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Atlas Financial discloses reserve strengthening

Atlas Financial Holdings Inc. said its overall reserves were strengthened based on year-end 2017 actuarial work coupled with a detailed internal file audit for claims with reserves not established by predictive analytics tools.

The company said payments for claims in Michigan continued to be disproportionate to historic premiums earned, although exposure in the state was reduced to about 1% of the overall business by year-end 2017. The company took a significant charge as claim expenses in the state substantially outpaced other states.

Additionally, Atlas Financial expects the cost of settling the remaining liability for non-New York Global Liberty business written before 2016 to be greater than expected.

Overall, Atlas Financial found that its remaining actuarially determined liability for remaining claims related to accident-year 2015 and prior was significantly higher than its carried reserves. The company determined that it needs a sizable reserve increase to ensure sufficient incurred-but-not-reported levels to extinguish the remaining claims, especially for older accident years.

The company said it expects the use of predictive modeling in claims to help reduce future expected losses, but it is likely "too early for credit to be given to this potential outcome from an actuarial perspective."