Press Release

Trisura Group Reports Fourth Quarter and 2021 Annual Results – QNT Press Release

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TORONTO, Feb. 10, 2022 (GLOBE NEWSWIRE) — Trisura Group Ltd. (“Trisura” or “Trisura Group”) (TSX:TSU), a leading international specialty insurance provider, today announced financial results for the fourth quarter and year ended December 31, 2021.

David Clare, President and CEO of Trisura, stated, “Our business performed very well through 2021, recording earnings of $62.6 million, an increase of 92.8% compared to 2020. Persistent growth and strong underwriting, supported by investment gains, generated a 19.0% return on equity(1)despite continued investment in growth.

Expansion of market share, maturation of our platform and new products drove premium growth of 54.3% in the quarter and 68.7% for the year. In Canada, focused underwriting resulted in an 81.1% combined ratio for the year, despite higher than trend claims activity in Q4. Our US business bound a quarterly record $293.3 million of gross premiums, supporting $6.8 million in net income and significant deferred fee income.

We continued the rationalization of our Reinsurance platform, negotiating a novation of our life annuity reinsurance contract to a third party, which reduces our exposure to variability in European interest rates and allows management to direct focus to core North American businesses. The novation drove the $2.6 million loss(2) from life annuity contracts in the quarter.”

Highlights

  • EPS of $0.24 in Q4 2021 and $1.49 for the full year compared to $0.26 and $0.82 respectively in 2020. Adjusted EPS(3) of $0.31 for the quarter and $1.47 for the full year compared to $0.24 and $0.84 in prior periods.
  • Book value per share(1) of $8.70 increased by 23.2% from December 31, 2020, driven by significant earnings and unrealized gains in the investment portfolio.
  • Gross written premiums growth of 54.3% in Q4 2021, and 68.7% for the full year, was supported by continued growth in Canada and strong momentum in US fronting.
  • Net income of $10.3 million in the quarter fell 6.0% compared to Q4 2020, negatively impacted by novation of our life annuity reinsurance contract and higher claims in the quarter. Adjusted net income(2) of $13.2 million in the quarter grew by 31.6% compared to Q4 2020. Net income for the full year grew by 92.8% to $62.6 million, a result of both growth and strong underwriting in Canada, increasing fee income from the US, and appropriate asset liability matching in our Reinsurance business.
  • ROE of 19.0% compared to 13.4% in 2020, exceeding our mid-teens target despite significant growth.
  • GPW in Canada increased by 84.9% in Q4 2021 and 102.1% for the full year. Strong underwriting performance across all lines contributed to a combined ratio(1) of 91.2% for the quarter and 81.1% for the year, and a 29.8% ROE.
  • New fronting arrangements in Canada contributed $96.3 million in the quarter and $198.2 million for the full year.
  • US premium grew by 39.2% and fee income grew by 41.2% in the quarter compared to Q4 2020, reaching $293.3 million and $11.9 million, respectively. For the year, premium grew by 54.4% to $1.0 billion and fee income grew by 76.6% to $43.0 million. This contributed to improved net income of $6.8 million in the quarter and $27.2 million for the full year, contributing to a 14.0% ROE despite an increase in the capital base.
Amounts in C$ millions Q4 2021 Q4 2020 Variance 2021 2020 Variance
Gross premiums written 484.7 314.2 54.3% 1,563.2 926.4 68.7%
net income 10.3 10.9 (6.0%) 62.6 32.4 92.8%
EPS – diluted, $ 0.24 0.26 (7.7%) 1.49 0.82 81.7%
Adjusted EPS – diluted, $ 0.31 0.24 29.2% 1.47 0.84 75.0%
Book value per share, $ 8.70 7.06 23.2% 8.70 7.06 23.2%
Debt-to-Capital ratio(1) 17.3% 8.7% 8.6pts 17.3% 8.7% 8.6pts
ROE 19.0% 13.4% 5.6pts 19.0% 13.4% 5.6pts
Adjusted ROE(4) 18.8% 13.8% 5.0pts 18.8% 13.8% 5.0pts
Combined ratio – Canada 91.2% 87.3% 3.9pts 81.1% 85.5% (4.4pts)
Fronting Operational Ratio – US(1) 79.0% 68.5% 10.5pts 72.7% 70.6% 2.1pts


COVID-19

  • We have begun a gradual return to work in some jurisdictions based on local guidance, following increased safety measures and increased levels of vaccination.
  • Despite demonstrated resilience, we acknowledge that, uncertainty regarding variants, economic reopening, normalization of government support and the potential for a weaker than anticipated economic recovery continue to threaten momentum.
  • Premium generation and claims activity may be impacted depending on the length and depth of any future pandemic-related economic slowdown, as well as the effectiveness of government support programs and vaccines in driving a sustained re-opening. Depending on these factors, premium growth could slow and claims activity could increase.

Insurance Operations

  • Disciplined underwriting in Canada contributed to a loss ratio(1) of 26.2% for the quarter and 21.2% for the year, which were both improved over 2020, while premiums grew by 84.9% in the quarter and 102.1% for the full year.
  • Growth continued in the US, with GPW of $293.3 million in the quarter, compared to $210.7 million in Q4 2020, and fee income of $11.9 million in the quarter compared to $8.4 million in Q4 2020. Growth was the result of maturing and new programs.
  • Reinsurance business simplified following the novation of our life annuity contract.

Capital

  • The minimum capital test (“MCT”) ratio(5) of our regulated Canadian subsidiary was 229% as at December 31, 2021 (249% as at December 31, 2020), which comfortably exceeded regulatory requirements(6) of 150%.
  • Capital in our US operations of $212.7 million at December 31, 2021 ($156.0 million at December 31, 2020) was in excess of the various Company Action Levels of the states in which Trisura is licensed.
  • Consolidated debt-to-capital ratio of 17.3% as at December 31, 2021 is below our long-term target of 20.0%, providing incremental capacity for growth.

Investments

  • Interest and dividend income rose 25.8% in the quarter compared to Q4 2020 and 17.6% for the full year compared to 2020. The Canadian and US portfolios benefited from improved diversification and increased capital generated from strong operational performance.

Corporate Development

  • Launched Bricktown Specialty Insurance Company, a companion Excess and Surplus balance sheet to support growth of our hybrid fronting platform.
  • AM Best reaffirmed A- ratings for both Canada and the US, as well as introduced a group financial size rating increasing our financial size category to size IX, which is expected to be helpful as we continue to pursue admitted opportunities.
  • Trisura continues to pursue admitted licenses in all 50 states.

Financial Statement Presentation – Update

  • Adjusted EPS and Adjusted ROE were introduced in Q4 2020, to adjust for certain items to normalize earnings of core operations in order to better reflect our North American specialty operations.

Earnings Conference Call

Trisura will host its Fourth Quarter Earnings Conference Call to review financial results at 9:00 am ET on Friday February 11th2022.

To listen to the call via live audio webcast, please follow the link below:
https://edge.media-server.com/mmc/p/zi8qnky5

A replay of the call will be available through the link above.

Footnotes

(1) This is a supplementary financial measure. Refer to 2021 MD&A, Section 10, Operating Metrics table for its composition. To access MD&A, see Trisura’s website or SEDAR at www.sedar.com.

(2) See section on Non-IFRS financial measures, Reconciliation of Reported Net Income to Adjusted Net Income. Adjusted Net Income is a non-IFRS financial measure. Non-IFRS financial measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Company to which the measure relates and might not be comparable to similar financial measures disclosed by other companies. Details and an explanation of how it provides useful information to an investor can be found in the reconciliation table.

(3) This is a non-IFRS ratio, see table 10.2 in 2021 MD&A for details on composition, as well as each non-IFRS financial measure used as a component of ratio, and an explanation of how it provides useful information to an investor. Non- IFRS ratios are not standardized under the financial reporting framework used to prepare the financial statements of the Company to which the ratio relates and might not be comparable to similar ratios disclosed by other companies.

(4) This is a non-IFRS ratio. See table 10.4 in 2021 MD&A for details on composition, as well as each non-IFRS financial measure used as a component of ratio, and an explanation of how it provides useful information to an investor .

(5) This measure is calculated in accordance with the Office of the Superintendent of Financial Institutions Canada’s (OSFI’s) Guideline A, Minimum Capital Test.

(6) This target is in accordance with OSFI’s Guideline A-4, Regulatory Capital and Internal Capital Targets.

About Trisura Group

Trisura Group Ltd. is an international specialty insurance provider operating in the surety, risk solutions, corporate insurance, fronting and reinsurance segments 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”), as well as Barbados (“Trisura International”). Trisura Group Ltd. is listed on the Toronto Stock Exchange under the symbol “TSU”.

Further information is available at http://www.trisura.com/group. 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


Trisura Group Ltd.
Consolidated Statements of Financial Position
As at December 31, 2021 and December 31, 2020
(in thousands of Canadian dollars, except as otherwise noted)

As at December 31, 2021 December 31, 2020
Cash and cash equivalents 341,319

Full story available on Benzinga.com

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