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Atlas Financial (AFH) Misses on Q1 Earnings; Revenues Rise

Atlas Financial Holdings, Inc. AFH reported first-quarter 2016 operating income of 34 cents per share, which missed the Zacks Consensus Estimate of 37 cents. However, earnings improved 26% year over year on higher revenues.

Including non-recurring items, net income came in at 38 cents per share, more than double year over year.
   
Behind the Headlines

Atlas Financial’s revenues surged 52.3% year over year to $43 million on higher net premiums earned (up 38.4%), net investment income (up 25.6%) and a significant rise in other income (up 219%). However, revenues missed the Zacks Consensus Estimate of $47 million.

Gross premiums written soared 42.4% year over year to $64 million. Core commercial auto business premiums increased 42.9% and in-force premiums as of Mar 31, 2016 were $220.6 million.

The company’s total expenses increased 31% year over year to $35.5 million due to a rise in net claims incurred, acquisition costs, interest costs and other underwriting expenses.

Atlas Financial’s underwriting income was $6.5 million, reflecting an over twofold increase from the year-ago quarter. Combined ratio improved 540 basis points (bps) year over year to 84.4% driven by a 900 bps improvement in underwriting ratio.

Financial Update

Atlas Financial exited the quarter with cash and cash equivalents of $17.3 million, down 22.8% from the 2015-end level.

Total assets of Atlas Financial increased 2.9% from year-end 2015 to $423.3 million as of Mar 31, 2016.

Total shareholders’ equity increased 5.2% from year-end 2015 to $136.6 million.

Book value was $10.73 per share as of Mar 31, 2016, up 16.3% year over year.

Atlas Financial’s return on average common equity was 15% in the quarter, higher than 7.7% in the year-ago quarter.

2016 Guidance

Atlas Financial expects a favorable pricing environment in the specialty light commercial auto market.

Zacks Rank and Performance of Other Insurers

Currently, Atlas Financial carries a Zacks Rank #3 (Hold). The bottom line at RLI Corp RLI, The Allstate Corporation ALL and Aflac Inc. AFL outperformed their Zacks Consensus Estimate in the first quarter.

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AFLAC INC (AFL): Free Stock Analysis Report
 
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ALLSTATE CORP (ALL): Free Stock Analysis Report
 
ATLAS FINL HLDG (AFH): Free Stock Analysis Report
 
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