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) RETIREMENT SAVINGS PLAN The following exhibits are filed herewith: Exhibit 1: Financial Statements and Supplemental Schedule for the years ended December 31, 2009 and 2008 together with Report of Independent Registered Public Accounting Firm. Exhibit 2: Consent of BDO Seidman LLP, Independent Registered Public Accounting Firm.
Exhibit 1
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND
SUPPLEMENTAL SCHEDULE
For the Years Ended December 31, 2009 and 2008
with
Report of Independent Registered Public Accounting Firm
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
December 31, 2009 AND 2008
- --------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm........................1
Statements of Net Assets Available for Benefits................................2
Statement of Changes in Net Assets Available for Benefits......................3
Notes to Financial Statements..................................................4
Supplemental Schedule:
Schedule H, Line 4i: Schedule of Assets (Held at End of Year)...........19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator
Atlantic American Corporation 401(k) Retirement Savings Plan
Atlanta, Georgia
We have audited the accompanying statements of net assets available for benefits
of the Atlantic American Corporation 401(k) Retirement Savings Plan (the "Plan")
as of December 31, 2009 and 2008, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2009. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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 of the Plan as of
December 31, 2009 and 2008, and the changes in net assets available for benefits
for the year ended December 31, 2009 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming opinions on the basic
financial statements taken as a whole. The accompanying supplemental Schedule H,
Line 4i-Schedule of Assets (Held at End of Year) as of or for the year ended
December 31, 2009 is presented for the purpose of additional analysis and is not
a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
BDO SEIDMAN LLP
Atlanta, Georgia
June 14, 2010
1
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2009 and 2008
- --------------------------------------------------------------------------------
2009 2008
------------------ ------------------
Cash $ 11,291 $ 3
Investments, at fair value (Note 3)
Common/collective trusts 913,829 846,734
Employer securities 495,884 394,959
Registered investment companies 6,472,957 4,499,866
Participant loans 99,458 123,689
----------------- ------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 7,993,419 $ 5,865,251
================== =================
The accompanying notes are an integral part of these financial statements.
2
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2009
- --------------------------------------------------------------------------------
Additions to Net Assets
Contributions:
Participants $ 620,105
Company 294,361
-----------------
TOTAL CONTRIBUTIONS 914,466
Interest and dividend income 152,490
Net appreciation in fair market value of investments (Note 3) 1,581,748
-----------------
TOTAL ADDITIONS TO NET ASSETS 2,648,704
-----------------
Deductions from Net Assets
Benefit payments to participants 478,980
Fees 41,556
-----------------
TOTAL DEDUCTIONS 520,536
-----------------
Net Increase 2,128,168
Net Assets Available for Benefits at Beginning of Year 5,865,251
-----------------
Net Assets Available for Benefits at End of Year $ 7,993,419
=================
The accompanying notes are an integral part of these financial statements.
3
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN
The following description of the Atlantic American Corporation 401(k) Retirement
Savings Plan (the "Plan") provides only general information. Participating
members ("Participants") should refer to the Plan document for a more complete
description of the Plan's provisions. Information with regard to eligibility,
contributions, distributions, vesting, withdrawals, restoration, loans, fund
redistribution, and definitions of all terms are contained in that document.
General: The Plan is a defined contribution plan available to all U.S. employees
of Atlantic American Corporation and its subsidiaries (collectively, the
"Company"). All employees of the Company, except collective bargaining
employees, nonresident aliens, and leased employees are eligible to participate
and are automatically enrolled, effective on the date of employment. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), as amended.
Participating Companies: As of December 31, 2009, the Company owned three
insurance subsidiaries, Bankers Fidelity Life Insurance Company, American
Southern Insurance Company and its wholly owned subsidiary, American Safety
Insurance Company, in addition to one non-insurance company, Self Insurance
Administrators, Inc. All four of these subsidiaries were eligible to participate
in the Plan in 2009.
Plan Administration: Wachovia Bank, National Association (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 automatically become a participant and are
enrolled into the Plan at a 4% deferral rate on their date of hire. At any time,
a participant may stop his or her contribution or change his or her deferral
percentage in 1% increments up to 50% of his or her annual compensation, as
defined by the Plan, subject to certain limitations under the Internal Revenue
Code (the "Code"), and elect to contribute into any of the investment funds
offered by the Plan. Participant pre-tax limitations were limited to $16,500 for
2009 and $15,500 for 2008.
Participants may also contribute amounts representing distributions from other
qualified benefit plans. These contributions, if any, are classified as rollover
contributions in the statement of changes in net assets available for benefits.
Participants who have attained age 50 before the end of the Plan year are
eligible to make catch-up contributions to the Plan. The maximum individual
catch-up contribution amount was $5,500 for 2009 and $5,000 for 2008.
4
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
The Company provides a matching contribution equal to a certain percentage of
each participant's contributions. On January 1, 2009, the Company adopted safe
harbor plan provisions, with employer matching contributions of 100% of a
participant's pre-tax contribution, up to the first 4% of earnings. Safe harbor
contributions are fully vested immediately. The Company may also make
profit-sharing contributions, at its discretion, which will be allocated among
all eligible participants in the Plan whether they make contributions or not.
For the year ended December 31, 2008, the Company's matching contribution
equaled 50% of each participant's tax deferred contribution up to the first 6%
of eligible compensation. All Company matching contributions prior to July 1,
2008 were in Company common stock. Subsequent thereto and prior to January 1,
2009, Company matching contributions were in either Company common stock or cash
depending on the participating company. Effective January 1, 2009, all employer
matching contributions are made in cash; and Company common stock remains an
investment option in the Plan.
Vesting: Participants are always fully vested in their own contributions and
safe harbor matching contributions. Each participant becomes vested in the
pre-2009 Company matching stock contributions based on years of continuous
service. The vesting percentage for the Company matching stock contributions are
as follows:
Years of service:
Less than one 0%
One 20%
Two 40%
Three 60%
Four 80%
Five 100%
In addition, participants become fully vested upon retirement, death, or
disability.
Benefits: Upon termination of service due to death, disability, retirement, or
separation from service, a participant or his or her beneficiary with a vested
balance greater than $5,000 may elect to receive an amount equal to the value of
the participant's vested interest in his or her account or they can remain in
the Plan but contributions cease. The form of payment, selected by the
participant or his or her beneficiary, is either a lump-sum distribution or a
direct rollover into a qualified retirement plan or individual retirement
account. A vested balance less than $5,000 is automatically distributed to the
terminated participant or his or her beneficiary in the quarterly period
following termination.
5
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
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 investment income
(loss). Allocations of income (loss) are based on the proportion that each
participant's account balance bears to the total of all participant account
balances and their investment elections.
Investment Options: Participants may direct their contributions and any related
earnings into several investment options in 1% increments. Participants may
change their investment elections at any time. As of December 31, 2009,
participants in the Plan can invest in any of the following investment options:
o AIM Dynamics Fund - seeks long-term capital growth. The fund normally
invests at least 65% of assets in equity securities of
mid-capitalization companies.
o AllianceBernstein International Value Fund - seeks long-term growth of
capital. The fund invests primarily in a diversified portfolio of
equity securities of established companies selected from more than 40
industries and more than 40 developed and emerging market countries.
It invests in companies that are believed to be undervalued and whose
long-term earnings power is not reflected in the current market price
of their securities.
o Allianz NFJ Dividend Value Fund - seeks long-term growth of capital
and income. The fund invests at least 80% of assets in common stocks
and other equity securities of companies that pay or are expected to
pay dividends. It invests primarily in common stocks of companies with
market capitalizations greater than $3.5 billion. In addition to
common stocks and other equity securities, the fund may invest in real
estate investment trusts (REITs) and in non-U.S. securities, including
emerging market securities.
o Atlantic American Corporation Common Stock Fund - is comprised of
Atlantic American common stock and a small percentage of cash to allow
for daily transfers in and out of the fund. Fund performance will
differ from the actual performance of Atlantic American common stock
because of the cash held in the fund for liquidity purposes.
o Baron Growth Fund - seeks capital appreciation. The fund invests
primarily in common stocks of smaller growth companies selected for
their capital appreciation potential. It considers a small-sized
company as one having a market value of under $2.5 billion at the time
of purchase. The fund seeks to purchase securities that are expected
to increase in value 100% in four years and then double again in the
following four or five years.
6
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
o Columbia Mid Cap Value Fund - seeks to provide long-term growth of
capital. The fund normally invests at least 80% of net assets in
equity securities of companies that have market capitalizations in the
range of the companies in the Russell Midcap Value Index that are
believed to be undervalued and have the potential for long-term
growth. It may invest up to 20% of total assets in foreign securities.
The fund also may invest in REITs.
o Columbia Small Cap Value Fund - seeks long-term growth of capital. The
fund normally invests at least 80% of net assets in equity securities
of companies that have market capitalizations in the range of the
companies in the Russell 2000 Value Index that are believed to be
undervalued and have the potential for long-term growth of capital. It
may invest up to 20% of total assets in foreign securities and also
may invest in REITs.
o Fidelity Puritan Fund - seeks income and capital growth consistent
with reasonable risk. The fund invests 60% of assets in stocks and
other equity securities and the remainder in bonds and other debt
securities, including lower-quality debt securities. It invests at
least 25% of total assets in fixed-income senior securities (including
debt securities and preferred stock). The fund also invests in
domestic and foreign issuers and in Fidelity's central funds.
o Oppenheimer Global Opportunities Fund - seeks capital appreciation,
consistent with preservation of principal, while providing current
income. The fund primarily invests in equity securities of issuers in
the U.S. and foreign countries but may invest in debt securities with
up to 25% of assets in bonds rated below investment grade. The fund
can invest in any country, including developed or emerging markets,
but currently emphasizes investments in developed countries. As a
fundamental policy, it normally invests in at least four countries.
o PIMCO Total Return Fund - seeks maximum total return. The fund
normally invests at least 65% of total assets in a diversified
portfolio of fixed income instruments of varying maturities, which may
be represented by forwards or derivatives such as options, futures
contracts, or swap agreements. It may invest all assets in derivative
instruments, such as options, futures contracts or swap agreements, or
in mortgage or asset-backed securities. The fund also invests up to
10% of total assets in preferred stocks.
7
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
o Putnam International Capital Opportunities Fund - seeks long-term
capital appreciation. The fund normally invests in common stocks of
companies outside the United States that are believed to have
favorable investment potential. It primarily invests in equities of
small-to mid-capitalization issuers, however, it can invest in
companies of any size. The fund may also invest in securities issued
in both developed and emerging markets.
o T. Rowe Price Blue Chip Growth Fund - seeks long-term growth of
capital; income is secondary. The fund will normally invest at least
80% of assets in the common stocks of large and medium-sized blue chip
growth companies. These are firms that are well established in their
industries and have the potential for above-average earnings growth.
It focuses on companies with leading market position, seasoned
management and strong financial fundamentals. While the fund invests
most assets in U.S. common stocks, it may also purchase other
securities including foreign stocks, futures and options.
o T. Rowe Price Retirement Strategy Funds - seeks the highest total
return over time consistent with an emphasis on both capital growth
and income. The funds invest in a set of underlying T. Rowe Price
mutual funds representing a variety of asset classes and investment
styles. Each fund's asset mix becomes more conservative - both prior
to and after age 65 - as time elapses. Once a fund reaches its most
conservative planned allocation, approximately 30 years after its
stated target retirement date, its allocation to stocks will remain
fixed at approximately 20% of assets. The remainder will be invested
in 60% fixed income securities and 20% short-term securities.
o Vanguard Midcap Index Fund - seeks to track the performance of a
benchmark index that measures the investment return of
mid-capitalization stocks. The fund employs a passive management
investment approach designed to track the performance of the MSCI US
Mid Cap 450 Index, a broadly diversified index of the stocks of
medium-size U.S. companies. It attempts to replicate the target index
by investing all, or substantially all, of assets in the stocks that
make up the index, holding each stock in approximately the same
proportion as its weighting in the index.
o Vanguard Small Cap Index Fund - seeks to track the performance of a
benchmark index that measures the investment return of small
capitalization stocks. The fund employs a passive management
investment approach designed to track the performance of the MSCI US
Small Cap 1750 Index, a broadly diversified index of the stocks of
smaller U.S. companies. It attempts to replicate the target index by
investing all, or substantially all, of assets in the stocks that make
up the index,
8
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
holding each stock in approximately the same proportion as its
weighting in the index.
o Vanguard Total Bond Market Index Fund - seeks to track the performance
of a broad, market-weighted bond index. The fund invests by sampling
the index. It invests at least 80% of assets in bonds held in the
index. The fund maintains a dollar-weighted average maturity
consistent with that of the index, ranging between 5 and 10 years.
o Enhanced Stock Market Fund of Wachovia - seeks to provide a total rate
of return equal to or exceeding that of the S&P 500 market index.
o Wachovia Diversified Stable Value Fund - seeks to provide rates of
return greater than three-month Treasury bills while maintaining a
relatively stable principal value.
Forfeitures: Amounts forfeited from non-vested accounts, if any, are used to
reduce future employer contributions. There were no forfeitures used in 2009 to
reduce employer contributions. At December 31, 2009 and 2008, $49,946 and
$46,426, respectively, were available to be used in the future.
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 their vested
account 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 balances 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.
Specified Hardship Withdrawals: Upon written application to the Trustee by a
participant for a specified hardship withdrawal, the participant may withdraw
from his or her fund accounts. Such withdrawal may be made only upon the express
determination that it is necessary to prevent a severe financial hardship to
such participant and specific to the following events: expenses for medical
care; costs directly related to the purchase of a principal residence; payment
of tuition and related educational fees; and to prevent eviction from a
principal residence or foreclosure on the mortgage of a principle residence. A
participant who has made a specified hardship withdrawal may include any amounts
necessary to pay federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution; shall make no
9
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 1-DESCRIPTION OF THE PLAN-Continued
more than one withdrawal during any calendar quarter; and shall incur a
mandatory suspension of all contributions for twelve months after such
withdrawal.
Administrative Expenses: The Company pays certain administrative expenses of the
Plan. Trustee fees are paid by the Plan. Fees resulting from individual
participant transactions, such as loan origination and benefit payments, or
certain investment elections, are paid by the participant and are included in
the fee amount on the statement of changes in net assets available for benefits.
NOTE 2-ACCOUNTING POLICIES
Use of Estimates and Basis of Accounting: The financial statements of the Plan
are prepared under the accrual method of accounting. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates that affect the financial statements and
accompanying notes. Actual results could differ from those estimates.
As described in Accounting Standards Codification 946-210, Financial Services -
Investment Companies, investment contracts held by a defined contribution plan
are required to be reported at fair value. However, contract value is the
relevant measurement attribute for that portion of the net assets available for
benefits of a defined contribution plan attributable to fully benefit-responsive
investment contracts provided that those net assets available for benefits are
established under a trust whereby the trust itself is adopted as part of one or
more qualified employer-sponsored defined contribution plans. The Plan invests
in investment contracts through collective trusts. The contract value of these
investments is the amount participants would receive if they were to initiate
permitted transactions under the terms of the plan. The fair value of the
collective trusts approximates contract value as of December 31, 2009 and 2008.
Investment Valuation and Income Recognition: The Plan's investments are stated
at estimated fair value. Where available, quoted market prices are used to value
investments. Shares of registered investment companies are valued at the net
asset value of shares held by the Plan at year-end. Participant loans are valued
at their outstanding balances, which approximate fair value. The Plan's interest
in the common/collective trusts is valued based on information reported by the
investment advisor using the audited financial statements.
10
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 2-ACCOUNTING POLICIES-Continued
Purchases and sales of securities are recorded on a trade date basis. Dividends
are recorded on the ex-dividend date. Interest income is recorded on an accrual
basis.
Investment securities, in general, are exposed to various risks, including
interest rate, credit, and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term,
and such changes could materially affect the amounts reported in the statements
of net assets available for benefits.
The following describes the fair value hierarchy and provides information as to
the extent to which the Plan uses fair value to measure 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 Plan has the ability to access
at the measurement date. The Plan did not classify any of its assets
as Level 1 instruments.
Level 2 Observable inputs, other than quoted prices included in Level 1, for
the asset or liability or prices for similar assets or liabilities.
The Plan assets identified as Level 2 instruments include certain
common/collective trusts, employer securities and registered
investment companies, as well as participant loans.
Level 3 Valuations that are derived from techniques in which one or more of
the significant inputs are unobservable (including assumptions about
risk). The Plan assets identified as Level 3 instruments include
stable value funds. Fair value is based on criteria that use
assumptions or other data that are not readily observable from
objective sources and provided primarily from the sponsors of the
underlying funds. As of December 31, 2009 and 2008, the Plan's stable
value funds valued using Level 3 criteria totaled $567,598 and
$483,358, respectively. The use of different criteria or assumptions
regarding data may have yielded different valuations.
11
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
NOTE 2-ACCOUNTING POLICIES-Continued
As of December 31, 2009, assets carried at fair value were measured on a
recurring basis as summarized below:
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 2-ACCOUNTING POLICIES-Continued As of December 31, 2008, assets carried at fair value were measured on a recurring basis as summarized below:
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 2-ACCOUNTING POLICIES-Continued The following is a roll-forward of the financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the two years ended December 31, 2009. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Stable Value Funds --------------- Balance, January 1, 2008 $ 641,292 Contributions 1,636,266 Withdrawals (1,817,125) Net appreciation in fair value 22,925 --------------- Balance, December 31, 2008 483,358 Contributions 281,761 Withdrawals (207,702) Net appreciation in fair value 10,181 --------------- Balance, December 31, 2009 $ 567,598 =============== The Plan assets identified as Level 3 instruments are comprised solely of stable value funds. They are not actively traded and valuation techniques used to measure their fair value are primarily based on data provided from the sponsors of the underlying stable value funds. Net Appreciation (Depreciation): Net realized gains (losses) and unrealized appreciation (depreciation) are recorded in the accompanying statement of changes in net assets available for benefits as net appreciation (depreciation) in fair market value of investments. Payment of Benefits: Distributions to participants are recorded when payment is made. 14
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 2-ACCOUNTING POLICIES-Continued New Accounting Pronouncements: The Financial Accounting Standards Board ("FASB") issued Acounting Standards Codification 105-10-05, Generally Accepted Accounting Principles, which establishes the Accounting Standards Codification ("ASC") as the single source of authoritative GAAP recognized by the FASB to be applied to nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of GAAP for SEC registrants. The Codification supersedes all existing non-SEC accounting and reporting standards. GAAP is not intended to be changed as a result of the Codification, but the ASC does change the way the guidance is organized and presented. As a result, these changes have an impact on how companies reference GAAP in their financial statements and in their accounting policies for financial statements issued for the interim and annual periods ending after September 15, 2009. The Company has included the references to the Codification, as appropriate, in these financial statements. 15
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 3-INVESTMENTS The estimated fair values of individual investments that represent 5% or more of the Plan's net assets as of December 31, 2009 and 2008 are as follows:
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 4-NONPARTICIPANT-DIRECTED INVESTMENTS Information about the net assets as of December 31, 2009 and 2008 and the significant components of the change in net assets for the years then ended relating to the Company's common stock (nonparticipant-directed investments) is as follows:
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS December 31, 2009 and 2008 NOTE 7-PARTY-IN-INTEREST TRANSACTIONS The Plan held 353,387 shares and 476,863 shares of Atlantic American Corporation (the Plan Sponsor) common stock as of December 31, 2009 and 2008 in the Atlantic American Stock Fund. The fund invests in Atlantic American Corporation common stock and money market funds and had an estimated fair value of $495,884 and $394,959, at December 31, 2009 and 2008, respectively. Certain investments totaling $913,829, held by the Plan at December 31, 2009, are managed by the Trustee. These transactions qualify as party-in-interest transactions. NOTE 8-SUBSEQUENT EVENT Effective January 1, 2010, the Company decreased its employer match to 50% of the first 4% of a participant's pre-tax contribution. In addition, the Company will provide a safe harbor non-elective contribution of 3% of compensation to all eligible participants during the 2010 Plan year. 18
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN PLAN NUMBER 001 58-1027114 SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2009 - --------------------------------------------------------------------------------
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN PLAN NUMBER 001 58-1027114 SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR) - CONTINUED December 31, 2009 - --------------------------------------------------------------------------------
Exhibit 2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Atlantic American Corporation 401(k) Retirement Savings Plan
Atlanta, Georgia
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 33-90890) of our report dated June 14, 2010,
relating to the financial statements and supplemental schedule of Atlantic
American Corporation 401(k) Retirement Savings Plan which appear in this Form
11-K.
BDO Seidman LLP
Atlanta, Georgia
June 14, 2010