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Sandler O'Neill downgrades Atlas Financial on reserve strengthening

Sandler O'Neill & Partners analyst Paul Newsome has downgraded Atlas Financial Holdings Inc. to "hold" from "buy" after the company strengthened its reserves.

"We just do not know if there is something going on with the business that is poorly understood or if Atlas' financial systems are simply not sophisticated enough to pick up deteriorating results before the year-end actuarial review," Newsome wrote.

But the use of analytics and models to set prices and the decision to settle claims earlier than in the past should positively impact the company.

Newsome kept his EPS estimates unchanged at $2.00 for 2018 and $2.10 for 2019. He expects a loss of $2.70 per share for 2017 when the company reports its quarterly and full-year results March 15.