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What changed in ATLANTIC AMERICAN CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ATLANTIC AMERICAN CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+156 added−145 removedSource: 10-K (2025-03-25) vs 10-K (2024-04-01)

Top changes in ATLANTIC AMERICAN CORP's 2024 10-K

156 paragraphs added · 145 removed · 128 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+12 added−5 removed84 unchanged
Biggest changeChanges in assumptions may be made from one issue year to another to reflect actual experience. Actual future experience that deviates significantly from the assumptions, or actual results that differ significantly from our estimates, could have a materially adverse effect on our liquidity, results of operations, or financial condition.
Biggest changeActual future experience that deviates significantly from the assumptions, or actual results that differ significantly from our estimates, could have a materially adverse effect on our liquidity, results of operations, or financial condition. 6 Table of Contents Liabilities for future benefits on life insurance policies and accident and health insurance policies are based on assumed investment yields, mortality rates, disablement rates, benefit utilization rates, and lapse rates after giving effect to possible risks of unexpected adverse claim experience.
Current limits per occurrence within the reinsurance treaties are as follows: Inland marine and commercial automobile physical damage - $225,000 excess of $125,000 retention; and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $150,000 to $500,000 depending on the account.
Limits per occurrence within the reinsurance treaties are as follows: Inland marine and commercial automobile physical damage - $225,000 excess of $125,000 retention; and automobile liability and general liability - excess coverage of $2.0 million less retentions that may vary from $150,000 to $500,000 depending on the account.
These reserves are calculated to satisfy policy and contract obligations as they are projected to come due. Reserves for insurance policies are calculated using assumptions for interest rates, mortality rates, disablement rates, benefit utilization rates, and lapse rates. These assumptions vary by the product type, the year the policy was issued, and certain policyholder demographic information.
These reserves are calculated to satisfy policy and contract obligations as they are projected to come due. Reserves for insurance policies are calculated using assumptions for interest rates, mortality rates, disablement rates, benefit utilization rates, and lapse rates. These assumptions vary by the product type, the year the policy was issued, and policyholder demographic information.
Bankers Fidelity has also entered into a reinsurance contract ceding excess new Medicare Supplement business to General Re Life Corporation. Ceding thresholds are set annually. During 2023, the liability of the reinsurer was 50% of all new Medicare Supplement business issued by the Company on amounts up to a maximum retention of $15.0 million of annualized premium.
Bankers Fidelity has also entered into a reinsurance contract ceding excess new Medicare Supplement business to General Re Life Corporation. Ceding thresholds are set annually. During 2024, the liability of the reinsurer was 50% of all new Medicare Supplement business issued by the Company on amounts up to a maximum retention of $15.0 million of annualized premium.
The RBC calculation determines the amount of adjusted capital needed by a company to avoid regulatory action. “Authorized Control Level Risk-Based Capital” (“ACL”) is calculated, and if a company’s adjusted capital is 200% or lower than ACL, it is subject to regulatory action. At December 31, 2023, the Company’s insurance subsidiaries’ RBC levels exceeded the required regulatory levels.
The RBC calculation determines the amount of adjusted capital needed by a company to avoid regulatory action. “Authorized Control Level Risk-Based Capital” (“ACL”) is calculated, and if a company’s adjusted capital is 200% or lower than ACL, it is subject to regulatory action. At December 31, 2024, the Company’s insurance subsidiaries’ RBC levels exceeded the required regulatory levels.
Executive Officers of the Registrant The table and information below set forth, for each current executive officer of the Company, his name, age (as of March 1, 2024), positions with the Company and business experience for the past five years, as well as any prior service to the Company.
Executive Officers of the Registrant The table and information below set forth, for each current executive officer of the Company, his name, age (as of March 1, 2025), positions with the Company and business experience for the past five years, as well as any prior service to the Company.
Products offered by Bankers Fidelity include ordinary life insurance, Medicare supplement and other accident and health insurance products. 4 Table of Contents Life Insurance products include non-participating, individual and group whole life insurance policies with a variety of riders and options.
Products offered by Bankers Fidelity include ordinary life insurance, Medicare supplement and other accident and health insurance products. 2 Table of Contents Life Insurance products include non-participating, individual and group whole life insurance policies with a variety of riders and options.
Bankers Fidelity Life Insurance Company and its wholly-owned subsidiary, Bankers Fidelity Assurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M. Best. Regulation Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business.
Bankers Fidelity Life Insurance Company and its wholly-owned subsidiaries, Bankers Fidelity Assurance Company and Atlantic Capital Life Assurance Company, are each, as of the date of this report, rated “A-” (Excellent) by A.M. Best. Regulation Like all domestic insurance companies, the Company’s insurance subsidiaries are subject to regulation and supervision in the jurisdictions in which they do business.
Substantially all revenue other than that in the corporate and other segment is from external sources. For more information on segments, see Note 16 of Notes to Consolidated Financial Statements.
Substantially all revenue other than that in the corporate and other segment is from external sources. For more information on segments, see Note 17 of Notes to Consolidated Financial Statements.
The estimated liability is periodically reviewed and updated, and changes to the estimated liability are recorded in the statement of operations in the period in which such changes become known. For long-tail lines of business, the emergence of paid losses and case reserves is less credible in the early periods, and accordingly may not be indicative of ultimate losses.
The estimated liability is periodically reviewed and updated, and changes to the estimated liability are recorded in the statement of operations in the period in which such changes become known. 5 Table of Contents For long-tail lines of business, the emergence of paid losses and case reserves is less credible in the early periods, and accordingly may not be indicative of ultimate losses.
Bankers Fidelity has established itself as a trusted carrier of choice for its customers providing quality and sustainability for over 65 years. In order to compete, Bankers Fidelity actively seeks opportunities in niche markets, developing long-term relationships with a select number of independent marketing organizations.
Bankers Fidelity has established itself as a trusted carrier of choice for its customers providing quality and sustainability for over 65 years. 7 Table of Contents In order to compete, Bankers Fidelity actively seeks opportunities in niche markets, developing long-term relationships with a select number of independent marketing organizations.
As the Company continues to expand its geographical footprint with agents and products, one of its main objectives is to have a healthy mix of all of its product lines nationwide. 5 Table of Contents Differentiation . Bankers Fidelity prides itself on the quality of customer service it offers to policyholders and agents.
As the Company continues to expand its geographical footprint with agents and products, one of its main objectives is to have a healthy mix of all of its product lines nationwide. Differentiation . Bankers Fidelity prides itself on the quality of customer service it offers to policyholders and agents.
IBNR reserves for prior accident years are similarly determined, again relying on an indicated, historical development pattern for reported losses. 7 Table of Contents Based on the results of regular reserve estimate reviews, the Company determines the appropriate reserve adjustment, if any, to record in each period.
IBNR reserves for prior accident years are similarly determined, again relying on an indicated, historical development pattern for reported losses. Based on the results of regular reserve estimate reviews, the Company determines the appropriate reserve adjustment, if any, to record in each period.
Certain fixed maturities do not have publicly quoted prices, and are carried at estimated fair value as determined by management. Total amortized cost of fixed maturities was $238.6 million as of December 31, 2023 and $236.8 million as of December 31, 2022. (2) Equity securities are carried on the balance sheet at estimated fair value.
Certain fixed maturities do not have publicly quoted prices, and are carried at estimated fair value as determined by management. Total amortized cost of fixed maturities was $236.3 million as of December 31, 2024 and $238.6 million as of December 31, 2023. (2) Equity securities are carried on the balance sheet at estimated fair value.
Name Age Positions with the Company Director or Officer Since Hilton H. Howell, Jr. 61 Chairman of the Board, President & CEO 1992 J. Ross Franklin 46 Vice President, CFO and Corporate Secretary 2017 Officers are elected annually and serve at the discretion of the board of directors. Mr.
Name Age Positions with the Company Director or Officer Since Hilton H. Howell, Jr. 62 Chairman of the Board, President & CEO 1992 J. Ross Franklin 47 Vice President, CFO and Corporate Secretary 2017 Officers are elected annually and serve at the discretion of the board of directors. Mr.
Total cost of equity securities was $4.9 million as of December 31, 2023 and 2022. (3) Other invested assets are accounted for using the equity method. Total cost of other invested assets was $7.0 million as of December 31, 2023 and $5.6 million as of December 31, 2022. (4) Policy loans are valued at unpaid principal balances.
Total cost of equity securities was $4.9 million as of December 31, 2024 and 2023. (3) Other invested assets are accounted for using the equity method. Total cost of other invested assets was $7.9 million as of December 31, 2024 and $7.0 million as of December 31, 2023. (4) Policy loans are valued at unpaid principal balances.
Management does not anticipate regulatory action as a result of the 2023 IRIS ratio results for the insurance subsidiaries. 10 Table of Contents Risk-Based Capital Risk-based capital (“RBC”) is a metric used by ratings agencies and regulators as an early warning tool to identify weakly capitalized companies for the purpose of initiating further regulatory action.
Management does not anticipate regulatory action as a result of the 2024 IRIS ratio results for the insurance subsidiaries. Risk-Based Capital Risk-based capital (“RBC”) is a metric used by ratings agencies and regulators as an early warning tool to identify weakly capitalized companies for the purpose of initiating further regulatory action.
As of December 31, 2023, $8.3 million of the $814.2 million of life insurance in force at Bankers Fidelity was reinsured under a combination of coinsurance and yearly renewable term agreements. Certain prior year reinsurance agreements also remain in force although they no longer provide reinsurance for new business.
As of December 31, 2024, $7.2 million of the $975.8 million of life insurance in force at Bankers Fidelity was reinsured under a combination of coinsurance and yearly renewable term agreements. Certain prior year reinsurance agreements also remain in force although they no longer provide reinsurance for new business.
He is also Executive Chairman and Chief Executive Officer of Gray Television, Inc. 12 Table of Contents Mr. Franklin has been Vice President, Chief Financial Officer and Corporate Secretary of the Company since November 2017, and prior thereto served as Interim Chief Financial Officer from August 2017 to November 2017.
He is also Executive Chairman and Chief Executive Officer of Gray Media, Inc. Mr. Franklin has been Vice President, Chief Financial Officer and Corporate Secretary of the Company since November 2017, and prior thereto served as Interim Chief Financial Officer from August 2017 to November 2017.
As of December 31, 2023, the Company was in compliance with all such requirements, and securities with an amortized cost of $14.6 million were on deposit either directly with various state authorities or with third parties pursuant to various custodial agreements on behalf of the Company’s insurance subsidiaries.
As of December 31, 2024, the Company was in compliance with all such requirements, and securities with an amortized cost of $15.1 million were on deposit either directly with various state authorities or with third parties pursuant to various custodial agreements on behalf of the Company’s insurance subsidiaries.
We believe that our ability to attract and retain highly motivated and skilled employees with diverse backgrounds and experiences is critical to our continued success. We also believe the structure of our compensation program is aligned with the interests of our shareholders and serves to reward the performance of our employees.
Of the 156 people, 153 were full-time. We believe that our ability to attract and retain highly motivated and skilled employees with diverse backgrounds and experiences is critical to our continued success. We also believe the structure of our compensation program is aligned with the interests of our shareholders and serves to reward the performance of our employees.
As an experienced writer of insurance policies for certain governmental programs, the company actively pursues this market on a direct basis. Much of this business is priced by means of competitive bid situations.
American Southern also solicits business from governmental entities. As an experienced writer of insurance policies for certain governmental programs, the company actively pursues this market on a direct basis. Much of this business is priced by means of competitive bid situations.
Accordingly, $0.8 million of the Company’s $1.5 million of new annualized Medicare Supplement premium was ceded.
Accordingly, $5.1 million of the Company’s $10.1 million of new annualized Medicare Supplement premium was ceded.
At December 31, 2023, approximately 73% of the losses and claims reserves related to property and casualty and approximately 27% related to life and health. The Company’s property and casualty operations incur losses which may take extended periods of time to evaluate and settle.
At December 31, 2024, approximately 72% of the losses and claims reserves related to property and casualty and approximately 28% related to life and health. The Company’s property and casualty operations incur losses which may take extended periods of time to evaluate and settle.
Actuarial best estimates do not necessarily represent the midpoint value determined using the various actuarial methods; however, such estimates will fall between the estimated low and high end reserve values. The range of estimates developed in connection with the December 31, 2023 actuarial review indicated that reserves could be as much as 16.9% lower or as much as 18.3% higher.
Actuarial best estimates do not necessarily represent the midpoint value determined using the various actuarial methods; however, such estimates will fall between the estimated low and high end reserve values. The range of estimates developed in connection with the December 31, 2024 actuarial review indicated that reserves could be as much as 5.2% lower or as much as 25.0% higher.
Upon notification of an occurrence purportedly giving rise to a claim, a claim file is established. The claims department then conducts a preliminary investigation, determines whether an insurable event has occurred and, if so, updates the file for the findings and any required reserve adjustments. Independent adjusters and appraisers are frequently utilized to service claims which require on-site inspections.
The claims department then conducts a preliminary investigation, determines whether an insurable event has occurred and, if so, updates the file for the findings and any required reserve adjustments. Independent adjusters and appraisers are frequently utilized to service claims which require on-site inspections.
Health insurance products, primarily Medicare supplement insurance, accounted for 83% of Bankers Fidelity’s net earned premiums in 2023 while life insurance, including both whole and term life insurance policies, accounted for the balance. In terms of the number of policies written in 2023, 63% were health insurance policies and 37% were life insurance policies.
Health insurance products, primarily Medicare supplement insurance, accounted for 82% of Bankers Fidelity’s net earned premiums in 2024 while life insurance, including both whole and term life insurance policies, accounted for the balance. In terms of the number of policies written in 2024, 69% were health insurance policies and 31% were life insurance policies.
For the year ended December 31, 2023, Bankers Fidelity Assurance Company had three ratios outside the usual range, primarily as a result of net loss for the year, certain surplus ratios and Non-admitted Assets to Admitted Assets.
Bankers Fidelity Assurance Company (“BFAC”) had three ratios outside the normal range, primarily the result of a net loss for the year, certain surplus ratios and non-admitted assets to admitted assets.
Investments Investment income represents a significant portion of the Company’s operating and total income. Insurance company investments are subject to state insurance laws and regulations which limit the concentration and types of investments. The following table provides information on the Company’s investments as of the dates indicated.
Investments Investment income represents a significant portion of the Company’s operating and total income. Insurance company investments are subject to state insurance laws and regulations which limit the concentration and types of investments.
The following table summarizes, for the periods indicated, the allocation of American Southern’s net earned premiums from each of its principal product lines: Year Ended December 31, 2023 2022 (In thousands) Automobile liability $ 38,821 $ 33,981 Automobile physical damage 15,046 21,069 General liability 5,758 5,871 Surety 6,303 6,039 Other lines 2,515 3,316 Total $ 68,443 $ 70,276 Life and Health Operations Bankers Fidelity comprises the life and health operations of the Company and offers a variety of life and supplemental health products.
The following table summarizes, for the periods indicated, the allocation of American Southern’s net earned premiums from each of its principal product lines: Year Ended December 31, 2024 2023 (In thousands) Automobile liability $ 39,788 $ 38,821 Automobile physical damage 13,464 15,046 General liability 5,990 5,758 Surety 5,809 6,303 Other lines 2,638 2,515 Total $ 67,689 $ 68,443 Life and Health Operations Bankers Fidelity comprises the life and health operations of the Company and offers a variety of life and supplemental health products.
Contracting as independent agents enables Bankers Fidelity to effectively expand or contract its sales force without incurring significant expense. Bankers Fidelity had approximately 4,639 licensed agents contracted in both the individual and group divisions as of December 31, 2023. During 2023, approximately 454 of these licensed agents wrote policies on behalf of Bankers Fidelity.
Contracting as independent agents enables Bankers Fidelity to effectively expand or contract its sales force without incurring significant expense. Bankers Fidelity had approximately 6,243 licensed agents contracted in both the individual and group divisions as of December 31, 2024.
Insurers authorized to transact business in these jurisdictions are generally subject to assessments of up to 4% of annual direct premiums written in that jurisdiction to pay such claims, if any. The likelihood and amount of any future assessments cannot be estimated until an insolvency has occurred.
Insurers authorized to transact business in these jurisdictions are generally subject to assessments of up to 4% of annual direct premiums written in that jurisdiction to pay such claims, if any.
Results of the Company’s investment portfolio for periods shown were as follows: Year Ended December 31, 2023 2022 (Dollars in thousands) Average investments (1) $ 275,995 $ 270,636 Net investment income 10,058 9,932 Average yield on investments 3.6 % 3.7 % Realized investment gains, net 70 30 (1) Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters. 11 Table of Contents The Company engages a global investment management firm serving the insurance industry to manage the Company’s investment portfolios.
Results of the Company’s investment portfolio for periods shown were as follows: Year Ended December 31, 2024 2023 (Dollars in thousands) Average investments (1) $ 280,420 $ 275,995 Net investment income 9,791 10,058 Average yield on investments 3.5 % 3.6 % Realized investment gains, net 1,210 70 (1) Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters.
Best’s financial strength ratings, which may be revised or revoked at any time, follow a graduated scale of rating categories and notches ranging from A++ (Superior) to F (in liquidation). A.M.
Best’s financial strength ratings, which may be revised or revoked at any time, follow a graduated scale of rating categories and notches ranging from A++ (Superior) to F (in liquidation). A.M. Best’s ratings are based on a detailed analysis of the statutory financial condition and operations of an insurance company compared to the industry in general. American Southern.
Management’s recent investment strategy has been a continued focus on quality and diversification, while improving the overall risk versus return profile of the portfolio. Human Capital The Company and its subsidiaries employed 155 people at December 31, 2023. Of the 155 people, 154 were full-time.
The Company engages a global investment management firm serving the insurance industry to manage the Company’s investment portfolios. Management’s recent investment strategy has been a continued focus on quality and diversification, while improving the overall risk versus return profile of the portfolio. Human Capital The Company and its subsidiaries employed 156 people at December 31, 2024.
The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines: Year Ended December 31, 2023 2022 (In thousands) Life insurance $ 18,584 $ 15,805 Medicare supplement 77,425 86,970 Other accident and health 14,373 12,389 Total health insurance 91,798 99,359 Total $ 110,382 $ 115,164 Marketing Property and Casualty Operations A portion of American Southern’s business is marketed through a small number of specialized, experienced independent agents.
The following table summarizes, for the periods indicated, the allocation of Bankers Fidelity’s net earned premiums from each of its principal product lines: Year Ended December 31, 2024 2023 (In thousands) Group life $ 14,700 $ 12,431 Individual life 5,594 6,153 Total life 20,294 18,584 Medicare supplement 71,867 77,424 Group accident and health 11,390 7,583 Other individual health 7,491 6,791 Total health 90,748 91,798 Total $ 111,042 $ 110,382 Marketing Property and Casualty Operations A portion of American Southern’s business is marketed through a small number of specialized, experienced independent agents.
The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement. 8 Table of Contents Property and Casualty Operations American Southern’s basic reinsurance treaties generally cover all claims in excess of specified per occurrence limitations.
The reinsurer assumes the exposure in return for a portion of the premiums. The ceding of insurance does not legally discharge the insurer from primary liability for the full amount of the policies written by it, and the ceding company will incur a loss if the reinsurer fails to meet its obligations under the reinsurance agreement.
Government agencies and authorities $ 50,059 21.1 % $ 44,412 19.4 % States, municipalities and political subdivisions 8,106 3.4 9,187 4.1 Public utilities 9,530 4.0 10,284 4.5 All other corporate bonds 150,319 63.4 144,623 63.2 Redeemable preferred stock 205 0.1 223 0.1 Total fixed maturities (1) 218,219 92.0 208,729 91.3 Equity securities (2) 9,413 4.0 11,562 5.0 Other invested assets (3) 6,381 2.8 5,386 2.4 Policy loans (4) 1,778 0.7 1,759 0.8 Real estate 38 0.0 38 0.0 Investments in unconsolidated trusts 1,238 0.5 1,238 0.5 Total investments $ 237,067 100.0 % $ 228,712 100.0 % (1) Fixed maturities are carried on the balance sheet at estimated fair value.
Government agencies and authorities $ 22,251 9.7 % $ 22,849 9.6 % Loan backed and structured securities 22,290 9.7 27,210 11.5 States, municipalities and political subdivisions 7,623 3.3 8,106 3.4 All other corporate bonds 160,261 69.6 159,849 67.4 Redeemable preferred stock 187 0.1 205 0.1 Total fixed maturities (1) 212,612 92.4 218,219 92.0 Equity securities (2) 7,900 3.4 9,413 4.0 Other invested assets (3) 6,616 3.0 6,381 2.8 Policy loans (4) 1,722 0.7 1,778 0.7 Real estate 38 0.0 38 0.0 Investments in unconsolidated trusts 1,238 0.5 1,238 0.5 Total investments $ 230,126 100.0 % $ 237,067 100.0 % (1) Fixed maturities are carried on the balance sheet at estimated fair value.
Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions by participating in a profit sharing arrangement that is directly linked to the profitability of the underlying business. American Southern also solicits business from governmental entities.
American Southern’s agent selection process is actively managed by internal marketing personnel with oversight from management. Senior management carefully reviews all new programs prior to acceptance. Most of American Southern’s agents are paid an up-front commission with the potential for additional commissions by participating in a profit sharing arrangement that is directly linked to the profitability of the underlying business.
Best’s ratings are based on a detailed analysis of the statutory financial condition and operations of an insurance company compared to the industry in general. 9 Table of Contents American Southern. American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this report, rated “A” (Excellent) by A.M. Best. Bankers Fidelity.
American Southern Insurance Company and its wholly-owned subsidiary, American Safety Insurance Company, are each, as of the date of this report, rated “A” (Excellent) by A.M. Best. Bankers Fidelity.
Accordingly, the Company’s policyholder and claims services seek to offer expeditious disposition of service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts. The Company also utilizes an automatic call distribution system designed to ensure that inbound calls to customer service support groups are processed efficiently.
Additionally, the Company believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries. Accordingly, the Company’s policyholder and claims services seek to offer expeditious disposition of service requests by providing toll-free access for all customers, 24-hour claim reporting services, and direct computer links with some of its largest accounts.
Financial Information by Industry Segment American Southern and Bankers Fidelity each operate with relative autonomy and each company is evaluated on its individual performance. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income.
Our CODM is the Company’s Chairman, President and Chief Executive Officer. American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market. Each segment derives revenue from the collection of premiums, as well as from investment income.
The spread of risk is also reviewed which analyzes the content of the employees within the group which includes the spread of gender, ages, salaries and occupations. This information is used to quote an appropriate benefits package, pricing, waiting periods and rates for the group entity.
The spread of risk is also reviewed which analyzes the content of the employees within the group which includes the spread of gender, ages, salaries and occupations.
The net loss at Bankers Fidelity Assurance Company is primarily related to federal income taxes incurred which resulted in a corresponding decrease in surplus levels for the year as well as a growing Deferred Tax Asset which is a Non-admitted. Atlantic Capital Life Assurance Company had one ratio outside the normal range, Change in Asset Mix.
The net loss is primarily related to federal income taxes incurred which resulted in a corresponding decrease in surplus levels for the year as well as a deferred tax asset which is non-admitted. The surplus relief ratio for BFAC triggered because the ratio of commission & expense allowances to capital exceeds 100%.
December 31, 2023 2022 Amount Percent Amount Percent (Dollars in thousands) Fixed maturities: U.S. Treasury securities and obligations of U.S.
The following table provides information on the Company’s investments as of the dates indicated. 9 Table of Contents December 31, 2024 2023 Amount Percent Amount Percent (Dollars in thousands) Fixed maturities: U.S. Treasury securities and obligations of U.S.
NAIC Ratios The National Association of Insurance Commissioners (the “NAIC”) was established to, among other things, provide guidelines to assess the financial strength of insurance companies for state regulatory purposes. The NAIC conducts annual reviews of the financial data of insurance companies primarily through the application of financial ratios prepared on a statutory basis.
The NAIC conducts annual reviews of the financial data of insurance companies primarily through the application of financial ratios prepared on a statutory basis.
Options depend on job responsibilities and may include flexible work schedules, paid time off, paid holidays and part-time employment. We offer tuition reimbursement along with budgeted professional development opportunities in order to foster professional growth and to increase skillsets.
Options depend on job responsibilities and may include flexible work schedules, paid time off, paid holidays and part-time employment.
In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer. The reinsurer assumes the exposure in return for a portion of the premiums.
Reinsurance The Company’s insurance subsidiaries from time-to-time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses. In a reinsurance transaction, an insurance company transfers, or “cedes,” a portion or all of its exposure on insurance policies to a reinsurer.
Bankers Fidelity’s marketing and distribution strategy revolves around five pillars: Diversification, Differentiation, Quality, Retention and Profitability. Diversification .
During 2024, approximately 1,429 of these licensed agents wrote policies on behalf of Bankers Fidelity. 3 Table of Contents Bankers Fidelity’s marketing and distribution strategy revolves around five pillars: Diversification, Differentiation, Quality, Retention and Profitability. Diversification .
Policyholder and Claims Services The Company believes that prompt, efficient policyholder and claims services are essential to its continued success in marketing its insurance products (see “Competition”). Additionally, the Company believes that its insureds are particularly sensitive to claims processing time and to the accessibility of qualified staff to answer inquiries.
This information is used to quote an appropriate benefits package, pricing, waiting periods and rates for the group entity. 4 Table of Contents Policyholder and Claims Services The Company believes that prompt, efficient policyholder and claims services are essential to its continued success in marketing its insurance products (see “Competition”).
Operational data generated from this system allows management to further refine ongoing client service programs and service representative training modules. 6 Table of Contents Property and Casualty Operations American Southern controls its claims costs by utilizing an in-house staff of claims supervisors to investigate, verify, negotiate and settle claims.
Property and Casualty Operations American Southern controls its claims costs by utilizing an in-house staff of claims supervisors to investigate, verify, negotiate and settle claims. Upon notification of an occurrence purportedly giving rise to a claim, a claim file is established.
Other Accident and Health Insurance coverages include several individual and group policies providing for the payment of standard benefits in connection with the treatment of diagnosed cancer and other critical illnesses, as well as a number of other policies providing short-term nursing facility care, accident only, hospital indemnity and disability coverages.
These policies provide insurance coverage for certain expenses not covered by the Medicare program, including but not limited to copayments and deductibles. Other Accident and Health Insurance coverages include several individual and group policies providing for the payment of benefits that help defray the health care and other costs associated with the treatment of cancer and other critical illnesses.
Removed
Policy premiums are dependent upon a number of factors, including issue age, level of coverage and selected riders or options.
Added
Policy premiums depend on a number of factors, including but not limited to issue age, level of coverage and any selected riders or options. Medicare Supplement Insurance includes 8 of the 10 standardized Medicare supplement plans that were developed in response to the requirements of the Omnibus Budget Reconciliation Act of 1990 (“OBRA 1990”).
Removed
Medicare Supplement Insurance includes 8 of the 10 standardized Medicare supplement policies created under the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), which are designed to provide insurance coverage for certain expenses not covered by the Medicare program, including copayments and deductibles.
Added
In addition, Bankers Fidelity offers policies that reimburse the costs associated with short-term nursing facility care, policies that provide monthly benefits in the event of a covered disability, and policies that provide cash benefits in the event of a covered accident or a covered hospital stay.
Removed
American Southern’s agent selection process is actively managed by internal marketing personnel with oversight from management. Senior management carefully reviews all new programs prior to acceptance. American Southern solicits business through multiple channels.
Added
The Company also utilizes an automatic call distribution system designed to ensure that inbound calls to customer service support groups are processed efficiently. Operational data generated from this system allows management to further refine ongoing client service programs and service representative training modules.
Removed
See Note 6 of Notes to Consolidated Financial Statements for more information on insurance reserves and policyholder funds. Reinsurance The Company’s insurance subsidiaries from time to time purchase reinsurance from unaffiliated insurers and reinsurers to reduce their potential liability on individual risks and to protect against catastrophic losses.
Added
Changes in assumptions may be made from one issue year to another to reflect actual experience.
Removed
The Change in Asset Mix was the result of Atlantic Capital Life Assurance Company investing its cash and cash equivalents from prior year into bonds. Bankers Fidelity Life Insurance Company, American Southern Insurance Company and American Safety Insurance Company had no IRIS ratios outside the usual ranges.
Added
The mortality, morbidity, and lapse assumptions are based upon the Company’s experience and incorporate a margin for adverse experience development. These assumptions are modified as necessary to reflect anticipated trends and are generally established at contract inception. See Note 7 of Notes to Consolidated Financial Statements for more information on insurance reserves and policyholder funds.
Added
Property and Casualty Operations American Southern’s basic reinsurance treaties generally cover all claims in excess of specified per occurrence limitations.
Added
The likelihood and amount of any future assessments cannot be estimated until an insolvency has occurred. 8 Table of Contents NAIC Ratios The National Association of Insurance Commissioners (the “NAIC”) was established to, among other things, provide guidelines to assess the financial strength of insurance companies for state regulatory purposes.
Added
For the year ended December 31, 2024, American Southern Insurance Company had one ratio that was outside the usual range, the two-year reserve development to policyholders’ surplus, which was primarily due to adverse reserve developments on prior year claims in the commercial automobile liability line of business.
Added
BFAC writes only Medicare supplement insurance and cedes 100% of its written business to its parent, therefore the change in product mix ratio will always produce no result. Bankers Fidelity Life Insurance Company had two ratios outside the normal range. Both the first and second ratios were unusual because capital and surplus fell greater than 10% from 2023 to 2024.
Added
The decrease in capital was due primarily to the extraordinary dividend paid to its parent. Other contributing factors are a lower net income in 2024 versus 2023 and an increase in unrealized loss on our invested bond portfolio. Atlantic Capital Life Assurance Company (“ACLAC”) had one ratio outside the normal range, ratio 8 Surplus Relief.
Added
The surplus relief ratio for ACLAC triggered because the ratio of commission & expense allowances to capital exceeds 100%. ACLAC writes only Medicare supplement insurance and cedes 100% of its written business to its parent, therefore the change in product mix ratio will always produce no result. American Safety Insurance Company had no IRIS ratios outside the usual ranges.
Added
We offer tuition reimbursement along with budgeted professional development opportunities in order to foster professional growth and to increase skillsets. 10 Table of Contents Financial Information by Industry Segment The Parent’s primary insurance subsidiaries operate with relative autonomy with the oversight of the Chief Operating Decision Maker (“CODM”) and each company is evaluated based on its individual performance.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeItem 1A. Risk Factors As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K (a “smaller reporting company”), we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item. Item 1B. Unresolved Staff Comments Not applicable.
Biggest changeItem 1A. Risk Factors As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K (a “smaller reporting company”), we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company’s senior officers, including its Chief Information Officer, are responsible for the operation of the information security program and regularly communicate with the Audit Committee on the state of the program, risks faced by the Company and the Company’s risk mitigation efforts related thereto. 13 Table of Contents In addition, the Company’s information technology environment is managed by an experienced team of professionals who follow an extensive set of policies and procedures related to data security.
Biggest changeThe Company’s senior officers, including its Chief Information Officer, are responsible for the operation of the information security program and regularly communicate with the Audit Committee on the state of the program, risks faced by the Company and the Company’s risk mitigation efforts related thereto.
Our data security employees have backgrounds in cybersecurity and data protection, including prior relevant experience in the industry and industry standard certifications.
In addition, the Company’s information technology environment is managed by an experienced team of professionals who follow an extensive set of policies and procedures related to data security. Our data security employees have backgrounds in cybersecurity and data protection, including prior relevant experience in the industry and industry standard certifications. 12 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company believes that its current properties are in good condition, and are sufficient for the operations of its business.
Biggest changeThe lease term expires September 30, 2026. Under the terms of the lease, American Southern occupies approximately 17,014 square feet. The Company believes that its current properties are in good condition and are sufficient for the operations of its business.
Item 2. Properties Leased Properties. The Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia under a lease which continues until either party provides written notice of cancellation at least twelve months in advance of the actual termination date.
Item 2. Properties Leased Properties. The Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia under a lease which continues until either party provides written notice of cancellation at least twelve months in advance of the actual termination date (“Lease Agreement”).
The lease, which commenced on November 1, 2007, provides for rent adjustments on every fifth anniversary of the commencement date. Under the current terms of the lease, the Company occupies approximately 49,586 square feet of office space. In December 2022, Delta Life Insurance Company, the owner of the building, transferred title to the building to 4370 Peachtree LLC.
The lease, which commenced on November 1, 2007, provides for rent adjustments on every fifth anniversary of the commencement date. Under the current terms of the lease, the Company occupies approximately 49,586 square feet of office space. The owner of the building, 4370 Peachtree LLC, is controlled by an affiliate of the Company.
Removed
Each of Delta Life Insurance Company and 4370 Peachtree LLC is controlled by an affiliate of the Company. American Southern leases space for its office in a building located in Atlanta, Georgia. The lease term expires September 30, 2026. Under the terms of the lease, American Southern occupies approximately 17,014 square feet.
Added
On December 26, 2024, the Company, and its subsidiary, Bankers Fidelity Life Insurance Company, entered into a Second Amendment to Lease Agreement (the “Second Amendment”) with 4370 Peachtree LLC.
Added
The Second Amendment amends the Lease Agreement, dated November 1, 2007, by and among the same parties (as previously amended, the “Lease Agreement”), pursuant to which the Company leases space for its principal offices and for some of its insurance operations in an office building located in Atlanta, Georgia.
Added
Pursuant to the Second Amendment, the Lease Agreement was modified to increase the base rent payable by the Company, beginning January 1, 2025. The Second Amendment also provides for rent adjustment on January 1, 2027, January 1, 2030 and each five years thereafter. American Southern leases space for its office in a building located in Atlanta, Georgia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn August 8, 2023, the Company announced that the board of directors declared an annual cash dividend of $0.02 per share, which was paid on September 12, 2023 to shareholders of record as of August 22, 2023.
Biggest changeOn April 1, 2024, the Company announced that the board of directors declared an annual cash dividend of $0.02 per share, which was paid on April 26, 2024 to shareholders of record as of April 12, 2024.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs October 1 – October 31, 2023 — $ — — 325,129 November 1 – November 30, 2023 — — — 325,129 December 1 – December 31, 2023 — — — 325,129 Total — $ — — Stock Performance Graph As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs October 1 – October 31, 2024 — $ — — 325,129 November 1 – November 30, 2024 — — — 325,129 December 1 – December 31, 2024 — — — 325,129 Total — $ — — Stock Performance Graph As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item.
The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended December 31, 2023.
The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed on the Nasdaq Global Market (Symbol: AAME). As of March 13, 2024, there were 1,286 shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed on the Nasdaq Global Market (Symbol: AAME). As of March 12, 2025, there were 1,214 shareholders of record.
The Company’s primary recurring source of cash for the payment of dividends is dividends from its subsidiaries; although as of December 31, 2023, the Parent held unrestricted cash and investment balances of approximately $4.7 million.
The Company’s primary recurring source of cash for the payment of dividends is dividends from its subsidiaries; although as of December 31, 2024, the Parent held unrestricted cash and investment balances of approximately $5.6 million.
On April 1, 2024, the Company announced that the board of directors declared an annual cash dividend of $0.02 per share of common stock that is payable to shareholders of record at the close of business on April 12, 2024.
On March 25, 2025, the Company announced that the board of directors declared an annual cash dividend of $0.02 per share of common stock that is payable to shareholders of record at the close of business on April 9, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther health product premiums increased $2.0 million, or 16.0%, during 2023 as compared to 2022, primarily as a result of new sales of the company’s group health and individual cancer products. Gross earned premiums from the life insurance line of business increased $2.8 million, or 17.6%, in 2023 from 2022 due to an increase in the group life product premiums.
Biggest changePartially offsetting the decrease were increases in the group accident and health, group life and other individual health lines of business due to new sales. Ceded premiums decreased $2.7 million, or 4.9%, during 2024 as compared to 2023. The decrease in ceded premiums was due to a decrease in Medicare supplement premiums subject to reinsurance.
The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of 3-month CME Term SOFR plus applicable tenor spread of 0.26161 percent plus an applicable margin.
The outstanding $18.0 million and $15.7 million of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company, and have an interest rate of 3-month CME Term SOFR plus applicable tenor spread of 0.26161% plus an applicable margin.
See Note 2 and Note 3 of Notes to Consolidated Financial Statements with respect to assets and liabilities carried at fair value and information about the inputs used to value those financial instruments, by hierarchy level, in accordance with ASC 820-10-20. Future policy benefits comprised 34% of the Company’s total liabilities at December 31, 2023.
See Note 2 and Note 3 of Notes to Consolidated Financial Statements with respect to assets and liabilities carried at fair value and information about the inputs used to value those financial instruments, by hierarchy level, in accordance with ASC 820-10-20. Future policy benefits comprised 34% of the Company’s total liabilities at December 31, 2024.
The Company intends to pay its obligations under the Junior Subordinated Debentures using existing cash balances, dividend and tax-sharing payments from the operating subsidiaries, or from existing or potential future financing arrangements. At December 31, 2023, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.
The Company intends to pay its obligations under the Junior Subordinated Debentures using existing cash balances, dividend and tax-sharing payments from the operating subsidiaries, or from existing or potential future financing arrangements. At December 31, 2024, the Company had 55,000 shares of Series D preferred stock (“Series D Preferred Stock”) outstanding.
If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by the Company. Inflation also affects the rate of investment return on the Company’s investment portfolio with a corresponding effect on investment income. During 2023, inflation was a factor in increased loss experience within the Company’s automobile liability line of business.
If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by the Company. Inflation also affects the rate of investment return on the Company’s investment portfolio with a corresponding effect on investment income. During 2024, inflation was a factor in increased loss experience within the Company’s automobile liability line of business.
Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of December 31, 2023, the Company had outstanding borrowings of $3.0 million under the Credit Agreement.
Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of December 31, 2024 and 2023, the Company had outstanding borrowings of $4.0 million and $3.0 million under the Credit Agreement.
Development on reported claims, estimates of unpaid ultimate losses on claims incurred prior to December 31, 2023 but not yet reported, and estimates of unpaid loss adjustment expenses are developed based on the Company’s historical experience, using actuarial methods to assist in the analysis.
Development on reported claims, estimates of unpaid ultimate losses on claims incurred prior to December 31, 2024 but not yet reported, and estimates of unpaid loss adjustment expenses are developed based on the Company’s historical experience, using actuarial methods to assist in the analysis.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”) for the years ended December 31, 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is management’s discussion and analysis of the financial condition and results of operations of Atlantic American Corporation (“Atlantic American” or the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”) for the years ended December 31, 2024 and 2023.
This liability includes estimates for: (1) unpaid losses on claims reported prior to December 31, 2023, (2) future development on those reported claims, (3) unpaid ultimate losses on claims incurred prior to December 31, 2023 but not yet reported and (4) unpaid loss adjustment expenses for reported and unreported claims incurred prior to December 31, 2023.
This liability includes estimates for: (1) unpaid losses on claims reported prior to December 31, 2024, (2) future development on those reported claims, (3) unpaid ultimate losses on claims incurred prior to December 31, 2024 but not yet reported and (4) unpaid loss adjustment expenses for reported and unreported claims incurred prior to December 31, 2024.
The Series D Preferred Stock is not currently convertible. The Company had accrued, but unpaid, dividends on the Series D Preferred Stock of $17.7 thousand at December 31, 2023 and 2022. During each of 2023 and 2022, the Company paid Series D Preferred Stock dividends of $0.4 million.
The Series D Preferred Stock is not currently convertible. The Company had accrued, but unpaid, dividends on the Series D Preferred Stock of $17.7 thousand at December 31, 2024 and 2023. During each of 2024 and 2023, the Company paid Series D Preferred Stock dividends of $0.4 million.
Atlantic American does not expect that changes in the estimates determined using these policies will have a material effect on the Company’s financial condition or liquidity, although changes could have a material effect on its consolidated results of operations. Cash and investments comprised 70% of the Company’s total assets at December 31, 2023.
Atlantic American does not expect that changes in the estimates determined using these policies will have a material effect on the Company’s financial condition or liquidity, although changes could have a material effect on its consolidated results of operations. Cash and investments comprised 68% of the Company’s total assets at December 31, 2024.
The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.0 million, as of December 31, 2023. Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB. As of December 31, 2023, BFLIC has pledged bonds having an amortized cost of $9.6 million to the FHLB.
The membership arrangement provides for credit availability of five percent of statutory admitted assets, or approximately $8.2 million, as of December 31, 2024. Additional FHLB stock purchases may be required based upon the amount of funds borrowed from the FHLB. As of December 31, 2024, BFLIC has pledged bonds having an amortized cost of $9.2 million to the FHLB.
Losses are recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical experience. Deferred acquisition costs comprised 12% of the Company’s total assets at December 31, 2023.
Losses are recognized by the Company when determined on a specific account basis and a general provision for loss is made based on the Company’s historical experience. Deferred acquisition costs comprised 11% of the Company’s total assets at December 31, 2024.
Receivables are amounts due from reinsurers, insureds and agents, and any sales of investment securities not yet settled, and comprised 12% of the Company’s total assets at December 31, 2023. Insured and agent balances are evaluated periodically for collectibility. Annually, the Company performs an analysis of the creditworthiness of the reinsurers with whom the Company contracts using various data sources.
Receivables are amounts due from reinsurers, insureds and agents, and any sales of investment securities not yet settled, and comprised 13% of the Company’s total assets at December 31, 2024. Insured and agent balances are evaluated periodically for collectability. Annually, the Company performs an analysis of the creditworthiness of the reinsurers with whom the Company contracts using various data sources.
If actual results differ from the initial assumptions, the amount of the Company’s recorded liability could require adjustment. 16 Table of Contents Unpaid loss and loss adjustment expenses comprised 32% of the Company’s total liabilities at December 31, 2023.
If actual results differ from the initial assumptions, the amount of the Company’s recorded liability could require adjustment. 15 Table of Contents Unpaid loss and loss adjustment expenses comprised 32% of the Company’s total liabilities at December 31, 2024.
The amount charged to and paid by the subsidiaries for these services was $8.7 million and $7.6 million in 2023 and 2022, respectively. In addition, the Parent has a formal tax-sharing agreement with each of its insurance subsidiaries.
The amount charged to and paid by the subsidiaries for these services was $9.4 million and $8.7 million in 2024 and 2023, respectively. In addition, the Parent has a formal tax-sharing agreement with each of its insurance subsidiaries.
The margin ranges from 4.00% to 4.10%. At December 31, 2023, the effective interest rate was 9.69%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities.
The margin ranges from 4.00% to 4.10%. At December 31, 2024, the effective interest rate was 8.82%. The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities.
Changes in interest expense were primarily due to changes in the Term Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited (“CME”), as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility are directly related to SOFR.
Changes in interest expense were primarily due to changes in the Secured Overnight Financing Rate (“SOFR”) published by CME Group Benchmark Administration Limited, as the interest rates on the Company’s outstanding junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) and the revolving credit facility utilize SOFR as the reference rate.
The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time. The Credit Agreement also contains customary representations and warranties and events of default.
The Credit Agreement requires the Company to comply with certain covenants, including a debt to capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned. The Credit Agreement also contains customary representations and warranties and events of default.
The combined ratio is divided into two components, the loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) and the expense ratio (the ratio of expenses incurred to premiums earned). 19 Table of Contents Insurance benefits incurred at American Southern increased $3.8 million, or 8.1%, during 2023 as compared to 2022.
The combined ratio is divided into two components, the loss ratio (the ratio of losses and loss adjustment expenses incurred to premiums earned) and the expense ratio (the ratio of expenses incurred to premiums earned). 18 Table of Contents Insurance benefits incurred at American Southern increased $4.8 million, or 9.3%, during 2024 as compared to 2023.
A net total of $4.0 million and $3.9 million were paid to the Parent under the tax sharing agreement in 2023 and 2022, respectively.
A net total of $4.4 million and $4.0 million were paid to the Parent under the tax sharing agreement in 2024 and 2023, respectively.
During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease. In 2023, variable commissions at American Southern decreased $1.4 million as compared to 2022 due to an increase in loss ratios from certain accounts subject to variable commissions.
During periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase, and conversely, during periods in which the loss ratio increases, commissions and underwriting expenses will generally decrease. In 2024, variable commissions at American Southern decreased $1.1 million as compared to 2023 due to an unfavorable loss experience from accounts subject to variable commissions.
At December 31, 2023, the Parent’s insurance subsidiaries had an aggregate statutory surplus of $90.1 million. Dividends were paid to Atlantic American by its subsidiaries totaling $8.4 million and $7.2 million in 2023 and 2022, respectively. The Parent provides certain administrative, purchasing and other services to each of its subsidiaries.
At December 31, 2024, the Parent’s insurance subsidiaries had an aggregate statutory surplus of $80.1 million. Dividends were paid to Atlantic American by its subsidiaries totaling $9.0 million and $8.4 million in 2024 and 2023, respectively. The Parent provides certain administrative, purchasing and other services to each of its subsidiaries.
Also contributing to differences between the effective tax rate and the federal statutory income tax rate were the adjustment for prior years’ estimates to actual that are generally updated at the completion of the third quarter of each fiscal year and were $0.1 million in the year ended December 31, 2022.
Also contributing to differences between the effective tax rate and the federal statutory income tax rate was the adjustment for prior years’ estimates to actual that are generally updated at the completion of the third quarter of each fiscal year and were $35 thousand in the year ended December 31, 2024.
At December 31, 2023, the Parent had approximately $4.7 million of unrestricted cash and investments. 21 Table of Contents Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries.
At December 31, 2024, the Parent had approximately $5.6 million of unrestricted cash and investments. Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries.
Refer to Note 1 of Notes to Consolidated Financial Statements for details regarding the Company’s significant accounting policies. 17 Table of Contents Overall Corporate Results Year Ended December 31, 2023 2022 (In thousands) Revenue Property and Casualty: American Southern $ 72,846 $ 73,949 Life and Health: Bankers Fidelity 114,199 114,015 Corporate and Other (252 ) (113 ) Total revenue $ 186,793 $ 187,851 Income (loss) before income taxes Property and Casualty: American Southern $ 5,085 $ 6,613 Life and Health: Bankers Fidelity 4,722 3,812 Corporate and Other (10,372 ) (8,329 ) Income (loss) before income taxes $ (565 ) $ 2,096 Net income (loss) $ (171 ) $ 1,525 Management also considers and evaluates performance by analyzing the non-GAAP measure operating income or loss, and believes it 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 operational results (such as any realized or unrealized investment gains or 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).
Refer to Note 1 of Notes to Consolidated Financial Statements for details regarding the Company’s significant accounting policies. 16 Table of Contents Overall Corporate Results Year Ended December 31, 2024 2023 (In thousands) Revenue Property and Casualty: American Southern $ 72,220 $ 72,846 Life and Health: Bankers Fidelity 116,097 114,199 Corporate and Other (90 ) (252 ) Total revenue $ 188,227 $ 186,793 Income (loss) before income taxes Property and Casualty: American Southern $ 888 $ 5,085 Life and Health: Bankers Fidelity 4,155 4,722 Corporate and Other (10,307 ) (10,372 ) Loss before income taxes $ (5,264 ) $ (565 ) Net loss $ (4,268 ) $ (171 ) Management also considers and evaluates performance by analyzing the non-GAAP measure operating income or loss, and believes it 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 operational results (such as any realized or unrealized investment gains or 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).
A reconciliation of net income, the most directly comparable GAAP measure, to operating income is as follows: Year Ended December 31, 2023 2022 (In thousands) Reconciliation of Non-GAAP Financial Measure Net income (loss) $ (171 ) $ 1,525 Income tax expense (benefit) (394 ) 571 Realized investment gains, net (70 ) (30 ) Unrealized losses on equity securities, net 2,177 7,562 Non-GAAP operating income $ 1,542 $ 9,628 On a consolidated basis, the Company had net loss of $0.2 million, or $0.03 per diluted share, in 2023, compared to net income of $1.5 million, or $0.06 per diluted share, in 2022.
A reconciliation of net loss, the most directly comparable GAAP measure, to operating income (loss) is as follows: Year Ended December 31, 2024 2023 (In thousands) Reconciliation of Non-GAAP Financial Measure Net loss $ (4,268 ) $ (171 ) Income tax benefit (996 ) (394 ) Realized investment gains, net (1,210 ) (70 ) Unrealized losses on equity securities, net 1,516 2,177 Non-GAAP operating income (loss) $ (4,958 ) $ 1,542 On a consolidated basis, the Company had net loss of $4.3 million, or $(0.23) per diluted share, in 2024, compared to net loss of $0.2 million, or $(0.03) per diluted share, in 2023.
BFLIC may be required to post additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB. As of December 31, 2023, BFLIC does not have any outstanding borrowings from the FHLB.
BFLIC may be required to post additional acceptable forms of collateral for any borrowings that it makes in the future from the FHLB.
Management continually evaluates the Company’s investment portfolio and, as may be determined to be appropriate, makes adjustments for impairments and/or will divest investments. See Note 2 of Notes to Consolidated Financial Statements.
The net realized investment gains in 2023 were primarily attributable to gains from the sale of fixed maturities. Management continually evaluates the Company’s investment portfolio and, as may be determined to be appropriate, makes adjustments for impairments and/or will divest investments. See Note 2 of Notes to Consolidated Financial Statements.
The following table summarizes, for the periods indicated, American Southern’s net earned premiums by line of business: Year Ended December 31, 2023 2022 (In thousands) Automobile liability $ 38,821 $ 33,981 Automobile physical damage 15,046 21,069 General liability 5,758 5,871 Surety 6,303 6,039 Other lines 2,515 3,316 Total $ 68,443 $ 70,276 Net earned premiums decreased $1.8 million, or 2.6%, during 2023 as compared to 2022.
The following table summarizes, for the periods indicated, American Southern’s net earned premiums by line of business: Year Ended December 31, 2024 2023 (In thousands) Automobile liability $ 39,788 $ 38,821 Automobile physical damage 13,464 15,046 General liability 5,990 5,758 Surety 5,809 6,303 Other lines 2,638 2,515 Total $ 67,689 $ 68,443 Net earned premiums decreased $0.8 million, or 1.1%, during 2024 as compared to 2023.
Gross earned premiums from the Medicare supplement line of business decreased $15.4 million, or 10.4 %, in 2023 as compared to 2022, due primarily to non-renewals exceeding the level of new business writings as the existing block of business has incurred rate increases.
The decrease in gross earned premiums was primarily attributable to the decrease in gross earned premiums from the Medicare supplement line of business due primarily to non-renewals exceeding the level of new business writings as the existing block of business has incurred rate increases.
Income Taxes The primary difference between the effective tax rate and the federal statutory income tax rate for 2023 resulted from the adjustment for prior years’ estimates to actual of $0.3 million in the year ended December 31, 2023, which included the return to provision adjustment that is generally updated at the completion of the third quarter of each fiscal year and an adjustment for partnership valuation.
The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income. 2024 The primary difference between the effective tax rate and the federal statutory income tax rate for 2023 resulted from the adjustment for prior years’ estimates to actual of $0.3 million in the year ended December 31, 2023, which included the return to provision adjustment that is generally updated at the completion of the third quarter of each fiscal year and an adjustment for partnership valuation.
Partially offsetting the decrease in cash and cash equivalents was an increase in net cash provided by operating activities of $2.6 million. 22 Table of Contents The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it expects to receive from its subsidiaries and, if needed, additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the next 12 months and thereafter for the foreseeable future.
The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it expects to receive from its subsidiaries and, if needed, additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the next 12 months and thereafter for the foreseeable future.
The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets, as well as borrowings from time to time under our revolving credit facility.
Current and expected patterns of claim frequency and severity may change from period to period, but generally are expected to continue within historical ranges. The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets, as well as borrowings from time to time under our revolving credit facility.
Fixed commissions decreased as a result of the decline in written premiums during 2023. Also contributing to the decrease in expense ratio was American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write.
The decrease in the expense ratio was primarily due to American Southern’s use of a variable commission structure with certain agents, which compensates the participating agents in relation to the loss ratios of the business they write.
Unrealized Losses on Equity Securities, Net Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period. The Company recognized net unrealized losses on equity securities of $2.2 million and $7.6 million during the years ended December 2023 and 2022, respectively.
Unrealized Losses on Equity Securities, Net Investments in equity securities are measured at fair value at the end of the reporting period, with any changes in fair value reported in net income during the period.
Other contributing factors to the differences between the effective tax rate and the federal statutory income tax rate were permanent differences related to meals and entertainment and the dividends-received deduction (“DRD”).
Another contributing factor to the differences between the effective tax rate and the federal statutory income tax rate was a permanent difference related to dividends-received deduction (“DRD”).
On May 12, 2021, the Company entered into a Revolving Credit Agreement (the “Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Credit Agreement provides for an unsecured $10.0 million revolving credit facility that matures on April 12, 2024.
The Revolving Credit Agreement provides for an unsecured $10.0 million revolving credit facility that originally matured on April 12, 2024. On March 22, 2024, the Company entered into a First Amendment (the "Amendment") to its Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender.
As a percentage of premiums, insurance benefits and losses incurred were 74.5% in 2023 as compared to 67.1% in 2022. The increase in the loss ratio was mainly due to overall inflation on claims and increased severity of losses reported from certain governmental programs within the automobile liability line of business.
As a percentage of premiums, insurance benefits and losses incurred were 82.4% in 2024 as compared to 74.5% in 2023. The increase in the loss ratio was mainly due to an increase in the frequency and severity of claims in the automobile liability line of business.
American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally increase or decrease as earned premiums increase or decrease. The decrease in ceded premiums was primarily attributable to the decrease in earned premiums in the automobile physical damage line of business, as well as decreased ceding rates due to increased retention.
American Southern’s ceded premiums are typically determined as a percentage of earned premiums and generally increase or decrease as earned premiums increase or decrease or retentions levels change. The increase in ceded premiums was primarily attributable to an increase in lines of business with higher ceding rates.
Commissions and underwriting expenses increased $4.1 million, or 12.0%, during 2023 as compared to 2022. As a percentage of earned premiums, these expenses were 34.4% in 2023 as compared to 29.5% in 2022.
Commissions and underwriting expenses decreased $1.2 million, or 7.1%, during 2024 as compared to 2023. As a percentage of premiums, these expenses were 23.0% in 2024 as compared to 24.5% in 2023.
Partially offsetting the decrease in net earned premiums was an increase in earned premiums in the automobile liability line of business due mainly to rate increases and a retrospective premium adjustment in a governmental program.
Partially offsetting the decrease in net earned premiums was an increase in earned premiums in the automobile liability line of business due mainly to a new government program which began in the fourth quarter of 2023.
Also contributing to the increase in the loss ratio were increased losses in the general liability line of business from artisan contractor business. Partially offsetting the increase in the loss ratio was a decrease in losses related to the automobile physical damage line of business due to a decrease in exposure.
Also contributing to the increase in the loss ratio was an increase in the automobile physical damage line of business due to an increase in claims costs. Partially offsetting the increase in the loss ratio was a decrease in the general liability line of business due to favorable claim reserve development.
Also contributing to the differences between the effective tax rate and the federal statutory income tax rate was a permanent difference related to meals and entertainment. The primary differences between the effective tax rate and the federal statutory income tax rate for 2022 resulted from a permanent difference related to penalties and fines incurred of $0.1 million.
Income Taxes The primary difference between the effective tax rate and the federal statutory income tax rate for 2024 resulted from a permanent difference related to meals and entertainment.
The decrease in premium revenue was primarily attributable to a decrease in Medicare supplement insurance premiums within the life and health operations. Also contributing to the decrease in premium revenue was a decrease in earned premiums in the automobile physical damage line of business due to a reduction in the number of programs.
The decrease in premium revenue was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a decline in demand within the trucking industry within the property and casualty operations.
A more detailed analysis of the operating companies and other corporate activities follows. 18 Table of Contents UNDERWRITING RESULTS American Southern The following table summarizes, for the periods indicated, American Southern’s premiums, losses, expenses and underwriting ratios: Year Ended December 31, 2023 2022 (Dollars in thousands) Gross written premiums $ 77,567 $ 79,218 Ceded premiums (5,902 ) (6,547 ) Net written premiums $ 71,665 $ 72,671 Net earned premiums $ 68,443 $ 70,276 Insurance benefits and losses incurred 51,015 47,175 Commissions and underwriting expenses 16,746 20,161 Underwriting income $ 682 $ 2,940 Loss ratio 74.5 % 67.1 % Expense ratio 24.5 28.7 Combined ratio 99.0 % 95.8 % Gross written premiums at American Southern decreased $1.7 million, or 2.1%, during 2023 as compared to 2022.
UNDERWRITING RESULTS American Southern The following table summarizes, for the periods indicated, American Southern’s premiums, losses, expenses and underwriting ratios: Year Ended December 31, 2024 2023 (Dollars in thousands) Gross written premiums $ 73,671 $ 77,567 Ceded premiums (5,979 ) (5,902 ) Net written premiums $ 67,692 $ 71,665 Net earned premiums $ 67,689 $ 68,443 Insurance benefits and losses incurred 55,767 51,015 Commissions and underwriting expenses 15,565 16,746 Underwriting income (loss) $ (3,643 ) $ 682 Loss ratio 82.4 % 74.5 % Expense ratio 23.0 24.5 Combined ratio 105.4 % 99.0 % Gross written premiums at American Southern decreased $3.9 million, or 5.0%, during 2024 as compared to 2023.
The decrease in net earned premiums was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a reduction in the number of agencies as previously mentioned. Also contributing to the decrease was a decline in earned premiums in the inland marine line of business resulting from reduced cargo production.
The decrease in net earned premiums was primarily attributable to a decrease in earned premiums in the automobile physical damage line of business due to a decline in demand within the trucking industry as previously mentioned.
This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein.
This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein. Operating results achieved in any historical period are not necessarily indicative of results to be expected in any future period.
The decrease in gross written premiums was primarily attributable to the decrease in premiums written in the automobile physical damage line of business due to a reduction in the number of agencies.
The decrease in gross written premiums was primarily attributable to the decrease in premiums written in the automobile liability line of business due to the non-renewal of a program, as well as a decrease in premiums written in the automobile physical damage line of business due to a decline in demand within the trucking industry.
Bankers Fidelity The following summarizes, for the periods indicated, Bankers Fidelity’s premiums, losses and expenses: Year Ended December 31, 2023 2022 (Dollars in thousands) Medicare supplement $ 133,343 $ 148,747 Other health products 14,373 12,389 Life insurance 18,659 15,867 Gross earned premiums 166,375 177,003 Ceded premiums (55,993 ) (61,839 ) Net earned premiums 110,382 115,164 Insurance benefits and losses incurred 71,485 76,281 Commissions and underwriting expenses 37,992 33,922 Total expenses 109,477 110,203 Underwriting income $ 905 $ 4,961 Loss ratio 64.8 % 66.2 % Expense ratio 34.4 29.5 Combined ratio 99.2 % 95.7 % Net earned premium revenue at Bankers Fidelity decreased $4.8 million, or 4.2%, during 2023 as compared to 2022.
Bankers Fidelity The following summarizes, for the periods indicated, Bankers Fidelity’s premiums, losses and expenses: Year Ended December 31, 2024 2023 (Dollars in thousands) Gross earned premiums $ 164,291 $ 166,375 Ceded premiums (53,249 ) (55,993 ) Net earned premiums 111,042 110,382 Insurance benefits and losses incurred 70,064 71,485 Commissions and underwriting expenses 41,878 37,992 Total expenses 111,942 109,477 Underwriting income $ (900 ) $ 905 Loss ratio 63.1 % 64.8 % Expense ratio 37.7 34.4 Combined ratio 100.8 % 99.2 % Gross earned premiums at Bankers Fidelity decreased $2.1 million, or 1.3%, during 2024 as compared to 2023.
Cash and cash equivalents decreased from $28.9 million at December 31, 2022 to $28.3 million at December 31, 2023. The decrease in cash and cash equivalents during 2023 was primarily attributable to a decrease in net cash used in investing activities of $3.4 million primarily as a result of investment purchases exceeding investment sales and maturity of securities.
Also contributing to the increase in cash and cash equivalents was net cash provided by investing activities of $2.3 million primarily as a result of investment sales and maturity of securities exceeding investment purchases.
Changes in unrealized gains on equity securities for the applicable periods are primarily the result of fluctuations in the market value of certain of the Company’s equity securities. Interest Expense Interest expense increased $1.3 million, or 67.5%, in 2023 as compared to 2022.
The Company recognized net unrealized losses on equity securities of $1.5 million and net unrealized losses of $2.2 million during the years ended December 2024 and 2023, respectively. Changes in unrealized losses on equity securities for the applicable periods are primarily the result of fluctuations in the market value of certain of the Company’s equity securities.
Partially offsetting this increase was a decrease in individual life products premium, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales. Premiums ceded decreased $5.8 million, or 9.5%, in 2023 from 2022. The decrease in ceded premiums was due to a decrease in Medicare supplement premiums subject to reinsurance.
Also contributing to the decrease in gross earned premiums was a decrease in gross earned premiums in the individual life line of business, resulting from the redemption and settlement of existing individual life policy obligations exceeding the level of new individual life sales.
The Company had net realized investment gains of $0.1 million in 2023 as compared to net realized investment gains of $0.03 million in 2022. The net realized investment gains in 2023 and 2022 were primarily attributable to gains from the sale of fixed maturities.
The decrease in investment income was primarily attributable to a net loss in a certain investment within the Company's limited liability companies of $0.4 million. The Company had net realized investment gains of $1.2 million in 2024 as compared to net realized investment gains of $0.1 million in 2023.
The increase in investment income was primarily attributable to an increase in investment income related to fixed maturities and equity securities. Partially offsetting this increase was a decrease in the equity in earnings from investments in the Company's limited partnerships and limited liability companies of $0.6 million.
Partially offsetting this decrease was an increase in net realized investment gains mainly due to gains of $1.2 million from the sale of the Company's interest in a certain limited liability company as well as gains from the sale of a number of the Company's investments in fixed maturities.
Partially offsetting the decrease in premium revenue was an increase in earned premiums in the automobile liability line of business due mainly to rate increases and a retrospective premium adjustment in a governmental program. Operating income was $1.5 million in 2023 as compared to $9.6 million in 2022.
Partially offsetting the decrease in premium revenue was an increase in earned premiums in the group accident and health, group life and the other individual health lines of business due to new sales within the life and health operations. 17 Table of Contents Operating loss was $5.0 million in 2024 as compared to operating income of $1.5 million in 2023.
Liquidity and Capital Resources The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements. Current and expected patterns of claim frequency and severity may change from period to period, but generally are expected to continue within historical ranges.
Also contributing to the differences between the effective tax rate and the federal statutory income tax rate was a permanent difference related to meals and entertainment. 20 Table of Contents Liquidity and Capital Resources The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements.
Commissions and underwriting expenses decreased $3.4 million, or 16.9%, during 2023 as compared to 2022. As a percentage of premiums, these expenses were 24.5% in 2023 as compared to 28.7% in 2022. The decrease in the expense ratio was primarily due to the decrease in fixed and variable commissions.
These decreases were partially offset by higher incurred claims in the other health line of business. Commissions and underwriting expenses increased $3.9 million, or 10.2%, during 2024 as compared to 2023. As a percentage of earned premiums, these expenses were 37.7% in 2024 as compared to 34.4% in 2023.
Partially offsetting this decrease was a decline in unrealized losses on equity securities. Total revenue was $186.8 million in 2023 as compared to $187.9 million in 2022. Premium revenue decreased to $178.8 million in 2023 from $185.4 million in 2022.
Total revenue was $188.2 million in 2024 as compared to $186.8 million in 2023. Premium revenue decreased slightly to $178.7 million in 2024 from $178.8 million in 2023.
The increase in the expense ratio was primarily due to an increase in administrative costs related to growth in the group and individual health lines of business, coupled with increased Medicare supplement servicing costs. 20 Table of Contents Net Investment Income and Realized Gains Investment income increased $0.1 million, or 1.3%, in 2023 as compared to 2022.
The increase in the expense ratio was primarily due to an increase in administrative costs related to the growth in the group lines of business.
The decrease in operating income was primarily due to a decline in premium revenue and an increase in losses and expenses as a percentage of premiums, as discussed above.
The decrease in operating income was primarily due to an unfavorable loss experience in the property and casualty operations due to the frequency and severity of claims in the automobile liability line of business as well as an increase in claims costs in the automobile physical damage line of business as discussed above.
Partially offsetting the decrease in gross written premiums was an increase in premiums written in the automobile liability line of business resulting from new business, rate increases, and retrospective premium adjustments. Ceded premiums decreased $0.6 million, or 9.9%, during 2023 as compared to 2022.
Partially offsetting the increase in net earned premiums was a decrease in the Medicare supplement line of business primarily to non-renewals exceeding the level of new business writings as the existing block of business has incurred rate increases. Insurance benefits incurred decreased $1.4 million, or 2.0%, during 2024 as compared to 2023.
The decrease in the loss ratio was primarily due to improved rate adequacy and a decrease in the number of incurred claims within the Medicare supplement line of business. Also contributing to the decrease in loss ratio was an improvement in the other health lines profitability. These decreases were offset by higher incurred claims on our life lines of business.
As a percentage of premiums, benefits and losses were 63.1% in 2024 as compared to 64.8% in 2023. The decrease in the loss ratio was primarily due to improved loss experience within the group life line of business as well as the other individual health line of business.
Removed
Prior to January 1, 2023, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within realized investment gains (losses) when it was anticipated that the amortized cost would not be recovered.
Added
The increase in net loss was primarily due to an unfavorable loss experience in the property and casualty operations due to the frequency and severity of claims in the automobile liability line of business as well as an increase in claims costs in the automobile physical damage line of business.
Removed
When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value.
Added
Also contributing to the increase in net loss was an increase in administrative costs related to the growth in the group lines of business within the life and health operations.
Removed
If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings.
Added
Also contributing to the decrease in operating income was an increase in administrative costs related to the growth in the group lines of business within the life and health operations. A more detailed analysis of the operating companies and other corporate activities follows.
Removed
If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors was recorded in OCI.
Added
Also contributing to the decrease in gross written premiums was a decrease in premiums written in the surety line of business due to construction slowdowns in certain regions. Ceded premiums increased $0.1 million, or 1.3%, during 2024 as compared to 2023.
Removed
The decrease in net income was primarily due to a decrease in earned premiums, as well as an increase in losses and expenses as a percentage of premiums. Also contributing to the decrease in net income is an increase in debt service costs due to rising interest rates.
Added
The following table summarizes, for the periods indicated, Bankers Fidelity’s net earned premiums by line of business: Year Ended December 31, 2024 2023 (In thousands) Medicare supplement $ 71,867 $ 77,424 Group life 14,700 12,431 Individual life 5,594 6,153 Group accident and health 11,390 7,583 Other individual health 7,491 6,791 Total $ 111,042 $ 110,382 19 Table of Contents Net earned premium revenue at Bankers Fidelity increased $0.7 million, or 0.6%, during 2024 as compared to 2023.
Removed
Partially offsetting the decline in operating income was more favorable loss experience in the life and health operations, resulting from improved rate adequacy and a decrease in the number of incurred claims within the Medicare supplement line of business.
Added
The increase in net earned premiums was primarily attributable to increases in the group accident and health, group life and other individual health lines of business due to new sales as previously mentioned.
Removed
Insurance benefits and losses incurred decreased $4.8 million, or 6.3%, during 2023 as compared to 2022. As a percentage of premiums, benefits and losses were 64.8% in 2023 as compared to 66.2% in 2022.
Added
Partially offsetting the increase in the expense ratio was a decrease in commission expenses primarily attributable to a decrease in the Medicare supplement line of business as a result of non-renewals exceeding the level of new business writings, as previously mentioned. Net Investment Income and Realized Gains Investment income decreased $0.3 million, or 2.7%, in 2024 as compared to 2023.
Removed
As expected, discontinuation of London Interbank Offered Rate (“LIBOR”) occurred on June 30, 2023 and affected the rates used in the Company’s credit arrangements after that date. The U.S. Congress enacted the Adjustable Interest Rate LIBOR Act (the "LIBOR Act") to address LIBOR’s cessation and the Board of Governors of the Federal Reserve System issued regulations, 12 C.F.R.
Added
The net realized investment gains in 2024 were mainly due to gains of $1.2 million from the sale of the Company's interest in a certain limited liability company as well as gains from the sale of a number of the Company's investments in fixed maturities.
Removed
Part 253, “Regulations Implementing the Adjustable Interest Rate LIBOR Act (Regulation ZZ),” which relate to the LIBOR transition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item. 23 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not providing the information required by this Item. 22 Table of Contents

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