Atlas Financial Holdings (AFH) Reports Q4 Loss of $3.48, Revenues Miss

Atlas Financial Holdings (NASDAQ: AFH) reported Q4 EPS of ($3.48), versus $0.47 reported last year. Revenue for the quarter came in at $52.1 million versus the consensus estimate of $52.56 million.

• Gross premiums written were $57.7 million for the three months ended December 31, 2018 compared to $54.2 million for the three months ended December 31, 2017.
• Total revenue was $52.1 million for the three months ended December 31, 2018, a decrease of 11.7% from $59.0 million for the three months ended December 31, 2017.
• Underwriting loss was $39.6 million in fourth quarter 2018 compared to $69.1 million in fourth quarter 2017.
• The combined ratio was 175.5% in fourth quarter 2018 compared to 220.3% in fourth quarter 2017.
• Net loss was $53.6 million, or $4.47 loss per common share diluted, in fourth quarter 2018 compared to a net loss of $54.3 million, or $4.48 loss per common share diluted, in fourth quarter 2017.
• Annualized return on equity was a negative 250.3% in fourth quarter 2018 compared to negative 184.8% in fourth quarter 2017.

Management Comments

Scott D. Wollney, Atlas’ President and CEO, stated, “Our financial results this year were impacted by our decision to make changes in our claim reserve estimates. Actuarial work conducted in connection with year-end indicated a need to increase reserve estimates for unpaid losses due primarily to bodily injury claims from accident years 2016 and prior. These claims are showing higher severity and have been open for longer periods than we had estimated. Specifically, we strengthened reserves to account for the possibility of higher costs for the tail on these prior accident years. While our use of predictive analytics in underwriting and claims is having a positive impact on claim closures, we are still addressing historic challenges affecting commercial automobile insurance generally and in our book of business specifically. However, we believe that claim closure data for more recent accident years demonstrates the fundamental efficacy of our predictive model-driven processes.”

Outlook for 2019

Mr. Wollney concluded, “We believe our thesis and foundation for long-term growth and underwriting profitability remain valid. We will be re-evaluating our traditional business with a focus on reducing loss ratio volatility while exploring ways to maximize new opportunities we’re cultivating with transportation network companies and related businesses. We also believe that increased deployment of in-vehicle technologies coupled with our specialty focus and innovative processes will overcome the challenges facing our business and the auto insurance industry in general.”

For earnings history and earnings-related data on Atlas Financial Holdings (AFH) click here.

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