SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSACTION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-3722
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Atlantic American Corporation
401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursusant to the plan and the
address of its principal executive office:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, GA 30319
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized
Atlantic American Corporation
401(k) Reitrement Savings
_____________________________
(Name of Plan)
Date: June 30, 1999 __________________________________
Edward L. Rand, Jr.
Vice President & Treasurer
ATLANTIC AMERICAN CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
The following exhibits are filed herewith:
Exhibit 1: Financial Statements and Schedules as of December 31, 1998
and 1997 together with auditor's report.
Exhibit 2: Consent of Arthur Andersen LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Atlantic American Corporation 401(k)
Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Atlantic American Corporation 401(k) retirement savings plan as of
December 31, 1998 and 1997 and the related statements of changes in net assets
available for benefits, with fund information, for the year ended December 31,
1998. These financial statements and the schedules referred to below are the
responsibility of the Plan's administrator. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
1998 and 1997 and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the statement of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits for each fund.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Atlanta, Georgia
June 24, 1999
Atlantic American Corporation
401(k) Retirement Savings Plan
Financial Statements and Schedules
December 31, 1998 and 1997
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits--December 31, 1998 and
1997
Statement of Changes in Net Assets Available for Benefits, With Fund
Information, for the Year Ended December 31, 1998
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS
Schedule I: Item 27a--Schedule of Assets Held for Investment Purposes
--December 31, 1998
Schedule II: Item 27d--Schedule of Reportable Transactions for
the Year Ended December 31, 1998
Atlantic American Corporation
401(k) Retirement Savings Plan
Statements of Net Assets Available For Benefits
December 31, 1998 and 1997
1998 1997
------------- -----------
ASSETS:
Cash $ 1,215 $ 17,607
Employee contributions receivable 45,365 0
Investments, at quoted market prices:
Participant-directed:
Common stock--Atlantic American Corporation 956,564 795,012
Mutual funds:
INVESCO Cash Reserves Fund 327,560 411,740
INVESCO Industrial Income Fund 798,964 627,177
INVESCO Intermediate Government Bond Fund 292,433 289,584
INVESCO Total Return Fund 972,297 775,377
INVESCO Dynamics Fund 1,126,568 849,528
Nonparticipant
Common stock--Atlantic American Corporation 91,122 141,309
Participant loans, at contract value which approximates
value 26,836 19,593
-------- --------
NETS ASSETS AVAILABLE FOR BENEFITS $ 4,638,924 $ 3,926,927
=========== ==========
The accompanying notes are an integral part of these
statements.
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31,1998
Nonparticipant-------------------------------------------------------------
Directed Participant-Directed
Atlantic Atlantic
------------ American INVESCO INVESCO INVESCO INVESCO
American Corporation Cash IndustriIntermediatTotal INVESCO
Corporation Common ReservesIncome GovernmentReturn Dynamics Loan
Common Stock Stock Fund Fund Bond Fund Fund Fund Fund Other Total
Additions:
- -----------------------------
Participant $ $ $ $ $ $ $ $
contributions 0 $ 23,169 6,107 80,382 9,928 79,189 84,062 0 $45,365 328,202
- -----------------------------
Employer contributions, ------------ ----------- ------- --------- ------- -------- ------- --------
net of forfeitures 32,599 88,860 0 0 0 0 0 0 0 121,459
- -----------------------------
Total
contributions 32,599 112,029 6,107 80,382 9,928 79,189 84,062 0 45,365 449,661
- -----------------------------
Net appreciation
(depreciation) in
fair market value of
investments 2,456 (27,837) 0 78,562 7,162 90,128 208,571 0 0 359,042
- -----------------------------
Interest and dividend
income 0 0 16,087 17,690 13,981 23,511 884 0 0 72,153
- -----------------------------
Total additions 35,055 84,192 22,194 176,634 31,071 192,828 293,517 0 45,365 880,856
- -----------------------------
deductions:
- -----------------------------
Benefit payments to
participants (1,288) (21,800) (52,022)(34,837) (6,585) (32,053) (18,230) (457) 0 (167,272)
- -----------------------------
Participant loans, net
of repayments 0 (1,127) (68) (1,804) (288) (2,478) (1,530) 7,700 (1,992) (1,587)
- -----------------------------
Total deductions (1,288) (22,927) (52,090)(36,641) (6,873) (34,531) (19,760) 7,243 (1,992) (168,859)
- -----------------------------
transfers between funds (83,954) 100,287 (54,284)31,794 (21,349) 38,623 3,283 0 (14,400) 0
- -----------------------------
net (DECREASE) INCREASE (50,187) 161,552 (84,180)171,787 2,849 196,920 277,040 7,243 28,973 711,997
- -----------------------------
- -----------------------------
net assets available for
benefits:
- -----------------------------
Beginning of year 141,309 795,012 411,740 627,177 289,584 775,377 849,528 19,593 17,607 3,926,927
- -----------------------------
End of year $ 91,122 $956,564 $327,560$798,964$292,433 $972,297$1,126,56$26,836 $46,580 $4,638,924
- -----------------------------
============================================================================================================
The accompanying notes are an integral part of this
statement.
- 4 -
Atlantic American Corporation
401(k) retirement savings plan
NOTES TO FINANCIAL STATEMENTS and schedules
December 31, 1998 and 1997
1. Plan Description
General
The Atlantic American Corporation 401(k) Retirement Savings Plan (the
"Plan") is a defined contribution plan established by Atlantic American
Corporation (the "Company") under the provisions of Section 401(a) of the
Internal Revenue Code (the "Code"), which includes a qualified cash or
deferred arrangement as described in Sections 401(k) and 401(m) of the
Code, for the benefit of eligible employees of the Company. All employees
of the Company who have completed one year of service, as defined, are
eligible to participate. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
Participants should refer to the plan agreement for a complete description
of the Plan.
Plan Administration
INVESCO Trust Company (the "Trustee") is the Trustee of the Plan and has
custodial responsibility for the Plan's assets including the authority and
power to, among other things, invest the principal and income of the Plan's
assets.
Contributions
Eligible employees can elect to contribute an amount up to 16% of annual
compensation, as defined by the Plan, subject to certain limitations under
the Code. The Company provides a matching contribution equal to 50% of the
first 6% of each participant's contribution. All company matching
contributions are made in company common stock. A participant can elect to
transfer the company contribution into another investment fund only after
the participant is fully vested in the company matching contributions.
Vesting
Participants are always fully vested in their own contributions. Each
participant becomes vested in the employer contributions based on years of
continuous service. Participants become fully vested after seven years of
service with no intervening breaks in service of five years or more. A
participant is credited with one year of service each calendar year in
which the participant works 1,000 hours. A break in service is deemed to be
any year in which the participant does not complete more than 500 hours of
service. The participants vested percentage in employer contributions is as
follows:
Vested
Percentage
-------------------------------
Years of service:
-------------------------------
Less than one 0%
-------------------------------
One 10
-------------------------------
Two 20
-------------------------------
Three 30
-------------------------------
Four 40
-------------------------------
Five 60
-------------------------------
Six 80
-------------------------------
Seven or more 100
-------------------------------
Benefits
Upon termination of service due to death, disability, or retirement, a
participant or their beneficiary may elect to receive an amount equal to
the value of the participant's vested interest in his/her account. The form
of payment, selected by the participant or their beneficiary, is either a
lump-sum distribution, an annuity to be paid in monthly installments over a
fixed period of years, or a direct rollover into a qualified retirement
plan or IRA.
Participant Accounts
Individual accounts are maintained for each of the Plan's participants and
reflect the participant's contributions, employer contributions, and the
participant's share of the Plan's income. Allocations of income are based
on the proportion that each participant's account balance bears to the
total of all participant account balances.
Investment Options
Participants may direct their contributions and any related earnings into
several investment options in 10% increments. Participants may change their
investment elections once each calendar quarter. The participants in the
Plan can invest in any of the following options, all of which are INVESCO
mutual funds except for the company stock:
o Atlantic American Corporation Stock--Funds are invested in
common stock of Atlantic American Corporation.
o INVESCO Cash Reserves Fund--Funds are invested in short-term
obligations such as commercial paper, U.S. government and
government agency obligations, and repurchase agreements.
o INVESCO Industrial Income Fund--Funds are invested in
dividend-paying common stocks of large U.S. companies and in
convertible bonds, debt issues, and preferred stocks.
o INVESCO Intermediate Government Bond Fund--Funds are invested
in obligations of the U.S. government and government agencies
maturing in three to five years.
o INVESCO Total Return Fund--Funds are invested in common stocks
and in fixed and variable income securities.
o INVESCO Dynamics Fund--Funds are invested with rapidly growing
companies, traded essentially on national exchanges and
over-the-counter.
Forfeitures
Amounts forfeited from nonvested accounts are used to reduce future
employer contributions.
Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become fully vested in their accounts as of
the termination date.
2. Summary of Significant Accounting Policies and Other Matters
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported additions and
deductions during the reporting period. Actual results could differ from
those estimates.
Valuation of Investments
Cash equivalents are stated at cost, which approximates market value.
Marketable securities are stated at fair value. Purchases and sales of
securities and mutual funds are reflected on a trade-date basis.
Administrative Expenses
The Company pays all administrative expenses of the Plan, including trustee
fees.
3. Investments
The fair market values of individual investments that represent 5% or more
of the Plan's net assets as of December 31, 1998 and 1997 are as follows:
1998:
Atlantic American Corporation common stock $1,047,686
INVESCO Cash Reserves Fund 327,560
INVESCO Industrial Income Fund 798,964
INVESCO Intermediate Government Bond Fund 292,433
INVESCO Total Return Fund 972,297
INVESCO Dynamics Fund 1,126,568
1997:
Atlantic American Corporation common stock 936,321
INVESCO Cash Reserves Fund 411,740
INVESCO Industrial Income Fund 627,177
INVESCO Intermediate Government Bond Fund 289,584
INVESCO Total Return Fund 775,377
INVESCO Dynamics Fund 849,528
Net appreciation (depreciation) in fair value of investments by major
investment type for the year ended December 31, 1998 is as follows:
Common stock $ (25,381)
Mutual funds 384,423
$359,042
==========
4. TAX STATUS
The Internal Revenue Service issued a determination letter dated May 21,
1996 stating that the Plan was in accordance with applicable plan
requirements as of that date. The Plan has been amended since receiving the
determination letter. However, the plan administrator believes that the
Plan is currently designed and is being operated in compliance with the
applicable requirements of the Code. Therefore, the plan administrator
believes that the Plan was qualified and the related trust was tax-exempt
as of December 31, 1998 and 1997.
5. PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50% of the employee
contribution balance. Participants may elect to have their loans disbursed
from specific investment funds. Loan terms range from six months to five
years or within a reasonable time if used for the purchase of a primary
residence. The loans are secured by the vested value of the participants
account balance and bear interest at the prime rate of interest on the date
of the loan, plus 1%. Principal and interest are paid ratably through
payroll deductions of not less than $10 per pay period, or in a single lump
sum.
SCHEDULE I
ATLANTIC AMERICAN CORPOTATION
401(k) RETIREMENT SAVINGS PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
Current
Idenity Of Issuer Description Of Investment Cost Value
- --------------------------------------------------------------------------------------------------------------------------------
* INVESCO FUNDS GROUP Money market fund:
INVESCO Cash Reserves Fund, 327,560 units $327,560 $327,560
Mutual funds:
INVESCO Industrial Income Fund, 53,053 units 715,513 798,964
INVESCO Intermediate Government Bond Fund, 22,882
units 283,215 292,433
INVESCO Total Return Fund, 31,004 units 720,547 972,297
INVESCO Dynamics Fund, 71,528 units 920,704 1,126,568
* ATLANTIC AMERICAN CORPORATION Atlantic American Corporation common stock, 214,910
shares 653,831 1,047,686
* VARIOUS PLAN PARTICIPANTS Participant loans (8.75%-9.5%), 26,836 units 26,836 26,836
---------- -----------
Total $3,648,206 $4,592,344
========== ===========
*Indicates a party in interest.
The accompanying notes are an integral part of this
schedule.
atlantic american corporation
401(k) retirement savings plan
item 27d--SCHEDULE OF reportable transactions (a)
for the year ended DECEMBER 31, 1998
Sales
Purchase Selling Net
Identity of Party ----------------------------- Price Cost Price Gain
Involved Description of Asset
- -----
* INVESCO FUNDS INVESCO Industrial Income
Fund:
GROUP 29 purchases $205,558 $ 0 $ 0 $
17 sales 0 33,010 39,976 6,966
INVESCO Total Return Fund:
30 purchases 168,263 0 0 0
12 sales 0 26,345 36,497 10,152
INVESCO Dynamics Fund:
26 purchases 177,533 0 0 0
16 sales 0 19,205 23,588 4,383
* Indicates a party in interest.
(a) Represents transactions or a series of transactions in
excess of 5% of the fair value of plan assets at the
beginning of the year.
The accompanying notes are an integral part of this
schedule.
EXHIBIT 99.2
consent of independent public accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 24, 1999, included in this Annual Report of
The Atlantic American Corporation 401(k) Retirement Savings Plan on Form 11-K
for the year ended December 31, 1998, into the Plan's previously filed
Registration Statement No. 33-90890.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
June 28, 1999
