10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37536

Conifer Holdings, Inc.

(Exact name of registrant as specified in its charter)

Michigan	27-1298795
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3001 West Big Beaver Road, Suite 200
Troy, Michigan	48084
(Address of principal executive offices)	(Zip code)

(248) 559-0840

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	CNFR	The Nasdaq Stock Market LLC
9.75% Senior Notes due 2028	CNFRZ	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☑ Smaller reporting company ☑ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of outstanding shares of the registrant’s common stock, no par value, as of May 14, 2024, was 12,222,881.

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Form 10-Q

INDEX

	Page No.
Part I — Financial Information
Item 1 — Financial Statements	3
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Operations (Unaudited)	4
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	5
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	6
Consolidated Statements of Cash Flows (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3 — Quantitative and Qualitative Disclosures about Market Risk	31
Item 4 — Controls and Procedures	32
Part II — Other Information
Item 1 — Legal Proceedings	33
Item 1A — Risk Factors	33
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6 — Exhibits	34
Signatures	35

2

PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands)

	March 31, 2024			December 31, 2023
	(Unaudited)
Assets
Investment securities:
Debt securities, at fair value (amortized cost of $134,219 and $135,370, respectively)	$	120,534		$	122,113
Equity securities, at fair value (cost of $2,374 and $2,385, respectively)		2,387			2,354
Short-term investments, at fair value		23,724			20,838
Total investments		146,645			145,305
Cash and cash equivalents		17,316			11,125
Premiums and agents' balances receivable, net		24,056			29,369
Receivable from Affiliate		1,155			1,047
Reinsurance recoverables on unpaid losses		73,807			70,807
Reinsurance recoverables on paid losses		5,075			12,619
Prepaid reinsurance premiums		20,486			28,908
Deferred policy acquisition costs		5,663			6,285
Other assets		6,875			6,339
Total assets	$	301,078		$	311,804
Liabilities and Shareholders' Equity
Liabilities:
Unpaid losses and loss adjustment expenses	$	175,826		$	174,612
Unearned premiums		55,231			65,150
Reinsurance premiums payable		2,399			246
Debt		24,946			25,061
Funds held under reinsurance agreements		24,211			24,550
Premiums payable to other insureds		8,840			13,986
Accounts payable and accrued expenses		7,066			5,310
Total liabilities		298,519			308,915
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value (10,000,000 shares authorized; 1,000 issued and outstanding, respectively)		6,000			6,000
Common stock, no par value (100,000,000 shares authorized; 12,222,881 issued and outstanding, respectively)		98,132			98,100
Accumulated deficit		(86,609	)		(86,683	)
Accumulated other comprehensive income (loss)		(14,964	)		(14,528	)
Total shareholders' equity		2,559			2,889
Total liabilities and shareholders' equity	$	301,078		$	311,804

The accompanying notes are an integral part of the Consolidated Financial Statements.

3

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

(dollars in thousands, except per share data)

	Three Months Ended March 31,
	2024			2023
Revenue and Other Income
Premiums
Gross earned premiums	$	34,232			34,294
Ceded earned premiums		(17,345	)		(12,342	)
Net earned premiums		16,887			21,952
Net investment income		1,552			1,307
Net realized investment gains (losses)		—			—
Change in fair value of equity securities		43			694
Other gains (losses)		—			—
Agency commission income		4,336			430
Other income		260			196
Total revenue and other income		23,078			24,579
Expenses
Losses and loss adjustment expenses, net		10,520			13,713
Policy acquisition costs		7,013			4,721
Operating expenses		4,495			4,279
Interest expense		877			686
Total expenses		22,905			23,399
Income (loss) before equity earnings in Affiliate and income taxes		173			1,180
Equity earnings (loss) in Affiliate, net of tax		58			(179	)
Income tax expense (benefit)		—			—
Net income (loss)	$	231		$	1,001
Preferred stock dividends		157			—
Net income (loss) allocable to common shareholders	$	74		$	1,001
Earnings (loss) per common share, basic and diluted	$	0.01		$	0.08
Weighted average common shares outstanding, basic and diluted		12,222,881			12,215,849

The accompanying notes are an integral part of the Consolidated Financial Statements.

4

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(dollars in thousands)

	Three Months Ended March 31,
	2024			2023
Net income (loss)	$	231		$	1,001
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses):
Unrealized investment gains (losses) during the period		(436	)		2,286
Income tax (benefit) expense		—			—
Unrealized investment gains (losses), net of tax		(436	)		2,286
Less: reclassification adjustments to:
Net realized investment gains (losses) included in net income (loss)		—			—
Income tax (benefit) expense		—			—
Total reclassifications included in net income (loss), net of tax		—			—
Other comprehensive income (loss)		(436	)		2,286
Total comprehensive income (loss)	$	(205	)	$	3,287

The accompanying notes are an integral part of the Consolidated Financial Statements.

5

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

(dollars in thousands)

	No Par, Preferred Stock				No Par, Common Stock				Accumulated			Accumulated Other Comprehensive			Total Shareholders'
	Shares		Amount		Shares		Amount		Deficit			Income (Loss)			Equity
Balances at December 31, 2023		1,000		6,000		12,222,881	$	98,100	$	(86,683	)	$	(14,528	)	$	2,889
Net income (loss)		—		—		—		—		231			—			231
Stock-based compensation expense		—		—		—		32		—			—			32
Cash dividends paid on preferred stock		—		—		—		—		(157	)		—			(157	)
Other comprehensive income (loss)		—		—		—		—		—			(436	)		(436	)
Balances at March 31, 2024		1,000		6,000		12,222,881	$	98,132	$	(86,609	)	$	(14,964	)	$	2,559

	No Par, Common Stock				Accumulated			Accumulated Other Comprehensive			Total Shareholders'
	Shares		Amount		Deficit			Income (Loss)			Equity
Balances at December 31, 2022		12,215,849	$	97,913	$	(60,760	)	$	(18,203	)	$	18,950
Net income (loss)		—		—		1,001			—			1,001
Stock-based compensation expense		—		55		—			—			55
Other comprehensive income (loss)		—		—		—			2,286			2,286
Balances at March 31, 2023		12,215,849	$	97,968	$	(59,759	)	$	(15,917	)	$	22,292

The accompanying notes are an integral part of the Consolidated Financial Statements.

6

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)

	Three Months Ended March 31,
	2024			2023
Cash Flows From Operating Activities
Net income (loss)	$	231		$	1,001
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		148			98
Amortization of bond premium and discount, net		(167	)		(97	)
Change in fair value of equity securities		(43	)		(694	)
Stock-based compensation expenses		32			55
Equity loss (earnings) in Affiliate, net of tax		(58	)		179
Changes in operating assets and liabilities:
(Increase) decrease in:
Premiums and agents' balances and other receivables		5,205			(91	)
Reinsurance recoverables		4,544			19,180
Prepaid reinsurance premiums		8,422			(5,530	)
Deferred policy acquisition costs		622			1,964
Other assets		(499	)		(418	)
Increase (decrease) in:
Unpaid losses and loss adjustment expenses		1,214			(20,177	)
Unearned premiums		(9,919	)		1,920
Funds held under reinsurance agreements		(339	)		(2,759	)
Reinsurance premiums payable		2,153			1,319
Premiums payable to other insureds		(5,146	)		—
Accounts payable and other liabilities		1,775			(1,968	)
Net cash provided by (used in) operating activities		8,175			(6,018	)
Cash Flows From Investing Activities
Purchase of investments		(52,396	)		(60,052	)
Proceeds from maturities and redemptions of investments		1,764			2,105
Proceeds from sales of investments		49,074			58,413
Obligation to SSU		—			(934	)
Net cash provided by (used in) investing activities		(1,558	)		(468	)
Cash Flows From Financing Activities
Dividends paid to shareholders		(176	)		—
Repayment of long-term debt		(250	)		—
Net cash provided by (used in) financing activities		(426	)		—
Net increase (decrease) in cash		6,191			(6,486	)
Cash at beginning of period		11,125			28,035
Cash at end of period	$	17,316		$	21,549
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	964		$	686

The accompanying notes are an integral part of the Consolidated Financial Statements.

7

CONIFER HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation and Management Representation

The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), Conifer Insurance Services ("CIS"), which is our managing general agency ("MGA"), formerly known as Sycamore Insurance Agency, Inc. ("Sycamore"), and VSRM, Inc. ("VSRM"). CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc. is referred to as the "Parent Company." VSRM owns a 50% non-controlling interest in Sycamore Specialty Underwriters, LLC ("SSU" or "Affiliate").

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. The Company has applied the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included.

These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results expected for the year ended December 31, 2024.

Business

The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into three types of insurance businesses: commercial lines, personal lines, and agency business. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in almost all 50 states in the United States of America (“U.S.”). The Company is in the process of strategically shifting from mostly underwriting insurance products (generating revenues through premiums) to mostly producing, or selling, insurance products through its MGA. Utilizing its existing relationships with retail agencies and other agencies, in the first quarter of 2024, the Company began producing business that was directly underwritten by a third-party insurer. The Company’s corporate headquarters are located in Troy, Michigan with additional office facilities in Florida and Michigan.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates.

Cash, Cash Equivalents, and Short-term Investments

Cash consists of cash deposits in banks, generally in operating accounts. Cash equivalents consist of money-market funds that are specifically used as overnight investments tied to cash deposit accounts. Short-term investments, consisting of money market funds, are classified as investments in the consolidated balance sheets as they relate to the Company’s investment activities.

Accounting Guidance Not Yet Adopted

In January 2021, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848). This guidance provides optional expedients and exceptions that are intended to ease the burden of updating contracts to contain a new reference rate due to the discontinuation of the London Inter-Bank Offered Rate (LIBOR). This guidance is available immediately and may be

8

implemented in any period prior to the guidance expiration on December 31, 2024. Management does not expect the new guidance to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. ASU 2023-07 is effective for fiscal years beginning after December 31, 2024. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). ASU 2023-09 requires public business entities to disclose additional information with respect to the reconciliation of the effective tax rate to the statutory rate. Additionally, public business entities will need to disaggregate federal, state and foreign taxes paid in their financial statements. ASU 2023-09 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

Company Liquidity

We conduct our business operations primarily through our Insurance Company Subsidiaries and MGA. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries and MGA to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries and MGA by the Parent Company. The Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company, and we do not anticipate any dividends being paid to us from our Insurance Company Subsidiaries during 2024 and 2025. The Parent Company may receive dividends from our MGA without regulatory restrictions.

Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Accordingly, in the first quarter of 2024, management implemented a strategic shift in which the Company began utilizing third-party insurers to mostly rely on commission revenues generated by our MGA to fund operations and service debt, going forward. Substantially all of our commercial lines business will no longer be written by our Insurance Company Subsidiaries by the end of the second quarter of 2024. However, we do plan to continue to write a limited amount of the personal lines on CIC. We do not expect to be writing any business in WPIC by the end of the second quarter of 2024. The Company may need to contribute more capital into WPIC before the end of the year in order to maintain its licenses, however, since the Company will no longer be writing business in WPIC, this will not have a material impact on the Company's operations or cash flows. We expect to be able to fund any needed contributions with existing cash and investments at the Parent Company.

The Company will expect to generate the vast majority of its revenue from commissions from third-party insurers, going forward. The Company has executed multiple producer agreements that will underwrite a majority of the Company’s commercial lines business. We expect to continue to underwrite the existing personal lines business within our Insurance Company Subsidiaries. Management may also consider the sale of other assets to generate additional cash resources available to the Company. We believe that our existing cash, cash equivalents, short-term investments and investment securities balances will be adequate to meet our capital and liquidity needs and the needs of our subsidiaries over the next twelve months.

2. Investments

The Company analyzed its investment portfolio in accordance with its credit loss review policy and determined it did not need to record a credit loss for the three months ended March 31, 2024. The Company holds only investment grade securities from high credit quality issuers. The gross unrealized losses of $13.8 million as of March 31, 2024, from the Company's available-for-sale securities are due to market conditions and interest rate changes.

9

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

	March 31, 2024
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,702	$	—	$	(172	)	$	5,530
State and local government		23,961		—		(3,799	)		20,162
Corporate debt		33,880		—		(3,667	)		30,213
Asset-backed securities		37,813		75		(485	)		37,403
Mortgage-backed securities		26,320		—		(5,044	)		21,276
Commercial mortgage-backed securities		3,382		—		(142	)		3,240
Collateralized mortgage obligations		3,161		—		(451	)		2,710
Total debt securities available for sale	$	134,219	$	75	$	(13,760	)	$	120,534

	December 31, 2023
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,405	$	3	$	(161	)	$	5,247
State and local government		24,274		—		(3,810	)		20,464
Corporate debt		34,002		—		(3,507	)		30,495
Asset-backed securities		38,289		47		(584	)		37,752
Mortgage-backed securities		26,768		—		(4,641	)		22,127
Commercial mortgage-backed securities		3,404		—		(160	)		3,244
Collateralized mortgage obligations		3,228		—		(444	)		2,784
Total debt securities available for sale	$	135,370	$	50	$	(13,307	)	$	122,113

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

	March 31, 2024
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		3	$	1,938	$	(27	)		9	$	3,407	$	(145	)		12	$	5,345	$	(172	)
State and local government		1		300		(1	)		114		19,862		(3,798	)		115		20,162		(3,799	)
Corporate debt		—		—		—			65		30,213		(3,667	)		65		30,213		(3,667	)
Asset-backed securities		7		3,453		(4	)		11		11,175		(481	)		18		14,628		(485	)
Mortgage-backed securities		1		5		(1	)		66		21,271		(5,043	)		67		21,276		(5,044	)
Commercial mortgage-backed securities		—		—		—			4		3,240		(142	)		4		3,240		(142	)
Collateralized mortgage obligations		—		—		—			31		2,710		(451	)		31		2,710		(451	)
Total debt securities available for sale		12	$	5,696	$	(33	)		300	$	91,878	$	(13,727	)		312	$	97,574	$	(13,760	)

10

	December 31, 2023
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		1	$	649	$	(7	)		9	$	3,400	$	(154	)		10	$	4,049	$	(161	)
State and local government		3		1,193		(7	)		113		19,096		(3,803	)		116		20,289		(3,810	)
Corporate debt		—		—		—			66		30,495		(3,507	)		66		30,495		(3,507	)
Asset-backed securities		1		1,090		(1	)		21		16,270		(583	)		22		17,360		(584	)
Mortgage-backed securities		4		11		(1	)		64		22,116		(4,640	)		68		22,127		(4,641	)
Commercial mortgage-backed securities		—		—		—			4		3,225		(160	)		4		3,225		(160	)
Collateralized mortgage obligations		—		—		—			32		2,803		(444	)		32		2,803		(444	)
Total debt securities available for sale		9	$	2,943	$	(16	)		309	$	97,405	$	(13,291	)		318	$	100,348	$	(13,307	)

11

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Debt securities	$	1,225		$	853
Equity securities		11			11
Cash, cash equivalents and short-term investments		377			503
Total investment income		1,613			1,367
Investment expenses		(61	)		(60	)
Net investment income	$	1,552		$	1,307

The Company had no gross realized gains or losses from sales, calls and maturities of available-for-sale debt and equity securities for the three months ended March 31, 2024 and 2023, respectively.

Proceeds from available-for-sale debt securities were $1.8 million and $23.6 million for the three months ended March 31, 2024 and 2023, respectively.

There were no payables or receivables from securities purchased or sold for the three months ended March 31, 2024 and 2023, respectively.

The Company's gross unrealized gains related to its equity investments were $505,000 as of March 31, 2024 and December 31, 2023, respectively. The Company’s gross unrealized losses related to its equity investments were $492,000 and $535,000 as of March 31, 2024 and December 31, 2023, respectively.

The Company also carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price. We review these investments for impairment during each reporting period. There were no impairments or observable changes in price recorded for the three months ended March 31, 2024 and 2023, respectively, related to the Company's other equity investments. These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.4 million as of March 31, 2024 and December 31, 2023, respectively.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2024. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,629	$	4,564
Due after one year through five years		30,738		28,557
Due after five years through ten years		17,489		14,648
Due after ten years		10,687		8,136
Securities with contractual maturities		63,543		55,905
Asset-backed securities		37,813		37,403
Mortgage-backed securities		26,320		21,276
Commercial mortgage-backed securities		3,382		3,240
Collateralized mortgage obligations		3,161		2,710
Total debt securities	$	134,219	$	120,534

At March 31, 2024 and December 31, 2023, the Insurance Company Subsidiaries had $8.1 million and $8.2 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At March 31, 2024 and December 31, 2023, the Company had $122.5 million and $123.5 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. Approximately $121.7 million of the trust account balances are for collateral of gross unearned premiums and gross loss reserves of the fronted business on the security guard and installation industries ("Security Program") and the quick service restaurant program. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds. As the unearned premiums run off to zero and loss reserves are paid on these programs, the remaining trust balances will be released and available for general use.

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3. Fair Value Measurements

The Company’s financial instruments include assets carried at fair value, as well as debt carried at face value, net of unamortized debt issuance costs, and are disclosed at fair value in this note. All fair values disclosed in this note are determined on a recurring basis other than the debt which is a non-recurring fair value measure. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices from sources independent of the reporting entity (“observable inputs”) and the lowest priority to prices determined by the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). The fair value hierarchy is as follows:

Level 1 - Valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Valuations that are based on observable inputs (other than Level 1 prices) such as quoted prices for similar
assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable,
either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent the
Company’s best assumption of how market participants would price the assets or liabilities.

Net Asset Value (NAV) - The fair values of investment company limited partnership investments and mutual funds are
based on the capital account balances reported by the investment funds subject to their management review and adjustment.
These capital account balances reflect the fair value of the investment funds.

The following tables present the Company’s assets and liabilities measured at fair value, classified by the valuation hierarchy as of March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31, 2024
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,530	$	—	$	5,530	$	—
State and local government		20,162		—		20,162		—
Corporate debt		30,213		—		30,213		—
Asset-backed securities		37,403		—		37,403		—
Mortgage-backed securities		21,276		—		21,276		—
Commercial mortgage-backed securities		3,240		—		3,240		—
Collateralized mortgage obligations		2,710		—		2,710		—
Total debt securities		120,534		—		120,534		—
Equity Securities		939		182		757		—
Short-term investments		23,724		23,724		—		—
Total marketable investments measured at fair value	$	145,197	$	23,906	$	121,291	$	—
Investments measured at NAV:
Investment in limited partnership		1,448
Total assets measured at fair value	$	146,645
Liabilities:
Senior unsecured notes *	$	10,896	$	—	$	10,896	$	—
Senior secured notes *		9,599		—		—		9,599
Total Liabilities (non-recurring fair value measure)	$	20,495	$	—	$	10,896	$	9,599

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

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	December 31, 2023
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,247	$	—	$	5,247	$	—
State and local government		20,464		—		20,464		—
Corporate debt		30,495		—		30,495		—
Asset-backed securities		37,752		—		37,752		—
Mortgage-backed securities		22,127		—		22,127		—
Commercial mortgage-backed securities		3,244		—		3,244		—
Collateralized mortgage obligations		2,784		—		2,784		—
Total debt securities		122,113		—		122,113		—
Equity securities		896		139		757		—
Short-term investments		20,838		20,838		—		—
Total marketable investments measured at fair value	$	143,847	$	20,977	$	122,870	$	—
Investments measured at NAV:
Investment in limited partnership		1,458
Total assets measured at fair value	$	145,305
Liabilities:
Senior unsecured notes *	$	11,791	$	—	$	11,791	$	—
Subordinated notes *		9,965		—		—		9,965
Total Liabilities (non-recurring fair value measure)	$	21,756	$	—	$	11,791	$	9,965

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

Level 1 investments consist of equity securities traded in an active exchange market. The Company uses unadjusted quoted prices for identical instruments to measure fair value. Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments. The fair value measurements that were based on Level 1 inputs comprise 16% and 15% of the fair value of the total marketable investments measured at fair value as of March 31, 2024 and December 31, 2023, respectively.

Level 2 investments include debt securities and equity securities, which consist of U.S. government agency securities, state and local municipal bonds (including those held as restricted securities), corporate debt securities, mortgage-backed and asset-backed securities. The fair value of securities included in the Level 2 category were based on the market values obtained from a third-party pricing service that were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other observable market information. The third-party pricing service monitors market indicators, as well as industry and economic events. The fair value measurements that were based on Level 2 inputs comprise 84% and 85% of the fair value of the total marketable investments measured at fair value as of March 31, 2024 and December 31, 2023, respectively.

The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments. To validate that these quoted prices are reasonable estimates of fair value, the Company performs various quantitative and qualitative procedures, such as (i) evaluation of the underlying methodologies, (ii) analysis of recent sales activity, (iii) analytical review of our fair values against current market prices and (iv) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for the investments were determined to be inactive at period-ends. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants.

As of March 31, 2024 and December 31, 2023, the fair value of the Senior Secured Notes reported at amortized cost was considered a Level 3 liability in the fair value hierarchy and is entirely comprised of the Company's Senior Secured Notes. In determining the fair value of the Senior Secured Notes outstanding at March 31, 2024 and December 31, 2023, the security attributes (issue date, maturity, coupon, calls, etc.) were entered into a valuation model. A lognormal trinomial interest rate lattice was created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S. Treasury rates. The OAS was then entered back into the model along with the March 31, 2024 and December 31, 2023 U.S. Treasury rates, respectively. A new lattice was

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generated and the fair value was computed from the OAS. There were no changes in assumptions of credit risk from the issuance date.

The Company's policy on recognizing transfers between hierarchies is applied at the end of each reporting period. There were no transfers in or out of Level 3 for the three months ended March 31, 2024 and 2023.

4. Deferred Policy Acquisition Costs

The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the three months ended March 31, 2024 and 2023. The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Balance at beginning of period	$	6,285		$	10,290
Deferred policy acquisition costs		6,391			2,757
Amortization of policy acquisition costs		(7,013	)		(4,721	)
Net change		(622	)		(1,964	)
Balance at end of period	$	5,663		$	8,326

5. Unpaid Losses and Loss Adjustment Expenses

The Company establishes reserves for unpaid losses and loss adjustment expenses ("LAE") which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not yet reported losses; or “IBNR”) and LAE incurred that remain unpaid at the balance sheet date. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.

Reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses; therefore, the establishment of appropriate reserves is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in the results of operations in the period such changes are determined to be needed and recorded.

Management believes that the reserve for losses and LAE is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the consolidated financial statements based on available facts and in accordance with applicable laws and regulations.

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The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands):

	Three months ended March 31,
	2024			2023
Gross reserves - beginning of period	$	174,612		$	165,539
Less: reinsurance recoverables on unpaid losses		(70,807	)		(82,651	)
Net reserves - beginning of period		103,805			82,888
Add: incurred losses and LAE, net of reinsurance:
Current period		10,981			14,926
Prior period		(461	)		(1,213	)
Total net incurred losses and LAE		10,520			13,713
Deduct: loss and LAE payments, net of reinsurance:
Current period		2,862			1,987
Prior period		9,444			10,353
Total net loss and LAE payments		12,306			12,340
Net reserves - end of period		102,019			84,261
Plus: reinsurance recoverables on unpaid losses		73,807			61,101
Gross reserves - end of period	$	175,826		$	145,362

Net losses and LAE decreased by $3.2 million, or 23.3%, to $10.5 million during the first quarter of 2024, compared to $13.7 million for the same period in 2023. The decrease was attributable to a $3.9 million decrease in current accident year losses during the first quarter of 2024, compared to the same period in 2023.

The Company’s incurred losses during the three months ended March 31, 2024 included prior-year favorable development of $461,000. Of the $461,000 of favorable development experience during the first quarter of 2024, $508,000 of favorable development was experienced in the Company's personal lines of business, mostly related to accident year 2023. The $508,000 of favorable development in the Company's personal lines was offset by $47,000 of adverse development in the Company's commercial lines of business, mostly related to accident year 2022.

Net losses and LAE were $13.7 million during the first quarter of 2023. The Company experienced favorable development of $1.2 million during the first quarter of 2023, of which $817,000 was related to the Company's commercial lines of business, and $396,000 was related to the personal lines of business. The majority of the favorable development occurred in the 2022 and 2021 accident years. For accident year 2022, the redundancy was due in part to less-than-expected commercial property loss emergence during the first quarter of 2023. For accident year 2021, the claim frequency of the quick service restaurant program was less than expected resulting in a reduction in the estimated ultimate loss. There was $1.8 million of adverse development relating to 2019 and prior accident years that was covered under the Loss Portfolio Transfer ("LPT"), resulting in no net development. As of March 31, 2023, the Company was $2.4 million into the $20.0 million adverse development cover provided by the LPT.

6. Reinsurance

In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events. The Company ceded primarily all specific commercial liability risks in excess of $400,000 in 2024 and 2023. The Company ceded specific commercial property risks in excess of $400,000 in 2024 and 2023. The Company ceded homeowners specific risks in excess of $400,000 and $300,000 in 2024 and 2023, respectively.

A "treaty" is a reinsurance agreement in which coverage is provided for a class of risks and does not require policy by policy underwriting of the reinsurer. "Facultative" reinsurance is where a reinsurer negotiates an individual reinsurance agreement for every policy it will reinsure on a policy by policy basis. A loss is covered under a reinsurance contract if the loss occurs within the effective dates of the agreement notwithstanding when the loss is reported.

Reinsurance does not discharge the direct insurer from liability to its policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables.

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The Company assumes written premiums under a few fronting arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a minimum A.M. Best rating, or where the policies are written in a state where the Company is not licensed or for other strategic reasons.

On September 30, 2023, the Company entered into a 100% quota share reinsurance agreement with the buyer of the renewal rights of the Security Program. The Company ceded $30.9 million of its gross unearned premiums relating to the Security Program in exchange for a 22% - 27% ceding commission.

On November 1, 2022, the Company entered into a loss portfolio transfer (“LPT”) reinsurance agreement. As of March 31, 2024, the Company has recorded losses through the $5.5 million corridor and $8.5 million into the $20.0 million layer. As of December 31, 2023, the Company recorded losses through the $5.5 million corridor and $9.1 million into the $20.0 million layer.

As of March 31, 2024, the Consolidated Balance Sheets included $2.5 million and $7.5 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively. As of December 31, 2023, the Consolidated Balance Sheets included $3.8 million and $10.9 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively.

The following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Written premiums:
Direct	$	24,099		$	24,341
Assumed		214			11,873
Ceded		(8,922	)		(17,872	)
Net written premiums	$	15,391		$	18,342
Earned premiums:
Direct	$	24,808		$	23,315
Assumed		9,424			10,979
Ceded		(17,345	)		(12,342	)
Net earned premiums	$	16,887		$	21,952
Losses and LAE:
Direct	$	21,982		$	1,969
Assumed		(3,264	)		1,497
Ceded		(8,198	)		10,247
Net Losses and LAE	$	10,520		$	13,713

7. Debt

As of March 31, 2024, the Company’s debt was comprised of two instruments: $17.9 million of 9.75% public senior unsecured notes (the "New Public Notes") which were issued during the third quarter of 2023, and $9.5 million of privately placed 12.5% senior secured notes ("Senior Secured Notes"), which were issued on September 30, 2023. The New Public Notes have substantially the same terms as the 6.75% public senior unsecured notes (the "Old Public Notes") which matured on September 30, 2023, except for the coupon. A summary of the Company's outstanding debt is as follows (dollars in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Debt		Unamortized Debt Issuance Costs		Net Debt		Gross Debt		Unamortized Debt Issuance Costs		Net Debt
Senior unsecured notes	$	17,887	$	1,591	$	16,296	$	17,887	$	1,679	$	16,208
Senior secured notes		9,500		850		8,650		9,750		897		8,853
Total	$	27,387	$	2,441	$	24,946	$	27,637	$	2,576	$	25,061

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New Public Notes

The Company issued $17.9 million of New Public Notes during the third quarter of 2023. The new notes bear an interest rate of 9.75% per annum, payable quarterly at the end of March, June, September and December and mature on September 30, 2028. The Company may redeem the new notes, in whole or in part, at face value at any time after September 30, 2025.

Senior Secured Notes

The Company restructured its subordinated notes to Senior Secured Notes with its lender on September 30, 2023. The Senior Secured Notes mature on September 30, 2028, and bear an interest rate of 12.5% per annum. Interest is payable quarterly at the end of March, June, September, and December. Quarterly principal payments of $250,000 are required starting on December 31, 2023 through September 30, 2028. The Company may redeem the senior secured notes, in whole or in part, for a call premium of $1.8 million less 22% of the interest payment amounts that were paid prior to the date of redemption. The Company accounted for this restructuring as a debt modification because there was no concession made to the lender. The Company had $9.5 million of outstanding Senior Secured Notes as of March 31, 2024.

Debt issuance costs

The Company incurred $173,000 of restructuring costs from the lender related to the Senior Secured Notes. These costs were capitalized as debt issuance costs as of September 30, 2023.

As of March 31, 2024, the carrying value of the New Public Notes and Senior Secured Notes were offset by $1.6 million and $850,000 of capitalized costs, respectively. The debt issuance costs are amortized through interest expense over the life of the loans.

Debt covenants

The Senior Secured Notes contain various restrictive financial debt covenants that relate to the Company’s minimum tangible net worth, minimum fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions and risk-based capital ratios. The Senior Secured Notes also require that any proceeds the Company receives from asset sales be used to pay down the principal. Debt covenants have been waived for violation of compliance as of December 31, 2023 and any potential future violations through May 31, 2025.

The following table shows the scheduled principal payments of the Company's debt as of March 31, 2024 (dollars in thousands):

Year	Senior unsecured notes		Senior secured notes
2024		750		—
2025		1,000		—
2026		1,000		—
2027		1,000		—
2028		5,750		17,887
Total	$	9,500	$	17,887

8. Shareholder’s Equity

Preferred Stock

On December 20, 2023, the Company issued $6.0 million of its newly designated Series A Preferred Stock (the "Preferred Stock"), no par value, through a private placement of 1,000 shares priced at $6,000 per share that matures on June 30, 2026. The Preferred Stock was sold to Clarkston 91 West LLC (the "Purchaser"), an entity affiliated with Gerald and Jeffrey Hakala, members of the Board of Directors of the Company. Preferred Stock shareholders have no voting rights and optional redemption is only in the control of the Company.

The Preferred Stock requires quarterly dividend payments. The Preferred Stock dividend rate is equal to the prime rate of Waterford Bank, N.A. ("Waterford Bank"), or 8.0%, whichever is higher, plus 200 basis points. As of March 31, 2024, this equated to an annualized rate of 10.5%.

The Company has the option to redeem the Preferred Stock at the end of any fiscal quarter, in whole or in part, at a price equal to issue price, plus the amount that would result in a 20.0%, compounded annually, annualized return to the holder (inclusive of the dividends paid), on the portion being redeemed.

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On the maturity date, each outstanding share of the Preferred Stock, that has not otherwise been redeemed, shall, without any further action by the holders, automatically convert into 4,000 shares of the Company's common stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the initial issue date.

As of March 31, 2024 and December 31, 2023, the Company had 1,000 issued and outstanding shares of Preferred Stock, respectively.

Common Stock

As of March 31, 2024 and December 31, 2023, the Company had 12,222,881 issued and outstanding shares of common stock, respectively. Holders of common stock are entitled to one vote per share and to receive dividends only when and if declared by the board of directors. The holders have no preemptive, conversion or subscription rights.

9. Earnings Per Share

Basic and diluted earnings (loss) per share are computed by dividing net income allocable to common shareholders by the weighted average number of common shares outstanding during the period. The dividends on preferred stock are deducted from the net income to arrive at net income allocable to common shareholders. The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share and share amounts):

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	231	$	1,001
Preferred stock dividends		157		—
Net income (loss) allocable to common shareholders	$	74	$	1,001
Weighted average common shares, basic and diluted *		12,222,881		12,215,849
Earnings (loss) per common share, basic and diluted	$	0.01	$	0.08

* The preferred shares that may be convertible into a total of 4,000,000 common shares were anti-dilutive and thus did not impact the diluted earnings per share calculation. There were no unvested restricted stock units as of March 31, 2024. The non-vested shares of stock options were anti-dilutive as of March 31, 2024. The non-vested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2023. Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2024 and March 31, 2023.

10. Stock-based Compensation

On March 8, 2022 the Company issued options to purchase 630,000 shares of the Company's common stock to two named executive officers. The right to exercise the options vest over a five-year period on a straight-line basis. The options have a strike price of $4.53 per share and will expire on March 8, 2032. The estimated grant date fair value of these options is $612,000, which is being expensed ratably over the vesting period. A Black Scholes model was used to determine the fair value of the options at the time the options were issued, using the Company’s historical 5-year market price of its stock to determine volatility (equating to 65.04%), an estimated 5-year term to exercise the options, a 5-year risk-free rate of return of 1.8%, and the market price for the Company’s stock of $2.40 per share.

On June 30, 2020, the Company issued options to purchase 280,000 shares of the Company’s common stock, to certain executive officers and other employees. The right to exercise the options vest over a five-year period on a straight-line basis. The options have a strike price of $3.81 per share and expire on June 30, 2030. The estimated grant date fair value of these options is $290,000, which is being expensed ratably over the vesting period.

In 2018, the Company issued 70,000 of restricted stock units (“RSUs”) to various employees to be settled in shares of common stock, which were valued at $404,000 on the date of the grant.

The Company recorded $0 and $12,000 compensation expense related to the RSUs for the three months ended March 31, 2024 and 2023, respectively. There were no unvested RSUs remaining as of March 31, 2024.

The Company recorded $1,000 and $12,000 of compensation expense for the three months ended March 31, 2024 and 2023, respectively, related to the stock options granted on June 30, 2020. There were 94,000 options outstanding and unvested as of March 31, 2024, which will generate an estimated future expense of $61,000.

The Company recorded $31,000 three months ended March 31, 2024 and 2023, respectively, related to the stock options granted on March 8, 2022. There were 378,000 options outstanding and unvested as of March 31, 2024, which will generate an estimated future expense of $357,000.

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11. Commitments and Contingencies

Legal proceedings

The Company and its subsidiaries are subject at times to various claims, lawsuits and proceedings relating principally to alleged errors or omissions in the placement of insurance, claims administration, and other business transactions arising in the ordinary course of business. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Most of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the insurance policy at issue. We account for such activity through the establishment of unpaid losses and LAE reserves. In accordance with accounting guidance, if it is probable that a liability has been incurred as of the date of the financial statements and the amount of loss is reasonably estimable; then an accrual for the costs to resolve these claims is recorded by the Company in the accompanying consolidated financial statements. Periodic expenses related to the defense of such claims are included in the accompanying consolidated statements of operations. On the basis of current information, the Company does not believe that there is a reasonable possibility that any material loss exceeding amounts already accrued, if any, will result from any of the claims, lawsuits and proceedings to which the Company is subject to, either individually or in the aggregate.

12. Segment Information

The Company is engaged in the sale of property and casualty insurance products and has organized its business model around three classes of insurance businesses: commercial lines, personal lines, and wholesale agency business. Within these three businesses, the Company offers various insurance products and insurance agency services. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies. The Company views the commercial and personal lines segments as underwriting business (business that takes on insurance underwriting risk). The wholesale agency business provides non-risk bearing revenue through commissions and policy fees. The wholesale agency business increases the product options to the Company’s independent retail agents by offering both insurance products from the Insurance Company Subsidiaries as well as products offered by other insurers.

The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision makers in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision maker, the Chief Executive Officer, review a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries, and other revenue and expenses. The primary measure used for making decisions about resources to be allocated to an operating segment and assessing its performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and operating expenses of the operating segments. Operating expenses primarily include compensation and related benefits for personnel, policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products through its own insurance agencies and a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Michigan, Texas, Oklahoma and Ohio. For the three months ended March 31, 2024 and 2023, gross written premiums attributable to these four states were 83.1% and 52.4%, respectively, of the Company’s total gross written premiums.

The wholesale agency business sells insurance products on behalf of the Company’s commercial and personal lines businesses as well as to third-party insurers. Certain acquisition costs incurred by the commercial and personal lines businesses are reflected as commission revenue for the wholesale agency business and are eliminated in the Eliminations category.

In addition to the reportable segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team, some finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported within net investment income, net realized investment gains, and change in fair value of equity securities on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.

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The following tables present information by reportable operating segment (dollars in thousands):

Three months ended March 31, 2024	Commercial Lines			Personal Lines		Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	12,762		$	11,551	$	24,313	$	—		$	—		$	—		$	24,313
Net written premiums	$	8,287		$	7,104	$	15,391	$	—		$	—		$	—		$	15,391
Net earned premiums	$	8,797		$	8,090	$	16,887	$	—		$	—		$	—		$	16,887
Agency commission income		—			—		—		4,336			—			—			4,336
Other income		50			28		78		6,369			71			(6,258	)		260
Segment revenue		8,847			8,118		16,965		10,705			71			(6,258	)		21,483
Losses and LAE, net		6,766			3,754		10,520		—			—			—			10,520
Policy acquisition costs		1,147			2,013		3,160		9,119			—			(5,266	)		7,013
Operating expenses		1,748			971		2,719		1,633			143			—			4,495
Segment expenses		9,661			6,738		16,399		10,752			143			(5,266	)		22,028
Segment gain (loss)	$	(814	)	$	1,380	$	566	$	(47	)	$	(72	)	$	(992	)	$	(545	)
Investment income												1,552						1,552
Change in fair value of equity securities												43						43
Interest expense												(877	)					(877	)
Income (loss) before equity earnings in Affiliate and income taxes	$	(814	)	$	1,380	$	566	$	(47	)	$	646		$	(992	)	$	173

Three months ended March 31, 2023	Commercial Lines		Personal Lines			Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	28,975	$	7,239		$	36,214	$	—		$	—		$	—		$	36,214
Net written premiums	$	12,241	$	6,101		$	18,342	$	—		$	—		$	—		$	18,342
Net earned premiums	$	17,123	$	4,829		$	21,952	$	—		$	—		$	—		$	21,952
Agency commission income		—		—			—		430			—			—			430
Other income		52		23			75		449			72			(400	)		196
Segment revenue		17,175		4,852			22,027		879			72			(400	)		22,578
Losses and LAE, net		10,547		3,166			13,713		—			—			—			13,713
Policy acquisition costs		3,196		1,389			4,585		548			—			(412	)		4,721
Operating expenses		3,028		592			3,620		352			307			—			4,279
Segment expenses		16,771		5,147			21,918		900			307			(412	)		22,713
Segment gain (loss)	$	404	$	(295	)	$	109	$	(21	)	$	(235	)	$	12		$	(135	)
Investment income												1,307						1,307
Change in fair value of equity securities												694						694
Interest expense												(686	)					(686	)
Income (loss) before equity earnings in Affiliate and income taxes	$	404	$	(295	)	$	109	$	(21	)	$	1,080		$	12		$	1,180

13. Subsequent Events

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The Company performed an evaluation of subsequent events through the date the financial statements were issued and determined there were no recognized or unrecognized subsequent events that would require an adjustment or additional disclosure in the condensed consolidated financial statements as of March 31, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the Periods Ended March 31, 2024 and 2023

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements (Unaudited), related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K, filed on April 1, 2024 with the U. S. Securities and Exchange Commission.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, which are not statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, as Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek” and similar terms and phrases, or the negative thereof, may be used to identify forward-looking statements.

The forward-looking statements contained in this report are based on management’s good-faith belief and reasonable judgment based on current information. The forward-looking statements are qualified by important factors, risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including those described in our Form 10-K (“Item 1A Risk Factors”) filed with the SEC on April 1, 2024 and subsequent reports filed with or furnished to the SEC. Any forward-looking statement made by us in this report speaks only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws or regulations.

Recent Developments

Strategic Shift from Premium Revenues to Commission Revenues

In the first quarter of 2024, the Company began a strategic shift that will reduce premiums revenues from underwriting operations and increase commission revenues from policy production within the MGA. The Company began utilizing one third-party insurer for the underwriting capacity in one program, but is expected to see significant expansion of the use of two third-party insurers during the second quarter of 2024. By the third quarter of 2024, we expect that almost all commercial lines business previously underwritten by the Company’s Insurance Company Subsidiaries will be written by third-party insurers. The Company expects to continue to directly write the Midwest and Texas homeowners business.

A.M. Best and Kroll

On March 25, 2024, Kroll downgraded the financial strength ratings of CIC and WPIC. Kroll has given CIC an insurance financial strength rating of BB- with a negative outlook. Kroll has given WPIC an insurance financial strength rating of B with a negative outlook. A BB- and a B rating indicates that the insurer's financial condition is low quality. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by Kroll going forward.

On March 14, 2024, A.M. Best downgraded the financial strength ratings of CIC and WPIC to C. A rating of C means A.M. Best considers both companies to have a "weak" ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation in the rating process, and shall be non-rated by A.M. Best going forward.

Business Overview

We are an insurance holding company that markets and services our product offerings through specialty commercial and specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia, and we offer our insurance products in almost all 50 states.

Our revenues are primarily derived from premiums earned from our insurance operations. We also generate other revenues through investment income and other income which mainly consists of: installment fees and policy issuance fees generally related to the policies we write.

Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. We organize our operations in three insurance businesses: commercial insurance lines, personal lines,

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and agency business. Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business.

Through our commercial insurance lines, we offer coverage for both commercial property and commercial liability. We also offer coverage for commercial automobiles and workers’ compensation. Our insurance policies are sold to targeted small and mid-sized businesses on a single or multiple-coverage basis.

Through our personal insurance lines, we offer homeowners insurance and dwelling fire insurance products to individuals in several states. Our specialty homeowners insurance product line is primarily comprised of low-value dwelling insurance tailored for owners of lower valued homes, which we offer in Illinois, Indiana and Texas.

Through our MGA, CIS operates through our wholesale agency business segment. Through CIS, we offer commercial and personal lines insurance products for our Insurance Company Subsidiaries as well as third-party insurers. The wholesale agency business segment provides our agents with more insurance product options. We expect the wholesale agency segment to become more prominent going forward as substantially all of our commercial lines business will be produced by our MGA and underwritten by third-party insurers.

An advantage of using these third-party insurers is they will both have a minimum of an A- A.M. Best rating, which greatly improves our competitive edge in the marketplace.

As we transition to more of a MGA operation, more revenues will be derived from commissions while insurance premiums and investment income will diminish over time. Cash flows from written premiums will decline quickly over the next two quarters and will be almost entirely comprised of the homeowners business by the third quarter of 2024. Concurrently, cash flows from commissions revenues will increase. As claims are settled, claim payments will be funded from the sale of investments within the Insurance Company Subsidiaries. Such claims payments will reduce cash flows provided by operating activities and will be offset by an increase in cash flows from investing activities as the investment portfolio is liquidated over time to fund the claim payments. Management may consider the sale of other assets to generate additional cash resources available to the Company.

There will be fewer claim payments as loss reserves run off. Other operating costs and commissions to retail agencies will fluctuate relatively similarly to the premiums produced by the MGA as they did when the premiums were written by the insurance companies. However, certain insurance company specific costs will decrease as the premium volume in the insurance company subsidiaries decreases. We expect that the net revenues generated in the MGA will provide the majority of the cash flows needed to cover operating and debt service costs going forward.

Critical Accounting Policies and Estimates

In certain circumstances, we are required to make estimates and assumptions that affect amounts reported in our consolidated financial statements and related footnotes. We evaluate these estimates and assumptions periodically on an on-going basis based on a variety of factors. There can be no assurance, however, that actual results will not be materially different than our estimates and assumptions, and that reported results of operations will not be affected by accounting adjustments needed to reflect changes in these estimates and assumptions. During the three months ended March 31, 2024, there were no material changes to our critical accounting policies and estimating methodologies, which are disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024.

Executive Overview

The Company reported $24.3 million of gross written premiums in the first quarter of 2024, representing a 32.9% decrease as compared to the same period in 2023. Our commercial lines gross written premiums decreased by $16.2 million, or 56.0%, to $12.8 million in the first quarter of 2024, compared to $29.0 million for the same period in 2023. Personal lines gross written premiums increased by $4.3 million, or 59.6%, to $11.6 million in the first quarter of 2024, compared to $7.2 million for the same period in 2023.

The Company reported net income allocable to common shareholders of $74,000, or $0.01 per share for the three months ended March 31, 2024. The Company reported net income of $1.0 million, or $0.08 per share, for the three months ended March 31, 2023.

Adjusted operating income per share is a non-GAAP measure that represents net income allocable to common shareholders excluding net realized investment gains or losses, change in fair value of equity securities, and other gains or losses. Adjusted operating income was $188,000, or $0.02 per share, for the three months ended March 31, 2024. Adjusted operating income was $307,000, or $0.03 per share, for the three months ended March 31, 2023.

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Our underwriting combined ratio was 96.7% and 99.5% for the three months ended March 31, 2024 and 2023, respectively.

Results of Operations For The Three Months Ended March 31, 2024 and 2023

The following table summarizes our operating results for the periods indicated (dollars in thousands):

Summary of Operating Results

	Three Months Ended March 31,
	2024			2023			$ Change			% Change
Gross written premiums	$	24,313		$	36,214		$	(11,901	)		(32.9	%)
Net written premiums	$	15,391		$	18,342		$	(2,951	)		(16.1	%)
Net earned premiums	$	16,887		$	21,952		$	(5,065	)		(23.1	)%
Agency commission income		4,336			430			3,906		*
Other income		260			196			64			32.7	%
Losses and loss adjustment expenses, net		10,520			13,713			(3,193	)		(23.3	)%
Policy acquisition costs		7,013			4,721			2,292			48.5	%
Operating expenses		4,495			4,279			216			5.0	%
Underwriting gain (loss)		(545	)		(135	)		(410	)	*
Net investment income		1,552			1,307			245			18.7	%
Change in fair value of equity securities		43			694			(651	)		(93.8	)%
Interest expense		877			686			191			27.8	%
Income (loss) before equity earnings in Affiliate, net of tax		173			1,180			(1,007	)	*
Equity earnings (loss) in Affiliate, net of tax		58			(179	)		237		*
Income tax expense (benefit)		—			—			—		*
Net income (loss)	$	231		$	1,001		$	(770	)	*
Book value per common share outstanding	$	0.21		$	1.82
Underwriting Ratios:
Loss ratio (1)		62.0	%		62.2	%
Expense ratio (2)		34.7	%		37.3	%
Combined ratio (3)		96.7	%		99.5	%

(1)The loss ratio is the ratio, expressed as a percentage, of net losses and loss adjustment expenses to net earned premiums and other income from underwriting operations.

(2)The expense ratio is the ratio, expressed as a percentage, of policy acquisition costs and other underwriting expenses to net earned premiums and other income from underwriting operations.

(3)The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% indicates an underwriting profit. A combined ratio over 100% indicates an underwriting loss.

* Percentage change is not meaningful.

Premiums

Premiums are earned ratably over the term of the policy, whereas written premiums are reflected on the effective date of the policy. Almost all commercial lines and homeowners products have annual policies, under which premiums are earned evenly over one year. The resulting net earned premiums are impacted by the gross and ceded written premiums, earned ratably over the terms of the policies.

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Our premiums are presented below for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Summary of Premium Revenue

	Three Months Ended March 31,
	2024		2023		$ Change			% Change
Gross written premiums
Commercial lines	$	12,762	$	28,975	$	(16,213	)		(56.0	)%
Personal lines		11,551		7,239		4,312			59.6	%
Total	$	24,313	$	36,214	$	(11,901	)		(32.9	)%
Net written premiums
Commercial lines	$	8,287	$	12,241	$	(3,954	)		(32.3	)%
Personal lines		7,104		6,101		1,003			16.4	%
Total	$	15,391	$	18,342	$	(2,951	)		(16.1	)%
Net earned premiums
Commercial lines	$	8,797	$	17,123	$	(8,326	)		(48.6	)%
Personal lines		8,090		4,829		3,261			67.5	%
Total	$	16,887	$	21,952	$	(5,065	)		(23.1	)%

Gross written premiums decreased $11.9 million, or 32.9%, to $24.3 million for the three months ended March 31, 2024, as compared to $36.2 million for the same period in 2023.

Commercial lines gross written premiums decreased $16.2 million, or 56.0%, to $12.8 million in the first quarter of 2024, as compared to $29.0 million for the first quarter of 2023. There was a $13.5 million decrease in premiums due to the sale of the Security Program in September 2023, as well as continued reductions in certain hospitality lines as we exited less profitable states. To a lesser degree, some of the premium reduction was due to our MGA beginning to shift business from our Insurance Company Subsidiaries to the third-party insurers. This impact will be significantly greater in the second and third quarters of 2024.

Personal lines gross written premiums increased $4.3 million, or 59.6%, to $11.6 million in the first quarter of 2024, as compared to $7.2 million for the same period in 2023. The increase was due to the organic growth in the low-value dwelling book of business in Texas and Oklahoma. The Company is expected to discontinue writing in Oklahoma in the second quarter of 2024, while Texas homeowners is expected to continue to grow.

Net written premiums decreased $3.0 million, or 16.1%, to $15.4 million for the three months ended March 31, 2024, as compared to $18.3 million for the same period in 2023. Net written premiums declined as a result of the Company's reduction in gross written premiums during the first quarter of 2024.

Agency Commission Income

Commission income is received by the Company’s insurance agency for writing policies for third-party insurance companies. Agency commission income increased by $3.9 million to $4.3 million during the first quarter of 2024, compared to $430,000 for the same period in 2023. The increase was due to the Company's Security Program transaction in September of 2023. As part of the arrangement with the buyer, our MGA was appointed as the producer for this business, for approximately a two-year transition period. During this time our MGA will receive a commission from the buyer, and pay a sub-producer substantially the same commission. This will result in higher consolidated Agency Commission Income for the Company. Policy acquisition costs will remain substantially the same amount for the period of this agreement. In the first quarter of 2024, the Company recorded $3.6 million of commission revenue and $3.6 million of commission expense as a result of this arrangement. Going forward, as our MGA produces more business for third-party insurers, we expect that commission revenue, net of expense, is to grow significantly.

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Losses and Loss Adjustment Expenses

The tables below detail our losses and loss adjustment expenses and loss ratios in our underwriting business for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three months ended March 31, 2024	Commercial Lines			Personal Lines			Total
Accident year net losses and LAE	$	6,719		$	4,262		$	10,981
Net (favorable) adverse development		47			(508	)		(461	)
Calendar year net losses and LAE	$	6,766		$	3,754		$	10,520
Accident year loss ratio		76.0	%		52.5	%		64.7	%
Net (favorable) adverse development		0.5	%		(6.3	)%		(2.7	)%
Calendar year loss ratio		76.5	%		46.2	%		62.0	%

Three months ended March 31, 2023	Commercial Lines			Personal Lines			Total
Accident year net losses and LAE	$	11,364		$	3,562		$	14,926
Net (favorable) adverse development		(817	)		(396	)		(1,213	)
Calendar year net losses and LAE	$	10,547		$	3,166		$	13,713
Accident year loss ratio		66.2	%		73.4	%		67.8	%
Net (favorable) adverse development		(4.8	)%		(8.1	)%		(5.6	)%
Calendar year loss ratio		61.4	%		65.3	%		62.2	%

Net losses and LAE decreased by $3.2 million, or 23.3%, to $10.5 million during the first quarter of 2024, compared to $13.7 million for the same period in 2023. The decrease was attributable to a $3.9 million decrease in current accident year losses during the first quarter of 2024, compared to the same period in 2023.

The Company’s incurred losses during the three months ended March 31, 2024 included prior-year favorable development of $461,000. Of the $461,000 of favorable development experience during the first quarter of 2024, $508,000 of favorable development was experienced in the Company's personal lines of business, mostly related to accident year 2023. The $508,000 of favorable development in the Company's personal lines was offset by $47,000 of adverse development in the Company's commercial lines of business, mostly related to accident year 2022.

Expense Ratio

Our expense ratio is a measure of the efficiency and performance of the commercial and personal lines of business (our risk-bearing underwriting operations). It is calculated by dividing the sum of policy acquisition costs and other underwriting expenses by the sum of net earned premiums and other income of the underwriting business. Costs that cannot be readily identifiable as a direct cost of a segment or product line remain in Corporate for segment reporting purposes. The expense ratio excludes wholesale agency and Corporate expenses.

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The table below provides the expense ratio by major component.

	Three Months Ended March 31,
	2024			2023
Commercial Lines
Policy acquisition costs		13.0	%		18.6	%
Operating expenses		19.7	%		17.6	%
Total		32.7	%		36.2	%
Personal Lines
Policy acquisition costs		24.8	%		28.6	%
Operating expenses		12.0	%		12.2	%
Total		36.8	%		40.8	%
Total Underwriting
Policy acquisition costs		18.7	%		20.8	%
Operating expenses		16.0	%		16.5	%
Total		34.7	%		37.3	%

Our expense ratio decreased by 2.6% during the first quarter of 2024, compared to the same period in 2023.

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports and underwriter compensation costs. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums and other income decreased by 2.1% during the first quarter of 2024 to 18.7%, compared to 20.8% during the same period in 2023. The decrease was primarily related to the impact from the ceding commissions received from the unearned premium transfer of the Security Program effective September 30, 2023.

Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income decreased by 0.5% during the first quarter of 2024 to 16.0%, compared to 16.5% for the same period in 2023. The decrease was primarily due to cost-reducing measures taken by management throughout the year.

Segment Results

We measure the performance of our consolidated results, in part, based on our underwriting gain or loss. The following table provides the underwriting gain or loss for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Segment Gain (Loss)

	Three Months Ended March 31,
	2024			2023			$ Change
Commercial Lines	$	(814	)	$	404		$	(1,218	)
Personal Lines		1,380			(295	)		1,675
Total Underwriting		566			109			457
Wholesale Agency		(47	)		(21	)		(26	)
Corporate		(72	)		(235	)		163
Eliminations *		(992	)		12			(1,004	)
Total segment gain (loss)	$	(545	)	$	(135	)	$	(410	)

* Elimination amounts are a result of more intercompany commission revenue being generated in the Wholesale Agency, which is recognized when the premiums are written, while the Insurance Company Subsidiaries recognize the intercompany commission expense when the premiums are earned. This timing difference between two consolidating companies is adjusted through Eliminations.

Liquidity and Capital Resources

Sources and Uses of Funds

At March 31, 2024, the Company had $41.0 million in cash, cash equivalents and short-term investments. Our principal sources of funds are insurance premiums, investment income, proceeds from maturities and sales of invested assets and

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installment fees. These funds are primarily used to pay claims, commissions, employee compensation, taxes and other operating expenses, and service debt.

For the next twelve months, based on the capital structure as of March 31, 2024, the Company will be required to make $1.0 million of principal payments on the senior secured notes, $630,000 of preferred dividend payments and approximately $2.9 million of interest on all of the Company's debt instruments, all of which are paid quarterly.

We conduct our business operations primarily through our Insurance Company Subsidiaries and our MGA. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries and MGA to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries and MGA by the Parent Company. Secondarily, the Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the three months ended March 31, 2024 and 2023, respectively. We do not anticipate any dividends being paid to us from our insurance subsidiaries in the near term. The MGA may pay dividends to the Parent without regulatory restrictions, and we believe is will be utilized as the MGA begins to produce more business for third-party insurers.

Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Also, both CIC and WPIC fell below critical statutory capital and surplus minimum requirements including the Risk Based Capital (“RBC”) ratio. CIC’s and WPIC’s RBC ratios at December 31, 2023, were 169% and 142%, respectively. The Insurance Company Subsidiaries submitted an action plan with the state of domicile insurance regulator on April 1, 2024, to remediate certain statutory capital and surplus regulatory deficiencies. As part of the plan, WPIC will no longer write any business after June 30, 2024, and CIC will only write a small amount of commercial business as well as the homeowners business after June 30, 2024. These actions were part of a strategic shift implemented by management to utilize third-party insurers and to mostly rely on commission revenues generated by our MGA to fund operations and service debt, going forward.

With the producer agreements currently executed, the Company expects to be able to generate the needed revenues to meet our obligations as they become due over the next twelve months. Management believes the actions that were executed to implement the planned strategic shift coupled with additional available sources of available liquidity, will be sufficient to enable the Company to meet its obligations for the foreseeable future.

Our outstanding public debt securities are currently trading at a discount to their face amount. In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase such debt for cash, in exchange for common stock, or for a combination of cash and common stock, in open market or privately negotiated transactions. We will evaluate any such transactions in light of then-existing market conditions, taking into account our current liquidity and prospects for future access to capital. The amounts involved in such transactions, individually or in the aggregate, may be material.

We believe that our existing cash, cash equivalents, short-term investments and investment securities balances will be adequate to meet our capital and liquidity needs and the needs of our subsidiaries on a short-term and long-term basis.

Cash Flows

Operating Activities. Cash provided by operating activities for the three months ended March 31, 2024 was $8.2 million compared to cash used in operating activities of $6.0 million for the same period in 2023. The $14.2 million increase in cash provided by operating activities was primarily due a $12.4 million decrease in total net losses paid and a $4.0 million increase in other income received during the period. These amounts were offset by a $2.4 million increase in acquisition costs paid during the first three months of 2024, compared to the same period in 2023.

Investing Activities. Cash used in investing activities for the three months ended March 31, 2024 was $1.6 million, compared to $468,000 for the same period in 2023. The $1.1 million increase in cash used by investing activities was driven by a $9.3 million decrease in proceeds from sales of investment during the period. This amount was offset by a $7.7 million decrease in purchases of investments during the period.

Financing Activities. Cash used in financing activities for the three months ended March 31, 2024 was $426,000 compared to $0 for the same period in 2023. The $426,000 increase in cash used for financing activities was attributable to $176,000 of preferred stock dividends paid during the first quarter of 2024, and a $250,000 principal payment towards the Company's senior secured notes during the first quarter of 2024. The Company did not have the Senior Secured Notes or the preferred stock in the first quarter of 2023.

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Statutory Capital and Surplus

Our Insurance Company Subsidiaries are required to file quarterly and annual financial reports with state insurance regulators. These financial reports are prepared using statutory accounting practices promulgated by the Insurance Company Subsidiaries’ state of domiciliary, rather than GAAP. The Insurance Company Subsidiaries’ aggregate statutory capital and surplus (which is a statutory measure of equity) was $34.0 million and $32.8 million at March 31, 2024 and December 31, 2023, respectively.

Non-GAAP Financial Measures

Adjusted Operating Income and Adjusted Operating Income Per Share

Adjusted operating income and adjusted operating income per share are non-GAAP measures that represent net income allocable to common shareholders excluding net realized investment gains or losses, changes in fair value of equity securities and other gains and losses. The most directly comparable financial GAAP measures to adjusted operating income and adjusted operating income per share are net income and net income per share, respectively. Adjusted operating income and adjusted operating income per share are intended as supplemental information and are not meant to replace net income or net income per share. Adjusted operating income and adjusted operating income per share should be read in conjunction with the GAAP financial results. Our definition of adjusted operating income may be different from that used by other companies. The following is a reconciliation of net income (loss) to adjusted operating income (loss) (dollars in thousands), as well as net income (loss) per share to adjusted operating income (loss) per share:

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	231	$	1,001
Less:
Change in fair value of equity securities		43		694
Impact of income tax expense (benefit) from adjustments *		—		—
Adjusted operating income (loss)	$	188	$	307
Weighted average common shares diluted		12,222,881		12,215,849
Diluted income (loss) per common share:
Net income (loss)	$	0.02	$	0.08
Less:
Change in fair value of equity securities		—		0.05
Impact of income tax expense (benefit) from adjustments *		—		—
Adjusted operating income (loss) per share	$	0.02	$	0.03

* The Company has recorded a full valuation allowance against its deferred tax assets as of March 31, 2024 and March 31, 2023, respectively. As a result, there were no taxable impacts to adjusted operating income from the adjustments to net income (loss) in the table above after taking into account the use of NOLs and the change in the valuation allowance.

We use adjusted operating income and adjusted operating income per share to assess our performance and to evaluate the results of our overall business. We believe these measures provide investors with valuable information relating to our ongoing performance that may be obscured by the net effect of realized gains and losses as a result of our market risk sensitive instruments, which primarily relate to debt securities that are available for sale and not held for trading purposes. The change in fair value of equity securities and realized gains and losses may vary significantly between periods and are generally driven by external economic developments, such as capital market conditions. Accordingly, adjusted operating income excludes the effect of items that tend to be highly variable from period to period and highlights the results from our ongoing business operations and the underlying results of our business. We believe that it is useful for investors to evaluate adjusted operating income and adjusted operating income per share, along with net income and net income per share, when reviewing and evaluating our performance.

30

Recently Issued Accounting Pronouncements

Refer to Note 1 ~ Summary of Significant Accounting Policies – Recently Issued Accounting Guidance of the Notes to the Consolidated Financial Statements for detailed information regarding recently issued accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices such as interest rates, other relevant market rates or price changes. The volatility and liquidity in the markets in which the underlying assets are traded directly influence market risk. The following is a discussion of our primary market risk exposures and how those exposures are currently managed as of March 31, 2024. Our market risk sensitive instruments are primarily related to fixed income securities, which are available-for-sale and not held for trading purposes.

Interest Rate Risk

At March 31, 2024, the fair value of our investment portfolio, excluding cash and cash equivalents, was $146.6 million. Our investment portfolio consists principally of investment-grade, fixed-income securities, all of which are classified as available for sale. Accordingly, the primary market risk exposure to our debt securities is interest rate risk. In general, the fair market value of a portfolio of debt securities increases or decreases inversely with changes in market interest rates, while net investment income realized from future investments in debt securities increases or decreases along with interest rates. We attempt to mitigate interest rate risks by investing in securities with varied maturity dates and by managing the duration of our investment portfolio to a defined range of three to four years. The effective duration of our portfolio as of March 31, 2024 and December 31, 2023 was 2.7 and 2.9 years, respectively.

The table below illustrates the sensitivity of the fair value of our debt investments, classified as debt securities and short-term investments, to selected hypothetical changes in interest rates as of March 31, 2024. The selected scenarios are not predictions of future events, but rather illustrate the effect that events may have on the fair value of the debt portfolio and shareholders’ equity (dollars in thousands).

			Estimated			Hypothetical Percentage Increase (Decrease) in
Hypothetical Change in Interest Rates	Estimated		Change in						Shareholders'
As of March 31, 2024	Fair Value		Fair Value			Fair Value			Equity
200 basis point increase	$	136,973	$	(7,285	)		(5.1	)%		(284.7	)%
100 basis point increase		140,478		(3,780	)		(2.6	)%		(147.7	)%
No change		144,258		—			—			—
100 basis point decrease		148,326		4,068			2.8	%		159.0	%
200 basis point decrease		152,654		8,396			5.8	%		328.1	%

Credit Risk

An additional exposure to our debt securities portfolio is credit risk. We manage our credit risk by investing only in investment-grade securities. In addition, we comply with applicable statutory requirements, which limit the portion of our total investment portfolio that we can invest in any one security.

We are subject to credit risks with respect to our reinsurers. Although a reinsurer is liable for losses to the extent of the coverage which it assumes, our reinsurance contracts do not discharge our insurance companies from primary liability to each policyholder for the full amount of the applicable policy, and consequently our insurance companies remain obligated to pay claims in accordance with the terms of the policies regardless of whether a reinsurer fulfills or defaults on its obligations under the related reinsurance agreement. To mitigate our credit risk to reinsurance companies, we attempt to select financially strong reinsurers with an A.M. Best rating of “A-” or better and continue to evaluate their financial condition throughout the duration of our agreements.

At March 31, 2024, the net amount due to the Company from reinsurers, including prepaid reinsurance premiums, was $72.8 million. We believe all amounts recorded as due from reinsurers are recoverable.

31

Effects of Inflation

We do not believe that inflation has a material effect on our results of operations, except for the effect that inflation may have on interest rates and claims costs. We consider the effects of inflation in pricing and estimating reserves for unpaid losses and LAE. The actual effects of inflation on our results are not known until claims are ultimately settled. In addition to general price inflation, we are exposed to a long-term upward trend in the cost of judicial awards for damages.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of March 31, 2024. Based on such evaluations, the Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

For the three months ended March 31, 2024, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting.

32

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required by this item is included under Note 11 ~ Commitments and Contingencies of the Notes to the Consolidated Financial Statements of the Company’s Form 10-Q for the three months ended March 31, 2024, which is hereby incorporated by reference.

ITEM 1A. RISK FACTORS

There were no material changes to the risk factors disclosed in our Annual Report on Form 10-K (“Item 1A Risk Factors”) filed with the SEC on April 1, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

ITEM 5. OTHER INFORMTION

During the three months ended March 31, 2024, none of the Company's directors or Section 16 officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Conifer securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as such term is defined in Item 408(a) of Regulation S-K.

33

ITEM 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Period Ending	Exhibit / Appendix Number	Filing Date
10.1	Limited Waiver Regarding Second Amended and Restated Note Purchase Agreement	10-K	December 31, 2023	10.8	April 1, 2024
31.1	Section 302 Certification — CEO
31.2	Section 302 Certification — CFO
32.1*	Section 906 Certification — CEO
32.2*	Section 906 Certification — CFO
101.INS	inline XBRL Instance Document
101.SCH	inline XBRL Taxonomy Extension Schema Document
104	Cover Page Interactive Date File (embedded within the Inline XBRL document)

* This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CONIFER HOLDINGS, INC.
By:	/s/ Harold J. Meloche
	Harold J. Meloche
	Chief Financial Officer,
	Principal Financial Officer,
	Principal Accounting Officer

Dated: May 14, 2024

35

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER’S 302 CERTIFICATION

I, Nicholas J. Petcoff, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Conifer Holdings, Inc. for the quarterly period ended March 31, 2024;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2024

/s/ Nicholas J. Petcoff

Nicholas J. Petcoff

Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER’S 302 CERTIFICATION

I, Harold J. Meloche, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Conifer Holdings, Inc. for the quarterly period ended March 31, 2024;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2024

/s/ Harold J. Meloche

Harold J. Meloche

Chief Financial Officer

(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Conifer Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nicholas J. Petcoff, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 14, 2024

/s/ Nicholas J. Petcoff

Nicholas J. Petcoff

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Conifer Holdings, Inc. (the “Company”) on Form 10-Q for the year quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harold J. Meloche, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 14, 2024

/s/ Harold J. Meloche

Harold J. Meloche

Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	May 14, 2024
Document Information [Line Items]
Document Type	10-Q
Entity Registrant Name	Conifer Holdings, Inc.
Entity Central Index Key	0001502292
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,222,881
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity File Number	001-37536
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	27-1298795
Entity Address, Address Line One	3001 West Big Beaver Road
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Troy
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48084
City Area Code	248
Local Phone Number	559-0840
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	CNFR
Security Exchange Name	NASDAQ
9.75% Senior Notes due 2028
Document Information [Line Items]
Title of 12(b) Security	9.75% Senior Notes due 2028
Trading Symbol	CNFRZ
Security Exchange Name	NASDAQ

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Investment securities:
Debt securities, at fair value (amortized cost of $134,219 and $135,370, respectively)	$ 120,534	$ 122,113
Equity securities, at fair value (cost of $2,374 and $2,385, respectively)	2,387	2,354
Short-term investments, at fair value	23,724	20,838
Total investments	146,645	145,305
Cash and cash equivalents	17,316	11,125
Premiums and agents' balances receivable, net	24,056	29,369
Reinsurance recoverables on unpaid losses	73,807	70,807
Reinsurance recoverables on paid losses	5,075	12,619
Prepaid reinsurance premiums	20,486	28,908
Deferred policy acquisition costs	5,663	6,285
Other assets	6,875	6,339
Total assets	301,078	311,804
Liabilities:
Unpaid losses and loss adjustment expenses	175,826	174,612
Unearned premiums	55,231	65,150
Reinsurance premiums payable	2,399	246
Debt	24,946	25,061
Funds held under reinsurance agreements	24,211	24,550
Premiums payable to other insureds	8,840	13,986
Accounts payable and accrued expenses	7,066	5,310
Total liabilities	298,519	308,915
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value (10,000,000 shares authorized; 1,000 issued and outstanding, respectively)	6,000	6,000
Common stock, no par value (100,000,000 shares authorized; 12,222,881 issued and outstanding, respectively)	98,132	98,100
Accumulated deficit	(86,609)	(86,683)
Accumulated other comprehensive income (loss)	(14,964)	(14,528)
Total shareholders' equity	2,559	2,889
Total liabilities and shareholders' equity	301,078	311,804
Affiliated Entity
Investment securities:
Receivable from Affiliate	$ 1,155	$ 1,047

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Debt securities, amortized cost	$ 134,219	$ 135,370
Equity securities, amortized cost	$ 2,374	$ 2,385
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	1,000	1,000
Preferred stock, shares outstanding (in shares)	1,000	1,000
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	12,222,881	12,222,881
Common stock, shares outstanding (in shares)	12,222,881	12,222,881

XML

Consolidated Statements of Operations (Unaudited) - USD ($)		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Revenue and Other Income
Gross earned premiums		$ 34,232,000	$ 34,294,000
Ceded earned premiums		(17,345,000)	(12,342,000)
Net earned premiums		16,887,000	21,952,000
Net investment income		1,552,000	1,307,000
Net realized investment gains (losses)		0	0
Change in fair value of equity securities		43,000	694,000
Other gains (losses)		0	0
Agency commission income		4,336,000	430,000
Other income		260,000	196,000
Total revenue and other income		23,078,000	24,579,000
Expenses
Losses and loss adjustment expenses, net		10,520,000	13,713,000
Policy acquisition costs		7,013,000	4,721,000
Operating expenses		4,495,000	4,279,000
Interest expense		877,000	686,000
Total expenses		22,905,000	23,399,000
Income (loss) before equity earnings in Affiliate and income taxes		173,000	1,180,000
Equity earnings (loss) in Affiliate, net of tax		58,000	(179,000)
Income tax expense (benefit)		0	0
Net income (loss)		231,000	1,001,000
Preferred stock dividends		157,000	0
Net income (loss) allocable to common shareholders		$ 74,000	$ 1,001,000
Earnings (loss) per common share, basic		$ 0.01	$ 0.08
Earnings (loss) per common share, diluted		$ 0.01	$ 0.08
Weighted average common shares outstanding, basic	[1]	12,222,881	12,215,849
Weighted average common shares outstanding, diluted	[1]	12,222,881	12,215,849

[1] The non-vested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2023. Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2024 and March 31, 2023.

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 231	$ 1,001
Unrealized investment gains (losses):
Unrealized investment gains (losses) during the period	(436)	2,286
Income tax (benefit) expense	0	0
Unrealized investment gains (losses), net of tax	(436)	2,286
Less: reclassification adjustments to:
Net realized investment gains (losses) included in net income (loss)	0	0
Income tax (benefit) expense	0	0
Total reclassifications included in net income (loss), net of tax	0	0
Net other comprehensive income (loss)	(436)	2,286
Total comprehensive income (loss)	$ (205)	$ 3,287

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	No Par, Preferred Stock	No Par, Common Stock	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance at beginning of period at Dec. 31, 2022	$ 18,950		$ 97,913	$ (60,760)	$ (18,203)
Balance at beginning of period (in shares) at Dec. 31, 2022			12,215,849
Net income (loss)	1,001			1,001
Stock-based compensation expense	55		$ 55
Other comprehensive income (loss)	2,286				2,286
Balance at end of period at Mar. 31, 2023	22,292		$ 97,968	(59,759)	(15,917)
Balance at ending of period (in shares) at Mar. 31, 2023			12,215,849
Balance at beginning of period at Dec. 31, 2023	2,889	$ 6,000	$ 98,100	(86,683)	(14,528)
Balance at beginning of period (in shares) at Dec. 31, 2023		1,000	12,222,881
Net income (loss)	231			231
Stock-based compensation expense	32		$ 32
Cash dividends paid on preferred stock	(157)			(157)
Other comprehensive income (loss)	(436)				(436)
Balance at end of period at Mar. 31, 2024	$ 2,559	$ 6,000	$ 98,132	$ (86,609)	$ (14,964)
Balance at ending of period (in shares) at Mar. 31, 2024		1,000	12,222,881

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash Flows From Operating Activities
Net income (loss)	$ 231	$ 1,001
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	148	98
Amortization of bond premium and discount, net	(167)	(97)
Change in fair value of equity securities	(43)	(694)
Stock-based compensation expenses	32	55
Equity loss (earnings) in Affiliate, net of tax	(58)	179
(Increase) decrease in:
Premiums and agents' balances and other receivables	5,205	(91)
Reinsurance recoverables	4,544	19,180
Prepaid reinsurance premiums	8,422	(5,530)
Deferred policy acquisition costs	622	1,964
Other assets	(499)	(418)
Increase (decrease) in:
Unpaid losses and loss adjustment expenses	1,214	(20,177)
Unearned premiums	(9,919)	1,920
Funds held under reinsurance agreements	(339)	(2,759)
Reinsurance premiums payable	2,153	1,319
Premiums payable to other insureds	(5,146)
Accounts payable and other liabilities	1,775	(1,968)
Net cash provided by (used in) operating activities	8,175	(6,018)
Cash Flows From Investing Activities
Purchase of investments	(52,396)	(60,052)
Proceeds from maturities and redemptions of investments	1,764	2,105
Proceeds from sales of investments	49,074	58,413
Obligation to SSU		(934)
Net cash provided by (used in) investing activities	(1,558)	(468)
Cash Flows From Financing Activities
Dividends paid to shareholders	(176)
Repayment of long-term debt	(250)
Net cash provided by (used in) financing activities	(426)	0
Net increase (decrease) in cash	6,191	(6,486)
Cash at beginning of period	11,125	28,035
Cash at end of period	17,316	21,549
Supplemental Disclosure of Cash Flow Information:
Interest paid	$ 964	$ 686

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 74	$ 1,001

XML

Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation and Management Representation

The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), Conifer Insurance Services ("CIS"), which is our managing general agency ("MGA"), formerly known as Sycamore Insurance Agency, Inc. ("Sycamore"), and VSRM, Inc. ("VSRM"). CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc. is referred to as the "Parent Company." VSRM owns a 50% non-controlling interest in Sycamore Specialty Underwriters, LLC ("SSU" or "Affiliate").

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. The Company has applied the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included.

These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results expected for the year ended December 31, 2024.

Business

The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into three types of insurance businesses: commercial lines, personal lines, and agency business. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in almost all 50 states in the United States of America (“U.S.”). The Company is in the process of strategically shifting from mostly underwriting insurance products (generating revenues through premiums) to mostly producing, or selling, insurance products through its MGA. Utilizing its existing relationships with retail agencies and other agencies, in the first quarter of 2024, the Company began producing business that was directly underwritten by a third-party insurer. The Company’s corporate headquarters are located in Troy, Michigan with additional office facilities in Florida and Michigan.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates.

Cash, Cash Equivalents, and Short-term Investments

Cash consists of cash deposits in banks, generally in operating accounts. Cash equivalents consist of money-market funds that are specifically used as overnight investments tied to cash deposit accounts. Short-term investments, consisting of money market funds, are classified as investments in the consolidated balance sheets as they relate to the Company’s investment activities.

Accounting Guidance Not Yet Adopted

In January 2021, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848). This guidance provides optional expedients and exceptions that are intended to ease the burden of updating contracts to contain a new reference rate due to the discontinuation of the London Inter-Bank Offered Rate (LIBOR). This guidance is available immediately and may be

implemented in any period prior to the guidance expiration on December 31, 2024. Management does not expect the new guidance to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. ASU 2023-07 is effective for fiscal years beginning after December 31, 2024. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). ASU 2023-09 requires public business entities to disclose additional information with respect to the reconciliation of the effective tax rate to the statutory rate. Additionally, public business entities will need to disaggregate federal, state and foreign taxes paid in their financial statements. ASU 2023-09 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

Company Liquidity

We conduct our business operations primarily through our Insurance Company Subsidiaries and MGA. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries and MGA to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries and MGA by the Parent Company. The Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company, and we do not anticipate any dividends being paid to us from our Insurance Company Subsidiaries during 2024 and 2025. The Parent Company may receive dividends from our MGA without regulatory restrictions.

Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Accordingly, in the first quarter of 2024, management implemented a strategic shift in which the Company began utilizing third-party insurers to mostly rely on commission revenues generated by our MGA to fund operations and service debt, going forward. Substantially all of our commercial lines business will no longer be written by our Insurance Company Subsidiaries by the end of the second quarter of 2024. However, we do plan to continue to write a limited amount of the personal lines on CIC. We do not expect to be writing any business in WPIC by the end of the second quarter of 2024. The Company may need to contribute more capital into WPIC before the end of the year in order to maintain its licenses, however, since the Company will no longer be writing business in WPIC, this will not have a material impact on the Company's operations or cash flows. We expect to be able to fund any needed contributions with existing cash and investments at the Parent Company.

The Company will expect to generate the vast majority of its revenue from commissions from third-party insurers, going forward. The Company has executed multiple producer agreements that will underwrite a majority of the Company’s commercial lines business. We expect to continue to underwrite the existing personal lines business within our Insurance Company Subsidiaries. Management may also consider the sale of other assets to generate additional cash resources available to the Company. We believe that our existing cash, cash equivalents, short-term investments and investment securities balances will be adequate to meet our capital and liquidity needs and the needs of our subsidiaries over the next twelve months.

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Investments

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investments

2. Investments

The Company analyzed its investment portfolio in accordance with its credit loss review policy and determined it did not need to record a credit loss for the three months ended March 31, 2024. The Company holds only investment grade securities from high credit quality issuers. The gross unrealized losses of $13.8 million as of March 31, 2024, from the Company's available-for-sale securities are due to market conditions and interest rate changes.

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

	March 31, 2024
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,702	$	—	$	(172	)	$	5,530
State and local government		23,961		—		(3,799	)		20,162
Corporate debt		33,880		—		(3,667	)		30,213
Asset-backed securities		37,813		75		(485	)		37,403
Mortgage-backed securities		26,320		—		(5,044	)		21,276
Commercial mortgage-backed securities		3,382		—		(142	)		3,240
Collateralized mortgage obligations		3,161		—		(451	)		2,710
Total debt securities available for sale	$	134,219	$	75	$	(13,760	)	$	120,534

	December 31, 2023
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,405	$	3	$	(161	)	$	5,247
State and local government		24,274		—		(3,810	)		20,464
Corporate debt		34,002		—		(3,507	)		30,495
Asset-backed securities		38,289		47		(584	)		37,752
Mortgage-backed securities		26,768		—		(4,641	)		22,127
Commercial mortgage-backed securities		3,404		—		(160	)		3,244
Collateralized mortgage obligations		3,228		—		(444	)		2,784
Total debt securities available for sale	$	135,370	$	50	$	(13,307	)	$	122,113

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

	March 31, 2024
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		3	$	1,938	$	(27	)		9	$	3,407	$	(145	)		12	$	5,345	$	(172	)
State and local government		1		300		(1	)		114		19,862		(3,798	)		115		20,162		(3,799	)
Corporate debt		—		—		—			65		30,213		(3,667	)		65		30,213		(3,667	)
Asset-backed securities		7		3,453		(4	)		11		11,175		(481	)		18		14,628		(485	)
Mortgage-backed securities		1		5		(1	)		66		21,271		(5,043	)		67		21,276		(5,044	)
Commercial mortgage-backed securities		—		—		—			4		3,240		(142	)		4		3,240		(142	)
Collateralized mortgage obligations		—		—		—			31		2,710		(451	)		31		2,710		(451	)
Total debt securities available for sale		12	$	5,696	$	(33	)		300	$	91,878	$	(13,727	)		312	$	97,574	$	(13,760	)

	December 31, 2023
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		1	$	649	$	(7	)		9	$	3,400	$	(154	)		10	$	4,049	$	(161	)
State and local government		3		1,193		(7	)		113		19,096		(3,803	)		116		20,289		(3,810	)
Corporate debt		—		—		—			66		30,495		(3,507	)		66		30,495		(3,507	)
Asset-backed securities		1		1,090		(1	)		21		16,270		(583	)		22		17,360		(584	)
Mortgage-backed securities		4		11		(1	)		64		22,116		(4,640	)		68		22,127		(4,641	)
Commercial mortgage-backed securities		—		—		—			4		3,225		(160	)		4		3,225		(160	)
Collateralized mortgage obligations		—		—		—			32		2,803		(444	)		32		2,803		(444	)
Total debt securities available for sale		9	$	2,943	$	(16	)		309	$	97,405	$	(13,291	)		318	$	100,348	$	(13,307	)

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Debt securities	$	1,225		$	853
Equity securities		11			11
Cash, cash equivalents and short-term investments		377			503
Total investment income		1,613			1,367
Investment expenses		(61	)		(60	)
Net investment income	$	1,552		$	1,307

The Company had no gross realized gains or losses from sales, calls and maturities of available-for-sale debt and equity securities for the three months ended March 31, 2024 and 2023, respectively.

Proceeds from available-for-sale debt securities were $1.8 million and $23.6 million for the three months ended March 31, 2024 and 2023, respectively.

There were no payables or receivables from securities purchased or sold for the three months ended March 31, 2024 and 2023, respectively.

The Company's gross unrealized gains related to its equity investments were $505,000 as of March 31, 2024 and December 31, 2023, respectively. The Company’s gross unrealized losses related to its equity investments were $492,000 and $535,000 as of March 31, 2024 and December 31, 2023, respectively.

The Company also carries other equity investments that do not have a readily determinable fair value at cost, less impairment or observable changes in price. We review these investments for impairment during each reporting period. There were no impairments or observable changes in price recorded for the three months ended March 31, 2024 and 2023, respectively, related to the Company's other equity investments. These investments are included in Other Assets in the Consolidated Balance Sheets and amounted to $1.4 million as of March 31, 2024 and December 31, 2023, respectively.

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2024. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,629	$	4,564
Due after one year through five years		30,738		28,557
Due after five years through ten years		17,489		14,648
Due after ten years		10,687		8,136
Securities with contractual maturities		63,543		55,905
Asset-backed securities		37,813		37,403
Mortgage-backed securities		26,320		21,276
Commercial mortgage-backed securities		3,382		3,240
Collateralized mortgage obligations		3,161		2,710
Total debt securities	$	134,219	$	120,534

At March 31, 2024 and December 31, 2023, the Insurance Company Subsidiaries had $8.1 million and $8.2 million, respectively, on deposit in trust accounts to meet the deposit requirements of various state insurance departments. At March 31, 2024 and December 31, 2023, the Company had $122.5 million and $123.5 million, respectively, held in trust accounts to meet collateral requirements with other third-party insurers, relating to various fronting arrangements. Approximately $121.7 million of the trust account balances are for collateral of gross unearned premiums and gross loss reserves of the fronted business on the security guard and installation industries ("Security Program") and the quick service restaurant program. There are withdrawal and other restrictions on these deposits, including the type of investments that may be held, however, the Company may generally invest in high-grade bonds and short-term investments and earn interest on the funds. As the unearned premiums run off to zero and loss reserves are paid on these programs, the remaining trust balances will be released and available for general use.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The Company’s financial instruments include assets carried at fair value, as well as debt carried at face value, net of unamortized debt issuance costs, and are disclosed at fair value in this note. All fair values disclosed in this note are determined on a recurring basis other than the debt which is a non-recurring fair value measure. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company applies the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices from sources independent of the reporting entity (“observable inputs”) and the lowest priority to prices determined by the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”). The fair value hierarchy is as follows:

Level 1 - Valuations that are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Valuations that are based on observable inputs (other than Level 1 prices) such as quoted prices for similar
assets or liabilities at the measurement date; quoted prices in markets that are not active; or other inputs that are observable,
either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs that are supported by little or no market activity. The unobservable inputs represent the
Company’s best assumption of how market participants would price the assets or liabilities.

Net Asset Value (NAV) - The fair values of investment company limited partnership investments and mutual funds are
based on the capital account balances reported by the investment funds subject to their management review and adjustment.
These capital account balances reflect the fair value of the investment funds.

The following tables present the Company’s assets and liabilities measured at fair value, classified by the valuation hierarchy as of March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31, 2024
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,530	$	—	$	5,530	$	—
State and local government		20,162		—		20,162		—
Corporate debt		30,213		—		30,213		—
Asset-backed securities		37,403		—		37,403		—
Mortgage-backed securities		21,276		—		21,276		—
Commercial mortgage-backed securities		3,240		—		3,240		—
Collateralized mortgage obligations		2,710		—		2,710		—
Total debt securities		120,534		—		120,534		—
Equity Securities		939		182		757		—
Short-term investments		23,724		23,724		—		—
Total marketable investments measured at fair value	$	145,197	$	23,906	$	121,291	$	—
Investments measured at NAV:
Investment in limited partnership		1,448
Total assets measured at fair value	$	146,645
Liabilities:
Senior unsecured notes *	$	10,896	$	—	$	10,896	$	—
Senior secured notes *		9,599		—		—		9,599
Total Liabilities (non-recurring fair value measure)	$	20,495	$	—	$	10,896	$	9,599

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

	December 31, 2023
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,247	$	—	$	5,247	$	—
State and local government		20,464		—		20,464		—
Corporate debt		30,495		—		30,495		—
Asset-backed securities		37,752		—		37,752		—
Mortgage-backed securities		22,127		—		22,127		—
Commercial mortgage-backed securities		3,244		—		3,244		—
Collateralized mortgage obligations		2,784		—		2,784		—
Total debt securities		122,113		—		122,113		—
Equity securities		896		139		757		—
Short-term investments		20,838		20,838		—		—
Total marketable investments measured at fair value	$	143,847	$	20,977	$	122,870	$	—
Investments measured at NAV:
Investment in limited partnership		1,458
Total assets measured at fair value	$	145,305
Liabilities:
Senior unsecured notes *	$	11,791	$	—	$	11,791	$	—
Subordinated notes *		9,965		—		—		9,965
Total Liabilities (non-recurring fair value measure)	$	21,756	$	—	$	11,791	$	9,965

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

Level 1 investments consist of equity securities traded in an active exchange market. The Company uses unadjusted quoted prices for identical instruments to measure fair value. Level 1 also includes money market funds and other interest-bearing deposits at banks, which are reported as short-term investments. The fair value measurements that were based on Level 1 inputs comprise 16% and 15% of the fair value of the total marketable investments measured at fair value as of March 31, 2024 and December 31, 2023, respectively.

Level 2 investments include debt securities and equity securities, which consist of U.S. government agency securities, state and local municipal bonds (including those held as restricted securities), corporate debt securities, mortgage-backed and asset-backed securities. The fair value of securities included in the Level 2 category were based on the market values obtained from a third-party pricing service that were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other observable market information. The third-party pricing service monitors market indicators, as well as industry and economic events. The fair value measurements that were based on Level 2 inputs comprise 84% and 85% of the fair value of the total marketable investments measured at fair value as of March 31, 2024 and December 31, 2023, respectively.

The Company obtains pricing for each security from independent pricing services, investment managers or consultants to assist in determining fair value for its Level 2 investments. To validate that these quoted prices are reasonable estimates of fair value, the Company performs various quantitative and qualitative procedures, such as (i) evaluation of the underlying methodologies, (ii) analysis of recent sales activity, (iii) analytical review of our fair values against current market prices and (iv) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for the investments were determined to be inactive at period-ends. Based on these procedures, the Company did not adjust the prices or quotes provided from independent pricing services, investment managers or consultants.

As of March 31, 2024 and December 31, 2023, the fair value of the Senior Secured Notes reported at amortized cost was considered a Level 3 liability in the fair value hierarchy and is entirely comprised of the Company's Senior Secured Notes. In determining the fair value of the Senior Secured Notes outstanding at March 31, 2024 and December 31, 2023, the security attributes (issue date, maturity, coupon, calls, etc.) were entered into a valuation model. A lognormal trinomial interest rate lattice was created within the model to compute the option adjusted spread (“OAS”) which is the amount, in basis points, of interest rate required to be paid under the debt agreement over the risk-free U.S. Treasury rates. The OAS was then entered back into the model along with the March 31, 2024 and December 31, 2023 U.S. Treasury rates, respectively. A new lattice was

generated and the fair value was computed from the OAS. There were no changes in assumptions of credit risk from the issuance date.

The Company's policy on recognizing transfers between hierarchies is applied at the end of each reporting period. There were no transfers in or out of Level 3 for the three months ended March 31, 2024 and 2023.

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Deferred Policy Acquisition Costs

3 Months Ended

Mar. 31, 2024

Deferred Policy Acquisition Costs Disclosures [Abstract]

Deferred Policy Acquisition Costs

4. Deferred Policy Acquisition Costs

The Company defers costs incurred which are incremental and directly related to the successful acquisition of new or renewal insurance business, net of corresponding amounts of ceded reinsurance commissions. Net deferred policy acquisition costs are amortized and charged to expense in proportion to premium earned over the estimated policy term. The Company anticipates that its deferred policy acquisition costs will be fully recoverable and there were no premium deficiencies for the three months ended March 31, 2024 and 2023. The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Balance at beginning of period	$	6,285		$	10,290
Deferred policy acquisition costs		6,391			2,757
Amortization of policy acquisition costs		(7,013	)		(4,721	)
Net change		(622	)		(1,964	)
Balance at end of period	$	5,663		$	8,326

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Unpaid Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2024

Insurance Loss Reserves [Abstract]

Unpaid Losses and Loss Adjustment Expenses

5. Unpaid Losses and Loss Adjustment Expenses

The Company establishes reserves for unpaid losses and loss adjustment expenses ("LAE") which represent the estimated ultimate cost of all losses incurred that were both reported and unreported (i.e., incurred but not yet reported losses; or “IBNR”) and LAE incurred that remain unpaid at the balance sheet date. The Company’s reserving process takes into account known facts and interpretations of circumstances and factors including the Company’s experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix and contractual terms, changes in law and regulation, judicial decisions, and economic conditions. In the normal course of business, the Company may also supplement its claims processes by utilizing third-party adjusters, appraisers, engineers, inspectors, and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process.

Reserves are estimates of unpaid portions of losses that have occurred, including IBNR losses; therefore, the establishment of appropriate reserves is an inherently uncertain and complex process. The ultimate cost of losses may vary materially from recorded amounts, which are based on management’s best estimates. The highest degree of uncertainty is associated with reserves for losses incurred in the current reporting period as it contains the greatest proportion of losses that have not been reported or settled. The Company regularly updates its reserve estimates as new information becomes available and as events unfold that may affect the resolution of unsettled claims. Changes in reserve estimates, which may be material, are reported in the results of operations in the period such changes are determined to be needed and recorded.

Management believes that the reserve for losses and LAE is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by the date of the consolidated financial statements based on available facts and in accordance with applicable laws and regulations.

The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands):

	Three months ended March 31,
	2024			2023
Gross reserves - beginning of period	$	174,612		$	165,539
Less: reinsurance recoverables on unpaid losses		(70,807	)		(82,651	)
Net reserves - beginning of period		103,805			82,888
Add: incurred losses and LAE, net of reinsurance:
Current period		10,981			14,926
Prior period		(461	)		(1,213	)
Total net incurred losses and LAE		10,520			13,713
Deduct: loss and LAE payments, net of reinsurance:
Current period		2,862			1,987
Prior period		9,444			10,353
Total net loss and LAE payments		12,306			12,340
Net reserves - end of period		102,019			84,261
Plus: reinsurance recoverables on unpaid losses		73,807			61,101
Gross reserves - end of period	$	175,826		$	145,362

Net losses and LAE decreased by $3.2 million, or 23.3%, to $10.5 million during the first quarter of 2024, compared to $13.7 million for the same period in 2023. The decrease was attributable to a $3.9 million decrease in current accident year losses during the first quarter of 2024, compared to the same period in 2023.

The Company’s incurred losses during the three months ended March 31, 2024 included prior-year favorable development of $461,000. Of the $461,000 of favorable development experience during the first quarter of 2024, $508,000 of favorable development was experienced in the Company's personal lines of business, mostly related to accident year 2023. The $508,000 of favorable development in the Company's personal lines was offset by $47,000 of adverse development in the Company's commercial lines of business, mostly related to accident year 2022.

Net losses and LAE were $13.7 million during the first quarter of 2023. The Company experienced favorable development of $1.2 million during the first quarter of 2023, of which $817,000 was related to the Company's commercial lines of business, and $396,000 was related to the personal lines of business. The majority of the favorable development occurred in the 2022 and 2021 accident years. For accident year 2022, the redundancy was due in part to less-than-expected commercial property loss emergence during the first quarter of 2023. For accident year 2021, the claim frequency of the quick service restaurant program was less than expected resulting in a reduction in the estimated ultimate loss. There was $1.8 million of adverse development relating to 2019 and prior accident years that was covered under the Loss Portfolio Transfer ("LPT"), resulting in no net development. As of March 31, 2023, the Company was $2.4 million into the $20.0 million adverse development cover provided by the LPT.

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Reinsurance

3 Months Ended

Mar. 31, 2024

Reinsurance Disclosures [Abstract]

Reinsurance

6. Reinsurance

In the normal course of business, the Company participates in reinsurance agreements in order to limit losses that may arise from catastrophes or other individually severe events. The Company ceded primarily all specific commercial liability risks in excess of $400,000 in 2024 and 2023. The Company ceded specific commercial property risks in excess of $400,000 in 2024 and 2023. The Company ceded homeowners specific risks in excess of $400,000 and $300,000 in 2024 and 2023, respectively.

A "treaty" is a reinsurance agreement in which coverage is provided for a class of risks and does not require policy by policy underwriting of the reinsurer. "Facultative" reinsurance is where a reinsurer negotiates an individual reinsurance agreement for every policy it will reinsure on a policy by policy basis. A loss is covered under a reinsurance contract if the loss occurs within the effective dates of the agreement notwithstanding when the loss is reported.

Reinsurance does not discharge the direct insurer from liability to its policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors the concentration of credit risk arising from similar geographic regions, activities, or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. To date, the Company has not experienced any significant difficulties in collecting reinsurance recoverables.

The Company assumes written premiums under a few fronting arrangements. The fronting arrangements are with unaffiliated insurers who write on behalf of the Company in markets that require a minimum A.M. Best rating, or where the policies are written in a state where the Company is not licensed or for other strategic reasons.

On September 30, 2023, the Company entered into a 100% quota share reinsurance agreement with the buyer of the renewal rights of the Security Program. The Company ceded $30.9 million of its gross unearned premiums relating to the Security Program in exchange for a 22% - 27% ceding commission.

On November 1, 2022, the Company entered into a loss portfolio transfer (“LPT”) reinsurance agreement. As of March 31, 2024, the Company has recorded losses through the $5.5 million corridor and $8.5 million into the $20.0 million layer. As of December 31, 2023, the Company recorded losses through the $5.5 million corridor and $9.1 million into the $20.0 million layer.

As of March 31, 2024, the Consolidated Balance Sheets included $2.5 million and $7.5 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively. As of December 31, 2023, the Consolidated Balance Sheets included $3.8 million and $10.9 million of reinsurance recoverables on paid and unpaid losses related to the LPT, respectively.

The following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Written premiums:
Direct	$	24,099		$	24,341
Assumed		214			11,873
Ceded		(8,922	)		(17,872	)
Net written premiums	$	15,391		$	18,342
Earned premiums:
Direct	$	24,808		$	23,315
Assumed		9,424			10,979
Ceded		(17,345	)		(12,342	)
Net earned premiums	$	16,887		$	21,952
Losses and LAE:
Direct	$	21,982		$	1,969
Assumed		(3,264	)		1,497
Ceded		(8,198	)		10,247
Net Losses and LAE	$	10,520		$	13,713

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Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

7. Debt

As of March 31, 2024, the Company’s debt was comprised of two instruments: $17.9 million of 9.75% public senior unsecured notes (the "New Public Notes") which were issued during the third quarter of 2023, and $9.5 million of privately placed 12.5% senior secured notes ("Senior Secured Notes"), which were issued on September 30, 2023. The New Public Notes have substantially the same terms as the 6.75% public senior unsecured notes (the "Old Public Notes") which matured on September 30, 2023, except for the coupon. A summary of the Company's outstanding debt is as follows (dollars in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Debt		Unamortized Debt Issuance Costs		Net Debt		Gross Debt		Unamortized Debt Issuance Costs		Net Debt
Senior unsecured notes	$	17,887	$	1,591	$	16,296	$	17,887	$	1,679	$	16,208
Senior secured notes		9,500		850		8,650		9,750		897		8,853
Total	$	27,387	$	2,441	$	24,946	$	27,637	$	2,576	$	25,061

New Public Notes

The Company issued $17.9 million of New Public Notes during the third quarter of 2023. The new notes bear an interest rate of 9.75% per annum, payable quarterly at the end of March, June, September and December and mature on September 30, 2028. The Company may redeem the new notes, in whole or in part, at face value at any time after September 30, 2025.

Senior Secured Notes

The Company restructured its subordinated notes to Senior Secured Notes with its lender on September 30, 2023. The Senior Secured Notes mature on September 30, 2028, and bear an interest rate of 12.5% per annum. Interest is payable quarterly at the end of March, June, September, and December. Quarterly principal payments of $250,000 are required starting on December 31, 2023 through September 30, 2028. The Company may redeem the senior secured notes, in whole or in part, for a call premium of $1.8 million less 22% of the interest payment amounts that were paid prior to the date of redemption. The Company accounted for this restructuring as a debt modification because there was no concession made to the lender. The Company had $9.5 million of outstanding Senior Secured Notes as of March 31, 2024.

Debt issuance costs

The Company incurred $173,000 of restructuring costs from the lender related to the Senior Secured Notes. These costs were capitalized as debt issuance costs as of September 30, 2023.

As of March 31, 2024, the carrying value of the New Public Notes and Senior Secured Notes were offset by $1.6 million and $850,000 of capitalized costs, respectively. The debt issuance costs are amortized through interest expense over the life of the loans.

Debt covenants

The Senior Secured Notes contain various restrictive financial debt covenants that relate to the Company’s minimum tangible net worth, minimum fixed-charge coverage ratios, dividend paying capacity, reinsurance retentions and risk-based capital ratios. The Senior Secured Notes also require that any proceeds the Company receives from asset sales be used to pay down the principal. Debt covenants have been waived for violation of compliance as of December 31, 2023 and any potential future violations through May 31, 2025.

The following table shows the scheduled principal payments of the Company's debt as of March 31, 2024 (dollars in thousands):

Year	Senior unsecured notes		Senior secured notes
2024		750		—
2025		1,000		—
2026		1,000		—
2027		1,000		—
2028		5,750		17,887
Total	$	9,500	$	17,887

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Shareholder's Equity

3 Months Ended

Mar. 31, 2024

Stockholders' Equity Note [Abstract]

Shareholder's Equity

8. Shareholder’s Equity

Preferred Stock

On December 20, 2023, the Company issued $6.0 million of its newly designated Series A Preferred Stock (the "Preferred Stock"), no par value, through a private placement of 1,000 shares priced at $6,000 per share that matures on June 30, 2026. The Preferred Stock was sold to Clarkston 91 West LLC (the "Purchaser"), an entity affiliated with Gerald and Jeffrey Hakala, members of the Board of Directors of the Company. Preferred Stock shareholders have no voting rights and optional redemption is only in the control of the Company.

The Preferred Stock requires quarterly dividend payments. The Preferred Stock dividend rate is equal to the prime rate of Waterford Bank, N.A. ("Waterford Bank"), or 8.0%, whichever is higher, plus 200 basis points. As of March 31, 2024, this equated to an annualized rate of 10.5%.

The Company has the option to redeem the Preferred Stock at the end of any fiscal quarter, in whole or in part, at a price equal to issue price, plus the amount that would result in a 20.0%, compounded annually, annualized return to the holder (inclusive of the dividends paid), on the portion being redeemed.

On the maturity date, each outstanding share of the Preferred Stock, that has not otherwise been redeemed, shall, without any further action by the holders, automatically convert into 4,000 shares of the Company's common stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the initial issue date.

As of March 31, 2024 and December 31, 2023, the Company had 1,000 issued and outstanding shares of Preferred Stock, respectively.

Common Stock

As of March 31, 2024 and December 31, 2023, the Company had 12,222,881 issued and outstanding shares of common stock, respectively. Holders of common stock are entitled to one vote per share and to receive dividends only when and if declared by the board of directors. The holders have no preemptive, conversion or subscription rights.

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Earnings Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Earnings Per Share

9. Earnings Per Share

Basic and diluted earnings (loss) per share are computed by dividing net income allocable to common shareholders by the weighted average number of common shares outstanding during the period. The dividends on preferred stock are deducted from the net income to arrive at net income allocable to common shareholders. The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share and share amounts):

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	231	$	1,001
Preferred stock dividends		157		—
Net income (loss) allocable to common shareholders	$	74	$	1,001
Weighted average common shares, basic and diluted *		12,222,881		12,215,849
Earnings (loss) per common share, basic and diluted	$	0.01	$	0.08

* The preferred shares that may be convertible into a total of 4,000,000 common shares were anti-dilutive and thus did not impact the diluted earnings per share calculation. There were no unvested restricted stock units as of March 31, 2024. The non-vested shares of stock options were anti-dilutive as of March 31, 2024. The non-vested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2023. Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2024 and March 31, 2023.

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Stock-based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

10. Stock-based Compensation

On March 8, 2022 the Company issued options to purchase 630,000 shares of the Company's common stock to two named executive officers. The right to exercise the options vest over a five-year period on a straight-line basis. The options have a strike price of $4.53 per share and will expire on March 8, 2032. The estimated grant date fair value of these options is $612,000, which is being expensed ratably over the vesting period. A Black Scholes model was used to determine the fair value of the options at the time the options were issued, using the Company’s historical 5-year market price of its stock to determine volatility (equating to 65.04%), an estimated 5-year term to exercise the options, a 5-year risk-free rate of return of 1.8%, and the market price for the Company’s stock of $2.40 per share.

On June 30, 2020, the Company issued options to purchase 280,000 shares of the Company’s common stock, to certain executive officers and other employees. The right to exercise the options vest over a five-year period on a straight-line basis. The options have a strike price of $3.81 per share and expire on June 30, 2030. The estimated grant date fair value of these options is $290,000, which is being expensed ratably over the vesting period.

In 2018, the Company issued 70,000 of restricted stock units (“RSUs”) to various employees to be settled in shares of common stock, which were valued at $404,000 on the date of the grant.

The Company recorded $0 and $12,000 compensation expense related to the RSUs for the three months ended March 31, 2024 and 2023, respectively. There were no unvested RSUs remaining as of March 31, 2024.

The Company recorded $1,000 and $12,000 of compensation expense for the three months ended March 31, 2024 and 2023, respectively, related to the stock options granted on June 30, 2020. There were 94,000 options outstanding and unvested as of March 31, 2024, which will generate an estimated future expense of $61,000.

The Company recorded $31,000 three months ended March 31, 2024 and 2023, respectively, related to the stock options granted on March 8, 2022. There were 378,000 options outstanding and unvested as of March 31, 2024, which will generate an estimated future expense of $357,000.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Legal proceedings

The Company and its subsidiaries are subject at times to various claims, lawsuits and proceedings relating principally to alleged errors or omissions in the placement of insurance, claims administration, and other business transactions arising in the ordinary course of business. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Most of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the insurance policy at issue. We account for such activity through the establishment of unpaid losses and LAE reserves. In accordance with accounting guidance, if it is probable that a liability has been incurred as of the date of the financial statements and the amount of loss is reasonably estimable; then an accrual for the costs to resolve these claims is recorded by the Company in the accompanying consolidated financial statements. Periodic expenses related to the defense of such claims are included in the accompanying consolidated statements of operations. On the basis of current information, the Company does not believe that there is a reasonable possibility that any material loss exceeding amounts already accrued, if any, will result from any of the claims, lawsuits and proceedings to which the Company is subject to, either individually or in the aggregate.

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Segment Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Information

12. Segment Information

The Company is engaged in the sale of property and casualty insurance products and has organized its business model around three classes of insurance businesses: commercial lines, personal lines, and wholesale agency business. Within these three businesses, the Company offers various insurance products and insurance agency services. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies. The Company views the commercial and personal lines segments as underwriting business (business that takes on insurance underwriting risk). The wholesale agency business provides non-risk bearing revenue through commissions and policy fees. The wholesale agency business increases the product options to the Company’s independent retail agents by offering both insurance products from the Insurance Company Subsidiaries as well as products offered by other insurers.

The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision makers in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision maker, the Chief Executive Officer, review a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries, and other revenue and expenses. The primary measure used for making decisions about resources to be allocated to an operating segment and assessing its performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and operating expenses of the operating segments. Operating expenses primarily include compensation and related benefits for personnel, policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products through its own insurance agencies and a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Michigan, Texas, Oklahoma and Ohio. For the three months ended March 31, 2024 and 2023, gross written premiums attributable to these four states were 83.1% and 52.4%, respectively, of the Company’s total gross written premiums.

The wholesale agency business sells insurance products on behalf of the Company’s commercial and personal lines businesses as well as to third-party insurers. Certain acquisition costs incurred by the commercial and personal lines businesses are reflected as commission revenue for the wholesale agency business and are eliminated in the Eliminations category.

In addition to the reportable segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team, some finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported within net investment income, net realized investment gains, and change in fair value of equity securities on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.

The following tables present information by reportable operating segment (dollars in thousands):

Three months ended March 31, 2024	Commercial Lines			Personal Lines		Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	12,762		$	11,551	$	24,313	$	—		$	—		$	—		$	24,313
Net written premiums	$	8,287		$	7,104	$	15,391	$	—		$	—		$	—		$	15,391
Net earned premiums	$	8,797		$	8,090	$	16,887	$	—		$	—		$	—		$	16,887
Agency commission income		—			—		—		4,336			—			—			4,336
Other income		50			28		78		6,369			71			(6,258	)		260
Segment revenue		8,847			8,118		16,965		10,705			71			(6,258	)		21,483
Losses and LAE, net		6,766			3,754		10,520		—			—			—			10,520
Policy acquisition costs		1,147			2,013		3,160		9,119			—			(5,266	)		7,013
Operating expenses		1,748			971		2,719		1,633			143			—			4,495
Segment expenses		9,661			6,738		16,399		10,752			143			(5,266	)		22,028
Segment gain (loss)	$	(814	)	$	1,380	$	566	$	(47	)	$	(72	)	$	(992	)	$	(545	)
Investment income												1,552						1,552
Change in fair value of equity securities												43						43
Interest expense												(877	)					(877	)
Income (loss) before equity earnings in Affiliate and income taxes	$	(814	)	$	1,380	$	566	$	(47	)	$	646		$	(992	)	$	173

Three months ended March 31, 2023	Commercial Lines		Personal Lines			Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	28,975	$	7,239		$	36,214	$	—		$	—		$	—		$	36,214
Net written premiums	$	12,241	$	6,101		$	18,342	$	—		$	—		$	—		$	18,342
Net earned premiums	$	17,123	$	4,829		$	21,952	$	—		$	—		$	—		$	21,952
Agency commission income		—		—			—		430			—			—			430
Other income		52		23			75		449			72			(400	)		196
Segment revenue		17,175		4,852			22,027		879			72			(400	)		22,578
Losses and LAE, net		10,547		3,166			13,713		—			—			—			13,713
Policy acquisition costs		3,196		1,389			4,585		548			—			(412	)		4,721
Operating expenses		3,028		592			3,620		352			307			—			4,279
Segment expenses		16,771		5,147			21,918		900			307			(412	)		22,713
Segment gain (loss)	$	404	$	(295	)	$	109	$	(21	)	$	(235	)	$	12		$	(135	)
Investment income												1,307						1,307
Change in fair value of equity securities												694						694
Interest expense												(686	)					(686	)
Income (loss) before equity earnings in Affiliate and income taxes	$	404	$	(295	)	$	109	$	(21	)	$	1,080		$	12		$	1,180

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Subsequent Events

3 Months Ended

Mar. 31, 2024

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

The Company performed an evaluation of subsequent events through the date the financial statements were issued and determined there were no recognized or unrecognized subsequent events that would require an adjustment or additional disclosure in the condensed consolidated financial statements as of March 31, 2024.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Presentation and Management Representation

Basis of Presentation and Management Representation

The consolidated financial statements include accounts, after elimination of intercompany accounts and transactions, of Conifer Holdings, Inc. (the “Company” or “Conifer”), its wholly owned subsidiaries, Conifer Insurance Company ("CIC"), White Pine Insurance Company ("WPIC"), Red Cedar Insurance Company ("RCIC"), Conifer Insurance Services ("CIS"), which is our managing general agency ("MGA"), formerly known as Sycamore Insurance Agency, Inc. ("Sycamore"), and VSRM, Inc. ("VSRM"). CIC, WPIC, and RCIC are collectively referred to as the "Insurance Company Subsidiaries." On a stand-alone basis, Conifer Holdings, Inc. is referred to as the "Parent Company." VSRM owns a 50% non-controlling interest in Sycamore Specialty Underwriters, LLC ("SSU" or "Affiliate").

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which differ from statutory accounting practices prescribed or permitted for insurance companies by regulatory authorities. The Company has applied the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting and therefore the consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting of items of a normal recurring nature, necessary for a fair presentation of the consolidated interim financial statements, have been included.

These consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results expected for the year ended December 31, 2024.

Business

Business

The Company is engaged in the sale of property and casualty insurance products and has organized its principal operations into three types of insurance businesses: commercial lines, personal lines, and agency business. The Company underwrites a variety of specialty insurance products, including property, general liability, liquor liability, automobile, and homeowners and dwelling policies. The Company markets and sells its insurance products through a network of independent agents, including managing general agents, whereby policies are written in almost all 50 states in the United States of America (“U.S.”). The Company is in the process of strategically shifting from mostly underwriting insurance products (generating revenues through premiums) to mostly producing, or selling, insurance products through its MGA. Utilizing its existing relationships with retail agencies and other agencies, in the first quarter of 2024, the Company began producing business that was directly underwritten by a third-party insurer. The Company’s corporate headquarters are located in Troy, Michigan with additional office facilities in Florida and Michigan.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While management believes the amounts included in the consolidated financial statements reflect management's best estimates and assumptions, actual results may differ from these estimates.

Cash, Cash Equivalents, and Short-term Investments

Cash, Cash Equivalents, and Short-term Investments

Cash consists of cash deposits in banks, generally in operating accounts. Cash equivalents consist of money-market funds that are specifically used as overnight investments tied to cash deposit accounts. Short-term investments, consisting of money market funds, are classified as investments in the consolidated balance sheets as they relate to the Company’s investment activities.

Accounting Guidance Not Yet Adopted

Accounting Guidance Not Yet Adopted

In January 2021, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848). This guidance provides optional expedients and exceptions that are intended to ease the burden of updating contracts to contain a new reference rate due to the discontinuation of the London Inter-Bank Offered Rate (LIBOR). This guidance is available immediately and may be

implemented in any period prior to the guidance expiration on December 31, 2024. Management does not expect the new guidance to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. ASU 2023-07 is effective for fiscal years beginning after December 31, 2024. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). ASU 2023-09 requires public business entities to disclose additional information with respect to the reconciliation of the effective tax rate to the statutory rate. Additionally, public business entities will need to disaggregate federal, state and foreign taxes paid in their financial statements. ASU 2023-09 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

Company Liquidity

Company Liquidity

We conduct our business operations primarily through our Insurance Company Subsidiaries and MGA. Our ability to service debt, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries and MGA to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries and MGA by the Parent Company. The Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company, and we do not anticipate any dividends being paid to us from our Insurance Company Subsidiaries during 2024 and 2025. The Parent Company may receive dividends from our MGA without regulatory restrictions.

Due to significant losses in 2023, much of which was attributable to strengthening reserves and severe storm activity affecting the Oklahoma homeowners business, both Insurance Company Subsidiaries lack sufficient capital to continue to underwrite the volume of business they have historically written. Accordingly, in the first quarter of 2024, management implemented a strategic shift in which the Company began utilizing third-party insurers to mostly rely on commission revenues generated by our MGA to fund operations and service debt, going forward. Substantially all of our commercial lines business will no longer be written by our Insurance Company Subsidiaries by the end of the second quarter of 2024. However, we do plan to continue to write a limited amount of the personal lines on CIC. We do not expect to be writing any business in WPIC by the end of the second quarter of 2024. The Company may need to contribute more capital into WPIC before the end of the year in order to maintain its licenses, however, since the Company will no longer be writing business in WPIC, this will not have a material impact on the Company's operations or cash flows. We expect to be able to fund any needed contributions with existing cash and investments at the Parent Company.

The Company will expect to generate the vast majority of its revenue from commissions from third-party insurers, going forward. The Company has executed multiple producer agreements that will underwrite a majority of the Company’s commercial lines business. We expect to continue to underwrite the existing personal lines business within our Insurance Company Subsidiaries. Management may also consider the sale of other assets to generate additional cash resources available to the Company. We believe that our existing cash, cash equivalents, short-term investments and investment securities balances will be adequate to meet our capital and liquidity needs and the needs of our subsidiaries over the next twelve months.

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Investments (Tables)

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities

The cost or amortized cost, gross unrealized gains or losses, and estimated fair value of the investments in securities classified as available for sale at March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

	March 31, 2024
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,702	$	—	$	(172	)	$	5,530
State and local government		23,961		—		(3,799	)		20,162
Corporate debt		33,880		—		(3,667	)		30,213
Asset-backed securities		37,813		75		(485	)		37,403
Mortgage-backed securities		26,320		—		(5,044	)		21,276
Commercial mortgage-backed securities		3,382		—		(142	)		3,240
Collateralized mortgage obligations		3,161		—		(451	)		2,710
Total debt securities available for sale	$	134,219	$	75	$	(13,760	)	$	120,534

	December 31, 2023
	Cost or		Gross Unrealized					Estimated
	Amortized Cost		Gains		Losses			Fair Value
Debt Securities:
U.S. Government	$	5,405	$	3	$	(161	)	$	5,247
State and local government		24,274		—		(3,810	)		20,464
Corporate debt		34,002		—		(3,507	)		30,495
Asset-backed securities		38,289		47		(584	)		37,752
Mortgage-backed securities		26,768		—		(4,641	)		22,127
Commercial mortgage-backed securities		3,404		—		(160	)		3,244
Collateralized mortgage obligations		3,228		—		(444	)		2,784
Total debt securities available for sale	$	135,370	$	50	$	(13,307	)	$	122,113

Schedule Of Unrealized Loss On Investments

The following table summarizes the aggregate fair value and gross unrealized losses, by security type, of the available-for-sale securities in unrealized loss positions. The table segregates the holdings based on the length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):

	March 31, 2024
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		3	$	1,938	$	(27	)		9	$	3,407	$	(145	)		12	$	5,345	$	(172	)
State and local government		1		300		(1	)		114		19,862		(3,798	)		115		20,162		(3,799	)
Corporate debt		—		—		—			65		30,213		(3,667	)		65		30,213		(3,667	)
Asset-backed securities		7		3,453		(4	)		11		11,175		(481	)		18		14,628		(485	)
Mortgage-backed securities		1		5		(1	)		66		21,271		(5,043	)		67		21,276		(5,044	)
Commercial mortgage-backed securities		—		—		—			4		3,240		(142	)		4		3,240		(142	)
Collateralized mortgage obligations		—		—		—			31		2,710		(451	)		31		2,710		(451	)
Total debt securities available for sale		12	$	5,696	$	(33	)		300	$	91,878	$	(13,727	)		312	$	97,574	$	(13,760	)

	December 31, 2023
	Less than 12 months							Greater than 12 months							Total
	No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses			No. of Issues		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
Debt Securities:
U.S. Government		1	$	649	$	(7	)		9	$	3,400	$	(154	)		10	$	4,049	$	(161	)
State and local government		3		1,193		(7	)		113		19,096		(3,803	)		116		20,289		(3,810	)
Corporate debt		—		—		—			66		30,495		(3,507	)		66		30,495		(3,507	)
Asset-backed securities		1		1,090		(1	)		21		16,270		(583	)		22		17,360		(584	)
Mortgage-backed securities		4		11		(1	)		64		22,116		(4,640	)		68		22,127		(4,641	)
Commercial mortgage-backed securities		—		—		—			4		3,225		(160	)		4		3,225		(160	)
Collateralized mortgage obligations		—		—		—			32		2,803		(444	)		32		2,803		(444	)
Total debt securities available for sale		9	$	2,943	$	(16	)		309	$	97,405	$	(13,291	)		318	$	100,348	$	(13,307	)

Schedule of Investment Income and Losses

The Company’s sources of net investment income and losses are as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Debt securities	$	1,225		$	853
Equity securities		11			11
Cash, cash equivalents and short-term investments		377			503
Total investment income		1,613			1,367
Investment expenses		(61	)		(60	)
Net investment income	$	1,552		$	1,307

Summary of Amortized Cost and Fair Value of Securities

The table below summarizes the amortized cost and fair value of available-for-sale debt securities by contractual maturity at March 31, 2024. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,629	$	4,564
Due after one year through five years		30,738		28,557
Due after five years through ten years		17,489		14,648
Due after ten years		10,687		8,136
Securities with contractual maturities		63,543		55,905
Asset-backed securities		37,813		37,403
Mortgage-backed securities		26,320		21,276
Commercial mortgage-backed securities		3,382		3,240
Collateralized mortgage obligations		3,161		2,710
Total debt securities	$	134,219	$	120,534

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value

The following tables present the Company’s assets and liabilities measured at fair value, classified by the valuation hierarchy as of March 31, 2024 and December 31, 2023 (dollars in thousands):

	March 31, 2024
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,530	$	—	$	5,530	$	—
State and local government		20,162		—		20,162		—
Corporate debt		30,213		—		30,213		—
Asset-backed securities		37,403		—		37,403		—
Mortgage-backed securities		21,276		—		21,276		—
Commercial mortgage-backed securities		3,240		—		3,240		—
Collateralized mortgage obligations		2,710		—		2,710		—
Total debt securities		120,534		—		120,534		—
Equity Securities		939		182		757		—
Short-term investments		23,724		23,724		—		—
Total marketable investments measured at fair value	$	145,197	$	23,906	$	121,291	$	—
Investments measured at NAV:
Investment in limited partnership		1,448
Total assets measured at fair value	$	146,645
Liabilities:
Senior unsecured notes *	$	10,896	$	—	$	10,896	$	—
Senior secured notes *		9,599		—		—		9,599
Total Liabilities (non-recurring fair value measure)	$	20,495	$	—	$	10,896	$	9,599

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

	December 31, 2023
	Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Debt Securities:
U.S. Government	$	5,247	$	—	$	5,247	$	—
State and local government		20,464		—		20,464		—
Corporate debt		30,495		—		30,495		—
Asset-backed securities		37,752		—		37,752		—
Mortgage-backed securities		22,127		—		22,127		—
Commercial mortgage-backed securities		3,244		—		3,244		—
Collateralized mortgage obligations		2,784		—		2,784		—
Total debt securities		122,113		—		122,113		—
Equity securities		896		139		757		—
Short-term investments		20,838		20,838		—		—
Total marketable investments measured at fair value	$	143,847	$	20,977	$	122,870	$	—
Investments measured at NAV:
Investment in limited partnership		1,458
Total assets measured at fair value	$	145,305
Liabilities:
Senior unsecured notes *	$	11,791	$	—	$	11,791	$	—
Subordinated notes *		9,965		—		—		9,965
Total Liabilities (non-recurring fair value measure)	$	21,756	$	—	$	11,791	$	9,965

* Carried at face value of debt net of unamortized debt issuance costs on the consolidated balance sheets

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Deferred Policy Acquisition Costs (Tables)

3 Months Ended

Mar. 31, 2024

Deferred Policy Acquisition Costs Disclosures [Abstract]

Summary of Deferred Policy Acquisition Costs

The activity in deferred policy acquisition costs, net of reinsurance transactions, is as follows (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Balance at beginning of period	$	6,285		$	10,290
Deferred policy acquisition costs		6,391			2,757
Amortization of policy acquisition costs		(7,013	)		(4,721	)
Net change		(622	)		(1,964	)
Balance at end of period	$	5,663		$	8,326

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Unpaid Losses and Loss Adjustment Expenses (Tables)

3 Months Ended

Mar. 31, 2024

Insurance Loss Reserves [Abstract]

Schedule of the Changes in the Reserves for Losses and Loss Adjustment Expense

The table below provides the changes in the reserves for losses and LAE, net of reinsurance recoverables, for the periods indicated as follows (dollars in thousands):

	Three months ended March 31,
	2024			2023
Gross reserves - beginning of period	$	174,612		$	165,539
Less: reinsurance recoverables on unpaid losses		(70,807	)		(82,651	)
Net reserves - beginning of period		103,805			82,888
Add: incurred losses and LAE, net of reinsurance:
Current period		10,981			14,926
Prior period		(461	)		(1,213	)
Total net incurred losses and LAE		10,520			13,713
Deduct: loss and LAE payments, net of reinsurance:
Current period		2,862			1,987
Prior period		9,444			10,353
Total net loss and LAE payments		12,306			12,340
Net reserves - end of period		102,019			84,261
Plus: reinsurance recoverables on unpaid losses		73,807			61,101
Gross reserves - end of period	$	175,826		$	145,362

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Reinsurance (Tables)

3 Months Ended

Mar. 31, 2024

Reinsurance Disclosures [Abstract]

Summary of the Effects of Reinsurance

The following table presents the effects of reinsurance and assumption transactions on written premiums, earned premiums and losses and LAE (dollars in thousands):

	Three Months Ended March 31,
	2024			2023
Written premiums:
Direct	$	24,099		$	24,341
Assumed		214			11,873
Ceded		(8,922	)		(17,872	)
Net written premiums	$	15,391		$	18,342
Earned premiums:
Direct	$	24,808		$	23,315
Assumed		9,424			10,979
Ceded		(17,345	)		(12,342	)
Net earned premiums	$	16,887		$	21,952
Losses and LAE:
Direct	$	21,982		$	1,969
Assumed		(3,264	)		1,497
Ceded		(8,198	)		10,247
Net Losses and LAE	$	10,520		$	13,713

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Debt (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Outstanding Senior Debt

A summary of the Company's outstanding debt is as follows (dollars in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Debt		Unamortized Debt Issuance Costs		Net Debt		Gross Debt		Unamortized Debt Issuance Costs		Net Debt
Senior unsecured notes	$	17,887	$	1,591	$	16,296	$	17,887	$	1,679	$	16,208
Senior secured notes		9,500		850		8,650		9,750		897		8,853
Total	$	27,387	$	2,441	$	24,946	$	27,637	$	2,576	$	25,061

Summary of Scheduled Principal Payments of Company's Debt

The following table shows the scheduled principal payments of the Company's debt as of March 31, 2024 (dollars in thousands):

Year	Senior unsecured notes		Senior secured notes
2024		750		—
2025		1,000		—
2026		1,000		—
2027		1,000		—
2028		5,750		17,887
Total	$	9,500	$	17,887

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table presents the calculation of basic and diluted earnings (loss) per common share, as follows (dollars in thousands, except per share and share amounts):

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	231	$	1,001
Preferred stock dividends		157		—
Net income (loss) allocable to common shareholders	$	74	$	1,001
Weighted average common shares, basic and diluted *		12,222,881		12,215,849
Earnings (loss) per common share, basic and diluted	$	0.01	$	0.08

* The preferred shares that may be convertible into a total of 4,000,000 common shares were anti-dilutive and thus did not impact the diluted earnings per share calculation. There were no unvested restricted stock units as of March 31, 2024. The non-vested shares of stock options were anti-dilutive as of March 31, 2024. The non-vested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2023. Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2024 and March 31, 2023.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Schedule of Information by Reportable Segment

The following tables present information by reportable operating segment (dollars in thousands):

Three months ended March 31, 2024	Commercial Lines			Personal Lines		Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	12,762		$	11,551	$	24,313	$	—		$	—		$	—		$	24,313
Net written premiums	$	8,287		$	7,104	$	15,391	$	—		$	—		$	—		$	15,391
Net earned premiums	$	8,797		$	8,090	$	16,887	$	—		$	—		$	—		$	16,887
Agency commission income		—			—		—		4,336			—			—			4,336
Other income		50			28		78		6,369			71			(6,258	)		260
Segment revenue		8,847			8,118		16,965		10,705			71			(6,258	)		21,483
Losses and LAE, net		6,766			3,754		10,520		—			—			—			10,520
Policy acquisition costs		1,147			2,013		3,160		9,119			—			(5,266	)		7,013
Operating expenses		1,748			971		2,719		1,633			143			—			4,495
Segment expenses		9,661			6,738		16,399		10,752			143			(5,266	)		22,028
Segment gain (loss)	$	(814	)	$	1,380	$	566	$	(47	)	$	(72	)	$	(992	)	$	(545	)
Investment income												1,552						1,552
Change in fair value of equity securities												43						43
Interest expense												(877	)					(877	)
Income (loss) before equity earnings in Affiliate and income taxes	$	(814	)	$	1,380	$	566	$	(47	)	$	646		$	(992	)	$	173

Three months ended March 31, 2023	Commercial Lines		Personal Lines			Total Underwriting		Wholesale Agency			Corporate			Eliminations			Total
Gross written premiums	$	28,975	$	7,239		$	36,214	$	—		$	—		$	—		$	36,214
Net written premiums	$	12,241	$	6,101		$	18,342	$	—		$	—		$	—		$	18,342
Net earned premiums	$	17,123	$	4,829		$	21,952	$	—		$	—		$	—		$	21,952
Agency commission income		—		—			—		430			—			—			430
Other income		52		23			75		449			72			(400	)		196
Segment revenue		17,175		4,852			22,027		879			72			(400	)		22,578
Losses and LAE, net		10,547		3,166			13,713		—			—			—			13,713
Policy acquisition costs		3,196		1,389			4,585		548			—			(412	)		4,721
Operating expenses		3,028		592			3,620		352			307			—			4,279
Segment expenses		16,771		5,147			21,918		900			307			(412	)		22,713
Segment gain (loss)	$	404	$	(295	)	$	109	$	(21	)	$	(235	)	$	12		$	(135	)
Investment income												1,307						1,307
Change in fair value of equity securities												694						694
Interest expense												(686	)					(686	)
Income (loss) before equity earnings in Affiliate and income taxes	$	404	$	(295	)	$	109	$	(21	)	$	1,080		$	12		$	1,180

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Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) State Class_business	Dec. 31, 2023 USD ($)
Accounting Policies [Line Items]
Non Controlling Interest	50.00%
Number of types of business | Class_business	3
Number of states in which entity operates | State	50
Total shareholders' equity | $	$ 2,559	$ 2,889

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Sale of Renewal Rights - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Sep. 30, 2023	Mar. 31, 2024	Mar. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Gross earned premiums		$ 24,808	$ 23,315
Ceded Premiums Written		$ 8,922	$ 17,872
100% Quota Share Reinsurance Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ceded Premiums Written	$ 30,900

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Investments - Narrative (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Investments, Debt and Equity Securities [Abstract]
Gross unrealized gain (loss) on available for sale securities	$ 13,800,000
Proceeds from available-for-sale debt securities	1,800,000	$ 23,600,000
Gross realized gains or losses from sales, calls and maturities of available-for-sale debt and equity securities	0	0
Amount payable for securities purchased	0	0
Amount receivable for securities sold	0	0
Gross unrealized gains	505,000		$ 505,000
Gross unrealized losses	492,000		535,000
Other than temporary impairments losses, investments	0	$ 0
Investments	1,400,000		1,400,000
Deposits held in trust accounts	8,100,000		8,200,000
Deposits, held in trust for collateral requirements	122,500,000		$ 123,500,000
Collateral of gross unearned premiums and gross loss reserves	121,700,000
Unearned premiums run off	$ 0

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Investments - Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	$ 134,219	$ 135,370
Debt securities, Gross Unrealized Gain	75	50
Debt securities, Gross Unrealized Losses	(13,760)	(13,307)
Debt securities, Estimated Fair Value	120,534	122,113
U.S. Government
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	5,702	5,405
Debt securities, Gross Unrealized Gain	0	3
Debt securities, Gross Unrealized Losses	(172)	(161)
Debt securities, Estimated Fair Value	5,530	5,247
State and local government
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	23,961	24,274
Debt securities, Gross Unrealized Gain	0	0
Debt securities, Gross Unrealized Losses	(3,799)	(3,810)
Debt securities, Estimated Fair Value	20,162	20,464
Corporate debt
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	33,880	34,002
Debt securities, Gross Unrealized Gain	0	0
Debt securities, Gross Unrealized Losses	(3,667)	(3,507)
Debt securities, Estimated Fair Value	30,213	30,495
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	37,813	38,289
Debt securities, Gross Unrealized Gain	75	47
Debt securities, Gross Unrealized Losses	(485)	(584)
Debt securities, Estimated Fair Value	37,403	37,752
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	26,320	26,768
Debt securities, Gross Unrealized Gain	0	0
Debt securities, Gross Unrealized Losses	(5,044)	(4,641)
Debt securities, Estimated Fair Value	21,276	22,127
Commercial mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	3,382	3,404
Debt securities, Gross Unrealized Gain	0	0
Debt securities, Gross Unrealized Losses	(142)	(160)
Debt securities, Estimated Fair Value	3,240	3,244
Collateralized mortgage obligations
Debt Securities, Available-for-sale [Line Items]
Debt securities, Cost or Amortized Cost	3,161	3,228
Debt securities, Gross Unrealized Gain	0	0
Debt securities, Gross Unrealized Losses	(451)	(444)
Debt securities, Estimated Fair Value	$ 2,710	$ 2,784

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Investments - Available-for-sale Securities in Unrealized Loss Positions (Details) $ in Thousands	Mar. 31, 2024 USD ($) Security	Dec. 31, 2023 USD ($) Security
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	12	9
Debt securities, greater than 12 months, number of issues | Security	300	309
Debt securities, number of issues | Security	312	318
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 5,696	$ 2,943
Debt securities, greater than 12 months, fair value	91,878	97,405
Debt securities, fair value	97,574	100,348
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	(33)	(16)
Debt securities, greater than 12 months, unrealized losses	(13,727)	(13,291)
Debt securities, total unrealized losses	$ (13,760)	$ (13,307)
U.S. Government
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	3	1
Debt securities, greater than 12 months, number of issues | Security	9	9
Debt securities, number of issues | Security	12	10
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 1,938	$ 649
Debt securities, greater than 12 months, fair value	3,407	3,400
Debt securities, fair value	5,345	4,049
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	(27)	(7)
Debt securities, greater than 12 months, unrealized losses	(145)	(154)
Debt securities, total unrealized losses	$ (172)	$ (161)
State and local government
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	1	3
Debt securities, greater than 12 months, number of issues | Security	114	113
Debt securities, number of issues | Security	115	116
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 300	$ 1,193
Debt securities, greater than 12 months, fair value	19,862	19,096
Debt securities, fair value	20,162	20,289
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	(1)	(7)
Debt securities, greater than 12 months, unrealized losses	(3,798)	(3,803)
Debt securities, total unrealized losses	$ (3,799)	$ (3,810)
Corporate debt
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	0	0
Debt securities, greater than 12 months, number of issues | Security	65	66
Debt securities, number of issues | Security	65	66
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 0	$ 0
Debt securities, greater than 12 months, fair value	30,213	30,495
Debt securities, fair value	30,213	30,495
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	0	0
Debt securities, greater than 12 months, unrealized losses	(3,667)	(3,507)
Debt securities, total unrealized losses	$ (3,667)	$ (3,507)
Asset-backed securities
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	7	1
Debt securities, greater than 12 months, number of issues | Security	11	21
Debt securities, number of issues | Security	18	22
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 3,453	$ 1,090
Debt securities, greater than 12 months, fair value	11,175	16,270
Debt securities, fair value	14,628	17,360
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	(4)	(1)
Debt securities, greater than 12 months, unrealized losses	(481)	(583)
Debt securities, total unrealized losses	$ (485)	$ (584)
Mortgage-backed securities
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	1	4
Debt securities, greater than 12 months, number of issues | Security	66	64
Debt securities, number of issues | Security	67	68
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 5	$ 11
Debt securities, greater than 12 months, fair value	21,271	22,116
Debt securities, fair value	21,276	22,127
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	(1)	(1)
Debt securities, greater than 12 months, unrealized losses	(5,043)	(4,640)
Debt securities, total unrealized losses	$ (5,044)	$ (4,641)
Commercial mortgage-backed securities
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	0	0
Debt securities, greater than 12 months, number of issues | Security	4	4
Debt securities, number of issues | Security	4	4
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 0	$ 0
Debt securities, greater than 12 months, fair value	3,240	3,225
Debt securities, fair value	3,240	3,225
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	0	0
Debt securities, greater than 12 months, unrealized losses	(142)	(160)
Debt securities, total unrealized losses	$ (142)	$ (160)
Collateralized mortgage obligations
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Debt securities, less than 12 months, number of issues | Security	0	0
Debt securities, greater than 12 months, number of issues | Security	31	32
Debt securities, number of issues | Security	31	32
Debt Securities, Available-for-sale, Unrealized Loss Position [Abstract]
Debt securities, less than 12 months, fair value	$ 0	$ 0
Debt securities, greater than 12 months, fair value	2,710	2,803
Debt securities, fair value	2,710	2,803
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Debt securities, less than 12 months, unrealized losses	0	0
Debt securities, greater than 12 months, unrealized losses	(451)	(444)
Debt securities, total unrealized losses	$ (451)	$ (444)

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Investments - Net Investment Income and Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Net Investment Income [Line Items]
Investment income	$ 1,613	$ 1,367
Investment expenses	(61)	(60)
Net investment income	1,552	1,307
Debt securities
Net Investment Income [Line Items]
Investment income	1,225	853
Equity securities
Net Investment Income [Line Items]
Investment income	11	11
Cash, cash equivalents and short-term investments
Net Investment Income [Line Items]
Investment income	$ 377	$ 503

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Investments - Available-for-sale Fixed Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Amortized Cost
Due in one year or less	$ 4,629
Due after one year through five years	30,738
Due after five years through ten years	17,489
Due after ten years	10,687
Securities with contractual maturities	63,543
Total debt securities	134,219	$ 135,370
Estimated Fair Value
Due in one year or less	4,564
Due after one year through five years	28,557
Due after five years through ten years	14,648
Due after ten years	8,136
Securities with contractual maturities	55,905
Total debt securities	120,534	122,113
Asset-backed securities
Amortized Cost
Total debt securities	37,813	38,289
Estimated Fair Value
Total debt securities	37,403	37,752
Mortgage-backed securities
Amortized Cost
Total debt securities	26,320	26,768
Estimated Fair Value
Total debt securities	21,276	22,127
Commercial mortgage-backed securities
Amortized Cost
Total debt securities	3,382	3,404
Estimated Fair Value
Total debt securities	3,240	3,244
Collateralized mortgage obligations
Amortized Cost
Total debt securities	3,161	3,228
Estimated Fair Value
Total debt securities	$ 2,710	$ 2,784

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Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets:
Total debt securities	$ 120,534	$ 122,113
Equity Securities	939	896
Short-term investments	23,724	20,838
Total marketable investments measured at fair value	145,197	143,847
Total assets measured at fair value	146,645	145,305
Liabilities:
Total Liabilities (non-recurring fair value measure)	20,495	21,756
U.S. Government
Assets:
Total debt securities	5,530	5,247
State and local government
Assets:
Total debt securities	20,162	20,464
Corporate debt
Assets:
Total debt securities	30,213	30,495
Asset-backed securities
Assets:
Total debt securities	37,403	37,752
Mortgage-backed securities
Assets:
Total debt securities	21,276	22,127
Commercial mortgage-backed securities
Assets:
Total debt securities	3,240	3,244
Collateralized mortgage obligations
Assets:
Total debt securities	2,710	2,784
Senior Unsecured Notes
Liabilities:
Debt	10,896	11,791
Senior Secured Notes
Liabilities:
Debt	9,599
Subordinated notes
Liabilities:
Debt		9,965
Partnership interest
Assets:
Investments measured at NAV	1,448	1,458
Level 1
Assets:
Total debt securities	0	0
Equity Securities	182	139
Short-term investments	23,724	20,838
Total marketable investments measured at fair value	23,906	20,977
Liabilities:
Total Liabilities (non-recurring fair value measure)	0	0
Level 1 | U.S. Government
Assets:
Total debt securities	0	0
Level 1 | State and local government
Assets:
Total debt securities	0	0
Level 1 | Corporate debt
Assets:
Total debt securities	0	0
Level 1 | Asset-backed securities
Assets:
Total debt securities	0	0
Level 1 | Mortgage-backed securities
Assets:
Total debt securities	0	0
Level 1 | Commercial mortgage-backed securities
Assets:
Total debt securities	0	0
Level 1 | Collateralized mortgage obligations
Assets:
Total debt securities	0	0
Level 1 | Senior Unsecured Notes
Liabilities:
Debt	0	0
Level 1 | Senior Secured Notes
Liabilities:
Debt	0
Level 1 | Subordinated notes
Liabilities:
Debt		0
Level 2
Assets:
Total debt securities	120,534	122,113
Equity Securities	757	757
Short-term investments	0	0
Total marketable investments measured at fair value	121,291	122,870
Liabilities:
Total Liabilities (non-recurring fair value measure)	10,896	11,791
Level 2 | U.S. Government
Assets:
Total debt securities	5,530	5,247
Level 2 | State and local government
Assets:
Total debt securities	20,162	20,464
Level 2 | Corporate debt
Assets:
Total debt securities	30,213	30,495
Level 2 | Asset-backed securities
Assets:
Total debt securities	37,403	37,752
Level 2 | Mortgage-backed securities
Assets:
Total debt securities	21,276	22,127
Level 2 | Commercial mortgage-backed securities
Assets:
Total debt securities	3,240	3,244
Level 2 | Collateralized mortgage obligations
Assets:
Total debt securities	2,710	2,784
Level 2 | Senior Unsecured Notes
Liabilities:
Debt	10,896	11,791
Level 2 | Senior Secured Notes
Liabilities:
Debt	0
Level 2 | Subordinated notes
Liabilities:
Debt		0
Level 3
Assets:
Total debt securities	0	0
Equity Securities	0	0
Short-term investments	0	0
Total marketable investments measured at fair value	0	0
Liabilities:
Total Liabilities (non-recurring fair value measure)	9,599	9,965
Level 3 | U.S. Government
Assets:
Total debt securities	0	0
Level 3 | State and local government
Assets:
Total debt securities	0	0
Level 3 | Corporate debt
Assets:
Total debt securities	0	0
Level 3 | Asset-backed securities
Assets:
Total debt securities	0	0
Level 3 | Mortgage-backed securities
Assets:
Total debt securities	0	0
Level 3 | Commercial mortgage-backed securities
Assets:
Total debt securities	0	0
Level 3 | Collateralized mortgage obligations
Assets:
Total debt securities	0	0
Level 3 | Senior Unsecured Notes
Liabilities:
Debt	0	0
Level 3 | Senior Secured Notes
Liabilities:
Debt	$ 9,599
Level 3 | Subordinated notes
Liabilities:
Debt		$ 9,965

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Fair Value Measurements - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Transfers into level 3	$ 0	$ 0
Transfers out of Level 3	$ 0	$ 0
Level 1
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Marketable investment percentage	16.00%		15.00%
Level 2
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Marketable investment percentage	84.00%		85.00%
Senior Secured Notes
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt	$ 9,599,000
Senior Secured Notes | Level 1
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt	0
Senior Secured Notes | Level 2
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt	0
Senior Secured Notes | Level 3
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items]
Debt	$ 9,599,000

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Deferred Policy Acquisition Costs - Activity in Deferred Policy Acquisition Costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
Balance at beginning of period	$ 6,285	$ 10,290
Deferred policy acquisition costs	6,391	2,757
Amortization of policy acquisition costs	(7,013)	(4,721)
Net change	(622)	(1,964)
Balance at end of period	$ 5,663	$ 8,326

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Unpaid Losses and Loss Adjustment Expenses - Changes in the Liability for Unpaid Losses and Loss Adjustment Expenses (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Gross reserves - beginning of period	$ 174,612,000	$ 165,539,000	$ 165,539,000
Less: reinsurance recoverables on unpaid losses	(70,807,000)	(82,651,000)	(82,651,000)
Net reserves - beginning of period	103,805,000	82,888,000	82,888,000
Add: incurred losses and LAE, net of reinsurance:
Current period	10,981,000	14,926,000
Prior period	(461,000)	(1,213,000)
Total net incurred losses and LAE	10,520,000	13,713,000
Deduct: loss and LAE payments, net of reinsurance:
Current period	2,862,000	1,987,000
Prior period	9,444,000	10,353,000
Total net loss and LAE payments	12,306,000	12,340,000
Net reserves - end of period	102,019,000	84,261,000	103,805,000
Plus: reinsurance recoverables on unpaid losses	73,807,000	61,101,000	70,807,000
Gross reserves - end of period	$ 175,826,000	$ 145,362,000	$ 174,612,000

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Unpaid Losses and Loss Adjustment Expenses - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Liability for Claims and Claims Adjustment Expense [Line Items]
Decrease in losses and loss adjustment expenses	$ 3,200,000
Decrease in losses and loss adjustment expenses, percentage	23.30%
Losses and loss adjustment expenses, net	$ 10,520,000	$ 13,713,000
Prior year adjustments	461,000	1,213,000
Development expenses, net	102,019,000	84,261,000	$ 103,805,000	$ 82,888,000
Prior year claims and claims adjustment expenses		2,400,000
Loss Portfolio Transfer (LPT)
Liability for Claims and Claims Adjustment Expense [Line Items]
Prior year claims and claims adjustment expenses		20,000,000
Accident Year 2022 | Commercial Line
Liability for Claims and Claims Adjustment Expense [Line Items]
Prior year adjustments	47,000
Accident Year 2023
Liability for Claims and Claims Adjustment Expense [Line Items]
Prior year adjustments		1,200,000
Accident Year 2023 | Commercial Line
Liability for Claims and Claims Adjustment Expense [Line Items]
Losses and loss adjustment expenses, net		817,000
Accident Year 2023 | Personal Line
Liability for Claims and Claims Adjustment Expense [Line Items]
Prior year adjustments	508,000	$ 396,000
Accident Year 2024
Liability for Claims and Claims Adjustment Expense [Line Items]
Decrease in losses and loss adjustment expenses	3,900,000
Accident Year 2019 and Prior Accident Years | Loss Portfolio Transfer (LPT)
Liability for Claims and Claims Adjustment Expense [Line Items]
Prior year adjustments	1,800,000
Development expenses, net	$ 0

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Reinsurance - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Sep. 30, 2023	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Effects Of Reinsurance [Line Items]
Ceded premium written		$ 8,922,000	$ 17,872,000
Ceded premiums earned		17,345,000	12,342,000
Reinsurance recoverables on paid losses		5,075,000		$ 12,619,000
Stated net reserves retained		102,019,000	84,261,000	103,805,000	$ 82,888,000
Losses and loss adjustment expenses, net		10,520,000	13,713,000
Prior period		461,000	1,213,000
Reinsurance recoverables on unpaid losses		73,807,000	61,101,000	70,807,000	$ 82,651,000
Loss Portfolio Transfer (“LPT”) Reinsurance Agreement
Effects Of Reinsurance [Line Items]
Reinsurance recoverables on paid losses		2,500,000		3,800,000
Reinsurance recoverables on unpaid losses		7,500,000		10,900,000
100% Quota Share Reinsurance Agreement
Effects Of Reinsurance [Line Items]
Ceded premium written	$ 30,900,000
100% Quota Share Reinsurance Agreement | Maximum
Effects Of Reinsurance [Line Items]
Percentage of commission ceded, net	27.00%
100% Quota Share Reinsurance Agreement | Minimum
Effects Of Reinsurance [Line Items]
Percentage of commission ceded, net	22.00%
100% Cede of Commercial Liability Risks In Excess of $400,000
Effects Of Reinsurance [Line Items]
Amount retained (excess of)		400,000	400,000
Corridor | Loss Portfolio Transfer (“LPT”) Reinsurance Agreement
Effects Of Reinsurance [Line Items]
Losses and loss adjustment expenses, net		5,500,000		5,500,000
Layer | Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Maximum
Effects Of Reinsurance [Line Items]
Losses and loss adjustment expenses, net		20,000,000		20,000,000
Layer | Loss Portfolio Transfer (“LPT”) Reinsurance Agreement | Minimum
Effects Of Reinsurance [Line Items]
Losses and loss adjustment expenses, net		8,500,000		$ 9,100,000
Ceded Commercial Property Risks In Excess of $200,000
Effects Of Reinsurance [Line Items]
Amount retained (excess of)		400,000	400,000
Ceded Homeowners Specific Risks In Excess of $300,000
Effects Of Reinsurance [Line Items]
Amount retained (excess of)		$ 400,000	$ 300,000

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Reinsurance - Effects of Reinsurance and Assumption Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Written premiums:
Direct	$ 24,099	$ 24,341
Assumed	214	11,873
Ceded	(8,922)	(17,872)
Net written premiums	15,391	18,342
Earned premiums:
Direct	24,808	23,315
Assumed	9,424	10,979
Ceded	(17,345)	(12,342)
Net earned premiums	16,887	21,952
Losses and LAE:
Direct	21,982	1,969
Assumed	(3,264)	1,497
Ceded	(8,198)	10,247
Total net incurred losses and LAE	$ 10,520	$ 13,713

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Debt - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023	Sep. 30, 2023
FHLB of Indianapolis
Debt Instrument [Line Items]
Debt issuance costs	$ 24,946,000	$ 25,061,000
Senior Unsecured Notes | FHLB of Indianapolis
Debt Instrument [Line Items]
Debt issuance costs	16,296,000	16,208,000
Senior Unsecured Notes | 9.75% Public Senior Unsecured Notes (New Public Notes)
Debt Instrument [Line Items]
Face amount of debt	$ 17,900,000		$ 17,900,000
Maturity date	Sep. 30, 2028
Interest rate	9.75%		9.75%
Interest rate, payment terms	interest rate of 9.75% per annum, payable quarterly at the end of March, June, September and December
Debt issuance costs	$ 1,600,000
Senior Unsecured Notes | 6.75% Public Senior Unsecured notes (Old Public Notes)
Debt Instrument [Line Items]
Interest rate	6.75%
Senior Secured Notes
Debt Instrument [Line Items]
Call premium	$ 1,800,000
Outstanding debt	9,500,000
Senior Secured Notes | FHLB of Indianapolis
Debt Instrument [Line Items]
Debt issuance costs	8,650,000	8,853,000
Senior Secured Notes | Privately Placed 12.5% Senior Secured Notes
Debt Instrument [Line Items]
Face amount of debt	$ 9,500,000
Maturity date			Sep. 30, 2028
Interest rate	12.50%		12.50%
Quarterly payment of principal	$ 250,000
Call premium percentage	22.00%
Concession made to the lender	$ 0
Debt issuance costs		$ 850,000
Restructuring costs incurred	$ 173,000

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Debt - Outstanding Senior Debt (Details) - FHLB of Indianapolis - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Gross Debt	$ 27,387	$ 27,637
Unamortized Debt Issuance Costs	2,441	2,576
Debt Issuance Costs, Net, Total	24,946	25,061
Senior Unsecured Notes
Debt Instrument [Line Items]
Gross Debt	17,887	17,887
Unamortized Debt Issuance Costs	1,591	1,679
Debt Issuance Costs, Net, Total	16,296	16,208
Senior Secured Notes
Debt Instrument [Line Items]
Gross Debt	9,500	9,750
Unamortized Debt Issuance Costs	850	897
Debt Issuance Costs, Net, Total	$ 8,650	$ 8,853

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Debt - Scheduled Principal Payments of Company's Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Total	$ 24,946	$ 25,061
Senior Unsecured Notes
Debt Instrument [Line Items]
2024	750
2025	1,000
2026	1,000
2027	1,000
2028	5,750
Total	9,500
Senior Secured Notes
Debt Instrument [Line Items]
2028	17,887
Total	$ 17,887

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Shareholder's Equity - Narrative (Details) $ / shares in Units, $ in Millions		3 Months Ended
	Dec. 20, 2023 USD ($) Vote $ / shares shares	Mar. 31, 2024 Vote $ / shares shares	Dec. 31, 2023 $ / shares shares
Equity Class Of Treasury Stock [Line Items]
Preferred stock, par value (in dollars per share) | $ / shares		$ 0	$ 0
Preferred stock, shares issued		1,000	1,000
Preferred stock, shares outstanding		1,000	1,000
Common stock, shares issued (in shares)		12,222,881	12,222,881
Common stock, shares outstanding (in shares)		12,222,881	12,222,881
Common stock voting rights, number of votes per share | Vote		1
Preferred Stock
Equity Class Of Treasury Stock [Line Items]
Preferred stock dividend rate		8.00%
Preferred shares dividend basis point		2.00%
Preferred stock equated to an annualized rate		10.50%
Preferred stock redemption description		The Company has the option to redeem the Preferred Stock at the end of any fiscal quarter, in whole or in part, at a price equal to issue price, plus the amount that would result in a 20.0%, compounded annually, annualized return to the holder (inclusive of the dividends paid), on the portion being redeemed.
Preferred stock redemption percentage		20.00%
Conversion of preferred stock in to common stock		4,000
Preferred stock, shares issued		1,000	1,000
Preferred stock, shares outstanding		1,000	1,000
Preferred Stock | Series A Preferred Stock
Equity Class Of Treasury Stock [Line Items]
Preferred stock voting rights, number of votes per share | Vote	0
Common stocks
Equity Class Of Treasury Stock [Line Items]
Common stock, shares issued (in shares)		12,222,881	12,222,881
Common stock, shares outstanding (in shares)		12,222,881	12,222,881
Private placement | Preferred Stock | Series A Preferred Stock
Equity Class Of Treasury Stock [Line Items]
Shares issued | $	$ 6.0
Preferred stock, par value (in dollars per share) | $ / shares	$ 0
Shares issued (in shares)	1,000
Offering price per share (in dollars per share) | $ / shares	$ 6,000
Maturity date	Jun. 30, 2026

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Earnings Per Share - Basic and Diluted Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Net income (loss)		$ 231	$ 1,001
Preferred stock dividends		157	0
Net income (loss) allocable to common shareholders		$ 74	$ 1,001
Weighted average common shares outstanding, basic	[1]	12,222,881	12,215,849
Weighted average common shares outstanding, diluted	[1]	12,222,881	12,215,849
Earnings (loss) per common share, basic		$ 0.01	$ 0.08
Earnings (loss) per common share, diluted		$ 0.01	$ 0.08

[1] The non-vested shares of the restricted stock units and stock options were anti-dilutive as of March 31, 2023. Therefore, the basic and diluted weighted average common shares are equal for the three months ended March 31, 2024 and March 31, 2023.

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Earnings Per Share - Basic and Diluted Income (Loss) Per Common Share (Parenthetical) (Details)	3 Months Ended
	Mar. 31, 2024 shares
Earnings Per Share [Abstract]
Total of convertible preferred shares, antidilutive securities excluded from computation of earnings per share	4,000,000
Unvested restricted stock units	0

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Stock-based Compensation - Narrative (Details) - USD ($)		3 Months Ended		6 Months Ended	12 Months Ended
	Mar. 08, 2022	Mar. 31, 2024	Mar. 31, 2023	Jun. 30, 2020	Dec. 31, 2018	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation nonvested shares		0
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options issued to purchase shares of common stock	630,000			280,000
Vesting period	5 years			5 years
Strike price	$ 4.53			$ 3.81
Estimated grant date fair value of options issued to purchase shares of common stock	$ 612,000			$ 290,000
Expiration date	Mar. 08, 2032			Jun. 30, 2030
Stock options volatility rate	65.04%
Options exercisable term	5 years
Risk free interest rate term of options	5 years
Risk free interest rate of options	1.80%
Market value of stock	$ 2.4
Employee Stock Option | Stock Options Granted on June 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 1,000	$ 12,000
Share-based compensation expense not yet recognized		$ 61,000
Share-based compensation nonvested shares		94,000
Employee Stock Option | Stock Options Granted on March 8, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 31,000	31,000
Share-based compensation expense not yet recognized		357,000
Share-based compensation nonvested shares						378,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 0	$ 12,000
Restricted Stock Units (RSUs) | 2015 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted in period (in shares)					70,000
Shares granted in period					$ 404,000
Share-based compensation nonvested shares		0

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Segment Information - Narrative (Details) - Business	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Number of businesses	3
Gross Written Premiums | Geographic Concentration Risk | Michigan, Texas, Oklahoma and Ohio
Segment Reporting Information [Line Items]
Concentration risk	83.10%	52.40%

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Segment Information - Information by Reportable Operating Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Gross written premiums	$ 24,313	$ 36,214
Net written premiums	15,391	18,342
Net earned premiums	16,887	21,952
Agency commission income	4,336	430
Other income	260	196
Segment revenue	21,483	22,578
Losses and LAE, net	10,520	13,713
Policy acquisition costs	7,013	4,721
Operating expenses	4,495	4,279
Segment expenses	22,028	22,713
Segment gain (loss)	(545)	(135)
Net investment income	1,552	1,307
Change in fair value of equity securities	43	694
Interest expense	(877)	(686)
Income (loss) before equity earnings in Affiliate and income taxes	173	1,180
Operating Segments | Commercial Lines
Segment Reporting Information [Line Items]
Gross written premiums	12,762	28,975
Net written premiums	8,287	12,241
Net earned premiums	8,797	17,123
Other income	50	52
Segment revenue	8,847	17,175
Losses and LAE, net	6,766	10,547
Policy acquisition costs	1,147	3,196
Operating expenses	1,748	3,028
Segment expenses	9,661	16,771
Segment gain (loss)	(814)	404
Income (loss) before equity earnings in Affiliate and income taxes	(814)	404
Operating Segments | Personal Lines
Segment Reporting Information [Line Items]
Gross written premiums	11,551	7,239
Net written premiums	7,104	6,101
Net earned premiums	8,090	4,829
Other income	28	23
Segment revenue	8,118	4,852
Losses and LAE, net	3,754	3,166
Policy acquisition costs	2,013	1,389
Operating expenses	971	592
Segment expenses	6,738	5,147
Segment gain (loss)	1,380	(295)
Income (loss) before equity earnings in Affiliate and income taxes	1,380	(295)
Operating Segments | Total Underwriting
Segment Reporting Information [Line Items]
Gross written premiums	24,313	36,214
Net written premiums	15,391	18,342
Net earned premiums	16,887	21,952
Other income	78	75
Segment revenue	16,965	22,027
Losses and LAE, net	10,520	13,713
Policy acquisition costs	3,160	4,585
Operating expenses	2,719	3,620
Segment expenses	16,399	21,918
Segment gain (loss)	566	109
Income (loss) before equity earnings in Affiliate and income taxes	566	109
Operating Segments | Wholesale Agency
Segment Reporting Information [Line Items]
Agency commission income	4,336	430
Other income	6,369	449
Segment revenue	10,705	879
Policy acquisition costs	9,119	548
Operating expenses	1,633	352
Segment expenses	10,752	900
Segment gain (loss)	(47)	(21)
Income (loss) before equity earnings in Affiliate and income taxes	(47)	(21)
Corporate
Segment Reporting Information [Line Items]
Other income	71	72
Segment revenue	71	72
Operating expenses	143	307
Segment expenses	143	307
Segment gain (loss)	(72)	(235)
Net investment income	1,552	1,307
Change in fair value of equity securities	43	694
Interest expense	(877)	(686)
Income (loss) before equity earnings in Affiliate and income taxes	646	1,080
Eliminations
Segment Reporting Information [Line Items]
Other income	(6,258)	(400)
Segment revenue	(6,258)	(400)
Policy acquisition costs	(5,266)	(412)
Segment expenses	(5,266)	(412)
Segment gain (loss)	(992)	12
Income (loss) before equity earnings in Affiliate and income taxes	$ (992)	$ 12