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Item 1. Financial Statements

2022-11-08 compared with 2022-08-12 · 293 added, 263 removed, 678 unchanged (45% of the section changed)

1 unchanged sentence

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED

BALANCE SHEETS

(In thousands, except share and per share data)

September 30,

Cash and cash equivalents

45 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Insurance premiums, net

Net investment income

Realized investment gains (losses), net

Realized investment gains, net

Unrealized gains (losses) on equity securities, net

11 unchanged sentences

Net income (loss) applicable to common shareholders

Earnings (loss) per common share (basic)

Earnings (loss) per common share (diluted)

Earnings (loss) per common share (basic and diluted)

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE LOSS

Dollars in thousands)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Other comprehensive loss:

Available-for-sale fixed maturity securities:

Gross unrealized holding gain (loss) arising in the period

Gross unrealized holding loss arising in the period

Related income tax effect

reclassification adjustment for net realized (gains) losses included in net income (loss)

reclassification adjustment for net realized gains included in net income (loss)

Related income tax effect

Total other comprehensive income (loss), net of tax

Total comprehensive income (loss)

Total other comprehensive loss, net of tax

Total comprehensive loss

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

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Preferred stock:

17 unchanged sentences

Balance, beginning of period

Other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax

Balance, end of period

22 unchanged sentences

In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

(Additions to) amortization of acquisition costs, net

Realized investment losses (gains), net

Unrealized (gains) losses on equity securities, net

Realized investment gains, net

Unrealized losses (gains) on equity securities, net

Earnings from equity method investees

44 unchanged sentences

(the “2021 Annual Report”).

The Company’s financial condition and results of operations and cash flows as of and for the three and six month periods ended June 30, 2022 are not necessarily indicative of the financial condition or results of

The Company’s financial condition and results of operations and cash flows as of and for the three and nine month periods ended September 30, 2022 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, 2022 or for any other future period.

Company’s significant accounting policies have not changed materially from those set out in the 2021 Annual Report, except as noted below for the adoption of new accounting standards.

Company’s significant accounting policies have not changed materially from those set out in the 2021 Annual Report.

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

6 unchanged sentences

The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses and cost or amortized cost of

the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of June 30, 2022 and December 31, 2021.

the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of September 30, 2022 and December 31, 2021.

Fixed maturities were comprised of the following:

June 30, 2022

September 30, 2022

Fixed maturities:

28 unchanged sentences

Bonds having an amortized cost of $ 11,002

and $ 11,169 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2022 and December 31,

and $ 11,169 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2022 and December

31, 2021, respectively, in accordance with statutory requirements.

Additionally, bonds having an amortized cost of $ 7,872 and $ 5,371 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta ("FHLB") at June 30, 2022 and December 31,

Additionally, bonds having an amortized cost of $ 7,253 and $ 5,371 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta ("FHLB") at September 30, 2022 and December

31, 2021, respectively.

Equity securities were comprised of the following:

June 30, 2022

September 30, 2022

Equity securities:

9 unchanged sentences

Total equity securities

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2022 and December 31, 2021 by contractual

The carrying value and amortized cost of the Company’s investments in fixed maturities at September 30, 2022 and December 31, 2021 by contractual

maturity were as follows.

Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

June 30, 2022

September 30, 2022

December 31, 2021

5 unchanged sentences

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous

unrealized loss position as of June 30, 2022 and December 31, 2021.

June 30, 2022

unrealized loss position as of September 30, 2022 and December 31, 2021.

September 30, 2022

Less than 12 months

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There were no OTTI charges

recorded during the three month and six month periods ended June 30, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, there were 227

and 61 securities, respectively, in an unrealized loss position, which primarily included certain of the Company’s investments in fixed

maturities within the financial services, other diversified business and other diversified consumer sectors.

The increase in the number of securities in an unrealized loss position during the six month period ended June 30, 2022 was primarily

attributable to a decline in market values in certain of the Company’s fixed maturity securities as a result of a rising interest rate environment.

The Company does not currently intend to sell nor does it expect to be required to sell any of the

securities in an unrealized loss position.

Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the

Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of June 30, 2022.

The following tables summarize realized investment gains (losses) for the three month and six month periods ended June 30, 2022 and 2021.

recorded during the three month and nine month periods ended September 30, 2022 and 2021.

As of September 30, 2022 and December 31, 2021, there were 235 and 61 securities, respectively, in an unrealized loss position, which

primarily included certain of the Company’s investments in fixed maturities within the financial services, other diversified business and other diversified consumer sectors.

The increase in the number of securities in an unrealized loss position

during the nine month period ended September 30, 2022 was primarily attributable to a decline in market values in certain of the Company’s fixed maturity securities as a result of a rising interest rate environment.

The Company does not currently

intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.

Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and

ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of September 30, 2022.

The following tables summarize realized investment gains for the three month and nine month periods ended September 30, 2022 and 2021.

Three Months Ended

June 30, 2022

Realized investment losses, net

September 30, 2022

Realized investment gains, net

Three Months Ended

June 30, 2021

September 30, 2021

Realized investment gains, net

Six Months Ended

June 30, 2022

Realized investment losses, net

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2022

Realized investment gains (losses), net

Nine Months Ended

September 30, 2021

Realized investment gains, net

The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and six month

periods ended June 30, 2022 and 2021.

The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month and nine month

periods ended September 30, 2022 and 2021.

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net realized and unrealized gains (losses) recognized during the period on equity securities

4 unchanged sentences

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 $ 5,128 and $ 198 as of June 30, 2022 and

December 31, 2021, respectively.

The Company’s VIE interests, carried as a part of other invested assets, totaled $ 5,421 and $ 198 as of September 30, 2022

and December 31, 2021, respectively.

The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $ 1,238

as of June 30, 2022 and December 31, 2021.

as of September 30, 2022 and December 31, 2021.

The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the

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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 $ 6,366 and $ 1,436 , as of June 30, 2022 and December 31, 2021,

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 $ 6,659 and $ 1,436 , as of September 30, 2022 and December 31,

2021, respectively.

As of June 30, 2022 and December 31, 2021, the Company had outstanding commitments totaling $ 5,872 and $ 1,997 , respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to

As of September 30, 2022 and December 31, 2021, the Company had outstanding commitments totaling $ 5,872 and $ 1,997 , 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.

28 unchanged sentences

The Company’s financial instruments valued using Level 3 criteria consist of two fixed maturity securities and one equity security.

As of June 30, 2022 and December 31, 2021, the value of the fixed maturities valued using Level

3 criteria was $ 0 and $ 250 , respectively.

As of June 30, 2022

and December 31, 2021, the value of the equity security valued using Level 3 criteria was $ 156 and $ 157 , respectively.

As of September 30, 2022 and December 31, 2021, the value of the fixed maturities valued using

Level 3 criteria was $ 475 and $ 250 , respectively.

As of September 30, 2022 and December 31, 2021, the value of the equity security valued using Level 3 criteria was $ 157 and $ 157 , 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

of June 30, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below:

of September 30, 2022, financial instruments carried at fair value were measured on a recurring basis as summarized below:

Quoted Prices in

12 unchanged sentences

The following table sets forth the

carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2022

carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of September 30, 2022

and December 31, 2021.

June 30, 2022

September 30, 2022

December 31, 2021

7 unchanged sentences

Junior subordinated debentures, net

Revolving credit facility

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.

12 unchanged sentences

The Company incurred and capitalized implementation costs of $ 500 during the year

ended December 31, 2021, and $ 958 during the six months ended June 30, 2022.

As a result, the Company has capitalized $ 1,458 in implementation costs in its condensed consolidated balance sheet as of June 30, 2022.

The Company expects the software will be substantially

ready for its intended use during 2023.

Accordingly, the Company has no t recorded any amortization expense related to software

implementation costs for the six months ended June 30, 2022.

ended December 31, 2021, and $ 1,357 during the nine months ended September 30, 2022.

As a result, the Company has capitalized $ 1,857 in implementation costs in its condensed consolidated balance sheet as of September 30, 2022.

The Company expects the software will be

substantially ready for its intended use during 2023.

Accordingly, the Company has no t recorded any amortization expense related to

software implementation costs for the nine months ended September 30, 2022.

Insurance Reserves for Losses and Claims

roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2022 and 2021 is as follows:

Six Months Ended

roll-forward of insurance reserves for losses and claims for the nine months ended September 30, 2022 and 2021 is as follows:

Nine Months Ended

September 30,

Beginning insurance reserves for losses and claims, gross

24 unchanged sentences

insurance benefits and losses incurred:

Six Months Ended

Nine Months Ended

September 30,

Total incurred losses

20 unchanged sentences

among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.

As of June 30, 2022, the Company had outstanding borrowings of $ 1,000 under the Credit Agreement.

As of September 30, 2022, the Company had outstanding borrowings of $ 1,000 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 Atlantic American;

The Company has two unconsolidated Connecticut statutory

business trusts, which exist for the exclusive purposes of:

(i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts;

(ii) investing the gross proceeds of the

Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of Atlantic American;

and (iii) engaging in those activities necessary or incidental thereto.

The financial structure of each of

Atlantic American Statutory Trust I and II as of June 30, 2022 was as follows:

Atlantic American Statutory Trust I and II as of September 30, 2022 was as follows:

Atlantic American

3 unchanged sentences

JUNIOR SUBORDINATED DEBENTURES (1) (2)

Principal amount owed June 30 , 2022

Principal amount owed September 30 , 2022

Treasury debt (3)

Net balance June 30 , 2022

Net balance September 30 , 2022

Net balance December 31, 2021

33 unchanged sentences

Three Months Ended

June 30 , 2022

September 30 , 2022

(In thousands)

3 unchanged sentences

Three Months Ended

September 30 , 2021

(In thousands)

Basic Earnings Per Common Share:

Basic and Diluted Loss Per Common Share:

Less preferred stock dividends

Net income applicable to common shareholders

Diluted Earnings Per Common Share:

Effect of Series D preferred stock

Net income applicable to common shareholders

Six Months Ended

Net loss applicable to common shareholders

Nine Months Ended

September 30,

(In thousands)

Basic and Diluted Income Per Common Share:

Basic and Diluted Earnings Per Common Share:

Less preferred stock dividends

Net income applicable to common shareholders

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

Basic and Diluted Income Per Common Share:

Basic and Diluted Earnings Per Common Share:

Less preferred stock dividends

Net income applicable to common shareholders

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for all periods presented, except for the three month period ended June 30, 2021, since its impact would have

been antidilutive.

Equity and Incentive

Compensation Plan

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 since its impact would have been antidilutive.

Equity and Incentive Compensation Plan

On May 1, 2012, the Company’s shareholders approved the 2012 Equity Incentive Plan (the “2012 Plan”).

2 unchanged sentences

shares, performance units and other awards for the purpose of providing the Company’s non-employee directors, consultants, officers and other employees incentives and rewards for superior performance.

During the six month period ended June 30,

During the nine month period ended September

30, 2022, a total of 25,000 restricted shares, with an estimated fair value of $ 69 were issued under the 2012 Plan.

During 2021, there were no restricted

shares issued under the 2012 Plan.

During 2021, there were no

restricted shares issued under the 2012 Plan.

The estimated fair value of the restricted shares issued under the 2012 Plan during 2022 was based on the common stock price at date of grant.

Stock grants are generally issued from treasury shares.

restricted shares generally occurs after a one to three year period following the date of grant .

The Company accounts for forfeitures as they occur.

Vesting of restricted shares generally occurs after a one to three year period following the date of grant .

The Company accounts for forfeitures as they

There were no stock options granted or outstanding under the 2012 Plan in 2022 or 20 21.

Shares available for future grant under the 2012 Plan at

December 31, 2021 were 935,200 .

Shares available for future grant

under the 2012 Plan at December 31, 2021 were 935,200 .

The 2012 Plan expired on April 30, 2022, ten years after its effective date.

As such, no grants have been or will

be made under the 2012 Plan on or after its expiration, but outstanding awards granted thereunder will continue in accordance with their terms.

grants have been or will be made under the 2012 Plan on or after its expiration, but outstanding awards granted thereunder will continue in accordance with their terms.

On May 24, 2022, the Company’s shareholders approved the 2022 Equity and Incentive Compensation Plan (the “2022 Plan”).

1 unchanged sentence

and succeeded the 2012 Plan for the purpose of providing the Company’s non-employee directors, consultants, officers and other employees incentives and rewards for superior performance.

As of June 30, 2022, no shares have been issued under the 2022 Plan .

As of September 30, 2022, no shares have been issued under the 2022 Plan .

A reconciliation of the differences between income taxes computed at the federal

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Federal income tax provision at statutory rate of 21 %

4 unchanged sentences

Penalties and fines

Adjustment for prior years' estimates to actual

Income tax expense (benefit)

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Current – Federal

9 unchanged sentences

lease expense is recognized on a straight-line basis over the term of the lease.

Lease expense reported for the six months ended June 30, 2022 and June 30, 202 1 was $ 507 .

Lease expense reported for the nine months ended September 30, 2022 and September 30, 202 1 was $ 761 .

Additional information regarding the Company’s real estate

operating leases is as follows:

Six Months Ended

Nine Months Ended

September 30,

Other information on operating leases:

11 unchanged sentences

Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet

As of June 30, 2022, the Company has no operating leases that

have not yet commenced.

As of September 30, 2022, the Company has no operating leases

that have not yet commenced.

Commitments and Contingencies

18 unchanged sentences

following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2022 and 2021.

September 30,

American Southern

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

American Southern

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

American Southern

5 unchanged sentences

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 six month periods ended June 30, 2022.

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, 2021 (the “2021 Annual Report”).

subsidiaries (collectively with the Parent, the “Company”) as of and for the three month and nine month periods ended September 30, 2022.

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, 2021 (the “2021 Annual Report”).

Atlantic American is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries:

3 unchanged sentences

is evaluated on its individual performance.

The Company recently formed a new life and health insurance entity, Atlantic Capital Life Assurance Company, a wholly owned subsidiary of Bankers Fidelity Life Insurance Company.

Effective October

14, 2022, Atlantic Capital Life Assurance Company obtained its Certificate of Authority from the Office of the Commissioner of Insurance of the State of Georgia.

Management intends to seek certificates of authority in additional states and expects

to commence operations sometime during 2023.

Critical Accounting Policies

7 unchanged sentences

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income (loss) for the three month and six month periods ended June 30, 2022 and the comparable periods in 2021:

The following presents the Company’s revenue, expenses and net income (loss) for the three month and nine month periods ended September 30, 2022 and the comparable periods in 2021:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Insurance premiums, net

Net investment income

Realized investment gains (losses), net

Realized investment gains, net

Unrealized gains (losses) on equity securities, net

11 unchanged sentences

are, to a limited extent, subject to discretion in terms of timing of realization).

A reconciliation of net income (loss) to operating income (loss) for the three month and six month periods ended June 30, 2022 and the comparable periods in 2021 is as follows:

A reconciliation of net income (loss) to operating income (loss) for the three month and nine month periods ended September 30, 2022 and the comparable periods in 2021 is as follows:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Reconciliation of Non-GAAP Financial Measure

2 unchanged sentences

Income tax expense (benefit)

Realized investment (gains) losses, net

Realized investment gains, net

Unrealized (gains) losses on equity securities, net

Non-GAAP operating income (loss)

On a consolidated basis, the Company had net loss of $1.7 million, or $0.09 per diluted share, for the three month period ended June 30, 2022, compared to net income of $3.0 million, or $0.14 per

diluted share, for the three month period ended June 30, 2021.

The Company had net income of $1.2 million, or $0.05 per diluted share, for the six month period ended June 30, 2022, compared to net income of $2.5 million, or $0.11 per diluted

share, for the six month period ended June 30, 2021.

The decrease in net income for the three month and six month periods ended June 30, 2022 was primarily attributable to the decrease in unrealized gains of $8.9 million and $7.4 million,

respectively, over the comparable periods in 2021.

For the three month period ended June 30, 2022, premium revenue increased $1.9 million, or 4.3%, to $47.1 million from $45.1 million in the comparable period in 2021.

For the six month period

ended June 30, 2022, premium revenue increased $2.9 million, or 3.2%, to $94.1 million from $91.2 million in the comparable period in 2021.

The increase in premium revenue was primarily attributable to an increase in business writings and price

increases in certain programs within the automobile physical damage and automobile liability lines of business in the property and casualty operations.

Also contributing to this increase in premium revenue was an increase in the life insurance

premiums in the life and health operations.

On a consolidated basis, the Company had net loss of $0.7 million, or $0.04 per diluted share, for the three month period ended September 30, 2022, compared to net loss of $0.9 million, or $0.05

per diluted share, for the three month period ended September 30, 2021.

The Company had net income of $0.5 million, or $0.01 per diluted share, for the nine month period ended September 30, 2022, compared to net income of $1.6 million, or $0.06

per diluted share, for the nine month period ended September 30, 2021.

The decrease in net loss for the three month period ended September 30, 2022 was primarily attributable to more favorable loss experience in the life and health operations,

partially offset by a decrease in unrealized gains of $3.5 million, from the comparable period in 2021.

The decrease in net income for the nine month period ended September 30, 2022 was primarily attributable to the decrease in unrealized gains of

$10.9 million from the comparable period in 2021, partially offset by more favorable loss experience in the life and health operations.

For the three month period ended September 30, 2022, premium revenue increased $0.3 million, or 0.6%, to $46.4 million from $46.1 million in the comparable period in 2021.

For the nine month

period ended September 30, 2022, premium revenue increased $3.2 million, or 2.3%, to $140.5 million from $137.3 million in the comparable period in 2021.

The increase in premium revenue was primarily attributable to an increase in business

writings and price increases in certain programs within the automobile liability line of business in the property and casualty operations.

Also contributing to this increase in premium revenue was an increase in group life insurance premiums in

the life and health operations.

Partially offsetting this increase was a decrease in the Medicare supplement line of business in the life and health operations.

Operating income increased $3.1 million in the three month period ended June 30, 2022 from the three month period ended June 30, 2021.

For the six month period ended June 30, 2022, operating income increased $6.1

million from the comparable period in 2021.

The increase in operating income was primarily due to favorable loss experience in the life and health operations, resulting from an increase in earned premium within the group lines of business coupled

with a decrease in the number of claims incurred in the Medicare supplement line of business.

Operating income increased $4.1 million in the three month period ended September 30, 2022 from the three month period ended September 30, 2021.

For the nine month period ended September 30, 2022, operating income

increased $10.2 million from the comparable period in 2021.

The increase in operating income was primarily due to favorable loss experience in the life and health operations, resulting from an increase in earned premium within the group lines of

business coupled with a decrease in the number of claims incurred in the Medicare supplement line of business.

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 six month periods ended June 30, 2022 and the comparable periods in 2021:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

8 unchanged sentences

Combined ratio

Gross written premiums at American Southern increased $6.5 million, or 19.8%, during the three month period ended June 30, 2022 and $6.6 million, or 14.9%, during the six month period ended June

30, 2022, from the comparable periods in 2021.

The increase in gross written premiums during the three month and six month periods ended June 30, 2022 was primarily attributable to an increase in premiums written in the automobile physical damage

and automobile liability lines of business, resulting from new business writings and price increases in certain programs.

Ceded premiums increased $0.2 million, or 10.0%, during the three month period ended June 30, 2022 and $0.1 million, or 2.8%, during the six month period ended June 30, 2022, from the comparable

periods in 2021.

Gross written premiums at American Southern decreased $1.5 million, or 11.1%, during the three month period ended September 30, 2022 and increased $5.1 million, or 8.7%, during the nine month

period ended September 30, 2022, from the comparable periods in 2021.

The decrease in gross written premiums during the three month period ended September 30, 2022 was primarily attributable to the decrease in premiums written in the automobile

physical damage line of business.

The increase in gross written premiums during the nine month period ended September 30, 2022 was primarily attributable to an increase in premiums written in the automobile liability line of business, resulting

from new business writings and price increases in certain programs.

Ceded premiums decreased slightly during the three month period ended September 30, 2022 and increased slightly during the nine month period ended September 30, 2022, from the comparable periods in

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.

Partially offsetting the increase in ceded premiums in 2022

was a decrease in ceding rates for two large programs in the automobile liability line of business.

The following presents American Southern’s net earned premiums by line of business for the three month and six month periods ended June 30, 2022 and the comparable periods in 2021:

However, during the three month period ended September 30, 2022, the

decrease in ceded premiums was primarily due to the decrease in the automobile physical damage line of business, coupled with a decrease in ceding rates for two large programs in the automobile liability line of business.

The following presents American Southern’s net earned premiums by line of business for the three month and nine month periods ended September 30, 2022 and the comparable periods in 2021:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

General liability

Net earned premiums increased $2.4 million, or 14.7%, during the three month period ended June 30, 2022, and $3.1 million, or 9.5%, during the six month period ended June 30, 2022, over the

comparable periods in 2021.

The increase in net earned premiums was primarily attributable to an increase in business writings and price increases in certain programs within the automobile physical damage and automobile liability lines of business

as previously mentioned.

Net earned premiums increased $0.3 million, or 1.9%, during the three month period ended September 30, 2022, and $3.5 million, or 6.9%, during the nine month period ended September 30, 2022, over

the comparable periods in 2021.

The increase in net earned premiums was primarily attributable to an increase in business writings and price increases in certain programs within the automobile liability line of business as previously mentioned.

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.

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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 increased $3.9 million, or 38.2%, during the three month period ended June 30, 2022, and increased $2.6 million, or 11.9%, during the six

month period ended June 30, 2022, over the comparable periods in 2021.

As a percentage of earned premiums, insurance benefits and losses incurred were 74.8% in the three month period ended June 30, 2022, compared to 62.1% in the three month period

ended June 30, 2021.

For the six month period ended June 30, 2022, this ratio increased to 67.9% from 66.4% in the comparable period in 2021.

The increase in the loss ratio during the three month and six month periods ended June 30, 2022 was

mainly due to severity of losses reported from programs within the automobile liability line of business.

Partially offsetting this increase was a decrease in the frequency of claims in the automobile physical damage line of business.

Commissions and underwriting expenses decreased $0.5 million, or 9.8%, during the three month period ended June 30, 2022, and increased $1.1 million, or 11.9% during the six month period ended June

30, 2022, over the comparable periods in 2021.

As a percentage of earned premiums, underwriting expenses were 25.4% in the three month period ended June 30, 2022, compared to 32.3% in the three month period ended June 30, 2021.

For the six month

period ended June 30, 2022, this ratio increased to 29.7% from 29.0% in the comparable period in 2021.

The decrease in the expense ratio during the three month period ended June 30, 2022 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.

During the three month period ended June 30, 2022, variable commissions decreased by $0.7 million from the

comparable period in 2021 due to less favorable loss experience from accounts subject to variable commissions.

During the six month period ended June 30, 2022, variable commissions increased by $0.4 million, respectively, from the comparable period

in 2021 due to favorable loss experience from accounts subject to variable commissions.

Insurance benefits and losses incurred at American Southern increased $0.4 million, or 3.3%, during the three month period ended September 30, 2022, and increased $3.0 million, or 8.9%, during the

nine month period ended September 30, 2022, over the comparable periods in 2021.

As a percentage of earned premiums, insurance benefits and losses incurred were 68.2% in the three month period ended September 30, 2022, compared to 67.3% in the

three month period ended September 30, 2021.

For the nine month period ended September 30, 2022, this ratio increased to 68.0% from 66.7% in the comparable period in 2021.

The increase in the loss ratio during the three month and nine month

periods ended September 30, 2022 was mainly due to severity of losses reported from programs within the automobile liability line of business.

Partially offsetting this increase was a decrease in the frequency of claims in the automobile physical

damage line of business.

Commissions and underwriting expenses decreased $0.3 million, or 5.3%, during the three month period ended September 30, 2022, and increased $0.9 million, or 6.1% during the nine month period ended

September 30, 2022, over the comparable periods in 2021.

As a percentage of earned premiums, underwriting expenses were 26.2% in the three month period ended September 30, 2022, compared to 28.1% in the three month period ended September 30, 2021.

For the nine month period ended September 30, 2022, this ratio decreased to 28.5% from 28.7% in the comparable period in 2021.

The decrease in the expense ratio during the three month and nine month periods ended September 30, 2022 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.

Bankers Fidelity

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

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

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Combined ratio

Net earned premium revenue at Bankers Fidelity decreased $0.5 million, or 1.7%, during the three month period ended June 30, 2022, and $0.2 million, or 0.4%, during the six month period ended June

Net earned premium revenue at Bankers Fidelity remained consistent during the three month period ended September 30, 2022, and decreased $0.2 million, or 0.3%, during the nine month period ended

September 30, 2022, from the comparable periods in 2021.

Gross earned premiums from the Medicare supplement line of business decreased $3.6 million, or 8.9%, during the three month period ended September 30, 2022, and $10.2 million, or 8.4%, during

the nine month period ended September 30, 2022, due primarily to non-renewals exceeding the level of new business writings.

Other health product premiums increased $0.6 million, or 22.1%, during the three month period ended September 30, 2022, and

$1.8 million, or 23.7%, during the nine month period ended September 30, 2022, over the comparable periods in 2021, 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 $1.6 million, or 68.0%, during the three month period ended September 30, 2022, and increased $4.4 million, or 56.6%, during the nine month period ended September 30, 2022, over the comparable periods in

2021, 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 $1.3 million, or 8.0%, during the three month period ended September 30, 2022 and $3.8 million, or 7.6%, during the nine month period ended September 30, 2022,

from the comparable periods in 2021.

Gross earned premiums from the Medicare supplement line of business decreased $3.6 million, or 8.8%, during the three month period ended June 30, 2022, and $6.6 million, or 8.1%, during the six month

period ended June 30, 2022, due primarily to non-renewals exceeding the level of new business writings.

Other health product premiums increased $0.6 million, or 24.5%, during the three month period ended June 30, 2022, and $1.2 million, or 24.5%,

during the six month period ended June 30, 2022, over the comparable periods in 2021, 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 $1.1 million, or 45.7%, during the three month period ended June 30, 2022, and increased $2.8 million, or 51.5%, during the six month period ended June 30, 2022, over the comparable periods in 2021, 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

Premiums ceded decreased $1.4 million, or 8.4%, during the three month period ended June 30, 2022 and $2.5 million, or 7.4%, during the six month period ended June 30, 2022.

The decrease in ceded premiums for the three month and six

month periods ended June 30, 2022 was due to a decrease in Medicare supplement premiums subject to reinsurance.

Insurance benefits and losses incurred decreased $2.8 million, or 13.1%, during the three month period ended June 30, 2022, and $3.7 million, or 8.5%, during the six month period ended June 30, 2022, from the

comparable periods in 2021.

As a percentage of earned premiums, benefits and losses were 66.1% in the three month period ended June 30, 2022, compared to 74.9% in the three month period ended June 30, 2021.

For the six month period ended June 30,

2022, this ratio decreased to 67.9% from 73.9% in the comparable period in 2021.

The decrease in the loss ratio for the three month and six month periods ended June 30, 2022 was primarily due to a decrease in the loss ratio in the Medicare

supplement line of business as a result of improved rate adequacy, as well as a decrease in the loss ratio in the group lines of business.

Commissions and underwriting expenses decreased $1.4 million, or 15.8%, during the three month period ended June 30, 2022, and $2.5 million, or 13.5%, during the six month period ended June 30,

2022, over the comparable periods in 2021.

As a percentage of earned premiums, underwriting expenses were 26.1% in the three month period ended June 30, 2022, compared to 30.4% in the three month period ended June 30, 2021.

For the six month

period ended June 30, 2022, this ratio decreased to 27.8% from 32.0% in the comparable period in 2021.

The decrease in the expense ratio for the three month and six month periods ended June 30, 2022 was primarily due to the level of additions to

deferred acquisition costs ("DAC") exceeding the amortization of DAC.

Net Investment Income and Realized Gains (Losses)

Investment income increased $0.3 million, or 11.6%, during the three month period ended June 30, 2022, and $0.5 million, or 11.2%, during the six month period ended June 30, 2022, over the

comparable periods in 2021.

The increase in investment income was primarily attributable to prepayment income of $0.3 million in each of the three month and six month periods ended June 30, 2022, from the comparable periods in 2021, related to the

redemption of certain fixed maturities.

Also, contributing to the increase in investment income was an increase in the equity in earnings from investments in the Company's limited liability companies of $0.04 million and $0.1 million,

respectively.

The Company had net realized investment losses of $0.1 million during the three month period ended June 30, 2022, compared to net realized investment gains of $0.1 during the three month period

ended June 30, 2021.

The Company had net realized investment losses of $0.1 million during the six month period ended June 30, 2022 and net realized investment gains of $0.2 during the six month period ended June 30, 2021.

The net realized

investment losses during the three month and six month periods ended June 30, 2022 resulted primarily from the redemption of several of the Company’s investments in fixed maturity securities.

The net realized investment gains during the three month

and six month periods ended June 30, 2021 resulted from the disposition 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.

The decrease in ceded premiums for the three month and nine month periods ended September 30, 2022 was due to a decrease in Medicare supplement premiums subject to reinsurance.

Insurance benefits and losses incurred decreased $4.8 million, or 20.5%, during the three month period ended September 30, 2022, and $8.5 million, or 12.7%, during the nine month period ended September 30, 2022, from

the comparable periods in 2021.

As a percentage of earned premiums, benefits and losses were 64.7% in the three month period ended September 30, 2022, compared to 81.3% in the three month period ended September 30, 2021.

For the nine month period

ended September 30, 2022, this ratio decreased to 66.8% from 76.4% in the comparable period in 2021.

The decrease in the loss ratio for the three month and nine month periods ended September 30, 2022 was primarily due to a decrease in the loss

ratio in the Medicare supplement line of business as a result of improved rate adequacy, partially offset by an increase in the loss ratio in the group lines of business.

Commissions and underwriting expenses increased $1.0 million, or 10.7%, during the three month period ended September 30, 2022, and decreased $1.6 million, or 5.7%, during the nine month period

ended September 30, 2022, over the comparable periods in 2021.

As a percentage of earned premiums, underwriting expenses were 34.4% in the three month period ended September 30, 2022, compared to 31.1% in the three month period ended September 30,

For the nine month period ended September 30, 2022, this ratio decreased to 30.0% from 31.7% in the comparable period in 2021.

The increase in the expense ratio for the three month period ended September 30, 2022 was primarily due to an

increase in commission expense and insurance servicing costs resulting from new sales within the group life line of business.

The decrease in the expense ratio for the nine month period ended September 30, 2022 was primarily due to the level of

additions to deferred acquisition costs ("DAC") exceeding the amortization of DAC.

Net Investment Income and Realized Gains

Investment income increased $0.5 million, or 23.6%, during the three month period ended September 30, 2022, and $1.0 million, or 15.3%, during the nine month period ended September 30, 2022, over

the comparable periods in 2021.

The increase in investment income in each of the three month and nine month periods ended September 30, 2022, from the comparable periods in 2021, was primarily attributable to the increase in the equity in earnings

from investments in the Company's limited liability companies of $0.3 million and $0.4 million, respectively.

Also, contributing to the increase in investment income during the nine month period ended September 30, 2022 from the comparable period

in 2021 was prepayment income of $0.3 million related to the redemption of certain fixed maturities.

The Company had net realized investment gains of $0.1 million during the three month period ended September 30, 2022, compared to net realized investment gains of $0.3 million during the three

month period ended September 30, 2021.

The Company had net realized investment gains of nil during the nine month period ended September 30, 2022 and net realized investment gains of $0.5 million during the nine month period ended September 30,

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 certain fixed maturity securities.

The net realized investment gains during the three month and nine month periods ended September 30, 2021 resulted from the disposition of several of the Company’s investments in fixed maturity

Management continually evaluates the Company’s investment portfolio and makes adjustments for impairments and/or divests investments as may be determined to be appropriate.

Unrealized Gains (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.

Company recognized net unrealized losses on equity securities of $4.9 million during the three month period ended June 30, 2022 and unrealized gains on equity securities of $4.0 million during the three month period ended June 30, 2021.

Company recognized net unrealized losses on equity securities of $2.7 million during the six month period ended June 30, 2022 and unrealized gains on equity securities of $4.7 million during the six month period ended June 30, 2021.

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.

Company recognized net unrealized losses on equity securities of $2.8 million during the three month period ended September 30, 2022 and unrealized gains on equity securities of $0.7 million during the three month period ended September 30, 2021.

The Company recognized net unrealized losses on equity securities of $5.5 million during the nine month period ended September 30, 2022 and unrealized gains on equity securities of $5.5 million during the nine month period ended September 30,

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 $0.1 million, or 19.3%, during the three month period ended June 30, 2022, and $0.1 million, or 10.8%, during the six month period ended June 30, 2022, from the

comparable periods in 2021.

Interest expense increased $0.2 million, or 50.7%, during the three month period ended September 30, 2022, and $0.3 million, or 24.1%, during the nine month period ended September 30, 2022, from

the comparable periods in 2021.

Changes in interest expense were primarily due to changes in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior

Subordinated Debentures”) are directly related to LIBOR.

Subordinated Debentures”) and the revolving credit facility are directly related to LIBOR.

The Company is preparing for the expected discontinuation of LIBOR by identifying, assessing and monitoring risks associated with LIBOR transition.

Preparation includes taking steps to

update operational processes to support alternative reference rates and models, as well as evaluating legacy contracts for any changes that may be required, including the determination of applicable fallbacks.

Preparation includes taking steps to update operational processes to support alternative reference rates and models, as well as evaluating legacy contracts for any changes that may be required, including the determination of applicable fallbacks.

Liquidity and Capital Resources

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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.

June 30, 2022, the Parent had approximately $4.4 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $2.2 million for the six month period ended June 30, 2022, compared to statutory net income of $1.5 million for the six month

period ended June 30, 2021.

September 30, 2022, the Parent had approximately $3.8 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $5.7 million for the nine month period ended September 30, 2022, compared to statutory net income of $0.8 million for the nine

month period ended September 30, 2021.

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

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.

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;

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recognizing realized investment gains of the individual insurance subsidiaries.

At June 30, 2022, American Southern had $52.5 million of statutory capital and surplus and Bankers Fidelity had $35.9 million of statutory capital and surplus.

At September 30, 2022, American Southern had $53.0 million of statutory capital and surplus and Bankers Fidelity had $35.3 million of statutory capital and surplus.

2022, dividend payments by the Parent’s insurance subsidiaries in excess of $5.6 million would require prior approval.

Through June 30, 2022, the Parent received dividends of $3.0 million from its subsidiaries.

Through September 30, 2022, the Parent received dividends of $4.5 million from its subsidiaries.

The Parent provides certain administrative and other services to each of its insurance subsidiaries.

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The margin ranges from 4.00% to 4.10%.

At June 30, 2022, the effective interest rate was 5.56%.

At September 30, 2022, the effective interest rate was

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 June 30, 2022,

the Company has not made such an election.

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.

September 30, 2022, 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 June 30, 2022, 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.

At September 30, 2022, 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;

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 June 30, 2022, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.2 million.

At September 30, 2022, 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.

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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 $8.2 million, as of June 30, 2022.

Additional FHLB stock purchases

may be required based upon the amount of funds borrowed from the FHLB.

As of June 30, 2022, BFLIC has pledged bonds having an amortized cost of $7.9 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 2022, BFLIC does not have any outstanding borrowings from the FHLB.

The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.0 million, as of September 30, 2022.

Additional FHLB stock

purchases may be required based upon the amount of funds borrowed from the FHLB.

As of September 30, 2022, BFLIC has pledged bonds having an amortized cost of $7.3 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, 2022, 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”).

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things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.

As of June 30, 2022, the Company had outstanding borrowings of $1.0 million under the Credit Agreement.

Cash and cash equivalents decreased from $24.8 million at December 31, 2021 to $15.9 million at June 30, 2022.

The decrease in cash and cash equivalents during the six month period ended June 30,

2022 was primarily attributable to net cash used in investing activities of $5.0 million primarily as a result of investment purchases exceeding investment sales and maturity of securities.

Also contributing to the decrease in cash and cash

equivalents was net cash used in operating activities of $4.4 million.

Partially offsetting the decrease in cash and cash equivalents was net cash provided by financing activities primarily as a result of proceeds from bank financing of $1.0

As of September 30, 2022, the Company had outstanding borrowings of $1.0 million under the Credit Agreement.

Cash and cash equivalents decreased from $24.8 million at December 31, 2021 to $21.9 million at September 30, 2022.

The decrease in cash and cash equivalents during the nine month period ended

September 30, 2022 was primarily attributable to net cash used in operating activities of $2.2 million.

Also contributing to the decrease in cash and cash equivalents was net cash used in investing activities of $1.1 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 $0.5 million primarily as a result of proceeds from bank

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

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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-Q

Item 1. Financial Statements