CNFRL - Conifer Holdings Reports 2024 First Quarter Financial Results | Benzinga
TROY, Mich., May 14, 2024 (GLOBE NEWSWIRE) -- Conifer Holdings, Inc. (NASDAQ:CNFR) ("Conifer" or the "Company") today announced results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights (compared to the prior year period)
- Combined ratio was 96.7%, an improvement of 2.8 percentage points from Q1 2023
- Expense ratio improved 2.6 percentage points to 34.7%
- Net investment income increased 18.7% over the prior year period to $1.6 million
- Net income allocable to common shareholders of $74,000, or $0.01 per share, based on 12.2 million weighted average shares outstanding
Management Comments
Nick Petcoff, CEO of Conifer, commented, "We are pleased to see the early signs of progress resulting from our strategic shift away from a risk-bearing carrier revenue model, toward wholesale agency, production-based revenue. Results to date have been encouraging, and we are proud to report a profitable first quarter for Conifer."
Strategic Shift to Non-Risk Bearing Revenue
As previously announced, Conifer made the strategic decision to shift its revenue model to focus on a wholesale agency, production-based approach beginning in 2024. Progress to date has been steady, and the Company's return to profitability in the first quarter of 2024 underscores the effectiveness of this strategic initiative.
Based on initial indications, Conifer ultimately plans to redirect all commercial gross written premium through its wholly owned managing general agency ("MGA"), Conifer Insurance Services ("CIS"). Accordingly, the Company anticipates that substantially all commercial lines business will be directly written by third-party insurers with A.M. Best ratings of A- or better by the end of the second quarter of 2024.
Conifer made considerable progress during the first quarter of 2024 in directing premium to capacity providers for coverage across multiple lines of business. Furthermore, the Company has ramped up transfer of cannabis premium to capacity providers and expects to ultimately shift all premium for this line of business to its capacity partners as well. The Company anticipates that this and other capacity initiatives will lead to substantially increased premiums placed for its agency segment and generate greater commission revenue over time.
The Company does plan to continue retaining and underwriting low-value homeowners business in Texas and the Midwest. As detailed in the Personal Lines results overview below, premium for the first quarter of 2024 increased 59.6% from the prior year period. Moreover, this line of business has demonstrated strong performance, leading to a combined ratio of 83.0% for the quarter.
2024 First Quarter Financial Results Overview
| At and for the Three Months Ended March 31, |
| 2024 |
| 2023 |
| % Change |
| (dollars in thousands, except share and per share amounts) |
| Gross written premiums |
| $ |
| 24,313 |
| $ |
| 36,214 |
| -32.9 |
| % |
| Net written premiums |
| 15,391 |
| 18,342 |
| -16.1 |
| % |
| Net earned premiums |
| 16,887 |
| 21,952 |
| -23.1 |
| % |
| Net investment income |
| 1,552 |
| 1,307 |
| 18.7 |
| % |
| Change in fair value of equity investments |
| 43 |
| 694 |
| -93.8 |
| % |
| Net income (loss) allocable to common shareholders |
| 74 |
| 1,001 |
| ** |
| Earnings (loss) per common share, basic and diluted |
| $ |
| 0.01 |
| $ |
| 0.08 |
| Adjusted operating income (loss)* |
| 188 |
| 307 |
| ** |
| Adjusted operating income (loss) per share, diluted* |
| $ |
| 0.02 |
| $ |
| 0.03 |
| ** |
| Book value per common share outstanding |
| $ |
| 0.21 |
| $ |
| 1.82 |
| Weighted average shares outstanding, basic and diluted |
| 12,222,881 |
| 12,215,849 |
| Underwriting ratios: |
| Loss ratio (1) |
| 62.0 |
| % |
| 62.2 |
| % |
| Expense ratio (2) |
| 34.7 |
| % |
| 37.3 |
| % |
| Combined ratio (3) |
| 96.7 |
| % |
| 99.5 |
| % |
| * 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. |
2024 First Quarter Gross Written Premium
Gross written premiums decreased 32.9% in the first quarter of 2024 to $24.3 million, compared to
$36.2 million in the prior year period. This decrease reflects the Company's planned decision to reduce premium leverage on our operating subsidiaries and focus on non-risk bearing revenue.
Commercial Lines Financial and Operational Review
| Commercial Lines Financial Review |
| Three Months Ended March 31, |
| 2024 |
| 2023 |
| % Change |
| (dollars in thousands) |
| Gross written premiums |
| $ |
| 12,762 |
| $ |
| 28,975 |
| -56.0 |
| % |
| Net written premiums |
| 8,287 |
| 12,241 |
| -32.3 |
| % |
| Net earned premiums |
| 8,797 |
| 17,123 |
| -48.6 |
| % |
| Underwriting ratios: |
| Loss ratio |
| 76.5 |
| % |
| 61.4 |
| % |
| Expense ratio |
| 32.7 |
| % |
| 36.2 |
| % |
| Combined ratio |
| 109.2 |
| % |
| 97.6 |
| % |
| Contribution to combined ratio from net |
| (favorable) adverse prior year development |
| 0.5 |
| % |
| -4.8 |
| % |
| Accident year combined ratio (1) |
| 108.7 |
| % |
| 102.4 |
| % |
| (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 ... |