Atlantic American(AAME) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, net income was a loss of $0.7 million, or$(0.04) per diluted share, compared to net income of $1.7 million, or$0.08 per diluted share for the same period in 2023[98]. - Total revenue for the three months ended June 30, 2024, was $47.7 million, a decrease of 3.1$49.2 million in the same period in 2023[94]. - The company reported a net loss of $2.7 million, or$(0.14) per diluted share, for the six months ended June 30, 2024, compared to net income of $0.3 million for the same period in 2023[98]. Insurance Operations - Insurance premiums, net, decreased by$1.1 million, or 2.3%, to $45.0 million for the three months ended June 30, 2024, compared to$46.1 million in the same period in 2023[99]. - American Southern's gross written premiums decreased by $1.6 million, or 4.1$0.3 million, or 1.9%, during the three months ended June 30, 2024, compared to the same period in 2023[106]. - Insurance benefits and losses incurred at American Southern increased by $0.7 million, or 5.0$0.8 million, or 3.2%, for the six-month period[108]. - The combined ratio for American Southern was 101.3% for the three months ended June 30, 2024, compared to 100.3% for the same period in 2023[102]. - The loss ratio for the three-month period ended June 30, 2024, was 81.1%, up from 75.8% in the same period in 2023, while for the six-month period, it increased to 76.3% from 74.7%[108]. - Commissions and underwriting expenses decreased by $0.8 million, or 19.1$0.5 million, or 5.7%, for the six-month period[109]. - Net earned premium revenue at Bankers Fidelity decreased by $0.7 million, or 2.6$2.9 million, or 5.2%, for the six-month period[111]. - Gross earned premiums from the Medicare supplement line decreased by $2.7 million, or 8.2$5.7 million, or 8.4%, for the six-month period[111]. - Insurance benefits and losses incurred increased by $1.8 million, or 11.1$3.1 million, or 9.1%, for the six-month period[112]. - The combined ratio for the three-month period ended June 30, 2024, was 102.0%, compared to 94.6% in the same period in 2023, while for the six-month period, it was 106.2% compared to 96.7%[111]. Investment and Financing - Unrealized gains on equity securities increased during the six months ended June 30, 2024, partially offsetting the increase in net loss[99]. - Investment income decreased by $0.1 million, or 5.6$0.1 million, or 2.5%, for the six-month period[114]. - Interest expense increased by $0.1 million, or 7.4$0.2 million, or 10.6%, for the six-month period[118]. - As of June 30, 2024, the Company had outstanding Junior Subordinated Debentures totaling $33.7 million, with an effective interest rate of 9.65$4.0 million under its Revolving Credit Agreement as of June 30, 2024, compared to $3.0 million as of December 31, 2023[130]. - The Series D Preferred Stock has a stated value of$100 per share and accrues annual dividends at a rate of $7.25 per share, with accrued but unpaid dividends totaling$0.2 million as of June 30, 2024[127]. - The Company has access to approximately $8.2 million in credit availability from the Federal Home Loan Bank of Atlanta as of June 30, 2024[128]. - The Revolving Credit Agreement was amended to extend the maturity date to March 22, 2027, and requires the Company to maintain a consolidated net worth of not less than$64.2 million[129]. - The Company has pledged bonds with an amortized cost of $9.4 million to the Federal Home Loan Bank as of June 30, 2024[128]. Liquidity and Cash Flow - The Company reported a decrease in cash and cash equivalents from$28.3 million at December 31, 2023, to $21.2 million at June 30, 2024, primarily due to net cash used in operating activities of$4.9 million[131]. - The Company believes existing cash balances and expected payments from subsidiaries will meet liquidity requirements for the foreseeable future[132]. Corporate Governance - The Company is in the process of remediating a material weakness in internal control over financial reporting, with expected operational enhancements by September 30, 2024[139]. - The Company has not made any purchases of common stock under its Repurchase Plan during the three-month period ending June 30, 2024, with a maximum of 325,129 shares remaining available for repurchase[144].