AM Best Affirms Credit Ratings of Conifer Holdings, Inc. and Its Subsidiaries
May 18 2023 - 4:52PM
Business Wire
AM Best has affirmed the Financial Strength Rating of B+
(Good) and the Long-Term ICRs of “bbb-” (Good) of Conifer Insurance
Company (CIC) and White Pine Insurance Company (White Pine),
subsidiaries of Conifer Holdings, Inc. (CHI) [NASDAQ: CNFR], a
publicly traded property/casualty insurance holding company.
Concurrently, AM Best has affirmed the Long-Term ICR of “bb-”
(Fair) of CHI. The outlook of these Credit Ratings (ratings) is
stable. All companies are domiciled in Troy, MI. Collectively,
these companies are referred to as Conifer Insurance Group
(Conifer).
The ratings reflect Conifer’s balance sheet strength, which AM
Best assesses as adequate, as well as its marginal operating
performance, neutral business profile and marginal enterprise risk
management (ERM).
The rating affirmations also reflect the challenges facing the
group and management’s ongoing attempts to cull its book and stem
losses caused by underperforming segments of business. The ratings
and outlooks consider the strategic initiatives and corrective
measures recently taken by management by way of retroactive
reinsurance to help minimize the impact of future loss reserve
development and its effect on the balance sheet. The ratings also
take into consideration the additional capital raise and
monetization from the completed sale of its managing general
agency, VSRM Insurance Agency, Inc. (formerly named Venture Agency
Holdings, Inc.). In addition, in fourth-quarter 2022, the group
executed on a significant loss portfolio transfer (LPT) reinsurance
agreement, which provided cover for $20 million of adverse reserve
development protection for accident years 2019 and prior.
Conifer’s balance sheet strength assessment of adequate includes
its very strong level of risk -adjusted capitalization, as measured
by Best’s Capital Adequacy Ratio (BCAR), offset by what has been
persistent, material adverse loss reserve development and the
group’s inability to grow surplus organically via retained
earnings. The balance sheet strength assessment has also been
impacted by the limited financial flexibility and profile of the
parent company, CHI.
Conifer’s operating performance is assessed as marginal, as
underwriting and operating results remain well below expectations.
Although Conifer has dedicated its efforts toward refining its
niche business segments, exiting problematic regions, pruning
underperforming business and refining its pricing, these actions
have not translated into meaningful improvement to date. ERM
capabilities remain marginal as well as the organization has been
plagued by substantial reserving issues and its inability to
organically grow surplus since inception.
The stable rating outlooks reflect AM Best's expectation that
Conifer’s business profile, with continued focus on its expertise
in niche lines, coupled with the aforementioned actions, should
benefit underwriting and operating results prospectively.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best's
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Performance Assessments, Best’s Preliminary Credit
Assessments and AM Best press releases, please view Guide to Proper
Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2023 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Adrienne Stark Senior Financial Analyst +1 908 439
2200, ext. 5526 adrienne.stark@ambest.com
Daniel Ryan Senior Director +1 908 439 2200,
ext. 5325 daniel.ryan@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 439 2200, ext. 5098 al.slavin@ambest.com
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