Conifer Holdings Inc
For the period ended Dec 31, 2023. Filed Apr 1, 2024.
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FY2023 · Filed Apr 1, 2024
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Schedule II – Condensed Financial Information of Registrant
Balance Sheets – Parent Company Only
| December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Assets | ||
| Investment in subsidiaries | $31,157 | $56,670 |
| Cash | 3,174 | 9,022 |
| Due from Affiliate | 33 | 113 |
| Other assets | 1,457 | 2,434 |
| Total assets | $35,821 | $68,239 |
| Liabilities and Shareholders' Equity | ||
| Liabilities: | ||
| Debt | $29,061 | $33,876 |
| Due to subsidiaries | 3,436 | 9,754 |
| Other liabilities | 1,798 | 5,659 |
| Total liabilities | 34,295 | 49,289 |
| Shareholders' equity: | ||
| Preferred stock, no par value (10,000,000 shares authorized; 1,000 and 0 issued and outstanding, respectively) | 6,000 | — |
| Common stock, no par value (100,000,000 shares authorized; 12,222,881 and 12,215,849 issued and outstanding, respectively) | 98,100 | 97,913 |
| Accumulated deficit | (86,683) | (60,760) |
| Accumulated other comprehensive income (loss) | (15,891) | (18,203) |
| Total shareholders' equity | 1,526 | 18,950 |
| Total liabilities and shareholders' equity | $35,821 | $68,239 |
Statements of Comprehensive Income (Loss) – Parent Company Only
| Year Ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Revenue | ||
| Management fees from subsidiaries | $17,367 | $4,980 |
| Other income | 819 | 190 |
| Total revenue | 18,186 | 5,170 |
| Expenses | ||
| Operating expenses | 14,133 | 14,365 |
| Interest expense | 3,079 | 2,816 |
| Total expenses | 17,212 | 17,181 |
| Income (loss) before equity in earnings (losses) of subsidiaries and income tax expense (benefit) | 974 | (12,011) |
| Income tax expense (benefit) | 73 | (4,078) |
| Income (loss) before equity earnings (losses) of subsidiaries | 901 | (7,933) |
| Equity earnings (losses) in subsidiaries | (26,805) | (2,748) |
| Net income (loss) | (25,904) | (10,681) |
| Other Comprehensive Income | ||
| Equity in other comprehensive income (loss) of subsidiaries | 2,312 | (16,093) |
| Total Comprehensive income (loss) | $(23,592) | $(26,774) |
Statement of Cash Flows – Parent Company Only
| Year Ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Cash Flows from Operating Activities | ||
| Net income (loss) | $(25,904) | $(10,681) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
| Depreciation and amortization | 545 | 436 |
| Equity in undistributed (income) loss of subsidiaries | 26,805 | 2,748 |
| Stock-based compensation expense | 190 | 211 |
| Deferred income tax expense | (3,806) | 3,884 |
| Other (gain) loss | — | — |
| Changes in operating assets and liabilities: | ||
| Due from subsidiaries | (6,318) | 2,699 |
| Due from Affiliate | 80 | 107 |
| Current income tax recoverable | — | — |
| Other assets | 860 | 62 |
| Other liabilities | (73) | (203) |
| Net cash provided by (used in) operating activities | (7,621) | (737) |
| Cash Flows From Investing Activities | ||
| Contributions to subsidiaries | 1,019 | 4,000 |
| Dividends received from subsidiaries | — | — |
| Purchases of investments | — | — |
| Purchases of property and equipment | — | — |
| Net cash provided by (used in) investing activities | 1,019 | 4,000 |
| Cash Flows From Financing Activities | ||
| Proceeds received from issuance of shares of preferred stock | 6,000 | — |
| Proceeds received from issuance of shares of common stock | — | 5,000 |
| Proceeds from issuance of long-term debt | 10,727 | — |
| Repurchase of common stock | (3) | 10 |
| Borrowings under debt arrangements | — | 5,000 |
| Repayment of borrowings under debt arrangements | — | (5,000) |
| Paydown of long-term debt | (13,971) | — |
| Debt issuance costs | (1,999) | — |
| Net cash provided by financing activities | 754 | 5,010 |
| Net increase (decrease) in cash | (5,848) | 8,273 |
| Cash at beginning of period | 9,022 | 749 |
| Cash at end of period | $3,174 | $9,022 |
| Supplemental Disclosure of Cash Flow Information: | ||
| Interest paid | 2,949 | 2,979 |
| Preferred stock dividends declared but not paid at end of period | 19 | — |
Conifer Holding, Inc.
Parent Company Only
Notes to Condensed Financial Statements
- Accounting Policies
Organization
Conifer Holdings, Inc. (the “Parent”) is a Michigan‑domiciled holding company organized for the purpose of managing its insurance entities. The Parent conducts its principal operations through these entities.
Basis of Presentation
The accompanying condensed financial information should be read in conjunction with the Consolidated Financial Statements and related Notes of Conifer Holdings, Inc. and Subsidiaries. Investments in subsidiaries are accounted for using the equity method. Under the equity method, the investment in subsidiaries is stated at cost plus contributions and equity in undistributed income (loss) of consolidated subsidiaries less dividends received since the date of acquisition.
The Parent’s operations consist of income earned from management and administrative services performed for the insurance entities pursuant to intercompany services agreements. These management and administrative services include providing management, marketing, offices and equipment, and premium collection, for which the insurance companies pay fees based on a percentage of gross premiums written. Also, the Parent receives commission income for performing agency services. The primary operating costs of the Parent are salaries and related costs of personnel, information technology, administrative expenses, and professional fees. The income received from the management and administrative services is used to cover operating costs, meet debt service requirements and cover other holding company obligations.
Estimates and Assumptions
Preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates.
Dividends
The Parent received $1.4 million in cash dividends from RCIC in 2023. The Parent received a $10.8 million dividend from CIS during the fourth quarter of 2022.
- Guarantees
The Parent has guaranteed the principal and interest obligations of a $10.0 million surplus note issued by Conifer Insurance Company to White Pine Insurance Company (both wholly owned subsidiaries). The note pays interest annually at a per annum rate of 4% and has no maturity.
As of December 31, 2023, the surplus note was adjusted to a fair value of $6.8 million as a result of KBRA downgrading CIC's surplus note rating from BBB- to BB+. This change in CIC's rating required a change in the statutory statement presentation from a cost basis to a fair value basis of accounting.
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