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|   | 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)          |   |

|   | Title of each class     | Name of exchange     |   |
|--------|-------------------------|----------------------|--------|
|   | Common Stock, par value | NASDAQ Global Market |   |
|   | $1.00 per share         |                 |   |

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| Large accelerated filer  ̈ | Accelerated filer  ̈ | Non-accelerated filer  ̈                  | Smaller reporting company x |
|--------------------------------|--------------------------|-----------------------------------------------|-----------------------------|
|                           |                     | (Do not check if a smaller reporting company) |                        |

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TABL

|     |                                                                                                              | Page     |
|----------|-------------------------------------------------------------------------------------------------------------------|----------|
| PART I   |                                                                                                              |     |
| Item 1.  | Business                                                                                                          | 3        |
|     | The Company                                                                                                       | 3        |
|     | Marketing                                                                                                         | 4        |
|     | Underwriting                                                                                                      | 5        |
|     | Policyholder and Claims Services                                                                                  | 6        |
|     | Reserves                                                                                                          | 7        |
|     | Reinsurance                                                                                                       | 11       |
|     | Competition                                                                                                       | 11       |
|     | Ratings                                                                                                           | 12       |
|     | Regulation                                                                                                        | 12       |
|     | NAIC Ratios                                                                                                       | 13       |
|     | Risk-Based Capital                                                                                                | 13       |
|     | Investments                                                                                                       | 14       |
|     | Employees                                                                                                         | 15       |
|     | Financial Information by Industry Segment                                                                         | 15       |
|     | Available Information                                                                                             | 15       |
|     | Executive Officers of the Registrant                                                                              | 15       |
|     | Forward-Looking Statements                                                                                        | 16       |
| Item 1A. | Risk Factors                                                                                                      | 16       |
| Item 1B. | Unresolved Staff Comments                                                                                         | 16       |
| Item 2.  | Properties                                                                                                        | 16       |
| Item 3.  | Legal Proceedings                                                                                                 | 17       |
| Item 4.  | Removed and reserved                                                                                              | 17       |
|     |                                                                                                              |     |
| PART II  |                                                                                                              |     |
| Item 5.  | Market for Registrant’s Common Equity, Related Shareholder Mattersand Issuer Purchases of Equity Securities |  17 |
| Item 6.  | Selected Financial Data                                                                                           | 18       |
| Item 7.  | Management's Discussion and Analysis of Financial Condition and Results of Operations                             | 18       |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                        | 27       |
| Item 8.  | Financial Statements and Supplementary Data                                                                       | 28       |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              | 57       |
| Item 9A. | Controls and Procedures                                                                                           | 57       |
| Item 9B. | Other Information                                                                                                 | 57       |
|     |                                                                                                              |     |
| PART III |                                                                                                              |     |
| Item 10. | Directors, Executive Officers and Corporate Governance                                                            | 57       |
| Item 11. | Executive Compensation                                                                                            | 57       |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters                    | 57       |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                         | 57       |
| Item 14. | Principal Accountant Fees and Services                                                                            | 57       |
|     |                                                                                                              |     |
| PART IV  |                                                                                                              |     |
| Item 15. | Exhibits and Financial Statement Schedules                                                                        | 58       |

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Table of Contents

| Item 1. | Business |
|---------|----------|

The Company

|                       |   | Year Ended December 31, |   |
|----------------------------|--------|-------------------------|--------|
|                       |   | 2010                    |   |   | 2009 |   |
|                       |   | (In thousands)          |   |
| Automobile liability       |   | $                       | 14,399 |   |   | $ | 12,299 |   |
| Automobile physical damage |   |                    | 6,883  |   |   |   | 6,679 |   |
| General liability          |   |                    | 5,057  |   |   |   | 6,008 |   |
| Property                   |   |                    | 2,479  |   |   |   | 2,442 |   |
| Surety                     |   |                    | 6,121  |   |   |   | 6,872 |   |
| Total                      |   | $                       | 34,939 |   |   | $ | 34,300 |   |

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Table of Contents

|                      |   | Year Ended December 31, |   |
|---------------------------|--------|-------------------------|--------|
|                      |   | 2010                    |   |   | 2009 |   |
|                      |   | (In thousands)          |   |
| Life insurance            |   | $                       | 11,258 |   |   | $ | 10,616 |   |
| Medicare supplement       |   |                    | 46,816 |   |   |   | 42,679 |   |
| Other accident and health |   |                    | 4,600  |   |   |   | 3,867 |   |
| Total health insurance    |   |                    | 51,416 |   |   |   | 46,546 |   |
| Total                     |   | $                       | 62,674 |   |   | $ | 57,162 |   |

Marketing

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Table of Contents

Underwriting

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Table of Contents

Policyholder and Claims Services

----

Table of Contents

Reserves

|                                      |   | 2010           |    |   | 2009   |   |
|-------------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                      |   | (In thousands) |    |
| Balance at January 1                      |   | $              | 50,112  |   |   | $      | 52,499 |   |
| Less:  Reinsurance recoverables |   |           | (11,489 | )      |   |   | (14,870 | ) |
| Net balance at January 1                  |   |           | 38,623  |   |   |   | 37,629 |   |
|                                      |   |           |    |   |   |   |   |   |
| Incurred related to:                      |   |           |    |   |   |   |   |   |
| Current year                              |   |           | 69,779  |   |   |   | 65,093 |   |
| Prior years (1)                           |   |           | (6,304  | )      |   |   | (7,620 | ) |
| Total incurred                            |   |           | 63,475  |   |   |   | 57,473 |   |
|                                      |   |           |    |   |   |   |   |   |
| Paid related to:                          |   |           |    |   |   |   |   |   |
| Current year                              |   |           | 47,749  |   |   |   | 42,335 |   |
| Prior years                               |   |           | 14,614  |   |   |   | 14,144 |   |
| Total paid                                |   |           | 62,363  |   |   |   | 56,479 |   |
| Net balance at December 31                |   |           | 39,735  |   |   |   | 38,623 |   |
| Plus:  Reinsurance recoverables |   |           | 14,226  |   |   |   | 11,489 |   |
| Balance at December 31                    |   | $              | 53,961  |   |   | $      | 50,112 |   |

|   | (1) | Favorable loss development from property and casualty operations for the years ended December 31, 2010 and 2009 was $5.4 million and $6.7 million, respectively. See Note 3 of Notes of Consolidated Financial Statements. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|                                 |   | Case           |   |   | IBNR   |   |   | Total  |   |
|--------------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   | (In thousands) |   |
| Business automobile                  |   | $              | 11,998 |   |   | $      | 9,723  |   |   | $ | 21,721 |   |
| Personal automobile/physical damage  |   |           | 1,133  |   |   |   | 342    |   |   |   | 1,475 |   |
| General & other liability        |   |           | 4,998  |   |   |   | 8,829  |   |   |   | 13,827 |   |
| Other lines (including life)         |   |           | 4,331  |   |   |   | 5,010  |   |   |   | 9,341 |   |
| Medicare supplement                  |   |           | 142    |   |   |   | 5,869  |   |   |   | 6,011 |   |
| Unallocated loss adjustment reserves |   |           | -      |   |   |   | 1,586  |   |   |   | 1,586 |   |
| Total reserves for losses and claims |   | $              | 22,602 |   |   | $      | 31,359 |   |   | $ | 53,961 |   |

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Table of Contents

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Table of Contents

|                                       |   | Year Ended December 31, |   |
|--------------------------------------------|--------|-------------------------|--------|
|                                       |   | 2010                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |   | 2002 |   |   | 2001 |   |   | 2000 |   |
|                                       |   | (In thousands)          |   |
| Reserve for Losses and LAE                 |   | $                       | 46,092 |   |   | $ | 42,248 |   |   | $ | 44,928 |   |   | $ | 43,994 |   |   | $ | 45,655 |   |   | $ | 43,593 |   |   | $ | 42,310 |   |   | $ | 39,042 |   |   | $ | 44,428 |   |   | $ | 46,242 |   |   | $ | 48,350 |   |
|                                       |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative paid as of:                     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One year later                             |   |                    |   |   |   |   | 10,486 |   |   |   | 13,627 |   |   |   | 11,630 |   |   |   | 18,010 |   |   |   | 14,254 |   |   |   | 16,521 |   |   |   | 13,772 |   |   |   | 15,825 |   |   |   | 18,093 |   |   |   | 20,682 |   |
| Two years later                            |   |                    |   |   |   |   |   |   |   |   | 19,003 |   |   |   | 21,187 |   |   |   | 24,793 |   |   |   | 23,967 |   |   |   | 24,217 |   |   |   | 22,202 |   |   |   | 23,933 |   |   |   | 26,194 |   |   |   | 31,687 |   |
| Three years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   | 23,993 |   |   |   | 29,338 |   |   |   | 27,235 |   |   |   | 28,775 |   |   |   | 26,673 |   |   |   | 28,487 |   |   |   | 31,257 |   |   |   | 35,865 |   |
| Four years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 30,853 |   |   |   | 29,179 |   |   |   | 31,019 |   |   |   | 28,645 |   |   |   | 31,398 |   |   |   | 33,683 |   |   |   | 37,223 |   |
| Five years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 30,629 |   |   |   | 31,594 |   |   |   | 30,257 |   |   |   | 32,820 |   |   |   | 35,134 |   |   |   | 38,616 |   |
| Six years later                            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 32,149 |   |   |   | 30,447 |   |   |   | 34,238 |   |   |   | 35,610 |   |   |   | 39,166 |   |
| Seven years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 30,616 |   |   |   | 34,288 |   |   |   | 36,814 |   |   |   | 39,538 |   |
| Eight years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 34,418 |   |   |   | 36,854 |   |   |   | 39,603 |   |
| Nine years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 36,984 |   |   |   | 39,627 |   |
| Ten years later                            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 39,758 |   |
|                                       |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ultimate losses and LAE reestimated as of: |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| End of year                                |   |                    | 46,092 |   |   |   | 42,248 |   |   |   | 44,928 |   |   |   | 43,994 |   |   |   | 45,655 |   |   |   | 43,593 |   |   |   | 42,310 |   |   |   | 39,042 |   |   |   | 44,428 |   |   |   | 46,242 |   |   |   | 48,350 |   |
| One year later                             |   |                    |   |   |   |   | 32,563 |   |   |   | 31,649 |   |   |   | 33,663 |   |   |   | 35,590 |   |   |   | 34,897 |   |   |   | 37,280 |   |   |   | 35,706 |   |   |   | 42,235 |   |   |   | 39,628 |   |   |   | 46,778 |   |
| Two years later                            |   |                    |   |   |   |   |   |   |   |   | 28,386 |   |   |   | 29,903 |   |   |   | 34,163 |   |   |   | 32,929 |   |   |   | 34,108 |   |   |   | 34,779 |   |   |   | 40,099 |   |   |   | 40,249 |   |   |   | 43,104 |   |
| Three years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   | 29,077 |   |   |   | 33,499 |   |   |   | 31,560 |   |   |   | 33,338 |   |   |   | 31,710 |   |   |   | 39,260 |   |   |   | 38,877 |   |   |   | 42,208 |   |
| Four years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 32,753 |   |   |   | 32,043 |   |   |   | 33,370 |   |   |   | 31,224 |   |   |   | 37,163 |   |   |   | 39,339 |   |   |   | 41,503 |   |
| Five years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 32,085 |   |   |   | 33,090 |   |   |   | 31,049 |   |   |   | 37,133 |   |   |   | 39,067 |   |   |   | 41,490 |   |
| Six years later                            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 32,960 |   |   |   | 31,203 |   |   |   | 36,914 |   |   |   | 39,484 |   |   |   | 41,600 |   |
| Seven years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 31,246 |   |   |   | 37,008 |   |   |   | 39,331 |   |   |   | 41,822 |   |
| Eight years later                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 37,149 |   |   |   | 39,405 |   |   |   | 41,652 |   |
| Nine years later                           |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 39,583 |   |   |   | 41,735 |   |
| Ten years later                            |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 41,914 |   |
|                                       |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative redundancy                      |   |                    |   |   |   | $ | 9,685 |   |   | $ | 16,542 |   |   | $ | 14,917 |   |   | $ | 12,902 |   |   | $ | 11,508 |   |   | $ | 9,350 |   |   | $ | 7,796 |   |   | $ | 7,279 |   |   | $ | 6,659 |   |   | $ | 6,436 |   |
|                                       |   |                    |   |   |   |   | 22.9 | % |   |   | 36.8 | % |   |   | 33.9 | % |   |   | 28.3 | % |   |   | 26.4 | % |   |   | 22.1 | % |   |   | 20.0 | % |   |   | 16.4 | % |   |   | 14.4 | % |   |   | 13.3 | % |

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Table of Contents

Reinsurance

Competition

----

Table of Contents

Ratings

Regulation

----

Table of Contents

NAIC 

Risk-Based Capital

----

Table of Contents

Investments

|                                              |   | December 31,           |    |
|---------------------------------------------------|--------|------------------------|---------|
|                                              |   | 2010                   |    |   | 2009 |   |
|                                              |   | Amount                 |    |   | Percent |   |   | Amount |   |   | Percent |   |
|                                              |   | (Dollars in thousands) |    |
| Fixed maturity securities:                        |   |                   |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies and authorities          |   | $                      | 46,630  |   |   |   | 25.3 | % |   | $ | 124,392 |   |   |   | 63.7 | % |
| States, municipalities and political subdivisions |   |                   | 21,007  |   |   |   | 11.4 |   |   |   | - |   |   |   | - |   |
| Public utilities(5)                               |   |                   | 14,732  |   |   |   | 8.0 |   |   |   | 12,607 |   |   |   | 6.5 |   |
| All other corporate bonds(5)                      |   |                   | 81,635  |   |   |   | 44.2 |   |   |   | 39,079 |   |   |   | 20.0 |   |
| Redeemable preferred stock                        |   |                   | 7,644   |   |   |   | 4.1 |   |   |   | 7,882 |   |   |   | 4.0 |   |
| Certificates of deposit                           |   |                   | -       |   |   |   | 0.0 |   |   |   | 100 |   |   |   | 0.0 |   |
| Total fixed maturity securities(1)                |   |                   | 171,648 |   |   |   | 93.0 |   |   |   | 184,060 |   |   |   | 94.2 |   |
| Common and non-redeemable preferred stocks(2)     |   |                   | 8,524   |   |   |   | 4.6 |   |   |   | 6,914 |   |   |   | 3.6 |   |
| Policy and student loans(3)                       |   |                   | 2,200   |   |   |   | 1.2 |   |   |   | 2,139 |   |   |   | 1.1 |   |
| Other invested assets(4)                          |   |                   | 980     |   |   |   | 0.5 |   |   |   | 1,021 |   |   |   | 0.5 |   |
| Real estate                                       |   |                   | 38      |   |   |   | 0.0 |   |   |   | 38 |   |   |   | 0.0 |   |
| Investments in unconsolidated trusts              |   |                   | 1,238   |   |   |   | 0.7 |   |   |   | 1,238 |   |   |   | 0.6 |   |
| Total investments                                 |   | $                      | 184,628 |   |   |   | 100.0 | % |   | $ | 195,410 |   |   |   | 100.0 | % |

|   | (1) | Fixed maturity securities are carried on the balance sheet at estimated fair value.  Certain fixed maturity securities do not have publicly quoted prices, and are carried at estimated fair value as determined by management.  Total cost of fixed maturity securities was $171.9 million as of December 31, 2010 and $189.1 million as of December 31, 2009. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Equity securities are carried on the balance sheet at estimated fair value.  Total cost of equity securities was $10.0 million as of December 31, 2010 and $8.6 million as of December 31, 2009. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Policy and student loans are valued at historical cost. |
|--------|-----|---------------------------------------------------------|

|   | (4) | Investments in other invested assets are accounted for using the equity method. Total cost of other invested assets was $1.0 million as of December 31, 2010 and 2009. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Certain reclassifications have been made to the 2009 balances to conform to the current year presentation. |
|--------|-----|------------------------------------------------------------------------------------------------------------|

|                              |   | Year Ended December 31, |    |
|-----------------------------------|--------|-------------------------|---------|
|                              |   | 2010                    |    | 2009 |   |
|                              |   | (Dollars in thousands)  |    |
| Average investments(1)            |   | $                       | 219,503 |   |   | $ | 219,755 |   |
| Net investment income             |   |                    | 9,579   |   |   |   | 10,554 |   |
| Average yield on investments      |   |                    | 4.4     | % |   |   | 4.8 | % |
| Realized investment gains, net(2) |   |                    | 1,571   |   |   |   | 273 |   |

|   | (1) | Calculated as the average of cash and investment balances (at amortized cost) at the beginning of the year and at the end of each of the succeeding four quarters. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes impairment charges of $0.1 million in 2009 primarily related to the write-down in the value of certain bonds, preferred and common stocks.  See Note 2 of Notes to Consolidated Financial Statements. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

Employees

Information 

Available Information

Executive Officers of the Registrant

| Name                  |   | Age |   | Positions with the Company                 |   | Director orOfficer Since |
|-----------------------|--------|-----|--------|--------------------------------------------|--------|--------------------------|
| Hilton H. Howell, Jr. |   | 48  |   | Chairman of the Board, President & CEO |   | 1992                     |
| John G. Sample, Jr.   |   | 54  |   | Senior Vice President & CFO            |   | 2002                     |

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Table of Contents

Forward-Looking Statements

| Item 1A. | Risk Factors |
|----------|--------------|

| Item 1B. | Unresolved Staff Comments |
|----------|---------------------------|

| Item 2. | Properties |
|---------|------------|

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Table of Contents

| Item 3. | Legal Proceedings |
|---------|-------------------|

| Item 4. | Removed and reserved |
|---------|----------------------|

| Item 5. | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
|---------|--------------------------------------------------------------------------------------------------------------------|

| Year Ended December 31, |   | High   |   |   | Low    |   |
|-------------------------|--------|--------|--------|--------|--------|--------|
|                    |   |   |   |   |   |   |
| 2010                    |   |   |   |   |   |   |
| 1st quarter             |   | $      | 1.60   |   |   | $      | 1.15 |   |
| 2nd quarter             |   |   | 1.99   |   |   |   | 1.06 |   |
| 3rd quarter             |   |   | 1.92   |   |   |   | 1.15 |   |
| 4th quarter             |   |   | 2.05   |   |   |   | 1.43 |   |
| 2009                    |   |   |   |   |   |   |   |   |
| 1st quarter             |   | $      | 0.97   |   |   | $      | 0.46 |   |
| 2nd quarter             |   |   | 0.99   |   |   |   | 0.45 |   |
| 3rd quarter             |   |   | 1.20   |   |   |   | 0.64 |   |
| 4th quarter             |   |   | 1.72   |   |   |   | 1.00 |   |

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Table of Contents

| Period                               |   | Total Number of Shares Purchased |   |   | Average Price Paid per Share |   |   | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |   |
|--------------------------------------|--------|----------------------------------|--------|--------|------------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
| October 1 – October 31, 2010   |   |                             | 5,756  |   |                         | $      | 1.74   |                                                                             |   |   | 5,756                                                                          |   |   |   | 449,500 |   |
| November 1 – November 30, 2010 |   |                             | 200    |   |                         |   | 2.08   |                                                                             |   |   | 200                                                                            |   |   |   | 449,300 |   |
| December 1 – December 31, 2010 |   |                             | 11,971 |   |                         |   | 1.96   |                                                                             |   |   | 11,971                                                                         |   |   |   | 437,329 |   |
| Total                                |   |                             | 17,927 |   |                         | $      | 1.89   |                                                                             |   |   | 17,927                                                                         |   |   |   |   |   |

| Item 6. | Selected Financial Data |
|---------|-------------------------|

| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

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|                              |   |                    |    |
|-----------------------------------|--------|-------------------------|---------|
|                              |   | Year Ended December 31, |    |
|                              |   | 2010                    |    |   | 2009 |   |
|                              |   | (In thousands)          |    |
| Revenue                           |   |                    |    |   |   |   |
| Property and Casualty:            |   |                    |    |   |   |   |
| American Southern                 |   | $                       | 39,607  |   |   | $ | 39,172 |   |
| Life and Health:                  |   |                    |    |   |   |   |   |   |
| Bankers Fidelity                  |   |                    | 68,525  |   |   |   | 63,075 |   |
| Corporate and Other               |   |                    | 1,069   |   |   |   | 463 |   |
| Total revenue                     |   | $                       | 109,201 |   |   | $ | 102,710 |   |
| Income (loss) before income taxes |   |                    |    |   |   |
| Property and Casualty:            |   |                    |    |   |   |   |   |   |
| American Southern                 |   | $                       | 4,698   |   |   | $ | 4,782 |   |
| Life and Health:                  |   |                    |    |   |   |   |   |   |
| Bankers Fidelity                  |   |                    | 3,186   |   |   |   | 2,984 |   |
| Corporate and Other               |   |                    | (4,951  | ) |   |   | (6,416 | ) |
| Income before income taxes        |   | $                       | 2,933   |   |   | $ | 1,350 |   |
| Net income (loss)                 |   | $                       | 2,493   |   |   | $ | (1,207 | ) |

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|                                    |   | Year Ended December 31, |   |
|-----------------------------------------|--------|-------------------------|--------|
|                                    |   | 2010                    |   |   | 2009 |   |
|                                    |   | (Dollars in thousands)  |   |
| Gross written premiums                  |   | $                       | 43,505 |   |   | $ | 39,066 |   |
| Ceded premiums                          |   |                    | (5,505 | ) |   |   | (6,207 | ) |
| Net written premiums                    |   | $                       | 38,000 |   |   | $ | 32,859 |   |
| Net earned premiums                     |   | $                       | 34,939 |   |   | $ | 34,300 |   |
| Net losses and loss adjustment expenses |   |                    | 21,208 |   |   |   | 18,829 |   |
| Underwriting expenses                   |   |                    | 13,701 |   |   |   | 15,561 |   |
| Underwriting income (loss)              |   | $                       | 30     |   |   | $ | (90 | ) |
| Loss ratio                              |   |                    | 60.7   | % |   |   | 54.9 | % |
| Expense ratio                           |   |                    | 39.2   |   |   |   | 45.4 |   |
| Combined ratio                          |   |                    | 99.9   | % |   |   | 100.3 | % |

|                                                                        |   | Year Ended December 31, |   |
|-----------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                        |   | 2010                    |   |   | 2009 |   |
|                                                                        |   | (In thousands)          |   |
| Automobile liability                                                        |   | $                       | 14,399 |   |   | $ | 12,299 |   |
| Automobile physical damage                                                  |   |                    | 6,883  |   |   |   | 6,679 |   |
| General liability                                                           |   |                    | 5,057  |   |   |   | 6,008 |   |
| Property                                                                    |   |                    | 2,479  |   |   |   | 2,442 |   |
| Surety                                                                      |   |                    | 6,121  |   |   |   | 6,872 |   |
|          Total earned premiums |   | $                       | 34,939 |   |   | $ | 34,300 |   |

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|                          |   | Year Ended December 31, |   |
|-------------------------------|--------|-------------------------|--------|
|                          |   | 2010                    |   |   | 2009 |   |
|                          |   | (In thousands)          |   |
| Medicare supplement           |   | $                       | 46,816 |   |   | $ | 42,679 |   |
| Other health products         |   |                    | 4,600  |   |   |   | 3,867 |   |
| Life insurance                |   |                    | 11,258 |   |   |   | 10,616 |   |
| Total earned premiums         |   |                    | 62,674 |   |   |   | 57,162 |   |
|                          |   |                    |   |   |   |   |   |   |
| Insurance benefits and losses |   |                    | 45,646 |   |   |   | 41,955 |   |
| Underwriting expenses         |   |                    | 19,693 |   |   |   | 18,136 |   |
| Total expenses                |   |                    | 65,339 |   |   |   | 60,091 |   |
| Underwriting loss             |   | $                       | (2,665 | ) |   | $ | (2,929 | ) |

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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
|----------|------------------------------------------------------------|

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| Item 8. | Financial Statements and Supplementary Data |
|---------|---------------------------------------------|

|                                                                                                                  | Page   |
|-----------------------------------------------------------------------------------------------------------------------|--------|
| ATLANTIC AMERICAN CORPORATION                                                                                         |   |
|                                                                                                                  |   |
| Report of Independent Registered Public Accounting Firm                                                               | 29     |
|                                                                                                                  |   |
| Consolidated Balance Sheets as of December 31, 2010 and 2009                                                          | 30     |
|                                                                                                                  |   |
| Consolidated Statements of Operations for each of the two years in the period ended December 31, 2010                 | 31     |
|                                                                                                                  |   |
| Consolidated Statements of Shareholders’ Equity for each of the two years in the period ended December 31, 2010 | 32     |
|                                                                                                                  |   |
| Consolidated Statements of Cash Flows for each of the two years in the period ended December 31, 2010                 | 33     |
|                                                                                                                  |   |
| Notes to Consolidated Financial Statements                                                                            | 34     |

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|                                                                                                                 |   | December 31,                                  |    |
|----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                                                 |   | 2010                                          |    |   | 2009 |   |
|                                                                                                                 |   | (Dollars in thousands, except per share data) |    |
| ASSETS                                                                                                               |   |
| Cash and cash equivalents                                                                                            |   | $                                             | 28,325  |   |   | $ | 20,129 |   |
| Investments                                                                                                          |   |                                          | 184,628 |   |   |   | 195,410 |   |
| Receivables:                                                                                                         |   |                                          |    |   |   |   |   |   |
| Reinsurance                                                                                                          |   |                                          | 14,301  |   |   |   | 11,489 |   |
| Investment sales pending settlement                                                                                  |   |                                          | 15,438  |   |   |   | - |   |
| Insurance premiums and other, net of allowance for doubtful accounts of $442 and $533 in 2010 and 2009, respectively |   |                                          | 7,051   |   |   |   | 6,023 |   |
| Deferred income taxes, net                                                                                           |   |                                          | 3,228   |   |   |   | 6,041 |   |
| Deferred acquisition costs                                                                                           |   |                                          | 21,239  |   |   |   | 19,453 |   |
| Other assets                                                                                                         |   |                                          | 1,228   |   |   |   | 1,413 |   |
| Goodwill                                                                                                             |   |                                          | 2,128   |   |   |   | 2,128 |   |
| Total assets                                                                                                         |   | $                                             | 277,566 |   |   | $ | 262,086 |   |

| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                   |   |
|--------------------------------------------------------------------------------------------------------------|--------|
| Insurance reserves and policyholder funds                                                                    |   | $ | 137,902 |   |   | $ | 129,213 |   |
| Accounts payable and accrued expenses                                                                        |   |   | 15,733 |   |   |   | 14,165 |   |
| Debt payable                                                                                                 |   |   | 41,238 |   |   |   | 41,238 |   |
| Total liabilities                                                                                            |   |   | 194,873 |   |   |   | 184,616 |   |
| Commitments and contingencies  (Note 8)                                                            |   |   |   |   |   |   |   |   |
| Shareholders' equity:                                                                                        |   |   |   |   |   |   |   |   |
| Preferred stock, $1 par, 4,000,000 shares authorized;                                                        |   |   |   |   |   |   |   |   |
| Series D preferred, 70,000 shares issued and outstanding; $7,000 redemption value                            |   |   | 70 |   |   |   | 70 |   |
| Common stock, $1 par, 50,000,000 shares authorized;                                                          |   |   |   |   |   |   |   |   |
| 22,373,900 shares issued; 22,257,035 shares and 22,291,310 shares outstanding in 2010 and 2009, respectively |   |   | 22,374 |   |   |   | 22,374 |   |
| Additional paid-in capital                                                                                   |   |   | 57,129 |   |   |   | 57,129 |   |
| Retained earnings                                                                                            |   |   | 5,389 |   |   |   | 3,404 |   |
| Accumulated other comprehensive loss                                                                         |   |   | (2,107 | ) |   |   | (5,405 | ) |
| Treasury stock, at cost, 116,865 shares in 2010 and 82,590 shares in 2009                                    |   |   | (162 | ) |   |   | (102 | ) |
| Total shareholders' equity                                                                                   |   |   | 82,693 |   |   |   | 77,470 |   |
| Total liabilities and shareholders' equity                                                                   |   | $ | 277,566 |   |   | $ | 262,086 |   |

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|                                         |   | Year Ended December 31,                       |    |
|----------------------------------------------|--------|-----------------------------------------------|---------|
|                                         |   | 2010                                          |    |   | 2009 |   |
|                                         |   | (Dollars in thousands, except per share data) |    |
| Revenue:                                     |   |                                          |    |   |   |   |
| Insurance premiums                           |   | $                                             | 97,613  |   |   | $ | 91,462 |   |
| Investment income                            |   |                                          | 9,737   |   |   |   | 10,688 |   |
| Realized investment gains, net               |   |                                          | 1,571   |   |   |   | 273 |   |
| Other income                                 |   |                                          | 280     |   |   |   | 287 |   |
| Total revenue                                |   |                                          | 109,201 |   |   |   | 102,710 |   |
|                                         |   |                                          |    |   |   |   |   |   |
| Benefits and expenses:                       |   |                                          |    |   |   |   |   |   |
| Insurance benefits and losses incurred       |   |                                          | 66,854  |   |   |   | 60,784 |   |
| Commissions and underwriting expenses        |   |                                          | 28,099  |   |   |   | 28,379 |   |
| Interest expense                             |   |                                          | 2,612   |   |   |   | 2,756 |   |
| Other                                        |   |                                          | 8,703   |   |   |   | 9,441 |   |
| Total benefits and expenses                  |   |                                          | 106,268 |   |   |   | 101,360 |   |
|                                         |   |                                          |    |   |   |   |   |   |
| Income before income taxes                   |   |                                          | 2,933   |   |   |   | 1,350 |   |
| Income tax expense                           |   |                                          | 440     |   |   |   | 2,557 |   |
| Net income (loss)                            |   |                                          | 2,493   |   |   |   | (1,207 | ) |
| Preferred stock dividends                    |   |                                          | (508    | ) |   |   | (508 | ) |
| Net income (loss) applicable to common stock |   | $                                             | 1,985   |   |   | $ | (1,715 | ) |
| Basic earnings (loss) per common share       |   | $                                             | .09     |   |   | $ | (.08 | ) |
| Diluted earnings (loss) per common share     |   | $                                             | .09     |   |   | $ | (.08 | ) |

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|                                                                      |   | PreferredStock         |   |   | CommonStock |   |   | AdditionalPaid-InCapital |   |   | Retained Earnings |   |   | AccumulatedOtherComprehensiveLoss |   |   | TreasuryStock |   |   | Total  |   |
|---------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------|--------|--------|--------------------------|--------|--------|-------------------|--------|--------|-----------------------------------|--------|--------|---------------|--------|--------|--------|--------|
|                                                                      |   | (Dollars in thousands) |   |
| Balance, December 31, 2008                                                |   | $                      | 70     |   |        | $      | 22,374 |                     |   | $      | 57,107            |   |   | $                                 | 5,119  |   |          | $      | (9,200 | )      |   | $ | (56 | ) |   | $ | 75,414 |   |
| Comprehensive income:                                                     |   |                   |   |   |        |   |   |                     |   |   |              |   |   |                              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                  |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | (1,207 | )      |          |   | -      |   |   |   | - |   |   |   | (1,207 | ) |
| Decrease in unrealized investment losses                                  |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | 4,925  |   |   |   | - |   |   |   | 4,925 |   |
| Fair value adjustment to derivative financial instrument                  |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | 538    |   |   |   | - |   |   |   | 538 |   |
| Minimum pension liability adjustment                                      |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | 375    |   |   |   | - |   |   |   | 375 |   |
| Deferred income tax attributable  to other comprehensive income |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | (2,043 | )      |   |   | - |   |   |   | (2,043 | ) |
| Total comprehensive income                                                |   |                   |   |   |        |   |   |                     |   |   |              |   |   |                              |   |   |          |   |   |   |   |   |   |   |   |   | 2,588 |   |
| Dividends on preferred stock                                              |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | (508   | )      |          |   | -      |   |   |   | - |   |   |   | (508 | ) |
| Amortization of unearned compensation                                     |   |                   | -      |   |        |   | -      |                     |   |   | 22                |   |   |                              | -      |   |          |   | -      |   |   |   | - |   |   |   | 22 |   |
| Purchase of 40,777 shares for treasury                                    |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | -      |   |   |   | (46 | ) |   |   | (46 | ) |
| Balance, December 31, 2009                                                |   |                   | 70     |   |        |   | 22,374 |                     |   |   | 57,129            |   |   |                              | 3,404  |   |          |   | (5,405 | )      |   |   | (102 | ) |   |   | 77,470 |   |
| Comprehensive income:                                                     |   |                   |   |   |        |   |   |                     |   |   |              |   |   |                              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | 2,493  |   |          |   | -      |   |   |   | - |   |   |   | 2,493 |   |
| Decrease in unrealized investment losses                                  |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | 5,080  |   |   |   | - |   |   |   | 5,080 |   |
| Fair value adjustment to derivative financial instrument                  |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | (6     | )      |   |   | - |   |   |   | (6 | ) |
| Deferred income tax attributable  to other comprehensive income |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | (1,776 | )      |   |   | - |   |   |   | (1,776 | ) |
| Total comprehensive income                                                |   |                   |   |   |        |   |   |                     |   |   |              |   |   |                              |   |   |          |   |   |   |   |   |   |   |   |   | 5,791 |   |
| Dividends on preferred stock                                              |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | (508   | )      |          |   | -      |   |   |   | - |   |   |   | (508 | ) |
| Purchase of 34,275 shares for treasury                                    |   |                   | -      |   |        |   | -      |                     |   |   | -                 |   |   |                              | -      |   |          |   | -      |   |   |   | (60 | ) |   |   | (60 | ) |
| Balance, December 31, 2010                                                |   | $                      | 70     |   |        | $      | 22,374 |                     |   | $      | 57,129            |   |   | $                                 | 5,389  |   |          | $      | (2,107 | )      |   | $ | (162 | ) |   | $ | 82,693 |   |

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|                                                                                               |   | Year Ended December 31, |    |
|----------------------------------------------------------------------------------------------------|--------|-------------------------|---------|
|                                                                                               |   | 2010                    |    |   | 2009 |   |
|                                                                                               |   | (Dollars in thousands)  |    |
| Cash flows from operating activities:                                                              |   |                    |    |   |   |   |
| Net income (loss)                                                                                  |   | $                       | 2,493   |   |   | $ | (1,207 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |   |                    |    |   |   |   |   |   |
| Amortization of deferred acquisition costs                                                         |   |                    | 9,775   |   |   |   | 9,656 |   |
| Acquisition costs deferred                                                                         |   |                    | (11,561 | ) |   |   | (9,949 | ) |
| Realized investment gains, net                                                                     |   |                    | (1,571  | ) |   |   | (273 | ) |
| Increase (decrease) in insurance reserves and policyholder funds                                   |   |                    | 8,689   |   |   |   | (1,561 | ) |
| Compensation expense related to share awards                                                       |   |                    | -       |   |   |   | 22 |   |
| Depreciation and amortization                                                                      |   |                    | 379     |   |   |   | 323 |   |
| Deferred income tax expense                                                                        |   |                    | 1,037   |   |   |   | 2,493 |   |
| (Increase) decrease in receivables, net                                                            |   |                    | (3,840  | ) |   |   | 4,762 |   |
| Decrease in other liabilities                                                                      |   |                    | (589    | ) |   |   | (5,105 | ) |
| Other, net                                                                                         |   |                    | 88      |   |   |   | 71 |   |
| Net cash provided by (used in) operating activities                                                |   |                    | 4,900   |   |   |   | (768 | ) |
|                                                                                               |   |                    |    |   |   |   |   |   |
| Cash flows from investing activities:                                                              |   |                    |    |   |   |   |   |   |
| Proceeds from investments sold                                                                     |   |                    | 3,290   |   |   |   | 9,335 |   |
| Proceeds from investments matured, called or redeemed                                              |   |                    | 83,026  |   |   |   | 102,960 |   |
| Investments purchased                                                                              |   |                    | (82,402 | ) |   |   | (128,066 | ) |
| Additions to property and equipment                                                                |   |                    | (50     | ) |   |   | (99 | ) |
| Net cash provided by (used in) investing activities                                                |   |                    | 3,864   |   |   |   | (15,870 | ) |
|                                                                                               |   |                    |    |   |   |   |   |   |
| Cash flows from financing activities:                                                              |   |                    |    |   |   |   |   |   |
| Payment of dividends on Series D Preferred Stock                                                   |   |                    | (508    | ) |   |   | (508 | ) |
| Purchase of treasury shares                                                                        |   |                    | (60     | ) |   |   | (46 | ) |
| Net cash used in financing activities                                                              |   |                    | (568    | ) |   |   | (554 | ) |
|                                                                                               |   |                    |    |   |   |   |   |   |
| Net increase (decrease) in cash                                                                    |   |                    | 8,196   |   |   |   | (17,192 | ) |
| Cash and cash equivalents at beginning of year                                                     |   |                    | 20,129  |   |   |   | 37,321 |   |
| Cash and cash equivalents at end of year                                                           |   | $                       | 28,325  |   |   | $ | 20,129 |   |
|  Supplemental cash flow information:                                                          |   |                    |    |   |   |   |   |   |
| Cash paid for interest                                                                             |   | $                       | 2,615   |   |   | $ | 2,811 |   |
| Cash paid for income taxes                                                                         |   | $                       | -       |   |   | $ | - |   |
| Cash received for income taxes                                                                     |   | $                       | 650     |   |   | $ | 6 |   |

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|                                                                                 |   | 2010           |    |
|--------------------------------------------------------------------------------------|--------|----------------|---------|
|                                                                                 |   | Carrying Value |    |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Amortized Cost |   |
| Fixed maturity securities:                                                           |   |           |    |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of U.S. Government agencies and authorities |   | $              | 46,630  |   |   | $ | 1,454 |   |   | $ | 52 |   |   | $ | 45,228 |   |
| Obligations of states and political subdivisions                                     |   |           | 21,007  |   |   |   | 32 |   |   |   | 876 |   |   |   | 21,851 |   |
| Corporate securities:                                                                |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utilities and telecom                                                                |   |           | 23,010  |   |   |   | 1,079 |   |   |   | 355 |   |   |   | 22,286 |   |
| Financial services                                                                   |   |           | 21,400  |   |   |   | 324 |   |   |   | 1,745 |   |   |   | 22,821 |   |
| Media                                                                                |   |           | 2,506   |   |   |   | 153 |   |   |   | - |   |   |   | 2,353 |   |
| Other business – diversified                                                   |   |           | 25,919  |   |   |   | 422 |   |   |   | 529 |   |   |   | 26,026 |   |
| Other consumer – diversified                                                   |   |           | 23,532  |   |   |   | 149 |   |   |   | 232 |   |   |   | 23,615 |   |
| Total corporate securities                                                           |   |           | 96,367  |   |   |   | 2,127 |   |   |   | 2,861 |   |   |   | 97,101 |   |
| Redeemable preferred stocks:                                                         |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utilities and telecom                                                                |   |           | 2,670   |   |   |   | 170 |   |   |   | - |   |   |   | 2,500 |   |
| Financial services                                                                   |   |           | 4,781   |   |   |   | 22 |   |   |   | 250 |   |   |   | 5,009 |   |
| Other consumer – diversified                                                   |   |           | 193     |   |   |   | - |   |   |   | - |   |   |   | 193 |   |
| Total redeemable preferred stocks                                                    |   |           | 7,644   |   |   |   | 192 |   |   |   | 250 |   |   |   | 7,702 |   |
| Total fixed maturity securities                                                      |   |           | 171,648 |   |   |   | 3,805 |   |   |   | 4,039 |   |   |   | 171,882 |   |
| Common and non-redeemable preferred stocks:                                          |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utilities and telecom                                                                |   |           | 1,073   |   |   |   | 109 |   |   |   | - |   |   |   | 964 |   |
| Financial services                                                                   |   |           | 5,461   |   |   |   | 754 |   |   |   | 82 |   |   |   | 4,789 |   |
| Media                                                                                |   |           | 885     |   |   |   | - |   |   |   | 2,313 |   |   |   | 3,198 |   |
| Other business – diversified                                                   |   |           | 120     |   |   |   | 73 |   |   |   | - |   |   |   | 47 |   |
| Other consumer – diversified                                                   |   |           | 985     |   |   |   | 4 |   |   |   | - |   |   |   | 981 |   |
| Total common and non-redeemable preferred stocks                                     |   |           | 8,524   |   |   |   | 940 |   |   |   | 2,395 |   |   |   | 9,979 |   |
| Other invested assets                                                                |   |           | 980     |   |   |   | - |   |   |   | - |   |   |   | 980 |   |
| Policy and student loans                                                             |   |           | 2,200   |   |   |   | - |   |   |   | - |   |   |   | 2,200 |   |
| Real estate                                                                          |   |           | 38      |   |   |   | - |   |   |   | - |   |   |   | 38 |   |
| Investments in unconsolidated trusts                                                 |   |           | 1,238   |   |   |   | - |   |   |   | - |   |   |   | 1,238 |   |
| Total investments                                                                    |   | $              | 184,628 |   |   | $ | 4,745 |   |   | $ | 6,434 |   |   | $ | 186,317 |   |

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Table of Contents

|                                                                                 |   | 2009           |    |
|--------------------------------------------------------------------------------------|--------|----------------|---------|
|                                                                                 |   | Carrying Value |    |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Amortized Cost |   |
| Fixed maturity securities:                                                           |   |           |    |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and obligations of U.S. Government agencies and authorities |   | $              | 124,392 |   |   | $ | 628 |   |   | $ | 3,538 |   |   | $ | 127,302 |   |
| Corporate securities:                                                                |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utilities and telecom                                                                |   |           | 24,615  |   |   |   | 695 |   |   |   | 105 |   |   |   | 24,025 |   |
| Financial services                                                                   |   |           | 13,518  |   |   |   | 228 |   |   |   | 2,324 |   |   |   | 15,614 |   |
| Media                                                                                |   |           | 2,412   |   |   |   | 59 |   |   |   | - |   |   |   | 2,353 |   |
| Other business – diversified                                                   |   |           | 6,515   |   |   |   | 125 |   |   |   | 92 |   |   |   | 6,482 |   |
| Other consumer – diversified                                                   |   |           | 4,726   |   |   |   | 134 |   |   |   | 90 |   |   |   | 4,682 |   |
| Total corporate securities                                                           |   |           | 51,786  |   |   |   | 1,241 |   |   |   | 2,611 |   |   |   | 53,156 |   |
| Redeemable preferred stocks:                                                         |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utilities and telecom                                                                |   |           | 2,668   |   |   |   | 168 |   |   |   | - |   |   |   | 2,500 |   |
| Financial services                                                                   |   |           | 4,215   |   |   |   | 6 |   |   |   | 800 |   |   |   | 5,009 |   |
| Media                                                                                |   |           | 806     |   |   |   | - |   |   |   | 145 |   |   |   | 951 |   |
| Other consumer – diversified                                                   |   |           | 193     |   |   |   | - |   |   |   | - |   |   |   | 193 |   |
| Total redeemable preferred stocks                                                    |   |           | 7,882   |   |   |   | 174 |   |   |   | 945 |   |   |   | 8,653 |   |
| Total fixed maturity securities                                                      |   |           | 184,060 |   |   |   | 2,043 |   |   |   | 7,094 |   |   |   | 189,111 |   |
| Common and non-redeemable preferred stocks:                                          |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial services                                                                   |   |           | 6,097   |   |   |   | 1,029 |   |   |   | 318 |   |   |   | 5,386 |   |
| Media                                                                                |   |           | 718     |   |   |   | - |   |   |   | 2,480 |   |   |   | 3,198 |   |
| Other business – diversified                                                   |   |           | 99      |   |   |   | 52 |   |   |   | - |   |   |   | 47 |   |
| Total common and non-redeemable preferred stocks                                     |   |           | 6,914   |   |   |   | 1,081 |   |   |   | 2,798 |   |   |   | 8,631 |   |
| Other invested assets                                                                |   |           | 1,021   |   |   |   | - |   |   |   | - |   |   |   | 1,021 |   |
| Policy and student loans                                                             |   |           | 2,139   |   |   |   | - |   |   |   | - |   |   |   | 2,139 |   |
| Real estate                                                                          |   |           | 38      |   |   |   | - |   |   |   | - |   |   |   | 38 |   |
| Investments in unconsolidated trusts                                                 |   |           | 1,238   |   |   |   | - |   |   |   | - |   |   |   | 1,238 |   |
| Total investments                                                                    |   | $              | 195,410 |   |   | $ | 3,124 |   |   | $ | 9,892 |   |   | $ | 202,178 |   |

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Table of Contents

|                                                        |   | 2010          |    |   | 2009          |   |
|-------------------------------------------------------------|--------|---------------|---------|--------|---------------|--------|
|                                                        |   | CarryingValue |    |   | AmortizedCost |   |   | UnrealizedGains (Losses) |   |   | CarryingValue |   |   | AmortizedCost |   |   | UnrealizedGains (Losses) |   |
| U.S. Treasury securities and U.S. Government agencies       |   | $             | 46,630  |   |          | $      | 45,228 |   |   | $ | 1,402 |   |   | $ | 124,392 |   |   | $ | 127,302 |   |   | $ | (2,910 | ) |
| Obligations of states and  political subdivisions |   |          | 21,007  |   |          |   | 21,851 |   |   |   | (844 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Utilities and telecom                                       |   |          | 26,753  |   |          |   | 25,750 |   |   |   | 1,003 |   |   |   | 27,283 |   |   |   | 26,525 |   |   |   | 758 |   |
| Financial services                                          |   |          | 31,642  |   |          |   | 32,619 |   |   |   | (977 | ) |   |   | 23,830 |   |   |   | 26,009 |   |   |   | (2,179 | ) |
| Media (1)                                                   |   |          | 3,391   |   |          |   | 5,551 |   |   |   | (2,160 | ) |   |   | 3,936 |   |   |   | 6,502 |   |   |   | (2,566 | ) |
| Other business – diversified                          |   |          | 26,039  |   |          |   | 26,073 |   |   |   | (34 | ) |   |   | 6,614 |   |   |   | 6,529 |   |   |   | 85 |   |
| Other consumer – diversified                          |   |          | 24,710  |   |          |   | 24,789 |   |   |   | (79 | ) |   |   | 4,919 |   |   |   | 4,875 |   |   |   | 44 |   |
| Other investments                                           |   |          | 4,456   |   |          |   | 4,456 |   |   |   | - |   |   |   | 4,436 |   |   |   | 4,436 |   |   |   | - |   |
| Investments                                                 |   | $             | 184,628 |   |          | $      | 186,317 |   |   | $ | (1,689 | ) |   | $ | 195,410 |   |   | $ | 202,178 |   |   | $ | (6,768 | ) |

|                                                                                 |   | 2010                |   |
|--------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                 |   | Less than 12 months |   |   | 12 months or longer |   |   | Total |   |
|                                                                                 |   | Fair Value          |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
| U.S. Treasury securities and obligations of U.S. Government agencies and authorities |   | $                   | 5,490  |   |   | $ | 52 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,490 |   |   | $ | 52 |   |
| Obligations of states and political subdivisions                                     |   |                | 18,919 |   |   |   | 876 |   |   |   | - |   |   |   | - |   |   |   | 18,919 |   |   |   | 876 |   |
| Corporate securities                                                                 |   |                | 40,426 |   |   |   | 1,263 |   |   |   | 3,402 |   |   |   | 1,598 |   |   |   | 43,828 |   |   |   | 2,861 |   |
| Redeemable preferred stocks                                                          |   |                | 2,188  |   |   |   | 53 |   |   |   | 2,072 |   |   |   | 197 |   |   |   | 4,260 |   |   |   | 250 |   |
| Common and non-redeemable  preferred stocks                                |   |                | 972    |   |   |   | 28 |   |   |   | 3,114 |   |   |   | 2,367 |   |   |   | 4,086 |   |   |   | 2,395 |   |
| Total temporarily impaired securities                                                |   | $                   | 67,995 |   |   | $ | 2,272 |   |   | $ | 8,588 |   |   | $ | 4,162 |   |   | $ | 76,583 |   |   | $ | 6,434 |   |

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Table of Contents

|                                                                                 |   | 2009                |    |
|--------------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                                 |   | Less than 12 months |    |   | 12 months or longer |   |   | Total |   |
|                                                                                 |   | Fair Value          |    |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
| U.S. Treasury securities and obligations of U.S. Government agencies and authorities |   | $                   | 96,977  |   |   | $ | 3,300 |   |   | $ | 4,772 |   |   | $ | 238 |   |   | $ | 101,749 |   |   | $ | 3,538 |   |
| Corporate securities                                                                 |   |                | 12,894  |   |   |   | 609 |   |   |   | 7,525 |   |   |   | 2,002 |   |   |   | 20,419 |   |   |   | 2,611 |   |
| Redeemable preferred stocks                                                          |   |                | -       |   |   |   | - |   |   |   | 4,515 |   |   |   | 945 |   |   |   | 4,515 |   |   |   | 945 |   |
| Common and non-redeemable preferred stocks                                           |   |                | -       |   |   |   | - |   |   |   | 3,683 |   |   |   | 2,798 |   |   |   | 3,683 |   |   |   | 2,798 |   |
| Total temporarily impaired securities                                                |   | $                   | 109,871 |   |   | $ | 3,909 |   |   | $ | 20,495 |   |   | $ | 5,983 |   |   | $ | 130,366 |   |   | $ | 9,892 |   |

|                                       |   |   |   |
|--------------------------------------------|--------|--------|--------|
|                                       |   | 2010   |   |   | 2009 |   |
| Corporate securities                       |   | $      | -      |   |   | $ | 44 |   |
| Redeemable preferred stocks                |   |   | -      |   |   |   | 43 |   |
| Common and non-redeemable preferred stocks |   |   | -      |   |   |   | 17 |   |
| Other invested assets                      |   |   | -      |   |   |   | 17 |   |
|     Total              |   | $      | -      |   |   | $ | 121 |   |

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| Level 1 | Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2 | Observable inputs, other than quoted prices included in Level 1, for an asset or liability or prices for similar assets or liabilities.  The Company’s Level 2 instruments include significantly all of its fixed maturity securities, which consist of U.S. Treasury securities and U.S. Government securities, municipal bonds, and certain corporate fixed maturity securities, as well as its common and non-redeemable preferred stocks.  In determining Level 2 fair value measurements, the Company utilizes various external pricing sources. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3 | Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk).  The Company’s Level 3 financial instruments include certain fixed maturity securities and a zero cost interest rate collar.  Fair value is based on criteria that use assumptions or other data that are not readily observable from objective sources.  As of December 31, 2010, the value of the Company’s fixed maturity securities valued using Level 3 criteria was $1,943 (See Note 15). The use of different criteria or assumptions regarding data may have yielded different valuations. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                      |   | Quoted Prices in Active Marketsfor Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |    |  Significant Unobservable Inputs(Level 3) |   |   | Total |   |
|---------------------------|--------|--------------------------------------------------------------|--------|--------|----------------------------------------------|--------|---------|------------------------------------------------|--------|--------|-------|--------|
| Fixed maturity securities |   | $                                                            | -      |   |                                         | $      | 169,705 |                                           |   | $      | 1,943 |   |   | $ | 171,648 |   |
| Equity securities         |   |                                                         | -      |   |                                         |   | 8,524   |                                           |   |   | -     |   |   |   | 8,524 |   |
| Total                     |   | $                                                            | -      |   |                                         | $      | 178,229 |                                           |   | $      | 1,943 |   |   | $ | 180,172 |   |

|                      |   | Quoted Prices in Active Marketsfor Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |    |  Significant Unobservable Inputs(Level 3) |   |   | Total |   |
|---------------------------|--------|--------------------------------------------------------------|--------|--------|----------------------------------------------|--------|---------|------------------------------------------------|--------|--------|-------|--------|
| Fixed maturity securities |   | $                                                            | -      |   |                                         | $      | 182,281 |                                           |   | $      | 1,779 |   |   | $ | 184,060 |   |
| Equity securities         |   |                                                         | -      |   |                                         |   | 6,914   |                                           |   |   | -     |   |   |   | 6,914 |   |
| Total                     |   | $                                                            | -      |   |                                         | $      | 189,195 |                                           |   | $      | 1,779 |   |   | $ | 190,974 |   |

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Table of Contents

|                                   |   | 2010          |    |   | 2009          |   |
|----------------------------------------|--------|---------------|---------|--------|---------------|--------|
|                                   |   | CarryingValue |    |   | AmortizedCost |   |   | CarryingValue |   |   | AmortizedCost |   |
| Due in one year or less                |   | $             | 5,007   |   |          | $      | 4,903 |   |   | $ | 1,865 |   |   | $ | 1,840 |   |
| Due after one year through five years  |   |          | 5,504   |   |          |   | 5,179 |   |   |   | 10,571 |   |   |   | 10,052 |   |
| Due after five years through ten years |   |          | 18,955  |   |          |   | 18,263 |   |   |   | 14,409 |   |   |   | 13,808 |   |
| Due after ten years                    |   |          | 141,157 |   |          |   | 142,544 |   |   |   | 156,260 |   |   |   | 162,418 |   |
| Varying maturities                     |   |          | 1,025   |   |          |   | 993 |   |   |   | 955 |   |   |   | 993 |   |
| Totals                                 |   | $             | 171,648 |   |          | $      | 171,882 |   |   | $ | 184,060 |   |   | $ | 189,111 |   |

|                                       |   | 2010   |   |   | 2009   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
| Fixed maturity securities                  |   | $      | 8,901  |   |   | $      | 9,878 |   |
| Common and non-redeemable preferred stocks |   |   | 481    |   |   |   | 510 |   |
| Other                                      |   |   | 355    |   |   |   | 300 |   |
| Total investment income                    |   |   | 9,737  |   |   |   | 10,688 |   |
| Less investment expenses                   |   |   | (158   | )      |   |   | (134 | ) |
| Net investment income                      |   | $      | 9,579  |   |   | $      | 10,554 |   |

|                           |   | 2010   |   |
|--------------------------------|--------|--------|--------|
|                           |   | Stocks |   |   | FixedMaturity Securities |   |   | OtherInvested Assets |   |   | Total |   |
| Gains                          |   | $      | 486    |   |   | $ | 1,149 |   |   | $ | - |   |   | $ | 1,635 |   |
| Losses                         |   |   | -      |   |   |   | (64 | ) |   |   | - |   |   |   | (64 | ) |
| Realized investment gains, net |   | $      | 486    |   |   | $ | 1,085 |   |   | $ | - |   |   | $ | 1,571 |   |

|                                    |   | 2009   |   |
|-----------------------------------------|--------|--------|--------|
|                                    |   | Stocks |   |   | FixedMaturity Securities |   |   | OtherInvested Assets |   |   | Total |   |
| Gains                                   |   | $      | 179    |   |   | $ | 509 |   |   | $ | - |   |   | $ | 688 |   |
| Losses                                  |   |   | (16    | ) |   |   | (386 | ) |   |   | (13 | ) |   |   | (415 | ) |
| Realized investment gains (losses), net |   | $      | 163    |   |   | $ | 123 |   |   | $ | (13 | ) |   | $ | 273 |   |

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Table of Contents

|                                       |   | 2010   |   |   | 2009   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
| Common and non-redeemable preferred stocks |   | $      | 270    |   |   | $      | 415 |   |
| Fixed maturity securities                  |   |   | 2,968  |   |   |   | 8,562 |   |
| Other investments                          |   |   | 52     |   |   |   | 358 |   |
| Total proceeds                             |   | $      | 3,290  |   |   | $      | 9,335 |   |

|                                            |   |   |    |   |   |   |    | Amount of InsuranceIn Force |   |
|-------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|-----------------------------|--------|
|                                            |   | 2010   |    |   | 2009   |   |    | 2010                        |   |   | 2009 |   |
| Future policy benefits                          |   |   |    |   |   |   |    |                        |   |   |   |   |
| Life insurance policies:                        |   |   |    |   |   |   |    |                        |   |   |   |   |
| Ordinary                                        |   | $      | 48,278  |   |   | $      | 46,942  |                        |   | $ | 252,543 |   |   | $ | 250,604 |   |
| Mass market                                     |   |   | 3,572   |   |   |   | 3,900   |                        |   |   | 4,941 |   |   |   | 5,534 |   |
| Individual annuities                            |   |   | 193     |   |   |   | 241     |                        |   |   | - |   |   |   | - |   |
|                                            |   |   | 52,043  |   |   |   | 51,083  |                        |   | $ | 257,484 |   |   | $ | 256,138 |   |
| Accident and health insurance policies          |   |   | 8,768   |   |   |   | 7,898   |                        |   |   |   |   |   |   |   |   |
|                                            |   |   | 60,811  |   |   |   | 58,981  |                        |   |   |   |   |   |   |   |   |
| Unearned premiums                               |   |   | 21,170  |   |   |   | 18,130  |                        |   |   |   |   |   |   |   |   |
| Losses, claims and loss adjustment expenses     |   |   | 53,961  |   |   |   | 50,112  |                        |   |   |   |   |   |   |   |   |
| Other policy liabilities                        |   |   | 1,960   |   |   |   | 1,990   |                        |   |   |   |   |   |   |   |   |
| Total insurance reserves and policyholder funds |   | $      | 137,902 |   |   | $      | 129,213 |                        |   |   |   |   |   |   |   |   |

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Table of Contents

|                                      |   | 2010   |    |   | 2009   |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                      |   |   |    |   |   |   |
| Balance at January 1                      |   | $      | 50,112  |   |   | $      | 52,499 |   |
| Less:  Reinsurance recoverables |   |   | (11,489 | )      |   |   | (14,870 | ) |
| Net balance at January 1                  |   |   | 38,623  |   |   |   | 37,629 |   |
|                                      |   |   |    |   |   |   |   |   |
| Incurred related to:                      |   |   |    |   |   |   |   |   |
| Current year                              |   |   | 69,779  |   |   |   | 65,093 |   |
| Prior years                               |   |   | (6,304  | )      |   |   | (7,620 | ) |
| Total incurred                            |   |   | 63,475  |   |   |   | 57,473 |   |
|                                      |   |   |    |   |   |   |   |   |
| Paid related to:                          |   |   |    |   |   |   |   |   |
| Current year                              |   |   | 47,749  |   |   |   | 42,335 |   |
| Prior years                               |   |   | 14,614  |   |   |   | 14,144 |   |
| Total paid                                |   |   | 62,363  |   |   |   | 56,479 |   |
| Net balance at December 31                |   |   | 39,735  |   |   |   | 38,623 |   |
| Plus:  Reinsurance recoverables |   |   | 14,226  |   |   |   | 11,489 |   |
| Balance at December 31                    |   | $      | 53,961  |   |   | $      | 50,112 |   |

|                                         |   | 2010   |   |   | 2009   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |
| Total incurred claims                        |   | $      | 63,475 |   |   | $      | 57,473 |   |
| Cash surrender value and matured endowments  |   |   | 1,509  |   |   |   | 1,220 |   |
| Benefit reserve changes                      |   |   | 1,870  |   |   |   | 2,091 |   |
| Total insurance benefits and losses incurred |   | $      | 66,854 |   |   | $      | 60,784 |   |

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Table of Contents

|                                       |   | 2010   |    |   | 2009   |   |
|--------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                       |   |   |    |   |   |   |
| Direct premiums written                    |   | $      | 101,447 |   |   | $      | 92,901 |   |
| Plus – premiums assumed              |   |   | 4,764   |   |   |   | 3,461 |   |
| Less – premiums ceded                |   |   | (5,558  | )      |   |   | (6,312 | ) |
| Net premiums written                       |   |   | 100,653 |   |   |   | 90,050 |   |
| Change in unearned premiums                |   |   | (3,040  | )      |   |   | 1,412 |   |
| Net premiums earned                        |   | $      | 97,613  |   |   | $      | 91,462 |   |
|                                       |   |   |    |   |   |   |   |   |
| Provision for benefits and losses incurred |   | $      | 71,285  |   |   | $      | 62,129 |   |
| Reinsurance loss recoveries                |   |   | (4,431  | )      |   |   | (1,345 | ) |
| Insurance benefits and losses incurred     |   | $      | 66,854  |   |   | $      | 60,784 |   |

|                          |   | 2010   |   |   | 2009   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|
| Receivable on unpaid losses   |   | $      | 14,226 |   |   | $      | 11,489 |   |
| Receivable on paid losses     |   |   | 75     |   |   |   | - |   |
| Total reinsurance receivables |   | $      | 14,301 |   |   | $      | 11,489 |   |

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Table of Contents

|                                                               |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Total tax expense on income                                        |   | $      | 440    |   |   | $      | 2,557 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Tax expense (benefit) on components of shareholders’ equity: |   |   |   |   |   |   |   |   |
| Net unrealized gains (losses) on investment securities             |   |   | 1,778  |   |   |   | 1,724 |   |
| Fair value adjustment to derivative financial instrument           |   |   | (2     | )      |   |   | 188 |   |
| Minimum pension liability adjustment                               |   |   | -      |   |   |   | 131 |   |
| Total tax expense on shareholders’ equity                    |   |   | 1,776  |   |   |   | 2,043 |   |
| Total tax expense                                                  |   | $      | 2,216  |   |   | $      | 4,600 |   |

|                                                                                                           |   | 2010   |   |   | 2009   |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Federal income tax provision at statutory rate of 35%                                                          |   | $      | 1,026  |   |   | $      | 473 |   |
| Tax exempt interest and dividends received deductions                                                          |   |   | (193   | )      |   |   | (230 | ) |
| Small life insurance company deduction                                                                         |   |   | (232   | )      |   |   | (119 | ) |
| Other permanent differences                                                                                    |   |   | 39     |   |   |   | 42 |   |
| Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets |   |   | (92    | )      |   |   | 2,016 |   |
| Adjustment for prior years’ estimates to actual                                                          |   |   | (108   | )      |   |   | 381 |   |
| State income taxes                                                                                             |   |   | -      |   |   |   | (6 | ) |
| Income tax expense                                                                                             |   | $      | 440    |   |   | $      | 2,557 |   |

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Table of Contents

|                              |   | 2010   |         |   | 2009   |   |
|-----------------------------------|--------|--------|--------------|--------|--------|--------|
| Deferred tax liabilities:         |   |   |         |   |   |   |
| Deferred acquisition costs        |   | $      | (3,501       | )      |   | $      | (2,999 | ) |
| Deferred and uncollected premiums |   |   | (738         | )      |   |   | (732 | ) |
| Other                             |   |   | (15          | )      |   |   | (10 | ) |
| Total deferred tax liabilities    |   |   |  (4,254 | )      |   |   |  (3,741 | ) |
| Deferred tax assets:              |   |   |         |   |   |   |   |   |
| Net operating loss carryforwards  |   |   | 2,217        |   |   |   | 2,221 |   |
| Insurance reserves                |   |   | 3,591        |   |   |   | 3,069 |   |
| Capital loss carryforwards        |   |   | 6,068        |   |   |   | 7,125 |   |
| Impaired assets                   |   |   | 250          |   |   |   | 587 |   |
| Alternative minimum tax credit    |   |   | 386          |   |   |   | 108 |   |
| Net unrealized investment losses  |   |   | 591          |   |   |   | 2,369 |   |
| Bad debts and other               |   |   | 937          |   |   |   | 953 |   |
| Total deferred tax assets         |   |   | 14,040       |   |   |   | 16,432 |   |
| Asset valuation allowance         |   |   | (6,558       | )      |   |   | (6,650 | ) |
| Net deferred tax assets           |   | $      | 3,228        |   |   | $      | 6,041 |   |

|                                             |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Current - Federal                                |   | $      | (597   | )      |   | $      | 70 |   |
| Current - State                                  |   |   | -      |   |   |   | (6 | ) |
| Deferred - Federal                               |   |   | 1,129  |   |   |   | 477 |   |
| Change in deferred tax asset valuation allowance |   |   | (92    | )      |   |   | 2,016 |   |
| Total                                            |   | $      | 440    |   |   | $      | 2,557 |   |

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Table of Contents

|                                   |   | AtlanticAmericanStatutory Trust I |   |   | Atlantic AmericanStatutory Trust II |   |
|----------------------------------------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|
| JUNIOR SUBORDINATED DEBENTURES (1) (2) |   |                              |   |   |                                |   |
| Principal amount owed                  |   | $                                 | 18,042 |   |                                | $      | 23,196 |   |
| Balance December 31, 2010              |   |                              | 18,042 |   |                                |   | 23,196 |   |
| Balance December 31, 2009              |   |                              | 18,042 |   |                                |   | 23,196 |   |
| Coupon rate                            |   | LIBOR + 4.00%                     |   |   | LIBOR + 4.10%                       |   |
| Interest payable                       |   | Quarterly                         |   |   | Quarterly                           |   |
| Maturity date                          |   | December 4, 2032                  |   |   | May 15, 2033                        |   |
| Redeemable by issuer                   |   | Yes                               |   |   | Yes                                 |   |
| TRUST PREFERRED SECURITIES             |   |                              |   |   |                                |   |   |   |
| Issuance date                          |   | December 4, 2002                  |   |   | May 15, 2003                        |   |
| Securities issued                      |   |                              | 17,500 |   |                                |   | 22,500 |   |
| Liquidation preference per security    |   | $                                 | 1      |   |                                | $      | 1 |   |
| Liquidation value                      |   |                              | 17,500 |   |                                |   | 22,500 |   |
| Coupon rate                            |   | LIBOR + 4.00%                     |   |   | LIBOR + 4.10%                       |   |
| Distribution payable                   |   | Quarterly                         |   |   | Quarterly                           |   |
| Distribution guaranteed by (3)         |   | Atlantic American Corporation     |   |   | Atlantic American Corporation       |   |

|   | (1) | For each of the respective debentures, the Company has the right at any time, and from time to time, to defer payments of interest on the Junior Subordinated Debentures for a period not exceeding 20 consecutive quarters up to the debentures’ respective maturity dates.  During any such period, interest will continue to accrue and the Company may not declare or pay any cash dividends or distributions on, or purchase, the Company’s common stock nor make any principal, interest or premium payments on or repurchase any debt securities that rank equally with or junior to the Junior Subordinated Debentures.  The Company has the right at any time to dissolve each of the trusts and cause the Junior Subordinated Debentures to be distributed to the holders of the Trust Preferred Securities. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | (2) | The Junior Subordinated Debentures are unsecured and rank junior and subordinate in right of payment to all senior debt of the Parent and are effectively subordinated to all existing and future liabilities of its subsidiaries. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The Parent has guaranteed, on a subordinated basis, all of the obligations under the Trust Preferred Securities, including payment of the redemption price and any accumulated and unpaid distributions to the extent of available funds and upon dissolution, winding up or liquidation. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year Ending December 31, |   |
|--------------------------|--------|
| 2011                     |   | $ | 856 |   |
| 2012                     |   |   | 394 |   |
| 2013                     |   |   | 404 |   |
| 2014                     |   |   | 414 |   |
| 2015                     |   |   | 425 |   |
| Thereafter               |   |   | 1,532 |   |
| Total                    |   | $ | 4,025 |   |

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Table of Contents

|                                   |   | 2010   |      |   | 2009                          |   |
|----------------------------------------|--------|--------|-----------|--------|-------------------------------|--------|
| Shares                                 |   | Shares |      |   | WeightedAverageExercise Price |   |   | Shares |   |   | WeightedAverageExercise Price |   |
| Options outstanding, beginning of year |   |   | 543,500   |   |                          | $      | 1.44 |   |   |   | 543,500 |   |   | $ | 1.44 |   |
| Options outstanding, end of year       |   |   | 543,500   |   |                          | $      | 1.44 |   |   |   | 543,500 |   |   | $ | 1.44 |   |
| Options exercisable                    |   |   | 543,500   |   |                          | $      | 1.44 |   |   |   | 543,500 |   |   | $ | 1.44 |   |
| Options available for future grant     |   |   | 2,531,406 |   |                          |   |   |   |   |   | 2,531,406 |   |   |   |   |   |

|                    |          |   |             |   |    | Outstanding and Exercisable           |   |
|-------------------------|---------------|--------|------------------|--------|---------|---------------------------------------|--------|
| Range ofExercise Prices |          |   | Number ofOptions |   |    | Weighted AverageRemaining Life(Years) |   |   | Weighted AverageExercise Price |   |
| $                       | 1.00 to $1.50 |   |             |   | 307,500 |                                  |   |   | 0.78 |   |   | $ | 1.25 |   |
| $                       | 1.51 to $2.00 |   |             |   | 236,000 |                                  |   |   | 2.16 |   |   | $ | 1.68 |   |
|                    |          |   |             |   | 543,500 |                                  |   |   |   |   |   |   |   |   |

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Table of Contents

| Obligation and Funded Status                                                         |   |   |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                 |   | 2009   |   |
| Change in Benefit Obligation                                                         |   |   |   |
| Net benefit obligation at beginning of year                                          |   | $      | 4,518  |   |
| Distribution of accumulated SERP benefits                                            |   |   | (2,262 | ) |
| Interest cost                                                                        |   |   | 128    |   |
| Actuarial gain                                                                       |   |   | 12     |   |
| Gross benefits paid                                                                  |   |   | (53    | ) |
| Net benefit obligation at end of year                                                |   |   | 2,343  |   |
|                                                                                 |   |   |   |   |
| Change in Plan Assets                                                                |   |   |   |   |
| Fair value of plan assets at beginning of year                                       |   |   | 2,139  |   |
| Employer contributions                                                               |   |   | 27     |   |
| Actual return on plan assets                                                         |   |   | (19    | ) |
| Gross benefits paid                                                                  |   |   | (53    | ) |
| Fair value of plan assets at end of year                                             |   |   | 2,094  |   |
|                                                                                 |   |   |   |   |
| Funded Status of Plan at end of year and net amount recognized in accrued liabilites |   | $      | (249   | ) |

| Discount rate to determine the projected benefit obligation |   |   | 5.75 | % |
|-------------------------------------------------------------|--------|--------|------|---|
| Projected annual salary increases                           |   |   | 4.50 | % |

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Table of Contents

|                                         |   | For the Year Ended December 31, 2010 |   |
|----------------------------------------------|--------|--------------------------------------|--------|
|                                         |   | Income                               |   |   | Shares |   |   | Per ShareAmount |   |
| Basic Earnings Per Common Share              |   |                                 |   |   |   |   |   |   |   |
| Net income before preferred stock dividends  |   | $                                    | 2,493  |   |   |   | 22,281 |   |   |   |   |
| Less preferred stock dividends               |   |                                 | (508   | ) |   |   | - |   |   |   |   |
| Net income applicable to common shareholders |   |                                 | 1,985  |   |   |   | 22,281 |   |   | $ | .09 |   |
| Diluted Earnings Per Common Share            |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Effect of dilutive stock options             |   |                                 | -      |   |   |   | 64 |   |   |   |   |   |
| Net income applicable to common shareholders |   | $                                    | 1,985  |   |   |   | 22,345 |   |   | $ | .09 |   |

|                                       |   | For the Year Ended December 31, 2009 |   |
|--------------------------------------------|--------|--------------------------------------|--------|
|                                       |   | Income                               |   |   | Shares |   |   | Per ShareAmount |   |
| Basic and Diluted Loss Per Common Share    |   |                                 |   |   |   |   |   |   |   |
| Net loss before preferred stock dividends  |   | $                                    | (1,207 | ) |   |   | 22,307 |   |   |   |   |   |
| Less preferred stock dividends             |   |                                 | (508   | ) |   |   | - |   |   |   |   |   |
| Net loss applicable to common shareholders |   | $                                    | (1,715 | ) |   |   | 22,307 |   |   | $ | (.08 | ) |

|                              |   | 2010   |   |   | 2009   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Life and Health, net income       |   | $      | 2,999  |   |   | $      | 2,469 |   |
| Property and Casualty, net income |   |   | 3,787  |   |   |   | 5,429 |   |
| Statutory net income              |   | $      | 6,786  |   |   | $      | 7,898 |   |
|                              |   |   |   |   |   |   |   |   |
| Life and Health, surplus          |   | $      | 31,874 |   |   | $      | 31,493 |   |
| Property and Casualty, surplus    |   |   | 38,717 |   |   |   | 38,854 |   |
| Statutory surplus                 |   | $      | 70,591 |   |   | $      | 70,347 |   |

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Table of Contents

|                                            |   | AmericanSouthern |    |   | BankersFidelity |   |    | Corporate& Other |   |   | Adjustments& Eliminations |   |   | Consolidated |    |
|-------------------------------------------------|--------|------------------|---------|--------|-----------------|--------|---------|----------------------|--------|--------|------------------------------------|--------|--------|--------------|---------|
| December 31, 2010                               |   |             |    |   |            |   |    |                 |   |   |                               |   |   |         |    |
| Insurance premiums                              |   | $                | 34,939  |   |            | $      | 62,674  |                 |   | $      | -                                  |   |   | $            | -       |   |   | $ | 97,613 |   |
| Insurance benefits and losses incurred          |   |             | 21,208  |   |            |   | 45,646  |                 |   |   | -                                  |   |   |         | -       |   |   |   | 66,854 |   |
| Expenses deferred                               |   |             | (8,267  | )      |            |   | (3,294  | )                    |   |   | -                                  |   |   |         | -       |   |   |   | (11,561 | ) |
| Amortization and depreciation expense           |   |             | 7,888   |   |            |   | 2,266   |                 |   |   | -                                  |   |   |         | -       |   |   |   | 10,154 |   |
| Other expenses                                  |   |             | 14,080  |   |            |   | 20,721  |                 |   |   | 12,804                             |   |   |         | (6,784  | ) |   |   | 40,821 |   |
| Total expenses                                  |   |             | 34,909  |   |            |   | 65,339  |                 |   |   | 12,804                             |   |   |         | (6,784  | ) |   |   | 106,268 |   |
| Underwriting income (loss)                      |   |             | 30      |   |            |   | (2,665  | )                    |   |   |                               |   |   |         |    |   |   |   |   |   |
| Investment income, including net realized gains |   |             | 4,578   |   |            |   | 5,817   |                 |   |   | 2,695                              |   |   |         | (1,782  | ) |   |   | 11,308 |   |
| Other income                                    |   |             | 90      |   |            |   | 34      |                 |   |   | 5,158                              |   |   |         | (5,002  | ) |   |   | 280 |   |
| Income (loss) before income taxes               |   | $                | 4,698   |   |            | $      | 3,186   |                 |   | $      | (4,951                             | )      |   | $            | -       |   |   | $ | 2,933 |   |
| Total revenues                                  |   | $                | 39,607  |   |            | $      | 68,525  |                 |   | $      | 7,853                              |   |   | $            | (6,784  | ) |   | $ | 109,201 |   |
| Goodwill                                        |   | $                | 1,350   |   |            | $      | 778     |                 |   | $      | -                                  |   |   | $            | -       |   |   | $ | 2,128 |   |
| Total assets                                    |   | $                | 116,740 |   |            | $      | 130,366 |                 |   | $      | 125,421                            |   |   | $            | (94,961 | ) |   | $ | 277,566 |   |

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Table of Contents

|                                            |   | AmericanSouthern |    |   | BankersFidelity |   |    | Corporate& Other |   |   | Adjustments& Eliminations |   |   | Consolidated |    |
|-------------------------------------------------|--------|------------------|---------|--------|-----------------|--------|---------|----------------------|--------|--------|------------------------------------|--------|--------|--------------|---------|
| December 31, 2009                               |   |             |    |   |            |   |    |                 |   |   |                               |   |   |         |    |
| Insurance premiums                              |   | $                | 34,300  |   |            | $      | 57,162  |                 |   | $      | -                                  |   |   | $            | -       |   |   | $ | 91,462 |   |
| Insurance benefits and losses incurred          |   |             | 18,829  |   |            |   | 41,955  |                 |   |   | -                                  |   |   |         | -       |   |   |   | 60,784 |   |
| Expenses deferred                               |   |             | (7,434  | )      |            |   | (2,515  | )                    |   |   | -                                  |   |   |         | -       |   |   |   | (9,949 | ) |
| Amortization and depreciation expense           |   |             | 8,097   |   |            |   | 1,882   |                 |   |   | -                                  |   |   |         | -       |   |   |   | 9,979 |   |
| Other expenses                                  |   |             | 14,898  |   |            |   | 18,769  |                 |   |   | 13,780                             |   |   |         | (6,901  | ) |   |   | 40,546 |   |
| Total expenses                                  |   |             | 34,390  |   |            |   | 60,091  |                 |   |   | 13,780                             |   |   |         | (6,901  | ) |   |   | 101,360 |   |
| Underwriting loss                               |   |             | (90     | )      |            |   | (2,929  | )                    |   |   |                               |   |   |         |    |   |   |   |   |   |
| Investment income, including net realized gains |   |             | 4,864   |   |            |   | 5,823   |                 |   |   | 2,302                              |   |   |         | (2,028  | ) |   |   | 10,961 |   |
| Other income                                    |   |             | 8       |   |            |   | 90      |                 |   |   | 5,062                              |   |   |         | (4,873  | ) |   |   | 287 |   |
| Income (loss) before income taxes               |   | $                | 4,782   |   |            | $      | 2,984   |                 |   | $      | (6,416                             | )      |   | $            | -       |   |   | $ | 1,350 |   |
| Total revenues                                  |   | $                | 39,172  |   |            | $      | 63,075  |                 |   | $      | 7,364                              |   |   | $            | (6,901  | ) |   | $ | 102,710 |   |
| Goodwill                                        |   | $                | 1,350   |   |            | $      | 778     |                 |   | $      | -                                  |   |   | $            | -       |   |   | $ | 2,128 |   |
| Total assets                                    |   | $                | 106,166 |   |            | $      | 124,645 |                 |   | $      | 120,679                            |   |   | $            | (89,404 | ) |   | $ | 262,086 |   |

|                                       | 2010                                  |   | 2009                                  |
|--------------------------------------------|---------------------------------------|--------|---------------------------------------|
|                                       | CarryingAmount                        |   | EstimatedFair Value                   |   | CarryingAmount |   | EstimatedFair Value |
| Assets:                                    |                                  |   |                                  |   |   |   |   |
| Cash and cash equivalents                  | $     28,325 |   | $     28,325 |   | $     20,129 |   | $     20,129 |
| Fixed maturity securities                  | 171,648                               |   | 171,648                               |   | 184,060 |   | 184,060 |
| Common and non-redeemable preferred stocks | 8,524                                 |   | 8,524                                 |   | 6,914 |   | 6,914 |
| Policy and student loans                   | 2,200                                 |   | 2,200                                 |   | 2,139 |   | 2,139 |
| Other invested assets                      | 980                                   |   | 980                                   |   | 1,021 |   | 1,021 |
| Real estate                                | 38                                    |   | 38                                    |   | 38 |   | 38 |
| Investments in unconsolidated trusts       | 1,238                                 |   | 1,238                                 |   | 1,238 |   | 1,238 |
| Liabilities:                               |                                  |   |                                  |   |   |   |   |
| Junior Subordinated Debentures             |     41,238        |   |     41,238        |   |     41,238 |   |     41,238 |

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Table of Contents

|                                                                   |   | Fixed Maturity Securities |   |   | Derivative (Liability) |   |
|------------------------------------------------------------------------|--------|---------------------------|--------|--------|------------------------|--------|
| Balance, January 1, 2009                                               |   | $                         | 1,929  |   |                   | $      | (2,085 | ) |
| Total unrealized gains (losses) included in total comprehensive income |   |                      | (150   | )      |                   |   | 538 |   |
| Balance, December 31, 2009                                             |   |                      | 1,779  |   |                   |   | (1,547 | ) |
| Total unrealized gains (losses) included in total comprehensive income |   |                      | 164    |   |                   |   | (6 | ) |
| Balance, December 31, 2010                                             |   | $                         | 1,943  |   |                   | $      | (1,553 | ) |

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Table of Contents

|                                                                            |   | December 31, |   |
|---------------------------------------------------------------------------------|--------|--------------|--------|
|                                                                            |   | 2010         |   |   | 2009 |   |
| Total net realized gains on investment securities included in net income (loss) |   | $            | 1,571  |   |   | $ | 273 |   |
| Other components of comprehensive income (loss):                                |   |         |   |   |   |   |   |   |
| Net pre-tax unrealized gains on investment securities arising during year  |   | $            | 6,651  |   |   | $ | 5,198 |   |
| Reclassification adjustment for net realized gains on investment securities     |   |         | (1,571 | ) |   |   | (273 | ) |
|                                                                            |   |         |   |   |   |   |   |   |
| Net pre-tax unrealized gains on investment securities recognized in other       |   |         |   |   |   |   |   |   |
| comprehensive income                                                            |   |         | 5,080  |   |   |   | 4,925 |   |
| Fair value adjustment to derivative financial instrument                        |   |         | (6     | ) |   |   | 538 |   |
| Minimum pension liability adjustment                                            |   |         | -      |   |   |   | 375 |   |
| Deferred income tax attributable to other comprehensive income (loss)           |   |         | (1,776 | ) |   |   | (2,043 | ) |
|                                                                            |   | $            | 3,298  |   |   | $ | 3,795 |   |

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Table of Contents

| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |   |
|---------|--------------------------------------------------------------------------------------|--------|

| Item 9A. | Controls and Procedures |
|----------|-------------------------|

| Item 9B. | Other Information |
|----------|-------------------|

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Table of Contents

| Plan Category                                                  |   | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights |    |   | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights |   |   | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) |   |
|----------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by security holders         |   |                                                                                        | 543,500 |   |                                                                        | $      | 1.44   |                                                                                                                                              |   |   | 2,531,406 |   |
| Equity compensation plans not approved by security holders (1) |   |                                                                                        | -       |   |                                                                        |   | -      |                                                                                                                                              |   |   | - |   |
| Total                                                          |   |                                                                                        | 543,500 |   |                                                                        | $      | 1.44   |                                                                                                                                              |   |   | 2,531,406 |   |

| Item 15. | Exhibits and Financial Statement Schedules |
|----------|--------------------------------------------|

| 1. | Financial Statements: |
|----|-----------------------|

| 2. | Financial Statement Schedules: |
|----|--------------------------------|

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Table of Contents

| 3. | Exhibits *: |
|----|-------------|

| 3.1     | -      | Restated Articles of Incorporation of the registrant, as amended [incorporated by reference to Exhibit 3.1 to the  registrant’s Form 10-K for the year ended December 31, 2008].                                                                                                                                           |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 3.2     | -      | Bylaws of the registrant, as amended [incorporated by reference to Exhibit 3.2 to the registrant’s Form 10-K for the year ended December 31, 2008].                                                                                                                                                                                  |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.01   | -      | Management Agreement between the 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].                                                               |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.02   | -      | 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].                                                                                                                   |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.03** | -      | Atlantic American Corporation 1992 Incentive Plan [incorporated by reference to Exhibit 4 to the registrant’s Form S-8 filed on November 1, 1999].                                                                                                                                                                                   |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.04** | -      | Atlantic American Corporation 1996 Director Stock Option Plan [incorporated by reference to Exhibit 4 to the registrant’s Form S-8 filed on November 1, 1999].                                                                                                                                                                       |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.05** | -      | Atlantic American Corporation 2002 Stock Incentive Plan [incorporated by reference to Exhibit 4.1 to the registrant’s Form S-8 filed on August 2, 2002].                                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.06** | -      | Summary Terms of Consulting Arrangement between Bankers Fidelity Life Insurance Company and William H. Whaley, M.D.                                                                                                                                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.07   | -      | Credit Agreement, dated as of December 22, 2006 between Atlantic American Corporation and Wachovia Bank, National Association [incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K dated December 22, 2006].                                                                                                      |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.08   | -      | First Amendment to Credit Agreement and Pledge Agreement, dated as of December 22, 2006 between Atlantic American Corporation and Wachovia Bank, National Association [incorporated by reference to Exhibit 10.1 to the registrant’s Form 10-Q for the quarter ended March 31, 2008].                                                |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.09   | -      | Lease Agreement between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life Insurance Company dated as of November 1, 2007 [incorporated by reference to Exhibit 10.10 to the registrant’s Form 10-K for the year ended December 31, 2007].                 |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.10   | -      | First Amendment to Lease Agreement between Georgia Casualty & Surety Company, Bankers Fidelity Life Insurance Company, Atlantic American Corporation and Delta Life Insurance Company dated as of March 31, 2008 [incorporated by reference to Exhibit 10.2 to the registrant’s Form 10-Q for the quarter ended March 31, 2008]. |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.11   | -      | Second Amendment to Credit Agreement between registrant and Wachovia Bank, National Association dated as of October 28, 2008 [incorporated by reference to Exhibit 10.1 to the registrant’s Form 8-K dated October 31, 2008].                                                                                                        |
|    |   |                                                                                                                                                                                                                                                                                                                                       |
| 10.12   | -      | Third Amendment to Credit Agreement between registrant and Wells Fargo Bank, National Association, successor-by-merger to Wachovia Bank, National Association, dated June 29, 2010 [incorporated by reference to Exhibit 10.1 to the registrant’s Form 10-Q for the quarter ended June 30, 2010].                                    |

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| 14.1   | -      | Code of Ethics [incorporated by reference to Exhibit 14.1 to the registrant’s Form 10-K for the year ended December 31, 2003]. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                 |
| 21.1   | -      | Subsidiaries of the registrant.                                                                                                      |
|   |   |                                                                                                                                 |
| 23.1   | -      | Consent of BDO USA LLP, Independent Registered Public Accounting Firm.                                                               |
|   |   |                                                                                                                                 |
| 31.1   | -      | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                          |
|   |   |                                                                                                                                 |
| 31.2   | -      | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                          |
|   |   |                                                                                                                                 |
| 32.1   | -      | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                            |

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Table of Contents

|   | ATLANTIC AMERICAN CORPORATION |                                              |
|--------|-------------------------------|---------------------------------------------------|
|   | (Registrant)                  |                                              |
|   |                          |                                              |
|   | By:                           |  /s/ John G. Sample, Jr.                     |   |
|   |                          | John G. Sample, Jr.                               |   |
|   |                          | Senior Vice President and Chief Financial Officer |   |
|   |                          |                                              |   |
|   |                          | Date: March 25, 2011                              |   |

| Signature                   |   | Title                                                   |   | Date           |
|-----------------------------|--------|---------------------------------------------------------|--------|----------------|
|                        |   |                                                    |   |           |
| /s/ J. Mack Robinson        |   | Chairman Emeritus                                       |   |           |
| J. MACK ROBINSON            |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Hilton H. Howell, Jr.   |   | President, Chief Executive Officer                      |   |           |
| HILTON H. HOWELL, JR.       |   | and Chairman of the Board (Principal Executive Officer) |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ John G. Sample, Jr.     |   | Senior Vice President and Chief Financial Officer       |   |           |
| JOHN G. SAMPLE, JR.         |   | (Principal Financial and Accounting Officer)            |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Edward E. Elson         |   | Director                                                |   |           |
| EDWARD E. ELSON             |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Samuel E. Hudgins       |   | Director                                                |   |           |
| SAMUEL E. HUDGINS           |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Harriett J. Robinson    |   | Director                                                |   |           |
| HARRIETT J. ROBINSON        |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Scott G. Thompson       |   | Director                                                |   |           |
| SCOTT G. THOMPSON           |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ William H. Whaley, M.D. |   | Director                                                |   |           |
| WILLIAM H. WHALEY, M.D.     |   |                                                    |   | March 25, 2011 |
|                        |   |                                                    |   |           |
| /s/ Dom H. Wyant            |   | Director                                                |   |           |
| DOM H. WYANT                |   |                                                    |   | March 25, 2011 |

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|                                      |   | December 31,   |    |
|-------------------------------------------|--------|----------------|---------|
|                                      |   | 2010           |    |   | 2009 |   |
|                                      |   | (In thousands) |    |
|                                      |   |           |    |   |   |   |
| Cash and cash equivalents                 |   | $              | 20,077  |   |   | $ | 15,887 |   |
| Investments                               |   |           | 4,958   |   |   |   | 7,638 |   |
| Investment in subsidiaries                |   |           | 94,961  |   |   |   | 89,404 |   |
| Investments in unconsolidated trusts      |   |           | 1,238   |   |   |   | 1,238 |   |
| Deferred tax asset, net                   |   |           | 2,568   |   |   |   | 5,381 |   |
| Income taxes receivable from subsidiaries |   |           | 1,719   |   |   |   | 1,594 |   |
| Other assets                              |   |           | 1,514   |   |   |   | 783 |   |
| Total assets                              |   | $              | 127,035 |   |   | $ | 121,925 |   |

| Other payables                                   |   | $      | 3,104   |   |   | $      | 3,217   |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Junior subordinated debentures                   |   |   | 41,238  |   |   |   | 41,238  |   |
|                                             |   |   |    |   |   |   |    |   |
| Total liabilities                                |   |   | 44,342  |   |   |   | 44,455  |   |
|                                             |   |   |    |   |   |   |    |   |
| Shareholders’ equity                       |   |   | 82,693  |   |   |   | 77,470  |   |
| Total liabilities and shareholders’ equity |   | $      | 127,035 |   |   | $      | 121,925 |   |

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|                                                  |   | Year Ended December 31, |   |
|-------------------------------------------------------|--------|-------------------------|--------|
|                                                  |   | 2010                    |   |   | 2009 |   |
|                                                  |   | (In thousands)          |   |
| REVENUE                                               |   |                    |   |   |   |   |
| Fee income from subsidiaries                          |   | $                       | 5,002  |   |   | $ | 4,873 |   |
| Distributed earnings from subsidiaries                |   |                    | 6,493  |   |   |   | 6,472 |   |
| Other                                                 |   |                    | 966    |   |   |   | 332 |   |
| Total revenue                                         |   |                    | 12,461 |   |   |   | 11,677 |   |
|                                                  |   |                    |   |   |   |   |   |   |
| GENERAL AND ADMINISTRATIVE EXPENSES                   |   |                    | 8,116  |   |   |   | 8,393 |   |
|                                                  |   |                    |   |   |   |   |   |   |
| INTEREST EXPENSE                                      |   |                    | 2,612  |   |   |   | 2,756 |   |
|                                                  |   |                    | 1,733  |   |   |   | 528 |   |
| INCOME TAX (BENEFIT) EXPENSE (1)                      |   |                    | (312   | ) |   |   | 1,851 |   |
|                                                  |   |                    | 2,045  |   |   |   | (1,323 | ) |
| EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES, NET |   |                    | 448    |   |   |   | 116 |   |
| NET INCOME (LOSS)                                     |   | $                       | 2,493  |   |   | $ | (1,207 | ) |

| (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. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                     |   | Year Ended December 31, |   |
|------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                     |   | 2010                    |   |   | 2009 |   |
|                                                                                     |   | (In thousands)          |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                    |   |   |   |   |
| Net income (loss)                                                                        |   | $                       | 2,493  |   |   | $ | (1,207 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                    |   |   |   |   |   |   |
| Realized investment (gains) losses                                                       |   |                    | (488   | ) |   |   | 7 |   |
| Depreciation and amortization                                                            |   |                    | 98     |   |   |   | 163 |   |
| Compensation expense related to share awards                                             |   |                    | -      |   |   |   | 22 |   |
| Equity in undistributed earnings of consolidated subsidiaries                            |   |                    | (448   | ) |   |   | (116 | ) |
| (Increase) decrease in intercompany taxes                                                |   |                    | (125   | ) |   |   | 1,670 |   |
| Deferred income tax expense                                                              |   |                    | 1,037  |   |   |   | 2,493 |   |
| Decrease in other liabilities                                                            |   |                    | (118   | ) |   |   | (1,713 | ) |
| Other, net                                                                               |   |                    | 34     |   |   |   | (359 | ) |
| Net cash provided by operating activities                                                |   |                    | 2,483  |   |   |   | 960 |   |
|                                                                                     |   |                    |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                    |   |   |   |   |   |   |
| Proceeds from investments sold                                                           |   |                    | 4,270  |   |   |   | 2 |   |
| Investments purchased                                                                    |   |                    | (1,945 | ) |   |   | (4,999 | ) |
| Capital contribution to subsidiaries                                                     |   |                    | -      |   |   |   | (400 | ) |
| Additions to property and equipment                                                      |   |                    | (50    | ) |   |   | (88 | ) |
| Net cash provided by (used in) investing activities                                      |   |                    | 2,275  |   |   |   | (5,485 | ) |
|                                                                                     |   |                    |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                    |   |   |   |   |   |   |
| Payment of dividends on Series D Preferred Stock                                         |   |                    | (508   | ) |   |   | (508 | ) |
| Purchase of treasury shares                                                              |   |                    | (60    | ) |   |   | (46 | ) |
| Net cash used in financing activities                                                    |   |                    | (568   | ) |   |   | (554 | ) |
|                                                                                     |   |                    |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                          |   |                    | 4,190  |   |   |   | (5,079 | ) |
| Cash and cash equivalents at beginning of year                                           |   |                    | 15,887 |   |   |   | 20,966 |   |
| Cash and cash equivalents at end of year                                                 |   | $                       | 20,077 |   |   | $ | 15,887 |   |
|                                                                                     |   |                    |   |   |   |   |   |   |
| Supplemental disclosure:                                                                 |   |                    |   |   |   |   |   |   |
| Cash paid for interest                                                                   |   | $                       | 2,615  |   |   | $ | 2,811 |   |
| Cash received for income taxes                                                           |   | $                       | 650    |   |   | $ | - |   |

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| Segment            |   | DeferredAcquisition Costs |   |   | Future PolicyBenefits, Losses,Claims and LossReserves |   |    | UnearnedPremiums |   |   | Other PolicyClaims andBenefits Payable |   |
|--------------------|--------|---------------------------|--------|--------|-------------------------------------------------------|--------|---------|------------------|--------|--------|----------------------------------------|--------|
|               |   |                      |   |   | (In thousands)                                        |   |    |             |   |
| December 31, 2010: |   |                      |   |   |                                                  |   |    |             |   |   |                                   |   |
| Bankers Fidelity   |   | $                         | 17,805 |   |                                                  | $      | 68,680  |             |   | $      | 3,313                                  |   |   | $ | 1,960 |   |
| American Southern  |   |                      | 3,434  |   |                                                  |   | 46,092  |             |   |   | 17,857                                 |   |   |   | - |   |
|               |   | $                         | 21,239 |   |                                                  | $      | 114,772 | (1)              |   | $      | 21,170                                 |   |   | $ | 1,960 |   |
|               |   |                      |   |   |                                                  |   |    |             |   |   |                                   |   |   |   |   |   |
| December 31, 2009: |   |                      |   |   |                                                  |   |    |             |   |   |                                   |   |   |   |   |   |
| Bankers Fidelity   |   | $                         | 16,588 |   |                                                  | $      | 66,845  |             |   | $      | 3,334                                  |   |   | $ | 1,990 |   |
| American Southern  |   |                      | 2,865  |   |                                                  |   | 42,248  |             |   |   | 14,796                                 |   |   |   | - |   |
|               |   | $                         | 19,453 |   |                                                  | $      | 109,093 | (2)              |   | $      | 18,130                                 |   |   | $ | 1,990 |   |

| (1) | Includes future policy benefits of $60,811 and losses and claims of $53,961. |
|-----|------------------------------------------------------------------------------|

| (2) | Includes future policy benefits of $58,981 and losses and claims of $50,112. |
|-----|------------------------------------------------------------------------------|

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| Segment            |   | PremiumRevenue |   |   | NetInvestmentIncome |   |   | Benefits,Claims, Lossesand SettlementExpenses |   |   | Amortizationof DeferredAcquisitionCosts |   |   | OtherOperatingExpenses |   |   | CasualtyPremiumsWritten |   |
|--------------------|--------|----------------|--------|--------|---------------------|--------|--------|-----------------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------------|--------|--------|-------------------------|--------|
|               |   |           |   |   |                |   |   | (In thousands)                                |   |   |                                    |   |   |                   |   |
| December 31, 2010: |   |           |   |   |                |   |   |                                          |   |   |                                    |   |   |                   |   |   |                    |   |
| Bankers Fidelity   |   | $              | 62,674 |   |                | $      | 5,056  |                                          |   | $      | 45,646                                  |   |   | $                      | 2,077  |   |                    | $      | 17,616 |   |   | $ | - |   |
| American Southern  |   |           | 34,939 |   |                |   | 4,097  |                                          |   |   | 21,208                                  |   |   |                   | 7,698  |   |                    |   | 6,003 |   |   |   | 38,000 |   |
| Other              |   |           | -      |   |                |   | 426    |                                          |   |   | -                                       |   |   |                   | -      |   |                    |   | 6,020 |   |   |   | - |   |
|               |   | $              | 97,613 |   |                | $      | 9,579  |                                          |   | $      | 66,854                                  |   |   | $                      | 9,775  |   |                    | $      | 29,639 |   |   | $ | 38,000 |   |
|               |   |           |   |   |                |   |   |                                          |   |   |                                    |   |   |                   |   |   |                    |   |   |   |   |   |   |   |
| December 31, 2009: |   |           |   |   |                |   |   |                                          |   |   |                                    |   |   |                   |   |   |                    |   |   |   |   |   |   |   |
| Bankers Fidelity   |   | $              | 57,162 |   |                | $      | 5,533  |                                          |   | $      | 41,955                                  |   |   | $                      | 1,721  |   |                    | $      | 16,415 |   |   | $ | - |   |
| American Southern  |   |           | 34,300 |   |                |   | 4,740  |                                          |   |   | 18,829                                  |   |   |                   | 7,935  |   |                    |   | 7,626 |   |   |   | 32,859 |   |
| Other              |   |           | -      |   |                |   | 281    |                                          |   |   | -                                       |   |   |                   | -      |   |                    |   | 6,879 |   |   |   | - |   |
|               |   | $              | 91,462 |   |                | $      | 10,554 |                                          |   | $      | 60,784                                  |   |   | $                      | 9,656  |   |                    | $      | 30,920 |   |   | $ | 32,859 |   |

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|                          |   | DirectAmount   |    |   | Ceded ToOtherCompanies |   |    | AssumedFrom OtherCompanies |   |   | NetAmounts |   |   | Percentage ofAmount AssumedTo Net |    |
|-------------------------------|--------|----------------|---------|--------|------------------------|--------|---------|----------------------------|--------|--------|------------|--------|--------|-----------------------------------|---------|
|                          |   | (In thousands) |    |
| Year ended December 31, 2010: |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |
| Life insurance in force       |   | $              | 284,289 |   |                   | $      | (26,805 | )                          |   | $      | -          |   |   | $                                 | 257,484 |   |   |   |   |
|                          |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |
| Premiums  --        |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |
| Bankers Fidelity              |   | $              | 62,578  |   |                   | $      | (53     | )                          |   | $      | 149        |   |   | $                                 | 62,674  |   |   |   | 0.2 | % |
| American Southern             |   |           | 37,244  |   |                   |   | (5,505  | )                          |   |   | 3,200      |   |   |                              | 34,939  |   |   |   | 9.2 | % |
| Total premiums                |   | $              | 99,822  |   |                   | $      | (5,558  | )                          |   | $      | 3,349      |   |   | $                                 | 97,613  |   |   |   | 3.4 | % |
|                          |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |   |
| Year ended December 31, 2009: |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |   |
| Life insurance in force       |   | $              | 287,056 |   |                   | $      | (30,918 | )                          |   | $      | -          |   |   | $                                 | 256,138 |   |   |   |   |   |
|                          |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |   |
| Premiums  --        |   |           |    |   |                   |   |    |                       |   |   |       |   |   |                              |    |   |   |   |   |   |
| Bankers Fidelity              |   | $              | 57,073  |   |                   | $      | (105    | )                          |   | $      | 194        |   |   | $                                 | 57,162  |   |   |   | 0.3 | % |
| American Southern             |   |           | 37,496  |   |                   |   | (6,207  | )                          |   |   | 3,011      |   |   |                              | 34,300  |   |   |   | 8.8 | % |
| Total premiums                |   | $              | 94,569  |   |                   | $      | (6,312  | )                          |   | $      | 3,205      |   |   | $                                 | 91,462  |   |   |   | 3.5 | % |

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|              |   |   DeferredPolicy |   |   |     |   |   |     |   |   |     |   |   |   Net     |   |   | Claims and ClaimAdjustment ExpensesIncurred Related To |   |   |  Amortization of Deferred |   |   | Paid Claims and Claim |   |   |       |   |
|-------------------|--------|-----------------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------------|--------|--------|--------------------------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------|--------|--------|------------|--------|
|              |   | Acquisition           |   |   |     |   |   | Unearned |   |   | Earned   |   |   | Investment     |   |   |  Current                                          |   |   | Prior                          |   |   |  Acquisition     |   |   | Adjustment |   |   | Premiums |   |
| Year Ended        |   | Costs                 |   |   | Reserves |   |   | Premiums |   |   | Premiums |   |   | Income         |   |   | Year                                                   |   |   | Years                          |   |   | Costs                 |   |   | Expenses   |   |   | Written |   |
|              |   |                  |   |   |     |   |   |     |   |   |     |   |   | (In thousands) |   |   |                                                   |   |   |                           |   |   |                  |   |
| December 31, 2010 |   | $                     | 3,434  |   |     | $      | 46,092 |     |   | $      | 17,857   |   |   | $              | 34,939 |   |                                                   | $      | 4,097  |                           |   | $      | 26,579                |   |   | $          | (5,371 | ) |   | $ | 7,698 |   |   | $ | 20,128 |   |   | $ | 38,000 |   |
|              |   |                  |   |   |     |   |   |     |   |   |     |   |   |           |   |   |                                                   |   |   |                           |   |   |                  |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009 |   | $                     | 2,865  |   |     | $      | 42,248 |     |   | $      | 14,796   |   |   | $              | 34,300 |   |                                                   | $      | 4,740  |                           |   | $      | 25,576                |   |   | $          | (6,747 | ) |   | $ | 7,935 |   |   | $ | 17,987 |   |   | $ | 32,859 |   |

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