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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Conifer Holdings Inc | NASDAQ:CNFR | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.1396 | 0.968 | 1.30 | 0 | 09:39:56 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
On November 10, 2023 Conifer Holdings, Inc. (the “Company”) presented additional background information on the Company and on its strategic plan (the “Investor Presentation”) on its conference call/webcast to discuss results for the third quarter ended September 30, 2023. A copy of the Investor Presentation, which is available on the Company’s website at www.CNFRH.com under the tab “Investors,” is attached hereto as Exhibit 99.1, and is incorporated herein by reference. The information in this Item 7.01 and the attached exhibit shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly stated by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits. |
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Exhibit 99.1 |
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Exhibit 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Conifer Holdings Inc. |
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Date: November 13, 2023 |
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By: |
/s/ BRIAN J. RONEY |
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Brian J. Roney |
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President |
Nasdaq: CNFR Fulfilling the Unique Needs of Specialty Insurance Markets as a Long-Term Partner Q3 2023 Investor Conference Call November 10, 2023
Safe Harbor Statement This presentation contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management’s beliefs and assumptions and on information currently available to management. These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, product expansion, future operations, margins, profitability, future efficiencies, and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “potential,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, inherent risks and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation. Our actual future results may be materially different from what we expect due to factors largely outside our control, including the occurrence of severe weather conditions and other catastrophes, the cyclical nature of the insurance industry, future actions by regulators, our ability to obtain reinsurance coverage at reasonable rates and the effects of competition. These and other risks and uncertainties associated with our business are described under the heading “Risk Factors” in our most recently filed Annual Report on Form 10-K and our earnings press release for the quarter ended September 30, 2023, which should be read in conjunction with this presentation. The company and subsidiaries operate in a dynamic business environment, and therefore the risks identified are not meant to be exhaustive. Risk factors change and new risks emerge frequently. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. 2
Conifer Holdings, Inc. provides niche market insurance programs through Conifer Insurance Company and White Pine Insurance Company on both an admitted and E&S basis. Program Portfolio Cannabis Craft Beverage CBD & Hemp Food & Beverage Liquor Liability Marijuana Liability Workers’ Compensation Specialty Homeowners Conifer’s Infrastructure Conifer Insurance Company Founded in 2009 Licensed & Admitted in 4 States (MI, IL, IN, SD) E&S in 49 States (Exc. NY) White Pine Insurance Company Founded in 2010 Licensed & Admitted in 44 States & DC 3 Conifer Insurance Services Wholly owned general agency Acts as a conduit for retail agents to access and write E&S and admitted policies for Conifer and White Pine Insurance Companies Facilitates specialty programs and markets on a select basis
Q3 2023 Highlights Top Line Growth in Key Verticals GWP Q3 2023: $38.5M +16.5% over Q3 2022 Focus is on expanding profitable core premium within select key verticals Expense Ratio Beats Near-Term Target Q3 2023 Expense Ratio: 33.9% 600 bps improvement compared to Q3 2022 Beat our near-term target expense ratio of 35% Book Value of $0.96 per share Excludes $23.9M of DTAs ($1.96 per share) Total adjusted book value of $2.92 as of quarter ended September 30, 2023 Strategic Initiatives Continue to Strengthen Foundation for Sustainable Profitability 4
Our Lines Of Business Commercial Personal 5 Gross Written Premium for Q3 2023: $38.5 Million, up 16.5% YoY
Focus on classes where we have deep underwriting knowledge and experience Partner with retail and select wholesale agencies and retain underwriting authority in-house: Underwriting teams have established strong relationships with retail and wholesale specialists in these lines of business. With agents who specialize in our unique classes, we remain closer to our insureds and underwrite a stronger account / risk profile. A hallmark of our success has always been tight agent relationships that generate high account retention: Commercial retention in the quarter was over 90%. High account retention allows us to selectively grow market share where we see the best pricing and profitability. Leverage ability to write on E&S and admitted paper for rate and form flexibility: Our markets continue firming, and we are seeing rate increases in our specialty markets. Increasing rate, especially Excess & Surplus lines. Maintain low limits as much as possible: vast majority of property TIV is under $1M Also, we are seeing opportunities for additional market share movement in our space Continuing to emphasize specialty business, our premium mix remains firmly dedicated to Commercial Lines with 73.9% Specialty Commercial and 26.1% Personal Lines for Q3 2023. Commercial Lines Focus: Disciplined, Quality Underwriting 6
$27.6 $28.5 MILLIONS +3.1% Gross Written Premium Underwriting focus narrowing to select key verticals: commercial lines GWP increased 3.1% from Q3 2022 Commercial Lines represented roughly 74% of the premium written in Q3 2023 Sustained expansion of premium and market share in key geographies, including home state of Michigan Commercial Lines 7 YTD September 30, 2023 Top Five States Gross Written Premium $ in thousands Michigan $ 26,430 28.7% California 10,785 11.7% New York 8,682 9.4% Florida 7,587 8.2% Texas 4,049 4.4% All Other 34,695 37.6% Total $ 92,228 100.0%
Underwriting teams have established strong relationships with retail and wholesale specialists in low value dwelling markets Leverage ability to write on E&S and admitted paper, where possible, for rate and form flexibility Utilize technology to appropriately price our property risks Maintain competitive advantage in ease of use for agency portal and submission/bind process Cloud-based agency portal system with strong data mining and predictive outcome capabilities Maintain rate and underwriting discipline regardless of market cycles 8 Personal Lines Focus: Niche Specialty Homeowners Products
$5.5M $10.1M MILLIONS Gross Written Premium Personal Lines production comprised approximately 26% of total premium in Q3 2023 Growth in low-value dwelling segment with Texas as the largest state Texas book is performing well – loss ratio for the first nine months of 2023 is 53% +84.4% Personal Lines YTD September 30, 2023 Top Five States Gross Written Premium $ in thousands Texas $ 12,950 47.6% Oklahoma 12,484 45.9% Indiana 1,216 4.5% Illinois 374 1.4% Nevada 116 0.4% All Other 68 0.2% Total $ 27,208 100.0% 9
Strategic Initiatives: Progress to Date Focusing on select key verticals in specialty commercial and personal lines Significant Rate Increases Infrastructure in place to handle anticipated organic growth Reducing exposure to underperforming markets and geographies Expense management initiatives delivering results Narrowing focus to select specialty markets and reliable geographic venues Rate continues to contribute to premium growth in select lines Emphasis on achieving appropriate scale and utilizing native data for optimal performance Substantial decrease in number of open claims leads to more predictable loss-cost predictions in future periods Expense ratio beat near-term target – posted 33.9% for Q3 2023 10
+16.5% Q3 2023 Results Overview Results Reflect Disciplined Growth 11 $33.1M $38.5M MILLIONS Gross Written Premium: GWP was $38.5M in Q3 2023 – up 16.5% from Q3 2022 Commercial Lines GWP increased 3.1% in Q3 2023 Personal Lines GWP increased 84.4% over Q3 2022, in historically profitable business lines Net Earned Premium: NEP was $24.0M in Q3 2023, compared to $25.0M in Q3 2022 Commercial Lines NEP was $17.3M in Q3 2023, down 16.7% year over year The decrease was primarily due to higher specific loss property reinsurance rates, effective January 1, 2023 Personal Lines NEP increased 59.8% to $6.7M for Q3 2023, compared to $4.2M for the same period in 2022 Gross Written Premium
Continued focus on disciplined underwriting in select key verticals within our most profitable specialty lines of business For Q3 2023: Personal Lines combined ratio was 121.7%, though before the impact of storms, combined ratio was: 90.5% for Q3 2023 89.7% for YTD 2023 Commercial Lines combined ratio was 120.5% Since 2018, significant re-underwriting has taken place in our Commercial Lines, eliminating poor performers and geographies 74% of total premiums in Q3 2023 were from core specialty commercial business in historically profitable lines and geographies Continued organic growth is expected to come from select key commercial lines verticals and low-value dwelling programs through 2023 and beyond Q3 2023 Combined Ratio 106.5% 120.8% 12 Combined Ratio
13 Q3 2023 Investment Portfolio Net Investment Income for Q3 2023: $1.5M Highly liquid portfolio of investment grade debt securities Total investment portfolio of $159.0M at September 30, 2023: Average duration: 2.8 years Average tax-equivalent yield: ~2.9% Average credit quality: AA+ Debt Security Portfolio Credit Rating $ in thousands September 30, 2023 Fair Value % of Total AAA $ 47,362 47% AA 32,986 32% A 13,654 13% BBB 7,743 8% Total Debt Securities $ 101,745 100% Debt Security Portfolio Allocation
Balance Sheet Remains Well-Positioned to Support Companies Significant Runway for Additional Growth Opportunities Financial Trends Moving Toward Sustainably Profitable Operations Tech Investments Create a Scalable Platform Why Conifer 14
Aligned and Experienced Management Team Insiders own nearly 72% of outstanding stock James Petcoff Executive Chairman & Co-CEO As Executive Chairman & Co-Chief Executive Officer of Conifer Holdings, Inc., Jim Petcoff is responsible for establishing the overall direction and materializing the strategy of the Company. Mr. Petcoff and Mr. Nicholas Petcoff founded the Company in 2009. He has over 35 years of insurance industry experience, including founding North Pointe Insurance Company in 1986, taking it public in 2005 and facilitating the sale to QBE Holdings Inc. in 2008. Mr. Petcoff has a B.A. from Michigan State University, a M.B.A. from University of Detroit and a J.D. from University of Detroit School of Law. Mr. Petcoff's extensive executive leadership and public company expertise provides irreplaceable direction for the continued growth of the Company. Nicholas Petcoff Director & Co-CEO As Director & Co-Chief Executive Officer of Conifer Holdings, Inc., Nick Petcoff oversees the Company's Underwriting, Reinsurance, Claims and Information Technology operations. Mr. Petcoff is also Director and President of Conifer Insurance Company and President of White Pine Insurance Company, both wholly owned subsidiaries of Conifer Holdings, Inc. He has been with the Company since 2009 and has more than 17 years of experience in the insurance industry. Mr. Petcoff’s distinctive skillset in the areas of Underwriting, Claims and Treaty Reinsurance equips him to direct the Company’s overall strategy, growing the business while enabling the Company to conceptualize and deftly respond to market needs. Brian Roney President As President of Conifer Holdings, Inc., Brian Roney oversees the Company's finance and investor relations functions, as well as general operations. He has been with the Company since 2010 and has over 24 years of experience in the insurance industry. Mr. Roney has a B.A. from the University of Notre Dame and a M.B.A. from the University of Detroit. Mr. Roney has more than 34 years of financial services experience and spent 10 years in the securities industry as a principal with a broker-dealer, where he specialized in public and private offerings and held FINRA (NASD) Series 7, 24 and 63 licenses. Mr. Roney's prior experience with multiple publicly traded insurance companies brings vital public company expertise to the executive leadership team. Harold Meloche Chief Financial Officer & Treasurer As Chief Financial Officer and Treasurer of Conifer Holdings, Inc., Harold Meloche has primary responsibility over accounting and financial reporting. Mr. Meloche has been with the Company since 2013 and has over 28 years of experience in the insurance industry. Mr. Meloche is a registered Certified Public Accountant and his analytical expertise bears considerable value to the Company’s financial leadership team. 15
Contact: Jessica Gulis (248) 559-0840 ir@cnfrh.com Appendix Income Statement Balance Sheet Summary Financial Information Adjusted Operating EPS 16
Net loss of $2.7 million, or $0.22 per share, based on 12.2 million average shares outstanding For Q3 2023, adjusted operating loss was $5.0 million, or $0.41 per share Three Months Ended September 30, ($ in thousands, except per share data) 2023 2022 Gross Written Premium $ 38,548 $ 33,088 Net Written Premium 5,689 23,693 Net Earned Premium 23,979 24,958 Net Income (Loss) (2,706) (1,523) EPS, Basic and Diluted ($ 0.22) ($ 0.14) Adjusted Operating Income (Loss) (4,954) (1,438) Adjusted Operating Income (Loss) per share $ (0.41) $ (0.13) Q3 2023 Income Statement 17
Shareholders’ equity of $11.8 million – book value of $0.96 per share $1.96 per share full valuation allowance against deferred tax assets not reflected in book value Total adjusted book value of $2.92 as of quarter ended September 30, 2023 Summary Balance Sheet $ in thousands September 30, 2023 December 31, 2022 Cash & Invested Assets $ 158,974 $ 165,432 Reinsurance Recoverables 53,725 89,304 Goodwill and Intangible Assets 985 985 Total Assets $ 293,443 $ 312,350 Unpaid Losses and Loss Adjustment Expenses 139,214 165,539 Unearned Premiums 78,865 67,887 Debt 25,264 33,876 Total Liabilities $ 281,652 $ 293,400 Total Shareholders' Equity $ 11,791 $ 18,950 September 30, 2023 Balance Sheet 18
Operating Results Three Months Ended September 30, $ in thousands, except per share data 2023 2022 Gross Written Premiums $38,548 33,088 Ceded Written Premiums (32,859) (9,395) Net Written Premiums 5,689 23,693 Net Earned Premiums 23,979 24,958 Net Investment Income 1,450 860 Net Realized Investment Gains (Losses) - - Change in Fair Value of Equity Securities (87) (151) Other Gains (Losses) - 66 Gain from sale of renewal rights 2,335 - Other Income 439 603 Total Revenue and Other Income 28,116 26,336 Losses and Loss Adjustment Expenses, Net 20,911 16,671 Policy Acquisition Costs 4,725 6,230 Operating Expenses 4,403 4,380 Interest Expense 855 778 Total Expenses 30,894 28,059 Income (Loss) before Equity Earnings in Affiliate and Income Taxes (2,778) (1,723) Equity Earnings in Affiliate, Net of Tax 72 199 Income Tax (Benefit) Expense - (1) Net Income (Loss) (2,706) (1,523) Earnings (Loss) per Common Share, Basic and Diluted (0.22) (0.14) Weighted Average Common Shares Outstanding, Basic and Diluted 12,222,881 11,101,194 Summary Financial Information 19
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 and losses, and other gains and losses, after-tax, and excluding the tax impact of changes in unrealized gains and losses. Beginning in 2018, the change in fair value of equity securities, net of tax, and the deferred gain on losses ceded to the ADC are also excluded from net income to arrive at adjusted operating income. 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. Adjusted Operating Income 20
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