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 March 31, 2014

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

(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 May 7, 2014 was 20,797,451.

ATLANTIC AMERICAN CORPORATION

TABLE OF CONTENTS

Part I.      Financial Information		Page No.
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013	2
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013	4
	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2014 and 2013	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 4.	Controls and Procedures	23
Part II.     Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 6.	Exhibits	25
Signatures		26

PART I.  FINANCIAL INFORMATION

Item 1.    Financial Statements

ATLANTIC AMERICAN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

ASSETS

	Unaudited
	March 31,		December 31,
	2014		2013
Cash and cash equivalents	$	27,178	$	33,102
Investments:
Fixed maturities (cost: $201,245and $201,217)		206,809		201,303
Common and non-redeemable preferred stocks (cost: $12,164 and $12,432)		17,476		21,890
Other invested assets (cost: $2,077 and $2,123)		2,077		2,123
Policy loans		2,294		2,369
Real estate		38		38
Investment in unconsolidated trusts		1,238		1,238
Total investments		229,932		228,961
Receivables:
Reinsurance		14,551		14,314
Insurance premiums and other (net of allowance for doubtful accounts: $275 and $339)		6,819		9,343
Deferred income taxes, net		-		363
Deferred acquisition costs		27,296		27,509
Other assets		3,622		3,245
Intangibles		2,544		2,544
Total assets	$	311,942	$	319,381

LIABILITIES AND SHAREHOLDERS’ EQUITY
Insurance reserves and policyholder funds:
Future policy benefits	$	70,054		$	69,864
Unearned premiums		20,757			27,415
Losses and claims		65,389			63,018
Other policy liabilities		1,583			2,076
Total insurance reserves and policyholder funds		157,783			162,373
Accounts payable and accrued expenses		10,848			14,843
Deferred income taxes, net		213			-
Junior subordinated debenture obligations		41,238			41,238
Total liabilities		210,082			218,454
Commitments and contingencies (Note 6)
Shareholders’ equity:
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred, 65,000 shares issued and outstanding; $6,500 redemption value		65			65
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 21,092,519 and 21,117,874		22,401			22,401
Additional paid-in capital		57,212			57,103
Retained earnings		19,018			18,738
Accumulated other comprehensive income		7,070			6,204
Unearned stock grant compensation		(576	)		(485	)
Treasury stock, at cost: 1,308,375 and 1,283,020 shares		(3,330	)		(3,099	)
Total shareholders’ equity		101,860			100,927
Total liabilities and shareholders’ equity	$	311,942		$	319,381

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 March 31,
	2014			2013
Revenue:
Insurance premiums	$	38,418		$	33,019
Investment income		2,598			2,905
Realized investment gains, net		108			678
Other income		36			48
Total revenue		41,160			36,650
Benefits and expenses:
Insurance benefits and losses incurred		26,828			23,362
Commissions and underwriting expenses		9,907			9,283
Interest expense		429			577
Other expense		3,003			2,417
Total benefits and expenses		40,167			35,639
Income before income taxes		993			1,011
Income tax expense		173			89
Net income		820			922
Preferred stock dividends		(118	)		(127	)
Net income applicable to common shareholders	$	702		$	795
Earnings per common share (basic and diluted)	$	.03		$	.04

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 March 31,
	2014			2013
Net income	$	820		$	922
Other comprehensive income (loss):
Available-for-sale securities:
Gross unrealized holding gain (loss) arising in the period		1,440			(2,246	)
Related income tax effect		(504	)		786
Less: reclassification adjustment for net realized gains included in net income (1)		(108	)		(678	)
Related income tax effect (2)		38			237
Net effect on other comprehensive income (loss)		866			(1,901	)
Derivative financial instrument:
Fair value adjustment to derivative financial instrument		-			141
Related income tax effect		-			(49	)
Net effect on other comprehensive income (loss)		-			92
Total other comprehensive income (loss), net of tax		866			(1,809	)
Total comprehensive income (loss)	$	1,686		$	(887	)

⁽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)

Three Months Ended March 31, 2014	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income			Unearned Stock Grant Compensation			Treasury Stock			Total
Balance, December 31, 2013	$	65	$	22,401	$	57,103	$	18,738		$	6,204		$	(485	)	$	(3,099	)	$	100,927
Net income		-		-		-		820			-			-			-			820
Other comprehensive income, net of tax		-		-		-		-			866			-			-			866
Dividends declared on common stock		-		-		-		(422	)		-			-			-			(422	)
Dividends accrued on preferred stock		-		-		-		(118	)		-			-			-			(118	)
Restricted stock grants		-		-		102		-			-			(178	)		76			-
Amortization of unearned compensation		-		-		-		-			-			87			-			87
Purchase of shares for treasury		-		-		-		-			-			-			(312	)		(312	)
Issuance of shares under stock plans		-		-		7		-			-			-			5			12
Balance, March 31, 2014	$	65	$	22,401	$	57,212	$	19,018		$	7,070		$	(576	)	$	(3,330	)	$	101,860
Three Months Ended March 31, 2013
Balance, December 31, 2012	$	70	$	22,401	$	57,180	$	8,621		$	19,571		$	-		$	(2,107	)	$	105,736
Net income		-		-		-		922			-			-			-			922
Other comprehensive loss, net of tax		-		-		-		-			(1,809	)		-			-			(1,809	)
Dividends declared on common stock		-		-		-		(423	)		-			-			-			(423	)
Dividends accrued on preferred stock		-		-		-		(127	)		-			-			-			(127	)
Purchase of shares for treasury		-		-		-		-			-			-			(272	)		(272	)
Balance, March 31, 2013	$	70	$	22,401	$	57,180	$	8,993		$	17,762		$	-		$	(2,379	)	$	104,027

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)

	Three Months Ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	820		$	922
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of deferred acquisition costs		2,849			2,796
Acquisition costs deferred		(2,636	)		(3,273	)
Realized investment gains, net		(108	)		(678	)
Decrease in insurance reserves		(4,590	)		(3,583	)
Compensation expense related to share awards		87			-
Depreciation and amortization		213			142
Deferred income tax expense		110			87
Decrease in receivables, net		2,287			1,564
Decrease in other liabilities		(3,376	)		(858	)
Other, net		18			48
Net cash used in operating activities		(4,326	)		(2,833	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured		11,570			13,521
Investments purchased		(11,202	)		(10,510	)
Additions to property and equipment		(1,666	)		(80	)
Net cash (used in) provided by investing activities		(1,298	)		2,931
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued under stock plans		12			-
Purchase of shares for treasury		(312	)		(272	)
Net cash used in financing activities		(300	)		(272	)
Net decrease in cash and cash equivalents		(5,924	)		(174	)
Cash and cash equivalents at beginning of period		33,102			18,951
Cash and cash equivalents at end of period	$	27,178		$	18,777
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	435		$	643
Cash paid for income taxes	$	292		$	310

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, 2013.  The Company’s financial condition and results of operations as of and for the three month period ended March 31, 2014 are not necessarily indicative of the financial condition or results of operations that may be expected for the year ending December 31, 2014 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. 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 and Bankers Fidelity Assurance Company (together known as “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 periods ended March 31, 2014 and 2013.

Revenues	Three Months Ended March 31,
	2014		2013
American Southern	$	14,201	$	10,490
Bankers Fidelity		26,838		25,938
Corporate and Other		121		222
Total revenue	$	41,160	$	36,650

Income Before Income Taxes	Three Months Ended March 31,
	2014			2013
American Southern	$	1,057		$	1,442
Bankers Fidelity		1,648			1,037
Corporate and Other		(1,712	)		(1,468	)
Income before income taxes	$	993		$	1,011

-7-

Note 3. 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 March 31, 2014 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 March 31, 2014		18,042		23,196
Balance December 31, 2013		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.

-8-

Note 4. 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 March 31, 2014
	Income			Shares (In thousands)		Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	820			21,073
Less preferred stock dividends		(118	)		-
Net income applicable to common shareholders	$	702			21,073	$	.03

	Three Months Ended March 31, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	922			21,182
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		795			21,182	$	.04
Diluted Earnings Per Common Share:
Effect of dilutive stock options					40
Net income applicable to common shareholders	$	795			21,222	$	.04

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings per common share calculation for all periods presented since its impact would have been antidilutive.  There were no stock options outstanding in the three month period ended March 31, 2014.

Note 5. 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 March 31,
	2014			2013
Federal income tax provision at statutory rate of 35%	$	348		$	354
Dividends-received deduction		(31	)		(37	)
Small life insurance company deduction		(116	)		-
Other permanent differences		10			9
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(38	)		(237	)
Income tax expense	$	173		$	89

-9-

The components of income tax expense were:

	Three Months Ended March 31,
	2014			2013
Current – Federal	$	63		$	2
Deferred – Federal		148			324
Change in deferred tax asset valuation allowance		(38	)		(237	)
Total	$	173		$	89

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2014 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 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.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2013 resulted from the DRD and the change in deferred tax asset valuation allowance.  The change in deferred tax asset valuation allowance was also due to the utilization of certain capital loss carryforward benefits.

Note 6. 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.

-10-

Note 7. 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 March 31, 2014 and December 31, 2013.

Investments were comprised of the following:

	March 31, 2014
	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	$	21,458	$	792	$	88	$	20,754
Obligations of states and political subdivisions		7,925		703		-		7,222
Corporate securities:
Utilities and telecom		14,450		1,825		-		12,625
Financial services		54,170		2,582		310		51,898
Other business – diversified		70,926		1,858		1,267		70,335
Other consumer – diversified		35,486		645		1,182		36,023
Total corporate securities		175,032		6,910		2,759		170,881
Redeemable preferred stocks:
Financial services		2,202		14		8		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,394		14		8		2,388
Total fixed maturities		206,809		8,419		2,855		201,245
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,427		463		-		964
Financial services		5,800		570		309		5,539
Other business – diversified		187		140		-		47
Other consumer – diversified		10,062		4,448		-		5,614
Total equity securities		17,476		5,621		309		12,164
Other invested assets		2,077		-		-		2,077
Policy loans		2,294		-		-		2,294
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	229,932	$	14,040	$	3,164	$	219,056

-11-

	December 31, 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	$	17,240	$	576	$	210	$	16,874
Obligations of states and political subdivisions		7,611		402		17		7,226
Corporate securities:
Utilities and telecom		16,532		1,353		7		15,186
Financial services		50,531		1,736		320		49,115
Other business – diversified		70,326		870		2,906		72,362
Other consumer – diversified		36,712		391		1,745		38,066
Total corporate securities		174,101		4,350		4,978		174,729
Redeemable preferred stocks:
Financial services		2,159		4		41		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,351		4		41		2,388
Total fixed maturities		201,303		5,332		5,246		201,217
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,474		510		-		964
Financial services		5,761		514		560		5,807
Other business – diversified		178		131		-		47
Other consumer – diversified		14,477		8,863		-		5,614
Total equity securities		21,890		10,018		560		12,432
Other invested assets		2,123		-		-		2,123
Policy loans		2,369		-		-		2,369
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	228,961	$	15,350	$	5,806	$	219,417

The amortized cost and carrying value of the Company’s investments in fixed maturities at March 31, 2014 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.

	March 31, 2014
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		11,896		11,323
Due after five years through ten years		117,124		114,038
Due after ten years		69,279		67,590
Varying maturities		8,510		8,294
Totals	$	206,809	$	201,245

-12-

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2014 and December 31, 2013.

	March 31, 2014						December 31, 2013
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	21,458	$	20,754	$	704	$	17,240	$	16,874	$	366
Obligations of states and political subdivisions		7,925		7,222		703		7,611		7,226		385
Utilities and telecom		15,877		13,589		2,288		18,006		16,150		1,856
Financial services		62,172		59,633		2,539		58,451		57,118		1,333
Other business – diversified		71,113		70,382		731		70,504		72,409		(1,905	)
Other consumer – diversified		45,740		41,829		3,911		51,381		43,872		7,509
Other investments		5,647		5,647		-		5,768		5,768		-
Investments	$	229,932	$	219,056	$	10,876	$	228,961	$	219,417	$	9,544

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 March 31, 2014 and December 31, 2013.

	March 31, 2014
	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	$	6,532	$	80	$	499	$	8	$	7,031	$	88
Corporate securities		42,007		1,747		7,183		1,012		49,190		2,759
Redeemable preferred stocks		488		8		-		-		488		8
Common and non-redeemable preferred stocks		3,707		309		-		-		3,707		309
Total temporarily impaired securities	$	52,734	$	2,144	$	7,682	$	1,020	$	60,416	$	3,164

-13-

	December 31, 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	$	8,326	$	210	$	-	$	-	$	8,326	$	210
Obligations of states and political subdivisions		1,018		17		-		-		1,018		17
Corporate securities		92,049		3,714		6,938		1,264		98,987		4,978
Redeemable preferred stocks		704		41		-		-		704		41
Common and non-redeemable preferred stocks		3,724		560		-		-		3,724		560
Total temporarily impaired securities	$	105,821	$	4,542	$	6,938	$	1,264	$	112,759	$	5,806

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 March 31, 2014, 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 March 31, 2014.

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 March 31, 2014 and December 31, 2013, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,056 and $1,991. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

-14-

As of March 31, 2014, 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	$	-	$	204,753	$	2,056	$	206,809
Equity securities		11,963		5,513		-		17,476
Cash equivalents		27,178		-		-		27,178
Total	$	39,141	$	210,266	$	2,056	$	251,463

As of December 31, 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	$	-	$	199,312	$	1,991	$	201,303
Equity securities		16,406		5,484		-		21,890
Cash equivalents		31,618		-		-		31,618
Total	$	48,024	$	204,796	$	1,991	$	254,811

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2014.

	Fixed Maturities
Balance, December 31, 2013	$	1,991
Total unrealized gains included in other comprehensive income		65
Balance, March 31, 2014	$	2,056

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.

-15-

Note 8. 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.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, 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 March 31, 2014 and December 31, 2013.

			March 31, 2014				December 31, 2013
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	27,178	$	27,178	$	33,102	$	33,102
Fixed maturities		(1)		206,809		206,809		201,303		201,303
Equity securities		(1)		17,476		17,476		21,890		21,890
Other invested assets	Level 3			2,077		2,077		2,123		2,123
Policy loans	Level 2			2,294		2,294		2,369		2,369
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

⁽¹⁾ See Note 7 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

Note 9. Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of March 31, 2014 and December 31, 2013, and the changes in the balance of each component thereof during the three month period ended March 31, 2014, net of taxes.

	Unrealized Gains on Available-for-Sale Securities
Balance, December 31, 2013	$	6,204
Other comprehensive income before reclassifications		936
Amounts reclassified from accumulated other comprehensive income		(70	)
Net current-period other comprehensive income		866
Balance, March 31, 2014	$	7,070

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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 period ended March 31, 2014. 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, 2013.

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 and Bankers Fidelity Assurance Company (together known as “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, 2013. During the three month period ended March 31, 2014, 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, 2013.

Overall Corporate Results

The following presents the Company’s revenue, expenses and net income for the three month period ended March 31, 2014 and the comparable period in 2013:

	Three Months Ended March 31,
	2014		2013
	(In thousands)
Insurance premiums	$	38,418	$	33,019
Investment income		2,598		2,905
Realized investment gains, net		108		678
Other income		36		48
Total revenue		41,160		36,650
Insurance benefits and losses incurred		26,828		23,362
Commissions and underwriting expenses		9,907		9,283
Other expense		3,003		2,417
Interest expense		429		577
Total benefits and expenses		40,167		35,639
Income before income taxes	$	993	$	1,011
Net income	$	820	$	922

-17-

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 period ended March 31, 2014 and the comparable period in 2013 is as follows:

	Three Months Ended March 31,
Reconciliation of Net Income to non-GAAP Measurement	2014			2013
	(In thousands)
Net income	$	820		$	922
Income tax expense		173			89
Realized investment gains, net		(108	)		(678	)
Operating income	$	885		$	333

On a consolidated basis, the Company had net income of $0.8 million, or $0.03 per diluted share, for the three month period ended March 31, 2014, compared to net income of $0.9 million, or $0.04 per diluted share, for the three month period ended March 31, 2013. The decrease in net income during the three month period ended March 31, 2014 was primarily attributable to decreases in investment income and realized investment gains.  Premium revenue for the three month period ended March 31, 2014 increased $5.4 million, or 16.4%, to $38.4 million. The increase in premium revenue was primarily due to an increase in commercial automobile earned premiums in the property and casualty operations resulting from a significant state contract which incepted in the second quarter of 2013.  Operating income increased to $0.9 million in the three month period ended March 31, 2014 from $0.3 million in the comparable period of 2013.  The increase in operating income was primarily attributable to an increase in premium revenue as well as more favorable loss experience in the life and health operations.  Partially offsetting the increase in operating income was a decrease in investment income as the Company had previously sold several higher yielding, longer-term investments during 2013 in an attempt to shorten the average maturity of the portfolio.

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

American Southern

The following summarizes American Southern’s premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2014 and the comparable period in 2013:

	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands)
Gross written premiums	$	7,386		$	8,876
Ceded premiums		(1,705	)		(1,897	)
Net written premiums	$	5,681		$	6,979
Net earned premiums	$	13,026		$	8,927
Net loss and loss adjustment expenses		10,097			5,322
Underwriting expenses		3,047			3,726
Underwriting loss	$	(118	)	$	(121	)
Loss ratio		77.5	%		59.6	%
Expense ratio		23.4			41.8
Combined ratio		100.9	%		101.4	%

-18-

Gross written premiums at American Southern decreased $1.5 million, or 16.8%, during the three month period ended March 31, 2014 from the comparable period in 2013.  The decrease in gross written premiums was primarily attributable to a decrease of $2.1 million in commercial automobile written premiums resulting from the cancellation by the company of an agency due to unfavorable loss experience.  Partially offsetting the decrease in gross written premiums was an increase of $0.3 million in commercial automobile business from a new program.

Ceded premiums decreased $0.2 million, or 10.1%, during the three month period ended March 31, 2014 from the comparable period in 2013.  American Southern’s ceded premiums are determined as a percentage of earned premiums and generally will increase or decrease as earned premiums increase or decrease.  However, the change in ceded premiums during the three month period ended March 31, 2014 was disproportionate to the increase in earned premiums due to a reinsurance agreement incepted solely to reinsure the commercial automobile business resulting from the specific state contract awarded to American Southern in the second quarter of 2013.  The decrease in ceded premiums for the three month period ended March 31, 2014 was primarily attributable to the decline in commercial automobile earned premiums resulting from the agency cancellation discussed previously.  Commercial automobile business generally has higher contractual reinsurance cession rates than other lines of business.

The following presents American Southern’s net earned premiums by line of business for the three month period ended March 31, 2014 and the comparable period in 2013:

	Three Months Ended March 31,
	2014		2013
	(In thousands)
Commercial automobile	$	9,413	$	5,862
General liability		936		750
Property		845		599
Surety		1,832		1,716
Total	$	13,026	$	8,927

Net earned premiums increased $4.1 million, or 45.9%, during the three month period ended March 31, 2014 over the comparable period in 2013.  The increase in net earned premiums was primarily attributable to the increase in commercial automobile earned premiums from the significant state contract referenced above.  Also contributing were increases in general liability and property earned premiums resulting from new programs to the company which incepted in 2013.  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.

Net loss and loss adjustment expenses at American Southern increased $4.8 million, or 89.7%, during the three month period ended March 31, 2014 over the comparable period in 2013.  As a percentage of premiums, net loss and loss adjustment expenses were 77.5% in the three month period ended March 31, 2014, compared to 59.6% in the three month period ended March 31, 2013.  The increase in the loss ratio was primarily due to increased losses in the commercial automobile line of business resulting from the state contract awarded to American Southern in the second quarter of 2013, referenced previously.  Also contributing to the increase in the loss ratio were higher claims in the general liability and surety lines of business.

Underwriting expenses decreased $0.7 million, or 18.2%, during the three month period ended March 31, 2014 from the comparable period in 2013.  As a percentage of premiums, underwriting expenses were 23.4% in the three month period ended March 31, 2014, compared to 41.8% in the three month period ended March 31, 2013.  The decrease in the expense ratio 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 increases, commissions and underwriting expenses will generally decrease, and conversely, during periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase. During the three month period ended March 31, 2014, these commissions at American Southern decreased $0.8 million from the comparable period in 2013 due to unfavorable loss experience.  Also contributing to the decrease in the expense ratio was the significant increase in earned premiums coupled with a relatively consistent level of fixed general and administrative expenses.

-19-

Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums, losses, expenses and underwriting ratios for the three month period ended March 31, 2014 and the comparable period in 2013:

	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands)
Medicare supplement	$	21,527		$	20,197
Other health products		1,189			1,145
Life insurance		2,676			2,750
Total earned premiums		25,392			24,092
Insurance benefits and losses		16,731			18,040
Underwriting expenses		8,460			6,861
Total expenses		25,191			24,901
Underwriting income (loss)	$	201		$	(809	)
Loss ratio		65.9	%		74.9	%
Expense ratio		33.3			28.5
Combined ratio		99.2	%		103.4	%

Premium revenue at Bankers Fidelity increased $1.3 million, or 5.4%, during the three month period ended March 31, 2014 over the comparable period in 2013.  Premiums from the Medicare supplement line of business increased $1.3 million, or 6.6%, during the three month period ended March 31, 2014, due primarily to the implementation of rate increases on renewal business. Other health product premiums increased slightly during the same comparable period, 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 2.7%, during the three month period ended March 31, 2014 due to the redemption and settlement of existing policy obligations exceeding the level of new sales activity.

Benefits and losses decreased $1.3 million, or 7.3%, during the three month period ended March 31, 2014 from the comparable period in 2013.  As a percentage of premiums, benefits and losses were 65.9% in the three month period ended March 31, 2014, compared to 74.9% in the three month period ended March 31, 2013.  The decrease in the loss ratio was primarily attributable to more favorable loss experience in the Medicare supplement line of business due to a number of factors including the implementation of rate increases as well as reduced medical utilization by policyholders resulting from worse than normal winter weather.  During the three month period ended March 31, 2013, Bankers Fidelity experienced an increase in losses in the Medicare supplement line of business resulting from a disproportionate number of first quarter deductible reimbursements which did not recur to the same extent in the comparable period of 2014.  As the company’s Medicare supplement product generally reimburses the annual Part B deductible to an insured, annual deductible reimbursements are generally incurred disproportionately at the beginning of a calendar year.  Such trend was more pronounced in the first quarter of 2013 as compared to the first quarter of 2014.

Underwriting expenses increased $1.6 million, or 23.3%, during the three month period ended March 31, 2014 over the comparable period in 2013.  As a percentage of premiums, underwriting expenses were 33.3% in the three month period ended March 31, 2014, compared to 28.5% in the three month period ended March 31, 2013.  The increase in the expense ratio was primarily attributable to increases in agency related expenses, increased compensation accruals as well as expenses related to the continued development of worksite products.

-20-

INVESTMENT INCOME AND REALIZED GAINS

Investment income decreased $0.3 million, or 10.6%, during the three month period ended March 31, 2014 from the comparable period in 2013.  The decrease in investment income was primarily attributable to sales during 2013 of a number of the Company’s higher yielding, longer-term fixed maturities due to management’s decision to shorten the average maturity in the portfolio in recognition of the potential future increases in longer-term interest rates.

The Company had net realized investment gains of $0.1 million during the three month period ended March 31, 2014, compared to net realized investment gains of $0.7 million in the three month period ended March 31, 2013.   The net realized investment gains in the three month periods ended March 31, 2014 and 2013 resulted from the disposition of several of the Company’s investments in fixed maturities.  Management continually evaluates the Company’s investment portfolio and, as may be determined to be appropriate, makes adjustments for impairments and/or will divest investments.

INTEREST EXPENSE

Interest expense decreased $0.1 million, or 25.6%, during the three month period ended March 31, 2014 from the comparable period in 2013 due primarily 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 through the maturity date.

OTHER EXPENSES

Other expenses (commissions, underwriting expenses, and other expenses) increased $1.2 million, or 10.3%, during the three month period ended March 31, 2014 over the comparable period in 2013.  The increase in other expenses was primarily attributable to increases in agency related expenses, expenses related to continued development of worksite products as well as amortization of deferred acquisition costs exceeding deferrals due to lower levels of new business. Further, during the three month period ended March 31, 2014, there were increased incentive compensation accruals of $0.6 million related to the Company’s improved operating performance as compared to the same period in 2013, as well as amortization of unearned compensation from stock awards in the past twelve month period.  Partially offsetting the increase in other expenses was the decrease in commission accruals at American Southern due to recent loss experience.  During the three month period ended March 31, 2014, these commissions at American Southern decreased $0.8 million from the comparable period in 2013.  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 increases, commissions and underwriting expenses will generally decrease, and conversely, during periods in which the loss ratio decreases, commissions and underwriting expenses will generally increase.  On a consolidated basis, as a percentage of earned premiums, other expenses decreased to 33.6% in the three month period ended March 31, 2014 from 35.4% in the three month period ended March 31, 2013.  The decrease in the expense ratio was primarily attributable to a reduction in commission accruals discussed previously.

INCOME TAXES

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2014 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 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.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2013 resulted from the DRD and the change in deferred tax asset valuation allowance.  The change in deferred tax asset valuation allowance was also due to the utilization of certain capital loss carryforward benefits.

-21-

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 March 31, 2014, the Parent had approximately $26.2 million of unrestricted cash and investments.

The Parent’s insurance subsidiaries reported statutory net income of $2.7 million for the three month period ended March 31, 2014 compared to statutory net income of $2.0 million for the three month period ended March 31, 2013.  Statutory results are impacted by the recognition of all costs of acquiring business.  In periods in which the Company’s first year premiums increase, 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.

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 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries.  At March 31, 2014, American Southern had $39.1 million of statutory surplus and Bankers Fidelity had $34.9 million of statutory surplus. In 2014, dividend payments by the Parent’s insurance subsidiaries in excess of $7.1 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 $3.2 million at March 31, 2014.

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 March 31, 2014, 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.

-22-

At March 31, 2014, 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.  At March 31, 2014, the Company had accrued but unpaid dividends on the Series D Preferred Stock totaling $0.1 million.

Cash and cash equivalents decreased from $33.1 million at December 31, 2013 to $27.2 million at March 31, 2014. The decrease in cash and cash equivalents during the three month period ended March 31, 2014 was primarily attributable to net cash used in operating activities of $4.3 million, additions to property and equipment of $1.7 million and the purchase of shares for treasury for $0.3 million.  Partially offsetting the decrease in cash and cash equivalents was a $0.4 million increase resulting from the sale and maturity of securities exceeding investment purchases.

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.

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.

-23-

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, 2013, 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.

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 March 31, 2014.

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
January 1 – January 31, 2014		45,461	$	4.09		45,461		327,424
February 1 – February 28, 2014		24,666		4.01		24,666		302,758
March 1 – March 31, 2014		7,420		3.76		7,420		295,338
Total		77,547	$	4.03		77,547

-24-

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.

-25-

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: May 13, 2014	By:	/s/ John G. Sample, Jr.
		John G. Sample, Jr.
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

-26-

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:  May 13, 2014	/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:  May 13, 2014	/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 March 31, 2014, 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:	May 13, 2014	/s/ Hilton H. Howell, Jr.
		Hilton H. Howell, Jr.
		President and Chief Executive Officer
Date:	May 13, 2014	/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 (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013
Carrying Amount [Member]
Assets [Abstract]
Fixed maturities	$ 206,809	[1]	$ 201,303	[1]
Equity securities	17,476	[1]	21,890	[1]
Carrying Amount [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents	27,178		33,102
Carrying Amount [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans	2,294		2,369
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	2,077		2,123
Estimated Fair Value [Member]
Assets [Abstract]
Fixed maturities	206,809	[1]	201,303	[1]
Equity securities	17,476	[1]	21,890	[1]
Estimated Fair Value [Member] | Level 1 [Member]
Assets [Abstract]
Cash and cash equivalents	27,178		33,102
Estimated Fair Value [Member] | Level 2 [Member]
Assets [Abstract]
Policy loans	2,294		2,369
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	$ 2,077		$ 2,123

[1] See Note 7 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

XML

Junior Subordinated Debentures (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Trust
Debt Instrument [Line Items]
Number of connecticut statutory business trusts	2
Financial structure of statutory business trusts [Abstract]
Balance March 31, 2014	$ 41,238
Balance December 31, 2013	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 March 31, 2014	18,042	[1],[2]
Balance December 31, 2013	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 March 31, 2014	23,196	[1],[2]
Balance December 31, 2013	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] 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

Segment Information

3 Months Ended

Mar. 31, 2014

Segment Information [Abstract]

Segment Information

Note 2. 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 and Bankers Fidelity Assurance Company (together known as “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 periods ended March 31, 2014 and 2013.

Revenues	Three Months Ended March 31,
	2014		2013
American Southern	$	14,201	$	10,490
Bankers Fidelity		26,838		25,938
Corporate and Other		121		222
Total revenue	$	41,160	$	36,650

Income Before Income Taxes	Three Months Ended March 31,
	2014			2013
American Southern	$	1,057		$	1,442
Bankers Fidelity		1,648			1,037
Corporate and Other		(1,712	)		(1,468	)
Income before income taxes	$	993		$	1,011

XML

Investments, Part II (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Carrying Value [Abstract]
Due in one year or less	$ 0
Due after one year through five years	11,896
Due after five years through ten years	117,124
Due after ten years	69,279
Varying maturities	8,510
Totals	206,809	201,303
Amortized Cost [Abstract]
Due in one year or less	0
Due after one year through five years	11,323
Due after five years through ten years	114,038
Due after ten years	67,590
Varying maturities	8,294
Totals	$ 201,245

XML

Investments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	$ 229,932	$ 228,961
Gross Unrealized Gains	14,040	15,350
Gross Unrealized Losses	3,164	5,806
Amortized Cost	219,056	219,417
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	21,458	17,240
Amortized Cost	20,754	16,874
Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	7,925	7,611
Amortized Cost	7,222	7,226
Utilities and telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	15,877	18,006
Amortized Cost	13,589	16,150
Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	62,172	58,451
Amortized Cost	59,633	57,118
Other business - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	71,113	70,504
Amortized Cost	70,382	72,409
Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	45,740	51,381
Amortized Cost	41,829	43,872
Fixed maturities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	206,809	201,303
Gross Unrealized Gains	8,419	5,332
Gross Unrealized Losses	2,855	5,246
Amortized Cost	201,245	201,217
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	21,458	17,240
Gross Unrealized Gains	792	576
Gross Unrealized Losses	88	210
Amortized Cost	20,754	16,874
Fixed maturities [Member] | Bonds [Member] | Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	7,925	7,611
Gross Unrealized Gains	703	402
Gross Unrealized Losses	0	17
Amortized Cost	7,222	7,226
Fixed maturities [Member] | Corporate securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	175,032	174,101
Gross Unrealized Gains	6,910	4,350
Gross Unrealized Losses	2,759	4,978
Amortized Cost	170,881	174,729
Fixed maturities [Member] | Corporate securities [Member] | Utilities and telecom [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	14,450	16,532
Gross Unrealized Gains	1,825	1,353
Gross Unrealized Losses	0	7
Amortized Cost	12,625	15,186
Fixed maturities [Member] | Corporate securities [Member] | Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	54,170	50,531
Gross Unrealized Gains	2,582	1,736
Gross Unrealized Losses	310	320
Amortized Cost	51,898	49,115
Fixed maturities [Member] | Corporate securities [Member] | Other business - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	70,926	70,326
Gross Unrealized Gains	1,858	870
Gross Unrealized Losses	1,267	2,906
Amortized Cost	70,335	72,362
Fixed maturities [Member] | Corporate securities [Member] | Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	35,486	36,712
Gross Unrealized Gains	645	391
Gross Unrealized Losses	1,182	1,745
Amortized Cost	36,023	38,066
Fixed maturities [Member] | Redeemable preferred stocks [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,394	2,351
Gross Unrealized Gains	14	4
Gross Unrealized Losses	8	41
Amortized Cost	2,388	2,388
Fixed maturities [Member] | Redeemable preferred stocks [Member] | Financial services [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,202	2,159
Gross Unrealized Gains	14	4
Gross Unrealized Losses	8	41
Amortized Cost	2,196	2,196
Fixed maturities [Member] | Redeemable preferred stocks [Member] | Other consumer - diversified [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	192	192
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	192	192
Equity securities [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	17,476	21,890
Gross Unrealized Gains	5,621	10,018
Gross Unrealized Losses	309	560
Amortized Cost	12,164	12,432
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	1,427	1,474
Gross Unrealized Gains	463	510
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	5,800	5,761
Gross Unrealized Gains	570	514
Gross Unrealized Losses	309	560
Amortized Cost	5,539	5,807
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	187	178
Gross Unrealized Gains	140	131
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	10,062	14,477
Gross Unrealized Gains	4,448	8,863
Gross Unrealized Losses	0	0
Amortized Cost	5,614	5,614
Other invested assets [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,077	2,123
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	2,077	2,123
Policy loans [Member]
Schedule of investments aggregated by type and industry [Abstract]
Carrying Value	2,294	2,369
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Amortized Cost	2,294	2,369
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

Investments, Part III (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of investments aggregated by industry [Abstract]
Carrying Value	$ 229,932	$ 228,961
Amortized Cost	219,056	219,417
Unrealized Gains (Losses)	10,876	9,544
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	52,734	105,821
12 months or longer	7,682	6,938
Total	60,416	112,759
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	2,144	4,542
12 months or longer	1,020	1,264
Total	3,164	5,806
U.S. Treasury securities and obligations of U.S. Government agencies and authorities [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	21,458	17,240
Amortized Cost	20,754	16,874
Unrealized Gains (Losses)	704	366
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	6,532	8,326
12 months or longer	499	0
Total	7,031	8,326
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	80	210
12 months or longer	8	0
Total	88	210
Obligations of states and political subdivisions [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	7,925	7,611
Amortized Cost	7,222	7,226
Unrealized Gains (Losses)	703	385
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months		1,018
12 months or longer		0
Total		1,018
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months		17
12 months or longer		0
Total		17
Utilities and telecom [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	15,877	18,006
Amortized Cost	13,589	16,150
Unrealized Gains (Losses)	2,288	1,856
Financial services [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	62,172	58,451
Amortized Cost	59,633	57,118
Unrealized Gains (Losses)	2,539	1,333
Other business - diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	71,113	70,504
Amortized Cost	70,382	72,409
Unrealized Gains (Losses)	731	(1,905)
Other consumer - diversified [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	45,740	51,381
Amortized Cost	41,829	43,872
Unrealized Gains (Losses)	3,911	7,509
Other Investment [Member]
Schedule of investments aggregated by industry [Abstract]
Carrying Value	5,647	5,768
Amortized Cost	5,647	5,768
Unrealized Gains (Losses)	0	0
Corporate securities [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	42,007	92,049
12 months or longer	7,183	6,938
Total	49,190	98,987
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	1,747	3,714
12 months or longer	1,012	1,264
Total	2,759	4,978
Redeemable preferred stocks [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	488	704
12 months or longer	0	0
Total	488	704
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	8	41
12 months or longer	0	0
Total	8	41
Common and non-redeemable preferred stocks [Member]
Available-for-sale securities, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months	3,707	3,724
12 months or longer	0	0
Total	3,707	3,724
Available-for-sale securities, continuous unrealized loss position, Unrealized Losses [Abstract]
Less than 12 months	309	560
12 months or longer	0	0
Total	$ 309	$ 560

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Investments, Part IV (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	$ 251,463	$ 254,811
Fixed maturities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	206,809	201,303
Equity securities [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	17,476	21,890
Cash equivalents [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	27,178	31,618
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	39,141	48,024
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	11,963	16,406
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	27,178	31,618
Significant Other Observable Inputs (Level 2) [Member]
Financial instruments carried at fair value measured on a recurring basis [Abstract]
Assets at fair value	210,266	204,796
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	204,753	199,312
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	5,513	5,484
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	2,056	1,991
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	2,056	1,991
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

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

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, 2013.  The Company’s financial condition and results of operations as of and for the three month period ended March 31, 2014 are not necessarily indicative of the financial condition or results of operations that may be expected for the year ending December 31, 2014 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.

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Investments, Part V (Details) (Fixed maturities [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Fixed maturities [Member]
Assets measured at fair value on a recurring basis [Abstract]
Balance, beginning of period	$ 1,991
Total unrealized gains included in other comprehensive income	65
Balance, end of period	$ 2,056

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Cash and cash equivalents	$ 27,178	$ 33,102
Investments:
Fixed maturities (cost: $201,245 and $201,217)	206,809	201,303
Common and non-redeemable preferred stocks (cost: $12,164 and $12,432)	17,476	21,890
Other invested assets (cost: $2,077 and $2,123)	2,077	2,123
Policy loans	2,294	2,369
Real estate	38	38
Investment in unconsolidated trusts	1,238	1,238
Total investments	229,932	228,961
Receivables:
Reinsurance	14,551	14,314
Insurance premiums and other (net of allowance for doubtful accounts: $275 and $339)	6,819	9,343
Deferred income taxes, net	0	363
Deferred acquisition costs	27,296	27,509
Other assets	3,622	3,245
Intangibles	2,544	2,544
Total assets	311,942	319,381
LIABILITIES AND SHAREHOLDERS' EQUITY
Future policy benefits	70,054	69,864
Unearned premiums	20,757	27,415
Losses and claims	65,389	63,018
Other policy liabilities	1,583	2,076
Total insurance reserves and policyholder funds	157,783	162,373
Accounts payable and accrued expenses	10,848	14,843
Deferred income taxes, net	213	0
Junior subordinated debenture obligations	41,238	41,238
Total liabilities	210,082	218,454
Commitments and contingencies (Note 6)
Shareholders' equity:
Preferred stock, $1 par, 4,000,000 shares authorized; Series D preferred,65,000 shares issued and outstanding; $6,500 redemption value	65	65
Common stock, $1 par, 50,000,000 shares authorized; shares issued: 22,400,894; shares outstanding: 21,092,519 and 21,117,874	22,401	22,401
Additional paid-in capital	57,212	57,103
Retained earnings	19,018	18,738
Accumulated other comprehensive income	7,070	6,204
Unearned stock grant compensation	(576)	(485)
Treasury stock, at cost: 1,308,375 and 1,283,020 shares	(3,330)	(3,099)
Total shareholders' equity	101,860	100,927
Total liabilities and shareholders' equity	$ 311,942	$ 319,381

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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, 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	922	0	0	0	922
Other comprehensive income (loss), net of tax	0	0	0	0	(1,809)	0	0	(1,809)
Dividends declared on common stock	0	0	0	(423)	0	0	0	(423)
Dividends accrued on preferred stock	0	0	0	(127)	0	0	0	(127)
Purchase of shares for treasury	0	0	0	0	0	0	(272)	(272)
Balance at Mar. 31, 2013	70	22,401	57,180	8,993	17,762	0	(2,379)	104,027
Balance at Dec. 31, 2013	65	22,401	57,103	18,738	6,204	(485)	(3,099)	100,927
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	820	0	0	0	820
Other comprehensive income (loss), net of tax	0	0	0	0	866	0	0	866
Dividends declared on common stock	0	0	0	(422)	0	0	0	(422)
Dividends accrued on preferred stock	0	0	0	(118)	0	0	0	(118)
Restricted stock grants	0	0	102	0	0	(178)	76	0
Amortization of unearned compensation	0	0	0	0	0	87	0	87
Purchase of shares for treasury	0	0	0	0	0	0	(312)	(312)
Issuance of shares under stock plans	0	0	7	0	0	0	5	12
Balance at Mar. 31, 2014	$ 65	$ 22,401	$ 57,212	$ 19,018	$ 7,070	$ (576)	$ (3,330)	$ 101,860

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Fair Values of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

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 March 31, 2014 and December 31, 2013.

			March 31, 2014				December 31, 2013
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	27,178	$	27,178	$	33,102	$	33,102
Fixed maturities		(1)		206,809		206,809		201,303		201,303
Equity securities		(1)		17,476		17,476		21,890		21,890
Other invested assets	Level 3			2,077		2,077		2,123		2,123
Policy loans	Level 2			2,294		2,294		2,369		2,369
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

⁽¹⁾ See Note 7 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Segment	Mar. 31, 2013
Segment Information [Abstract]
Number of business units	2
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	$ 41,160	$ 36,650
Income before income taxes	993	1,011
American Southern [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	14,201	10,490
Income before income taxes	1,057	1,442
Bankers Fidelity [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	26,838	25,938
Income before income taxes	1,648	1,037
Corporate and Other [Member]
Revenue and income before income taxes for each business unit [Abstract]
Total revenue	121	222
Income before income taxes	$ (1,712)	$ (1,468)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 820	$ 922
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of deferred acquisition costs	2,849	2,796
Acquisition costs deferred	(2,636)	(3,273)
Realized investment gains, net	(108)	(678)
Decrease in insurance reserves	(4,590)	(3,583)
Compensation expense related to share awards	87	0
Depreciation and amortization	213	142
Deferred income tax expense	110	87
Decrease in receivables, net	2,287	1,564
Decrease in other liabilities	(3,376)	(858)
Other, net	18	48
Net cash used in operating activities	(4,326)	(2,833)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold, called or matured	11,570	13,521
Investments purchased	(11,202)	(10,510)
Additions to property and equipment	(1,666)	(80)
Net cash (used in) provided by investing activities	(1,298)	2,931
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued under stock plans	12	0
Purchase of shares for treasury	(312)	(272)
Net cash used in financing activities	(300)	(272)
Net decrease in cash and cash equivalents	(5,924)	(174)
Cash and cash equivalents at beginning of period	33,102	18,951
Cash and cash equivalents at end of period	27,178	18,777
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	435	643
Cash paid for income taxes	$ 292	$ 310

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Investments:
Fixed maturities, cost	$ 201,245	$ 201,217
Common and non-redeemable preferred stocks, cost	12,164	12,432
Other invested assets, cost	2,077	2,123
Receivables:
Insurance premiums and other, allowance for doubtful accounts	275	339
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	65,000
Preferred stock, shares outstanding (in shares)	65,000	65,000
Preferred stock, redemption value	$ 6,500	$ 6,500
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)	21,092,519	21,117,874
Treasury stock, at cost (in shares)	1,308,375	1,283,020

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

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 periods ended March 31, 2014 and 2013.

Revenues	Three Months Ended March 31,
	2014		2013
American Southern	$	14,201	$	10,490
Bankers Fidelity		26,838		25,938
Corporate and Other		121		222
Total revenue	$	41,160	$	36,650

Income Before Income Taxes	Three Months Ended March 31,
	2014			2013
American Southern	$	1,057		$	1,442
Bankers Fidelity		1,648			1,037
Corporate and Other		(1,712	)		(1,468	)
Income before income taxes	$	993		$	1,011

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 07, 2014
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		20,797,451
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014

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Junior Subordinated Debentures (Tables)

3 Months Ended

Mar. 31, 2014

Junior Subordinated Debentures [Abstract]

Financial structure of statutory business trusts

The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2014 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 March 31, 2014		18,042		23,196
Balance December 31, 2013		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.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenue:
Insurance premiums	$ 38,418	$ 33,019
Investment income	2,598	2,905
Realized investment gains, net	108	678
Other income	36	48
Total revenue	41,160	36,650
Benefits and expenses:
Insurance benefits and losses incurred	26,828	23,362
Commissions and underwriting expenses	9,907	9,283
Interest expense	429	577
Other expense	3,003	2,417
Total benefits and expenses	40,167	35,639
Income before income taxes	993	1,011
Income tax expense	173	89
Net income	820	922
Preferred stock dividends	(118)	(127)
Net income applicable to common shareholders	$ 702	$ 795
Earnings per common share (basic and diluted) (in dollars per share)	$ 0.03	$ 0.04

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes [Abstract]

Income Taxes

Note 5. 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 March 31,
	2014			2013
Federal income tax provision at statutory rate of 35%	$	348		$	354
Dividends-received deduction		(31	)		(37	)
Small life insurance company deduction		(116	)		-
Other permanent differences		10			9
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(38	)		(237	)
Income tax expense	$	173		$	89

The components of income tax expense were:

	Three Months Ended March 31,
	2014			2013
Current – Federal	$	63		$	2
Deferred – Federal		148			324
Change in deferred tax asset valuation allowance		(38	)		(237	)
Total	$	173		$	89

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2014 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 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.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month period ended March 31, 2013 resulted from the DRD and the change in deferred tax asset valuation allowance.  The change in deferred tax asset valuation allowance was also due to the utilization of certain capital loss carryforward benefits.

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2014

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Note 4. 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 March 31, 2014
	Income			Shares (In thousands)		Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	820			21,073
Less preferred stock dividends		(118	)		-
Net income applicable to common shareholders	$	702			21,073	$	.03

	Three Months Ended March 31, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	922			21,182
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		795			21,182	$	.04
Diluted Earnings Per Common Share:
Effect of dilutive stock options					40
Net income applicable to common shareholders	$	795			21,222	$	.04

The assumed conversion of the Company’s Series D preferred stock was excluded from the earnings per common share calculation for all periods presented since its impact would have been antidilutive.  There were no stock options outstanding in the three month period ended March 31, 2014.

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2014

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 March 31, 2014 and December 31, 2013, and the changes in the balance of each component thereof during the three month period ended March 31, 2014, net of taxes.

	Unrealized Gains on Available-for-Sale Securities
Balance, December 31, 2013	$	6,204
Other comprehensive income before reclassifications		936
Amounts reclassified from accumulated other comprehensive income		(70	)
Net current-period other comprehensive income		866
Balance, March 31, 2014	$	7,070

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2014

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 March 31, 2014
	Income			Shares (In thousands)		Per Share Amount
Basic and Diluted Earnings Per Common Share:
Net income	$	820			21,073
Less preferred stock dividends		(118	)		-
Net income applicable to common shareholders	$	702			21,073	$	.03

	Three Months Ended March 31, 2013
	Income			Shares (In thousands)		Per Share Amount
Basic Earnings Per Common Share:
Net income	$	922			21,182
Less preferred stock dividends		(127	)
Net income applicable to common shareholders		795			21,182	$	.04
Diluted Earnings Per Common Share:
Effect of dilutive stock options					40
Net income applicable to common shareholders	$	795			21,222	$	.04

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Fair Values of Financial Instruments

3 Months Ended

Mar. 31, 2014

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

Note 8. 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.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, 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 March 31, 2014 and December 31, 2013.

			March 31, 2014				December 31, 2013
	Level in Fair Value Hierarchy (1)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1		$	27,178	$	27,178	$	33,102	$	33,102
Fixed maturities		(1)		206,809		206,809		201,303		201,303
Equity securities		(1)		17,476		17,476		21,890		21,890
Other invested assets	Level 3			2,077		2,077		2,123		2,123
Policy loans	Level 2			2,294		2,294		2,369		2,369
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

⁽¹⁾ See Note 7 for a description of the fair value hierarchy as well as a disclosure of levels for classes of these financial assets.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 6. 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.

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Investments

3 Months Ended

Mar. 31, 2014

Investments [Abstract ]

Investments

Note 7. 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 March 31, 2014 and December 31, 2013.

Investments were comprised of the following:

	March 31, 2014
	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	$	21,458	$	792	$	88	$	20,754
Obligations of states and political subdivisions		7,925		703		-		7,222
Corporate securities:
Utilities and telecom		14,450		1,825		-		12,625
Financial services		54,170		2,582		310		51,898
Other business – diversified		70,926		1,858		1,267		70,335
Other consumer – diversified		35,486		645		1,182		36,023
Total corporate securities		175,032		6,910		2,759		170,881
Redeemable preferred stocks:
Financial services		2,202		14		8		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,394		14		8		2,388
Total fixed maturities		206,809		8,419		2,855		201,245
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,427		463		-		964
Financial services		5,800		570		309		5,539
Other business – diversified		187		140		-		47
Other consumer – diversified		10,062		4,448		-		5,614
Total equity securities		17,476		5,621		309		12,164
Other invested assets		2,077		-		-		2,077
Policy loans		2,294		-		-		2,294
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	229,932	$	14,040	$	3,164	$	219,056

	December 31, 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	$	17,240	$	576	$	210	$	16,874
Obligations of states and political subdivisions		7,611		402		17		7,226
Corporate securities:
Utilities and telecom		16,532		1,353		7		15,186
Financial services		50,531		1,736		320		49,115
Other business – diversified		70,326		870		2,906		72,362
Other consumer – diversified		36,712		391		1,745		38,066
Total corporate securities		174,101		4,350		4,978		174,729
Redeemable preferred stocks:
Financial services		2,159		4		41		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,351		4		41		2,388
Total fixed maturities		201,303		5,332		5,246		201,217
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,474		510		-		964
Financial services		5,761		514		560		5,807
Other business – diversified		178		131		-		47
Other consumer – diversified		14,477		8,863		-		5,614
Total equity securities		21,890		10,018		560		12,432
Other invested assets		2,123		-		-		2,123
Policy loans		2,369		-		-		2,369
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	228,961	$	15,350	$	5,806	$	219,417

The amortized cost and carrying value of the Company’s investments in fixed maturities at March 31, 2014 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.

	March 31, 2014
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		11,896		11,323
Due after five years through ten years		117,124		114,038
Due after ten years		69,279		67,590
Varying maturities		8,510		8,294
Totals	$	206,809	$	201,245

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2014 and December 31, 2013.

	March 31, 2014						December 31, 2013
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	21,458	$	20,754	$	704	$	17,240	$	16,874	$	366
Obligations of states and political subdivisions		7,925		7,222		703		7,611		7,226		385
Utilities and telecom		15,877		13,589		2,288		18,006		16,150		1,856
Financial services		62,172		59,633		2,539		58,451		57,118		1,333
Other business – diversified		71,113		70,382		731		70,504		72,409		(1,905	)
Other consumer – diversified		45,740		41,829		3,911		51,381		43,872		7,509
Other investments		5,647		5,647		-		5,768		5,768		-
Investments	$	229,932	$	219,056	$	10,876	$	228,961	$	219,417	$	9,544

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 March 31, 2014 and December 31, 2013.

	March 31, 2014
	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	$	6,532	$	80	$	499	$	8	$	7,031	$	88
Corporate securities		42,007		1,747		7,183		1,012		49,190		2,759
Redeemable preferred stocks		488		8		-		-		488		8
Common and non-redeemable preferred stocks		3,707		309		-		-		3,707		309
Total temporarily impaired securities	$	52,734	$	2,144	$	7,682	$	1,020	$	60,416	$	3,164

	December 31, 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	$	8,326	$	210	$	-	$	-	$	8,326	$	210
Obligations of states and political subdivisions		1,018		17		-		-		1,018		17
Corporate securities		92,049		3,714		6,938		1,264		98,987		4,978
Redeemable preferred stocks		704		41		-		-		704		41
Common and non-redeemable preferred stocks		3,724		560		-		-		3,724		560
Total temporarily impaired securities	$	105,821	$	4,542	$	6,938	$	1,264	$	112,759	$	5,806

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 March 31, 2014, 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 March 31, 2014.

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 March 31, 2014 and December 31, 2013, the value of the Company’s fixed maturities valued using Level 3 criteria was $2,056 and $1,991. The use of different criteria or assumptions regarding data may have yielded materially different valuations.

As of March 31, 2014, 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	$	-	$	204,753	$	2,056	$	206,809
Equity securities		11,963		5,513		-		17,476
Cash equivalents		27,178		-		-		27,178
Total	$	39,141	$	210,266	$	2,056	$	251,463

As of December 31, 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	$	-	$	199,312	$	1,991	$	201,303
Equity securities		16,406		5,484		-		21,890
Cash equivalents		31,618		-		-		31,618
Total	$	48,024	$	204,796	$	1,991	$	254,811

The following is a roll-forward of the Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2014.

	Fixed Maturities
Balance, December 31, 2013	$	1,991
Total unrealized gains included in other comprehensive income		65
Balance, March 31, 2014	$	2,056

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.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2014

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

Note 9. Accumulated Other Comprehensive Income

The following table sets forth the balance of each component of accumulated other comprehensive income as of March 31, 2014 and December 31, 2013, and the changes in the balance of each component thereof during the three month period ended March 31, 2014, net of taxes.

	Unrealized Gains on Available-for-Sale Securities
Balance, December 31, 2013	$	6,204
Other comprehensive income before reclassifications		936
Amounts reclassified from accumulated other comprehensive income		(70	)
Net current-period other comprehensive income		866
Balance, March 31, 2014	$	7,070

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Changes in balances of each component of accumulated other comprehensive income, net of taxes [Roll Forward]
Beginning balance	$ 6,204
Total other comprehensive income (loss), net of tax	866	(1,809)
Ending balance	7,070
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	6,204
Other comprehensive income before reclassifications	936
Amounts reclassified from accumulated other comprehensive income	(70)
Total other comprehensive income (loss), net of tax	866
Ending balance	$ 7,070

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Investments (Tables)

3 Months Ended

Mar. 31, 2014

Investments [Abstract ]

Schedule of investments aggregated by type and industry

Investments were comprised of the following:

	March 31, 2014
	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	$	21,458	$	792	$	88	$	20,754
Obligations of states and political subdivisions		7,925		703		-		7,222
Corporate securities:
Utilities and telecom		14,450		1,825		-		12,625
Financial services		54,170		2,582		310		51,898
Other business – diversified		70,926		1,858		1,267		70,335
Other consumer – diversified		35,486		645		1,182		36,023
Total corporate securities		175,032		6,910		2,759		170,881
Redeemable preferred stocks:
Financial services		2,202		14		8		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,394		14		8		2,388
Total fixed maturities		206,809		8,419		2,855		201,245
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,427		463		-		964
Financial services		5,800		570		309		5,539
Other business – diversified		187		140		-		47
Other consumer – diversified		10,062		4,448		-		5,614
Total equity securities		17,476		5,621		309		12,164
Other invested assets		2,077		-		-		2,077
Policy loans		2,294		-		-		2,294
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	229,932	$	14,040	$	3,164	$	219,056

	December 31, 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	$	17,240	$	576	$	210	$	16,874
Obligations of states and political subdivisions		7,611		402		17		7,226
Corporate securities:
Utilities and telecom		16,532		1,353		7		15,186
Financial services		50,531		1,736		320		49,115
Other business – diversified		70,326		870		2,906		72,362
Other consumer – diversified		36,712		391		1,745		38,066
Total corporate securities		174,101		4,350		4,978		174,729
Redeemable preferred stocks:
Financial services		2,159		4		41		2,196
Other consumer – diversified		192		-		-		192
Total redeemable preferred stocks		2,351		4		41		2,388
Total fixed maturities		201,303		5,332		5,246		201,217
Equity securities:
Common and non-redeemable preferred stocks:
Utilities and telecom		1,474		510		-		964
Financial services		5,761		514		560		5,807
Other business – diversified		178		131		-		47
Other consumer – diversified		14,477		8,863		-		5,614
Total equity securities		21,890		10,018		560		12,432
Other invested assets		2,123		-		-		2,123
Policy loans		2,369		-		-		2,369
Real estate		38		-		-		38
Investments in unconsolidated trusts		1,238		-		-		1,238
Total investments	$	228,961	$	15,350	$	5,806	$	219,417

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 March 31, 2014 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.

	March 31, 2014
	Carrying Value		Amortized Cost
Due in one year or less	$	-	$	-
Due after one year through five years		11,896		11,323
Due after five years through ten years		117,124		114,038
Due after ten years		69,279		67,590
Varying maturities		8,510		8,294
Totals	$	206,809	$	201,245

Schedule of investments aggregated by industry

The following table sets forth the carrying value, amortized cost, and net unrealized gains (losses) of the Company’s investments aggregated by industry as of March 31, 2014 and December 31, 2013.

	March 31, 2014						December 31, 2013
	Carrying Value		Amortized Cost		Unrealized Gains		Carrying Value		Amortized Cost		Unrealized Gains (Losses)
U.S. Treasury securities and obligations of U.S. Government agencies and authorities	$	21,458	$	20,754	$	704	$	17,240	$	16,874	$	366
Obligations of states and political subdivisions		7,925		7,222		703		7,611		7,226		385
Utilities and telecom		15,877		13,589		2,288		18,006		16,150		1,856
Financial services		62,172		59,633		2,539		58,451		57,118		1,333
Other business – diversified		71,113		70,382		731		70,504		72,409		(1,905	)
Other consumer – diversified		45,740		41,829		3,911		51,381		43,872		7,509
Other investments		5,647		5,647		-		5,768		5,768		-
Investments	$	229,932	$	219,056	$	10,876	$	228,961	$	219,417	$	9,544

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 March 31, 2014 and December 31, 2013.

	March 31, 2014
	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	$	6,532	$	80	$	499	$	8	$	7,031	$	88
Corporate securities		42,007		1,747		7,183		1,012		49,190		2,759
Redeemable preferred stocks		488		8		-		-		488		8
Common and non-redeemable preferred stocks		3,707		309		-		-		3,707		309
Total temporarily impaired securities	$	52,734	$	2,144	$	7,682	$	1,020	$	60,416	$	3,164

	December 31, 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	$	8,326	$	210	$	-	$	-	$	8,326	$	210
Obligations of states and political subdivisions		1,018		17		-		-		1,018		17
Corporate securities		92,049		3,714		6,938		1,264		98,987		4,978
Redeemable preferred stocks		704		41		-		-		704		41
Common and non-redeemable preferred stocks		3,724		560		-		-		3,724		560
Total temporarily impaired securities	$	105,821	$	4,542	$	6,938	$	1,264	$	112,759	$	5,806

Financial instruments carried at fair value measured on a recurring basis

As of March 31, 2014, 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	$	-	$	204,753	$	2,056	$	206,809
Equity securities		11,963		5,513		-		17,476
Cash equivalents		27,178		-		-		27,178
Total	$	39,141	$	210,266	$	2,056	$	251,463

As of December 31, 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	$	-	$	199,312	$	1,991	$	201,303
Equity securities		16,406		5,484		-		21,890
Cash equivalents		31,618		-		-		31,618
Total	$	48,024	$	204,796	$	1,991	$	254,811

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 Company’s financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month period ended March 31, 2014.

	Fixed Maturities
Balance, December 31, 2013	$	1,991
Total unrealized gains included in other comprehensive income		65
Balance, March 31, 2014	$	2,056

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Earnings Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income [Abstract]
Net income	$ 820	$ 922
Less preferred stock dividends	(118)	(127)
Net income applicable to common shareholders	702	795
Net income applicable to common shareholders, diluted		$ 795
Shares [Abstract]
Weighted average shares outstanding (in shares)	21,073
Weighted average shares outstanding, basic (in shares)		21,182
Effect of dilutive stock options (in shares)		40
Weighted average shares outstanding, diluted (in shares)		21,222
Per Share Amount [Abstract]
Net income applicable to common shareholders (in dollars per share)	$ 0.03	$ 0.04
Net income applicable to common shareholders, basic (in dollars per share)		$ 0.04
Net income applicable to common shareholders, diluted (in dollars per share)		$ 0.04

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract]
Net income	$ 820		$ 922
Available-for-sale securities:
Gross unrealized holding gain (loss) arising in the period	1,440		(2,246)
Related income tax effect	(504)		786
Less: reclassification adjustment for net realized gains included in net income	(108)	[1]	(678)	[1]
Related income tax effect	38	[2]	237	[2]
Net effect on other comprehensive income (loss)	866		(1,901)
Derivative financial instrument:
Fair value adjustment to derivative financial instrument	0		141
Related income tax effect	0		(49)
Net effect on other comprehensive income (loss)	0		92
Total other comprehensive income (loss), net of tax	866		(1,809)
Total comprehensive income (loss)	$ 1,686		$ (887)

[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.

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Junior Subordinated Debentures

3 Months Ended

Mar. 31, 2014

Junior Subordinated Debentures [Abstract]

Junior Subordinated Debentures

Note 3. 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 March 31, 2014 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 March 31, 2014		18,042		23,196
Balance December 31, 2013		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.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Reconciliation of income tax (benefit) expense [Abstract]
Federal income tax provision at statutory rate of 35%	$ 348	$ 354
Dividends-received deduction	(31)	(37)
Small life insurance company deduction	(116)	0
Other permanent differences	10	9
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets	(38)	(237)
Income tax expense	173	89
Federal statutory income tax rate (in hundredths)	35.00%
Components of income tax expense [Abstract]
Current - Federal	63	2
Deferred - Federal	148	324
Change in deferred tax asset valuation allowance	(38)	(237)
Income tax expense	173	89
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
Maximum tentative amount of LICTI	$ 15,000

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2014

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 March 31,
	2014			2013
Federal income tax provision at statutory rate of 35%	$	348		$	354
Dividends-received deduction		(31	)		(37	)
Small life insurance company deduction		(116	)		-
Other permanent differences		10			9
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(38	)		(237	)
Income tax expense	$	173		$	89

Components of income tax expense

The components of income tax expense were:

	Three Months Ended March 31,
	2014			2013
Current – Federal	$	63		$	2
Deferred – Federal		148			324
Change in deferred tax asset valuation allowance		(38	)		(237	)
Total	$	173		$	89