What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-13 · 489 added, 458 removed, 514 unchanged (65% of the section changed)

1 unchanged sentence

ATLANTIC AMERICAN CORPORATION

COND ENSED CONSOLIDATED

BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

2 unchanged sentences

$ 233,156 and $ 236,299 ;

allowance for credit losses)

no allowance for credit losses)

Equity securities, at fair value (cost:

5 unchanged sentences

Reinsurance (net of allowance for expected credit losses of $ 43 and $ 51 )

Insurance premiums and other (net of allowance for expected credit losses $ 195

Insurance premiums and other (net of allowance for expected credit losses $ 194 and $ 201 )

Deferred income taxes, net

14 unchanged sentences

Preferred stock, $ 1 par, 4,000,000 shares authorized;

Series D preferred, 55,000

shares issued and outstanding;

Series D preferred, 55,000 shares issued and outstanding;

$ 5,500 redemption value

13 unchanged sentences

ATLANTIC AMERICAN CORPORATION

CONDENSED CO NSOLIDATED

STATEMENTS OF OPERATIONS

In thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

Insurance premiums, net

Net investment income

Unrealized gains (losses) on equity securities, net

Realized investment gains, net

Unrealized gains on equity securities, net

Total revenue

10 unchanged sentences

Net income (loss) applicable to common shareholders

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

Earnings (loss) per common share (basic)

Earnings (loss) per common share (diluted)

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

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

In thousands)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Dollars in thousands)

Three Months Ended

Six Months Ended

Net income (loss)

3 unchanged sentences

Related income tax effect

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

Related income tax effect

Total other comprehensive income (loss), net of tax

2 unchanged sentences

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED

STATEMENTS OF

SHAREHOLDERS’ EQUITY

In thousands except share and per share data)

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Dollars in thousands except share data)

Three Months Ended

Six Months Ended

Preferred stock:

33 unchanged sentences

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Amortization of acquisition costs, net

Unrealized (gains) losses on equity securities

Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities:

(Additions to) amortization of acquisition costs, net

Realized investment gains, net

Unrealized gains on equity securities

Losses from equity method investees

3 unchanged sentences

Deferred income tax expense (benefit)

Decrease in receivables, net

Decrease in insurance reserves and policyholder funds

Increase in receivables, net

Increase in insurance reserves and policyholder funds

Decrease in accounts payable and accrued expenses

Net cash used in operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of dividends on common stock

Treasury stock acquired — net employee share-based compensation

9 unchanged sentences

ATLANTIC AMERICAN CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Basis of Presentation and Significant Accounting Policies

accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).

The Parent’s primary operating subsidiaries,

American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together

known as “Bankers Fidelity”), operate in two principal business units.

American Southern operates in the property and casualty insurance

market, while Bankers Fidelity operates in the life and health insurance market.

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).

The Parent’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”), operate in two principal business units.

American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying financial statements have been prepared in accordance

with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all of the information

and notes required by GAAP for audited annual financial statements.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

The unaudited

condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2024 (the “2024 Annual Report”).

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

2024 Annual Report.

The Company’s financial condition and operating results as of and for the three month period ended March 31, 2025 are not necessarily indicative of the financial condition or results of operations and cash flows that may be

expected for the year ending December 31, 2025 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

financial statements, and the reported amounts of revenues and expenses during the reporting period.

The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).

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 2024 Annual Report.

The Company’s financial condition and operating results as of and for the three month and six month periods ended June 30, 2025 are not necessarily indicative of the financial condition or results of operations and cash flows that may be expected for the year ending December 31, 2025 or for any other future period.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of

contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ materially from those estimates.

To the extent that the Company changes its accounting for, or presentation of, items

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.

To the extent that the Company

changes its accounting for, or presentation of, items 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.

Enactment of the One Big Beautiful Bill Act of 2025

On July 4, 2025, the U.S.

enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (OBBBA) which includes both tax and non-tax provisions.

The OBBBA includes

significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

Management does not believe this will have a material impact on the financials.

Recently Issued Accounting Standards

Future Adoption of New Accounting Standards

For more information regarding accounting standards that the Company has not yet

adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note 1 of Notes to Consolidated Financial Statements in the 2024 Annual Report.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

equity securities, aggregated by type and industry, as of March 31, 2025 and December 31, 2024.

Accounting for Long-Duration Contracts.

In August 2018, the FASB issued ASU No.

2018-12, Financial Services —Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”).

This guidance (1) improves the timeliness of recognizing

changes in the liability for future policy benefits and modifies the rate used to discount future cash flows, by updating the assumptions used in measuring the liability for future policy benefits for these contracts at least annually rather than

establishing them at contract inception and retaining them over the life of the contracts, which will improve the timeliness of recognizing changes in the liability that are caused by deviations in experience from the assumptions, and these

deviations will be recognized and reflected in the liability for future benefits as they occur, (2) improves the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts, (3) simplifies the

amortization of deferred acquisition costs;

amortization on a constant level basis will be used in place of a complex actuarial methodology that is in place under existing financial reporting standards, and (4) improves the effectiveness of the

required disclosures, with additional disclosures required, including disaggregated rollforwards of deferred acquisition costs, liabilities for future policy benefits, market risk benefits and liability for policyholders’ account balances.

2018-12 is effective for annual reporting periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025, although earlier adoption is permitted.

The Company has completed the development of the necessary

actuarial models for the affected policies and is in the process of testing the models and developing procedures that are responsive to support the new valuation requirements that will be used to estimate the liability for future benefits for

these policies.

The Company expects its Life, Medicare supplement and certain individual Accident and Health products to fall within the scope of this standard.

The Company has elected to use the modified retrospective method upon adoption.

disclosures under ASU 2018-12 will change significantly, and the impact on our consolidated financial statements is expected to be material.

For more information regarding accounting standards that the Company has not yet adopted, see the “Recently Issued Accounting Standards - Future Adoption of New Accounting Standards” section of Note

1 of Notes to Consolidated Financial Statements in the 2024 Annual Report.

maturities and equity securities, aggregated by type and industry, as of June 30, 2025 and December 31, 2024.

Fixed maturities were comprised of the following:

March 31, 2025

Allowance for

Credit Losses

June 30, 2025

Allowance for Credit Losses

Fixed maturities:

14 unchanged sentences

December 31, 2024

Allowance for

Credit Losses

Allowance for Credit Losses

Fixed maturities:

13 unchanged sentences

Total fixed maturities

Bonds having an amortized cost of $ 14,890

and $ 15,065 and included in the tables above were on deposit with insurance regulatory authorities as of March 31, 2025 and December 31,

2024, respectively, in accordance with statutory requirements.

In addition, the Company maintains cash and cash equivalents on deposit with insurance regulatory authorities of $ 226

as of March 31, 2025 and December 31, 2024.

Additionally, bonds having an amortized cost of $ 9,132 and $ 9,209 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at March 31, 2025 and December 31,

2024, respectively.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Bonds having an amortized cost of $ 14,898 and $ 15,065 and included in the tables above were on deposit with insurance regulatory authorities as of June 30, 2025 and December 31, 2024, respectively, in accordance with statutory requirements.

In addition, the Company maintains cash and cash equivalents on deposit with insurance regulatory authorities of $ 226 as of June 30, 2025 and December 31, 2024.

Additionally, bonds having an amortized cost of $ 9,048 and $ 9,209 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at June 30, 2025 and December 31, 2024, respectively.

Equity securities were comprised of the following:

March 31, 2025

June 30, 2025

Equity securities:

9 unchanged sentences

Total equity securities

The carrying value and amortized cost of the Company’s investments in fixed maturities at March 31, 2025 and December 31, 2024 by contractual

maturity were as follows.

The carrying value and amortized cost of the Company’s investments in fixed maturities at June 30, 2025 and December 31, 2024 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.

March 31, 2025

June 30, 2025

December 31, 2024

4 unchanged sentences

Asset backed securities

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

unrealized loss position as of March 31, 2025 and December 31, 2024.

March 31, 2025

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2025 and December 31, 2024.

June 30, 2025

Less than 12 months

5 unchanged sentences

Corporate securities

Redeemable preferred stocks

Total temporarily impaired securities

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2024

8 unchanged sentences

Total temporarily impaired securities

of Securities in Unrealized Loss Positions

As of March 31, 2025 and December 31, 2024, there were 207 and 213 securities,

respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer

The unrealized

losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest

and repay principal.

any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market drivers, such as the recent increases in interest

rates, or due to credit-related factors.

Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that could impact the ultimate collection of

principal and interest.

For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit profile.

corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data.

For non-corporate issuers, the Company analyzes all

reasonably available sources of credit support, including issuer-specific factors.

The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly.

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

relevant features.

Analysis of Securities in Unrealized Loss Positions

As of June 30, 2025 and December 31, 2024, there were 198 and 213 securities, respectively, in an unrealized loss position which primarily included certain of the Company’s investments in fixed maturities within the utilities and telecom, financial services, other diversified business and other diversified consumer sectors.

The unrealized losses on the Company’s fixed maturity securities investments have been primarily related to general market changes in interest rates and/or the levels of credit spreads rather than specific concerns with the issuer’s ability to pay interest and repay principal.

For any of its fixed maturity securities with significant declines in fair value, the Company performs detailed analyses to identify whether the drivers of the declines are due to general market

drivers, such as the elevated interest rate environment, or due to credit-related factors.

Identifying the drivers of the declines in fair value helps to align and allocate the Company’s resources to securities with real credit-related concerns that

could impact the ultimate collection of principal and interest.

For any significant declines in fair value determined to be non-interest rate or market related, the Company performs a more focused review of the related issuers’ specific credit

For corporate issuers, the Company evaluates their assets, business profile including industry dynamics and competitive positioning, financial statements and other available financial data.

non-corporate issuers, the Company analyzes all reasonably available sources of credit support, including issuer-specific factors.

The Company utilizes information available in the public domain and, for certain private placement issuers, from

consultations with the issuers directly.

The Company also considers ratings from Nationally Recognized Statistical Rating Organizations, as well as the specific characteristics of the security it owns including seniority in the issuer’s capital

structure, covenant protections, or other relevant features.

From these reviews, the Company evaluates the issuers’ continued ability to service the Company’s investment through payment of interest and principal.

no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity.

Based on its credit analysis, the Company believes that the issuers of its fixed maturity

investments in the sectors shown in the table above have the ability to service their obligations to the Company.

In addition, the Company does not intend to sell the investments, and it is not more likely than not that the Company will be

required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, from time to time the Company identifies certain available-for-sale fixed maturity securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors and as a

result, a credit allowance will be estimated.

The Company had no allowance for credit losses on its available-for-sale fixed

maturities as of March 31, 2025 and December 31, 2024.

There were no realized

investment gains for the three month periods ended March 31, 2025 and 2024.

The following table presents the portion of unrealized gains (losses) related to equity securities still held for the three month period ended March 31, 2025 and 2024.

Assuming no credit-related factors develop, unrealized gains and losses on fixed maturity securities are expected to diminish as investments near maturity.

Based on its credit analysis, the Company

believes that the issuers of its fixed maturity investments in the sectors shown in the table above have the ability to service their obligations to the Company.

In addition, the Company does not intend to sell the investments, and it is not more

likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

The Company had no allowance for credit losses (“ACL”) on its available-for-sale fixed maturities as of June 30, 2025 or December 31, 2024.

The following tables summarize realized investment gains for the three month and six month periods ended June 30, 2025 and 2024.

Three Months Ended

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

June 30, 2025

Invested Assets

Realized investment gains, net

Three Months Ended

June 30, 2024

Invested Assets

Realized investment gains, net

Six Months Ended

June 30, 2025

Invested Assets

Realized investment gains, net

Six Months Ended

June 30, 2024

Invested Assets

Realized investment gains, net

The following table presents the change in unrealized gains related to equity securities still held for the three month and six month periods ended June 30, 2025 and 2024.

Three Months Ended

Six Months Ended

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

Net realized gains recognized during the period on equity securities sold during the period

Unrealized gains (losses) recognized during the reporting period on equity securities, net

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unrealized gains recognized during the reporting period on equity securities, net

Variable Interest Entities

The Company holds passive interests in a number of entities that are considered to be variable interest entities (“VIEs”) under GAAP guidance.

Company’s VIE interests principally consist of interests in limited partnerships and limited liability companies formed for the purpose of achieving diversified equity returns.

The Company’s VIE interests, carried as a part of other invested

assets, totaled $ 6,461 and $ 6,616

as of March 31, 2025 and December 31, 2024, respectively.

The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $ 1,238 as of March 31, 2025 and December 31, 2024.

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

primary beneficiary.

The Company’s VIE interests principally consist of interests in limited liability companies formed for the purpose of achieving diversified equity returns.

The Company’s VIE interests, carried as a part of other invested assets, totaled $ 6,324 and $ 6,616 as of June 30, 2025 and December 31, 2024, respectively.

The Company’s VIE interests, carried as a part of investment in unconsolidated trusts, totaled $ 1,238 as of June 30, 2025 and December 31, 2024.

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

Therefore, the Company has not consolidated these VIEs.

The Company’s involvement with each VIE is limited to its direct ownership interest in the VIE.

The Company has no arrangements with any of the VIEs to provide other

financial support to or on behalf of the VIE.

The Company’s maximum loss exposure relative to these investments was limited to the carrying value of the Company’s investment in the VIEs, which amount to $ 7,699 and $ 7,854 , as of March 31, 2025 and December 31, 2024,

respectively.

As of March 31, 2025 and December 31, 2024, the Company had outstanding commitments totaling $ 2,200 , respectively,

whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

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 $ 7,562 and $ 7,854 , as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the Company had outstanding commitments totaling $ 2,200 , respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

Fair Values of Financial Instruments

estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.

However, considerable judgment is necessary to interpret

market data and to develop the estimates of fair value.

Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented herein are not necessarily indicative of the amounts

which the Company could realize in a current market exchange.

The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.

However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value.

Although management is not aware of any factors that would significantly affect the estimated fair value amounts, the estimates presented

herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange.

The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about

the inputs used to value those financial instruments.

The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Observable inputs that reflect

quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange

traded common stocks.

Observable inputs, other than quoted

prices included in Level 1, for an asset or liability or prices for similar assets or liabilities.

The Company’s financial instruments valued using Level 2 criteria include most of its fixed maturities, which consist of U.S.

securities, U.S.

Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

The Company’s financial instruments valued using Level 1 criteria

include cash equivalents and exchange traded common stocks.

Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities.

The Company’s financial instruments valued using Level 2 criteria include most of its fixed maturities,

which consist of U.S.

Treasury securities, U.S.

Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks.

In determining fair value measurements of its fixed maturities

and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers.

Prices for the majority of the Company’s Level 2 fixed

maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize models where the significant inputs are observable (e.g.

interest rates, yield curves, prepayment speeds,

default rates and loss severities) or can be corroborated by observable market data.

that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).

Fair value is based on criteria that use assumptions or other data that are not readily observable from

objective sources.

With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or

In determining fair value

measurements of its fixed maturities and non-redeemable preferred stocks using Level 2 criteria, the Company utilizes data from outside sources, including nationally recognized pricing services and broker/dealers.

Prices for the majority of

the Company’s Level 2 fixed maturities and non-redeemable preferred stocks were determined using unadjusted prices received from pricing services that utilize models where the significant inputs are observable (e.g.

interest rates, yield

curves, prepayment speeds, default rates and loss severities) or can be corroborated by observable market data.

Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).

Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources.

The Company’s financial instruments valued using Level 3 criteria consist of one equity security.

As of March 31, 2025 and December 31, 2024, the value of the equity security valued using Level 3 criteria was $ 192 and $ 189 , respectively.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of March 31, 2025, financial instruments carried at fair value were measured on a recurring basis as summarized below:

As of June 30, 2025 and December 31, 2024, the value of the equity security valued using Level 3 criteria was $ 193 and $ 189 , respectively.

As of June 30, 2025, financial instruments carried at fair value were measured on a recurring basis as summarized below:

Quoted Prices in

4 unchanged sentences

Cash equivalents

of December 31, 2024, financial instruments carried at fair value were measured on a recurring basis as summarized below:

As of December 31, 2024, financial instruments carried at fair value were measured on a recurring basis as summarized below:

Quoted Prices in

4 unchanged sentences

Cash equivalents

The following table sets forth the

carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2025

and December 31, 2024.

March 31, 2025

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2025 and December 31, 2024.

June 30, 2025

December 31, 2024

6 unchanged sentences

Revolving credit facility

See the aforementioned information for a description of the fair value hierarchy as well as a description of levels

for classes of these financial assets.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

The Company has one equity security valued at level 3 and all other equity securities are valued at level 1.

The Company had no transfers into or out of level 3 for the six months ended June 30, 2025 or the year ended December 31, 2024.

Allowance for Expected Credit Losses

Reinsurance Recoverables

The following table presents the balances of reinsurance recoverables, net of the allowance for estimated

uncollectible reinsurance, at March 31, 2025 and 2024, and the changes in the allowance for expected credit losses for the three months ended March 31, 2025 and 2024.

At and for the three months ended March 31, 2025

The following table presents the balances of reinsurance recoverables, net of the allowance for expected credit losses, at June 30, 2025 and 2024, and the changes in the allowance for expected credit losses for the three month and six month periods ended June 30, 2025 and 2024.

At and for the three months ended June 30, 2025

At and for the six months ended June 30, 2025

Recoverables,

Net of Allowance

for Expected Credit

Allowance for

Expected Credit

Reinsurance Recoverables,

Net of Allowance for Expected

Credit Losses

Allowance for Expected

Credit Losses

Net of Allowance

for Expected Credit Losses

Allowance for Expected Credit Losses

Balance, beginning of period

2 unchanged sentences

Balance, end of period

At and for the three months ended March 31, 2024

At and for the three months ended June 30, 2024

At and for the six months ended June 30, 2024

Recoverables,

Net of Allowance

for Expected Credit

Allowance for

Expected Credit

Reinsurance Recoverables,

Net of Allowance for Expected

Credit Losses

Allowance for Expected

Credit Losses

Net of Allowance

for Expected Credit Losses

Allowance for Expected Credit Losses

Balance, beginning of period

3 unchanged sentences

Insurance Premium and Other Receivables

The following table presents the balances of insurance premiums and other, net of the allowance for expected

credit losses, at March 31, 2025 and 2024, and the changes in the allowance for expected credit losses for the three months ended March 31, 2025 and 2024.

At and for the three months ended March 31, 2025

The following table presents the balances of insurance premiums and other, net of the allowance for expected credit losses, at June 30, 2025 and 2024, and the changes in the allowance for expected credit losses for the three month and six month periods ended June 30, 2025 and 2024.

At and for the three months ended June 30, 2025

At and for the six months ended June 30, 2025

Insurance Premiums

and Other, Net of

Expected Credit Losses

Expected Credit

Allowance for

Expected Credit Losses

Expected Credit

Insurance Premiums

and Other, Net of

Expected Credit

Allowance for

Expected Credit

Balance, beginning of period

2 unchanged sentences

Balance, end of period

At and for the three months ended March 31, 2024

At and for the three months ended June 30, 2024

At and for the six months ended June 30, 2024

Insurance Premiums

and Other, Net of

Expected Credit Losses

Expected Credit

Allowance for

Expected Credit Losses

Expected Credit

Insurance Premiums

and Other, Net of

Expected Credit

Allowance for

Expected Credit

Balance, beginning of period

3 unchanged sentences

Internal-Use Software

On March 3, 2021, the Company entered

into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services.

The software is managed, hosted, supported, and delivered as a

cloud-based software service product offering (software-as-a-service).

On March 3, 2021, the Company entered into a hosting arrangement through a service contract with a third party software solutions vendor to provide a suite of policy, billing, claim, and customer management services.

The software is managed, hosted, supported, and delivered as a cloud-based software service product offering (software-as-a-service).

The initial term of the arrangement, as amended, was three years .

The arrangement was renewed in March 2024 for an additional five years , with a subsequent renewal term of five years .

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Service fees related to the hosting

arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred.

Service fees related to the hosting arrangement are recorded as an expense in the Company’s condensed consolidated statement of operations as incurred.

Implementation expenses incurred related to third party professional and consulting services have been capitalized.

will begin amortizing, on a straight-line basis over the expected remaining term of the hosting arrangement, when the software is substantially ready for its intended use.

The Company incurred and capitalized implementation costs of $ 20 and $ 10 during the three months

ended March 31, 2025 and 2024, respectively.

As a result, the Company has capitalized $ 4,695 and $ 4,675 in implementation costs in other assets within its condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024,

respectively.

The Company expects the software will be substantially ready for its intended use during 2025.

Accordingly, the Company has no t

recorded any amortization expense related to software implementation costs for the three months ended March 31, 2025 and 2024.

The Company will begin amortizing, on a straight-line basis over the expected remaining term of the hosting arrangement, when the software is substantially ready for its intended use.

The Company incurred and capitalized implementation costs of $ 39 and $ 51 during the six months ended June 30, 2025 and 2024, respectively.

As a result, the Company has capitalized $ 4,714 and $ 4,675 in implementation costs in other assets within its condensed consolidated balance sheet as of June 30, 2025 and December 31, 2024, respectively.

The Company expects the software will be substantially ready for its intended use in the second half of 2025.

Accordingly, the Company has no t recorded any amortization expense related to software implementation costs for the three months and six months ended June 30, 2025 and 2024.

Insurance Reserves for Losses and Claims

roll-forward of insurance reserves for losses and claims for the three months ended March 31, 2025 and 2024 is as follows:

Three Months Ended

The roll-forward of insurance reserves for losses and claims for the six months ended June 30, 2025 and 2024 is as follows:

Six Months Ended

Beginning insurance reserves for losses and claims, gross

11 unchanged sentences

Ending insurance reserves for losses and claims, gross

Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the

life and health operations.

Prior years’ development was primarily the result of favorable development in the property and casualty operations, partially

offset by unfavorable 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:

Three Months Ended

(1) Prior years’ development was primarily the result of favorable development in the Medicare supplement line of business in the life and health operations, partially offset by unfavorable development in the property and casualty operations predominately in the automobile liability line of business.

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

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

Six Months Ended

Total incurred losses

2 unchanged sentences

Total insurance benefits and losses incurred

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

On May 12, 2021, the

Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”).

Credit Arrangements

On May 12, 2021, the Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”).

The Revolving Credit Agreement provides for an unsecured $ 10,000 revolving credit facility that originally matured on April 12, 2024 .

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.

The Amendment, among other things, (a) updates the interest rate provisions to memorialize that the

Company pays interest on the unpaid principal balance of outst anding 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 , (c) requires the

monthly payment of an unused commitment fee of 0.2 % of the un used facility amount, and (d) requires that the

Company maintain a consolidated net worth of not less than $ 64,200 .

Except as modified by the 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

Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned.

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.

The Amendment, among other things, (a) updates the interest rate provisions 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 , (c) requires the monthly payment of an unused commitment fee of 0.2 % of the unused facility amount, and (d) requires that the Company maintain a consolidated net worth of not less than $ 64,200 .

Except as modified by the 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 Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned.

The Credit Agreement also contains customary representations and warranties and events of default.

Events of default

include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence

of bankruptcy or insolvency events.

Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events.

Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.

As of March 31, 2025, and

December 31, 2024, the Company had outstanding borrowings including accrued interest of $ 4,022 and $ 4,023 , respectively, under the Credit Agreement.

For the three months ended March 31, 2025 and 2024, the Company incurred $ 64 and $ 61 in interest expense, respectively, on the

revolving credit facility borrowing.

During the three month periods ended March 31, 2025 and 2024, the Company paid $ 3 and $ 0 , respectively, in fees on the available unused amount of the revolving credit facility of $ 6,000 .

At March 31, 2025 and December 31, 2024, the effective interest rate was 6.42 % and 6.67 %, respectively.

As of June 30, 2025, and December 31, 2024, the Company had outstanding borrowings including accrued interest of $ 4,021 and $ 4,023 , respectively, under the Credit Agreement.

For the three months ended June 30, 2025 and 2024, the Company incurred $ 65 and $ 76 in interest expense, respectively, on the revolving credit facility borrowing.

For the six months ended June 30, 2025 and 2024, the Company incurred $ 129 and $ 137 , respectively, in interest expense.

During the three month and six month periods ended June 30, 2025, the Company paid $ 3 and $ 6 , respectively, in fees on the available unused amount of the revolving credit facility of $ 6,000 .

At June 30, 2025 and December 31, 2024, the effective interest rate was 6.43 % and 6.67 %, respectively.

Junior Subordinated Debentures

The Company has two unconsolidated Connecticut

statutory business trusts, which exist for the exclusive purposes of:

The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of:

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

(ii) investing the gross

proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company;

(ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company;

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

The outstanding $ 18,042 and $ 15,696 of Junior Subordinated Debentures mature on December 4, 2032

and May 15, 2033 , respectively, are callable quarterly, in whole or in part, only at the option of the Company.

Prior to July 1,

2023, the interest rate was based on 3-month LIBOR plus an applicable margin.

The outstanding $ 18,042 and $ 15,696 of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033 , respectively, are callable quarterly, in whole or in part, only at the option of the Company.

Prior to July 1, 2023, the interest rate was based on 3 -month LIBOR plus an applicable margin.

Effective July 1, 2023, the interest rate is determined based on a reference rate of the 3 -month SOFR plus applicable tenor spread of 0.26161 % plus an applicable margin, ranging from 4.00 % to 4.10 %.

At March 31, 2025 and December 31, 2024, the effective interest rate was 8.64 % and 8.82 %, respectively.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The financial structure of each of

Atlantic American Statutory Trust I and II as of March 31, 2025 and December 31, 2024 was as follows:

At June 30, 2025 and December 31, 2024, the effective interest rate was 8.64 % and 8.82 %, respectively.

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2025 was as follows:

Atlantic American

3 unchanged sentences

JUNIOR SUBORDINATED DEBENTURES (1) (2)

Principal amount owed March 31 ,

Principal amount owed June 30, 2025

Treasury debt (3)

Net balance March 31 , 2025

Net balance June 30, 2025

Net balance December 31, 2024

17 unchanged sentences

Atlantic American Corporation

For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated

Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.

During any such

period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt

securities that rank equally with or junior to the Junior Subordinated Debentures.

The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the

Trust Preferred Securities.

The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated

to all existing and future liabilities of its subsidiaries.

On August 4, 2014, the Company acquired $ 7,500 of the

Junior Subordinated Debentures.

The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any

accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.

(1) For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.

During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.

The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

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

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

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

Earnings (Loss) Per Common Share

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

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

Three Months Ended

March 31, 2025

June 30, 2025

Average Shares

(In thousands)

Basic and Diluted Earnings Per Common Share:

Basic Earnings Per Common Share:

Less preferred stock dividends

Net income applicable to common shareholders

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Diluted Earnings Per Common Share:

Effect of Series D preferred stock

Net income applicable to common shareholders

Three Months Ended

March 31, 2024

June 30, 2024

Average Shares

3 unchanged sentences

Net loss applicable to common shareholders

The assumed conversion of the Company’s Series D preferred stock was excluded from the e arnings ( loss) per common share calculation for three month periods ended March 31, 2025 and 2024, since its impact would have

been antidilutive.

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

Six Months Ended

June 30, 2025

Average Shares

(In thousands)

Basic Earnings Per Common Share:

Less preferred stock dividends

Net income applicable to common shareholders

Diluted Earnings Per Common Share:

Effect of Series D preferred stock

Net income applicable to common shareholders

Six Months Ended

June 30, 2024

Average Shares

(In thousands)

Basic and Diluted Loss Per Common Share:

Less preferred stock dividends

Net loss applicable to common shareholders

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation for the three month and six month periods ended June 30, 2024,

since its impact would have been antidilutive.

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

Three Months Ended

Six Months Ended

Federal income tax provision at statutory rate of 21 %

6 unchanged sentences

Three Months Ended

Six Months Ended

Current – Federal

Deferred – Federal

The Company has two operating lease agreements, each for the use of office space in the ordinary course of business.The original term of the first lease was to automatically renew on an annual

basis and was amended on December 26, 2024, when the Company and its subsidiary, Bankers Fidelity Life Insurance Company, entered into a Second Amendment to the Lease Agreement (the “Second Amendment”) with 4370 Peachtree LLC.

The Second Amendment

amends the Lease Agreement, dated November 1, 2007, by and among the same parties (as previously amended, the “Lease Agreement”), pursuant to which the Company leases space for its principal offices and for some of its insurance operations in an

office building located in Atlanta, Georgia.

The Company has two operating lease agreements, each for the use of office space in the ordinary course of business.

The original term of the first lease was to automatically renew on an annual basis and was amended on December 26, 2024, when the Company and its subsidiary, Bankers Fidelity Life Insurance Company, entered into a Second Amendment to the Lease Agreement (the “Second Amendment”) with 4370 Peachtree LLC.

The Second Amendment amends the Lease Agreement, dated November 1, 2007, by and among the same parties (as previously amended, the “Lease Agreement”), pursuant to which the Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia.

Pursuant to the Second Amendment, the Lease Agreement was modified to increase the base rent payable by the Company, beginning January 1, 2025.

The Second Amendment also provides for rent adjustment on

January 1, 2027, January 1, 2030 and each five years thereafter.

The Second Amendment also provides for rent adjustment on January 1, 2027, January 1, 2030 and each five years thereafter.

The original term of the second lease was ten years and amended in January 2017 to provide for an additional seven years , with a termination date on September 30, 2026.

The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured

borrowing rate commensurate with the term of the underlying lease.

These leases are accounted for

as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease.

Lease expense reported for the three months ended March 31, 2025 and March 31, 2024 was $ 285 and $ 254 , respectively.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Additional information regarding the Company’s real estate

operating leases is as follows:

Three Months Ended

Other information on operating leases:

Cash payments included in the measurement of lease

liabilities reported in operating cash flows

The rate used in determining the present value of lease payments is based upon an estimate of the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease.

Lease expense reported for the six months ended June 30, 2025 and June 30, 2024 was $ 569 and $ 507 , respectively.

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

Six Months Ended

Cash payments included in the measurement of lease liabilities reported in operating cash flows

Right-of-use assets included in other assets on the condensed consolidated balance sheet

1 unchanged sentence

Weighted average remaining lease term in years

The following table presents maturities and present value of

the Company’s lease liabilities:

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

Lease Liability

3 unchanged sentences

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

As of March 31, 2025, the Company has no operating leases that

have not yet commenced.

As of June 30, 2025, the Company has no operating leases that have not yet commenced.

Commitments and Contingencies

From time to time, the

Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and arising in the ordinary course of its business.

In the opinion of management, any such known claims are not expected to have a material effect on

the financial condition or results of operations of the Company.

From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and arising in the ordinary course of its business.

In the opinion of

management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.

Regulatory Matters

Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to

regulation and supervision in the jurisdictions in which they do business.

Statutes typically delegate regulatory, supervisory, and administrative powers to state insurance commissioners.

From time to time, and in the ordinary course of

business, the Company receives notices and inquiries from state insurance departments with respect to various matters.

In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial

condition or results of operations of the Company.

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

Statutes typically delegate

regulatory, supervisory, and administrative powers to state insurance commissioners.

From time to time, and in the ordinary course of business, the Company receives notices and inquiries from state insurance departments with respect to various

In the opinion of management, any such known regulatory matters are not expected to have a material effect on the financial condition or results of operations of the Company.

Segment Information

The Parent’s primary insurance subsidiaries operate with relative autonomy and each

company is evaluated based on its individual performance.

American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.

Each segment derives revenue from the

collection of premiums, as well as from investment income.

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

Substantially all revenue other than that in the

corporate and other segment is from external sources.

The Parent’s primary insurance subsidiaries operate with relative autonomy and each company is evaluated based on its individual performance.

American Southern operates in the property and casualty

insurance market, while Bankers Fidelity operates in the life and health insurance market.

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

The Company’s strategy is to focus on well-defined geographic,

demographic and/or product niches within the insurance marketplace.

Substantially all revenue other than that in the corporate and other segment is from external sources.

The Company adopted ASU No.

2023-07, Segment

Reporting- An Amendment for Improvements to Reportable Segment Disclosures (Topic 280) in December 2024.

The most significant provision was for the Company to disclose significant segment expenses that are regularly provided to the Chief Operating

Decision Maker (“CODM”).

Our CODM is the Company’s Chairman, President and Chief Executive Officer.

The segment’s most significant expenses include insurance benefits and losses incurred and other expenses, such as commissions and underwriting.

2023-07, Segment Reporting- An Amendment for Improvements to Reportable Segment Disclosures (Topic 280) in December 2024.

The most significant provision was for the

Company to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”).

The Company’s CODM is the Chairman, President and Chief Executive Officer.

The segment’s most significant expenses include

insurance benefits and losses incurred and other expenses, such as commissions and underwriting.

Interest expense at the segment level is insignificant.

To assess proﬁtability on a reportable segment basis, the CODM reviews income (loss) before income taxes.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following sets

forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2025 and 2024.

To assess proﬁtability on a reportable segment basis, the CODM reviews income (loss) before

income taxes.

The following sets forth the assets, revenue and income (loss) before income taxes for each business unit as of and for the periods ended 2025 and 2024.

American Southern

2 unchanged sentences

Three Months Ended

Six Months Ended

American Southern

3 unchanged sentences

Three Months Ended

Six Months Ended

Insurance benefits and losses incurred

4 unchanged sentences

Three Months Ended

Commissions and underwriting expenses

Six Months Ended

Commissions and underwriting

American Southern

1 unchanged sentence

Corporate, Other and Eliminations

Total commissions and underwriting expenses

Total commissions and underwriting

Three Months Ended

Six Months Ended

Income (loss) Before Income Taxes

6 unchanged sentences

The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its

subsidiaries (collectively with the Parent, the “Company”) as of and for three month period ended March 31, 2025.

This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto

included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).

subsidiaries (collectively with the Parent, the “Company”) as of and for the three month and six month periods ended June 30, 2025.

This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and

notes thereto included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).

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

12 unchanged sentences

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income (loss) for the three month period ended March 31, 2025 and the comparable period in 2024:

The following presents the Company’s revenue, expenses and net income (loss) for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Net investment income

Unrealized gains (losses) on equity securities, net

Realized investment gains, net

Unrealized gains on equity securities, net

Total revenue

12 unchanged sentences

Management believes operating income

(loss) is a useful metric for investors, potential investors, securities analysts and others because it isolates the “core” operating results of the Company before considering certain items that are either beyond the control of management (such as

taxes, which are subject to timing, regulatory and rate changes depending on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized and unrealized

as taxes, which are subject to timing, regulatory and rate changes depending on the timing of the associated revenues and expenses) or are not expected to regularly impact the Company’s operational results (such as any realized and unrealized

investment gains, which are not a part of the Company’s primary operations and are, to a limited extent, subject to discretion in terms of timing of realization).

A reconciliation of net income (loss) to operating income (loss) for the three month period ended March 31, 2025 and the comparable period in 2024 is as follows:

A reconciliation of net income (loss) to operating income (loss) for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024 is as follows:

Three Months Ended

Six Months Ended

Reconciliation of Non-GAAP Financial Measure

2 unchanged sentences

Income tax expense (benefit)

Unrealized (gains) losses on equity securities, net

Realized investment gains, net

Unrealized gains on equity securities, net

Non-GAAP operating income (loss)

On a consolidated basis, the Company had net income of $0.8 million, or $0.03 per diluted share, for the three month period ended March 31, 2025, compared to net loss of $2.0 million, or $(0.10)

per diluted share, for the three month period ended March 31, 2024.

The increase in net income for the first quarter of 2025 was primarily the result of an increase in premium revenue in the life and health operations coupled with favorable loss

experience in the life and health operations.

Premium revenue for the three month period ended March 31, 2025 increased $2.4 million, or 5.3%, to $46.9 million from $44.6 million in the three month period ended March 31, 2024.

in premium revenue was primarily attributable to an increase in the group accident and health, other individual health and Medicare supplement lines of business due to new sales in the life and health operations.

Also contributing to the increase

was an increase in earned premiums in inland marine within the other lines of business and the automobile physical damage line of business in the property and casualty operations.

Operating income increased $2.7 million in the three month period ended March 31, 2025 from the three month period ended March 31, 2024.

The increase in operating income was primarily due to an

increase in premium revenue in the life and health operations coupled with favorable loss experience in the life and health operations.

On a consolidated basis, the Company had net income of $3.3 million, or $0.15 per diluted share, for the three month period ended June 30, 2025, compared to net loss of $0.7 million, or $(0.04)

per diluted share, for the three month period ended June 30, 2024.

The Company had net income of $4.1 million, or $0.19 per diluted share, for the six month period ended June 30, 2025, compared to net loss of $2.7 million, or $(0.14) per diluted

share, for the six month period ended June 30, 2024.

The increase in net income for the three month and six month periods ended June 30, 2025 was primarily the result of increases in premium revenue within the inland marine line of business in

the property and casualty operations, as well as increases in the Medicare supplement and group accident and health lines of business within the life and health operations.

Also contributing to the increase in net income was an increase in

unrealized gains on equity securities during the three month and six month periods ended June 30, 2025.

Also contributing to the increase in net income for the three month and six month periods ended June 30, 2025 was favorable development in the

Medicare supplement line of business in the life and health operations.

For the three month period ended June 30, 2025, premium revenue increased $5.2 million, or 11.5%, to $50.1 million from $45.0 million in the comparable period in 2024.

For the six month period

ended June 30, 2025, premium revenue increased $7.5 million, or 8.4%, to $97.1 million from $89.5 million in the comparable period in 2024.

The increase in premium revenue during the three month and six month periods ended June 30, 2025 was

primarily attributable to increases in premium revenue in the inland marine line of business, as well as the automobile physical damage line of business, due to increases in premium writings in the property and casualty operations.

contributing to the increase in premium revenue was increases in the Medicare supplement and group accident and health lines of business due to new sales within the life and health operations.

Operating income increased $2.7 million in the three month period ended June 30, 2025 from the three month period ended June 30, 2024.

For the six month period ended June 30, 2025, operating

income increased $5.4 million from the comparable period in 2024.

The increase in operating income for the three month and six month periods ended June 30, 2025 was primarily the result of increases in premium revenue within the inland marine

line of business in the property and casualty operations, as well as increases in the Medicare supplement and group accident and health lines of business within the life and health operations, as previously mentioned.

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

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2025 and the comparable period in 2024:

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

Three Months Ended

Six Months Ended

(Dollars in thousands)

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Combined ratio

Gross written premiums at American Southern increased $0.9 million, or 10.2%, during the three month period ended March 31, 2025 from the comparable period in 2024.

The increase in gross written

premiums was primarily attributable to the increase in premiums written in inland marine within the other lines of business due to a new program written by an existing agency.

Also contributing to the increase in gross written premiums was an

increase in the automobile physical damage line of business resulting from increased writings from existing agencies.

Partially offsetting the increase in gross written premiums was a decrease in premiums written in the automobile liability line of

business resulting from retrospective premium adjustments.

Ceded premiums increased $0.1 million, or 9.1%, during the three month period ended March 31, 2025 from the comparable period in 2024.

American Southern’s ceded premiums are typically determined as

a percentage of earned premiums and generally fluctuate as earned premiums increase or decrease or retention levels change.

The following presents American Southern’s net earned premiums by line of business for the three month period ended March 31, 2025 and the comparable period in 2024:

Gross written premiums at American Southern increased $15.8 million, or 43.3%, during the three month period ended June 30, 2025 and $16.7 million, or 37.0%, during the six month period ended

June 30, 2025, from the comparable periods in 2024.

The increase in gross written premiums during the three month and six month periods ended June 30, 2025 was primarily attributable to an increase in premiums written in the automobile

liability line of business due to the renewal of a program, which included a rate increase.

Also contributing to the increase in gross written premiums were increases in premiums written in the inland marine line of business due to a new

program written by an existing agency, as well as an increase in premiums written in the automobile physical damage line of business resulting from an increase in writings from existing agents.

Ceded premiums remained constant during the three month period ended June 30, 2025 and increased $0.1 million, or 4.0%, during the six month period ended

June 30, 2025, from the comparable periods in 2024.

American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally fluctuate as earned premiums subject to reinsurance increase or decrease or

retentions levels change.

The following presents American Southern’s net earned premiums by line of business for the three month and six month periods ended June 30, 2025 and the comparable periods in 2024:

Three Months Ended

Six Months Ended

(In thousands)

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General liability

Net earned premiums increased $0.5 million, or 2.5%, during the three month period ended March 31, 2025 over the comparable period in 2024.

The increase in net earned premiums was primarily

attributable to an increase in earned premiums in inland marine within the other lines of business and the automobile physical damage line of business.

Partially offsetting the increase in net earned premiums was a decrease in earned premiums in

the automobile liability line of business resulting from the nonrenewal of one program and retrospective premiums adjustments.

Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are

related to policies written during both the current year and immediately preceding year.

Inland marine

Net earned premiums increased $3.6 million, or 20.5%, during the three month period ended June 30, 2025, and $4.1 million, or 11.4%, during the six month period ended June 30, 2025, over the

comparable periods in 2024.

The increase in net earned premiums during the three month period ended June 30, 2025 was mainly due to increases in earned premiums in the inland marine line of business, as well as the earning out of premium within

the automobile liability line of business.

The increase in net earned premiums during the six month period ended June 30, 2025 was primarily attributable to increases in earned premiums in the inland marine line of business, as well as the

automobile physical damage line of business, due to increases in premium writings, as previously mentioned.

Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies

written during both the current year and immediately preceding year.

The performance of an insurance company is often measured by its combined ratio.

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loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) and the expense ratio (the ratio of expenses incurred to premiums earned).

Insurance benefits and losses incurred at American Southern increased $1.8 million, or 13.9%, during the three month period ended March 31, 2025 over the comparable period in 2024.

As a percentage

of earned premiums, insurance benefits and losses incurred were 79.6% in the three month period ended March 31, 2025, compared to 71.7% in the three month period ended March 31, 2024.

The increase in the loss ratio during the three month period

ended March 31, 2025 was primarily due to an increase in losses in the automobile physical damage and other lines of business.

Also contributing to the increase in the loss ratio was an increase in loss adjustment expenses related to an increase

in claims costs.

Partially offsetting the increase was a decrease in the frequency of claims in the automobile liability line of business.

Commissions and underwriting expenses decreased $0.4 million, or 8.8%, during the three month period ended March 31, 2025, over the comparable period in 2024.

As a percentage of earned premiums,

underwriting expenses were 22.6% in the three month period ended March 31, 2025, compared to 25.4% in the three month period ended March 31, 2024.

The decrease in the expense ratio during the three month period ended March 31, 2025 was primarily

due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write.

During periods in which the loss ratio decreases,

commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.

During the three month period ended March 31, 2025,

variable commissions at American Southern decreased by $0.5 million from the comparable period in 2024 due to an unfavorable loss experience from accounts subject to variable commissions.

Insurance benefits and losses incurred at American Southern increased $1.8 million, or 12.5%, during the three month period ended June 30, 2025, and $3.6 million, or 13.2%, during the six month

period ended June 30, 2025, over the comparable periods in 2024.

As a percentage of earned premiums, insurance benefits and losses incurred were 75.7% in the three month period ended June 30, 2025, compared to 81.1% in the three month period

ended June 30, 2024.

For the six month period ended June 30, 2025, this ratio increased to 77.5% from 76.3% in the comparable period in 2024.

The decrease in the loss ratio during the three month period ended June 30, 2025 was due to an increase

in premium growth exceeding the increase in insurance benefits and losses incurred.

The increase in the loss ratio during the six month period ended June 30, 2025 was mainly due to an increase in losses within the automobile physical damage line

of business and the inland marine line of business.

Commissions and underwriting expenses increased $1.8 million, or 50.7%, during the three month period ended June 30, 2025, and $1.4 million, or 17.3% during the six month period ended June 30,

2025, over the comparable periods in 2024.

As a percentage of earned premiums, underwriting expenses were 25.3% in the three month period ended June 30, 2025, compared to 20.2% in the three month period ended June 30, 2024.

For the six month

period ended June 30, 2025, this ratio increased to 24.0% from 22.8% in the comparable period in 2024.

The increase in the expense ratio during the three month and six month periods ended June 30, 2025 was primarily due to American Southern’s use

of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write.

During periods in which the loss ratio decreases, commissions and underwriting expenses

will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease.

During the three month and six month periods ended June 30, 2025, variable commissions at

American Southern increased by $1.2 million and $0.7 million, respectively, from the comparable periods in 2024 due to favorable loss experience from accounts subject to variable commissions.

Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2025 and the comparable period in 2024:

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2025 and the comparable periods in

Three Months Ended

Six Months Ended

(Dollars in thousands)

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Combined ratio

Gross earned premiums at Bankers Fidelity increased $2.8 million, or 7.1%, during the three month period ended March 31, 2025, from the comparable period in 2024.

The increase in gross earned

premiums was primarily attributable to the increase in gross earned premiums from the Medicare supplement line of business due primarily to the level of new business writings exceeding non-renewals.

Also contributing to the increase in gross earned

premiums was an increase in gross earned premiums in the group accident and health line of business.

Ceded premiums increased $0.9 million, or 7.1%, during the three month period ended March 31, 2025, from the comparable period in 2024.

The increase in ceded premiums was due to an increase in

Medicare supplement premiums subject to reinsurance.

Gross earned premiums increased $3.2 million, or 7.9%, during the three month period ended June 30, 2025, and $6.1 million, or 7.5%, during the six month period ended June 30, 2025, from the

comparable periods in 2024.

The increase in gross earned premiums was primarily attributable to the increase in gross earned premiums from the Medicare supplement line of business due primarily to the level of new business writings exceeding

non-renewals, partially offset by lapses within the same line of business.

Also contributing to the increase in gross earned premiums was an increase in gross earned premiums in the group accident and health line of business, resulting from new

business sales.

Ceded premiums increased $1.7 million, or 12.7%, during the three month period ended June 30, 2025, and $2.6 million, or 9.9%, during the six month period ended June 30, 2025, from the comparable

periods in 2024.

The increase in ceded premiums was due to an increase in Medicare supplement premiums subject to reinsurance.

The following table summarizes, for the periods indicated, Bankers Fidelity’s net earned premiums by line of business:

Three Months Ended

Six Months Ended

(In thousands)

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Other individual accident and health

Net earned premium revenue at Bankers Fidelity increased $1.9 million, or 7.2%, during the three month period ended March 31, 2025, from the comparable period in 2024.

The increase in net earned

premiums was primarily attributable to increases in the group accident and health, other individual health and Medicare supplement lines of business due to new sales as previously mentioned.

Insurance benefits and losses incurred decreased $1.8 million, or 9.4%, during the three month period ended March 31, 2025, from the comparable period in 2024.

As a percentage of earned premiums,

insurance benefits and losses incurred were 60.6% in the three month period ended March 31, 2025, compared to 71.7% in the three month period ended March 31, 2024.

The decrease in the loss ratio for the three month period ended March 31, 2025 was

primarily due to lower utilization in the Medicare supplement line of business.

Partially offsetting this decrease was an increase in incurred losses in the individual life and other individual accident and health lines of business.

Commissions and underwriting expenses increased $0.4 million, or 3.9%, during the three month period ended March 31, 2025, over the comparable period in 2024.

As a percentage of earned premiums,

underwriting expenses were 37.6% in the three month period ended March 31, 2025, compared to 38.8% in the three month period ended March 31, 2024.

The decrease in the expense ratio was primarily due to an increase in earned premiums in the

Medicare supplement, group life and group accident and health lines of business.

Net Investment Income and Realized Gains (Losses)

Investment income decreased $0.1 million, or 4.5%, during the three month period ended March 31, 2025, from the comparable period in 2024.

The decrease in investment income was primarily

attributable to a decrease in the equity in earnings from investments in the Company’s limited partnerships and limited liability companies of $0.1 million.

The Company had no net realized investment gains during each of the three month periods ended March 31, 2025 and 2024.

Management continually evaluates the Company’s investment portfolio and, as

may be determined to be appropriate, makes adjustments for impairments and/or will divest investments.

See Note 3 of Notes to Condensed Consolidated Financial Statements.

Unrealized Gains (Losses) on Equity Securities

Net earned premium increased $1.6 million, or 5.7%, during the three month period ended June 30, 2025, and $3.5 million, or 6.4%, during the six month period ended June 30, 2025, over the

comparable periods in 2024.

The increase in net earned premiums was primarily attributable to increases in the Medicare supplement and group accident and health lines of business due to new sales as previously mentioned.

Also contributing to the

increase in net earned premiums was an increase in the other individual accident and health line of business due to new business growth.

Insurance benefits and losses incurred increased $0.1 million, or 0.3%, during the three month period ended June 30, 2025, and decreased $1.7 million, or 4.7%, during the six month period ended

June 30, 2025, from the comparable periods in 2024.

As a percentage of earned premiums, benefits and losses were 60.8% in the three month period ended June 30, 2025, compared to 64.0% in the three month period ended June 30, 2024.

month period ended June 30, 2025, this ratio decreased to 60.7% from 67.8% in the comparable period in 2024.

The decrease in the loss ratio for the three month and six month periods ended June 30, 2025 was primarily due to lower utilization

within the Medicare supplement line of business.

Commissions and underwriting expenses decreased $0.8 million, or 8.1%, during the three month period ended June 30, 2025, and $0.4 million, or 2.1%, during the six

month period ended June 30, 2025, over the comparable periods in 2024.

As a percentage of earned premiums, underwriting expenses were 33.1% in the three month period ended June 30, 2025, compared to 38.0% in the three month period ended June

For the six month period ended June 30, 2025, this ratio decreased to 35.3% from 38.4% in the comparable period in 2024.

The decrease in the expense ratio for the three month and six month periods ended June 30, 2025 was mainly due

to growth in premiums coupled with a decline in underwriting expenses, primarily from lower variable expenses related to the group lines of business.

Net Investment Income and Realized Gains

Investment income increased $0.1 million, or 4.1%, during the three month period ended June 30, 2025, and remained constant during the six month period ended June 30, 2025, over the comparable

periods in 2024.

The increase in investment income in the three month period ended June 30, 2025, from the comparable periods in 2024, was primarily attributable to an increase in the equity in earnings from investments in the Company’s limited

partnerships and limited liability companies.

The Company had net realized investment gains of less than $0.1 million during each of the three month and six month periods ended June 30, 2025, compared to net realized investment gains of less

than $0.1 million during each of the three month and six month periods ended June 30, 2024.

The net realized investment gains during the three month and six month periods ended June 30, 2025 was due to the sale and redemption of several of the

Company’s investments in fixed maturity securities.

The net realized investment gains during the three month and six month periods ended June 30, 2024 resulted primarily from the redemption of several of the Company’s investments in fixed

maturity securities.

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

Unrealized Gains on Equity Securities

Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period.

The Company recognized net

unrealized gains on equity securities of $0.8 million during the three month period ended March 31, 2025 and unrealized losses on equity securities of $0.1 million during the three month period ended March 31, 2024.

Changes in unrealized gains

(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.

unrealized gains on equity securities of $2.6 million during the three month period ended June 30, 2025 and unrealized gains on equity securities of $0.2 million during the three month period ended June 30, 2024.

The Company recognized net

unrealized gains on equity securities of $3.4 million during the six month period ended June 30, 2025 and unrealized gains on equity securities of $0.1 million during the six month period ended June 30, 2024.

Changes in unrealized gains on equity

securities for the applicable periods are the result of fluctuations in the market value of the Company’s equity securities.

Interest Expense

Interest expense decreased $0.1 million, or 9.5%, during the three month period ended March 31, 2025, from the comparable period in 2024.

Changes in interest expense were primarily due to changes

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

the revolving credit facility utilize SOFR as the reference rate.

Interest expense decreased $0.1 million, or 10.8%, during the three month period ended June 30, 2025, and $0.2 million, or 10.2%, during the six month period ended June 30, 2025, from the

comparable periods in 2024.

Changes in interest expense were primarily due to changes 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 the revolving credit facility utilize SOFR as the reference rate.

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.

and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges.

The Company’s primary sources of cash are written premiums, investment income and proceeds from

the sale and maturity of its invested assets.

The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium

receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed.

Current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges.

The Company’s primary sources of cash are written premiums, investment income and

proceeds from the sale and maturity of its invested assets.

The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings,

future premium receipts and reinsurance collections will be adequate to fund the payment of claims and operating expenses as needed.

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries.

The principal cash needs of the Parent are for the payment

of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time.

March 31, 2025, the Parent had approximately $3.5 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $4.3 million for the three month period ended March 31, 2025, compared to statutory net income of $1.6 million for the three

month period ended March 31, 2024.

The principal cash needs of the Parent are for the

payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to

At June 30, 2025, the Parent had approximately $4.4 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $4.7 million for the six month period ended June 30, 2025, compared to statutory net loss of $0.4 million for the six month

period ended June 30, 2024.

Statutory results are impacted by the recognition of all costs of acquiring business.

In periods in which the Company’s first year premiums increase, statutory results are generally lower than results determined

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.

6 unchanged sentences

recognizing realized investment gains of the individual insurance subsidiaries.

At March 31, 2025, American Southern had $47.6 million of statutory capital and surplus and Bankers Fidelity had $33.5 million of statutory capital and surplus.

At June 30, 2025, American Southern had $47.2 million of statutory capital and surplus and Bankers Fidelity had $34.6 million of statutory capital and surplus.

2025, dividend payments by the Parent’s insurance subsidiaries in excess of $6.3 million would require prior approval.

Through March 31, 2025, the Parent received dividends of $2.1 million from its subsidiaries.

Through June 30, 2025, the Parent received dividends of $4.2 million from its subsidiaries.

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

2 unchanged sentences

In addition, there is in place a formal tax-sharing agreement between the Parent and its insurance subsidiaries.

As a result of the Parent’s tax loss, it is

anticipated that the tax-sharing agreement will continue to provide the Parent with additional funds from profitable subsidiaries to assist in meeting its cash flow obligations.

As a result of the Parent’s tax loss, it

is anticipated that the tax-sharing agreement will continue to provide the Parent with additional funds from profitable subsidiaries to assist in meeting its cash flow obligations.

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

8 unchanged sentences

trust preferred securities.

As of March 31, 2025, the Company has not made such an election.

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

or potential future financing arrangements.

At March 31, 2025, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.

As of June 30, 2025, the Company has not made such an election.

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

existing or potential future financing arrangements.

At June 30, 2025, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.

All of the shares of Series D Preferred Stock are held by an affiliate of the

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The outstanding shares of Series D Preferred Stock have a stated value of $100 per share;

accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option

of the board of directors of the Company) and are cumulative.

In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock, subject to

certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval;

and are redeemable solely at the Company’s option.

accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the

option of the board of directors of the Company) and are cumulative.

In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,378,000 shares of the Company’s common stock,

subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval;

and are redeemable solely at the

Company’s option.

The Series D Preferred Stock is not currently convertible.

At March 31, 2025, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.1 million.

At June 30, 2025, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.2 million.

Bankers Fidelity Life Insurance Company (‘‘BFLIC”) is a member of the Federal Home Loan Bank of Atlanta (“FHLB”), for the primary purpose of enhancing financial flexibility.

As a member, BFLIC can

obtain access to low-cost funding and also receive dividends on FHLB stock.

The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.4 million, as of March 31, 2025.

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

As of March 31, 2025, BFLIC has pledged bonds having an amortized cost of $9.1 million to the FHLB.

BFLIC may be required to post additional acceptable

forms of collateral for any borrowings that it makes in the future from the FHLB.

As of March 31, 2025, BFLIC does not have any outstanding borrowings from the FHLB.

As a member, BFLIC

can obtain access to low-cost funding and also receive dividends on FHLB stock.

The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.8 million, as of June 30, 2025.

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

As of June 30, 2025, BFLIC has pledged bonds having an amortized cost of $9.0 million to the FHLB.

BFLIC may be required to post additional

acceptable forms of collateral for any borrowings that it makes in the future from the FHLB.

As of June 30, 2025, BFLIC does not have any outstanding borrowings from the FHLB.

On May 12, 2021, the Company entered into a Revolving Credit Agreement with Truist Bank as the lender (the “Lender”).

The Revolving Credit Agreement provides for an unsecured $10.0 million revolving credit facility

that originally matured on April 12, 2024.

The Revolving Credit Agreement provides for an unsecured $10.0 million

revolving credit facility that originally matured on April 12, 2024.

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.

The Amendment, among other things,

(a) updates the interest rate provisions 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, (c) requires the monthly payment of an unused commitment fee of 0.2% of the unused facility amount, and (d) requires that the Company maintain a consolidated net worth of not less

than $64.2 million.

Amendment, among other things, (a) updates the interest rate provisions 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, (c) requires the monthly payment of an unused commitment fee of 0.2% of the unused facility amount, and (d) requires that the Company

maintain a consolidated net worth of not less than $64.2 million.

Except as modified by the 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 Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned.

The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35%

of the Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned.

The Credit Agreement also contains customary representations and warranties and events of default.

Events of default

bankruptcy or insolvency events.

default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the

occurrence of bankruptcy or insolvency events.

Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments.

As of March 31, 2025 and

December 31, 2024, the Company had outstanding borrowings, including accrued interest of $4.0 million in each of the respective periods, under the Credit Agreement.

Cash and cash equivalents increased from $35.6 million at December 31, 2024 to $35.9 million at March 31, 2025.

The increase in cash and cash equivalents during the three month period ended March

31, 2025 was primarily attributable to net cash provided by investing activities of $1.1 million primarily as a result of investment sales and maturity of securities exceeding investment purchases.

Partially offsetting the increase in cash and cash

equivalents was net cash used in operating activities of $0.7 million.

As of June 30,

2025 and December 31, 2024, the Company had outstanding borrowings, including accrued interest of $4.0 million in each of the respective periods, under the Credit Agreement.

Cash and cash equivalents increased from $35.6 million at December 31, 2024 to $46.4 million at June 30, 2025.

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

2025 was primarily attributable to net cash provided by operating activities of $8.6 million.

Also contributing to the increase in cash and cash equivalents was net cash provided by investing activities of $2.7 million primarily as a result of

investment sales and maturity of securities exceeding investment purchases.

The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it expects to receive from its subsidiaries and, if needed, borrowings under its credit

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

What changed 10-Q

Item 1. Financial Statements