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Atlantic American Corp. Reports Operating Results (10-Q)

November 08, 2010 | About:
10qk

10qk

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Atlantic American Corp. (AAME) filed Quarterly Report for the period ended 2010-09-30.

Atlantic American Corp. has a market cap of $40.56 million; its shares were traded at around $1.82 with a P/E ratio of 36.4 and P/S ratio of 0.39.

Highlight of Business Operations:

On a consolidated basis, the Company had net income of $0.5 million, or $0.02 per diluted share, for the three month period ended September 30, 2010, compared to a net loss of $2.1 million, or a loss of $0.10 per diluted share, for the three month period ended September 30, 2009. The Company had net income of $1.0 million, or $0.03 per diluted share, for the nine month period ended September 30, 2010, compared to a net loss of $1.8 million, or $0.10 per diluted share, for the nine month period ended September 30, 2009. The net loss in the three month and nine month periods ended September 30, 2009 was primarily attributable to a $1.8 million increase in the Company s deferred tax asset valuation allowance. The change in deferred tax asset valuation allowance was due to reassessment of the realization of certain capital loss carryforward benefits. Income before taxes was $0.6 million in the three month period ended September 30, 2010, compared to $0.2 million in the three month period ended September 30, 2009. Income before taxes for the nine month period ended September 30, 2010 was $1.2 million compared to $0.4 million for the nine month period ended September 30, 2009. The increase in income before taxes in the three month and nine month periods ended September 30, 2010 was primarily due to an increase in premium revenue and realized investment gains with a relatively consistent level of fixed expenses. Also contributing to the increase in income before taxes in the nine month period ended September 30, 2010 was a decrease in discretionary compensation accruals. Partially offsetting the increase in income before taxes in the three month and nine month periods ended September 30, 2010 was a decrease in investment income due to declining yields from invested assets. During the three month and nine month periods ended September 30, 2010, a large number of securities held by the Company were called by the issuers, the proceeds from which the Company was not able to reinvest at equivalent rates.

Premium revenue for the three month period ended September 30, 2010 increased $1.8 million, or 7.9%, to $24.6 million. For the nine month period ended September 30, 2010, premium revenue increased $3.8 million, or 5.6%, to $72.3 million. The increase in premiums in the three month and nine month periods ended September 30, 2010 was primarily attributable to new business generated by the Company s life and health operation as a result of increased marketing initiatives. Property and casualty premiums also increased during the three month period ended September 30, 2010 over the comparable period in 2009 primarily due to an increase in commercial automobile business. Partially offsetting the increase in the life and health premiums during the nine month period ended September 30, 2010 was a decrease in property and casualty premiums due to the decline in general liability and surety business.

Gross written premiums at American Southern increased $2.2 million, or 24.7%, during the three month period ended September 30, 2010, and $0.9 million, or 2.9%, during the nine month period ended September 30, 2010, over the comparable periods in 2009. The increase in gross written premiums during the three month and nine month periods ended September 30, 2010 was primarily attributable to an increase in commercial automobile business marketed through a newly appointed general agent. Partially offsetting the increase in gross written premiums was the continued decline in the general liability line of business resulting from continued weakness in the construction industry as well as decreases in business writings from certain targeted agencies due to the strengthening of the company s underwriting guidelines.

Ceded premiums decreased $0.2 million, or 10.2%, during the three month period ended September 30, 2010, and $0.8 million, or 16.9%, during the nine month period ended September 30, 2010, from the comparable periods in 2009. The decrease in ceded premiums during the three month and nine month periods ended September 30, 2010 was primarily due to lower cession rates resulting from a new reinsurance agreement with a new carrier which incepted in the fourth quarter of 2009.

Net earned premiums increased $0.4 million, or 4.5%, during the three month period ended September 30, 2010 over the three month period ended September 30, 2009, and decreased $0.6 million, or 2.3%, during the nine month period ended September 30, 2010, from the comparable period in 2009. The increase in net earned premiums during the three month period ended September 30, 2010 was primarily due to the increase in commercial automobile business discussed previously. The decrease in net earned premiums in the 2010 year to date period was primarily attributable to the decline in the general liability and surety lines of business resulting from continued weakness in the construction industry. Premiums are earned ratably over their respective policy terms, and therefore premiums earned in the current year are related to policies written during both the current and prior years.

Premium revenue at Bankers Fidelity increased $1.4 million, or 9.9%, during the three month period ended September 30, 2010, and $4.4 million, or 10.4%, during the nine month period ended September 30, 2010, over the comparable periods in 2009, primarily due to successful marketing initiatives, recruiting of new agents, and effective utilization of the company s proprietary lead program. Premiums from the Medicare supplement line of business increased $1.1 million, or 10.4%, during the three month period ended September 30, 2010, and $3.2 million, or 10.0%, during the nine month period ended September 30, 2010, while premiums from the life insurance line of business increased $0.1 million and $0.6 million, respectively, during the same comparable periods. Other health products premiums increased during the three month and nine month periods ended September 30, 2010 over the comparable periods in 2009 due primarily to an increase in sales of short-term care products and increased business activities with group associations.

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