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Atlas Announces Completion Of Public Offering

Stocks in this article: AFH

Atlas Financial Holdings, Inc. (NASDAQ:AFH) (“Atlas” or the “Company”) today announced the closing and settlement of its underwritten public offering of 2,000,000 ordinary common shares of the Company at a price to the public of $12.50 per share for gross proceeds of $25,000,000. Underwriters exercised their right to purchase an additional 161,000 common shares increasing gross proceeds to $27,012,500. The net proceeds from the sale of the shares, after deducting the underwriters’ discounts and other estimated offering expenses payable by the Company, will be approximately $25,061,750. Total outstanding common shares are 11,771,586 after the issuance.

On a pro-forma basis, book value per common share based on March 31, 2014 actual results plus the net proceeds from this offering is $7.67 per common share as compared to the reported figure of $6.79. The Company had $0.91 per common share of deferred tax assets at March 31, 2014 which were not included in book value per common share. On a pro-forma basis after the new share issuance this is $0.74 per common share. Atlas plans to use the net proceeds from the offering for general corporate purposes, including, without limitation, business expansion, working capital and possible acquisitions.

“We expect this capital raise to allow Atlas to continue to take advantage of the increasingly favorable insurance market conditions we’ve identified in our specialty niche and are pleased to have completed the offering at this time,” commented Scott D. Wollney, President & CEO, “Our focus has been, and remains, to consistently exceed the P&C insurance industry return on equity. With this incremental capital coupled with the opportunities we are pursuing, achieving this goal on an even larger scale is possible.”

As previously communicated, Atlas' first quarter 2014 net income, adjusted pro-forma to exclude certain non-recurring expenses, resulted in an annualized return on common equity as follows:

(Amounts in $000)        
Net income attributable to Atlas       $2,192
Less: Preferred share dividends       23
Net income attributable to common shareholders       2,169
Add: Management incentive compensation (amount in excess of accrual)       500
Adjusted net income attributable to common shareholders       $2,669
Average common equity at March 31, 2014       $63,445
Annualized return on common equity (pro-forma)       16.8%
Average common equity pro-forma after capital raise       $75,976
Annualized return on common equity pro-forma after capital raise       14.1%

Sandler O’Neill + Partners, L.P. acted as the book-running manager for the offering. Janney Montgomery Scott LLC and Sterne, Agee & Leach, Inc. acted as co-managers for the offering.

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