10-K: Atlantic American Corp. Faces Nasdaq Scrutiny Amidst Filing Delays

Atlantic American Corporation's 2025 10-K filing reveals material weaknesses in internal controls, delayed financial report submissions, and ongoing Nasdaq compliance issues, overshadowing modest revenue growth.

Summary

• Atlantic American Corporation filed its 2025 Form 10-K, reporting a net income of $6.0 million ($0.28 per diluted share) for the year, a significant improvement from a net loss of $1.4 million ($(0.09) per diluted share) in 2024.
• Total revenue increased to $210.4 million in 2025 from $188.1 million in 2024, driven by higher premiums in both property and casualty and life and health segments.
• The company identified material weaknesses in internal control over financial reporting related to group premium receivables, LDTI implementation, and income tax accounting.
• Atlantic American is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to the delayed filing of its 2025 10-K and other periodic reports, and expects a potential delisting determination.
• The company adopted new accounting standards for long-duration contracts (LDTI) and revised its 2024 financial information due to identified errors in premium receivables and revenue recognition.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as having a negative sentiment due to significant material weaknesses in internal controls, Nasdaq non-compliance, and delayed filings, despite some operational improvements.

Positives

• Achieved net income of $6.0 million in 2025, a turnaround from a net loss in 2024.
• Total revenue increased by 11.9% to $210.4 million in 2025.
• Property and casualty operations saw a significant increase in gross written premiums by 31.1% to $96.6 million.
• Medicare Supplement business experienced a 9.6% increase in gross earned premiums to $179.9 million.
• The company's insurance subsidiaries maintained Risk-Based Capital (RBC) levels exceeding regulatory requirements.
• Investments in fixed maturity securities increased to $244.1 million, with 99% rated investment grade by NAIC.

Negatives

• Identified material weaknesses in internal control over financial reporting across multiple areas, including premium receivables, LDTI implementation, and income tax accounting.
• The company is not in compliance with Nasdaq Listing Rule 5250(c)(1) due to delayed filings of its 2025 10-K and other periodic reports.
• Expects a potential delisting determination from Nasdaq.
• Revised previously issued financial statements for 2024 due to identified errors in premium receivables and revenue recognition.
• The CFO resigned effective May 27, 2026.
• Bankers Fidelity has not yet filed its annual audited statutory financial statements for 2025.

Risks

• The company's ability to regain compliance with Nasdaq listing standards and maintain the listing of its common stock.
• The risk that additional material weaknesses or significant deficiencies may be identified in the future.
• The potential impact of cybersecurity threats, including breaches and unauthorized access to data.
• The uncertain effect of regulatory and market-driven changes in practices relating to incentive compensation.
• The incidence and severity of catastrophes, both natural and man-made.
• Information technology system failures or network disruptions.

Future Outlook

The company is focused on remediating its material weaknesses in internal controls and regaining compliance with Nasdaq listing standards. While operational performance showed improvement in 2025, the ongoing filing delays and potential delisting pose significant risks to future operations and investor confidence.

Management Comments

• Management identified deficiencies in controls over enrollment information, policy-status maintenance, due-premium accounting, account reconciliations and related management review, which constituted a material weakness.
• Management concluded that deficiencies in controls over the adoption and implementation of LDTI constituted a material weakness.
• Management concluded that deficiencies in controls over the preparation, review and financial reporting of income tax provision constituted a material weakness.
• Management has initiated remediation activities intended to address the material weaknesses, which remain unremediated as of the date of this report.

Industry Context

StockSavvy.ai notes that the insurance industry is heavily regulated, and timely financial reporting is critical for maintaining investor trust and regulatory compliance. The identified material weaknesses and delayed filings at Atlantic American Corporation are significant concerns within this context, potentially impacting its ability to operate and attract capital.

Comparison to Industry Standards

• The company's A- (Excellent) rating from A.M. Best for its insurance subsidiaries is a positive, aligning with industry standards for financial strength.
• However, the material weaknesses in internal controls and delayed filings are deviations from industry best practices and regulatory expectations for publicly traded companies.
• The adoption of LDTI is a significant accounting change impacting the insurance sector, and Atlantic American's challenges in implementing it highlight the complexity faced by many insurers.
• Competitors in the insurance sector generally maintain timely SEC filings and robust internal control environments, making Atlantic American's situation a notable outlier.

Management Changes

Corporate Governance

Legal Proceedings

• The company and its subsidiaries are involved in various claims and lawsuits arising in the ordinary course of business, which are accounted for through reserves. Management does not expect the ultimate liability to be material to consolidated financial condition.

Related Party Transactions

• Lease of office space from 4370 Peachtree LLC, an entity controlled by the estate of Harriett J. Robinson, for approximately $1.4 million in 2025.
• Investment in Series D Preferred Stock by Delta Life, an entity controlled by the estate of Harriett J. Robinson.
• Payment of $0.4 million in dividends on Series D Preferred Stock in 2025.
• Insurance premiums paid by Gray Media, Inc. (Gray) to the company for voluntary employee benefit plans, amounting to approximately $2.1 million in 2025.

Stakeholder Impact

• Shareholders: Potential delisting from Nasdaq could negatively impact stock liquidity and value. Material weaknesses in controls may erode investor confidence.
• Creditors: Amendments to the credit agreement indicate ongoing discussions and waivers related to financial covenant compliance, potentially affecting credit terms.
• Employees: The resignation of the CFO and ongoing compliance issues may create uncertainty.
• Regulators: Delayed filings and identified control deficiencies are subject to regulatory scrutiny.

Next Steps

• Continue to work diligently toward filing the remaining Delinquent Reports.
• Appeal any potential delisting determination from Nasdaq to a Nasdaq Hearings Panel.
• Implement remediation measures to address identified material weaknesses in internal control over financial reporting.
• Name a successor to the former Chief Financial Officer.
• Complete and file audited statutory financial statements for Bankers Fidelity and second-quarter statutory filings.
• Cooperate with the regulatory examination commenced by the Nebraska Department of Insurance.

Key Dates

Recommendation

While the company has returned to profitability and shows revenue growth, the significant material weaknesses in internal controls, delayed filings, and the ongoing risk of Nasdaq delisting present substantial uncertainties. These factors outweigh the positive financial results, suggesting a cautious 'hold' approach until these critical issues are resolved and compliance is re-established.

Keywords

Insurance, Property and Casualty Insurance, Life and Health Insurance, Financial Reporting, Internal Controls, SEC Filing, Nasdaq Compliance, LDTI Adoption