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<SEC-DOCUMENT>0000008177-10-000008.txt : 20100507
<SEC-HEADER>0000008177-10-000008.hdr.sgml : 20100507
<ACCEPTANCE-DATETIME>20100507115118
ACCESSION NUMBER:		0000008177-10-000008
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20100331
FILED AS OF DATE:		20100507
DATE AS OF CHANGE:		20100507

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ATLANTIC AMERICAN CORP
		CENTRAL INDEX KEY:			0000008177
		STANDARD INDUSTRIAL CLASSIFICATION:	LIFE INSURANCE [6311]
		IRS NUMBER:				581027114
		STATE OF INCORPORATION:			GA
		FISCAL YEAR END:			0228

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-03722
		FILM NUMBER:		10810950

	BUSINESS ADDRESS:	
		STREET 1:		4370 PEACHTREE RD NE
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30319
		BUSINESS PHONE:		4042665500

	MAIL ADDRESS:	
		STREET 1:		4370 PEACHTREE ROAD
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30319
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>form10q1st10.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>

<html>
<head>
<title>
Form 10-Q 1st Quarter 2010
</title>
</head>
<body>
<BR><BR>
<HR width=100% SIZE=2 NOSHADE>

<p align=center><font face="Times New Roman, Serif" size=2>UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>
                                                        Washington, D.C. 20549</font></p>

<p align=center><font face="Times New Roman, Serif" size=3><b>FORM 10-Q</b></font></p>


<p><font size=2 face="times new roman, serif">|X| &nbsp;&nbsp;&nbsp;QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></p>

<p><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the quarterly period ended March 31, 2010</font></p>

<p align=center><font size=2 face="times new roman, serif">OR</font></p>

<p><font size=2 face="times new roman, serif">|_| &nbsp;&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></p>



<p align=center><font size=2 face="times new roman, serif">Commission File Number 0-3722</font></p>


<p align=center><font size=4 face="times new roman, serif"><b>ATLANTIC AMERICAN CORPORATION<BR></b></font>
                          <font size=2 face="times new roman, serif"><i>(Exact name of registrant as specified in its charter)</i></font></p>






<table width=90% align=center cellspacing=0 cellpadding=8 border=0>
<tr>
<td width=50%></td>
<td width=50%></td>
</tr>

<tr>
<td align=center><font size=2 face="times new roman, serif"><b>Georgia</b><BR>
<i> (State or other jurisdiction of<BR>incorporation or organization)</i><BR><BR>
<B>4370 Peachtree Road, N.E.,<BR>Atlanta, Georgia<BR></b><i> (Address of principal executive offices)</i></font></td>

<td align=center><font size=2 face="times new roman, serif"><b>58-1027114</b><BR><i>(I.R.S. Employer<BR>Identification No.)</i><BR><BR>
<b>30319</b><BR><i>(Zip Code)</i></font></td>

</tr>
</table>



<p align=center><font size=2 face="times new roman, serif"> <b>(404) 266-5500</b><BR>
                              <i>(Registrant's telephone number, including area code)</i></font></p>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No |_|</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files). Yes |_| No |_| </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of
&#147;large accelerated filer,&#148; &#147;accelerated filer&#148; and
&#147;smaller reporting company&#148; in Rule 12b-2 of the Exchange Act. (Check
one): </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Large accelerated filer |_|
Accelerated filer |_| Non-accelerated filer |_| (Do not check if a smaller
reporting company) Smaller reporting company |X| </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes |_| No |X| </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The total number of shares
of the registrant&#146;s Common Stock, $1 par value, outstanding on May 7, 2010,
was 22,287,960.</FONT></P>

<HR width=100% SIZE=2 NOSHADE>
<BR><BR>



<PAGE>



<HR SIZE=2       COLOR=GRAY NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>

<a name="table_of_contents"></a>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ATLANTIC
AMERICAN CORPORATION</FONT></H1>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS</FONT></H1>

<table width=680 align=center cellspacing=0 cellpadding=8 border=0>
<tr>
<td><font size=2 face="times new roman, serif"><u>Part I.</u></font></td>
<td><font size=2 face="times new roman, serif"><u> Financial Information</u></font></td>
<td align=center><font size=2 face="times new roman, serif"><u> Page No.</u></font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Item 1. </font></td>
<td><font size=2 face="times new roman, serif">Financial Statements:</font></td>
<td>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td><font size=2 face="times new roman, serif"><A HREF="#consolidated_balance_sheets">Consolidated Balance Sheets</A>-<BR>
March 31, 2010 and December 31, 2009</font></td>
<td align=center><font size=2 face="times new roman, serif">2</font></td>
</tr>
<tr bgcolor="#eeeeee">

<td>&nbsp;</td>
<td><font size=2 face="times new roman, serif"><A HREF="#consolidated_statements_operations">Consolidated Statements of Operations</A>-<BR>
         Three months ended March 31, 2010 and 2009</font>  </td>
<td align=center> <font size=2 face="times new roman, serif">3</font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td><font size=2 face="times new roman, serif"><A HREF="#consolidated_statements_shareholders_equity">Consolidated Statements of Shareholders' Equity</A> -<BR>
         Three months ended March 31, 2010 and 2009 </font></td>
<td align=center><font size=2 face="times new roman, serif">4</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td>&nbsp;</td>
<td><font size=2 face="times new roman, serif"><A HREF="#consolidates_statement_cash_flows">Consolidated Statements of Cash Flows</A> -<BR>
Three months ended March 31, 2010 and 2009</font></td>
<td align=center><font size=2 face="times new roman, serif">5</font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td> <font size=2 face="times new roman, serif"><A HREF="#notes_to_consolidated_statements">Notes to Consolidated Financial Statements</A></font></td>
<td align=center><font size=2 face="times new roman, serif">6</font></td>
</tr>
<tr bgcolor="#eeeeee" valign=top>
<td><font size=2 face="times new roman, serif">Item 2.</font></td>
<td><font size=2 face="times new roman, serif"><A HREF="#managements_discussion">Management's Discussion and Analysis of Financial Condition</A><BR>
and Results of Operations</font></td>
<td align=center><font size=2 face="times new roman, serif">17</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Item 3.</font></td>
<td> <font size=2 face="times new roman, serif"><A HREF="#quantitative_and_qualitative_disclosures">Quantitative and Qualitative Disclosures About Market Risk</A></font></td>
<td align=center><font size=2 face="times new roman, serif">24</font></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Item 4T.</font></td>
<td> <font size=2 face="times new roman, serif"><A HREF="#controls_and_procedures">Controls and Procedures</A></font></td>
<td align=center><font size=2 face="times new roman, serif">24</font></td>
</tr>



<tr>
<td><font size=2 face="times new roman, serif"><u>Part II.</u></font> </td>
<td><font size=2 face="times new roman, serif"><u>Other Information</u></font></td>
<td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Item 2.</font></td>
<td><font size=2 face="times new roman, serif"><A HREF="#legal_proceedings">Unregistered Sales of Equity Securities and Use of Proceeds</A></font></td>
<td align=center><font size=2 face="times new roman, serif">25</font></td>
</tr>


<tr>
<td><font size=2 face="times new roman, serif">Item 6.</font></td>
<td><font size=2 face="times new roman, serif"><A HREF="#exhibits_and_reports">Exhibits</A></font></td>
<td align=center><font size=2 face="times new roman, serif">25</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"><A HREF="#signature">Signatures</A></font></td>
<td>&nbsp;</td>
<td align=center> <font size=2 face="times new roman, serif">26</font></td>
</tr>
</table>







<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>



<a name="consolidated_balance_sheets"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>


<p align=center><font size=2 face="times new roman, serif"><b>PART I.&nbsp;&nbsp;FINANCIAL INFORMATION</B></font></P>

<p><font size=2 face="times new roman, serif"><u>Item 1.&nbsp;  Financial Statements</u></font></p>
<p align=center><font size=2 face="times new roman, serif"><b> ATLANTIC AMERICAN CORPORATION<BR>
                                                      CONSOLIDATED BALANCE SHEETS</b><BR><i>
(Dollars in thousands, except share data)</i></font></p>
<TABLE WIDTH=630 ALIGN=CENTER CELLSPACING=0 CELLPADDING=0 BORDER=0>
<tr>
<td width=71%></td>
<td width=14%></td>
<td width=1%></td>
<td width=14%></td>
</tr>
<tr>
<td align=center colspan=4><font size=2 face="times new roman, serif"><b>ASSETS</b></font></td>

</tr>
<tr valign=bottom>
<td>&nbsp;</td>
<td align=center colspan=2> <font size=2 face="times new roman, serif"><i>Unaudited</i><BR>March 31,<BR> 2010</font><hr noshade size=1></td>
<td align=center><font size=2 face="times new roman, serif">December 31,<BR>2009</font><hr noshade size=1></td>
</tr>

<tr valign=top bgcolor="#eeeeee">
<td align=left> <font size=2 face="times new roman, serif">Cash and cash equivalents, including short-term investments of $14,699 and<BR>&nbsp;&nbsp;&nbsp; $14,697</font></td>
<td align=right><font size=2 face="times new roman, serif"> $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17,364</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20,129</font><hr noshade size=1></td>
</tr>
<tr>
<td align=left> <font size=2 face="times new roman, serif">Investments:</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td align=left><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;Fixed maturities (cost: $187,120 and $189,111)</font></td>
<td align=right><font size=2 face="times new roman, serif">185,860</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">184,060</font></td>
</tr>
<tr>
<td align=left><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;Common and non-redeemable preferred stocks
(cost: $8,631 and $8,631)</font></td>
<td align=right><font size=2 face="times new roman, serif">7,694</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">6,914</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td align=left> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Other invested assets (cost: $989 and $1,021)</font></td>
<td align=right> <font size=2 face="times new roman, serif">989</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">1,021</font></td>
</tr>

<tr valign=top>
<td> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Policy and student loans</font></td>
<td align=right> <font size=2 face="times new roman, serif">2,130</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">2,139</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Real estate</font></td>
<td align=right> <font size=2 face="times new roman, serif">38</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">38</font></td>
</tr>
<tr>
<td valign=top> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Investment in unconsolidated trusts</font></td>
<td align=right> <font size=2 face="times new roman, serif">1,238</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">1,238</font><hr noshade size=1></td>
</tr>


<tr bgcolor="#eeeeee" valign=top>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investments</font></td>
<td align=right><font size=2 face="times new roman, serif">197,949</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">195,410</font><hr noshade size=1></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"> Receivables:</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Reinsurance</font></td>
<td align=right> <font size=2 face="times new roman, serif">11,767</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">11,489</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;Other (net of allowance for doubtful accounts: $547 and $533)</font></td>
<td align=right> <font size=2 face="times new roman, serif">6,664</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">6,023</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"> Deferred income taxes, net</font></td>
<td align=right><font size=2 face="times new roman, serif">4,314</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">6,041</font></TD>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"> Deferred acquisition costs</font></td>
<td align=right><font size=2 face="times new roman, serif">19,841</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">19,453</font></TD>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"> Other assets</font></td>
<td align=right> <font size=2 face="times new roman, serif">1,318</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">1,413</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif"> Goodwill</font></td>
<td align=right><font size=2 face="times new roman, serif">2,128</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">2,128</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee" valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</font></td>
<td align=right> <font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;261,345</font><hr noshade size=3></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;262,086</font><hr noshade size=3></td>
</tr>
</table>


<p align=center><font size=2 face="times new roman, serif"><b>LIABILITIES AND SHAREHOLDERS' EQUITY</b></font></p>
<TABLE ALIGN=CENTER WIDTH=630 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR>
<td width=71%></td>
<td width=14%></td>
<td width=1%></td>
<td width=14%></td>
</tr>
<TR>
<TD><font size=2 face="times new roman, serif">Insurance reserves and policy funds:</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future policy benefits</font></td>
<td align=right width=15%><font size=2 face="times new roman, serif">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;59,362</font></td>
<td>&nbsp;</td>
<td align=right width=15%><font size=2 face="times new roman, serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;58,981</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">17,402</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">18,130</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses and claims</font></td>
<td align=right><font size=2 face="times new roman, serif">49,739</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">50,112</font></td>
</tr>
<tr valign=top>
<td> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other policy liabilities</font></td>
<td align=right> <font size=2 face="times new roman, serif">1,492</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">1,990</font><HR NOSHADE SIZE=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total policy liabilities</font></td>
<td align=right><font size=2 face="times new roman, serif">127,995</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">129,213</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Accounts payable and accrued expenses</font></td>
<td align=right><font size=2 face="times new roman, serif">11,442</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">14,165</font></td>
</tr>


<tr bgcolor="#eeeeee" valign=top>
<td><font size=2 face="times new roman, serif">Junior subordinated debenture obligations</font></td>
<td align=right><font size=2 face="times new roman, serif">41,238</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">41,238</font><hr noshade size=1></td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities</font></td>
<td align=right><font size=2 face="times new roman, serif">180,675</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">184,616</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td colspan=4>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Commitments and contingencies (Note 10)</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Shareholders' equity:</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee" valign=bottom>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $1 par, 4,000,000 shares authorized;<BR>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series D preferred, 70,000 shares issued and outstanding;<BR>
       &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$7,000 redemption value </font></td>
<td align=right><font size=2 face="times new roman, serif"> 70</font></td>
<td>&nbsp;</td>
<td align=right> <font size=2 face="times new roman, serif">70</font></td>
</tr>

<tr valign=bottom>
<td> <font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $1 par, 50,000,000 shares authorized;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued: 22,373,900;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares outstanding: 22,288,710 and 22,291,310</font></td>
<td align=right><font size=2 face="times new roman, serif"> 22,374</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif"> 22,374</font></td>
</tr>
<tr bgcolor="#eeeeee" >
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</font></td>
<td align=right><font size=2 face="times new roman, serif">57,129</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">57,129</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings</font></td>
<td align=right><font size=2 face="times new roman, serif">3,694</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">3,404</font></td>
</tr>




<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss</font></td>
<td align=right> <font size=2 face="times new roman, serif">(2,491)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(5,405)</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury stock, at cost: 85,190 and 82,590
shares<BR></font></td>
<td align=right> <font size=2 face="times new roman, serif">(106)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(102)</font><HR NOSHADE SIZE=1></td>
</tr>
<tr bgcolor="#eeeeee" valign=top>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</font></td>
<td align=right><font size=2 face="times new roman, serif">80,670</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">77,470</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total liabilities and shareholders' equity</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;261,345</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;262,086</font><HR NOSHADE SIZE=2></td>
</tr>
</table>


<p align=center><font size=2  face="times new roman, serif">The accompanying notes are an integral part of these consolidated financial statements.</font></p>


<p align=center><font size=2 face="times new roman, serif">-2-</font></p>




<PAGE>

<HR SIZE=2 COLOR=GRAY NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>




<a name="consolidated_statements_operations"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

<p align=center><font size=2 face="times new roman, serif"><B>ATLANTIC
AMERICAN CORPORATION<BR>
CONSOLIDATED
STATEMENTS OF OPERATIONS</b><BR>
<i>(Unaudited; Dollars in thousands, except per share data)</i></font></p>

<table align=center width=630 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=68%></td>
<td width=15.5%></td>
<td width=1%></td>
<td width=15.5%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" align=center colspan=3><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><HR NOSHADE SIZE=1></td>

</tr>

<tr>
<td><font size=2 face="times new roman, serif">Revenue:</font></td>
<td colspan=3>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Insurance premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23,358</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;22,797</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Investment income</font></td>
<td align=right><font size=2 face="times new roman, serif">2,557</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">2,735</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Realized investment gains, net</font></td>
<td align=right><font size=2 face="times new roman, serif">-</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">13</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Other income</font></td>
<td align=right><font size=2 face="times new roman, serif">48</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">67</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue</font></td>
<td align=right><font size=2 face="times new roman, serif">25,963</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">25,612</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Benefits and expenses:</font></td>
<td colspan=3>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Insurance benefits and losses incurred</font></td>
<td align=right><font size=2 face="times new roman, serif">15,390</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">14,880</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Commissions and underwriting expenses</font></td>
<td align=right><font size=2 face="times new roman, serif">7,140</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">7,518</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Interest expense</font></td>
<td align=right><font size=2 face="times new roman, serif">642</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">721</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Other</font></td>
<td align=right><font size=2 face="times new roman, serif">2,217</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">2,186</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total benefits and expenses</font></td>
<td align=right><font size=2 face="times new roman, serif">25,389</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">25,305</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Income before income taxes</font></td>
<td align=right><font size=2 face="times new roman, serif">574</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">307</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Income tax expense</font></td>
<td align=right><font size=2 face="times new roman, serif">157</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">51</font><HR NOSHADE SIZE=1></td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">Net income</font></td>
<td align=right><font size=2 face="times new roman, serif">417</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">256</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Preferred stock dividends</font></td>
<td align=right><font size=2 face="times new roman, serif">(127)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(127)</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Net income applicable to common stock</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;290</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;129</font><HR NOSHADE SIZE=2></td>

</tr>


<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Net income per common share (basic and diluted)
</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</font><HR NOSHADE SIZE=2></td>
</tr>
</table>

<p align=center><font size=2 face="times new roman, serif"> The accompanying notes are an
integral part of these consolidated financial statements.</font></p>
<p align=center><font size=2 face="times new roman, serif">-3-</font></p>


<HR SIZE=2 COLOR=GRAY NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>


<a name="consolidated_statements_shareholders_equity"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>


<table align="center" width="100%" cellspacing="0" cellpadding="2" border="0">
<tr>
<td width=30%></td>
<td width=10%></td>
<td width=10%></td>
<td width=10%></td>
<td width=10%></td>

<td width=12%></td>
<td width=10%></td>
<td width=10%></td>
</tr>
<tr>
<td align=center colspan=9><font size=2 face="times new roman, serif"><b>ATLANTIC AMERICAN CORPORATION<BR>
                                               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY<BR></b>
                                                      <i>(Unaudited; Dollars in thousands)</i></font></td></tr>
<tr valign=top bgcolor="#eeeeee">
<td align=left><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Three Months Ended March 31, 2010</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Preferred<BR>Stock</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Common<BR>Stock</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>Additional<BR>Paid-in<BR>Capital</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Retained<BR>Earnings</font><hr noshade size=1></td>

<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>Accumulated<BR>Other<BR>Comprehensive<BR>Loss</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Treasury<BR>Stock</font><hr noshade size=1></td>
<td align=center><font size=1 face="times new roman, serif">&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Total</font><hr noshade size=1></td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">Balance, December 31, 2009</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;22,374</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;57,129</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,404</font></td>

<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,405)</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(102)</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;77,470</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Comprehensive income (loss):</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net income</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">417</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">417</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Decrease in unrealized investment losses</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">4,571</font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">4,571</font></td>
</tr>
<tr valign=bottom>
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fair value adjustment to derivative financial<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
instrument</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(88)</font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(88)</font></td>
</tr>



<tr bgcolor="#eeeeee" >
<td valign=top><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income tax attributable to other<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
comprehensive income&nbsp;<BR></font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(1,569)&nbsp;<BR></font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(1,569)</font><hr noshade size=1></td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">Total comprehensive income</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>3,331</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Dividends accrued on preferred stock</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(127)</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(127)</font></td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">Purchase of shares for treasury</font></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(4)</font><hr noshade size=1></td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(4)</font><hr noshade size=1></td>
</tr>

<tr valign=top bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Balance, March 31, 2010</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;22,374</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;57,129</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,694</font><hr noshade size=2></td>

<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2,491)</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(106)</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;80,670</font><hr noshade size=2></td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Three Months Ended March 31, 2009</font><hr noshade size=1></td>
<td colspan=8>&nbsp;</td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">Balance, December 31, 2008</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;22,374</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;57,107</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,119</font></td>

<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9,200)</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(56)</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;75,414</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Comprehensive income (loss):</font></td>
<td colspan=8>&nbsp;</td>
</tr>
<tr>
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net income</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">256</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">256</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Increase in unrealized investment losses</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(5,722)</font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(5,722)</font></td>
</tr>
<tr valign=bottom>
<td><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fair value adjustment to derivative financial<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
instrument</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>81</font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>81</font></td>
</tr>

<tr bgcolor="#eeeeee" >
<td valign=top><font size=1 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income tax attributable to other<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
comprehensive loss&nbsp;<BR></font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">1,974&nbsp;<BR></font></td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>1,974</font><hr noshade size=1></td>
</tr>



<tr>
<td><font size=1 face="times new roman, serif">Total comprehensive loss</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(3,411)</font><hr noshade size=1></td>
</tr>






<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Dividends accrued on preferred stock</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(127)</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">(127)</font></td>
</tr>


<tr>
<td><font size=1 face="times new roman, serif">Amortization of unearned compensation</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">17</font></td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right>-</td>
<td align=right><font size=1 face="times new roman, serif">17</font></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=1 face="times new roman, serif">Purchase of shares for treasury</font></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td valign=bottom align=right>&nbsp;-<hr noshade size=1></td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(7)</font><hr noshade size=1></td>
<td align=right><font size=1 face="times new roman, serif">&nbsp;<BR>(7)</font><hr noshade size=1></td>
</tr>


<tr valign=top>
<td><font size=1 face="times new roman, serif">Balance, March 31, 2009</font></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;70</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;22,374</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;57,124</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,248</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;(12,867)</font><hr noshade size=2></td>
<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(63)</font><hr noshade size=2></td>

<td align=right><font size=1 face="times new roman, serif">$&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;71,886</font><hr noshade size=2></td>
</tr>
<tr>
<td colspan=9>&nbsp;</td>
</tr>
<tr>
<td align=center colspan=9><font size=2 face="times new roman, serif">
The accompanying notes are an integral part of these consolidated financial statements.</font></td></tr>
<tr>
<td align=center colspan=9><font size=2 face="times new roman, serif">-4-</font></td></tr>
</table>





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<a name="consolidates_statement_cash_flows"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

<p align=center></p>

<table align=center width=630 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=72%></td>
<td width=13.5%></td>
<td width=1%></td>
<td width=13.5%></td>
</tr>
<tr>
<td align=center colspan=4><font size=2 face="times new roman, serif"><b>ATLANTIC AMERICAN CORPORATION<BR>

                                                    CONSOLIDATED STATEMENTS OF CASH FLOWS</b><BR>
<i>(Unaudited; Dollars in thousands)</i></font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" align=center colspan=3><font size=2 face="times new roman, serif">Three Months Ended<BR>
March 31,</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif"> 2010</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif"> 2009</font><HR NOSHADE SIZE=1></td>
</tr>

<tr bgcolor="#eeeeee" >
<td><font size=2 face="times new roman, serif"><b>CASH FLOWS FROM OPERATING ACTIVITIES:</b></font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Net income</font></td>
<td align=right><font size=2 face="times new roman, serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;417</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;256</font></TD>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;used in operating activities:</font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred acquisition costs</font></td>
<td align=right><font size=2 face="times new roman, serif">2,559</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">2,745</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition costs deferred</font></td>
<td align=right><font size=2 face="times new roman, serif">(2,947)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(2,761)</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized investment gains</font></td>
<td align=right><font size=2 face="times new roman, serif">-</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(13)</font></td>
</tr>
<tr bgcolor="#eeeeee">
<Td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in insurance reserves</font></td>
<td align=right><font size=2 face="times new roman, serif">(1,218)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(6,794)</font></td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense related to share awards</font></td>
<td align=right><font size=2 face="times new roman, serif">-</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">17</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</font></td>
<td align=right><font size=2 face="times new roman, serif">110</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">54</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense</font></td>
<td align=right><font size=2 face="times new roman, serif">157</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">51</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;(Increase) decrease in receivables, net</font></td>
<td align=right><font size=2 face="times new roman, serif">(919)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">5,421</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Decrease in other liabilities</font></td>
<td align=right><font size=2 face="times new roman, serif">(1,938)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(5,091)</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;Other, net</font></td>
<td align=right><font size=2 face="times new roman, serif">99</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">38</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;Net cash used in operating activities</font></td>
<td align=right><font size=2 face="times new roman, serif">(3,680)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(6,077)</font><HR NOSHADE SIZE=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><b>CASH FLOWS FROM INVESTING ACTIVITIES:</b></font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from investments sold, called or matured</font></TD>
<td align=right><font size=2 face="times new roman, serif">5,619</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">34,801</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Investments purchased</font></td>
<td align=right><font size=2 face="times new roman, serif">(4,690)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(42,030)</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Additions to property and equipment</font></td>
<td align=right><font size=2 face="times new roman, serif">(10)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(88)</font><HR NOSHADE SIZE=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash provided by (used in) investing activities</font></td>
<td align=right><font size=2 face="times new roman, serif">919</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(7,317)</font><HR NOSHADE SIZE=1></td>
</tr>
<tr>
<td colspan=5>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><b>CASH FLOWS FROM FINANCING ACTIVITIES:</b></font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Purchase of shares for treasury</font></td>
<td align=right><font size="-1" face="times new roman, serif">(4)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(7)</font><HR NOSHADE SIZE=1></td>
</tr>

<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities</font></td>
<td align=right><font size=2 face="times new roman, serif">(4)</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(7)</font><HR NOSHADE SIZE=1></td>
</tr>


<tr>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Net decrease in cash and cash equivalents</font></td>
<td align=right><font size=2 face="times new roman, serif">(2,765)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(13,401)</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents at beginning of period</font></td>
<td align=right><font size=2 face="times new roman, serif">20,129</font><HR NOSHADE SIZE=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">37,321</font><HR NOSHADE SIZE=1></td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents at end of period</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17,364</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23,920</font><HR NOSHADE SIZE=2></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><b>SUPPLEMENTAL CASH FLOW INFORMATION:</b></font></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;641</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
755</font><HR NOSHADE SIZE=2></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
- -</font><HR NOSHADE SIZE=2></td>
<td>&nbsp;</td>
<td align=right><font size="-1" face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
- -</font><HR NOSHADE SIZE=2></td>
</tr>
<tr>
<td colspan=3>&nbsp;</td>
</tr>
<tr>
<td align=center colspan=4><font size=2 face="times new roman, serif">The accompanying notes are an integral part of these
 consolidated financial statements.</font></td>
</tr>
<tr>
<td colspan=3>&nbsp;</td>
</tr>
<tr>
<td align=center colspan=4><font size=2 face="times new roman, serif">-5-</font></td>
</tr>
</table>













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<a name="notes_to_consolidated_statements"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

<p align=center><font face="times new roman, serif" size=2><b>ATLANTIC AMERICAN CORPORATION<BR>
                                              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
                                                             March 31, 2010</b><BR>
                                      <i>(Unaudited; Dollars in thousands, except per share amounts)</i></font></p>


<p><font face="times new roman, serif" size=2><b><u>Note 1.</u></b>&nbsp;&nbsp;Basis of Presentation</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying unaudited
condensed consolidated financial statements include the accounts of Atlantic
American Corporation (the &#147;Parent&#148;) and its subsidiaries
(collectively, the &#147;Company&#148;). All significant intercompany accounts
and transactions have been eliminated in consolidation. The accompanying
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (&#147;GAAP&#148;) for interim
financial information and with the instructions to Form 10-Q and Article 8 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by GAAP. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The unaudited condensed consolidated financial
statements included herein and these related notes should be read in conjunction
with the Company&#146;s consolidated financial statements, and the notes
thereto, that are included in the Company&#146;s Annual Report on Form 10-K for
the year ended December 31, 2009. Operating results for the three month period
ended March 31, 2010 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2010 or for any other future period.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of
financial statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities, disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ materially from those
estimates.</FONT></P>

<p><font face="times new roman, serif" size=2><b><u>Note 2.</u></b>&nbsp;&nbsp;Impact of Recently Issued Accounting Standards</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January 2010, the
Financial Accounting Standards Board (&#147;FASB&#148;) issued Accounting
Standards Update (&#147;ASU&#148;) No. 2010-6, Fair Value Measurements and
Disclosures (Topic 820) &#150; Improving Disclosures about Fair Value
Measurements (&#147;ASU 2010-6&#148;), which requires entities to make
disclosures about recurring and nonrecurring fair value measurements. The
reporting entity should disclose separately the amounts of significant transfers
in and out of Level 1 and Level 2 fair value measurements and describe the
reasons for the transfers. ASU 2010-6 also requires an entity to present
separately information about purchases, sales, issuances, and settlements in the
reconciliation of fair value measurements using significant unobservable inputs
(Level 3). The disclosures in ASU 2010-6 are effective for interim and annual
reporting periods beginning after December 15, 2009, except for the purchases,
sales, issuances, and settlements in the roll forward activity in Level 3 fair
value measurements. Those disclosures are effective for fiscal years beginning
after December 15, 2010 and for interim periods within those fiscal years. See
Note 11, Investments, for expanded interim disclosures. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&#160;2009, the FASB
issued amendments to Accounting Standards Codification (&#147;ASC&#148;) 810-10
(&#147;ASC 810-10&#148;), which amend the consolidation guidance applicable to
variable interest entities (&#147;VIEs&#148;). Pursuant to these amendments, an
entity would consolidate a VIE, as the primary beneficiary, when the entity has
both of the following: (a)&#160;the power to direct the activities of a VIE that
most significantly impact the entity&#146;s economic performance and
(b)&#160;the obligation to absorb losses of the entity that could potentially be
significant to the VIE or the right to receive benefits from the entity that
could potentially be significant to the VIE. Ongoing reassessment of whether an
enterprise is the primary beneficiary of a VIE is required. The amendments to
ASC 810-10 eliminate the quantitative approach previously required for
determining the primary beneficiary of a VIE. The amendments to ASC 810-10 are
effective for fiscal years and interim periods beginning after November&#160;15,
2009. The Company adopted the amendments to ASC 810-10 on January&#160;1, 2010.
Adoption of the amendments to ASC 810-10 did not have a material impact on the
Company&#146;s financial condition or results of operations.  </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&#160;2009, the FASB
issued an amendment to ASC 860 (&#147;ASC 860&#148;). The amendment to ASC 860
amends the derecognition guidance and eliminates the concept of a qualifying
special purpose entity. The amendment to ASC 860 is effective for fiscal years
and interim periods beginning after November&#160;15, 2009. Early adoption of
the amendment to ASC 860 is prohibited. The Company adopted the amendment to ASC
860 on January&#160;1, 2010. Adoption of the amendment to ASC 860 did not have a
material impact on the Company&#146;s financial condition or results of
operations.</FONT></P>







<BR><BR>

<p align=center><font face="times new roman, serif" size=2>-6-</font></p>



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<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>













<p><font face="times new roman, serif" size=2><b><u>Note 3.</u></b>&nbsp;&nbsp;Segment Information</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s
operating subsidiaries, American Southern Insurance Company and American Safety
Insurance Company (together known as &#147;American Southern&#148;) and Bankers
Fidelity Life Insurance Company (&#147;Bankers Fidelity&#148;) operate in two
principal business units, each focusing on a specific geographic region and/or
specific products. American Southern operates in the property and casualty
insurance market, while Bankers Fidelity operates in the life and health
insurance market. Each business unit is managed independently and is evaluated
on its individual performance. The following sets forth the revenue and pre-tax
income (loss) for each business unit for the three month periods ended March 31,
2010 and 2009. </FONT></P>


<table width=500 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=51%></td>
<td width=24%></td>
<td width=1%></td>
<td width=24%></td>

</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=4 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,
</font><hr noshade size=1></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif"><b>Revenues<BR>&nbsp;</b></font></td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>



<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">American Southern</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,172</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,252</font></td>

</tr>
<tr>
<td><font size=2 face="times new roman, serif">Bankers Fidelity</font></td>
<td align=right><font size=2 face="times new roman, serif">16,646</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">15,242</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Corporate and Other</font></td>
<td align=right><font size=2 face="times new roman, serif">145</font><hr size=1 noshade></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">118</font><hr size=1 noshade></td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif">Total revenue</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,963</font>
<hr size=2 noshade></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,612</font>
<hr size=2 noshade></td>

</tr>
</table>
<BR>

<table width=500 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=51%></td>
<td width=24%></td>
<td width=1%></td>
<td width=24%></td>

</tr>
<tr valign=bottom>
<td>&nbsp;</td>

<td bgcolor="#eeeeee" align=center colspan=3><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>

</tr>
<tr>
<td><font size=2 face="times new roman, serif"><b>Income (loss) before income taxes<BR>&nbsp;
</b></font></td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>


<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">American Southern</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,239</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,605</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Bankers Fidelity</font></td>
<td align=right><font size=2 face="times new roman, serif">904</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">395</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Corporate and Other</font></td>
<td align=right><font size=2 face="times new roman, serif">(1,569)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(1,693)</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Income before income taxes</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;574</font>
<hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;307</font>
<hr noshade size=2></td>
</tr>
</table>
<BR>



<p><font face="times new roman, serif" size=2><b><u>Note 4.</u></b>&nbsp;&nbsp; Credit Arrangements</font></p>

<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bank Debt</i></b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At March 31, 2010, the
Company had a reducing revolving credit facility (the &#147;Credit
Agreement&#148;) with Wachovia Bank, National Association (&#147;Wachovia&#148;)
pursuant to which the Company was able to, subject to the terms and conditions
thereof, initially borrow or reborrow up to $15,000 (the &#147;Commitment
Amount&#148;). In accordance with the terms of the Credit Agreement, the
Commitment Amount is incrementally reduced every six months and was equal to
$10,500 at March 31, 2010. 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 London Interbank Offered Rate
(&#147;LIBOR&#148;) determined on an interest period of 1-month, 2-months,
3-months or 6-months, plus an Applicable Margin (as defined). The Applicable
Margin varies based upon the Company&#146;s leverage ratio (funded debt to total
capitalization, each as defined) and ranges from 1.75% to 2.50%. 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, Wachovia may terminate the
Credit Agreement and declare all amounts outstanding due and payable in full.
During the three month period ended March 31, 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, 2010. </FONT></P>







<p align=center><font face="times new roman, serif" size=2>-7-</font></p>

<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>










<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>




















<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2><b><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Junior Subordinated Debentures</i></b></font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two
unconsolidated Connecticut statutory business trusts, which exist for the
exclusive purposes of: (i) issuing trust preferred securities (&#147;Trust
Preferred Securities&#148;) 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 (&#147;Junior
Subordinated Debentures&#148;) of Atlantic American; and (iii) engaging in only
those activities necessary or incidental thereto. </FONT></P>



<p><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial structure of each of Atlantic American Statutory Trust I and II as of March 31, 2010 was as follows:</font></p>



<table width=100% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=22.5%></td>
<td width=22.5%></td>
</tr>
<tr>
<td>&nbsp;</td>
<TD><font face="times new roman, serif" size=2>Atlantic American<BR>Statutory Trust I</font><hr noshade size=1></td>

<TD><font face="times new roman, serif" size=2>Atlantic American<BR>Statutory Trust II</font><hr noshade size=1></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
JUNIOR SUBORDINATED DEBENTURES<SUP> (1) (2)</sup></font></TD>
<TD COLSPAN=2>&nbsp;</TD>
</TR>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Principal amount owed</font></TD>
<td><font face="times new roman, serif" size=2>$&nbsp;&nbsp;18,042</font></td>
<td><font face="times new roman, serif" size=2>$&nbsp;&nbsp;23,196</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Balance March 31, 2010</font></TD>
<td><font face="times new roman, serif" size=2>
&nbsp;&nbsp;&nbsp;&nbsp;18,042</font></td>
<td><font face="times new roman, serif" size=2>
&nbsp;&nbsp;&nbsp;&nbsp;23,196</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Balance December 31, 2009</font></TD>
<td><font face="times new roman, serif" size=2>
&nbsp;&nbsp;&nbsp;&nbsp;18,042</font></td>
<td><font face="times new roman, serif" size=2>
&nbsp;&nbsp;&nbsp;&nbsp;23,196</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Coupon rate</font></TD>
<td><font face="times new roman, serif" size=2>LIBOR + 4.00%</font></td>
<td><font face="times new roman, serif" size=2>LIBOR + 4.10%</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Interest payable</font></TD>
<td><font face="times new roman, serif" size=2>Quarterly</font></td>
<td><font face="times new roman, serif" size=2>Quarterly</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Maturity date</font></TD>
<td><font face="times new roman, serif" size=2>December 4, 2032</font></td>
<td><font face="times new roman, serif" size=2>May 15, 2033</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Redeemable by issuer on or after</font></TD>
<td><font face="times new roman, serif" size=2>December 4, 2007</font></td>
<td><font face="times new roman, serif" size=2>May 15, 2008</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
TRUST PREFERRED SECURITIES</font></TD>
<TD COLSPAN=2>&nbsp;</TD>
</TR>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Issuance date</font></TD>
<td><font face="times new roman, serif" size=2>December 4, 2002</font></td>
<td><font face="times new roman, serif" size=2>May 15, 2003</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Securities issued</font></TD>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;17,500</font></td>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;22,500</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Liquidation preference per security</font></TD>
<td><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</font></td>
<td><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Liquidation value</font></TD>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;17,500</font></td>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;22,500</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Coupon rate</font></TD>
<td><font face="times new roman, serif" size=2>LIBOR + 4.00%</font></td>
<td><font face="times new roman, serif" size=2>LIBOR + 4.10%</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>
Distribution payable</font></TD>
<td><font face="times new roman, serif" size=2>Quarterly</font></td>
<td><font face="times new roman, serif" size=2>Quarterly</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>
Distribution guaranteed by<sup>(3)</sup></font></TD>
<td><font face="times new roman, serif" size=2>Atlantic American Corporation</font></td>
<td><font face="times new roman, serif" size=2>Atlantic American Corporation</font></td>
</tr>

</table>
<BR>

<table width=100% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=4%></td>
<td width=96%></td>

</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2><sup>(1)</sup></font></td>
<td><font face="times new roman, serif" size=2>
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.</font></td>
</tr>

<tr>
<td valign=top><font face="times new roman, serif" size=2><sup>(2)</sup></font></td>
<td><font face="times new roman, serif" size=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.</font></td>
</tr>

<tr>
<td valign=top><font face="times new roman, serif" size=2><sup>(3)</sup></font></td>
<td><font face="times new roman, serif" size=2>
 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.</font></td>
</tr>
</table>
<BR>

<p><font face="times new roman, serif" size=2><b><u>Note 5.</u></b>&nbsp;&nbsp;Derivative Financial Instruments</font></p>
<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February 21, 2006, the
Company entered into a zero cost rate collar with Wachovia to hedge future
interest payments on a portion of the Junior Subordinated Debentures. The
notional amount of the collar was $18,042 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 4<SUP>th</SUP> of each March, June, September and
December through termination on March 4, 2013. The Company began making payments
to Wachovia under the zero cost rate collar on June 4, 2008. As a result of
interest rates remaining below the LIBOR floor rate of 4.77%, these payments to
Wachovia under the zero cost rate collar continued throughout 2009 and into
2010. While the Company is exposed to counterparty risk should Wachovia fail to
perform, based on the current level of interest rates, and coupled with the
current macroeconomic outlook, the Company believes that its current
counterparty risk exposure is minimal. </font></p>
<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The estimated fair value
and related carrying value of the Company&#146;s interest rate collar at March
31, 2010 was a liability of approximately $1,635 with a corresponding increase
in accumulated other comprehensive loss in shareholders&#146; equity, net of
deferred tax. </font></p>







<p align=center><font face="times new roman, serif" size=2>-8-</font></p>

<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>











<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>








<p><font face="times new roman, serif" size=2><b><u>Note 6.</u></b>&nbsp;&nbsp;Reconciliation of Other Comprehensive Income (Loss)</font></p>





<table width=630 cellspacing=0 cellpadding=2 border=0>
<tr>
<td width=61%></td>
<td width=19%></td>
<td width=1%></td>
<td width=19%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,
</font><hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Net realized gains on investments included in net<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;income<BR>&nbsp;</font></td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
- -</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;13</font><hr noshade size=2></td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">Other components of comprehensive income (loss):</font></td>
<td colspan=4>&nbsp;</td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;
Net pre-tax unrealized gains (losses) on investments<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;arising during period</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,571</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5,709)</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reclassification adjustment</font></td>
<td align=right><font size=2 face="times new roman, serif">-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(13)</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net pre-tax unrealized gains (losses) on investments<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;recognized in other comprehensive income (loss)</font></td>
<td align=right valign=bottom><font size=2 face="times new roman, serif">4,571</font></td>
<td valign=bottom>&nbsp;</td>
<td align=right valign=bottom><font size=2 face="times new roman, serif">(5,722)</font></td>
</tr>
<tr>
<td valign=top><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair value adjustment to derivative financial<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;instrument</font></td>
<td align=right valign=bottom><font size=2 face="times new roman, serif">(88)</font></td>
<td valign=bottom>&nbsp;</td>
<td align=right valign=bottom><font size=2 face="times new roman, serif">81</font></td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax attributable to other<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;comprehensive income (loss)<BR>&nbsp;</font></td>
<td align=right><font size=2 face="times new roman, serif">(1,569)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">1,974</font><hr noshade size=1></td>
</tr>
<tr valign=bottom>
<td><font size=2 face="times new roman, serif">Change in accumulated other comprehensive loss</font></td>
<td align=right><font size=2 face="times new roman, serif">2,914</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(3,667)</font></td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Accumulated other comprehensive loss<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;beginning of period<BR>&nbsp;
</font></td>
<td align=right><font size=2 face="times new roman, serif">(5,405)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(9,200)</font><hr noshade size=1></td>
</tr>
<tr valign=bottom>
<td><font size=2 face="times new roman, serif">Accumulated other comprehensive loss<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;end of period<BR>&nbsp;
</font></td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2,491)</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;(12,867)</font><hr noshade size=2></td>
</tr>
</table>





<p><font face="times new roman, serif" size=2><u><b>Note 7.</b></u>&nbsp;&nbsp;Earnings Per Common Share</font></p>

<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A reconciliation of the numerator and denominator used in the earnings per common share calculations is as follows:</font><p>


<table width=630 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=50%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31, 2010</font>
<hr size=1 noshade></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">&nbsp;<BR>Income</font><hr noshade size=1></td>
<td align=center><font size=2 face="times new roman, serif">Shares<BR>(In thousands)</font><hr noshade size=1></td>
<td align=center><font size=2 face="times new roman, serif">Per Share<BR>Amount</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><i>Basic Earnings Per Common Share:</i></font></td>
<td colspan=3>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Net income</font></td>
<td align=right><font size=2 face="times new roman, serif">$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
417</font></td>
<td align=right><font size=2 face="times new roman, serif">22,290</font></td>
<td>&nbsp;</td>
</tr>

<tr bgcolor="#eeeeee">

<td><font size=2 face="times new roman, serif">Less preferred stock dividends<BR>&nbsp;</font></td>
<td valign=bottom align=right><font size=2 face="times new roman, serif">(127)</font><hr noshade size=1></td>
<td align=right>&nbsp;<hr noshade size=1></td>
<td>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Net income applicable to common shareholders</font></td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
290</font></td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>22,290</font></td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</font>
<hr noshade size=2></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><i>Diluted Earnings Per Common Share:</i></font></td>
<td colspan=3>&nbsp;</td>
</tr>
<tr valign=bottom>
<td><font size=2 face="times new roman, serif">Effect of dilutive stock options<BR>&nbsp;</font></td>
<td align=right>&nbsp;<hr noshade size=1></td>
<td align=right valign=bottom><font size=2 face="times new roman, serif">34</font><hr noshade size=1></td>
<td>&nbsp;</td>
</tr>


<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Net income applicable to common shareholders </font></td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;290</font><hr noshade size=2></Td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>22,324</font><hr noshade size=2></Td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</font><hr noshade size=2></Td>
</tr>
</table>
<BR><BR>




















<p align=center><font face="times new roman, serif" size=2>-9-</font></p>

<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>


























<table width=630 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=50%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
<td width=16.66%>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31, 2009</font>
<hr size=1 noshade></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">&nbsp;<BR>Income</font><hr noshade size=1></td>
<td align=center><font size=2 face="times new roman, serif">Shares<BR>(In thousands)</font><hr noshade size=1></td>
<td align=center><font size=2 face="times new roman, serif">Per Share<BR>Amount</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif"><i>Basic and Diluted Earnings Per Common Share:</i></font></td>
<td colspan=3>&nbsp;</td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Net income</font></td>
<td align=right><font size=2 face="times new roman, serif">$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
256</font></td>
<td align=right><font size=2 face="times new roman, serif">22,297</font></td>
<td>&nbsp;</td>
</tr>

<tr bgcolor="#eeeeee">

<td><font size=2 face="times new roman, serif">Less preferred stock dividends<BR>&nbsp;</font></td>
<td valign=bottom align=right><font size=2 face="times new roman, serif">(127)</font><hr noshade size=1></td>
<td align=right>&nbsp;<hr noshade size=1></td>
<td>&nbsp;</td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">Net income applicable to common shareholders</font></td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;129</font><hr noshade size=2></Td>
<td align=right valign=top><font size=2 face="times new roman, serif">&nbsp;<BR>22,297</font><hr noshade size=2></Td>
<td align=right><font size=2 face="times new roman, serif">&nbsp;<BR>$
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</font><hr noshade size=2></Td>
</tr>
</table>
<BR><BR>




<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The assumed conversion of
the Company&#146;s Series D Preferred Stock was excluded from the earnings per
common share calculation for the three month periods ended March 31, 2010 and
2009, respectively, since its impact was antidilutive. All outstanding stock
options were excluded from the earnings per common share calculation for the
three month period ended March 31, 2009 since their impact was also
antidilutive. </font><p>


<p><font face="times new roman, serif" size=2><b><u>Note 8.</u></b>&nbsp;&nbsp;Income Taxes</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of the differences between income taxes computed at the federal statutory income tax
rate and the income tax expense is as follows:</FONT></P>


<table width=550 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=61%></td>
<td width=19%></td>
<td width=1%></td>
<td width=19%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,
</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
        </tr>

<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Federal income tax provision at statutory rate of 35%</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;201</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;107</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Tax exempt interest and dividends received deductions</font></td>
<td align=right><font size=2 face="times new roman, serif">(49)</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(64)</font></td>
</tr>

<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Other permanent differences</font></td>
<td align=right><font size=2 face="times new roman, serif">5</font><hr size=1 noshade></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">8</font><hr size=1 noshade></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Income tax expense</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;157</font>
<hr size=2 noshade></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51</font>
<hr size=2 noshade></td>
</tr>
</table>
<BR>


<p><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The components of the
income tax expense were: </font></p>

<table width=400 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=51%></td>
<td width=24%></td>
<td width=1%></td>
<td width=24%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,
</font><hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Current - Federal</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font></td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif">Deferred - Federal</font></td>
<td align=right><font size=2 face="times new roman, serif">157</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">51</font><hr noshade size=1></td>
</tr>


<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Total</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;157</font>
<hr size=2 noshade></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51</font>
<hr size=2 noshade></td>
</tr>
</table>


<p><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary differences
between the effective tax rate and the federal statutory income tax rate for the
three month periods ended March 31, 2010 and 2009, respectively, resulted from
the dividends-received deduction (&#147;DRD&#148;). 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.</font></p>




































<p align=center><font face="times new roman, serif" size=2>-10-</font></p>






<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>














<p><font face="times new roman, serif" size=2><b><u>Note 9.</u></b>&nbsp;&nbsp;Employee Retirement Plans</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective May 31, 2008, the
Company froze all benefits related to its qualified pension plan, as well as its
supplemental executive retirement plan (&#147;SERP&#148;). In May 2009, the
Company terminated the SERP and distributed the accumulated benefits to those
participating employees. On March 11, 2010, the Company received a determination
letter from the Internal Revenue Service approving the termination of the
Company&#146;s qualified pension plan. It is anticipated that the Company will
distribute the accumulated benefits to participating employees, and terminate
the qualified pension plan in the second quarter of 2010.</FONT></P>



<p><font face="times new roman, serif" size=2><u><b>Note 10.</b></u>&nbsp;&nbsp;Commitments and Contingencies</font></p>
<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, the
Company is involved in various claims and lawsuits incidental to and in the
ordinary course of its businesses. In the opinion of management, any such known
claims are not expected to have a material effect on the business or financial
condition of the Company. </FONT></P>


<p align=center><font face="times new roman, serif" size=2>-11-</font></p>










<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>




<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>








<p><font face="times new roman, serif" size=2><u><b>Note 11.</b></u>&nbsp;&nbsp;Investments</font></p>
<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables set
forth the carrying value, gross unrealized gains, gross unrealized losses and
amortized cost of the Company&#146;s investments, aggregated by type and
industry, as of March 31, 2010 and December 31, 2009. </FONT></P>

<p align=justify><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments were comprised of the following:</FONT></P>





<table width=90% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=55%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=7 align=center bgcolor="#eeeeee"><font face="times new roman, serif" size=2>March 31, 2010</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Carrying<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Gross<BR>Unrealized<BR>Gains</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Gross<BR>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Amortized<BR>Cost</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Fixed Maturities:</font></td>
<td colspan=7>&nbsp;</td>
</tr>

<tr>
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury securities and obligations of<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Government agencies and authorities</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123,214</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;972</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,034</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123,276</font><hr noshade size=1></td>
</tr>


<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate securities</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities and telecom</font></td>
<td align=right><font face="times new roman, serif" size=2>24,893</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>914</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>48</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>24,027</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>13,706</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>260</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,071</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>15,517</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>2,462</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>109</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,353</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>13,431</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>376</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>239</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>13,294</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total corporate securities</font></td>
<td align=right><font face="times new roman, serif" size=2>54,492</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,659</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,358</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>55,191</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redeemable preferred stocks</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities and telecom</font></td>
<td align=right><font face="times new roman, serif" size=2>2,647</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>147</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,500</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>4,440</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>20</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>589</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>5,009</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>874</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>77</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>951</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>193</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>193</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>8,154</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>167</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>666</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>8,653</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total fixed maturities</font></td>
<td align=right><font face="times new roman, serif" size=2>185,860</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,798</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,058</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>187,120</font><hr noshade size=1></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Common and non-redeemable preferred stocks:</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>6,416</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,244</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>214</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>5,386</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>1,156</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,042</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>3,198</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>122</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>75</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>47</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total common and non-redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>7,694</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,319</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,256</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>8,631</font><hr noshade size=1></td>
</tr>







<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Other invested assets (fair value of $989)</font></td>
<td align=right><font face="times new roman, serif" size=2>989</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>989</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Policy and student loans</font></td>
<td align=right><font face="times new roman, serif" size=2>2,130</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,130</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Real estate</font></td>
<td align=right><font face="times new roman, serif" size=2>38</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>38</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Investments in unconsolidated trusts</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>1,238</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>1,238</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments</font></td>
<td align=right><font face="times new roman, serif" size=2>197,949</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,117</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6,314</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>200,146</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Short-term investments</font></td>
<td align=right><font face="times new roman, serif" size=2>14,699</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>14,699</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investments</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;212,648</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,117</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,314</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;214,845</font><hr noshade size=2></td>
</tr>
</table>







<p align=center><font face="times new roman, serif" size=2>-12-</font></p>












<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>










<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>






<table width=90% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=55%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10.5%>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=7 align=center bgcolor="#eeeeee"><font face="times new roman, serif" size=2>December 31, 2009</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Carrying<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Gross<BR>Unrealized<BR>Gains</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Gross<BR>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Amortized<BR>Cost</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Fixed Maturities:</font></td>
<td colspan=7>&nbsp;</td>
</tr>

<tr>
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury securities and obligations of<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Government agencies and authorities</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;124,392</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;628</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,538</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;127,302</font><hr noshade size=1></td>
</tr>


<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate securities</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities and telecom</font></td>
<td align=right><font face="times new roman, serif" size=2>24,615</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>695</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>105</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>24,025</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>13,518</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>228</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,324</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>15,614</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>2,412</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>59</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,353</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>11,241</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>259</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>182</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>11,164</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total corporate securities</font></td>
<td align=right><font face="times new roman, serif" size=2>51,786</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,241</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,611</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>53,156</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redeemable preferred stocks</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities and telecom</font></td>
<td align=right><font face="times new roman, serif" size=2>2,668</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>168</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,500</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>4,215</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>800</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>5,009</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>806</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>145</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>951</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>193</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>193</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>7,882</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>174</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>945</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>8,653</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total fixed maturities</font></td>
<td align=right><font face="times new roman, serif" size=2>184,060</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,043</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,094</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>189,111</font><hr noshade size=1></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Common and non-redeemable preferred stocks:</font></td>
<td colspan=7>&nbsp;</td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>6,097</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,029</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>318</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>5,386</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Media</font></td>
<td align=right><font face="times new roman, serif" size=2>718</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,480</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>3,198</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other-diversified</font></td>
<td align=right><font face="times new roman, serif" size=2>99</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>52</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>47</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total common and non-redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>6,914</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,081</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,798</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>8,631</font><hr noshade size=1></td>
</tr>







<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Other invested assets (fair value of $1,021)</font></td>
<td align=right><font face="times new roman, serif" size=2>1,021</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,021</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Policy and student loans</font></td>
<td align=right><font face="times new roman, serif" size=2>2,139</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,139</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Real estate</font></td>
<td align=right><font face="times new roman, serif" size=2>38</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>38</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Investments in unconsolidated trusts</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>1,238</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>1,238</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments</font></td>
<td align=right><font face="times new roman, serif" size=2>195,410</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>3,124</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>9,892</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>202,178</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Short-term investments</font></td>
<td align=right><font face="times new roman, serif" size=2>14,697</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>14,697</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investments</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;210,107</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,124</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,892</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;216,875</font><hr noshade size=2></td>
</tr>
</table>




<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amortized cost and
carrying value of fixed maturities and short-term investments at March 31, 2010
by contractual maturity were as follows. Actual maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.</FONT></P>



<table width=70% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=44%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=27%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=27%>&nbsp;</td>
</tr>

<tr bgcolor="#eeeeee" valign=bottom>
<td><font face="times new roman, serif" size=2><b>Maturities</b></font><hr noshade size=1></td>
<td>&nbsp;</td>
<td colspan=3 align=center><font face="times new roman, serif" size=2>March 31, 2010</font><hr noshade size=1></td>
</tr>

<tr>
<td colspan=2>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Carrying<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Amortized<BR>Cost</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Due in one year or less</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,143</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18,048</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Due after one year through five years</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>8,385</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,930</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Due after five  years through ten years</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>15,087</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>14,310</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Due after ten years</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>157,935</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>160,538</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>Varying maturities</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>1,009</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>993</font><hr noshade size=1></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;200,559</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;201,819</font><hr noshade size=2></td>
</tr>
</table>





<p align=center><font face="times new roman, serif" size=2>-13-</font></p>












<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>










<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>











<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets
forth the carrying value, amortized cost, and net unrealized gains or losses of
the Company&#146;s investments aggregated by industry as of March 31, 2010 and
December 31, 2009.</FONT></P>




<table width=100% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=26%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=11.5%>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=5 align=center bgcolor="#eeeeee"><font face="times new roman, serif" size=2>March 31, 2010</font><hr noshade size=1></td>
<td bgcolor="#eeeeee">&nbsp;</td>
<td colspan=5 align=center bgcolor="#eeeeee"><font face="times new roman, serif" size=2>December 31, 2009</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Carrying<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Amortized<BR>Cost</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Gains<BR>(Losses)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Carrying<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Amortized<BR>Cost</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Gains<BR>(Losses)</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>U.S. Treasury securities and<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Government agencies</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123,214</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123,276</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(62)</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;124,392</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;127,302</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2,910)</font></td>
</tr>


<tr>
<td><font face="times new roman, serif" size=2>Utilities and telecom</font></td>
<td align=right><font face="times new roman, serif" size=2>27,540</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>26,527</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>1,013</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>27,283</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>26,525</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>758</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Financial services</font></td>
<td align=right><font face="times new roman, serif" size=2>24,562</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>25,912</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>(1,350)</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>23,830</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>26,009</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>(2,179)</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Media <SUP>(1)</sup></font></td>
<td align=right><font face="times new roman, serif" size=2>4,492</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6,502</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>(2,010)</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>3,936</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6,502</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>(2,566)</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>Other - diversified</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>13,746</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>13,534</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>212</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>11,533</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>11,404</font></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>129</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Other investments</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,395</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,395</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,436</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,436</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee" valign=top>
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments</font></td>
<td align=right valign=top><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;197,949</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;200,146</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2,197)</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;195,410</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;202,178</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6,768)</font><hr noshade size=2></td>
</tr>

</table>
<BR>
<table width=100% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=2%></td>
<td width=98%></td>

</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2><sup>(1)</sup></font></td>
<td><font face="times new roman, serif" size=2>
Media includes related party investments in Gray Television, Inc. with an amortized cost basis of $3,198 and which had an
aggregate carrying value of $1,156 and $718 at March 31, 2010 and December 31, 2009, respectively.</font></td>
</tr>
</table>



<p><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables
present the Company&#146;s unrealized loss aging for securities by type and
length of time the security was in a continuous unrealized loss position as of
March 31, 2010 and December 31, 2009.</FONT></P>






<table width=95% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=35%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=11 align=center><font face="times new roman, serif" size=2>March 31, 2010</font><hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>Less than 12 months</font><hr noshade size=1></td>
<td bgcolor="#eeeeee">&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>12 months or longer</font><hr noshade size=1></td>
<td bgcolor="#eeeeee">&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>Total</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>U.S. Treasury securities and obligations of<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Government agencies and authorities</font></td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51,646</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;686</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,162</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;348</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;59,808</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,034</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Corporate securities</font></td>
<td align=right><font face="times new roman, serif" size=2>10,427</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>283</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,951</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,075</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>18,378</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,358</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,794</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>666</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,794</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>666</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Common and non-redeemable preferred stocks</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,225</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>2,256</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>4,225</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>2,256</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total temporarily impaired securities</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;62,073</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;969</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,132</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,345</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;87,205</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,314</font><hr noshade size=2></td>
</tr>
</table>

<table width=95% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=35%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=10%>&nbsp;</td>
</tr>

<tr>
<td>&nbsp;</td>
<td colspan=11 align=center><font face="times new roman, serif" size=2>December 31, 2009</font><hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>Less than 12 months</font><hr noshade size=1></td>
<td bgcolor="#eeeeee">&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>12 months or longer</font><hr noshade size=1></td>
<td bgcolor="#eeeeee">&nbsp;</td>
<td align=center colspan=3 bgcolor="#eeeeee"><font face="times new roman, serif" size=2>Total</font><hr noshade size=1></td>
</tr>

<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fair<BR>Value</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Unrealized<BR>Losses</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>U.S. Treasury securities and obligations of<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Government agencies and authorities</font></td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;96,977</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,300</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,772</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;238</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;101,749</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>&nbsp;<BR>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,538</font></td>
</tr>
<tr>
<td><font face="times new roman, serif" size=2>Corporate securities</font></td>
<td align=right><font face="times new roman, serif" size=2>12,894</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>609</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,525</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,002</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>20,419</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>2,611</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Redeemable preferred stocks</font></td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,515</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>945</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>4,515</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>945</font></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Common and non-redeemable preferred stocks</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>3,683</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>2,798</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>3,683</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>2,798</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total temporarily impaired securities</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;109,871</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,909</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20,495</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,983</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;130,366</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,892</font><hr noshade size=2></td>
</tr>
</table>


<p align=center><font face="times new roman, serif" size=2>-14-</font></p>












<PAGE>
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<H5 align="left" style="page-break-before:always"></H5>










<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>


















<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The evaluation of other than temporary impairment is a quantitative and qualitative process, which is
subject to risks and uncertainties in the determination of whether declines in
the fair value of investments are other than temporary. The risks and
uncertainties include, among other things, changes in general economic
conditions, an issuer&#146;s financial condition or near term recovery prospects
and the effects of changes in interest rates. In evaluating a potential
impairment, the Company considers, among other factors, the intent and ability
to hold these securities until price recovery, the nature of the investment and the prospects for the
issuer and its industry, the issuer&#146;s continued satisfaction of the
investment obligations in accordance with their contractual terms, and
management&#146;s expectation as to the issuer's ability and intent to continue to do so, as well as
ratings actions that may affect the issuer&#146;s credit status. There were no
other than temporary impairments identified in the three month periods ended
March 31, 2010 or 2009.  </FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March 31, 2010,
securities in an unrealized loss position were primarily related to the
Company&#146;s investments in fixed maturity securities, and common and
non-redeemable preferred stocks, most significantly within the financial
services and media sectors, which have experienced significant price
deterioration and continue to be impacted by current economic conditions. The
media sector includes related party investments in Gray Television, Inc. which
had unrealized losses of $2,042 as of March 31, 2010 and accounted for the
majority of the unrealized loss position in that sector. During the three month period ended March 31, 2010, net
pre-tax unrealized losses on investment securities recognized in other
comprehensive loss decreased $4,571 from net pre-tax unrealized losses on
investment securities of $6,768 valued as of December 31, 2009. The decline in
unrealized losses during the three month period ended March 31, 2010 was
primarily due to the increase in fair value of the Company&#146;s holdings in
U.S. Government agency bonds as well as certain financial services and media
securities. The Company does not intend to sell nor does it expect to be
required to sell the securities referenced previously. In addition, the Company
asserts its intent and ability to retain the above equity securities until price
recovery. Furthermore, based upon the Company&#146;s expected continuation of
receipt of contractually required principal and interest payments, the Company
has deemed these securities to be temporarily impaired as of March 31, 2010.  </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following describes the
fair value hierarchy and provides information as to the extent to which the
Company 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. </FONT></P>


<table width=100% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=10%></td>
<td width=90%></td>

</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Level 1</font></td>
<td><font face="times new roman, serif" size=2>
Observable inputs that reflect quoted prices for identical assets or
liabilities in active markets that the Company has the ability to access at the
measurement date. The Company&#146;s Level 1 instruments consist of short-term
investments.</font></td>
</tr>
<tr>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Level 2</font></td>
<td><font face="times new roman, serif" size=2>
Observable inputs, other than quoted prices included in Level 1, for the asset
or liability or prices for similar assets or liabilities. The Company&#146;s
Level 2 instruments include most of its fixed maturity securities, which consist
of U.S. Treasury securities and U.S. Government securities, municipal bonds, and
certain corporate fixed maturity securities, as well as its common and
non-redeemable preferred stocks. In determining Level 2 fair value measurements,
the Company utilizes various external pricing services.</font></td>
</tr>
<tr>
<td>&nbsp;</td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>Level 3</font></td>
<td><font face="times new roman, serif" size=2>
Valuations that are derived from techniques in which one or more of the
significant inputs are unobservable (including assumptions about risk). The
Company&#146;s Level 3 financial instruments include certain fixed maturity
securities and a zero cost interest rate collar. Fair value is based on criteria
that use assumptions or other data that are not readily observable from
objective sources. As of March 31, 2010, the value of the Company&#146;s fixed
maturity securities valued using Level 3 criteria was $1,793 and the value of
the zero cost interest rate collar was a liability of $1,635 (See Note 5). The
use of different criteria or assumptions regarding data may have yielded
different valuations. </font></td>
</tr>
</table>



<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March 31, 2010, investments carried at fair value were measured on a recurring basis as summarized below:</font></p>



<table width=630 cellspacing=0 cellpadding=2 border=0>
<tr>
<td width=29%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
</tr>

<tr bgcolor="#eeeeee">
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Quoted Prices<BR>in Active<BR>Markets<BR>for Identical<BR>Assets<BR>(Level 1)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Significant<BR>Other<BR>Observable<BR>Inputs<BR>(Level 2)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>&nbsp;<BR>Significant<BR>Unobservable<BR>Inputs<BR>(Level 3)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>
&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Total</font><hr noshade size=1></td>
</tr>

<tr>
<td><font face="times new roman, serif" size=2>Fixed maturity securities</font></td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;184,067</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,793</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;185,860</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Equity securities</font></td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,694</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>7,694</font></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>Short-term investments</font></td>
<td align=right><font face="times new roman, serif" size=2>14,699</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>14,699</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14,699</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;191,761</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,793</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;208,253</font><hr noshade size=2></td>
</tr>
</table>


<p align=center><font face="times new roman, serif" size=2>-15-</font></p>












<PAGE>
<HR SIZE=2 NOSHADE>
<H5 align="left" style="page-break-before:always"></H5>










<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>


<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2009, investments carried at fair value were measured on a recurring basis as summarized below:</font></p>



<table width=630 cellspacing=0 cellpadding=2 border=0>
<tr>
<td width=29%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td width=1%>&nbsp;</td>
<td width=17%>&nbsp;</td>
</tr>

<tr bgcolor="#eeeeee">
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Quoted Prices<BR>in Active<BR>Markets<BR>for Identical<BR>Assets<BR>(Level 1)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Significant<BR>Other<BR>Observable<BR>Inputs<BR>(Level 2)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>&nbsp;<BR>Significant<BR>Unobservable<BR>Inputs<BR>(Level 3)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>
&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>&nbsp;<BR>Total</font><hr noshade size=1></td>
</tr>

<tr>
<td><font face="times new roman, serif" size=2>Fixed maturity securities</font></td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;182,281</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,779</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;184,060</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Equity securities</font></td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6,914</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>6,914</font></td>
</tr>
<tr valign=top>
<td><font face="times new roman, serif" size=2>Short-term investments</font></td>
<td align=right><font face="times new roman, serif" size=2>14,697</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>-</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>14,697</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</font></td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14,697</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;189,195</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,779</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;205,671</font><hr noshade size=2></td>
</tr>
</table>


<P align=justify><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 three month period
ended March 31, 2010. </font></p>


<table width=60% cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=65%>&nbsp;</td>
<td width=17%>&nbsp;</td>
<td>&nbsp;</td>
<td width=17%>&nbsp;</td>
</tr>
<tr>
<td>&nbsp;</td>
<td colspan=3><hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>Fixed<BR>Maturity<BR>Securities</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>&nbsp;<BR>Derivative<BR>(Liability)</font><hr noshade size=1></td>
</tr>


<tr bgcolor="#eeeeee">
<td><font face="times new roman, serif" size=2>Balance, December 31, 2009</font></td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,779</font></td>
<td>&nbsp;</td>
<td align=right><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,547)</font></td>
</tr>

<tr>
<td valign=top><font face="times new roman, serif" size=2>Total unrealized gains (losses) included in other<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;comprehensive income</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>14</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>&nbsp;<BR>(88)</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td valign=top><font face="times new roman, serif" size=2>Balance, March 31, 2010</font></td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,793</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right valign=bottom><font face="times new roman, serif" size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1,635)</font><hr noshade size=2></td>
</tr>
</table>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s fixed
maturity securities valued using Level 3 inputs consist solely of issuances of
pooled debt obligations of multiple, smaller financial services companies. They
are not actively traded and valuation techniques used to measure fair value are
based on future estimated cash flows discounted at a reasonably estimated rate
of interest. Other qualitative and quantitative information received from the
original underwriter of the pooled offerings is also considered, as applicable.
As the derivative is an interest rate collar, changes in valuation are more
closely correlated with changes in interest rates and, accordingly, values are
estimated using projected cash flows at current interest rates discounted at a
reasonably estimated rate of interest. Fair value quotations are also obtained
from the counterparty to the transaction. </font></p>








<p align=center><font face="times new roman, serif" size=2>-16-</font></p>












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<a name="managements_discussion"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

























<p><font face="times new roman, serif" size=2><u>Item 2.</u></font></p>
<p align=center>
<font face="times new roman, serif" size=2><b>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>
                                                       AND RESULTS OF OPERATIONS</b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is
management&#146;s discussion and analysis of the financial condition and results
of operations of Atlantic American Corporation (&#147;Atlantic American&#148; or
the &#147;Parent&#148;) and its subsidiaries (collectively, the
&#147;Company&#148;) for the three month period ended March 31, 2010. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere herein, as well as with the
consolidated financial statements and notes included in the Company&#146;s
Annual Report on Form 10-K for the year ended December 31, 2009.  </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Atlantic American is an
insurance holding company whose operations are conducted primarily through its
insurance subsidiaries: American Southern Insurance Company and American Safety
Insurance Company (together known as &#147;American Southern&#148;) and Bankers
Fidelity Life Insurance Company (&#147;Bankers Fidelity&#148;). Each operating
company is managed separately, offers different products and is evaluated on its
individual performance.</FONT></P>

<p><font face="times new roman, serif" size=2><b>Critical Accounting Policies</b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accounting and
reporting policies of the Company are in accordance with accounting principles
generally accepted in the United States of America and, in management&#146;s
belief, conform to general practices within the insurance industry. The
following is an explanation of the Company&#146;s accounting policies and the
resultant estimates considered most significant by management. These accounting
policies inherently require significant judgment and assumptions and actual
operating results could differ significantly from management&#146;s initial
estimates determined using these policies. Atlantic American does not expect
that changes in the estimates determined using these policies will have a
material effect on the Company&#146;s financial condition or liquidity, although
changes could have a material effect on its consolidated results of operations.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unpaid loss and loss
adjustment expenses</i> comprised 28% of the Company&#146;s total liabilities at
March 31, 2010. This liability includes estimates for: 1) unpaid losses on
claims reported prior to March 31, 2010, 2) future development on those reported
claims, 3) unpaid ultimate losses on claims incurred prior to March 31, 2010 but
not yet reported and 4) unpaid loss adjustment expenses for reported and
unreported claims incurred prior to March 31, 2010. Quantification of loss
estimates for each of these components involves a significant degree of judgment
and estimates may vary, materially, from period to period. Estimated unpaid
losses on reported claims are developed based on historical experience with
similar claims by the Company. Development on reported claims, estimates of
unpaid ultimate losses on claims incurred prior to March 31, 2010 but not yet
reported, and estimates of unpaid loss adjustment expenses are developed based
on the Company&#146;s historical experience, using actuarial methods to assist
in the analysis. The Company&#146;s actuaries develop ranges of estimated
development on reported and unreported claims as well as loss adjustment
expenses using various methods including the paid-loss development method, the
reported-loss development method, the paid Bornhuetter-Ferguson method and the
reported Bornhuetter-Ferguson method. Any single method used to estimate
ultimate losses has inherent advantages and disadvantages due to the trends and
changes affecting the business environment and the Company&#146;s administrative
policies. Further, a variety of external factors, such as legislative changes,
medical cost inflation, and others may directly or indirectly impact the
relative adequacy of liabilities for unpaid losses and loss adjustment expenses.
The Company&#146;s approach is to select an estimate of ultimate losses based on
comparing results of a variety of reserving methods, as opposed to total
reliance on any single method. Unpaid loss and loss adjustment expenses are
reviewed periodically for significant lines of business, and when current
results differ from the original assumptions used to develop such estimates, the
amount of the Company&#146;s recorded liability for unpaid loss and loss
adjustment expenses is adjusted. In the event the Company&#146;s actual reported
losses in any period are materially in excess of the previous estimated amounts,
such losses, to the extent reinsurance coverage does not exist, could have a
material adverse effect on the Company&#146;s results of operations. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Future policy benefits</i>
comprised 33% of the Company&#146;s total liabilities at March 31,
2010. These liabilities relate primarily to life insurance products and are
based upon assumed future investment yields, mortality rates, and withdrawal
rates after giving effect to possible risks of adverse deviation. The assumed
mortality and withdrawal rates are based upon the Company&#146;s experience. If
actual results differ from the initial assumptions, the amount of the
Company&#146;s recorded liability could require adjustment.</FONT></P>









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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred acquisition costs</i>
comprised 8% of the Company&#146;s total assets at March 31, 2010.
Deferred acquisition costs are commissions, premium taxes, and other costs that
vary with and are primarily related to the acquisition of new and renewal
business and are generally deferred and amortized. The deferred amounts are
recorded as an asset on the balance sheet and amortized to expense in a
systematic manner. Traditional life insurance and long-duration health insurance
deferred policy acquisition costs are amortized over the estimated
premium-paying period of the related policies using assumptions consistent with
those used in computing the related liability for policy benefit reserves. The
deferred acquisition costs for property and casualty insurance and
short-duration health insurance are amortized over the effective period of the
related insurance policies. Deferred policy acquisition costs are expensed when
such costs are deemed not to be recoverable from future premiums (for
traditional life and long-duration health insurance) and from the related
unearned premiums and investment income (for property and casualty and
short-duration health insurance). Assessments of recoverability for property and
casualty and short-duration health insurance are extremely sensitive to the
estimates of a subsequent year&#146;s projected losses related to the unearned
premiums. Projected loss estimates for a current block of business for which
unearned premiums remain to be earned may vary significantly from the indicated
losses incurred in any given previous calendar year.</FONT></P>








<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Receivables</i> are
amounts due from reinsurers, insureds and agents, and comprised 7% of the
Company&#146;s total assets at March 31, 2010. Insured and agent balances are
evaluated periodically for collectibility. Annually, the Company performs an
analysis of the credit worthiness of the Company&#146;s reinsurers using various
data sources. Failure of reinsurers to meet their obligations due to
insolvencies, disputes or otherwise could result in uncollectible amounts and
losses to the Company. Allowances for uncollectible amounts are established, as
and when a loss has been determined probable, against the related receivable.
Losses are recognized when determined on a specific account basis and a general
provision for loss is made based on the Company&#146;s historical experience. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cash and investments</i>
comprised 82% of the Company&#146;s total assets at March 31, 2010.
Substantially all of the Company&#146;s investments are in bonds and common and
preferred stocks, the values of which are subject to significant market
fluctuations. The Company carries all investments as available for sale and,
accordingly, at their estimated fair values. The Company owns certain fixed
maturity securities that do not have publicly quoted values, but had an
estimated fair value as determined by management of $1.8 million at March 31,
2010. Such values inherently involve a greater degree of judgment and
uncertainty and therefore ultimately greater price volatility. On occasion, the
value of an investment may decline to a value below its amortized purchase price
and remain at such value for an extended period of time. When an
investment&#146;s indicated fair value has declined below its cost basis for a
period of time, the Company evaluates such investment for an other than
temporary impairment. The evaluation of other than temporary impairment is a
quantitative and qualitative process, which is subject to risks and
uncertainties in the determination of whether declines in the fair value of
investments are other than temporary. The risks and uncertainties include, among
other things, changes in general economic conditions, an issuer&#146;s financial
condition or near term recovery prospects and the effects of changes in interest
rates. In evaluating a potential impairment, the Company considers, among other factors, the
intent and ability to hold these securities until price recovery, the nature of
the investment and the prospects for the issuer and its industry, the
issuer&#146;s continued satisfaction of the investment obligations in accordance
with their contractual terms, and management&#146;s expectation as to the
issuer&#146;s ability and intent to continue to do so, as well as ratings
actions that may affect the issuer&#146;s credit status. If an other than temporary
impairment is deemed to exist, then the Company will write down the amortized
cost basis of the investment to its estimated fair value. While such write down
does not impact the reported value of the investment in the Company&#146;s
balance sheet, it is reflected as a realized investment loss in the
Company&#146;s consolidated statements of operations. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company determines the
fair values of certain financial instruments based on the fair market hierarchy
established in Accounting Standards Codification (&#147;ASC&#148;) 820-10-20,
Fair Value Measurements and Disclosures (&#147;ASC 820-10-20&#148;). The fair
values for fixed maturity and equity securities are largely determined by either
independent methods prescribed by the National Association of Insurance
Commissioners, which do not differ materially from nationally quoted market
prices, when available, or independent broker quotations. See Note 11 of the
accompanying notes to consolidated financial statements with respect to assets
and liabilities carried at fair value and information about the inputs used to
value those financial instruments, by hierarchy level, in accordance with ASC
820-10-20. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income taxes</i> comprised approximately 2% of the Company&#146;s total assets at March
31, 2010. Deferred income taxes reflect the effect of temporary differences
between assets and liabilities that are recognized for financial reporting
purposes and the amounts that are recognized for tax purposes. These deferred
income taxes are measured by applying currently enacted tax laws and rates.
Valuation allowances are recognized to reduce the deferred tax assets to the
amount that is deemed more likely than not to be realized. In assessing the
likelihood of realization, management considers estimates of future taxable
income and tax planning strategies.</FONT></P>







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<p><font face="times new roman, serif" size=2><b>Recently
Issued Accounting Standards</b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For a discussion of recently issued accounting standards applicable to the Company, see Note 2 of
the accompanying notes to the consolidated financial statements.</FONT></P>

<p><font face="times new roman, serif" size=2><u><b>OVERALL CORPORATE RESULTS</b></u></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On a consolidated basis, the Company had net income of $0.4 million, or $0.01 per diluted share, for the
three month period ended March 31, 2010, compared to net income of $0.3 million,
or $0.01 per diluted share, for the three month period ended March 31, 2009.
Premium revenue for the three month period ended March 31, 2010 increased $0.6
million, or 2.5%, to $23.4 million. The increase in premiums was primarily
attributable to new business generated by the Company&#146;s life and health
operations as a result of increased marketing initiatives. Partially offsetting
the increase in the life and health premiums during the three month period ended
March 31, 2010 was a continued decline in property and casualty premiums. The
increase in net income during the three month period ended March 31, 2010 was
primarily due to the overall increase in net earned premiums coupled with a
relatively consistent level of fixed expenses.</FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A more detailed analysis of the individual operating companies and other corporate activities is provided below.</FONT></P>




<p><font face="times new roman, serif" size=2><b>American Southern</b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary
of American Southern&#146;s premiums for the three month period ended March 31,
2010 and the comparable period in 2009 (in thousands): </FONT></P>

<table width=430 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=27%></td>
<td width=1%></td>
<td width=27%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Gross written premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,094</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,877</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Ceded premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">(1,309)</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">(1,666)</font><hr noshade size=1></td>
</tr>

<tr bgcolor="#eeeeee">
<td valign=top><font size=2 face="times new roman, serif">Net written premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,785</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,211</font><hr noshade size=2></td>
</tr>

<tr valign=top>
<td><font size=2 face="times new roman, serif">Net earned premiums</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,057</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;8,986</font><hr noshade size=2></td>
</tr>

</table>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross written premiums at
American Southern decreased $0.8 million, or 8.8%, during the three month period
ended March 31, 2010 from the comparable period in 2009. The decrease in gross
written premiums was primarily attributable to the continued decline in the
general liability and surety lines of business resulting from continued weakness
in the construction industry.</FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ceded premiums decreased
$0.4 million, or 21.4%, during the three month period ended March 31, 2010 from
the comparable period in 2009. The decrease in ceded premiums was primarily due
to the decline in written premiums and lower cession rates resulting from a new
reinsurance agreement which incepted in the fourth quarter of 2009. </FONT></P>





<p align=center><font face="times new roman, serif" size=2>-19-</font></p>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following presents
American Southern&#146;s net earned premiums by line of business for the three
month period ended March 31, 2010 and the comparable period in 2009 (in
thousands): </font></p>

<table width=430 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=27%></td>
<td width=1%></td>
<td width=27%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Commercial automobile</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,605</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,691</font></td>
<td>&nbsp;</td>
</tr>

<tr>
<td><font size=2 face="times new roman, serif">General liability</font></td>
<td align=right><font size=2 face="times new roman, serif">1,311</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">1,658</font></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Property</font></td>
<td align=right><font size=2 face="times new roman, serif">606</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">615</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Surety</font></td>
<td align=right><font size=2 face="times new roman, serif">1,535</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">2,022</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Total</font></td>

<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,057</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,986</font><hr noshade size=2></td>
</tr>
</table>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net earned premiums
decreased $0.9 million, or 10.3%, during the three month period ended March 31,
2010 from the comparable period in 2009, primarily due to the reasons discussed
previously. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following sets forth
American Southern&#146;s loss and expense ratios for the three month period
ended March 31, 2010 and for the comparable period in 2009: </FONT></P>


<table width=430 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=27%></td>
<td width=1%></td>
<td width=27%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Loss ratio</font></td>
<td align=right><font size=2 face="times new roman, serif">55.0%</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">48.2%</font></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Expense ratio</font></td>
<td align=right><font size=2 face="times new roman, serif">43.4%</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">48.0%</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Combined ratio</font></td>
<td align=right><font size=2 face="times new roman, serif">98.4%</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">96.2%</font><hr noshade size=2></td>
</tr>
</table>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The loss ratio for the
three month period ended March 31, 2010 increased to 55.0% from 48.2% in the
comparable period of 2009. The increase in the loss ratio was primarily
attributable to an increase in losses in the surety line of business during the
three month period ended March 31, 2010 as compared to the same period in 2009. </FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The expense ratio for the
three month period ended March 31, 2010 decreased to 43.4% from 48.0% in the
comparable period of 2009. The decrease in the expense ratio was primarily due
to American Southern&#146;s variable commission structure, which compensates the
company&#146;s agents in relation to the loss ratios of the business they write.
In periods where the loss ratio increases, commissions and underwriting expenses
will decrease and conversely in periods where the loss ratio decreases,
commissions and underwriting expenses will increase. </FONT></P>


<p><font face="times new roman, serif" size=2><b>Bankers Fidelity</b></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes
Bankers Fidelity&#146;s earned premiums for the three month period ended March
31, 2010 and the comparable period in 2009 (in thousands): </FONT></P>

<table width=430 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=27%></td>
<td width=1%></td>
<td width=27%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Medicare supplement</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;11,357</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,324</font></td>
</tr>
<tr>
<td><font size=2 face="times new roman, serif">Other health</font></td>
<td align=right><font size=2 face="times new roman, serif">1,123</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">899</font></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Life</font></td>
<td align=right><font size=2 face="times new roman, serif">2,821</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">2,588</font><hr noshade size=1></td>
</tr>
<tr valign=top>
<td><font size=2 face="times new roman, serif">Total</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,301</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13,811</font><hr noshade size=2></td>
</tr>
</table>





<p align=center><font face="times new roman, serif" size=2>-20-</font></p>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Premium revenue at Bankers
Fidelity increased $1.5 million, or 10.8%, during the three month period ended
March 31, 2010 over the comparable period in 2009, primarily due to successful
marketing initiatives, recruiting of new agents, and effective utilization of
the company&#146;s proprietary lead program. Premiums from the Medicare
supplement line of business increased $1.0 million, or 10.0%, during the three
month period ended March 31, 2010 over the comparable period in 2009 while
premiums from the life insurance line of business increased $0.2 million, or
9.0%, during the same comparable period. The other health products premiums
increased $0.2 million, or 24.9%, during the three month period ended March 31,
2010 over the comparable period in 2009 due primarily to an increase in sales of
short-term care products and increased business activities with group
associations.</FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes
Bankers Fidelity&#146;s operating expenses for the three month period ended
March 31, 2010 and the comparable period in 2009 (in thousands):</FONT></P>

<table width=430 cellspacing=0 cellpadding=0 border=0>
<tr>
<td width=45%></td>
<td width=27%></td>
<td width=1%></td>
<td width=27%></td>
</tr>
<tr>
<td>&nbsp;</td>
<td bgcolor="#eeeeee" colspan=3 align=center><font size=2 face="times new roman, serif">Three Months Ended<BR>March 31,</font>
<hr noshade size=1></td>
</tr>
<tr>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2010</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=center><font size=2 face="times new roman, serif">2009</font><hr noshade size=1></td>
</tr>
<tr bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Benefits and losses</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,957</font></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10,552</font></td>
</tr>
<tr valign=bottom>
<td><font size=2 face="times new roman, serif">Commission and other<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expenses<BR>&nbsp;</font></td>
<td align=right><font size=2 face="times new roman, serif">4,785</font><hr noshade size=1></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">4,295</font><hr noshade size=1></td>
</tr>
<tr valign=top bgcolor="#eeeeee">
<td><font size=2 face="times new roman, serif">Total expenses</font></td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,742</font><hr noshade size=2></td>
<td>&nbsp;</td>
<td align=right><font size=2 face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14,847</font><hr noshade size=2></td>
</tr>
</table>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Benefits and losses
increased $0.4 million, or 3.8%, during the three month period ended March 31,
2010 over the comparable period in 2009. As a percentage of premiums, benefits
and losses were 71.6% for the three month period ended March 31, 2010, compared
to 76.4% for the three month period ended March 31, 2009. The decrease in the
loss ratio was primarily attributable to more favorable loss experience in the
Medicare supplement line of business during the 2010 period.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commissions and other
expenses increased $0.5 million, or 11.4%, during the three month period ended
March 31, 2010 over the comparable period in 2009. As a percentage of premiums,
these expenses were 31.3% for the three month period ended March 31, 2010,
compared to 31.1% for the three month period ended March 31, 2009. The increase
in commissions and other expenses was primarily due to increases in agency
related expenses which resulted from the company&#146;s increased marketing
initiatives. </FONT></P>

<p><font face="times new roman, serif" size=2><u><b>INVESTMENT INCOME AND REALIZED GAINS</b></U></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment income decreased
$0.2 million, or 6.5%, during the three month period ended March 31, 2010 from
the comparable period in 2009. The decrease in investment income was primarily
due to the decrease in interest rates. The average yield on the Company&#146;s
invested assets decreased in the three month period ended March 31, 2010 as
compared to the three month period ended March 31, 2009.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no realized
gains in the three month period ended March 31, 2010. During the three month
period ended March 31, 2009, the Company had net realized gains of $13,000.
Management continually evaluates the Company&#146;s investment portfolio and, as
needed, makes adjustments for impairments and/or will divest investments.</FONT></P>


<p><font face="times new roman, serif" size=2><u><b>INTEREST EXPENSE</b></U></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense decreased
$0.1 million, or 11.0%, during the three month period ended March 31, 2010 from
the comparable period in 2009. The decrease in interest expense was due to a
decrease in the London Interbank Offered Rate (&#147;LIBOR&#148;), as the
interest rates on the Company&#146;s trust preferred obligations and outstanding
bank debt are based on LIBOR.</FONT></P>







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<font face="times new roman, serif" size=2>-21-</font></p>




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<p><font face="times new roman, serif" size=2><u><b>OTHER EXPENSES</b></U></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other expenses
(commissions, underwriting expenses, and other expenses) decreased $0.3 million,
or 3.6%, during the three month period ended March 31, 2010 from the comparable
period in 2009. The decrease in other expenses was primarily attributable to the
reduction in profit sharing commissions at American Southern. During the three
month period ended March 31, 2010, profit sharing commissions at American
Southern decreased $0.4 million from the three month period ended March 31, 2009
due to the inversely higher loss ratios. The majority of American
Southern&#146;s business is structured in a way that agents are rewarded or
penalized based upon the loss ratios of the business they submit to the company.
In periods where the loss ratio increases, commissions and underwriting expenses
will decrease, and conversely, in periods where the loss ratio decreases,
commissions and underwriting expenses will increase. Partially offsetting the
decrease in other expenses were increases in agency related expenses in the
Company&#146;s life and health operations due to increased marketing
initiatives. On a consolidated basis, as a percentage of earned premiums, other
expenses decreased to 40.1% in the three month period ended March 31, 2010 from
42.6% in the three month period ended March 31, 2009. The decrease in the
expense ratio was primarily due to the reduction in profit sharing commissions
discussed previously. Also contributing to the decrease in the expense ratio was
the increase in earned premiums coupled with a relatively consistent level of
fixed expenses.</FONT></P>

<p><font face="times new roman, serif" size=2><u><b>INCOME TAXES</b></U></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary differences
between the Company&#146;s effective tax rate and the federal statutory income
tax rate for the three month periods ended March 31, 2010 and 2009,
respectively, resulted from the dividends-received deduction (&#147;DRD&#148;).
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. </FONT></P>






<p><font face="times new roman, serif" size=2><u><b>LIQUIDITY AND CAPITAL RESOURCES</b></U></font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary cash needs of the
Company are for the payment of claims and operating expenses, maintaining
statutorily adequate 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&#146;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.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 March 31, 2010, the Parent had approximately $23.7
million of 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.  </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Parent&#146;s insurance
subsidiaries reported statutory net income of $1.9 million for the three month
period ended March 31, 2010 compared to statutory net income of $1.9 million for
the three month period ended March 31, 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 (&#147;GAAP&#148;).
The Parent&#146;s insurance subsidiaries reported GAAP net income of $1.9
million for the three month period ended March 31, 2010, compared to $1.8
million for the three month period ended March 31, 2009. The reasons for the
increase in GAAP net income in the three month period ended March 31, 2010 are
discussed above under &#147;Results of Operations.&#148; Statutory results for
the Company&#146;s property and casualty operations may differ from the
Company&#146;s results of operations under GAAP due to the deferral of
acquisition costs for financial reporting purposes. The Company&#146;s life and
health operations&#146; 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.  </FONT></P>
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over 90% of the investment
assets of the Parent&#146;s insurance subsidiaries are 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 the
Parent 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 March 31, 2010, American Southern had
$39.0 million of statutory surplus and Bankers Fidelity had $32.1 million of
statutory surplus. </FONT></P>





<p align=center>
<font face="times new roman, serif" size=2>-22-</font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#146; use of the Parent&#146;s
tax loss carryforwards, which totaled approximately $6.8 million at March 31,
2010. </FONT></P>



<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to these
internal funding sources, the Company maintains its revolving credit facility
(the &#147;Credit Agreement&#148;) with Wachovia Bank, National Association
(&#147;Wachovia&#148;) pursuant to which the Company was able to, subject to the
terms and conditions thereof, initially borrow or reborrow up to $15.0 million
(the &#147;Commitment Amount&#148;). In accordance with the terms of the Credit
Agreement, the Commitment Amount is incrementally reduced every six months and
was equal to $10.5 million at March 31, 2010. 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 an Applicable Margin (as defined). The Applicable Margin varies based upon
the Company&#146;s leverage ratio (funded debt to total capitalization, each as
defined) and ranges from 1.75% to 2.50%. 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, Wachovia may terminate the Credit Agreement and declare
all amounts outstanding due and payable in full. During the three month period
ended March 31, 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, 2010 and
the Company currently does not anticipate entering into any future credit
agreements. Notwithstanding the foregoing, however, changes in business or
general economic conditions could result in the Company determining that it is
in the Company&#146;s best interest to enter into such an agreement at any time
in the future. In such event, no assurances can be provided that the Company
would be able to enter into such an agreement in a timely manner, on acceptable
terms, or at all. </FONT></P>









<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 (&#147;Junior Subordinated
Debentures&#148;). 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 March 31, 2010, the effective interest rate was 4.31%.
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&#146;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.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2006, the Company
entered into a zero cost rate collar with Wachovia 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 4<SUP>th</SUP> of each March, June, September and December
through termination on March 4, 2013. The Company began making payments to
Wachovia under the zero cost rate collar on June 4, 2008. As a result of
interest rates remaining below the LIBOR floor rate of 4.77%, these payments to
Wachovia under the zero cost rate collar continued throughout 2009 and into
2010. While the Company is exposed to counterparty risk should Wachovia 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. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.</FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March 31, 2010, the
Company had 70,000 shares of Series D Preferred Stock (&#147;Series D Preferred
Stock&#148;) outstanding. All of the shares of Series D Preferred Stock are held
by an affiliate of the Company&#146;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&#146;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&#146;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&#146;s option. The Series D Preferred Stock is not currently
convertible. At March 31, 2010, the Company had accrued, but unpaid, dividends
on the Series D Preferred Stock totaling $0.1 million.</FONT></P>




<p align=center><font face="times new roman, serif" size=2>-23-</font></p>









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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Net cash used in operating
activities was $3.7 million in the three month period ended March 31, 2010,
compared to $6.1 million in the three month period ended March 31, 2009. Cash
and short-term investments decreased from $20.1 million at December 31, 2009 to
$17.4 million at March 31, 2010. The decrease in cash and short-term investments
during the three month period ended March 31, 2010 was primarily due to the
payment of agent profit sharing commissions, expenses associated with new
business and annual management bonuses. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&#146;s liquidity, capital resources or operations. </FONT></P>


<a name="quantitative_and_qualitative_disclosures"></a>

<p><font face="times new roman, serif" size=2><u>Item 3. Quantitative and Qualitative Disclosures About Market Risk</u>
</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
requested by this Item.</FONT></P>



<a name="controls_and_procedures"></a>
<p><font face="times new roman, serif" size=2><u>Item 4T. Controls and Procedures</u>
</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 &#147;Exchange
Act&#148;) reports is recorded, processed, summarized and reported within the
time periods specified in the SEC&#146;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&#146;s control objectives. The Company&#146;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. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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.</FONT></P>



<p><font face="times new roman, serif" size=2><b>FORWARD-LOOKING STATEMENTS</b>
</font></p>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><i>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&#146;s current assessments of various risks and
uncertainties, as well as assumptions made in accordance with the &#147;safe
harbor&#148; provisions of the federal securities laws. The Company&#146;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&#146;s Annual Report on Form 10-K for
the fiscal year ended December 31, 2009 and the other filings made by the
Company from time to time with the Securities and Exchange Commission.</I> </FONT></P>




<p align=center><font face="times new roman, serif" size=2>-24-</font></p>











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<a name="legal_proceedings"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>






<p align=center><font face="times new roman, serif" size=2><b>PART II.  OTHER INFORMATION</b>
</font></p>


<p><font face="times new roman, serif" size=2><u>Item 2. Unregistered Sales of Equity Securities and Use of Proceeds</u>
</font></p>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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&#146;s common stock (the &#147;Repurchase
Plan&#148;). 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&#146;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.  </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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. </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 March 31, 2010.</FONT></P>


<table width=100% cellspacing=0 cellpadding=3 border=0>
<tr>
<td width=30%>&nbsp;</td>
<td width=14%>&nbsp;</td>
<td width=14%>&nbsp;</td>
<td width=14%>&nbsp;</td>
<td width=14%>&nbsp;</td>
<td width=14%>&nbsp;</td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td align=left><font size=2  face="times new roman, serif"><b>Period</b>
</font><hr width=100% size=1></td>
<td align=center><font size=2  face="times new roman, serif"><b>Total Number<BR>of Shares<BR>Purchased</b>
</font><hr width=100% size=1></td>
<td align=center><font size=2  face="times new roman, serif"><b>Average<BR>Price Paid<BR>per Share</b>
</font><hr width=100% size=1></td>
<td align=center><font size=2  face="times new roman, serif"><b>Total Number<BR>of Shares<BR>Purchased as<BR>
Part of Publicly<BR>Announced<BR>Plans or<BR>Programs</b>
</font><hr width=100% size=1></td>
<td align=center><font size=2  face="times new roman, serif"><b>Maximum<BR>Number of<BR>Shares that<BR>
May Yet be<BR>Purchased<BR>Under the<BR>Plans or<BR>Programs</b>
</font><hr width=100% size=1></td>
</tr>
<tr valign=bottom>
<td><font size=2  face="times new roman, serif">January 1 - January 31, 2010</font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,200</font></td>
<td align=center><font size=2  face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.39</font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,200</font></td>
<td align=center><font size=2  face="times new roman, serif">470,404</font></td>
</tr>
<tr valign=bottom bgcolor="#eeeeee">
<td><font size=2  face="times new roman, serif">February 1 - February 28, 2010</font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,400</font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;1.53</font></td>

<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,400</font></td>
<td align=center><font size=2  face="times new roman, serif">469,004</font></td>
</tr>


<tr valign=top>
<td><font size=2  face="times new roman, serif">March 1 - March 31, 2010</font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font><hr noshade size=1></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font><hr noshade size=1></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font><hr noshade size=1></td>
<td align=center><font size=2  face="times new roman, serif">469,004</font></td>
</tr>






<tr valign=top bgcolor="#eeeeee">
<td align=center><font size=2  face="times new roman, serif"><b>Total</b></font></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,600&nbsp;</font><hr noshade size=2></td>
<td align=center><font size=2  face="times new roman, serif">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.46</font><hr noshade size=2></td>
<td align=center><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,600</font><hr noshade size=2></td>
<td>&nbsp;</td>
</tr>
</table>

<a name="exhibits_and_reports"></a>
<p><font face="times new roman, serif" size=2><u>Item 6.&nbsp; Exhibits</u></font></p>

<table width=100% cellspacing=0 cellpadding=1 border=0>
<tr>
<td width=8%></td>
<td width=92%></td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>31.1 &nbsp;&nbsp;&nbsp;&#150;</font></td>
<td><font face="times new roman, serif" size=2>
<A HREF="exhibit_31110.htm">Certification of the Principal Executive Officer
pursuant to Section 302 of the Sarbanes Oxley&#150;Act of 2002.</A></font></td>
</tr>
<tr>
<td colspan=2>&nbsp;</td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>31.2&nbsp;&nbsp;&nbsp; &#150;</font></td>
<td><font face="times new roman, serif" size=2><A HREF="exhibit_31210.htm">
Certification of the Principal Financial Officer
pursuant to Section 302 of the Sarbanes Oxley&#150;Act of 2002.</a></font></td>
</tr>
<tr>
<td colspan=2>&nbsp;</td>
</tr>
<tr>
<td valign=top><font face="times new roman, serif" size=2>32.1 &nbsp;&nbsp;&nbsp;&#150;</font></td>
<td><font face="times new roman, serif" size=2><A HREF="exhibit_32110.htm">
Certifications
pursuant to Section 906 of the Sarbanes Oxley&#150;Act of 2002.</a></font></td>
</tr>
</table>























<p align=center><font face="times new roman, serif" size=2>-25-</font></p>
<HR SIZE=2 NOSHADE>








<PAGE>
<H5 align="left" style="page-break-before:always"></H5>





<a name="signature"></a>
<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

<p align=center><font size=2 face="times new roman, serif"><u><b>SIGNATURES</b></u></font></p>

<p align=justify><font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.</font></p>


<p align=center><font size=2 face="times new roman, serif"><u> ATLANTIC AMERICAN CORPORATION<BR></u>
(Registrant)</font></p>
<BR>
<BR>
<BR>


<table width=80% align=left cellspacing=0 cellpadding=0 border=0>
<tr>
<td valign=top width=45%><font size=2 face="times new roman, serif">Date:&nbsp;<u> May 7, 2010</u></font></td>
<td width=55%><font size=2 face="times new roman, serif">By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font face="times new roman, serif" size=2>
<u>/s/ John G. Sample, Jr.</u></font> <BR>
<font size=2 face="times new roman, serif">&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John G. Sample, Jr.<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer
</font></td>
</tr>
</table>


<BR><BR><BR><BR><BR>

<BR><BR><BR><BR><BR>
<BR><BR><BR><BR><BR>

<p align=center>
<font face="times new roman, serif" size=2>-26-</font></p>
<HR SIZE=2 NOSHADE>







<PAGE>
<H5 align="left" style="page-break-before:always"></H5>



<p><font size=2 face="times new roman, serif"><b><A HREF="#table_of_contents">TABLE OF CONTENTS</A></b></font></p>

<p align=center><font face="times new roman, serif" size=2><b><U>EXHIBIT INDEX</U></B></FONT></P>

<table width=630 align=center cellspacing=5 cellpadding=8 border=0>
<tr>
<td><font size=2 face="times new roman, serif"><b>Exhibit<BR><u>Number</u></b></font></td>
<td colspan=2><font size=2 face="times new roman, serif"><b>&nbsp;<BR><u> Title</u></b></font></td>

</tr>



<tr>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;31.1</FONT></td>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<BR><A HREF="exhibit_31110.htm">Certification of the Principal Executive Officer
pursuant to Section 302 of the Sarbanes&#150;Oxley Act of 2002.</a></FONT></td>
</tr>


<tr>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;31.2 </FONT></td>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<BR><A HREF="exhibit_31210.htm">Certification of the Principal Financial Officer
pursuant to Section 302 of the Sarbanes&#150;Oxley Act of 2002.</a></FONT></td>
</tr>
<tr>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;32.1</FONT></td>
<td><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="exhibit_32110.htm">Certifications
pursuant to Section 906 of the Sarbanes&#150;Oxley Act of 2002.</a></FONT></td>
</tr>
</table>
<BR><BR><BR><BR><BR>


</body>
</html>










</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>exhibit_31110.htm
<DESCRIPTION>CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
<TEXT>
<html>
<head>
<title>
Exhibit 31.1
</title>
</head>
<body>
<A NAME="certification_executive"></A>
<p align=right><font face="times new roman, serif" size=2><b><u>EXHIBIT 31.1</u></b></font></p>

<p align=center><font size=2 face="times new roman, serif"><b>CERTIFICATION
OF THE PRINCIPAL EXECUTIVE OFFICER<BR>PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002</b></font></p>

<p><font size=2  face="times new roman, serif">I, Hilton H. Howell, Jr., certify that:</font></p>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>

<tr>

<td width=5 align=center><font face="times new roman, serif" size=2>1.</font></td>
<td colspan=2 align=justify><font size=2 face="times new roman, serif">
I have reviewed this report on Form 10-Q of Atlantic American Corporation;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">2.</font></td>
<td valign=top><p align=justify><font size=2 face="times new roman, serif">
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;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">3.</font></td>
<td valign=top><p align=justify><font size=2 face="times new roman, serif">
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;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">4.</font></td>
<td colspan=2><p align=justify><font size=2  face="times new roman, serif">
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:</font></td>
</tr>

</table>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>a)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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;</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>b)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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;
</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>c)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>

<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>d)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>
</table>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>

<tr valign=top>

<td width=5 align=center><font face="times new roman, serif" size=2>5.</font></td>
<td colspan=2 align=justify><font size=2 face="times new roman, serif">
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):

</font></td>
</tr>
</table>
<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr valign=top>
<td width=10>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>a)</font></td>
<td valign=top><p align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>b)</font></td>
<td valign=top><p align=justify><font face="times new roman, serif" size=2>
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.
</font></td>
</tr>
</table>
<table align=center width=95% cellspacing=0 cellpadding=8 border=0>





<tr>
<td width=40%>
&nbsp;
</td>
<td width=20%>
&nbsp;
</td>
<td width=40%>
&nbsp;</td>
</tr>
<tr>
<td valign=top><font size=2  face="times new roman, serif">Date:&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
May 7, 2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</td>
<td>
&nbsp;
</td>
<td align=center>
<font size=2  face="times new roman, serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Hilton H. Howell, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hilton H. Howell, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
President and Chief Executive Officer</font></td>
</tr>
</table>
</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>exhibit_31210.htm
<DESCRIPTION>CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
<TEXT>
<html>
<head>
<title>
Exhibit 31.2
</title>
</head>
<body>
<A NAME="certification_financial"></A>
<p align=right><font face="times new roman, serif" size=2><b><u>EXHIBIT 31.2</u></b></font></p>

<p align=center><font size=2 face="times new roman, serif"><b>CERTIFICATION
OF THE PRINCIPAL FINANCIAL OFFICER<BR>PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002</b></font></p>

<p><font size=2  face="times new roman, serif">I, John G. Sample, Jr., certify that:</font></p>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>

<tr>

<td width=5 align=center><font face="times new roman, serif" size=2>1.</font></td>
<td colspan=2 align=justify><font size=2 face="times new roman, serif">
I have reviewed this report on Form 10-Q of Atlantic American Corporation;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">2.</font></td>
<td valign=top><p align=justify><font size=2 face="times new roman, serif">
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;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">3.</font></td>
<td valign=top><p align=justify><font size=2 face="times new roman, serif">
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;</font></td>
</tr>

<tr valign=top>
<td align=center><font size=2 face="times new roman, serif">4.</font></td>
<td colspan=2><p align=justify><font size=2  face="times new roman, serif">
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:</font></td>
</tr>

</table>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>a)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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;</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>b)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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;
</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>c)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>

<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>d)</font></td>
<td valign=top align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>
</table>

<table align=center width=95% cellspacing=0 cellpadding=8 border=0>

<tr valign=top>

<td width=5 align=center><font face="times new roman, serif" size=2>5.</font></td>
<td colspan=2 align=justify><font size=2 face="times new roman, serif">
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):

</font></td>
</tr>
</table>
<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr valign=top>
<td width=10>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>a)</font></td>
<td valign=top><p align=justify><font face="times new roman, serif" size=2>
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
</font></td>
</tr>
<tr valign=top>
<td width=10>&nbsp;</td>
<td align=center><font face="times new roman, serif" size=2>b)</font></td>
<td valign=top><p align=justify><font face="times new roman, serif" size=2>
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.
</font></td>
</tr>
</table>
<table align=center width=95% cellspacing=0 cellpadding=8 border=0>





<tr>
<td width=40%>
&nbsp;
</td>
<td width=20%>
&nbsp;
</td>
<td width=40%>
&nbsp;</td>
</tr>
<tr>
<td valign=top><font size=2  face="times new roman, serif">Date:&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
May 7, 2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</td>
<td>
&nbsp;
</td>
<td align=center>
<font size=2  face="times new roman, serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ John G. Sample, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
John G. Sample, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
Senior Vice President and <BR>Chief Financial Officer</font></td>
</tr>
</table>
</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>exhibit_32110.htm
<DESCRIPTION>CERTIFICATION PURSUANT TO SECTION 906
<TEXT>
<html>
<head>
<title>
Exhibit 32.1
</title>
</head>
<body>




<p align=right><font size=2 face="times new roman, serif"><B><U>EXHIBIT 32.1</U></B></font></p>

<p><font size=2  face="times new roman, serif">
Certifications Pursuant to &sect;906 of the Sarbanes-Oxley Act of 2002</font></p>
<p><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

             Pursuant to 18 U.S.C.
&#167;1350, as adopted pursuant to &#167;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 &#147;Company&#148;) for the quarterly period ended
March 31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the &#147;Report&#148;), each of the undersigned officers of the Company
certifies, that, to such officer&#146;s knowledge:</font></p>
<table width=95% cellpadding=0 cellspacing=8 border=0>
<tr valign=top>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td width=5 align=center><font face="times new roman, serif" size=2>(1)</font></td>
<td colspan=2><p align=justify><font size=2 face="times new roman, serif">
The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and</font></td>
</tr>
<tr valign=top>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td width=5 align=center><font face="times new roman, serif" size=2>(2)</font></td>
<td colspan=2><p align=justify><font size=2 face="times new roman, serif">
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.</font></td>
</tr>
</table>


<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr>
<td width=40%>
&nbsp;
</td>
<td width=20%>
&nbsp;
</td>
<td width=40%>
&nbsp;</td>
</tr>
<tr>
<td valign=top><font size=2  face="times new roman, serif">Date:&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
May 7, 2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</td>
<td>
&nbsp;
</td>
<td align=center>
<font size=2  face="times new roman, serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Hilton H. Howell, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Hilton H. Howell, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
President and Chief Executive Officer</font></td>
</tr>
</table>




<table align=center width=95% cellspacing=0 cellpadding=8 border=0>
<tr>
<td width=40%>
&nbsp;
</td>
<td width=20%>
&nbsp;
</td>
<td width=40%>
&nbsp;</td>
</tr>
<tr>
<td valign=top><font size=2  face="times new roman, serif">Date:&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
May 7, 2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
</td>
<td>
&nbsp;
</td>
<td align=center>
<font size=2  face="times new roman, serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ John G. Sample, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
John G. Sample, Jr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<BR>
Senior Vice President and <BR>Chief Financial Officer</font></td>
</tr>
</table>

<BR><BR><BR><BR>

<p align=justify><font size=2  face="times new roman, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

         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.</font></p>








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