OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
B++ (Good) and downgraded the issuer credit rating to “bbb” from “bbb+”
of Conifer Insurance Company (Conifer). Concurrently, A.M. Best
has affirmed the FSR of B+ (Good) and ICR of “bbb-” of its affiliate, White
Pine Insurance Company(White Pine) (formerly known as Mid-Continent
Insurance Company).The outlook for all ratings is stable. Both
companies are wholly owned subsidiaries of Conifer Holdings, Inc.
(CHI), a Michigan-based property/casualty insurance holding company. All
companies are domiciled in Southfield, MI.
While Conifer maintains strong risk-adjusted capitalization, the
downgrading of its ICR reflects the inherent challenges in attracting
new profitable business in the midst of a soft market. In 2011, Conifer
sourced nearly all of its business from White Pine (via quota share
reinsurance), providing Conifer immediate access to a mature legacy
business with demonstrated loss experience. Effective January 1, 2012,
this treaty was terminated. Alternatively, Conifer will continue to
build its business and grow through other relationships.
Conifer was acquired on December 23, 2009, by the former management team
of North Pointe Insurance Company. The rating actions are based
on A.M. Best’s consideration of the prior successes of Conifer’s
management and its intention to focus on specific books of business that
fall within management’s areas of historical underwriting expertise, as
well as its concern about the considerable amount of execution risk
involved in Conifer building a profitable portfolio, particularly in
light of today’s prevailing competitive market conditions for specialty
Positive actions on the ratings and/or outlook of Conifer could be
warranted over time, if it successfully executes its plan to profitably
build its book of business while leveraging its underwriting expertise
and relationships with the agents and brokers producing the business;
thus, maintaining risk-adjusted capitalization that comfortably supports
the ratings. Conversely, if the company begins to generate deteriorating
underwriting or operating results over the near term as it builds its
portfolio, leading to a weakening in its risk-adjusted capitalization,
negative rating actions could result.
The rating affirmations for White Pine recognize its adequate
capitalization, improved prior year loss reserve development and the
expectation of sustained profitability, which would be consistent with
its most recent trends. The latter speaks to a number of underwriting
initiatives implemented by management in 2009, 2010 and 2011, including
multiple rate increases, coverage exclusions and restrictions to
specifically address the issues that contributed to White Pine’s
unprofitable underwriting history prior to Conifer’s ownership.
As for White Pine, positive rating actions could occur if recent
underwriting and operating trends relative to current and prior year
underwriting profitability lead to improved performance and organic
generation of earnings. Negative rating actions could result from a
return to negative claim frequency or severity trends, and if the
favorable loss reserve development of recent years was reversed.
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.
Founded in 1899, 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 © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.David Blades, CPCUSenior
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MorrowSenior Manager, Public Relations(908)
439-2200, ext. firstname.lastname@example.orgJoseph
RoethelAssistant Vice President(908) 439-2200,
PeavyAssistant Vice President, Public Relations(908)
439-2200, ext. email@example.com
Source: A.M. Best Co.