TORONTO, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Trisura Group Ltd. (“Trisura” or “Trisura Group”) (TSX: TSU), a leading international specialty insurance provider, today announced financial results for the third quarter of 2019.

David Clare, President and CEO of Trisura, stated, “In Q3, Trisura Group Ltd. generated net income of $2.5 million, driven by strong performance from our specialty P&C platforms in North America.

In Canada, consistent underwriting and enhanced investment returns yielded a 19.1% TTM ROE. Our U.S. platform continued its trajectory of growth, with net income of $1.4 million alongside GPW of $71.2 million.

Declining interest rates in Europe drove strengthening in our reinsurance annuity reserves, offset by improved investment income as well as the adoption of a reserving methodology consistent with Solvency II.”

Highlights

  • Gross and net premiums written growth of 99.6% and 24.5% in Q3 2019, supported by strong momentum in our U.S. business and continued growth in Canada.
  • Q3 2019 net income of $2.5 million, driven by strong underwriting performance and investment income in Canada and the U.S., offset by an increase in our reinsurance reserves due to a decrease in European interest rates.
  • Consolidated Trailing Twelve Months (“TTM”) ROE of 1.9% at September 30, 2019, compared to 5.6% at September 30, 2018. Excluding the impact of our reinsurance business in 2019, consolidated TTM ROE is approximately 8.5%.
  • Successfully completed a $55.7 million equity raise to sustain growth in the US, and further improve asset liability matching in our reinsurance company, supported by existing and new shareholders.
  • Stable results from our Canadian business, achieving a 92.6% combined ratio, driving a 19.1% TTM ROE.
  • Accelerating premium generation in our US fronting platform, with $71.2 million in GPW, and increasing earned fee income generating consistent profitability.
  • Basic and diluted EPS of $0.37 in Q3 2019, compared to $0.62 in Q3 2018; $0.29 per share when adjusted for the share count at quarter end.
  • Book value per share of $21.41, a 10.6% increase over September 30, 2018.
Amounts in millions of Canadian dollarsQ3 2019 Q3 2018 Variance Q3 2019 YTD Q3 2018 YTD Variance 
Gross Premiums Written114.4 57.3 99.6% 305.1 150.8 102.3% 
Net Premiums Written37.4 30.1 24.5% 103.0 84.4 22.1% 
Net Underwriting (Loss) Income(6.6) 2.1 nm (23.8) 3.3 nm 
Net Investment Income10.0 3.6 174.6% 20.7 7.6 171.1% 
Net Income2.5 4.2 (38.9%) 0.9 7.0 (86.8%) 
Earnings Per Common Share - basic, $0.37 0.62 (40.4%) 0.13 1.05 (87.8%) 
Adjusted Earnings Per Common Share, $*0.29 n/a n/a 0.10 n/a n/a 
Book Value Per Share, $21.41 19.35 10.6% 21.41 19.35 10.6% 
Debt-to-Capital Ratio13.6% 18.8% (5.2pts) 13.6% 18.8% (5.2pts) 
ROE TTM1.9% 5.6% (3.7pts) 1.9% 5.6% (3.7pts) 
Combined Ratio - Canadian Specialty P&C92.6% 85.5% 7.1pts 89.5% 87.2% 2.3pts 
Canadian Specialty P&C ROE - TTM19.1% 15.8% 3.3pts 19.1% 15.8% 3.3pts 

* Net income attributable to common shareholders for the reporting period divided by the ending number of common shares as at the reporting date

Underwriting

  • Stable performance from our Canadian operations, achieving NPE growth of 10.7% and a 92.6% combined ratio supported by strong underwriting across all lines.
  • Accelerating premium growth in our U.S. platform, with GPW of $71.2 million in Q3 2019 compared to $55.5 million in Q2 2019. Earned fee income of $2.4 million, compared to $1.5 million in Q2 2019, helped support annualized quarterly ROE of 8.3%.
  • Weakening interest rates in Europe drove reserve strengthening in our reinsurance subsidiary, partially offset by investment income.
  • Adoption of a new reserving methodology, consistent with Solvency II, resulted in $5.8 million reduction in reserves.

Capital

  • The minimum capital test (“MCT”) ratio of our Canadian subsidiary was 233% (239% as at December 31, 2018), which comfortably exceeds regulatory requirements of 150%.
  • Trisura Specialty’s capital of $60.2 million USD as at September 30, 2019 ($48.8 million USD as at December 31, 2018) was in excess of the minimum requirement of the Oklahoma Insurance Department.
  • Trisura International’s capital of $14.5 million USD as at September 30, 2019 ($21.1 million USD as at December 31, 2018) was sufficient to meet the FSC’s regulatory capital requirement.
  • Consolidated debt-to-capital ratio of 13.6% as at September 30, 2019 is below our long-term target of 20%.
  • AM Best affirmed the Financial Strength Rating A- (Excellent) and the Long-Term Credit Rating of “a-” of Trisura Guarantee and Trisura Specialty. The outlook of these Credit Ratings remains stable.

Investments

  • Net investment income of $10.0 million in Q3 2019 compared to $3.6 million in Q3 2018, driven by deployment of reinsurance assets into long-dated European government bonds, which generated strong results in a declining interest rate environment.
  • In Canada, interest and dividend income increased 42.4% over the prior period as we continued to benefit from the reallocation of the Canadian portfolio.
  • In the fourth quarter we continued to deploy reinsurance capital into long-dated European government bonds which has further improved our asset liability matching, as well as increasing our expected interest income.

Corporate Development

  • On June 22, Trisura applied for approval from the Pennsylvania Insurance Department to acquire control of 21st Century Preferred Insurance Company. The company is a shell entity, with 13 admitted state licenses that will enhance the offering of our US fronting platform.
  • Regulatory approval was received on October 22, and the transaction closed November 1.

About Trisura Group

Trisura Group Ltd. is an international specialty insurance provider operating in the surety, risk solutions, corporate insurance and reinsurance segments of the market. Trisura has three principal regulated subsidiaries: Trisura Guarantee Insurance Company in Canada, Trisura Specialty Insurance Company in the U.S. and Trisura International Insurance Ltd. in Barbados. Trisura Group 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 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 September 30, 2019 and December 31, 2018
(in thousands of Canadian dollars, except as otherwise noted)

As atSeptember 30, 2019 December 31, 2018 
Cash and cash equivalents131,913 95,212 
Investments340,130 282,874 
Premiums and accounts receivable, and other assets72,504 46,276 
Deferred acquisition costs91,912 63,715 
Recoverable from reinsurers238,872 109,567 
Capital assets and intangible assets10,201 2,512 
Deferred tax assets1,361 826 
Total assets886,893 600,982 
Accounts payable, accrued and other liabilities33,719 24,167 
Reinsurance premiums payable62,750 41,406 
Unearned premiums285,268 182,623 
Unearned reinsurance commissions40,932 19,137 
Unpaid claims and loss adjustment expenses245,693 173,997 
Loan payable29,700 29,700 
Total liabilities698,062 471,030 
Shareholders' equity188,831 129,952 
Total liabilities and shareholders' equity886,893 600,982 


Trisura Group Ltd.
Consolidated Statements of Comprehensive Income
For the three and nine months ended September 30
(in thousands of Canadian dollars, except as otherwise noted)

 Q3 2019Q3 2018Q3 2019 YTDQ3 2018 YTD
Gross premiums written114,354 57,282 305,050 150,767 
Net premiums written37,429 30,072 102,972 84,361 
Net premiums earned29,719 25,281 77,794 65,826 
Fee income2,530 370 8,631 4,049 
Total underwriting revenue32,249 25,651 86,425 69,875 
Net claims(18,092) (4,583) (49,249) (13,482) 
Net commissions(10,265) (8,313) (27,839) (23,358) 
Premium taxes(1,491) (1,418) (3,889) (3,480) 
Operating expenses(9,020) (9,245) (29,237) (26,250) 
Net claims and expenses (38,868) (23,559) (110,214) (66,570) 
Net underwriting (loss) income(6,619) 2,092 (23,789) 3,305 
Net investment income9,991 3,639 20,679 7,628 
Settlement from structured insurance assets- - 8,077 - 
Foreign exchange gains (losses)512 171 1,096 (153) 
Interest expense(333) (243) (1,020) (709) 
Income before income taxes3,551 5,659 5,043 10,071 
Income tax expense(1,008) (1,499) (4,121) (3,064) 
Net income2,543 4,160 922 7,007 
Other comprehensive income (loss)1,048 (2,712) 1,996 (468) 
Comprehensive income3,591 1,448 2,918 6,539 


Trisura Group Ltd.
Consolidated Statements of Cash Flows
For the three and nine months ended September 30
(in thousands of Canadian dollars, except as otherwise noted)

 Q3 2019Q3 2018Q3 2019 YTDQ3 2018 YTD
Net income from operating activities2,543 4,160 922 7,007 
Non-cash items to be deducted(348) 529 (1,508) 2,918 
Stock options granted146 (72) 364 171 
Change in working capital operating items25,704 9,255 39,982 7,010 
Realized gains on AFS investments(1,054) (1,083) (2,800) (782) 
Income taxes paid(592) (426) (2,459) (2,367) 
Interest paid(350) (256) (1,056) (725) 
Net cash from operating activities26,049 12,107 33,445 13,232 
Proceeds on disposal of investments13,098 49,607 41,647 81,725 
Purchases of investments(27,832) (55,982) (91,076) (160,731) 
Net purchases of capital and intangible assets(104) (269) (408) (584) 
Net cash used in investing activities(14,838) (6,644) (49,837) (79,590) 
Dividends paid(24) (24) (72) (72) 
Shares issued55,669  55,669  
Issuance of new loan payable- - - 29,700 
Repayment of loan payable- - - (29,700) 
Principal portion of lease payments(265) - (760) - 
Net cash from (used in) financing activities55,380 (24) 54,837 (72) 
Net increase (decrease) in cash66,591 5,439 38,445 (66,430) 
Cash at beginning of the period64,949 97,739 95,212 165,675 
Currency translation373 (490) (1,744) 3,443 
Cash at the end of the period131,913 102,688 131,913 102,688 


Cautionary Statement Regarding Forward-Looking Statements and Information

Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Trisura Group, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of Trisura Group to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the ability to appropriately manage human capital; the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; governmental investigations; litigation; changes in tax laws; ability to collect amounts owed; catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts and cyber terrorism; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, Trisura Group undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.