Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Atlas Financial Holdings, Inc. | q42017pressrelease.htm |
| 8-K - 8-K - Atlas Financial Holdings, Inc. | a8-kreq42017earningsrelease.htm |
NASDAQ: AFH
2017 Fourth Quarter
Conference Call
April 3, 2018
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 2
Statements in this presentation, including the information set forth as to the future financial or operating performance
of Atlas Financial Holdings, Inc., American Country Insurance Company, American Service Insurance Company, Inc.,
Gateway Insurance Company and/or Global Insurance Company of New York (collectively, “Atlas”), that are not
current or historical factual statements may constitute “forward looking” information within the meaning of securities
laws. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Atlas, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such forward looking statements. When used in
this presentation, such statements may include, among other terms, such words as “may,” “will,” “expect,” “believe,”
“plan,” “anticipate,” “intend,” “estimate” and other similar terminology. These statements reflect current expectations,
estimates and projections regarding future events and operating performance and speak only as to the date of this
presentation. Readers should not place undue importance on forward looking statements and should not rely upon this
information as of any other date. These forward looking statements involve a number of risks and uncertainties. Some
of the factors facing Atlas that could cause actual results to differ materially from those expressed in or underlying
such forward looking statements include: (i) market fluctuations, changes in interest rates or the need to generate
liquidity; (ii) access to capital; (iii) recognition of future tax benefits on realized and unrealized investment losses; (iv)
managing expansion effectively; (v) conditions affecting the industries in which we operate; (vi) competition from
industry participants; (vii) attracting and retaining independent agents and brokers; (viii) comprehensive industry
regulation; (ix) our holding company structure; (x) our ratings with A.M. Best; (xi) new claim and coverage issues;
(xii) claims payments and related expenses; (xiii) reinsurance arrangements; (xiv) credit risk; (xv) our ability to retain
key personnel; (xvi) our ability to replace or remove management or Directors; (xvii) future sales of common shares;
(xviii) public company challenges; and (xix) failure to effectively execute our business plan. The foregoing list of
factors is not exhaustive. See also “Risk Factors” listed in the Company’s most recent registration statement filed with
the SEC. Many of these issues can affect Atlas’ actual results and could cause the actual results to differ materially
from those expressed or implied in any forward looking statements made by, or on behalf of, Atlas. Readers are
cautioned that forward looking statements are not guarantees of future performance, and should not place undue reliance
on them. In formulating the forward looking statements contained in this presentation, it has been assumed that business
and economic conditions affecting Atlas will continue substantially in the ordinary course. These assumptions, although
considered reasonable at the time of preparation, may prove to be incorrect.
When discussing our business operations, we may use certain terms of art which are not defined under U.S. GAAP.
In the event of any unintentional difference between presentation materials and our GAAP results, investors should
rely on the financial information in our public filings.
Corporate
Headquarters
Schaumburg, IL
(Chicago Suburb)
Core Target Markets Taxi/Limo/Livery/Paratransit
NASDAQ: AFH At 12/31/2017 At 12/31/2016
Cash and Investments $243.5 million $224.8 million
Total Assets $482.5 million $423.6 million
Total Atlas
Shareholders’ Equity $90.6 million $127.3 million
Common Shares
Outstanding (includes
Restricted Share
Units)
12,178,857 12,045,519
Book Value Per
Common Share
Outstanding
$7.42 $10.54
Safe Harbor
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 3
2017 Q4 Financial and Underwriting Results
Premium
Results
Underwriting
Results Book Value
Gross Premiums Written increased 4.3% to $54.2
million
Overall premium shifted toward limo / livery / para-
transit during period
Combined ratio was 220.3% as compared to 156.5%
for the prior year period, which included a 130.3%
and 72.9% impact from prior years reserve
strengthening, respectively. 2016 was partially offset
by 9.0% benefit related to expenses recovered from
stock purchase agreement
Atlas’ book value decreased to $7.42 at 12/31/2017
from $10.54 at 12/31/2016
Gross Premiums Written
(in millions)
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
Q4 2016 Q4 2017
$52.0
$54.2
Loss Before Income Taxes
(in millions)
$0
-$10
-$20
-$30
-$40
-$50
-$60
-$70
-$80
Q4 2016 Q4 2017
$(23.2)
$(68.0)
Loss per Common Share Diluted
$0.00
-$0.50
-$1.00
-$1.50
-$2.00
-$2.50
-$3.00
-$3.50
-$4.00
-$4.50
-$5.00
Q4 2016 Q4 2017
$(1.13)
$(4.48)
Book Value per Common Share
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
Q4 2016 Q4 2017
$10.54
$7.42
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 4
Business Mix Analysis
Limo/Livery and
Para-transit
continue to show
strong growth
• Average premium per vehicle increased quarter over quarter
• Growth in both premium and vehicles in-force
• Continued focus on growing market share in traditional niche and pursuing TNC
related business nationwide
• Expanding underlying addressable markets
• Consistent claims and underwriting discipline
Taxi premium down
• Continue to see positive sights of stability in the segment
• Average premium per vehicle decreased as a result of the continued focus on
predictive analytics targeting better than average business
• Accounts reporting fewer vehicles being taken out of service, with modest return
of some drivers
• Current livery drivers who were on a taxi policy one year ago remains at
approximately 10%
Expectations:
Taxi growth will be flat
Commercial drivers who
migrated to TNCs will pursue
commercial insurance
Hit ratio for new and renewal
business will increase as a
result of implementation of
targeted predictive analytics and
competitive dynamic
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 5
Atlas Business Mix
Taxi Limo/Livery Para-transit
2015
Taxi Limo/Livery Para-transit
2016
Taxi Limo/Livery Para-transit
2017
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 6
Geographic Diversification
Three Month Periods Ended
December 31, 2017 December 31, 2016
New York $ 14,262 26.3% $ 16,057 30.9%
California 9,101 16.8% 7,720 14.9%
New Jersey 3,203 5.9% 3,079 5.9%
Texas 2,536 4.7% 2,076 4.0%
Nevada 2,429 4.5% 2,131 4.1%
Virginia 2,190 4.0% 2,360 4.5%
Illinois 1,928 3.6% 1,123 2.2%
Ohio 1,913 3.5% 1,483 2.9%
Minnesota 1,770 3.3% 2,449 4.7%
Louisiana 1,296 2.4% 2,047 3.9%
Other 13,585 25.0% 11,459 22.0%
Total $ 54,213 100.0% $ 51,984 100.0%
NY: 26.3%
CA: 16.8%
NJ: 5.9%TX: 4.7%
NV: 4.5%
VA: 4.0%
IL: 3.6%
OH: 3.5%
MN: 3.3%
LA: 2.4%
Other: 25.0%
NY: 30.9%
CA: 14.9%
NJ: 5.9%
TX: 4.0%
NV: 4.1%
VA: 4.5%
IL: 2.2%
OH: 2.9%
MN: 4.7%
LA: 3.9%
Other: 22.0%
Nationwide market share is estimated at approximately
12% - 13%, with proportionate share forecast at 20%
Gross premiums written by state (in $000)
Limited volume of business
in-force in FL to evaluate
market conditions
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 7
Commercial Auto Insurance
Competitive Landscape
Commercial Auto is the
only large segment
with rate changes
trending up
Rate increases
“retrenching” as result
of industry reserve
strengthening
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 8
ASI Pool Global - 2015 Atlas Combined Unearned Premium Reserves
Premium In-force (Bars)
Unearned Premium Reserves (Line)
$300
$250
$200
$150
$100
$50
$0
M
ill
io
ns
Q1
201
3
Q2
201
3
Q3
201
3
Q4
201
3
Q1
201
4
Q2
201
4
Q3
201
4
Q4
201
4
Q1
201
5
Q2
201
5
Q3
201
5
Q4
201
5
Q1
201
6
Q2
201
6
Q3
201
6
Q4
201
6
Q1
201
7
Q2
201
7
Q3
201
7
Q4
201
7
Written Premium: In-force
At December 31, 2017, in-force premium was $268.5 million and the Company’s gross unearned premium reserves were $128.0 million.
Financial Highlights
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 10
2017 Fourth Quarter Financial Highlights
2017 Fourth Quarter Financial and Operating Information
Quarterly Premiums Affected by Rate
Decisions / Shift in Market Dynamics
• Gross Premiums Written generated
by the Company for the fourth quarter
ended December 31, 2017 grew by
4.3% to $54.2 million
• In-force premium at December 31,
2017 increased 19.5% to $268.5
million, compared to $224.6 million
Underwriting
Performance
• Underwriting loss for the fourth
quarter of 2017 was $69.1 million,
compared to underwriting loss of
$25.0 million in the prior year period
• Atlas’ underwriting expense ratio(1)(2)
for the quarter ended December 31,
2017 was 30.3% and on a year to
date basis was 27.5%
• Combined Ratio(1) (“CR”) was 220.3%
• Net loss was $54.3 million or $4.48
loss per common share diluted
(1) Ratios are computed as a percentage of net premiums earned
(2) Excluding the impact of share-based compensation expenses
Book Value / Return on Equity
• Book value per common share of
$7.42 (decreased 312.0% compared
to prior year end)
• Return on equity was (184.8)% in the
fourth quarter 2017 compared to
(39.6)% in the prior year period
2018 Financial Expectations
ü Relative stability regarding target market
with continued growth
ü Emphasis remains on underwriting profit as
priority
ü Expense ratio at or below current levels
ü Exceed P&C industry Return on Equity
(“ROE”) by 500 - 1,000 bps
No indicators of new market entry and Company continues to expect price leadership to optimize return on deployed capital via underwriting
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 11
Reserve Strengthening
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 12
Combined Ratio Analysis
The table below details the comparisons of each component of the Company’s combined ratio for the
periods indicated (after accounting for the effect of quota share reinsurance):
Three Month Periods Ended Year Ended
December 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
Loss Ratio:
Current accident year 59.2 % 62.8 % 59.5 % 59.7 %
Prior accident years 130.3 % 72.9 % 35.0 % 19.1 %
Loss Ratio 189.5% 135.7 % 94.5% 78.8 %
Underwriting Expense Ratio:
Acquisition cost ratio 14.5 % 13.0 % 12.9 % 11.0 %
Other underwriting expense ratio 15.2 % 15.9 % 14.2 % 16.3 %
Deferred policy acquisition costs ratio 0.6 % — % 0.4 % (0.4)%
Underwriting expense ratio before expenses related to
stock purchase agreements and share-based compensation 30.3 % 28.9 % 27.5 % 26.9 %
Expenses recovered related to stock purchase agreement — % (9.0)% — % (3.7)%
Share-based compensation expense ratio 0.5 % 0.9 % 0.5 % 0.9 %
Underwriting expense ratio 30.8% 20.8 % 28.0% 24.1 %
Total combined ratio 220.3% 156.5 % 122.5% 102.9 %
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 13
Combined Ratio
Combined Ratio by Quarter
2013 2014 2015 2016 2017
250%
200%
150%
100%
50%
0%
Q1 Q2 Q3 Q4*
Loss & LAE Ratio Underwriting Expense Ratio
140%
120%
100%
80%
60%
40%
20%
0%
2013 2014 2015 2016 2017
63.9% 62.3% 59.2%
78.8%
94.5%
30.3% 29.1% 29.0%
24.1%
28.0%
Three Month Periods Ended
December 31, 2017 December 31, 2016
Loss ratio 189.5 % 135.7 %
Underwriting expense ratio 30.8 % 20.8 %
Combined Ratio 220.3% 156.5%
* 130.3% and
72.9% impact in
Q4 2017 & 2016,
respectively,
related to claims
reserve
strengthening on
prior accident
years
(1) 2016 includes 19.1% impact for the full year related to claims reserves strengthening related to
prior accident years
(2) 2017 includes 35.0% impact for the full year related to claims reserves strengthening related to
prior accident years
(1) (2)
Underwriting expense ratio for the three month period ended December 31, 2016 includes a $4.0
million expense recovery from stock purchase agreements which reduced the Q4 2016 underwriting
expense ratio by 9.0 percentage points.
Combined Ratio Full Year
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 14
Healthy Balance Sheet with
Availability of Capital & Reinsurance to Support Growth
• Attractive investment leverage, Company has $25 million outstanding of Senior Unsecured Notes at December 31, 2017
($ in millions) December 31, 2017 December 31, 2016
Cash and Investments $243.5 $224.8
Total Assets $482.5 $423.6
Claims Liabilities (gross of Reinsurance Recoverable) $211.6 $139.0
Unearned Premium Reserves $128.0 $113.2
Atlas Shareholders’ Equity $90.6 $127.3
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 15
Investment Portfolio
Conservative Investment Approach
• Emphasize preservation of capital, market liquidity to support
payment of liabilities and diversification of risk
• Investment duration re-positioned to match core commercial auto
reserve liabilities (3.9 years)
Investment Portfolio
• As of December 31, 2017, total cash and invested assets were
$243.5 million, of which fixed income consisted of 64.9%
• Predominantly corporate and government bonds
• Average S&P rating of AA
• 27.2% AAA
• 81.3% A or better
Investment Portfolio (12/31/2017)
Government: 17%
Corporate: 30%
Mortgage Backed: 27%
Other Asset Backed: 6%
Equity Securities: 4%
Other Investments: 16%
December 31, 2017 December 31, 2016
Amount % of Total Amount % of Total
AAA/Aaa $ 42,978 27.2% $ 44,521 28.5%
AA/Aa 58,173 36.8% 64,324 41.1%
A/A 27,384 17.3% 23,427 15.0%
BBB/Baa 28,348 18.0% 22,886 14.6%
BB 875 0.6% 1,114 0.7%
B 226 0.1% 215 0.1%
Total Fixed Income Securities $ 157,984 100.0% $ 156,487 100.0%
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 16
Detailed Impact of Changes to Book Value per Common Share
$ (2.35) decrease related to net income after tax and before items indicated below;
(0.87) decrease related to the change in the statutory tax rate due to the Tax Cuts and Jobs Act of 2017;
0.05 increase related to the change in net realized investment gains after tax;
0.02 increase related to the change in unrealized gains/losses after tax; and
0.03 increase related to share-based compensation
$ (3.12) total decrease from December 31, 2016 book value per common share
Book value per common share of $7.42 decreased by $3.12 relative to December 31, 2016 as
follows:
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 17
Operating Leverage (Actual through Q4 2017)
GAAP
Version
Statutory
Version
Net Premiums Written Surplus Net Premiums Written Core-Surplus (right axis)
Gross Premiums Written Core-Surplus (right axis)
$300
$250
$200
$150
$100
$50
$0
M
ill
io
ns
3.00
2.00
1.00
0.00
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
$59 $66 $74 $85
$94 $101 $108 $111 $122
$137 $151 $169
$178 $177 $177 $180
$215 $227 $229 $230
$49 $53 $53 $53 $54 $61 $62 $63 $81
$104 $112 $118 $122 $129 $133 $114 $118 $125 $131 $88
1.19 1.23
1.41
1.60 1.74 1.66 1.76 1.76 1.51
1.32 1.35 1.42 1.46 1.37 1.33
1.58
1.83 1.82 1.75
2.62
1.23 1.27
1.46
1.67 1.81 1.73
1.86 1.90
1.66 1.51 1.62
1.75 1.86 1.78 1.68
1.96
2.20 2.15 2.08
3.13
Net Premiums Written GAAP Common Equity
Net Premiums Written Core-GAAP Common Equity (right axis) Gross Premiums Written Core-GAAP Common Equity (right axis)
$300
$250
$200
$150
$100
$50
$0
M
ill
io
ns
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
$59 $66 $74
$85 $94 $101
$108 $111 $122
$137 $151
$169 $178 $177 $177 $180
$215 $227 $229 $230
$42 $37 $51
$62 $65
$94 $97 $107 $111 $114
$119 $122 $129 $136
$143 $127 $133 $139 $144
$91
1.38
1.78
1.44 1.38 1.44
1.07 1.11 1.03 1.10
1.21 1.28
1.38 1.38 1.30 1.24
1.41
1.62 1.63 1.59
2.54
1.43
1.85
1.50 1.44 1.50
1.11 1.18 1.11 1.21
1.39
1.53
1.70 1.76 1.68 1.57
1.76
1.95 1.93 1.89
3.03
Continue to hold sufficient capital on hand to self-fund profitable growth in the foreseeable future
Technological
Advancements
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 19
The Evolution of Atlas’ Technology
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 20
Analytics and Technology
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 21
Premiums Written: Rate Activity
Atlas Rate Change (Ave) Average ISO Recommendation (for period)
Pricing Relative to ISO
25
20
15
10
5
0
-5
-10
Q1 1
2
Q2 1
2
Q3 1
2
Q4 1
2
Q1 1
3
Q2 1
3
Q3 1
3
Q4 1
3
Q1 1
4
Q2 1
4
Q3 1
4
Q4 1
4
Q1 1
5
Q2 1
5
Q3 1
5
Q4 1
5
Q1 1
6
Q2 1
6
Q3 1
6
Q4 1
6
Q1 1
7
Q2 1
7
Q3 1
7
Q4 1
7
Policy
Quote
Predictive Model Policy Counts
6/1/2016 - 12/31/2017
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Po
lic
y
C
ou
nt
0 - 100 101 - 200 201 - 300 301 - 400 401 - 500 501 - 600 601 - 700 701 - 800 801 - 900 901+
Score Group
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 22
2018 Outlook
NASDAQ: AFH
For Additional Information
At the Company:
Scott Wollney
Chief Executive Officer
swollney@atlas-fin.com
847-700-8600
Investor Relations:
The Equity Group Inc.
Adam Prior
Senior Vice President
APrior@equityny.com
212-836-9606A reconciliation of Non-GAAP financial measures can be found on the next slide
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 24
Reconciliation of Non-U.S. GAAP Financial Measurements
We use these non-GAAP financial measures in order to present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. The non-GAAP financial
measures that we present may not be comparable to similarly-named measures reported by other companies.
Adjusted operating income, before income taxes includes both underwriting income and loss and net investment income, but excludes net realized gains and losses, legal and professional expense incurred related to business
combinations, interest expense, net impairment charges recognized in earnings and other items. Underwriting income is derived by reducing net premiums earned by net claims incurred, policy acquisition costs and general
operating expenses.
After-tax return on average common equity is derived by subtracting preferred share dividends accrued from net income and dividing by average common equity. Common equity is total shareholders’ equity less preferred shares
and cumulative preferred share dividends accrued. Average common equity is the average of common equity at the beginning and the ending of the reporting period.
Reconciliation of U.S. GAAP Net Income to Adjusted Operating Income,
Before Income Taxes ($ in ‘000s, except per share data)
Three Month Periods Ended Twelve Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
Net (loss) income $ (54,297) $ (4.48) $ (13,561) $ (1.13) $ (38,810) $ (3.22) $ 2,646 $ 0.22
Add: income tax benefit (13,685) (1.13) (9,659) (0.80) (5,343) (0.44) (2,134) (0.17)
Add: expenses recovered pursuant to stock purchase agreement — — (4,000) (0.33) — — (6,297) (0.52)
Add: interest expense 461 0.04 270 0.02 1,840 0.15 1,026 0.08
Less: net realized investment (losses) gains (128) (0.01) 206 0.02 872 0.07 1,230 0.10
Less: other income 103 0.01 187 0.01 435 0.04 467 0.04
Adjusted operating loss, before tax $ (67,496) $ (5.57) $ (27,343) $ (2.27) $ (43,620) $ (3.62) $ (6,456) $ (0.53)
Reconciliation of U.S. GAAP Shareholders’ Equity to Common Equity ($ in ‘000s)
As of: December 31, 2017 September 30, 2017 December 31, 2016 September 30, 2016 December 31, 2015
Total shareholders’ equity $ 90,645 $ 144,397 $ 127,342 $ 142,592 $ 122,681
Less: accrued dividends on preferred shares (333) (333) (333) (286) (460)
Total common equity $ 90,312 $ 144,064 $ 127,009 $ 142,306 $ 122,221
Reconciliation of U.S. GAAP Return on Equity to Return on Common Equity ($ in ‘000s) Three Month Periods Ended Twelve Month Periods Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016
Net (loss) income $ (54,297) $ (13,561) $ (38,810) $ 2,646
Average equity 117,521 136,967 108,994 125,012
Return on equity (184.8)% (39.6)% (35.6)% 2.1%
Net (loss) income $ (54,297) $ (13,561) $ (38,810) $ 2,646
Preferred share dividends accrued — (47) — (281)
Net (loss) income attributable to common shareholders $ (54,297) $ (13,608) $ (38,810) $ 2,365
Average common equity 117,188 134,658 108,661 124,615
Return on average common equity (185.3)% (40.4)% (35.7)% 1.9%
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 25
Operating Activities: Underwriting
(commercial business only: excludes Global Liberty)
Mid single digit rate increases are now being pursued for profitable renewals and desirable new accounts. Less deviation from predictive model (1-4 unit
accounts quoted directly via POS using predictive analytics). Hit ratios are strongest in most desired score bands.
Target of 85% based on
current market conditions.
Hit Ratio Target Hit Ratio Persistency Target Persistency
120%
100%
80%
60%
40%
20%
0%
Jan
, 2
01
5
Fe
b,
20
15
M
ar,
20
15
Ap
r, 2
01
5
M
ay
, 2
01
5
Ju
n,
20
15
Ju
l, 2
01
5
Au
g,
20
15
Se
p,
20
15
Oc
t, 2
01
5
No
v,
20
15
De
c,
20
15
Jan
, 2
01
6
Fe
b,
20
16
M
ar,
20
16
Ap
r, 2
01
6
M
ay
, 2
01
6
Ju
n,
20
16
Ju
l, 2
01
6
Au
g,
20
16
Se
p,
20
16
Oc
t, 2
01
6
No
v,
20
16
De
c,
20
16
Jan
, 2
01
7
Fe
b,
20
17
M
ar,
20
17
Ap
r, 2
01
7
M
ay
, 2
01
7
Ju
n,
20
17
Ju
l, 2
01
7
Au
g,
20
17
Se
p,
20
17
Oc
t, 2
01
7
No
v,
20
17
De
c,
20
17
Current target of 52%. Market conditions
continue to show support for mid single digit
rate increases (magnitude varies by
geography.
Note: From Q4 ’15 forward, data is compiled
from the newly launched Atlas Xpress (Duck
Creek) policy system. The basis for hit ratio
now includes additional submission
information (not just commercial auto
accounts that are quoted)
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 26
Incremental Benefit of Predictive Analytics
Pricing & Underwriting
Policy
Quote
Predictive Model Premiums Written
6/1/2016 - 12/31/2017
60,000
50,000
40,000
30,000
20,000
10,000
0
Pr
em
iu
m
sW
rit
te
n
(0
00
s)
0 - 100 101 - 200 201 - 300 301 - 400 401 - 500 501 - 600 601 - 700 701 - 800 801 - 900 901+
Score Group
Policy
Quote
Predictive Model Policy Counts
6/1/2016 - 12/31/2017
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Po
lic
y
C
ou
nt
0 - 100 101 - 200 201 - 300 301 - 400 401 - 500 501 - 600 601 - 700 701 - 800 801 - 900 901+
Score Group
Key Reasons for Quotes “More” than Model
• Limit on POS external credit use
• Association accounts
• Underwriting considerations
Continued desired bias towards
better predicted L/R accounts with
higher hit ratio on “right” end of
scale.
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 27
Utilizing Analytics to Support Usage Based Insurance in 2018
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 28
Prior sequential rate increases actuarially determined to achieve expected profitability targets
• Maximum rate supported taken each year
• There were 323 open Michigan claims as of December 31, 2017
Vehicles In-force Policies In-force
Michigan In-force
3,000
2,500
2,000
1,500
1,000
500
0
Jan
-16
Feb
-16
Ma
r-16
Ap
r-16
Ma
y-1
6
Jun
-16
Jul
-16
Au
g-1
6
Sep
-16
Oc
t-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Ma
r-17
Ap
r-17
Ma
y-1
7
Jun
-17
Jul
-17
Au
g-1
7
Sep
-17
Oc
t-17
No
v-1
7
De
c-1
7
Michigan Exposure
April 3, 2018 Atlas Financial Holdings, Inc. 2017 Fourth Quarter Conference Call 29
Operating Activities: Underwriting
(commercial business only: excludes Global Liberty)
New Vehicles (incls Expiring) Prior Year
New Business Submissions
(Monthly Vehicles Submitted)
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Actual Prior Year
Vehicles In-Force
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec