Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Conifer Holdings First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Brian Roney. ahead. go Please

Brian Roney

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

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

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

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

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

management's We will conduct Q&A after prepared remarks morning. session this a

Executive that, turn to Jim? call I'll Petcoff, and Jim the Executive Chairman Co-Chief Officer. over With

Jim Petcoff

Good Brian. morning, everyone. Thanks,

strategic our business particular, as years. Harold report financial In these the select on decisions focusing that growth. bear out strengthening Nick I'm actions verticals profitable the actions the key Joining well as are reserves. have several the for by results profitable mix implementing the been and overall today Together, over me our to quarter improve first on past well. took management positioned call has us pleased to future we as

One XXXX of of prior. undertaken the loss initiatives liability for agreement, the accident transfer in years execution specific major reinsurance our was lines and XXXX portfolio to

and that As already that recognize we to in from will these detail further resulting the first we later report in results the have decision in favorable will confident further we benefits are of XXXX, continue. the call, quarter begun

we always, improvements favorable a metrics quarter. to this of profitability sustainable report we for As improvement remain In profitability structure broad to underwriting spectrum that practices and other sustainable These underwriting to maintain operational will been Conifer generate the dedicated quarter, and instrumental and a to across ability to have evaluate pleased in top our refine expense our return significant first our achieve shareholders. and growth. drive continue our preserving light, I'm continuing line, to streamline to to

and exceptional work entire we to team, our committed remain hard value dedication the of of delivering our proud and are We insurers our shareholders. to and

and on We months success the quarter's come. to years will to this continue in build

for going more our it I'm to to off now Nick hand color underwriting. on

Nick Petcoff

location accurately us claims likelihood of history. predict to several and such underwriting way tools future sustainable to of the point on bear the several a results to we the and past more continued profitability. claims of years and implementing As Significant factors enable enhancements based underwriting the and past numerous include demographics, that that losses a variety years are changes have Jim that over noted, variety previous underwriting over as implemented beginning

increased and appropriate tightened terms to of has us to including the make risk for informed reflect more policy. This geographic underwriting each distribution conditions, where decisions, rate allowed improved level and

Narrowing has generated in well, customer turnaround processes team diligently of focus we've focus superior improved streamlined our breadth several improved In and an addition, to expenses resulting underwriting expertise our customer enabled our our insurers. and specialty verticals, and unique on agents service utilize key deepen to operating and underwriting as reduce provide the to their to provide develop and more times policy efficiency maintaining products by experience. faster area overall of

$XX was agency premium million build in partners last for account was selection to focus making, for only quarter, continue better retention to and to us we premium strong Moreover, all efforts $XX relationships as overall. just of XX% period severity of better The evidenced frontline premium underwriting written reduced these to where slightly agency underwriters our lines claims selection markets the where leads production the by risk underwriting of Commercial greater our as and Gross period. our of continues to the over product XX% first Years generating over successful with overall from majority drive help combined partners deliver same up results. increase results. a year. can million refined in continuing specialty we commercial on of lines, accounted the XX% which not our total are frequency come be gross our written but

profitable a ratio In lines. commercial of for the quarter, combined we XX.X% reported

group top the than Generally, more Conifer. quarter. premium continued to contributing lines lines to in XX% factor contributor in positive strong across to be group major growth commercial business business line Our of rate continues increased for we the small all as this a production be of saw

written dwelling consists which total share gross Our overall first of the solid first million over represent gross XX% low-value up for at written was the of XX% the year to for quarter. to Personal $X premium quarter. premium than last lines personal business, same business of lines products just period a more principally continues over

achieving the first Oklahoma quarter, and and elevated the cat we losses for well an are that to ratio to with continue Texas are perform despite we spread pleased there. overall led loss geographic

continue earnings we additional rate premium previous in in growth calls, our continued for runway production. lines increases to personal and see noted As logical

trend continue across general as frequency severity. results to In with our addition claim and book to to favorably positive premium respect per underwriting claims our overall, well

For example, XX% open XX, as of down quarter liability claims XXXX. are the since all March of first

to point results evidence positive All combine strategic that we factors provide decisions improvement the are XXXX continued well of going and ongoing were they founded, these implemented our prior in confident in that and forward. underwriting to

Harold with turn the to to financials. it that, And discuss I'll over

Harold Meloche

you, provide Thank greater for the the quick results, of investors filings company's presentation I and website encourage review on I'll and our to review a Nick. detail.

in $XX premiums first the detailed to focus ratio financial first Nick over our the breakout, having the quarter, Nick the overall written period results. million. As points XX With percentage increased noted, XX% was in last same gross premium I'll down combined from on quarter, year. Conifer's XX.X% more

for compared first XX% XXXX. Our loss XX% of ratio quarter the was to

year past was As fruition, first made compared in of several first prior strategic coming clearly we year, for XX% going quarter, anticipate in results underwriting reflecting The initiatives improvement loss last down we commercial the years. continued ratio positive improvements quarter the the to the see XX results points over the of lines to forward. our percentage

ongoing reduction approaching from our XX%. the lower down year of net Our our was to earned for period expense and expense ratio of the first The premiums same last the efforts. slightly improve target continues despite XX% expense expense due ratio success to ratio quarter,

in earned growth climb the during prior key $XXX,XXX expense million in premiums is time, As the net up to Net our $X.X fair first first was expected in through verticals was the the realized net to in increase year. the income equity from investments continue begin [indiscernible] anticipated income of improve. ratio investment quarter, over to organic insignificant. recorded while $XXX,XXX investment quarter, We value

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

quarter, adjusted last for the $X.X year. of income $X.XX adjusted per or loss or Conifer compared million to of per an operating This first quarter $XXX,XXX share share reported an operating $X.XX of

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

book from increase Our XX% year-end. at value value book a at representing quarter $X.XX $X.XX was per share, of share per end

due reflected We that were have $X.XX tax value. per share in to net deferred allowance a valuation in book assets full not

remarks. back to I'd over turn closing for Jim And with it like that, to

Jim Petcoff

Thanks, Harold we we things our Though have path. our I'm think Nick. do runway us and very performance with of better, on this pleased to significant quarter. ahead we're In that conclusion,

across the commitment income the Our through discipline operating underwriting and decision-making generate to results profitable strategic to speak organization.

success several last I'm profitability underwriting our to future. improvements this consistent in and the and will the growth focus confident our key that continued Over quarter, the drive were years, sustainable our

ahead, continue Looking in are we any our on to about opportunities business future. focused for value growth. We'll remain now we to shareholders, logical We and exceptional explore customers will take excited delivering and and our invest the questions.

Operator

ahead. of begin question Sandler. session. go the now Instructions] question-and-answer will from first Paul Please come We Piper will Newsome [Operator our And

Paul Newsome

increases morning. growth personal of by for the both look growth to of I lines kind the commercial over about Thanks or you lines exposure separately premium versus could generated Good time. at call. and the talk rate hoping the was amount that's

Jim Petcoff

That's call. question the obviously for Nick. a on you're Glad Paul. morning, Good

Nick Petcoff

Sure. X/X. a And book there side, our had was XX% effective we our Yes, increase increase on Oklahoma Texas personal a rate on filed a effective then on homeowners implemented we the lines rate – XX% book, X/X/XXXX.

book, because rate. growth exposure, a the was a small But the that working off growth we as relatively on saw organic to of is there So percentage lines also the both on Obviously, well number. it's quarter. in of personal led and combination growth rate our large that we're both growth but

lines Similar story side. commercial the on

business our Our year-over-year, year-over-year were our GL X% is hospitality rates were on while and property small up to renewal up year-over-year. our XX% rates closer X%

personal certainly a it's combination lines of the and So rate side. exposure both on

seeing in rate also like line some key been a little commercial geographies we've as the exiting line grown commercial side, bit the more Florida. side, because On we're we've

So the bit a line side. we're commercial seeing on via growth rate little more

Paul Newsome

Great.

what reinsurance quarter us and hard the your if might hard Another business. topic reinsurance and the for been reinsurance usage almost of on happen sort the impact you every reinsurance market insurer your prospectively is this has market of where Could and continues? remind

Jim Petcoff

market of was ever that most Well, one at of end I've the the year difficult the the seen. reinsurance

all. Fortunately, was there at change been our not consistent. casualty, pretty on much We've

should I have it it think gone didn't. but down,

on I we of in cat the the commercial hit get several very didn't due policies significant The the much rate large came They We very guess really at Ian. that's hard to really change didn't excess was side. negative. had there. So property We the But of clients. specifically loss all.

is So the quite we our was which We're excess our reality the get on contracts loss to middle at property in up premium. cat, now. beginning have But much change. we there X:X right capacity a at comes hit don't expect which year, the the of did hard

than near other to quite this future expect our Ian improve We is it's experience still because in the good.

on Nick, That's you probably more – hoping for do we're in year I've the So reality want markets one was of end sure the the reinsurance add the the to ever relief detail the for worst seen. than the But property term. but at needed. in was side you it of a anything? near

Nick Petcoff

at property you cat per risk. We expect don't did see increases that on our No, our up changes property covered major We I comes it. on X:X. think

Paul Newsome

obviously And commentary in specialty seeing environment then wondering in you're if in quarter of broad was business. the a the the environment I far of if There in lot Great. your total, question. this specialty particular. call competitive been any you slice of the are mixed about competitive so earnings for for relatively small commercial – parts changes commercial a more has last the a

Jim Petcoff

I'm let answer Nick it. going to

Nick Petcoff

Sure.

we competition I bit varies us that less see past. in by as a in our by say as geography focus. quite and seen market have think in it hospitality, much so I the I'd don't guess for we

I'd side, E&S of small business. new And to focused casualty you lines, the market is we're lines the our Property a say, very entrants other of some and, on still mentioned that the hard especially are seeing. seeing due some reinsurance we that tight commercial on more

we're markets We have in. casualty few the new seen some in of that a E&S entrants

how we a we'll But We pricing more in over in to the impact marketplace. year. seeing are see dramatic the of And competitors haven't the markets. seen on yes, those develops yet have that rest

Paul Newsome

Great, thank much the help Very always. you. appreciate as

Nick Petcoff

Thanks, Paul.

Jim Petcoff

Thanks, Paul.

Operator

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

Jim Petcoff

people, the look Thanks. interest. continued are I future. want question and for we who and feel just on your thank, right to the path we're forward to I appreciate the for listening Paul, the in, and And

Operator

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

Conifer (CNFR) 11 May 232023 Q1 Earnings call transcript