• Conifer Holdings Reports 2022 First Quarter Financial Results

    المصدر: Nasdaq GlobeNewswire / 11 مايو 2022 18:19:39   America/New_York

    BIRMINGHAM, Mich., May 11, 2022 (GLOBE NEWSWIRE) -- Conifer Holdings, Inc. (Nasdaq: CNFR) (“Conifer” or the “Company”) today announced results for the first quarter ended March 31, 2022.

    First Quarter 2022 Financial Highlights (compared to the prior year period)

    • Gross written premium increased 8.5% to $33.0 million
    • Commercial Lines gross written premium increased 5.0% to $28.6 million
    • Personal Lines gross written premium increased 38.9% to $4.4 million
    • Net earned premium increased 4.9% to 24.0 million
    • Expense ratio decreased to 37.5%, down 710 basis points from Q1 2021
    • Book value per share of $3.13 as of March 31, 2022

    James Petcoff, Executive Chairman and Co-CEO, commented, “While we are very encouraged by the  strong and sustainable top line growth experienced in our most profitable lines of business, generated largely through consistent rate increases in the period, our results were clearly hampered by development on select older accident years.  As always, we remain committed to mitigating any future development, as we continue to strengthen our overall reserve position over time.  In the quarter, we were also pleased to see the positive impact of our on-going expense reduction efforts.  We fully expect this expense ratio trend to persist, as we move toward sustained underwriting profitability.”

    2022 First Quarter Financial Results Overview

      At and for the
    Three Months Ended March 31,
      
       2022   2021  % Change 
      (dollars in thousands, except share and per share amounts) 
             
    Gross written premiums$32,964  $30,373  8.5%  
    Net written premiums 18,021   24,483  -26.4%  
    Net earned premiums 23,955   22,835  4.9%  
             
    Net investment income 507   532  -4.7%  
    Net realized investment gains (losses) (69)  2,924  **  
    Change in fair value of equity investments 280   (540) **  
    Other gains (losses) (5)  -  **  
             
    Net income (loss) (2,870)  (4,636) **  
     Net income (loss) per share, diluted$(0.30) $(0.48)    
             
    Adjusted operating income (loss)* (3,076)  (7,020) **  
     Adjusted operating income (loss) per share, diluted*$(0.32) $(0.72) **  
             
    Book value per common share outstanding$3.13  $3.82     
             
    Weighted average shares outstanding, basic and diluted 9,707,817   9,681,728     
             
    Underwriting ratios:       
     Loss ratio (1) 75.0%  84.4%    
     Expense ratio (2) 37.5%  44.6%    
     Combined ratio (3) 112.5%  129.0%    
             
    * The "Definitions of Non-GAAP Measures" section of this release defines and reconciles data that are not based on generally accepted accounting principles. 
    ** Percentage is not meaningful       
    (1) The loss ratio is the ratio, expressed as a percentage, of net losses and loss adjustment expenses to net earned premiums and other income from underwriting operations. 
    (2) The expense ratio is the ratio, expressed as a percentage, of policy acquisition costs and other underwriting expenses to net earned premiums and other income from underwriting operations. 
    (3) The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss. 
             

    2022 First Quarter Premiums

    Gross Written Premiums
    Gross written premiums increased 8.5% in the first quarter of 2022 to $33.0 million, compared to $30.4 million in the prior year period. The increase owes to a combination of rate and continued expansion into select specialty lines, specifically in the Company’s small business programs. Personal lines premium continues to compliment Conifer’s profitable top line growth, largely through its low-value dwelling line of business.

    Net Earned Premiums
    Net earned premiums increased 4.9% to $24.0 million for the first quarter of 2022, compared to $22.8 million for the prior year period. The Company expects net earned premium increases to continue throughout 2022 as the past several quarters of consistent growth in gross written premium continues to earn ratably through the year.

    Commercial Lines Financial and Operational Review

    Commercial Lines Financial Review
      Three Months Ended March 31,
       2022  2021 % Change
      (dollars in thousands)
           
    Gross written premiums$28,586 $27,221 5.0%
    Net written premiums 14,340  21,557 -33.5%
    Net earned premiums 20,524  20,706 -0.9%
           
    Underwriting ratios:     
     Loss ratio 80.7%  81.7%  
     Expense ratio 36.5%  44.6%  
     Combined ratio 117.2%  126.3%  
           
    Contribution to combined ratio from net (favorable) adverse prior year development 27.9%  24.9%  
           
    Accident year combined ratio (1) 89.3%  101.4%  
           
    (1) The accident year combined ratio is the sum of the loss ratio and the expense ratio, less changes in net ultimate loss estimates from prior accident year loss reserves. The accident year combined ratio provides management with an assessment of the specific policy year's profitability and assists management in their evaluation of product pricing levels and quality of business written.
           

    The Company’s commercial lines of business, representing 86.7% of total gross written premium in the first quarter of 2022, primarily consists of property and liability coverage offered to owner-operated small- to mid-sized businesses.

    Commercial lines gross written premium increased 5.0% in the first quarter of 2022 to $28.6 million, as the Company continues to emphasize growth of its most profitable specialty lines.

    The commercial lines combined ratio was 117.2% for the three months ended March 31, 2022, compared to 126.3% in the prior year period.   The loss ratio was 80.7% for the three months ended March 31, 2022, compared with 81.7% in the prior year period; near-term improvement is anticipated as deemphasized lines of business roll off the Company’s books. The expense ratio for the first quarter was 36.5%, a significant improvement from 44.6% during the prior year period.

    Commercial lines accident year combined ratio was 89.3% for the first quarter of 2022.

    Personal Lines Financial and Operational Review

           
    Personal Lines Financial Review
      Three Months Ended March 31,
       2022  2021 % Change
      (dollars in thousands)
           
    Gross written premiums$4,378 $3,152 38.9%
    Net written premiums 3,681  2,926 25.8%
    Net earned premiums 3,431  2,129 61.2%
           
    Underwriting ratios:     
     Loss ratio 41.0%  111.0%  
     Expense ratio 43.5%  43.8%  
     Combined ratio 84.5%  154.8%  
           
    Contribution to combined ratio from net (favorable) adverse prior year development (6.3)%  28.2%  
           
    Accident year combined ratio 90.8%  126.6%  
           

    Personal lines, representing 13.3% of total gross written premium for the first quarter of 2022, consists largely of low-value dwelling homeowner’s insurance.

    Personal lines gross written premium increased 38.9% to $4.4 million in the first quarter of 2022 compared to the prior year period, led by growth in the Company’s low-value dwelling line of business in Oklahoma and Texas.

    Personal lines combined ratio was 84.5% for the three months ended March 31, 2022, compared to 154.8% in the prior year period. Personal lines loss ratio was 41.0%, compared to 111.0% in the prior year period.

    The personal lines accident year combined ratio was 90.8% for the quarter.

    Combined Ratio Analysis

      Three Months Ended March 31,
      2022 2021
      (dollars in thousands)
         
    Underwriting ratios:   
     Loss ratio75.0% 84.4%
     Expense ratio37.5% 44.6%
     Combined ratio112.5% 129.0%
         
    Contribution to combined ratio from net (favorable) adverse prior year development23.0% 25.2%
         
    Accident year combined ratio89.5% 103.8%
         

    Combined Ratio
    The Company's combined ratio was 112.5% for the quarter ended March 31, 2022, compared to 129.0% for the same period in 2021. The Company’s accident year combined ratio for the quarter ended March 31, 2022 was 89.5%, compared to 103.8% in the prior year period.

    Loss Ratio:
    The Company’s losses and loss adjustment expenses were $18.0 million for the three months ended March 31, 2022, compared to $19.4 million in the prior year period. This resulted in a loss ratio of 75.0%, compared to 84.4% in the prior year period.

    Expense Ratio:
    The expense ratio was 37.5% for the first quarter of 2022, compared to 44.6% in the prior year period.

    Net Investment Income
    Net investment income was $507,000 during the quarter ended March 31, 2022, compared to $532,000 in the prior year period.

    Net Realized Investment (Losses) Gains
    Net realized investment losses during the first quarter were $69,000, compared to net realized investment gains of $2.9 million in the prior year period.

    Change in Fair Value of Equity Securities
    During the quarter, the Company reported a gain of $280,000 from the change in fair value of equity investments, compared to a loss of $540,000 in the prior year period.

    Net Income (Loss)

    In the first quarter of 2022, the Company reported a net loss of $2.9 million, or $0.30 per share, compared to net loss of $4.6 million, or $0.48 per share, in the prior year period.

    Adjusted Operating Income (Loss)

    In the first quarter of 2022, the Company reported an adjusted operating loss of $3.1 million, or $0.32 per share, compared to an adjusted operating loss of $7.0 million, or $0.72 per share, for the same period in 2021. See Definitions of Non-GAAP Measures.

    Earnings Conference Call with Accompanying Slide Presentation
    The Company will hold a conference call/webcast on Thursday, May 12, 2022 at 8:30 a.m. ET to discuss results for the first quarter ended March 31, 2022.

    Investors, analysts, employees and the general public are invited to listen to the conference call via:

     Webcast:On the Event Calendar at IR.CNFRH.com
     Conference Call:844-868-8843 (domestic) or 412-317-6589 (international)

    The webcast will be archived on the Conifer Holdings website and available for replay for at least one year.

    About the Company
    Conifer Holdings, Inc. is a specialty insurance holding company, offering customized coverage solutions tailored to the needs of our insureds. Nationwide, Conifer markets largely through independent agents, and is traded on the NASDAQ exchange under the symbol “CNFR”. Additional information is available on the Company’s website at www.CNFRH.com.

    Definitions of Non-GAAP Measures
    Conifer prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.

    We believe that investors’ understanding of Conifer’s performance is enhanced by our disclosure of adjusted operating income. Our method for calculating this measure may differ from that used by other companies and therefore comparability may be limited. We define adjusted operating income (loss), a non-GAAP measure, as net income (loss) excluding after-tax net realized investment gains and losses, excluding the tax effect of changes in unrealized gains and losses, excluding the after-tax change in fair value of equity securities. We use adjusted operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance.

    Reconciliations of adjusted operating income and adjusted operating income per share:

      Three Months Ended March 31,
      2022   2021 
      (dollar in thousands, except share
    and per share amounts)
        
    Net income (loss)$(2,870) $(4,636)
    Less:   
    Net realized investment gains (losses), net of tax (69)  2,924 
    Other gains (losses), net of tax (5)  - 
    Change in fair value of equity securities, net of tax 280   (540)
    Adjusted operating income (loss)$(3,076) $(7,020)
        
    Weighted average common shares, diluted 9,707,817   9,681,728 
        
    Diluted income (loss) per common share:   
    Net income (loss)$(0.30) $(0.48)
    Less:   
    Net realized investment gains (losses), net of tax (0.01)  0.30 
    Other gains (losses), net of tax -   - 
    Change in fair value of equity securities, net of tax 0.03   (0.06)
    Adjusted operating income (loss), per share$(0.32) $(0.72)
        

    Forward-Looking Statement

    This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance, and include Conifer’s expectations regarding premiums, earnings, its capital position, expansion, and growth strategies. The forward-looking statements contained in this press release are based on management’s good-faith belief and reasonable judgment based on current information. The forward-looking statements are qualified by important factors, risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including those described in our form 10-K (“Item 1A Risk Factors”) filed with the SEC on March 10, 2022 and subsequent reports filed with or furnished to the SEC. Any forward-looking statement made by us in this report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws or regulations.

    For Further Information:
    Jessica Gulis, 248.559.0840
    ir@cnfrh.com


             
    Conifer Holdings, Inc. and Subsidiaries 
    Consolidated Balance Sheets 
    (dollars in thousands) 
             
         March 31, December 31, 
          2022   2021  
    Assets (Unaudited)   
    Investment securities:     
     Debt securities, at fair value (amortized cost of $152,217 and $150,732, respectively) $144,035  $149,783  
            
     Equity securities, at fair value (cost of $11,652 and $10,972, respectively) 10,892   9,931  
     Short-term investments, at fair value  18,197   23,013  
      Total investments  173,124   182,727  
             
    Cash and cash equivalents  7,837   9,913  
    Premiums and agents' balances receivable, net  21,422   21,197  
    Receivable from Affiliate  5,117   5,784  
    Reinsurance recoverables on unpaid losses  40,605   40,344  
    Reinsurance recoverables on paid losses  2,287   1,347  
    Prepaid reinsurance premiums  14,434   8,301  
    Deferred policy acquisition costs  10,124   12,267  
    Other assets  9,981   8,524  
       Total assets $284,931  $290,404  
             
    Liabilities and Shareholders' Equity     
    Liabilities:     
     Unpaid losses and loss adjustment expenses $140,938  $139,085  
     Unearned premiums  65,468   65,269  
     Reinsurance premiums payable  3,342   5,318  
     Debt   38,642   33,564  
     Accounts payable and accrued expenses  6,157   6,665  
       Total liabilities  254,547   249,901  
             
    Commitments and contingencies  -   -  
             
    Shareholders' equity:     
          
     Common stock, no par value (100,000,000 shares authorized; 9,707,817 issued and outstanding, respectively)  92,730   92,692  
     Accumulated deficit  (52,949)  (50,079) 
     Accumulated other comprehensive income (loss)  (9,397)  (2,110) 
      Total shareholders' equity   30,384   40,503  
       Total liabilities and shareholders' equity $284,931  $290,404  
             



    Conifer Holdings, Inc. and Subsidiaries
    Consolidated Statements of Operations (Unaudited)
    (dollars in thousands, except share and per share data)
             
         Three Months Ended 
         March 31, 
          2022   2021  
             
    Revenue and Other Income     
     Premiums     
      Gross earned premiums $32,764  $28,247  
      Ceded earned premiums  (8,809)  (5,412) 
       Net earned premiums  23,955   22,835  
     Net investment income  507   532  
     Net realized investment gains (losses)  (69)  2,924  
     Change in fair value of equity securities  280   (540) 
     Other gains (losses)  (5)  -  
     Other income  698   556  
       Total revenue and other income  25,366   26,307  
             
    Expenses     
     Losses and loss adjustment expenses, net  18,018   19,362  
     Policy acquisition costs  5,464   6,750  
     Operating expenses  4,160   4,349  
     Interest expense  711   721  
       Total expenses  28,353   31,182  
             
    Income (loss) before equity earnings in Affiliate and income taxes  (2,987)  (4,875) 
     Equity earnings in Affiliate, net of tax  76   248  
     Income tax expense (benefit)  (41)  9  
    Net income (loss)  (2,870)  (4,636) 
             
          
    Earnings (loss) per common share, basic and diluted
     $(0.30) $(0.48) 
             
    Weighted average common shares outstanding,basic and diluted  9,707,817   9,681,728  
               

     


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