Trisura Group Reports Second Quarter 2023 Results
David Clare, President and CEO of Trisura, stated, “Trisura reported strong performance in the quarter with operating net income of $26.0 million, or $0.56 per share, achieved through measured growth, underwriting profitability and enhanced investment income. Quarterly net income of $26.8 million, or $0.57 per share, was positively impacted by the run-off of a US program, partially offset by unrealized losses on the investment portfolio.
Maturation of our business and continued expansion with distribution partners drove increased market share and resulted in insurance revenue growth of 43.0%. In Canada, disciplined underwriting yielded a combined ratio of 82.9%. US Fronting demonstrated strong fundamentals, with improvements in fronting operational ratio and sustained growth.
Net investment income grew 134.4% in the quarter, reaching $11.9 million through higher risk-adjusted yields and increased size of the investment portfolio.
Our business remains well-capitalized, supported by surplus capital, a $50 million revolving credit facility, a 12.4% debt to capital ratio and a conservatively positioned investment portfolio.”
Financial Highlights
- Insurance revenue growth of 43.0% in Q2 2023 reflected sustained momentum across North America.
- Net income of $26.8 million in the quarter grew compared to prior period as a result of growth in the business. Operating net income ( 1 ) of $26.0 million in the quarter grew 36.5% compared to prior period, driven by profitable growth in Canada and growth in core operations (2) in the US, as well as growth in Net investment income.
- EPS of $0.57 in Q2 2023 compared to $0.50 in Q2 2022. Operating EPS ( 3 ) of $0.56 for the quarter compared to $0.45 in the prior year.
- Book value per share ( 4 ) of $11.53 increased 30.0% from June 30, 2022, driven by our July 2022 equity raise, strong Canadian earnings and foreign currency movements, but diluted by the write down on reinsurance recoverables and unrealized losses on investments.
- ROE ( 4 ) of 4.9% compared to 19.2% in Q2 2022, below our mid-teens target as a result of the write down on reinsurance recoverables and losses associated with the run-off program. Operating ROE ( 5 ) of 19.2% exceeded our target, demonstrating the strength of our core operations despite significant growth and a larger capital base.
Insurance Operations
- Insurance revenue in Canada increased by 31.5% in the quarter compared to Q2 2022, reflecting increased market share, expansion of distribution relationships, new fronting arrangements and the benefit of stable market pricing conditions in certain lines of business. Strong underwriting performance across all lines contributed to a combined ratio of 82.9%, an ROE of 26.7% and Operating ROE of 28.4% in Q2 2023.
- Insurance revenue in the US of $467.9 million in the quarter increased by 48.5%, compared to Q2 2022, reflecting favourable market conditions and maturation of existing programs. Fee income ( 7 ) of $18.9 million in the quarter increased by 22.3% compared to $15.5 million in Q2 2022. This contributed to Net income of $16.0 million and improved Operating net income of $11.1 million in the quarter, supporting a 14.3% Operating ROE.
Capital
- The Minimum Capital Test ratio ( 8 ) of our regulated Canadian subsidiary was 224% as at June 30, 2023 (233% as at December 31, 2022), which comfortably exceeded regulatory requirements ( 9 ) of 150%.
- As at December 31, 2022, the Risk-Based Capital of the regulated insurance companies of Trisura US were in excess of the various company action levels of the states in which they are licensed.
- Consolidated debt-to-capital ratio of 12.4% as at June 30, 2023 is below our long-term target of 20.0%.
- Surplus capital and a $50 million revolving credit facility. In July 2023, $10 million USD was utilized from the revolving credit facility for purposes of issuing a letter of credit, in relation to our US Surety operations.
Investments
- Interest and dividend income rose 134.4% in the quarter compared to Q2 2022. The portfolio benefited from higher risk-adjusted yields and increased capital generated from strong operational performance and the July 2022 equity raise.
Corporate Development
- On August 9 th , Trisura executed a purchase and sale agreement to acquire a US surety company. The company is a Treasury-listed platform that will enhance the offering of our US Surety practice as well as expand our distribution relationships. Regulatory approval is pending.
Earnings Conference Call
Trisura will host its Second Quarter Earnings Conference Call to review financial results at 9:00 a.m. ET on Friday, August 11 th , 2023.
To listen to the call via live audio webcast, please follow the link below:
https://edge.media-server.com/mmc/p/4awigj54
A replay of the call will be available through the link above.
About Trisura Group
Trisura Group Ltd. Is a specialty insurance provider operating in the Surety, Risk Solutions, Corporate Insurance, and Fronting business lines of the market. Trisura has investments in wholly owned subsidiaries through which it conducts insurance and reinsurance operations. Those operations are primarily in Canada (“Trisura Canada”) and the United States (“Trisura US”). Trisura Group Ltd. Is listed on the Toronto Stock Exchange under the symbol “TSU”.
Further information is available at http://www.trisura.com . Important information may be disseminated exclusively via the website; investors should consult the site to access this information. Details regarding the operations of Trisura Group Ltd. Are also set forth in regulatory filings. A copy of the filings may be obtained on Trisura Group’s SEDAR profile at www.sedar.com .
For more information, please contact:
Name: Bryan Sinclair
Tel: 416 607 2135
Email: bryan.sinclair@trisura.com
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