Business Wire | Aug 10, 2021 04:16PM EDT

Atlas Financial Holdings Announces Unaudited Second Quarter 2021 Financial Results

Aug. 10, 2021

CHICAGO--(BUSINESS WIRE)--Aug. 10, 2021--Atlas Financial Holdings, Inc. (OTC: AFHIF) ("we," "us," "our," or "Atlas") today reported its unaudited financial results for the second quarter ended June 30, 2021, and announced that the Company has filed with the Securities and Exchange Commission ("SEC") its Quarterly Report on Form 10-Q for the period ended June 30, 2021. The most recent filing can be reviewed in full in the SEC Filings section of the Company's website at www.atlas-fin.com.

Scott D. Wollney, Atlas' President & CEO said, "Atlas continues to make significant progress in establishing relationships with large public automobile dispatch companies in anticipation of drivers and vehicles being returning back to service. We are receiving consistent feedback from taxi, livery and ride-share focused operators indicating that demand for rides greatly exceeds supply of drivers. As "enhanced unemployment" benefits start running out, the consensus is that a significant number of drivers will return to work which we expect will result in a very large increase in new business submissions. In the meantime, our second quarter 2021 submissions were up 55% as compared to the first quarter this year, and policies issued were up 59%. This trend continued to accelerate in the third quarter, as July submissions were up 85% as compared to the second quarter monthly average and policies issued during the month were up 108% on this same basis. While this growth rate is significant, the most exciting thing is the opportunity still ahead. Our current policy issuance is only 5% of what it was in 2018 and our average price per vehicle is up 25%. We continue to see extremely favorable rate conditions in our target markets, and are in a great position to take advantage of an unprecedented growth rate from our distribution channel of more than 400 active independent producers as cars are put back in service into operation."

Second Quarter 2021 Financial Performance Summary

* Commission income was $1.8 million for the three months ended June 30, 2021, an increase of 88.3% from $951,000 for the three months ended June 30, 2020. * Total revenue was $1.2 million for the three months ended June 30, 2021, a decrease of 3.1% from $1.3 million for the three months ended June 30, 2020. * Loss from operating activities was $2.9 million in second quarter 2021 compared to a loss from operating activities of $4.7 million in second quarter 2020. * On June 14, 2021 the SBA forgave our first $4.6 million PPP loan. * Net income from continuing operations was $660,000, or $0.06 per common share diluted, in second quarter 2021 compared to a net loss from continuing operations of $4.6 million, or $0.39 loss per common share diluted, in second quarter 2020.

Revenue

As an MGA, our commission and fee income are derived from policies and premium produced on behalf of insurance carrier partners. We earn commission for the sale of first year and renewal policies, which are presented in our condensed consolidated statements of operations as commission revenue.

Commission income for the three months ended June 30, 2021 totaled $1.8 million, compared to $951,000 for the three months ended June 30, 2020. The increase in commission income from the prior year period was largely due to modest increases in vehicles insured as compared to earlier COVID-19 pandemic levels, offset by the sale of renewal rights on larger paratransit accounts in 2020.

Atlas recorded other income of $925,000 and $327,000 for the three months ended June 30, 2021 and 2020, respectively. The increase resulted from professional services income received.

Total revenue was $1.2 million for the three months ended June 30, 2021, a decrease of 3.1% from $1.3 million for the three months ended June 30, 2020. Excluding a one-time impairment charge related to our headquarter building, which is held for sale, total revenue related to MGA operating activities is $2.7 million, an increase of 112.5% compared to the same quarter last year.

Underwriting Expenses

Acquisition costs for the three months ended June 30, 2021 were $955,000 compared to $466,000 for the three months ended June 30, 2020, and represent commissions paid to retail agents who sell insurance policies on our behalf.

Other underwriting expenses for the three months ended June 30, 2021 and 2020 were $3.6 million and $5.1 million, respectively. Approximately $2.4 million of our other underwriting expenses in the quarter related to the continuing operations of AGMI (which includes non-cash depreciation and amortization of $206,000) and the remaining $1.2 million relates to the Company's headquarters building, which is listed for sale, and other holding company expenses. We believe that because a portion of our personnel and other expenses are relatively fixed in nature, changes in premium production may impact our operating scale and operating expense ratios.

Results of Operations

Atlas reported net income of $659,000 during the three months ended June 30, 2021 compared to net loss of $4.7 million during the three months ended June 30, 2020. Income per common share diluted was $0.06 for the three months ended June 30, 2021 compared to a net loss per common share diluted of $0.39 during the three months ended June 30, 2020.

Conference Call Details

Atlas will discuss these results in a conference call tomorrow morning (Wednesday, August 11, 2021) at 8:30 a.m. ET.

Participant Dial-In Numbers:

(United States): 877-407-9753

(International): 201-493-6739

To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with passcode "Atlas". An accompanying slide presentation will be available in .pdf format via the "Investor Relations" section of Atlas' website at www.atlas-fin.com/investorrelations after the issuance of the earnings release.

Submit Questions for the CallQuestions for consideration for the call can be emailed to aprior@equityny.com prior to 8:00 a.m. ET on Wednesday, August 11, 2021.

Webcast

The call will also be simultaneously webcast over the Internet via the Investor Relations section of Atlas' website or by clicking on the conference call link: https://78449.themediaframe.com/dataconf/productusers/atfin/mediaframe/46307/indexl.html.

Audio and a transcript of the call will be archived on the Company's website.

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, nonemergency para-transit, limousine/livery (including full-time transportation network company drivers) and business auto. Atlas' specialized infrastructure is designed to leverage analytics, expertise and technology to efficiently and profitably provide insurance solutions for independent contractors, owner operators and other smaller accounts.

The Company's strategy is focused on leveraging its managing general agency operation ("AGMI") and its insuretech digital platform ("optOn"). For more information about Atlas, please visit www.atlas-fin.com, www.agmiinsurance.com, and www.getopton.com.

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 2020 Annual Report on Form 10-K. 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.

Atlas Financial Holdings, Inc. Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

($ in '000s,except for share Three months ended June 30, Six months ended June 30,and per sharedata)

2021 2020 2021 2020

(unaudited) (unaudited)

Commission $ 1,791 $ 951 $ 3,484 $ 3,003 income

Net realized (1,477 ) - (1,465 ) - losses

Other income 925 327 1,561 481

Total revenue 1,239 1,278 3,580 3,484

Acquisition 955 466 1,849 1,875 costs

Otherunderwriting 3,614 5,072 7,096 8,581 expenses

Amortization ofintangible 97 97 195 195 assets

Forgiveness ofPaycheck (4,601 ) - (4,601 ) - ProtectionProgram Loan

Interest 514 501 1,083 821 expense, net

Total expenses 579 6,136 5,622 11,472

Income (loss)from operations 660 (4,858 ) (2,042 ) (7,988 )before incometaxes

Income tax - (227 ) - (123 )benefit

Income (loss)from continuing 660 (4,631 ) (2,042 ) (7,865 )operations

(Loss) incomefromdiscontinued (1 ) (103 ) 151 (160 )operations, netof tax

Net income $ 659 $ (4,734 ) $ (1,891 ) $ (8,025 )(loss)



Basic net income(loss) per shareattributable to commonshareholders

Continuing $ 0.06 $ (0.39 ) $ (0.17 ) $ (0.66 )operations

Discontinued - (0.01 ) 0.01 (0.01 )operations

Net income $ 0.06 $ (0.40 ) $ (0.16 ) $ (0.67 )(loss)

Diluted netincome (loss)income per share attributable tocommonshareholders

Continuing $ 0.06 $ (0.39 ) $ (0.17 ) $ (0.66 )operations

Discontinued - (0.01 ) 0.01 (0.01 )operations

Net income loss $ 0.06 $ (0.40 ) $ (0.16 ) $ (0.67 )

Basic weightedaverage common 12,047,334 11,874,653 12,035,560 11,855,882 sharesoutstanding

Diluted weightedaverage common 12,047,334 11,874,653 12,035,560 11,855,882 sharesoutstanding



Condensed Consolidated Statements of Comprehensive Income (Loss)

Net income $ 659 $ (4,734 ) $ (1,891 ) $ (8,025 )(loss)



Othercomprehensive (loss) income:

Changes in netunrealized (9 ) 303 (22 ) 245 investment(losses) gains

Reclassificationto net income (1 ) (2 ) (159 ) (93 )(loss)

Othercomprehensive (10 ) 301 (181 ) 152 (loss) income

Totalcomprehensive $ 649 $ (4,433 ) $ (2,072 ) $ (7,873 )income (loss)



See accompanying Notes to Condensed Consolidated Financial Statements in the Company's Form 10-Q

Atlas Financial Holdings, Inc. Condensed Consolidated Statements of Financial Position

($ in '000s, except for share and per share data) June 30, December 31, 2021 2020

Assets (unaudited)

Cash and cash equivalents $ 2,014 $ 5,238

Restricted cash 3,197 5,287

Premiums receivable (net of allowance of $800 and 13,859 13,442 $800)

Intangible assets, net 2,040 2,235

Property and equipment, net 3,260 18,815

Right-of-use asset 566 888

Notes receivable 18,017 18,017

Other assets 1,977 1,895

Assets held for sale 57,870 53,885

Total assets $ 102,800 $ 119,702

Liabilities

Premiums payable $ 18,500 $ 19,416

Lease liability 663 1,091

Due to deconsolidated affiliates 19,091 19,170

Notes payable, net 33,354 36,168

Other liabilities and accrued expenses 3,446 4,342

Liabilities held for sale 50,544 60,407

Total liabilities $ 125,598 $ 140,594

Commitments and contingencies

Shareholders' Deficit

Ordinary voting common shares, $0.003 par value,266,666,667 shares authorized, shares issued: June30, 2021 - 12,302,839 and December 31, 2020 - $ 37 $ 37 12,248,798; shares outstanding: June 30, 2021 -12,047,334 and December 31, 2020 - 11,993,293

Restricted voting common shares, $0.003 par value,33,333,334 shares authorized, shares issued and - - outstanding: June 30, 2021 and December 31, 2020 -0

Additional paid-in capital 82,006 81,840

Treasury stock, at cost: 255,505 shares of ordinaryvoting common shares at June 30, 2021 and December (3,000 ) (3,000 )31, 2020, respectively

Retained deficit (102,090 ) (100,199 )

Accumulated other comprehensive income, net of tax 249 430

Total shareholders' deficit $ (22,798 ) $ (20,892 )

Total liabilities and shareholders' deficit $ 102,800 $ 119,702



See accompanying Notes to Condensed Consolidated Financial Statements in the Company's Form 10-Q

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CONTACT: At the Company Atlas Financial Holdings, Inc. Scott Wollney, CEO 847-700-8600 swollney@atlas-fin.com www.atlas-fin.com

CONTACT: Investor Relations The Equity Group Inc. Adam Prior, Senior Vice President 212-836-9606 aprior@equityny.com www.theequitygroup.com