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
theThree 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 PremiumsGross 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 PremiumsNet 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
ratio |
75.0% |
|
84.4% |
|
Expense
ratio |
37.5% |
|
44.6% |
|
Combined
ratio |
112.5% |
|
129.0% |
|
|
|
|
|
Contribution to combined ratio from net (favorable) adverse
prior year development |
23.0% |
|
25.2% |
|
|
|
|
|
Accident year combined ratio |
89.5% |
|
103.8% |
|
|
|
|
|
Combined RatioThe 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 IncomeNet
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)
GainsNet 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
SecuritiesDuring 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 PresentationThe 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 CompanyConifer
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
MeasuresConifer 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 shareand 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, 248.559.0840ir@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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Conifer (NASDAQ:CNFRL)
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From May 2024 to Jun 2024
Conifer (NASDAQ:CNFRL)
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From Jun 2023 to Jun 2024