What changed in this filing

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Item 1. Business

2022-03-25 compared with 2021-03-23 · 231 added, 243 removed, 262 unchanged (64% of the section changed)

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within the life and health and property and casualty insurance industries.

The Parent’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) within the

property and casualty insurance industry and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) within the life and health insurance industry.

Each of American Southern and Bankers

Fidelity is managed separately based upon the type of products it offers, and is evaluated on its individual performance.

The Parent’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) within

the property and casualty insurance industry and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as “Bankers Fidelity”) within the life and health insurance industry.

Each of American Southern and

Bankers Fidelity is managed separately based upon the type of products it offers, and is evaluated on its individual performance.

The Company’s strategy is to focus on well-defined geographic, demographic and/or product niches within the insurance

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American Southern comprises the Company’s property and casualty operations and its primary product lines are as follows:

Business Automobile Insurance policies provide bodily injury and/or property damage liability coverage, uninsured motorist coverage and physical damage

coverage for commercial accounts.

General Liability Insurance policies cover bodily injury and property damage liability for both premises and completed operations exposures for general

classes of business.

Surety Bonds are contracts under which one party, the insurance company issuing the surety bond, guarantees to a third party that the primary party

will fulfill an obligation in accordance with a contractual agreement.

This obligation may involve meeting a contractual commitment, paying a debt or performing certain duties.

Business Automobile Insurance policies

provide bodily injury and/or property damage liability coverage, uninsured motorist coverage and physical damage coverage for commercial accounts.

General Liability Insurance policies

cover bodily injury and/or property damage liability for both premises and completed operations exposures for general classes of business.

Surety Bonds are contracts under which one party, the

insurance company issuing the surety bond, guarantees to a third party that the primary party will fulfill an obligation in accordance with a contractual agreement.

This obligation may involve meeting a contractual commitment, paying a debt or

performing certain duties.

American Southern provides tailored business automobile insurance coverage, on a multi-year contract basis, to state governments, local municipalities and other large motor pools and fleets (“block

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liability coverages.

Additionally, American Southern directly provides surety bond coverage for subdivision construction, as well as performance and payment bonds.

Additionally, American Southern directly provides surety bond coverage for subdivision construction, school bus contracts, as well as performance and payment bonds.

The following table summarizes, for the periods indicated, the allocation of American Southern’s net earned premiums from each of its principal product lines:

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Bankers Fidelity comprises the life and health operations of the Company and offers a variety of life and supplemental health products.

Products offered by Bankers Fidelity include ordinary and term

life insurance, Medicare supplement and other accident and health insurance products.

Life Insurance products include non-participating term, individual and group whole life insurance policies with a variety of riders and options.

premiums are dependent upon a number of factors, including issue age, level of coverage and selected riders or options.

Medicare Supplement Insurance includes 8 of the 10 standardized Medicare supplement policies created under the Medicare Improvements for Patients and

Providers Act of 2008 (“MIPPA”), which are designed to provide insurance coverage for certain expenses not covered by the Medicare program, including copayments and deductibles.

Other Accident and Health Insurance coverages include several individual and group policies providing for the payment of standard benefits in

connection with the treatment of diagnosed cancer and other critical illnesses, as well as a number of other policies providing short-term nursing facility care, accident expense, hospital indemnity and disability coverages.

Products offered by Bankers Fidelity include ordinary life

insurance, Medicare supplement and other accident and health insurance products.

Life Insurance products include

non-participating, individual and group whole life insurance policies with a variety of riders and options.

Policy premiums are dependent upon a number of factors, including issue age, level of coverage and selected riders or options.

Medicare Supplement Insurance includes

8 of the 10 standardized Medicare supplement policies created under the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), which are designed to provide insurance coverage for certain expenses not covered by the Medicare

program, including copayments and deductibles.

Other Accident and Health Insurance

coverages include several individual and group policies providing for the payment of standard benefits in connection with the treatment of diagnosed cancer and other critical illnesses, as well as a number of other policies providing short-term

nursing facility care, accident expense, hospital indemnity and disability coverages.

Health insurance products, primarily Medicare supplement insurance, accounted for 91% of Bankers Fidelity’s net earned premiums in 2021 while life insurance, including both whole and term life

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In terms of the number of policies written in 2021, 67% were health insurance policies and 33% were life insurance policies.

The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines followed by a brief description of the

principal products:

The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines:

Year Ended December 31,

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Senior management carefully reviews all new programs prior to acceptance.

Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions by

participating in a profit sharing arrangement that is directly linked to the profitability of the underlying business.

Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions

by participating in a profit sharing arrangement that is directly linked to the profitability of the underlying business.

American Southern also solicits business from governmental entities.

As an experienced writer of insurance policies for certain

governmental programs, the company actively pursues this market on a direct basis.

As an experienced writer of insurance policies for

certain governmental programs, the company actively pursues this market on a direct basis.

Much of this business is priced by means of competitive bid situations.

As a result, there can be no assurance with respect to the ultimate profitability or ability of

the Company to obtain or retain such business at the time of a specific contract renewal.

As a result, there can be no assurance with respect to the ultimate profitability or

ability of the Company to obtain or retain such business at the time of a specific contract renewal.

Life and Health Operations

Bankers Fidelity acquires its clientele through three distribution channels spread across 46 different states and two business divisions, all of which utilize commissioned, independent agents.

three distribution channels include traditional independent agents, brokers typically interested in a specific product of Bankers Fidelity and brokers who focus on sales within the group/employer benefits arena of BankersWorksite, all of which are

responsible for their own marketing and sales activities.

Benefits, all of which are responsible for their own marketing and sales activities.

Contracting as independent agents enables Bankers Fidelity to effectively expand or contract its sales force without incurring significant expense.

Bankers Fidelity had 4,198 licensed agents contracted in both senior market and worksite divisions as of December 31, 2020.

During 2020, approximately 786 of these licensed agents wrote policies on

behalf of Bankers Fidelity.

Bankers Fidelity had approximately 4,380 licensed agents contracted in both the individual and group divisions as of December 31, 2021.

During 2021, approximately 660 of these licensed agents wrote

policies on behalf of Bankers Fidelity.

Bankers Fidelity’s marketing and distribution strategy revolves around five pillars:

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Diversification .

Through unique product offerings such as the Vantage Recovery®, short-term care product and a group whole life product featuring a chronic

illness rider, the Company is able to offer its distributors an array of products to sell that stand out from the competition.

As the Company continues to expand its geographical footprint with agents and products, one of its main objectives is to

have a healthy mix of all of its product lines nationwide.

Through unique product

offerings such as the Vantage Recovery®, short-term care product and a group whole life product featuring a chronic illness rider, the Company is able to offer its distributors an array of products to sell that stand out from the competition.

the Company continues to expand its geographical footprint with agents and products, one of its main objectives is to have a healthy mix of all of its product lines nationwide.

Differentiation .

Bankers Fidelity prides itself on the quality of customer service it offers to policyholders and agents.

A dedicated agent support team is

available to the field to support them on administration, underwriting, sales training, product questions and a plethora of other services which differentiates the Company from other carriers.

Additionally, a customer loyalty team is available solely

to serve insureds for any of their insurance needs.

Bankers Fidelity prides itself on being agile, which we believe differentiates us from larger carriers and helps the Company to quickly execute senior management’s initiatives.

Bankers Fidelity is focused on being a niche carrier that delivers superior service, quality products and innovative solutions.

Sophisticated

technology and reporting allows the home office teams to work with the sales force to deliver a tailored experience and phenomenal customer service.

Through seasonal campaigns and customer outreach, the Company is focused on client retention and servicing its policyholders through all stages in

By providing its agents with an innovative product portfolio, the Company further promotes client retention by empowering its agents to continually meet the needs of our policyholders.

Bankers Fidelity prides itself

on the quality of customer service it offers to policyholders and agents.

A dedicated agent support team is available to the field to support them on administration, underwriting, sales training, product questions and a plethora of other services

which differentiates the Company from other carriers.

Additionally, a customer loyalty team is available solely to serve insureds for any of their insurance needs.

Bankers Fidelity prides itself on being agile, which we believe differentiates us

from larger carriers and helps the Company to quickly execute senior management’s initiatives.

Bankers Fidelity is focused on being a

niche carrier that delivers superior service, quality products and innovative solutions.

Sophisticated technology and reporting allows the home office teams to work with the sales force to deliver a tailored experience and phenomenal customer

Through seasonal campaigns and

customer outreach, the Company is focused on client retention and servicing its policyholders through all stages in their lives.

By providing its agents with an innovative product portfolio, the Company further promotes client retention by

empowering its agents to continually meet the needs of our policyholders.

Profitability .

In an effort to be sustainable in the marketplace as a long-term partner, senior management is focused on diversification, differentiation,

quality and retention to achieve profitability.

In an effort to be sustainable

in the marketplace as a long-term partner, senior management is focused on diversification, differentiation, quality and retention to achieve profitability.

Property and Casualty Operations

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Life and Health Operations

Bankers Fidelity issues a variety of products that span from the worksite markets to the senior markets for both life and health insurance.

Bankers Fidelity issues a variety of products that span from the group markets to the individual markets for both life and health insurance.

Products offered by Bankers Fidelity include life

insurance, typically with small face amounts, Medicare supplement and other accident and health insurance.

Bankers Fidelity also provides an array of worksite products such as accident, cancer, critical illness, hospital indemnity and life insurance

Bankers Fidelity also provides an array of group products such as accident, cancer, critical illness, hospital indemnity and life insurance

that is offered to employers who are looking to provide coverage for their employees and have the related premiums deducted through payroll deductions.

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utilization reports as well as telephone interviews to determine whether an applicant meets the Company’s underwriting criteria.

Bankers Fidelity may also utilize medical records and investigative services to supplement and substantiate information,

as necessary.

Bankers Fidelity may also utilize medical records and investigative services to supplement and substantiate

information, as necessary.

Policyholder and Claims Services

The Company believes that prompt, efficient policyholder and claims services are essential to its continued success in marketing its insurance products (see “Competition”).

Additionally, the Company

believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries.

Accordingly, the Company’s policyholder and claims services seek to offer expeditious disposition of

service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts.

The Company also utilizes an automatic call distribution system to ensure that inbound

calls to customer service support groups are processed efficiently.

Additionally, the

Company believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries.

Accordingly, the Company’s policyholder and claims services seek to offer expeditious

disposition of service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts.

The Company also utilizes an automatic call distribution system designed

to ensure that inbound calls to customer service support groups are processed efficiently.

Operational data generated from this system allows management to further refine ongoing client service programs and service representative training modules.

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Life and Health Operations

Insureds may obtain claim forms by calling the claims department customer service group or through Bankers Fidelity’s website.

Insureds covered under a group policy may also file a claim directly on

the Company’s website.

To shorten claim processing time, a letter detailing all supporting documents that are required to complete a claim for a particular policy is sent to the customer along with the correct claim form.

With respect to life

policies, the claim is entered into Bankers Fidelity’s claims system when the proper documentation is received.

The majority of life and health claims are filed electronically while insureds also have the ability to download claims forms and file directly.

Insureds may also obtain claim forms by calling the

customer service group or through Bankers Fidelity’s website.

All of these claims are entered into the system immediately upon receipt and put into a pending status until the claim can be fully processed.

To shorten claim processing time, a

letter detailing all supporting documents that are required to complete a claim for a particular policy is sent to the customer along with the correct claim form.

Properly documented claims are generally paid within five business days of receipt.

With regard to Medicare supplement policies, the claim

is either directly billed to Bankers Fidelity by the provider or sent electronically through a Medicare clearing house.

With regard to Medicare supplement policies, the claim is either directly billed to Bankers Fidelity by the provider or sent electronically through a Medicare clearing house.

Reserves are set by line of business within each of the subsidiaries.

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The Company’s property and casualty operations incur losses which may take extended periods of time to evaluate and settle.

Issues with respect to legal liability, actual loss quantification, legal discovery and ultimate

subrogation, among other factors, may influence the initial and subsequent estimates of loss.

In the property and casualty operations, the Company’s general practice is to reserve at the higher end of the determined reasonable range of loss if no

other value within the range is determined to be more probable.

Issues with respect to legal liability, actual loss quantification, legal discovery and

ultimate subrogation, among other factors, may influence the initial and subsequent estimates of loss.

In the property and casualty operations, the Company’s general practice is to reserve at the higher end of the determined reasonable range of

loss if no other value within the range is determined to be more probable.

The Company’s life and health operations generally incur losses which are more readily quantified.

Medical claims received are recorded in case reserves based on contractual terms using

the submitted billings as a basis for determination.

Medical claims received are recorded in case reserves based on contractual

terms using the submitted billings as a basis for determination.

Life claims are recorded based on contract value at the time of notification to the Company;

offset by policy reserves related to such contracts previously established.

Individual case reserves are

established by a claims processor on each individual claim and are periodically reviewed and adjusted as new information becomes known during the course of handling a claim.

Regular internal periodic reviews are also performed by management to ensure

that loss reserves are established and revised timely relative to the receipt of new or additional information.

case reserves are established by a claims processor on each individual claim and are periodically reviewed and adjusted as new information becomes known during the course of handling a claim.

Regular internal periodic reviews are also performed by

management to ensure that loss reserves are established and revised timely relative to the receipt of new or additional information.

Lines of business for which loss data (e.g.

paid losses and case reserves) emerge over a long period of time are referred to as long-tail

lines of business.

paid losses and case reserves) emerge over a long period of time are

referred to as long-tail lines of business.

Lines of business for which loss data emerge more quickly are referred to as short-tail lines of business.

The Company’s long-tail line of business generally consists of its general liability coverage while the short-tail lines of

business generally consist of property and automobile coverages.

The Company’s long-tail line of business generally consists of its general liability coverage

while the short-tail lines of business generally consist of property and automobile coverages.

The Company’s actuaries regularly review reserves for both current and prior accident years using the most current claims data.

These reviews incorporate a variety of actuarial methods (discussed in

Critical Accounting Policies) and judgments and involve a disciplined analysis.

These reviews incorporate a variety of actuarial methods (discussed

in Critical Accounting Policies) and judgments and involve a disciplined analysis.

For most lines of business, certain actuarial methods and specific assumptions are deemed more appropriate based on the current circumstances affecting that line of

These selections incorporate input from claims personnel and operating management on reported loss cost trends and other factors that could affect the reserve estimates.

The Company establishes reserves for claims based upon:

(a) management’s estimate of ultimate liability and claims adjusters’ evaluations of unpaid claims reported prior to the close of the

accounting period, (b) estimates of IBNR claims based on past experience, and (c) estimates of LAE.

The estimated liability is periodically reviewed and updated, and changes to the estimated liability are recorded in the statement of operations in

the period in which such changes become known.

For long-tail lines of business, the emergence of paid losses and case reserves is less credible in the early periods, and accordingly may not be indicative of ultimate losses.

For these lines,

methods which incorporate a development pattern assumption are given less weight in calculating incurred but not reported (“IBNR”) reserves for the early periods of loss emergence because such a low percentage of ultimate losses are reported in that

Accordingly, for any given accident year, the rate at which losses on long-tail lines of business emerge in the early periods is generally not as reliable an indication of ultimate losses as it would be for shorter-tail lines of business.

The estimation of reserves for these lines of business in the early periods of loss emergence is therefore largely influenced by statistical analyses and application of prior accident years’ loss ratios, after considering changes to earned pricing,

loss costs, mix of business, ceded reinsurance and other factors that are expected to affect the estimated ultimate losses.

For later periods of loss emergence, methods which incorporate a development pattern assumption are given more weight in

estimating ultimate losses.

that time frame.

earned pricing, loss costs, mix of business, ceded reinsurance and other factors that are expected to affect the estimated ultimate losses.

For later periods of loss emergence, methods which incorporate a development pattern assumption are given

more weight in estimating ultimate losses.

For short-tail lines of business, the emergence of paid loss and case reserves is more credible in the early periods and is more likely to be indicative of ultimate losses.

The method used to set reserves for these lines

of business is based upon utilization of a historical development pattern for reported losses.

IBNR reserves for the current year are set as the difference between the estimated fully developed ultimate losses for each year, less the established,

related case reserves and cumulative related payments.

The method used to set reserves

for these lines of business is based upon utilization of a historical development pattern for reported losses.

IBNR reserves for the current year are set as the difference between the estimated fully developed ultimate losses for each year, less

the established, related case reserves and cumulative related payments.

IBNR reserves for prior accident years are similarly determined, again relying on an indicated, historical development pattern for reported losses.

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years and less volatile lines of business.

Estimating case reserves and ultimate losses involves various considerations which differ according to the line of business.

In addition, changes in legislative and regulatory environments may impact

loss estimates.

General liability claims may have a long pattern of loss emergence.

Given the broad nature of potential general liability coverages, investigative time periods may be extended and questions of coverage may exist.

Such uncertainties

create greater imprecision in estimating required levels of loss reserves.

The property and automobile lines of business generally have less variable reserve estimates than other lines.

This is largely due to the coverages having relatively shorter

periods of loss emergence.

Estimates, however, can still vary due to a number of factors, including interpretations of frequency and severity trends.

Severity trends can be impacted by changes in internal claim handling and reserving practices in

addition to changes in the external environment.

These changes in claim practices increase the uncertainty in the interpretation of case reserve data, which increases the uncertainty in recorded reserve levels.

The Company’s policy is to record reserves for losses and claims in amounts which approximate actuarial best estimates of ultimate values.

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indicated that reserves could be as much as 9.8% lower or as much as 3.5% higher.

In the opinion of management, recorded reserves represent the best estimate of outstanding losses, although significant judgments are made in the derivation of reserve

estimates and revisions to such estimates are expected to be made in future periods.

In the opinion of management, recorded reserves represent the best estimate of outstanding losses, although significant judgments are made in the derivation of

reserve estimates and revisions to such estimates are expected to be made in future periods.

Any such revisions could be material, and may materially adversely affect the Company’s financial condition and results of operations in any future period.

Property and Casualty Operations

American Southern maintains loss reserves representing estimates of amounts necessary for payment of losses and loss adjustment expense (“LAE”), and which are not discounted.

American Southern maintains loss reserves representing estimates of amounts necessary for payment of losses and loss adjustment expense (“LAE”), which are not discounted.

IBNR reserves are also

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historical reserve results.

American Southern establishes reserves for claims based upon:

(a) management’s estimate of ultimate liability and claims adjusters’ evaluations of unpaid claims reported prior to the close of the

accounting period, (b) estimates of IBNR claims based on past experience, and (c) estimates of LAE.

If no value is determined to be more probable in estimating a loss after considering all factors, the Company’s general practice is to reserve at the

higher end of the determined reasonable range of loss.

The estimated liability is periodically reviewed and updated, and changes to the estimated liability are recorded in the statement of operations in the period in which such changes become known.

Estimating case reserves and ultimate losses involves various considerations which differ according to the line of business.

In addition, changes in legislative and regulatory environments may

impact loss estimates.

General liability claims may have a long pattern of loss emergence.

Given the broad nature of potential general liability coverages, investigative time periods may be extended and questions of coverage may exist.

uncertainties create greater imprecision in estimating required levels of loss reserves.

The property and automobile lines of business generally have less variable reserve estimates than other lines.

This is largely due to the coverages having

relatively shorter periods of loss emergence.

Estimates, however, can still vary due to a number of factors, including interpretations of frequency and severity trends.

Severity trends can be impacted by changes in internal claim handling and

reserving practices in addition to changes in the external environment.

These changes in claim practices increase the uncertainty in the interpretation of case reserve data, which increases the uncertainty in recorded reserve levels.

Life and Health Operations

Bankers Fidelity establishes liabilities for future policy benefits to meet projected future obligations under outstanding policies.

These reserves are calculated to satisfy policy and contract

obligations as they mature.

The amount of reserves for insurance policies is calculated using assumptions for interest rates, mortality and morbidity rates, expenses, and withdrawals.

Reserves are adjusted periodically based on published actuarial

tables with modifications to reflect actual experience.

The use of significantly different assumptions, or actual results that differ significantly from our estimates, could materially adversely affect our liquidity, results of operations or

financial condition.

Bankers Fidelity establishes liabilities for future policy benefits to meet projected obligations under policies that are in force as of the statement date.

These reserves are calculated to satisfy

policy and contract obligations as they are projected to come due.

Reserves for insurance policies are calculated using assumptions for interest rates, mortality rates, morbidity rates and lapse rates.

These assumptions vary by the product type,

the year the policy was issued, and other demographic information about the policyholder.

Variations in assumptions may be made from one issue year to another to reflect actual experience.

Assumptions that deviate significantly from actual future

experience, or actual results that differ significantly from our estimates, could have a materially adverse effect on our liquidity, results of operations, or financial condition.

See Note 5 of Notes to Consolidated Financial Statements for more information on insurance reserves and policyholder funds.

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Inland marine and commercial automobile physical damage - $250,000 excess of $100,000 retention;

and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $100,000 to $300,000 depending on the

and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $100,000 to $500,000 depending on

American Southern maintains a property catastrophe treaty with a $5.7 million limit excess of $300,000 retention.

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Bankers Fidelity has entered into reinsurance contracts ceding the excess of its life retention.

Maximum retention by Bankers Fidelity on any one individual in the case of life insurance policies is

Maximum retention by Bankers Fidelity on any one individual in the case of life insurance policies

At December 31, 2021, $9.5 million of the $416.5 million of life insurance in force at Bankers Fidelity was reinsured under a mix of coinsurance and yearly renewable term agreements.

Certain prior year reinsurance agreements also remain in

force although they no longer provide reinsurance for new business.

Certain prior year reinsurance agreements also

remain in force although they no longer provide reinsurance for new business.

Bankers Fidelity has also entered into a reinsurance contract ceding excess new Medicare supplement business to General Re Life Corporation.

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Medicare supplement premium was ceded.

Competition for insurance products is based on many factors including premiums charged, terms and conditions of coverage, customer service, financial ratings assigned by independent rating agencies,

claims handling, consumer recognition and reputation, perceived financial strength and the experience of the organization in the line of business being written.

Competition for insurance products is based on many factors including premiums charged, terms and conditions of coverage, customer service, financial ratings assigned by independent rating

agencies, claims handling, consumer recognition and reputation, perceived financial strength and the experience of the organization in the line of business being written.

Property and Casualty Operations

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offered by other insurers doing business in the states in which American Southern operates.

American Southern strives to develop strong relationships with its agents and, consequently, believes it is well positioned for new opportunities and programs

with those agents.

American Southern strives to develop strong relationships with its agents and, consequently, believes it is well positioned for new opportunities and

programs with those agents.

Life and Health Operations

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and other accident and health insurance products.

Bankers Fidelity has established itself as a trusted carrier of choice for its customers providing quality and sustainability for nearly 65 years.

Bankers Fidelity has established itself as a trusted carrier of choice for its customers providing quality and sustainability for over 65 years.

In order to compete, Bankers Fidelity actively seeks opportunities in niche markets, developing long-term relationships with a select number of independent marketing organizations.

Additionally,

Bankers Fidelity actively promotes BankersWorksite, the group benefits division, as well as selective association partnerships.

It competes with other insurers to attract and retain the allegiance of its independent agents through commission and

sales incentive arrangements, accessibility and marketing assistance, lead programs, reputation and market expertise.

Bankers Fidelity successfully competes in its chosen markets by establishing relationships with independent agents and providing

proprietary marketing initiatives as well as providing outstanding service to policyholders.

Bankers Fidelity actively promotes Atlantic American Employee Benefits, the group benefits division, as well as selective association partnerships.

It competes with other insurers to attract and retain the allegiance of its independent agents

through commission and sales incentive arrangements, accessibility and marketing assistance, lead programs, reputation and market expertise.

Bankers Fidelity successfully competes in its chosen markets by establishing relationships with independent

agents and providing proprietary marketing initiatives as well as providing outstanding service to policyholders.

Ratings are important measures within the insurance industry, and higher ratings are expected to have a favorable impact on the ability of a company to compete in the marketplace.

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American Southern.

American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this

report, rated “A” (Excellent) by A.M.

American Southern Insurance

Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this report, rated “A” (Excellent) by A.M.

Bankers Fidelity.

Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company, are each, as of the date of this

report, rated “A-” (Excellent) by A.M.

Bankers Fidelity Life

Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M.

Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business.

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approval of policy forms, reserve requirements, the standards of solvency to be met and maintained, deposits of securities for the benefit of policyholders, and periodic examinations of insurers and trade practices, among other things.

The Company’s

products generally are subject to rate regulation by state insurance commissions, which require that certain minimum loss ratios be maintained.

Certain states also have insurance holding company laws which require registration and periodic reporting

by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions.

The Company’s insurance subsidiaries are subject to such legislation and are registered as controlled insurers in those

jurisdictions in which such registration is required.

Such laws vary from state to state, but typically require periodic disclosure concerning the corporation which controls the registered insurers and all subsidiaries of such corporations, as well

as prior notice to, or approval by, the state insurance commissioners of intercorporate transfers of assets (including payments of dividends by the insurance subsidiaries in excess of specified amounts) within the holding company system.

believes it is in compliance with all such requirements.

Company’s products generally are subject to rate regulation by state insurance commissioners, which require that certain minimum loss ratios be maintained.

Certain states also have insurance holding company laws which require registration and

periodic reporting by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions.

The Company’s insurance subsidiaries are subject to such legislation and are registered as controlled

insurers in those jurisdictions in which such registration is required.

Such laws vary from state to state, but typically require periodic disclosure concerning the corporation which controls the registered insurers and all subsidiaries of such

corporations, as well as prior notice to, or approval by, the state insurance commissioners of intercorporate transfers of assets (including payments of dividends by the insurance subsidiaries in excess of specified amounts) within the holding

company system.

The Company believes it is in compliance with all such requirements.

Most states require that rate schedules and other information be filed with the state’s insurance regulatory authority, either directly or through a ratings organization with which the insurer is

The regulatory authority may disapprove a rate filing if it determines that the rates are inadequate, excessive, or discriminatory.

The Company has historically experienced no significant regulatory resistance to its applications for rate

The Company has historically experienced no significant regulatory resistance to its applications for

rate adjustments;

however, the Company cannot provide any assurance that it will not receive any objections to any applications in the future.

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The NAIC conducts annual reviews of the financial data of insurance companies primarily through the application of financial ratios prepared on a statutory basis.

Annual statements are required to be submitted to state insurance

departments to assist them in monitoring insurance companies in their state and to allow such states to determine a desirable range for each such ratio with which companies should comply.

Annual statements are required to be submitted to state

insurance departments to assist them in monitoring insurance companies in their state and to allow such states to determine a desirable range for each such ratio with which companies should comply.

The NAIC developed the Insurance Regulatory Information System (“IRIS”) to help state regulators identify companies that may require regulatory attention.

Financial examiners review annual financial

statements and the results of key financial ratios based on year-end data with the goal of identifying insurers that appear to require immediate regulatory attention.

Financial examiners review annual

financial statements and the results of key financial ratios based on year-end data with the goal of identifying insurers that appear to require immediate regulatory attention.

Each ratio has an established “usual range” of results.

A ratio result falling

outside the usual range, however, is not necessarily considered adverse;

A ratio result

falling outside the usual range, however, is not necessarily considered adverse;

rather, unusual values are used as part of the regulatory early monitoring system.

Furthermore, in some years, it may not be unusual for financially sound companies to have

several ratios with results outside the usual ranges.

Generally, an insurance company may become subject to regulatory scrutiny or, depending on the company’s financial condition, regulatory action if certain of its key IRIS ratios fall outside the

usual ranges and the insurer’s financial condition is trending downward.

For the year ended December 31, 2020, Bankers Fidelity Life Insurance Company had no IRIS ratios outside the usual ranges.

However, Bankers Fidelity Assurance Company had three ratios outside the usual range primarily as

a result of net loss for the year, certain surplus ratios and nonadmitted assets to admitted assets.

The net loss at Bankers Fidelity Assurance Company is primarily related to federal income taxes incurred which resulted in a corresponding decrease

in surplus levels for the year as well as a growing deferred tax asset which is reduced by admissibility limitations.

Furthermore, in some years, it may not be unusual for financially sound companies to

have several ratios with results outside the usual ranges.

Generally, an insurance company may become subject to regulatory scrutiny or, depending on the company’s financial condition, regulatory action if certain of its key IRIS ratios fall

outside the usual ranges and the insurer’s financial condition is trending downward.

For the year ended December 31, 2021, Bankers Fidelity Life Insurance Company had two ratios outside the usual range as a result of net loss from operations primarily driven by the Medicare supplement line of business,

as well as a decrease in reserves on individual life policies.

Bankers Fidelity Assurance Company had four ratios outside the usual range primarily as a result of net loss for the year, an increase in nonadmitted deferred tax assets to admitted

assets and certain surplus ratios.

American Southern Insurance Company and American Safety Insurance Company had no IRIS ratios outside the usual ranges.

does not anticipate regulatory action as a result of the 2020 IRIS ratio results for the insurance subsidiaries.

Management does not anticipate regulatory action as a result of the 2021 IRIS ratio results

for the insurance subsidiaries.

Risk-Based Capital

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The RBC calculation determines the amount of adjusted capital needed by a company to avoid regulatory action.

“Authorized Control Level Risk-Based Capital” (“ACL”) is calculated, and if a company’s adjusted capital is 200% or lower than ACL,

it is subject to regulatory action.

“Authorized Control Level Risk-Based Capital” (“ACL”) is calculated, and if a company’s adjusted capital is 200% or lower than

ACL, it is subject to regulatory action.

At December 31, 2021, the Company’s insurance subsidiaries’ RBC levels exceeded the required regulatory levels.

Information Technology and Cybersecurity

The Company’s operations rely on the secure processing, storage, and transmission of confidential and personal identifiable information within technology platforms.

Cybersecurity is a high priority

and the Company has made significant investments in order to prevent, detect, and respond to cyber threats.

In recent years, the Company has enhanced intrusion protection and detection technology, infrastructure and application firewalls, and network

The Company’s operations rely on the secure processing, storage, and transmission of confidential and personal identifiable information within various technology platforms.

Cybersecurity is a high

priority and the Company has made significant investments in order to prevent, detect, and respond to cyber threats.

The Company continues to enhance its intrusion protection and detection technology, infrastructure and application firewalls, and

network monitoring.

The Company has also installed advanced endpoint threat protection technology and implemented a mandatory security awareness training program for all employees.

The Company has a sophisticated technology environment that supports the replication of data across multiple secure data centers.

It also includes a comprehensive disaster recovery plan that is

continually tested to ensure capabilities to resume business in the event of a disaster.

The Company’s technology environment is managed by an experienced team of professionals who follow an extensive set of policies and procedures related to data

This training is reinforced through periodic simulated phishing

The Company uses a sophisticated backup and recovery situation that supports the replication of data across multiple secure data centers.

It also includes a comprehensive disaster recovery plan

that is continually tested to ensure capabilities to resume business in the event of a disaster.

The Company’s technology environment is managed by an experienced team of professionals who follow an extensive set of policies and procedures related

to data security.

Through recurring internal and external audits, controls are regularly reviewed, tested, and enhanced to ensure best practices.

The Company has augmented the information security program through a partnership with a leading global

cybersecurity provider to review and implement additional services such as Security Event Monitoring, Advanced Endpoint Threat Detection, Incident Management Retainer Services, and Strategic Advisory Services focused on Chief Information Security

Officer (CISO) duties such as counter-threat intelligence.

cybersecurity service provider to review and implement additional services such as Security Event Monitoring, Advanced Endpoint Threat Detection, Incident Management Retainer Services, and Strategic Advisory Services focused on Chief Information

Security Officer (CISO) duties such as counter-threat intelligence.

The information security program also includes a cybersecurity Incident Response Plan (“IRP”) that was established to help protect the integrity, availability and confidentiality of information,

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The Audit Committee of the Board of Directors has oversight of the Company’s information security program.

The Company’s senior officers, including its Chief Information Officer, are responsible for

the operation of the information security program and regularly communicate with the Audit Committee on the state of the program.

The Company’s senior officers, including its Chief Information Officer, are responsible

for the operation of the information security program and regularly communicate with the Audit Committee on the state of the program.

The Company also maintains dedicated cyber liability insurance for breach event costs, including:

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Total fixed maturities (1)

Common and non-redeemable preferred stocks (2)

Policy loans (3)

Equity securities (2)

Other invested assets (3)

Policy loans (4)

Investments in unconsolidated trusts

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Total cost of equity securities was $4.9 million as of December 31, 2021 and $6.4 million as of December 31, 2020.

Policy loans are valued at unpaid principal balances.

Other invested assets are accounted for using the equity method.

Total cost of other invested assets was $0.7 million as of December 31, 2021 and $3.8 million as of December 31, 2020.

Policy loans are valued at unpaid principal balances.

Estimated fair values are determined as discussed in Note 1 of Notes to Consolidated Financial Statements.

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Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters.

During 2019, the Company engaged a global investment management firm serving the insurance industry to manage the Company’s investment portfolios.

Management’s recent investment strategy has been a

continued focus on quality and diversification, while improving the overall risk versus return profile of the portfolio.

The Company engages a global investment management firm serving the insurance industry to manage the Company’s investment portfolios.

Management’s recent investment strategy has been a continued

focus on quality and diversification, while improving the overall risk versus return profile of the portfolio.

Human Capital

The Company and its subsidiaries employed 140 people at December 31, 2021.

Of the 153 people employed at December 31, 2020, 152 were full-time.

Of the 140 people, 138 were full-time.

We believe that our ability to attract and retain highly motivated and skilled

corporate employees with diverse backgrounds and experiences is critical to our continued success.

We also believe the structure of our compensation program is aligned with the interests of our shareholders and serves to reward the performance of

our employees.

We monitor and evaluate the effectiveness of our human capital management efforts by seeking formal and informal feedback from our corporate employees, including periodic surveys to obtain opinions on key topics.

We sponsor health and wellness programs in an effort to support a healthier employee base.

We also offer competitive health and wellbeing benefits to include health, dental, vision, health and

flexible savings accounts, disability, life, supplemental and telemedicine.

An Employee Assistance Program (“EAP”) is provided to all full-time employees and their family members at no cost.

The EAP offers confidential telephonic counseling,

referral services, legal and financial services and additional tools that offer support and solutions.

Additionally, we offer a 401(k) retirement savings plan with an employer match as well as an annual Safe Harbor Non-Elective contribution.

We strive to provide a work environment that encourages work/life balance.

Options depend on job responsibilities and may include flexible work schedules, paid time off, paid holidays and

part-time employment.

We offer tuition reimbursement along with budgeted professional development opportunities in order to foster professional growth and to increase skillsets.

The Company requires all employees to be fully vaccinated against COVID-19 where allowable under the law, unless they are approved for a reasonable accommodation based on disability, medical

condition or religious belief that prevents them from being vaccinated.

Financial Information by Industry Segment

Each of American Southern and Bankers Fidelity operate with relative autonomy and each company is evaluated on its individual performance.

American Southern and Bankers Fidelity each operate with relative autonomy and each company is evaluated on its individual performance.

American Southern operates in the property and casualty

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Each segment derives revenue from the collection of premiums, as well as from investment income.

Substantially all revenue other than that in the corporate and

other segment is from external sources.

See Note 15 of Notes to Consolidated Financial Statements.

Substantially all revenue other than that in the corporate

and other segment is from external sources.

For more information on segments, see Note 15 of Notes to Consolidated Financial Statements.

Available Information

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Executive Officers of the Registrant

The table and information below set forth, for each executive officer of the Company as of December 31, 2020, his name, age, positions with the Company and business experience for the past five

years, as well as any prior service to the Company.

The table and information below set forth, for each current executive officer of the Company, his name, age (as of March 1, 2022), positions with the Company and business experience for the past

five years, as well as any prior service to the Company.

Positions with the Company

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Officers are elected annually and serve at the discretion of the board of directors.

Howell has been President and Chief Executive Officer of the Company since May 1995, and prior thereto served as Executive Vice President of the Company

from October 1992 to May 1995.

He has been a Director of the Company since October 1992 and effective February 24, 2009, began serving as Chairman of the board of directors.

He is also Executive Chairman and Chief Executive Officer of Gray

Television, Inc.

Franklin has been Vice President, Chief Financial Officer and Corporate Secretary of the Company since November 2017, and prior thereto served as Interim

Chief Financial Officer from August 2017 to November 2017.

Since 2000 he has held various roles of increasing responsibility with Atlantic American and its subsidiaries, previously serving as Vice President, Accounting and Treasurer of Bankers

Fidelity since 2009.

Forward-Looking Statements

Certain of the statements contained or incorporated by reference herein are forward-looking statements within the meaning of the federal securities laws.

These forward-looking statements are made

pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Exchange Act of 1933, and Section 21E of the Securities Act of 1934, and include estimates and assumptions related to, among

other things, general economic, competitive, operational and legislative developments.

Forward-looking statements are subject to changes and uncertainties which are, in many instances, beyond the Company’s control and have been made based upon

management’s current expectations and beliefs concerning future developments and their potential effect upon the Company.

There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of

future developments on the Company will be those anticipated by management.

Actual results could differ materially from those expected by the Company, depending on the occurrence or outcome of various factors.

These factors include, among others:

significant changes in general economic conditions;

unexpected developments in the health care or insurance industries affecting providers or individuals, including the cost or availability of services, or the tax consequences related thereto;

disruption to the financial markets;

unanticipated increases in the rate, number and amounts of claims outstanding;

the level of performance of reinsurance companies under reinsurance contracts and the availability, pricing and adequacy of

reinsurance to protect the Company against losses;

changes in the stock markets, interest rates or other financial markets, including the potential effect on the Company’s statutory capital levels;

the uncertain effect on the Company of regulatory

and market-driven changes in practices relating to the payment of incentive compensation to brokers, agents and other producers;

the impact of COVID-19 or other public health emergencies;

the incidence and severity of catastrophes, both natural and

the possible occurrence of terrorist attacks;

stronger than anticipated competitive activity;

unfavorable judicial or legislative developments;

the potential effect of regulatory developments, including those which could increase the

Company’s business costs and required capital levels;

the Company’s ability to distribute its products through distribution channels, both current and future;

the uncertain effect of emerging claim and coverage issues;

the effect of assessments and

other surcharges for guaranty funds and other mandatory pooling arrangements;

and risks related to cybersecurity matters, such as breaches of our computer network or the loss of unauthorized access to the data we maintain.

Many of such factors are

beyond the Company’s ability to control or predict.

As a result, the Company’s actual financial condition and results of operations could differ materially from those expressed in any forward-looking statements made by the Company.

Undue reliance

should not be placed upon forward-looking statements.

The Company does not intend to publicly update any forward-looking statements that may be made from time to time by, or on behalf of, the Company.

Howell has been President and Chief

Executive Officer of the Company since May 1995, and prior thereto served as Executive Vice President of the Company from October 1992 to May 1995.

He has been a Director of the Company since October 1992 and effective February 24, 2009, began

serving as Chairman of the board of directors.

He is also Executive Chairman and Chief Executive Officer of Gray Television, Inc.

Franklin has been Vice President, Chief

Financial Officer and Corporate Secretary of the Company since November 2017, and prior thereto served as Interim Chief Financial Officer from August 2017 to November 2017.

Since 2000 he has held various roles of increasing responsibility with

Atlantic American and its subsidiaries, previously serving as Vice President, Accounting and Treasurer of Bankers Fidelity since 2009.

As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K (a “smaller reporting company”), we have elected to comply with certain scaled

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business