ATLANTIC AMERICAN CORP 10-K

Item 1. Business The Company Atlantic American Corporation, a Georgia corporation incorporated in 1968 (the “Parent” or “Company”), is a holding company that operates through its subsidiaries in well-defined specialty markets within the life and health and property and casualty insurance industries. The Parent’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) within the property and casualty insurance industry and Bankers Fidelity Life Insurance Company, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company (together known as “Bankers Fidelity”) within the life and health insurance industry. Each of American Southern and Bankers Fidelity is managed separately based upon the type of products it offers and is evaluated on its individual performance. The Company’s strategy is to focus on well-defined geographic, demographic and/or product niches within the insurance marketplace. Each of American Southern and Bankers Fidelity operates with relative autonomy, which structure is designed to allow for quick reaction to market opportunities. The Parent has no significant business operations of its own and relies on fees, dividends and other distributions from its operating subsidiaries as the principal source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of the Parent can be found in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. Property and Casualty Operations American Southern comprises the Company’s property and casualty operations and its primary product lines are as follows: Commercial Automobile Insurance policies provide bodily injury and/or property damage liability coverage, uninsured motorist coverage and physical damage coverage for commercial accounts. General Liability Insurance policies cover bodily injury and/or property damage liability for both premises and completed operations exposures for general classes of business. Surety Bonds are contracts under which one party, the insurance company issuing the surety bond, guarantees to a third party that the primary party will fulfill an obligation in accordance with a contractual agreement. This obligation may involve meeting a contractual commitment, paying a debt or performing certain duties. Inland Marine policies provide motor truck cargo coverage for commercial accounts. American Southern provides tailored commercial automobile insurance coverage, on a multi-year contract basis, to state governments, local municipalities and other large motor pools and fleets (“block accounts”) that can be specifically rated and underwritten. The size of the block accounts insured by American Southern are generally such that individual class experience can be determined, which allows for customized policy terms and rates. American Southern is licensed to do business in 32 states and the District of Columbia. While the majority of American Southern’s premiums are derived from its automobile lines of business, American Southern also offers general liability and other lines such as inland marine coverage. Additionally, American Southern directly provides surety bond coverage for subdivision construction, school bus contracts, as well as performance and payment bonds. The following table summarizes, for the periods indicated, the allocation of American Southern’s net earned premiums from each of its principal product lines: Year Ended December 31, 2025 2024 (In thousands) Automobile liability $ 49,640 $ 39,788 Automobile physical damage 16,515 13,464 General liability 6,121 5,990 Surety 5,178 5,809 Inland marine 7,050 2,638 Total $ 84,504 $ 67,689 3 Table of Contents Life and Health Operations Bankers Fidelity comprises the life and health operations of the Company and offers a variety of life and supplemental health products. Products offered by Bankers Fidelity include ordinary life insurance, Medicare Supplement and other accident and health insurance products. Life Insurance products include non-participating, individual and group whole life insurance policies with a variety of riders and options. Policy premiums depend on several factors, including but not limited to issue age, level of coverage and any selected riders or options. Medicare Supplement Insurance includes 8 of the 10 standardized Medicare Supplement plans that were developed in response to the requirements of the Omnibus Budget Reconciliation Act of 1990. These policies provide insurance coverage for certain expenses not covered by the Medicare program, including but not limited to, copayments and deductibles. Other Accident and Health Insurance coverages include several individual and group policies providing for the payment of benefits that help defray the health care and other costs associated with the treatment of cancer and other critical illnesses. In addition, Bankers Fidelity offers policies that reimburse the costs associated with short-term nursing facility care, policies that provide monthly benefits in the event of a covered disability, and policies that provide cash benefits in the event of a covered accident or a covered hospital stay. Health insurance products, primarily Medicare Supplement insurance, accounted for 84% of Bankers Fidelity’s net earned premiums in 2025 while life insurance, including both whole and term life insurance policies, accounted for the balance. In terms of the number of policies written in 2025, 83% were health insurance policies and 17% were life insurance policies. The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines: Year Ended December 31, 2025 2024 (Restated) (In thousands) Group life $ 12,559 $ 14,270 Individual life 5,600 5,922 Total life 18,159 20,192 Medicare Supplement 75,360 71,766 Group accident and health 9,178 11,469 Other individual health 8,941 7,472 Total health 93,479 90,707 Total $ 111,638 $ 110,899 Marketing Property and Casualty Operations A portion of American Southern’s business is marketed through a small number of specialized, experienced independent agents. American Southern’s agent selection process is actively managed by internal marketing personnel with oversight from management. Senior management carefully reviews all new programs prior to acceptance. Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions by participating in a profit sharing arrangement that is directly linked to the profitability of the underlying business. American Southern also solicits business from governmental entities. As an experienced writer of insurance policies for certain governmental programs, the company actively pursues this market on a direct basis. Much of this business is priced by means of competitive bid situations. As a result, there can be no assurance with respect to the ultimate profitability or ability of the Company to obtain or retain such business at the time of a specific contract renewal. 4 Table of Contents Life and Health Operations Bankers Fidelity acquires its clientele through three distribution channels spread across 46 different states and two business divisions, all of which utilize commissioned, independent agents. The three distribution channels include traditional independent agents, brokers who are typically interested in a specific product of Bankers Fidelity and brokers who focus on sales within the group/employer benefits division, Atlantic American Employee Benefits, all of which are responsible for their own marketing and sales activities. Contracting as independent agents enables Bankers Fidelity to effectively expand or contract its sales force without incurring significant expense. Bankers Fidelity had approximately 6,565 licensed agents contracted in both the individual and group divisions as of December 31, 2025. During 2025, approximately 3,094 of these licensed agents wrote policies on behalf of Bankers Fidelity. Bankers Fidelity’s marketing and distribution strategy revolves around five pillars: Diversification, Differentiation, Quality, Retention and Profitability. Diversification . Through unique product offerings such as the Vantage Flex Plus®, a hospital indemnity plan, and Vantage Recovery®, a short-term care product and a group whole life product featuring a chronic illness rider, the Company is able to offer its distributors an array of products to sell that stand out from the competition. As the Company continues to expand its geographical footprint with agents and products, one of its main objectives is to have a healthy mix of all of its product lines nationwide. Differentiation . Bankers Fidelity prides itself on the quality of customer service it offers to policyholders and agents. A dedicated agent support team is available to the field to support them in administration, underwriting, sales training, product questions and a plethora of other services which differentiates the Company from other carriers. Additionally, a customer loyalty team is available solely to serve insureds for any of their insurance needs. Bankers Fidelity prides itself on being agile, which we believe differentiates us from larger carriers and helps the Company to quickly execute senior management’s initiatives. Quality . Bankers Fidelity is focused on being a niche carrier that delivers superior service, quality products and innovative solutions. Sophisticated technology and reporting allows the home office teams to work with the sales force to deliver a tailored experience and phenomenal customer service. Retention. Through seasonal campaigns and customer outreach, the Company is focused on client retention and servicing its policyholders through all stages in their lives. By providing its agents with an innovative product portfolio, the Company further promotes client retention by empowering its agents to continually meet the needs of our policyholders. Profitability . In an effort to be sustainable in the marketplace as a long-term partner, senior management is focused on diversification, differentiation, quality and retention to achieve profitability. Underwriting Property and Casualty Operations American Southern specializes in underwriting various risks that are sufficiently large enough to establish separate class experience, relying upon the underwriting expertise of its agents. During the course of the policy life, extensive use is made of risk management representatives to assist commercial underwriters in identifying and correcting potential loss exposures and to physically inspect new accounts. The underwriting results from each insured are reviewed on an individual basis periodically. If results are below expectations, management takes corrective action, which may include adjusting rates, revising underwriting standards, adjusting commissions paid to agents, and/or altering or declining to renew accounts at expiration. Life and Health Operations Bankers Fidelity issues a variety of products that span from the group markets to the individual markets for both life and health insurance. Products offered by Bankers Fidelity include life insurance, typically with small face amounts, Medicare Supplement and other accident and health insurance. Bankers Fidelity also provides an array of group products such as accident, cancer, critical illness, hospital indemnity and life insurance that is offered to employers who are looking to provide coverage for their employees and have the related premiums deducted through payroll deductions. The individual products are underwritten on a non-medical basis using a simplified issue approach by which an application containing a variety of health related questions is submitted. Applications for insurance are reviewed to determine the face amount, age, medical history and any other necessary information. Bankers Fidelity utilizes information obtained directly from the insured, the medical claims data, prescription utilization reports as well as telephone interviews to determine whether an applicant meets the Company’s underwriting criteria. Bankers Fidelity may also utilize medical records and investigative services to supplement and substantiate information, as necessary. 5 Table of Contents The group products are underwritten and assessed at the group level for financial risk. The underwriting will utilize several factors to determine this risk such as the industry, demographics, enrollment strategies, employee access, locations of offices and any regulatory or legislative changes that could impact the decisions. The spread of risk is also reviewed which analyzes the content of the employees within the group which includes the spread of gender, ages, salaries and occupations. This information is used to quote an appropriate benefits package, pricing, waiting periods and rates for the group entity. Policyholder and Claims Services The Company believes that prompt, efficient policyholder and claims services are essential to its continued success in marketing its insurance products (see “Competition”). Additionally, the Company believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries. Accordingly, the Company’s policyholder and claims services seek to offer expeditious disposition of service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts. The Company also utilizes an automatic call distribution system designed to ensure that inbound calls to customer service support groups are processed efficiently. Operational data generated from this system allows management to further refine ongoing client service programs and service representative training modules. Property and Casualty Operations American Southern controls its claims costs by utilizing an in-house staff of claims supervisors to investigate, verify, negotiate and settle claims. Upon notification of an occurrence purportedly giving rise to a claim, a claim file is established. The claims department then conducts a preliminary investigation, determines whether an insurable event has occurred and, if so, updates the file for the findings and any required reserve adjustments. Independent adjusters and appraisers are frequently utilized to service claims which require on-site inspections. Life and Health Operations The majority of life and health claims are filed electronically while insureds also have the ability to download claims forms and file directly. Insureds may also obtain claim forms by calling the customer service group or through Bankers Fidelity’s website. All of these claims are entered into the system immediately upon receipt and put into a pending status until the claim can be fully processed. To shorten claim processing time, a letter detailing all supporting documents that are required to complete a claim for a particular policy is sent to the customer along with the correct claim form. Properly documented claims are generally paid within five business days of receipt. With regard to Medicare Supplement policies, the claim is either directly billed to Bankers Fidelity by the provider or sent electronically through a Medicare clearing house. Reserves Overview - The Company establishes insurance reserves by line of business within each insurance subsidiary based on the classification of the underlying products as either short-duration or long-duration in accordance with applicable accounting guidance. The determination of insurance reserves, particularly liabilities for future policy benefits, and the liability for losses and claims, involves significant judgment and estimation uncertainty and are considered critical accounting estimates. Short Duration Contracts American Southern records short-duration property and casualty loss and loss adjustment expense (“LAE”) reserves. Bankers Fidelity records group accident and health policies as short duration. Long Duration Contracts Bankers Fidelity primarily records reserves for life and health insurance contracts, including liabilities for future policy benefits (“LFPB”) for long-duration contracts. Reserves are determined using actuarial methodologies and assumptions that reflect management’s current best estimate of future experience, without provision for adverse deviation. Key assumptions include mortality, voluntary policyholder terminations and claim costs for accident and health policies and the discount rate. These assumptions are based on Company-specific experience, industry data, and anticipated trends and are reviewed at least annually and updated when they no longer represent management’s best estimates. Actual experience is incorporated into the measurement of reserves each reporting period. Differences between actual and expected experience, as well as impacts related to changes in assumptions, are recognized in earnings. Changes in discount rates for long-duration contracts are recognized in other comprehensive income (“OCI”). Under LDTI, the Company remeasures the LFPB each reporting period to reflect actual experience and current discount rates and updates its cash flow assumptions when its periodic reviews indicate that those assumptions no longer represent management’s best estimates. Due to the inherent uncertainty in estimating insurance liabilities, particularly for long-duration obligations, actual results may differ materially from recorded estimates. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” for additional discussion. 6 Table of Contents Property and Casualty Operations Short-duration contracts . American Southern maintains short-duration property and casualty loss and claim reserves for unpaid losses and LAE. These reserves include (i) case reserves established through claim-by-claim evaluations for known, reported claims and (ii) incurred but not reported (“IBNR”) reserves, which include estimates for claims not yet reported as well as future development on reported claims. Such reserves are not discounted and represent management’s estimate, based on known facts and circumstances as of the reporting date, of amounts expected to be paid on incurred claims. Reserve estimates are influenced by, among other factors, reported claim counts and severities, paid loss emergence, case reserve adequacy, claim development patterns, expense patterns, and changes in claim settlement practices. Longer tail exposures. Certain coverages (e.g., general liability) are subject to extended reporting and settlement patterns, which may increase estimation uncertainty due to longer development periods and variability in claim outcomes. Management considers these factors in evaluating reserve adequacy. Life and Health Operations Short-duration contracts. Bankers Fidelity classifies its group accident and health policies (group critical illness, group disability income, group hospital indemnity, and group accident and medical expense) as short duration because Bankers Fidelity may unilaterally terminate coverage at each policy anniversary (and may terminate certain groups of ported certificates subject to statutory notice), such that coverage can be terminated within one year. Liabilities associated with these contracts are recorded as short-duration insurance reserves, including claim liabilities, rather than as long-duration liabilities for future policy benefits. Long-duration contracts. Bankers Fidelity classifies individual and group life policies, Medicare Supplement policies, and other individual accident and health policies as long-duration and records a LFPB. The LFPB is calculated as the present value of expected future benefits and claim-related expenses, less the present value of expected future net premiums, using cohorts that do not span more than one issue year. The locked-in discount rate is the rate established for each cohort and used to calculate interest accretion and measure changes in cash flow assumptions recognized in earnings. For policies issued after January 1, 2024 (“the Transition Date”), the locked- in discount rate is based on the current discount rate in effect during the quarter of issuance, while for policies issued prior to the Transition Date, it reflects the historical expected investment yield at policy issuance. The current discount rate is updated quarterly, with changes from the locked-in discount rate recognized in OCI. Assumptions other than the discount rate reflect management’s current best estimate of future experience and are reviewed at least annually and updated when they no longer represent best estimates. Actual experience replaces projected experience each reporting period (referred to as “retrospective unlocking”) as part of the determination of the LFPB. Assumptions. The Net Premium Ratio (“NPR”) is updated each reporting period and capped at 100%, with any excess recognized in earnings as an increase in the LFPB. The LFPB is floored at zero for cohorts where the present value of expected future premiums exceeds expected future benefits. Changes in the LFPB resulting from updates to the current discount rate are recorded in OCI, while the liability presented on the balance sheet reflects the current discount rate. The development of long-duration reserves involves significant judgment due to the long-term nature of the underlying obligations and the sensitivity of the LFPB to changes in assumptions. See Notes 7 and 8 of Notes to Consolidated Financial Statements for more information on future policy benefits and other insurance reserves and policyholder funds. Reinsurance The Company’s insurance subsidiaries from time-to-time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” at least a portion of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums collected from policyholders. Reinsurance arrangements do not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement. In order to qualify for reinsurance accounting treatment, there must be risk transfer. Property and Casualty Operations American Southern’s basic reinsurance treaties generally cover all claims in excess of specified per occurrence limitations. Limits per occurrence within the reinsurance treaties are as follows: inland marine and automobile physical damage - $225,000 excess of $125,000 retention; and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $100,000 to $700,000 depending on the account. American Southern maintains a property catastrophe treaty with a $5.5 million limit excess of $500,000 retention. Life and Health Operations Bankers Fidelity has entered into reinsurance contracts ceding the excess of its life retention. The maximum retention by Bankers Fidelity on any one individual life insurance policyholder is $200,000. As of December 31, 2025, $5.7 million of the $1,040.3 million of life insurance in force at Bankers Fidelity was reinsured under a combination of coinsurance and yearly renewable term agreements. Certain prior year reinsurance agreements also remain in force although they no longer provide reinsurance for new business. 7 Table of Contents Bankers Fidelity has also entered into a reinsurance contract ceding excess new Medicare Supplement business to General Re Life Corporation. Ceding thresholds are set for all policies issued in a given calendar year. During 2025, the liability of the reinsurer was 71% of all Medicare Supplement business issued by the Company that year. This percentage is calculated based on a cession percentage of 50% on amounts of new business of up to $30 million of annualized premium, and 100% of all new Medicare Supplement business in excess of $30.0 million of annualized premiums. Accordingly, $36.9 million of the Company’s $51.9 million of new annualized Medicare Supplement premium was ceded. Competition Competition for insurance products is based on many factors including premiums charged, terms and conditions of coverage, customer service, financial ratings assigned by independent rating agencies, claims handling, consumer recognition and reputation, perceived financial strength and the experience of the organization in the line of business being written. Property and Casualty Operations The businesses in which American Southern engages are highly competitive. The principal areas of competition are pricing and service. Many competing property and casualty companies have been in business longer than American Southern, offer more diversified lines of insurance and have substantially greater financial resources. Management believes, however, that the policies it sells are competitive with those providing similar benefits offered by other insurers doing business in the states in which American Southern operates. American Southern strives to develop strong relationships with its agents and, consequently, believes it is well positioned for new opportunities and programs with those agents. Life and Health Operations The life and health insurance business remains highly competitive and includes a large number of insurance companies, many of which are new entrants to the business of providing Medicare Supplement and other accident and health insurance products. Bankers Fidelity has established itself as a trusted carrier of choice for its customers providing quality and sustainability for over 65 years. In order to compete, Bankers Fidelity actively seeks opportunities in niche markets, developing long-term relationships with a select number of independent marketing organizations. Additionally, Bankers Fidelity actively promotes Atlantic American Employee Benefits, the group benefits division, as well as selective association partnerships. It competes with other insurers to attract and retain the allegiance of its independent agents through commission and sales incentive arrangements, accessibility and marketing assistance, lead programs, reputation and market expertise. Bankers Fidelity successfully competes in its chosen markets by establishing relationships with independent agents and providing proprietary marketing initiatives as well as providing outstanding service to policyholders. Ratings Ratings are important measures within the insurance industry, and higher ratings are expected to have a favorable impact on the ability of a company to compete in the marketplace. Ratings of insurance companies are not designed for investors and do not constitute recommendations to buy, sell, or hold any security. Each year A.M. Best Company, Inc. (“A.M. Best”) publishes Best’s Insurance Reports, which includes assessments and ratings of all insurance companies. A.M. Best’s financial strength ratings, which may be revised or revoked at any time, follow a graduated scale of rating categories and notches ranging from A++ (Superior) to F (in liquidation). A.M. Best’s ratings are based on a detailed analysis of the statutory financial condition and operations of an insurance company compared to the industry in general. American Southern. American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M. Best. Bankers Fidelity. Bankers Fidelity Life Insurance Company and its wholly-owned subsidiaries, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M. Best. 8 Table of Contents Regulation 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. The method of such regulation varies, but regulation relates generally to the licensing of insurers and their agents, the nature of and limitations on investments, approval of policy forms, reserve requirements, the standards of solvency to be met and maintained, deposits of securities for the benefit of policyholders, and periodic examinations of insurers and trade practices, among other things. The Company’s products generally are subject to rate regulation by state insurance commissions, which require that certain minimum loss ratios be maintained. Certain states also have insurance holding company laws which require registration and periodic reporting by insurance companies controlled by other corporations licensed to transact business within their respective jurisdictions. The Company’s insurance subsidiaries are subject to such legislation and are registered as controlled insurers in those jurisdictions in which such registration is required. Such laws vary from state to state, but typically require periodic disclosure concerning the corporation which controls the registered insurers and all subsidiaries of such corporations, as well as prior notice to, or approval by, the state insurance commissioners of intercorporate transfers of assets (including payments of dividends by the insurance subsidiaries in excess of specified amounts) within the holding company system. The Company believes it is in compliance with all such requirements. Most states require that rate schedules and other information be filed with the state’s insurance regulatory authority, either directly or through a ratings organization with which the insurer is affiliated. The regulatory authority may disapprove a rate filing if it determines that the rates are inadequate, excessive, or discriminatory. The Company has historically experienced no significant regulatory resistance to its applications for rate adjustments; however, the Company cannot provide any assurance that it will not receive any objections to any applications in the future. A state may require that acceptable securities be deposited for the protection either of policyholders located in those states or of all policyholders. As of December 31, 2025, the Company was in compliance with all such requirements, and securities with an amortized cost of $15.4 million were on deposit either directly with various state authorities or with third parties pursuant to various custodial agreements on behalf of the Company’s insurance subsidiaries. Virtually all of the states in which the Company’s insurance subsidiaries are licensed to transact business require participation in their respective guaranty funds designed to cover claims against insolvent insurers. Insurers authorized to transact business in these jurisdictions are generally subject to assessments of up to 4% of annual direct premiums written in that jurisdiction to pay such claims, if any. The likelihood and amount of any future assessments cannot be estimated until an insolvency has occurred. As of the date of this Form 10-K, Bankers Fidelity has not yet filed its annual audited statutory financial statements for the fiscal year ended December 31, 2025 or quarterly statutory financial statements for the quarter ended June 30, 2026 with the applicable state insurance regulatory authorities. Bankers Fidelity is working with its independent auditors and the state regulators to complete and file the required financial statements and intends to seek an extension if appropriate. If Bankers Fidelity is unable to file the required financial statements by the applicable deadlines (including as the same may be extended), the Company is unable to predict with any certainty what measures may be imposed by the applicable regulatory authorities. NAIC Ratios The National Association of Insurance Commissioners (the “NAIC”) was established to, among other things, provide guidelines to assess the financial strength of insurance companies for state regulatory purposes. The NAIC conducts annual reviews of the financial data of insurance companies primarily through the application of financial ratios prepared on a statutory basis. Annual statements are required to be submitted to state insurance departments to assist them in monitoring insurance companies in their state and to allow such states to determine a desirable range for each such ratio with which companies should comply. The NAIC developed the Insurance Regulatory Information System (“IRIS”) to help state regulators identify companies that may require regulatory attention. Financial examiners review annual financial statements and the results of key financial ratios based on year-end data with the goal of identifying insurers that appear to require immediate regulatory attention. Each ratio has an established “usual range” of results. A ratio result falling outside the usual range, however, is not necessarily considered adverse; rather, unusual values are used as part of the regulatory early monitoring system. Furthermore, in some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges. Generally, an insurance company may become subject to regulatory scrutiny or, depending on the company’s financial condition, regulatory action if certain of its key IRIS ratios fall outside the usual ranges and the insurer’s financial condition is trending downward. For the year ended December 31, 2025, American Southern Insurance Company had two ratios that were outside the usual range, the change in net premiums written and the two-year reserve development to policyholders’ surplus. The change in net premiums written ratio was primarily attributable to a significant rate increase in a governmental program. The two-year reserve development to policyholders’ surplus ratio was due primarily to continued reserve strengthening in the commercial automobile liability line of business. American Safety Insurance Company had no IRIS ratios outside the usual ranges. Bankers Fidelity Assurance Company (“BFAC”) had four ratios outside the normal range, mainly due to a net loss driven by federal income taxes, despite operating income. This led to a lower surplus and a deferred tax asset, with a portion non-admitted. The surplus relief ratio for BFAC triggered because the ratio of commission and expense allowances to capital exceeds 100%. BFAC writes only Medicare Supplement insurance and cedes 100% of its written business to its parent, therefore the adequacy of investment income and change in product mix ratios will always produce no result. Bankers Fidelity Life Insurance Company had no IRIS ratios outside the usual ranges. 9 Table of Contents Atlantic Capital Life Assurance Company (“ACLAC”) had six ratios outside the normal range, which are as follows: 1. Capital and surplus fell from the beginning to the end of 2025, mainly due to non-admitted agent balance advances. ACLAC’s increased advances to agents reflect industry practices as it grows new business. 2. Gross change in capital and surplus: see above explanation. 3. Net income for 2025 was negative, driven by federal taxes. Operational gains were offset by these taxes, resulting in a net loss. 4. ACLAC writes and cedes only Medicare Supplement insurance, so investment income adequacy always yields no result. 5. Non-admitted assets spiked in 2025 due to agent balances; see item 1 for details. 6. Surplus Relief ratio triggered because the ratio of commission and expense allowances to capital exceeds 100%. ACLAC writes only Medicare Supplement insurance and cedes 100% of its written business to its parent, therefore the change in product mix ratio will always produce no result. Management does not anticipate regulatory action as a result of the 2025 IRIS ratio results for the insurance subsidiaries. Risk-Based Capital Risk-based capital (“RBC”) is a metric used by ratings agencies and regulators as an early warning tool to identify weakly capitalized companies for the purpose of initiating further regulatory action. The RBC calculation determines the amount of adjusted capital needed by a company to avoid regulatory action. “Authorized Control Level Risk-Based Capital” (“ACLRBC”) is calculated, and if a company’s adjusted capital is 200% or lower than ACLRBC, it is subject to regulatory action. At December 31, 2025, the Company’s insurance subsidiaries’ RBC levels exceeded the required regulatory levels. Investments Investment income represents a significant portion of the Company’s operating and total income. Insurance company investments are subject to state insurance laws and regulations which limit the concentration and types of investments. The following table provides information on the Company’s investments as of the dates indicated: December 31, 2025 2024 Amount Percent Amount Percent (In thousands) Fixed maturity securities: U.S. Treasury securities and obligations of U.S. Government agencies and authorities $ 24,067 9.1 % $ 22,251 9.7 % Loan backed and structured securities 29,033 10.9 22,290 9.7 States, municipalities and political subdivisions 7,335 2.8 7,623 3.3 All other corporate bonds 183,472 69.1 160,261 69.6 Redeemable preferred stock 204 0.1 187 0.1 Total fixed maturity securities (1) 244,111 92.0 212,612 92.4 Equity securities (2) 12,395 4.7 7,900 3.4 Other invested assets (3) 6,037 2.2 6,616 3.0 Policy loans (4) 1,683 0.6 1,722 0.7 Real estate 38 0.0 38 0.0 Investments in unconsolidated trusts 1,238 0.5 1,238 0.5 Total investments $ 265,502 100.0 % $ 230,126 100.0 % (1) Fixed maturity securities are carried on the balance sheet at estimated fair value. Certain fixed maturity securities do not have publicly quoted prices, and are carried at estimated fair value as determined by management. Total amortized cost of fixed maturity securities was $260.2 million as of December 31, 2025 and $236.3 million as of December 31, 2024. (2) Equity securities are carried on the balance sheet at estimated fair value. Total cost of equity securities was $4.9 million as of December 31, 2025 and 2024. (3) Other invested assets are accounted for using the equity method. Total cost of other invested assets was $7.9 million as of December 31, 2025 and 2024. (4) Policy loans are valued at unpaid principal balances. Estimated fair values are determined as discussed in Note 1 of Notes to Consolidated Financial Statements. 10 Table of Contents Results of the Company’s investment portfolio for periods shown were as follows: Year Ended December 31, 2025 2024 (Dollars in thousands) Average investments (1) $ 297,722 $ 280,420 Net investment income 10,266 9,791 Average yield on investments 3.5 % 3.5 % Realized investment gains (losses), net (471 ) 1,210 (1) Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters. The Company engages a global investment management firm serving the insurance industry to manage the Company’s investment portfolios. Management’s recent investment strategy has been a continued focus on quality and diversification, while improving the overall risk versus return profile of the portfolio. Human Capital The Company and its subsidiaries employed 166 people at December 31, 2025. Of the 166 people, 163 were full-time. We believe that our ability to attract and retain highly motivated and skilled employees with diverse backgrounds and experiences is critical to our continued success. We also believe the structure of our compensation program is aligned with the interests of our shareholders and serves to reward the performance of our employees. We monitor and evaluate the effectiveness of our human capital management efforts by seeking formal and informal feedback from our employees, including periodic surveys to obtain opinions on key topics. We sponsor health and wellness programs in an effort to promote a healthier employee base. We also offer competitive health and wellbeing benefits to include health, dental, vision, health and flexible savings accounts, disability, life, supplemental and telemedicine. An Employee Assistance Program (“EAP”) is provided to all full-time employees and their family members at no cost. The EAP offers confidential telephonic counseling, referral services, legal and financial services and additional tools that offer support and solutions. Additionally, we offer a 401(k) retirement savings plan with an employer match as well as an annual Safe Harbor Non-Elective contribution. We strive to provide a work environment that encourages work/life balance. Options depend on job responsibilities and may include flexible work schedules, paid time off, paid holidays and part-time employment. We offer tuition reimbursement along with budgeted professional development opportunities in order to foster professional growth and to increase skillsets. Financial Information by Industry Segment The Parent’s primary insurance subsidiaries operate with relative autonomy with the oversight of the Chief Operating Decision Maker (“CODM”) and each company is evaluated based on its individual performance. Our CODM is the Company’s Chairman of the Board, President and Chief Executive Officer. 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. Substantially all revenue other than that in the corporate and other segment is from external sources. For more information on segments, see Note 18 of Notes to Consolidated Financial Statements. Available Information The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Company. In addition, as soon as reasonably practicable after such materials are filed with or furnished to the SEC by the Company, the Company makes copies available to the public, free of charge, on or through its web site at www.atlam.com. Neither the Company’s website, nor the information appearing on the website, is included, incorporated into, or a part of, this report. 11 Table of Contents Executive Officers of the Registrant The table and information below set forth, for each current executive officer of the Company, their name, age (as of October 1, 2026), positions with the Company and business experience for the past five years, as well as any prior service to the Company. Name Age Positions with the Company Director or Officer Since Hilton H. Howell, Jr. 64 Chairman of the Board, President, CEO 1992 Officers are elected annually and serve at the discretion of the board of directors. Mr. Howell has been President and Chief Executive Officer of the Company since May 1995, and prior thereto served as Executive Vice President of the Company from October 1992 to May 1995. He has been a Director of the Company since October 1992 and, effective February 24, 2009, began serving as Chairman of the board of directors. He is also Executive Chairman and Chief Executive Officer of Gray Media, Inc. Item 1A. Risk Factors As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K (a “smaller reporting company”), we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.