ifer (CNFR) - 2025 Q2 - Quarterly Results

Executive Summary Conifer Holdings reported positive Q2 2025 financial results, driven by net income, an earnout valuation gain, and increased book value per share Second Quarter 2025 Financial Highlights Q2 2025 saw positive net income, earnings per share, and book value per share, significantly boosted by an earnout valuation Second Quarter 2025 Financial Highlights | Metric | Q2 2025 Value | | :----------------------------------- | :------------ | | Net income allocable to common shareholders | $2.1 million | | Net income per share | $0.17 | | Net investment income | $1.3 million | | Book value per common share outstanding | $2.31 | - Gains in the quarter were largely due to the valuation recognition of an earnout related to the CIS sale from last year[2][3] Management Comments CEO Brian Roney highlighted organizational streamlining, core line focus, double-digit gross written premium growth, and the positive impact of an earnout - The Company is streamlining its organization and focusing on core lines, with Commercial Lines production largely running off[2] - Gross written premium increased double digits for the period, primarily driven by the Personal Lines business, which is recovering after a challenging first quarter[2] - Quarterly results were positively impacted by the partial recognition of an earnout from the CIS sale[2] Consolidated Financial Performance Overview The company achieved significant net income and book value improvements in Q2 2025, with gross written premiums increasing despite declines in net written and earned premiums Key Financial Metrics Q2 2025 showed improved net income and book value per share year-over-year, alongside an 11.1% increase in gross written premiums Consolidated Key Financial Metrics (Q2 and Six Months Ended June 30, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YTD) | | :----------------------------------- | :------ | :------ | :------------- | :------- | :------- | :------------- | | Gross written premiums | $21,079 | $18,971 | 11.1% | $37,252 | $43,284 | -13.9% | | Net written premiums | $1,383 | $13,247 | -89.6% | $12,223 | $28,638 | -57.3% | | Net earned premiums | $9,564 | $16,666 | -42.6% | $19,879 | $33,553 | -40.8% | | Net investment income | $1,298 | $1,473 | -11.9% | $2,587 | $3,019 | -14.3% | | Net income (loss) allocable to common shareholders | $2,051 | $(3,950) | ** | $2,573 | $(3,876) | ** | | Net income (loss) per share, diluted | $0.17 | $(0.32) | ** | $0.21 | $(0.32) | ** | | Book value per common share outstanding | $2.31 | $(0.10) | ** | $2.31 | $(0.10) | ** | Gross Written Premium Analysis Consolidated gross written premiums rose 11.1% in Q2 2025, primarily due to disciplined underwriting in homeowners' lines in Texas and the Midwest Consolidated Gross Written Premiums (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--------------------- | :--------------------- | :--------------------- | :------- | | Gross written premiums | $21,079 | $18,971 | 11.1% | - The increase was largely due to a renewed focus on disciplined underwriting in homeowners' lines of business in Texas and the Midwest[9] - Performance in these lines improved substantially compared to Q1 2025, which was impacted by storm activity[10] Consolidated Underwriting Ratios Analysis The consolidated combined ratio improved slightly in Q2 2025 to 121.1% from 123.6% in Q2 2024, driven by a lower loss ratio, despite an increased expense ratio Consolidated Underwriting Ratios (Q2 and Six Months Ended June 30) | Underwriting Ratios | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------------ | :------ | :------ | :------- | :------- | | Loss ratio | 68.8% | 91.5% | 79.7% | 76.6% | | Expense ratio | 52.3% | 32.1% | 51.5% | 33.4% | | Combined ratio | 121.1% | 123.6% | 131.2% | 110.0% | | Contribution to combined ratio from net adverse prior year development | 5.8% | 16.8% | 3.5% | 6.9% | | Accident year combined ratio | 115.3% | 106.8% | 127.7% | 103.1% | - A combined ratio under 100% indicates an underwriting profit, while over 100% indicates an underwriting loss[7] Segment Performance Review This section reviews the financial and operational performance of the Commercial and Personal Lines segments, highlighting strategic shifts and premium trends Commercial Lines Financial and Operational Review Commercial Lines gross written premiums decreased significantly in Q2 2025, reflecting a strategic shift towards Personal Lines Commercial Lines Key Financial Metrics (Q2 and Six Months Ended June 30, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YTD) | | :--------------------- | :--------------------- | :--------------------- | :------------- | :---------------------- | :---------------------- | :------------- | | Gross written premiums | $3,190 | $6,782 | -53.0% | $5,237 | $19,544 | -73.2% | | Net written premiums | $(433) | $4,285 | ** | $(2,036) | $12,572 | ** | | Net earned premiums | $468 | $8,681 | -94.6% | $1,799 | $17,478 | -89.7% | | Loss ratio | 79.4% | 216.4% | | 140.0% | 77.9% | | | Expense ratio | 25.3% | 40.9% | | 29.5% | 29.1% | | | Combined ratio | 104.7% | 257.3% | | 169.5% | 107.0% | | - Commercial lines accounted for 15.1% of total gross written premium in Q2 2025[14] - Premiums decreased considerably year over year as Conifer focused underwriting efforts on Personal Lines, particularly homeowners' insurance in Texas and the Midwest[14] Personal Lines Financial and Operational Review Personal Lines gross written premiums increased substantially in Q2 2025, driven by homeowners' insurance in Texas and the Midwest, though the expense ratio rose Personal Lines Key Financial Metrics (Q2 and Six Months Ended June 30, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change (QoQ) | YTD 2025 | YTD 2024 | % Change (YTD) | | :--------------------- | :--------------------- | :--------------------- | :------------- | :---------------------- | :---------------------- | :------------- | | Gross written premiums | $17,889 | $12,189 | 46.8% | $32,015 | $23,740 | 34.9% | | Net written premiums | $1,816 | $8,962 | -79.7% | $14,259 | $16,066 | -11.2% | | Net earned premiums | $9,096 | $7,985 | 13.9% | $18,080 | $16,075 | 12.5% | | Loss ratio | 61.2% | 104.6% | | 73.7% | 75.2% | | | Expense ratio | 53.0% | 39.5% | | 53.8% | 38.1% | | | Combined ratio | 114.2% | 144.1% | | 127.5% | 113.3% | | - Personal lines represented 84.9% of total gross written premium for the quarter, primarily consisting of low-value dwelling homeowners' insurance in Texas and the Midwest[16] - The expense ratio increased partly due to a quota share treaty effective June 1, 2025, which reduced net earned premium[17] Detailed Financial Components This section provides a detailed breakdown of key financial components including net investment income, equity securities fair value changes, net income, and adjusted operating income Net Investment Income Net investment income for Q2 2025 decreased to $1.3 million from $1.5 million in the prior year Net Investment Income (in millions) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $1.3 | $1.5 | Change in Fair Value of Equity Securities The company reported a reduced loss of $65,000 from equity securities fair value changes in Q2 2025 compared to the prior year Change in Fair Value of Equity Securities (in thousands) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | $(65) | $(196) | Net Income (Loss) Allocable to Common Shareholders Conifer Holdings reported net income allocable to common shareholders of $2.1 million, or $0.17 per share, for Q2 2025 Net Income Allocable to Common Shareholders (Q2 2025) | Metric | Value | | :----------------------------------- | :---- | | Net income allocable to common shareholders | $2.1 million | | Net income per share | $0.17 | Adjusted Operating Income (Loss) The company reported an adjusted operating loss of $2.1 million, or $0.17 per share, for Q2 2025 Adjusted Operating Income (Loss) (Q2 2025) | Metric | Value | | :-------------------------- | :---- | | Adjusted operating loss | $(2.1) million | | Adjusted operating loss per share | $(0.17) | Company Information and Disclosures This section provides information about Conifer Holdings, definitions of non-GAAP measures, and a forward-looking statement disclaimer About Conifer Holdings Conifer Holdings, Inc. is a Michigan-based property and casualty holding company offering specialty insurance through independent agents and trading on Nasdaq - Conifer Holdings, Inc. is a Michigan-based property and casualty holding company[23] - Through its subsidiaries, Conifer offers specialty insurance coverage for both commercial and personal lines, marketed through independent agents[23] - The Company trades on the Nasdaq Capital Market under the symbol CNFR[23] Definitions of Non-GAAP Measures This section defines adjusted operating income (loss) as a non-GAAP measure used by management to assess operational performance - Conifer prepares financial statements in conformity with GAAP, while statutory data follows NAIC rules and is not reconciled to GAAP[24] - Adjusted operating income (loss) is a non-GAAP measure defined as net income (loss) excluding net realized investment gains/losses, change in fair value of equity securities, change in fair value of contingent considerations, contingent consideration bonus expense, and net income/loss from discontinued operations[25] - This measure is used internally to provide useful insight into the results of operations and underlying business performance[25] Forward-Looking Statement The press release includes forward-looking statements based on management's expectations, subject to risks and uncertainties - The press release contains forward-looking statements regarding future events or financial/operating performance, including expectations for premiums, earnings, capital position, expansion, and growth strategies[27] - These statements are based on management's good-faith belief and reasonable judgment but are qualified by important factors, risks, and uncertainties beyond the Company's control[27] - The Company undertakes no obligation to publicly update any forward-looking statement, except as required by applicable laws or regulations[27] Financial Statements and Reconciliations This section presents reconciliations of non-GAAP measures and condensed consolidated financial statements for balance sheets and statements of operations Reconciliations of Adjusted Operating Income (Loss) This section details the reconciliation of net income (loss) to adjusted operating income (loss) for Q2 and YTD 2025 and 2024 Reconciliation of Net Income (Loss) to Adjusted Operating Income (Loss) (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net income (loss) | $2,051 | $(3,792) | $2,573 | $(3,561) | | Less: Net realized investment gains (losses) | $(28) | $(118) | $(25) | $(118) | | Less: Change in fair value of equity securities | $(65) | $(196) | $(257) | $(153) | | Less: Change in fair value of contingent considerations | $5,355 | - | $9,750 | - | | Less: Contingent consideration bonus expense | $(1,141) | - | $(1,141) | - | | Less: Net income (loss) from discontinued operations | - | $(64) | - | $(1,402) | | Adjusted operating income (loss) | $(2,070) | $(3,414) | $(5,754) | $(1,888) | | Diluted income (loss) per common share: Net income (loss) | $0.17 | $(0.31) | $0.21 | $(0.29) | | Diluted income (loss) per common share: Adjusted operating income (loss) | $(0.17) | $(0.28) | $(0.47) | $(0.15) | - The Company recorded a full valuation allowance against its deferred tax assets, resulting in no taxable impacts to adjusted operating income from the adjustments[29] Condensed Consolidated Balance Sheets The balance sheet shows increased total assets and shareholders' equity, with decreased total liabilities, as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total investments | $135,628 | $128,419 | | Cash and cash equivalents | $21,953 | $27,654 | | Total assets | $283,262 | $281,656 | | Unpaid losses and loss adjustment expenses | $164,644 | $189,285 | | Total liabilities | $255,054 | $260,131 | | Total shareholders' equity | $28,208 | $21,525 | Condensed Consolidated Statements of Operations The statements of operations show a net income of $2.1 million for Q2 2025, a significant improvement from the prior year's net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------------ | :------ | :------ | :------- | :------- | | Net earned premiums | $9,564 | $16,666 | $19,879 | $33,553 | | Total revenue and other income | $16,134 | $17,902 | $32,009 | $36,527 | | Total expenses | $14,083 | $21,963 | $29,436 | $39,170 | | Net income (loss) | $2,051 | $(3,792) | $2,573 | $(3,561) | | Net income (loss) allocable to common shareholders | $2,051 | $(3,950) | $2,573 | $(3,876) | | Earnings (loss) per common share, basic and diluted | $0.17 | $(0.32) | $0.21 | $(0.32) |