What changed in this filing

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Item 9A. Controls and Procedures

2025-03-25 compared with 2024-04-01 · 103 added, 94 removed, 189 unchanged (51% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for

The Company’s internal control over financial reporting system has been designed to provide reasonable assurance regarding the reliability and the preparation of financial statements for external purposes in accordance with

generally accepted accounting principles.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed

in our Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is

accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the

participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of

the Securities Exchange Act of 1934).

Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were not effective as of that date due to the

previously identified and unremediated material weakness in internal control over financial reporting described below.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial

reporting for the Company.

with generally accepted accounting principles.

Management recognizes that there are inherent limitations in the effectiveness of any internal control system.

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prevent or detect all misstatements.

Furthermore, the application of any evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of

compliance with the policies or procedures may deteriorate.

Furthermore, the application of any evaluations of effectiveness on future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation

of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the

Securities Exchange Act of 1934).

weakness in internal control over financial reporting described below.

Management’s Report on Internal Control Over Financial Reporting

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 based

upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the updated 2013 Internal Control –

Integrated Framework .

Based on that evaluation, management believes that internal control over financial reporting as such term is

defined in Exchange Act Rule 13a-15(f) was not effective as of December 31, 2023, as a result of the material weakness described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial

reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of management’s evaluation, we identified certain deficiencies in internal control that we believe rise to the level

of a material weakness.

Specifically, management determined that the design of the controls surrounding the process of reviewing insurance reserves and deferred acquisition costs within the Company’s life and health segment was not effective.

This deficiency in design did not enable the timely detection of anomalies in these values at the level of precision necessary to detect misstated values that may be material.

Notwithstanding these deficiencies, management believes that, because of the actions taken by management in identifying, and to

address and correct, these deficiencies prior to the completion and filing of this Annual Report on Form 10-K, and the effective operation of other internal controls over financial reporting, the material weakness did not result in any

identified material misstatements to our financial statements.

As a result, there were no changes to any of our historical financial statements.

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding

internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to certain rules of the Securities and Exchange Commission that exempt

non-accelerated filers, including the Company, from such requirement.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,

2024 based upon the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the updated 2013 Internal

Control – Integrated Framework .

Based on that evaluation, management believes that internal control over financial reporting as such

term is defined in Exchange Act Rule 13a-15(f) was not effective as of December 31, 2024, as a result of the previously identified and unremediated material weakness described below.

A material weakness is a deficiency, or combination of

deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As initially disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, we previously

identified certain deficiencies in internal control that we believe rise to the level of a material weakness.

Specifically, management determined that the design of the controls surrounding the process of reviewing insurance reserves and deferred

acquisition costs within the Company’s life and health segment was not effective.

This deficiency in design did not enable the timely detection of anomalies in these values at the level of precision necessary to detect misstated values that may be

Notwithstanding these deficiencies, management believes that, because of the actions taken by management in

identifying, and the efforts that the Company has been taking to address and correct, these deficiencies prior to the completion and filing of this Annual Report on Form 10-K, and the effective operation of other internal controls over financial

reporting, the material weakness did not result in any identified material misstatements to our financial statements.

Similarly, there were no changes to any of our historical financial statements.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2023 that

have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company is currently in the process of remediating the material weakness as described above, which remediation efforts began

in the quarter ended March 31, 2024 and include developing and implementing enhanced controls related to the review of values that are estimated using actuarial models.

The enhancements include implementing reviews at the product level where

management evaluates, for each of the Company’s life and health products, the components of underwriting income and how they interrelate.

In addition, calculations that are independent from the actuarial models will, once fully developed,

validate that the product parameters and actuarial assumptions are completely and accurately reflected within the actuarial models.

The Company has also initiated the development of an array of analytical reports that will help facilitate the timely detection of

anomalous values within the Company’s life and health segment.

It is currently expected that these reports will be operational by September 30, 2024.

These reports will include reconciliations of actuarial values from quarter to quarter,

utilizing values estimated via the actuarial models and values that are produced by accounting processes.

The Company’s remediation efforts of the previously identified material weakness, which began in the quarter ended

March 31, 2024, remained ongoing though the quarter ended December 31, 2024, and through the date hereof.

The Company has made significant progress in its remediation efforts, and during the quarter ended December 31, 2024, management conducted a

systematic review of the components of underwriting income for the Company’s Life products.

This review included independent calculations of actuarial values for these products using a comprehensive process that had been developed, tested, and

implemented during the quarter ended December 31, 2024.

Based on this review, management did not identify any material misstatement in the Company’s financial statements.

In furtherance of the remediation efforts, the Company has continued the development of a system to perform

calculations independently of the actuarial models.

This system is intended to verify that the product parameters and actuarial assumptions are properly reflected in the reported values.

The Company’s group whole life product has been implemented

on the system, which was used to validate the actuarial values for this product as of December 31, 2024.

The Company currently expects that an extension of this system to accommodate other product lines the Company offers will be operational by

September 30, 2025.

Full development and implementation of this system has required more time than previously anticipated due to unforeseen complexities inherent in the actuarial software systems used to calculate and report the actuarial values.

These complexities have required additional effort to understand and to replicate in this system, and to complete the remediation process

Inherent Limitations on Effectiveness of Controls

No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives of the

system of controls are met.

No system of controls, no matter how well designed and implemented, can provide absolute assurance that the objectives

of the system of controls are met.

Furthermore, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud within a company have been detected.

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s independent registered public accounting

firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to certain rules of the Securities and Exchange Commission that

exempt non-accelerated filers, including the Company, from such requirement.

Other Information

None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended December 31, 2023, as such

terms are defined under Item 408(a) of Regulation S-K.

None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended December 31, 2024, as such terms are

defined under Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

With the exception of certain information relating to the executive officers of the Company, which is provided in Part I hereof, the information relating to securities authorized for issuance

under equity compensation plans and the information relating to the Company’s Code of Business Conduct and Ethics, each of which is included below, all information required by Part III (Items 10, 11, 12, 13 and 14 of Form 10-K) is

incorporated by reference to the sections entitled “Election of Directors,” “Security Ownership of Certain Beneficial Owners and Management,” “Delinquent Section 16(a) Reports” (if applicable), “Executive Compensation,” “Certain Relationships

and Related Person Transactions" and “Ratification of the Appointment of the Company's Independent Registered Public Accounting Firm” to be contained in the Company’s definitive proxy statement in connection with the Company’s 2024 Annual

Meeting of Shareholders, to be filed with the SEC within 120 days of the Company’s fiscal year end.

With the exception of certain information relating to the executive officers of the Company, which is provided in Part I hereof, the information relating to securities

authorized for issuance under equity compensation plans and the information relating to the Company’s Code of Business Conduct and Ethics, each of which is included below, all information required by Part III (Items 10, 11, 12, 13 and 14 of Form

10-K) is incorporated by reference to the sections entitled “Election of Directors,” “Security Ownership of Certain Beneficial Owners and Management,” “Delinquent Section 16(a) Reports” (if applicable), “Executive Compensation,” “Certain

Relationships and Related Person Transactions" and “Ratification of the Appointment of the Company's Independent Registered Public Accounting Firm” to be contained in the Company’s definitive proxy statement in connection with the Company’s 2025

Annual Meeting of Shareholders, to be filed with the SEC within 120 days of the Company’s fiscal year end.

Equity Compensation Plan Information

The following table sets forth, as of December 31, 2023, the number of securities issuable upon exercise of outstanding options, warrants and rights, the weighted average exercise price

thereof and the number of securities remaining available for future issuance under the Company’s equity compensation plans:

The following table sets forth, as of December 31, 2024, the number of securities issuable upon exercise of outstanding options, warrants and rights, the weighted average

exercise price thereof and the number of securities remaining available for future issuance under the Company’s equity compensation plans:

Plan Category

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Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or any

persons performing similar functions, as well as its directors and other employees.

The Company has adopted a Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or

controller, or any persons performing similar functions, as well as its directors and other employees.

A copy of this Code of Business Conduct and Ethics has been filed as an exhibit to this annual report on Form 10-K.

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Schedules other than those listed above are omitted as they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto.

Columns omitted from

schedules filed have been omitted because the information is not applicable.

omitted from schedules filed have been omitted because the information is not applicable.

Restated Articles of Incorporation of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the registrant’s Form 10-K for the year ended December 31, 2008].

Restated Bylaws of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the registrant’s Form 8-K filed on March 4, 2016].

Description of the registrant’s common stock registered pursuant to section 12 of the Securities Exchange Act of 1934 [incorporated by reference to Exhibit 4.1 to the registrant’s Form 10-K filed on

March 24, 2020].

Management Agreement, dated July 1, 1993, between the registrant and Atlantic American Life Insurance Company and Bankers Fidelity Life Insurance Company [incorporated by reference to Exhibit 10.41 to

the registrant’s Form 10-Q for the quarter ended September 30, 1993].

Tax Allocation Agreement, dated as of January 4, 2016, between the registrant and the registrant’s subsidiaries [incorporated by reference to Exhibit 10.02 to the registrant’s Form 10-K for the year

ended December 31, 2017].

Description of the registrant’s common stock registered pursuant to section 12 of the Securities Exchange Act of 1934 [incorporated by reference to Exhibit 4.1 to the registrant’s Form

10-K filed on March 24, 2020].

Management Agreement, dated July 1, 1993, between the registrant and Atlantic American Life Insurance Company and Bankers Fidelity Life Insurance Company [incorporated by reference to

Exhibit 10.41 to the registrant’s Form 10-Q for the quarter ended September 30, 1993].

Tax Allocation Agreement, dated as of January 4, 2016, between the registrant and the registrant’s subsidiaries [incorporated by reference to Exhibit 10.02 to the registrant’s Form

10-K for the year ended December 31, 2017].

Atlantic American Corporation 2012 Nonqualified Stock Purchase Plan [incorporated by reference to Exhibit 99.1 to the registrant’s Form S-8 (File No.

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Atlantic American Corporation 2012 Equity Incentive Plan [incorporated by reference to Exhibit 10.1 to the registrant’s Form 10-Q for the quarter ended March 31, 2013].

Lease Agreement, dated as of November 1, 2007, between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life Insurance Company

[incorporated by reference to Exhibit 10.10 to the registrant’s Form 10-K for the year ended December 31, 2007].

First Amendment to Lease Agreement, dated as of March 31, 2008, between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life

Insurance Company [incorporated by reference to Exhibit 10.2 to the registrant’s Form 10-Q for the quarter ended March 31, 2008].

Assignment and Assumption of Leases and Contracts, dated as of December 21, 2022, by and between Delta Life Insurance Company and 4370 Peachtree LLC.

Revolving Credit Agreement, dated as of May 12, 2021, by and between Atlantic American Corporation and Truist Bank [incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K filed with the

SEC on May 13, 2021].

Lease Agreement, dated as of November 1, 2007, between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life

Insurance Company [incorporated by reference to Exhibit 10.10 to the registrant’s Form 10-K for the year ended December 31, 2007].

First Amendment to Lease Agreement, dated as of March 31, 2008, between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation

and Delta Life Insurance Company [incorporated by reference to Exhibit 10.2 to the registrant’s Form 10-Q for the quarter ended March 31, 2008].

Assignment and Assumption of Leases and Contracts, dated as of December 21, 2022, by and between Delta Life Insurance Company and 4370 Peachtree LLC [incorporated by reference to

Exhibit 10.07 to the registrant’s Form 10-K filed on June 30, 2023].

Revolving Credit Agreement, dated as of May 12, 2021, as amended by that certain First Amendment to Revolving Credit Agreement, dated as of March 22, 2024, by and between Atlantic

American Corporation and Truist Bank [incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K filed with the SEC on May 13, 2021].

Atlantic American Corporation 2022 Equity and Incentive Compensation Plan [incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K filed on May 31, 2022].

Second Amendment to Lease Agreement, dated as of December 26, 2024, by and among 4370 Peachtree LLC, Atlantic American Corporation and Bankers Fidelity Life Insurance Company

[incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K filed with the SEC on December 30, 2024].

Code of Business Conduct and Ethics [incorporated by reference to Exhibit 14.1 to the registrant’s Form 10-K for the year ended December 31, 2003].

American Corporation Insider Trading Policy

Subsidiaries of the registrant [incorporated by reference to Exhibit 21.1 to the registrant’s Form 10-K for the year ended December 31, 2015].

Consent of FORVIS LLP, Independent Registered Public Accounting Firm.

Consent of Forvis Mazars, LLP, Independent Registered Public Accounting Firm.

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

The registrant agrees to furnish to the Commission upon request a copy of any instruments defining the rights of security holders of the registrant that may be omitted from filing in accordance with the Commission’s rules and

Commission’s rules and regulations.

Management contract, compensatory plan or arrangement.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto

duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

ATLANTIC AMERICAN CORPORATION

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Vice President and Chief Financial Officer

April 1, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the

dates indicated.

March 25, 2025

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the

capacities and on the dates indicated.

/s/ Hilton H.

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(Principal Executive Officer)

April 1, 2024

March 25, 2025

Ross Franklin

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(Principal Financial and Accounting Officer)

April 1, 2024

March 25, 2025

ROSS FRANKLIN

April 1, 2024

March 25, 2025

/s/ Joseph M.

April 1, 2024

March 25, 2025

Keehln Wheeler

April 1, 2024

March 25, 2025

KEEHLN WHEELER

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Revolving credit facility

Junior subordinated debentures

Junior subordinated debentures obligations, net

Total liabilities

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Equity in undistributed earnings of subsidiaries, net

Net income (loss)

Under the terms of a tax-sharing agreement, income tax provisions for the subsidiary companies are computed on a separate company

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Cash flows from operating activities:

Net Income (loss)

Adjustments to reconcile net income to net cash used in operating activities:

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Compensation expense related to share awards

Loss (earnings) from equity method investees

Loss from equity method investees

Equity in undistributed earnings of subsidiaries, net

(Increase) decrease in intercompany taxes

Decrease (increase) in intercompany taxes

Deferred income tax benefit

Decrease in accounts payable and accrued expenses

Net cash used in operating activities

Increase (decrease) in accounts payable and accrued expenses

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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SUPPLEMENTARY INSURANCE INFORMATION

Income (Loss)

(In thousands)

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

What changed 10-K

Item 9A. Controls and Procedures