Commission File Number | ||
000-54627 | ||
CAYMAN ISLANDS | 27-5466079 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
150 NW POINT BOULEVARD | 60007 | |
Elk Grove Village, IL | (Zip Code) | |
(Address of principal executive offices) |
ATLAS FINANCIAL HOLDINGS, INC. (Registrant) | ||||
/s/ Paul A. Romano By: Paul A. Romano (Vice President and Chief Financial Officer) | ||||
November 9, 2015 |
• | Gross premium written increased by 55.3% to $65.3 million, which included an increase of 57.8% in our core commercial auto business |
• | In-force premium at September 30, 2015 was $199.1 million |
• | Operating income was $5.8 million for the three month period ended September 30, 2015, or $0.46 per diluted share, compared to $3.4 million for the three month period ended September 30, 2014, or $0.28 per diluted share |
• | Combined ratio improved by 0.8 percentage points to 88.8% |
• | Underwriting results improved to $4.7 million as compared to $2.7 million |
• | For the three month period ended September 30, 2015, net income attributable to Atlas was $4.0 million on a fully tax effected basis compared to $3.5 million which was not tax effected based on the Company's treatment of DTAs in 2014 |
• | Net earnings per diluted common share were $0.32, representing a $0.03 or 10.3% increase. |
• | On a tax effected basis, net earnings per diluted common share increased by 68.4% from the $0.19 per share in the prior year period had Atlas been a full U.S. taxpayer during the third quarter 2014 |
• | Book value per diluted common share on September 30, 2015 was $9.88, compared to $9.08 at December 31, 2014 and $8.24 at September 30, 2014 |
• | Annualized after tax return on common equity (“ROCE”) was 13.6% in the third quarter 2015, which includes the effect of Atlas becoming a full U.S. taxpayer in 2015 |
• | Loss Ratio: The loss ratio relating to claims incurred in the three month period ended September 30, 2015 was 60.0% compared to 62.2% in the three month period ended September 30, 2014. Although the Q3 2015 loss ratio was higher than Q2 2015 due to business mix, it was lower than the same quarter in 2014 as a result of favorable pricing activity in the past year. The Company continues to see incremental opportunities to leverage decades of experience in the claims area coupled with underwriting opportunities to increase expected margin in subsequent quarters. Atlas utilizes data and experience accumulated over its operating subsidiaries’ many years spent focusing on niche target markets to model potential risk and deliver value in terms of claims and other areas of support. |
• | Underwriting Expense Ratio: The ratio for the combination of acquisition costs and other underwriting expenses was near target levels at 27.2 % as compared to 27.4% in the three month period ended September 30, 2014, plus 1.6% of expenses related to the Company’s debt treatment and equity incentive plan for a total of 28.8% in the three month period ended September 30, 2015. Year over year organic premium growth in the |
Three Month Periods Ended | ||||
September 30, 2015 | September 30, 2014 | |||
Loss Ratio | 60.0 % | 62.2 % | ||
Underwriting Expense Ratio: | ||||
Acquisition cost ratio | 12.0 | % | 14.4 | % |
Other underwriting expense ratio | 15.2 | % | 11.8 | % |
Underwriting expense ratio before interest and stock based compensation expenses | 27.2 | % | 26.2 | % |
Interest expense ratio | 0.6 | % | -- | % |
Stock based compensation expense ratio | 1.0 | % | 1.2 | % |
Underwriting expense ratio | 28.8 | % | 27.4 | % |
Total combined ratio | 88.8 | % | 89.6 | % |
Three Month Periods Ended | ||
September 30, 2015 | September 30, 2014 | |
Acquisition costs | 14.9% | 14.7% |
Other underwriting expense | 13.2% | 11.6% |
Interest expense | 0.6% | — |
Share based compensation expense | 0.9% | 1.2% |
Three Month Periods Ended | |||||||
September 30, 2015 | September 30, 2014 | ||||||
U.S. GAAP net income attributable to Atlas | $4,024 | $3,493 | |||||
Add: income tax expense | 2,068 | 8 | |||||
Less: net investment gains | 91 | 68 | |||||
Less: other income (expense) | 269 | (1) | |||||
Operating income | $5,732 | $3,434 |
Three Month Periods Ended | |||||||
September 30, 2015 | September 30, 2014 | ||||||
Weighted average common shares outstanding | 12,008,624 | 11,808,624 | |||||
Dilutive potential ordinary shares: | |||||||
Dilutive stock options | 211,706 | 147,959 | |||||
Dilutive shares upon preferred share conversion | 573,444 | 254,000 | |||||
Dilutive average common shares outstanding | 12,793,774 | 12,210,583 |
• | $0.96 increase related to net income after tax and before items indicated below; |
• | $0.02 increase related to the change in realized investment after tax; |
• | ($0.02) decrease related to the preferred share dividend liquidation; |
• | $0.02 increase related to the change in unrealized gains/losses after tax; |
• | ($0.05) decrease related to share based compensation; and |
• | ($0.13) decrease related to expenses incurred with the acquisition of subsidiaries. |
Three Month Periods Ended | Nine Month Periods Ended | |||||||||||||||
September 30, 2015 (unaudited) | September 30, 2014 (unaudited) | September 30, 2015 (unaudited) | September 30, 2014 (unaudited) | |||||||||||||
Net premiums earned | $ | 41,666 | $ | 25,575 | $ | 110,137 | $ | 70,835 | ||||||||
Net investment income | 1,093 | 768 | 2,804 | 2,226 | ||||||||||||
Net realized investment gains | 91 | 68 | 272 | 154 | ||||||||||||
Other income | 269 | (1 | ) | 426 | 1 | |||||||||||
Total revenue | 43,119 | 26,410 | 113,639 | 73,216 | ||||||||||||
Net claims incurred | 24,988 | 15,894 | 64,449 | 44,235 | ||||||||||||
Acquisition costs | 4,988 | 3,686 | 13,983 | 10,252 | ||||||||||||
Other underwriting expenses | 7,013 | 3,329 | 17,229 | 10,377 | ||||||||||||
Expenses incurred related to Anchor acquisition and Gateway stock purchase agreement | - | - | 1,920 | - | ||||||||||||
Total expenses | 36,989 | 22,909 | 97,581 | 64,864 | ||||||||||||
Income from operations before income tax expense | 6,130 | 3,501 | 16,058 | 8,352 | ||||||||||||
Income tax expense | 2,068 | 8 | 5,923 | 108 | ||||||||||||
Net income including non-controlling interest | 4,062 | 3,493 | 10,135 | 8,244 | ||||||||||||
Net income attributable to non-controlling interest | 38 | - | 38 | - | ||||||||||||
Net income attributable to Atlas | 4,024 | 3,493 | 10,097 | 8,244 | ||||||||||||
Less: Preferred share dividends | 81 | 24 | 196 | 70 | ||||||||||||
Net income attributable to common shareholders | $ | 3,943 | $ | 3,469 | $ | 9,901 | $ | 8,174 | ||||||||
Basic weighted average common shares outstanding | 12,008,624 | 11,808,624 | 11,956,611 | 10,643,507 | ||||||||||||
Earnings per common share, basic | $ | 0.33 | $ | 0.29 | $ | 0.83 | $ | 0.77 | ||||||||
Diluted weighted average common shares outstanding | 12,793,774 | 12,210,583 | 12,741,165 | 11,042,465 | ||||||||||||
Earnings per common share, diluted | $ | 0.32 | $ | 0.29 | $ | 0.80 | $ | 0.75 | ||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||||
Net income attributable to Atlas | $ | 4,024 | $ | 3,493 | $ | 10,097 | $ | 8,244 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Changes in net unrealized investment gains (losses) | 555 | (773 | ) | 165 | 1,748 | |||||||||||
Reclassification to income of net realized investment gains | 4 | 60 | 199 | 172 | ||||||||||||
Effect of income tax | (190 | ) | 242 | (124 | ) | (653 | ) | |||||||||
Other comprehensive income (loss) | 369 | (471 | ) | 240 | 1,267 | |||||||||||
Comprehensive income attributable to Atlas | $ | 4,393 | $ | 3,022 | $ | 10,337 | $ | 9,511 |
September 30, 2015 (unaudited) | December 31, 2014 | |||||||
Assets | ||||||||
Investments, available for sale | ||||||||
Fixed income securities, at fair value (amortized cost $188,886 and $126,701) | $ | 189,257 | $ | 126,949 | ||||
Equity securities, at fair value (cost $2,147 and $2,220) | 2,260 | 2,093 | ||||||
Other investments | 21,547 | 14,366 | ||||||
Total Investments | 213,064 | 143,408 | ||||||
Cash and cash equivalents | 21,043 | 36,586 | ||||||
Accrued investment income | 1,050 | 660 | ||||||
Accounts receivable and other assets (net of allowance of $890 and $560) | 88,029 | 49,770 | ||||||
Reinsurance recoverables on amounts paid | 4,077 | 2,230 | ||||||
Reinsurance recoverables on amounts unpaid | 23,554 | 18,421 | ||||||
Prepaid reinsurance premiums | 16,138 | 3,628 | ||||||
Deferred policy acquisition costs | 10,700 | 8,166 | ||||||
Deferred tax asset, net | 18,184 | 17,317 | ||||||
Intangible assets, net | 5,916 | 740 | ||||||
Software and office equipment, net | 2,693 | 2,819 | ||||||
Assets held for sale | 166 | 166 | ||||||
Total Assets | $ | 404,614 | $ | 283,911 | ||||
Liabilities | ||||||||
Claims liabilities | $ | 123,740 | $ | 102,430 | ||||
Unearned premiums | 108,079 | 58,950 | ||||||
Due to reinsurers and other insurers | 11,065 | 2,456 | ||||||
Note payable | 17,500 | - | ||||||
Other liabilities and accrued expenses | 16,045 | 10,676 | ||||||
Total Liabilities | $ | 276,429 | $ | 174,512 | ||||
Shareholders’ Equity | ||||||||
Preferred shares, par value per share $0.001, 100,000,000 shares authorized, 6,940,500 shares issued and outstanding at September 30, 2015 and 2,000,000 shares issued and outstanding at December 31, 2014. Liquidation value $1.00 per share | $ | 6,941 | $ | 2,000 | ||||
Ordinary voting common shares, par value per share $0.003, 266,666,667 shares authorized, 11,846,130 shares issued and outstanding at September 30, 2015 and 11,638,723 shares issued and outstanding at December 31, 2014 | 36 | 34 | ||||||
Restricted voting common shares, par value per share $0.003, 33,333,334 shares authorized, 132,863 shares issued and outstanding at September 30, 2015 and December 31, 2014 | - | - | ||||||
Additional paid-in capital | 197,325 | 196,079 | ||||||
Retained deficit | (78,697 | ) | (88,794 | ) | ||||
Accumulated other comprehensive income, net of tax | 320 | 80 | ||||||
Total Atlas Shareholders' Equity | 125,925 | 109,399 | ||||||
Shareholders' Equity Attributable to Non-controlling Interest | 2,260 | - | ||||||
Total Shareholders’ Equity | 128,185 | 109,399 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 404,614 | $ | 283,911 |
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