Atlantic American Reports Third Quarter Results

Atlantic American Reports Third Quarter Results




Atlantic American Reports Third Quarter Results

ATLANTA, Nov. 10, 2020 (GLOBE NEWSWIRE) — Atlantic American Corporation (Nasdaq- AAME) today reported net income for the three month period ended September 30, 2020 of $1.9 million, or $0.09 per diluted share, as compared to net loss of $1.4 million, or $0.07 per diluted share, for the comparable period in 2019. For the nine month period ended September 30, 2020, the Company reported net income of $0.3 million, or nil per diluted share, as compared to net loss of $1.7 million, or $0.10 per diluted share, for the comparable period in 2019. The increase in net income during the third quarter of 2020 was primarily due to a $5.5 million decrease in insurance benefits and losses incurred somewhat offset by a decrease in unrealized gains on equity securities of $1.7 million for the third quarter of 2020 as compared to the third quarter of 2019. The increase in net income for the nine month period ended September 30, 2020 was primarily due to a $14.3 million decrease in insurance benefits and losses incurred mostly offset by a decrease of $9.9 million of net unrealized gains on equity securities during the nine month period ended September 30, 2020 as compared to the comparable period in 2019. 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, operating income (as defined below) increased $5.2 million in the three month period ended September 30, 2020 from the three month period ended September 30, 2019. For the nine month period ended September 30, 2020, operating income increased $13.6 million over the comparable period in 2019. The increase in operating income for the three and nine month periods was primarily due to improved loss experience in the Company’s life and health operations, resulting from a significant decrease in the number of incurred claims within the Medicare supplement line of business. The decrease in number of incurred claims was primarily attributable to the Company’s individual policy holders being subject to varying degrees of shelter in place orders instituted throughout the United States during the second and third quarters of 2020 as a result of COVID-19.

Commenting on the results, Hilton H. Howell, Jr., chairman, president and chief executive officer, stated, “I’m proud to announce we are celebrating 65 years in business for our Bankers Fidelity Life Insurance subsidiary and have reached nearly $200 million in annualized gross premium. Rate adequacy in the Medicare supplement block continues to improve, while expansion of our ancillary product lines has promoted further diversification of premium revenue. Our property and casualty operations continue to do extremely well and we anticipate a good close to the current year.”
  
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 Corporation
Financial Data

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
(Unaudited; In thousands, except per share data)   2020       2019       2020       2019  
Insurance premiums              
    Life and health $ 30,208     $ 30,530     $ 91,511     $ 92,221  
    Property and casualty   14,770       14,475       45,516       43,035  
        Insurance premiums, net   44,978       45,005       137,027       135,256  
               
Net investment income   1,828       2,187       5,717       6,834  
Realized investment gains (losses), net   183       (430 )     432       1,565  
Unrealized gains (losses) on equity securities, net   (731 )     944       (7,831 )     2,096  
Other income   11       39       71       139  
               
Total revenue   46,269       47,745       135,416       145,890  
               
Insurance benefits and losses incurred              
    Life and health   20,088       25,279       61,192       75,831  
    Property and casualty   9,131       9,440       28,686       28,346  
Commissions and underwriting expenses   11,202       11,471       34,682       33,995  
Interest expense   363       533       1,253       1,624  
Other expense   3,052       2,766       9,116       8,142  
               
  Total benefits and expenses   43,836       49,489       134,929       147,938  
               
Income (loss) before income taxes   2,433       (1,744 )     487       (2,048 )
Income tax expense (benefit)   557       (352 )     166       (392 )
               
Net income (loss) $ 1,876     $ (1,392 )   $ 321     $ (1,656 )
               
Earnings (loss) per common share (basic and diluted) $ 0.09     $ (0.07 )   $     $ (0.10 )
               
Reconciliation of Non-GAAP Financial Measure              
               
Net income (loss) $ 1,876     $ (1,392 )   $ 321     $ (1,656 )
Income tax expense (benefit)   557       (352 )     166       (392 )
Realized investment (gains) losses, net   (183 )     430       (432 )     (1,565 )
Unrealized (gains) losses on equity securities, net   731       (944 )     7,831       (2,096 )
               
Non-GAAP Operating income (loss) $ 2,981     $ (2,258 )   $ 7,886     $ (5,709 )
               
       
  September 30, December 31,        
Selected Balance Sheet Data   2020       2019          
               
Total cash and investments $ 283,597     $ 281,530          
    Insurance subsidiaries   277,516       274,730          
    Parent and other   6,081       6,800          
Total assets   384,952       377,626          
Insurance reserves and policyholder funds   201,064       201,906          
Debt   33,738       33,738          
Total shareholders’ equity   128,015       118,394          
Book value per common share   6.00       5.51          
Statutory capital and surplus              
    Life and health   35,725       35,546          
    Property and casualty   46,397       45,827