ATLANTIC AMERICAN CORP

Atlanta, Georgia

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Atlantic American Corporation (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes and schedules II (Condensed Financial Information of Registrant), III (Supplementary Insurance Information), IV (Reinsurance Information) and VI (Supplemental Information Concerning Property-Casualty Insurance Operations) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting and presentation related to long-duration contracts and certain related balances effective January 1, 2025, with a transition date of January 1, 2024 due to the adoption of Accounting Standards Update No. 2018-12,Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as amended(“ASU 2018-12”).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Insurance Reserves for Losses and Claims (Claim Reserves)

As reflected on the consolidated balance sheet and discussed in Note 8 to the consolidated financial statements, the Company’s insurance reserves for losses and claims (“claim reserves”), were $113.8 million as of December 31, 2025. The Company’s claim reserves relate primarily to its property casualty lines of business and Medicare supplement business. The process of establishing claim reserves requires the use of estimates and judgments based on circumstances underlying the insured loss at the date of accrual. Management’s judgments include claims adjusters’ evaluations for unpaid claims reported prior to the close of the accounting period, estimates of incurred but not reported (“IBNR”) claims based on past experience and estimates of loss adjustment expenses.

The principal considerations for our determination that the valuation of claim reserves is a critical audit matter are the high degree of judgment and subjectivity in auditing the actuarial methods and assumptions used in the valuation process, including assumptions around expected loss ratios and reported and paid loss emergence patterns.

Addressing the matter involved performing the following audit procedures, among others:

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Involving our actuarial specialists to assist in our procedures in:

o

Evaluating the appropriateness of management’s actuarial reserving methodologies and assumptions;

o

Evaluating management’s hindsight analyses;

o

Comparing management’s carried reserve to the range calculated by management’s specialist for property casualty claim reserves;

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Testing the completeness and accuracy of data provided by management that served as the basis for the actuarial analyses on a sample basis; and

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Evaluating the movement of the Company’s recorded property casualty claim reserves within the Company’s estimated reserve range year over year.

Valuation of Insurance Reserves for Future Policy Benefits (Policy Reserves)

As reflected on the consolidated balance sheet and discussed in Notes 1 and 7 to the consolidated financial statements, the Company’s insurance reserves for future policy benefits (“policy reserves”) were $84.7 million as of December 31, 2025. The Company adopted ASU 2018-12, effective January 1, 2025 with a transition date of January 1, 2024 (See Change in Accounting Principle explanatory paragraph above). As part of the adoption, policy reserves were remeasured using the modified retrospective transition method. Policy reserves are related to long-duration life and health insurance policies and are based upon significant management assumptions including mortality, morbidity, policyholder lapses and other termination rates, claim costs, loss ratios, anticipated premium-rate increases, discount rates and expenses. These assumptions are based on historical experience modified as necessary to reflect anticipated trends and are established at contract inception and updated at least annually.

The principal considerations for our determination that the valuation of policy reserves is a critical audit matter are the high degree of judgment and involvement of actuarial specialists required to assess certain assumptions that impact reserves for future policy benefits, the complexity of the underling actuarial calculations and the judgment and complexity of adopting ASU 2018-12 in the current period.

Addressing the matter involved performing the following audit procedures, among others:

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Involving our actuarial specialists to assist in our procedures in:

o

Evaluating whether the methodology applied by management is consistent in the aggregate with the methodology compliant with US GAAP;

o

Assessing the significant assumptions used by management for new insurance contracts issued during the current year by comparing the significant assumptions noted above to historical experience, observable market data or management’s estimates of prospective changes to these assumptions; and

o

Evaluating whether significant assumptions were applied in the valuation model as intended on a sample basis.

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Testing the completeness and accuracy of data used by management in developing the valuation and evaluating the valuation on a sample basis.

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Reviewing the adequacy of the Company’s disclosures related to the transition impact as well as the ongoing disclosure requirements under ASU 2018-12.

We have served as the Company’s auditor since 2018.

Atlanta, Georgia

October 16, 2026