Conifer Holdings Reports 2025 First Quarter Financial Results

Rhea-AI Summary

Conifer Holdings (NASDAQ: CNFR) reported mixed Q1 2025 financial results. The company achieved net income of $522,000 ($0.04 per share), but posted an adjusted operating loss of $3.7 million (-$0.30 per share). Personal Lines production grew significantly, up 22.3% to $14.1 million, representing 87.4% of total gross written premiums. However, overall gross written premiums decreased 33.5% to $16.2 million due to strategic shift away from Commercial Lines. The company's combined ratio deteriorated to 140.5% from 96.7% year-over-year, indicating significant underwriting losses. Book value increased to $2.09 per share, though mainly due to GAAP treatment of an expected earn-out payment. Net investment income declined to $1.3 million from $1.5 million in the prior year period.

Positive

• Personal Lines gross written premium increased 22.3% to $14.1 million
• Net income of $522,000 compared to $74,000 in prior year
• Book value per share improved to $2.09 from $0.21
• Strategic shift towards focusing on Personal Lines business, particularly homeowner's insurance

Negative

• Adjusted operating loss of $3.7 million compared to $1.3 million profit last year
• Combined ratio deteriorated to 140.5% from 96.7%, indicating significant underwriting losses
• Overall gross written premiums decreased 33.5% to $16.2 million
• Net investment income declined 16.6% to $1.3 million
• Loss ratio increased to 89.7% from 62.0%

Insights

Financial Analyst

Conifer shows concerning financial performance with severely deteriorating underwriting metrics despite modest net income boosted by non-operational accounting adjustments.

Conifer's Q1 2025 presents a concerning financial picture despite the headline net income of $522,000. The 140.5% combined ratio signals severe underwriting losses, meaning the company is paying out $1.40 for every premium dollar collected. This represents a significant deterioration from the 96.7% in Q1 2024.

The company is undergoing a major strategic pivot, reducing Commercial Lines exposure (down 84%) while growing Personal Lines (up 22.3%). However, this transition is creating significant challenges:

• Gross written premiums declined 33.5% to $16.2 million
• Net earned premiums fell 38.9% to $10.3 million
• The loss ratio jumped to 89.7% from 62% last year
• Expense ratio increased to 50.8% from 34.7%

Most concerning is the adjusted operating loss of $3.7 million compared to a $1.3 million profit last year. This metric, which excludes non-recurring items, reveals the true operational performance.

The discrepancy between positive net income and negative operating income suggests the $0.04 EPS was largely driven by non-operational accounting adjustments, specifically related to an earn-out payment treatment under GAAP, as mentioned by the CEO. This explains why book value increased to $2.09 per share despite poor underwriting results.

The Personal Lines segment, now comprising 87.4% of total premium, shows a troubling 140.9% combined ratio. Management attributes this to seasonal storms in Texas but projects improvement. However, the accident year combined ratio of 132.3% indicates fundamental underwriting challenges beyond weather events.

Overall, this quarter reveals a company in difficult transition with deteriorating core metrics that should be closely monitored in upcoming quarters.

TROY, Mich., May 14, 2025 (GLOBE NEWSWIRE) -- Conifer Holdings, Inc. (Nasdaq: CNFR) (“Conifer” or the “Company”) today announced results for the first quarter ended March 31, 2025.

First Quarter 2025 Financial Highlights

• Personal Lines production was up 22% for the period
• Net income allocable to common shareholders of $522,000, or $0.04 per share
• Book value increased to $2.09 per common share outstanding
  

Management Comments

Brian Roney, CEO of Conifer, commented, "While we were pleased to see continued growth in our Personal lines production, overall, Conifer had an up and down quarter, netting to a small gain. Of note for the period, book value did increase, but largely due to GAAP treatment of an expected earn-out payment.”

2025 First Quarter Financial Results Overview

	At and for the Three Months Ended March 31,
	2025				2024				% Change
	(dollars in thousands, except share and per share amounts)
Gross written premiums	$	16,173			$	24,313			-33.5	%
Net written premiums		10,840				15,391			-29.6	%
Net earned premiums		10,315				16,887			-38.9	%
Net investment income		1,289				1,546			-16.6	%
Net realized investment gains (losses)		3				-			**
Change in fair value of equity investments		(192	)			43			**
Net income (loss) allocable to common shareholders		522				74			**
Net income (loss) allocable to common shareholders per share, diluted	$	0.04			$	0.01			**
Adjusted operating income (loss)*		(3,684	)			1,314			**
Adjusted operating income (loss) per share, diluted*	$	(0.30	)		$	0.11			**
Book value per common share outstanding	$	2.09			$	0.21
Weighted average shares outstanding, basic and diluted		12,222,881				12,222,881
Underwriting ratios:
Loss ratio (1)		89.7	%			62.0	%
Expense ratio (2)		50.8	%			34.7	%
Combined ratio (3)		140.5	%			96.7	%
* The "Definitions of Non-GAAP Measures" section of this release defines and reconciles data that are not based on generally accepted accounting principles.
** Percentage is not meaningful
(1) The loss ratio is the ratio, expressed as a percentage, of net losses and loss adjustment expenses to net earned premiums and other income from underwriting operations.
(2) The expense ratio is the ratio, expressed as a percentage, of policy acquisition costs and other underwriting expenses to net earned premiums and other income from underwriting operations.
(3) The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss.

2025 First Quarter Gross Written Premium

Gross written premiums decreased 33.5% in the first quarter of 2025 to $16.2 million, compared to
$24.3 million in the prior year period. This decrease reflects the Company’s strategic shift away from Commercial Lines premium following the sale of our agency group in 2024.

Commercial Lines Financial and Operational Review

Commercial Lines Financial Review
	Three Months Ended March 31,
	2025				2024				% Change
	(dollars in thousands)
Gross written premiums	$	2,047			$	12,762			-84.0	%
Net written premiums		(1,604	)			8,287			-119.4	%
Net earned premiums		1,331				8,797			-84.9	%
Underwriting ratios:
Loss ratio		113.1	%			76.5	%
Expense ratio		25.3	%			32.7	%
Combined ratio		138.4	%			109.2	%
Contribution to combined ratio from net (favorable) adverse prior year development		-46.6	%			0.5	%
Accident year combined ratio (1)		185.0	%			108.7	%
(1) The accident year combined ratio is the sum of the loss ratio and the expense ratio, less changes in net ultimate loss estimates from prior accident year loss reserves. The accident year combined ratio provides management with an assessment of the specific policy year's profitability and assists management in their evaluation of product pricing levels and quality of business written.

The Company’s commercial lines of business represented 12.6% of total gross written premium in the first quarter of 2025. As noted above, premium decreased considerably year over year as Conifer continued to focus its underwriting efforts on Personal Lines business, notably our homeowner’s insurance portfolio in Texas and the Midwest.

Personal Lines Financial and Operational Review

Personal Lines Financial Review
	Three Months Ended March 31,
	2025				2024				% Change
	(dollars in thousands)
Gross written premiums	$	14,126			$	11,551			22.3	%
Net written premiums		12,444				7,104			75.2	%
Net earned premiums		8,984				8,090			11.1	%
Underwriting ratios:
Loss ratio		86.3	%			46.2	%
Expense ratio		54.6	%			36.8	%
Combined ratio		140.9	%			83.0	%
Contribution to combined ratio from net (favorable) adverse prior year development		8.6	%			-6.3	%
Accident year combined ratio		132.3	%			89.3	%

Personal lines, representing 87.4% of total gross written premium for the quarter, consists primarily of low-value dwelling homeowner’s insurance in Texas and the Midwest.

Personal lines gross written premium increased 22.3% from the prior year period to $14.1 million for the first quarter of 2025, led by growth in the Company’s low-value dwelling line of business in Texas.

For the quarter, the loss ratio was impacted by ordinary seasonal storms, largely in Texas. As per the expected norm, we believe that the loss ratio should moderate as the year progresses.

Combined Ratio Analysis

	Three Months Ended March 31,
	2025			2024
Underwriting ratios:
Loss ratio	89.7	%		62.0	%
Expense ratio	50.8	%		34.7	%
Combined ratio	140.5	%		96.7	%
Contribution to combined ratio from net (favorable) adverse prior year development	1.4	%		-2.7	%
Accident year combined ratio	139.1	%		99.4	%

Net Investment Income
Net investment income was $1.3 million for the quarter ended March 31, 2025, compared to $1.5 million in the prior year period.

Change in Fair Value of Equity Securities
During the quarter, the Company reported a loss from the change in fair value of equity investments of $192,000, compared to a $43,000 gain in the prior year period.

Net Income (Loss) allocable to common shareholders
The Company reported net income allocable to common shareholders of $522,000, or $0.04 per share, for the first quarter of 2025.

Adjusted Operating Income (Loss)
There was an adjusted operating loss of $3.7 million, or $0.30 per share, for the first quarter ended March 31, 2025. See Definitions of Non-GAAP Measures.

About Conifer Holdings
Conifer Holdings, Inc. is a Michigan-based property and casualty holding company. Through its subsidiaries, Conifer offers specialty insurance coverage for largely personal lines, marketing through independent agents. The Company trades on the Nasdaq Capital Market under the symbol CNFR. Additional information is available on the Company's website at www.ir.cnfrh.com.

Definitions of Non-GAAP Measures
Conifer prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Statutory data is prepared in accordance with statutory accounting rules as defined by the National Association of Insurance Commissioners' (NAIC) Accounting Practices and Procedures Manual, and therefore is not reconciled to GAAP data.

We believe that investors’ understanding of Conifer’s performance is enhanced by our disclosure of adjusted operating income. Our method for calculating this measure may differ from that used by other companies and therefore comparability may be limited. We define adjusted operating income (loss), a non-GAAP measure, as net income (loss) excluding: 1) net realized investment gains and losses, 2) change in fair value of equity securities 3) change in fair value of contingent considerations and 4) net income (loss) from discontinued operations. We use adjusted operating income as an internal performance measure in the management of our operations because we believe it gives our management and other users of our financial information useful insight into our results of operations and our underlying business performance.

Forward-Looking Statement

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance, and include Conifer’s expectations regarding premiums, earnings, its capital position, expansion, and growth strategies. The forward-looking statements contained in this press release are based on management’s good-faith belief and reasonable judgment based on current information. The forward-looking statements are qualified by important factors, risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including those described in our form 10-K (“Item 1A Risk Factors”) filed with the SEC on March 28, 2025 and subsequent reports filed with or furnished to the SEC. Any forward-looking statement made by us in this report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws or regulations.

Reconciliations of adjusted operating income (loss) and adjusted operating income (loss) per share:

	Three Months Ended March 31,
	2025				2024
	(dollar in thousands, except share and per share amounts)
Net income (loss)	$	522			$	231
Less:
Net realized investment gains (losses)		3				-
Change in fair value of equity securities		(192	)			43
Change in fair value of contingent considerations		4,395				-
Net income (loss) from discontinued operations		-				(1,126	)
Impact of income tax expense (benefit) from adjustments *		-				-
Adjusted operating income (loss)	$	(3,684	)		$	1,314
Weighted average common shares, diluted		12,222,881				12,222,881
Diluted income (loss) per common share:
Net income (loss)	$	0.04			$	0.02
Less:
Net realized investment gains (losses)		-				-
Change in fair value of equity securities		(0.02	)			0.01
Change in fair value of contingent considerations		0.36				-
Net income (loss) from discontinued operations		-				(0.10	)
Impact of income tax expense (benefit) from adjustments *		-				-
Adjusted operating income (loss), per share	$	(0.30	)		$	0.11

* The Company has recorded a full valuation allowance against its deferred tax assets as of March 31, 2025 and March 31, 2024, respectively. As a result, there were no taxable impacts to adjusted operating income from the adjustments to net income (loss) in the table above after taking into account the use of NOLs and the change in the valuation allowance.

Conifer Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)
		March 31,				December 31,
		2025				2024
Assets		(Unaudited)
Investment securities:
Debt securities, at fair value (amortized cost of $106,636 and $117,827, respectively)		$	96,023			$	105,665
Equity securities, at fair value (cost of $1,838 and $1,836, respectively)			1,411				1,603
Short-term investments, at fair value			42,066				21,151
Total investments			139,500				128,419
Cash and cash equivalents			10,281				27,654
Premiums and agents' balances receivable, net			9,568				9,901
Reinsurance recoverables on unpaid losses			77,872				84,490
Reinsurance recoverables on paid losses			11,666				6,919
Prepaid reinsurance premiums			5,403				6,088
Deferred policy acquisition costs			6,647				6,380
Receivable from contingent considerations			12,465				8,070
Other assets			3,672				3,735
Total assets		$	277,074			$	281,656
Liabilities and Shareholders' Equity
Liabilities:
Unpaid losses and loss adjustment expenses		$	176,362			$	189,285
Unearned premiums			30,645				30,590
Reinsurance premiums payable			2,488				1
Debt			11,996				11,932
Mandatorily redeemable preferred stock			5,651				-
Funds held under reinsurance agreements			20,964				25,829
Accounts payable and accrued expenses			3,383				2,494
Total liabilities			251,489				260,131
Commitments and contingencies			-				-
Shareholders' equity:
Common stock, no par value (100,000,000 shares authorized; 12,222,881 issued and outstanding, respectively)			100,117				98,178
Accumulated deficit			(62,631	)			(63,153	)
Accumulated other comprehensive income (loss)			(11,901	)			(13,500	)
Total shareholders' equity			25,585				21,525
Total liabilities and shareholders' equity		$	277,074			$	281,656

Conifer Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except share and per share data)
		Three Months Ended
		March 31
		2025				2024
Revenue and Other Income
Premiums
Gross earned premiums		$	16,118			$	34,232
Ceded earned premiums			(5,803	)			(17,345	)
Net earned premiums			10,315				16,887
Net investment income			1,289				1,546
Net realized investment gains (losses)			3				-
Change in fair value of equity securities			(192	)			43
Other income			65				149
Change in fair value of contingent considerations			4,395				-
Total revenue and other income			15,875				18,625
Expenses
Losses and loss adjustment expenses, net			9,274				10,520
Policy acquisition costs			2,677				3,160
Operating expenses			2,861				2,862
Interest expense			541				877
Total expenses			15,353				17,419
Income (loss) from continuing operations before income taxes			522				1,206
Income tax expense (benefit)			-				(151	)
Net income (loss) from continuing operations		$	522			$	1,357
Net income (loss) from discontinued operations			-				(1,126	)
Net income (loss)			522				231
Series A Preferred Stock dividends			-				157
Net income (loss) allocable to common shareholders		$	522			$	74
Earnings (loss) per common share, basic and diluted
Net income (loss) from continuing operations		$	0.04			$	0.11
Net income (loss) from discontinued operations		$	-			$	(0.10	)
Net income (loss) allocable to common shareholders		$	0.04			$	0.01
Weighted average common shares outstanding, basic and diluted			12,222,881				12,222,881

For Further Information:
Jessica Gulis, 248.559.0840
ir@cnfrh.com

FAQ

What were CNFR's Q1 2025 earnings per share?

Conifer Holdings reported net income of $0.04 per share, but adjusted operating loss was -$0.30 per share in Q1 2025.

How much did Conifer Holdings' Personal Lines business grow in Q1 2025?

Conifer's Personal Lines gross written premiums grew 22.3% to $14.1 million in Q1 2025.

What was CNFR's combined ratio in the first quarter of 2025?

Conifer's combined ratio was 140.5% in Q1 2025, up from 96.7% in the prior year period, indicating significant underwriting losses.

What is Conifer Holdings' book value per share as of Q1 2025?

Conifer's book value per share was $2.09 as of Q1 2025, an increase from $0.21 in the prior year.

How did CNFR's gross written premiums perform in Q1 2025?

Total gross written premiums decreased 33.5% to $16.2 million, primarily due to the company's strategic shift away from Commercial Lines business.