v3.26.3
Credit Arrangements
 12 Months Ended
Dec. 31, 2025
Credit Arrangements [Abstract]  
Credit Arrangements
 
Note 11. Credit Arrangements

Bank Debt

On May 12, 2021, the Company entered into a revolving credit agreement (“Revolving Credit Agreement”) with Truist Bank as the lender (the “Lender”). The Revolving Credit Agreement provides for an unsecured $10,000 revolving credit facility that originally matured on April 12, 2024. On March 22, 2024, the Company entered into a First Amendment (the "Amendment") to its Revolving Credit Agreement (as amended, the “Credit Agreement”) with the Lender. The Amendment, among other things, (a) updates the interest rate provisions to memorialize that the Company pays interest on the unpaid principal balance of outstanding revolving loans at the Adjusted Term SOFR rate (as defined in the Credit Agreement), plus 2.00%, (b) extends the maturity date of the revolving credit facility to March 22, 2027, (c) requires the monthly payment of an unused commitment fee of 0.2% of the unused facility amount, and (d) requires that the Company maintain a consolidated net worth of not less than $64,200. On May 27, 2026, July 31, 2026, October 9, 2026 and October 15, 2026, the Company and the Lender entered into amendments to the Credit Agreement, each of which had the effect of extending the then-applicable deadlines by which the Company must deliver to the Lender (i) the Company’s audited consolidated financial statements for the year ended December 31, 2025, (ii) the Company’s interim consolidated financial statements for the quarters ended March 31, 2026, June 30, 2026 and September 30, 2026, and (iii) related certificates of the Company’s compliance with financial covenants under the Credit Agreement and certain other matters. The Fifth Amendment to the Revolving Credit Agreement, dated October 15, 2026, also amended the minimum AM Best financial strength rating that must be maintained by American Southern Insurance Company to be no lower than “A-” and waived related defaults under the Credit Agreement occurring prior to such amendment. Except as modified by these amendments, the existing terms of the original Credit Agreement remain in effect.

The Credit Agreement requires the Company to comply with certain covenants, including a debt-to-capital ratio that restricts the Company from incurring consolidated indebtedness that exceeds 35% of the Company’s consolidated capitalization at any time and maintaining a minimum consolidated net worth, as previously mentioned. The Credit Agreement also contains customary representations and warranties and events of default. Events of default include, among others, (a) the failure by the Company to pay any amounts owed under the Credit Agreement when due, (b) the failure to perform and not timely remedy certain covenants, (c) a change in control of the Company and (d) the occurrence of bankruptcy or insolvency events. Upon an event of default, the Lender may, among other things, declare all obligations under the Credit Agreement immediately due and payable and terminate the revolving commitments. As of December 31, 2025 and 2024, the Company had outstanding borrowings of $5,021 and $4,023, respectively, under the Credit Agreement.

For the year ended 2025 and 2024, the Company incurred $257 and $283 in interest expense, respectively, on the revolving credit facility borrowing. During the year ended 2025 and 2024, the Company paid $12 and $9, respectively, in fees on the available unused amount of the revolving credit facility of $5,000 and $6,000, respectively. At December 31, 2025 and 2024, the effective interest rate was 5.97% and 6.67%, respectively.

Junior Subordinated Debentures

The Company has two unconsolidated Connecticut statutory business trusts, which exist for the exclusive purposes of: (i) issuing trust preferred securities (“Trust Preferred Securities”) representing undivided beneficial interests in the assets of the trusts; (ii) investing the gross proceeds of the Trust Preferred Securities in junior subordinated deferrable interest debentures (“Junior Subordinated Debentures”) of the Company; and (iii) engaging in those activities necessary or incidental thereto.

The outstanding $18,042 and $15,696 of Junior Subordinated Debentures mature on December 4, 2032 and May 15, 2033, respectively, are callable quarterly, in whole or in part, only at the option of the Company. Prior to July 1, 2023, the interest rate was based on 3-month LIBOR plus an applicable margin. Effective July 1, 2023, the interest rate is determined based on a reference rate of the 3-month SOFR plus applicable tenor spread of 0.26161% plus an applicable margin, ranging from 4.00% to 4.10%. At December 31, 2025 and 2024, the effective interest rate was 8.13% and 8.82%, respectively.

The financial structure of each of Atlantic American Statutory Trust I and II, as of December 31, 2025 and 2024, was as follows:
 
Atlantic American
Statutory Trust I

 
Atlantic American
Statutory Trust II
JUNIOR SUBORDINATED DEBENTURES(1)(2)
                
Balance December 31, 2025
   $
18,042
     $
23,196
  
Less: Treasury debt(3)
    
-
      
(7,500
)
Net balance December 31, 2025
   $
18,042
     $
15,696
  
Net balance December 31, 2024
   $
18,042
     $
15,696
  
Coupon rate
    
3-Month SOFR + 0.26161 spread adj + 4.00%
      
3-Month SOFR + 0.26161 spread adj + 4.10%
  
Interest payable
    
Quarterly
      
Quarterly
  
Maturity date
    
December 4, 2032
      
May 15, 2033
  
Redeemable by issuer
    
Yes
      
Yes
  
TRUST PREFERRED SECURITIES
                
Issuance date
    
December 4, 2002
      
May 15, 2003
  
Securities issued
    
17,500
      
22,500
  
Liquidation preference per security
   $
1
     $
1
  
Liquidation value
   $
17,500
     $
22,500
  
Coupon rate
    
3-Month SOFR + 0.26161 spread adj + 4.00%
      
3-Month SOFR + 0.26161 spread adj + 4.10%
  
Distribution payable
    
Quarterly
      
Quarterly
  
Distribution guaranteed by(4)
    
Atlantic American Corporation
      
Atlantic American Corporation
  

(1)
For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates. During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures. The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities.
(2)
 The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries.
(3)
 In 2014, the Company acquired $7,500 of the Junior Subordinated Debentures.
(4)
The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation.