Atlas Announces Financial Results for Full Year 2011

    




 CHICAGO, March 26, 2012 /CNW/ -  Atlas Financial Holdings,  Inc. ("Atlas" or the "Company") today announced its financial results  for the fourth quarter and full year 2011. 

 As originally announced via press release on March 6, 2012, the Company  became a domestic issuer in the United States ("US") and transitioned  from reporting according to Canadian regulations with US secondary  filings, to reporting according to US regulations with Canadian  secondary filings. As a result, the Company has adopted US generally  accepted accounting principles ("US GAAP") in its first annual filing  under Form 10-K. 

 All amounts shown are in US dollars. 

 Full year 2011 Highlights 




        --  On a year over year basis, gross premium written related to
            core commercial lines increased by 37% for 2011 as compared to
            2010.

        --  Net loss for the year ended December 31, 2011 was $2.5 million.

        --  After taking the impact of the liquidation preference of the
            preferred shares into consideration, the basic and diluted loss
            per common share in 2011 was $(0.18).

        --  Non-operating expenses had an unfavorable impact of ($0.18) on
            basic and diluted earnings per share in 2011.

        --  Total investment income (including realized capital gains) in
            2011 was $7.5 million, an increase of 36% as compared to 2010.

        --  Underwriting losses improved by $12.7 million for the year
            ended December 31, 2011 as compared to the full year of 2010.

        --  Atlas' distribution channel was able to write business in a
            total of 25 states at the end of 2011.

        --  Book value per common share diluted at December 31, 2011 was
            $2.03.

        --  Atlas carries a valuation allowance, in the amount of $0.67 per
            common share diluted at December 31, 2011, against its deferred
            tax asset.




 In Atlas' core lines of business, commercial automobile insurance, gross  premium written in the fourth quarter 2011 was $4.3 million, an  increase of 40.3% over fourth quarter 2010 and a decrease of 19.9% as  compared to the third quarter 2011, reflecting seasonality. Total gross  premium written for the fourth quarter 2011 was $9.1 million reflecting  a 2.1% decrease from the fourth quarter 2010 and a 16.9% decrease from  the third quarter 2011. 

 For the year ended December 31, 2011, gross premium written related to  core commercial lines increased by 36.9% for 2011 as compared to 2010.   Total gross premium written was $42.0 million compared to $46.7 million  in 2010, representing a 10.0% decrease primarily due to the reduction  of non-core lines of business. Net premium earned was $9.1 million in  the fourth quarter 2011, a 21.7% decrease compared with the fourth  quarter of 2010 and a 3.2% increase compared to the third quarter  2011.  Premiums are earned ratably over the term of underlying  policies; therefore, changes in earned premiums follow any changes in  written premium during the trailing twelve month period based on Atlas'  typical policy term. 

 Net premium earned was $35.7 million in 2011, a 33.3% decrease compared  with $53.6 million in 2010. The decrease in net premiums earned is  attributable to the written premium decline experienced by the  Company's insurance subsidiaries prior to Atlas' formation, coupled  with the transition away from private passenger automobile insurance  and other non-core lines of business during 2011. 

 Atlas' loss and loss adjustment expense ratio was 92.5% in the fourth  quarter 2011 as compared with 87.0% in the fourth quarter 2010 and  79.4% in the third quarter 2011.  This figure includes $1.8 million  reserve strengthening adjustment made in the fourth quarter 2011 which  unfavorably impacted the loss ratio by 19.8% in the fourth quarter and  5% on a full year 2011 basis.   This reserve strengthening related to  policies issued in years preceding 2010 which are currently being run  off. The loss ratio relating to full year 2011 was 81.1% compared to  89.7% in 2010. 

 Atlas' loss ratio improved in 2011 compared to 2010 due to the increased  composition of commercial auto as a percentage of the total written  premium and the winding down of terminated non-core and non-profitable  lines. Atlas has extensive experience and expertise with respect to  underwriting and claims management in this specialty area of insurance  and expects the loss ratio to return to levels supporting underwriting  profit. 

 Other underwriting expense in the fourth quarter 2011 was $5.1 million,  representing a 21.6% increase from the fourth quarter of 2010 and a  177.5% increase from the third quarter 2011. These ratios include a  one-time $2.5 million non-cash charge recorded in the fourth quarter  upon settlement of the American Country Pension Plan. This charge  unfavorably impacted the other underwriting expense ratio by 28.0% in  the fourth quarter.   Excluding the pension related charge, other  underwriting expense in the fourth quarter was 8.1% lower than fourth  quarter 2010 and 7.0% higher than third quarter 2011. For the full  year, the other underwriting expense ratio was 29.9% in 2011 compared  to 34.3% in 2010.  In the first quarter of 2011, we incurred  non-recurring expenses of $0.6 million. The combination of the  settlement of the American Country Pension Plan and the non-recurring  expenses unfavorably impacted the other underwriting expense ratio by  8.8% for the full year. The favorable change in other areas of  underwriting expense can be attributed to operating efficiencies  realized after the reverse merger at the end of 2010 as well as the  absence of significant agent receivable write-offs in 2011. 

 Atlas' combined ratio, which measures underwriting performance, was  169.7% for the fourth quarter 2011 as compared with 140.7% in the  fourth quarter 2010 and 118.4% in the third quarter 2011.  The  aforementioned reserve strengthening and non-cash settlement charge  unfavorably impacted the combined ratio in the fourth quarter by 47.8%.  Atlas expects that growth in premiums from core lines and an absence of  significant non-operating charges will improve the Company's combined  ratio and deliver underwriting profit. 

 For the full year 2011, Atlas' combined ratio was 131.4% as compared to  144.7% in 2010.  Non-operating expenses including reserve strengthening  for pre-Atlas periods had an unfavorable impact of 13.9% on the  Company's combined ratio in 2011. 

 Atlas lost $2.5 million during 2011 compared to net losses of $21.8  million in 2010.  After taking the impact of the liquidation preference  of the preferred shares into consideration, the basic and diluted loss  per common share in 2011 was $(0.18) versus a loss per common share of  $(1.19) in 2010 computed under continuation accounting rules. 

 The combination of the one-time $2.5 million ($1.8 million net of tax)  non-cash charge upon settlement of the American Country Pension Plan,  the $1.8 million ($1.2 million net of tax) fourth quarter reserve  strengthening, and other non-recurring expenses incurred in Q1 2011 of  $0.6 million ($0.4 million net of tax), had an unfavorable impact of  ($0.18) on basic and diluted earnings per common share in 2011. 

 "The past year was an important transitional period in which we  successfully consolidated our infrastructure around a lower cost base,  brought closure to legacy issues and re-energized our distribution  channel," said Scott D. Wollney, Atlas President & CEO.  "In 2012, our  focus shifts from transitioning away from the past to building a  successful future." 

 Atlas' active states can be found on the Company's website.  Continued  expansion where Atlas' research supports a strong comparative value  proposition utilizing existing licenses will continue into 2012. 

 Financial Information 

 Additional information about Atlas, including a copy of Atlas' fourth  quarter and full year 2011 consolidated financial statements and  Management Discussion & Analysis, can be accessed on the Canadian  Securities Administrators' website at www.sedar.com, via the U.S. Securities and Exchange Commission internet site at www.sec.gov, or through Atlas' website at www.atlas-fin.com.   As mentioned above, the Company has adopted US GAAP in its first  annual filing under Form 10-K. Financials for the first through third  quarters of 2011 are also available in US GAAP in addition to the  originally filed IFRS statements on www.sedar.com and through Atlas' website. The adoption of US GAAP did not have a  material impact on our financial condition. 

 Conference Call 

 Atlas will hold a conference call at 8:30 a.m. (Eastern Time) on March  26, 2012 to review fourth quarter and full year 2011 results. To access  the call, approximately five minutes before the start time please dial  800-593-0693 and, when asked, provide the operator with passcode  "Atlas". Questions will be taken at the end of the call. 

 Following the call, an audio webcast will be available and can be  accessed at www.atlas-fin.com/atlas_investor_relations.html. 

 Continuation Accounting 

 Atlas was formed on December 31, 2010 through a reverse triangular  merger and the consolidated financial statements for 2010 are those of  Atlas and its two insurance subsidiaries, American Country Insurance  Company and American Service Insurance Company, Inc., which have been  prepared in accordance with continuation accounting concepts included  in Accounting Standard Codification 805 Business Combinations. Accordingly, and as a result of the merger date, shareholder's equity  and earnings per share information provided herein for 2010 reflect the  ordinary voting shares outstanding at the date of the merger as well as  the ordinary voting shares, restricted voting shares and preferred  shares that were issued in connection with the merger, as if such  capitalization structure were in place during all 2010 periods for  which financial information is being provided. 

 Financial Statement Presentation 

 As noted above, Atlas' financial statements reflect consolidated results  including prior periods based on historical financial statements of  Atlas' subsidiaries: American Insurance Acquisition Inc., American  Country Insurance Company and American Service Insurance Company, Inc.  while under the management of its previous owners. The 2010 financial  statements and the historic results reflected therein contain certain  expenses and fees that supported the infrastructure of the previous  parent of these subsidiaries. Atlas no longer incurs these expenses,  which included management fees, allocated overhead cost, and shared  infrastructure expenses, after the December 31, 2010 date of the  reverse triangular merger which created Atlas. 

 About Atlas 

 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 paratransit, limousine/livery and business auto. The  business of Atlas is carried on through its insurance subsidiaries  American Country Insurance Company and American Service Insurance  Company, Inc.  Atlas' insurance subsidiaries have decades of experience  with a commitment to always being an industry leader in these  specialized areas of insurance. 

 Notice regarding forward-looking statements: 

 This release includes forward-looking statements regarding Atlas and its  insurance subsidiaries and businesses. Such statements are based on the  current expectations of the management of each entity. The words  "anticipate", "expect", "believe", "may", "should", "estimate",  "project", "outlook", "forecast" or similar words are used to identify  such forward looking information.  The forward-looking events and  circumstances discussed in this release may not occur and could differ  materially as a result of known and unknown risk factors and  uncertainties affecting the Companies, including risks regarding the  insurance industry, economic factors and the equity markets generally  and the risk factors discussed in the "Risk Factors" section of the  Company's Form 10-K for the year ended December 31, 2011. No  forward-looking statement can be guaranteed. Except as required by  applicable securities laws, forward-looking statements speak only as of  the date on which they are made and Atlas and its subsidiaries  undertake no obligation to publicly update or revise any  forward-looking statement, whether as a result of new information,  future events, or otherwise.  

 Neither TSX Venture Exchange nor its Regulation Services Provider (as  that term is defined in the policies of the TSX Venture Exchange)  accepts responsibility for the adequacy or accuracy of this release. 

Atlas Financial Holdings, Inc.


CONTACT:  Scott Wollney, Chief Executive Officer of Atlas FinancialHoldings,Inc. at 847-700-8600. 


    

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