Atlantic American Reports Third Quarter Results

Rhea-AI Summary

Atlantic American Corporation (Nasdaq-AAME) reported a net income of $1.9 million, or $0.09 per diluted share, for the three months ended September 30, 2020, a sign of recovery from a net loss of $1.4 million during the same period in 2019. Year-to-date, net income reached $0.3 million versus a loss of $1.7 million in 2019. Key factors include a $5.5 million decrease in insurance benefits and a significant drop in claims in the Medicare supplement line, attributed to COVID-19 restrictions. The company anticipates strong performance in the property and casualty sector as they celebrate 65 years of Bankers Fidelity Life Insurance.

Positive

• Net income increased to $1.9 million for Q3 2020 from a loss of $1.4 million in Q3 2019.
• Operating income rose by $5.2 million for Q3 2020 compared to Q3 2019.
• Significant decrease in insurance benefits by $5.5 million for Q3 2020.
• Improved loss experience in life and health operations due to reduced Medicare claims.
• Company celebrating 65 years in business with nearly $200 million in annualized gross premium.

Negative

• Unrealized gains on equity securities decreased by $1.7 million for Q3 2020 compared to Q3 2019.
• Net unrealized gains on equity securities declined by $9.9 million year-to-date.

ATLANTA, Nov. 10, 2020 (GLOBE NEWSWIRE) -- Atlantic American Corporation (Nasdaq- AAME) today reported net income for the three month period ended September 30, 2020 of $1.9 million, or $0.09 per diluted share, as compared to net loss of $1.4 million, or $0.07 per diluted share, for the comparable period in 2019. For the nine month period ended September 30, 2020, the Company reported net income of $0.3 million, or nil per diluted share, as compared to net loss of $1.7 million, or $0.10 per diluted share, for the comparable period in 2019. The increase in net income during the third quarter of 2020 was primarily due to a $5.5 million decrease in insurance benefits and losses incurred somewhat offset by a decrease in unrealized gains on equity securities of $1.7 million for the third quarter of 2020 as compared to the third quarter of 2019. The increase in net income for the nine month period ended September 30, 2020 was primarily due to a $14.3 million decrease in insurance benefits and losses incurred mostly offset by a decrease of $9.9 million of net unrealized gains on equity securities during the nine month period ended September 30, 2020 as compared to 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 $5.2 million in the three month period ended September 30, 2020 from the three month period ended September 30, 2019. For the nine month period ended September 30, 2020, operating income increased $13.6 million over the comparable period in 2019. The increase in operating income for the three and nine month periods was primarily due to improved 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. The decrease in 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 and third quarters of 2020 as a result of COVID-19.

Commenting on the results, Hilton H. Howell, Jr., chairman, president and chief executive officer, stated, “I’m proud to announce we are celebrating 65 years in business for our Bankers Fidelity Life Insurance subsidiary and have reached nearly $200 million in annualized gross premium. Rate adequacy in the Medicare supplement block continues to improve, while expansion of our ancillary product lines has promoted further diversification of premium revenue. Our property and casualty operations continue to do extremely well and we anticipate a good close to the current year.”
  
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								Nine Months Ended
	September 30,								September 30,
(Unaudited; In thousands, except per share data)		2020				2019				2020				2019
Insurance premiums
Life and health	$	30,208			$	30,530			$	91,511			$	92,221
Property and casualty		14,770				14,475				45,516				43,035
Insurance premiums, net		44,978				45,005				137,027				135,256
Net investment income		1,828				2,187				5,717				6,834
Realized investment gains (losses), net		183				(430	)			432				1,565
Unrealized gains (losses) on equity securities, net		(731	)			944				(7,831	)			2,096
Other income		11				39				71				139
Total revenue		46,269				47,745				135,416				145,890
Insurance benefits and losses incurred
Life and health		20,088				25,279				61,192				75,831
Property and casualty		9,131				9,440				28,686				28,346
Commissions and underwriting expenses		11,202				11,471				34,682				33,995
Interest expense		363				533				1,253				1,624
Other expense		3,052				2,766				9,116				8,142
Total benefits and expenses		43,836				49,489				134,929				147,938
Income (loss) before income taxes		2,433				(1,744	)			487				(2,048	)
Income tax expense (benefit)		557				(352	)			166				(392	)
Net income (loss)	$	1,876			$	(1,392	)		$	321			$	(1,656	)
Earnings (loss) per common share (basic and diluted)	$	0.09			$	(0.07	)		$	-			$	(0.10	)
Reconciliation of Non-GAAP Financial Measure
Net income (loss)	$	1,876			$	(1,392	)		$	321			$	(1,656	)
Income tax expense (benefit)		557				(352	)			166				(392	)
Realized investment (gains) losses, net		(183	)			430				(432	)			(1,565	)
Unrealized (gains) losses on equity securities, net		731				(944	)			7,831				(2,096	)
Non-GAAP Operating income (loss)	$	2,981			$	(2,258	)		$	7,886			$	(5,709	)
	September 30,				December 31,
Selected Balance Sheet Data		2020				2019
Total cash and investments	$	283,597			$	281,530
Insurance subsidiaries		277,516				274,730
Parent and other		6,081				6,800
Total assets		384,952				377,626
Insurance reserves and policyholder funds		201,064				201,906
Debt		33,738				33,738
Total shareholders' equity		128,015				118,394
Book value per common share		6.00				5.51
Statutory capital and surplus
Life and health		35,725				35,546
Property and casualty		46,397				45,827

FAQ

What are the Q3 2020 financial results for Atlantic American Corporation (AAME)?

Atlantic American Corporation reported a net income of $1.9 million, or $0.09 per diluted share, for Q3 2020.

How did Atlantic American Corporation's net income change year-over-year?

Net income increased from a loss of $1.4 million in Q3 2019 to a profit of $1.9 million in Q3 2020.

What caused the increase in Atlantic American Corporation's operating income for 2020?

The increase in operating income was primarily due to a reduction in insurance benefits and improved loss experience in the Medicare supplement segment.

What is the status of unrealized gains for Atlantic American Corporation in 2020?

Unrealized gains on equity securities decreased by $1.7 million in Q3 2020 compared to Q3 2019.

How is Atlantic American Corporation performing in its Medicare supplement line?

The company observed a significant decrease in claims in the Medicare supplement line, contributing to improved financial results.