    
68.0
%
Expense ratio
    
26.2
      
26.2
      
25.0
      
28.5
  
Combined ratio
    
97.9
%
    
94.4
%
    
98.7
%
    
96.5
%

Gross written premiums at American Southern decreased $1.5 million, or 12.4%, during the three month period ended September 30, 2023 and decreased $5.2 million, or 8.2%, during the nine month period ended September 30, 2023, from the comparable periods in 2022. The decrease in gross written premiums during the three month and nine month periods ended September 30, 2023 was primarily attributable to the decrease in premiums written in the automobile physical damage line of business due to a reduction in the number of agencies.  Partially offsetting the decrease in gross written premiums was an increase in premiums written in the automobile liability line of business due to price increases in certain programs.

22
Ceded premiums decreased $0.1 million, or 5.2%, during the three month period ended September 30, 2023 and decreased $0.4 million, or 9.1%, during the nine month period ended September 30, 2023, from the comparable periods in 2022. American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally increase or decrease as earned premiums increase or decrease.

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(In thousands)
  
Automobile liability
  
$
9,455
    
$
9,546
    
$
29,270
    
$
25,731
  
Automobile physical damage
    
3,534
      
4,179
      
11,574
      
16,649
  
General liability
    
1,399
      
1,532
      
4,250
      
4,391
  
Surety
    
1,592
      
1,485
      
4,696
      
4,453
  
Other lines
    
591
      
899
      
1,872
      
2,529
  
Total
  
$
16,571
    
$
17,641
    
$
51,662
    
$
53,753
  

Net earned premiums decreased $1.1 million, or 6.1%, during the three month period ended September 30, 2023, and $2.1 million, or 3.9%, during the nine month period ended September 30, 2023, over the comparable periods in 2022. The decrease in net earned premiums was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a reduction in the number of agencies as previously mentioned, partially offset during the nine month period ended September 30, 2023, by the increase in the automobile liability line of business.  Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies written during both the current year and immediately preceding year.

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

Insurance benefits and losses incurred at American Southern decreased $0.2 million, or 1.2%, during the three month period ended September 30, 2023, and increased $1.5 million, or 4.2%, during the nine month period ended September 30, 2023, over the comparable periods in 2022. As a percentage of earned premiums, insurance benefits and losses incurred were 71.7% in the three month period ended September 30, 2023, compared to 68.2% in the three month period ended September 30, 2022.  For the nine month period ended September 30, 2023, this ratio increased to 73.7% from 68.0% in the comparable period in 2022.  The increase in the loss ratio during the three month and nine month periods ended September 30, 2023 was mainly due to an increase in the frequency and severity of claims in the automobile liability line of business, as well as in the general liability line of business.  Partially offsetting the increase in the loss ratio was a decrease in losses related to the automobile physical damage line of business due to a decrease in exposure.

Commissions and underwriting expenses decreased $0.3 million, or 6.1%, during the three month period ended September 30, 2023, and $2.4 million, or 15.8% during the nine month period ended September 30, 2023, over the comparable periods in 2022. As a percentage of earned premiums, underwriting expenses were 26.2% in each of the three month periods ended September 30, 2023 and 2022. For the nine month period ended September 30, 2023, this ratio decreased to 25.0% from 28.5% in the comparable period in 2022.  The decrease in the expense ratio during the three month and nine month periods ended September 30, 2023 was primarily due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write. During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.

23
Bankers Fidelity

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

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
   
(Dollars in thousands)
  
Medicare supplement
  
$
32,957
    
$
36,766
    
$
100,815
    
$
112,013
  
Other health products
    
3,525
      
3,392
      
10,907
      
9,314
  
Life insurance
    
4,619
      
3,994
      
14,691
      
12,081
  
Gross earned premiums
    
41,101
      
44,152
      
126,413
      
133,408
  
Ceded premiums
    
(13,926
)
    
(15,413
)
    
(42,169
)
    
(46,635
)
Net earned premiums
    
27,175
      
28,739
      
84,244
      
86,773
  
Insurance benefits and losses incurred
    
14,937
      
18,599
      
48,554
      
58,003
  
Commissions and underwriting expenses
    
8,810
      
9,893
      
30,373
      
26,012
  
Total expenses
    
23,747
      
28,492
      
78,927
      
84,015
  
Underwriting income
  
$
3,428
    
$
247
    
$
5,317
    
$
2,758
  
Loss ratio
    
55.0
%
    
64.7
%
    
57.6
%
    
66.8
%
Expense ratio
    
32.4
      
34.4
      
36.1
      
30.0
  
Combined ratio
    
87.4
%
    
99.1
%
    
93.7
%
    
96.8
%

Net earned premium revenue at Bankers Fidelity decreased $1.6 million, or 5.4%, during the three month period ended September 30, 2023, and $2.5 million, or 2.9%, during the nine month period ended September 30, 2023, from the comparable periods in 2022. Gross earned premiums from the Medicare supplement line of business decreased $3.8 million, or 10.4%, during the three month period ended September 30, 2023, and $11.2 million, or 10.0%, during the nine month period ended September 30, 2023, due primarily to non-renewals exceeding the level of new business writings. Other health product premiums increased $0.1 million, or 3.9%, during the three month period ended September 30, 2023, and $1.6 million, or 17.1%, during the nine month period ended September 30, 2023, over the comparable periods in 2022, primarily as a result of new sales of the company’s group health and individual cancer products. Gross earned premiums from the life insurance line of business increased $0.6 million, or 15.6%, during the three month period ended September 30, 2023, and increased $2.6 million, or 21.6%, during the nine month period ended September 30, 2023, over the comparable periods in 2022, primarily due to an increase in the group life products premium.  Partially offsetting this increase was a decrease in individual life products premium, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales.  Premiums ceded decreased $1.5 million, or 9.6%, during the three month period ended September 30, 2023 and $4.5 million, or 9.6%, during the nine month period ended September 30, 2023, from the comparable periods in 2022.  The decrease in ceded premiums for the three month and nine month periods ended September 30, 2023 was due to a decrease in Medicare supplement premiums subject to reinsurance.

Insurance benefits and losses incurred decreased $3.7 million, or 19.7%, during the three month period ended September 30, 2023, and $9.4 million, or 16.3%, during the nine month period ended September 30, 2023, from the comparable periods in 2022.  As a percentage of earned premiums, benefits and losses were 55.0% in the three month period ended September 30, 2023, compared to 64.7% in the three month period ended September 30, 2022.  For the nine month period ended September 30, 2023, this ratio decreased to 57.6% from 66.8% in the comparable period in 2022.  The decrease in the loss ratio for the three month and nine month periods ended September 30, 2023 was primarily due to improved rate adequacy and a decrease in the number of incurred claims within the Medicare supplement line of business.  This decrease was marginally offset by increased loss ratios on the other health lines of business.

Commissions and underwriting expenses decreased $1.1 million, or 10.9%, during the three month period ended September 30, 2023, and increased $4.4 million, or 16.8%, during the nine month period ended September 30, 2023, over the comparable periods in 2022.  As a percentage of earned premiums, underwriting expenses were 32.4% in the three month period ended September 30, 2023, compared to 34.4% in the three month period ended September 30, 2022.  For the nine month period ended September 30, 2023, this ratio increased to 36.1% from 30.0% in the comparable period in 2022. The decrease in the expense ratio for the three month period ended September 30, 2023 was primarily due to a decrease in commission expenses in the Medicare supplement line of business as a result of non-renewals exceeding the level of new business writings, as previously mentioned.  The increase in the expense ratio for the nine month period ended September 30, 2023 was due to an increase in administrative costs related to the growth in the group and individual lines of business, coupled with increased Medicare supplement servicing costs.

Net Investment Income and Realized Gains

Investment income decreased $0.3 million, or 12.0%, during the three month period ended September 30, 2023, and decreased $0.1 million, or 1.1%, during the nine month period ended September 30, 2023, over the comparable periods in 2022. The decrease in investment income in the three month and nine month periods ended September 30, 2023, from the comparable periods in 2022, was primarily attributable to the decrease in the equity in earnings from investments in the Company's limited liability companies of $0.6 million in each of the aforementioned periods.

The Company had no net realized investment gains during the three month period ended September 30, 2023, compared to net realized investment gains of $0.1 million during the three month period ended September 30, 2022.  The Company had net realized investment gains of $0.1 million during the nine month period ended September 30, 2023 and net realized investment gains of less than $0.1 million during the nine month period ended September 30, 2022.  The net realized investment gains during the nine month period ended September 30, 2023 resulted primarily from the disposition of several of the Company's investments in fixed maturity securities. The net realized investment gains during the three month and nine month periods ended September 30, 2022 resulted primarily from the disposition of several of the Company's investments in fixed maturity securities, partially offset by the redemption of several of the Company’s investments in fixed maturity securities. Management continually evaluates the Company’s investment portfolio and makes adjustments for impairments and/or divests investments as may be determined to be appropriate.

24
Unrealized Losses on Equity Securities

Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period, with certain exceptions. The Company recognized net unrealized losses on equity securities of $1.5 million during the three month period ended September 30, 2023 and unrealized losses on equity securities of $2.8 million during the three month period ended September 30, 2022.  The Company recognized net unrealized losses on equity securities of $3.4 million during the nine month period ended September 30, 2023 and unrealized losses on equity securities of $5.5 million during the nine month period ended September 30, 2022.  Changes in unrealized gains on equity securities for the applicable periods are primarily the result of fluctuations in the market value of certain of the Company’s equity securities.

Interest Expense

Interest expense increased $0.3 million, or 62.5%, during the three month period ended September 30, 2023, and $1.1 million, or 86.4%, during the nine month period ended September 30, 2023, from the comparable periods in 2022. Changes in interest expense were primarily due to changes in the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility are directly related to SOFR. As expected, discontinuation of London Interbank Offered Rate (“LIBOR”) occurred on June 30, 2023, affected the rates used in the Company’s credit arrangements after that date. The U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the "LIBOR Act") to address LIBOR’s cessation and the Board of Governors of the Federal Reserve System (the “Board”) 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. For more details about the LIBOR transition see Note 7 (Credit Arrangements).

Liquidity and Capital Resources

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

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries. The principal cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time. At September 30, 2023, the Parent had approximately $4.8 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $8.9 million for the nine month period ended September 30, 2023, compared to statutory net income of $5.7 million for the nine month period ended September 30, 2022. Statutory results are impacted by the recognition of all costs of acquiring business. In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined under GAAP. Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes. The Company’s life and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations. Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries. At September 30, 2023, American Southern had $53.4 million of statutory capital and surplus and Bankers Fidelity had $37.4 million of statutory capital and surplus. In 2023, dividend payments by the Parent’s insurance subsidiaries in excess of $8.7 million would require prior approval. Through September 30, 2023, the Parent received dividends of $5.4 million from its subsidiaries.

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

25
The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in Junior Subordinated Debentures. The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin. The margin ranges from 4.00% to 4.10%. At September 30, 2023, the effective interest rate was 9.70%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities. Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities. As of September 30, 2023, the Company has not made such an election.

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

At September 30, 2023, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding. All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s controlling shareholder. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative. In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option. The Series D Preferred Stock is not currently convertible. At September 30, 2023, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million.

Bankers Fidelity Life Insurance Company (''BFLIC") is a member of the Federal Home Loan Bank of Atlanta ("FHLB"), for the primary purpose of enhancing financial flexibility. As a member, BFLIC can obtain access to low-cost funding and also receive dividends on FHLB stock. The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.0 million, as of September 30, 2023. Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB.  As of September 30, 2023, BFLIC has pledged bonds having an amortized cost of $6.9 million to the FHLB.  BFLIC may be required to post additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB.  As of September 30, 2023, BFLIC does not have any outstanding borrowings from the FHLB.

On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10.0 million revolving credit facility that matures on April 12, 2024. Under the Credit Agreement, the Company paid interest on the unpaid principal balance of outstanding revolving loans at 1-month SOFR plus a spread adjustment of 0.11448% plus 2.00%, subject to a SOFR floor rate of 1.00%.

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 September 30, 2023, the Company had outstanding borrowings of $3.0 million under the Credit Agreement.

Cash and cash equivalents decreased from $28.9 million at December 31, 2022 to $23.9 million at September 30, 2023. The decrease in cash and cash equivalents during the nine month period ended September 30, 2023 was primarily attributable to net cash used in operating activities of $3.5 million. Also contributing to the decrease in cash and cash equivalents was net cash used in investing activities of $2.0 million primarily as a result of investment purchases exceeding investment sales and maturity of securities. Partially offsetting the decrease in cash and cash equivalents was net cash provided by financing activities of $0.6 million primarily as a result of proceeds from bank financing.

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

26
Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Remediation of Material Weakness in Internal Control Over Financial Reporting

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

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

To address the previously disclosed material weakness, the Company implemented changes in processes that include enhanced controls over the development, testing, and implementation of actuarial models, and additional controls over the reporting of the financial information that is obtained from these models. During the quarter ended September 30, 2023, the Company successfully completed the testing necessary to conclude that the material weakness has been remediated.

Changes in Internal Control Over Financial Reporting

Except for the changes described above, relating to the Company’s remediation efforts, there were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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

27
PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

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

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

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

Period
  
Total Number
of Shares
Purchased
    
Average
Price Paid
per Share
    
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
    
Maximum Number
of Shares that may
Yet be Purchased
Under the Plans
or Programs
  
July 1 – July 31, 2023
    
—
    
$
—
      
—
      
325,129
  
August 1 – August 31, 2023
    
—
      
—
      
—
      
325,129
  
September 1 – September 30, 2023
    
—
      
—
      
—
      
325,129
  
Total
    
—
    
$
—
      
—
          

Item 5. Other Information

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

Item 6. Exhibits

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
   
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
   
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
   
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
   
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
   
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
   
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

28
SIGNATURES

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

 
ATLANTIC AMERICAN CORPORATION
 
(Registrant)
  
       
Date: November 13, 2023
By:
/s/ J. Ross Franklin
  
   
J. Ross Franklin
   
Vice President and Chief Financial Officer
   
(Principal Financial and Accounting Officer)


29
EXHIBIT 31.1

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

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


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


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


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


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


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


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


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


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


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


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


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

Date: November 13, 2023
/s/ Hilton H. Howell, Jr.
 
Hilton H. Howell, Jr.
 
President and Chief Executive Officer


EXHIBIT 31.2

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

I, J. Ross Franklin, certify that:


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


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


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


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


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


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


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


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


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


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


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

Date: November 13, 2023
/s/ J. Ross Franklin
 
J. Ross Franklin
 
Vice President and
 
Chief Financial Officer


EXHIBIT 32.1

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

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


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


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

Date: November 13, 2023
/s/ Hilton H. Howell, Jr.
  
 
Hilton H. Howell, Jr.
  
 
President and Chief Executive Officer
  
     
Date: November 13, 2023
/s/ J. Ross Franklin
  
 
J. Ross Franklin
  
 
Vice President and
  
 
Chief Financial Officer
  

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


v3.23.3
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2023
Oct. 31, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Document Transition Report false  
Entity File Number 0-3722  
Entity Registrant Name ATLANTIC AMERICAN CORP  
Entity Central Index Key 0000008177  
Entity Incorporation, State or Country Code GA  
Entity Tax Identification Number 58-1027114  
Entity Address, Address Line One 4370 Peachtree Road, N.E.  
Entity Address, City or Town Atlanta  
Entity Address, State or Province GA  
Entity Address, Postal Zip Code 30319  
City Area Code 404  
Local Phone Number 266-5500  
Title of 12(b) Security Common Stock, par value $1.00 per share  
Trading Symbol AAME  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   20,402,288
v3.23.3
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
ASSETS    
Cash and cash equivalents $ 23,921 $ 28,863
Investments:    
Fixed maturities, available-for-sale, at fair value (amortized cost: $237,213 and $236,766; no allowance for credit losses) 203,068 208,729
Equity securities, at fair value (cost: $4,936 and $4,907) 8,224 11,562
Other invested assets (cost: $6,982 and $5,628) 6,398 5,386
Policy loans 1,822 1,759
Real estate 38 38
Investment in unconsolidated trusts 1,238 1,238
Total investments 220,788 228,712
Receivables:    
Reinsurance (net of allowance for uncollectible reinsurance of $64 and $0) 21,839 25,913
Insurance premiums and other (net of allowance for expected credit losses $191 and net of allowance for doubtful accounts $177) 24,687 15,386
Deferred income taxes, net 17,156 14,163
Deferred acquisition costs 41,926 42,281
Other assets 8,759 9,202
Intangibles 2,544 2,544
Total assets 361,620 367,064
Insurance reserves and policyholder funds:    
Future policy benefits 84,851 85,564
Unearned premiums 30,642 28,348
Losses and claims 85,679 87,484
Other policy liabilities 816 1,255
Total insurance reserves and policyholder funds 201,988 202,651
Accounts payable and accrued expenses 24,129 26,473
Revolving credit facility 3,019 2,009
Junior subordinated debenture obligations, net 33,738 33,738
Total liabilities 262,874 264,871
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 53,257 51,982
Accumulated other comprehensive income (26,975) (22,149)
Unearned stock grant compensation (16) (132)
Treasury stock, at cost: 1,998,606 and 1,993,665 shares (7,401) (7,389)
Total shareholders' equity 98,746 102,193
Total liabilities and shareholders' equity $ 361,620 $ 367,064
v3.23.3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Investments:    
Fixed maturities, cost $ 237,213 $ 236,766
Allowance for credit losses 0 0
Equity securities, cost 4,936 4,907
Other invested assets, cost 6,982 5,628
Receivables:    
Reinsurance, allowance for uncollectible reinsurance 64 0
Insurance premiums and other, allowance for expected credit losses/allowance for doubtful accounts $ 191 $ 177
Shareholders' equity:    
Preferred stock, par value (in dollars per share) $ 1 $ 1
Preferred stock, shares authorized (in shares) 4,000,000 4,000,000
Preferred stock, shares issued (in shares) 55,000 55,000
Preferred stock, shares outstanding (in shares) 55,000 55,000
Preferred stock, redemption value $ 5,500 $ 5,500
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 50,000,000 50,000,000
Common stock, shares issued (in shares) 22,400,894 22,400,894
Common stock, shares outstanding (in shares) 20,402,288 20,407,229
Treasury stock, at cost (in shares) 1,998,606 1,993,665
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Revenue:        
Insurance premiums, net $ 43,746 $ 46,380 $ 135,906 $ 140,526
Net investment income 2,325 2,641 7,425 7,510
Realized investment gains, net 0 101 70 29
Unrealized losses on equity securities, net (1,486) (2,783) (3,367) (5,456)
Other income 6 4 14 11
Total revenue 44,591 46,343 140,048 142,620
Benefits and expenses:        
Insurance benefits and losses incurred 26,818 30,630 86,643 94,552
Commissions and underwriting expenses 11,064 12,843 36,830 35,894
Interest expense 850 523 2,407 1,291
Other expense 3,721 3,296 11,631 10,151
Total benefits and expenses 42,453 47,292 137,511 141,888
Income (loss) before income taxes 2,138 (949) 2,537 732
Income tax expense (benefit) 379 (265) 480 253
Net income (loss) 1,759 (684) 2,057 479
Preferred stock dividends (100) (100) (299) (299)
Net income (loss) applicable to common shareholders $ 1,659 $ (784) $ 1,758 $ 180
Earnings (loss) per common share (basic) (in dollars per share) $ 0.08 $ (0.04) $ 0.09 $ 0.01
Earnings (loss) per common share (diluted) (in dollars per share) $ 0.08 $ (0.04) $ 0.09 $ 0.01
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]        
Net income (loss) $ 1,759 $ (684) $ 2,057 $ 479
Available-for-sale fixed maturity securities:        
Gross unrealized holding losses arising in the period (7,604) (12,987) (6,038) (54,548)
Related income tax effect 1,596 2,727 1,267 11,455
Subtotal (6,008) (10,260) (4,771) (43,093)
Less: reclassification adjustment for net realized gains included in net income (loss) 0 (101) (70) (48)
Related income tax effect 0 21 15 10
Subtotal 0 (80) (55) (38)
Total other comprehensive loss, net of tax (6,008) (10,340) (4,826) (43,131)
Total comprehensive loss $ (4,249) $ (11,024) $ (2,769) $ (42,652)
v3.23.3
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)       479         $ 479
Other comprehensive loss, net of tax           (43,131)     (43,131)
Dividends on common stock       (408)          
Dividends accrued on preferred stock       (299)          
Restricted stock grants, net of forfeitures     2       (71) 69  
Amortization of unearned compensation             92    
Net shares acquired related to employee share-based compensation plans               (108)  
Balance, end of period at Sep. 30, 2022 55 $ 22,401 57,443 51,036   (25,443) (52) (7,529) $ 97,911
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)   (36,347)              
Restricted stock grants, net of forfeitures (in shares)   25,000              
Balance, end of period (in shares) at Sep. 30, 2022   20,367,229              
Balance, beginning of period at Jun. 30, 2022 55 $ 22,401 57,443 51,820   (15,103) (79) (7,436)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income (loss)       (684)         $ (684)
Other comprehensive loss, net of tax           (10,340)     (10,340)
Dividends on common stock       0          
Dividends accrued on preferred stock       (100)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             27    
Net shares acquired related to employee share-based compensation plans               (93)  
Balance, end of period at Sep. 30, 2022 55 $ 22,401 57,443 51,036   (25,443) (52) (7,529) $ 97,911
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 Jun. 30, 2022   20,398,497              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   (31,268)              
Restricted stock grants, net of forfeitures (in shares)   0              
Balance, end of period (in shares) at Sep. 30, 2022   20,367,229              
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)       2,057         2,057
Other comprehensive loss, net of tax           (4,826)     (4,826)
Dividends on common stock       (408)          
Dividends accrued on preferred stock       (299)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             116    
Net shares acquired related to employee share-based compensation plans               (12)  
Balance, end of period at Sep. 30, 2023 55 $ 22,401 57,425 53,257   (26,975) (16) (7,401) $ 98,746
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, 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 Sep. 30, 2023   20,402,288             20,402,288
Balance, beginning of period at Jun. 30, 2023 55 $ 22,401 57,425 52,006   (20,967) (33) (7,401)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net income (loss)       1,759         $ 1,759
Other comprehensive loss, net of tax           (6,008)     (6,008)
Dividends on common stock       (408)          
Dividends accrued on preferred stock       (100)          
Restricted stock grants, net of forfeitures     0       0 0  
Amortization of unearned compensation             17    
Net shares acquired related to employee share-based compensation plans               0  
Balance, end of period at Sep. 30, 2023 $ 55 $ 22,401 $ 57,425 $ 53,257   $ (26,975) $ (16) $ (7,401) $ 98,746
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 Jun. 30, 2023   20,402,288              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net shares acquired under employee share-based compensation plans (in shares)   0              
Restricted stock grants, net of forfeitures (in shares)   0              
Balance, end of period (in shares) at Sep. 30, 2023   20,402,288             20,402,288
v3.23.3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 2,057 $ 479
Adjustments to reconcile net income to net cash used in operating activities:    
Amortization of (additions to) acquisition costs, net 355 (2,718)
Realized investment gains, net (70) (29)
Unrealized losses on equity securities, net 3,367 5,456
Losses (earnings) from equity method investees 343 (275)
Compensation expense related to share awards 116 92
Depreciation and amortization 521 683
Deferred income tax benefit (1,711) (1,394)
Increase in receivables, net (5,227) (4,783)
(Decrease) increase in insurance reserves and policyholder funds (663) 2,492
Decrease in accounts payable and accrued expenses (2,644) (2,350)
Other, net 13 101
Net cash used in operating activities (3,543) (2,246)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from investments sold 5,038 3,871
Proceeds from investments matured, called or redeemed 8,000 8,997
Investments purchased (14,942) (13,871)
Additions to property and equipment (75) (112)
Net cash used in investing activities (1,979) (1,115)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payment of dividends on common stock (408) (408)
Treasury stock acquired - net employee share-based compensation (12) (108)
Proceeds from revolving credit facility, net 1,000 1,000
Net cash provided by financing activities 580 484
Net decrease in cash and cash equivalents (4,942) (2,877)
Cash and cash equivalents at beginning of period 28,863 24,753
Cash and cash equivalents at end of period 23,921 21,876
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid for interest 2,370 1,200
Cash paid for income taxes $ 2,026 $ 2,164
v3.23.3
Basis of Presentation and Significant Accounting Policies
 9 Months Ended
Sep. 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 nine month periods ended September 30, 2023 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2023 or for any other future period.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.
v3.23.3
Recently Issued Accounting Standards
 9 Months Ended
Sep. 30, 2023
Recently Issued Accounting Standards [Abstract]  
Recently Issued Accounting Standards
Note 2.
Recently Issued Accounting Standards


Adoption of New Accounting Standards



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



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



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



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



Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



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

   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(11
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
21,839
    
$
64
  



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 September 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the nine months ended September 30, 2023.


   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
14
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
24,687
    
$
191
  



Future Adoption of New Accounting Standards



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



Accounting Policies



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



Credit Impairments of Fixed Maturities



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



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



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



Reinsurance Recoverables



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



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



Insurance Premiums and Other Receivables



Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.
v3.23.3
Investments
 9 Months Ended
Sep. 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 September 30, 2023 and December 31, 2022.
  

Fixed maturities were comprised of the following:
 
   
September 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
  
$
47,576
    
$
1
    
$
6,595
     $ —    
$
54,170
  
Obligations of states and political subdivisions
     7,570
       —
       1,947
       —       9,517
  
Corporate securities:
                                        
Utilities and telecom
     19,693
       —
       4,064
       —       23,757
  
Financial services
     55,897
       369
       8,212
       —       63,740
  
Other business – diversified
     31,035
       87
       5,524
       —       36,472
  
Other consumer – diversified
     41,073
       3
       8,294
       —       49,364
  
Total corporate securities
     147,698
       459
       26,094
       —       173,333
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     224
       31
       —
       —       193
  
Total redeemable preferred stocks
     224
       31
       —
       —       193
  
Total fixed maturities
   $ 203,068     $ 491     $ 34,636     $ —     $ 237,213  
 
   
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 $11,778 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $6,883 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at September 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
September 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 880     $ 577     $ —     $ 303  
Other business – diversified
     7,344
       2,711
       —
       4,633
  
Total equity securities
   $ 8,224     $ 3,288     $ —     $ 4,936  

   
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 September 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.
  
   
September 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 367     $ 375     $ 3,776     $ 3,797  
Due after one year through five years
     57,498
       61,209
       40,150
       42,174
  
Due after five years through ten years
     33,444
       38,759
       44,044
       49,711
  
Due after ten years
     77,744
       97,530
       87,719
       103,095
  
Asset backed securities
     34,015
       39,340
       33,040
       37,989
  
Totals
   $ 203,068     $ 237,213     $ 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 September 30, 2023 and December 31, 2022.
 
   
September 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
   $ 10,205     $ 264     $ 36,873     $ 6,331     $ 47,078     $ 6,595  
Obligations of states and political subdivisions
     2,121       39       5,449       1,908       7,570       1,947  
Corporate securities
     12,457
       748
       129,484
       25,346
       141,941
       26,094
  
Total temporarily impaired securities
   $ 24,783     $ 1,051     $ 171,806     $ 33,585     $ 196,589     $ 34,636  
  
   
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 September 30, 2023 and December 31, 2022, there were 251 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 increases 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. In addition, 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 September 30, 2023.


    

The following tables summarize realized investment gains for the three month and nine month periods ended September 30, 2023 and 2022.
   
   
Three Months Ended
September 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
     —       —       —       —  
Realized investment gains, net
  
$
—
    
$
—
    
$
—
    
$
—
  
 
   
Three Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
101
    
$
—
    
$
—
    
$
101
  
Losses
    
—
   
—
      
—
   
—
Realized investment gains, net
  
$
101
 
$
—
    
$
—
 
$
101

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

   
Nine Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ 101     $ —     $ —     $ 101  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains (losses), net
  
$
48
    
$
—
    
$
(19
)
  
$
29
  


The following table presents the change in unrealized losses related to equity securities still held for the three month and nine month periods ended September 30, 2023 and 2022.

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized losses recognized during the period on equity securities
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized losses recognized during the reporting period on equity securities, net
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
  

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 $6,398 and $5,386 as of September 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 September 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 $7,636 and $6,624, as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $4,518 and $5,872, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.
v3.23.3
Fair Values of Financial Instruments
 9 Months Ended
Sep. 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 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 September 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $185 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 September 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
  
$
—
    
$
203,068
    
$
—
    
$
203,068
  
Equity securities
    
8,039
      
—
      
185
      
8,224
  
Cash equivalents
    
14,035
      
—
      
—
      
14,035
  
Total
  
$
22,074
    
$
203,068
    
$
185
    
$
225,327
  


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 September 30, 2023 and December 31, 2022.
       
September 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
    
$
23,921
    
$
23,921
    
$
28,863
    
$
28,863
  
Fixed maturities
 Level 2
   
203,068
      
203,068
      
208,729
      
208,729
  
Equity securities
 (1)
   
8,224
      
8,224
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,398
      
6,398
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,822
      
1,822
      
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
      
32,923
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,019       3,019       2,009       2,009  

(1)
See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.3
Internal-Use Software
 9 Months Ended
Sep. 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 $1,218 and $1,357 during the nine months ended September 30, 2023 and 2022, respectively.  As a result, the Company has capitalized $4,240 in implementation costs in other assets within its condensed consolidated balance sheet as of September 30, 2023.  The Company expects the software will be substantially ready for its intended use in the first half of 2024. Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the three months and nine months ended September 30, 2023.
v3.23.3
Insurance Reserves for Losses and Claims
 9 Months Ended
Sep. 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 nine months ended September 30, 2023 and 2022 is as follows:
   
Nine Months Ended
September 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
    
82,276
      
96,897
  
Prior accident year development
     2,706 (1)    
(3,544
)(2)
Total incurred
    
84,982
      
93,353
  
                 
Paid related to:
                
Current accident year
    
43,595
      
57,478
  
Prior accident years
    
41,634
      
34,647
  
Total paid
    
85,229
      
92,125
  
Ending insurance reserves for losses and claims, net
    
69,590
      
69,158
  
Plus: Reinsurance recoverable on unpaid losses
    
16,089
      
17,420
  
Ending insurance reserves for losses and claims, gross
  
$
85,679
    
$
86,578
  

(1)
Prior years’ development was primarily the result of unfavorable development in the automobile liability line of business in the property and casualty operations due to inflationary factors.

(2)
Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, as well as favorable development in the surety line of business in the property and casualty operations.


Following is a reconciliation of total incurred losses to total insurance benefits and losses incurred:
   
Nine Months Ended
September 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
84,982
    
$
93,353
  
Cash surrender value and matured endowments
    
1,063
      
1,326
  
Benefit reserve changes
    
598
      
(127
)
Total insurance benefits and losses incurred
  
$
86,643
    
$
94,552
  
v3.23.3
Credit Arrangements
 9 Months Ended
Sep. 30, 2023
Credit Arrangements [Abstract]  
Credit Arrangements
Note 7.
Credit Arrangements



As expected, discontinuation of London Interbank Offered Rate (“LIBOR”) occurred on June 30, 2023 (“LIBOR Cessation Date”) and affected 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. Prior to July 1, 2023, the Company paid interest on the unpaid principal balance of outstanding revolving loans at the 1-month LIBOR Rate (as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR floor rate of 1.00%. Effective July 1, 2023, the interest rate on the unpaid principal balance of outstanding revolving loans is determined based on a reference rate of the 1-month Term Secured Overnight Financing Rate (“SOFR”) published by Chicago Mercantile Exchange Group Benchmark Administration Limited (“CME”) (as defined in the Credit Agreement) plus a spread adjustment of 0.11448% plus 2.00%, subject to a SOFR floor rate of 1.00%.



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 September 30, 2023, the Company had outstanding borrowings including accrued interest of $3,019 under the Credit Agreement.

Junior Subordinated Debentures



The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company; and (iii) engaging in those activities necessary or incidental thereto.



The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company.  Prior to July 1, 2023, the interest rate was based on 3-month LIBOR plus an applicable margin. The margin ranges from 4.00% to 4.10%. Effective July 1, 2023, the interest rate is determined based on a reference rate of the 3-month SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin, ranging from 4.00% to 4.10%.



The financial structure of each of Atlantic American Statutory Trust I and II as of September 30, 2023 was as follows:
   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed September 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance September 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
18,042
    
$
15,696
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
    
3-Month SOFR + 0.26161 spread adj + 4.10%
  
Interest payable
  
Quarterly
    
Quarterly
  
Maturity date   December 4, 2032     May 15, 2033  
Redeemable by issuer
  
Yes
    
Yes
  
TRUST PREFERRED SECURITIES
                
Issuance date
  
December 4, 2002
    
May 15, 2003
  
Securities issued
    
17,500
      
22,500
  
Liquidation preference per security
  
$
1
    
$
1
  
Liquidation value
  
$
17,500
    
$
22,500
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
     3-Month SOFR + 0.26161 spread adj + 4.10%
  
Distribution payable
  
Quarterly
    
Quarterly
  
Distribution guaranteed by (4)
  
Atlantic American Corporation
    
Atlantic American Corporation
  

(1)
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2)
The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3)
On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.

(4)
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
v3.23.3
Earnings (Loss) Per Common Share
 9 Months Ended
Sep. 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
September 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,759       20,402
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,659       20,402
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,759       21,780     $ 0.08  


   
Three Months Ended
September 30, 2022
  
    Loss    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (684 )     20,389        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (784 )     20,389
     $ (0.04 )

   
Nine Months Ended
September 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 2,057       20,405
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 1,758       20,405
     $ 0.09  

   
Nine Months Ended
September 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 479     20,390
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 180     20,390
     $ 0.01


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 September 30, 2023, since its impact would have been antidilutive.
v3.23.3
Income Taxes
 9 Months Ended
Sep. 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
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
449
    
$
(199
)
  
$
533
    
$
154
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(27
)
    
(18
)
Meals and entertainment
    
9
      
29
      
32
      
49
  
Vested stock and club dues
     11       (7 )     14       (7 )
Parking disallowance
    
5
      
4
      
13
      
12
  
Penalties and fines
     —       —       —       149  
Adjustment for prior years’ estimates to actual
     (85 )     (86 )     (85 )     (86 )
Income tax expense (benefit)
  
$
379
    
$
(265
)
  
$
480
    
$
253
  



The components of income tax expense (benefit) were:
   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
790
    
$
435
    
$
2,191
    
$
1,647
  
Deferred – Federal
    
(411
)
    
(700
)
    
(1,711
)
    
(1,394
)
Total
  
$
379
    
$
(265
)
  
$
480
    
$
253
  
v3.23.3
Leases
 9 Months Ended
Sep. 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 nine months ended September 30, 2023 and September 30, 2022 was $761.



Additional information regarding the Company’s real estate operating leases is as follows:
   
Nine Months Ended
September 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
784
    
$
772
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
2,817
      
3,595
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.1 years
    
4.1 years
  


The following table presents maturities and present value of the Company’s lease liabilities:
    Lease Liability
 
Remainder of 2023
  
$
264
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,354
  
Less: present value adjustment
    
343
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,011
  


As of September 30, 2023, the Company has no operating leases that have not yet commenced.
v3.23.3
Commitments and Contingencies
 9 Months Ended
Sep. 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 arising in the ordinary course of its business. In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.

Regulatory Matters

Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business. Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners.  From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various matters. In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company.
v3.23.3
Segment Information
 9 Months Ended
Sep. 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
  
September 30,
2023
    
December 31,
2022
  
American Southern
  
$
142,359
    
$
144,455
  
Bankers Fidelity
    
188,875
      
195,028
  
Corporate and Other
    
30,386
      
27,581
  
Total assets
  
$
361,620
    
$
367,064
  


Revenues
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
17,652
    
$
18,538
     $ 54,817     $ 56,540  
Bankers Fidelity
    
27,249
      
27,641
       85,632       86,099  
Corporate and Other
    
(310
)
    
164
       (401 )     (19 )
Total revenue
  
$
44,591
    
$
46,343
     $ 140,048     $ 142,620  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
1,437
    
$
1,892
     $ 3,823     $ 4,659  
Bankers Fidelity
    
3,502
      
(850
)
     6,705       2,084  
Corporate and Other
    
(2,801
)
    
(1,991
)
     (7,991 )     (6,011 )
Income (loss) before income taxes
  
$
2,138
    
$
(949
)
   $ 2,537     $ 732  
v3.23.3
Recently Issued Accounting Standards (Policies)
 9 Months Ended
Sep. 30, 2023
Recently Issued Accounting Standards [Abstract]  
Adoption of New Accounting Standards

Adoption of New Accounting Standards



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



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



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



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



Impact of Adoption on Condensed Consolidated Balance Sheet



Reinsurance Recoverables



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

   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(11
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
21,839
    
$
64
  



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 September 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the nine months ended September 30, 2023.


   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
14
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
24,687
    
$
191
  



Future Adoption of New Accounting Standards



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

Credit Impairments of Fixed Maturities



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



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



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

Reinsurance Recoverables



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



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

Insurance Premiums and Other Receivables



Receivables amounts due from insureds and agents are evaluated periodically for collectibility. Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related receivable. An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.
v3.23.3
Recently Issued Accounting Standards (Tables)
 9 Months Ended
Sep. 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 September 30, 2023, and the changes in the allowance for estimated uncollectible reinsurance for the nine months ended September 30, 2023.

   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Reinsurance Recoverables,
Net of Allowance for Estimated
Uncollectible Reinsurance
    
Allowance for Estimated
Uncollectible Reinsurance
  
Balance, beginning of period
  
$
25,913
    
$
—
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
75
  
Current period change for estimated uncollectible reinsurance
     —      
(11
)
Write-offs of uncollectible reinsurance recoverables
     —      
—
  
Balance, end of period
  
$
21,839
    
$
64
  
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 September 30, 2023, and the changes in the allowance for doubtful accounts/expected credit losses for the nine months ended September 30, 2023.


   
At and for the nine months ended September 30, 2023
  
(in thousands)
  
Insurance Premiums and Other,
Net of Expected Credit Losses
    
Allowance for Doubtful
Accounts/Expected Credit
Losses
  
Balance, beginning of period
  
$
15,386
    
$
177
  
Cumulative effect of adoption of updated accounting guidance for
 credit losses at January 1, 2023
     —      
—
  
Current period change for expected credit losses
     —      
14
  
Write-offs of uncollectible insurance premiums and other receivables
     —       —  
Balance, end of period
  
$
24,687
    
$
191
  
v3.23.3
Investments (Tables)
 9 Months Ended
Sep. 30, 2023
Investments [Abstract]  
Investments Aggregated by Type and Industry

Fixed maturities were comprised of the following:
 
   
September 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
  
$
47,576
    
$
1
    
$
6,595
     $ —    
$
54,170
  
Obligations of states and political subdivisions
     7,570
       —
       1,947
       —       9,517
  
Corporate securities:
                                        
Utilities and telecom
     19,693
       —
       4,064
       —       23,757
  
Financial services
     55,897
       369
       8,212
       —       63,740
  
Other business – diversified
     31,035
       87
       5,524
       —       36,472
  
Other consumer – diversified
     41,073
       3
       8,294
       —       49,364
  
Total corporate securities
     147,698
       459
       26,094
       —       173,333
  
Redeemable preferred stocks:
                                        
Other consumer – diversified
     224
       31
       —
       —       193
  
Total redeemable preferred stocks
     224
       31
       —
       —       193
  
Total fixed maturities
   $ 203,068     $ 491     $ 34,636     $ —     $ 237,213  
 
   
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 $11,778 and $12,333 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2023 and December 31, 2022, respectively, in accordance with statutory requirements. Additionally, bonds having an amortized cost of $6,883 and $7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at September 30, 2023 and December 31, 2022, respectively.



Equity securities were comprised of the following:
   
   
September 30, 2023
  
   
Estimated
Fair Value
    
Gross
Unrealized
Gains
    
Gross
Unrealized
Losses
    
Cost
  
Equity securities:
                        
Common and non-redeemable preferred stocks:
                        
Financial services
   $ 880     $ 577     $ —     $ 303  
Other business – diversified
     7,344
       2,711
       —
       4,633
  
Total equity securities
   $ 8,224     $ 3,288     $ —     $ 4,936  

   
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 September 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.
  
   
September 30, 2023
    
December 31, 2022
  
   
Carrying
Value
    
Amortized
Cost
    
Carrying
Value
    
Amortized
Cost
  
Due in one year or less
   $ 367     $ 375     $ 3,776     $ 3,797  
Due after one year through five years
     57,498
       61,209
       40,150
       42,174
  
Due after five years through ten years
     33,444
       38,759
       44,044
       49,711
  
Due after ten years
     77,744
       97,530
       87,719
       103,095
  
Asset backed securities
     34,015
       39,340
       33,040
       37,989
  
Totals
   $ 203,068     $ 237,213     $ 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 September 30, 2023 and December 31, 2022.
 
   
September 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
   $ 10,205     $ 264     $ 36,873     $ 6,331     $ 47,078     $ 6,595  
Obligations of states and political subdivisions
     2,121       39       5,449       1,908       7,570       1,947  
Corporate securities
     12,457
       748
       129,484
       25,346
       141,941
       26,094
  
Total temporarily impaired securities
   $ 24,783     $ 1,051     $ 171,806     $ 33,585     $ 196,589     $ 34,636  
  
   
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 for the three month and nine month periods ended September 30, 2023 and 2022.
   
   
Three Months Ended
September 30, 2023
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
—
    
$
—
    
$
—
    
$
—
  
Losses
     —       —       —       —  
Realized investment gains, net
  
$
—
    
$
—
    
$
—
    
$
—
  
 
   
Three Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains
  
$
101
    
$
—
    
$
—
    
$
101
  
Losses
    
—
   
—
      
—
   
—
Realized investment gains, net
  
$
101
 
$
—
    
$
—
 
$
101

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

   
Nine Months Ended
September 30, 2022
  
   
Fixed
Maturities
    
Equity
Securities
    
Other
Invested Assets
    
Total
  
Gains   $ 101     $ —     $ —     $ 101  
Losses
    
(53
)
    
—
      
(19
)
    
(72
)
Realized investment gains (losses), net
  
$
48
    
$
—
    
$
(19
)
  
$
29
  
Unrealized Gains (Losses) on Equity Securities

The following table presents the change in unrealized losses related to equity securities still held for the three month and nine month periods ended September 30, 2023 and 2022.

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
    2023     2022
    2023
     2022  
Net realized and unrealized losses recognized during the period on equity securities
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
Less: Net realized gains recognized during the period on equity securities sold during the period
    
—
      
—
       —       —  
Unrealized losses recognized during the reporting period on equity securities, net
  
$
(1,486
)
  
$
(2,783
)
   $ (3,367 )   $ (5,456 )
v3.23.3
Fair Values of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2023
Fair Values of Financial Instruments [Abstract]  
Financial Instruments Carried at Fair Value Measured on a Recurring Basis

As of September 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
  
$
—
    
$
203,068
    
$
—
    
$
203,068
  
Equity securities
    
8,039
      
—
      
185
      
8,224
  
Cash equivalents
    
14,035
      
—
      
—
      
14,035
  
Total
  
$
22,074
    
$
203,068
    
$
185
    
$
225,327
  


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 September 30, 2023 and December 31, 2022.
       
September 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
    
$
23,921
    
$
23,921
    
$
28,863
    
$
28,863
  
Fixed maturities
 Level 2
   
203,068
      
203,068
      
208,729
      
208,729
  
Equity securities
 (1)
   
8,224
      
8,224
      
11,562
      
11,562
  
Other invested assets
Level 3
      
6,398
      
6,398
      
5,386
      
5,386
  
Policy loans
Level 2
      
1,822
      
1,822
      
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
      
32,923
      
33,738
      
33,810
  
Revolving credit facility
  Level 2       3,019       3,019       2,009       2,009  

(1)
See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.3
Insurance Reserves for Losses and Claims (Tables)
 9 Months Ended
Sep. 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 nine months ended September 30, 2023 and 2022 is as follows:
   
Nine Months Ended
September 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
    
82,276
      
96,897
  
Prior accident year development
     2,706 (1)    
(3,544
)(2)
Total incurred
    
84,982
      
93,353
  
                 
Paid related to:
                
Current accident year
    
43,595
      
57,478
  
Prior accident years
    
41,634
      
34,647
  
Total paid
    
85,229
      
92,125
  
Ending insurance reserves for losses and claims, net
    
69,590
      
69,158
  
Plus: Reinsurance recoverable on unpaid losses
    
16,089
      
17,420
  
Ending insurance reserves for losses and claims, gross
  
$
85,679
    
$
86,578
  

(1)
Prior years’ development was primarily the result of unfavorable development in the automobile liability line of business in the property and casualty operations due to inflationary factors.

(2)
Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, as well as favorable development in the surety line of business in the property and casualty 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:
   
Nine Months Ended
September 30,
  
   
2023
    
2022
  
Total incurred losses
  
$
84,982
    
$
93,353
  
Cash surrender value and matured endowments
    
1,063
      
1,326
  
Benefit reserve changes
    
598
      
(127
)
Total insurance benefits and losses incurred
  
$
86,643
    
$
94,552
  
v3.23.3
Credit Arrangements (Tables)
 9 Months Ended
Sep. 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 September 30, 2023 was as follows:
   
Atlantic American
Statutory Trust I
    
Atlantic American
Statutory Trust II
  
JUNIOR SUBORDINATED DEBENTURES (1) (2)
            
Principal amount owed September 30, 2023
  
$
18,042
    
$
23,196
  
Less: Treasury debt (3)
    
—
      
(7,500
)
Net balance September 30, 2023
  
$
18,042
    
$
15,696
  
Net balance December 31, 2022
  
$
18,042
    
$
15,696
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
    
3-Month SOFR + 0.26161 spread adj + 4.10%
  
Interest payable
  
Quarterly
    
Quarterly
  
Maturity date   December 4, 2032     May 15, 2033  
Redeemable by issuer
  
Yes
    
Yes
  
TRUST PREFERRED SECURITIES
                
Issuance date
  
December 4, 2002
    
May 15, 2003
  
Securities issued
    
17,500
      
22,500
  
Liquidation preference per security
  
$
1
    
$
1
  
Liquidation value
  
$
17,500
    
$
22,500
  
Coupon rate
  
3-Month SOFR + 0.26161 spread adj + 4.00%
     3-Month SOFR + 0.26161 spread adj + 4.10%
  
Distribution payable
  
Quarterly
    
Quarterly
  
Distribution guaranteed by (4)
  
Atlantic American Corporation
    
Atlantic American Corporation
  

(1)
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2)
The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3)
On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.

(4)
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
v3.23.3
Earnings (Loss) Per Common Share (Tables)
 9 Months Ended
Sep. 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
September 30, 2023
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic Earnings Per Common Share:
                  
Net income
   $ 1,759       20,402
        
Less preferred stock dividends
     (100 )     —
        
   Net income applicable to common shareholders
     1,659       20,402
    
0.08  
Diluted Earnings Per Common Share:                        
Effect of Series D preferred stock     100       1,378          
Net income applicable to common shareholders
   $ 1,759       21,780     $ 0.08  


   
Three Months Ended
September 30, 2022
  
    Loss    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Loss Per Common Share:
                  
Net loss
   $ (684 )     20,389        
Less preferred stock dividends
     (100 )     —        
   Net loss applicable to common shareholders
   $ (784 )     20,389
     $ (0.04 )

   
Nine Months Ended
September 30, 2023
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 2,057       20,405
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 1,758       20,405
     $ 0.09  

   
Nine Months Ended
September 30, 2022
  
   
Income
    
Weighted
Average Shares
(In thousands)
    
Per Share
Amount
  
Basic and Diluted Earnings Per Common Share:
                  
Net income
   $ 479     20,390
      
 
Less preferred stock dividends
     (299 )     —
          
Net income applicable to common shareholders
   $ 180     20,390
     $ 0.01
v3.23.3
Income Taxes (Tables)
 9 Months Ended
Sep. 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
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Federal income tax provision at statutory rate of 21%
  
$
449
    
$
(199
)
  
$
533
    
$
154
  
Dividends-received deduction
    
(10
)
    
(6
)
    
(27
)
    
(18
)
Meals and entertainment
    
9
      
29
      
32
      
49
  
Vested stock and club dues
     11       (7 )     14       (7 )
Parking disallowance
    
5
      
4
      
13
      
12
  
Penalties and fines
     —       —       —       149  
Adjustment for prior years’ estimates to actual
     (85 )     (86 )     (85 )     (86 )
Income tax expense (benefit)
  
$
379
    
$
(265
)
  
$
480
    
$
253
  
Components of Income Tax Expense

The components of income tax expense (benefit) were:
   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
    
2022
    
2023
    
2022
  
Current – Federal
  
$
790
    
$
435
    
$
2,191
    
$
1,647
  
Deferred – Federal
    
(411
)
    
(700
)
    
(1,711
)
    
(1,394
)
Total
  
$
379
    
$
(265
)
  
$
480
    
$
253
  
v3.23.3
Leases (Tables)
 9 Months Ended
Sep. 30, 2023
Leases [Abstract]  
Additional Information of Operating Leases

Additional information regarding the Company’s real estate operating leases is as follows:
   
Nine Months Ended
September 30,
  
Other information on operating leases:
  
2023
   
2022
 
Cash payments included in the measurement of lease liabilities reported in operating cash flows
  
$
784
    
$
772
  
Right-of-use assets included in other assets on the condensed consolidated balance sheet
    
2,817
      
3,595
  
Weighted average discount rate
    
6.8
%
    
6.8
%
Weighted average remaining lease term in years
  
3.1 years
    
4.1 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
  
$
264
  
2024
    
1,065
  
2025
    
1,083
  
2026
    
942
  
Thereafter
    
—
  
Total undiscounted lease payments
    
3,354
  
Less: present value adjustment
    
343
  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
  
$
3,011
  
v3.23.3
Segment Information (Tables)
 9 Months Ended
Sep. 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
  
September 30,
2023
    
December 31,
2022
  
American Southern
  
$
142,359
    
$
144,455
  
Bankers Fidelity
    
188,875
      
195,028
  
Corporate and Other
    
30,386
      
27,581
  
Total assets
  
$
361,620
    
$
367,064
  


Revenues
  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2023
     2022    
2023
     2022  
American Southern
  
$
17,652
    
$
18,538
     $ 54,817     $ 56,540  
Bankers Fidelity
    
27,249
      
27,641
       85,632       86,099  
Corporate and Other
    
(310
)
    
164
       (401 )     (19 )
Total revenue
  
$
44,591
    
$
46,343
     $ 140,048     $ 142,620  
 
 Income (Loss) Before Income Taxes  
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  

 
2023
    
2022
    
2023
     2022  
American Southern
  
$
1,437
    
$
1,892
     $ 3,823     $ 4,659  
Bankers Fidelity
    
3,502
      
(850
)
     6,705       2,084  
Corporate and Other
    
(2,801
)
    
(1,991
)
     (7,991 )     (6,011 )
Income (loss) before income taxes
  
$
2,138
    
$
(949
)
   $ 2,537     $ 732  
v3.23.3
Basis of Presentation and Significant Accounting Policies (Details)
 9 Months Ended
Sep. 30, 2023
Segment
Basis of Presentation and Significant Accounting Policies [Abstract]  
Number of business units 2
v3.23.3
Recently Issued Accounting Standards, Reinsurance Recoverables (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2023
USD ($)
Financial Instruments - Credit Losses [Abstract]  
Allowance for credit losses $ 64
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 25,913
Balance, end of period 21,839
Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 0
Current period change for estimated uncollectible reinsurance (11)
Write-offs of uncollectible reinsurance recoverables 0
Balance, end of period 64
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]  
Financial Instruments - Credit Losses [Abstract]  
Allowance for credit losses  
Reinsurance Recoverables, Net of Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period 0
Allowance for Estimated Uncollectible Reinsurance [Abstract]  
Balance, beginning of period $ 75
v3.23.3
Recently Issued Accounting Standards, Insurance Premium and Other Receivables (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2023
USD ($)
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract]  
Balance, beginning of period $ 15,386
Balance, end of period 24,687
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract]  
Balance, beginning of period 177
Current period change for expected credit losses 14
Write-offs of uncollectible insurance premiums and other receivables 0
Balance, end of period 191
ASU 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]  
Insurance Premiums and Other, Net of Expected Credit Losses [Abstract]  
Balance, beginning of period 0
Allowance for Doubtful Accounts/Expected Credit Losses [Abstract]  
Balance, beginning of period $ 0
v3.23.3
Investments, Aggregated by Type and Industry (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Investments aggregated by type and industry [Abstract]    
Estimated fair value $ 203,068 $ 208,729
Allowance for credit losses 0 0
Amortized cost total 237,213 236,766
Estimated fair value 8,224 11,562
Cost 4,936 4,907
Amortized cost of bonds on deposit with insurance regulatory authorities 11,778 12,333
Bonds Pledged as Collateral [Member] | FHLB Advances [Member]    
Investments aggregated by type and industry [Abstract]    
Amortized cost pledged as collateral to FHLB 6,883 7,221
Fixed Maturities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 203,068 208,729
Gross unrealized gains 491 753
Gross unrealized losses 34,636 28,790
Allowance for credit losses 0  
Amortized cost total 237,213 236,766
U.S. Treasury Securities and Obligations of U.S. Government Agencies and Authorities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 47,576 44,412
Gross unrealized gains 1 5
Gross unrealized losses 6,595 5,926
Allowance for credit losses 0  
Amortized cost total 54,170 50,333
Obligations of States and Political Subdivisions [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 7,570 9,187
Gross unrealized gains 0 4
Gross unrealized losses 1,947 1,702
Allowance for credit losses 0  
Amortized cost total 9,517 10,885
Corporate Securities [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 147,698 154,907
Gross unrealized gains 459 713
Gross unrealized losses 26,094 21,162
Allowance for credit losses 0  
Amortized cost total 173,333 175,356
Corporate Securities [Member] | Utilities and Telecom [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 19,693 22,090
Gross unrealized gains 0 120
Gross unrealized losses 4,064 3,299
Allowance for credit losses 0  
Amortized cost total 23,757 25,269
Corporate Securities [Member] | Financial Services [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 55,897 59,054
Gross unrealized gains 369 397
Gross unrealized losses 8,212 7,085
Allowance for credit losses 0  
Amortized cost total 63,740 65,742
Corporate Securities [Member] | Other Business - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 31,035 31,058
Gross unrealized gains 87 161
Gross unrealized losses 5,524 4,689
Allowance for credit losses 0  
Amortized cost total 36,472 35,586
Corporate Securities [Member] | Other Consumer - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 41,073 42,705
Gross unrealized gains 3 35
Gross unrealized losses 8,294 6,089
Allowance for credit losses 0  
Amortized cost total 49,364 48,759
Redeemable Preferred Stocks [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 224 223
Gross unrealized gains 31 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 224 223
Gross unrealized gains 31 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 8,224 11,562
Gross unrealized gains 3,288 6,655
Gross unrealized losses 0 0
Cost 4,936 4,907
Common and Non-redeemable Preferred Stocks [Member] | Financial Services [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 880 790
Gross unrealized gains 577 516
Gross unrealized losses 0 0
Cost 303 274
Common and Non-redeemable Preferred Stocks [Member] | Other Business - Diversified [Member]    
Investments aggregated by type and industry [Abstract]    
Estimated fair value 7,344 10,772
Gross unrealized gains 2,711 6,139
Gross unrealized losses 0 0
Cost $ 4,633 $ 4,633
v3.23.3
Investments, Fixed Maturities by Contractual Maturities (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Carrying Value [Abstract]    
Due in one year or less $ 367 $ 3,776
Due after one year through five years 57,498 40,150
Due after five years through ten years 33,444 44,044
Due after ten years 77,744 87,719
Asset backed securities 34,015 33,040
Carrying value total 203,068 208,729
Amortized Cost [Abstract]    
Due in one year or less 375 3,797
Due after one year through five years 61,209 42,174
Due after five years through ten years 38,759 49,711
Due after ten years 97,530 103,095
Asset backed securities 39,340 37,989
Amortized cost total $ 237,213 $ 236,766
v3.23.3
Investments, Securities with Continuous Unrealized Loss Position (Details)
$ in Thousands
Sep. 30, 2023
USD ($)
Securities
Dec. 31, 2022
USD ($)
Securities
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]    
Less than 12 months $ 24,783 $ 159,874
12 months or longer 171,806 33,773
Total 196,589 193,647
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 1,051 20,326
12 months or longer 33,585 8,464
Total $ 34,636 $ 28,790
Number of securities in unrealized loss position | Securities 251 237
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 10,205 23,763
12 months or longer 36,873 19,259
Total 47,078 43,022
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 264 2,410
12 months or longer 6,331 3,516
Total 6,595 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 2,121 8,183
12 months or longer 5,449 0
Total 7,570 8,183
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 39 1,702
12 months or longer 1,908 0
Total 1,947 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 12,457 127,928
12 months or longer 129,484 14,514
Total 141,941 142,442
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses [Abstract]    
Less than 12 months 748 16,214
12 months or longer 25,346 4,948
Total 26,094 $ 21,162
Allowance for expected credit losses on available-for-sale fixed maturities $ 0  
v3.23.3
Investments, Summary of Realized Investment Gains (Losses) (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Summary of realized investment gains (losses) [Abstract]        
Gains $ 0 $ 101 $ 70 $ 101
Losses 0 0 0 (72)
Realized investment losses (gains), net 0 101 70 29
Fixed Maturities [Member]        
Summary of realized investment gains (losses) [Abstract]        
Gains 0 101 70 101
Losses 0 0 0 (53)
Realized investment losses (gains), net 0 101 70 48
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 0 0 (19)
Realized investment losses (gains), net $ 0 $ 0 $ 0 $ (19)
v3.23.3
Investments, Unrealized Gains (Losses) on Equity Securities (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Investments [Abstract]        
Net realized and unrealized losses recognized during the period on equity securities $ (1,486) $ (2,783) $ (3,367) $ (5,456)
Less: Net realized gains recognized during the period on equity securities sold during the period 0 0 0 0
Unrealized losses recognized during the reporting period on equity securities, net $ (1,486) $ (2,783) $ (3,367) $ (5,456)
v3.23.3
Investments, Variable Interest Entities (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Variable Interest Entities [Abstract]    
Carrying amount of interest $ 6,398 $ 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 6,398 5,386
Investment in unconsolidated trusts 1,238 1,238
Maximum loss exposure 7,636 6,624
Outstanding commitments $ 4,518 $ 5,872
v3.23.3
Fair Values of Financial Instruments, Measured on a Recurring Basis (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities $ 203,068 $ 208,729
Equity securities 8,224 11,562
Recurring [Member]    
Financial instruments carried at fair value measured on a recurring basis [Abstract]    
Fixed maturities 203,068 208,729
Equity securities 8,224 11,562
Cash equivalents 14,035 18,861
Assets at fair value 225,327 239,152
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 8,039 11,406
Cash equivalents 14,035 18,861
Assets at fair value 22,074 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 203,068 208,729
Equity securities 0 0
Cash equivalents 0 0
Assets at fair value 203,068 208,729
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 185 156
Cash equivalents 0 0
Assets at fair value $ 185 $ 156
v3.23.3
Fair Values of Financial Instruments, Estimated Fair Value and Level (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Dec. 31, 2022
Assets [Abstract]    
Fixed maturities $ 203,068 $ 208,729
Equity securities 8,224 11,562
Carrying Amount [Member]    
Assets [Abstract]    
Equity securities [1] 8,224 11,562
Carrying Amount [Member] | Level 1 [Member]    
Assets [Abstract]    
Cash and cash equivalents 23,921 28,863
Carrying Amount [Member] | Level 2 [Member]    
Assets [Abstract]    
Fixed maturities 203,068 208,729
Policy loans 1,822 1,759
Investment in unconsolidated trusts 1,238 1,238
Liabilities [Abstract]    
Junior subordinated debentures, net 33,738 33,738
Revolving credit facility 3,019 2,009
Carrying Amount [Member] | Level 3 [Member]    
Assets [Abstract]    
Other invested assets 6,398 5,386
Estimated Fair Value [Member]    
Assets [Abstract]    
Equity securities [1] 8,224 11,562
Estimated Fair Value [Member] | Level 1 [Member]    
Assets [Abstract]    
Cash and cash equivalents 23,921 28,863
Estimated Fair Value [Member] | Level 2 [Member]    
Assets [Abstract]    
Fixed maturities 203,068 208,729
Policy loans 1,822 1,759
Investment in unconsolidated trusts 1,238 1,238
Liabilities [Abstract]    
Junior subordinated debentures, net 32,923 33,810
Revolving credit facility 3,019 2,009
Estimated Fair Value [Member] | Level 3 [Member]    
Assets [Abstract]    
Other invested assets $ 6,398 $ 5,386
[1] See the aforementioned information for a description of the fair value hierarchy as well as a description of levels for classes of these financial assets.
v3.23.3
Internal-Use Software (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2023
Sep. 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   $ 1,218 $ 1,357
Capitalized implementation costs $ 4,240 4,240  
Amortization expense $ 0 $ 0  
Software Capitalized Implementation Costs [Member]      
Internal Use Software [Abstract]      
Amortization period 10 years 10 years  
v3.23.3
Insurance Reserves for Losses and Claims (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 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     82,276 96,897
Prior accident year development     2,706 [1] (3,544) [2]
Total incurred     84,982 93,353
Paid related to [Abstract]        
Current accident year     43,595 57,478
Prior accident years     41,634 34,647
Total paid     85,229 92,125
Ending insurance reserves for losses and claims, net $ 69,590 $ 69,158 69,590 69,158
Plus: Reinsurance recoverable on unpaid losses 16,089 17,420 16,089 17,420
Ending insurance reserves for losses and claims, gross 85,679 86,578 85,679 86,578
Reconciliation of total incurred claims to total insurance benefits and losses incurred [Abstract]        
Total incurred losses     84,982 93,353
Cash surrender value and matured endowments     1,063 1,326
Benefit reserve changes     598 (127)
Total insurance benefits and losses incurred $ 26,818 $ 30,630 $ 86,643 $ 94,552
[1] Prior years’ development was primarily the result of unfavorable development in the automobile liability line of business in the property and casualty operations due to inflationary factors.
[2] Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, as well as favorable development in the surety line of business in the property and casualty operations.
v3.23.3
Credit Arrangements, Bank Debt (Details) - Revolving Credit Facility [Member]
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
Jun. 30, 2023
Sep. 30, 2023
USD ($)
May 12, 2021
USD ($)
Bank Debt [Abstract]        
Unsecured credit facility       $ 10,000
Maturity date     Apr. 12, 2024  
Basis spread on variable rate   2.00%    
Outstanding borrowings $ 3,019   $ 3,019  
Minimum [Member]        
Bank Debt [Abstract]        
Indebtedness capital ratio 0.35   0.35  
LIBOR [Member]        
Bank Debt [Abstract]        
Interest rate floor   1.00%    
Variable rate term     1 month  
SOFR [Member]        
Bank Debt [Abstract]        
Basis spread on variable rate 0.11448%      
Interest rate floor 1.00%      
Variable rate term 1 month      
v3.23.3
Credit Arrangements, Junior Subordinated Debentures (Details)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
$ / shares
shares
Jun. 30, 2023
Sep. 30, 2023
USD ($)
Quarter
Trust
$ / 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   $ 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] | LIBOR [Member]      
Financial structure of statutory business trusts [Abstract]      
Variable rate term     3 months
Junior Subordinated Debentures [Member] | SOFR [Member]      
Financial structure of statutory business trusts [Abstract]      
Basis spread on variable rate     0.26161%
Variable rate term 3 months    
Atlantic American Statutory Trust I [Member] | Junior Subordinated Debentures [Member]      
Financial structure of statutory business trusts [Abstract]      
Principal amount owed June 30, 2023 [1],[2] $ 18,042   $ 18,042
Less: Treasury debt [1],[2],[3] 0   0
Net balance June 30, 2023 [1],[2] $ 18,042   18,042
Net balance December 31, 2022 [1],[2]     $ 18,042
Coupon rate     3-Month SOFR + 0.26161 spread adj + 4.00%
Interest payable     Quarterly
Maturity date [1],[2]     Dec. 04, 2032
Redeemable by issuer [1],[2]     Yes
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member]      
Financial structure of statutory business trusts [Abstract]      
Coupon rate     3-Month SOFR + 0.26161 spread adj + 4.00%
Issuance date     Dec. 04, 2002
Securities issued (in shares) | shares 17,500   17,500
Liquidation preference per security (in dollars per share) | $ / shares $ 1   $ 1
Liquidation value $ 17,500   $ 17,500
Distribution payable     Quarterly
Distribution guaranteed by [4]     Atlantic American Corporation
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member] | LIBOR [Member]      
Financial structure of statutory business trusts [Abstract]      
Basis spread on variable rate   4.10%  
Atlantic American Statutory Trust I [Member] | Trust Preferred Securities [Member] | SOFR [Member]      
Financial structure of statutory business trusts [Abstract]      
Basis spread on variable rate 4.10%    
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member]      
Financial structure of statutory business trusts [Abstract]      
Principal amount owed June 30, 2023 [1],[2] $ 23,196   $ 23,196
Less: Treasury debt [1],[2],[3] (7,500)   (7,500)
Net balance June 30, 2023 [1],[2] $ 15,696   15,696
Net balance December 31, 2022 [1],[2]     $ 15,696
Coupon rate     3-Month SOFR + 0.26161 spread adj + 4.10%
Interest payable     Quarterly
Maturity date [1],[2]     May 15, 2033
Redeemable by issuer [1],[2]     Yes
Atlantic American Statutory Trust II [Member] | Junior Subordinated Debentures [Member] | LIBOR [Member]      
Financial structure of statutory business trusts [Abstract]      
Basis spread on variable rate   4.00%  
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member]      
Financial structure of statutory business trusts [Abstract]      
Coupon rate     3-Month SOFR + 0.26161 spread adj + 4.10%
Issuance date     May 15, 2003
Securities issued (in shares) | shares 22,500   22,500
Liquidation preference per security (in dollars per share) | $ / shares $ 1   $ 1
Liquidation value $ 22,500   $ 22,500
Distribution payable     Quarterly
Distribution guaranteed by [4]     Atlantic American Corporation
Atlantic American Statutory Trust II [Member] | Trust Preferred Securities [Member] | SOFR [Member]      
Financial structure of statutory business trusts [Abstract]      
Basis spread on variable rate 4.00%    
[1] For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.
[2] The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.
[3] On August 4, 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.
[4] The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
v3.23.3
Earnings (Loss) Per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Basic Earnings (Loss) Per Common Share [Abstract]        
Net income (loss) $ 1,759 $ (684) $ 2,057 $ 479
Less: preferred stock dividends (100) (100) (299) (299)
Net income (loss) applicable to common shareholders 1,659 (784) 1,758 180
Diluted Earnings (Loss) Per Common Share [Abstract]        
Effect of Series D preferred stock 100      
Net income (loss) applicable to common shareholders $ 1,759 $ (784) $ 1,758 $ 180
Weighted Average Shares [Abstract]        
Weighted average shares outstanding, Basic (in shares) 20,402 20,389 20,405 20,390
Effect of Series D preferred stock (in shares) 1,378      
Weighted average shares outstanding, Diluted (in shares) 21,780 20,389 20,405 20,390
Per Share Amount, Basic [Abstract]        
Net income (loss) applicable to common shareholders, Basic (in dollars per share) $ 0.08 $ (0.04) $ 0.09 $ 0.01
Per Share Amount, Diluted [Abstract]        
Net income (loss) applicable to common shareholders, Diluted (in dollars per share) $ 0.08 $ (0.04) $ 0.09 $ 0.01
v3.23.3
Income Taxes (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Reconciliation of income tax expense (benefit) [Abstract]        
Federal income tax provision at statutory rate of 21% $ 449 $ (199) $ 533 $ 154
Dividends-received deduction (10) (6) (27) (18)
Meals and entertainment 9 29 32 49
Vested stock and club dues 11 (7) 14 (7)
Parking disallowance 5 4 13 12
Penalties and fines 0 0 0 149
Adjustment for prior years' estimates to actual (85) (86) (85) (86)
Income tax expense (benefit) 379 (265) $ 480 253
Federal statutory income tax rate     21.00%  
Components of income tax expense (benefit) [Abstract]        
Current - Federal 790 435 $ 2,191 1,647
Deferred - Federal (411) (700) (1,711) (1,394)
Income tax expense (benefit) $ 379 $ (265) $ 480 $ 253
v3.23.3
Leases (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2023
USD ($)
Lease
Sep. 30, 2022
USD ($)
Lease description [Abstract]    
Number of operating lease agreements | Lease 2  
Lease expense $ 761 $ 761
Other information on operating leases [Abstract]    
Cash payments included in the measurement of lease liabilities reported in operating cash flows 784 772
Right-of-use assets included in other assets on the condensed consolidated balance sheet $ 2,817 $ 3,595
Weighted average discount rate 6.80% 6.80%
Weighted average remaining lease term in years 3 years 1 month 6 days 4 years 1 month 6 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 $ 264  
2024 1,065  
2025 1,083  
2026 942  
Thereafter 0  
Total undiscounted lease payments 3,354  
Less: present value adjustment 343  
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet $ 3,011  
Operating Lease, Liability, Statement of Financial Position [Extensible List] Accounts Payable and Accrued Liabilities  
Second Lease [Member]    
Lease description [Abstract]    
Lease term 10 years  
Renewal option period 7 years  
v3.23.3
Segment Information (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
Sep. 30, 2022
USD ($)
Sep. 30, 2023
USD ($)
Segment
Sep. 30, 2022
USD ($)
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 $ 361,620   $ 361,620   $ 367,064
Revenues 44,591 $ 46,343 140,048 $ 142,620  
Income (loss) before income taxes 2,138 (949) 2,537 732  
Operating Segments [Member] | American Southern [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 142,359   142,359   144,455
Revenues 17,652 18,538 54,817 56,540  
Income (loss) before income taxes 1,437 1,892 3,823 4,659  
Operating Segments [Member] | Bankers Fidelity [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 188,875   188,875   195,028
Revenues 27,249 27,641 85,632 86,099  
Income (loss) before income taxes 3,502 (850) 6,705 2,084  
Corporate and Other [Member]          
Assets, Revenue and Income (loss) before income taxes for each business unit [Abstract]          
Assets 30,386   30,386   $ 27,581
Revenues (310) 164 (401) (19)  
Income (loss) before income taxes $ (2,801) $ (1,991) $ (7,991) $ (6,011)  
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