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Shares of Atlas Financial Holdings, Inc. (AFH - Snapshot Report) continue to rally riding on the strength of fourth-quarter earnings results. Shares surged almost 12.3% since the earnings announcement on Mar 10.

The Zacks Consensus Estimate for 2014 moved north by 4.2% to $1.00 while that for 2015 rose 8.9% to $1.35 over the last seven days.

Atlas Financial’s fourth-quarter net operating earnings per share of 22 cents, increased 46.7% year over year. The number also beat the Zacks Consensus Estimate by a penny.

Bottom-line growth was largely driven by the company’s revenue accretion. Significant improvement in net premiums earned drove the top line, which surged 72.2% year over year. Total revenue also exceeded the Zacks Consensus Estimate by 20.7%.

Atlas Financial’s gross premium written surged substantially during the reported quarter, which resulted from higher premiums written in the commercial auto business line.

Underwriting results of Atlas Financial also exhibited improvement during the fourth quarter increasing 28.6% year over year.

Atlas Financial is witnessing operating synergies owing to its well-managed vertical expansion throughout its geographic base, established over the past two years. The company’s acquisition of Gateway, in early 2013, has also contributed to top-line growth.

We expect the company’s 2014 earnings to gain from insurance price strengthening and augmenting business operations. It is also worth noting that Atlas Financial is not materially exposed to catastrophic risk which eliminates potential earnings volatility.

Atlas Financial is also equipped with strong assets. Total assets of the company as of 2013-end stood at $219.3 million compared to $163 million as of 2012-end.

Zacks Rank

Atlas Financial presently carries a Zacks Rank #1 (Strong Buy). Investors interested in the property and casualty insurance industry may also consider some other top-ranked stocks like Alleghany Corporation (Y - Snapshot Report), American Financial Group Inc. (AFG - Analyst Report) and AmTrust Financial Services, Inc. (AFSI - Snapshot Report). All these stocks sport the same Zacks Rank as Atlas Financial.

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