Atlantic American Corporation Reports Third Quarter Results for 2024

Rhea-AI Summary

Atlantic American (AAME) reported a net loss of $2.0 million, or $(0.10) per diluted share, for Q3 2024, compared to net income of $1.8 million in Q3 2023. For the nine-month period, losses reached $4.7 million versus $2.1 million profit last year. The decline was primarily due to increased losses in life, health, and property operations. Q3 premium revenue slightly increased to $43.8 million, while nine-month premium revenue decreased 1.9% to $133.3 million, mainly due to lower Medicare supplement insurance premiums.

Positive

• Q3 premium revenue slightly increased to $43.8 million from $43.7 million YoY
• Strong sales momentum reported in life and health operations
• New charter showing promising market entrance

Negative

• Q3 2024 net loss of $2.0 million versus $1.8 million profit in Q3 2023
• Nine-month net loss of $4.7 million compared to $2.1 million profit in 2023
• Nine-month premium revenue decreased 1.9% to $133.3 million
• Increased losses in group life and Medicare supplement business
• Unfavorable loss experience in automobile liability claims

Insights

Financial Analyst

Atlantic American's Q3 2024 results reveal significant operational challenges. The company reported a $2.0 million net loss ($0.10 per share), a stark contrast to the $1.8 million profit in Q3 2023. The nine-month performance shows a concerning $4.7 million loss compared to a $2.1 million profit in the previous year.

Key concerns include deteriorating underwriting performance in both major segments. The life and health division faces increased losses in group life and Medicare supplement lines, while the property and casualty segment struggles with higher automobile liability claims. Premium revenue remained nearly flat at $43.8 million for Q3, but showed a 1.9% decline over nine months to $133.3 million, primarily due to lower Medicare supplement premiums.

The inflationary pressures in the auto insurance market and persistent claims issues suggest continued near-term earnings pressure, though management's optimism about their new charter and underwriting strategies could provide some relief in future quarters.

ATLANTA, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Atlantic American Corporation (Nasdaq- AAME) today reported net loss of $2.0 million, or $(0.10) per diluted share, for the three month period ended September 30, 2024, compared to net income of $1.8 million, or $0.08 per diluted share, for the three month period ended September 30, 2023. The Company had net loss of $4.7 million, or $(0.24) per diluted share, for the nine month period ended September 30, 2024, compared to net income of $2.1 million, or $0.09 per diluted share, for the nine month period ended September 30, 2023. The increase in net loss for the three month and nine month periods ended September 30, 2024 was primarily the result of unfavorable loss experience in the Company’s life and health operations due to an increase in incurred losses in the group life and Medicare supplement lines of business, as well as unfavorable loss experience in the Company’s property and casualty operations due to the frequency and severity of claims in the automobile liability line of business, compared to the prior year periods.

For the three month period ended September 30, 2024, premium revenue increased slightly to $43.8 million from $43.7 million in the comparable period in 2023. For the nine month period ended September 30, 2024, premium revenue decreased $2.6 million, or 1.9%, to $133.3 million from $135.9 million in the comparable period in 2023. The decrease in premium revenue during the nine month period ended September 30, 2024 was primarily attributable to a decrease in the Medicare supplement insurance premiums in the Company’s life and health operations.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “As we enter the fourth quarter, I am encouraged by the strong sales momentum within our life and health operations. Our newest charter has made a promising entrance into the market, supported by enhanced underwriting and distribution strategies that we believe will drive long-term improvements in our bottom-line performance. At the same time, our property and casualty business continues to navigate a highly inflationary automobile market, though we expect conditions to stabilize and return to historical norms in the near term. While we have work ahead of us, we remain confident in our ability to execute our strategy and are optimistic about the path forward.”
           
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 subsequent Quarterly Reports on Form 10Q, 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								Nine Months Ended
	September 30,								September 30,
(Unaudited; In thousands, except per share data)		2024				2023				2024				2023
Insurance premiums
Life and health	$	27,568			$	27,175			$	81,691			$	84,244
Property and casualty		16,214				16,571				51,636				51,662
Insurance premiums, net		43,782				43,746				133,327				135,906
Net investment income		2,477				2,325				7,449				7,425
Realized investment gains, net		4				-				17				70
Unrealized losses on equity securities, net		(1,746	)			(1,486	)			(1,617	)			(3,367	)
Other income		2				6				8				14
Total revenue		44,519				44,591				139,184				140,048
Insurance benefits and losses incurred
Life and health		16,776				14,937				53,467				48,554
Property and casualty		13,984				11,881				41,025				38,089
Commissions and underwriting expenses		11,490				11,064				35,740				36,830
Interest expense		869				850				2,591				2,407
Other expense		3,854				3,721				12,170				11,631
Total benefits and expenses		46,973				42,453				144,993				137,511
Income (loss) before income taxes		(2,454	)			2,138				(5,809	)			2,537
Income tax expense (benefit)		(456	)			379				(1,129	)			480
Net income (loss)	$	(1,998	)		$	1,759			$	(4,680	)		$	2,057
Earnings (loss) per common share (basic & diluted)	$	(0.10	)		$	0.08			$	(0.24	)		$	0.09
Reconciliation of non-GAAP financial measure
Net income (loss)	$	(1,998	)		$	1,759			$	(4,680	)		$	2,057
Income tax expense (benefit)		(456	)			379				(1,129	)			480
Realized investment gains, net		(4	)			-				(17	)			(70	)
Unrealized losses on equity securities, net		1,746				1,486				1,617				3,367
Non-GAAP operating income (loss)	$	(712	)		$	3,624			$	(4,209	)		$	5,834
	September 30,				December 31,
Selected balance sheet data		2024				2023
Total cash and investments	$	263,750			$	265,368
Insurance subsidiaries		254,931				259,253
Parent and other		8,819				6,115
Total assets		386,989				381,265
Insurance reserves and policyholder funds		218,882				212,422
Debt		37,762				36,757
Total shareholders' equity		105,759				107,275
Book value per common share		4.91				4.99
Statutory capital and surplus
Life and health		31,038				38,299
Property and casualty		50,424				51,774

FAQ

What was Atlantic American's (AAME) Q3 2024 earnings per share?

Atlantic American reported a loss of $(0.10) per diluted share in Q3 2024.

How much did AAME's premium revenue change in Q3 2024?

AAME's premium revenue slightly increased to $43.8 million from $43.7 million in Q3 2023.

What caused AAME's losses in Q3 2024?

The losses were primarily due to unfavorable loss experience in life and health operations, particularly in group life and Medicare supplement lines, as well as increased automobile liability claims.

How did AAME's nine-month premium revenue perform in 2024?

AAME's nine-month premium revenue decreased by $2.6 million (1.9%) to $133.3 million compared to the same period in 2023.