Trisura Group Ltd. (“Trisura” or “Trisura Group”) (TSX: TSU), a
leading international specialty insurance provider, today announced
financial results for the first quarter of 2020.
David Clare, President and CEO of Trisura,
stated, “We are pleased with Trisura’s first quarter results,
generating net income of $8.4 million, vs. $2.5 million in Q1 2019
driven by increasing profitability from our US platform and
continued strength in Canada.
Our US operations bound $120.7 million of gross
premiums written and generated $2.6 million in net income. In
Canada, disciplined underwriting and enhanced investment returns
sustained our industry-leading 19.3% return on equity.
Importantly, improved asset-liability matching
in our international reinsurance operations limited volatility in a
challenging environment.
Notwithstanding our improved net income, book
value per share decreased as a result of mark-to-market losses in
the investment portfolio. However, our balance sheet remains
healthy. Regulatory capital levels are strong despite market
volatility while liquidity has been enhanced through an increase in
available capacity from our revolving credit facility.”
Highlights
- Gross and net written premiums growth of 108.8% and 46.1% in
Q1, supported by continued momentum in our US operations and
continued growth in Canada.
- Net income of $8.4 million vs. $2.5 million in Q1 2019, driven
by strong underwriting performance and investment income in Canada,
and growing profitability in the US. We also recognized a gain
related to the recognition of previously generated tax
losses.
- EPS of $0.94 in Q1 2020, compared to $0.37 in Q1
2019.
- Book value per share of $21.23, a 1.6% decrease from $21.58 at
December 31, 2019 as a result of unrealized losses in the
investment portfolio.
- Industry-leading results from our Canadian business, achieving
a combined ratio of 82.0% in the current quarter vs. 83.5% in Q1
2019, and producing a 19.3% LTM ROE.
- Continued acceleration in our US. operations, producing $120.7
million in GPW in the quarter vs. $41.9 million in Q1 2019; $2.6
million in net income, and a 9.3% LQA ROE demonstrate the potential
of our maturing platform.
- Increased our revolving credit facility capacity to $50.0
million, at consistent pricing, with the ability to draw proceeds
in Canadian or US dollars. Debt-to-capital ratio was 15.3% at
March 31, 2020, below our long-term target of 20.0%.
Amounts in C$ millions |
Q1 2020 |
|
Q1 2019 |
Variance |
|
Gross premiums written |
170.0 |
|
81.4 |
108.8% |
|
Net premiums written |
41.5 |
|
28.4 |
46.1% |
|
Net underwriting income (loss) |
0.6 |
|
(8.3) |
nm |
|
Net investment income |
8.5 |
|
4.3 |
97.9% |
|
Net income |
8.4 |
|
2.5 |
232.6% |
|
EPS - diluted, $ |
0.94 |
|
0.37 |
154.9% |
|
Book value per share, $ |
21.2 |
|
20.4 |
4.0% |
|
Debt-to-Capital ratio |
15.3% |
|
18.0% |
(2.7pts) |
|
LTM ROE |
6.8% |
|
7.2% |
(0.4pts) |
|
Combined ratio - Canada |
82.0% |
|
83.5% |
(1.5pts) |
|
LTM ROE - Canada |
19.3% |
|
21.3% |
(2.0pts) |
|
COVID-19
- Preliminary results for the month of April have demonstrated
resilience, however Q2 2020 premium generation and claims activity
may be impacted by the length and depth of the pandemic-related
economic slowdown, as well as the effectiveness of government
support programs. Depending on these factors, premium growth
could slow and claims activity could increase.
- The most direct financial impact observed during the quarter
related to COVID-19 was the mark-to-market volatility in our
investment portfolio.
- In April, we did not observe a significant impact on
underwriting results; our policies generally do not provide
pandemic coverage and many surety bonds are focused on
infrastructure projects deemed essential.
- Trisura employees are working effectively from home.
Underwriting
- Disciplined underwriting from our Canadian operations,
achieving a loss ratio of 24.3% in the quarter, supported by strong
underwriting across all lines. Improvements in expense ratio
driven by operational efficiency resulted in a combined ratio of
82.0%
- Accelerating growth in our US platform, with GPW of $120.7
million in Q1 2020 compared to $95.4 million in Q4 2019, and fee
income of $4.1 million in Q1 2020 compared to $3.1 million in Q4
2019.
- Improved asset-liability matching in our international
reinsurance operations limited volatility in the quarter.
Capital
- The minimum capital test (“MCT”) ratio of our Canadian
operations was 233% (258% as at December 31, 2019), which
comfortably exceeded regulatory requirements of 150%.
- Trisura US’s capital of $81.3 million USD as at March 31, 2020
($83.3 million USD as at December 31, 2019) was in excess of the
minimum requirement of the Oklahoma Insurance Department.
- Trisura International’s capital of $13.0 million USD as at
March 31, 2020 ($14.2 million USD as at December 31, 2019) was
greater than the FSC’s regulatory capital
requirement.
- Consolidated debt-to-capital ratio of 15.3% as at March 31,
2020 is below our long-term target of 20.0%.
Investments
- In Q1 2020, net investment income of $8.5 million compared to
$4.3 million in Q1 2019. The improvement was driven by an increase
in interest and dividend income in North America, as well as longer
duration reinsurance assets, which generated strong results in a
declining interest rate environment.
- In Canada, interest and dividend income increased 28.1% in Q1
2020, over Q1 2019, as we continued to benefit from an improved
asset mix.
- In the US, interest and dividend income increased 41.2% in Q1
2020, over Q1 2019, as we benefited both from diversification of
the portfolio and increased capital following our equity raise in
September 2019.
- European rates fell in Q1 2020, which resulted in net
investment gain of $5.5 million in Trisura International, offset by
reserve increases.
- Other comprehensive (loss) income was negatively impacted by
unrealized losses in the preferred share and equity portfolios in
both Canada and the US, stemming from the sell-off related to the
COVID-19 pandemic.
- Foreign exchange differences, arising from the translation of
financial statements of our US and International operations,
provided a benefit in the quarter. We have initiated a hedging
program to mitigate future currency-related volatility.
Corporate Development
- Following the close of the acquisition of Trisura Insurance
Company (formerly known as 21st Century Preferred Insurance
Company) on November 1, 2019, Trisura continues to grow its
capabilities with the intention of securing admitted licenses in
all 50 states.
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 US 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 SinclairTel: 416 607 2135 Email:
bryan.sinclair@trisura.com
Trisura Group Ltd. Consolidated
Statements of Financial PositionAs at March 31,
2020 and December 31, 2019(in thousands of
Canadian dollars, except as otherwise noted)
As at |
March 31, 2020 |
December 31, 2019 |
Cash and cash equivalents, and short-term securities |
84,352 |
85,905 |
Investments |
394,484 |
392,617 |
Premiums and accounts receivable, and other assets |
124,661 |
86,669 |
Recoverable from reinsurers |
394,224 |
293,068 |
Deferred acquisition costs |
124,861 |
104,197 |
Capital assets and intangible assets |
14,507 |
14,477 |
Deferred tax assets |
5,975 |
1,460 |
Total assets |
1,143,064 |
978,393 |
Accounts payable, accrued and other liabilities |
37,035 |
40,916 |
Reinsurance premiums payable |
103,517 |
80,186 |
Unearned premiums |
401,642 |
328,091 |
Unearned reinsurance commissions |
68,463 |
51,291 |
Unpaid claims and loss adjustment expenses |
311,483 |
257,880 |
Loan payable |
33,704 |
29,700 |
Total liabilities |
955,844 |
788,064 |
Shareholders' equity |
187,220 |
190,329 |
Total liabilities and shareholders' equity |
1,143,064 |
978,393 |
Trisura Group
Ltd.Consolidated Statements of Comprehensive
(Loss) IncomeFor the three months ended March
31(in thousands of Canadian dollars, except as
otherwise noted)
|
Q1 2020 |
Q1 2019 |
Gross premiums written |
169,952 |
|
81,383 |
|
Net premiums written |
41,500 |
|
28,410 |
|
Net premiums earned |
30,567 |
|
22,093 |
|
Fee income |
7,541 |
|
4,349 |
|
Total underwriting revenue |
38,108 |
|
26,442 |
|
Net claims |
(14,186 |
) |
(14,894 |
) |
Net commissions |
(11,233 |
) |
(8,518 |
) |
Operating expenses and premium taxes |
(12,085 |
) |
(11,290 |
) |
Net claims and expenses |
(37,504 |
) |
(34,702 |
) |
Net underwriting income (loss) |
604 |
|
(8,260 |
) |
Net investment income |
8,534 |
|
4,313 |
|
Settlement from structured insurance assets |
- |
|
8,077 |
|
Net (losses) gains |
(2,054 |
) |
655 |
|
Interest expense |
(400 |
) |
(345 |
) |
Income before income taxes |
6,684 |
|
4,440 |
|
Income tax benefit (expense) |
1,687 |
|
(1,923 |
) |
Net income |
8,371 |
|
2,517 |
|
Other comprehensive (loss) income |
(11,370 |
) |
2,658 |
|
Comprehensive (loss) income |
(2,999 |
) |
5,175 |
|
Trisura Group
Ltd.Consolidated Statements of Cash
FlowsFor the three months ended March
31(in thousands of Canadian dollars, except as
otherwise noted)
|
Q1 2020 |
Q1 2019 |
Net income from
operating activities |
8,371 |
|
2,517 |
|
Non-cash items to be
deducted |
(1,813 |
) |
1,378 |
|
Stock options
granted |
152 |
|
65 |
|
Change in working
capital operating items |
(539 |
) |
(2,435 |
) |
Realized (gains) on AFS
investments |
(2,821 |
) |
(1,421 |
) |
Income taxes paid |
(3,279 |
) |
(860 |
) |
Interest paid |
(436 |
) |
(283 |
) |
Net cash used in
operating activities |
(365 |
) |
(1,039 |
) |
Proceeds on disposal of investments |
27,062 |
|
13,540 |
|
Purchases of
investments |
(33,769 |
) |
(23,793 |
) |
Net purchases of capital and intangible assets |
(371 |
) |
(200 |
) |
Net cash used in investing activities |
(7,078 |
) |
(10,453 |
) |
Dividends paid |
- |
|
(24 |
) |
Loans received |
32,700 |
|
- |
|
Repayment of loan
payable |
(29,700 |
) |
- |
|
Lease payments |
(480 |
) |
(313 |
) |
Net cash from (used in) financing activities |
2,520 |
|
(337 |
) |
Net decrease in
cash |
(4,923 |
) |
(11,829 |
) |
Cash at beginning of the
period |
85,905 |
|
95,212 |
|
Currency translation |
3,370 |
|
(1,311 |
) |
Cash at the end of the period |
84,352 |
|
82,072 |
|
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 the Company and its subsidiaries, 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,” “likely,” “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 our
Company 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:
developments related to COVID-19, including the impact of COVID-19
on the economy and global financial markets; the impact or
unanticipated impact of general economic, political and market
factors in the countries in which we do business; the behaviour 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; changes in capital
requirements; changes in reinsurance arrangements; ability to
collect amounts owed; catastrophic events, such as earthquakes,
hurricanes or pandemics; the possible impact of international
conflicts and other developments including terrorist acts and
cyberterrorism; and other risks and factors detailed from time to
time in our documents filed with 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 Ltd. 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.
Trisura (TSX:TSU)
Historical Stock Chart
From Mar 2024 to Apr 2024
Trisura (TSX:TSU)
Historical Stock Chart
From Apr 2023 to Apr 2024