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AM Best Affirms Credit Ratings of Atlantic American Corporation and Its Subsidiaries

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AM Best has affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
"a" of American Southern Insurance Company (Topeka, KS) and its wholly
owned and 100% reinsured subsidiary, American Safety Insurance Company
(collectively referred to as American Southern Group). Additionally, AM
Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of
"a-" of Bankers Fidelity Life Insurance Company and its wholly owned and
100% reinsured subsidiary, Bankers Fidelity Assurance Company
(collectively referred to as Bankers Fidelity Life Insurance Group
[BFLIG]). The outlook of these Credit Ratings (ratings) are stable. All
companies are domiciled Atlanta GA, unless otherwise specified.

Concurrently, AM Best has affirmed the Long-Term ICR of "bbb-" of the
parent company, Atlantic American Corporation (Atlantic American)
(NASDAQ:AAME). The outlook of this rating is stable.

The ratings reflect American Southern Group's balance sheet strength,
which AM Best categorizes as very strong, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management (ERM). The ratings also reflect the group's
long history of operating profitability, management's disciplined
underwriting approach and its local market knowledge. American Southern
Group's balance sheet strength assessment reflects risk-adjusted
capitalization that is at the strongest level, as measured by Best's
Capital Adequacy Ratio (BCAR), partially offset by the group's payment
of substantial stockholder dividends, which historically have been used
to service debt held at Atlantic American.

The ratings also consider the financial leverage and interest coverage
at Atlantic American, with its adjusted debt-to-total capital at 15.4%
as of Dec. 31, 2018. Interest coverage historically has been supported
adequately by the insurance operating companies' ability to generate
sufficient earnings to cover obligations at the parent.

The ratings of BFLIG reflect its balance sheet strength, which AM Best
categorizes as very strong, as well as its marginal operating
performance, neutral business profile and appropriate ERM.

The group has benefited from explicit capital support from its parent
company, Atlantic American, in 2017 and 2018. The infusions have helped
to bolster capital strength somewhat, as the results of new business
development have added capital strain. Owing to the execution of the
business development strategy in its Medicare supplement line of
business, the group has incurred higher benefit losses and expenses, as
well as the accompanying increases in reserves. The reported net losses
over the past two years has increased the volatility of average earnings
trend.

Business diversification, both geographic and by product design, has led
to the execution of an extra-regional, business expansion strategy,
which now covers new and traditional supplemental accident and health
markets. The group is cautiously leveraging operations into a larger
number of states, recasting its footprint. While BFLIG manages its ERM
through traditional means, its governance, processes and procedures will
need to continue to evolve as operations become more complex.

This press release relates to Credit Ratings that have been published
on AM Best's website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best's
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and AM Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and AM Best Rating
Action Press Releases
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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