Conifer Holdings Reports 2023 Second Quarter Financial Results
- Gross written premiums increased 19.4% to $44.7 million in Q2 2023 compared to the prior year period
- Expense ratio improved by 110 basis points from Q2 2022
- Combined ratio of 120.9%; accident year combined ratio excluding storm-related losses was 95.4%
- Net earned premiums decreased 5.7% to $23.2 million in Q2 2023 compared to the prior year period
- Net income (loss) of $(4,739) million in Q2 2023
- Loss ratio of 83.0% in Q2 2023
Company to Host Conference Call at 8:30 AM ET on Thursday, August 10, 2023
TROY, Mich., Aug. 09, 2023 (GLOBE NEWSWIRE) -- Conifer Holdings, Inc. (Nasdaq: CNFR) (“Conifer” or the “Company”) today announced results for the second quarter ended June 30, 2023.
Second Quarter 2023 Financial Highlights (compared to the prior year period)
- Gross written premium increased
19.4% to$44.7 million - Expense ratio continues downward trend: 110 basis point improvement from Q2 2022
- Combined ratio of
120.9% ; accident year combined ratio excluding the impact of storm-related losses was95.4% (6)
Management Comments
James Petcoff, Executive Chairman and Co-CEO, commented, “While the second quarter results were affected by atypically severe storm losses, it is important to emphasize that excluding the impact of these storm-related losses, Conifer would have achieved continued profitability in the quarter.”
2023 Second Quarter Financial Results Overview
At and for the Three Months Ended June 30, | At and for the Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||||||||
Gross written premiums | $ | 44,674 | $ | 37,418 | 19.4 | % | $ | 80,888 | $ | 70,382 | 14.9 | % | |||||||||||
Net written premiums | 29,328 | 27,266 | 7.6 | % | 47,670 | 45,287 | 5.3 | % | |||||||||||||||
Net earned premiums | 23,183 | 24,576 | -5.7 | % | 45,135 | 48,531 | -7.0 | % | |||||||||||||||
Net investment income | 1,354 | 564 | 140.1 | % | 2,661 | 1,071 | 148.5 | % | |||||||||||||||
Net realized investment gains (losses) | - | (1,436 | ) | ** | - | (1,505 | ) | ** | |||||||||||||||
Change in fair value of equity investments | (12 | ) | 317 | -103.8 | % | 682 | 597 | 14.2 | % | ||||||||||||||
Other gains (losses) | - | (1 | ) | ** | - | (6 | ) | ** | |||||||||||||||
Net income (loss) | (4,739 | ) | (8,399 | ) | ** | (3,738 | ) | (11,269 | ) | ** | |||||||||||||
Net income (loss) per share, diluted | $ | (0.39 | ) | $ | (0.86 | ) | $ | (0.31 | ) | $ | (1.16 | ) | |||||||||||
Adjusted operating income (loss)* | (4,727 | ) | (7,279 | ) | ** | (4,420 | ) | (10,355 | ) | ** | |||||||||||||
Adjusted operating income (loss) per share, diluted* | $ | (0.39 | ) | $ | (0.75 | ) | ** | $ | (0.36 | ) | $ | (1.07 | ) | ** | |||||||||
Book value per common share outstanding | $ | 1.38 | $ | 1.75 | $ | 1.38 | $ | 1.75 | |||||||||||||||
Weighted average shares outstanding, basic and diluted | 12,220,331 | 9,712,602 | 12,218,102 | 9,710,223 | |||||||||||||||||||
Underwriting ratios: | |||||||||||||||||||||||
Loss ratio (1) | 83.0 | % | 90.2 | % | 72.9 | % | 82.7 | % | |||||||||||||||
Expense ratio (2) | 37.9 | % | 39.0 | % | 37.6 | % | 38.3 | % | |||||||||||||||
Combined ratio (3) | 120.9 | % | 129.2 | % | 110.5 | % | 121.0 | % | |||||||||||||||
* 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 | |||||||||||||||||||||||
2023 Second Quarter Premiums
Gross Written Premiums
Gross written premiums increased
This approach was most clearly demonstrated in the Company’s small business program, where GWP increased
Net Earned Premiums
Net earned premiums decreased
Commercial Lines Financial and Operational Review
Commercial Lines Financial Review | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Gross written premiums | $ | 34,761 | $ | 32,076 | 8.4 | % | $ | 63,736 | $ | 60,662 | 5.1 | % | |||||||||||
Net written premiums | 20,485 | 22,386 | -8.5 | % | 32,726 | 36,726 | -10.9 | % | |||||||||||||||
Net earned premiums | 17,487 | 20,784 | -15.9 | % | 34,610 | 41,308 | -16.2 | % | |||||||||||||||
Underwriting ratios: | |||||||||||||||||||||||
Loss ratio | 77.5 | % | 95.5 | % | 69.5 | % | 88.1 | % | |||||||||||||||
Expense ratio | 37.4 | % | 38.0 | % | 36.8 | % | 37.2 | % | |||||||||||||||
Combined ratio | 114.9 | % | 133.5 | % | 106.3 | % | 125.3 | % | |||||||||||||||
Contribution to combined ratio from net (favorable) adverse prior year development | 5.0 | % | 44.4 | % | 0.2 | % | 36.1 | % | |||||||||||||||
Accident year combined ratio (non-GAAP) (4) | 109.9 | % | 89.1 | % | 106.1 | % | 89.2 | % | |||||||||||||||
Impact from storms | 5.5 | % | - | 2.7 | % | - | |||||||||||||||||
Accident year combined ratio before impact of storms (non-GAAP) (4) | 104.4 | % | 89.1 | % | 103.4 | % | 89.2 | % | |||||||||||||||
(4) 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 accident year combined ratio is a non-GAAP measure. We excluded | |||||||||||||||||||||||
The Company’s commercial lines of business represented
Commercial lines gross written premium increased
The Commercial lines combined ratio was
The expense ratio was
Personal Lines Financial and Operational Review
Personal Lines Financial Review | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Gross written premiums | $ | 9,913 | $ | 5,342 | 85.6 | % | $ | 17,152 | $ | 9,720 | 76.5 | % | |||||||||||
Net written premiums | 8,843 | 4,880 | 81.2 | % | 14,944 | 8,561 | 74.6 | % | |||||||||||||||
Net earned premiums | 5,696 | 3,792 | 50.2 | % | 10,525 | 7,223 | 45.7 | % | |||||||||||||||
Underwriting ratios: | |||||||||||||||||||||||
Loss ratio | 100.1 | % | 61.4 | % | 84.1 | % | 51.7 | % | |||||||||||||||
Expense ratio | 39.2 | % | 44.7 | % | 40.0 | % | 44.1 | % | |||||||||||||||
Combined ratio | 139.3 | % | 106.1 | % | 124.1 | % | 95.8 | % | |||||||||||||||
Contribution to combined ratio from net (favorable) adverse prior year development | -6.4 | % | 7.0 | % | -7.2 | % | 0.6 | % | |||||||||||||||
Accident year combined ratio (non-GAAP) (5) | 145.7 | % | 99.1 | % | 131.3 | % | 95.2 | % | |||||||||||||||
Impact from storms | 78.0 | % | - | 42.2 | % | - | |||||||||||||||||
Accident year combined ratio before impact of storms (non-GAAP) (5) | 67.7 | % | 99.1 | % | 89.1 | % | 95.2 | % | |||||||||||||||
(5) 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 accident year combined ratio is a non-GAAP measure. We excluded | |||||||||||||||||||||||
Personal lines, representing
Personal lines gross written premium increased
Personal lines combined ratio was
Combined Ratio Analysis
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Underwriting ratios: | |||||||||||||||
Loss ratio | 83.0 | % | 90.2 | % | 72.9 | % | 82.7 | % | |||||||
Expense ratio | 37.9 | % | 39.0 | % | 37.6 | % | 38.3 | % | |||||||
Combined ratio | 120.9 | % | 129.2 | % | 110.5 | % | 121.0 | % | |||||||
Contribution to combined ratio from net (favorable) adverse prior year development | 2.2 | % | 38.6 | % | -1.5 | % | 30.9 | % | |||||||
Accident year combined ratio (non-GAAP) (6) | 118.7 | % | 90.6 | % | 112.0 | % | 90.1 | % | |||||||
Impact from storms | 23.3 | % | - | 11.9 | % | - | |||||||||
Accident year combined ratio before impact of storms (non-GAAP) (6) | 95.4 | % | 90.6 | % | 100.1 | % | 90.1 | % | |||||||
(6) 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 accident year combined ratio is a non-GAAP measure. We excluded | |||||||||||||||
Combined Ratio:
The Company's combined ratio was
Loss Ratio:
The Company’s losses and loss adjustment expenses were
Expense Ratio:
The expense ratio continues to improve, due in large part to the Company’s sustained emphasis on expense management: the expense ratio for the second quarter of 2023 was
Net Investment Income
Net investment income was
Net Realized Investment Gains (Losses)
The Company did not have any realized investment gains or losses during the second quarter of 2023. Net realized investment losses were
Change in Fair Value of Equity Securities
During the quarter, the Company reported a loss of
Net Income (Loss)
The Company reported net loss of
Adjusted Operating Income (Loss)
In the second quarter of 2023, the Company reported an adjusted operating loss of
Earnings Conference Call with Accompanying Slide Presentation
The Company will hold a conference call/webcast on Thursday, August 10, 2023 at 8:30 a.m. ET to discuss results for the second quarter ended June 30, 2023.
Investors, analysts, employees and the general public are invited to listen to the conference call via:
Webcast: Conference Call: | On the Event Calendar at IR.CNFRH.com 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 Conifer Holdings
Conifer Holdings, Inc. is a specialty insurance holding company, offering customized coverage solutions tailored to the needs of our insureds nationwide. Conifer 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 the after-tax amounts of: 1) net realized investment gains and losses, 2) Other gains (losses) and 3) 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 June 30, | Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(dollar in thousands, except share and per share amounts) | |||||||||||||||
Net income (loss) | $ | (4,739 | ) | $ | (8,399 | ) | $ | (3,738 | ) | $ | (11,269 | ) | |||
Less: | |||||||||||||||
Net realized investment gains (losses), net of tax | - | (1,436 | ) | - | (1,505 | ) | |||||||||
Other gains (losses), net of tax | - | (1 | ) | - | (6 | ) | |||||||||
Change in fair value of equity securities, net of tax | (12 | ) | 317 | 682 | 597 | ||||||||||
Adjusted operating income (loss) | $ | (4,727 | ) | $ | (7,279 | ) | $ | (4,420 | ) | $ | (10,355 | ) | |||
Weighted average common shares, diluted | 12,220,331 | 9,712,602 | 12,218,102 | 9,710,223 | |||||||||||
Diluted income (loss) per common share: | |||||||||||||||
Net income (loss) | $ | (0.39 | ) | $ | (0.86 | ) | $ | (0.31 | ) | $ | (1.16 | ) | |||
Less: | |||||||||||||||
Net realized investment gains (losses), net of tax | - | (0.14 | ) | - | (0.15 | ) | |||||||||
Other gains (losses), net of tax | - | - | - | - | |||||||||||
Change in fair value of equity securities, net of tax | - | 0.03 | 0.05 | 0.06 | |||||||||||
Adjusted operating income (loss), per share | $ | (0.39 | ) | $ | (0.75 | ) | $ | (0.36 | ) | $ | (1.07 | ) | |||
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 27, 2023 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) | |||||||
June 30, | December 31, | ||||||
2023 | 2022 | ||||||
Assets | (Unaudited) | ||||||
Investment securities: | |||||||
Debt securities, at fair value (amortized cost of | $ | 105,996 | $ | 110,201 | |||
Equity securities, at fair value (cost of | 2,326 | 1,267 | |||||
Short-term investments, at fair value | 39,564 | 25,929 | |||||
Total investments | 147,886 | 137,397 | |||||
Cash and cash equivalents | 18,765 | 28,035 | |||||
Premiums and agents' balances receivable, net | 25,895 | 21,802 | |||||
Receivable from Affiliate | 933 | 1,261 | |||||
Reinsurance recoverables on unpaid losses | 56,505 | 82,651 | |||||
Reinsurance recoverables on paid losses | 5,828 | 6,653 | |||||
Prepaid reinsurance premiums | 24,444 | 16,399 | |||||
Deferred policy acquisition costs | 9,500 | 10,290 | |||||
Other assets | 6,767 | 7,862 | |||||
Total assets | $ | 296,523 | $ | 312,350 | |||
Liabilities and Shareholders' Equity | |||||||
Liabilities: | |||||||
Unpaid losses and loss adjustment expenses | $ | 145,004 | $ | 165,539 | |||
Unearned premiums | 78,468 | 67,887 | |||||
Reinsurance premiums payable | 12,023 | 6,144 | |||||
Debt | 34,031 | 33,876 | |||||
Accounts payable and accrued expenses | 10,140 | 19,954 | |||||
Total liabilities | 279,666 | 293,400 | |||||
Commitments and contingencies | - | - | |||||
Shareholders' equity: | |||||||
Common stock, no par value (100,000,000 shares authorized; 12,222,881 and 12,215,849 issued and outstanding, respectively) | 98,013 | 97,913 | |||||
Accumulated deficit | (64,498 | ) | (60,760 | ) | |||
Accumulated other comprehensive income (loss) | (16,658 | ) | (18,203 | ) | |||
Total shareholders' equity | 16,857 | 18,950 | |||||
Total liabilities and shareholders' equity | $ | 296,523 | $ | 312,350 | |||
Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
(dollars in thousands, except share and per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue and Other Income | ||||||||||||||||
Premiums | ||||||||||||||||
Gross earned premiums | $ | 36,013 | $ | 33,782 | $ | 70,307 | $ | 66,546 | ||||||||
Ceded earned premiums | (12,830 | ) | (9,206 | ) | (25,172 | ) | (18,015 | ) | ||||||||
Net earned premiums | 23,183 | 24,576 | 45,135 | 48,531 | ||||||||||||
Net investment income | 1,354 | 564 | 2,661 | 1,071 | ||||||||||||
Net realized investment gains (losses) | - | (1,436 | ) | - | (1,505 | ) | ||||||||||
Change in fair value of equity securities | (12 | ) | 317 | 682 | 597 | |||||||||||
Other gains (losses) | - | (1 | ) | - | (6 | ) | ||||||||||
Other income | 398 | 663 | 1,024 | 1,361 | ||||||||||||
Total revenue and other income | 24,923 | 24,683 | 49,502 | 50,049 | ||||||||||||
Expenses | ||||||||||||||||
Losses and loss adjustment expenses, net | 19,319 | 22,251 | 33,032 | 40,269 | ||||||||||||
Policy acquisition costs | 4,413 | 5,725 | 9,134 | 11,189 | ||||||||||||
Operating expenses | 5,114 | 4,470 | 9,393 | 8,630 | ||||||||||||
Interest expense | 820 | 727 | 1,506 | 1,438 | ||||||||||||
Total expenses | 29,666 | 33,173 | 53,065 | 61,526 | ||||||||||||
Income (loss) before equity earnings in Affiliate and income taxes | (4,743 | ) | (8,490 | ) | (3,563 | ) | (11,477 | ) | ||||||||
Equity earnings (loss) in Affiliate, net of tax | 4 | 93 | (175 | ) | 169 | |||||||||||
Income tax expense (benefit) | - | 2 | - | (39 | ) | |||||||||||
Net income (loss) | (4,739 | ) | (8,399 | ) | (3,738 | ) | (11,269 | ) | ||||||||
Earnings (loss) per common share, basic and diluted | $ | (0.39 | ) | $ | (0.86 | ) | $ | (0.31 | ) | $ | (1.16 | ) | ||||
Weighted average common shares outstanding, basic and diluted | 12,220,331 | 9,712,602 | 12,218,102 | 9,710,223 | ||||||||||||
For Further Information:
Jessica Gulis, 248.559.0840
ir@cnfrh.com
FAQ
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