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A.M. Best Revises Outlook to Negative and Affirms Ratings of Conifer Insurance Company; Affirms Affiliate's Ratings
[January 16, 2015]

A.M. Best Revises Outlook to Negative and Affirms Ratings of Conifer Insurance Company; Affirms Affiliate's Ratings


A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating of "bbb" of Conifer Insurance Company (Conifer). Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and the ICR of "bbb-" of Conifer's affiliate, White Pine Insurance Company (White Pine). The outlook for White Pine's ratings is stable. Both companies are wholly owned subsidiaries of Conifer Holdings, Inc. (CHI), a property/casualty insurance holding company. All companies are domiciled in Birmingham, MI.

While Conifer maintains risk-adjusted capitalization that supports its ratings, the revision of the outlook reflects its failure to generate profitable net operating results over the past few years, including 2014. The results, in part, have been affected adversely by the expenses and volatility incurred as the company builds its business portfolio, even as it mainly utilizes established relationships with agents and brokers. Conifer was acquired on Dec. 23, 2009, by the former management team of North Pointe Insurance Company. Current management is focusing primarily on writing specific books of business that fall within its historical areas of underwriting expertise. Despite this fact, A.M. Best remains concerned about the considerable amount of inherent execution risk involved in Conifer building its portfolio amid the prevailing competitive market conditions for specialty commercial business. The challenges have led to underwriting and operating losses being reported since 2011.

Positive rating actions and/or an outlook revision for Conifer are not anticipated at the present time, but could be warranted over the longer term if the company successfully executes its plan to build a profitable book of business while leveraging itsunderwriting expertise and business relationships. It also will be dependent on Conifer maintaining a risk-adjusted capitalization that comfortably supports the ratings. Conversely, if the company continues to generate unprofitable results, negative rating actions likely would ensue.



The affirmation of White Pine's ratings recognizes its adequate capitalization, improved prior-year loss reserve development and the expectation that operating results, which had been favorable over the prior three years coming into 2014, can be re-established in 2015 and beyond. The company's improved performance was owed to a number of underwriting initiatives implemented by management in 2009-2011, including multiple rate increases and coverage exclusions and restrictions to specifically address the issues that contributed to White Pine's unprofitable underwriting history prior to Conifer's ownership.

Positive rating actions for White Pine could occur if underwriting and operating trends improve and lead to a fortification of the company's capitalization. Negative rating actions could result from continued operating losses, particularly if they lead to a dissipation of balance sheet strength and especially if they are caused by a return of negative claim frequency or severity trends. A reversal of the favorable loss reserve development in recent years could also add negative rating pressure.


The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings
  • Insurance Holding Company and Debt Ratings
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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