Atlantic American Corporation (Nasdaq- AAME) today reported net loss for the three month period ended September 30, 2021 of $0.9 million, or $0.05 per diluted share, as compared to net income of $1.9 million, or $0.09 per diluted share, for the comparable period in 2020. For the nine month period ended September 30, 2021, the Company reported net income of $1.6 million, or $0.06 per diluted share, as compared to net income of $0.3 million, or nil per diluted share, for the comparable period in 2020. The decrease in net income during the third quarter of 2021 was primarily due to a $5.8 million increase in insurance benefits and losses incurred, somewhat offset by an increase in unrealized gains on equity securities of $1.4 million for the third quarter of 2021 as compared to the third quarter of 2020. The increase in net income for the nine month period ended September 30, 2021 was primarily due to an increase of $13.3 million in net unrealized gains on equity securities largely offset by an increase in insurance benefits and losses incurred of $10.1 million during the nine month period ended September 30, 2021 as compared to the third quarter of 2020. Changes in unrealized gains and losses on equity securities for the applicable periods are primarily the result of fluctuations in the market values of the Company’s equity investments.

Excluding the effects of realized or unrealized gains or losses and taxes, the Company reported operating loss (as defined below) of $2.4 million for the three month period ended September 30, 2021 as compared to $3.0 million operating income for the three month period ended September 30, 2020. For the nine month period ended September 30, 2021, the Company reported operating loss of $4.1 million as compared to operating income of $7.9 million in the comparable period in 2020. The decrease in operating income for the three and nine month periods was primarily due to an increase in insurance benefits and losses in the Company’s life and health operations, predominantly as a result of claims within the Medicare supplement line of business. During 2021, utilization of Medicare supplement insurance benefits has increased, returning to historical averages relative to the exceptionally low utilization experienced after the onset of the COVID-19 pandemic when many policyholders were sheltered in place.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “We are pleased to report the premium growth in our property and casualty operation has continued, with a historic high reached for the third quarter. As a result of their selective underwriting, our property and casualty operation continues to perform quite well. While our life and health operation faced a challenging quarter due to increasing demand for health care services, a series of strategic pricing adjustments in our Medicare supplement product is expected to improve profit margins on that business.”   Atlantic American Corporation is an insurance holding company involved through its subsidiary companies in specialty markets of the life, health, and property and casualty insurance industries. Its principal insurance subsidiaries are American Southern Insurance Company, American Safety Insurance Company, Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company.

Note regarding non-GAAP financial measure: Atlantic American Corporation presents its consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). However, from time to time, the Company may present, in its public statements, press releases and filings with the Securities and Exchange Commission, non-GAAP financial measures such as operating income (loss). 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 income tax expense, which is 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 operating results (such as any realized and unrealized investment gains (losses), 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). The financial data attached includes a reconciliation of operating income (loss) to net income (loss), the most comparable GAAP financial measure. The Company’s definition of operating income (loss) may differ from similarly titled financial measures used by others. This non-GAAP financial measure should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

Note regarding Private Securities Litigation Reform Act: Except for historical information contained herein, this press release contains forward-looking statements that involve a number of risks and uncertainties. Actual results could differ materially from those indicated by such forward-looking statements due to a number of factors and risks detailed from time to time in statements and reports that Atlantic American Corporation files with the Securities and Exchange Commission.

For further information contact:    
J. Ross Franklin   Hilton H. Howell, Jr.
Chief Financial Officer   Chairman, President & CEO
Atlantic American Corporation   Atlantic American Corporation
404-266-5580   404-266-5505

Atlantic American CorporationFinancial Data

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
(Unaudited; In thousands, except per share data)   2021       2020       2021       2020  
Insurance premiums              
Life and health $ 28,772     $ 30,208     $ 87,018     $ 91,511  
Property and casualty   17,320       14,770       50,297       45,516  
Insurance premiums, net   46,092       44,978       137,315       137,027  
               
Net investment income   2,137       1,828       6,516       5,717  
Realized investment gains, net   349       183       520       432  
Unrealized gains (losses) on equity securities, net   711       (731 )     5,458       (7,831 )
Other income   1       11       13       71  
               
Total revenue   49,290       46,269       149,822       135,416  
               
Insurance benefits and losses incurred              
Life and health   23,394       20,088       66,463       61,192  
Property and casualty   11,651       9,131       33,557       28,686  
Commissions and underwriting expenses   11,927       11,202       36,670       34,682  
Interest expense   347       363       1,040       1,253  
Other expense   3,264       3,052       10,178       9,116  
               
Total benefits and expenses   50,583       43,836       147,908       134,929  
               
Income (loss) before income taxes   (1,293 )     2,433       1,914       487  
Income tax expense (benefit)   (378 )     557       298       166  
               
Net income (loss) $ (915 )   $ 1,876     $ 1,616     $ 321  
               
Earnings (loss) per common share (basic and diluted) $ (0.05 )   $ 0.09     $ 0.06     $ -  
               
Reconciliation of Non-GAAP Financial Measure              
               
Net income (loss) $ (915 )   $ 1,876     $ 1,616     $ 321  
Income tax expense (benefit)   (378 )     557       298       166  
Realized investment gains, net   (349 )     (183 )     (520 )     (432 )
Unrealized (gains) losses on equity securities, net   (711 )     731       (5,458 )     7,831  
               
Non-GAAP Operating income (loss) $ (2,353 )   $ 2,981     $ (4,064 )   $ 7,886  
                       
                     
  September 30, December 31,        
Selected Balance Sheet Data   2021       2020          
               
Total cash and investments $ 300,297     $ 298,630          
Insurance subsidiaries   295,191       292,478          
Parent and other   5,106       6,152          
Total assets   404,077       405,187          
Insurance reserves and policyholder funds   205,757       198,676          
Debt   33,738       33,738          
Total shareholders' equity   139,995       145,060          
Book value per common share   6.60       6.84          
Statutory capital and surplus              
Life and health   38,503       42,326          
Property and casualty   50,394       50,194          
               
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