What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-12 · 388 added, 303 removed, 700 unchanged (50% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Cash and cash equivalents

9 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 $ 194 and $ 201 )

Insurance premiums and other (net of allowance for expected credit losses of $ 209 and $ 201 )

Deferred income taxes, net

33 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Insurance premiums, net

1 unchanged sentence

Realized investment gains, net

Unrealized gains on equity securities, net

Unrealized gains (losses) on equity securities, net

Total revenue

17 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Other comprehensive income:

Available-for-sale fixed maturity securities:

Gross unrealized holding gains (losses) arising in the period

Gross unrealized holding gains arising in the period

Related income tax effect

1 unchanged sentence

Related income tax effect

Total other comprehensive income (loss), net of tax

Total other comprehensive income, net of tax

Total comprehensive income (loss)

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Preferred stock:

15 unchanged sentences

Balance, beginning of period

Other comprehensive income (loss), net of tax

Other comprehensive income, net of tax

Balance, end of period

17 unchanged sentences

In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

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

(Additions to) amortization of acquisition costs, net

Capitalization of acquisition costs, net

Realized investment gains, net

Unrealized gains on equity securities

Unrealized (gains) losses on equity securities

Losses from equity method investees

5 unchanged sentences

Increase in insurance reserves and policyholder funds

Decrease in accounts payable and accrued expenses

Increase (decrease) in accounts payable and accrued expenses

Net cash provided by (used in) operating activities

4 unchanged sentences

Additions to property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

3 unchanged sentences

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

17 unchanged sentences

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 Company’s financial condition and operating results as of and for the three month and nine month periods ended September 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

8 unchanged sentences

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.

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

Management does not believe this legislation will have a material impact on the Company’s consolidated financial

Recently Issued Accounting Standards

3 unchanged sentences

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.

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.

ASU 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 that will be used to estimate both the liability for future benefits and the amortization of deferred acquisition costs for the affected

policies and is in the process of testing the models to ensure that they reflect all applicable assumptions and product parameters.

This testing includes an evaluation of the components of the amounts that will be disclosed for the transition

liability under ASU 2018-12 in the Company’s consolidated financial statements as of and for the year ending December 31, 2025.

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 selected the modified retrospective transition method, which requires the guidance to be applied as of the beginning of the earliest period presented on the financial statements, beginning on January 1, 2024

(“Transition Date”).

The modified retrospective transition method generally results in applying the standard to contracts on the basis of existing carrying value as of the Transition Date.

On the Transition Date, the Company calculates the ratio of

expected benefits less existing carrying values to gross premiums (net premium ratio) using updated assumptions and the discount rate immediately before the Transition Date.

The Company uses the net premium ratio calculated on the Transition Date

(and capped at 100% if required) to calculate the liability for future policy benefits.

Upon adoption, opening equity will be adjusted for the Transaction Date impacts to accumulated other comprehensive income and retained earnings and prior periods

presented (2024) will be restated following ASU 2018-12.

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

Internal Use Software.

In September 2025, the FASB issued ASU No.

2025-06, Targeted Improvements to the Accounting for Internal-Use Software- Intangibles—Goodwill and Other—

Internal-Use Software (Subtopic 350-40) (“ASU 2025-06”).

This ASU was issued to improve the accounting for internal-use software under ASC 350-40.

The update addresses limitations in prior guidance that did not reflect contemporary software

development practices.

The amendments apply to all entities that develop or acquire software for internal use and are intended to improve consistency in capitalization decisions, reduce complexity, and align accounting with real-world development

Under the amendments introduced by ASU 2025-06 to ASC 350-40, entities are required to capitalize internal use software costs only when both of the following conditions are met:

Management Authorization:

Management has authorized and committed to funding the software project.

Probable-to-Complete Threshold:

It is probable that the project will be completed, and the software will be used to perform its intended function.

In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software (referred to as

“significant development uncertainty”).

The two factors to consider in determining whether there is significant development uncertainty are whether:

The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved

through coding and testing.

The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software’s significant performance requirements.

If significant development uncertainty exists, capitalization should be deferred until the uncertainty is resolved.

This principles-based threshold replaces the prior reliance on development stages and introduces a more

consistent and judgment-based recognition model.

This clarification ensures that costs are capitalized only when the project is sufficiently stable and likely to deliver its intended functionality.

The ASU is effective for public business entities

for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods.

Early adoption is permitted as of the beginning of an annual reporting period.

Lastly, entities may choose to adopt prospectively,

modified retrospectively or full retrospectively.

The Company is evaluating the new guidance and any effect it will have on the Company’s consolidated financial statements.

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 unchanged sentence

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 June 30, 2025 and December 31, 2024.

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

Fixed maturities were comprised of the following:

June 30, 2025

Allowance for Credit Losses

September 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 $ 14,898 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.

Bonds having an amortized cost of $ 15,368 and $ 15,065 and included in the tables above were on deposit with insurance regulatory authorities as of September 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 $ 0 and $ 226 as of September 30, 2025 and December 31, 2024, respectively.

Additionally, bonds having an amortized cost of $ 8,954 and $ 9,209 and included in the tables above were pledged as collateral to the Federal Home Loan Bank of Atlanta (“FHLB”) at September 30, 2025 and December 31, 2024, respectively.

Equity securities were comprised of the following:

June 30, 2025

September 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 June 30, 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 September 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.

June 30, 2025

September 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 June 30, 2025 and December 31, 2024.

June 30, 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 September 30, 2025 and December 31, 2024.

September 30, 2025

Less than 12 months

17 unchanged sentences

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.

As of September 30, 2025 and December 31, 2024, there were 193 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.

17 unchanged sentences

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 (“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.

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

The following tables summarize realized investment gains and losses for the three month and nine month periods ended September 30, 2025 and 2024.

Three Months Ended

June 30, 2025

September 30, 2025

Invested Assets

1 unchanged sentence

Three Months Ended

June 30, 2024

September 30, 2024

Invested Assets

Realized investment gains, net

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

Invested Assets

Realized investment gains, net

Six Months Ended

June 30, 2024

Nine Months Ended

September 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.

The following table presents the change in unrealized gains (losses) related to equity securities still held for the three month and nine month periods ended September 30, 2025 and 2024.

Three Months Ended

Six Months Ended

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

September 30,

Nine Months Ended

September 30,

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

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

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

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

Variable Interest Entities

1 unchanged sentence

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’s VIE interests, carried as a part of other invested assets, totaled $ 6,225 and $ 6,616 as of September 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 September 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.

1 unchanged sentence

The Company’s involvement with each VIE is limited to its direct ownership interest in 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 $ 7,562 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.

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 $ 7,463 and $ 7,854 , as of September 30, 2025 and December 31, 2024, respectively.

As of September 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

25 unchanged sentences

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

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:

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

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

Quoted Prices in

11 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 June 30, 2025 and December 31, 2024.

June 30, 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 September 30, 2025 and December 31, 2024.

September 30, 2025

December 31, 2024

8 unchanged sentences

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.

The Company had no transfers into or out of level 3 for the nine months ended September 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 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

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

At and for the three months ended

September 30, 2025

At and for the nine months ended

September 30, 2025

Recoverables,

3 unchanged sentences

Expected Credit

Reinsurance Recoverables,

Recoverables,

Net of Allowance

for Expected Credit Losses

Allowance for Expected Credit Losses

for Expected Credit

Allowance for

Expected Credit

Balance, beginning of period

2 unchanged sentences

Balance, end of period

At and for the three months ended June 30, 2024

At and for the six months ended June 30, 2024

At and for the three months ended

September 30, 2024

At and for the nine months ended

September 30, 2024

Recoverables,

3 unchanged sentences

Expected Credit

Reinsurance Recoverables,

Recoverables,

Net of Allowance

for Expected Credit Losses

Allowance for Expected Credit Losses

for Expected Credit

Allowance for

Expected Credit

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 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

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

At and for the three months ended

September 30, 2025

At and for the nine months ended

September 30, 2025

Insurance Premiums

12 unchanged sentences

Balance, end of period

At and for the three months ended June 30, 2024

At and for the six months ended June 30, 2024

At and for the three months ended

September 30, 2024

At and for the nine months ended

September 30, 2024

Insurance Premiums

20 unchanged sentences

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.

The Company incurred and capitalized implementation costs of $ 318 and $ 78 during the nine months ended September 30, 2025 and 2024, respectively.

As a result, the Company has capitalized $ 4,993 and $ 4,675 in implementation costs in other assets within its condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively.

The Company expects the software will be substantially ready for its intended use in 2026.

Accordingly, the Company has not recorded any amortization expense related to software implementation costs for the three months and nine months ended September 30, 2025 and 2024.

Insurance Reserves for Losses and Claims

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

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

Nine Months Ended

September 30,

Beginning insurance reserves for losses and claims, gross

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(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

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

Nine Months Ended

September 30,

Total losses incurred

Cash surrender value and matured endowments

11 unchanged sentences

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 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.

As of September 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 September 30, 2025 and 2024, the Company incurred $ 66 and $ 76 in interest expense, respectively, on the revolving credit facility borrowing.

For the nine months ended September 30, 2025 and 2024, the Company incurred $ 195 and $213, respectively, in interest expense.

In each of the three months ended September 30, 2025 and 2024, the Company paid $ 3 in fees on the available unused amount (“unused commitment fees”) of the revolving credit facility of $ 6,000 .

During the nine months ended September 30, 2025 and 2024, the Company paid $ 9 and $ 6 , respectively, in unused commitment fees.

At September 30, 2025 and December 31, 2024, the effective interest rate was 6.42 % and 6.67 %, respectively.

Junior Subordinated Debentures

6 unchanged sentences

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 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:

At September 30, 2025 and December 31, 2024, the effective interest rate was 8.51 % and 8.82 %, respectively.

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

Atlantic American

3 unchanged sentences

JUNIOR SUBORDINATED DEBENTURES (1) (2)

Principal amount owed June 30, 2025

Principal amount owed September 30, 2025

Treasury debt (3)

Net balance June 30, 2025

Net balance September 30, 2025

Net balance December 31, 2024

26 unchanged sentences

Three Months Ended

June 30, 2025

September 30, 2025

Average Shares

(In thousands)

Basic Earnings Per Common Share:

Basic and Diluted 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

Three Months Ended

June 30, 2024

September 30, 2024

Average Shares

3 unchanged sentences

Net loss applicable to common shareholders

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

Average Shares

(In thousands)

Basic Earnings Per Common Share:

Basic and Diluted 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

Nine Months Ended

September 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 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.

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings (loss) per common share calculation, 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

September 30,

Nine Months Ended

September 30,

Federal income tax provision at statutory rate of 21 %

3 unchanged sentences

Parking disallowance

Adjustment for prior years’ estimates to actual

Income tax expense (benefit)

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Current – Federal

Deferred – Federal

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

The Company has three 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.

4 unchanged sentences

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.

The original term of the third lease was three years and renewed for an additional three years , effective August 1, 2025 with a termination date on July 31, 2028.

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.

Lease expense reported for the nine months ended September 30, 2025 and September 30, 2024 was $ 890 and $ 761 , respectively.

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

Six Months Ended

Nine Months Ended

September 30,

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

8 unchanged sentences

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

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

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

Commitments and Contingencies

4 unchanged sentences

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

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.

1 unchanged sentence

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.

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.

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.

10 unchanged sentences

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.

September 30,

American Southern

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

American Southern

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Insurance benefits and losses incurred

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Commissions and underwriting

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

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 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”).

subsidiaries (collectively with the Parent, the “Company”) as of and for the three month and nine month periods ended September 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 and six month periods ended June 30, 2025 and the comparable periods in 2024:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Realized investment gains, net

Unrealized gains on equity securities, net

Unrealized gains (losses) 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

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 and six month periods ended June 30, 2025 and the comparable periods in 2024 is as follows:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Reconciliation of Non-GAAP Financial Measure

3 unchanged sentences

Realized investment gains, net

Unrealized gains on equity securities, net

Unrealized (gains) losses on equity securities, net

Non-GAAP operating income (loss)

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.

On a consolidated basis, the Company had net income of $0.6 million, or $0.02 per diluted share, for the three month period ended September 30, 2025, compared to net loss of $2.0 million, or

$(0.10) per diluted share, for the three month period ended September 30, 2024.

The Company had net income of $4.7 million, or $0.22 per diluted share, for the nine month period ended September 30, 2025, compared to net loss of $4.7 million, or

$(0.24) per diluted share, for the nine month period ended September 30, 2024.

The increase in net income for the three month and nine month periods ended September 30, 2025 was primarily the result of increases in premium revenue within

the automobile liability, inland marine and automobile physical damage lines 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 nine month periods ended September 30, 2025.

For the three month period ended September 30, 2025, premium revenue increased $8.2 million, or 18.7%, to $52.0 million from $43.8 million in the comparable period in 2024.

For the nine month

period ended September 30, 2025, premium revenue increased $15.7 million, or 11.8%, to $149.0 million from $133.3 million in the comparable period in 2024.

The increase in premium revenue during the three month and nine month periods ended

September 30, 2025 was primarily attributable to the increase in earned premiums within the automobile liability line of business, as well as increases in earned premiums in the inland marine and automobile physical damage lines of business, due to

increases in premium writings in the property and casualty operations.

Also 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 $2.3 million in the three month period ended September 30, 2025 from the three month period ended September 30, 2024.

For the nine month period ended September 30, 2025,

operating income increased $7.7 million from the comparable period in 2024.

The increase in operating income for the three month and nine month periods ended September 30, 2025 was primarily the result of increases in premium revenue in

the automobile liability, inland marine and automobile physical damage lines of business within 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 and six month periods ended June 30, 2025 and the comparable periods in 2024:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

8 unchanged sentences

Combined ratio

Gross written premiums at American Southern increased $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.

Gross written premiums at American Southern increased $1.7 million, or 19.4%, during the three month period ended September 30, 2025 and $18.3 million, or 34.2%, during the nine month period

ended September 30, 2025, from the comparable periods in 2024.

The increase in gross written premiums during the three month and nine month periods ended September 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 September 30, 2025 and increased $0.1 million, or 2.3%, during the nine month period

ended September 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:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

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.

Net earned premiums increased $6.3 million, or 38.8%, during the three month period ended September 30, 2025, and $10.3 million, or 20.0%, during the nine month period ended September 30, 2025,

over the comparable periods in 2024.

The increase in net earned premiums during the three month and nine month periods ended September 30, 2025 was mainly due to a rate increase upon renewal of a program within the automobile liability line of

business, as well as increases in earned premiums in the inland marine and automobile physical damage lines 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.

4 unchanged sentences

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 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.

Insurance benefits and losses incurred at American Southern increased $4.0 million, or 28.4%, during the three month period ended September 30, 2025, and $7.5 million, or 18.4%, during the nine

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

As a percentage of earned premiums, insurance benefits and losses incurred were 79.8% in the three month period ended September 30, 2025, compared to 86.2% in the three

month period ended September 30, 2024.

For the nine month period ended September 30, 2025, this ratio decreased to 78.4% from 79.5% in the comparable period in 2024.

The decrease in the loss ratios during the three month and nine month periods

ended September 30, 2025 was due to an increase in premium growth exceeding the increase in insurance benefits and losses incurred.

Commissions and underwriting expenses increased $0.3 million, or 6.6%, during the three month period ended September 30, 2025, and $1.7 million, or 13.9% during the nine month period ended

September 30, 2025, over the comparable periods in 2024.

As a percentage of earned premiums, underwriting expenses were 18.1% in the three month period ended September 30, 2025, compared to 23.6% in the three month period ended September 30, 2024.

For the nine month period ended September 30, 2025, this ratio decreased to 21.9% from 23.1% in the comparable period in 2024.

American Southern uses 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.

However, during the three month and nine month periods ended September 30, 2025, the expense ratio decreased primarily due to an increase in premiums on programs that do not participate in the

variable commission structure.

Bankers Fidelity

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

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

8 unchanged sentences

Combined ratio

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

Gross earned premiums increased $4.7 million, or 11.6%, during the three month period ended September 30, 2025, and $10.8 million, or 8.9%, during the nine month period ended September 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 $2.8 million, or 21.2%, during the three month period ended September 30, 2025, and $5.4 million, or 13.7%, during the nine month period ended September 30, 2025, from the

comparable periods in 2024.

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.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Other individual accident and health

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.

Net earned premium increased $1.9 million, or 6.9%, during the three month period ended September 30, 2025, and $5.4 million, or 6.6%, during the nine month period ended September 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.

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 $0.7 million, or 4.4%, during the three month period ended September 30, 2025, and decreased $1.0 million, or 1.9%, during the nine month period

ended September 30, 2025, from the comparable periods in 2024.

As a percentage of earned premiums, benefits and losses were 59.4% in the three month period ended September 30, 2025, compared to 60.9% in the three month period ended September 30,

For the nine month period ended September 30, 2025, this ratio decreased to 60.3% from 65.5% in the comparable period in 2024.

The decrease in the loss ratio for the three month and nine month periods ended September 30, 2025 was primarily

due to rate increases on renewals and lower utilization within the Medicare supplement line of business.

Commissions and underwriting expenses increased $0.8 million, or 8.5%, during the three month period ended September 30, 2025, and $0.4 million, or 1.3%, during the nine month period ended

September 30, 2025, over the comparable periods in 2024.

As a percentage of earned premiums, underwriting expenses were 36.7% in the three month period ended September 30, 2025, compared to 36.2% in the three month period ended September 30, 2024.

For the nine month period ended September 30, 2025, this ratio decreased to 35.8% from 37.6% in the comparable period in 2024.

The increase in the expense ratio for the three month period ended September 30, 2025 was primarily due to an increase in

commissions and underwriting expenses due to premium growth.

The decrease in the expense ratio for the nine month period ended September 30, 2025 was primarily due to growth in premiums coupled with a decline in underwriting expenses.

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.

Investment income increased $0.2 million, or 6.3%, during the three month period ended September 30, 2025, and remained constant during the nine month period ended September 30, 2025, over the

comparable periods in 2024.

The increase in investment income in the three month period ended September 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 nine month periods ended September 30, 2025, compared to net realized investment gains of

less than $0.1 million during each of the three month and nine month periods ended September 30, 2024.

The net realized investment gains during the three month and nine month periods ended September 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 nine month periods ended September 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

Unrealized Gains (Losses) on Equity Securities

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

The Company recognized net

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.

unrealized losses on equity securities of $0.8 million during the three month period ended September 30, 2025 and unrealized losses on equity securities of $1.7 million during the three month period ended September 30, 2024.

The Company recognized

net unrealized gains on equity securities of $2.5 million during the nine month period ended September 30, 2025 and unrealized losses on equity securities of $1.6 million during the nine month period ended September 30, 2024.

Changes in unrealized

gains (losses) 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 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.

Interest expense decreased $0.1 million, or 10.4%, during the three month period ended September 30, 2025, and $0.3 million, or 10.2%, during the nine month period ended September 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

2 unchanged sentences

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.

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.

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

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.

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.

September 30, 2025, the Parent had approximately $4.7 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $8.0 million for the nine month period ended September 30, 2025, compared to statutory net income of $2.0 million for the nine

month period ended September 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 under

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

determined under GAAP.

Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes.

The Company’s life and health

operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

The Company’s life

and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required;

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recognizing realized investment gains of the individual insurance subsidiaries.

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

At September 30, 2025, American Southern had $48.2 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 June 30, 2025, the Parent received dividends of $4.2 million from its subsidiaries.

Through September 30, 2025, the Parent received dividends of $6.3 million from its subsidiaries.

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

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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

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30, 2025, the effective interest rate was 8.51%.

The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the

trust preferred securities.

Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related

trust preferred securities.

As of June 30, 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

Company’s controlling shareholder.

The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to

the trust preferred securities.

related trust preferred securities.

As of September 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 September 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 Company’s controlling shareholder.

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

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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.

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

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

and are redeemable solely at the Company’s option.

The Series D Preferred Stock is not currently convertible.

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

At September 30, 2025, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million.

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

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.

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 $9.0 million, as of September 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.

As of September 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.

As of September 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.

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.

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.

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.

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 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.

As of September 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 decreased from $35.6 million at December 31, 2024 to $34.4 million at September 30, 2025.

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

September 30, 2025 was primarily attributable to net cash used in investing activities of $15.9 million primarily as a result of investment purchases exceeding investment sales and maturity of securities.

Partially offsetting the decrease in cash

and cash equivalents was net cash provided by operating activities of $15.2 million.

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