Conifer Holdings, Inc.

Good morning, everyone, and welcome to Conifer Holdings' first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note today's event is also being recorded. At this time, I'd like to turn the conference call over to Brian Roney. Sir, please go ahead.

Thank you and good morning, everyone. Conifer issued its 2024 first quarter financial results after the close of market yesterday. You can find copies of the earnings release on the company's website at ir.cnfrh.com. The slide presentation accompanying management's remarks this morning is available to view or download via webcast or from the investor relations section of Conifer's website. Before we get started, please note that except with regard to historical information, statements made in this conference call may constitute forward-looking statements within the meaning of the federal securities laws, including statements relating to trends, the company's operations and financial results, and the business and the products of the company and its subsidiaries. Actual results may differ materially from the results anticipated in these forward-looking statements. due to various risks and uncertainties underlying our forward-looking statements, as described from time to time in CONIFER's filings with the SEC, including our latest Form 10-K and subsequent reports. CONIFER specifically disclaims any obligation to update or revise any forward-looking statements, whether due to new information, future developments, or otherwise. In addition, a replay of this call will be provided through a link on the investor relations section of our website. During this call, we'll also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included when possible in our earnings release and our historical SEC filings. Statutory accounting data is prepared in accordance with statutory accounting rules and is therefore not reconciled to GAAP. We will conduct a Q&A session after management's prepared remarks this morning. With that, I'll turn the call over to Nick Prekoff, our Chief Executive Officer. Nick?

Thanks, Brian, and good morning, everyone. Also on the call with us today is Harold Milosh. I'm pleased to report that the first quarter financial results bear out the strategic decisions we discussed during our last call. We have made significant strides in executing our shift to a revenue model focused on a wholesale agency production-based approach. We see the first quarter results as indicative that we are moving in the right direction. At the outset, let me provide a brief overview of our tactical commercial lines direction. Recognizing the evolving landscape of the insurance industry and with an eye to the long-term success and sustainability of the company, we made the decision to pivot towards a wholesale agency model and largely away from an underwriting revenue model for our commercial lines business. This move allows us to leverage the expertise and networks of our agency partners, enhancing our distribution channels and expanding our reach in key markets. Further, this decision to focus on non-risk bearing revenue enables us to offer insureds A-rated capacity and simultaneously mitigate market risks, ultimately ensuring stability in our bottom line. We made considerable progress during the first quarter of 2024 in directing premium to capacity providers for coverage across multiple lines of business. We've also started to ramp up transfer of cannabis premium to our capacity partners, expanding our reach to new markets and strengthening our position as a leading provider of cannabis-related coverage. At our core, we remain committed to preserving a strong and consistent top line, continuing to streamline our expense structure, and maintaining operational profitability over the long term to generate favorable returns for coniferous shareholders. In that light, the preliminary results are encouraging as they have borne out the key decision to shift our focus to a commission revenue model based upon wholesale agency production at the beginning of 2024. With planned reductions in premium leverage starting in 2023, our percentage of commercial lines production was expected to be down in the first quarter. Overall, commercial lines represented roughly 53% of total production for the quarter. Our personalized production made up a larger percentage of premiums in Q1. While we have moved our commercial lines business largely to a commission-based model utilizing our in-house MGA conifer insurance services, our personalized production is still retained by our operating subsidiaries. As a result, we have continued to underwrite low-valued homeowners' business, primarily in Texas and the Midwest. Given the strong performance in that line year-to-date, leading to a combined ratio of 83% for the first quarter, we are pleased to retain that business on conifer paper moving forward. As we effectively manage the shift in production models, we are proud of the hard work and dedication of our entire team and remain committed to delivering exceptional value to our insurers and shareholders. We will continue to build on this quarter's success in the months and years to come.