Michigan | | | 6331 | | | 27-1298795 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) |
Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller reporting company | | | ☒ |
| | | | Emerging growth company | | | ☐ |
| | Per Note | | | Total | |
Public offering price(1) | | | % | | | $ |
Underwriting discounts and commissions(2) | | | % | | | $ |
Proceeds to us, before expenses(3) | | | % | | | $ |
(1) | Plus accrued interest, if any, from , 20 . |
(2) | See “Underwriting.” |
(3) | Before deducting expenses of the offering. |
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• | Hospitality, such as restaurants, bars, taverns and bowling centers (that require, among other lines, liquor liability insurance), as well as small grocery and convenience stores; |
• | Artisan contractors, such as plumbers, painters, carpenters, electricians and other independent contractors; and |
• | Security service providers, such as companies that provide security guard services, security alarm products and services, and private investigative services. |
| | Gross Written Premium by Segment | ||||||||||||||||||||||
| | Three months ended March 31, 2022 | | | % | | | Year ended Dec 31, 2021 | | | % | | | Year ended Dec 31, 2020 | | | % | | | Year ended Dec 31, 2019 | | | % | |
Commercial | | | $28,586 | | | 87% | | | $117,075 | | | 89% | | | $102,763 | | | 92% | | | $94,391 | | | 93% |
Personal | | | 4,378 | | | 13% | | | 15,020 | | | 11% | | | 8,572 | | | 8% | | | 7,462 | | | 7% |
Total | | | $32,964 | | | 100% | | | $132,095 | | | 100% | | | $111,335 | | | 100% | | | $101,853 | | | 100% |
| | Gross Written Premiums by State | ||||||||||||||||||||||
| | Three months ended March 31, 2022% | | | % | | | Year ended Dec 31, 2021 | | | % | | | Year ended Dec 31, 2020 | | | % | | | Year ended Dec 31, 2019 | | | % | |
Michigan | | | $9,306 | | | 28.2% | | | $29,314 | | | 22.2% | | | $23,304 | | | 20.9% | | | $19,346 | | | 19.0% |
California | | | 3,638 | | | 11.0% | | | 11,805 | | | 8.9% | | | 8,140 | | | 7.3% | | | 7,037 | | | 6.9% |
Florida | | | 3,406 | | | 10.3% | | | 13,727 | | | 10.4% | | | 13,573 | | | 12.2% | | | 16,993 | | | 16.7% |
Texas | | | 3,193 | | | 9.7% | | | 12,062 | | | 9.1% | | | 10,243 | | | 9.2% | | | 8,236 | | | 8.1% |
Oklahoma | | | 2,234 | | | 6.8% | | | 7,695 | | | 5.8% | | | 2,264 | | | 2.2% | | | 912 | | | 0.9% |
New York | | | 1,482 | | | 4.5% | | | 7,893 | | | 6.0% | | | 6,386 | | | 5.7% | | | 7,955 | | | 7.8% |
Ohio | | | 1,313 | | | 4.0% | | | 4,123 | | | 3.1% | | | 3,823 | | | 3.4% | | | 4,129 | | | 4.1% |
Colorado | | | 960 | | | 2.9% | | | 2,917 | | | 2.2% | | | 2,832 | | | 2.5% | | | 3,044 | | | 3.0% |
Indiana | | | 765 | | | 2.3% | | | 3,692 | | | 2.8% | | | 3,559 | | | 3.2% | | | 3,937 | | | 3.9% |
Pennsylvania | | | 631 | | | 1.9% | | | 4,863 | | | 3.7% | | | 4,846 | | | 4.4% | | | 6,015 | | | 5.9% |
West Virginia | | | 507 | | | 1.5% | | | 2,006 | | | 1.5% | | | 1,774 | | | 1.6% | | | 1,924 | | | 1.9% |
All Other States | | | 5,529 | | | 16.9% | | | 31,998 | | | 24.3% | | | 30,591 | | | 27.4% | | | 22,325 | | | 21.9% |
Total | | | 32,964 | | | 100.0% | | | 132,095 | | | 100.0% | | | 111,335 | | | 100.0% | | | 101,853 | | | 100.0% |
• | Focus on under-served markets. We focus on providing specialty insurance products to targeted policyholders in under-served markets. We believe that most of our small business customers, many of which are owner-operated, value the efficiency of dealing with a single insurer for multiple products. By targeting small- to medium-sized accounts, we add value to the business owner directly without competing solely on price. |
• | Strong relationships with our agents. We develop strong relationships with our independent agents by providing them with responsive service, attractive commissions and competitive products to offer policyholders. We believe our agents understand that we view them as key partners in risk selection and understand that their partnership is instrumental in helping us serve our ultimate client — the insured. We focus on working directly with retail agents. We believe this gives us a competitive advantage over other insurers that rely heavily on managing general agents and wholesalers, because we are closer to the policyholders. |
• | Deep understanding of the business and regulatory landscapes of our markets. The competition for insurance business and the regulatory operating environment vary significantly from state to state. We focus on tailoring our business to concentrate on the geographic markets and regulatory environments with the greatest opportunities for growth and profitability. Our business plan centers on identification of market opportunities in jurisdictions where our insurance products can profitably suit the needs of our potential customers. |
• | Emphasis on flexibility. We offer coverage to our insureds both on an E&S and admitted basis. We believe this flexibility enables us to pivot effectively between E&S and admitted policies as customer needs and regulatory conditions dictate. |
• | Conservative risk management with an emphasis on lowering volatility. We focus on the risk/reward of insurance underwriting, while maintaining a prudent investment policy. We employ conservative risk management practices and opportunistically purchase reinsurance to minimize our exposure to liability for individual risks. In addition, we seek to maintain a diversified liquid investment portfolio to reduce overall balance sheet volatility. As of March 31, 2022, our investments primarily consisted of fixed income investments with an average credit rating of “AA” and an option adjusted duration of 3.7 years. |
• | Talented underwriters with broad expertise. Our underwriters have significant experience managing account profitability across market cycles. With an average of over 28 years of experience, our senior underwriters possess the required expertise to respond appropriately to market forces. |
• | Controlled and disciplined underwriting. We underwrite substantially all policies to our specific guidelines with our experienced, in-house underwriting team. We customize the coverages we offer, and continually monitor our markets and respond to changes in our markets by adjusting our pricing, product structures and underwriting guidelines. By tailoring the terms and conditions of our policies, we align our actual underwriting risk with the profit of each insurance account that we write. |
• | Proactive claims handling. We employ a proactive claims handling philosophy that utilizes an internal team of experienced in-house attorneys to manage and supervise our claims from inception to resolution. We pay what we owe, contest what we don’t owe, and make sound judgment for those claims that fall in between. Our proactive handling of claims reinforces our relationships with our customers and agents by demonstrating our willingness to defend our insureds aggressively and help them mitigate losses. |
• | Proven management team. Our senior management team has an average of over 28 years of experience in the insurance industry. Our senior management team has successfully created, managed and grown numerous insurance companies and books of business, and has longstanding relationships with many independent agents and policyholders in our targeted markets. |
• | Ability to leverage technology to drive efficiency. We utilize a web-based information technology system that creates greater organizational efficiency in our Company. Leveraging the infrastructure of programmers and support staff of third-party vendors allows our in-house business analysts to focus on new product development and roll-out. We believe this capability reduces our time to market for new products, enhances services for insureds, increases our ability to capture data, and reduces cost. |
| | Three Months Ended March 31, | | | Three Months Ended March 31, | | | Year Ended December 31, | |||||||
| | 2022 | | | 2021 | | | 2021 | | | 2020 | | | 2019 | |
| | (dollars in thousands) | |||||||||||||
Operating Results: | | | | | | | | | | | |||||
Gross written premiums | | | $32,964 | | | $30,373 | | | $132,095 | | | $111,335 | | | $101,853 |
Ceded written premiums | | | (14,943) | | | (5,890) | | | (30,666) | | | (18,395) | | | (14,129) |
Net written premiums | | | $18,021 | | | $24,483 | | | $101,429 | | | $92,940 | | | $87,724 |
Net earned premiums | | | $23,955 | | | $22,835 | | | $98,802 | | | $89,103 | | | $89,089 |
Net investment income | | | 507 | | | 532 | | | 1,968 | | | 3,156 | | | 4,031 |
Net realized investment gains (losses) | | | (69) | | | 2,924 | | | 2,878 | | | 8,126 | | | 1,196 |
Change in fair value of equity securities | | | 280 | | | (540) | | | (2,020) | | | 228 | | | (427) |
Other gains (losses) | | | (5) | | | — | | | 11,664 | | | 260 | | | — |
Other income | | | 698 | | | 556 | | | 2,671 | | | 2,615 | | | 2,109 |
Total revenue | | | 25,366 | | | 26,307 | | | 115,963 | | | 103,488 | | | 95,998 |
Losses and loss adjustment expenses, net | | | 18,018 | | | 19,362 | | | 69,861 | | | 56,228 | | | 59,744 |
Policy acquisition costs | | | 5,464 | | | 6,750 | | | 28,451 | | | 26,105 | | | 24,911 |
Operating expenses | | | 4,160 | | | 4,349 | | | 16,509 | | | 18,468 | | | 17,582 |
Interest expense | | | 711 | | | 721 | | | 2,852 | | | 2,925 | | | 2,882 |
Total expenses | | | 28,353 | | | 31,182 | | | 117,673 | | | 103,726 | | | 105,119 |
| | Three Months Ended March 31, | | | Three Months Ended March 31, | | | Year Ended December 31, | |||||||
| | 2022 | | | 2021 | | | 2021 | | | 2020 | | | 2019 | |
| | (dollars in thousands) | |||||||||||||
Income (loss) before income taxes | | | (2,987) | | | (4,875) | | | (1,710) | | | (238) | | | (9,121) |
Equity earnings in Affiliate, net of tax | | | 76 | | | 248 | | | 824 | | | 839 | | | 386 |
Income tax expense (benefit) | | | (41) | | | 9 | | | 208 | | | 6 | | | (913) |
Net income (loss) | | | (2,870) | | | (4,636) | | | (1,094) | | | 595 | | | (7,822) |
Net income (loss) allocable to common shareholders | | | $(2,870) | | | $(4,636) | | | $(1,094) | | | $595 | | | $(7,822) |
Net income (loss) per share allocable to common shareholders, basic and diluted | | | $(0.30) | | | $(0.48) | | | $(0.11) | | | $0.06 | | | $(0.88) |
Weighted average common shares outstanding, basic and diluted | | | 9,707,817 | | | 9,681,728 | | | 9,691,998 | | | 9,625,059 | | | 8,880,107 |
| | Three Months Ended March 31, | | | Three Months Ended March 31, | | | Year Ended December 31, | |||||||
| | 2022 | | | 2021 | | | 2021 | | | 2020 | | | 2019 | |
| | (dollars in thousands) | |||||||||||||
Balance Sheet Data: | | | | | | | | | | | |||||
Cash and invested assets | | | $180,961 | | | $184,406 | | | $192,640 | | | $191,400 | | | $177,196 |
Reinsurance recoverables | | | 42,892 | | | 30,482 | | | 41,691 | | | 26,356 | | | 27,734 |
Total assets | | | 284,931 | | | 259,687 | | | 290,404 | | | 261,597 | | | 247,265 |
Unpaid losses and loss adjustment expenses | | | 140,938 | | | 118,676 | | | 139,085 | | | 111,270 | | | 107,246 |
Unearned premiums | | | 65,468 | | | 58,350 | | | 65,269 | | | 56,224 | | | 51,503 |
Debt | | | 38,642 | | | 39,075 | | | 33,564 | | | 40,997 | | | 35,824 |
Total liabilities | | | 254,547 | | | 222,711 | | | 249,901 | | | 217,184 | | | 204,540 |
Total shareholders’ equity | | | 30,384 | | | 36,976 | | | 40,503 | | | 44,413 | | | 42,725 |
| | | | | | | | | | ||||||
Other Data: | | | | | | | | | | | |||||
Shareholders’ equity per common share outstanding | | | $3.13 | | | $3.82 | | | $4.17 | | | $4.59 | | | $4.45 |
Regulatory capital and surplus(2) | | | 62,394 | | | 58,726 | | | 63,854 | | | 64,066 | | | 59,561 |
| | Three Months Ended March 31, | | | Three Months Ended March 31, | | | | | | | ||||
| | 2022 | | | 2021 | | | 2021 | | | 2020 | | | 2019 | |
Underwriting Ratios: | | | | | | | | | | | |||||
Loss ratio | | | 75.0% | | | 84.4% | | | 70.5% | | | 62.8% | | | 66.8% |
Expense ratio | | | 37.5% | | | 44.6% | | | 42.4% | | | 45.6% | | | 44.0% |
Combined ratio | | | 112.5% | | | 129.0% | | | 112.9% | | | 108.4% | | | 110.8% |
• | limiting our ability to satisfy our obligations with respect to the Notes; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, and other general corporate requirements; |
• | requiring a substantial portion of our cash flow from operations for the payment of principal of, and interest on, our indebtedness and thereby reducing our ability to use our cash flow to fund working capital, capital expenditures and general corporate requirements; and |
• | limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and putting us at a disadvantage compared to competitors with less indebtedness. |
• | the number of holders of the Notes; |
• | the interest of securities dealers in making a market for the Notes; |
• | the overall market for debt securities; |
• | our financial performance and prospects; and |
• | the prospects for companies in our industry generally. |
• | United States interest rates. We expect that the market value of the Notes will be affected by actual or anticipated changes in interest rates in the United States. In general, if U.S. interest rates increase, the market value of the Notes may decrease. |
• | Our credit ratings, financial condition and results. Actual or anticipated changes in our A.M. Best ratings, other credit ratings, financial condition or results of operations may affect the market value of the Notes. |
• | Our other existing and future liabilities. Existing and any future indebtedness and other obligations of our, or of our subsidiaries, may affect the market value of the Notes. |
• | General economic conditions. General economic conditions may affect the market value of the Notes. |
• | Market for similar securities. The market for similar securities may affect the market value of the Notes. |
• | the occurrence of severe weather conditions and other catastrophes; |
• | the cyclical nature of the insurance industry, resulting in periods during which we may experience excess underwriting capacity and unfavorable premium rates; |
• | our ability to obtain reinsurance coverage at reasonable prices or on terms that adequately protect us; |
• | a decline in our financial strength rating resulting in a reduction of new or renewal business; |
• | our ability to manage our growth effectively; |
• | exposure to credit risk, interest rate risk and other market risk in our investment portfolio; |
• | competition within the property and casualty insurance industry; |
• | the inherent uncertainty of estimating reserves and the possibility that incurred losses may be greater than our loss and loss adjustment expense reserves; |
• | inaccurate estimates and judgments in our risk management may expose us to greater risks than intended; |
• | the potential loss of key members of our management team or key employees and our ability to attract and retain personnel; |
• | potential effects on our business of emerging claim and coverage issues; |
• | losses in our investment portfolio; |
• | additional government or market regulation; |
• | a forced sale of investments to meet our liquidity needs; |
• | our underwriters and other associates could take excessive risks; |
• | losses resulting from reinsurance counterparties failing to pay us on reinsurance claims; |
• | the potential impact of internal or external fraud, operational errors, systems malfunctions or cybersecurity incidents; |
• | an adverse outcome in a legal action that we are or may become subject to in the course of our insurance operations; |
• | failure to maintain effective internal controls in accordance with the Sarbanes-Oxley Act of 2002; and |
• | other factors that we discuss in the section titled “Risk Factors” in this prospectus, or in any of the documents incorporated by reference herein. |
• | on an actual basis; |
• | on an as adjusted basis to reflect issuance of the Notes and the anticipated application of the proceeds from this offering to redeem the existing 6.75% Senior Unsecured Notes Due 2023. |
| | March 31, 2022 | ||||
| | Actual | | | As Adjusted | |
| | (dollars in thousands) | ||||
Cash and cash equivalents | | | $7,837 | | | |
Debt | | | | | ||
Senior unsecured notes | | | 23,991 | | | |
Subordinated notes | | | 9,651 | | | |
Line of credit | | | 5,000 | | | |
Total debt | | | 38,642 | | | |
Shareholders' equity | | | 30,384 | | | |
Common stock | | | 92,730 | | | |
Accumulated deficit | | | (52,949) | | | |
Accumulated other comprehensive income (loss) | | | (9,397) | | | |
Total shareholders' equity | | | 30,384 | | | |
Total capitalization | | | 69,026 | | |
• | default in the payment of any installment of interest on the Notes as and when due and payable, and continuance of such default for a period of 30 days; |
• | default in the payment of the principal on the Notes as and when due and payable either at maturity, upon redemption, by declaration of acceleration or otherwise; |
• | failure to duly observe or perform any of the covenants, warranties or agreements on the part of Conifer in respect of the Notes in the Indenture (other than a covenant, warranty or agreement, a default in whose performance or whose breach is specifically dealt with in the section of the Indenture governing events of default) and the continuance of such default or breach for a period of 90 days after the date on which written notice of such failure, specifying such failure and requiring the same to be remedied, shall have been given to Conifer by the Trustee, by registered mail, or to Conifer and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes; |
• | if any event of default as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of Conifer, whether such indebtedness now exists or is hereafter created or incurred, happens and consists of default in the payment of more than $15 million in principal amount of such indebtedness at the maturity thereof, after giving effect to any applicable grace period, or results in such indebtedness in principal amount in excess of $15 million becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such default is not cured or such acceleration is not rescinded or annulled within a period of 30 days after the date on which written notice of such failure, specifying such failure and requiring the same to be remedied, shall have been given to Conifer by the Trustee, by registered mail, or to Conifer and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes; |
• | the failure by Conifer within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $15 million, which is not stayed on appeal or is not otherwise being appropriately contested in good faith; |
• | a decree or order by a court having jurisdiction in the premises shall have been entered adjudging Conifer bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of Conifer under the Federal bankruptcy laws or any other similar applicable Federal or state law, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee or other similar official in bankruptcy or insolvency of Conifer or of all or substantially all of its property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or |
• | Conifer shall institute proceedings to be adjudicated voluntarily bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking an arrangement or a reorganization under the Federal bankruptcy laws or any other similar applicable Federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee or other similar official in bankruptcy or insolvency of it or of all or substantially all of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due. |
• | such holder has previously given the Trustee written notice of the occurrence of an event of default and the continuance thereof; |
• | holders of not less than 25% in aggregate principal amount of the outstanding Notes have made a written request to the Trustee to pursue the remedy; |
• | such holders provide to the Trustee such reasonable indemnity as the Trustee may require against any loss, liability or expense; |
• | the Trustee has not complied with such request within 60 days after receipt of the request and the provision of security or indemnity reasonably acceptable to the Trustee; and |
• | the holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction inconsistent with the request within such 60-day period. |
• | rank senior in right of payment to any of Conifer existing and future indebtedness and other obligations that are, by their terms, expressly subordinated or junior in right of payment to the Notes; |
• | rank equally in right of payment to all of Conifer existing and future unsecured indebtedness and other obligations that are not, by their terms, expressly subordinated or junior in right of payment to the Notes; |
• | be effectively subordinated to all of Conifer existing and future secured indebtedness and other obligations to the extent of the value of the collateral securing such secured indebtedness and other obligations; and |
• | be structurally subordinated to the indebtedness and other obligations of all of Conifer subsidiaries. |
• | immediately after such consolidation, merger, sale, conveyance or lease, the person formed by or surviving any such consolidation or merger, or to which such sale, conveyance or lease is made, is not in default in the performance or observance of any of the terms, covenants and conditions of the Indenture to be kept or performed by Conifer; and |
• | the due and punctual payment of the principal of and premium, if any, and interest on the Notes, and the due and punctual performance and observance of all of the covenants and conditions of the Indenture to be performed or observed by Conifer, are expressly assumed by the person (if other than Conifer) formed by such consolidation, or into which Conifer is merged, or by the person which shall have acquired or leased such property. |
• | prohibits Conifer from, directly or indirectly, selling, assigning, pledging, transferring or otherwise disposing, and Conifer cannot permit any of its subsidiaries to, directly or indirectly, sell, pledge, assign, transfer or otherwise dispose of, shares of voting capital stock, or securities convertible into voting capital stock, or options, warrants or rights to subscribe for or purchase capital stock of a Material Subsidiary (as defined below); and |
• | prohibits Conifer from permitting a Material Subsidiary to issue, sell or otherwise dispose of any shares of its voting capital stock or securities convertible into its voting capital stock or options, warrants or rights to subscribe for or purchase its voting capital stock, unless Conifer will own, directly or indirectly, at least 90% of the issued and outstanding voting stock of the Material Subsidiary after giving effect to that transaction. The covenant described in the preceding sentence does not apply to any transaction of the type described above under “— Merger, Consolidation, Sale, Lease or Conveyance.” |
• | merge or consolidate with or into any corporation or other person, unless such Material Subsidiary is the surviving corporation or person, or unless Conifer will own, directly or indirectly, at least 90% of the surviving corporation’s issued and outstanding voting stock; |
• | lease, sell, assign or transfer all or substantially all of its properties and assets to any corporation or other person (other than us), unless Conifer will own, directly or indirectly, at least 90% of the issued and outstanding voting stock of that corporation or other person; or |
• | pay any dividend in a Material Subsidiary’s voting capital stock or make any other distribution in its voting capital stock, other than to Conifer or its other subsidiaries, unless the Material Subsidiary to which the transaction relates, after obtaining any necessary regulatory approvals, unconditionally guarantees payment of the principal and any premium and interest on the Notes. |
• | pledge, encumbrance or lien to secure Conifer’s indebtedness or the indebtedness of a subsidiary as part of the purchase price of such shares of voting stock, or incurred prior to, at the time of or within 120 days after acquisition thereof for the purpose of financing all or any part of the purchase price thereof; |
• | lien for taxes, assessments or other government charges or levies (i) which are not yet due or payable without penalty, (ii) which Conifer is contesting in good faith by appropriate proceedings so long as Conifer has set aside on its books such reserves as shall be required in respect thereof in conformity with generally accepted accounting principles or (iii) which secure obligations of less than $500,000 in amount; or |
• | lien of any judgment, if that judgment (i) is discharged, or stayed on appeal or otherwise, within 90 days, (ii) is currently being contested in good faith by appropriate proceedings so long as Conifer has set aside on its books such reserves as shall be required in respect thereof in conformity with generally accepted accounting principles or (iii) involves claims of less than $500,000. |
(1) | either: (a) all Notes that have been authenticated and delivered, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for which payment has been deposited in trust or segregated and held in trust by Conifer and thereafter repaid to Conifer, have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation (i) have become due and payable at their stated maturity, (ii) shall become due and payable within one year or (iii) if redeemable at Conifer’s option, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of Conifer and Conifer has irrevocably deposited with the Trustee or the paying agent, in trust, for the benefit of the holders of the Notes, cash in United States dollars and/or non-callable government securities in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay and |
(2) | Conifer has paid all sums payable by it under the Indenture with respect to the Notes; |
(3) | Conifer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be; and |
(4) | Conifer has delivered to the Trustee an officers’ certificate and an opinion of counsel stating that the conditions precedent to the satisfaction and discharge of the Notes have been satisfied. |
(1) | Conifer has irrevocably deposited with the Trustee, in trust, cash in United States dollars and/or non-callable government securities that will provide funds in amount sufficient, without reinvestment, in the opinion of a nationally recognized public accounting firm, to pay the principal of, premium, if any, and accrued interest on the Notes at the time such payments are due or on the applicable redemption date in accordance with the terms of the Indenture; |
(2) | Conifer has delivered to the Trustee: (i) an opinion of counsel to the effect that beneficial owners of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of the defeasance and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such defeasance had not occurred, which opinion of counsel must be based upon a ruling of the Internal Revenue Service to the same effect or a change in applicable federal income tax law or related treasury regulations after the date of the Indenture; and (ii) an opinion of counsel to the effect that the defeasance trust does not constitute an “investment company” within the meaning of the Investment Company Act of 1940 and, after the passage of 91 days following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; |
(3) | no default (as defined above) or event of default will have occurred and be continuing on the date of such deposit, or insofar as events of default due to certain events of bankruptcy, insolvency or reorganization in respect of Conifer are concerned, during the period ending on the 91st day after the date of such deposit; |
(4) | Conifer shall have delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that, subject to certain assumptions and exclusions, all conditions precedent provided for or relating to the defeasance have been complied with; and |
(5) | the Trustee shall have received such other documents, assurances and opinions of counsel as the Trustee shall have reasonably required. |
• | change the stated maturity of the principal of, or any premium or any installment of interest on, the Notes; |
• | reduce the principal amount of, or the rate, or modify the calculation of such rate, of interest on, or any premium payable upon the redemption of, the Notes; |
• | change the redemption provisions of the Notes; |
• | change the place of payment or the coin or currency in which the principal of or any premium or interest on the Notes is payable; |
• | impair the right to institute suit for the enforcement of any payment on or after the stated maturity of the Notes or, in the case of redemption, on or after the redemption date; |
• | modify any of the provisions of the indenture relating to the offices for notices and payments, filling vacancies in the Trustee’s office, and paying agent provisions in a manner adverse to holders of the debt securities; or |
• | reduce the percentage of Notes, the holders of which are required to: |
• | consent to any supplemental indenture; |
• | rescind and annul a declaration that the Notes are due and payable as a result of the occurrence of an event of default; |
• | waive any past event of default under the Indenture and its consequences; and |
• | waive compliance with other specified provisions of the Indenture. |
• | to evidence the succession of another corporation to Conifer under the Indenture, or successive successions, and the assumption by the successor corporation of our covenants, agreements and obligations pursuant to the Indenture; |
• | to add to the covenants applicable to Conifer such further covenants, restrictions, conditions or provisions as our board of directors and the Trustee shall consider to be for the protection of the holders of the Notes, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions, conditions or provisions a default or event of default with respect to such series permitting the enforcement of all or any of the several remedies provided in the Indenture; provided, however, that in respect of any such additional covenant, restriction or condition, such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; |
• | to cure any ambiguity or to correct or supplement any provision contained in the Indenture or in any supplemental indenture which may be defective or inconsistent with any other provision contained in the Indenture or in any supplemental indenture or any description of such provision contained in this “Description of the Notes;” |
• | to convey, transfer, assign, mortgage or pledge any property to or with the Trustee; |
• | to make other provisions in regard to matters or questions arising under the Indenture as shall not adversely affect the interests of the holders and to make any change that would provide additional rights or benefits to the holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such holder; |
• | to evidence and provide for the acceptance of appointment by another corporation as a successor trustee under the Indenture with respect to the Notes and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or facilitate the administration of the trusts under the indenture by more than one trustee; |
• | to modify, amend or supplement the Indenture in such a manner as to permit the qualification of any supplemental indenture under the TIA as then in effect, except that nothing contained in the Indenture shall permit or authorize the inclusion in any supplemental indenture of the provisions referred to in Section 316(a)(2) of the TIA; |
• | to provide for the issuance under the Indenture of debt securities in coupon form (including debt securities registrable as to principal only) and to provide for exchangeability of such debt securities with debt securities of the same series issued hereunder in fully registered form and to make all appropriate changes for such purpose; |
• | to change or eliminate any of the provisions of the Indenture; provided, however, that any such change or elimination shall become effective only when there is no debt security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; and |
• | to establish any additional form of debt security and to provide for the issuance of any additional series of debt securities. |
• | by notification in writing by the holders of a majority in aggregate principal amount of the outstanding Notes; or |
• | by Conifer if the Trustee (i) fails to comply with the obligations imposed upon it under the TIA; (ii) is not organized and doing business under the laws of the United States or any state thereof; (iii) becomes incapable of acting as Trustee; or (iv) a court takes certain actions with respect to such Trustee relating to bankruptcy or insolvency. |
• | upon deposit of the global notes, DTC will credit the accounts of participants designated by the underwriters with portions of the principal amount of the global notes; and |
• | ownership of interests in the global notes will be shown on, and the transfer of ownership of the global notes will be effected only through, records maintained by DTC (with respect to participants) or by participants and indirect participants (with respect to other owners of beneficial interests in the global notes). |
• | any aspect of DTC’s records or any participant’s or indirect participant’s records relating to, or payments made on account of, beneficial ownership interests in the global notes, or for maintaining, supervising or reviewing any of DTC’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the global notes; or |
• | any other matter relating to the actions and practices of DTC or any of its participants or indirect participants. |
• | DTC notifies Conifer that it is unwilling or unable to continue as depositary for the global notes and Conifer fails to appoint a successor depositary within 90 days of receipt of DTC’s notice, or DTC has ceased to be a clearing agency registered under the Exchange Act and Conifer fails to appoint a successor depositary within 90 days of becoming aware of this condition; |
• | at Conifer’s request, DTC notifies holders of the Notes that they may utilize DTC’s procedures to cause the Notes to be issued in certificated form, and such holders request such issuance; or |
• | an event of default, or any event which after notice or lapse of time or both would be an event of default, exists under the Indenture and a request is made by DTC or one of its participants. |
• | An individual who is a citizen or resident of the United States; |
• | a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of any state of the United States or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a “United States person.” |
• | a Non-U.S. Holder does not actually or constructively own 10% or more of our stock within the meaning of 871(h)(3) of the Code; |
• | a Non-U.S. Holder is not a “controlled foreign corporation” for U.S. federal income tax purposes that is related to us (directly or indirectly) through ownership; |
• | a Non-U.S. Holder is not a bank extending credit under a loan agreement in the ordinary course of its trade or business; |
• | the Non-U.S. Holder satisfies the certification requirements described below; and |
• | such interest is not effectively connected with the conduct of a trade or business in the United States by a Non-U.S. Holder. |
Underwriter | | | Principal Amount Of Notes |
| | ||
| | ||
Total | | | $ |
| | Per Note | | | Total | |||||||
| | Without Over- allotment | | | With Over- allotment | | | Without Over- allotment | | | With Over- allotment | |
Public offering price(1) | | | $ | | | $ | | | $ | | | $ |
Underwriting discounts and commissions | | | $ | | | $ | | | $ | | | $ |
Proceeds to us, before expenses | | | $ | | | $ | | | $ | | | $ |
Net proceeds to us, after expenses | | | $ | | | $ | | | $ | | | $ |
(1) | Plus accrued interest, if any, from , 2022 |
• | our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 10, 2022; |
• | our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 12, 2022; |
• | our Proxy Statement filed with the SEC on April 7, 2022; and |
• | our Current Report on Form 8-K filed with the Commission on March 10, 2022. |
Item 13. | Other Expenses of Issuance and Distribution |
SEC Registration Fee | | | $ |
FINRA filing fee | | | |
Nasdaq listing fee | | | |
Legal Fees and Expenses | | | |
Accounting Fees and Expenses | | | |
Printing Fees and Expenses | | | |
Trustee Fees | | | |
Miscellaneous Expenses | | | |
Total | | | $ |
Item 14. | Indemnification of Directors and Officers |
Item 15. | Recent Sales of Unregistered Securities |
Item 16. | Exhibits and Financial Statement Schedules |
Exhibit Number | | | Description |
1.1** | | | Form of Underwriting Agreement |
| | ||
| | Second Amended and Restated Articles of Incorporation of Conifer Holdings, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on August 28, 2015) | |
| | ||
| | Amended and Restated Bylaws of Conifer Holdings, Inc. (incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement Form S-1/A filed on July 30, 2015) | |
| | ||
| | Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement Form S-1/A filed on July 30, 2015) | |
| | ||
| | 2018 Indenture (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on September 24, 2018) | |
| | ||
| | 2018 Supplemental Indenture (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on September 24, 2018) | |
| | ||
| | Form of 2018 Note (incorporated by reference to Exhibit 4.4 of the Company’s Registration Statement on Form S-1/A filed on September 10, 2018) | |
| | ||
4.5** | | | Form of 2022 Indenture |
| | ||
4.6** | | | Form of 2022 Supplemental Indenture |
| | ||
4.7** | | | Form of 2022 Note |
| | ||
5.1** | | | Opinion of Honigman LLP |
| | ||
| | 2015 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Registration Statement Form S-1 filed on July 2, 2015) | |
| | ||
| | Lease Agreement, dated September 18, 2013, as amended (incorporated by reference to Exhibit 10.3 to the Company’s S-1 filed on July 2, 2015) | |
| | ||
| | Employment Agreements with Nicholas J. Petcoff, James G. Petcoff, Andrew D. Petcoff and Brian J. Roney (incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K filed on March 15, 2017) | |
| |
Exhibit Number | | | Description |
| | Note Purchase Agreement dated September 29, 2017 between the Company and Elanus Capital Investments Master SP Series 3 (incorporated by reference to Exhibit 10.14 of the Company’s Quarterly Report on Form 10-Q filed on November 8, 2017) | |
| | ||
| | Credit Agreement dated as of June 21, 2018 between the Company and The Huntington National Bank (incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K filed on March 13, 2019) | |
| | ||
| | First Amendment to Credit Agreement dated as of December 27, 2018 between the Company and the Huntington National Bank (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K filed on March 13, 2019) | |
| | ||
| | Second Amendment to Credit Agreement dated as of June 21, 2019 between the Company and The Huntington National Bank (incorporated by reference to Exhibit 10.22 of the Company’s Annual Report on Form 10-K filed on March 12, 2020) | |
| | ||
| | Third Amendment to Credit Agreement dated as of April 24, 2020 between the Company and The Huntington National Bank (incorporated by reference to Exhibit 10.24 of the Company’s Quarterly Report on Form 10-Q filed on May 13, 2020) | |
| | ||
| | Fourth Amendment to Credit Agreement dated as of June 19, 2020 between the Company and The Huntington National Bank (incorporated by reference to Exhibit 10.26 of the Company’s Quarterly Report on Form 10-Q filed on August 12, 2020) | |
| | ||
| | Fifth Amendment to Credit Agreement dated as of June 18, 2021 between the Company and the Huntington National Bank (incorporated by reference to Exhibit 10.28 of the Company’s Quarterly Report on Form 10-Q filed on August 11, 2021) | |
| | ||
| | Amended and Restated Note Purchase Agreement dated September 25, 2018 between the Company and Elanus Capital Investments Master SP Series 3 (incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K filed on March 13, 2019) | |
| | ||
| | First Amendment to Amended and Restated Note Purchase Agreement dated as of December 13, 2018 between the Company and Elanus Capital Investments Master SP Series 3 (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K filed on March 13, 2019) | |
| | ||
| | Second Amendment to Amended and Restated Note Purchase Agreement dated as of June 21, 2019 between the Company and Elanus Capital Investments Master SP Series 3 (incorporated by reference to Exhibit 10.21 of the Company’s Annual Report on Form 10-K filed on March 12, 2020) | |
| | ||
| | Third Amendment to Amended and Restated Note Purchase Agreement dated as of May 9, 2022 between the Company and Elanus Capital Investments Master SP Series 3 | |
| | ||
| | Waiver and Consent from The Huntington National Bank dated as of October 31, 2018 regarding the Amended and Restated Note Purchase Agreement between the Company and Elanus Capital Investments Master SP Series 3 (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K filed on March 13, 2019) | |
| | ||
| | Waiver from The Huntington National Bank dated as of May 11, 2022 | |
| |
Exhibit Number | | | Description |
| | Waiver from Elanus Capital Investments Master SP Series 3 dated as of May 9, 2022 | |
| | ||
| | List of Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K filed on March 10, 2022) | |
| | ||
| | Consent of Deloitte & Touche LLP | |
| | ||
23.2** | | | Consent of Honigman LLP (included in Exhibit 5.1) |
| | ||
| | Power of Attorney (included on signature page) | |
| | ||
25.1** | | | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, by the trustee under the Indenture |
| | ||
| | Filing Fee Table |
* | Filed herewith. |
** | To be filed by amendment. |
Item 17. | Undertakings |
(1) | That for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
(2) | That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| | CONIFER HOLDINGS, INC. | ||||
| | | | |||
| | By: | | | /s/ James G. Petcoff | |
| | | | James G. Petcoff | ||
| | | | Executive Chairman and Co-Chief Executive Officer (Principal Executive Officer) |
Signature | | | Title | | | Date |
| | | | |||
/s/ James G. Petcoff | | | Executive Chairman and Co-Chief Executive Officer (Principal Executive Officer) | | | May 17, 2022 |
James G. Petcoff | | |||||
| | | | |||
/s/ Nicholas J. Petcoff | | | Co-Chief Executive Officer (Principal Executive Officer) | | | May 17, 2022 |
Nicholas J. Petcoff | | |||||
| | | | |||
/s/ Harold J. Meloche | | | Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer) | | | May 17, 2022 |
Harold J. Meloche | | |||||
| | | | |||
/s/ Timothy Lamothe | | | Director | | | May 17, 2022 |
Timothy Lamothe | | |||||
| | | | |||
/s/ Andrew Petcoff | | | Director | | | May 17, 2022 |
Andrew Petcoff | | |||||
| | | | |||
/s/ John Melstrom | | | Director | | | May 17, 2022 |
John Melstrom | | |||||
| | | | |||
/s/ Richard J. Williams, Jr. | | | Director | | | May 17, 2022 |
Richard J. Williams, Jr. | |
ELANUS CAPITAL INVESTMENTS MASTER SP SERIES 3
|
||
By:
|
/s/ Jon Imundo
|
|
Name:
|
Jon Imundo
|
|
Title:
|
Authorized Signatory
|
CONIFER HOLDINGS, INC.
|
||
By:
|
/s/ Harold Meloche
|
|
Name:
|
Harold Meloche
|
|
Title:
|
Chief Financial Officer
|
Re: |
Credit Agreement dated June 21, 2018 between Conifer Holdings, Inc. (“Borrower”) and The Huntington National Bank, as amended (“Credit Agreement”)
|
Very truly yours,
|
||
THE HUNTINGTON NATIONAL BANK
|
||
By:
|
/s/ T. Elliot Shafer
|
|
T. Elliot Shafer
|
||
Its:
|
Vice President
|
Acknowledge and Agreed:
|
||
CONFER HOLDINGS, INC.
|
||
By:
|
/s/ Harold Meloche
|
|
Harold Meloche | ||
Its:
|
CFO
|
Re: |
Waiver re: Amended and Restated Note Purchase Agreement
|
ELANUS CAPITAL INVESTMENTS MASTER SP SERIES 3
|
||
By:
|
/s/ Jon Imundo
|
|
Name:
|
Jon Imundo
|
|
Title:
|
Authorized Signatory
|
|
CONIFER HOLDINGS, INC.
|
||
By:
|
/s/ Harold Meloche
|
|
Name:
|
Harold Meloche
|
|
Title:
|
Chief Financial Officer
|
Security Type
|
Security Class Title
|
Fee Calculation Rule
|
Maximum Aggregate Offering Price
|
Fee Rate
|
Amount of Registration Fee
|
Debt
|
Senior Unsecured Notes Due
|
Rule 457(o)
|
$32,000,000.00
|
0.0000927
|
$2,966.40
|
Total Offering Amounts
|
$2,966.40 |
||||
Total Fee Offsets
|
- |
||||
Net Fee Due
|
$2,966.40 |
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