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Why Atlas Financial Holdings Shares Crashed 25%?

by | Mar 3, 2019

Atlas Financial Holdings, Inc.

M.Cap: $81 million

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 para-transit, limousine/livery and business auto.

Reason for the stock price crash

After reporting 4th quarter and FY 218 results, shares of Atlas Financial Holdings slumped by roughly 25%. During the fourth quarter, revenue declined by 11.7% to $52.1 million, andnet loss was $53.6 million compared to a net loss of $54.3 million in the 4th quarter of 2017. Moreover, for the FY 2018, the company’s revenue declined by 0.1% to $221.8 million, andbook value per common share decreased $3.34 to $4.08 as of December 31, 2018.

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.“

Atlas Financial Holdings Announces Unaudited Fourth Quarter 2018 Financial Results


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