Kroll Bond Rating Agency Assigns Insurance Financial Strength Ratings to Conifer

Business Wire

NEW YORK--(BUSINESS WIRE)-- Kroll Bond Rating Agency (KBRA) has assigned insurance financial strength ratings (IFSR) of BBB+ with a stable outlook to the insurance subsidiaries of Conifer Holdings, Inc. (CHI) (NASDAQ: CNFR) – Conifer Insurance Company and White Pine Insurance Company (together, referred to as Conifer). Additionally, KBRA has assigned an issuer rating of BB+ with a stable outlook to CHI. Conifer is a regional specialty property/casualty insurer headquartered in Birmingham, Michigan.

The assigned ratings reflect the organization’s niche focus, experienced management team, sound capitalization, and flexible operating platform. Conifer underwrites specialty insurance products such as property, general liability, liquor liability, commercial automobile, and homeowners and dwelling policies to unique and potentially underserved market segments. The organization is licensed to write insurance on both an excess and surplus and an admitted basis, affording it flexibility in a variety of markets and pricing scenarios. Conifer’s seasoned management team brings extensive knowledge and longstanding relationships with experienced agents and underwriters, having successfully run North Pointe Insurance Company. The company maintains a conservative balance sheet with manageable financial leverage and an investment portfolio of high-quality fixed-income securities. Additionally, Conifer maintains a comprehensive reinsurance program to manage loss exposure on both a per risk and per event basis.

Tempering these strengths are Conifer’s elevated—albeit declining—expense ratio, recent reserve corrections, and unfavorable operating results. The company’s expense ratio is atypical of similarly sized and specialty-focused peers; however, KBRA notes this is largely due to the startup nature of operations, and that the expense ratio has been improving quarter over quarter since the fourth quarter of 2015. In 2016, Conifer significantly strengthened prior-year reserves and increased loss picks for the accident year in order to ensure adequate reserves at year end. The company experienced significant losses on non-core offerings such as Florida homeowners (as a result of non-hurricane water payments) and personal automobile (currently in run-off, results driven by market wide deteriorating loss experience). Finally, Conifer has a high concentration of gross written premium with a select group of agents both in the company’s commercial lines and its personal lines segments.

The ratings are based on KBRA’s Global Insurer & Insurance Holding Company Rating Methodology published on April 21, 2016.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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Kroll Bond Rating Agency

Analytical:

Patrick Curboy, Senior Analyst

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Fred DeLeon, Director

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Andrew Edelsberg, Managing Director

646-731-2371

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