Atlantic American Corporation Reports Second Quarter Results for 2024

Rhea-AI Summary

Atlantic American (Nasdaq: AAME) reported a net loss of $0.7 million, or $(0.04) per diluted share, for Q2 2024, compared to a net income of $1.7 million in Q2 2023. The company's six-month net loss increased to $2.7 million in 2024 from $0.3 million in 2023. The losses were primarily due to unfavorable loss experience in both life and health operations and property and casualty operations. Operating income decreased by $2.8 million in Q2 and $5.7 million for the six-month period. Despite challenges, CEO Hilton H. Howell Jr. expressed optimism about recent product launches and the company's long-term strategy.

Positive

• Recent product launches in key states position the company for a strong sales season
• Property and casualty division demonstrates resilience in a softening market
• Strategic investments in technology and talent are expected to improve future performance

Negative

• Net loss of $0.7 million in Q2 2024 compared to net income of $1.7 million in Q2 2023
• Six-month net loss increased to $2.7 million in 2024 from $0.3 million in 2023
• Operating income decreased by $2.8 million in Q2 and $5.7 million for the six-month period
• Unfavorable loss experience in life and health operations, particularly in group life and Medicare supplement lines
• Increased frequency and severity of claims in the automobile liability line of business

Insights

Financial Analyst

Atlantic American 's Q2 2024 results reveal significant challenges. The company reported a $0.7 million net loss ($0.04 per share), compared to a $1.7 million profit in Q2 2023. This stark reversal is primarily due to unfavorable loss experiences in both life & health and property & casualty segments.

Key concerns include:

• Operating income decreased by $2.8 million in Q2 and $5.7 million for H1 2024
• Increased incurred losses in group life and Medicare supplement lines
• Higher frequency and severity of claims in automobile liability

While management remains optimistic about recent product launches and strategic investments, these results suggest underlying operational issues that need addressing. Investors should closely monitor the company's ability to improve underwriting performance and navigate the softening market conditions.

Insurance Industry Expert

The Q2 2024 results for Atlantic American highlight systemic challenges across multiple insurance lines. The unfavorable loss experience in both life & health and property & casualty segments points to potential issues in risk assessment and pricing strategies.

Of particular concern:

• Increased losses in Medicare supplement business, suggesting possible mispricing or demographic shifts
• Higher claims in automobile liability, indicating potential underwriting or risk selection issues

While management's focus on technology investments and new product launches is commendable, the immediate priority should be on reassessing risk models and improving underwriting discipline. The company's ability to adapt to these challenges during the upcoming annual enrollment period will be important for its near-term performance and long-term sustainability in a competitive insurance market.

ATLANTA, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Atlantic American Corporation (Nasdaq- AAME) today reported net loss of $0.7 million, or $(0.04) per diluted share, for the three month period ended June 30, 2024, compared to net income of $1.7 million, or $0.08 per diluted share, for the three month period ended June 30, 2023. The Company had net loss of $2.7 million, or $(0.14) per diluted share, for the six month period ended June 30, 2024, compared to net income of $0.3 million, or $0.00 per diluted share, for the six month period ended June 30, 2023. The increase in net loss for the three month and six month periods ended June 30, 2024 was primarily the result of unfavorable loss experience in the Company’s life and health operations, as well as in the Company’s property and casualty operations, compared to the prior year periods.

Operating income decreased $2.8 million in the three month period ended June 30, 2024 from the three month period ended June 30, 2023. For the six month period ended June 30, 2024, operating income decreased $5.7 million from the comparable period in 2023. The decrease in operating income for the three month and six month periods ended June 30, 2024 was primarily the result of unfavorable loss experience in the life and health operations due to an increase in incurred losses in the group life and Medicare supplement lines of business. Also contributing to the decrease in operating income was unfavorable loss experience in the property and casualty operations due to the frequency and severity of claims in the automobile liability line of business.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “Although this year has presented challenges in our life and health operations, we believe our strategic investments in technology and talent will provide the foundation for future performance. We believe our recent product launches in several key states position us well for a strong sales season during the upcoming annual enrollment period. Additionally, our property and casualty division has demonstrated remarkable resilience in a softening market, consistently writing profitable business. We remain committed to our long-term strategy and are optimistic about the opportunities that lie ahead.”         

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, Bankers Fidelity Assurance Company and Atlantic Capital Life 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). We define operating income (loss) as net income (loss) excluding: (i) income tax expense (benefit); (ii) realized investment (gains) losses, net; and (iii) unrealized (gains) losses on equity securities, net. 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 (benefit), 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 forward-looking statements: 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, including the Company’s ability to remediate the identified material weakness in its internal control over financial reporting as described in the Company’s most recent Annual Report on Form 10-K and those other risks and uncertainties detailed in statements and reports that the Company files from time to time 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)	2024				2023				2024				2023
Insurance premiums
Life and health	$	27,449			$	28,180			$	54,123			$	57,069
Property and casualty		17,544				17,880				35,422				35,091
Insurance premiums, net		44,993				46,060				89,545				92,160
Net investment income		2,416				2,559				4,972				5,100
Realized investment gains, net		13				70				13				70
Unrealized gains (losses) on equity securities, net		243				494				129				(1,881	)
Other income		3				5				6				8
Total revenue		47,668				49,188				94,665				95,457
Insurance benefits and losses incurred
Life and health		17,579				15,817				36,691				33,617
Property and casualty		14,228				13,548				27,041				26,208
Commissions and underwriting expenses		11,584				12,848				24,250				25,766
Interest expense		867				807				1,722				1,557
Other expense		4,259				3,951				8,316				7,910
Total benefits and expenses		48,517				46,971				98,020				95,058
Income (loss) before income taxes		(849	)			2,217				(3,355	)			399
Income tax expense (benefit)		(165	)			473				(673	)			101
Net income (loss)	$	(684	)		$	1,744			$	(2,682	)		$	298
Earnings (loss) per common share (basic & diluted)	$	(0.04	)		$	0.08			$	(0.14	)		$	-
Reconciliation of non-GAAP financial measure
Net income (loss)	$	(684	)		$	1,744			$	(2,682	)		$	298
Income tax expense (benefit)		(165	)			473				(673	)			101
Realized investment gains, net		(13	)			(70	)			(13	)			(70	)
Unrealized (gains) losses on equity securities, net		(243	)			(494	)			(129	)			1,881
Non-GAAP operating income (loss)	$	(1,105	)		$	1,653			$	(3,497	)		$	2,210
	June 30,				December 31,
Selected balance sheet data	2024				2023
Total cash and investments	$	256,525			$	265,368
Insurance subsidiaries		248,857				259,253
Parent and other		7,668				6,115
Total assets		386,007				381,265
Insurance reserves and policyholder funds		225,252				212,422
Debt		37,762				36,757
Total shareholders' equity		100,672				107,275
Book value per common share		4.67				4.99
Statutory capital and surplus
Life and health		32,689				38,299
Property and casualty		51,967				51,774

FAQ

What was Atlantic American 's (AAME) net loss for Q2 2024?

Atlantic American (AAME) reported a net loss of $0.7 million, or $(0.04) per diluted share, for Q2 2024.

How did AAME's Q2 2024 results compare to Q2 2023?

AAME's Q2 2024 results showed a net loss of $0.7 million compared to a net income of $1.7 million in Q2 2023, representing a significant decrease in performance.

What factors contributed to AAME's losses in Q2 2024?

The losses were primarily due to unfavorable loss experience in both life and health operations and property and casualty operations, particularly in group life, Medicare supplement, and automobile liability lines of business.

How much did AAME's operating income decrease in Q2 2024?

AAME's operating income decreased by $2.8 million in Q2 2024 compared to Q2 2023.

What positive outlook did AAME's CEO provide despite the Q2 2024 losses?

CEO Hilton H. Howell Jr. expressed optimism about recent product launches in key states, the resilience of the property and casualty division, and the potential benefits of strategic investments in technology and talent for future performance.