Atlas Financial Holdings, Inc. (TSX.V:AFH) (“Atlas” or the “Company”)
today reported its financial results for the third quarter ended
September 30, 2012.
Scott D. Wollney, Atlas' President & CEO noted, “We are pleased to
report this landmark quarter for the company, which included significant
improvement in our combined ratio and an underwriting profit. At the end
of the first half of 2012, we believed that Atlas’ business had reached
an inflection point and believe that our financial results are now
beginning to show the real potential of our core commercial auto
business. Through the end of the third quarter, gross premium written
from Atlas’ commercial automobile lines was $41.0 million, representing
a 183.0% increase relative to the same period in 2011. With 100% percent
of our resources focused on organic growth and strategic acquisitions in
our core lines, we plan to maximize the benefits to all stakeholders in
what increasingly appears to be a hardening insurance market.”
2012 Third Quarter Financial and Operational Review
At the time of Atlas' going public transaction, the Company committed
to a strategic focus on specialty commercial automobile lines of
insurance. The successful winding down of other insurance lines last
year, coupled with the successful expansion of the Company's
multi-state retail agent focused distribution channel, now enables
Atlas to devote its resources to its core lines of business. Our
transition to a vertical growth strategy in the second half of 2012
successfully generated more business from existing agents, as we
leveraged our strong position in key markets to grow our core
products. As a percentage of Atlas' subsidiaries book of business,
commercial auto gross premiums written now represent 95% for the three
month period ended September 30, 2012, compared to 49% for the prior
Net Income: Atlas reported net income of $1.7 million, or basic
and diluted earnings per common share of $0.08, during the three month
period ended September 30, 2012, compared to income of $1.1 million,
or basic and diluted earnings per common share of $0.05, during the
three month period ended September 30, 2011.
Gross Premium Written: In the three month period ended
September 30, 2012, gross premium written from commercial automobile
was $22.1 million, representing a 313.4% increase relative to the
three month period ended September 30, 2011.
Loss and Combined Ratio: The Company's loss ratio improved to
65.5% compared to a loss ratio of 79.4% for the prior year quarter.
Atlas' combined ratio improved for the three month period ended
September 30, 2012 to 97.6%, versus 119.7% for the corresponding prior
year period. This is the first quarter since Atlas' inception that it
has achieved a combined ratio under 100%.
Underwriting Results: Underwriting results improved by $2.0
million compared to the three month period ended September 30, 2011,
in part due to the Company's shift away from non-core lines of
business which were primarily non-standard private passenger
automobile insurance products. These results also benefitted from
increased volume of business where policyholders maintain larger
self-insured retentions, which Atlas expects to generate a lower loss
ratio than business with lower deductibles.
Book Value: Book value increased by $0.10 per basic and diluted
common share in the quarter. Book value per diluted common share on
September 30, 2012 was $2.15, compared to $2.05 at June 30, 2012.
Deferred Tax Assets: The Company was able to utilize deferred
tax assets to offset tax liability related to earnings in the quarter
and maintains additional deferred tax assets valued at $0.64 per basic
and diluted common share which are fully allowed for at this time but
may be used in the future, subject to tax laws.
Balance Sheet / Investment Overview
Cash and Invested Assets: Cash and investment assets as of the
period ended September 30, 2012 totaled $121.7 million, consisting
primarily of fixed income securities.
Investment Strategy: Atlas aligns its securities portfolio to
support the liabilities and operating cash needs of the insurance
subsidiaries, to preserve capital and to generate investment returns.
Atlas invests predominantly in corporate and government bonds with
relatively short durations that correlate with the payout patterns of
Atlas' claims liabilities.
Investment Income: During the three month period ended
September 30, 2012, Atlas reported investment income and other
revenues of $1.39 million, of which $779,000 was recognized as
Investment Yield: The investment income and other revenues
generated by the investment portfolio resulted in a 4.6% annual
investment yield for the quarter. A portion of this yield relates to
capital gains. Excluding the effect of these capital gains the annual
investment yield for the quarter was 2.0%.
Conference Call Details
November 12, 2012 - 8:30 a.m. ET
Participant Dial-In Numbers: 800-593-0693
To access the call, please dial-in approximately five minutes before the
start time and, when asked, provide the operator with passcode "Atlas".
Questions will be taken at the end of the call.
Following the call, a webcast will be made available and can be accessed
through the Company's website at www.atlas-fin.com/atlas_investor_relations.html.
The primary business of Atlas is commercial automobile insurance in the
United States, with a niche market orientation and focus on insurance
for the "light" commercial automobile sector including taxi cabs,
non-emergency paratransit, limousine/livery and business auto. The
business of Atlas is carried on through its insurance subsidiaries
American Country Insurance Company and American Service Insurance
Company, Inc. Atlas' insurance subsidiaries have decades of experience
with a commitment to always being an industry leader in these
specialized areas of insurance.
For more information about Atlas, please visit www.atlas-fin.com.
Atlas' financial statements reflect consolidated results of Atlas'
subsidiaries: American Insurance Acquisition Inc., American Country
Insurance Company and American Service Insurance Company, Inc.
Additional information about Atlas, including a copy of Atlas' third
quarter 2012 Form 10-Q unaudited condensed consolidated financial
statements and Management Discussion & Analysis, can be accessed on the
Canadian Securities Administrators' website at www.sedar.com,
via the U.S. Securities and Exchange Commission internet site (www.sec.gov)
or through Atlas' website at www.atlas-fin.com.
This release includes forward-looking statements regarding Atlas and its
insurance subsidiaries and businesses. Such statements are based on the
current expectations of the management of each entity. The words
"anticipate," "expect," "believe," "may," "should," "estimate,"
"project," "outlook," "forecast" or similar words are used to identify
such forward looking information. The forward-looking events and
circumstances discussed in this release may not occur and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting the Companies, including risks regarding the
insurance industry, economic factors and the equity markets generally
and the risk factors discussed in the “Risk Factors” section of the
Company's third quarter 2012 Form 10-Q. No forward-looking statement can
be guaranteed. Except as required by applicable securities laws,
forward-looking statements speak only as of the date on which they are
made and Atlas and its subsidiaries undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of
new information, future events, or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.