A.M. Best Affirms Ratings of Atlantic American Corporation and Its Subsidiaries.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of "a" of American Southern Group (American Southern) and its members. These ratings apply to American Southern Insurance Company (Topeka, KS) and its wholly owned and 100% reinsured subsidiary, American Safety Insurance Company (Atlanta, GA).

Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of "bbb+" of Bankers Fidelity Life Insurance Company (Bankers Fidelity) (Atlanta, GA).

Concurrently, A.M. Best has affirmed the ICR of "bbb-" of the parent company, Atlantic American Corporation (Atlantic American) (Atlanta, GA) (NASDAQ: AAME). The outlook for all ratings is stable.

American Southern's ratings reflect its strong risk-adjusted capitalization, long history of demonstrated profitability, management's disciplined underwriting approach and local market knowledge. Somewhat offsetting these positive rating factors is American Southern's history of paying substantial stockholder dividends, which historically have been used to service the debt held at Atlantic American. The stable outlook reflects A.M. Best's expectations that a solid level of profitability will be maintained over the near term, further supporting risk-adjusted capitalization.

The affirmation of Bankers Fidelity's ratings recognizes its ongoing favorable operating results, while conducting business in the competitive senior life/health insurance market. The company continues to emphasize the sale of senior life and niche individual life business, while maintaining its Medicare supplement presence.

The ratings also consider the financial leverage and interest coverage of Atlantic American. Leverage measures improved significantly in 2008 as the parent retired a portion of its outstanding preferred stock and bank debt with the proceeds from the sale of two former affiliates (Georgia Casualty & Surety Company and Association Casualty Insurance Company). In all, adjusted debt-to-capital and interest coverage ratios were roughly 22.2% and 1.0 times, respectively, at June 30, 2009. Interest coverage is slightly below expectations for the given rating level; however, this is offset by the insurance operating companies' ability to historically generate sufficient earnings to cover debt obligations at the parent company. In addition, the parent also holds roughly $19 million of cash and short-term investments as of June 30, 2009.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.