- -------------------------------------------------------------------------------


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   -----------


                                    FORM 10-Q

                                   -----------

             |X| Quarterly Report pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                For the quarterly period ended September 30, 1995

                                       OR

            |_| Transition report pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                                   -----------

                         Commission File Number 0-3722-3


                          ATLANTIC AMERICAN CORPORATION
            Incorporated pursuant to the laws of the State of Georgia

                                   -----------

             Internal Revenue Service-- Employer Identification No.
                                   58-1027114


                     Address of Principal Executive Offices:
                4370 Peachtree Road, N.E., Atlanta, Georgia 30319
                                 (404) 266-5500


Indicate by check mark whether  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 |X| NO |_|

The total  number of shares of the  registrant's  Common  Stock,  $1 par  value,
outstanding on November 6, 1995, was 18,690,289.

- -------------------------------------------------------------------------------






                   ATLANTIC AMERICAN CORPORATION

                               INDEX


Part 1.  Financial Information                           Page No.
- -------  ---------------------                           --------

Item 1.  Financial Statements:


             Consolidated Balance Sheets -
             December 31, 1994 and September 30, 1995       2


             Consolidated  Statements of Operations
             Three months ended and nine months ended       3
             September 30, 1994 and 1995


             Consolidated Statements of Cash Flows -
             Nine months ended September 30, 1994           4
             and 1995


             Notes to Consolidated Financial                5
             Statements


Item 2.  Management's Discussion and Analysis of          6 - 9
         Financial Condition and Results of Operations


Part II.  Other Information
- --------  -----------------


Item 5.  Other information                                  10


Item 6.  Exhibits and reports on Form 8-K                   10


Signatures                                                  11

                 ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                                  
(In thousands, except share        ASSETS         September 30,   December 31,
and per share data)                                  1995            1994
                            Insurance             -------------   ------------
  Cash, including short-term investments of                  
     $7,600 and $2,498                              $  8,975       $  4,016
  Investments (see Note 2)                            99,453         89,660
  Receivables:
     Reinsurance                                      12,766         12,334
     Other (net of allowance for bad debts:  $958     
       and $872)                                      11,032          9,233
  Deferred acquisition costs                          13,220         13,553
  Other assets                                         2,900          3,017
  Receivables from Retail Furniture                    7,243          8,908
                                                    --------       --------
        Total Insurance assets                       155,589        140,721
                                                    --------       --------
                    Retail Furniture        
Cash                                                     320          2,383
Trade Receivables (net of allowance for bad            
   debts:  $25 and $19)                                3,551          3,800  
Merchandise inventory                                 24,844         25,008
Prepaid expenses                                       1,347          1,263
Deferred income taxes                                    644            --
                                                    --------       --------
      Total current assets                            30,706         32,454

Property and equipment, net                           22,384         21,459
Goodwill                                              10,526         10,483
Other assets                                             301            328
                                                    --------       --------
      Total Retail Furniture assets                   63,917         64,724
                                                    --------       --------
            Total assets                            $219,506       $205,445
                                                    ========       ========
                     LIABILITIES AND SHAREHOLDERS' EQUITY
                            Insurance
  Insurance reserves and policy funds (see Note 3)  $ 91,577       $ 88,295
  Accounts payable and accrued expenses                5,735          4,458
  Short-term debt payable to affiliates                  --             675
  Long-term debt                                       4,594          4,594
  Long-term debt payable to affiliates                19,733         19,733
  Minority interest                                    1,210            963
                                                    --------       --------
         Total Insurance liabilities                 122,849        118,718
                                                    --------       --------
                         Retail Furniture
Short-term borrowings and current portion of                 
   long-term debt                                        287            198
Short-term borrowings and current portion of          
   long-term debt payable to affiliates               20,675         15,849
Accounts payable and accrued expenses                 21,897         23,730
Deferred income taxes                                    --             247
Payable to Insurance                                     843          2,685
                                                    --------       --------
     Total current liabilities                        43,702         42,709
Long-term debt, less current maturities                  831            775
Long-term debt, less current maturities payable        
   to affiliates                                       6,950          4,331
Payable to Insurance                                   6,400          6,223
Other liabilities                                        942          1,063
Deferred income taxes                                    523            759
Minority interest                                        --             845
                                                    --------       --------
       Total Retail Furniture liabilities             59,348         56,705
                                                    --------       --------
Commitments and contingencies
Shareholders' equity:
   Preferred stock, $1 par, 4,000,000 shares
     authorized; 30,000 shares issued,
     $3,000 redemption value                              30             30
   Common stock, $1 par, 30,000,000 shares
     authorized; 18,712,167 shares
     issued in 1995 and 18,413,942 shares             18,712         18,414
     issued in 1994
    Additional paid-in capital                        33,344         33,289
    Accumulated deficit                              (29,707)       (27,452)
    Net unrealized investment gains                   14,984          5,741
    Treasury stock                                       (54)           --
                                                    --------       --------
         Total shareholders' equity                   37,309         30,022
                                                    --------       --------
              Total liabilities and              
                shareholders' equity                $219,506       $205,445
                                                    ========       ========
The accompanying  notes are an integral  part of these financial statements.
                                 -2-

                 ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                        Three Months Ended   Nine Months Ended
                                           September  30,      September 30,
 (In thousands, except per share data)      1995     1994     1995      1994
                                            ----     ----     ----      ----
 
                            Insurance
Revenue:
  Insurance premiums                      $11,085  $10,754  $32,000   $30,577
  Investment income                         1,416    1,485    4,281     4,308
  Realized investment gains, net              903       51    1,441       645
                                          -------  -------  -------   -------  
      Total revenue                        13,404   12,290   37,722    35,530
                                          -------  -------  -------   -------

Benefits and expenses:
  Insurance benefits and losses incurred    6,317    7,048   19,043    20,461
  Commissions and underwriting expenses     3,952    2,859   11,000     8,946
  Interest expense                            557      494    1,690     1,472
  Other                                     1,555    1,369    4,380     4,007
                                          -------  -------  -------   -------
      Total benefits and expenses          12,381   11,770   36,113    34,886
                                          -------  -------  -------   -------

Revenue from Retail Furniture                 228      172      654       483
                                          -------  -------  -------   -------
      Insurance income                      1,251      692    2,263     1,127
                                          -------  -------  -------   -------
                    Retail Furniture
Net sales                                  26,450   29,647   83,674    87,234
Cost of sales                              14,386   16,236   44,966    48,040
                                         --------  -------  -------   -------
      Gross profit                         12,064   13,411   38,708    39,194

Selling, general and administrative        
   expenses                                12,601   12,591   38,508    35,521
                                          -------  -------  -------   -------
      Operating (loss) income                (537)     820      200     3,673
                                          -------  -------  -------   -------
Other expenses:
   Interest                                   701      495    2,093     1,300
   Other, net                                 (18)     134      160       577
   Write-down for store closings              --       --     1,782       --
   Expense to Insurance segment               228      172      654       483
                                         --------  -------  -------   -------
       Retail Furniture (loss) income      (1,448)      19   (4,489)    1,313
                                         --------  -------  -------   -------
                     Total Company
(Loss) income before income tax
   (expense) benefit and
    extraordinary gain                       (197)     711   (2,226)    2,440
Income tax (expense) benefit                  --      (106)      (9)      862
                                         --------  -------  -------   -------   
Income before extraordinary gain             (197)     605   (2,235)    3,302
Extraordinary gain on extinguishment of
   long-term debt                             --       100      --        100
                                         --------  -------  -------   -------   
              Net (loss) income          ($   197) $   705  ($2,235)  $ 3,402
                                         ========  =======  =======   =======
 
Net (loss) income per common share:
  Income before extraordinary gain        ($0.01)  $  0.03  ($0.13)   $  0.17
  Extraordinary gain on extinguishment                                 
    of long-term debt                         --       NIL      --        NIL
                                          -------  -------  -------   -------   
              Net (loss) income           ($0.01)  $  0.03  ($0.13)   $  0.17
                                          ======   =======  ======    =======
                                          
Weighted average common shares            
 outstanding                              18,732    18,500  18,627     18,513
                                          ======    ======  ======     ======


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

                                       -3-

                 ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                          Nine Months Ended
                                                             September 30,
                                                          -----------------
                                                             1995     1994
                                                             ----     ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) income                                       ($2,235)  $3,402
   Adjustments to reconcile net (loss) income to
     net cash used in operating activities:
      Amortization of deferred acquisition costs             2,924    2,168
      Acquisition costs deferred                            (2,591)  (2,279)
      Realized investment gains                             (1,441)    (645)
      Increase in insurance reserves                         3,282      488
      (Increase) decrease in merchandise                     
        inventories                                           (183)   3,296
      Provision for write-down for store closings            1,782      --
      Depreciation and amortization                          1,930    1,747
      Deferred income taxes                                      9     (862)
      Extraordinary item                                       --      (100)
      Minority interest                                       (435)     179
      Increase in receivables, net                          (2,222)  (3,520)
      Decrease in other liabilities                         (4,635)  (4,462)
      Other, net                                               730     (404)
                                                           -------  -------
             Net cash used in operating activities          (3,085)    (992)
                                                           -------  -------    
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from investments sold or matured                22,620   15,277
   Investments purchased                                   (19,747) (23,642)
   Acquisition of minority interest                         (1,012)     --
   Acquisition of furniture stores                             --    (5,283)
   Additions to property and equipment                      (2,707)  (2,254)
                                                           -------   ------ 
             Net cash used in investing activities            (846) (15,902)
                                                           -------  -------    
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of notes payable                   3,500    4,000
   Net borrowings under line of credit agreement             4,500    3,000
   Preferred stock dividends to affiliates                    (237)    (237)
   Proceeds from exercise of stock options                     600       15
   Purchase of treasury shares                                (124)     --
   Repayments of long-term debt and notes payable           (1,412)  (1,586)
                                                           -------  -------
           Net cash provided by financing activities         6,827    5,192
                                                           -------  -------

Net increase (decrease) in cash and cash             
   equivalents                                               2,896  (11,702)

Cash and cash equivalents at beginning of period             6,399   24,798
                                                           -------  -------
Cash and cash equivalents at end of period                 $ 9,295  $13,096
                                                           =======  ======= 
SUPPLEMENTAL CASH FLOW INFORMATION:
   Insurance - Net cash provided by (used in)       
     operating activities                                  $ 4,051  ($2,415)
   Furniture - Net cash (used in) provided by
     operating activities                                   (7,136)   1,423
                                                           -------  -------
          Net cash used in operating activities            ($3,085) ($  992)
                                                           =======  ======= 
   
   Cash paid for interest                                  $ 3,847   $1,938
                                                           =======   ======
                                                          
   Cash paid for income taxes                              $   408   $  327
                                                           =======   ======
                                                    
   Fair value of assets acquired                           $   --    $5,587
                                                         
   Less:  Cash paid                                            --    (5,283)
                                                           -------   ------
   Liabilities assumed                                     $   --    $  304
                                                           =======   ======     
    The accompanying notes are an integral part of these financial statements.
                                       -4-



                ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


Note 1.    Basis of presentation.

    The accompanying  unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included. All significant intercompany accounts and transactions within the
Insurance  segment and Furniture  segment have been eliminated in consolidation.
The interests of minority  shareholders have been recognized.  Substantially all
intercompany  accounts and transactions  between  Insurance and Retail Furniture
are segregated but not eliminated. In the opinion of management,  this financial
statement  presentation  provides  a  comprehensive  view  of its  two  business
segments.  Leath Furniture,  Inc., is reported on a two month lag basis. Certain
prior year amounts have been  reclassified to conform to the 1995  presentation.
Operating  results for the nine month period ended  September 30, 1995,  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1995. For further  information,  refer to the financial  statements
and footnotes  thereto  included in the Company's annual report on Form 10-K for
the year ended December 31, 1994.


Note 2.  Investments.

   Investments are comprised of the following:

                                                  September 30,  December 31,
                                                      1995          1994
                                                  -------------  ------------
         Bonds (cost:  $58,359 and $52,931)         $58,427        $51,475
         Common and preferred stocks (cost:          
           $19,841 and $22,371)                      35,102         29,571
         Mortgage loans                                 576            654
         Policy and student loans                     4,255          6,867
         Investment in limited partnership            1,047          1,047
         Real estate                                     46             46
                                                    -------        -------
              Total investments                     $99,453        $89,660
                                                    =======        =======
                                                   

Note 3.  Insurance reserves and policy funds.

   Insurance reserves and policy funds are comprised of the following:
                                                  
                                                  September 30,  December 31,
                                                      1995          1994
                                                  -------------  ------------
         Future policy benefits                     $36,529        $37,641
         Unearned premiums                            9,352          7,740
         Losses and claims                           42,917         40,003
         Other policy liabilities                     2,779          2,911
                                                    -------        -------
               Total policy liabilities             $91,577        $88,295
                                                    =======        =======









                                     -5-

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                      OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

   Atlantic American  Corporation's (the "Company" or "Parent Company") net loss
for the third  quarter of 1995 was  $197,000  or $.01 per share  compared to net
income  of  $705,000  or $.03 per  share  for the  third  quarter  of 1994.  The
Company's  net loss  year-to-date  for 1995 was $2.2  million  or $.13 per share
compared to net income of $3.4 million or $.17 per share in 1994.  The Company's
third quarter and  year-to-date  1994 results  include a $100,000  extraordinary
gain which  related to the payoff of remaining  debt to a bank by the  Furniture
Division.  Reduced  earnings in the third quarter and  year-to-date are due to a
reduction in earnings in the furniture segment of $1.5 million and $5.8 million,
respectively,  offset by an increase in  earnings  in the  Insurance  Segment of
$559,000 and $1.1 million, respectively.

   The Company  recorded no tax expense in the third  quarter of 1995 due to the
loss for the quarter  compared to a tax expense of $106,000 in the third quarter
of 1994.  Year-to-date  the Company recorded a tax expense of $9,000 in 1995 for
alternative minimum taxes compared to a net tax benefit of $862,000 in 1994. The
Company's  third  quarter  results  for 1994  include an income  tax  expense of
$106,000 which is made up of total Company  alternative minimum taxes of $16,000
and state income  taxes of $90,000  related to the  Furniture  segment for which
there are no offsetting loss carryforwards available. The Company's year-to-date
results  for 1994  include a tax benefit of  $862,000  which  consists of a $1.0
million tax  benefit  related to the  Insurance  segment  offset by  alternative
minimum  taxes of $48,000 and state taxes of  $90,000.  The Company  reduced its
deferred tax balance in the  Insurance  segment by $350,000 in the first quarter
of 1994 upon  settlement of a tax case with the IRS regarding tax years 1983 and
1984.  In the second  quarter of 1994,  the  Company  reduced its  deferred  tax
balance by $650,000  upon  expiration  of a time  limitation  with  respect to a
potential  tax  liability.  The  Company  did not  reflect a regular  income tax
expense in the first nine months of 1995 due to the year-to-date  loss incurred.
At September 30, 1995,  the Company had a net  cumulative  deferred tax asset of
$121,000.  The net  cumulative  deferred tax asset  consists of $32.8 million of
deferred tax assets,  offset by $7.9 million of deferred tax liabilities,  and a
$24.8 million  valuation  allowance.  The Company's  ability to generate taxable
income from  operations  is dependent  upon various  factors,  many of which are
beyond  management's  control.  Accordingly,  there can be no assurance that the
Company will generate future taxable income.  Therefore,  the realization of the
deferred tax assets is assessed  periodically based on the Company's current and
anticipated results of operations.

   Georgia  Casualty & Surety (the "Casualty  Division")  earned $823,000 in the
third quarter of 1995 compared to $290,000 in the third quarter of 1994. For the
year-to-date,  the Casualty  Division  earned $1.5  million in 1995  compared to
$646,000 in 1994.  This  improvement  in earnings is due to improved  results of
operations  that are due to  increased  premiums  and the  Casualty  Division no
longer  paying  its parent  interest  on surplus  notes that were  converted  to
capital in the second quarter of 1994. In addition,  realized  investment  gains
increased $323,000 for the quarter and $318,000 year-to-date.  Interest totaling
$256,000 was paid to the Parent Company in the first quarter of 1994.

   Atlantic  American  Life and  Bankers  Fidelity  Life (the  "Life and  Health
Division")  had income of  $995,000  in the third  quarter of 1995  compared  to
income of  $763,000  in the third  quarter of 1994.  For the year,  the Life and
Health  Division had income of $2.3  million in 1995  compared to income of $1.4
million in 1994. This increase in earnings is mainly due to a decrease in losses
and claims as a percentage  of premiums  and an increase in realized  investment
gains of $509,000 for the quarter and $384,000 year-to-date.

   Leath Furniture,  Inc.  ("Leath") which is comprised of Leath,  Modernage and
Jefferson Home, had a loss of $1.4 million in the third quarter of 1995 compared
to income of $19,000 in the third  quarter of 1994.  Leath's  third quarter 1995
and  1994  results  include  the time  period  from May  through  July.  For the
year-to-date,  Leath had a loss of $4.5  million in 1995  compared  to income of
$1.3 million in 1994. Leath's year-to-date results for 1995 and 1994 include the
time period from November  through July.  Leath's  decline in earnings is due to
slow sales and increases in the prime rate coupled with the  amortization of new
store start-up  costs.  Slow sales prompted the Company in the second quarter of
1995 to close three unprofitable stores and record a write-down of $1.8 million,
which is included in Leath's operating  results,  for the store closings and the
implementation of a cost reduction plan.

RESULTS OF OPERATIONS - Insurance

   Total  revenue  increased  to $13.4  million  and $37.7  million in the third
quarter and first nine months of 1995 from $12.3  million and $35.5  million for
the comparable periods in 1994. Total revenue increased in 1995 primarily due to
an increase in premiums and realized investment gains. Premiums increased in the
third  quarter and first nine months of the year by $331,000  and $1.4  million,
respectively. Realized investment gains increased in the third quarter and first
nine months of the year by $852,000 and $796,000, respectively.

   Insurance  premiums  increased  in 1995 due to an increase in the  Casualty
Division's premiums of $874,000 in the third quarter

                                     -6-



and $2.4 million in the first nine months of the year, while the Life and Health
Division's  premiums  declined  $543,000  and $1.0  million,  respectively.  The
Casualty Division's increase in premiums is mainly in the worker's  compensation
market and is due to the division  emphasizing a renewed marketing effort in its
core  states of  Georgia  and  Mississippi.  The  decline in the Life and Health
Division's  premiums is mainly in the accident and health line of business.  The
Life and Health  Division's  premiums declined $794,000 in the third quarter and
$1.6  million  in the  first  nine  months of the  year,  but were  offset by an
increase in life premiums of $251,000 and $627,000, respectively. The decline in
accident  and health  premiums  resulted  primarily  from a decrease in Medicare
supplement  insurance  premiums.  Overall,  the Life  and  Health  Division  has
experienced  a  decline  in  accident  and  health   premiums  as  a  result  of
management's  decision to move premiums to a more  diversified  product mix with
more emphasis on life insurance.

   Investment  income has remained  approximately the same as last year due to a
lower level of  invested  assets  earning a higher  rate of return in 1995.  The
Company  paid  $9.1  million  in  cash on the  settlement  of  certain  workers'
compensation  liabilities  in the fourth quarter of 1994 and interest rates have
risen approximately 1% since last year. Management has focused on increasing the
Company's  investment in short and medium maturity bonds.  The carrying value of
funds  available for  investment  on September 30, 1995 (which  include cash and
short-term  investments,  bonds  and  common  and  preferred  stocks)  increased
approximately  $17.4  million  mainly due to the increase in market value of the
bond and common and preferred stock portfolio of $9.2 million, net cash received
from the sale of student  loans of $2.6 million and cash  provided by operations
of $4.0 million.

   Insurance  benefits and losses have decreased in the third quarter of 1995 to
$6.3 million from $7.0 million in 1994 and  year-to-date  they have decreased to
$19.0 million from $20.5 million in 1994. The decrease in insurance benefits and
losses in the third  quarter of 1995 was due to an  increase  of $116,000 in the
Casualty  Division  offset by a  decrease  of  $846,000  in the Life and  Health
Division.  The decrease in insurance benefits and losses for the year was due to
an increase of $914,000 in the  Casualty  Division  offset by a decrease of $2.3
million in the Life and Health Division. The Casualty Division's increase is due
to increased  premiums which led to a  corresponding  increase in reserves.  The
Life  and  Health  Division's  decrease  is due to a  corresponding  decline  in
insurance  premiums and a decrease in reserves  caused by elimination of a block
of funeral home business.

   As a percentage of premium  revenue,  insurance  benefits and losses incurred
have  decreased  to 57.0% in the third  quarter  of 1995 from 65.5% in the third
quarter of 1994,  and they have  decreased  to 59.5% from  66.9%,  respectively,
year-to-date. In the third quarter of 1995, the percentage of insurance benefits
and losses  incurred to premium  revenue  for the  Casualty  Division  was 64.7%
compared  to  76.5%  in  the  third  quarter  of  1994,  and  71.3%  and  79.1%,
respectively,  year-to-date. For the Life and Health Division, the percentage of
insurance  benefits and losses to premium revenue was 51.2% in the third quarter
of 1995  compared  to 59.4% in the third  quarter  of 1994,  and 51.2% and 60.3%
respectively, year-to-date.

   Commission and  underwriting  expenses in the first nine months  increased to
$11.0  million in 1995 from $8.9  million in 1994.  The reasons for this were an
increase in commissions  of $416,000,  an increase in  underwriting  expenses of
$1.1 million and an increase in net amortization of deferred  acquisition  costs
of $558,000.  The increases in commissions  and  underwriting  expenses were due
mainly to increased  premiums in the  Casualty  Division and the increase in the
net amortization of deferred acquisition costs was due mainly to the elimination
of the block of funeral home business.

   Interest  expense in the first nine months  increased in 1995 to $1.7 million
from $1.5  million in 1994 due to an increase in the  Company's  debt payable to
affiliates.  The Company  borrowed a total of $3.2 million in the fourth quarter
of 1994 with a weighted average interest rate of 9.8%.

   Revenue from Retail  Furniture  represents  interest and dividends from Leath
Furniture.  In the first nine months of 1995,  $654,000  of revenue  from Retail
Furniture   consisted  of  $549,000  of  interest  to  the  Company's  insurance
subsidiaries on mortgage loans and $105,000 of dividends on preferred stock owed
to the Company.  In 1994, $483,000 of revenue from Retail Furniture consisted of
$477,000  of  mortgage  loan  interest  and  $6,000 on a loan Leath had with its
parent which has previously been paid off.


RESULTS OF OPERATIONS - Furniture

   Net sales for the third quarter of 1995 decreased to $26.4 million from $29.6
million  in 1994.  For the year  sales  decreased  to $83.7  million  from $87.2
million in 1994.  This  represents a 10.8% decrease in sales for the quarter and
4.1% for the year.  While the number of stores  increased from the previous year
due to acquisitions,  same store sales for the third quarter were down 16.6% and
for the year were down 15.1%.  Same store sales for the Florida  market in which
Modernage  Furniture  competes were down 19.6% for the quarter and 27.4% for the
year. Same store sales for the Midwest market in which Leath Furniture  competes
were down 14.9% for the quarter and 7.4% for the year.  This decline in sales is
directly attributable to the industry-wide decline in

                                     -7-



consumer spending over the last few months. Leath opened a new store in Madison,
Wisconsin,  in January 1995. In May 1995, two  additional  stores were opened in
Champaign  and  Peoria,  Illinois.  Each of these new  locations  is expected to
create  economies by sharing in advertising  and  distribution  costs with other
stores in the same advertising  markets. One additional store is planned to open
in the Fall of 1995 in Rockford,  Illinois.  Leath operated 44 stores at the end
of July 1995.

   Gross profit  increased to 45.6% from 45.2% in the third  quarter of 1995 and
increased  to 46.3% from 44.9% for the first  nine  months of the year.  Selling
general and  administrative  expenses  increased from 42.5% to 47.6% of sales in
the third quarter of 1995 and from 40.7% to 46.0% for the first nine months. The
increase in selling general and administrative expenses as a percentage of sales
was due to expenses  associated with the opening of new stores where their sales
have not yet reached full,  normal  volume.  Selling  expenses for the year were
$10.5  million  (12.7% of sales) in 1995  compared  to $11.7  million  (13.4% of
sales) in 1994. General and administrative expenses were $28.0 million (33.6% of
sales) in 1995  compared  to $23.8  million  (27.3% of sales) in 1994.  Interest
expense  increased  from $1.3  million to $2.1  million in 1995 due to increased
borrowings from affiliates and higher interest rates. Other expense decreased to
$160,000  from $557,000 in 1994,  primarily  consisting of a decrease in noncash
expense  representing  the minority equity  interest in the Furniture  Division.
Expense to Insurance is described in Results of Operations - Insurance.

   As previously discussed, due to the decreased sales volume, Leath implemented
an aggressive cost reduction program. The Company closed unprofitable stores and
streamlined  overhead and operating  expenses.  A $2.0 million annual savings is
anticipated from this program. In conjunction with these cost reductions,  Leath
made provisions primarily for employee severance obligations and remaining lease
obligations of closed stores.  Leath has closed its Ft. Pierce store and its two
Orlando, Florida stores.

LIQUIDITY AND CAPITAL RESOURCES - Insurance

   The Company's  insurance  subsidiaries  reported a combined statutory gain of
$1.3 million and $2.5 million in the third quarter and first nine months of 1995
compared to $467,000 and $1.0 million,  respectively,  in 1994.  These statutory
results  are due to a gain of $444,000 in the  Casualty  Division  and a gain of
$888,000  in the Life and Health  Division  for the third  quarter and a gain of
$769,000  and a gain  of  $1.8  million  year-to-date,  respectively.  Statutory
results for the  Insurance  segment  approximate  the previous  explanations  of
generally accepted accounting  principles  ("GAAP") results of operations,  with
the exception of the amortization of deferred  acquisition costs and reserves in
the Life and Health Division.

   Management  attempts to keep the maximum  premium to surplus ratio to no more
than three to one for the  Casualty  Division.  As of September  30,  1995,  the
Casualty  Division  had  annualized  premiums  of $17.6  million and capital and
surplus of $11.0 million.  The Casualty Division has adequate  statutory surplus
due to a statutory recapitalization which was completed in the second quarter of
1994. In conjunction with the recapitalization,  the Casualty Division no longer
pays the Parent  Company  interest on the surplus notes  previously  held by the
Casualty Division. Correspondingly, the Parent Company rescheduled its quarterly
interest  payments  in the  second  quarter  of  1994,  on its debt  payable  to
affiliates to  correspond to the yearly  dividend it expects to receive from the
Casualty  Division.  The Casualty Division paid a dividend of approximately $2.0
million to the Parent Company on May 15, 1995. From the dividend funds received,
the  Parent  Company  paid a total  of  $1.1  million  in  accrued  interest  on
rescheduled interest payments along with $675,000 of short-term notes payable to
affiliates.

   On May 22, 1995,  Bankers Fidelity Life Insurance paid a dividend of $.30 per
share, which totals  approximately  $896,000.  A total of 93.0% or approximately
$835,000 of the total Bankers Fidelity  dividend was paid to the Parent Company.
These funds have been used to fund leasehold improvements and to fund the Parent
Company's stock repurchase plan for up to 500,000 shares which are being used in
the Company's  various  employee benefit plans. In 1995, a total of $267,000 has
been spent on leasehold  improvements  and $124,000 has been spent on purchasing
the Parent  Company's stock. A total of $600,000 of funds were received from the
exercise of stock  options in 1995,  the majority of which were due to expire in
July of 1995. The primary  sources of funds for the Parent Company are dividends
from its  subsidiaries and management fees and borrowings from affiliates of the
Company.  The Company  believes that additional  funding would be available from
Gulf  Capital  or other  affiliates  to meet  any  additional  liquidity  needs,
although currently there are no other arranged sources of unused borrowing.

   The Parent Company provides certain administrative and other services to each
of  its  insurance  subsidiaries.  The  amounts  charged  to  and  paid  by  the
subsidiaries  in 1995 have remained  approximately  the same as 1994. The Parent
Company believes that the fees and charges to its  subsidiaries,  dividends and,
if needed, borrowings from affiliates will enable the Parent Company to meet its
liquidity  requirements for the foreseeable future. In addition, the Company has
a formal tax-sharing  agreement between the Parent Company and its insurance and
furniture  subsidiaries.  A total of $1.1 million was paid to the Parent Company
under this  agreement in the first quarter of 1995 from the Furniture  Division,
funding of which was provided by additional  demand notes to  affiliates.  It is
anticipated  that this agreement will provide the Parent Company with additional
funds from profitable subsidiaries

                                     -8-


due to the  subsidiaries'  use of the Parent Company's tax loss  carryforward of
approximately $60.4 million. Approximately 94.5% of the investment assets of the
insurance  subsidiaries are in marketable  securities that can be converted into
cash, if required;  however, use of such assets by the Parent Company is limited
by state insurance  regulations.  Dividend payments to the Parent Company by its
insurance  subsidiaries are limited to the accumulated statutory earnings of the
individual insurance  subsidiaries.  At September 30, 1995, Georgia Casualty had
$11.0  million of  statutory  surplus and capital and Bankers  Fidelity had $6.0
million  of  accumulated  statutory  earnings.  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.

   Net cash  provided  by  operating  activities  totaled  $4.0  million in 1995
compared to net cash used of $2.4 million in 1994. This improvement in operating
cash flows is due mainly to an improvement in the Casualty Division's  operating
cash  flows  which  went  from a use of  cash of  $2.0  million  in 1994 to cash
provided  by  operations  of $3.4  million  in  1995.  The  Casualty  Division's
improvement  in  operating  cash  flows  is due to  increased  premiums  and the
elimination of payments to the National Workers' Compensation  Reinsurance Pool.
The Company  incurred a total of $871,000 of additions to property and equipment
in the first nine months of 1995,  which are mainly  leasehold  improvements and
additions to the new computer system. The insurance  subsidiaries of the Company
purchased  285,000  shares of Leath's  common stock for $1.0 million in June and
July of 1995 which is reflected in the financial  statements as the  acquisition
of minority  interest.  This  purchase now gives the Company  approximately  90%
ownership of Leath . Cash and short-term investments increased from $4.0 million
at December 31, 1994 , to $9.0 million at September 30, 1995,  mainly due to the
$4.0 million of cash provided by operations  and the net sale of $1.9 million of
bond,  stock  and  student  loan  investments.   Total  investments   (excluding
short-term  investments)  increased to $99.4 million at September 30, 1995, from
$89.6 million at December 31, 1994,  primarily due to the increase in unrealized
gains.

    Subsequent to the end of the third quarter, on October 16, 1995, the Company
announced that it had signed a definitive agreement to acquire American Southern
Insurance Company, and its subsidiaries,  from Fuqua Enterprises, Inc. for $34.0
million.  Funding for this  transaction is being handled by a bank loan of $34.0
million.  The Company anticipates the purchase transaction will close by the end
of 1995. See part II. Other Information.

LIQUIDITY AND CAPITAL RESOURCES - Furniture

   Net cash used in  operating  activities  in the first nine months of 1995 was
$7.1 million  compared to cash  provided by  operations of $1.4 million in 1994.
This decrease in cash from operations is due mainly to decreased sales without a
corresponding  decrease in general and  administrative  expenses.  The Furniture
Division's  principal  sources  of  liquidity  are  cash  flows  from  operating
activities and borrowings from affiliates.  The Furniture  Division's  principal
uses of cash are debt  service  obligations,  capital  expenditures  and working
capital needs.  In February  1995,  the Furniture  Division paid $1.1 million of
income  taxes  payable to the Parent  Company,  funding of which was provided by
demand notes of $1.0 million to affiliates. An additional $2.5 million of demand
notes to affiliates  was borrowed in the second  quarter of 1995 to fund capital
expenditures  and  working  capital  requirements.  The amount  borrowed  on the
Furniture  Division's open line of credit increased by $2.0 million in the third
quarter of 1995.  For fiscal year 1995 the  Furniture  Division  has  borrowed a
total of $4.5  million on its open line of credit.  A total of $1.9  million was
spent  by  Leath  in  the  nine-month  reporting  period  of  1995  for  capital
expenditures.  As of July 29, 1995,  the  Furniture  Division owed the Insurance
Segment  $7.2  million  which  consisted  of $6.4  million of mortgage  debt and
$843,000 of income taxes.  In July of 1995,  Leath  arranged for a  twelve-month
moratorium on all debt principal  payments to its affiliated  note holders which
includes mortgage notes due to the Insurance Segment.

   The  Furniture  Division  maintains an open line of credit with an affiliate,
Gulf Capital  Services,  Ltd. This facility provides for a $20.0 million secured
revolver  with interest at prime plus 2-1/4%.  The revolving  line is limited to
57% of the  Furniture  Division's  eligible  inventory.  The line is  secured by
inventory and all assets not specifically collateralized by other notes payable.
The  amount  available  on this  line of  credit,  as  limited  by the  eligible
inventory,  was $12.8  million,  although  the  lender has  permitted  an amount
borrowed of $19.0 million at July 29, 1995. The Furniture  Division  reports its
results on a two-month lag basis and at September 30, 1995, the amount available
on this line of credit, as limited by the eligible inventory, was $12.1 million,
although the lender  permitted an amount borrowed of $19.0 million.  The Company
believes that  additional  funding would be available from Gulf Capital or other
affiliates to meet any additional  liquidity needs of the Company,  although the
Company currently has no other source of unused borrowing capacity.
                                     -9-






                ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES


                           PART II. OTHER INFORMATION


Item 5.  Other information.
- ---------------------------

      On October 16, 1995, Atlantic American  Corporation  announced that it had
signed a definitive agreement to acquire American Southern Insurance Company and
its  subsidiaries  from Fuqua  Enterprises,  Inc.  for $34.0  million.  American
Southern is a property and casualty insurance company operating predominantly in
the southeastern  United States. As of December 31, 1994,  American Southern had
written premiums of $44.3 million,  assets of $84.7 million,  and  shareholders'
equity of $28.2  million.  American  Southern has a ten-year  average  return on
equity  before taxes of 28.8% and a ten-year  average  combined loss and expense
ratio of 93%.

      On a pro forma basis compared with year-end 1994,  this  acquisition  will
increase  Atlantic  American's   consolidated  assets  from  $205.0  million  to
approximately $300.0 million,  will double the insurance division's net premiums
written from $42.8 million to approximately $86.0 million, and will increase the
division's  statutory  capital and surplus from $29.5 million to $63.5  million.
The  transaction  will close as soon as the necessary  regulatory  approvals are
obtained.

Item 6.  Exhibits and Reports on Form 8-K.
- ------------------------------------------

   (a)The following exhibits are filed herewith:

      Exhibit 11.  Computation of net (loss) income per common share.

      Exhibit 99. Press release dated October 16, 1995.

   (b)No  reports  on Form  8-K were  filed  with the  Securities  and  Exchange
Commission during the third quarter of 1995.



























                                     -10-



                                   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:  November 10, 1995  By:      /s/                                          
       -----------------      ------------------------------------------------  
                               John W. Hancock
                               Senior Vice President-Treasurer
                               (Principal Financial Officer)




                          By:     /s/                                          
                              ------------------------------------------------

                              John C. Hall, Jr.
                              Controller
                              (Principal Accounting Officer)


























                                     -11-



                                                                      EXHIBIT 11
             
                 ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
               COMPUTATIONS OF NET (LOSS) INCOME PER COMMON SHARE
                               SUPPORTING SCHEDULE


                                     Three Months Ended   Nine Months Ended
                                         September 30,      September 30,
                                         -------------      -------------
(In thousands, except per share
data)                                  1995      1994      1995       1994
                                       ----      ----      ----       ----

Net (loss) income                     ($197)      $705    ($2,235)    $3,402

Less preferred dividends to             
 affiliates                             (79)       (79)      (237)      (237)
                                      ------      -----   --------    -------
Net (loss) income available to          
common shareholders                   ($276)      $626    ($2,472)    $3,165
                                      ======      =====   ========    =======

Weighted average common shares         
outstanding                          18,732     18,500     18,627     18,513
                                     ======     ======     ======     ======

Net (loss) income per common share   ($0.01)     $0.03     ($0.13)     $0.17
                                     =======    =======    =======    ======


NOTE:  Fully  diluted  earnings per common share are not  presented  because the
effect of convertible subordinated notes and preferred stock is anti-dilutive.


































                                                                      EXHIBIT 99

NEWS RELEASE                   For further information contact:
For Immediate Release          Hilton Howell, President & CEO or
                               John W. Hancock, Sr. V. P. & Treasurer
                               Atlantic American Corporation
                               (404) 266-5500 or (800) 241-1439

ATLANTA,  October 16, 1995--Atlantic  American Corporation  (NASDAQ--AAME) today
announced that it had signed a definitive agreement to acquire American Southern
Insurance  Company,   and  its  subsidiaries,   from  Fuqua  Enterprises,   Inc.
(NYSE--FQE) for $34.0 million.  American  Southern is a highly regarded property
and casualty  insurance  company  operating  predominantly  in the  Southeastern
United States. As of December 31, 1994 American Southern had written premiums of
$44.3  million,  assets  of $84.7  million  and  shareholder's  equity  of $28.2
million.

Hilton  Howell,  Atlantic  American's  President  and  CEO,  said:  "We are very
enthusiastic  about American  Southern joining our company.  We are particularly
pleased that the senior management of American Southern--Roy Thompson, Chairman;
Calvin Wall, Vice Chairman and CEO; and Scott Thompson, President and CFO-- will
be joining Atlantic American and will continue to run the company that they have
so successfully  built.  Together they have created a company that  consistently
earns in excess of $6.0  million  on a pretax  basis,  resulting  in a  ten-year
average  return on equity before taxes of 28.8%,  and boasts a ten-year  average
combined loss and expense ratio of 93%. There are few companies in the insurance
industry that have achieved such an outstanding record."

Roy Thompson,  Chairman of American  Southern,  said: "We are extremely  pleased
that this  agreement  has been  reached.  Mack  Robinson,  Chairman  of Atlantic
American,  and I have been  friends for over forty years.  He and Hilton  Howell
understand the insurance industry and we look forward to working with them."

On a pro forma basis compared with year-end 1994, this acquisition will increase
Atlantic  American's  consolidated  assets from $205.0 million to  approximately
$300.0 million,  will double the insurance  division's net premiums written from
$42.8 million to approximately  $86.0 million,  and will increase the division's
statutory  capital  and  surplus  from  $29.5  million  to  $63.5  million.  The
transaction  will  close  as  soon as the  necessary  regulatory  approvals  are
obtained.

Atlantic American  Corporation is a diversified  holding company involved in the
life, health,  property and casualty insurance and retail furniture  industries.
Its  subsidiaries  include  Atlantic  American Life Insurance  Company,  Bankers
Fidelity  Life  Insurance  Company,  Georgia  Casualty & Surety  Company,  Leath
Furniture, Inc., Modernage Furniture, Inc., and Jefferson
Home Furniture Company.

                                     - END -


 

5 1,000 9-MOS DEC-31-1995 SEP-30-1995 320 0 3,551 25 24,844 30,706 28,522 6,138 63,917 43,702 14,181 0 0 0 0 59,348 83,674 83,674 44,966 38,508 2,596 0 2,093 (4,489) 0 (4,489) 0 0 0 (4,489) 0 0
 

7 1,000 9-MOS DEC-31-1995 SEP-30-1995 0 58,427 58,427 35,102 576 46 99,453 8,975 12,766 13,220 155,589 79,446 9,352 2,779 0 24,327 0 0 0 0 122,849 32,000 4,281 1,441 0 19,043 2,924 8,076 2,263 0 2,263 0 0 0 2,263 0 0 0 0 0 0 0 0 0
 

CT 1,000 9-MOS DEC-31-1995 SEP-30-1995 219,506 18,712 0 30 18,567 219,506 121,396 9 (2,235) 0 0 0 (2,235) (.13) (.13)