4 unchanged sentences
(In thousands, except share and per share data)
−Removed: September 30,
Cash and cash equivalents
8 unchanged sentences
Total investments
−Removed: Reinsurance (net of allowance for uncollectible reinsurance of $ 64 and $ 0 )
−Removed: Insurance premiums and other (net of allowance for expected credit losses $ 191
−Removed: and net of allowance for doubtful accounts $ 177 )
+Added: Reinsurance (net of allowance for expected credit losses of $ 56 and $ 61 )
+Added: Insurance premiums and other (net of allowance for expected credit losses of $ 216
Deferred income taxes, net
23 unchanged sentences
Retained earnings
−Removed: Accumulated other comprehensive income
+Added: Accumulated other comprehensive loss
Unearned stock grant compensation
5 unchanged sentences
ATLANTIC AMERICAN CORPORATION
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF
−Removed: Dollars in thousands, except per share data)
+Added: CONDENSED CO NSOLIDATED STATEMENTS OF OPERATIONS
+Added: In thousands, except per share data)
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Insurance premiums, net
Net investment income
−Removed: Realized investment gains, net
Unrealized losses on equity securities, net
6 unchanged sentences
Total benefits and expenses
−Removed: Income (loss) before income taxes
−Removed: Income tax expense (benefit)
−Removed: Net income (loss)
+Added: Loss before income taxes
+Added: Income tax benefit
Preferred stock dividends
−Removed: Net income (loss) applicable to common shareholders
−Removed: Earnings (loss) per common share (basic)
−Removed: Earnings (loss) per common share (diluted)
+Added: Net loss applicable to common shareholders
+Added: Loss per common share (basic and diluted)
The accompanying notes are an integral part of these condensed consolidated financial statements.
ATLANTIC AMERICAN CORPORATION
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF
−Removed: COMPREHENSIVE LOSS
−Removed: Dollars in thousands)
+Added: CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
+Added: In thousands)
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Net income (loss)
−Removed: Other comprehensive loss:
+Added: Other comprehensive income (loss):
Available-for-sale fixed maturity securities:
−Removed: Gross unrealized holding losses arising in the period
−Removed: Related income tax effect
−Removed: reclassification adjustment for net realized gains included in net income (loss)
+Added: Gross unrealized holding gains (losses) arising in the period
Related income tax effect
−Removed: Total other comprehensive loss, net of tax
−Removed: Total comprehensive loss
+Added: Total other comprehensive income (loss), net of tax
+Added: Total comprehensive income (loss)
The accompanying notes are an integral part of these condensed consolidated financial statements.
ATLANTIC AMERICAN CORPORATION
−Removed: CONDENSED CONSOLIDATED STATEMENTS OF
+Added: CONDENSED CONSOLIDATED
+Added: STATEMENTS OF
SHAREHOLDERS’ EQUITY
−Removed: Dollars in thousands except share data)
+Added: In thousands except share and per share data)
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Preferred stock:
6 unchanged sentences
Balance, beginning of period
−Removed: Restricted stock grants, net of forfeitures
Balance, end of period
2 unchanged sentences
Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2023
−Removed: Net income (loss)
Dividends on common stock
3 unchanged sentences
Balance, beginning of period
−Removed: Other comprehensive loss, net of tax
+Added: Other comprehensive income (loss), net of tax
Balance, end of period
1 unchanged sentence
Balance, beginning of period
−Removed: Restricted stock grants, net of forfeitures
Amortization of unearned compensation
2 unchanged sentences
Balance, beginning of period
−Removed: Restricted stock grants, net of forfeitures
Net shares acquired related to employee share-based compensation plans
5 unchanged sentences
Net shares acquired under employee share-based compensation plans
−Removed: Restricted stock grants, net of forfeitures
Balance, end of period
3 unchanged sentences
In thousands)
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Adjustments to reconcile net income to net cash used in operating activities:
−Removed: Amortization of (additions to) acquisition costs, net
−Removed: Realized investment gains, net
+Added: Adjustments to reconcile net loss income to net cash used in operating activities:
+Added: Amortization of acquisition costs, net
Unrealized losses on equity securities, net
−Removed: Losses (earnings) from equity method investees
+Added: Losses from equity method investees
Compensation expense related to share awards
+Added: Provision for credit losses
Depreciation and amortization
Deferred income tax benefit
−Removed: Increase in receivables, net
−Removed: (Decrease) increase in insurance reserves and policyholder funds
+Added: Decrease in receivables, net
+Added: Decrease in insurance reserves and policyholder funds
Decrease in accounts payable and accrued expenses
7 unchanged sentences
CASH FLOWS FROM FINANCING ACTIVITIES:
−Removed: Payment of dividends on common stock
Treasury stock acquired — net employee share-based compensation
6 unchanged sentences
Cash paid for interest
−Removed: Cash paid for income taxes
The accompanying notes are an integral part of these condensed consolidated financial statements.
18 unchanged sentences
the year ended December 31, 2023 (the “2023 Annual Report”).
−Removed: The Company’s financial condition and results of operations and cash flows as of and for the three month and nine month periods ended September 30, 2023 are not necessarily indicative of
−Removed: the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2023 or for any other future period.
+Added: For more information regarding Significant Accounting Policies, see the “Summary of Significant Accounting Policies” section of Note 1 of Notes to Consolidated Financial Statements in the
+Added: 2023 Annual Report.
+Added: The Company’s financial condition and results of operations and cash flows as of and for the three month period ended March 31, 2024 are not necessarily indicative of the financial condition or results of operations and cash
+Added: flows that may be expected for the year ending December 31, 2024 or for any other future period.
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
1 unchanged sentence
Actual results could differ materially from those estimates.
+Added: To the extent that the Company changes its accounting for, or presentation of, items
+Added: in the financial statements, the presentation of such amounts in prior periods is changed to conform to the current period presentation, if appropriate, and disclosed, if material.
Recently Issued Accounting Standards
−Removed: Adoption of New Accounting Standards
−Removed: Reference Rate Reform .
−Removed: In March 2020, the FASB issued ASU No.
−Removed: 2020-04, Reference Rate Reform (Topic 848):
−Removed: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).
−Removed: This guidance provides optional expedients and exceptions for applying GAAP to investments, derivatives, or other transactions that reference the
−Removed: London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform.
−Removed: Along with the optional expedients, the amendments include a general principle that permits an entity to consider
−Removed: contract modifications due to reference reform to be an event that does not require contract re-measurement at the modification date or reassessment of a previous accounting determination.
−Removed: Additionally, a company may make a one-time election to
−Removed: sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that were classified as held to maturity before January 1, 2020.
−Removed: The Company adopted the
−Removed: guidance as of June 30, 2023.
−Removed: The adoption of the guidance had no significant impact on the Company’s financial condition and results of operations.
−Removed: Financial Instruments – Credit Losses.
−Removed: In June 2016, the FASB issued ASU No.
−Removed: 2016-13, Financial Instruments – Credit Losses
−Removed: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).
−Removed: The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial
−Removed: instruments measured at amortized cost (including reinsurance recoverables, premium and other receivables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures.
−Removed: The estimate of expected
−Removed: credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments.
−Removed: The expected credit losses, and subsequent adjustments to such losses, are recorded
−Removed: through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.
−Removed: The updated guidance also amends the previous other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account
−Removed: and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value.
−Removed: In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of
−Removed: whether a credit loss exists.
−Removed: The Company adopted the updated guidance as of January 1, 2023.
−Removed: guidance was applied by a cumulative effect adjustment to the opening balance of retained earnings as of January 1, 2023, the beginning of the period of adoption.
−Removed: The adoption of this guidance resulted in the recognition of an after-tax
−Removed: cumulative effect adjustment of $ 0.1 million to reflect the impact of recognizing expected credit losses, as compared to incurred
−Removed: credit losses recognized under the previous guidance.
−Removed: This adjustment is primarily associated with reinsurance recoverables, premium and other receivables.
−Removed: The cumulative effect adjustment decreased retained earnings as of January 1, 2023 and
−Removed: increased the allowance for estimated uncollectible reinsurance.
−Removed: Impact of Adoption on Condensed Consolidated Balance Sheet
−Removed: Reinsurance Recoverables
−Removed: The following table presents the balances of reinsurance recoverables, net of the allowance for estimated uncollectible reinsurance, at January 1, 2023 and September 30, 2023, and the changes in the allowance for estimated
−Removed: uncollectible reinsurance for the nine months ended September 30, 2023.
−Removed: At and for the nine
−Removed: months ended September 30, 2023
−Removed: (in thousands)
−Removed: Reinsurance Recoverables,
−Removed: Net of Allowance for Estimated
−Removed: Uncollectible Reinsurance
−Removed: Allowance for Estimated
−Removed: Uncollectible Reinsurance
−Removed: Balance, beginning of period
−Removed: Cumulative effect of adoption of updated accounting guidance for
−Removed: credit losses at January 1, 2023
−Removed: Current period change for estimated uncollectible reinsurance
−Removed: Write-offs of uncollectible reinsurance recoverables
−Removed: Balance, end of period
−Removed: Insurance Premium and Other Receivables
−Removed: The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at January 1, 2023 and September 30, 2023, and the changes in the allowance
−Removed: for doubtful accounts/expected credit losses for the nine months ended September 30, 2023.
−Removed: At and for the nine months ended September 30, 2023
−Removed: (in thousands)
−Removed: Insurance Premiums and Other,
−Removed: Net of Expected Credit Losses
−Removed: Allowance for Doubtful
−Removed: Accounts/Expected Credit
−Removed: Balance, beginning of period
−Removed: Cumulative effect of adoption of updated accounting guidance for
−Removed: credit losses at January 1, 2023
−Removed: Current period change for expected credit losses
−Removed: Write-offs of uncollectible insurance premiums and other receivables
−Removed: Balance, end of period
Future Adoption of New Accounting Standards
1 unchanged sentence
adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2023 Annual Report.
−Removed: Accounting Policies
−Removed: The following accounting policies have been updated to reflect the Company’s
−Removed: adoption of Financial Instruments - Credit Losses, as described above.
−Removed: Credit Impairments of Fixed Maturities
−Removed: The Company’s investments in fixed maturities, which include bonds and redeemable preferred stocks, are classified as “available-for-sale” and, accordingly, are carried at fair value with the after-tax difference from
−Removed: amortized cost, less allowance for credit losses (“ACL”), as adjusted if applicable, reflected in shareholders’ equity as a component of accumulated other comprehensive income or loss.
−Removed: The Company’s equity securities, which include common and
−Removed: non-redeemable preferred stocks, are carried at fair value with changes in fair value reported in net income.
−Removed: The fair values of fixed maturities and equity securities are largely determined from publicly quoted market prices, when available, or
−Removed: independent broker quotations.
−Removed: Values that are not determined using quoted market prices inherently involve a greater degree of judgment and uncertainty and therefore ultimately greater price volatility than the value of securities with publicly
−Removed: quoted market prices.
−Removed: Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position.
−Removed: An OTTI was recognized in earnings within realized investment gains (losses)
−Removed: when it was anticipated that the amortized cost would not be recovered.
−Removed: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery,
−Removed: the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value.
−Removed: If neither of these conditions existed, the difference between the amortized cost of the
−Removed: security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings.
−Removed: If the estimated fair value was less than the present value of projected future cash
−Removed: flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI.
−Removed: On January 1, 2023, the Company adopted accounting standards update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), using a modified
−Removed: retrospective approach.
−Removed: Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within realized investment gains (losses) when it is anticipated that the amortized cost will not be recovered.
−Removed: (i) the Company has the intent to sell the security;
−Removed: or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the
−Removed: entire difference between the security’s amortized cost and estimated fair value.
−Removed: If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be
−Removed: collected is recognized as a credit loss by establishing an ACL with a corresponding charge to earnings in realized investment gains (losses).
−Removed: However, the ACL is limited by the amount that the fair value is less than the amortized cost.
−Removed: limitation is known as the “fair value floor.” If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors
−Removed: (“noncredit loss”) is recorded in OCI.
−Removed: Reinsurance Recoverables
−Removed: The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against
−Removed: catastrophic losses.
−Removed: In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer.
−Removed: The reinsurer assumes the exposure in return for a portion of the premiums.
−Removed: ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance
−Removed: Amounts currently recoverable under reinsurance agreements are included in reinsurance receivables and amounts currently payable are included in other liabilities.
−Removed: Assets and liabilities relating
−Removed: to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement.
−Removed: In the event that reinsurers do not meet their obligations to the Company under the terms of
−Removed: the reinsurance agreements, reinsurance recoverable balances could become uncollectible.
−Removed: In such instances, reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance.
−Removed: Insurance Premiums and Other Receivables
−Removed: Receivables amounts due from insureds and agents are evaluated periodically for collectibility.
−Removed: Allowances for expected credit losses are established, as and when a loss has been determined probable, against the related
−Removed: An allowance for expected credit loss is recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical and expected experience.
−Removed: The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, ACL and cost or amortized
−Removed: cost of the Company’s investments in fixed maturities and equity securities, aggregated by type and industry, as of September 30, 2023
−Removed: and December 31, 2022.
+Added: The following tables set forth the estimated fair value, gross unrealized gains, gross unrealized losses, allowance for credit losses and cost or amortized cost of the Company’s investments in fixed maturities and
+Added: equity securities, aggregated by type and industry, as of March 31, 2024 and December 31, 2023.
Fixed maturities were comprised of the following:
−Removed: September 30, 2023
+Added: March 31, 2024
+Added: Allowance for
Credit Losses
14 unchanged sentences
December 31, 2023
+Added: Allowance for
+Added: Credit Losses
Fixed maturities:
13 unchanged sentences
Bonds having an amortized cost of $ 14,676
−Removed: and $ 12,333 and included in the tables above were on deposit with insurance regulatory authorities as of September 30, 2023 and December
+Added: and $ 14,647 and included in the tables above were on deposit with insurance regulatory authorities as of March 31, 2024 and December 31,
2023, respectively, in accordance with statutory requirements.
−Removed: Additionally, bonds having an amortized cost of $ 6,883 and $ 7,221 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at September 30, 2023 and December
+Added: In addition, the Company maintains cash and cash equivalents on deposit with insurance regulatory authorities of $ 226
+Added: as of March 31, 2024 and December 31, 2023.
+Added: Additionally, bonds having an amortized cost of $ 9,498 and $ 9,584 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at March 31, 2024 and December 31,
2023, respectively.
Equity securities were comprised of the following:
−Removed: September 30, 2023
+Added: March 31, 2024
Equity securities:
1 unchanged sentence
Financial services
−Removed: Other business – diversified
+Added: Communications
Total equity securities
3 unchanged sentences
Financial services
−Removed: Other business – diversified
+Added: Communications
Total equity securities
−Removed: The carrying value and amortized cost of the Company’s investments in fixed maturities at September 30, 2023 and December 31, 2022 by contractual
+Added: The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2024 and December 31, 2023 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.
−Removed: September 30, 2023
+Added: March 31, 2024
December 31, 2023
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
−Removed: unrealized loss position as of September 30, 2023 and December 31, 2022.
−Removed: September 30, 2023
+Added: unrealized loss position as of March 31, 2024 and December 31, 2023.
+Added: March 31, 2024
Less than 12 months
13 unchanged sentences
Total temporarily impaired securities
−Removed: Analysis of Securities in Unrealized Loss Positions
−Removed: As of September 30, 2023 and December 31, 2022, there were 251 and 237 securities, respectively, in an unrealized loss position which
−Removed: primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors.
−Removed: The unrealized losses on the Company’s fixed
−Removed: maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.
−Removed: For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the
−Removed: drivers of the declines are due to general market drivers, such as the recent increases in interest rates, or due to credit-related factors.
−Removed: Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources
−Removed: to securities with real credit-related concerns that could impact the ultimate collection of principal and interest.
−Removed: For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more
−Removed: focused review of the related issuers’ specific credit profile.
−Removed: For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial
−Removed: statements and other available financial data.
−Removed: For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors.
−Removed: The Company utilizes information available in the public domain and, for certain
−Removed: private placement issuers, from consultations with the issuers directly.
−Removed: The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns
−Removed: including seniority in the issuer’s capital structure, covenant protections, or other relevant features.
−Removed: From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and
−Removed: Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near
−Removed: Based on its credit analysis, the Company believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company.
−Removed: In addition, the Company does not
−Removed: intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
−Removed: However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the
−Removed: present value of the cash flows expected to be collected due to credit related factors and as a result, a credit allowance will be estimated.
−Removed: The Company had no ACL on its available-for-sale fixed maturities as of September 30, 2023.
−Removed: The following tables summarize realized investment gains for the three month and nine month periods ended September 30, 2023 and 2022.
−Removed: Three Months Ended
−Removed: September 30, 2023
−Removed: Invested Assets
−Removed: Realized investment gains, net
−Removed: Three Months Ended
−Removed: September 30, 2022
−Removed: Invested Assets
−Removed: Realized investment gains, net
−Removed: Nine Months Ended
−Removed: September 30, 2023
−Removed: Invested Assets
−Removed: Realized investment gains, net
−Removed: Nine Months Ended
−Removed: September 30, 2022
−Removed: Invested Assets
−Removed: Realized investment gains (losses), net
−Removed: The following table presents the change in unrealized losses related to equity securities still held for the three month and nine month periods
−Removed: ended September 30, 2023 and 2022.
+Added: of Securities in Unrealized Loss Positions
+Added: As of March 31, 2024 and December 31, 2023, there were 224 and 222 securities,
+Added: respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer
+Added: The unrealized
+Added: losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest
+Added: and repay principal.
+Added: any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent rise in interest rates, or
+Added: due to credit-related factors.
+Added: Identifying the drivers of the declines in fair value helps to focus the Company’s attention on securities with credit-related concerns that could impact the ultimate collection of principal and interest.
+Added: significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuer’s specific credit profile.
+Added: corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data.
+Added: For non-corporate issuers, the Company analyzes all
+Added: reasonably available sources of credit support, including issuer-specific factors.
+Added: The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly.
+Added: Company also considers ratings from Nationally Recognized Statistical Rating Organizations, as well as the specific characteristics of the security it owns including seniority in the issuer’s capital structure, covenant protections, or other
+Added: relevant features.
+Added: From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.
+Added: no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity.
+Added: Based on its credit analysis, the Company believes that the issuers of its fixed maturity
+Added: investments in the sectors shown in the table above have the ability to service their obligations to the Company, and the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell
+Added: the investments before recovery of their amortized cost bases, which may be at maturity.
+Added: However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors and as a
+Added: result, a credit allowance will be estimated.
+Added: The Company had no allowance for expected credit losses on its available-for-sale
+Added: fixed maturities as of March 31, 2024 and December 31, 2023.
+Added: There were no realized
+Added: investment gains for the three month periods ended March 31, 2024 and 2023.
+Added: The following table presents the portion of unrealized losses related to equity securities still held for the three month period ended March 31, 2024 and 2023.
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Net realized and unrealized losses recognized during the period on equity securities
3 unchanged sentences
The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance.
−Removed: Company’s VIE interests principally consist of interests in limited liability companies formed for the purpose of achieving diversified equity returns.
−Removed: The Company’s VIE interests, carried as a part of other invested assets, totaled $ 6,398 and $ 5,386 as of September 30,
−Removed: 2023 and December 31, 2022, respectively.
−Removed: The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $ 1,238
−Removed: as of September 30, 2023 and December 31, 2022.
+Added: Company’s VIE interests principally consist of interests in limited partnerships and limited liability companies formed for the purpose of achieving diversified equity returns.
+Added: The Company’s VIE interests, carried as a part of other invested
+Added: assets, totaled $ 6,278 and $ 6,381
+Added: as of March 31, 2024 and December 31, 2023, respectively.
+Added: The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $ 1,238 as of March 31, 2024 and December 31, 2023.
The Company does not have power over the activities that most significantly impact the economic performance of these VIEs and thus is not the
4 unchanged sentences
financial support to or on behalf of the VIE.
−Removed: The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $ 7,636 and $ 6,624 , as of September 30, 2023 and December 31,
+Added: The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $ 7,516 and $ 7,619 , as of March 31, 2024 and December 31, 2023,
respectively.
−Removed: As of September 30, 2023 and December 31, 2022, the Company had outstanding commitments totaling $ 4,518 and $ 5,872 , respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to
−Removed: fund the purchase of new investments and partnership expenses.
+Added: As of March 31, 2024 and December 31, 2023, the Company had outstanding commitments totaling $ 4,518 , respectively,
+Added: whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.
Fair Values of Financial Instruments
27 unchanged sentences
The Company’s financial instruments valued using Level 3 criteria consist of one equity security.
−Removed: As of September 30, 2023 and December 31, 2022, the value of the equity security valued using Level 3 criteria was $ 185 and $ 156 , respectively.
−Removed: equity security is not traded and is valued at cost.
−Removed: The use of different criteria or assumptions regarding data may have yielded materially different valuations.
−Removed: of September 30, 2023, financial instruments carried at fair value were measured on a recurring basis as summarized below:
+Added: As of March 31, 2024 and December 31, 2023, the value of the equity security valued using Level 3 criteria was $ 189 and $ 185 , respectively.
+Added: of March 31, 2024, 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
−Removed: carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of September 30, 2023
+Added: carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2024
and December 31, 2023.
−Removed: September 30, 2023
+Added: March 31, 2024
December 31, 2023
4 unchanged sentences
Equity securities
−Removed: Other invested assets
−Removed: Investment in unconsolidated trusts
Junior subordinated debentures, net
1 unchanged sentence
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.
+Added: Allowance for Expected Credit Losses
+Added: Reinsurance Recoverables
+Added: The following table presents the balances of reinsurance recoverables, net of the allowance for expected credit
+Added: losses, at March 31, 2024 and 2023, and the changes in the allowance for expected credit losses for the three months ended March 31, 2024 and 2023.
+Added: At and for the three months ended March 31, 2024
+Added: Reinsurance Recoverables,
+Added: Net of Allowance for Expected
+Added: Credit Losses
+Added: Allowance for Expected
+Added: Credit Losses
+Added: Balance, beginning of period
+Added: Current period change for expected credit losses
+Added: Write-offs of uncollectible reinsurance recoverables
+Added: Balance, end of period
+Added: At and for the three months ended March 31, 2023
+Added: Reinsurance Recoverables,
+Added: Net of Allowance for Expected
+Added: Credit Losses
+Added: Allowance for Expected
+Added: Credit Losses
+Added: Balance, beginning of period
+Added: Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2023
+Added: Current period change for expected credit losses
+Added: Write-offs of uncollectible reinsurance recoverables
+Added: Balance, end of period
+Added: Insurance Premium and Other Receivables
+Added: The following table presents the balances of insurance premiums and other, net of the allowance for expected
+Added: credit losses, at March 31, 2024 and 2023, and the changes in the allowance for expected credit losses for the three months ended March 31, 2024 and 2023.
+Added: At and for the three months ended March 31, 2024
+Added: Insurance Premiums and Other,
+Added: Net of Expected Credit Losses
+Added: Allowance for Expected
+Added: Credit Losses
+Added: Balance, beginning of period
+Added: Current period change for expected credit losses
+Added: Write-offs of uncollectible insurance premiums and other receivables
+Added: Balance, end of period
+Added: At and for the three months ended March 31, 2023
+Added: Insurance Premiums and Other,
+Added: Net of Expected Credit Losses
+Added: Allowance for Expected
+Added: Credit Losses
+Added: Balance, beginning of period
+Added: Cumulative effect of adoption of updated accounting guidance for credit losses at January 1, 2023
+Added: Current period change for expected credit losses
+Added: Write-offs of uncollectible insurance premiums and other receivables
+Added: Balance, end of period
Internal-Use Software
10 unchanged sentences
software is substantially ready for its intended use.
−Removed: The Company incurred and capitalized implementation costs of $ 1,218 and $ 1,357 during the nine months ended September 30, 2023 and 2022, respectively.
−Removed: As a result, the Company has capitalized $ 4,240 in implementation costs in other assets within its condensed consolidated balance sheet as of September 30, 2023.
−Removed: The Company expects the
−Removed: software will be substantially ready for its intended use in the first half of 2024 .
−Removed: Accordingly, the Company has no t recorded any amortization expense related to software implementation costs for the three months and nine months ended September 30, 2023.
+Added: The Company incurred and capitalized implementation costs of $ 970 and $ 592 during the three months ended March 31, 2024 and 2023, respectively.
+Added: As a result, the Company has capitalized $ 5,537 and $ 3,614 in implementation costs
+Added: in other assets within its condensed consolidated balance sheet as of March 31, 2024 and 2023, respectively.
+Added: The Company expects the software will be substantially ready for its intended use in the second half of 2024 .
+Added: Accordingly, the Company has no t recorded any amortization expense
+Added: related to software implementation costs for the three months ended March 31, 2024 and 2023.
Insurance Reserves for Losses and Claims
−Removed: roll-forward of insurance reserves for losses and claims for the nine months ended September 30, 2023 and 2022 is as follows:
−Removed: Nine Months Ended
−Removed: September 30,
+Added: roll-forward of insurance reserves for losses and claims for the three months ended March 31, 2024 and 2023 is as follows:
+Added: Three Months Ended
Beginning insurance reserves for losses and claims, gross
11 unchanged sentences
Ending insurance reserves for losses and claims, gross
−Removed: Prior years’ development was primarily the result of unfavorable development in the
−Removed: automobile liability line of business in the property and casualty operations due to inflationary factors.
−Removed: Prior years’ development was primarily the result of favorable development in the Medicare
−Removed: supplement line of business in the life and health operations, as well as favorable development in the surety line of business in the property and casualty operations.
+Added: Prior years’ development was primarily the result of favorable development in the property
+Added: and casualty operations, partially offset by unfavorable development in the Medicare supplement line of business in the life and health operations.
+Added: Prior years’ development was primarily the result of favorable development in the property
+Added: and casualty operations, as well as favorable development in the Medicare supplement line of business in the life and health operations.
Following is a reconciliation of total incurred losses to total
insurance benefits and losses incurred:
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
Total incurred losses
2 unchanged sentences
Total insurance benefits and losses incurred
−Removed: As expected, discontinuation of London Interbank Offered Rate ( “ LIBOR ” ) occurred on June 30, 2023 (“LIBOR Cessation Date”) and affected the rates used in the Company’s
−Removed: credit arrangements after that date.
−Removed: On March 15, 2022, the U.S.
−Removed: Congress enacted the Adjustable Interest Rate LIBOR Act (the “LIBOR Act”) to address LIBOR’s cessation and to establish a clear and uniform process for replacing the overnight and
−Removed: one-, three-, six- and 12-month tenors of USD LIBOR in existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate (“tough legacy contracts”).
−Removed: Further, the Board of Governors of the Federal
−Removed: Reserve System (the “Board”) has issued regulations, 12 C.F.R.
−Removed: Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which relates to
−Removed: the LIBOR transition.
−Removed: On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit
−Removed: Agreement”) with Truist Bank as the lender (the “Lender”).
−Removed: The Credit Agreement provides for an unsecured $ 10,000 revolving credit
−Removed: facility that matures on April 12, 2024 .
−Removed: Prior to July 1, 2023, the Company paid interest on the unpaid principal balance of
−Removed: outstanding revolving loans at the 1 -month LIBOR Rate (as defined in the Credit Agreement) plus 2.00 %, subject to a LIBOR floor rate of 1.00 %.
−Removed: Effective July 1, 2023, the interest rate on the unpaid principal balance of outstanding revolving loans is determined based on a reference rate of the 1 -month
−Removed: Term Secured Overnight Financing Rate (“SOFR”) published by Chicago Mercantile Exchange Group Benchmark Administration Limited (“CME”) (as defined in the Credit Agreement) plus a spread adjustment of 0.11448 % plus 2.00 %, subject to a SOFR floor rate of 1.00 %.
+Added: On May 12, 2021, the
+Added: Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”).
+Added: The Revolving Credit Agreement provides for an unsecured $ 10,000 revolving credit facility that originally matured on April 12, 2024 .
+Added: On March 22, 2024, the Company entered into a First Amendment (the “Amendment”) to its Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender.
+Added: The Amendment, among other things, (a) updates the interest rate provisions
+Added: to memorialize that the Company pays interest on the unpaid principal balance of outstanding revolving loans at the Adjusted Term SOFR rate (as defined in the Credit Agreement), plus 2.00 %, (b) extends the maturity date of the revolving credit facility to March 22, 2027 ,
+Added: and (c) requires that the Company maintain a consolidated net worth of not less than $ 64.2 million.
+Added: Except as modified by the
+Added: Amendment, the existing terms of the original Credit Agreement remain in effect.
The Credit Agreement requires the Company to comply with certain covenants,
including a debt-to-capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35 % of the
−Removed: Company’s consolidated capitalization at any time.
+Added: Company’s consolidated capitalization at any time and maintained a minimum consolidated net worth, as previously mentioned.
The Credit Agreement also contains customary representations and warranties and events of default.
−Removed: Events of default include, among others, (a) the failure by the Company to pay any amounts owed
−Removed: under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events.
−Removed: Upon an event of default, the Lender may,
−Removed: among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.
−Removed: As of September 30, 2023, the Company had outstanding borrowings including accrued interest of $ 3,019 under the Credit Agreement.
+Added: Events of default
+Added: include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence
+Added: of bankruptcy or insolvency events.
+Added: Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.
+Added: As of March 31, 2024 and
+Added: December 31, 2023, the Company had outstanding borrowings including accrued interest of $ 4,024 and $ 3,019 , respectively, under the Credit Agreement.
Junior Subordinated Debentures
−Removed: The Company has two unconsolidated Connecticut statutory
−Removed: business trusts, which exist for the exclusive purposes of:
+Added: The Company has two unconsolidated Connecticut
+Added: 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;
−Removed: (ii) investing the gross proceeds of the
−Removed: Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company;
+Added: (ii) investing the gross
+Added: proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company;
and (iii) engaging in those activities necessary or incidental thereto.
3 unchanged sentences
2023, the interest rate was based on 3-month LIBOR plus an applicable margin.
−Removed: The margin ranges from 4.00 % to 4.10 %.
−Removed: Effective July 1,
−Removed: 2023, the interest rate is determined based on a reference rate of the 3 -month SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin, ranging from 4.00 % to 4.10 %.
+Added: Effective July 1, 2023, the interest rate is
+Added: determined based on a reference rate of the 3-month SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin, ranging from 4.00 %
The financial structure of each of
−Removed: Atlantic American Statutory Trust I and II as of September 30, 2023 was as follows:
+Added: Atlantic American Statutory Trust I and II as of March 31, 2024 was as follows:
Atlantic American
3 unchanged sentences
JUNIOR SUBORDINATED DEBENTURES (1) (2)
−Removed: Principal amount owed September 30 , 2023
+Added: Principal amount owed March 31 ,
Treasury debt (3)
−Removed: Net balance September 30 , 2023
+Added: Net balance March 31 , 2024
Net balance December 31, 2023
17 unchanged sentences
Atlantic American Corporation
−Removed: For each of the respective debentures, the Company has the right at any time, and from time to time, to defer
−Removed: payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the
−Removed: debentures’ respective maturity dates.
−Removed: During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal,
−Removed: interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.
−Removed: The Company has the right at any time to dissolve each of the trusts and cause the Junior
−Removed: Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.
−Removed: The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all
−Removed: senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.
−Removed: On August 4, 2014, the Company acquired $ 7,500 of the Junior Subordinated Debentures.
−Removed: The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities,
−Removed: including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
−Removed: Earnings (Loss) Per Common Share
−Removed: A reconciliation of the numerator and denominator used in the earnings (loss) per
−Removed: common share calculations is as follows:
+Added: For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated
+Added: Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.
+Added: During any such
+Added: period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt
+Added: securities that rank equally with or junior to the Junior Subordinated Debentures.
+Added: The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the
+Added: Trust Preferred Securities.
+Added: The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated
+Added: to all existing and future liabilities of its subsidiaries.
+Added: On August 4, 2014, the Company acquired $ 7,500 of the
+Added: Junior Subordinated Debentures.
+Added: The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any
+Added: accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.
+Added: Loss Per Common Share
+Added: A reconciliation of the numerator and denominator used in the loss per common share calculations is as follows:
Three Months Ended
−Removed: September 30 , 2023
+Added: March 31, 2024
Average Shares
(In thousands)
−Removed: Basic Earnings Per Common Share:
+Added: Basic and Diluted Loss Per Common Share:
Less preferred stock dividends
−Removed: Net income applicable to common shareholders
−Removed: Diluted Earnings Per Common Share:
−Removed: Effect of Series D preferred stock
−Removed: Net income applicable to common shareholders
+Added: Net loss applicable to common shareholders
Three Months Ended
−Removed: September 30 , 2022
+Added: March 31, 2023
Average Shares
3 unchanged sentences
Net loss applicable to common shareholders
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Average Shares
−Removed: (In thousands)
−Removed: Basic and Diluted Earnings Per Common Share:
−Removed: Less preferred stock dividends
−Removed: Net income applicable to common shareholders
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Average Shares
−Removed: (In thousands)
−Removed: Basic and Diluted Earnings Per Common Share:
−Removed: Less preferred stock dividends
−Removed: Net income applicable to common shareholders
−Removed: The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for all periods presented, except for the three month period ended September 30, 2023, since its impact would
−Removed: have been antidilutive.
−Removed: A reconciliation of the differences between income taxes computed at the federal
−Removed: statutory income tax rate and income tax expense (benefit) is as follows:
+Added: The assumed conversion of the Company’s Series D preferred stock was excluded from the loss per common share calculation for three month periods ended
+Added: March 31, 2024 and 2023, since its impact would have been antidilutive.
+Added: A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax benefit is as follows:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Federal income tax provision at statutory rate of 21 %
3 unchanged sentences
Parking disallowance
−Removed: Penalties and fines
−Removed: Adjustment for prior years’ estimates to actual
−Removed: Income tax expense (benefit)
−Removed: The components of income tax expense (benefit) were:
+Added: Income tax benefit
+Added: The components of income tax benefit were:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Current – Federal
9 unchanged sentences
lease expense is recognized on a straight-line basis over the term of the lease.
−Removed: Lease expense reported for the nine months ended September 30, 2023 and September 30, 2022 was $ 761 .
+Added: Lease expense reported for the three months ended March 31, 2024 and March 31 , 2023 was $ 254 .
Additional information regarding the Company’s real estate
operating leases is as follows:
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
Other information on operating leases:
11 unchanged sentences
Operating lease liability included in accounts payable and accrued expenses on the condensed consolidated balance sheet
−Removed: As of September 30, 2023, the Company has no operating leases
−Removed: that have not yet commenced.
+Added: As of March 31, 2024, the Company has no operating leases that
+Added: have not yet commenced.
Commitments and Contingencies
12 unchanged sentences
Segment Information
−Removed: The Parent’s primary
−Removed: insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing on specific
+Added: Parent’s primary insurance subsidiaries, American Southern and Bankers Fidelity, operate in two principal business units, each focusing
+Added: on specific products.
American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.
Each business unit is managed independently and is evaluated on its individual
−Removed: following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2023 and 2022.
−Removed: September 30,
+Added: The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2024 and 2023.
American Southern
2 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
American Southern
2 unchanged sentences
Total revenue
−Removed: In come (Loss) Before Income Taxes
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Income (Loss) Before Income Taxes
American Southern
1 unchanged sentence
Corporate and Other
−Removed: Income (loss) before income taxes
+Added: Loss before income taxes
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
1 unchanged sentence
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
−Removed: subsidiaries (collectively with the Parent, the “Company”) as of and for the three month and nine month periods ended September 30, 2023.
−Removed: This discussion should be read in conjunction with the unaudited condensed consolidated financial
−Removed: statements and notes thereto included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual
+Added: subsidiaries (collectively with the Parent, the “Company”) as of and for three month period ended March 31, 2024.
+Added: This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto
+Added: 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, 2023 (the “2023 Annual Report”).
Atlantic American is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries:
1 unchanged sentence
Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”).
−Removed: Each operating company is
−Removed: managed separately, offers different products and is evaluated on its individual performance.
+Added: Each operating company is managed
+Added: separately, offers different products and is evaluated on its individual performance.
Critical Accounting Policies
−Removed: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and
−Removed: assumptions that affect reported amounts and related disclosures.
+Added: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions
+Added: that affect reported amounts and related disclosures.
Actual results could differ significantly from those estimates.
−Removed: The Company has identified certain estimates that involve a higher degree of judgment and are subject to a
−Removed: significant degree of variability.
+Added: The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of
The Company’s critical accounting policies and the resultant estimates considered most significant by management are disclosed in the 2023 Annual Report.
−Removed: Except as disclosed in Note 2 of Notes to Condensed
−Removed: Consolidated Financial Statements, the Company’s critical accounting policies are consistent with those disclosed in the 2022 Annual Report.
+Added: Except as disclosed in Note 1 of Notes to Condensed Consolidated Financial
+Added: Statements, the Company’s critical accounting policies are consistent with those disclosed in the 2023 Annual Report.
Overall Corporate Results
−Removed: The following presents the Company’s revenue, expenses and net income (loss) for the three month and nine month periods ended September 30, 2023 and the comparable periods in 2022:
+Added: The following presents the Company’s revenue, expenses and net loss for the three month period ended March 31, 2024 and the comparable period in 2023:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: (In thousands)
Insurance premiums, net
Net investment income
−Removed: Realized investment gains, net
Unrealized losses on equity securities, net
5 unchanged sentences
Total benefits and expenses
−Removed: Income (loss) before income taxes
−Removed: Net income (loss)
−Removed: In addition to measures of operating performance determined in accordance with GAAP, management also considers and evaluates performance by analyzing the non-GAAP measure operating income
−Removed: We define operating income (loss) as net income (loss) excluding:
−Removed: (i) income tax expense (benefit);
−Removed: (ii) realized investment (gains) losses, net;
−Removed: and (iii) unrealized (gains) losses on equity securities, net.
−Removed: Management believes
−Removed: operating income (loss) is a useful metric for investors, potential investors, securities analysts and others because it isolates the “core” operating results of the Company before considering certain items that are either beyond the control of
−Removed: management (such as taxes, which are subject to timing, regulatory and rate changes depending on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized
−Removed: and unrealized investment gains, which are not a part of the Company’s primary operations and are, to a limited extent, subject to discretion in terms of timing of realization).
−Removed: A reconciliation of net income (loss) to operating income for the three month and nine month periods ended September 30, 2023 and the comparable periods in 2022 is as follows:
+Added: Loss before income taxes
+Added: Management also considers and evaluates performance by analyzing the non-GAAP measure operating income (loss), and believes it is a useful metric for investors, potential investors, securities
+Added: analysts and others because it isolates the “core” operating results of the Company before considering certain items that are either beyond the control of management (such as taxes, which are subject to timing, regulatory and rate changes depending
+Added: on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized and unrealized investment gains, which are not a part of the Company’s primary operations and
+Added: are, to a limited extent, subject to discretion in terms of timing of realization).
+Added: A reconciliation of net loss to operating income (loss) for the three month period ended March 31, 2024 and the comparable period in 2023 is as follows:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Reconciliation of Non-GAAP Financial Measure
(In thousands)
−Removed: Net income (loss)
−Removed: Income tax expense (benefit)
−Removed: Realized investment gains, net
+Added: Income tax benefit
Unrealized losses on equity securities, net
−Removed: Non-GAAP operating income
−Removed: On a consolidated basis, the Company had net income of $1.8 million, or $0.08 per diluted share, for the three month period ended September 30, 2023, compared to net loss of $0.7 million, or
−Removed: $(0.04) per diluted share, for the three month period ended September 30, 2022.
−Removed: The Company had net income of $2.1 million, or $0.09 per diluted share, for the nine month period ended September 30, 2023, compared to net income of $0.5 million,
−Removed: or $0.01 per diluted share, for the nine month period ended September 30, 2022.
−Removed: The increase in net income for the three month and nine periods ended September 30, 2023 was primarily the result of a more favorable loss experience in the life
−Removed: and health operations, from the comparable periods in 2022, coupled with a decrease in unrealized losses on equity securities.
−Removed: Partially offsetting this increase in net income for the nine month period ended September 30, 2023 was an increase
−Removed: in ancillary costs related to the new actuarial valuation system, coupled with an increase in administrative costs related to the growth in the group and individual lines of business within the life and health operations.
−Removed: For the three month period ended September 30, 2023, premium revenue decreased $2.6 million, or 5.7%, to $43.7 million from $46.4 million in the comparable period in 2022.
−Removed: For the nine month
−Removed: period ended September 30, 2023, premium revenue decreased $4.6 million, or 3.3%, to $135.9 million from $140.5 million in the comparable period in 2022.
−Removed: The decrease in premium revenue was primarily attributable to a decrease in the Medicare
−Removed: supplement insurance premiums in the life and health operations.
−Removed: Also contributing to this decrease was a decrease in premium revenue in the automobile physical damage line of business in the property and casualty operations.
−Removed: Operating income increased $1.9 million in the three month period ended September 30, 2023 from the three month period ended September 30, 2022.
−Removed: For the nine month period ended September 30,
−Removed: 2023, operating income decreased $0.3 million from the comparable period in 2022.
−Removed: The increase in operating income for the three month period ended September 30, 2023 was primarily the result of a more favorable loss experience in the life and
−Removed: health operations, from the comparable period in 2022.
−Removed: The decrease in operating income for the nine month period ended September 30, 2023 was primarily attributable to ancillary costs related to the new actuarial valuation system, coupled with
−Removed: an increase in administrative costs related to the growth in the group and individual lines of business within the life and health operations, as mentioned above.
+Added: Non-GAAP operating income (loss)
+Added: On a consolidated basis, the Company had net loss of $2.0 million, or $(0.10) per diluted share, for the three month period ended March 31, 2024, compared to net loss of $1.4 million, or $(0.08)
+Added: per diluted share, for the three month period ended March 31, 2023.
+Added: The increase in net loss for the first quarter of 2024 was primarily the result of a decrease in premium revenue in the life and health operations coupled with unfavorable loss
+Added: experience in the life and health operations.
+Added: Premium revenue for the three month period ended March 31, 2024 decreased $1.5 million, or 3.4%, to $44.6 million from $46.1 million in the three month period ended March 31, 2023.
+Added: The decrease in
+Added: premium revenue was primarily attributable to a decrease in the Medicare supplement insurance premiums in the life and health operations.
+Added: Operating income decreased $2.9 million in the three month period ended March 31, 2024 from the three month period ended March 31, 2023.
+Added: The decrease in operating income was primarily due to
+Added: unfavorable loss experience in the life and health operations due to an increase in incurred losses in the group life and Medicare supplement lines of business.
A more detailed analysis of the individual operating segments and other corporate activities follows.
American Southern
−Removed: The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month and nine month periods ended September 30, 2023 and the comparable periods in
+Added: The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2024 and the comparable period in 2023:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
(Dollars in thousands)
8 unchanged sentences
Combined ratio
−Removed: Gross written premiums at American Southern decreased $1.5 million, or 12.4%, during the three month period ended September 30, 2023 and decreased $5.2 million, or 8.2%, during the nine month
−Removed: period ended September 30, 2023, from the comparable periods in 2022.
−Removed: The decrease in gross written premiums during the three month and nine month periods ended September 30, 2023 was primarily attributable to the decrease in premiums written
−Removed: in the automobile physical damage line of business due to a reduction in the number of agencies.
−Removed: Partially offsetting the decrease in gross written premiums was an increase in premiums written in the automobile liability line of business due
−Removed: to price increases in certain programs.
−Removed: Ceded premiums decreased $0.1 million, or 5.2%, during the three month period ended September 30, 2023 and decreased $0.4 million, or 9.1%, during the nine month period ended September 30,
−Removed: 2023, from the comparable periods in 2022.
−Removed: 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.
−Removed: The following presents American Southern’s net earned premiums by line of business for the three month and nine month periods ended September 30, 2023 and the comparable periods in 2022:
+Added: Gross written premiums at American Southern decreased $1.0 million, or 10.2%, during the three month period ended March 31, 2024 from the comparable period in 2023.
+Added: The decrease in gross written
+Added: premiums was primarily attributable to the decrease in premiums written in the automobile physical damage line of business due to an overall decline in the trucking industry.
+Added: Partially offsetting the decrease in gross written premiums was an
+Added: increase in premiums written in the automobile liability line of business resulting from retrospective premium adjustments.
+Added: Ceded premiums decreased slightly during the three month period ended March 31, 2024 from the comparable period in 2023.
+Added: American Southern’s ceded premiums are typically determined as a percentage
+Added: of earned premiums and generally increase or decrease as earned premiums increase or decrease.
+Added: The following presents American Southern’s net earned premiums by line of business for the three month period ended March 31, 2024 and the comparable period in 2023:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
(In thousands)
2 unchanged sentences
General liability
−Removed: Net earned premiums decreased $1.1 million, or 6.1%, during the three month period ended September 30, 2023, and $2.1 million, or 3.9%, during the nine month period ended September 30, 2023,
−Removed: over the comparable periods in 2022.
−Removed: The decrease in net earned premiums was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a reduction in the number of agencies as previously
−Removed: mentioned, partially offset during the nine month period ended September 30, 2023, by the increase in the automobile liability line of business.
−Removed: Premiums are earned ratably over their respective policy terms, and therefore premiums earned in
−Removed: the current year are related to policies written during both the current year and immediately preceding year.
+Added: Net earned premiums increased $0.7 million, or 3.9%, during the three month period ended March 31, 2024 over the comparable period in 2023.
+Added: The increase in net earned premiums was primarily
+Added: attributable to an increase in earned premiums in the automobile liability line of business due to an increase in the number of programs.
+Added: Partially offsetting the increase in net earned premiums was a decrease in earned premiums in the automobile
+Added: physical damage line of business due to an overall decline in the trucking industry as previously mentioned.
+Added: Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies
+Added: written during both the current year and immediately preceding year.
The performance of an insurance company is often measured by its combined ratio.
2 unchanged sentences
A combined ratio of under 100% represents an underwriting profit while a combined ratio of over 100% indicates an underwriting loss.
−Removed: The combined ratio is divided into two components,
−Removed: the loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) and the expense ratio (the ratio of expenses incurred to premiums earned).
−Removed: Insurance benefits and losses incurred at American Southern decreased $0.2 million, or 1.2%, during the three month period ended September 30, 2023, and increased $1.5 million, or 4.2%, during
−Removed: the nine month period ended September 30, 2023, over the comparable periods in 2022.
−Removed: As a percentage of earned premiums, insurance benefits and losses incurred were 71.7% in the three month period ended September 30, 2023, compared to 68.2% in
−Removed: the three month period ended September 30, 2022.
−Removed: For the nine month period ended September 30, 2023, this ratio increased to 73.7% from 68.0% in the comparable period in 2022.
−Removed: The increase in the loss ratio during the three month and nine
−Removed: month periods ended September 30, 2023 was mainly due to an increase in the frequency and severity of claims in the automobile liability line of business, as well as in the general liability line of business.
−Removed: Partially offsetting the increase
−Removed: in the loss ratio was a decrease in losses related to the automobile physical damage line of business due to a decrease in exposure.
−Removed: Commissions and underwriting expenses decreased $0.3 million, or 6.1%, during the three month period ended September 30, 2023, and $2.4 million, or 15.8% during the nine month period ended
−Removed: September 30, 2023, over the comparable periods in 2022.
−Removed: As a percentage of earned premiums, underwriting expenses were 26.2% in each of the three month periods ended September 30, 2023 and 2022.
−Removed: For the nine month period ended September 30,
−Removed: 2023, this ratio decreased to 25.0% from 28.5% in the comparable period in 2022.
−Removed: The decrease in the expense ratio during the three month and nine month periods ended September 30, 2023 was primarily due to American Southern’s use of a
−Removed: variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write.
−Removed: During periods in which the loss ratio decreases, commissions and underwriting expenses
−Removed: will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.
+Added: The combined ratio is divided into two components, the
+Added: 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).
+Added: Insurance benefits and losses incurred at American Southern increased $0.2 million, or 1.2%, during the three month period ended March 31, 2024 over the comparable period in 2023.
+Added: As a percentage
+Added: of earned premiums, insurance benefits and losses incurred were 71.7% in the three month period ended March 31, 2024, compared to 73.6% in the three month period ended March 31, 2023.
+Added: The decrease in the loss ratio during the three month period
+Added: ended March 31, 2024 was primarily due to a decrease in losses in the general liability line of business, resulting from favorable reserve development.
+Added: Also contributing to the decrease in the loss ratio was a decrease in loss adjustment expenses
+Added: related to a decline in claims costs, as well as a decline in the surety line of business resulting from the loss of one program.
+Added: Partially offsetting the decrease was an increase in the frequency and severity of claims in the automobile liability
+Added: line of business.
+Added: Commissions and underwriting expenses increased $0.3 million, or 8.3%, during the three month period ended March 31, 2024, over the comparable period in 2023.
+Added: As a percentage of earned premiums,
+Added: underwriting expenses were 25.4% in the three month period ended March 31, 2024, compared to 24.3% in the three month period ended March 31, 2023.
+Added: The increase in the expense ratio during the three month period ended March 31, 2024 was primarily
+Added: 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.
+Added: During periods in which the loss ratio decreases,
+Added: commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.
+Added: During the three month period ended March 31, 2024,
+Added: variable commissions at American Southern increased by $0.3 million from the comparable period in 2023 due to a favorable loss experience from accounts subject to variable commissions.
Bankers Fidelity
−Removed: The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month and nine month periods ended September 30, 2023 and the comparable
−Removed: periods in 2022:
+Added: The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2024 and the comparable period in 2023:
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
(Dollars in thousands)
8 unchanged sentences
Total expenses
−Removed: Underwriting income
+Added: Underwriting income (loss)
Expense ratio
Combined ratio
−Removed: Net earned premium revenue at Bankers Fidelity decreased $1.6 million, or 5.4%, during the three month period ended September 30, 2023, and $2.5 million, or 2.9%, during the nine month period
−Removed: ended September 30, 2023, from the comparable periods in 2022.
−Removed: Gross earned premiums from the Medicare supplement line of business decreased $3.8 million, or 10.4%, during the three month period ended September 30, 2023, and $11.2 million, or
−Removed: 10.0%, during the nine month period ended September 30, 2023, due primarily to non-renewals exceeding the level of new business writings.
−Removed: Other health product premiums increased $0.1 million, or 3.9%, during the three month period ended
−Removed: September 30, 2023, and $1.6 million, or 17.1%, during the nine month period ended September 30, 2023, over the comparable periods in 2022, primarily as a result of new sales of the company’s group health and individual cancer products.
−Removed: earned premiums from the life insurance line of business increased $0.6 million, or 15.6%, during the three month period ended September 30, 2023, and increased $2.6 million, or 21.6%, during the nine month period ended September 30, 2023, over
−Removed: the comparable periods in 2022, primarily due to an increase in the group life products premium.
−Removed: Partially offsetting this increase was a decrease in individual life products premium, resulting from the redemption and settlement of existing
−Removed: individual life policy obligations exceeding the level of new individual life sales.
−Removed: Premiums ceded decreased $1.5 million, or 9.6%, during the three month period ended September 30, 2023 and $4.5 million, or 9.6%, during the nine month period
−Removed: ended September 30, 2023, from the comparable periods in 2022.
−Removed: The decrease in ceded premiums for the three month and nine month periods ended September 30, 2023 was due to a decrease in Medicare supplement premiums subject to reinsurance.
−Removed: Insurance benefits and losses incurred decreased $3.7 million, or 19.7%, during the three month period ended September 30, 2023, and $9.4 million, or 16.3%, during the nine month period ended
−Removed: September 30, 2023, from the comparable periods in 2022.
−Removed: As a percentage of earned premiums, benefits and losses were 55.0% in the three month period ended September 30, 2023, compared to 64.7% in the three month period ended September 30,
−Removed: For the nine month period ended September 30, 2023, this ratio decreased to 57.6% from 66.8% in the comparable period in 2022.
−Removed: The decrease in the loss ratio for the three month and nine month periods ended September 30, 2023 was
−Removed: primarily due to improved rate adequacy and a decrease in the number of incurred claims within the Medicare supplement line of business.
−Removed: This decrease was marginally offset by increased loss ratios on the other health lines of business.
−Removed: Commissions and underwriting expenses decreased $1.1 million, or 10.9%, during the three month period ended September 30, 2023, and increased $4.4 million, or 16.8%, during the nine month
−Removed: period ended September 30, 2023, over the comparable periods in 2022.
−Removed: As a percentage of earned premiums, underwriting expenses were 32.4% in the three month period ended September 30, 2023, compared to 34.4% in the three month period ended
−Removed: September 30, 2022.
−Removed: For the nine month period ended September 30, 2023, this ratio increased to 36.1% from 30.0% in the comparable period in 2022.
−Removed: The decrease in the expense ratio for the three month period ended September 30, 2023 was
−Removed: primarily due to a decrease in commission expenses in the Medicare supplement line of business as a result of non-renewals exceeding the level of new business writings, as previously mentioned.
−Removed: The increase in the expense ratio for the nine
−Removed: month period ended September 30, 2023 was due to an increase in administrative costs related to the growth in the group and individual lines of business, coupled with increased Medicare supplement servicing costs.
+Added: Net earned premium revenue at Bankers Fidelity decreased $2.2 million, or 7.7%, during the three month period ended March 31, 2024, from the comparable period in 2023.
+Added: Gross earned premiums from
+Added: the Medicare supplement line of business decreased $2.9 million, or 8.6%, during the three month period ended March 31, 2024, due primarily to non-renewals exceeding the level of new business writings as the existing block of business has incurred
+Added: rate increases.
+Added: Other health product premiums decreased $0.1 million, or 3.8%, during the three month period ended March 31, 2024, over the comparable period in 2023, primarily as a result of a decline in new sales of the company’s group health
+Added: products, partially offset by an increase in new sales of the company's individual cancer product.
+Added: Gross earned premiums from the life insurance line of business decreased $0.2 million, or 4.1%, during the three month period ended March 31, 2024
+Added: over the comparable period in 2023 due to a decrease in the individual life products premium, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales.
+Added: ceded decreased $1.1 million, or 7.6%, during the three month period ended March 31, 2024, from the comparable period in 2023.
+Added: The decrease in ceded premiums for the three month period ended March 31, 2024 was due to a decrease in Medicare
+Added: supplement premiums subject to reinsurance.
+Added: Insurance benefits and losses incurred increased $1.3 million, or 7.4%, during the three month period ended March 31, 2024, from the comparable period in 2023.
+Added: As a percentage of earned premiums,
+Added: insurance benefits and losses incurred were 71.7% in the three month period ended March 31, 2024, compared to 61.6% in the three month period ended March 31, 2023.
+Added: The increase in the loss ratio for the three month period ended March 31, 2024 was
+Added: primarily due to an increase in incurred losses in the group life and Medicare supplement lines of business.
+Added: This increase was marginally offset by decreased loss ratios in the individual life lines of business.
+Added: Commissions and underwriting expenses decreased $0.4 million, or 3.5%, during the three month period ended March 31, 2024, over the comparable period in 2023.
+Added: As a percentage of earned premiums,
+Added: underwriting expenses were 38.8% in the three month period ended March 31, 2024, compared to 37.1% in the three month period ended March 31, 2023.
+Added: The increase in the expense ratio was primarily due to an increase in administrative costs related
+Added: to the group and individual health lines of business.
Net Investment Income and Realized Gains
−Removed: Investment income decreased $0.3 million, or 12.0%, during the three month period ended September 30, 2023, and decreased $0.1 million, or 1.1%, during the nine month period ended September 30,
−Removed: 2023, over the comparable periods in 2022.
−Removed: The decrease in investment income in the three month and nine month periods ended September 30, 2023, from the comparable periods in 2022, was primarily attributable to the decrease in the equity in
−Removed: earnings from investments in the Company's limited liability companies of $0.6 million in each of the aforementioned periods.
−Removed: The Company had no net realized investment gains during the three month period ended September 30, 2023, compared to net realized investment gains of $0.1 million during the three month period
−Removed: ended September 30, 2022.
−Removed: The Company had net realized investment gains of $0.1 million during the nine month period ended September 30, 2023 and net realized investment gains of less than $0.1 million during the nine month period ended
−Removed: September 30, 2022.
−Removed: The net realized investment gains during the nine month period ended September 30, 2023 resulted primarily from the disposition of several of the Company's investments in fixed maturity securities.
−Removed: The net realized
−Removed: investment gains during the three month and nine month periods ended September 30, 2022 resulted primarily from the disposition of several of the Company's investments in fixed maturity securities, partially offset by the redemption of several
−Removed: of the Company’s investments in fixed maturity securities.
−Removed: Management continually evaluates the Company’s investment portfolio and makes adjustments for impairments and/or divests investments as may be determined to be appropriate.
+Added: Investment income increased slightly during the three month period ended March 31, 2024, from the comparable period in 2023.
+Added: The increase in investment income was primarily attributable to an
+Added: increase in investment income related to fixed maturities and equity securities.
+Added: Partially offsetting this increase was a decrease in the equity in earnings from investments in the Company's limited partnerships and limited liability companies of
+Added: $0.1 million.
+Added: The Company had no net realized investment gains during each of the three month periods ended March 31, 2024 and 2023.
+Added: Management continually evaluates the Company’s investment portfolio and makes
+Added: adjustments for impairments and/or divests investments as may be determined to be appropriate.
Unrealized Losses on Equity Securities
−Removed: 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.
−Removed: The Company recognized net unrealized losses on equity securities of $1.5 million during the three month period ended September 30, 2023 and unrealized losses on equity securities of $2.8 million during the three month period ended September
−Removed: The Company recognized net unrealized losses on equity securities of $3.4 million during the nine month period ended September 30, 2023 and unrealized losses on equity securities of $5.5 million during the nine month period ended
−Removed: September 30, 2022.
−Removed: 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.
+Added: 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.
+Added: The Company recognized net
+Added: unrealized losses on equity securities of $0.1 million during the three month period ended March 31, 2024 and unrealized losses on equity securities of $2.4 million during the three month period ended March 31, 2023.
+Added: Changes in unrealized gains
+Added: (losses) 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
−Removed: Interest expense increased $0.3 million, or 62.5%, during the three month period ended September 30, 2023, and $1.1 million, or 86.4%, during the nine month period ended September 30, 2023,
−Removed: from the comparable periods in 2022.
−Removed: Changes in interest expense were primarily due to changes in the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”), as the interest rates on the
−Removed: Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility are directly related to SOFR.
−Removed: As expected, discontinuation of London Interbank Offered Rate (“LIBOR”)
−Removed: occurred on June 30, 2023, affected the rates used in the Company’s credit arrangements after that date.
−Removed: Congress enacted the Adjustable Interest Rate LIBOR Act (the "LIBOR Act") to address LIBOR’s cessation and the Board of Governors
−Removed: of the Federal Reserve System (the “Board”) issued regulations, 12 C.F.R.
−Removed: Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ)” together with the LIBOR Act, constitute the “Federal LIBOR Legislation,” which
−Removed: relates to the LIBOR transition.
−Removed: For more details about the LIBOR transition see Note 7 (Credit Arrangements).
+Added: Interest expense increased $0.1 million, or 14.0%, during the three month period ended March 31, 2024, from the comparable period in 2023.
+Added: Changes in interest expense were primarily due to changes
+Added: in the Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited, as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and
+Added: the revolving credit facility are directly related to SOFR.
Liquidity and Capital Resources
The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements.
−Removed: Current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges.
−Removed: The Company’s primary sources of cash are written premiums, investment income and
−Removed: proceeds from the sale and maturity of its invested assets.
−Removed: The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings,
−Removed: future premium receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed for the next 12 months and beyond.
+Added: and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges.
+Added: The Company’s primary sources of cash are written premiums, investment income and proceeds from
+Added: the sale and maturity of its invested assets.
+Added: The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium
+Added: receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed.
Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries.
−Removed: The principal cash needs of the Parent are for the
−Removed: payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to
−Removed: At September 30, 2023, the Parent had approximately $4.8 million of unrestricted cash and investments.
−Removed: The Parent’s insurance subsidiaries reported statutory net income of $8.9 million for the nine month period ended September 30, 2023, compared to statutory net income of $5.7 million for the
−Removed: nine month period ended September 30, 2022.
+Added: The principal cash needs of the Parent are for the payment
+Added: 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.
+Added: March 31, 2024, the Parent had approximately $5.9 million of unrestricted cash and investments.
+Added: The Parent’s insurance subsidiaries reported statutory net loss of $1.6 million for the three month period ended March 31, 2024, compared to statutory net income of $1.1 million for the three month
+Added: period ended March 31, 2023.
Statutory results are impacted by the recognition of all costs of acquiring business.
−Removed: In periods in which the Company’s first year premiums increase, statutory results are generally lower than results
−Removed: determined under GAAP.
+Added: In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined under
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.
−Removed: The Company’s
−Removed: 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.
+Added: The Company’s life and health
+Added: 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;
1 unchanged sentence
Company is limited by state insurance regulations.
−Removed: Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings
−Removed: before recognizing realized investment gains of the individual insurance subsidiaries.
−Removed: At September 30, 2023, American Southern had $53.4 million of statutory capital and surplus and Bankers Fidelity had $37.4 million of statutory capital and
−Removed: In 2023, dividend payments by the Parent’s insurance subsidiaries in excess of $8.7 million would require prior approval.
−Removed: Through September 30, 2023, the Parent received dividends of $5.4 million from its subsidiaries.
+Added: Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before
+Added: recognizing realized investment gains of the individual insurance subsidiaries.
+Added: At March 31, 2024, American Southern had $52.4 million of statutory capital and surplus and Bankers Fidelity had $32.6 million of statutory capital and surplus.
+Added: 2024, dividend payments by the Parent’s insurance subsidiaries in excess of $8.8 million would require prior approval.
+Added: Through March 31, 2024, the Parent received dividends of $2.7 million from its subsidiaries.
The Parent provides certain administrative and other services to each of its insurance subsidiaries.
−Removed: The amounts charged to and paid by the subsidiaries include reimbursements for various
−Removed: shared services and other expenses incurred directly on behalf of the subsidiaries by the Parent.
+Added: The amounts charged to and paid by the subsidiaries include reimbursements for various shared
+Added: services and other expenses incurred directly on behalf of the subsidiaries by the Parent.
In addition, there is in place a formal tax-sharing agreement between the Parent and its insurance subsidiaries.
−Removed: As a result of the Parent’s tax
−Removed: loss, it is anticipated that the tax-sharing agreement will continue to provide the Parent with additional funds from profitable subsidiaries to assist in meeting its cash flow obligations.
+Added: As a result of the Parent’s tax loss, it is
+Added: anticipated that the tax-sharing agreement will continue to provide the Parent with additional funds from profitable subsidiaries to assist in meeting its cash flow obligations.
The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and
3 unchanged sentences
The margin ranges from 4.00% to 4.10%.
−Removed: September 30, 2023, the effective interest rate was 9.70%.
−Removed: 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
−Removed: with respect to the trust preferred securities.
−Removed: 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
−Removed: payments on the related trust preferred securities.
−Removed: As of September 30, 2023, the Company has not made such an election.
−Removed: 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
−Removed: existing or potential future financing arrangements.
−Removed: At September 30, 2023, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.
−Removed: All of the shares of Series D Preferred Stock are held by an affiliate
−Removed: of the Company’s controlling shareholder.
+Added: March 31, 2024, the effective interest rate was 9.64%.
+Added: 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
+Added: respect to the trust preferred securities.
+Added: 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
+Added: the related trust preferred securities.
+Added: As of March 31, 2024, the Company has not made such an election.
+Added: 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
+Added: or potential future financing arrangements.
+Added: At March 31, 2024, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.
+Added: All of the shares of Series D Preferred Stock are held by an affiliate of the
+Added: Company’s controlling shareholder.
The outstanding shares of Series D Preferred Stock have a stated value of $100 per share;
−Removed: accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at
−Removed: the option of the board of directors of the Company) and are cumulative.
−Removed: 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,
−Removed: 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;
−Removed: and are redeemable solely at the
−Removed: Company’s option.
+Added: 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
+Added: of the board of directors of the Company) and are cumulative.
+Added: 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
+Added: 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;
+Added: and are redeemable solely at the Company’s option.
The Series D Preferred Stock is not currently convertible.
−Removed: At September 30, 2023, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million.
+Added: At March 31, 2024, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.1 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.
−Removed: As a member, BFLIC
−Removed: can obtain access to low-cost funding and also receive dividends on FHLB stock.
−Removed: The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.0 million, as of September 30, 2023.
−Removed: Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB.
−Removed: As of September 30, 2023, BFLIC has pledged bonds having an amortized cost of $6.9 million to the FHLB.
−Removed: BFLIC may be required to post
−Removed: additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB.
−Removed: As of September 30, 2023, BFLIC does not have any outstanding borrowings from the FHLB.
−Removed: On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”).
−Removed: The Credit Agreement provides for an unsecured
−Removed: $10.0 million revolving credit facility that matures on April 12, 2024.
−Removed: Under the Credit Agreement, the Company paid interest on the unpaid principal balance of outstanding revolving loans at 1-month SOFR plus a spread adjustment of 0.11448%
−Removed: plus 2.00%, subject to a SOFR floor rate of 1.00%.
−Removed: The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds
−Removed: 35% of the Company’s consolidated capitalization at any time.
+Added: As a member, BFLIC can
+Added: obtain access to low-cost funding and also receive dividends on FHLB stock.
+Added: The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.2 million, as of March 31, 2024.
+Added: FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB.
+Added: As of March 31, 2024, BFLIC has pledged bonds having an amortized cost of $9.5 million to the FHLB.
+Added: BFLIC may be required to post additional acceptable
+Added: forms of collateral for any borrowings that it makes in the future from the FHLB.
+Added: As of March 31, 2024, BFLIC does not have any outstanding borrowings from the FHLB.
+Added: On May 12, 2021, the Company entered into a Revolving Credit Agreement with Truist Bank as the lender
+Added: (the “Lender”).
+Added: The Revolving Credit Agreement provides for an unsecured $10.0 million revolving credit facility that originally matured on April 12, 2024.
+Added: On March 22, 2024, the Company entered into a First Amendment (the "Amendment") to its
+Added: Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender.
+Added: The Amendment, among other things, (a) updates the interest rate provisions to memorialize that the Company pays interest on the unpaid principal balance of
+Added: outstanding revolving loans at the Adjusted Term SOFR rate (as defined in the Credit Agreement), plus 2.00%, (b) extends the maturity date of the revolving credit facility to March 22, 2027, and (c) requires that the Company maintain a
+Added: consolidated net worth of not less than $64.2 million.
+Added: Except as modified by the Amendment, the existing terms of the original Credit Agreement remain in effect.
+Added: The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of
+Added: the Company’s consolidated capitalization at any time and maintained a minimum consolidated net worth, as previously mentioned.
The Credit Agreement also contains customary representations and warranties and events of default.
−Removed: Events of default include, among others, (a) the failure by the Company to pay any
−Removed: amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events.
−Removed: Upon an event of default,
−Removed: the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.
−Removed: As of September 30, 2023, the Company had outstanding borrowings of $3.0 million under
−Removed: the Credit Agreement.
−Removed: Cash and cash equivalents decreased from $28.9 million at December 31, 2022 to $23.9 million at September 30, 2023.
−Removed: The decrease in cash and cash equivalents during the nine month period ended
−Removed: September 30, 2023 was primarily attributable to net cash used in operating activities of $3.5 million.
−Removed: Also contributing to the decrease in cash and cash equivalents was net cash used in investing activities of $2.0 million primarily as a
−Removed: result of investment purchases exceeding investment sales and maturity of securities.
−Removed: Partially offsetting the decrease in cash and cash equivalents was net cash provided by financing activities of $0.6 million primarily as a result of proceeds
−Removed: from bank financing.
+Added: Events of default
+Added: include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of
+Added: bankruptcy or insolvency events.
+Added: Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.
+Added: As of March 31, 2024 and December
+Added: 31, 2023, the Company had outstanding borrowings including accrued interest of $4.0 million and $3.0 million, respectively, under the Credit Agreement.
+Added: Cash and cash equivalents decreased from $28.3 million at December 31, 2023 to $21.2 million at March 31, 2024.
+Added: The decrease in cash and cash equivalents during the three month period ended March
+Added: 31, 2024 was primarily attributable to net cash used in operating activities of $5.3 million.
+Added: Also contributing to the decrease in cash and cash equivalents was net cash used in investing activities of $2.8 million primarily as a result of
+Added: investment purchases exceeding investment sales and maturity of securities.
+Added: Partially offsetting the decrease in cash and cash equivalents was net cash provided by financing activities of $1.0 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
3 unchanged sentences
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.