3 October 2017 Insurance

Conifer signs Swiss Re deal to strengthen reserves

Conifer Holdings has announced several strategic initiatives designed to strengthen the company's financial position and accelerate its goals of returning to profitability in the coming quarters.

This includes a strengthened reserve position through agreement with Swiss Re to cover loss development of up to $17.5 million in excess of stated reserves as of June 30, 2017.

Conifer's agreement with Swiss Re, effective September 28, 2017, provides up to $17.5 million of reinsurance for adverse net loss reserve development for accident years 2005 through 2016. Conifer retains sole responsibility for all claims activities, which is important to the Company's ongoing value proposition to all of its customers.

The agreement attaches when net losses exceed $1.4 million of the $36.6 million carried reserves at June 30, 2017, and extends to $19.5 million in coverage up to $57.5 million (inclusive of a 10 percent co-participation). The consideration for this agreement is a payment of $7.2 million. There is a 35 percent contingent recovery depending on the performance of the reserves over time.

The company also completed a $30.0 million private placement of subordinated notes with an affiliate of Elanus Capital Management, providing long-term flexibility and less restrictive terms, repaid a senior credit facility and also announced commitments for up to $5.0 million of additional common equity through a private placement.

James Petcoff, chairman and CEO, commented: “We believe today's announcement represents an important moment in Conifer's history, as we have implemented a number of initiatives designed to strengthen our financial position while simultaneously accelerating the Company's ability to achieve consistently profitable results. After a thorough review, we felt it was prudent to proactively pursue decisive measures to curtail the challenging loss trends we have experienced, particularly in personal lines, and more specifically Florida homeowners in recent quarters.

“These efforts were taken to both strengthen our reserve position from past periods in a manner that reduces volatility in our earnings while also increasing financial flexibility to pursue growth opportunities in the lines where we are performing above our industry peers. Further, we concluded all of these initiatives in the third quarter of 2017, which we believe positions Conifer for success in the coming fourth quarter and into 2018 and beyond.”

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