MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Overview
The following
is management’s discussion and analysis of the financial condition
and results of operations of Atlantic American Corporation
(“Atlantic American” or the “Parent”) and its subsidiaries
(collectively with the Parent, the “Company”) as of and for three
month period ended March 31, 2022. 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, 2021 (the “2021 Annual Report”).
Atlantic
American is an insurance holding company whose operations are
conducted primarily through its insurance subsidiaries: American
Southern Insurance Company and American Safety Insurance Company
(together known as “American Southern”) and Bankers Fidelity Life
Insurance Company and Bankers Fidelity Assurance Company (together
known as “Bankers Fidelity”). Each operating company is managed
separately, offers different products and is evaluated on its
individual performance.
Critical
Accounting Policies
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that
affect reported amounts and related disclosures. Actual results
could differ significantly from those estimates. The Company has
identified certain estimates that involve a higher degree of
judgment and are subject to a significant degree of variability.
The Company’s critical accounting policies and the resultant
estimates considered most significant by management are disclosed
in the 2021 Annual Report. Except as disclosed in Note 2 of Notes
to Condensed Consolidated Financial Statements, the Company’s
critical accounting policies are consistent with those disclosed in
the 2021 Annual Report.
Overall
Corporate Results
The following
presents the Company’s revenue, expenses and net income (loss) for
the three month period ended March 31, 2022 and the comparable
period in 2021:
| |
|
Three Months Ended
March 31,
|
|
| |
|
2022
|
|
|
2021
|
|
| |
|
(In thousands)
|
|
|
Insurance
premiums, net
|
|
$
|
47,081
|
|
|
$
|
46,090
|
|
|
Net
investment income
|
|
|
2,340
|
|
|
|
2,113
|
|
|
Realized
investment gains (losses), net
|
|
|
(10
|
)
|
|
|
121
|
|
|
Unrealized
gains on equity securities, net
|
|
|
2,193
|
|
|
|
744
|
|
|
Other
income
|
|
|
4
|
|
|
|
7
|
|
|
Total
revenue
|
|
|
51,608
|
|
|
|
49,075
|
|
|
Insurance
benefits and losses incurred
|
|
|
31,169
|
|
|
|
33,272
|
|
|
Commissions
and underwriting expenses
|
|
|
12,836
|
|
|
|
12,564
|
|
|
Interest
expense
|
|
|
354
|
|
|
|
346
|
|
|
Other
expense
|
|
|
3,453
|
|
|
|
3,440
|
|
|
Total
benefits and expenses
|
|
|
47,812
|
|
|
|
49,622
|
|
|
Income (loss)
before income taxes
|
|
$
|
3,796
|
|
|
$
|
(547
|
)
|
|
Net income
(loss)
|
|
$
|
2,842
|
|
|
$
|
(431
|
)
|
Management
also considers and evaluates performance by analyzing the non-GAAP
measure operating income (loss), and believes it 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 investment gains, which are not a part of the Company’s
primary operations and are, to a limited extent, subject to
discretion in terms of timing of realization).
A
reconciliation of net income (loss) to operating income (loss) for
the three month period ended March 31, 2022 and the comparable
period in 2021 is as follows:
| |
|
Three Months Ended
March 31,
|
|
|
Reconciliation of Non-GAAP Financial Measure
|
|
2022
|
|
|
2021
|
|
| |
|
(In thousands)
|
|
|
Net income
(loss)
|
|
$
|
2,842
|
|
|
$
|
(431
|
)
|
|
Income tax
expense (benefit)
|
|
|
954
|
|
|
|
(116
|
)
|
|
Realized
investment (gains) losses, net
|
|
|
10
|
|
|
|
(121
|
)
|
|
Unrealized
gains on equity securities, net
|
|
|
(2,193
|
)
|
|
|
(744
|
)
|
|
Non-GAAP
operating income (loss)
|
|
$
|
1,613
|
|
|
$
|
(1,412
|
)
|
On a
consolidated basis, the Company had net income of $2.8 million, or
$0.13 per diluted share, for the three month period ended March 31,
2022, compared to net loss of $0.4 million, or $0.03 per diluted
share, for the three month period ended March 31, 2021.
Premium revenue for the three month period ended March 31, 2022
increased $1.0 million, or 2.2%, to $47.1 million from $46.1
million in the three month period ended March 31, 2021.
The increase in premium revenue was primarily attributable to an
increase in the automobile physical damage line of business in the
property and casualty operations. Also contributing to this
increase in premium revenue was an increase in the life insurance
premiums in the life and health operations.
Operating
income increased $3.0 million in the three month period ended March
31, 2022 from the three month period ended March 31, 2021.
The increase in operating income was primarily due to favorable
loss experience in the property and casualty operations due to a
decrease in the frequency and severity of claims within the
automobile physical damage line of business. Also contributing to
the increase in operating income was favorable loss experience in
the life and health operations, primarily as a result of an
increase in earned premium within the group lines of
business.
A more
detailed analysis of the individual operating segments and other
corporate activities follows.
American
Southern
The following
summarizes American Southern’s premiums, losses, expenses and
underwriting ratios for the three month period ended March 31, 2022
and the comparable period in 2021:
| |
|
Three Months Ended
March 31,
|
|
| |
|
2022
|
|
|
2021
|
|
| |
|
(Dollars in thousands)
|
|
|
Gross written
premiums
|
|
$
|
11,558
|
|
|
$
|
11,462
|
|
|
Ceded
premiums
|
|
|
(1,617
|
)
|
|
|
(1,684
|
)
|
|
Net written
premiums
|
|
$
|
9,941
|
|
|
$
|
9,778
|
|
|
Net earned
premiums
|
|
$
|
17,343
|
|
|
$
|
16,615
|
|
|
Insurance
benefits and losses incurred
|
|
|
10,478
|
|
|
|
11,749
|
|
|
Commissions
and underwriting expenses
|
|
|
5,943
|
|
|
|
4,286
|
|
|
Underwriting
income
|
|
$
|
922
|
|
|
$
|
580
|
|
|
Loss
ratio
|
|
|
60.4
|
%
|
|
|
70.7
|
%
|
|
Expense
ratio
|
|
|
34.3
|
|
|
|
25.8
|
|
|
Combined
ratio
|
|
|
94.7
|
%
|
|
|
96.5
|
%
|
Gross written
premiums at American Southern increased $0.1 million, or 0.8%,
during the three month period ended March 31, 2022 from the
comparable period in 2021. The increase in gross written premiums
was primarily attributable to an increase in premiums written in
the automobile physical damage line of business from existing
agencies, as well as increases in the surety line of
business. Partially offsetting the increase in gross written
premiums was a decrease in premiums written in the auto liability
line of business and retro premium adjustments.
Ceded premiums
decreased $0.1 million, or 4.0%, during the three month period
ended March 31, 2022 from the comparable period in 2021. The
decrease in ceded premiums in 2022 was primarily due to a decrease
in ceding rates for two large programs in the auto liability line
of business.
The following
presents American Southern’s net earned premiums by line of
business for the three month period ended March 31, 2022 and the
comparable period in 2021:
| |
|
Three Months Ended
March 31,
|
|
| |
|
2022
|
|
|
2021
|
|
| |
|
(In thousands)
|
|
|
Automobile
liability
|
|
$
|
7,625
|
|
|
$
|
7,737
|
|
|
Automobile
physical damage
|
|
|
6,023
|
|
|
|
5,534
|
|
|
General
liability
|
|
|
1,429
|
|
|
|
1,253
|
|
|
Surety
|
|
|
1,465
|
|
|
|
1,317
|
|
|
Other
lines
|
|
|
801
|
|
|
|
774
|
|
|
Total
|
|
$
|
17,343
|
|
|
$
|
16,615
|
|
Net earned
premiums increased $0.7 million, or 4.4%, during the three month
period ended March 31, 2022 over the comparable period in 2021. The
increase in net earned premiums was primarily attributable to an
increase in automobile physical damage coverage resulting from
existing agencies 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. The combined ratio represents the percentage of
losses, loss adjustment expenses and other expenses that are
incurred for each dollar of premium earned by the company. A
combined ratio of under 100% represents an underwriting profit
while a combined ratio of over 100% indicates an underwriting loss.
The combined ratio is divided into two components, the 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 decreased $1.3
million, or 10.8%, during the three month period ended March 31,
2022 over the comparable period in 2021. As a percentage of earned
premiums, insurance benefits and losses incurred were 60.4% in the
three month period ended March 31, 2022, compared to 70.7% in the
three month period ended March 31, 2021. The decrease in the loss
ratio during the three month period ended March 31, 2022 was
primarily due to a decrease in the frequency and severity of claims
in the automobile physical damage line of business, as well as in
the inland marine segment of the other line of business.
Commissions
and underwriting expenses increased $1.7 million, or 38.7%, during
the three month period ended March 31, 2022, over the comparable
period in 2021. As a percentage of earned premiums, underwriting
expenses were 34.3% in the three month period ended March 31, 2022,
compared to 25.8% in the three month period ended March 31, 2021.
The increase in the expense ratio during the three month period
ended March 31, 2022 was primarily due to American Southern’s use
of a variable commission structure with certain agents, which
compensates the participating agents in relation to the loss ratios
of the business they write. During periods in which the loss ratio
decreases, commissions and underwriting expenses will generally
increase, and conversely, during periods in which the loss ratio
increases, commissions and underwriting expenses will generally
decrease. During the three month period ended March 31, 2022,
variable commissions at American Southern increased by $1.1 million
from the comparable period in 2021 due to more favorable loss
experience from accounts subject to variable commissions.
Bankers
Fidelity
The following
summarizes Bankers Fidelity’s earned premiums, losses, expenses and
underwriting ratios for the three month period ended March 31, 2022
and the comparable period in 2021:
| |
|
Three Months Ended
March 31,
|
|
| |
|
2022
|
|
|
2021
|
|
| |
|
(Dollars in thousands)
|
|
|
Medicare
supplement
|
|
$
|
37,971
|
|
|
$
|
40,992
|
|
|
Other health
products
|
|
|
2,973
|
|
|
|
2,387
|
|
|
Life
insurance
|
|
|
4,517
|
|
|
|
2,887
|
|
|
Gross earned
premiums
|
|
|
45,461
|
|
|
|
46,266
|
|
|
Ceded
premiums
|
|
|
(15,723
|
)
|
|
|
(16,791
|
)
|
|
Net earned
premiums
|
|
|
29,738
|
|
|
|
29,475
|
|
|
Insurance
benefits and losses incurred
|
|
|
20,691
|
|
|
|
21,523
|
|
|
Commissions
and underwriting expenses
|
|
|
8,746
|
|
|
|
9,885
|
|
|
Total
expenses
|
|
|
29,437
|
|
|
|
31,408
|
|
|
Underwriting
income (loss)
|
|
$
|
301
|
|
|
$
|
(1,933
|
)
|
|
Loss
ratio
|
|
|
69.6
|
%
|
|
|
73.0
|
%
|
|
Expense ratio
|
|
|
29.4
|
|
|
|
33.5
|
|
|
Combined
ratio
|
|
|
99.0
|
%
|
|
|
106.5
|
%
|
Net earned
premium revenue at Bankers Fidelity increased $0.3 million, or
0.9%, during the three month period ended March 31, 2022, from the
comparable period in 2021. Gross earned premiums from the Medicare
supplement line of business decreased $3.0 million, or 7.4%, during
the three month period ended March 31, 2022, due primarily to
non-renewals exceeding the level of new business writings. Other
health product premiums increased $0.6 million, or 24.5%, during
the three month period ended March 31, 2022, over the comparable
period in 2021, primarily as a result of new sales of the company’s
group health products. Gross earned premiums from the life
insurance line of business increased $1.6 million, or 56.5%, during
the three month period ended March 31, 2022 over the comparable
period in 2021 due to an increase in the group life products
premium. Partially offsetting the increase in gross earned premiums
from the life insurance line was a decrease in individual life
products premium, resulting from the redemption and settlement of
existing individual life policy obligations exceeding the level of
new individual life sales. Premiums ceded decreased $1.1
million, or 6.4%, during the three month period ended March 31,
2022, from the comparable period in 2021. The decrease in
ceded premiums for the three month period ended March 31, 2022 was
due to a decrease in Medicare supplement premiums subject to
reinsurance.
Insurance
benefits and losses incurred decreased $0.8 million, or 3.9%,
during the three month period ended March 31, 2022, from the
comparable period in 2021. As a percentage of earned
premiums, insurance benefits and losses incurred were 69.6% in the
three month period ended March 31, 2022, compared to 73.0% in the
three month period ended March 31, 2021. The decrease in the
loss ratio for the three month period ended March 31, 2022 was
primarily due to a decrease in the number of incurred claims within
the Medicare supplement line of business.
Commissions
and underwriting expenses decreased $1.1 million, or 11.5%, during
the three month period ended March 31, 2022, over the comparable
period in 2021. As a percentage of earned premiums,
underwriting expenses were 29.4% in the three month period ended
March 31, 2022, compared to 33.5% in the three month period ended
March 31, 2021. The decrease in the expense ratio for the
three month period ended March 31, 2022 was primarily due to the
level of additions to deferred acquisition costs (“DAC”) exceeding
the amortization of DAC.
Net Investment
Income and Realized Gains
Investment
income increased $0.2 million, or 10.7%, during the three month
period ended March 31, 2022, from the comparable period in 2021.
The increase in investment income was attributable to an increase
in the equity in earnings from investments in the Company’s limited
partnerships and limited liability companies of $0.1 million.
The Company
had net realized investment losses of $0.01 million during the
three month period ended March 31, 2022, compared to net realized
investment gains of $0.1 million during the three month period
ended March 31, 2021. The net realized investment
losses during the three month period ended March 31, 2022 resulted
primarily from the redemption of the Company’s investment in a
fixed maturity. The net realized investment gains during the three
month period ended March 31, 2021 resulted primarily from the
disposition of several of the Company’s investments in fixed
maturities. Management continually evaluates the Company’s
investment portfolio and makes adjustments for impairments and/or
divests investments as may be determined to be appropriate.
Unrealized
Gains on Equity Securities
Investments in
equity securities are measured at fair value at the end of the
reporting period, with any changes in fair value reported in net
income during the period. The Company recognized net unrealized
gains on equity securities of $2.2 million during the three month
period ended March 31, 2022 and unrealized gains on equity
securities of $0.7 million during the three month period ended
March 31, 2021. Changes in unrealized gains on equity
securities for the applicable periods are primarily the result of
fluctuations in the market value of certain of the Company’s equity
securities.
Interest
Expense
Interest
expense increased slightly during the three month period ended
March 31, 2022, from the comparable period in 2021. Changes in
interest expense were primarily due to changes in the London
Interbank Offered Rate (“LIBOR”), as the interest rates on the
Company’s outstanding junior subordinated deferrable interest
debentures (“Junior Subordinated Debentures”) are directly related
to LIBOR. The Company is preparing for the expected
discontinuation of LIBOR by identifying, assessing and monitoring
risks associated with LIBOR transition. Preparation includes taking
steps to update operational processes to support alternative
reference rates and models, as well as evaluating legacy contracts
for any changes that may be required, including the determination
of applicable fallbacks.
Liquidity and
Capital Resources
The primary
cash needs of the Company are for the payment of claims and
operating expenses, maintaining adequate statutory capital and
surplus levels, and meeting debt service requirements. Current and
expected patterns of claim frequency and severity may change from
period to period but generally are expected to continue within
historical ranges. The Company’s primary sources of cash are
written premiums, investment income and proceeds from the sale and
maturity of its invested assets. The Company believes that, within
each operating company, total invested assets will be sufficient to
satisfy all policy liabilities and that cash inflows from
investment earnings, future premium receipts and reinsurance
collections will be adequate to fund the payment of claims and
operating expenses as needed.
Cash flows at
the Parent are derived from dividends, management fees, and
tax-sharing payments, as described below, from the subsidiaries.
The principal cash needs of the Parent are for the payment of
operating expenses, the acquisition of capital assets and debt
service requirements, as well as the repurchase of shares and
payments of any dividends as may be authorized and approved by the
Company’s board of directors from time to time. At March 31, 2022,
the Parent had approximately $3.5 million of unrestricted cash and
investments.
The Parent’s
insurance subsidiaries reported statutory net income of $1.3
million for the three month period ended March 31, 2022, compared
to statutory net income of $2.1 million for the three month period
ended March 31, 2021. 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 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.
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; however, the use of such assets by the Company is
limited by state insurance regulations. Dividend payments to a
parent corporation by its wholly owned insurance subsidiaries are
subject to annual limitations and are restricted to 10% of
statutory surplus or statutory earnings before recognizing realized
investment gains of the individual insurance subsidiaries. At March
31, 2022, American Southern had $53.4 million of statutory capital
and surplus and Bankers Fidelity had $38.5 million of statutory
capital and surplus. In 2022, dividend payments by the Parent’s
insurance subsidiaries in excess of $5.6 million would require
prior approval. Through March 31, 2022, the Parent received
dividends of $1.5 million from its subsidiaries.
The Parent
provides certain administrative and other services to each of its
insurance subsidiaries. The amounts charged to and paid by the
subsidiaries include reimbursements for various shared services and
other expenses incurred directly on behalf of the subsidiaries by
the Parent. 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.
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 investing the
gross proceeds of the trust preferred securities in Junior
Subordinated Debentures. The outstanding $18.0 million and $15.7
million of Junior Subordinated Debentures mature on December 4,
2032 and May 15, 2033, respectively, are callable quarterly, in
whole or in part, only at the option of the Company, and have an
interest rate of three-month LIBOR plus an applicable margin. The
margin ranges from 4.00% to 4.10%. At March 31, 2022, the effective
interest rate was 4.57%. 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 March 31,
2022, the Company has not made such an election.
The Company
intends to pay its obligations under the Junior Subordinated
Debentures using existing cash balances, dividend and tax-sharing
payments from the operating subsidiaries, or from existing or
potential future financing arrangements.
At March 31,
2022, 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; accrue
annual dividends at a rate of $7.25 per share (payable in cash or
shares of the Company’s common stock at the option of the board of
directors of the Company) and are cumulative. In certain
circumstances, the shares of the Series D Preferred Stock may be
convertible into an aggregate of approximately 1,378,000 shares of
the Company’s common stock, subject to certain adjustments and
provided that such adjustments do not result in the Company issuing
more than approximately 2,703,000 shares of common stock without
obtaining prior shareholder approval; and are redeemable solely at
the Company’s option. The Series D Preferred Stock is not currently
convertible. At March 31, 2022, the Company had accrued but unpaid
dividends on the Series D Preferred Stock totaling $0.1
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 $8.1
million, as of March 31, 2022. Additional FHLB stock purchases may
be required based upon the amount of funds borrowed from the
FHLB. As of March 31, 2022, BFLIC has pledged bonds having an
amortized cost of $4.8 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
2022, BFLIC does not have any outstanding borrowings from the
FHLB.
On May 12,
2021, the Company entered into a Revolving Credit Agreement (the
“Credit Agreement”) with Truist Bank as the lender (the “Lender”).
The Credit Agreement provides for an unsecured $10 million
revolving credit facility that matures on April 12, 2024. Under the
Credit Agreement, the Company will pay interest on the unpaid
principal balance of outstanding revolving loans at the LIBOR Rate
(as defined in the Credit Agreement) plus 2.00%, subject to a LIBOR
floor rate of 1.00%.
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. The Credit
Agreement also contains customary representations and warranties
and events of default. Events of default include, among others, (a)
the failure by the Company to pay any amounts owed under the Credit
Agreement when due, (b) the failure to perform and not timely
remedy certain covenants, (c) a change in control of the Company
and (d) the occurrence of bankruptcy or insolvency events. Upon an
event of default, the Lender may, among other things, declare all
obligations under the Credit Agreement immediately due and payable
and terminate the revolving commitments. As of March 31,
2022, the Company does not have any outstanding borrowings under
the Credit Agreement.
Cash and cash
equivalents decreased from $24.8 million at December 31, 2021 to
$15.6 million at March 31, 2022. The decrease in cash and cash
equivalents during the three month period ended March 31, 2022 was
primarily attributable to net cash used in operating activities of
$8.0 million. Also contributing to the decrease in cash and cash
equivalents was net cash used in investing activities of $1.1
million as a result of investment purchases exceeding investment
sales and maturity of securities.
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 facilities
or additional borrowings from financial institutions, will enable
the Company to meet its liquidity requirements for the foreseeable
future. Management is not aware of any current recommendations by
regulatory authorities, which, if implemented, would have a
material adverse effect on the Company’s liquidity, capital
resources or operations.
Item 4.
Controls and Procedures
We maintain
disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Securities Exchange Act
of 1934 (the “Exchange Act”) reports is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms, and that such
information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure. Management necessarily applies its judgment in
assessing the costs and benefits of such controls and procedures,
which, by their nature, can provide only reasonable assurance
regarding management’s control objectives. The Company’s
management, including the Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls and
procedures can prevent all possible errors or fraud. A control
system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the
control system are met. There are inherent limitations in all
control systems, including the realities that judgments in
decision-making can be faulty, and that breakdowns can occur
because of simple errors or mistakes. Additionally, controls can be
circumvented by the intentional acts of one or more persons. The
design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and, while our
disclosure controls and procedures are designed to be effective
under circumstances where they should reasonably be expected to
operate effectively, there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions. Because of the inherent limitations in any control
system, misstatements due to possible errors or fraud may occur and
may not be detected. An evaluation was performed under the
supervision and with the participation of our management, including
the Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) as of the end of the period covered
by this report. Based on that evaluation, our management, including
the Chief Executive Officer and Chief Financial Officer, concluded
that our disclosure controls and procedures were effective as of
the end of the period covered by this report.
There have
been no changes in our internal control over financial reporting
that occurred during the period covered by this report that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II. OTHER
INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds
On October 31,
2016, the Board of Directors of the Company approved a plan that
allows for the repurchase of up to 750,000 shares of the Company’s
common stock (the “Repurchase Plan”) on the open market or in
privately negotiated transactions, as determined by an authorized
officer of the Company. Any such repurchases can be made from time
to time in accordance with applicable securities laws and other
requirements.
Other than
pursuant to the Repurchase Plan, no purchases of common stock of
the Company were made by or on behalf of the Company during the
periods described below.
The table
below sets forth information regarding repurchases by the Company
of shares of its common stock on a monthly basis during the three
month period ended March 31, 2022.
|
Period
|
|
Total Number
of Shares
Purchased
|
|
|
Average
Price Paid
per Share
|
|
|
Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
|
|
|
Maximum Number
of Shares that
May Yet be
Purchased
Under the Plans
or Programs
|
|
|
January 1 –
January 31, 2022
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
325,129
|
|
|
February 1 –
February 28, 2022
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,129
|
|
|
March 1 –
March 31, 2022
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325,129
|
|
|
Total
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Certification of the Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
| |
|
|
|
Certification of the Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
| |
|
|
|
Certifications pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
| |
|
|
101. INS
|
Inline XBRL Instance Document
(the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL
document).
|
| |
|
|
101. SCH
|
Inline XBRL Taxonomy Extension
Schema Document.
|
| |
|
|
101. CAL
|
Inline XBRL Taxonomy Extension
Calculation Linkbase Document.
|
| |
|
|
101.DEF
|
Inline XBRL Taxonomy Extension
Definition Linkbase Document.
|
| |
|
|
101.LAB
|
Inline XBRL Taxonomy Extension
Label Linkbase Document.
|
| |
|
|
101.PRE
|
Inline XBRL Taxonomy Extension
Presentation Linkbase Document.
|
| |
|
|
104
|
Cover Page Interactive Data File
(formatted as inline XBRL and contained in Exhibit 101).
|
Pursuant to
the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
| |
ATLANTIC AMERICAN CORPORATION
|
| |
(Registrant)
|
|
| |
|
|
|
|
Date: May 11, 2022
|
By:
|
/s/ J. Ross Franklin
|
|
| |
|
J. Ross Franklin
|
| |
|
Vice President and Chief Financial Officer
|
| |
|
(Principal Financial and Accounting Officer)
|