A.M. Best Upgrades Ratings of American Southern Group; Upgrades and Affirms Ratings of Bankers Fidelity Life Insurance Company

Business Wire, August 28, 2008

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit ratings to "a" from "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).

A.M. Best also has affirmed the FSR of B (Good) and upgraded the ICR to "bbb " from "bbb" of Bankers Fidelity Life Insurance Company (Bankers Fidelity) (Atlanta, GA). The outlook for all the above ratings is stable.

Concurrently, A.M. Best has affirmed the ICR of "bbb-" of Atlantic American Corporation (Atlantic American) (Atlanta, GA) [NASDAQ: AAME]. The rating outlook has been revised to stable from negative. Atlantic American is the parent company of American Southern Group and Bankers Fidelity.

The upgrade of American Southern's ratings reflects the improved financial position of Atlantic American following its sale of two former property/casualty affiliates to a third party on March 31, 2008. With the sale of the two insurers, the parent was relieved of significant operating uncertainties that potentially required additional capital, which may have placed a strain on American Southern's potential to fund the group's capital needs through elevated shareholder dividends. The sale provided Atlantic American with additional cash that was partially utilized to repay bank debt on April 1, 2008, and thus, improved the organization's consolidated financial leverage to levels more supportive of the current ratings.

The upgrades also reflect American Southern's strong, stand-alone risk adjusted capitalization, long history of solid operating performance, conservative management philosophy and demonstrated ability to manage the company through market cycles.

The upgrade and affirmation of the ratings of Bankers Fidelity recognize the sale of its sizeable Wachovia Corp. common stock holdings in 2007 and the improved financial strength of Atlantic American. Bankers Fidelity continues to report good operating results while conducting business in the competitive senior life and health insurance market. Going forward, Bankers Fidelity will be emphasizing the sale of senior life and niche individual life business while maintaining its Medicare supplement presence.

Atlantic American's outlook was revised to stable from negative in recognition of the aforementioned improvements in its business profile and financial leverage. The parent maintains reasonable unadjusted financial leverage of total debt plus preferred stock-to-total tangible capital of 34%, with adjusted financial leverage of 21% at June 30, 2008. A.M. Best expects the majority of Atlantic American's debt service to be provided by American Southern. Furthermore, Atlantic American maintains a sizable cash cushion on its own balance sheet in support of its fixed obligations.

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.