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Should You Add Atlas Financial (AFH) to Your Portfolio? - Analyst Blog

On Nov 15, Zacks Investment Research upgraded Atlas Financial Holdings, Inc . ( AFH ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Atlas Financial has witnessed rising earnings estimates on the back of solid third-quarter results and an impressive inorganic growth story. Moreover, this property and casualty insurer delivered positive earnings surprises in two of last four quarters, with an average beat of 0.2%.

Atlas Financial delivered earnings of 28 cents per share in the third quarter of 2014 that outperformed the Zacks Consensus Estimate by 7.69% and improved year over year by 56% on higher revenues. Increased net premium earned and net investment income in turn drove revenues higher.

Given strong underwriting practices and a benign catastrophe environment, underwriting income more than doubled while combined ratio improved 430 basis points on better loss ratio, acquisition cost ratio and other underwriting expense ratio.

With respect to ramping up its inorganic growth profile, Atlas Financial agreed to acquire Global Liberty Insurance Company for $25 million. The transaction will likely accelerate Atlas Financial's commercial automobile presence significantly in selected sub-segments of New York's livery market and add valuable infrastructure on the East Coast, thereby driving growth.

Atlas Financial expects public auto premium of approximately $600 million or 30% of the total addressable market in 2015.

These positives prompted a rise in the Zacks Consensus Estimate for 2014 and 2015 over the last 30 days as half of the estimates moved up. It increased by a penny to $1.05 for 2014 and 5.2% to $1.63 for 2015.

Other Stocks to Consider

Investors interested in property and casualty insurers may also consider AmTrust Financial Services, Inc. ( AFSI ), Arch Capital Group Ltd ( ACGL ) and Hallmark Financial Services Inc. ( HALL ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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ATLAS FINL HLDG (AFH): Free Stock Analysis Report

HALLMARK FINL (HALL): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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