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Atlas Financial (AFH) Q4 Loss Widens, 2018 Guidance Issued
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Atlas Financial Holdings, Inc. reported fourth-quarter 2017 operating loss of $5.57 per share, wider than the Zacks Consensus Estimate of a loss of $3.91. The metric was also wider than the loss of $2.27, incurred in the year-ago quarter.
Atlas Financial Holdings, Inc. Price, Consensus and EPS Surprise
Atlas Financial’s revenues rose 28.3% year over year to $59 million on 29.8% higher net premiums. However, a 4.2% year-over-year decline in net investment income and nearly 45% drop in other income limited this upside. The top line met the Zacks Consensus Estimate.
Gross premiums written of $54.2 million increased 4.3%, driven by higher premiums written in livery/limousine in California and New Jersey, para-transit in Texas and taxi in Pennsylvania, partially offset by lower premiums written in para-transit in New Jersey and New York, taxi in Louisiana, and in all lines in Minnesota and Michigan.
The company’s total expenses escalated 82.6% year over year to nearly $127 million due to a rise in net claims incurred, acquisition costs, interest costs and other underwriting expenses.
Atlas Financial’s underwriting loss of $69.1 million is wider than $25 million loss suffered in the prior-year quarter. Combined ratio deteriorated 6380 basis points (bps) year over year to 220.3%.
Financial Update
Atlas Financial exited 2017 with cash and cash equivalents of $45.6 million, up 52.5% from 2016-end level.
Total assets of Atlas Financial grew 13.9% from year-end 2016 to $482.5 million as of Dec 31, 2017.
Debt level increased 25% from year-end 2016 to nearly $24 million as of Dec 31, 2017.
Total shareholders’ equity decreased 28.8% from year-end 2016 to $90.6 million.
Book value was $7.42 per share as of Dec 31, 2017, down nearly 30% from year-end 2016.
Atlas Financial’s return on average common equity was (35.7%) in 2017, comparing unfavorably with 1.9% in 2016.
The gross annualized investment yield on cash and cash equivalents was 0.3%, expanding 20 basis points in fourth-quarter 2017. This increase was driven by higher interest rates on certain new accounts and more balances in accounts earning greater interest.
2018 Guidance
Atlas expects to write more than $300 million in premiums and the combined ratio to hover around 80% in 2018. Net earnings per share are estimated to exceed $2.
Zacks Rank
Atlas Financial carries a Zacks Rank #5 (Strong Sell).
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
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Atlas Financial (AFH) Q4 Loss Widens, 2018 Guidance Issued
Atlas Financial Holdings, Inc. reported fourth-quarter 2017 operating loss of $5.57 per share, wider than the Zacks Consensus Estimate of a loss of $3.91. The metric was also wider than the loss of $2.27, incurred in the year-ago quarter.
Atlas Financial Holdings, Inc. Price, Consensus and EPS Surprise
Atlas Financial Holdings, Inc. Price, Consensus and EPS Surprise | Atlas Financial Holdings, Inc. Quote
Behind the Headlines
Atlas Financial’s revenues rose 28.3% year over year to $59 million on 29.8% higher net premiums. However, a 4.2% year-over-year decline in net investment income and nearly 45% drop in other income limited this upside. The top line met the Zacks Consensus Estimate.
Gross premiums written of $54.2 million increased 4.3%, driven by higher premiums written in livery/limousine in California and New Jersey, para-transit in Texas and taxi in Pennsylvania, partially offset by lower premiums written in para-transit in New Jersey and New York, taxi in Louisiana, and in all lines in Minnesota and Michigan.
The company’s total expenses escalated 82.6% year over year to nearly $127 million due to a rise in net claims incurred, acquisition costs, interest costs and other underwriting expenses.
Atlas Financial’s underwriting loss of $69.1 million is wider than $25 million loss suffered in the prior-year quarter. Combined ratio deteriorated 6380 basis points (bps) year over year to 220.3%.
Financial Update
Atlas Financial exited 2017 with cash and cash equivalents of $45.6 million, up 52.5% from 2016-end level.
Total assets of Atlas Financial grew 13.9% from year-end 2016 to $482.5 million as of Dec 31, 2017.
Debt level increased 25% from year-end 2016 to nearly $24 million as of Dec 31, 2017.
Total shareholders’ equity decreased 28.8% from year-end 2016 to $90.6 million.
Book value was $7.42 per share as of Dec 31, 2017, down nearly 30% from year-end 2016.
Atlas Financial’s return on average common equity was (35.7%) in 2017, comparing unfavorably with 1.9% in 2016.
The gross annualized investment yield on cash and cash equivalents was 0.3%, expanding 20 basis points in fourth-quarter 2017. This increase was driven by higher interest rates on certain new accounts and more balances in accounts earning greater interest.
2018 Guidance
Atlas expects to write more than $300 million in premiums and the combined ratio to hover around 80% in 2018. Net earnings per share are estimated to exceed $2.
Zacks Rank
Atlas Financial carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>