AM Best Affirms Credit Ratings of Conifer Holdings, Inc. and Its Subsidiaries

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.

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