--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM 10-K

              |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 1998
                                       or
            |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                          Commission file number 0-3722
                            ------------------------

                          ATLANTIC AMERICAN CORPORATION

             (Exact name of registrant as specified in its charter)
                   Georgia                              58-1027114  
         ------------------------------            -------------------
        (State or other jurisdiction of             (I.R.S. employer
        incorporation or organization)             identification no.)

          4370 Peachtree Road, N.E.,
                Atlanta, Georgia                          30319 
      ---------------------------------------          ----------
      (Address of principal executive offices)         (Zip code)

     (Registrant's telephone number, including area code)  (404) 266-5500
                                                           --------------

          Securities registered pursuant to section 12(b) of the Act:
                                     None
          Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $1.00 par value
                               (Title of class)

                      ----------------------------------

    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 

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this 10-K or any amendment to this Form
10-K. |X|
                           ------------------------

    The aggregate  market value of common stock held by  non-affiliates  of the
registrant as of March 8, 1999,  was  $22,090,372.  On March 8, 1999 there were
19,101,106  shares of the registrant's  common stock, par value $1.00 per share,
outstanding.
                           ------------------------

                      DOCUMENTS INCORPORATED BY REFERENCE

   1. Portions of registrant's  Annual Report to Shareholders for the year ended
December 31, 1998 - Parts I, II and IV.

   2.  Portions  of  registrant's  Proxy  Statement  for the Annual  Meeting of
Shareholders, to be held on May 4, 1999, have been incorporated in Items 10, 11,
12 and 13 of Part III of this Form 10-K.
--------------------------------------------------------------------------------

                                       1
<PAGE>


                               TABLE OF CONTENTS
PART I                                                                  Page
    Item  1. Business.................................................    3
                   The Company........................................    3
                   Casualty Operations................................    3
                   Bankers Fidelity...................................    5
                   Marketing..........................................    5
                   Underwriting.......................................    6
                   Operating Results..................................    8
                   Policyholder and Claims Services...................    9
                   Reserves...........................................   10
                   Reinsurance........................................   12
                   Competition........................................   12
                   Rating.............................................   13
                   Regulation.........................................   13
                   NAIC Ratios........................................   14
                   Risk-Based Capital.................................   14
                   Investments........................................   15
                   Employees..........................................   16
                 Financial Information by Industry Segment............   16
                 Executive Officers of the Registrant.................   16
                 Forward-Looking Statements...........................   17
    Item  2. Properties...............................................   17
    Item  3. Legal Proceedings........................................   17
    Item  4. Submission of Matters to a Vote of Security Holders......   17

PART II
    Item  5. Market for the Registrant's Common Equity and
               Related Shareholder Matters............................   18
    Item  6. Selected Financial Data..................................   18
    Item  7. Management's Discussion and Analysis of Financial 
               Condition and Results of Operations....................   18
    Item  8. Financial Statements and Supplementary Data..............   18
    Item  9. Changes in and Disagreements with Accountants on 
               Accounting and Financial Disclosure....................   18

PART III
    Item 10. Directors and Executive Officers of the Registrant.......   19
    Item 11. Executive Compensation...................................   19
    Item 12. Security Ownership of Certain Beneficial Owners 
               and Management.........................................   19
    Item 13. Certain Relationships and Related Transactions...........   19

PART IV
    Item 14. Exhibits, Financial Statement Schedules and Reports 
               on Form 8-K............................................   19


                                       2
<PAGE>
                                    PART I


ITEM 1.  BUSINESS

The Company

    Atlantic  American  Corporation,  a Georgia  corporation  (the  "Parent"  or
"Company")  incorporated in 1968, is a holding company that operates through its
subsidiaries in well-defined specialty markets of the life, health, property and
casualty insurance  industries.  Atlantic American's principal  subsidiaries are
Georgia Casualty & Surety Company ("Georgia Casualty"), incorporated in 1947 and
acquired  in  1968,   Bankers  Fidelity  Life  Insurance  Company   ("Bankers"),
incorporated  in 1955 and  acquired in 1976,  and  American  Southern  Insurance
Company  and its  wholly-owned  subsidiary  American  Safety  Insurance  Company
(collectively, "American Southern"), incorporated in 1936 and acquired in 1995.

    On January 1, 1997, the Company's wholly-owned  subsidiary Atlantic American
Life Insurance  Company  ("Atlantic  American  Life"),  incorporated in 1946 and
acquired in 1968, was merged with and into Bankers.  The business and operations
of Atlantic American Life, which were substantially similar to those of Bankers,
have been consolidated into Bankers.

    In addition, during 1997, the Company acquired 100% of the outstanding stock
of  American  Independent  Life  Insurance  Company  ("AI").  AI,  domiciled  in
Pennsylvania,  was  acquired  to  complement  the  operations  of  Bankers.  The
operations of AI were  assimilated  into the operations of Bankers shortly after
the acquisition and expanded the Company's  geographic  presence in the life and
health insurance markets by five states.  Together,  Bankers and AI are referred
to as "Bankers Fidelity".

    During 1997,  the Company also  acquired  100% of the  outstanding  stock of
Self-Insurance  Administrators,  Inc. ("SIA").  SIA, domiciled in Georgia,  is a
third party administrator that specializes in providing  administrative services
to those companies and  organizations  that choose to self-insure their workers'
compensation  risks.  The  acquisition of SIA provides the Company with an entry
into alternative services in the property and casualty insurance marketplace.

    During 1996, the Company sold its majority interest in Leath Furniture,  LLC
(f/k/a Leath  Furniture,  Inc.,  "Leath").  Leath is reflected as  discontinued
operations in the Company's financial statements for 1996.

    The Company's  strategy is to focus on  well-defined  niches within  various
areas of the insurance marketplace.  Each of the Company's subsidiaries operates
with relative  autonomy as the Company  believes this allows each  subsidiary to
best exploit its  expertise.  However,  the Company  seeks to develop and expand
cross-marketing and joint-underwriting opportunities as they arise.

    Additional  information  concerning the Company and its  subsidiaries may be
found in  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of  Operations"  of the Company's  1998 Annual  Report to  Shareholders,
which is incorporated herein by reference.

    Casualty Operations

    The  Company's  Casualty  Operations  are split  between  into two  distinct
operating entities, American Southern and Georgia Casualty. The primary products
offered by the two  casualty  companies  are  described  below,  followed  by an
overview of each of the companies.

    Workers'  Compensation  Insurance  policies  provide  indemnity  and medical
    ---------------------------------
benefits  to  insured  workers  for  injuries  sustained  in the course of their
employment.

    Business Automobile Insurance policies provide for bodily injury or property
    -----------------------------
damage liability coverage,  uninsured  motorists  coverage,  and physical damage
coverage.

    General Liability Insurance policies cover bodily injury and property damage
    ---------------------------
liability  for both  premises and  completed  operations  exposures  for general
classes of business.

    Property  Insurance  policies  provide  for  payment  of  losses on real and
    -------------------
personal property caused by fire and other multiple perils.


                                       3
<PAGE>
    American Southern.  American Southern provides tailored fleet automobile and
long-haul physical damage insurance coverage, on a multi-year contract basis, to
state governments,  local  municipalities and other large motor pools and fleets
("block accounts") that can be specifically rated and underwritten.  The size of
the block accounts  insured by American  Southern are such that individual class
experience generally can be determined, which allows for customized policy terms
and rates.  American  Southern  produces  business in 18 of the 24 states in the
Southeast and Midwest in which it is authorized to conduct  business.  While the
majority of American  Southern's  premiums are derived from auto  liability  and
auto  physical  damage,  American  Southern  also  provides  property,   general
liability, and surety coverages.

    The following table summarizes, for the periods indicated, the allocation of
American  Southern's net earned premiums for each of its principal product lines
since its acquisition by the Company.

                                      Year Ended December 31,
                                   ------------------------------
                                          (in thousands)
                                    1998       1997       1996
                                   --------  ---------  ---------
      Automobile Liability         $25,539    $30,909    $30,889
      Automobile Physical Damage     2,145      4,508      4,865
      General Liability              4,291      3,116      1,947
      Property                       2,970      3,206      3,461
      Surety                            57         60         88
                                   --------  ---------  ---------
          Total                    $35,002    $41,799    $41,250
                                   ========  =========  =========


    Georgia Casualty. Georgia Casualty is a property-casualty  insurance company
engaged in the sale of commercial  lines of insurance,  focusing on underwriting
workers' compensation and commercial coverages in the Southeast.

    Georgia Casualty writes business for both mainstream  business  accounts and
for  industries  that are perceived to be high risk. The company is selective in
its  underwriting  and  focuses  on  insureds  with  stringent  safety  and risk
management standards, or accounts that are willing to implement such standards.

    Georgia Casualty has a diversified book of business that includes commercial
lines other than workers' compensation,  including business automobile,  general
liability,  property, commercial umbrella, and a Business Owners Policy ("BOP").
The  company  can  offer a total  commercial  insurance  package  to  cover  the
insurance needs of its customers.

    Currently,  Georgia  Casualty is focusing  the  majority of its new business
efforts in Georgia,  Florida,  Tennessee and  Mississippi.  Management  believes
these states offer the greatest  opportunity  for balanced,  profitable  growth.
Outside of its core states,  at the end of 1998,  Georgia Casualty had authority
to operate in South  Carolina,  North Carolina and Kentucky and the company will
begin writing incidental workers' compensation in some of these states in 1999.

    The following table summarizes, for the periods indicated, the allocation of
Georgia Casualty's net earned premiums for each of its principal product lines:


                                         Year Ended December 31,
                             ------------------------------------------------
                                              (in thousands)
                              1998      1997       1996      1995      1994
                             ------------------------------------------------
Workers' Compensation        $14,344   $12,841    $13,826   $14,954   $11,958
Business Automobile            3,750     4,031      2,550     1,436     1,054
General Liability              1,619     1,387      1,152     1,025     1,065
Property                       2,100     1,657      1,269       887       574
                             ------------------------------------------------
   Total                     $21,813   $19,916    $18,797   $18,302   $14,651
                             ================================================



                                       4
<PAGE>
    Bankers Fidelity

    Bankers  Fidelity,  which  constitutes  the life and  health  operations  of
Atlantic American Corporation,  offers a variety of life and supplemental health
products with a focus on the senior and middle income markets.  Products offered
by Bankers Fidelity include:  ordinary life,  Medicare  supplement,  cancer, and
other  supplemental  health  products.  Medicare  supplement,  offered on both a
standard and  preferred  basis,  accounted for 57.3% of Bankers  Fidelity's  net
premiums in 1998. Life  insurance,  including both whole and term life insurance
policies,  accounted for 34.1% of Bankers  Fidelity's  premiums in 1998. Bankers
Fidelity also offers several of its products, both life and supplemental health,
through payroll deduction services.

    The following table summarizes, for the periods indicated, the allocation of
Bankers  Fidelity's net premiums earned for each of its principal  product lines
followed by a brief description of the principal products.


                                         Year Ended December 31,
--------------------------------------------------------------------------------
                                               (in thousands)
                              1998       1997      1996      1995      1994
--------------------------------------------------------------------------------
Ordinary Life                $10,848    $9,437    $8,937    $7,037    $6,716
Mass Market Life                 900     1,016     1,303     1,260     1,395
--------------------------------------------------------------------------------
   Total Life                 11,748    10,453    10,240     8,297     8,111
--------------------------------------------------------------------------------
Medicare Supplement           19,743    12,534    11,560    11,882    13,347
Cancer, accident and 
  other health                 2,986     3,980     4,178     4,892     5,592
--------------------------------------------------------------------------------
  Total Accident and Health   22,729    16,514    15,738    16,774    18,939
--------------------------------------------------------------------------------

    Total Life and Accident  
      and Health             $34,477   $26,967   $25,978   $25,071   $27,050
================================================================================

    Life Products.  Bankers Fidelity offers  non-participating  individual life
    --------------
insurance policies with a number of available riders and options.

    Medicare  Supplement.  Bankers  Fidelity  currently  markets  7  of  the  10
    ---------------------
standardized  Medicare  supplement  policies  created  under the Omnibus  Budget
Reconciliation Act of 1990 ("OBRA 1990") which are designed to provide insurance
coverage for certain  expenses not covered by the  Medicare  program,  including
copayments and deductibles.

    Cancer,  Accident & Other Health Coverages.  Bankers Fidelity offers several
    -------------------------------------------
policies  providing for payment of benefits in connection  with the treatment of
diagnosed cancer, as well as a number of other policies  including  convalescent
care, accident expense, hospital/surgical and disability.


Marketing

    Casualty Operations

    American Southern.  American Southern's business is marketed through a small
number  of  specialized,   experienced  independent  agents.  Most  of  American
Southern's agents are paid a moderate up-front commission with the potential for
additional  commission by participating in a profit sharing  arrangement that is
directly linked to the profitability of the business generated.  In addition,  a
significant  portion  (approximately  54% of total  written  premium in 1998) of
American  Southern's  premiums are assumed from third parties.  In  arrangements
similar to those with its agents,  the  premium  assumed  from these  parties is
adjusted  based upon the  profitability  of the assumed  business.  During 1998,
American  Southern  formed a 50/50 joint  venture,  American Auto Club Insurance
Agency, LLC, with the AAA Carolinas to market personal  automobile  insurance to
the members of the automobile club.

    Georgia  Casualty.  Georgia  Casualty  is  represented  by a field force of
approximately  100  independent  agents  in the  sale and  distribution  of its
insurance  products.  Each agency is a party to a standard  agency contract that
sets forth the  commission  structure  and other terms and can be  terminated by
either party upon thirty days written  notice.  Georgia  Casualty  also offers a
contingent profit-sharing  arrangement that allows the most profitable agents to
earn  additional  commissions  when specific loss  experience and premium growth
goals  are  achieved.  Marketing  efforts,  directed  by  experienced  marketing
professionals  in  each  state,  are  complemented  by  the  underwriting,  risk
management,  and audit staffs of Georgia  Casualty,  who are available to assist

 
                                      5
<PAGE>
agents in the  presentation  of all  insurance  products  and  services to their
insureds.  Georgia  Casualty  has also begun  marketing  programs  that  include
endorsements from trade organizations and business franchises.

    Bankers Fidelity

    Bankers  Fidelity  markets its policies  through  commissioned,  independent
agents.  In general,  Bankers  Fidelity  enters  contractual  arrangements  with
general  agents who, in turn,  contract with  independent  agents.  The standard
agreements  set forth the commission  arrangements  and are terminable by either
party upon  thirty  days  written  notice.  General  agents  receive an override
commission on sales made by agents contracted by them.

    Management  believes utilizing direct writing experienced agents, as well as
independent  general  agents who recruit  and train  their own  agents,  is cost
effective.  All independent  agents are compensated on a pure commission  basis.
Using  independent  agents also enables  Bankers  Fidelity to expand or contract
their sales forces at any time without incurring significant additional expense.

    Bankers Fidelity has implemented a selective agent qualification process and
had 2,800 licensed agents in 1998. The agents concentrate their sales activities
in either the accident and health or life insurance product lines.  During 1998,
a total of 1,232  agents  wrote  policies  on behalf of  Bankers  Fidelity,  and
approximately  20% of  those  agents  accounted  for 80% of  Bankers  Fidelity's
annualized premium.

    Products of Bankers Fidelity compete directly with products offered by other
insurance  companies,  as agents  may  represent  several  insurance  companies.
Bankers  Fidelity,  in an effort to motivate  agents to market  their  products,
offers the following agency services: a unique lead system, competitive products
and  commission  structures,   efficient  claims  service,   prompt  payment  of
commissions,  simplified  policy  issue  procedures,  periodic  sales  incentive
programs and, in some cases,  protected sales territories consisting of counties
and/or zip codes.  Additionally,  Bankers  Fidelity  has a staff of 19 employees
whose primary  function is to facilitate the activities of the agents and to act
as liaisons between the agents and Bankers Fidelity.

    The company utilizes a distribution  sales system which is centered around a
lead generation plan that rewards qualified agents with leads in accordance with
monthly production goals. In addition,  a protected territory is established for
each qualified  agent,  which  entitles them to all leads  produced  within that
territory.  The  territories  are zip code or county based and encompass  enough
physical  territory to produce a minimum senior  population of 12,000.  To allow
for  the  expense  of lead  generation,  commissions  were  lowered  on  Bankers
Fidelity's senior citizen life plans. In addition,  Bankers Fidelity recruits at
a general agent level rather than at a managing general agent level in an effort
to reduce commission expenses further.

    The  Company  believes  this  distribution  system  solves an  agent's  most
important  dilemma  --  prospecting  -- and  allows  Bankers  Fidelity  to build
long-term  relationships with individual  producers who view Bankers Fidelity as
their primary company. In addition,  management believes that Bankers Fidelity's
product line is less sensitive to competitor pricing and commissions  because of
the perceived  value of the protected  territory and the lead  generation  plan.
Through this  distribution  channel,  production per agent contracted  increased
substantially when compared to Bankers Fidelity's general brokerage division.

Underwriting

    Casualty Operations

    American  Southern  specializes  in the handling of block  accounts  such as
states and  municipalities  that generally are  sufficiently  large to establish
separate  class  experience,  relying  upon the  underwriting  expertise  of its
agents. In contrast,  Georgia Casualty  underwrites all of its accounts in-house
and has  developed  a team  approach  to  underwriting  with  respect to renewal
policies.  The renewal review team includes members of the staff from management
and the  underwriting,  risk  management,  claims and  finance  departments.  By
receiving active input from each of these departments,  the company has improved
its  underwriting  of the risks it continues  to insure.  All  individuals  with
first-hand   information  regarding  an  account  are  invited  to  share  their
information with the team.

    During  the  course  of the  policy  year,  extensive  use is  made  of risk
management  representatives to assist underwriters in identifying and correcting
potential loss exposures and to pre-inspect the majority of the
new  accounts  that are  underwritten.  The  results  of each  product  line are
reviewed  on a  stand-alone  basis.  When the  results  are below  expectations,
management takes appropriate  corrective action which may include raising rates,
reviewing underwriting standards,  reducing commissions paid to agents, altering
or declining to renew accounts at expiration,  and/or terminating  agencies with
an unprofitable book of business.


                                       6
<PAGE>
    American  Southern also acts as a reinsurer with respect to all of the risks
associated  with  certain  automobile  policies  issued by state  administrative
agencies,  naming the state and various local governmental entities as insureds.
Premiums written from such policies constituted 54% of American Southern's gross
premiums written in 1998.  Premiums assumed of $21.0 million,  in 1998 include a
single  state   contract  of  $12.6  million.   Management   believes  that  its
relationship  with all of its  agencies  is good;  however,  the loss of any one
agency as a customer  could  potentially  have a material  adverse effect on the
business or financial condition of the company.

    Georgia  Casualty  continually  evaluates the  industries in which it writes
workers'  compensation and today has a significant book of business in lines and
industries  where the cause of loss is more readily  identifiable and corrective
actions can be implemented  through risk management  programs,  safety policies,
drug-free  workplaces,  pre-employment  drug  testing  and  various  other  risk
reduction programs.

    Bankers Fidelity

    Bankers Fidelity issues a variety of products  including single and multiple
premium life insurance  policies with face amounts of not less than $1,000.  All
life insurance policies are fully underwritten, but the majority are issued with
limited  medical  examinations  subject to maximum  policy  limits  ranging from
$100,000 for persons under age 31 to $25,000 for persons  under age 51.  Medical
examinations  are required in  connection  with the  issuance of life  insurance
policies  in excess of these  limits  and for any amount on  policies  issued to
customers over age 50.  Paramedical  examinations  are ordered at age 41 for all
life  applications of $50,000 and above.  Approximately  95% of the net premiums
earned for life  insurance  sold during 1998 were  derived  from life  insurance
written below Bankers Fidelity's medical limits. For the senior market,  Bankers
Fidelity issues special life products on an  accept-or-reject  basis with a face
amount  from  $15,000  at age 45 to a face  amount of $2,000 at age 85.  Bankers
Fidelity only retains a maximum amount of $50,000 with respect to any individual
life (see "Reinsurance").

    Applications  for  insurance  are  reviewed  as to the  applicant's  age and
medical history and depending upon this information,  additional information may
be  requested  including  the  "Medical  Information  Bureau  Report",   medical
examinations,  statements from doctors,  and, where  indicated,  special medical
tests. If deemed  necessary,  Bankers  Fidelity uses  investigative  services to
supplement and substantiate information.  For certain limited coverages, Bankers
Fidelity has adopted  simplified  policy issue procedures by which the applicant
submits a short application for coverage, typically containing only a few health
related  questions  instead  of  presenting  the  applicant's  complete  medical
history.  At  present,  approximately  20% to 30% of  the  senior  citizen  life
applications,  through  age 79 on the  standard  product and up to age 75 on the
preferred,  are  verified  by  telephone.  For  ages 80 and  above,  100% of the
standard  applicants are verified.  All telephone  verifications are made by the
underwriting department.  Applications not meeting the underwriting criteria are
declined or additional information is requested.



                                       7
<PAGE>
Operating Results

    The following  table sets forth, on a statutory  basis,  the incurred losses
and loss ratios for the Company's  Casualty  Operations and for Bankers Fidelity
during the past five years.

                                       Year Ended December 31,   
--------------------------------------------------------------------------------
                              1998      1997      1996       1995        1994 
--------------------------------------------------------------------------------
                                       (dollars in thousands) 
Casualty Operations (1) 
  WORKERS' COMPENSATION:
    Incurred losses         $ 9,175   $ 6,740   $ 6,645    $ 9,733(2)  $ 7,243
    Loss ratio                64.0%     52.5%     48.1%       65.1%      61.9%
  BUSINESS AUTOMOBILE: 
    Incurred losses         $19,819   $27,237   $23,977    $ 1,227     $   602
    Loss ratio                 63.1%    69.0%     62.6%      85.5%       57.1%
  GENERAL LIABILITY:
    Incurred losses         $ 1,392   $ 1,428   $ 1,242    $(1,238)(2) $ 1,080
    Loss ratio                23.3%     31.3%     38.9%        -        101.3%
  PROPERTY:
    Incurred losses         $ 2,457   $ 1,840   $ 1,700    $   416     $   244
    Loss ratio                48.5%     37.9%     36.0%      47.0%       42.6%
  TOTAL CASUALTY:
    Incurred losses         $32,843   $37,245   $33,564    $10,138     $ 9,169
    Loss ratio                57.8%     60.3%     55.9%      55.4%       63.7%
    Loss adjustment
      expense ratio           12.9%     13.9%     12.4%      15.2%       20.1%
    Expense ratio             29.2%     25.3%     27.8%      31.4%       27.8%
    Combined ratio            99.9%     99.5%     96.1%     102.0%      111.6%

Bankers Fidelity (3)
  MEDICARE SUPPLEMENT:
    Incurred losses         $13,319   $ 7,820   $ 7,136    $ 6,688     $ 7,582
    Loss ratio                67.5%     62.4%     61.7%      57.6%       57.8%
  CANCER, ACCIDENT AND 
    OTHER HEALTH:
    Incurred losses         $   795   $ 1,747   $ 1,752    $ 2,671     $ 3,357
    Loss ratio                26.6%     43.6%     43.5%      56.1%       61.4%
  TOTAL BANKERS FIDELITY:
    Incurred losses         $14,114   $ 9,567   $ 8,888    $ 9,359     $10,939
    Loss ratio                62.1%     58.3%     57.2%      57.2%       58.9%

-----------------------

   (1) Includes American Southern for 1998, 1997 and 1996 only.  
   (2) Includes adjustment to reallocate reserves to workers' compensation.  
   (3) Includes American Independent for three months in 1997 and full year 
       in 1998.


   See "Reserves" for analysis of loss development and reserves.

                                       8
<PAGE>
Policyholder and Claims Services

   The Company believes that prompt,  efficient policyholder and claims services
are essential to its continued success in marketing its insurance  products (see
"Competition").  Additionally,  the  Company  believes  that  its  insureds  are
particularly  sensitive to claim  processing  time and to the  accessibility  of
qualified staff to answer inquiries. Accordingly, the Company's policyholder and
claims services include expeditious disposition of service requests by providing
toll-free access to all customers,  24-hour claim reporting services, and direct
computer  links with some of its largest  accounts.  The Company also utilizes a
state-of-the-art  automatic call distribution  system to insure timely response.
Inbound calls to customer  service  support  groups are  processed  efficiently.
Operational data generated from this system allows  management to further refine
ongoing client service programs and service representative training modules.

   The  Company  supports  a  Customer  Awareness  Program  as the basis for its
customer  service  philosophy.  All  personnel  are required to attend  customer
service  classes.  Hours  have  been  expanded  in all  service  areas  to serve
customers and agents in all time zones.

   Casualty Operations

   American  Southern  and  Georgia  Casualty.  American  Southern  and  Georgia
Casualty  control  their claims  costs by  utilizing an in-house  staff of claim
supervisors  to  investigate,   verify,   negotiate  and  settle  claims.   Upon
notification  of an occurrence  purportedly  giving rise to a claim,  the claims
department conducts a preliminary investigation, determines whether an insurable
event has  occurred  and, if so,  records the claim.  The  companies  frequently
utilize  independent  adjusters and  appraisers  to service claims which require
on-site inspections.

   Bankers Fidelity

   Insureds obtain claim forms by calling the claims department customer service
group.  To shorten claim  processing  time, a letter  detailing  all  supporting
documents that are required to complete a claim for a particular  policy is sent
to the  customer  along  with the  correct  claim  form.  With  respect  to life
policies,  the claim is entered into Bankers  Fidelity's  claims system when the
proper documentation is received.  Properly documented claims are generally paid
within three to nine business  days of receipt.  During 1998,  Bankers  Fidelity
paid  approximately   179,000  claims   aggregating  $19.4  million,   of  which
approximately  174,000  claims  aggregating  $12.2  million  were  for  Medicare
supplement insurance.



                                       9
<PAGE>
Reserves

    The following table sets forth  information  concerning the Company's losses
and  claims  and loss  adjustment  expenses  ("LAE")  reserves  for the  periods
indicated:

                                                   1998        1997
                                                ----------  ----------
         Balance at January 1                    $86,721     $84,074
         Less: Reinsurance recoverables          (24,006)    (26,293)
                                                ----------  ----------
             Net balance at January 1             62,715      57,781
                                                ----------  ----------

         Incurred related to:
             Current year                         63,030      60,252
             Prior years                          (2,606)         21
                                                ----------  ----------
                 Total incurred                   60,424      60,273
                                                ----------  ----------

         Paid related to:
             Current year                         35,566      33,857
             Prior years                          23,430      22,246
                                                ----------  ----------
                 Total paid                       58,996      56,103
                                                ----------  ----------

         Reserves acquired due to acquisition        -           764
                                                ----------  ----------
         Net balance at December 31               64,143      62,715
         Plus:  Reinsurance recoverables          22,625      24,006
                                                ----------  ----------
         Balance at December 31                  $86,768     $86,721
                                                ==========  ==========

    Casualty Operations

    Atlantic American  Corporation's  Casualty Operations maintain loss reserves
representing  estimates of amounts  necessary for payment of losses and LAE. The
Casualty  Operations also maintain  incurred but not reported  reserves and bulk
reserves for future  development.  These loss reserves are  estimates,  based on
known facts and  circumstances  at a given point in time, of amounts the insurer
expects to pay on  incurred  claims.  All  balances  are  reviewed  annually  by
qualified  independent  actuaries.  Reserves  for LAE are  intended to cover the
ultimate  costs of  settling  claims,  including  investigation  and  defense of
lawsuits resulting from such claims. Loss reserves for reported claims are based
on a case-by-case  evaluation of the type of claim involved,  the  circumstances
surrounding the claim, and the policy  provisions  relating to the type of loss.
The LAE for  claims  reported  and claims not  reported  is based on  historical
statistical data and anticipated future development. Inflation and other factors
which may affect  claim  payments  are  implicitly  reflected  in the  reserving
process  through  analysis  of cost  trends and  reviews of  historical  reserve
results;  however,  it is  difficult  to measure  the effect of any one of these
considerations on reserve estimates.

   The  Casualty  Operations  establish  reserves  for claims  based  upon:  (a)
management's estimate of ultimate liability and claim adjusters' evaluations for
unpaid  claims  reported  prior  to the  close  of the  accounting  period,  (b)
estimates of incurred but not reported claims based on past experience,  and (c)
estimates of LAE. The estimated  liability is continually  reviewed and updated,
and  changes  to the  estimated  liability  are  recorded  in the  statement  of
operations in the year in which such changes become known.

    The table on the following page sets forth the  development of balance sheet
reserves for unpaid losses and LAE for the Casualty Operations'  insurance lines
for 1988 through 1998,  including  periods  prior to the Company's  ownership of
American Southern.  The top line of the table represents the estimated amount of
losses and LAE for claims  arising  in all prior  years that were  unpaid at the
balance sheet date for each of the indicated  periods,  including an estimate of
losses that have been  incurred  but not yet  reported.  The  amounts  represent
initial reserve estimates at the respective  balance sheet dates for the current
and all prior years. The next portion of the table shows the cumulative  amounts
paid with respect to claims in each  succeeding  year.  The lower portion of the
table shows the  reestimated  amounts of previously  recorded  reserves based on
experience as of the end of each succeeding year.

    The reserve  estimates are modified as more information  becomes known about
the  frequency  and severity of claims for  individual  years.  The  "cumulative
redundancy or deficiency" for each year represents the aggregate  change in such
year's  estimates  through the end of 1998. In evaluating this  information,  it
should be noted that the amount of the  redundancy  or  deficiency  for any year
represents the cumulative  amount of the changes from initial reserve  estimates
for such  year.  Operations  for any one year are only  affected,  favorably  or
unfavorably,  by the  amount  of the  change  in the  estimate  for  such  year.
Conditions and trends that have affected development of the reserves in the past
may not necessarily  occur in the future.  Accordingly,  it is  inappropriate to
predict future redundancies or deficiencies based on the data in this table.


                                       10
<PAGE>

<TABLE>

                                                            Year ended December 31,
                                                                (in thousands)
                             1998     1997     1996     1995     1994     1993     1992    1991     1990     1989        1988
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>     <C>      <C>      <C>         <C>
Statutory  reserve for      $57,548  $56,712  $53,496  $53,320  $50,154  $48,031  $48,485  $50,808  $52,668   $47,819(1)  $39,036   
  losses & LAE

Cumulative paid as of:
        One year later                17,650   18,899   17,865   16,548   18,106   18,827   22,060   22,837    21,321      21,592
       Two years later                         26,387   25,821   25,280   25,914   27,731   32,560   35,278    33,507      32,352
     Three years later                                  29,884   29,273   31,021   36,786   38,046   40,768    40,891      39,832
      Four years later                                           31,180   33,674   40,295   41,872   44,267    43,745      43,713
      Five years later                                                    35,196   42,498   44,530   47,204    46,183      45,767
       Six years later                                                             43,989   46,523   49,000    48,056      47,880
     Seven years later                                                                      47,927   50,658    49,835      49,704
     Eight years later                                                                               51,809    51,100      51,288
      Nine years later                                                                                         52,239      52,424
       Ten years later                                                                                                     53,335

Ultimate losses and LAE
  reestimated as of:
           End of Year       57,548   56,712   53,496   53,320   50,154   48,031   48,485   50,808   52,668    47,819(1)   39,036
        One year later                50,013   51,103   49,799   46,249   47,021   46,756   53,700   53,676    53,212      47,314
       Two years later                         45,838   46,952   44,850   44,043   45,999   52,670   55,919    54,438      53,998
     Three years later                                  43,507   44,138   45,568   48,446   53,040   55,865    56,064      55,313 
      Four years later                                           41,914   46,638   53,064   52,326   56,514    55,707      56,255
      Five years later                                                    45,094   54,173   56,771   56,648    56,579      56,403
       Six years later                                                             53,574   57,898   60,515    56,984      57,446
     Seven years later                                                                      57,265   61,069    60,641      58,142
     Eight years later                                                                               60,403    61,327      60,791
      Nine years later                                                                                         60,560      61,362
       Ten years later                                                                                                     60,774
      
Cumulative redundancy                $ 6,699  $ 7,658  $ 9,813  $ 8,240  $ 2,937  $(5,089) $(6,457) $(7,735) $(12,741)   $(21,738)
  (deficiency)                                         

-----------------------
<FN>
(1) Restated due to  adjustment  of $4.7 million for  elimination  of structured
    annuities changed to reinsurance in 1990.
</FN>

</TABLE>
                                       11
<PAGE>
    Bankers Fidelity

    Bankers Fidelity  establishes future policy benefits reserves to meet future
obligations under outstanding policies. These reserves are calculated to satisfy
policy and  contract  obligations  as they  mature.  The amount of reserves  for
insurance policies is calculated using assumptions for interest rates, mortality
and  morbidity  rates,   expenses,   and  withdrawals.   Reserves  are  adjusted
periodically  based on  published  actuarial  tables with some  modification  to
reflect  actual  experience  (see  Note 3 of  Notes  to  Consolidated  Financial
Statements for the year ended December 31, 1998).

Reinsurance

    The insurance  subsidiaries  purchase reinsurance from unaffiliated insurers
and  reinsurers  to reduce their  liability on  individual  risks and to protect
against catastrophic losses. In a reinsurance transaction,  an insurance company
transfers, or "cedes," a portion or all of its exposure on insurance policies to
a reinsurer.  The reinsurer  assumes the exposure in return for a portion of the
premiums.  The ceding of insurance  does not legally  discharge the insurer from
primary  liability for the full amount of policies written by it, and the ceding
company incurs a loss if the reinsurer fails to meet its  obligations  under the
reinsurance agreement.

    Casualty Operations

    American Southern. The limits of risks retained by American Southern vary by
type of policy and insured,  and amounts in excess of such limits are reinsured.
The  largest  net amount  insured in any one risk is  $100,000.  Reinsurance  is
generally  maintained  as  follows:  for fire,  inland  marine,  and  commercial
automobile physical damage,  recovery of losses over $40,000 up to $130,000. Net
retentions  for third party  losses are  generally  over $35,000 up to $100,000.
Catastrophe  coverage for all lines  except third party  liability is for 95% of
$6.6 million over $400,000.

    Georgia  Casualty.  Georgia  Casualty's  basic  treaties cover all claims in
excess of $200,000 per person,  per occurrence on casualty losses,  and per risk
on property losses,  up to $10.0 million per casualty claim and $3.0 million per
property claim. An excess catastrophe treaty provides coverage
up to statutory  limits for any one  occurrence  on workers'  compensation.  The
property  lines of coverage  are  protected  with an excess of loss treaty which
affords  recovery for  property  losses in excess of $250,000 up to a maximum of
$3.0 million.  Facultative  arrangements are in place for property accounts with
limits in excess of $3.0 million per risk.

    Bankers Fidelity

    Bankers Fidelity has entered into reinsurance contracts ceding the excess of
their  retention to several  primary  reinsurers.  Maximum  retention by Bankers
Fidelity  on any  one  individual  in the  case of life  insurance  policies  is
$50,000. At December 31, 1998, Bankers Fidelity's  reinsured annualized premiums
totaled $16.9  million of the $275.6  million of life  insurance  then in force,
generally under yearly  renewable term agreements.  Two companies  accounted for
all of such reinsurance: Munich American Reassurance Company ($12.3 million) and
Optimum Reinsurance ($4.6 million).  Certain reinsurance  agreements that are no
longer active for new business  remain in force to cover any claims on a run-off
basis.

Competition

    Casualty Operations

    American  Southern.  The businesses in which American  Southern  engages are
highly competitive.  The principal areas of competition are pricing and service.
Many  competing  property  and  casualty  companies  which have been in business
longer than American Southern have available more diversified lines of insurance
and  have  substantially  greater  financial  resources.   Management  believes,
however, that the policies it sells are competitive with those providing similar
benefits  offered by other  insurers doing business in the states where American
Southern operates.

    Georgia  Casualty.   Georgia   Casualty's   insurance   business  is  highly
competitive.  The  competition can be placed in four  categories:  (1) companies
with higher A.M. Best ratings,  (2) alternative workers'  compensation  markets,
(3)  self-insured  funds,  and (4) insurance  companies  that  actively  solicit
monoline workers' compensation accounts. Georgia Casualty's efforts are directed
in the  following  three  general  categories  where  the  company  has the best
opportunity  to control  exposures and claims:  (1)  manufacturing,  (2) artisan
contractors,  and (3)  service  industries.  Management  believes  that  Georgia
Casualty's  keys to being  competitive  in these  areas are  maintaining  strong
underwriting standards, risk management programs,  writing workers' compensation
coverages as part of the total insurance package,  maintaining and expanding its
loyal network of agents and  development  of new agents in key  territories.  In
addition,  Georgia  Casualty offers quality  customer  service to its agents and
insureds, and provides rehabilitation, medical management, and claims management
services to its insureds.  Georgia Casualty believes that it will continue to be
competitive in the marketplace based on its current strategies and services.


                                       12
<PAGE>
    Bankers Fidelity

    The life and health insurance  business is highly competitive and includes a
large number of insurance  companies,  many of which have substantially  greater
financial resources.  Bankers Fidelity believes that the primary competitors are
the Blue Cross/Blue Shield companies,  AARP, the Prudential Insurance Company of
America, Pioneer Life Insurance Company of Illinois, AFLAC, American Travellers,
Kanawha  Life,  American  Heritage,  Bankers Life and Casualty  Company,  United
American Insurance Corporation,  and Standard Life of Oklahoma. Bankers Fidelity
competes with other insurers on the basis of premium rates, policy benefits, and
service to policyholders.  Bankers Fidelity also competes with other insurers to
attract and retain the allegiance of its independent  agents through  commission
arrangements,  accessibility and marketing assistance, lead programs, and market
expertise.  Bankers Fidelity believes that it competes  effectively on the basis
of policy benefits, services, and market expertise.

Rating

    In  1998,  for  the  first  time,  Atlantic  American  Corporation  and  its
subsidiaries  underwent a rating and review  process by Standard & Poor's.  As a
result of the review, each of the Company's insurance subsidiaries were assigned
a single "A-" counterparty credit and financial strength rating.

    Each year  A.M.  Best  Company,  Inc.  publishes  Best's  Insurance  Reports
("Best's"),  which include  assessments and ratings of all insurance  companies.
Best's ratings,  which may be revised  quarterly,  fall into fifteen  categories
ranging from A++ (Superior) to F (in  liquidation).  Best's ratings are based on
an analysis of the financial  condition and  operations of an insurance  company
compared  to the  industry  in  general.  These  ratings  are not  designed  for
investors  and do not  constitute  recommendations  to buy,  sell,  or hold  any
security.  Ratings are important in the insurance industry, and improved ratings
should have a favorable impact on the ability of the companies to compete in the
marketplace.

    Casualty Operations

    American Southern.  American Southern and its wholly-owned subsidiary, 
American Safety Insurance Company, are each currently rated "A-" (Excellent) by 
A.M. Best.

    Georgia  Casualty.  In  early  1998,  Georgia  Casualty  received  a Best's
rating of "B++" (Very Good).

    Bankers Fidelity

    Bankers  Fidelity.  Bankers Fidelity  maintains  a  Best's  rating  of  "B+"
(Very Good).

    American Independent.  American Independent is currently rated "C++".

Regulation

    In common with all domestic  insurance  companies,  the Company's  insurance
subsidiaries  are subject to regulation and supervision in the  jurisdictions in
which they do business. Statutes typically delegate regulatory, supervisory, and
administrative  powers  to  state  insurance  commissions.  The  method  of such
regulation varies, but regulation relates generally to the licensing of insurers
and their agents,  the nature of and  limitations  on  investments,  approval of
policy forms, reserve requirements,  the standards of solvency which must be met
and  maintained,  deposits of securities for the benefit of  policyholders,  and
periodic  examinations of insurers and trade practices,  among other things. The
Company's  products  generally are subject to rate regulation by state insurance
commissions,  which  require  that certain  minimum  loss ratios be  maintained.
Certain  states  also  have  insurance   holding   company  laws  which  require
registration and periodic reporting by insurance  companies  controlled by other
corporations   licensed   to   transact   business   within   their   respective
jurisdictions.   The  Company's  insurance  subsidiaries  are  subject  to  such
legislation and are registered as controlled  insurers in those jurisdictions in
which  such  registration  is  required.  Such laws vary from state to state but
typically require periodic disclosure  concerning the corporation which controls
the registered  insurers and all subsidiaries of such  corporations,  as well as
prior  notice  to,  or  approval   by,  the  state   insurance   commission   of
intercorporate transfers of assets (including payments of dividends in excess of
specified  amounts by the  insurance  subsidiaries)  within the holding  company
system.

    Most states require that rate schedules and other  information be filed with
the state's insurance regulatory authority,  either directly or through a rating
organization with which the insurer is affiliated.  The regulatory authority may
disapprove  a rate  filing  if it  determines  that the  rates  are  inadequate,
excessive,  or  discriminatory.  The Company  has  historically  experienced  no
significant regulatory resistance to its applications for rate increases.

                                       13
<PAGE>
    A  state  may  require  that  acceptable  securities  be  deposited  for the
protection   either  of  policyholders   located  in  those  states  or  of  all
policyholders.  As of December 31, 1998,  $14.8  million of  securities  were on
deposit  either  directly with various state  authorities  or with third parties
pursuant to various  custodial  agreements on behalf of Bankers Fidelity and the
Casualty Operations.

    Virtually  all of the states in which the Company's  insurance  subsidiaries
are licensed to transact  business  require  participation  in their  respective
guaranty  funds designed to cover claims against  insolvent  insurers.  Insurers
authorized to transact business in these  jurisdictions are generally subject to
assessments of up to 4% of annual direct premiums  written in that  jurisdiction
to pay such claims,  if any. The occurrence and amount of such  assessments  has
increased in recent years.  The likelihood and amount of any future  assessments
cannot be estimated  until an insolvency has occurred.  For the last five years,
the amount incurred by the Company was not material.

NAIC Ratios

    The  National  Association  of  Insurance  Commissioners  (the  "NAIC")  was
established to provide  guidelines to assess the financial strength of insurance
companies for state regulatory purposes. The NAIC conducts annual reviews of the
financial data of insurance  companies  primarily  through the application of 13
financial  ratios  prepared  on a statutory  basis.  The annual  statements  are
submitted to state insurance  departments to assist them in monitoring insurance
companies in their states and to set forth a desirable  range in which companies
should fall in each such ratio.

    The NAIC suggests that insurance companies which fall outside of the "usual"
range in four or more financial ratios are those most likely to require analysis
by state regulators. However, according to the NAIC, it may not be unusual for a
financially  sound company to have several ratios outside the "usual" range, and
in normal years the NAIC expects 15% of the companies it tests to be outside the
"usual" range in four or more categories.

    For the year ended December 31, 1998, American Southern and Bankers Fidelity
were  within  the NAIC  "usual"  range  for all 13  financial  ratios.  American
Independent was outside the "usual" range on four ratios:  net change in capital
and surplus,  net income to total income,  surplus relief and change in premium.
In 1998, the Company ceased writing new business  through  American  Independent
and  transferred  its agency  force to Bankers  Fidelity.  Georgia  Casualty was
outside the "usual" range on one ratio:  investment yield as a result of Georgia
Casualty's large investment in equity securities.

Risk-Based Capital

    RBC is used by rating  agencies and  regulators  as an early warning tool to
identify  weakly  capitalized  companies for the purpose of  initiating  further
regulatory action. The RBC calculation determines the amount of Adjusted Capital
needed  by a company  to avoid  regulatory  action.  "Authorized  Control  Level
Risk-Based  Capital" ("ACL") is calculated;  if a company's  adjusted capital is
200% or lower than ACL, it is subject to  regulatory  action.  At  December  31,
1998, all of the Company's insurance subsidiaries substantially exceeded the RBC
regulatory levels.



                                       14
<PAGE>


Investments

    Investment  income  represents a significant  portion of the Company's total
income.  Insurance  company  investments are subject to state insurance laws and
regulations  which  limit  the  concentration  and  types  of  investments.  The
following  table  provides  information  on the Company's  investments as of the
dates indicated.
<TABLE>
                                                                      December 31,                
------------------------------------------------------------------------------------------------------------------------------------
                                                   1998                  1997                  1996  
------------------------------------------------------------------------------------------------------------------------------------
                                             Amount    Percent     Amount    Percent     Amount    Percent
------------------------------------------------------------------------------------------------------------------------------------
                                                                      (Dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                                     <C>         <C>       <C>         <C>       <C>         <C>
Fixed maturities:

Bonds:
  U.S. Government agencies
    and authorities                        $ 86,535     43.9%    $ 76,701     38.6%    $ 73,097     39.7%
  States, municipalities and
    political subdivisions                    1,490      0.8        2,738      1.4        3,496      1.9
  Public utilities                            1,874      0.9        1,893      1.0        1,505      0.8
  Convertibles and bonds
    with warrants attached                      -        NIL          -        NIL        1,275      0.7
  All other corporate bonds                   9,442      4.8       10,457      5.3       11,562      6.3
  Certificates of deposit                     2,286      1.2          395      0.2          375      0.2
------------------------------------------------------------------------------------------------------------------------------------
    Total fixed maturities(1)               101,627     51.6       92,184     46.5       91,310     49.6
Common and preferred stocks (2)              61,007     30.9       46,876     23.6       37,762     20.5
Mortgage, policy and  student loans (3)       8,119      4.1        9,536      4.8       13,367      7.3
Investments in limited partnerships (4)       4,822      2.4        3,941      2.0          -        -
Real estate                                      46      NIL           46      NIL           46      NIL
Short-term investments (5)                   21,782     11.0       46,167     23.1       41,614     22.6
------------------------------------------------------------------------------------------------------------------------------------
    Total investments                      $197,403    100.0%    $198,750    100.0%    $184,099    100.0%
====================================================================================================================================
__________________

<FN>
   (1) Fixed maturities are carried on the balance sheet at market value.  Total
       cost of fixed  maturities  was $100.6  million as of December  31,  1998,
       $91.1  million as of December 31, 1997,  and $91.6 million as of December
       31, 1996.
   (2) Equity  securities are valued at market.  Total cost of equity securities
       was $33.1  million as of December 31, 1998,  $18.4 million as of December
       31, 1997, and $19.7 million as of December 31, 1996.
   (3) Mortgage  loans and policy  and  student  loans are valued at  historical
       cost.
   (4) Investments  in other  invested  assets  which are  traded  are valued at
       estimated  market value; all other  partnership  interests are carried at
       historical  cost.  Total cost of investments in limited  partnerships was
       $4.8  million as of December 31, 1998 and $4.0 million as of December 31,
       1997.
   (5) Short-term  investments  are valued at cost,  which  approximates  market
       value.
</FN>
</TABLE>

                                       15
<PAGE>
Results of the investment portfolio for periods shown were as follows:

                                                 Year Ended December 31, 
--------------------------------------------------------------------------------
                                              1998       1997        1996 
--------------------------------------------------------------------------------
                                                       (Dollars in thousands)
--------------------------------------------------------------------------------

Average investments(1)                     $199,132    $187,408    $180,816
Net investment income                      $ 11,167    $ 10,916    $ 10,699

Average yield on investments                   5.6%        5.8%        5.9%
Realized investment gains, net             $  2,909    $  1,076    $  1,589


(1) Calculated as the average of the balances at the beginning of the  year  and
    at the end of each of the four segment quarters.

    Management's  investment  strategy is an increased  investment  in short and
medium maturity bonds and common and convertible preferred stocks.

Employees

    The Company and its subsidiaries at December 31, 1998 employed 180 people.

Financial Information By Industry Segment

    Financial   information   concerning   the  Company  and  its   consolidated
subsidiaries by industry segment for the three years ended December 31, 1998, is
set forth on pages 22 and 23 of the 1998 Annual Report to Shareholders, and such
information by industry segment is incorporated herein by reference.

Executive Officers of the Registrant

    The table below and the  information  following the table set forth for each
executive  officer  of  the  Company  as  of  December  31,  1998,  (based  upon
information supplied by each of them) his name, age, positions with the Company,
principal occupation,  and business experience for the past five years and prior
service with the Company.

                                                                  Director or
      Name              Age     Position with the Company        Officer Since
--------------------------------------------------------------------------------

J. Mack Robinson        75      Chairman of the Board                1974
Hilton H. Howell, Jr.   37      Director, President & CEO            1992
Edward L. Rand, Jr.     32      Vice President and Treasurer         1998

    Officers are elected  annually and serve at the  discretion  of the Board of
Directors.

    Mr.  Robinson  has served as Director  and Chairman of the Board since 1974
and  served as  President  and Chief  Executive  Officer  of the  Company  from
September  1988 to May 1995.  In addition,  Mr.  Robinson is a Director of Bull
Run Corporation and Gray Communications Systems, Inc.

    Mr. Howell has been  President and Chief  Executive  Officer of the Company
since May 1995,  and prior thereto  served as Executive  Vice  President of the
Company from  October  1992 to May 1995.  He has been a Director of the Company
since October 1992.  Mr. Howell is the son-in-law of Mr.  Robinson.  He is also
a Director of Bull Run Corporation and Gray Communications Systems, Inc.

    Mr. Rand has served as Vice  President  and  Treasurer of the Company  since
May 1998, prior thereto  he served  as Vice President and Controller from August
1997 to May 1998. He  also serves in the following capacities at subsidiaries of
the  Company,  Treasurer of Self  Insurance  Administrators,  Inc.,  Director of
Georgia Casualty,  and a Director of Bankers Fidelity Life Insurance Company and
American  Independent  Life Insurance  Company.  Prior to joining the Company in
August  1997, he  was Vice President and Controller of United Capitol  Insurance
Company.


                                       16

<PAGE>
Forward-Looking Statements

    Certain of the statements and subject matters  contained herein that are not
based upon historical or current facts deal with or may be impacted by potential
future circumstances and developments,  and should be considered forward-looking
and subject to various risks and uncertainties.  Such forward-looking statements
are made based upon  management's  belief,  as well as  assumptions  made by and
information  currently  available,  to  management  pursuant  to  "safe  harbor"
provisions  of the  Private  Securities  Litigation  Reform  Act of  1995.  Such
statements, and the discussion of such subject areas, involve, and therefore are
qualified  by,  the  inherent  risks  and   uncertainties   surrounding   future
expectations  generally,  and may  materially  differ from the Company's  actual
future  experience  involving any one or more of such subject areas. The Company
has attempted to identify, in context,  certain of the factors that it currently
believes may cause actual future  experience  and results to differ from current
expectations.  The Company's  operations  and results also may be subject to the
effect of other risks and  uncertainties in addition to the relevant  qualifying
factors identified elsewhere herein, including, but not limited to, locality and
seasonality  in the  industries to which the Company  offers its  products,  the
impact of competitive products and pricing,  unanticipated increases in the rate
and number of claims  outstanding,  volatility  in the capital  markets that may
have an impact on the Company's investment portfolio, unanticipated developments
in the  process of  assessing  and  addressing  issues  related to the Year 2000
issue,  the  uncertainty  of general  economic  conditions,  and other risks and
uncertainties  identified  from time to time in the Company's  periodic  reports
filed with the  Securities  and  Exchange  Commission.  Many of such factors are
beyond the Company's ability to control or predict.  As a result,  the Company's
actual financial  condition,  results of operations and stock price could differ
materially  from those expressed in any  forward-looking  statements made by the
Company.  Undue reliance  should not be placed upon  forward-looking  statements
contained   herein.   The  Company  does  not  intend  to  publicly  update  any
forward-looking  statements  that may be made from time to time by, or on behalf
of, the Company.

ITEM 2.  PROPERTIES

    Owned  Properties.  The  Company  owns two  parcels of  unimproved  property
consisting  of  approximately  seven  acres  located  in Fulton  and  Washington
Counties,  Georgia.  At December  31,  1998,  the  aggregate  book value of such
properties was approximately $46,000.

    Leased  Properties.  The Company (with the  exception of American  Southern)
leases space for its principal offices in an office building located in Atlanta,
Georgia, from Delta Life Insurance Company, under leases which expire at various
times from May 31, 2002 to July 31, 2005. Under the current terms of the leases,
the Company  occupies  approximately  54,000 square feet of office space.  Delta
Life  Insurance  Company,  the owner of the  building,  is controlled by J. Mack
Robinson,  Chairman of the Board of  Directors  and largest  shareholder  of the
Company.  The terms of the  leases are  believed  by  Company  management  to be
comparable  to terms  which could be  obtained  by the  Company  from  unrelated
parties for comparable rental property.

    American  Southern  leases  space for its  offices in a building  located in
Atlanta,  Georgia.  The lease term expires January 31, 2000.  Under the terms of
the lease, American Southern occupies approximately 13,700 square feet.

ITEM 3.  LEGAL PROCEEDINGS

Litigation

    The Company and its subsidiaries are involved in various claims and lawsuits
incidental to and in the ordinary course of their businesses.  In the opinion of
management,  such  claims  will not have a material  effect on the  business  or
financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There  were no matters  submitted  to a vote of the  Company's  shareholders
during the quarter ended December 31, 1998.

                                       17
<PAGE>
                                     PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
           MATTERS

    The  Company's  common  stock is traded in the  over-the-counter  market and
quoted on the Nasdaq National Market (Symbol:  AAME). As of March 8, 1999, there
were  5,040  shareholders  of  record.  The  following  table sets forth for the
periods  indicated the high and low sale prices of the Company's common stock as
reported on the Nasdaq National Market.

           Year Ending December 31,           High        Low
--------------------------------------------------------------------------------
           1998
             1st quarter                     $5 1/2      $4 5/8
             2nd quarter                      5 1/16      3 7/8
             3rd quarter                      5 1/4       4
             4th quarter                      4 15/16     3 5/8

           1997
             1st quarter                     $3 3/4      $3 1/16
             2nd quarter                      3 1/4       2 1/2
             3rd quarter                      4 1/8       2 1/2
             4th quarter                      5 1/2       4


    The  Company has not paid  dividends  to its common  shareholders  since the
fourth  quarter of 1988.  Payment  of  dividends  in the  future  will be at the
discretion  of the  Company's  Board  of  Directors  and  will  depend  upon the
financial condition,  capital requirements,  and earnings of the Company as well
as other  factors as the Board of Directors  may deem  relevant.  The  Company's
primary  sources of cash for the payment of  dividends  are  dividends  from its
subsidiaries.  Under  the  Insurance  Code of the State of  Georgia,  cumulative
dividend  payments  to the Parent  Company  by its  insurance  subsidiaries  are
limited to the  accumulated  statutory  earnings of the  insurance  subsidiaries
without  the  prior  approval  of  the  Insurance  Commissioner.  The  Company's
principal  insurance   subsidiaries  had  the  following  accumulated  statutory
earnings  and/or  (deficits) as of December 31, 1998:  Georgia  Casualty - $13.7
million,  American  Southern  - $20.5  million,  Bankers  Fidelity  Life - $17.4
million. The Company has elected to retain its earnings to grow its business and
does not anticipate paying cash dividends on its common stock in the foreseeable
future.

ITEM 6.  SELECTED FINANCIAL DATA

    Selected  financial data of Atlantic  American  Corporation and subsidiaries
for the five year  period  December  31, 1998 is set forth on page 1 of the 1998
Annual Report to Shareholders and is incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

    Management's  discussion and analysis of financial  condition and results of
operations of Atlantic  American  Corporation and  subsidiaries are set forth on
pages 25 to 30 of the 1998 Annual Report to  Shareholders  and are  incorporated
herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under that caption  "Interest Rate and Market Risk" in
the  information  incorporated  by reference in Item 7 above, is incorporated by
reference herein.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated  financial  statements of the Company and related notes are
set forth on pages 10 to 24 of the 1998 Annual  Report to  Shareholders  and are
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

    None.


                                       18
<PAGE>
                                    PART III

With the  exception of  information  relating to the  Executive  Officers of the
Company,  which is provided in Part I hereof,  all information  required by Part
III (Items 10, 11, 12, and 13) is  incorporated  by  reference  to the  sections
entitled "Election of Directors",  "Security Ownership of Management",  "Section
16(a) Beneficial Ownership Compliance",  "Executive Compensation",  and "Certain
Relationships and Related  Transactions"  contained in the Company's  definitive
proxy statement to be delivered in connection with the Company's  Annual Meeting
of Shareholders to be held May 4, 1999.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) List of documents filed as part of this report:

FINANCIAL STATEMENTS

                                                                  Page
                                                                Reference
--------------------------------------------------------------------------------

Consolidated Balance Sheets as of 
  December 31, 1998 and December 31, 1997                         10*
Consolidated Statements of Operations for the 
  Three Years ended  December 31, 1998                            11* 
Consolidated Statements of Shareholders' Equity
  for the Three Years ended December 31, 1998                     12* 
Consolidated Statements of Cash Flows for the Three
  Years ended December 31, 1998                                   13* 
Notes to Consolidated Financial Statements                     14-24* 
Report of Independent Public Accountants                          31*


    * The page references so designated refer to page numbers in the 1998 Annual
      Report to Shareholders of Atlantic American  Corporation,  which pages are
      incorporated  herein by reference.  With the exception of the  information
      specifically incorporated within this Form 10-K, the 1998 Annual Report to
      Shareholders  of Atlantic  American  Corporation is not deemed to be filed
      under the Securities Exchange Act of 1934.


                          FINANCIAL STATEMENT SCHEDULES

            Report of Independent Public Accountants
       II - Condensed financial information of registrant for the three years
            ended December 31, 1998
      III - Supplementary Insurance Information for the three years ended
            December 31, 1998
       IV - Reinsurance for the three years ended December 31, 1998 
       VI - Supplemental Information concerning property-casualty insurance
            operations for the three years ended December 31, 1998

            Schedules  other than those listed above are omitted as they are not
            required or are not applicable, or the required information is shown
            in the financial  statements or notes thereto.  Columns omitted from
            schedules  filed have been omitted  because the  information  is not
            applicable.


                                    EXHIBITS

 3.1      - Restated and Amended  Articles of  Incorporation of the registrant
            [incorporated by reference to Exhibit 3.1 to the  registrant's  Form
            10-Q for the fiscal quarter ended March 31, 1996].

 3.2      - Bylaws of the registrant  [incorporated by reference to Exhibit 3.2
            to the  registrant's  Form  10-K for the year  ended  December  31,
            1993].

10.01     - Lease Contract between registrant and Delta Life Insurance Company
            dated June 1, 1992  [incorporated  by reference to Exhibit  10.11 to
            the registrant's Form 10-K for the year ended December 31, 1992].

10.02     - First  Amendment to Lease  Contract  between  registrant  and Delta
            Life  Insurance  Company  dated  June  1,  1993   [incorporated  by
            reference to Exhibit 10.11.1 to the  registrant's  Form 10Q for the
            quarter ended June 30, 1993].


                                       19
<PAGE>
10.03     - Second  Amendment to Lease  Contract  between  registrant and Delta
            Life  Insurance  Company  dated  August  1, 1994  [incorporated  by
            reference to Exhibit 10.11.2 to the  registrant's  Form 10Q for the
            quarter ended September 30, 1994].

10.04     - Lease Agreement between Georgia Casualty & Surety Company and
            Delta Life Insurance Company dated September 1, 1991 [incorporated
            by reference to Exhibit 10.12 to the registrant's Form 10-K for
            the year ended December 31, 1992].

10.05     - First  Amendment  to Lease  Agreement  between  Georgia  Casualty &
            Surety Company and Delta Life  Insurance  Company dated June 1,1992
            [incorporated  by reference to Exhibit 10.12.1 to the  registrant's
            Form 10-K for the year ended December 31, 1992].

10.06     - Management  Agreement  between  registrant  and Georgia  Casualty &
            Surety  Company dated April 1, 1983  [incorporated  by reference to
            Exhibit  10.16 to the  registrant's  Form  10-K for the year  ended
            December 31, 1986].

10.07*    - Minutes  of  Meeting  of  Board of  Directors  of  registrant  held
            February  25,  1992  adopting   registrant's  1992  Incentive  Plan
            together  with a copy of that  plan,  as adopted  [incorporated  by
            reference to Exhibit  10.21 to the  registrant's  Form 10-K for the
            year ended December 31, 1991].

10.08     - Employment   Agreement  dated   September  2,  1988,   between  the
            registrant and Eugene Choate  [incorporated by reference to Exhibit
            10.31 to the  registrant's  Form 10-K for the year  ended  December
            31, 1992].

10.09     - Loan  and  Security   Agreement  dated  August  26,  1991,  between
            registrant's  three  insurance  subsidiaries  and Leath  Furniture,
            Inc.   [incorporated   by  reference   to  Exhibit   10.38  to  the
            registrant's Form 10-K for the year ended December 31, 1992].

10.10     - First  amendment  to the amended and reissued  mortgage  note dated
            January 1, 1992,  [incorporated  by reference to Exhibit 10.38.1 to
            the registrant's Form 10-K for the year ended December 31, 1992].

10.11     - Intercreditor  Agreement  dated  August  26,  1991,  between  Leath
            Furniture,   Inc.,  the  registrant  and  the  registrant's   three
            insurance subsidiaries  [incorporated by reference to Exhibit 10.39
            to the  registrant's  Form  10-K for the year  ended  December  31,
            1992].

10.12     - Management  Agreement between Registrant and Atlantic American Life
            Insurance  Company  and Bankers  Fidelity  Life  Insurance  Company
            dated July 1, 1993  [incorporated  by reference to Exhibit 10.41 to
            the  registrant's  Form 10-Q for the quarter  ended  September  30,
            1993].

10.13     - Tax   allocation   agreement   dated  January  28,  1994,   between
            registrant   and   registrant's   subsidiaries   [incorporated   by
            reference to Exhibit  10.44 to the  registrant's  Form 10-K for the
            year ended December 31, 1993].

10.14     - Credit   Agreement,   dated  as  of  December  29,  1995,   between
            registrant  and Wachovia  Bank of Georgia,  N.A.  [incorporated  by
            reference  to  Exhibit  99.1 to the  registrant's  Form 8-K,  filed
            January 12, 1996].

13.1        - Those portions of the  registrant's  Annual Report to Shareholders
            for year ended December 31, 1997, that are specifically incorporated
            by reference herein.

21.1      - Subsidiaries of the registrant.

23.1      - Consent of Arthur Andersen LLP, Independent Public Accountants.

28.1      - Form  of  General  Agent's  Contract  of  Atlantic  American  Life
            Insurance  Company  [incorporated  by reference to Exhibit 28 to the
            registrant's Form 10-K for the year ended December 31, 1990].

28.2      - Form of  Agent's  Contract  of  Bankers  Fidelity  Life  Insurance
            Company [incorporated by reference to Exhibit 28 to the registrant's
            Form 10-K for the year ended December 31, 1990].

28.3      - Form of Agency  Contract  of  Georgia  Casualty  & Surety  Company
            [incorporated  by reference to Exhibit 28 to the  registrant's  Form
            10-K for the year ended December 31, 1990].

(b)         Reports on Form 8-K.  None.

*Management  contract,  compensatory  plan or  arrangement  required to be filed
pursuant to, Part IV, Item 14(C) of Form 10-K and Item 601 of Regulation S-K.


                                       20
<PAGE>
SIGNATURES

    Pursuant  to the  requirements  of  Section  13 or 15(d)  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.

                    (Registrant) ATLANTIC AMERICAN CORPORATION


                        By:   /s/                                  
                            ----------------------------------
                            Edward L. Rand, Jr.
                            Vice President and Treasurer

                            Date: March 26, 1999


    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

       Signature                           Title                         Date 

/s/                     
-----------------------------
J. MACK ROBINSON                 Chairman of the Board            March 26, 1999

/s/                     
-----------------------------
HILTON H. HOWELL, JR.            President, Chief Executive 
                                 Officer and Director
                                 (Principal Executive Officer)    March 26, 1999
/s/                     
-----------------------------
EDWARD L. RAND, JR.              Vice President and Treasurer     March 26, 1999

/s/                     
-----------------------------   
EDWARD E. ELSON                  Director                         March 26, 1999

/s/                     
-----------------------------
SAMUEL E. HUDGINS                Director                         March 26, 1999

/s/                     
-----------------------------
D. RAYMOND RIDDLE                Director                         March 26, 1999

/s/                     
-----------------------------
HARRIETT J. ROBINSON             Director                         March 26, 1999

/s/                     
-----------------------------
SCOTT G. THOMPSON                Director                         March 26, 1999

/s/                     
-----------------------------
MARK C. WEST                     Director                         March 26, 1999

/s/                     
-----------------------------
WILLIAM H. WHALEY, M.D.          Director                         March 26, 1999

/s/                     
-----------------------------
DOM H. WYANT                     Director                         March 26, 1999



                                       21
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Atlantic American Corporation:


     We have audited,  in accordance with generally accepted auditing standards,
the  consolidated   financial  statements  of  Atlantic  American   Corporation,
incorporated  by reference in this Form 10-K, and have issued our report thereon
dated March 26, 1999. Our audits of the financial  statements  were made for the
purpose  of  forming  an  opinion  on those  statements  taken  as a whole.  The
financial  statement  schedules listed in Item 14 (a) are the  responsibility of
the Company's  management,  are presented for the purpose of complying  with the
Securities  and  Exchange  Commission's  rules,  and are not  part of the  basic
consolidated  financial  statements.  These schedules have been subjected to the
auditing  procedures  applied  in  the  audits  of  the  consolidated  financial
statements  and, in our  opinion,  fairly  state in all  material  respects  the
financial  data  required  to be set  forth  therein  in  relation  to the basic
consolidated financial statements taken as a whole.






                              /s/                     
                              ---------------------------------------
                              ARTHUR ANDERSEN LLP




Atlanta, Georgia
March 26, 1999







                                       22
<PAGE>
                                                                     Schedule II
                                                                     Page 1 of 3

                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                          ATLANTIC AMERICAN CORPORATION
                              (Parent Company Only)

                                 BALANCE SHEETS
                                 (in thousands)


                                     ASSETS

                                                             December 31,
--------------------------------------------------------------------------------
                                                           1998      1997
--------------------------------------------------------------------------------
     Current assets:
       Cash and short-term investments                  $    130  $    223
       
       Investment in insurance subsidiaries              110,587   107,124
       
       Income taxes receivable from subsidiaries             -         137
       Other assets                                        1,884     2,424
--------------------------------------------------------------------------------
                                                        $112,601  $109,908
================================================================================
      

                      LIABILITIES AND SHAREHOLDERS' EQUITY

     Current liabilities:
       Current portion of long-term debt                $  2,400  $  1,000
       Other payables                                      4,320     3,125
--------------------------------------------------------------------------------
         Total current liabilities                         6,720     4,125

     Income taxes payable to subsidiaries                     64       -
     Long-term debt                                       23,600    27,600
     Shareholders' equity                                 82,217    78,183
--------------------------------------------------------------------------------
                                                        $112,601  $109,908
================================================================================





             The notes to consolidated financial statements are an
                  integral part of these condensed statements.




                                      II-1
<PAGE>
                                                                     Schedule II
                                                                     Page 2 of 3


                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                          ATLANTIC AMERICAN CORPORATION
                              (Parent Company Only)

                            STATEMENTS OF OPERATIONS
                                 (in thousands)



                                               Year Ended December 31,
--------------------------------------------------------------------------------
                                                   1998      1997      1996
--------------------------------------------------------------------------------

     REVENUE
       Fees, rentals and interest
         income from subsidiaries                $ 4,230   $ 3,841   $ 5,662
       Distributed earnings from
         subsidiaries                              7,054    11,209     6,850
       Other                                       1,155        20        94
--------------------------------------------------------------------------------
         Total revenue                            12,439    15,070    12,606

     GENERAL AND ADMINISTRATIVE EXPENSES           6,407     5,305     6,073

     INTEREST EXPENSE                              2,146     2,902     3,292
--------------------------------------------------------------------------------
                                                   3,886     6,863     3,241
     INCOME TAX BENEFIT (1)                        1,703     1,862     2,054
--------------------------------------------------------------------------------
                                                   5,589     8,725     5,295
     EQUITY IN UNDISTRIBUTED EARNINGS OF
       CONSOLIDATED SUBSIDIARIES, NET              2,969      (692)    2,316
--------------------------------------------------------------------------------
       Income from continuing operations           8,558     8,033     7,611
       (Loss) from discontinued                     
         operations, net                             -         -      (4,447)
--------------------------------------------------------------------------------

           Net income                            $ 8,558   $ 8,033   $ 3,164
================================================================================


  (1) Under the terms of its tax-sharing agreement with its subsidiaries, income
      tax  provisions  for the  individual  companies are computed on a separate
      company basis. Accordingly,  the Company's income tax benefit results from
      the  utilization of the parent company  separate return loss to reduce the
      consolidated taxable income of the Company and its subsidiaries.



              The notes to consolidated financial statements are an
                  integral part of these condensed statements.


                                      II-2
<PAGE>
                                                                     Schedule II
                                                                     Page 3 of 3


                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                          ATLANTIC AMERICAN CORPORATION
                              (Parent Company Only)

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)


                                                     Year Ended December 31,
--------------------------------------------------------------------------------
                                                  1998       1997       1996
--------------------------------------------------------------------------------
     CASH  FLOWS FROM OPERATING ACTIVITIES:
       Net income                               $ 8,558    $ 8,033    $ 3,164
       Adjustments to reconcile net income
         to net cash provided by operating 
         activities:
           Realized investment gains             (1,151)       -          -
           Depreciation and amortization            670        591        452
           Equity in undistributed earnings
             of consolidated subsidiaries        (2,969)       692     (2,316)
           Loss from discontinued operations        -          -        4,447
           Change in intercompany taxes             201       (715)      (245)
           Decrease in other liabilities            (11)      (157)      (262)
           Other, net                               186       (245)     2,528
--------------------------------------------------------------------------------
             Net cash provided by 
               operating activities               5,484      8,199      7,768
--------------------------------------------------------------------------------

     CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from sale of Leath
         Furniture, net                             -          -        3,645
       Additions to property and equipment         (305)      (536)    (1,177)
--------------------------------------------------------------------------------
             Net cash (used in) provided
               by investing activities             (305)      (536)     2,468
--------------------------------------------------------------------------------

      CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from issuance of bank financing    -        5,617     11,352
        Preferred stock dividends to 
          affiliated shareholders                  (315)      (315)      (315)
        Purchase of treasury shares              (1,447)      (558)      (338)
        Retirements and payments of
          long-term debt and notes 
          payable to affiliates                  (2,600)   (12,628)   (20,662)
        Redemption of preferred stock            (1,000)       -          -
        Proceeds from exercise of stock 
          options                                    90         62         85
--------------------------------------------------------------------------------
             Net cash (used in) provided                      
               by financing activities           (5,272)    (7,822)    (9,878)
            
--------------------------------------------------------------------------------
      Net increase (decrease) in cash               (93)      (159)       358
      Cash at beginning of year                     223        382         24
--------------------------------------------------------------------------------
      Cash at end of year                       $   130   $    223   $    382  
================================================================================

     Supplemental disclosure:
       Cash paid for interest                   $ 2,143   $  2,958   $  3,763
================================================================================
       Cash paid for income taxes               $   330   $     85   $    116
================================================================================
       Issuance of stock to acquire SIA, Inc.   $    66   $  1,212   $    -
================================================================================




              The notes to consolidated financial statements are an
                  integral part of these condensed statements.

                                      II-3
<PAGE>
<TABLE>                                                                 
                                                                                                                        Schedule III
                                                                                                                        Page 1 of 2


                                               ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                                                    SUPPLEMENTARY INSURANCE INFORMATION
                                                               (in thousands)

                                                                   Future Policy
                                                                  Benefits, Losses                              Other Policy
                                            Deferred              Claims and Loss         Unearned               Claims and 
     Segment                            Acquisition Costs             Reserves            Premiums            Benefits Payable
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                                  <C>                       <C>                     <C>                 <C>
December 31, 1998:
  Bankers Fidelity..........                $13,972                   $ 44,510            $ 2,874                  $ 2,065
  American Southern.........                  1,378                     46,952             11,830                    1,629
  Georgia Casualty..........                  1,531                     34,218              8,267                       32
------------------------------------------------------------------------------------------------------------------------------------
                                            $16,881                   $125,680 (1)        $22,971                  $ 3,726
====================================================================================================================================

December 31, 1997:
  Bankers Fidelity..........                $13,412                   $ 44,070            $ 2,631                  $ 2,001
  American Southern.........                  1,748                     47,783             12,964                    1,962
  Georgia Casualty..........                  1,323                     34,056              8,817                       34
------------------------------------------------------------------------------------------------------------------------------------
                                            $16,483                   $125,909 (2)        $24,412                  $ 3,997
====================================================================================================================================

December 31, 1996:
  Bankers Fidelity..........                $12,237                   $ 40,610            $ 2,135                  $ 1,912
  American Southern.........                  2,131                     44,652             16,481                    1,693
  Georgia Casualty..........                    811                     35,197              6,484                       34
------------------------------------------------------------------------------------------------------------------------------------
                                            $15,179                   $120,459 (3)        $25,100                  $ 3,639
====================================================================================================================================

------------------------------------
<FN>
(1) Includes future policy benefits of $38,912 and losses and claims of $86,768.
(2) Includes future policy benefits of $39,188 and losses and claims of $86,721.
(3) Includes future policy benefits of $36,385 and losses and claims of $84,074.

</FN>
</TABLE>
<PAGE>
<TABLE>
                                                                                                                        Schedule III
                                                                                                                         Page 2 of 2


                                               ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                                                     SUPPLEMENTARY INSURANCE INFORMATION
                                                               (in thousands)


                                                                     Benefits,       Amortization
                                                   Investment     Claims, Losses     of Deferred         Other           Casualty
                                  Premium            Income       and Settlement     Acquisition       Operating         Premiums
Segment                           Revenue           (Losses)*        Expenses           Costs          Expenses          Written 
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                            <C>               <C>           <C>                <C>               <C>               <C>
December 31, 1998:
  Bankers Fidelity..........      $34,477           $ 5,572           $21,494           $ 2,110         $12,895            $   -
  American Southern.........       35,002             4,503            23,135             4,748           5,183             33,869
  Georgia Casualty..........       21,813             3,113            16,216             3,737           3,522             21,266
  Other.....................          -               1,220               -                 -             4,323                -
------------------------------------------------------------------------------------------------------------------------------------
                                  $91,292           $14,408           $60,845           $10,595         $25,923            $55,135
====================================================================================================================================

December 31, 1997:
  Bankers Fidelity..........      $26,967           $ 5,175           $15,576           $ 1,944         $10,044             $   -
  American Southern.........       41,799             4,353            30,182             4,932           4,997              38,282
  Georgia Casualty..........       19,916             2,811            15,260             2,828           2,988              22,280
  Other.....................          -                  (7)              -                 -             4,293                 -
------------------------------------------------------------------------------------------------------------------------------------
                                  $88,682           $12,332           $61,018           $ 9,704         $22,322             $60,562
====================================================================================================================================

December 31, 1996:
  Bankers Fidelity..........      $25,978           $ 5,524           $14,036           $ 2,835         $12,110             $   -
  American Southern.........       41,250             4,284            28,586             5,349           5,108              41,561
  Georgia Casualty..........       18,797             2,921            12,482             2,203           4,905              19,507
  Other.....................          -                  11              (823)              -             4,465                 -
------------------------------------------------------------------------------------------------------------------------------------
                                  $86,025           $12,740           $54,281           $10,387         $26,588             $61,068
====================================================================================================================================

<FN>
* Includes realized investment gains (losses).
</FN>
</TABLE>

<PAGE>
<TABLE>
                                                                                                                         Schedule IV
 

                                               ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                                                                 REINSURANCE
                                                               (in thousands)

                                                                    Ceded To       Assumed
                                                      Direct          Other       From Other          Net
                                                      Amount        Companies     Companies         Amount
------------------------------------------------------------------------------------------------------------------------------------
<S><C>                                              <C>            <C>            <C>             <C>             
      Year ended December 31, 1998:
        Life insurance in force...........          $275,557       $(16,941)        $    -        $258,616
====================================================================================================================================

      Premiums  --
        Bankers Fidelity..................          $ 34,929       $ (2,236)        $ 1,784       $ 34,477
        American Southern.................            19,306         (5,215)         20,911         35,002
        Georgia Casualty..................            24,625         (3,206)            394         21,813
------------------------------------------------------------------------------------------------------------------------------------
           Total premiums.................          $ 78,860       $(10,657)        $23,089       $ 91,292
====================================================================================================================================

      Year ended December 31, 1997:
        Life insurance in force...........          $267,749       $(11,767)        $   -         $255,982
====================================================================================================================================
 
      Premiums  --
        Bankers Fidelity..................          $ 27,427       $   (460)        $   -         $ 26,967
        American Southern.................            22,471         (6,039)         25,367         41,799
        Georgia Casualty..................            22,884         (2,968)            -           19,916
------------------------------------------------------------------------------------------------------------------------------------
           Total premiums.................          $ 72,782       $ (9,467)        $25,367       $ 88,682
====================================================================================================================================

      Year ended December 31, 1996:
        Life insurance in force...........          $220,927       $(10,072)        $   -         $210,855
====================================================================================================================================

      Premiums  --
        Bankers Fidelity..................          $ 26,043       $    (65)        $   -         $ 25,978
        American Southern.................            24,462         (5,770)         22,558         41,250
        Georgia Casualty..................            22,011         (3,214)            -           18,797
------------------------------------------------------------------------------------------------------------------------------------
           Total premiums.................          $ 72,516       $ (9,049)        $22,558       $ 86,025
====================================================================================================================================

</TABLE>
<PAGE>
<TABLE>
                                                                                                                         Schedule VI


                                               ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
                                                     SUPPLEMENTAL INFORMATION CONCERNING
               
                                                   PROPERTY-CASUALTY INSURANCE OPERATIONS
                                                               (in thousands)

                                                                         Claims and Claim
                                                                         Adjustment Expenses
                                                                         Incurred Related To
                                                                         -------------------
                                                                                              Amortization  Paid Claims
                      Deferred                                    Net                          of Deferred   and Claim
                       Policy                Unearned  Earned  Investment Current    Prior     Acquisition   Adjustment  Premiums
  Year Ended         Acquisition  Reserves   Premium   Premium   Income    Year      Years        Costs       Expenses   Written 
  ----------         -----------  --------   -------   -------   ------   -------   --------     -------    ----------   --------
<S><C>               <C>          <C>        <C>       <C>       <C>      <C>       <C>          <C>        <C>          <C>     
December 31, 1998     $ 2,909     $81,170    $20,097   $56,815   $7,616   $47,579   $(7,168)     $ 8,485      $39,699     $55,135
                      =======     =======    =======   =======   ======   =======   ========     =======      =======     =======
                     

December 31, 1997     $ 3,071     $81,839    $21,781   $61,715   $7,165   $49,163   $(3,003)     $ 7,760      $41,883     $60,562
                      =======     =======    =======   =======   ======   =======   ========     =======      =======     =======
   

December 31, 1996     $ 2,942     $79,849    $22,965   $60,047   $7,205   $44,468   $(3,403)     $ 7,552      $41,017     $61,068
                      =======     =======    =======   =======   ======   =======   ========     =======      =======     =======
</TABLE>