10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-3722

ATLANTIC AMERICAN CORPORATION

(Exact name of registrant as specified in its charter)

Georgia	58-1027114
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4370 Peachtree Road, N.E.,	30319
Atlanta, Georgia	(Zip Code)
(Address of principal executive offices)

(404) 266-5500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  þ   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer ¨  Accelerated filer ¨  Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨   No þ

The total number of shares of the registrant's Common Stock, $1 par value, outstanding on August 5, 2013, was 21,309,560.

ATLANTIC AMERICAN CORPORATION

TABLE OF CONTENTS

Part I.    Financial Information		Page No.
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012	2
	Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2013 and 2012	3
	Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2013 and 2012	4
	Condensed Consolidated Statements of Shareholders’ Equity for the six months ended June 30, 2013 and 2012	5
	Condensed Consolidated Statements of Cash Flows  for the six months ended June 30, 2013 and 2012	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 4.	Controls and Procedures	25
Part II.    Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	26
Signatures		27

PART I.  FINANCIAL INFORMATION

Item 1.    Financial Statements

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

ASSETS
	Unaudited
	June 30,			December 31,
	2013			2012
Cash and cash equivalents	$	47,097		$	18,951
Investments:
Fixed maturities (cost: $177,918and $201,986)		184,750			230,508
Common and non-redeemable preferred stocks (cost: $9,495 and $10,477)		13,772			12,205
Other invested assets (cost: $641 and $565)		641			565
Policy loans		2,295			2,338
Real estate		38			38
Investment in unconsolidated trusts		1,238			1,238
Total investments		202,734			246,892
Receivables:
Reinsurance		17,934			18,768
Insurance premiums and other (net of allowance for doubtful accounts: $352 and $379)		22,435			6,330
Deferred acquisition costs		27,436			26,133
Other assets		1,149			975
Goodwill		2,128			2,128
Total assets	$	320,913		$	320,177
LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance reserves and policyholder funds:
Future policy benefits	$	68,289		$	66,932
Unearned premiums		36,451			22,637
Losses and claims		62,518			62,873
Other policy liabilities		1,503			2,116
Total insurance reserves and policyholder funds		168,761			154,558
Accounts payable and accrued expenses		11,558			11,481
Deferred income taxes, net		609			7,164
Junior subordinated debenture obligations		41,238			41,238
Total liabilities		222,166			214,441
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, shares issued and outstanding: 65,000 and 70,000; redemption value: $6,500 and $7,000		65			70
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 21,336,276 and 21,216,542		22,401			22,401
Additional paid-in capital		57,088			57,180
Retained earnings		14,834			8,621
Accumulated other comprehensive income		7,221			19,571
Unearned stock grant compensation		(649	)		-
Treasury stock, at cost: 1,064,618 and 1,184,352 shares		(2,213	)		(2,107	)
Total shareholders’ equity		98,747			105,736
Total liabilities and shareholders’ equity	$	320,913		$	320,177

The accompanying notes are an integral part of these consolidated financial statements.

-2-

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Dollars in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Revenue:
Insurance premiums	$	36,373		$	31,592		$	69,392		$	62,273
Investment income		2,774			2,855			5,679			5,738
Realized investment gains, net		5,454			470			6,132			1,428
Other income		47			36			95			65
Total revenue		44,648			34,953			81,298			69,504
Benefits and expenses:
Insurance benefits and losses incurred		24,999			23,095			48,361			45,767
Commissions and underwriting expenses		10,402			7,970			19,685			15,003
Interest expense		438			658			1,015			1,315
Other expense		2,746			2,376			5,163			4,845
Total benefits and expenses		38,585			34,099			74,224			66,930
Income before income taxes		6,063			854			7,074			2,574
Income tax expense		103			73			192			136
Net income		5,960			781			6,882			2,438
Preferred stock dividends		(119	)		(127	)		(246	)		(254	)
Net income applicable to common shareholders	$	5,841		$	654		$	6,636		$	2,184
Earnings per common share (basic)	$	.27		$	.03		$	.31		$	.10
Earnings per common share (diluted)	$	.26		$	.03		$	.30		$	.10

The accompanying notes are an integral part of these consolidated financial statements.

-3-

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; Dollars in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net income	$	5,960		$	781		$	6,882		$	2,438
Other comprehensive income (loss):
Available-for-sale securities:
Gross unrealized holding gain (loss) arising in the period		(10,763	)		7,921			(13,009	)		6,475
Related income tax effect		3,767			(2,772	)		4,553			(2,266	)
Less: reclassification adjustment for net realized gains included in net income (1)		(5,454	)		(470	)		(6,132	)		(1,428	)
Related income tax effect (2)		1,909			164			2,146			500
Net effect on other comprehensive income (loss)		(10,541	)		4,843			(12,442	)		3,281
Derivative financial instrument:
Fair value adjustment to derivative financial instrument		-			193			141			346
Related income tax effect		-			(67	)		(49	)		(121	)
Net effect on other comprehensive income (loss)		-			126			92			225
Total other comprehensive income (loss), net of tax		(10,541	)		4,969			(12,350	)		3,506
Total comprehensive income (loss)	$	(4,581	)	$	5,750		$	(5,468	)	$	5,944

⁽¹⁾ Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying condensed consolidated statements of operations.

⁽²⁾ Income tax effect on reclassification adjustment for net realized gains included in income tax expense on the accompanying condensed consolidated statements of operations.

The accompanying notes are an integral part of these consolidated financial statements.

-4-

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited; Dollars in thousands)

Six Months Ended June 30, 2013	Preferred Stock			Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Unearned Stock Grant Compensation			Treasury Stock			Total
Balance, December 31, 2012	$	70		$	22,401	$	57,180		$	8,621		$	19,571		$	-		$	(2,107	)	$	105,736
Net income		-			-		-			6,882			-			-			-			6,882
Other comprehensive loss, net of tax		-			-		-			-			(12,350	)		-			-			(12,350	)
Preferred stock redeemed		(5	)		-		(495	)		-			-			-			-			(500	)
Dividends on common stock		-			-		-			(423	)		-			-			-			(423	)
Dividends accrued on preferred stock		-			-		-			(246	)		-			-			-			(246	)
Restricted stock grants		-			-		393			-			-			(704	)		311			-
Amortization of unearned compensation		-			-		-			-			-			55			-			55
Purchase of shares for treasury		-			-		-			-			-			-			(520	)		(520	)
Issuance of shares under stock plans		-			-		10			-			-			-			103			113
Balance, June 30, 2013	$	65		$	22,401	$	57,088		$	14,834		$	7,221		$	(649	)	$	(2,213	)	$	98,747
Six Months Ended June 30, 2012
Balance, December 31, 2011	$	70		$	22,401	$	57,136		$	6,179		$	12,244		$	-		$	(1,753	)	$	96,277
Net income		-			-		-			2,438			-			-			-			2,438
Other comprehensive income, net of tax		-			-		-			-			3,506			-			-			3,506
Dividends on common stock		-			-		-			(426	)		-			-			-			(426	)
Dividends accrued on preferred stock		-			-		-			(254	)		-			-			-			(254	)
Purchase of shares for treasury		-			-		-			-			-			-			(49	)		(49	)
Issuance of shares under stock plans		-			-		22			-			-			-			78			100
Balance, June 30, 2012	$	70		$	22,401	$	57,158		$	7,937		$	15,750		$	-		$	(1,724	)	$	101,592

The accompanying notes are an integral part of these consolidated financial statements.

-5-

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in thousands)

	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,882		$	2,438
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of deferred acquisition costs		5,272			5,490
Acquisition costs deferred		(6,575	)		(6,680	)
Realized investment gains		(6,132	)		(1,428	)
Increase in insurance reserves		14,203			2,078
Compensation expense related to share awards		55			-
Depreciation and amortization		297			220
Deferred income tax expense		95			18
(Increase) decrease in receivables, net		(15,264	)		1,945
Decrease in other liabilities		(27	)		(3,235	)
Other, net		(54	)		(144	)
Net cash (used in) provided by operating activities		(1,248	)		702
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured		68,910			32,849
Investments purchased		(37,953	)		(31,947	)
Additions to property and equipment		(233	)		(148	)
Net cash provided by investing activities		30,724			754
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Series D preferred stock		(500	)		-
Payment of dividends on Series D preferred stock		-			(508	)
Payment of dividends on common stock		(423	)		(426	)
Proceeds from shares issued under stock plans		113			100
Purchase of shares for treasury		(520	)		(49	)
Net cash used in financing activities		(1,330	)		(883	)
Net increase in cash and cash equivalents		28,146			573
Cash and cash equivalents at beginning of period		18,951			21,285
Cash and cash equivalents at end of period	$	47,097		$	21,858
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	1,079		$	1,314
Cash paid for income taxes	$	314		$	80

The accompanying notes are an integral part of these consolidated financial statements.

-6-

ATLANTIC AMERICAN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited; Dollars in thousands, except per share amounts)

Note 1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).  All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  The Company’s results of operations for the three month and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from those estimates.

Note 2.  Recently Issued Accounting Standards

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). The main objective of ASU 2013-02 is to enhance disclosures for reclassification adjustments including changes in accumulated other comprehensive income (“AOCI”) balances by component and significant items reclassified out of AOCI. ASU 2013-02 does not change the requirements for reporting net income or other comprehensive income in financial statements. However, the ASU requires an entity to provide enhanced disclosures to present separately by component reclassifications out of AOCI. In addition, an entity is also required to provide a tabular disclosure of the effect of items reclassified out of AOCI on the respective line items of net income but only if the item reclassified is required under GAAP to be reclassified to net income in its entirety. For other reclassification items that are not required under GAAP to be reclassified directly to net income in their entirety, the new disclosure only requires a cross-reference to other disclosures required under GAAP for those items.  The Company adopted ASU 2013-02 on January 1, 2013.  Since ASU 2013-02 was a disclosure only update, its adoption did not have a material impact on the Company’s financial condition or results of operations.  See Condensed Consolidated Statements of Comprehensive Income and Note 11 for expanded disclosures.

-7-

Note 3.  Segment Information

The Company’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company (“Bankers Fidelity”) operate in two principal business units, each focusing on specific products.  American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.  Each business unit is managed independently and is evaluated on its individual performance.  The following sets forth the revenue and income before income taxes for each business unit for the three month and six month periods ended June 30, 2013 and 2012.

Revenues	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
American Southern	$	14,747	$	10,887	$	25,237	$	22,151
Bankers Fidelity		29,123		23,857		55,061		46,938
Corporate and Other		778		209		1,000		415
Total revenue	$	44,648	$	34,953	$	81,298	$	69,504

Income Before Income Taxes	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
American Southern	$	3,177		$	1,045		$	4,619		$	1,760
Bankers Fidelity		3,687			1,159			4,724			3,775
Corporate and Other		(801	)		(1,350	)		(2,269	)		(2,961	)
Income before income taxes	$	6,063		$	854		$	7,074		$	2,574

Note 4.Credit Arrangements

Junior Subordinated Debentures

The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of Atlantic American; and (iii) engaging in only those activities necessary or incidental thereto.

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2013 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance June 30, 2013		18,042		23,196
Balance December 31, 2012		18,042		23,196
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Interest payable	Quarterly		Quarterly
Maturity date	December 4, 2032		May 15, 2033
Redeemable by issuer	Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date	December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value		17,500		22,500
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable	Quarterly		Quarterly
Distribution guaranteed by (3)	Atlantic American Corporation		Atlantic American Corporation

-8-

(1) For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.  During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.  The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2) The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3) The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.

Note 5.Derivative Financial Instruments

The Company had a zero cost interest rate collar with Wells Fargo Bank, National Association, which terminated on March 4, 2013, the stated maturity date, by its terms. There were no balances outstanding under the zero cost interest rate collar at that time.

Note 6.  Earnings Per Common Share

A reconciliation of the numerator and denominator used in the earnings per common share calculations is as follows:

	Three Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	5,960			21,268
Less preferred stock dividends		(119	)
Net income applicable to common shareholders		5,841			21,268	$	.27
Diluted Earnings Per Common Share:
Effect of Series D preferred stock		119			1,629
Net income applicable to common shareholders	$	5,960			22,897	$	.26

	Three Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	781			21,272
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		654			21,272	$	.03
Diluted Earnings Per Common Share:
Effect of dilutive stock options					79
Net income applicable to common shareholders	$	654			21,351	$	.03

-9-

	Six Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	6,882			21,225
Less preferred stock dividends		(246	)
Net income applicable to common shareholders		6,636			21,225	$	.31
Diluted Earnings Per Common Share:
Effect of dilutive stock options					38
Effect of Series D preferred stock		246			1,629
Net income applicable to common shareholders	$	6,882			22,892	$	.30

	Six Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	2,438			21,273
Less preferred stock dividends		(254	)
Net income applicable to common shareholders		2,184			21,273	$	.10
Diluted Earnings Per Common Share:
Effect of dilutive stock options					84
Net income applicable to common shareholders	$	2,184			21,357	$	.10

The assumed conversion of the Company’s Series D Preferred Stock was excluded from the earnings per common share calculation for the three month and six month periods ended June 30, 2012 since its impact would have been antidilutive.

Note 7.  Income Taxes

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Federal income tax provision at statutory rate of 35%	$	2,122		$	299		$	2,476		$	901
Dividends received deduction		(41	)		(38	)		(78	)		(82	)
Small life insurance company deduction		(78	)		(32	)		(78	)		(237	)
Other permanent differences		9			8			18			16
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(1,909	)		(164	)		(2,146	)		(462	)
Income tax expense	$	103		$	73		$	192		$	136

-10-

The components of income tax expense were:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Current - Federal	$	95		$	22		$	97		$	118
Deferred - Federal		1,917			215			2,241			480
Change in deferred tax asset valuation allowance		(1,909	)		(164	)		(2,146	)		(462	)
Total	$	103		$	73		$	192		$	136

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and six month periods ended June 30, 2013 and 2012 resulted from the dividends received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the change in deferred tax asset valuation allowance.  The current estimated DRD is adjusted as underlying factors change and can vary from the estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.   The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000.  The change in deferred tax asset valuation allowance was due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve.

Note 8.  Commitments and Contingencies

From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its businesses.  In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.

-11-

Note 9.  Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of June 30, 2013 and December 31, 2012.

Investments were comprised of the following:

	June 30, 2013
	Carrying Value		Gross Unrealized  Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	1,093	$	52	$	12,618
Obligations of states and political subdivisions		11,363		1,079		-		10,284
Corporate securities:
Utilities and telecom		17,468		1,889		103		15,682
Financial services		42,645		1,894		416		41,167
Other business – diversified		54,397		1,868		1,387		53,916
Other consumer – diversified		42,832		2,089		1,120		41,863
Total corporate securities		157,342		7,740		3,026		152,628
Redeemable preferred stocks:
Financial services		2,194		2		4		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,386		2		4		2,388
Total fixed maturities		184,750		9,914		3,082		177,918
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,510		546		-		964
Financial services		7,228		517		96		6,807
Other business – diversified		169		122		-		47
Other consumer – diversified		4,865		3,188		-		1,677
Total equity securities		13,772		4,373		96		9,495
Other invested assets		641		-		-		641
Policy loans		2,295		-		-		2,295
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	202,734	$	14,287	$	3,178	$	191,625

-12-

	December 31, 2012
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	27,512	$	4,618	$	-	$	22,894
Obligations of states and political subdivisions		17,761		2,514		-		15,247
Corporate securities:
Utilities and telecom		17,921		3,128		-		14,793
Financial services		43,695		3,957		415		40,153
Other business – diversified		66,741		7,172		12		59,581
Other consumer – diversified		52,910		7,665		120		45,365
Total corporate securities		181,267		21,922		547		159,892
Redeemable preferred stocks:
Financial services		3,775		18		3		3,760
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		3,968		18		3		3,953
Total fixed maturities		230,508		29,072		550		201,986
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,298		334		-		964
Financial services		8,607		857		39		7,789
Other business – diversified		134		87		-		47
Other consumer – diversified		2,166		489		-		1,677
Total equity securities		12,205		1,767		39		10,477
Other invested assets		565		-		-		565
Policy loans		2,338		-		-		2,338
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	246,892	$	30,839	$	589	$	216,642

The amortized cost and carrying value of the Company’s investments in fixed maturities at June 30, 2013 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	June 30, 2013
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		8,892		8,241
Due after five years through ten years		52,685		51,519
Due after ten years		122,054		117,164
Varying maturities		1,119		994
Totals	$	184,750	$	177,918

-13-

The following table sets forth the carrying value, amortized cost, and net unrealized gains of the Company’s investments, aggregated by industry, as of June 30, 2013 and December 31, 2012.

	June 30, 2013						December 31, 2012
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	12,618	$	1,041	$	27,512	$	22,894	$	4,618
Obligations of states and political subdivisions		11,363		10,284		1,079		17,761		15,247		2,514
Utilities and telecom		18,978		16,646		2,332		19,219		15,757		3,462
Financial services		52,067		50,170		1,897		56,077		51,702		4,375
Other business – diversified		54,566		53,963		603		66,875		59,628		7,247
Other consumer – diversified		47,889		43,732		4,157		55,269		47,235		8,034
Other investments		4,212		4,212		-		4,179		4,179		-
Investments	$	202,734	$	191,625	$	11,109	$	246,892	$	216,642	$	30,250

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	3,229	$	52	$	-	$	-	$	3,229	$	52
Corporate securities		52,021		2,953		1,927		73		53,948		3,026
Redeemable preferred stocks		1,142		4		-		-		1,142		4
Common and non-redeemable preferred stocks		2,945		71		975		25		3,920		96
Total temporarily impaired securities	$	59,337	$	3,080	$	2,902	$	98	$	62,239	$	3,178

-14-

	December 31, 2012
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate securities	$	8,806	$	147	$	1,600	$	400	$	10,406	$	547
Redeemable preferred stocks		1,216		3		-		-		1,216		3
Common and non-redeemable preferred stocks		3,494		39		-		-		3,494		39
Total temporarily impaired securities	$	13,516	$	189	$	1,600	$	400	$	15,116	$	589

The evaluation for an other than temporary impairment is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold these securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

As of June 30, 2013, securities in an unrealized loss position primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer and financial services sectors. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of June 30, 2013.

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks.

Level 2 Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include substantially all of its fixed maturities, which consist of U.S. Treasury securities and U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements using Level 2 criteria, the Company utilizes various external pricing sources.

Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).  Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of June 30, 2013 and December 31, 2012, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,034 and $2,124. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

-15-

As of June 30, 2013, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	182,716	$	2,034	$	184,750
Equity securities		6,793		6,979		-		13,772
Cash equivalents		45,438		-		-		45,438
Total	$	52,231	$	189,695	$	2,034	$	243,960

As of December 31, 2012, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	228,384	$	2,124	$	230,508
Equity securities		3,805		8,400		-		12,205
Cash equivalents		15,326		-		-		15,326
Total	$	19,131	$	236,784	$	2,124	$	258,039
Liabilities:
Derivative financial instrument	$	-	$	-	$	141	$	141

The following is a roll-forward of the financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and six month periods ended June 30, 2013.

	Fixed Maturities			Derivative (Liability)
Balance, December 31, 2012	$	2,124		$	(141	)
Total unrealized gains (losses) included in other comprehensive income		(32	)		141
Balance, March 31, 2013		2,092			-
Total unrealized losses included in other comprehensive income		(58	)		-
Balance, June 30, 2013	$	2,034		$	-

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest.  There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal.  Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.  The Company’s derivative financial instrument was an interest rate collar which terminated on March 4, 2013, the stated maturity date, by its terms.

-16-

Note 10.  Fair Values of Financial Instruments

The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.  However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value.  Accordingly, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2013 and December 31, 2012.

			June 30, 2013				December 31, 2012
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	47,097	$	47,097	$	18,951	$	18,951
Fixed maturities		(1)		184,750		184,750		230,508		230,508
Equity securities		(1)		13,772		13,772		12,205		12,205
Other invested assets	Level 3			641		641		565		565
Policy loans	Level 2			2,295		2,295		2,338		2,338
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior subordinated debentures	Level 2			41,238		41,238		41,238		41,238
Derivative financial instrument	Level 3			-		-		141		141

(1) See Note 9 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

The fair value estimates as of June 30, 2013 and December 31, 2012 were based on pertinent information available to management as of the respective dates.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, current estimates of fair value may differ significantly from amounts that might ultimately be realized in a market exchange on any subsequent date.

Note 11.  Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of June 30, 2013 and December 31, 2012, and the changes in the balance of each component thereof during the six month period ended June 30, 2013, net of taxes.

	Unrealized Gains on Available-for- Sale Securities			Derivative Financial Instrument			Total
Balance, December 31, 2012	$	19,663		$	(92	)	$	19,571
Other comprehensive income (loss) before reclassifications		(8,456	)		92			(8,364	)
Amounts reclassified from accumulated other comprehensive income		(3,986	)		-			(3,986	)
Net current-period other comprehensive income (loss)		(12,442	)		92			(12,350	)
Balance, June 30, 2013	$	7,221		$	-		$	7,221

Note 12.  Subsequent Event

Subsequent to June 30, 2013, the Company purchased an additional $3,938 of Gray Television, Inc., a related party, Class A common stock.

-17-

Item 2.

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”) as of and for the three month and six month periods ended June 30, 2013. This discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere herein, as well as with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Atlantic American is an insurance holding company whose operations are conducted primarily through its insurance subsidiaries: American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company (“Bankers Fidelity”).  Each operating company is managed separately, offers different products and is evaluated on its individual performance.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures.   Actual results could differ significantly from those estimates.  The Company has identified certain estimates that involve a higher degree of judgment and are subject to a significant degree of variability. The Company’s critical accounting policies and the resultant estimates considered most significant by management are disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. During the six month period ended June 30, 2013, there were no changes to the critical accounting policies or related estimates from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards applicable, or expected to become applicable, to the Company, see Note 2 of the accompanying notes to the unaudited condensed consolidated financial statements.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income for the three month and six month periods ended June 30, 2013 and the comparable periods in 2012:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In thousands)
Insurance premiums	$	36,373	$	31,592	$	69,392	$	62,273
Investment income		2,774		2,855		5,679		5,738
Realized investment gains, net		5,454		470		6,132		1,428
Other income		47		36		95		65
Total revenue		44,648		34,953		81,298		69,504
Insurance benefits and losses incurred		24,999		23,095		48,361		45,767
Commissions and underwriting expenses		10,402		7,970		19,685		15,003
Other expense		2,746		2,376		5,163		4,845
Interest expense		438		658		1,015		1,315
Total benefits and expenses		38,585		34,099		74,224		66,930
Income before income taxes	$	6,063	$	854	$	7,074	$	2,574
Net income	$	5,960	$	781	$	6,882	$	2,438

-18-

Management also considers and evaluates performance by analyzing the non-GAAP measure, operating income, and believes it is a useful metric for investors, potential investors, securities analysts and others because it isolates the “core” results of the Company before considering certain items that are either beyond the control of management (such as taxes, which are 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 investment gains, which are not a part of the Company’s primary operations and are, to an extent, subject to discretion in terms of timing of realization).

A reconciliation of net income to operating income for the three month and six month periods ended June 30, 2013 and the comparable periods in 2012 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
Reconciliation of Net Income to non-GAAP Measurement	2013			2012			2013			2012
	(In thousands)
Net income	$	5,960		$	781		$	6,882		$	2,438
Income tax expense		103			73			192			136
Realized investment gains, net		(5,454	)		(470	)		(6,132	)		(1,428	)
Operating income	$	609		$	384		$	942		$	1,146

On a consolidated basis, the Company had net income of $6.0 million, or $0.26 per diluted share, for the three month period ended June 30, 2013, compared to net income of $0.8 million, or $0.03 per diluted share, for the three month period ended June 30, 2012.  The Company had net income of $6.9 million, or $0.30 per diluted share, for the six month period ended June 30, 2013, compared to net income of $2.4 million, or $0.10 per diluted share, for the six month period ended June 30, 2012.  The increase in net income for the three month and six month periods ended June 30, 2013 was primarily due to an increase in realized investment gains.  Premium revenue for the three month period ended June 30, 2013 increased $4.8 million, or 15.1%, to $36.4 million.  For the six month period ended June 30, 2013, premium revenue increased $7.1 million, or 11.4%, to $69.4 million.  The increase in premium revenue for the three month and six month periods ended June 30, 2013 was primarily due to an increase in Medicare supplement business in the life and health operations; although the property and casualty operations earned premiums increased 17.5% in the three month period ended June 30, 2013 as a result of a significant new contract which incepted during the second quarter of 2013.  Operating income was $0.6 million in the three month period ended June 30, 2013 compared to $0.4 million in the three month period ended June 30, 2012.  The increase in operating income was primarily attributable to a more favorable loss experience in the three month period ended June 30, 2013 in both of the life and health and property and casualty operations.  Operating income decreased to $0.9 million in the six month period ended June 30, 2013 from $1.1 million in the comparable period of 2012.  The decrease in operating income for the six month period ended June 30, 2013 was due primarily to increases in advertising expense for television commercials and social media initiatives as well as development of the worksite distribution channel and product.  Partially offsetting this decrease in operating income was increased profitability in the property and casualty operations due to a decrease in losses in the six month period ended June 30, 2013 as compared to the same period in 2012.

A more detailed analysis of the individual operating companies and other corporate activities is provided below.

-19-

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2013 and the comparable periods in 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Gross written premiums	$	28,214		$	12,030		$	37,090		$	21,579
Ceded premiums		(1,950	)		(1,904	)		(3,847	)		(3,819	)
Net written premiums	$	26,264		$	10,126		$	33,243		$	17,760
Net earned premiums	$	11,354		$	9,666		$	20,281		$	19,478
Net loss and loss adjustment expenses		7,057			6,738			12,379			14,757
Underwriting expenses		4,512			3,106			8,238			5,635
Underwriting loss	$	(215	)	$	(178	)	$	(336	)	$	(914	)
Loss ratio		62.2	%		69.7	%		61.0	%		75.8	%
Expense ratio		39.7			32.1			40.6			28.9
Combined ratio		101.9	%		101.8	%		101.6	%		104.7	%

Gross written premiums at American Southern increased $16.2 million, or 134.5%, during the three month period ended June 30, 2013, and $15.5 million, or 71.9%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  The increase in gross written premiums for the three month and six month periods ended June 30, 2013 was primarily attributable to an increase in commercial automobile written premiums of which $13.7 million resulted from a new state contract awarded to American Southern in the second quarter of 2013 through a competitive bidding process.

Ceded premiums increased slightly during the three month and six month periods ended June 30, 2013 over the comparable periods in 2012.  The increase in ceded premiums for the three month and six month periods ended June 30, 2013 was primarily due to the increase in related earned premiums.  As American Southern’s ceded premiums are determined as a percentage of earned premiums, an increase in ceded premiums occurs when earned premiums increase.  However, the increase in ceded premiums for the three month and six month periods ended June 30, 2013 was disproportionate to the related earned premiums due to the utilization of a limited stop loss agreement to reinsure the commercial automobile business from the new state contract referenced previously.

The following presents American Southern’s net earned premiums by line of business for the three month and six month periods ended June 30, 2013 and the comparable periods in 2012 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In thousands)
Commercial automobile	$	8,135	$	6,540	$	13,997	$	12,860
General liability		875		783		1,625		1,946
Property		600		556		1,199		998
Surety		1,744		1,787		3,460		3,674
Total	$	11,354	$	9,666	$	20,281	$	19,478

Net earned premiums increased $1.7 million, or 17.5%, during the three month period ended June 30, 2013, and $0.8 million, or 4.1%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  The increase in net earned premiums for the three month and six month periods ended June 30, 2013 was primarily attributable to the increase in commercial automobile earned premiums from the new state contract referenced previously.  Partially offsetting the increase in net earned premiums during the six month period ended June 30, 2013 was a decrease in general liability earned premiums resulting from the cancellation of certain general liability programs in 2012 as well as a decline in surety earned premiums.  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 year and immediately preceding year.

-20-

Net loss and loss adjustment expenses at American Southern increased $0.3 million, or 4.7%, during the three month period ended June 30, 2013 over the three month period ended June 30, 2012, but decreased $2.4 million, or 16.1%, during the six month period ended June 30, 2013, from the comparable period in 2012.  As a percentage of premiums, net loss and loss adjustment expenses were 62.2% in the three month period ended June 30, 2013, compared to 69.7% in the three month period ended June 30, 2012.  For the six month period ended June 30, 2013, this ratio decreased to 61.0% from 75.8% in the comparable period of 2012.  The decrease in the loss ratio for the three month period ended June 30, 2013 was primarily due to a decrease in losses in the general liability and surety lines of business.  The decrease in the loss ratio for the six month period ended June 30, 2013 was due to more favorable loss experience in all lines of business.  During the six month period ended June 30 2012, American Southern experienced significant increases in the frequency and severity of claims in the commercial automobile, general liability and surety lines of business which did not recur in the comparable 2013 periods.  The improvement in the 2013 quarter and year to date loss ratios was primarily attributable to actions taken in prior periods to better rationalize American Southern’s existing book of business and to strengthen the underwriting guidelines with respect to new and renewal business.

Underwriting expenses increased $1.4 million, or 45.3%, during the three month period ended June 30, 2013, and $2.6 million, or 46.2%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  As a percentage of premiums, underwriting expenses were 39.7% in the three month period ended June 30, 2013, compared to 32.1% in the three month period ended June 30, 2012.  For the six month period ended June 30, 2013, this ratio increased to 40.6% from 28.9% in the comparable period of 2012.  The increase in the expense ratio for the three month and six month periods ended June 30, 2013 was primarily due to American Southern’s variable commission structure, which compensates the company’s agents in relation to the loss ratios of the business they write.  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. During the three month and six month periods ended June 30, 2013, these commissions at American Southern increased $1.5 million and $2.7 million, respectively, from the comparable periods in 2012 due to the more favorable loss experience.

Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month and six month periods ended June 30, 2013 and the comparable periods in 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Medicare supplement	$	20,867		$	17,745		$	41,064		$	34,619
Other health products		1,165			1,116			2,310			2,234
Life insurance		2,987			3,065			5,737			5,942
Total earned premiums		25,019			21,926			49,111			42,795
Insurance benefits and losses		17,942			16,357			35,982			31,010
Underwriting expenses		7,494			6,339			14,355			12,152
Total expenses		25,436			22,696			50,337			43,162
Underwriting loss	$	(417	)	$	(770	)	$	(1,226	)	$	(367	)
Loss ratio		71.7	%		74.6	%		73.3	%		72.5	%
Expense ratio		30.0			28.9			29.2			28.4
Combined ratio		101.7	%		103.5	%		102.5	%		100.9	%

-21-

Premium revenue at Bankers Fidelity increased $3.1 million, or 14.1%, during the three month period ended June 30, 2013, and $6.3 million, or 14.8%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  Premiums from the Medicare supplement line of business increased $3.1 million, or 17.6%, during the three month period ended June 30, 2013, and $6.4 million, or 18.6%, during the six month period ended June 30, 2013, due primarily to an increase in business generated from the company’s existing agents and newly appointed agents, an increase in business in the state of Missouri as a result of favorable pricing compared to competitors, and active management and implementation of rate increases on renewal business, as appropriate.  Other health product premiums increased slightly during the same comparable periods, primarily as a result of new sales of the company’s short-term care products. Premiums from the life insurance line of business decreased $0.1 million, or 2.5%, during the three month period ended June 30, 2013, and $0.2 million, or 3.5%, during the six month period ended June 30, 2013 due to redemption and settlement of existing policy obligations exceeding the level of new sales activity.

Benefits and losses increased $1.6 million, or 9.7%, during the three month period ended June 30, 2013, and $5.0 million, or 16.0%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  As a percentage of premiums, benefits and losses were 71.7% in the three month period ended June 30, 2013, compared to 74.6% in the three month period ended June 30, 2012.  For the six month period ended June 30, 2013, this ratio increased slightly to 73.3% from 72.5% in the comparable period of 2012.  The decrease in the loss ratio for the three month period ended June 30, 2013 was primarily attributable to more favorable loss experience in the Medicare supplement line of business along with rate increases on the Medicare supplement business that helped mitigate the impact of higher medical costs.  The increase in the loss ratio for the six month period ended June 30, 2013 was primarily due to higher claims associated with the continued aging of the life insurance block of business.

Underwriting expenses increased $1.2 million, or 18.2%, during the three month period ended June 30, 2013, and $2.2 million, or 18.1%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  As a percentage of premiums, underwriting expenses were 30.0% in the three month period ended June 30, 2013, compared to 28.9% in the three month period ended June 30, 2012.  For the six month period ended June 30, 2013, this ratio increased to 29.2% from 28.4% in the comparable period of 2012.  The increase in the expense ratio for the three month and six month periods ended June 30, 2013 was primarily attributable to increases in advertising and agency related expenses as well as development of the worksite distribution channel and product.  Advertising expenses in the three month and six month periods ended June 30, 2013 increased $0.2 million and $0.7 million, respectively, over the comparable periods in 2012 and included charges for television commercials and social media initiatives.

INVESTMENT INCOME AND REALIZED GAINS

Investment income decreased $0.1 million, or 2.8%, during the three month period ended June 30, 2013, and $0.1 million, or 1.0%, during the six month period ended June 30, 2013, from the comparable periods in 2012.  The decrease in investment income for the three month and six month periods ended June 30, 2013 was primarily attributable to the sale of a number of the Company’s investments in long-term fixed maturities due to rising long-term interest rates.  The Company was not able to reinvest the proceeds from the sale of fixed maturities at equivalent interest rates resulting in a decrease in yield on invested assets and a lower average balance of fixed maturities held by the Company.

The Company had net realized investment gains of $6.1 million during the six month period ended June 30, 2013, compared to net realized investment gains of $1.4 million in the six month period ended June 30, 2012.   The net realized investment gains in the six month period ended June 30, 2013 was primarily due to the sale of a number of the Company’s investments in long-term fixed maturities discussed previously.  The net realized investment gains in the six month period ended June 30, 2012 also resulted from the disposition of several of the Company’s investments in fixed maturities, although in lesser amounts.  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.

INTEREST EXPENSE

Interest expense decreased $0.2 million, or 33.4%, during the three month period ended June 30, 2013, and $0.3 million, or 22.8%, during the six month period ended June 30, 2013, from the comparable periods in 2012.  The decrease in interest expense for the three month and six month periods ended June 30, 2013 was primarily due to the termination of the Company’s zero cost interest rate collar with Wells Fargo Bank, National Association (“Wells Fargo”) on March 4, 2013, the stated maturity date, by its terms.  The interest rate collar had a London Interbank Offered Rate (“LIBOR”) floor of 4.77%.  As a result of interest rates remaining below the LIBOR floor, the Company was required to make payments to Wells Fargo under the interest rate collar for all periods presented, through the maturity date.

-22-

OTHER EXPENSES

Other expenses (commissions, underwriting expenses, and other expenses) increased $2.8 million, or 27.1%, during the three month period ended June 30, 2013, and $5.0 million, or 25.2%, during the six month period ended June 30, 2013, over the comparable periods in 2012.  The increase in other expenses for the three month and six month periods ended June 30, 2013 was primarily attributable to increased commission accruals at American Southern due to recent favorable loss experience.  During the three month and six month periods ended June 30, 2013, these commissions at American Southern increased $1.5 million and $2.7 million, respectively, over the comparable periods in 2012.  The majority of American Southern’s business is structured in a way that agents are compensated based upon the loss ratios of the business they place with the company.  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.  Also contributing to the increase in other expenses was an increase in commission and underwriting costs in the life and health operations associated with the higher volume of business, increases in advertising and agency related expenses as well as expenses related to the development of the worksite distribution channel and product.  On a consolidated basis, as a percentage of earned premiums, other expenses increased to 36.1% in the three month period ended June 30, 2013 from 32.7% in the three month period ended June 30, 2012.  For the six month period ended June 30, 2013, this ratio increased to 35.8% from 31.9% in the comparable period of 2012. The increase in the expense ratio for the three month and six month periods ended June 30, 2013 was primarily attributable to the increase in commission accruals, advertising expenses and worksite product development expenses discussed previously.

INCOME TAXES

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and six month periods ended June 30, 2013 and 2012 resulted from the dividends received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the change in deferred tax asset valuation allowance.  The current estimated DRD is adjusted as underlying factors change and can vary from the estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.   The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3.0 million and is ultimately phased out at $15.0 million.  The change in deferred tax asset valuation allowance was due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve.

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.  The Company’s primary sources of cash are written premiums, investment income and proceeds from the sale and maturity of its invested assets.  The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium receipts and reinsurance collections will be adequate to fund the payment of claims and expenses as needed.

Cash flows at the Parent are derived from dividends, management fees, and tax-sharing payments, as described below, from the subsidiaries.  The cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements, as well as the repurchase of shares and payments of any dividends as may be authorized and approved by the Company’s board of directors from time to time.  At June 30, 2013, the Parent had approximately $27.4 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $3.9 million for the six month period ended June 30, 2013 compared to statutory net income of $1.0 million for the six month period ended June 30, 2012.  Statutory results are impacted by the recognition of all costs of acquiring business.  In a scenario in which the Company is growing, statutory results are generally lower than results determined under GAAP.  Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes.  The Company’s life and health operations’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

-23-

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations.  Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to the greater of 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries.  At June 30, 2013, American Southern had $38.9 million of statutory surplus and Bankers Fidelity had $34.7 million of statutory surplus. In 2013, dividend payments by the Parent’s insurance subsidiaries in excess of $9.6 million would require prior approval.

The Parent provides certain administrative and other services to each of its insurance subsidiaries.  The amounts charged to and paid by the subsidiaries include reimbursements for various shared services and other expenses incurred directly on behalf of the subsidiaries by the Parent.  In addition, there is in place a formal tax-sharing agreement between the Parent and its insurance subsidiaries.  It is anticipated that this agreement will provide the Parent with additional funds from profitable subsidiaries due to the subsidiaries' use of the Parent’s tax loss carryforwards, which totaled approximately $2.1 million at June 30, 2013.

The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”).  The outstanding $18.0 million and $23.2 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 three-month LIBOR plus an applicable margin.  The margin ranges from 4.00% to 4.10%.  At June 30, 2013, the effective interest rate was 4.3%.  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.  Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities.  The Company has not made such an election.

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 potential future financing arrangements.

The Company had a zero cost interest rate collar with Wells Fargo, which terminated on March 4, 2013, the stated maturity date, by its terms.  There were no balances outstanding under the zero cost interest rate collar at that time.

At June 30, 2013, the Company had 65,000 shares of Series D Preferred Stock (“Series D Preferred Stock”) outstanding.  All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s controlling shareholder. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative.  In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,629,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option.  The Series D Preferred Stock is not currently convertible.  During the three month period ended June 30, 2013, the Company redeemed 5,000 shares of the Series D Preferred Stock at the stated value of $100 per share, for an aggregate payment of $0.5 million thereby decreasing the issued and outstanding shares of Series D Preferred Stock to 65,000 from 70,000.  At June 30, 2013, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.3 million.

Cash and cash equivalents increased from $19.0 million at December 31, 2012 to $47.1 million at June 30, 2013. The increase in cash and cash equivalents during the six month period ended June 30, 2013 was primarily attributable to net cash provided by investing activities of $30.7 million resulting from the sale and maturity of securities exceeding investment purchases.  Partially offsetting the increase was net cash used in operating activities of $1.2 million, redemption of 5,000 shares of Series D Preferred Stock for $0.5 million, dividends paid on the Company’s common stock of $0.4 million and the purchase of shares for treasury for $0.5 million.

The Company believes that existing cash balances as well as the dividends, fees, and tax-sharing payments it receives from its subsidiaries and, if needed, additional borrowings from financial institutions, will enable the Company to meet its liquidity requirements for the foreseeable future. Management is not aware of any current recommendations by regulatory authorities, which, if implemented, would have a material adverse effect on the Company's liquidity, capital resources or operations.

-24-

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 (the “Exchange Act”) reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Management necessarily applies its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.  The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes.  Additionally, controls can be circumvented by the individual acts of one or more persons.  The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and, while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and may not be detected.  An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act).  Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains and references certain information that constitutes forward-looking statements as that term is defined in the federal securities laws.  Those statements, to the extent they are not historical facts, should be considered forward-looking statements, and are subject to various risks and uncertainties.  Such forward-looking statements are made based upon management’s current assessments of various risks and uncertainties, as well as assumptions made in accordance with the “safe harbor” provisions of the federal securities laws.  The Company’s actual results could differ materially from the results anticipated in these forward-looking statements as a result of such risks and uncertainties, including those identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, subsequent quarterly reports on Form 10-Q and the other filings made by the Company from time to time with the Securities and Exchange Commission.  The Company undertakes no obligation to update any forward-looking statement as a result of subsequent developments, changes in underlying assumptions or facts, or otherwise.

-25-

PART II.  OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On October 30, 2012, the Board of Directors of the Company approved a plan that allows for the repurchase of up to 750,000 shares of the Company's common stock (the "Repurchase Plan") on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company.  Any such repurchases can be made from time to time in accordance with applicable securities laws and other requirements.

Other than pursuant to the Repurchase Plan, no purchases of common stock of the Company were made by or on behalf of the Company during the periods described below.

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 June 30, 2013.

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
April 1 – April 30, 2013		18,414	$	3.45		18,414		644,723
May 1 – May 31, 2013		32,776		3.85		32,776		611,947
June 1 – June 30, 2013		14,571		3.97		14,571		597,376
Total		65,761	$	3.77		65,761

Item 6.  Exhibits

31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

-26-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ATLANTIC AMERICAN CORPORATION
		(Registrant)
Date: August 13, 2013	By:	/s/ John G. Sample, Jr.
		John G. Sample, Jr.
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

-27-

EXHIBIT INDEX

Exhibit
Number	Title
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hilton H. Howell, Jr., certify that:

1. I have reviewed this report on Form 10-Q of Atlantic American Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 13, 2013	/s/ Hilton H. Howell, Jr.
	Hilton H. Howell, Jr.
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John G. Sample, Jr., certify that:

1. I have reviewed this report on Form 10-Q of Atlantic American Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 13, 2013	/s/ John G. Sample, Jr.
	John G. Sample, Jr.
	Senior Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

    Pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q of Atlantic American Corporation (the “Company”) for the quarterly period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: August 13, 2013	/s/ Hilton H. Howell, Jr.
	Hilton H. Howell, Jr.
	President and Chief Executive Officer
Date: August 13, 2013	/s/ John G. Sample, Jr.
	John G. Sample, Jr.
	Senior Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

Note 10.  Fair Values of Financial Instruments

The estimated fair values have been determined by the Company using available market information from various market sources and appropriate valuation methodologies as of the respective dates.  However, considerable judgment is necessary to interpret market data and to develop the estimates of fair value.  Accordingly, the estimates presented herein are not necessarily indicative of the amounts which the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2013 and December 31, 2012.

			June 30, 2013				December 31, 2012
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	47,097	$	47,097	$	18,951	$	18,951
Fixed maturities		(1)		184,750		184,750		230,508		230,508
Equity securities		(1)		13,772		13,772		12,205		12,205
Other invested assets	Level 3			641		641		565		565
Policy loans	Level 2			2,295		2,295		2,338		2,338
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior subordinated debentures	Level 2			41,238		41,238		41,238		41,238
Derivative financial instrument	Level 3			-		-		141		141

(1) See Note 9 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

The fair value estimates as of June 30, 2013 and December 31, 2012 were based on pertinent information available to management as of the respective dates.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, current estimates of fair value may differ significantly from amounts that might ultimately be realized in a market exchange on any subsequent date.

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue:
Insurance premiums	$ 36,373	$ 31,592	$ 69,392	$ 62,273
Investment income	2,774	2,855	5,679	5,738
Realized investment gains, net	5,454	470	6,132	1,428
Other income	47	36	95	65
Total revenue	44,648	34,953	81,298	69,504
Benefits and expenses:
Insurance benefits and losses incurred	24,999	23,095	48,361	45,767
Commissions and underwriting expenses	10,402	7,970	19,685	15,003
Interest expense	438	658	1,015	1,315
Other expense	2,746	2,376	5,163	4,845
Total benefits and expenses	38,585	34,099	74,224	66,930
Income before income taxes	6,063	854	7,074	2,574
Income tax expense	103	73	192	136
Net income	5,960	781	6,882	2,438
Preferred stock dividends	(119)	(127)	(246)	(254)
Net income applicable to common shareholders	$ 5,841	$ 654	$ 6,636	$ 2,184
Earnings per common share (basic) (in dollars per share)	$ 0.27	$ 0.03	$ 0.31	$ 0.10
Earnings per common share (diluted) (in dollars per share)	$ 0.26	$ 0.03	$ 0.30	$ 0.10

XML

Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information [Abstract]

Segment Information

Note 3.  Segment Information

The Company’s primary operating subsidiaries, American Southern Insurance Company and American Safety Insurance Company (together known as “American Southern”) and Bankers Fidelity Life Insurance Company (“Bankers Fidelity”) operate in two principal business units, each focusing on specific products.  American Southern operates in the property and casualty insurance market, while Bankers Fidelity operates in the life and health insurance market.  Each business unit is managed independently and is evaluated on its individual performance.  The following sets forth the revenue and income before income taxes for each business unit for the three month and six month periods ended June 30, 2013 and 2012.

Revenues	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
American Southern	$	14,747	$	10,887	$	25,237	$	22,151
Bankers Fidelity		29,123		23,857		55,061		46,938
Corporate and Other		778		209		1,000		415
Total revenue	$	44,648	$	34,953	$	81,298	$	69,504

Income Before Income Taxes	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
American Southern	$	3,177		$	1,045		$	4,619		$	1,760
Bankers Fidelity		3,687			1,159			4,724			3,775
Corporate and Other		(801	)		(1,350	)		(2,269	)		(2,961	)
Income before income taxes	$	6,063		$	854		$	7,074		$	2,574

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2013

Investments [Abstract ]

Schedule of investments aggregated by type and industry

Investments were comprised of the following:

	June 30, 2013
	Carrying Value		Gross Unrealized  Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	1,093	$	52	$	12,618
Obligations of states and political subdivisions		11,363		1,079		-		10,284
Corporate securities:
Utilities and telecom		17,468		1,889		103		15,682
Financial services		42,645		1,894		416		41,167
Other business – diversified		54,397		1,868		1,387		53,916
Other consumer – diversified		42,832		2,089		1,120		41,863
Total corporate securities		157,342		7,740		3,026		152,628
Redeemable preferred stocks:
Financial services		2,194		2		4		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,386		2		4		2,388
Total fixed maturities		184,750		9,914		3,082		177,918
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,510		546		-		964
Financial services		7,228		517		96		6,807
Other business – diversified		169		122		-		47
Other consumer – diversified		4,865		3,188		-		1,677
Total equity securities		13,772		4,373		96		9,495
Other invested assets		641		-		-		641
Policy loans		2,295		-		-		2,295
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	202,734	$	14,287	$	3,178	$	191,625

	December 31, 2012
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	27,512	$	4,618	$	-	$	22,894
Obligations of states and political subdivisions		17,761		2,514		-		15,247
Corporate securities:
Utilities and telecom		17,921		3,128		-		14,793
Financial services		43,695		3,957		415		40,153
Other business – diversified		66,741		7,172		12		59,581
Other consumer – diversified		52,910		7,665		120		45,365
Total corporate securities		181,267		21,922		547		159,892
Redeemable preferred stocks:
Financial services		3,775		18		3		3,760
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		3,968		18		3		3,953
Total fixed maturities		230,508		29,072		550		201,986
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,298		334		-		964
Financial services		8,607		857		39		7,789
Other business – diversified		134		87		-		47
Other consumer – diversified		2,166		489		-		1,677
Total equity securities		12,205		1,767		39		10,477
Other invested assets		565		-		-		565
Policy loans		2,338		-		-		2,338
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	246,892	$	30,839	$	589	$	216,642

Amortized cost and carrying value of fixed maturities by contractual maturity

The amortized cost and carrying value of the Company’s investments in fixed maturities at June 30, 2013 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	June 30, 2013
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		8,892		8,241
Due after five years through ten years		52,685		51,519
Due after ten years		122,054		117,164
Varying maturities		1,119		994
Totals	$	184,750	$	177,918

Schedule of investments aggregated by industry

The following table sets forth the carrying value, amortized cost, and net unrealized gains of the Company’s investments, aggregated by industry, as of June 30, 2013 and December 31, 2012.

	June 30, 2013						December 31, 2012
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	12,618	$	1,041	$	27,512	$	22,894	$	4,618
Obligations of states and political subdivisions		11,363		10,284		1,079		17,761		15,247		2,514
Utilities and telecom		18,978		16,646		2,332		19,219		15,757		3,462
Financial services		52,067		50,170		1,897		56,077		51,702		4,375
Other business – diversified		54,566		53,963		603		66,875		59,628		7,247
Other consumer – diversified		47,889		43,732		4,157		55,269		47,235		8,034
Other investments		4,212		4,212		-		4,179		4,179		-
Investments	$	202,734	$	191,625	$	11,109	$	246,892	$	216,642	$	30,250

Schedule of investment securities with continuous unrealized loss position

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	3,229	$	52	$	-	$	-	$	3,229	$	52
Corporate securities		52,021		2,953		1,927		73		53,948		3,026
Redeemable preferred stocks		1,142		4		-		-		1,142		4
Common and non-redeemable preferred stocks		2,945		71		975		25		3,920		96
Total temporarily impaired securities	$	59,337	$	3,080	$	2,902	$	98	$	62,239	$	3,178

	December 31, 2012
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate securities	$	8,806	$	147	$	1,600	$	400	$	10,406	$	547
Redeemable preferred stocks		1,216		3		-		-		1,216		3
Common and non-redeemable preferred stocks		3,494		39		-		-		3,494		39
Total temporarily impaired securities	$	13,516	$	189	$	1,600	$	400	$	15,116	$	589

Financial instruments carried at fair value measured on a recurring basis

As of June 30, 2013, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	182,716	$	2,034	$	184,750
Equity securities		6,793		6,979		-		13,772
Cash equivalents		45,438		-		-		45,438
Total	$	52,231	$	189,695	$	2,034	$	243,960

As of December 31, 2012, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	228,384	$	2,124	$	230,508
Equity securities		3,805		8,400		-		12,205
Cash equivalents		15,326		-		-		15,326
Total	$	19,131	$	236,784	$	2,124	$	258,039
Liabilities:
Derivative financial instrument	$	-	$	-	$	141	$	141

Roll-forward of financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following is a roll-forward of the financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and six month periods ended June 30, 2013.

	Fixed Maturities			Derivative (Liability)
Balance, December 31, 2012	$	2,124		$	(141	)
Total unrealized gains (losses) included in other comprehensive income		(32	)		141
Balance, March 31, 2013		2,092			-
Total unrealized losses included in other comprehensive income		(58	)		-
Balance, June 30, 2013	$	2,034		$	-

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note 11.  Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of June 30, 2013 and December 31, 2012, and the changes in the balance of each component thereof during the six month period ended June 30, 2013, net of taxes.

	Unrealized Gains on Available-for- Sale Securities			Derivative Financial Instrument			Total
Balance, December 31, 2012	$	19,663		$	(92	)	$	19,571
Other comprehensive income (loss) before reclassifications		(8,456	)		92			(8,364	)
Amounts reclassified from accumulated other comprehensive income		(3,986	)		-			(3,986	)
Net current-period other comprehensive income (loss)		(12,442	)		92			(12,350	)
Balance, June 30, 2013	$	7,221		$	-		$	7,221

XML

Subsequent Event (Details) (Subsequent Event [Member], Repurchase of Equity From Related Party [Member], USD $)	3 Months Ended
	Jun. 30, 2013
Subsequent Event [Member] | Repurchase of Equity From Related Party [Member]
Subsequent Event [Line Items]
Purchase of additional common stock from Gray Television, Inc., a related party, amount	$ 3,938

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Segment	Jun. 30, 2012
Segment Information [Abstract]
Number of business units			2
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	$ 44,648	$ 34,953	$ 81,298	$ 69,504
Income before income taxes	6,063	854	7,074	2,574
American Southern [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	14,747	10,887	25,237	22,151
Income before income taxes	3,177	1,045	4,619	1,760
Bankers Fidelity [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	29,123	23,857	55,061	46,938
Income before income taxes	3,687	1,159	4,724	3,775
Corporate and Other [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	778	209	1,000	415
Income before income taxes	$ (801)	$ (1,350)	$ (2,269)	$ (2,961)

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income [Abstract]

Changes in balances of each component of accumulated other comprehensive income, net of taxes

The following table sets forth the balance of each component of accumulated other comprehensive income as of June 30, 2013 and December 31, 2012, and the changes in the balance of each component thereof during the six month period ended June 30, 2013, net of taxes.

	Unrealized Gains on Available-for- Sale Securities			Derivative Financial Instrument			Total
Balance, December 31, 2012	$	19,663		$	(92	)	$	19,571
Other comprehensive income (loss) before reclassifications		(8,456	)		92			(8,364	)
Amounts reclassified from accumulated other comprehensive income		(3,986	)		-			(3,986	)
Net current-period other comprehensive income (loss)		(12,442	)		92			(12,350	)
Balance, June 30, 2013	$	7,221		$	-		$	7,221

XML

Investments, Part IV (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	$ 243,960	$ 258,039
Derivative financial instrument [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Liabilities at fair value		141
Fixed maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	184,750	230,508
Equity securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	13,772	12,205
Cash equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	45,438	15,326
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	52,231	19,131
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Derivative financial instrument [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Liabilities at fair value		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fixed maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Equity securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	6,793	3,805
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Cash equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	45,438	15,326
Significant Other Observable Inputs (Level 2) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	189,695	236,784
Significant Other Observable Inputs (Level 2) [Member] | Derivative financial instrument [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Liabilities at fair value		0
Significant Other Observable Inputs (Level 2) [Member] | Fixed maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	182,716	228,384
Significant Other Observable Inputs (Level 2) [Member] | Equity securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	6,979	8,400
Significant Other Observable Inputs (Level 2) [Member] | Cash equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	0	0
Significant Unobservable Inputs (Level 3) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	2,034	2,124
Significant Unobservable Inputs (Level 3) [Member] | Derivative financial instrument [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Liabilities at fair value		141
Significant Unobservable Inputs (Level 3) [Member] | Fixed maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	2,034	2,124
Significant Unobservable Inputs (Level 3) [Member] | Equity securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	0	0
Significant Unobservable Inputs (Level 3) [Member] | Cash equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	$ 0	$ 0

XML

Investments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	$ 202,734	$ 246,892
Gross Unrealized Gains	14,287	30,839
Gross Unrealized Losses	3,178	589
Amortized Cost	191,625	216,642
U.S. Treasury securities and obligations of U.S. Government agencies and authorities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	13,659	27,512
Amortized Cost	12,618	22,894
Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	11,363	17,761
Amortized Cost	10,284	15,247
Utilities and telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	18,978	19,219
Amortized Cost	16,646	15,757
Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	52,067	56,077
Amortized Cost	50,170	51,702
Other business - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	54,566	66,875
Amortized Cost	53,963	59,628
Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	47,889	55,269
Amortized Cost	43,732	47,235
Fixed maturities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	184,750	230,508
Gross Unrealized Gains	9,914	29,072
Gross Unrealized Losses	3,082	550
Amortized Cost	177,918	201,986
Fixed maturities [Member] | Bonds [Member] | U.S. Treasury securities and obligations of U.S. Government agencies and authorities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	13,659	27,512
Gross Unrealized Gains	1,093	4,618
Gross Unrealized Losses	52	0
Amortized Cost	12,618	22,894
Fixed maturities [Member] | Bonds [Member] | Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	11,363	17,761
Gross Unrealized Gains	1,079	2,514
Gross Unrealized Losses	0	0
Amortized Cost	10,284	15,247
Fixed maturities [Member] | Corporate securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	157,342	181,267
Gross Unrealized Gains	7,740	21,922
Gross Unrealized Losses	3,026	547
Amortized Cost	152,628	159,892
Fixed maturities [Member] | Corporate securities [Member] | Utilities and telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	17,468	17,921
Gross Unrealized Gains	1,889	3,128
Gross Unrealized Losses	103	0
Amortized Cost	15,682	14,793
Fixed maturities [Member] | Corporate securities [Member] | Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	42,645	43,695
Gross Unrealized Gains	1,894	3,957
Gross Unrealized Losses	416	415
Amortized Cost	41,167	40,153
Fixed maturities [Member] | Corporate securities [Member] | Other business - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	54,397	66,741
Gross Unrealized Gains	1,868	7,172
Gross Unrealized Losses	1,387	12
Amortized Cost	53,916	59,581
Fixed maturities [Member] | Corporate securities [Member] | Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	42,832	52,910
Gross Unrealized Gains	2,089	7,665
Gross Unrealized Losses	1,120	120
Amortized Cost	41,863	45,365
Fixed maturities [Member] | Redeemable preferred stocks [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,386	3,968
Gross Unrealized Gains	2	18
Gross Unrealized Losses	4	3
Amortized Cost	2,388	3,953
Fixed maturities [Member] | Redeemable preferred stocks [Member] | Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,194	3,775
Gross Unrealized Gains	2	18
Gross Unrealized Losses	4	3
Amortized Cost	2,196	3,760
Fixed maturities [Member] | Redeemable preferred stocks [Member] | Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	192	193
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	192	193
Equity securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	13,772	12,205
Gross Unrealized Gains	4,373	1,767
Gross Unrealized Losses	96	39
Amortized Cost	9,495	10,477
Equity securities [Member] | Common and non-redeemable preferred stocks [Member] | Utilities and telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	1,510	1,298
Gross Unrealized Gains	546	334
Gross Unrealized Losses	0	0
Amortized Cost	964	964
Equity securities [Member] | Common and non-redeemable preferred stocks [Member] | Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	7,228	8,607
Gross Unrealized Gains	517	857
Gross Unrealized Losses	96	39
Amortized Cost	6,807	7,789
Equity securities [Member] | Common and non-redeemable preferred stocks [Member] | Other business - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	169	134
Gross Unrealized Gains	122	87
Gross Unrealized Losses	0	0
Amortized Cost	47	47
Equity securities [Member] | Common and non-redeemable preferred stocks [Member] | Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	4,865	2,166
Gross Unrealized Gains	3,188	489
Gross Unrealized Losses	0	0
Amortized Cost	1,677	1,677
Other invested assets [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	641	565
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	641	565
Policy loans [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,295	2,338
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	2,295	2,338
Real estate [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	38	38
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	38	38
Investments in unconsolidated trusts [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	1,238	1,238
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	$ 1,238	$ 1,238

XML

Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Fair Values of Financial Instruments [Abstract]

Carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2013 and December 31, 2012.

			June 30, 2013				December 31, 2012
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	47,097	$	47,097	$	18,951	$	18,951
Fixed maturities		(1)		184,750		184,750		230,508		230,508
Equity securities		(1)		13,772		13,772		12,205		12,205
Other invested assets	Level 3			641		641		565		565
Policy loans	Level 2			2,295		2,295		2,338		2,338
Real estate	Level 2			38		38		38		38
Investment in unconsolidated trusts	Level 2			1,238		1,238		1,238		1,238
Liabilities:
Junior subordinated debentures	Level 2			41,238		41,238		41,238		41,238
Derivative financial instrument	Level 3			-		-		141		141

(1) See Note 9 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (USD $) In Thousands, unless otherwise specified	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Unearned Stock Grant Compensation [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2011	$ 70	$ 22,401	$ 57,136	$ 6,179	$ 12,244	$ 0	$ (1,753)	$ 96,277
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	2,438	0	0	0	2,438
Other comprehensive income (loss), net of tax	0	0	0	0	3,506	0	0	3,506
Dividends on common stock	0	0	0	(426)	0	0	0	(426)
Dividends accrued on preferred stock	0	0	0	(254)	0	0	0	(254)
Purchase of shares for treasury	0	0	0	0	0	0	(49)	(49)
Issuance of shares under stock plans	0	0	22	0	0	0	78	100
Balance at Jun. 30, 2012	70	22,401	57,158	7,937	15,750	0	(1,724)	101,592
Balance at Dec. 31, 2012	70	22,401	57,180	8,621	19,571	0	(2,107)	105,736
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	6,882	0	0	0	6,882
Other comprehensive income (loss), net of tax	0	0	0	0	(12,350)	0	0	(12,350)
Preferred stock redeemed	(5)	0	(495)	0	0	0	0	(500)
Dividends on common stock	0	0	0	(423)	0	0	0	(423)
Dividends accrued on preferred stock	0	0	0	(246)	0	0	0	(246)
Restricted stock grants	0	0	393	0	0	(704)	311	0
Amortization of unearned compensation	0	0	0	0	0	55	0	55
Purchase of shares for treasury	0	0	0	0	0	0	(520)	(520)
Issuance of shares under stock plans	0	0	10	0	0	0	103	113
Balance at Jun. 30, 2013	$ 65	$ 22,401	$ 57,088	$ 14,834	$ 7,221	$ (649)	$ (2,213)	$ 98,747

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2013

Basis of Presentation [Abstract]

Basis of Presentation

Note 1.Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atlantic American Corporation (the “Parent”) and its subsidiaries (collectively with the Parent, the “Company”).  All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for audited annual financial statements.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  The unaudited condensed consolidated financial statements included herein and these related notes should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  The Company’s results of operations for the three month and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from those estimates.

XML

Credit Arrangements

6 Months Ended

Jun. 30, 2013

Credit Arrangements [Abstract]

Credit Arrangements

Note 4.Credit Arrangements

Junior Subordinated Debentures

The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of Atlantic American; and (iii) engaging in only those activities necessary or incidental thereto.

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2013 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance June 30, 2013		18,042		23,196
Balance December 31, 2012		18,042		23,196
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Interest payable	Quarterly		Quarterly
Maturity date	December 4, 2032		May 15, 2033
Redeemable by issuer	Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date	December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value		17,500		22,500
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable	Quarterly		Quarterly
Distribution guaranteed by (3)	Atlantic American Corporation		Atlantic American Corporation

(1) For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.  During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.  The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2) The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3) The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.

XML

Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2013

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards

Note 2.  Recently Issued Accounting Standards

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). The main objective of ASU 2013-02 is to enhance disclosures for reclassification adjustments including changes in accumulated other comprehensive income (“AOCI”) balances by component and significant items reclassified out of AOCI. ASU 2013-02 does not change the requirements for reporting net income or other comprehensive income in financial statements. However, the ASU requires an entity to provide enhanced disclosures to present separately by component reclassifications out of AOCI. In addition, an entity is also required to provide a tabular disclosure of the effect of items reclassified out of AOCI on the respective line items of net income but only if the item reclassified is required under GAAP to be reclassified to net income in its entirety. For other reclassification items that are not required under GAAP to be reclassified directly to net income in their entirety, the new disclosure only requires a cross-reference to other disclosures required under GAAP for those items.  The Company adopted ASU 2013-02 on January 1, 2013.  Since ASU 2013-02 was a disclosure only update, its adoption did not have a material impact on the Company’s financial condition or results of operations.  See Condensed Consolidated Statements of Comprehensive Income and Note 11 for expanded disclosures.

XML

Credit Arrangements (Details) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 BusinessTrust
Debt Instrument [Line Items]
Number of connecticut statutory business trusts	2
Financial structure of statutory business trusts [Abstract]
Balance June 30, 2013	$ 41,238
Balance December 31, 2012	41,238
JUNIOR SUBORDINATED DEBENTURES [Member]
Financial structure of statutory business trusts [Abstract]
Number of consecutive quarters for which interest payments can be deferred	20
Atlantic American Statutory Trust I [Member] | JUNIOR SUBORDINATED DEBENTURES [Member]
Financial structure of statutory business trusts [Abstract]
Principal amount owed	18,042	[1],[2]
Balance June 30, 2013	18,042	[1],[2]
Balance December 31, 2012	18,042	[1],[2]
Coupon rate	LIBOR + 4.00%	[1],[2]
Interest payable	Quarterly	[1],[2]
Maturity date	Dec. 04, 2032	[1],[2]
Redeemable by issuer	Yes	[1],[2]
Atlantic American Statutory Trust I [Member] | JUNIOR SUBORDINATED DEBENTURES [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate (in hundredths)	4.00%
Atlantic American Statutory Trust I [Member] | TRUST PREFERRED SECURITIES [Member]
Financial structure of statutory business trusts [Abstract]
Coupon rate	LIBOR + 4.00%
Issuance date	Dec. 04, 2002
Securities issued (in shares)	17,500
Liquidation preference per security (in dollars per share)	$ 1
Liquidation value	17,500
Distribution payable	Quarterly
Distribution guaranteed by	Atlantic American Corporation	[3]
Atlantic American Statutory Trust I [Member] | TRUST PREFERRED SECURITIES [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate (in hundredths)	4.00%
Atlantic American Statutory Trust II [Member] | JUNIOR SUBORDINATED DEBENTURES [Member]
Financial structure of statutory business trusts [Abstract]
Principal amount owed	23,196	[1],[2]
Balance June 30, 2013	23,196	[1],[2]
Balance December 31, 2012	23,196	[1],[2]
Coupon rate	LIBOR + 4.10%	[1],[2]
Interest payable	Quarterly	[1],[2]
Maturity date	May 15, 2033	[1],[2]
Redeemable by issuer	Yes	[1],[2]
Atlantic American Statutory Trust II [Member] | JUNIOR SUBORDINATED DEBENTURES [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate (in hundredths)	4.10%
Atlantic American Statutory Trust II [Member] | TRUST PREFERRED SECURITIES [Member]
Financial structure of statutory business trusts [Abstract]
Coupon rate	LIBOR + 4.10%
Issuance date	May 15, 2003
Securities issued (in shares)	22,500
Liquidation preference per security (in dollars per share)	$ 1
Liquidation value	$ 22,500
Distribution payable	Quarterly
Distribution guaranteed by	Atlantic American Corporation	[3]
Atlantic American Statutory Trust II [Member] | TRUST PREFERRED SECURITIES [Member] | LIBOR [Member]
Financial structure of statutory business trusts [Abstract]
Basis spread on variable rate (in hundredths)	4.10%

[1] The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

[2] For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

[3] The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.

XML

Investments, Part II (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Carrying Value [Abstract]
Due in one year or less	$ 0
Due after one year through five years	8,892
Due after five years through ten years	52,685
Due after ten years	122,054
Varying maturities	1,119
Totals	184,750	230,508
Amortized Cost [Abstract]
Due in one year or less	0
Due after one year through five years	8,241
Due after five years through ten years	51,519
Due after ten years	117,164
Varying maturities	994
Totals	$ 177,918

XML

Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance			$ 19,571
Other comprehensive income (loss) before reclassifications			(8,364)
Amounts reclassified from accumulated other comprehensive income			(3,986)
Total other comprehensive income (loss), net of tax	(10,541)	4,969	(12,350)	3,506
Ending balance	7,221		7,221
Unrealized Gains on Available-for-Sale Securities [Member]
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance			19,663
Other comprehensive income (loss) before reclassifications			(8,456)
Amounts reclassified from accumulated other comprehensive income			(3,986)
Total other comprehensive income (loss), net of tax			(12,442)
Ending balance	7,221		7,221
Derivative Financial Instrument [Member]
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance			(92)
Other comprehensive income (loss) before reclassifications			92
Amounts reclassified from accumulated other comprehensive income			0
Total other comprehensive income (loss), net of tax			92
Ending balance	$ 0		$ 0

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investments:
Fixed maturities, cost	$ 177,918	$ 201,986
Common and non-redeemable preferred stocks, cost	9,495	10,477
Other invested assets, cost	641	565
Receivables:
Insurance premiums and other, allowance for doubtful accounts	352	379
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	4,000,000	4,000,000
Preferred stock, shares issued (in shares)	65,000	70,000
Preferred stock, shares outstanding (in shares)	65,000	70,000
Preferred stock, redemption value	$ 6,500	$ 7,000
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	22,400,894	22,400,894
Common stock, shares outstanding (in shares)	21,336,276	21,216,542
Treasury stock, at cost (in shares)	1,064,618	1,184,352

XML

Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

Income Taxes

Note 7.  Income Taxes

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Federal income tax provision at statutory rate of 35%	$	2,122		$	299		$	2,476		$	901
Dividends received deduction		(41	)		(38	)		(78	)		(82	)
Small life insurance company deduction		(78	)		(32	)		(78	)		(237	)
Other permanent differences		9			8			18			16
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(1,909	)		(164	)		(2,146	)		(462	)
Income tax expense	$	103		$	73		$	192		$	136

The components of income tax expense were:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Current - Federal	$	95		$	22		$	97		$	118
Deferred - Federal		1,917			215			2,241			480
Change in deferred tax asset valuation allowance		(1,909	)		(164	)		(2,146	)		(462	)
Total	$	103		$	73		$	192		$	136

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and six month periods ended June 30, 2013 and 2012 resulted from the dividends received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the change in deferred tax asset valuation allowance.  The current estimated DRD is adjusted as underlying factors change and can vary from the estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.   The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”).  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000.  The change in deferred tax asset valuation allowance was due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve.

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Comprehensive Income (Loss) [Abstract]
Net income	$ 5,960		$ 781		$ 6,882		$ 2,438
Available-for-sale securities:
Gross unrealized holding gain (loss) arising in the period	(10,763)		7,921		(13,009)		6,475
Related income tax effect	3,767		(2,772)		4,553		(2,266)
Less: reclassification adjustment for net realized gains included in net income	(5,454)	[1]	(470)	[1]	(6,132)	[1]	(1,428)	[1]
Related income tax effect	1,909	[2]	164	[2]	2,146	[2]	500	[2]
Net effect on other comprehensive income (loss)	(10,541)		4,843		(12,442)		3,281
Derivative financial instrument:
Fair value adjustment to derivative financial instrument	0		193		141		346
Related income tax effect	0		(67)		(49)		(121)
Net effect on other comprehensive income (loss)	0		126		92		225
Total other comprehensive income (loss), net of tax	(10,541)		4,969		(12,350)		3,506
Total comprehensive income (loss)	$ (4,581)		$ 5,750		$ (5,468)		$ 5,944

[1] Realized gains on available-for-sale securities recognized in realized investment gains, net on the accompanying condensed consolidated statements of operations.

[2] Income tax effect on reclassification adjustment for net realized gains included in income tax expense on the accompanying condensed consolidated statements of operations.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 47,097	$ 18,951
Investments:
Fixed maturities (cost: $177,918 and $201,986)	184,750	230,508
Common and non-redeemable preferred stocks (cost: $9,495 and $10,477)	13,772	12,205
Other invested assets (cost: $641 and $565)	641	565
Policy loans	2,295	2,338
Real estate	38	38
Investment in unconsolidated trusts	1,238	1,238
Total investments	202,734	246,892
Receivables:
Reinsurance	17,934	18,768
Insurance premiums and other (net of allowance for doubtful accounts: $352 and $379)	22,435	6,330
Deferred acquisition costs	27,436	26,133
Other assets	1,149	975
Goodwill	2,128	2,128
Total assets	320,913	320,177
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits	68,289	66,932
Unearned premiums	36,451	22,637
Losses and claims	62,518	62,873
Other policy liabilities	1,503	2,116
Total insurance reserves and policyholder funds	168,761	154,558
Accounts payable and accrued expenses	11,558	11,481
Deferred income taxes, net	609	7,164
Junior subordinated debenture obligations	41,238	41,238
Total liabilities	222,166	214,441
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, shares issued and outstanding: 65,000 and 70,000; redemption value: $6,500 and $7,000	65	70
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 21,336,276 and 21,216,542	22,401	22,401
Additional paid-in capital	57,088	57,180
Retained earnings	14,834	8,621
Accumulated other comprehensive income	7,221	19,571
Unearned stock grant compensation	(649)	0
Treasury stock, at cost: 1,064,618 and 1,184,352 shares	(2,213)	(2,107)
Total shareholders' equity	98,747	105,736
Total liabilities and shareholders' equity	$ 320,913	$ 320,177

XML

Earnings Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income [Abstract]
Net income	$ 5,960	$ 781	$ 6,882	$ 2,438
Less preferred stock dividends	(119)	(127)	(246)	(254)
Net income applicable to common shareholders	5,841	654	6,636	2,184
Effect of Series D preferred stock	119		246
Net income applicable to common shareholders, diluted	$ 5,960	$ 654	$ 6,882	$ 2,184
Shares [Abstract]
Weighted average shares outstanding, basic (in shares)	21,268	21,272	21,225	21,273
Effect of dilutive stock options (in shares)		79	38	84
Effect of Series D preferred stock (in shares)	1,629		1,629
Weighted average shares outstanding, diluted (in shares)	22,897	21,351	22,892	21,357
Per Share Amount [Abstract]
Net income applicable to common shareholders, basic (in dollars per share)	$ 0.27	$ 0.03	$ 0.31	$ 0.10
Net income applicable to common shareholders, diluted (in dollars per share)	$ 0.26	$ 0.03	$ 0.30	$ 0.10

XML

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

Reconciliation of income tax expense

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax expense is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Federal income tax provision at statutory rate of 35%	$	2,122		$	299		$	2,476		$	901
Dividends received deduction		(41	)		(38	)		(78	)		(82	)
Small life insurance company deduction		(78	)		(32	)		(78	)		(237	)
Other permanent differences		9			8			18			16
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(1,909	)		(164	)		(2,146	)		(462	)
Income tax expense	$	103		$	73		$	192		$	136

Components of income tax expense

The components of income tax expense were:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Current - Federal	$	95		$	22		$	97		$	118
Deferred - Federal		1,917			215			2,241			480
Change in deferred tax asset valuation allowance		(1,909	)		(164	)		(2,146	)		(462	)
Total	$	103		$	73		$	192		$	136

XML

Investments, Part V (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013
Fixed maturities [Member]
Assets measured at fair value on a recurring basis [Abstract]
Balance, beginning of period	$ 2,092	$ 2,124
Total unrealized gains (losses) included in other comprehensive income	(58)	(32)
Balance, end of period	2,034	2,092
Derivative (Liability) [Member]
Liabilities measured at fair value on a recurring basis [Abstract]
Balance, beginning of period	0	(141)
Total unrealized gains (losses) included in other comprehensive income	0	141
Balance, end of period	$ 0	$ 0

XML

Fair Values of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Carrying Amount [Member]
Assets [Abstract]
Fixed maturities	$ 184,750	[1]	$ 230,508	[1]
Equity securities	13,772	[1]	12,205	[1]
Carrying Amount [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents	47,097		18,951
Carrying Amount [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans	2,295		2,338
Real estate	38		38
Investment in unconsolidated trusts	1,238		1,238
Liabilities [Abstract]
Junior subordinated debentures	41,238		41,238
Carrying Amount [Member] | Level 3 [Member]
Assets [Abstract]
Other invested assets	641		565
Liabilities [Abstract]
Derivative financial instrument	0		141
Estimated Fair Value [Member]
Assets [Abstract]
Fixed maturities	184,750	[1]	230,508	[1]
Equity securities	13,772	[1]	12,205	[1]
Estimated Fair Value [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents	47,097		18,951
Estimated Fair Value [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans	2,295		2,338
Real estate	38		38
Investment in unconsolidated trusts	1,238		1,238
Liabilities [Abstract]
Junior subordinated debentures	41,238		41,238
Estimated Fair Value [Member] | Level 3 [Member]
Assets [Abstract]
Other invested assets	641		565
Liabilities [Abstract]
Derivative financial instrument	$ 0		$ 141

[1] See Note 9 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

XML

Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Note 6.  Earnings Per Common Share

A reconciliation of the numerator and denominator used in the earnings per common share calculations is as follows:

	Three Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	5,960			21,268
Less preferred stock dividends		(119	)
Net income applicable to common shareholders		5,841			21,268	$	.27
Diluted Earnings Per Common Share:
Effect of Series D preferred stock		119			1,629
Net income applicable to common shareholders	$	5,960			22,897	$	.26

	Three Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	781			21,272
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		654			21,272	$	.03
Diluted Earnings Per Common Share:
Effect of dilutive stock options					79
Net income applicable to common shareholders	$	654			21,351	$	.03

	Six Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	6,882			21,225
Less preferred stock dividends		(246	)
Net income applicable to common shareholders		6,636			21,225	$	.31
Diluted Earnings Per Common Share:
Effect of dilutive stock options					38
Effect of Series D preferred stock		246			1,629
Net income applicable to common shareholders	$	6,882			22,892	$	.30

	Six Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	2,438			21,273
Less preferred stock dividends		(254	)
Net income applicable to common shareholders		2,184			21,273	$	.10
Diluted Earnings Per Common Share:
Effect of dilutive stock options					84
Net income applicable to common shareholders	$	2,184			21,357	$	.10

The assumed conversion of the Company’s Series D Preferred Stock was excluded from the earnings per common share calculation for the three month and six month periods ended June 30, 2012 since its impact would have been antidilutive.

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Reconciliation of income tax (benefit) expense [Abstract]
Federal income tax provision at statutory rate of 35%	$ 2,122	$ 299	$ 2,476	$ 901
Dividends received deduction	(41)	(38)	(78)	(82)
Small life insurance company deduction	(78)	(32)	(78)	(237)
Other permanent differences	9	8	18	16
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets	(1,909)	(164)	(2,146)	(462)
Income tax expense	103	73	192	136
Federal statutory income tax rate (in hundredths)			35.00%
Components of income tax expense [Abstract]
Current - Federal	95	22	97	118
Deferred - Federal	1,917	215	2,241	480
Change in deferred tax asset valuation allowance	(1,909)	(164)	(2,146)	(462)
Income tax expense	103	73	192	136
SLD as percentage of life insurance company taxable income (in hundredths)			60.00%
Percentage of reduction in SLD (in hundredths)			15.00%
Minimum tentative amount of LICTI	3,000		3,000
Maximum tentative amount of LICTI	$ 15,000		$ 15,000

XML

Investments

6 Months Ended

Jun. 30, 2013

Investments [Abstract ]

Investments

Note 9.  Investments

The following tables set forth the carrying value, gross unrealized gains, gross unrealized losses and amortized cost of the Company’s investments, aggregated by type and industry, as of June 30, 2013 and December 31, 2012.

Investments were comprised of the following:

	June 30, 2013
	Carrying Value		Gross Unrealized  Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	1,093	$	52	$	12,618
Obligations of states and political subdivisions		11,363		1,079		-		10,284
Corporate securities:
Utilities and telecom		17,468		1,889		103		15,682
Financial services		42,645		1,894		416		41,167
Other business – diversified		54,397		1,868		1,387		53,916
Other consumer – diversified		42,832		2,089		1,120		41,863
Total corporate securities		157,342		7,740		3,026		152,628
Redeemable preferred stocks:
Financial services		2,194		2		4		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,386		2		4		2,388
Total fixed maturities		184,750		9,914		3,082		177,918
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,510		546		-		964
Financial services		7,228		517		96		6,807
Other business – diversified		169		122		-		47
Other consumer – diversified		4,865		3,188		-		1,677
Total equity securities		13,772		4,373		96		9,495
Other invested assets		641		-		-		641
Policy loans		2,295		-		-		2,295
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	202,734	$	14,287	$	3,178	$	191,625

	December 31, 2012
	Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Amortized Cost
Fixed maturities:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	27,512	$	4,618	$	-	$	22,894
Obligations of states and political subdivisions		17,761		2,514		-		15,247
Corporate securities:
Utilities and telecom		17,921		3,128		-		14,793
Financial services		43,695		3,957		415		40,153
Other business – diversified		66,741		7,172		12		59,581
Other consumer – diversified		52,910		7,665		120		45,365
Total corporate securities		181,267		21,922		547		159,892
Redeemable preferred stocks:
Financial services		3,775		18		3		3,760
Other consumer – diversified		193		-		-		193
Total redeemable preferred stocks		3,968		18		3		3,953
Total fixed maturities		230,508		29,072		550		201,986
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,298		334		-		964
Financial services		8,607		857		39		7,789
Other business – diversified		134		87		-		47
Other consumer – diversified		2,166		489		-		1,677
Total equity securities		12,205		1,767		39		10,477
Other invested assets		565		-		-		565
Policy loans		2,338		-		-		2,338
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	246,892	$	30,839	$	589	$	216,642

The amortized cost and carrying value of the Company’s investments in fixed maturities at June 30, 2013 by contractual maturity were as follows.  Actual maturities may differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.

	June 30, 2013
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		8,892		8,241
Due after five years through ten years		52,685		51,519
Due after ten years		122,054		117,164
Varying maturities		1,119		994
Totals	$	184,750	$	177,918

The following table sets forth the carrying value, amortized cost, and net unrealized gains of the Company’s investments, aggregated by industry, as of June 30, 2013 and December 31, 2012.

	June 30, 2013						December 31, 2012
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	13,659	$	12,618	$	1,041	$	27,512	$	22,894	$	4,618
Obligations of states and political subdivisions		11,363		10,284		1,079		17,761		15,247		2,514
Utilities and telecom		18,978		16,646		2,332		19,219		15,757		3,462
Financial services		52,067		50,170		1,897		56,077		51,702		4,375
Other business – diversified		54,566		53,963		603		66,875		59,628		7,247
Other consumer – diversified		47,889		43,732		4,157		55,269		47,235		8,034
Other investments		4,212		4,212		-		4,179		4,179		-
Investments	$	202,734	$	191,625	$	11,109	$	246,892	$	216,642	$	30,250

The following tables present the Company’s unrealized loss aging for securities by type and length of time the security was in a continuous unrealized loss position as of June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	3,229	$	52	$	-	$	-	$	3,229	$	52
Corporate securities		52,021		2,953		1,927		73		53,948		3,026
Redeemable preferred stocks		1,142		4		-		-		1,142		4
Common and non-redeemable preferred stocks		2,945		71		975		25		3,920		96
Total temporarily impaired securities	$	59,337	$	3,080	$	2,902	$	98	$	62,239	$	3,178

	December 31, 2012
	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate securities	$	8,806	$	147	$	1,600	$	400	$	10,406	$	547
Redeemable preferred stocks		1,216		3		-		-		1,216		3
Common and non-redeemable preferred stocks		3,494		39		-		-		3,494		39
Total temporarily impaired securities	$	13,516	$	189	$	1,600	$	400	$	15,116	$	589

The evaluation for an other than temporary impairment is a quantitative and qualitative process, which is subject to risks and uncertainties in the determination of whether declines in the fair value of investments are other than temporary. Potential risks and uncertainties include, among other things, changes in general economic conditions, an issuer’s financial condition or near term recovery prospects and the effects of changes in interest rates. In evaluating a potential impairment, the Company considers, among other factors, management’s intent and ability to hold these securities until price recovery, the nature of the investment and the expectation of prospects for the issuer and its industry, the status of an issuer’s continued satisfaction of its obligations in accordance with their contractual terms, and management’s expectation as to the issuer’s ability and intent to continue to do so, as well as ratings actions that may affect the issuer’s credit status.

As of June 30, 2013, securities in an unrealized loss position primarily included certain of the Company’s investments in fixed maturities within the other diversified business, other diversified consumer and financial services sectors. The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position. Based upon the Company’s expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company’s evaluation of other relevant factors, including those described above, the Company has deemed these securities to be temporarily impaired as of June 30, 2013.

The following describes the fair value hierarchy and provides information as to the extent to which the Company uses fair value to measure the value of its financial instruments and information about the inputs used to value those financial instruments. The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three broad levels.

Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. The Company’s financial instruments valued using Level 1 criteria include cash equivalents and exchange traded common stocks.

Level 2 Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities. The Company’s financial instruments valued using Level 2 criteria include substantially all of its fixed maturities, which consist of U.S. Treasury securities and U.S. Government securities, obligations of states and political subdivisions, and certain corporate fixed maturities, as well as its non-redeemable preferred stocks. In determining fair value measurements using Level 2 criteria, the Company utilizes various external pricing sources.

Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).  Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources. The Company’s financial instruments valued using Level 3 criteria consist of a limited number of fixed maturities. As of June 30, 2013 and December 31, 2012, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,034 and $2,124. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of June 30, 2013, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	182,716	$	2,034	$	184,750
Equity securities		6,793		6,979		-		13,772
Cash equivalents		45,438		-		-		45,438
Total	$	52,231	$	189,695	$	2,034	$	243,960

As of December 31, 2012, financial instruments carried at fair value were measured on a recurring basis as summarized below:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Fixed maturities	$	-	$	228,384	$	2,124	$	230,508
Equity securities		3,805		8,400		-		12,205
Cash equivalents		15,326		-		-		15,326
Total	$	19,131	$	236,784	$	2,124	$	258,039
Liabilities:
Derivative financial instrument	$	-	$	-	$	141	$	141

The following is a roll-forward of the financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month and six month periods ended June 30, 2013.

	Fixed Maturities			Derivative (Liability)
Balance, December 31, 2012	$	2,124		$	(141	)
Total unrealized gains (losses) included in other comprehensive income		(32	)		141
Balance, March 31, 2013		2,092			-
Total unrealized losses included in other comprehensive income		(58	)		-
Balance, June 30, 2013	$	2,034		$	-

The Company’s fixed maturities valued using Level 3 inputs consist solely of issuances of pooled debt obligations of multiple, smaller financial services companies. They are not actively traded and valuation techniques used to measure fair value are based on future estimated cash flows (based on current cash flows) discounted at reasonable estimated rates of interest.  There are no assumed prepayments and/or default probability assumptions as a majority of these instruments contain certain U.S. government agency strips to support repayment of the principal.  Other qualitative and quantitative information received from the original underwriter of the pooled offerings is also considered, as applicable.  The Company’s derivative financial instrument was an interest rate collar which terminated on March 4, 2013, the stated maturity date, by its terms.

XML

Derivative Financial Instruments

6 Months Ended

Jun. 30, 2013

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 5.Derivative Financial Instruments

The Company had a zero cost interest rate collar with Wells Fargo Bank, National Association, which terminated on March 4, 2013, the stated maturity date, by its terms. There were no balances outstanding under the zero cost interest rate collar at that time.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 6,882	$ 2,438
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Amortization of deferred acquisition costs	5,272	5,490
Acquisition costs deferred	(6,575)	(6,680)
Realized investment gains	(6,132)	(1,428)
Increase in insurance reserves	14,203	2,078
Compensation expense related to share awards	55	0
Depreciation and amortization	297	220
Deferred income tax expense	95	18
(Increase) decrease in receivables, net	(15,264)	1,945
Decrease in other liabilities	(27)	(3,235)
Other, net	(54)	(144)
Net cash (used in) provided by operating activities	(1,248)	702
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured	68,910	32,849
Investments purchased	(37,953)	(31,947)
Additions to property and equipment	(233)	(148)
Net cash provided by investing activities	30,724	754
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Series D preferred stock	(500)	0
Payment of dividends on Series D preferred stock	0	(508)
Payment of dividends on common stock	(423)	(426)
Proceeds from shares issued under stock plans	113	100
Purchase of shares for treasury	(520)	(49)
Net cash used in financing activities	(1,330)	(883)
Net increase in cash and cash equivalents	28,146	573
Cash and cash equivalents at beginning of period	18,951	21,285
Cash and cash equivalents at end of period	47,097	21,858
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	1,079	1,314
Cash paid for income taxes	$ 314	$ 80

XML

Investments, Part III (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of investments aggregated by industry [Abstract]
Carrying Value	$ 202,734	$ 246,892
Amortized Cost	191,625	216,642
Unrealized Gains	11,109	30,250
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	59,337	13,516
12 months or longer	2,902	1,600
Total	62,239	15,116
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	3,080	189
12 months or longer	98	400
Total	3,178	589
U.S. Treasury securities and obligations of U.S. Government agencies and authorities [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	13,659	27,512
Amortized Cost	12,618	22,894
Unrealized Gains	1,041	4,618
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	3,229
12 months or longer	0
Total	3,229
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	52
12 months or longer	0
Total	52
Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	11,363	17,761
Amortized Cost	10,284	15,247
Unrealized Gains	1,079	2,514
Utilities and telecom [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	18,978	19,219
Amortized Cost	16,646	15,757
Unrealized Gains	2,332	3,462
Financial services [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	52,067	56,077
Amortized Cost	50,170	51,702
Unrealized Gains	1,897	4,375
Other business - diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	54,566	66,875
Amortized Cost	53,963	59,628
Unrealized Gains	603	7,247
Other consumer - diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	47,889	55,269
Amortized Cost	43,732	47,235
Unrealized Gains	4,157	8,034
Other Investment [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	4,212	4,179
Amortized Cost	4,212	4,179
Unrealized Gains	0	0
Corporate securities [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	52,021	8,806
12 months or longer	1,927	1,600
Total	53,948	10,406
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	2,953	147
12 months or longer	73	400
Total	3,026	547
Redeemable preferred stocks [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	1,142	1,216
12 months or longer	0	0
Total	1,142	1,216
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	4	3
12 months or longer	0	0
Total	4	3
Common and non-redeemable preferred stocks [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	2,945	3,494
12 months or longer	975	0
Total	3,920	3,494
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	71	39
12 months or longer	25	0
Total	$ 96	$ 39

XML

Subsequent Event

6 Months Ended

Jun. 30, 2013

Subsequent Event [Abstract]

Subsequent Event [Text Block]

Note 12.  Subsequent Event

Subsequent to June 30, 2013, the Company purchased an additional $3,938 of Gray Television, Inc., a related party, Class A common stock.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 8.  Commitments and Contingencies

From time to time, the Company is, and expects to continue to be, involved in various claims and lawsuits incidental to and in the ordinary course of its businesses.  In the opinion of management, any such known claims are not expected to have a material effect on the financial condition or results of operations of the Company.

XML

Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Common Share [Abstract]

Reconciliation of numerator and denominator used in earnings per common share calculations

A reconciliation of the numerator and denominator used in the earnings per common share calculations is as follows:

	Three Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	5,960			21,268
Less preferred stock dividends		(119	)
Net income applicable to common shareholders		5,841			21,268	$	.27
Diluted Earnings Per Common Share:
Effect of Series D preferred stock		119			1,629
Net income applicable to common shareholders	$	5,960			22,897	$	.26

	Three Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	781			21,272
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		654			21,272	$	.03
Diluted Earnings Per Common Share:
Effect of dilutive stock options					79
Net income applicable to common shareholders	$	654			21,351	$	.03

	Six Months Ended June 30, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	6,882			21,225
Less preferred stock dividends		(246	)
Net income applicable to common shareholders		6,636			21,225	$	.31
Diluted Earnings Per Common Share:
Effect of dilutive stock options					38
Effect of Series D preferred stock		246			1,629
Net income applicable to common shareholders	$	6,882			22,892	$	.30

	Six Months Ended June 30, 2012
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	2,438			21,273
Less preferred stock dividends		(254	)
Net income applicable to common shareholders		2,184			21,273	$	.10
Diluted Earnings Per Common Share:
Effect of dilutive stock options					84
Net income applicable to common shareholders	$	2,184			21,357	$	.10

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Information [Abstract]

Revenue and income before income taxes for each business unit

The following sets forth the revenue and income before income taxes for each business unit for the three month and six month periods ended June 30, 2013 and 2012.

Revenues	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
American Southern	$	14,747	$	10,887	$	25,237	$	22,151
Bankers Fidelity		29,123		23,857		55,061		46,938
Corporate and Other		778		209		1,000		415
Total revenue	$	44,648	$	34,953	$	81,298	$	69,504

Income Before Income Taxes	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
American Southern	$	3,177		$	1,045		$	4,619		$	1,760
Bankers Fidelity		3,687			1,159			4,724			3,775
Corporate and Other		(801	)		(1,350	)		(2,269	)		(2,961	)
Income before income taxes	$	6,063		$	854		$	7,074		$	2,574

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 05, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	ATLANTIC AMERICAN CORP
Entity Central Index Key	0000008177
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		21,309,560
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013

XML

Credit Arrangements (Tables)

6 Months Ended

Jun. 30, 2013

Credit Arrangements [Abstract]

Financial structure of statutory business trusts

The financial structure of each of Atlantic American Statutory Trust I and II as of June 30, 2013 was as follows:

	Atlantic American Statutory Trust I		Atlantic American Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES (1) (2)
Principal amount owed	$	18,042	$	23,196
Balance June 30, 2013		18,042		23,196
Balance December 31, 2012		18,042		23,196
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Interest payable	Quarterly		Quarterly
Maturity date	December 4, 2032		May 15, 2033
Redeemable by issuer	Yes		Yes
TRUST PREFERRED SECURITIES
Issuance date	December 4, 2002		May 15, 2003
Securities issued		17,500		22,500
Liquidation preference per security	$	1	$	1
Liquidation value		17,500		22,500
Coupon rate	LIBOR + 4.00%		LIBOR + 4.10%
Distribution payable	Quarterly		Quarterly
Distribution guaranteed by (3)	Atlantic American Corporation		Atlantic American Corporation

(1) For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.  During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.  The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.

(2) The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.

(3) The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.