CNFR - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to Conifer Holdings First Quarter 2022 Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to conference like Roney. to now would turn over the Brian I go Please ahead.

Brian Roney

good issued yesterday. everyone. quarter you morning, Thank and Conifer after close financial the its of market results first XXXX

release site. You copies portion the ir.cnfrh.com. slide download available accompanying can presentation Investor via of is company's discussion morning view of earnings Relations The this find management's to Web on the webcast site, Web the Conifer's or from or

made the Securities regard we this get the note we company's may the historical forward-looking in conference trends, these its in the Before and subsidiaries. statements and operations Actual statements a forward-looking results statements constitute that except results the anticipated call as to to meaning may information, with of Laws, risks and result from with started, Conifer's statements business well relating risks risks our and products business as from forward-looking as of its from underlying economy our including within the any of in time-to-time materially future and the on company including financial and Federal the the Conifer COVID-XX statements, results, described statements, result our latest uncertainties Form and revise specifically various disclaims associated filings those uncertainties and as XX-K whether with developments information, any or obligation SEC, otherwise. of update or subsequent new reports. a to and including Conifer forward-looking impact differ

a be our through will In Web call link the addition, Investor a of replay section site. provided on Relations of this

measures data when SEC and our comparable financial in not historical non-GAAP is accounting filings. release as non-GAAP G. GAAP. rules with financial statutory of defined prepared the measures and by our therefore Statutory this GAAP financial Regulation During Reconciliation included earnings we'll accounting accordance possible also to reconciled SEC these is measures are in discuss call, to

Executive after turn Jim Officer. the Executive Chairman remarks With call management's Co-Chief We Q&A this and Petcoff, will prepared morning. to over conduct session Jim? a that, I'll

Jim Petcoff

Thanks, Brian. everyone. Good morning,

call, a call is me update strategic provide progress our I'll the of Nick are Harold. company. key On today with our the also and brief towards Andy at initiatives and On today's absent today. business

per financials. business. will were discuss see premium will we results encouraged and the continued most As first of cover Nick the the growth in greater Generally, Harold top quarter, to detail; the norm, the profitable particularly in in lines line underwriting

growth combination of premium solid increases, through Our markets. chosen expansion disciplined our achieved a retention, account high in rate was and specialty

book written quarter, a business. X%, premiums For of of up the largely on result increases were our gross rate

are quarter, continue will ratio. the sub-XX improvement to for we to addition our for of premium ratio the year. short-term balance the our continued and we pleased in see the expense improved expense expect of growth, In We first realized expense goal trend

strengthening. was the line reserve premium results Consistent our sustained the net quarter. growth in the is the for when top expense once earned of management boosted Our well net us our for XX%. our positions with combined increases The year-over-year us earned of impact was financial What growth results. goal written gross near-term again ratio quarter expense with of challenging premiums for improvement continued premium

As shed we deemphasized to as of future lines a we burden of any result, committed mitigating residual development business. are

improved performance imminent. is business feel than we've profitability to and the date seen confident ever underwriting our Given that mix, more we

it clear to shareholders. a results positive ultimate Nick. over that, development energy executive bear These a which initiatives angles, to and forward path achieving on ratio see is to goal Our of all sustained loss With our teams the turning deliver profit and ultimately and leadership significant are on to we to combat number to management initiatives improvement. I'm starting to generate have concentrated

Nick Petcoff

Jim. Thank you,

particularly gross with of into continue see we quarter premium line pleased of written first As XX% the the lines, strong gross were our markets. specialty commercial geographic our top trends XXXX our in rate part in roughly which business growth $XX E&S X% small in our premium noted, by from on first growth products, written came total of by driven group. from to million. and to increases select our enjoyed in chosen Jim quarter expansion This part specialty was

we While is to believe states, premium commercial to geographic continue XX overall write in selection profitability. that long-term important we account all very

we example, are in problematic for writing for there. at industry us Florida jurisdictions remain certain clearly For while and the deemphasizing large,

geographies, state increase hand, key reach other deeper and into the expand share our continue core as our lines market Michigan. we home of specialty we our to On like in base, premium

of overall Michigan has accounted were sustained premiums XXXX, the fact, continuing written X% of a positive and remains first resulted future performance growth. up share market driver This of growth and In we this $XX business in strong in continued for trend. premium anticipated underwriting Commercialized plenty gross total for see million of in in XX% quarter, written more room significant the gross a expansion state. than to quarter

levels renewal continue business to high around benefiting we're still submissions New expand retention XX%. from and existing

mitigating trends continues focused reserve strong, reductions. strengthening bottom claim development, we though, wherever yet we quarter. continue largely the at impacted experience While losses Admittedly, in appropriate. future case be significantly in count to positive did we seeing development premium few overall trial a Generally line growth lines through to focus are our key commercial on

example, the XX% XX% XXXX. total in XXXX For QX down QX ago, in from XXXX and a same down period from from claims XX% down year were

first XX% claims restaurants, and service from from the down XXXX, from particular, the quick in XXXX For in XXXX. are period of XX% down XX% open quarter QX down same

$X time roughly to million. continue, written these we business growing trends attributed our to represented do our as for development lines are increase lines, we largely XX% Personal to business, refine in the share over at expect of reported which multiyear a positive overall personal less efforts emerge gross to improvements premium mix. of quarter, claim these XX% a As premium

established teams profitable lines personal Notably, this Our growth solid products, in emphasis in first of with Geographically, reporting financials. value for ratio markets. over well business the period. profit the strong low results positive combined for first of dispersed specialty the underwriting to improvement dwelling their lines select Harold of With principally the personal is delivered and that, Texas for our Oklahoma. particular call consists is the contributor quarter quarter to and relationships where period. and XX% have XXXX, now a over for of solid a the XXXX a turn I'll Meloche underwriting This

Harold Meloche

first With I'll results increased written Nick. detail. premiums gross greater I you, of from company's Web X% review premium Nick provide results. will review presentation year. the the quarter, the investors on I for to last on quick and Thank in and the same and encourage period detailed our million. was quarter, Jim down Conifer's site focus ratio having $XX in filings the first XXX% a to combined XXX% the In breakout, underwriting our

above in substantially ratio while the the loss lines still XXXX. same was from in down loss XX%, from unchanged And period was improvement XX%. XXX% considerably ratio Our XX% in was last quarter was The In first commercial target, this for our personal over for quarter ratio with which from year. the compared year, an the first the lines XX%, XXXX. in combined ratio a loss pleased a of of in XXX% period. the current same resulted we improvement Overall, This accident represents XX% combined ratio XX%. were percentage the the of particularly in underwriting period to prior some significant was of personal first the last quarter, year points our performance lines, XX year quarter while

expense ratio. to Moving our

this efforts, coupled expense to reduction the XX% see ongoing our resulting year. down quarter, Accordingly, points growth. for premium with improved basis last from XX% improvement compared same continue ratio period XXX We earned net additional to expense

was further to management the prior in compared maintain company prior investments of XXX,XXX period, expense year in a As technology, a we of earned realized for the sustainable have net believe year to moving XXXX we ratio million fourth XX,XXX period. of and quarter forward. improvement compared first investment investment continue while up net leverage the net in Net initiatives during XXX,XXX to X.X realized scale we our quarter the is loss the premium, cost income made the gain the reported

$XXX,XXX quarter. increase first also in value fair the equity in a investments We recorded of

of net million of X.X year with managed $X.XX the an a prior Our for quarter tax reported the compared duration per $X.X period. loss average the share years, first investments of and average net X.X%. or X.X a with company remain share $X.XX income in credit an AA, the a of majority quality securities, fixed in Overall, million per equivalent conservatively loss to yield or of

the This loss same or share XXXX. of X.X adjusted $X.XX of per loss reported period to share million or X quarter, in an operating $X.XX for operating an per Conifer compared adjusted million

at quarter million $XXX assets to and the balance investments with sheet. Moving total million. of were $XXX Total end cash

share. quarter book end per Our at value $X.XX was

have not reflected due per value. back to deferred were tax to in full for in it like allowance share closing Jim that, over book $X.XX remarks. turn And I'd We with to net assets valuation a

Jim Petcoff

Thank there we to of us, in our to questions? the The that will we're problem getting to a Any current be current accident and -- the direction our that respect manage future. you, feel another business. year Harold. it's seems confident It and we're with still been for was but right we on mix and able pop development up

Operator

begin We the Instructions]. will [Operator now question-and-answer session.

ahead. Sandler. from Paul is The Please first question Piper Newsome go of

Paul Newsome

just about How update could the that any various was hoping be the in the an changes down. I to going up related -- claim perhaps little pandemic? been the jurisdictions? of you more could on bit there jurisdictions, closed much in down various talk related seen morning. courts Good to because opening have is And cost any pattern you a courts

Jim Petcoff

yes. that. let you And I'm to give more detail answer is Nick on going The

Nick Petcoff

absolutely. Yes,

pick system able We open We did close held kind COVID. settle in during picked up. the see you're quarter. and are limbo claims started counts things that pretty moving was seeing as first or of in drop, up and That cases were the claim out court to evident

quarter On the again. have are a cases courts the to flipside, you up go we probably than open few normal because seeing did more trial a

to So COVID. years than cases with had they rapid over closing you're more pace at cases seeing couple out activity with both of going the and the a last trial

So the claims there's seeing activity definitely an impact there the that with side. we're on

Jim Petcoff

or detail is more want good? you that Do

Paul Newsome

a helpful. got that's question. related I've No, extremely

cases of that perspective? curious developments up sense that, -- up So was sort this any line during patterns development court the any about linking sort I would more questions the or kind with the an the line And year might down pandemic just the or I'm of recently? in in the reserve of not there accident two years accident shutting reserve patterns -- up the courts quarter, the from opening

Jim Petcoff

get and It seems are docket. It moved the trying the information we've stuff it's my get their on like this based off judges opinion, and like is just these to seen. anecdotal, seems cases

have us we they're we'd quarter. So geographies win, seeing I to difficult when counsel I'd first being choice. A spot. would activity of batting go forcing aggressive We're couple say, fence, in because go to lost we of, in on putting the certain that -- quite we're XXX extremely really to trial a and and lot were that no the we demand say with a thought the settlements on push trials, other or seeing trial, trying deal won. to plaintiff's is to being And about everybody couple also you we the and extremely being We're are plaintiffs way. kind

got Florida and hurt to the So restaurants in really geographies that some quick When major that geographies in or in jurisdictions the one is volume one, in chance seeing that into we we're being are what troubles. the were we're -- very not unfavorable we're court we're other us. reasonable pattern Michigan When well. where as a doing us it's service we Southeast have friendly, the we're that various is having systems,

mitigate obviously So as that and address logically trying much as to possible. those to move we're issue

So in through trying packed, to really are move they're quickly. that things courts

Paul Newsome

That makes sense.

development is of the does or it over last because the spread years are that years? So of happened mean the more that accident that more that couple years, accident out effect the reserve in

Jim Petcoff

The we years good very worked to -- in for started of 'XX, had believe the be 'XX, 'XX, going in turn a We changed 'XX, on XXXX, our And are are had of wrote the part better. and XXXX we some change heavy business. 'XX, and We for. we We the issues those can't we're that seeing business us. are development those XXXX years where and years mix dime. you 'XX, ship to was accident QSR believe in address diligently

Paul Newsome

anything perspective be from And and interesting terms quarter changed the in the from great? and in That in in then couple competitive makes just a sense. material businesses words general here, a perspective maybe the extra would a if or competitive on a rate environment anything way last

Nick Petcoff

property side, quite we saw I as think a I saw rate into evidence the quarter, strong But that QX. first on maybe not QX. still up that Yes, again and the picking environment it's in now think strong there's in we as that's

So increases thing economic the that's well. you're One seeing in environment. we're hospitality a as rate positive seeing in activity in see And is that the we hospitality up. rate side on some quarter with progress did the pick on

You're think seeing explicit terms. we're maybe able some And get rate, rate is business. on to in class I of less of we're that seeing what but then in

their but limit people rate tightening obviously you're So terms. insurance, to deductibles, increases, increase you're increase seeing on coverages save maybe

It's story pretty environment. dramatically quarters. still had So favorable there. QX there's prior But some a the wouldn't say rate from from strong changed momentum I

Paul Newsome

and for And all much the call. help. ask very let questions. you appreciate I'll Thank thanks I else the Great. somebody

Jim Petcoff

Paul. you, Thank

Operator

is The ahead. of & next Farnam go Boenning question Bob Please from Scattergood.

Bob Farnam

Yes. morning. Hi, there. Good

Just more the reserve a stuff. little on bit

So terms expect in your going may is, something How what's should second is we are and of the along there quarter And elevated my in feeling the quarter are logjam trial? cases? of the in third this of they gist cases question far the removing to courts? that that be still as the

Jim Petcoff

years But that going time claims on, years. and down, reserve older result doing loss the go strengthening have hopefully, number on development total we've cases of loss the are as of the number been to So is down. will then quite claims in active. those the okay? from And Things those total goes in we continues old

For for us, moving up? is quickly Yes. say I those years. the activity moving we're would things -- older are

numbers, said our don't As frequency I though, those know? and I Nick? you Paul remember Do XXXX significantly. in XXXX And down to is

Nick Petcoff

XX% Yes. is from down over well XXXX GL XXXX. frequency and

dollar, compared and the XXXX seeing significantly premium we the year year accident less from are So per accident XXXX claims XXXX. to XXXX compared to

and are seeing into part down. you well. takes come also the been rate And getting we've claims increase, that rate volume So metric as of increases account

So the significantly. frequency down actually premium per dollar number is

Jim Petcoff

up claims my answering picked Yes. down. but the I there question activities I'm but is specifically, of your total come And guess not have the point number

So may although it to up, deal as we don't with. many picked have have

QX the done XX% of claims same Our XX%. total number of 'XX And QX claims of in total received probably 'XX. down specifically from related number XX%, our to claims over number to as are well is outstanding

those So right? getting it's 'XX, knows, run, to the and really more have The from to hard we're to Having years. older statutes going who in imagine that new continue years years. that, we're we're not see confident the way 'XX. in But claims development 'XX, from those said

Harold Meloche

was versus said, Jim XXXX are line liability as claims first down XX%, quarter are first down The quarter what XX%. in with Nick And actual claims saying.

Jim Petcoff

up And and have premium if in is frequency. premium, reduction claim about you our that's significant a such we think our why

Bob Farnam

Right.

reserves. besides something to on move I'll Okay.

improved for ratio my know question. quarters I talking you're the about near this there talking reasonable? many anything one-time? quarter. looking the in improvement year that second been for you've But expense to term. more Is expense XX% a reach first that that's I Is than was are this ratio So -- That's And XX%? the about question, that target now. that's expected something we in

Jim Petcoff

for I that's a question think Harold.

Harold Meloche

you. Thank

reinsurance ratio. of loss why reasons ceding the and that our of our expense into is the a is one This So lower agreements ratio reducing expense we entered had increasing some ratio our commission. included effect

a premiums, earned by reduced commission. it but So ceding increased ceded commissions

some ratio it a it look expense made ratio down. improvement on Overall, a kind worse. is little ratio expense ratio the though, our in loss out basis, they So the but bit reflected and combined of net

were you still back to first of percentage XXXX. we're that If out, quarter X from the down points

expense what headway we're current our should the XX% at on for So expense away for the current of is ratio is probably year. good still this But too making very still some pick low ratio. maybe rest year. the we

Jim Petcoff

continues fixed our and to go to premium continues cost Our go earned down up.

continue to to going we're So improvements. see

first next toward XX% on but be of not the that we're So year, our XX% way. to quarter might headed definitely

Bob Farnam

Right. that, next question Harold. actually ceded follow Thanks premium kind the to saw a up that was of That for I went up. my because

So is reinsurance? I you're the was just in QX has happened guiding So change that what curious that to?

Nick Petcoff

and of results actually treaties with on boost part bit first of treaties, no on helps a excess commission impact It used the a a underwriting surplus of older really them. the is on very has our It loss was to similar us GAAP our statutory but basis. little basis, but time this we ceding for

Bob Farnam

like me for with I'm to income of investment is interest for money changes get what new from rates, question trying expect last the what kind feel yields, might -- And a going Okay. in forward? we

Brian Roney

is and or This is is is one. got take or XX% that less, or less, in floaters. X% three cash about years we've probably right Brian. now The portfolio I'll year in X% XX% XX% one and

money improving. with the new X.X, yields are definitely duration So

investment and So expect the with we of up relatively go see income to mix short portfolio. the breakout would short the duration

Bob Farnam

right, Thanks. All it for good. me. that's Okay,

Operator

Instructions]. next of ahead. is from The go Greg James. question [Operator Peters Please Raymond

Greg Peters

questions. have Well, everyone. I morning, good two

in just The geographic first commercial lines. on question will exposures be the the

Slide it's be investor And on second X the cats. of question I think will your deck.

little the comments bit So mentioned Nick, I maybe lightening think, you in certain geographic in in in commercial exposure, up for your areas a Florida.

Slide at how underwriting are I'm is mix states? locations looking going mix deck within five X top business your guidelines, business change to favorable or of your the think restrictions as and to emphasized And that your this on you investor this so you do

Nick Petcoff

And probably is some of our continue into think see product year strong the that another where see book underwriting decline state to personnel decline on the will lot all grow commercial runway focus well. excuse state. Michigan the really excluding see me, lines. in marketing Michigan, That's to Florida, marketing of and Texas we state Again, is lines in the then We on commercial of growth. that as a that the side. personal of right -- we'll year now. on, that to line Sure. that most see still focused next we Texas added in of to We've continue state continues that we're help book, and this

larger being see say I'd continue are of the So book, we a will and state that the and do that Florida overall to a Michigan see with probably areas Texas of two becoming the probably country portion decline.

Greg Peters

then you the And you've know we're simple it. catastrophe in be of enterprise's thinking light I'm we the your catastrophes 'XX to Got and just on what reinsurance how structure I to just question, entering about and wind exposure, commenting were with but just answer the on curious for in season done exposure previous should year, -- reinsurance?

Nick Petcoff

do still property on exposure We Florida Sure. side. commercial some have the

wind exposed is So from that's a standpoint. hurricane still obviously

Although lines of the are company of sort if book and for you QX growth tougher in the book, line look sort a personal quarters in of we're more and seen there. Texas outside we now, convective really really with QX straight at kind Oklahoma. especially haven't of the anything aggregate, norm that exposed And storm and

pricing Obviously, significant is but on we there last year, really changes to the significant some did We don't Our this Storm URI think come top changes either. the cat environment don't don't see see have structure structure. losses or does any I we up one. and the Winter from pricing to

Jim Petcoff

When storm, over loss. RMS add one at to the few so that, one blended have could much XXX-year actually of $X because probable say years. down We're maximum retention in of wind If should But at -- our something we're gone blended a you XXX-year million. and the has last look storm. in we the AIR, exposure I I

on good So reinsurance X with million. have very that underlying we exposure coverage

Greg Peters

I states. Harold, [indiscernible] PCS it, or quarter should I about getting So event? think $X you Texas a second we and am too You answered Oklahoma, those the and a this but of potential both think probably like about get granular? I lot activity million -- retention, guess, we have in each we think storm Should

Nick Petcoff

correct. that's No,

any personal before an hits the commercial reinsurance Our retention up do on cat. be a X and million have of that But side for commercial matter. some yes, that one it lines aggregate the on any would is event one event, for $X basis the in that We million. it on nearing picks

Jim Petcoff

are not the were But our same PMLs have last they year. as come --

geographic they're cetera, going We -- that's make changes cetera. our exposures, and down know standpoint, have inflation, to our gone continue impact reduced. a of et based what we and reinsurers risk We continues expectations risk the in expect on our get to to from et to don't

Nick Petcoff

through retention. the get any seen quarter, But anywhere haven't type our of that second we near event would

Greg Peters

that retention did events none results, you any in just the of the happened your events -- have quarter, PCS of And none in first -- correct? maximum the triggered

Nick Petcoff

Correct.

Jim Petcoff

the You ratios the would up, line personal have because -- go seen loss on

Nick Petcoff

Yes, it quiet a was quarter.

Jim Petcoff

lines And that performed our well. there through, events impacted. we but went And personal some were were not

Nick Petcoff

cause just to point only last touch that And cat. to up that significantly. us would through. hard have it's much coming relative losses exposure any one other that our of our that storm Not than go level individual that sort We hit and retention of year, happened to been to any don't really Uri pretty out hurricanes

Jim Petcoff

of we've hurricane. had Uri is ever cat the outside a first

Nick Petcoff

absolutely. Yes,

Greg Peters

luck. Good Well, the answers. for Okay. thanks

Nick Petcoff

Thanks.

Jim Petcoff

Greg. Thanks,

Operator

the our closing to turn This like back remarks. session. concludes Petcoff I for would conference to question-and-answer Jim over

Jim Petcoff

current cat call out. being performing thank accident we really moving on in just development. geographically we've the the standpoint. our are of everybody moved And direction. for cognizant today. years We right We've And I of feel the we're and quite want the to well. coming book We're managed the like Claims business.

in I my we're as said direction. optimistic right the remarks, we're moving that So in

again. thanks, So

Operator

presentation. today's The for conference Thank has concluded. you now attending

disconnect. now may You

Conifer (CNFR) 14 May 222022 Q1 Earnings call transcript