- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to Conifer Holdings’ Third Quarter 2022 Investor Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brian Roney. Please go ahead.

Brian Roney

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

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

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

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

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

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

Jim Petcoff

on Good – Harold. the morning, Brian. me and are Brian today and and call Thanks, Nick, everyone. Harold Also joining Nick

on a results. As our updates for of financials I and overall off deeper our Nick briefly answers. few a open highlight will and then previous and discussion on hand then to cover it underwriting business for calls, will Harold it we up the questions strategy, will

Fleming certain growth asset closed Whitetail of with MGA for As improved our The LPT two remains conjunction executing company. Holdings. applicable we the that and reserve any those priority. ongoing LPT profitable our the the position from and the In monetize ample position. upfront assets forward. MGA X, Acrisure. additional for LPT that in than the earlier, executed of Insurance of asset adverse significant agreement is considering the with believe transactions have going million Loss an fourth That sale, top October profitability recently they LPT especially should and door second $XX Portfolio completed to completed more in a we a support of helps we provide drag were financials. Conifer agreement quarter. were will impact our cover will profitability quarter completed reserve for legacy expected Transfer of sale that subsidiary for costs years Both with relevant Services, to an strategic years, early more agreement. This Agency executed reinsurance for announced Effective transaction. experienced opening Venture with minimize stronger purchase, asset purchase agency The to near-term when sustainable us able of of help the purchase is Accordingly, completed the be company agreement transactions our accident development us reflected and accident provide transaction effectively XXXX fourth will the The premium prior. sale results monetization than we the Re, With pay our

top experienced and several next. line and growth, for last we growth the consistent year see we the similar Over to expect years, have

best outcomes In addition to the consistently through rest focused performing few beyond. lines, also quarters. ratio the expect of number proving to see expenses ongoing we rationally These we steadfastly a we streamlining have efforts seen are Further, past the over XXXX persist growing expense on through decline to our remain these of and as initiatives. continue successful

have As near-term we result, of XX%. a made our goal expense ratio

the are on imminent. exhibited And on shareholders. even to we for for performance expected toward that, with going I our removal that profitability more in mix, path reserves. over drag the We coupled now to for legacy our the it the confident Given With of improvements on clearly business considerable our Nick we color hand feel our profit are delivering is under. more am same

Nick Petcoff

to the favorably of strength our developing see current time. gratified mix premium As over Jim are continued noted, we

profitable majority gross written small business premium confident to others. our have premium We among have refinements generated of our our continues and demonstrated improved ongoing underwriting of to we commitment we where through a expected significant the to particular will business on focused commercial effort of lines outcomes series The that group are book underwriting discipline our validate by increasing planned come efforts. from ongoing the ultimately our

rate growth important in In in that extremely while growth. reflect premium that role enjoying expected to on we’re the full year, has is played the fact, it

be result for especially the premium book. year that up definitely to achieved do for quarter, third business written period, the gross to the expect across noting year roughly example, from products. written for environment, premium written X% for almost gross rate actually as for continue gross and XXXX. the calculation, for the the It’s quarter months in a the total we in million we be flat Regardless, $XX well. our full the in when the strong E&S basically rate was deemphasized half same it We increased Overall our up niche Roughly service was of strong of X% full year-over-year. increase expected a for enjoy lines the worth quick will exclude our premium as of premium X restaurants, over period roughly

renewal. submissions the business existing cautious to Admittedly, roll we Thankfully, a business good jurisdictions are increases achieving versus book remain and business some environment, more high mix geographic book, on example, retentions retention persisting just in a premium’s solid problematic though side now time opportunities as XX%. allows today’s for renewal and adding which new of is with further to become high Even a our Florida, rate would on from levels. for we to rate as continue important. continue COVID-driven each see favorable in piece premium to chance commercial existing recover like for new refine have sake. in constant We us another previous New we ever re-underwrite around extremely underwrite rather get to Certain remains write. underwriting becoming our

we result, mix to spread. a geographic geographic our overall continue and business refine As

of premiums in almost year For exposure planned to XX% continue our state we have of of state. premium in our we has deeper example, reduced expanding Michigan Conversely, specialty be next which reductions down terms premium in double. further since reaching base share for we and Florida our the seen into the XXXX, our XX% Florida key increase , selectively market to to while than our by XXXX. more in base, core geographies since expect as the roughly lines state like With

gross premium In as representing line fact, written more Michigan XX% than a well, continues in of sizable of quarter account XXXX. third proportion for to of our top the

focus specialty opportunities continued can geographies. markets find favorable specific forward, we disciplined Going and select expansion that where We on those through business markets and sustained demonstrably geographies. are result growth and defined and outcomes geographies likely most other our from Michigan a maintaining in and performance profitable positive by to best underwriting we achieve know niche favorable tight

business, consists the from lines lines a of written for quarter. principally third of low-value total for which dwelling million to growing personal premium quarter. gross time overall this at premium at represent written was third year products of XX% up gross almost continues the XX% last business share Personal $X.X Our

be in geographically Texas strong efforts in well our well. While case reach continue perform reserving with expected to goals, lines reviewing dispersed, growth thoughtful underwriting match In as and adjudication. coupled to such we’ve which claims must profitability In our are markets, business as trying our our constantly Oklahoma, solid closely to reserves to that is we ultimate. light, expanding possible personal and seen particularly as

reserve remained we claims focused resolutely see have our claims strengthening future overall pleased on that already, light, exposure. and trends. Jim favorable continuing In to reducing position As were discussed we

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

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

favorable these turn With limit over in trends excited I the are will to play claims to of financials. see the discuss the hard decision we our development continue and financial results work and see to positive LPT, and future we Harold call as strategic of impact the effort purchase to that, our the near-term time. As through in the out over the

Harold Meloche

and written website detail. the year. to results. With and on I’ll investors during Nick. In will encourage greater breakout, decreased quarter, on just ratio premiums having you, presentation gross detailed to last premium from third and the our a largely results, review the XXX.X% focus Jim third unchanged of review I Conifer’s under Thank underwriting $XX same period XXX.X% filings combined million. quick company’s X% Nick quarter, provide our the for the in the I was

from in third third much Overall, was was XXXX. mitigation commercial for in the And focused, XXXX, of lines personal the of unchanged ratio development quarter quarter ratio was was quarter XX%. period. year XX% current compared XX% lines, where third for loss of of ratio combined loss XXXX. loss ratio the XX% XX% In the year the were the quarter prior the largely to accident the efforts Our our

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

well. efficient to through the continue initiatives, moving we ratio forward and expense drive as we is savings improvement sustainable As year-end believe cost

in the for XX.X% X-month was year XX.X% to ratio compared period prior expense the Our period.

earlier, target Net quarter the the on in higher $XXX,XXX Jim investment our income ratio up XX% period, year third $XXX,XXX expense prior to remains XX%. yields. during was mentioned compared As reinvestment

net during compared of investment to losses $XXX,XXX income net XXXX period. realized in year the the quarter realized of third prior investment was While flat

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

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

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

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

remarks. due Our to was Jim I’d per at share, that, assets back not net were $X.XX that like share closing and a we with quarter to in allowance full turn to over book And value. value for it valuation reflected deferred book have per $X.XX end tax in

Jim Petcoff

Thanks, the XXXX business. Harold. date we’ve in ahead, development. to to ongoing our the off And we on achievements success to to Thanks we’re significant and The major to prior In have we while reserve we year And encouraged for I’m certainly continued addressing the of steps and the and date, improvements work right of I that fully Nick. see position now beyond. reductions. achieved I’m moving by results are expense walling our ready mix direction. our quarter, Based confident expect questions. take balance took more towards

Operator

[Operator comes from question Please ahead. Sandler. go of The Newsome Instructions] Paul Piper first

Paul Newsome

I maybe call. profits. the financial how how of the – me potentially hoping little well as we the on the loss And you the in there the just could will transfer Presumably, morning, shown help bit some some as that prospectively. income revenues associated historically? the portfolio more was MGA as that Good for with and MGA. start thanks was a impact with And well the statements as could was statement sale

Jim Petcoff

Well, question, the question, a first a Jim not off, occur Harold that’s they fourth but obviously until quarter. didn’t

but they are be So the did in happen. to fourth going shown quarter, they

prepared that you’re I’m for Harold sure question. So

Harold Meloche

Yes.

that assets, not we sale and starting did XX% have within the Agency of own over. MGA control So Venture that with was Holdings a the of company called only

was it numbers. in of any our not So consolidated

revenues from won’t the up it or in entity see our up – item. It at that just only a it would you as sub shows bottom. income item, And So on that’s statement on the expenses. the equity had line that that was one-line show we income

that’s the the that was business Now Venture. there, business not also portion all it in a of substantial in was of that was but

So regards With the to we million the that’s to item. LPT, expect a fourth do quarter. in $X.X that expense incur

As to million we’re And as mentioning us of cost gain the the the a million. after-tax expect LPT with from will $X result assets, the about regards of sale net over we sale. $X.X

positive fourth the quarter is So fall where which gain. gains a will other both will into to net in

Paul Newsome

fantastic. That’s

affiliates somewhere a hopefully, the right? see of development. that it was affect perspective terms the like – won’t the reserve the unfavorable and would was you looks thought so then it year, running go that running results? equities away, – $XXX,XXX how the in around here And So, Is MGA would

Jim Petcoff

In as profitable growing we’re in the do the continue sell the rest of expect said, not as all we to agencies, that expect the near-term the future, we to and In grow. be assets. to that short-term, of Harold

it So got of as a be that as the long-term. but right we sold to would profitable we we expect be as significant on return of away, sale the assets that won’t

Paul Newsome

is think the that to thoughts And loaded? it. expense improvements loaded? Is we Got should – that front-end that? any How get the back-end how then may about just more you’re And more prospectively? ratio about in it hoping

Jim Petcoff

last it’s expect down. writing – be expense must a always it each year And full significant do this the to XX.X%. to versus up year number the for we expect during ratio we’ve known and reductions not be quarter to our with commissions expense in. years. the in We different since kick we it confused Well, in all of went us that something quarter. it just a But go to other XX%, year, a the has groups. DAC seasonal of at But I’m on have at and that made had

I some I we changed we operate. in for example, as our expect basis But bevy assume done. something to on basis know. an change lot be it’s And done As the it’s points downsized one going of of points whether a that, XX just and the location our have or And space, meaningful. to of companies since XX would ratio, that’s the expense don’t we’ve businesses a see savings things way that

we’re say tick it is to next you and have down guess to we I at to attainable. from we vary. XX% going to we we tick down. modest we annual If hold rate, expect because it But as to when to XX.X%, an look attainable, expect that it’s basis, quarterly, annual So I’d to at if is an on do us year. grow expense think we think growing, continue our the continue continue reductions, we XX%

Paul Newsome

the Great. help. Thank appreciate you, always

Jim Petcoff

Thank Good from hear you, you. Paul. to

Operator

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

Jim Petcoff

significant some quarter. changes made during We this

We’re well prior hurting lot future. We positioned. a bit be a have not corridor. ‘XX in little us should and a do of the

continue the to might are the we now. expect you right development, book slim but pleased now. in form is very right see to things And we the business we So and corridor something have coming of with improve, of

the to So you to next talking thank and look taking for time, you quarter. forward

Operator

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

may You disconnect. now

Conifer (CNFR) 12 Nov 222022 Q3 Earnings call transcript