The expense ratio for the three month period ended September 30, 2010 increased to 41.0% from 40.4% in the three month period ended September 30, 2009 and decreased to 42.0% in the nine month period ended September 30, 2010 from 46.6% in the comparable period of 2009.  The increase in the expense ratio in the three month period ended September 30, 2010 was primarily due to American Southern’s variable commission structure, which compensates the company’s agents in relation to the loss ratios of the business they write.  In periods where the loss ratio decreases, commissions and underwriting expenses will increase and conversely in periods where the loss ratio increases, commissions and underwriting expenses will decrease. The decrease in the expense ratio in the nine month period ended September 30, 2010 w as primarily attributable to a decrease in variable commissions resulting from inversely higher loss ratios as well as an overall decrease in underwriting expense.  Partially offsetting the decrease in the expense ratio in the nine month period ended September 30, 2010 was a non-recurring charge of $0.3 million which resulted from the termination and final settlement of the company’s qualified pension plan.  In the nine month period ended September 30, 2009, American Southern incurred a similar non-recurring charge of $0.4 million due to the termination of its supplemental executive retirement plan (“SERP”).

 

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Bankers Fidelity

The following summarizes Bankers Fidelity’s earned premiums for the three month and nine month periods ended September 30, 2010 and the comparable periods in 2009 (in thousands):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Medicare supplement		$	11,834			$	10,720			$	34,632			$	31,478
Other health			1,185				979				3,488				2,820
Life			2,783				2,681				8,581				8,000
Total		$	15,802			$	14,380			$	46,701			$	42,298

Premium revenue at Bankers Fidelity increased $1.4 million, or 9.9%, during the three month period ended September 30, 2010, and $4.4 million, or 10.4%, during the nine month period ended September 30, 2010, over the comparable periods in 2009, primarily due to successful marketing initiatives, recruiting of new agents, and effective utilization of the company’s proprietary lead program.  Premiums from the Medicare supplement line of business increased $1.1 million, or 10.4%, during the three month period ended September 30, 2010, and $3.2 million, or 10.0%, during the nine month period ended September 30, 2010, while premiums from the life insurance line of business increased $0.1 million and $0.6 million, respectively, during the same comparable periods.  Other health products premiums increased during the thr ee month and nine month periods ended September 30, 2010 over the comparable periods in 2009 due primarily to an increase in sales of short-term care products and increased business activities with group associations.

The following summarizes Bankers Fidelity’s operating expenses for the three month and nine month periods ended September 30, 2010 and the comparable periods in 2009 (in thousands):

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Benefits and losses		$	11,483			$	10,794			$	34,231			$	31,619
Commissions and other expenses			5,134				4,592				14,790				13,435
Total expenses		$	16,617			$	15,386			$	49,021			$	45,054

Benefits and losses increased $0.7 million, or 6.4%, during the three month period ended September 30, 2010, and $2.6 million, or 8.3%, during the nine month period ended September 30, 2010, over the comparable periods in 2009.  As a percentage of premiums, benefits and losses decreased to 72.7% in the three month period ended September 30, 2010 from 75.1% in the three month period ended September 30, 2009.  For the nine month period ended September 30, 2010, this ratio decreased to 73.3% from 74.8% in the comparable period in 2009.  The decrease in the loss ratio for the three month and nine month periods ended September 30, 2010 was primarily due to the increase in new life business which mitigated higher claims associated with the continued aging of the existing life business.

Commissions and other expenses increased $0.5 million, or 11.8%, during the three month period ended September 30, 2010, and $1.4 million, or 10.1%, during the nine month period ended September 30, 2010, over the comparable periods in 2009.  The increase in commissions and other expenses for the three month and nine month periods ended September 30, 2010 was primarily due to commission costs associated with increased premiums coupled with increases in underwriting expense related to the higher volume of business, legal fees and data processing expenses.  Also contributing to the increase in commissions and other expenses for the 2010 year to date period were increases in advertising and agency related expenses which resulted from the company’s increased marketing initiatives. As a percentage of premiums, these e xpenses increased to 32.5% in the three month period ended September 30, 2010 from 31.9% in the three month period ended September 30, 2009 primarily due to the reasons discussed previously.  For the nine month period ended September 30, 2010, this ratio decreased to 31.7% from 31.8% in the comparable period in 2009.  The slight decrease in the 2010 year to date expense ratio was primarily attributable to the increase in earned premiums.

 

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INVESTMENT INCOME AND REALIZED GAINS

Investment income decreased $0.4 million, or 14.7%, during the three month period ended September 30, 2010, and $0.7 million, or 8.7%, during the nine month period ended September 30, 2010, from the comparable periods in 2009.  The decrease in investment income for the three month and nine month periods ended September 30, 2010 was primarily attributable to a decrease in yield on invested assets.   The average yield on the Company’s invested assets decreased to 4.6% in the nine month period ended September 30, 2010 from 5.1% in the comparable period in 2009.  During the three month and nine month periods ended September 30, 2010, a large number of higher yielding securities held by the Company were redeemed by the issuers in accordance with the contractual terms thereof, the proceeds from which th e Company was not able to reinvest at equivalent rates.

The Company had net realized investment gains of $0.2 million during the nine month period ended September 30, 2010, compared to $1,000 in the nine month period ended September 30, 2009.  During the nine month period ended September 30, 2009, the Company recorded a realized loss of $0.1 million due to other than temporary impairments in its investment in redeemable preferred securities of General Motors Corporation and certain other invested assets which was offset by realized investment gains of a similar amount.  There were no impairments recorded during the nine month period ended September 30, 2010. Management continually evaluates the Company’s investment portfolio and, as may be determined to be appropriate, makes adjustments for impairments and/or will divest investments.

INTEREST EXPENSE

Interest expense decreased slightly during the three month period ended September 30, 2010, and $0.1 million, or 6.6%, during the nine month period ended September 30, 2010, from the comparable periods in 2009. The decrease in interest expense for the three month and nine month periods ended September 30, 2010 was due to a decrease in the London Interbank Offered Rate (“LIBOR”), as the interest rates on the Company’s bank debt and outstanding trust preferred obligations are based on LIBOR.

OTHER EXPENSES

Other expenses (commissions, underwriting expenses, and other expenses) increased $0.6 million, or 6.8%, during the three month period ended September 30, 2010 over the three month period ended September 30, 2009, and decreased $0.8 million, or 2.9%, during the nine month period ended September 30, 2010, from the comparable period in 2009.  The increase in other expenses for the three month period ended September 30, 2010 was primarily due to increased commission costs associated with increased premiums and increased profit sharing commissions at American Southern.  For the three month period ended September 30, 2010, profit sharing commissions increased $0.3 million from the comparable period of 2009 due to more favorable loss experience during the 2010 third quarter.  The majority of American Southern̵ 7;s business is structured in a way that agents are compensated based upon the loss ratios of the business they submit to the company.  In periods where the loss ratio decreases, commissions and underwriting expenses will increase, and conversely, in periods where the loss ratio increases, commissions and underwriting expenses will decrease.  The decrease in other expenses for the nine month period ended September 30, 2010 was primarily attributable to a $0.6 million decrease in discretionary compensation accruals and a reduction in profit sharing commissions at American Southern.  During the nine month period ended September 30, 2010, profit sharing commissions at American Southern decreased $0.6 million from the nine month period ended September 30, 2009 due primarily to the inversely higher loss ratios.  In addition, during the nine month period ended September 30, 2010, the Company terminated its qualified pension plan and distributed the accumulated benefits to pa rticipating employees.  In connection with the termination and final settlement of the qualified pension plan, the Company incurred a non-recurring charge of $0.3 million.  In the nine month period ended September 30, 2009, the Company incurred a similar non-recurring charge of $0.4 million due to the termination of its SERP.  Partially offsetting the decrease in other expenses in the nine month period ended September 30, 2010 were increases in the life and health operation for underwriting expense related to the higher volume of business, data processing expenses, legal fees as well as advertising and agency related expenses due to marketing initiatives.  On a consolidated basis, as a percentage of earned premiums, other expenses decreased to 38.5% in the three month period ended September 30, 2010 from 38.9% in the three month period ended September 30, 2009.  For the nine month period ended September 30, 2010, this ratio decreased to 38.4% from 41.7% in th e comparable period in 2009. The decrease in the expense ratio for the three month and nine month periods ended September 30, 2010 was primarily due to the increase in earned premiums coupled with a relatively consistent level of fixed expenses.  Also contributing to the decrease in the 2010 year to date expense ratio was the decrease in compensation accruals and the reduction in profit sharing commissions described above.

 

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INCOME TAXES

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and nine month periods ended September 30, 2010 resulted from the dividends-received deduction (“DRD”) and the provision-to-filed return adjustments.  The current estimated DRD is adjusted as underlying factors change.  The actual current year DRD can vary from the estimates based on, but not limited to, actual distributions from these investments as well as appropriate levels of taxable income.  The provision-to-filed return adjustments are generally updated at the completion of the third quarter of each fiscal year and were $0.1 million in the three month and nine month periods ended September 30, 2010.  The provision-to-f iled-return adjustments for the three month and nine month periods ended September 30, 2010 were primarily due to adjustments related to the carryback and utilization of capital losses on investments in the Company’s life and health operation.

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and nine month periods ended September 30, 2009 resulted from the DRD, the change in deferred tax asset valuation allowance, and the provision-to-filed return adjustments.  The change in deferred tax asset valuation allowance was due to reassessment of the realization of certain capital loss carryforward benefits.  The Company has established a corresponding valuation allowance of $1.8 million as it does not anticipate having sufficient future capital gains to offset these capital losses during the applicable carryforward period.  The provision-to-filed return adjustments were $0.5 million in the three month and nine month periods ended September 30, 2009.  The provision-to-filed-return adjustments for the three month and nine month periods ended September 30, 2009 were primarily due to adjustments related to the 2008 sale of the Company’s regional property and casualty operations.

LIQUIDITY AND CAPITAL RESOURCES

The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels, and meeting debt service requirements.  Current and expected patterns of claim frequency and severity may change from period to period but generally are expected to continue within historical ranges.  The Company’s primary sources of cash are written premiums, investment income and the sale and maturity of its invested assets.  The Company believes that, within each operating company, total invested assets will be sufficient to satisfy all policy liabilities and that cash inflows from investment earnings, future premium receipts and reinsurance collections will be adequate to fund the payment of claims and expenses as needed.

Cash flows at the Parent are derived from dividends, management fees, and tax sharing payments, as described below, from the subsidiaries.  The cash needs of the Parent are for the payment of operating expenses, the acquisition of capital assets and debt service requirements. At September 30, 2010, the Parent had approximately $25.2 million of unrestricted cash and investments.  The Company believes that traditional funding sources of the Parent, combined with current cash and investments, should provide sufficient liquidity for the Company and/or the Parent for the foreseeable future.

The Parent’s insurance subsidiaries reported statutory net income of $4.5 million for the nine month period ended September 30, 2010 compared to statutory net income of $5.0 million for the nine month period ended September 30, 2009.  Statutory results are impacted by the recognition of all costs of acquiring business.  In a scenario in which the Company is growing, statutory results are generally lower than results determined under generally accepted accounting principles (“GAAP”).  Statutory results for the Company’s property and casualty operations may differ from the Company’s results of operations under GAAP due to the deferral of acquisition costs for financial reporting purposes. The Company’s life and health operation s’ statutory results may differ from GAAP results primarily due to the deferral of acquisition costs for financial reporting purposes, as well as the use of different reserving methods.

Over 90% of the invested assets of the Parent’s insurance subsidiaries are invested in marketable securities that can be converted into cash, if required; however, the use of such assets by the Company is limited by state insurance regulations. Dividend payments to a parent corporation by its wholly owned insurance subsidiaries are subject to annual limitations and are restricted to the greater of 10% of statutory surplus or statutory earnings before recognizing realized investment gains of the individual insurance subsidiaries. At September 30, 2010, American Southern had $38.5 million of statutory surplus and Bankers Fidelity had $32.9 million of statutory surplus.  In 2010, dividend payments by the Parent’s insurance subsidiaries in excess of $8.1 million would re quire prior approval.

 

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The Parent provides certain administrative and other services to each of its insurance subsidiaries. The amounts charged to and paid by the subsidiaries include reimbursements for various shared services and other expenses incurred directly on behalf of the subsidiaries by the Parent.  In addition, there is in place a formal tax-sharing agreement between the Parent and its insurance subsidiaries. It is anticipated that this agreement will provide the Parent with additional funds from profitable subsidiaries due to the subsidiaries' use of the Parent’s tax loss carryforwards, which totaled approximately $5.8 million at September 30, 2010.

In addition to these internal funding sources, the Company maintains its revolving credit facility (the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), pursuant to which the Company is able to, subject to the terms and conditions thereof, borrow or reborrow up to $5.0 million.  The interest rate on amounts outstanding under the Credit Agreement is, at the option of the Company, equivalent to either (a) the base rate (which equals the higher of the Prime Rate or 0.5% above the Federal Funds Rate, each as defined) or (b) the LIBOR determined on an interest period of 1-month, 2-months, 3-months or 6-months, plus 2.00%.  Interest on amounts outstanding is payable quarterly.  The Credit Agreement requires the Company to comply with certain covenants, including, among others, ratios that relate funded debt to both total capitalization and earnings before interest, taxes, depreciation and amortization, as well as the maintenance of minimum levels of tangible net worth.  The Company must also comply with limitations on capital expenditures, certain payments, additional debt obligations, equity repurchases and certain redemptions, as well as minimum risk-based capital levels.  Upon the occurrence of an event of default, Wells Fargo may terminate the Credit Agreement and declare all amounts outstanding due and payable in full.  During the nine month period ended September 30, 2010, there was no balance outstanding under this Credit Agreement and the Company was in compliance with all terms of the Credit Agreement.  The termination date of this Credit Agreement is June 30, 2011.  The Company expects that it would seek to extend or renew the Credit Agreement on or prior to expiration, although no assurances can be provided that any extension or replacement would be available to the Company on acceptable terms, or at all.

The Company has two statutory trusts which exist for the exclusive purpose of issuing trust preferred securities representing undivided beneficial interests in the assets of the trusts and investing the gross proceeds of the trust preferred securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”).  The outstanding $41.2 million of Junior Subordinated Debentures have a maturity of thirty years from their original date of issuance, are callable, in whole or in part, only at the option of the Company, five years after their respective dates of issue and quarterly thereafter, and have an interest rate of three-month LIBOR plus an applicable margin.  The margin ranges from 4.00% to 4.10%.  At September 30, 201 0, the effective interest rate was 4.40%.  The obligations of the Company with respect to the issuances of the trust preferred securities represent a full and unconditional guarantee by the Parent of each trust’s obligations with respect to the trust preferred securities.  Subject to certain exceptions and limitations, the Company may elect from time to time to defer Junior Subordinated Debenture interest payments, which would result in a deferral of distribution payments on the related trust preferred securities.  The Company has not made such an election.

During 2006, the Company entered into a zero cost interest rate collar with Wells Fargo to hedge future interest payments on a portion of the Junior Subordinated Debentures.  The notional amount of the collar was $18.0 million with an effective date of March 6, 2006.  The collar has a LIBOR floor rate of 4.77% and a LIBOR cap rate of 5.85% and adjusts quarterly on the 4th of each March, June, September and December through termination on March 4, 2013.  The Company began making payments to Wells Fargo under the zero cost interest rate collar on June 4, 2008.  As a result of interest rates remaining below the LIBOR floor rate of 4.77%, these payments to Wells Fargo under the zero cost interest rate collar have continued through September 30, 2010.  While the Company may be exposed to counterparty risk should Wells Fargo fail to perform, based on the current level of interest rates, and coupled with the current macroeconomic outlook, the Company believes that its current exposure to nonperformance risks is minimal.

The Company intends to pay its obligations under the Credit Agreement, if any, and the Junior Subordinated Debentures using existing cash balances, dividend and tax sharing payments from the operating subsidiaries, or from potential future financing arrangements.

At September 30, 2010, the Company had 70,000 shares of Series D Preferred Stock (“Series D Preferred Stock”) outstanding.  All of the shares of Series D Preferred Stock are held by an affiliate of the Company’s Chairman Emeritus. The outstanding shares of Series D Preferred Stock have a stated value of $100 per share; accrue annual dividends at a rate of $7.25 per share (payable in cash or shares of the Company’s common stock at the option of the board of directors of the Company) and are cumulative.  In certain circumstances, the shares of the Series D Preferred Stock may be convertible into an aggregate of approximately 1,754,000 shares of the Company’s common stock, subject to certain adjustments and provided that such adjustments do not result in the Company issuing more than approximately 2,703,000 shares of common stock without obtaining prior shareholder approval; and are redeemable solely at the Company’s option.  The Series D Preferred Stock is not currently convertible.  At September 30, 2010, the Company had accrued, but unpaid, dividends on the Series D Preferred Stock totaling $0.4 million.

 

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Net cash provided by operating activities was $0.3 million in the nine month period ended September 30, 2010, compared to net cash used in operating activities of $3.3 million in the nine month period ended September 30, 2009.  Cash and short-term investments increased from $20.1 million at December 31, 2009 to $64.9 million at September 30, 2010.  The increase in cash and short-term investments during the nine month period ended September 30, 2010 was primarily due to a large number of called securities exceeding investment purchases. During the nine month period ended September 30, 2009, the Company distributed accumulated benefits of $2.8 million resulting from the termination of its SERP and paid a $1.8 million final settlement to Columbia Mutual Insurance Company in connection with the 2008 sale of its regional p roperty and casualty operations.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we have elected to comply with certain scaled disclosure reporting obligations, and therefore are not required to provide the information required by this Item.

Item 4T. Controls and Procedures

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

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

FORWARD-LOOKING STATEMENTS

This report contains and references certain information that constitutes forward-looking statements as that term is defined in the federal securities laws.  Those statements, to the extent they are not historical facts, should be considered forward-looking statements, and are subject to various risks and uncertainties.  Such forward-looking statements are made based upon management’s current assessments of various risks and uncertainties, as well as assumptions made in accordance with the “safe harbor” provisions of the federal securities laws.  The Company’s actual results could differ materially from the results anticipated in these forward-looking statements as a result of such risks and uncertainties, including those identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, subsequent quarterly reports on Form 10-Q and the other filings made by the Company from time to time with the Securities and Exchange Commission.

 

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PART II.  OTHER INFORMATION

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

On May 2, 1995, the Board of Directors of the Company approved an initial plan that allowed for the repurchase of shares of the Company's common stock (the "Repurchase Plan").  As amended since its original adoption, the Repurchase Plan currently allows for repurchases of up to an aggregate of 2.0 million shares of the Company's common stock on the open market or in privately negotiated transactions, as determined by an authorized officer of the Company.  Such purchases can be made from time to time in accordance with applicable securities laws and other requirements.

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

The table below sets forth information regarding repurchases by the Company of shares of its common stock on a monthly basis during the three month period ended September 30, 2010.

Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
July 1 – July 31, 2010			-			$	-				-				462,995
August 1 – August 31, 2010			1,950				1.38				1,950				461,045
September 1 – September 30, 2010			5,789				1.68				5,789				455,256
Total			7,739			$	1.61				7,739

 

Item 6.  Exhibits

31.1 – Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 – Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 – Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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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 8, 2010	By:	/s/ John G. Sample, Jr.
		John G. Sample, Jr.
		Senior Vice President and Chief Financial Officer

 

 

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EXHIBIT INDEX

Exhibit Number	Title
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

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

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

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

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

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

4.

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

a)

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

b)

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

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

d)

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

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

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

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

 

 

	Date:  November 8, 2010	/s/ Hilton H. Howell, Jr.
		Hilton H. Howell, Jr. President and Chief Executive Officer

 

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EXHIBIT 31.2

 

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

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

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

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

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

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

4.

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

a)

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

b)

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

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

d)

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

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

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

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

 

 

	Date:  November 8, 2010	/s/ John G. Sample, Jr.
		John G. Sample, Jr. Senior Vice President and Chief Financial Officer

 

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EXHIBIT 32.1

 

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

    Pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Quarterly Report on Form 10-Q of Atlantic American Corporation (the “Company”) for the quarterly period ended September 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, that, to such officer’s knowledge:

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

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

	Date: November 8, 2010	/s/ Hilton H. Howell, Jr.
		Hilton H. Howell, Jr. President and Chief Executive Officer
	Date: November 8, 2010	/s/ John G. Sample, Jr.
		John G. Sample, Jr. Senior Vice President and Chief Financial Officer

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

 

 

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