Conifer Holdings Inc logo

CNFR - Conifer Holdings Inc News Story

$2.75 0.1  2.2%

Last Trade - 8:59pm

Sector
Financials
Size
Micro Cap
Market Cap £18.9m
Enterprise Value £44.2m
Revenue £78.7m
Position in Universe 6233rd / 6995

Conifer Holdings Reports 2021 First Quarter Financial Results

Tue 11th May, 2021 9:01pm
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20210511:nGNX6y7ZVS&default-theme=true


BIRMINGHAM, Mich., May 11, 2021 (GLOBE NEWSWIRE) -- Conifer Holdings, Inc.
(Nasdaq: CNFR) (“Conifer” or the “Company”) today announced results
for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights (compared to the prior year first
quarter)
* Gross written premium increased 21.1% to $30.4 million
* Commercial Lines gross written premium increased 16.1% to $27.2 million
* Personal Lines gross written premium increased 92.2% to $3.2 million
* Catastrophe losses of $2.3 million from Winter Storm Uri
* Net loss of $4.6 million, or $0.48 per share, based on 9.7 million average
shares outstanding
* Book value per share of $3.82 as of March 31, 2021.
Management Comments 
James Petcoff, Chairman and CEO, commented, “Our results were impacted by
Winter Storm Uri and by severity from certain geographies largely in our quick
service restaurant business. We have worked diligently to reduce exposure in
our underperforming areas, while concentrating on markets where we have
consistently reported favorable results. We achieved solid top line growth in
both Commercial and Personal lines, which will help Conifer achieve an
efficient operating scale going forward.”

2021 First Quarter Financial Results Overview

                                                                                       As of and for the Three Months Ended March 31,                                                                                                                                                        
                                                                                                         2021                                                                    2020                                                  % Change                                              
                                                                                                                                                                                                                                                                                             
                                                                                       (dollars in thousands, except share and per                                                                                                                                                           
                                                                                       share amounts)                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                             
   Gross written premiums                                                              $                 30,373                                                $                 25,084                                                21.1              %                                   
   Net written premiums                                                                                  24,483                                                                  21,051                                                16.3              %                                   
   Net earned premiums                                                                                   22,835                                                                  22,017                                                3.7               %                                   
                                                                                                                                                                                                                                                                                             
   Net investment income                                                                                 532                                                                     954                                                   -44.2             %                                   
   Net realized investment gains                                                                         2,924                                                                   928                                                   **                                                    
   Change in fair value of equity investments                                                            (540              )                                                     (3,086            )                                   **                                                    
   Other gains                                                                                           -                                                                       115                                                   **                                                    
                                                                                                                                                                                                                                                                                             
   Net income (loss)                                                                                     (4,636            )                                                     (4,725            )                                   **                                                    
                                 Net income (loss) per share, diluted                  $                 (0.48             )                                   $                 (0.49             )                                                                                         
                                                                                                                                                                                                                                                                                             
   Adjusted operating income (loss)*                                                                     (7,020            )                                                     (2,682            )                                   **                                                    
                                 Adjusted operating income (loss) per share, diluted*  $                 (0.72             )                                   $                 (0.28             )                                   **                                                    
                                                                                                                                                                                                                                                                                             
   Book value per common share outstanding                                             $                 3.82                                                  $                 3.81                                                                                                        
                                                                                                                                                                                                                                                                                             
   Weighted average shares outstanding, basic and diluted                                                9,681,728                                                               9,592,774                                                                                                   
                                                                                                                                                                                                                                                                                             
   Underwriting ratios:                                                                                                                                                                                                                                                                      
                                 Loss ratio (1)                                                          84.4              %                                                     64.5              %                                                                                         
                                 Expense ratio (2)                                                       44.6              %                                                     47.1              %                                                                                         
                                 Combined ratio (3)                                                      129.0             %                                                     111.6             %                                                                                         
                                                                                                                                                                                                                                                                                             
   * 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.                                                                                       

2021 First Quarter Premiums

Gross Written Premiums
Gross written premiums increased 21.1% in the first quarter of 2021 to $30.4
million, compared to $25.1 million in the prior year period. The increase was
the result of growth in both Commercial and Personal lines business as we
continue to penetrate markets where we have been the most successful while
still reducing exposure to less profitable lines.

Net Earned Premiums
Net earned premiums increased 3.7% to $22.8 million for the first quarter of
2021, compared to $22.0 million for the prior year period. Growth was limited
by slightly higher reinsurance costs. The Company expects net earned premiums
to increase throughout 2021 as the growth in gross written premiums achieved
in the second half of 2020 and into 2021 continues to be earned ratably
through the year.

Commercial Lines Financial and Operational Review

   Commercial Lines Financial Review                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                  Three Months Ended March 31,                                                                                                                                                                                                                                                                                                                                  
                                                                                                                     2021                                                                                                                                        2020                                                                                                     % Change                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                
                                                                                  (dollars in thousands)                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                                
   Gross written premiums                                                         $                                  27,221                                                                                                   $                                  23,444                                                                                                   16.1                               %                                  
   Net written premiums                                                                                              21,557                                                                                                                                      19,687                                                                                                   9.5                                %                                  
   Net earned premiums                                                                                               20,706                                                                                                                                      20,431                                                                                                   1.3                                %                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                
   Underwriting ratios:                                                                                                                                                                                                                                                                                                                                                                                                                         
                                      Loss ratio                                                                     81.7                               %                                                                                                        65.6                               %                                                                                                                                           
                                      Expense ratio                                                                  44.6                               %                                                                                                        47.2                               %                                                                                                                                           
                                      Combined ratio                                                                 126.3                              %                                                                                                        112.8                              %                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                
   Contribution to combined ratio from net                                                                                                                                                                                                                                                                                                                                                                                                      
                                      (favorable) adverse prior year development                                     24.9                               %                                                                                                        17.9                               %                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                
   Accident year combined ratio (1)                                                                                  101.4                              %                                                                                                        94.9                               %                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                
   (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 89.6% of total
gross written premium in the first quarter of 2021, primarily consists of
property and liability coverage offered to owner-operated small- to mid-sized
businesses.

Commercial lines gross written premium increased 16.1% in the first quarter of
2021 to $27.2 million, as the Company continues to emphasize growth of its
specialty lines business.

The Commercial lines combined ratio was 126.3% for the three months ended
March 31, 2021, compared to 112.8% in the prior year period.   The loss
ratio was 81.7% for the three months ended March 31, 2021, compared with 65.6%
in the prior year period while the expense ratio was 44.6% in the current year
period, compared with 47.2% during the prior year period.

Winter Storm Uri (or “URI”), for the three months ended March 31, 2021,
increased the accident year loss ratio in the Commercial lines segment by 8.2
percentage points. Excluding URI, the accident year loss ratio would have been
48.6%. Similarly, the Commercial lines accident year combined ratio was 8.7
percentage point higher for the quarter because of URI, and would have been
92.7% excluding the impact of Winter Storm Uri.

Personal Lines Financial and Operational Review

   Personal Lines Financial Review                                                                                             
                                                                     Three Months Ended March 31,                              
                                                                          2021                  2020             % Change      
                                                                                                                               
                                                                     (dollars in thousands)                                    
                                                                                                                               
   Gross written premiums                                            $    3,152            $    1,640            92.2   %      
   Net written premiums                                                   2,926                 1,364            114.5  %      
   Net earned premiums                                                    2,129                 1,586            34.2   %      
                                                                                                                               
   Underwriting ratios:                                                                                                        
                         Loss ratio                                       111.0  %              49.8   %                       
                         Expense ratio                                    43.8   %              47.1   %                       
                         Combined ratio                                   154.8  %              96.9   %                       
                                                                                                                               
   Contribution to combined ratio from net                                                                                     
                         (favorable) adverse prior year development       28.2   %              4.0    %                       
                                                                                                                               
   Accident year combined ratio                                           126.6  %              92.9   %                       
                                                                                                                               

Personal lines, representing 10.4% of total gross written premium for the
first quarter of 2021, consists largely of low-value dwelling homeowner’s
insurance.

Personal lines gross written premium increased 92.2% to $3.2 million in the
first quarter of 2021 compared to the prior year period, led by growth in the
Company’s low-value dwelling line of business in Texas following Winter
Storm Uri.

Personal lines combined ratio was 154.8% for the three months ended March 31,
2021, compared to 96.9% in the prior year period. Personal lines loss ratio
was 111.0%, compared to 49.8% in the prior year period, largely driven by
losses associated with Winter Storm Uri.

Winter Storm Uri, for the three months ended March 31, 2021, increased the
accident year loss ratio in the Personal lines segment by 21.8 percentage
points. Excluding Uri, the accident year loss ratio would have been 61.0%.
Similarly, the Personal lines accident year combined ratio was 22.7 percentage
points higher for the quarter because of URI, and would have been 103.9%
excluding the impact of Winter Storm Uri.

Combined Ratio Analysis

                                                               Three Months Ended March 31,            
                                                               2021                    2020            
                                                                                                       
                                                               (dollars in thousands)                  
                                                                                                       
   Underwriting ratios:                                                                                
                               Loss ratio                      84.4    %               64.5    %       
                               Expense ratio                   44.6    %               47.1    %       
                               Combined ratio                  129.0   %               111.6   %       
                                                                                                       
   Contribution to combined ratio from net (favorable)                                                 
                               adverse prior year development  25.2    %               16.9    %       
                                                                                                       
   Accident year combined ratio                                103.8   %               94.7    %       
                                                                                                       

Combined Ratio
The Company's combined ratio was 129% for the quarter ended March 31, 2021,
compared to 111.6% for the same period in 2020. The Company’s accident year
combined ratio for the quarter ended March 31, 2021 was 103.8%, compared to
94.7% in the prior year period.

Loss Ratio: 
The Company’s losses and loss adjustment expenses were $19.4 million for the
three months ended March 31, 2021, compared to $14.3 million in the prior year
period. This resulted in a loss ratio of 84.4%, compared to 64.5% in the prior
year period.

Expense Ratio: 
The expense ratio was 44.6% for the first quarter of 2021, compared to 47.1%
in the prior year period.

Net Investment Income
Net investment income was $532,000 during the quarter ended March 31, 2021,
compared to $954,000 in the prior year period. Net realized investment gains
during the first quarter were $2.9 million, compared to net realized
investment gains of $928,000 in the prior year period.

Change in Fair Value of Equity Securities
During the quarter, the Company reported a loss from the change in fair value
of equity investments of $540,000, compared to a loss of $3.1 million in the
prior year period.

Net Income (Loss) 
In the first quarter of 2021, the Company reported a net loss of $4.6 million,
or $0.48 per share, compared to a net loss of $4.7 million, or $0.49 per
share, in the prior year period.

Adjusted Operating Income (Loss)

In the first quarter of 2021, the Company reported an adjusted operating loss
of $7.0 million, or $0.72 per share, compared to an adjusted operating loss of
$2.7 million, or $0.28 per share, for the same period in 2020. See Definitions
of Non-GAAP Measures.

Earnings Conference Call with Accompanying Slide Presentation
The Company will hold a conference call/webcast on Wednesday, May 12, 2021 at
8:30 a.m. ET to discuss results for the first quarter ended March 31, 2021.

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 Michigan-based insurance holding company. Through
its operating subsidiaries, Conifer offers customized coverage solutions
tailored to the needs of our specialty niche insureds.  Across all 50 states,
we utilize a multi-channel distribution approach, but largely market through
independent agents. Conifer is traded on the Nasdaq Global Market (Nasdaq:
CNFR), and 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 net realized
investment gains or losses, changes in fair value of equity securities, and
other gains or losses; all net of tax. 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,                                                 
                                                                                                        2021                                        2020                  
                                                                                                                                                                          
                                                                                             (dollar in thousands, except share and per share amounts)                    
                                                                                                                                                                          
   Net income (loss)                                                                         $          (4,636     )                     $          (4,725     )          
   Less:                                                                                                                                                                  
   Net realized investment gains and other gains, net of tax                                            2,924                                       1,043                 
   Change in fair value of equity securities, net of tax                                                (540       )                                (3,086     )          
   Adjusted operating income (loss)                                                          $          (7,020     )                     $          (2,682     )          
                                                                                                                                                                          
   Weighted average common shares, diluted                                                              9,681,728                                   9,592,774             
                                                                                                                                                                          
   Diluted income (loss) per common share:                                                                                                                                
                                  Net income (loss)                                          $          (0.48      )                     $          (0.49      )          
                                  Less:                                                                                                                                   
                                  Net realized investment gains and other gains, net of tax             0.30                                        0.11                  
                                  Change in fair value of equity securities, net of tax                 (0.06      )                                (0.32      )          
                                  Adjusted operating income (loss), per share                $          (0.72      )                     $          (0.28      )          
                                                                                                                                                                          

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 11, 2021 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.

   Conifer Holdings, Inc. and Subsidiaries                                                                                                                                              
   Consolidated Balance Sheets                                                                                                                                                          
   (dollars in thousands)                                                                                                                                                               
                                                                                                                                                                                        
                                                                                                                                      March 31,                  December 31,           
                                                                                                                                            2021                        2020            
   Assets                                                                                                                             (Unaudited)                                       
   Investment securities:                                                                                                                                                               
                 Debt securities, at fair value (amortized cost of $148,434 and                                                       $     147,629              $      151,999         
                                                   $149,954, respectively)                                                                                                              
                 Equity securities, at fair value (cost of $19,217 and $16,912, respectively)                                               19,638                      17,891          
                 Short-term investments, at fair value                                                                                      12,710                      13,317          
                                                   Total investments                                                                        179,977                     183,207         
                                                                                                                                                                                        
   Cash and cash equivalents                                                                                                                4,429                       8,193           
   Premiums and agents' balances receivable, net                                                                                            19,328                      20,162          
   Reinsurance recoverables on unpaid losses                                                                                                26,559                      24,218          
   Reinsurance recoverables on paid losses                                                                                                  3,923                       2,138           
   Prepaid reinsurance premiums                                                                                                             3,653                       1,316           
   Deferred policy acquisition costs                                                                                                        12,459                      12,243          
   Other assets                                                                                                                             9,359                       10,120          
                                                   Total assets                                                                       $     259,687              $      261,597         
                                                                                                                                                                                        
   Liabilities and Shareholders' Equity                                                                                                                                                 
   Liabilities:                                                                                                                                                                         
                 Unpaid losses and loss adjustment expenses                                                                           $     118,676              $      111,270         
                 Unearned premiums                                                                                                          58,350                      56,224          
                 Debt                                                                                                                       39,075                      40,997          
                 Accounts payable and accrued expenses                                                                                      6,610                       8,693           
                                                   Total liabilities                                                                        222,711                     217,184         
                                                                                                                                                                                        
   Commitments and contingencies                                                                                                            -                           -               
                                                                                                                                                                                        
   Shareholders' equity:                                                                                                                                                                
                 Common stock, no par value (100,000,000 shares authorized;                                                                                                             
                                                   9,681,728 issued and outstanding, respectively)                                          92,552                      92,486          
                 Accumulated deficit                                                                                                        (53,621  )                  (48,985  )      
                 Accumulated other comprehensive income (loss)                                                                              (1,955   )                  912             
                                                   Total shareholders' equity                                                               36,976                      44,413          
                                                   Total liabilities and shareholders' equity                                         $     259,687              $      261,597         
                                                                                                                                                                                        
                                                                                                                                                                                        



   Conifer Holdings, Inc. and Subsidiaries                                                                                                     
   Consolidated Statements of Operations (Unaudited)                                                                                           
   (dollars in thousands, except share and per share data)                                                                                     
                                                                                                                                               
                                                                                 Three Months Ended                                            
                                                                                 March 31                                                      
                                                                                         2021                               2020               
                                                                                                                                               
   Revenue                                                                                                                                     
                      Premiums                                                                                                                 
                                         Gross earned premiums                   $       28,247                     $       26,053             
                                         Ceded earned premiums                           (5,412     )                       (4,036     )       
                                                            Net earned premiums          22,835                             22,017             
                      Net investment income                                              532                                954                
                      Net realized investment gains                                      2,924                              928                
                      Change in fair value of equity securities                          (540       )                       (3,086     )       
                      Other gains                                                        -                                  115                
                      Other income                                                       556                                658                
                                                            Total revenue                26,307                             21,586             
                                                                                                                                               
   Expenses                                                                                                                                    
                      Losses and loss adjustment expenses, net                           19,362                             14,269             
                      Policy acquisition costs                                           6,750                              6,303              
                      Operating expenses                                                 4,349                              5,045              
                      Interest expense                                                   721                                731                
                                                            Total expenses               31,182                             26,348             
                                                                                                                                               
   Income (loss) before equity earnings in Affiliate and income taxes                    (4,875     )                       (4,762     )       
                      Equity earnings in Affiliate, net of tax                           248                                50                 
                      Income tax expense                                                 9                                  13                 
   Net income (loss)                                                                     (4,636     )                       (4,725     )       
                                                                                                                                               
   Earnings (loss) per common share,                                                                                                           
                      basic and diluted                                          $       (0.48      )               $       (0.49      )       
                                                                                                                                               
   Weighted average common shares outstanding,                                                                                                 
                      basic and diluted                                                  9,681,728                          9,592,774          
                                                                                                                                               

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

(https://www.globenewswire.com/NewsRoom/AttachmentNg/43852771-4c6b-4ab0-9e27-11296d560c27)



GlobeNewswire, Inc. 2021
© Stockopedia 2021, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.