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Atlantic American Corporation Reports Second Quarter Results for 2020

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ATLANTA, Aug. 11, 2020 (GLOBE NEWSWIRE) -- Atlantic American Corporation (Nasdaq- AAME) today reported net income for the three month period ended June 30, 2020 of $6.5 million, or $0.30 per diluted share, as compared to net loss of $4.4 million, or $0.22 per diluted share, for the comparable period in 2019.  For the six month period ended June 30, 2020, the Company reported net loss of $1.6 million, or $0.09 per diluted share, as compared to net loss of $0.3 million, or $0.02 per diluted share, for the comparable period in 2019.  The increase in net income during the second quarter of 2020 was primarily due to a $7.3 million decrease in total benefits and expenses coupled with an increase in unrealized gains on equity securities of $6.7 million for the second quarter of 2020 as compared to the second quarter of 2019.  The net loss for the six month period ended June 30, 2020 was primarily due to $7.1 million of net unrealized losses on equity securities during the six month period ended June 30, 2020 as compared to $1.2 million of unrealized gains on equity securities during 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 $7.8 million in the three month period ended June 30, 2020 from the three month period ended June 30, 2019.  For the six month period ended June 30, 2020, operating income increased $8.4 million over the comparable period in 2019.  The increase in operating income was primarily due to favorable 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.  This decrease in the 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 quarter of 2020 as a result of COVID-19.

Commenting on the results, Hilton H. Howell, Jr., chairman, president and chief executive officer, stated, "I am delighted with the performance of each of our operating segments and proud to report the return to operating income for the year.  Our BankersWorksite® division is on track for a record year of new sales which will further promote our diversification efforts.  Additionally, our property and casualty operations continue to perform well and had one of the best quarters on record. Our Company remains strong and firmly committed to delivering our superior service to policyholders, employers, and agents in these unprecedented times."

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   Six Months Ended
  June 30,   June 30,
(Unaudited; In thousands, except per share data)   2020       2019       2020       2019  
Insurance premiums              
Life and health $ 30,675     $ 30,715     $ 61,303     $ 61,691  
Property and casualty   15,824       14,754       30,746       28,560  
Insurance premiums, net   46,499       45,469       92,049       90,251  
               
Net investment income   1,850       2,313       3,889       4,647  
Realized investment gains, net   -       610       249       1,995  
Unrealized gains (losses) on equity securities, net   1,355       (5,337 )     (7,100 )     1,152  
Other income   33       72       60       100  
               
Total revenue   49,737       43,127       89,147       98,145  
               
Insurance benefits and losses incurred              
Life and health   17,055       24,288       41,104       50,552  
Property and casualty   10,021       9,863       19,555       18,906  
Commissions and underwriting expenses   10,854       11,509       23,480       22,524  
Interest expense   414       545       890       1,091  
Other expense   3,112       2,511       6,064       5,376  
               
Total benefits and expenses   41,456       48,716       91,093       98,449  
               
Income (loss) before income taxes   8,281       (5,589 )     (1,946 )     (304 )
Income tax expense (benefit)   1,749       (1,163 )     (391 )     (40 )
               
Net income (loss) $ 6,532     $ (4,426 )   $ (1,555 )   $ (264 )
               
Earnings (loss) per common share (basic) $ 0.31     $ (0.22 )   $ (0.09 )   $ (0.02 )
Earnings (loss) per common share (diluted) $ 0.30     $ (0.22 )   $ (0.09 )   $ (0.02 )
               
Reconciliation of Non-GAAP Financial Measure              
               
Net income (loss) $ 6,532     $ (4,426 )   $ (1,555 )   $ (264 )
Income tax expense (benefit)   1,749       (1,163 )     (391 )     (40 )
Realized investment gains, net   -       (610 )     (249 )     (1,995 )
Unrealized (gains) losses on equity securities, net   (1,355 )     5,337       7,100       (1,152 )
               
Non-GAAP Operating income (loss) $ 6,926     $ (862 )   $ 4,905     $ (3,451 )
               
       
  June 30,   December 31,        
Selected Balance Sheet Data   2020       2019          
               
Total cash and investments $ 283,254     $ 281,530          
Insurance subsidiaries   276,585       274,730          
Parent and other   6,669       6,800          
Total assets   385,737       377,626          
Insurance reserves and policyholder funds   204,711       201,906          
Debt   33,738       33,738          
Total shareholders' equity   123,894       118,394          
Book value per common share   5.79       5.51          
Statutory capital and surplus              
Life and health   34,735       35,546          
Property and casualty   45,927       45,827          
               

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