Atlantic American Reports Third Quarter Results For 2021

Rhea-AI Summary

Atlantic American Corporation (Nasdaq: AAME) reported a net loss of $0.9 million ($0.05 per diluted share) for Q3 2021, a significant decline from a net income of $1.9 million ($0.09 per diluted share) in Q3 2020. For the first nine months of 2021, the Company posted a net income of $1.6 million compared to $0.3 million in 2020. The loss in Q3 was attributed to a $5.8 million rise in insurance benefits, offset by $1.4 million in unrealized gains on equity securities. The increase in operating loss for both periods was driven by higher claims in the Medicare supplement line.

Positive

• Premium growth in property and casualty operations reached a historic high in Q3 2021.
• Unrealized gains on equity securities increased by $13.3 million for the nine-month period.

Negative

• Q3 2021 net loss of $0.9 million compared to net income of $1.9 million in Q3 2020.
• Operating loss of $2.4 million in Q3 2021, down from operating income of $3.0 million in Q3 2020.
• Increased insurance benefits and losses of $5.8 million in Q3 2021, affecting profitability.

ATLANTA, Nov. 10, 2021 (GLOBE NEWSWIRE) -- Atlantic American Corporation (Nasdaq- AAME) today reported net loss for the three month period ended September 30, 2021 of $0.9 million, or $0.05 per diluted share, as compared to net income of $1.9 million, or $0.09 per diluted share, for the comparable period in 2020. For the nine month period ended September 30, 2021, the Company reported net income of $1.6 million, or $0.06 per diluted share, as compared to net income of $0.3 million, or nil per diluted share, for the comparable period in 2020. The decrease in net income during the third quarter of 2021 was primarily due to a $5.8 million increase in insurance benefits and losses incurred, somewhat offset by an increase in unrealized gains on equity securities of $1.4 million for the third quarter of 2021 as compared to the third quarter of 2020. The increase in net income for the nine month period ended September 30, 2021 was primarily due to an increase of $13.3 million in net unrealized gains on equity securities largely offset by an increase in insurance benefits and losses incurred of $10.1 million during the nine month period ended September 30, 2021 as compared to the third quarter of 2020. 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, the Company reported operating loss (as defined below) of $2.4 million for the three month period ended September 30, 2021 as compared to $3.0 million operating income for the three month period ended September 30, 2020. For the nine month period ended September 30, 2021, the Company reported operating loss of $4.1 million as compared to operating income of $7.9 million in the comparable period in 2020. The decrease in operating income for the three and nine month periods was primarily due to an increase in insurance benefits and losses in the Company’s life and health operations, predominantly as a result of claims within the Medicare supplement line of business. During 2021, utilization of Medicare supplement insurance benefits has increased, returning to historical averages relative to the exceptionally low utilization experienced after the onset of the COVID-19 pandemic when many policyholders were sheltered in place.

Commenting on the results, Hilton H. Howell, Jr., Chairman, President and Chief Executive Officer, stated, “We are pleased to report the premium growth in our property and casualty operation has continued, with a historic high reached for the third quarter. As a result of their selective underwriting, our property and casualty operation continues to perform quite well. While our life and health operation faced a challenging quarter due to increasing demand for health care services, a series of strategic pricing adjustments in our Medicare supplement product is expected to improve profit margins on that business.”
  
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)		2021				2020				2021				2020
Insurance premiums
Life and health	$	28,772			$	30,208			$	87,018			$	91,511
Property and casualty		17,320				14,770				50,297				45,516
Insurance premiums, net		46,092				44,978				137,315				137,027
Net investment income		2,137				1,828				6,516				5,717
Realized investment gains, net		349				183				520				432
Unrealized gains (losses) on equity securities, net		711				(731	)			5,458				(7,831	)
Other income		1				11				13				71
Total revenue		49,290				46,269				149,822				135,416
Insurance benefits and losses incurred
Life and health		23,394				20,088				66,463				61,192
Property and casualty		11,651				9,131				33,557				28,686
Commissions and underwriting expenses		11,927				11,202				36,670				34,682
Interest expense		347				363				1,040				1,253
Other expense		3,264				3,052				10,178				9,116
Total benefits and expenses		50,583				43,836				147,908				134,929
Income (loss) before income taxes		(1,293	)			2,433				1,914				487
Income tax expense (benefit)		(378	)			557				298				166
Net income (loss)	$	(915	)		$	1,876			$	1,616			$	321
Earnings (loss) per common share (basic and diluted)	$	(0.05	)		$	0.09			$	0.06			$	-
Reconciliation of Non-GAAP Financial Measure
Net income (loss)	$	(915	)		$	1,876			$	1,616			$	321
Income tax expense (benefit)		(378	)			557				298				166
Realized investment gains, net		(349	)			(183	)			(520	)			(432	)
Unrealized (gains) losses on equity securities, net		(711	)			731				(5,458	)			7,831
Non-GAAP Operating income (loss)	$	(2,353	)		$	2,981			$	(4,064	)		$	7,886
	September 30,				December 31,
Selected Balance Sheet Data		2021				2020
Total cash and investments	$	300,297			$	298,630
Insurance subsidiaries		295,191				292,478
Parent and other		5,106				6,152
Total assets		404,077				405,187
Insurance reserves and policyholder funds		205,757				198,676
Debt		33,738				33,738
Total shareholders' equity		139,995				145,060
Book value per common share		6.60				6.84
Statutory capital and surplus
Life and health		38,503				42,326
Property and casualty		50,394				50,194

FAQ

What was Atlantic American Corporation's Q3 2021 net income?

Atlantic American Corporation reported a net loss of $0.9 million for Q3 2021.

How did Atlantic American's Q3 2021 performance compare to Q3 2020?

In Q3 2020, Atlantic American posted a net income of $1.9 million, indicating a decline in performance for Q3 2021.

What factors contributed to Atlantic American's losses in Q3 2021?

The increase in insurance benefits and losses incurred, totaling $5.8 million, primarily contributed to the losses.

What was the increase in unrealized gains reported by Atlantic American for 2021?

Atlantic American reported a $13.3 million increase in net unrealized gains on equity securities for the nine months ended September 30, 2021.

What was the operating loss for Atlantic American in Q3 2021?

Atlantic American reported an operating loss of $2.4 million for Q3 2021.