TORONTO, Feb. 10, 2021 (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, 2020.
David Clare, President and CEO of Trisura, stated, “We are pleased with Trisura’s progress, generating net income of $10.9 million in the fourth quarter and $32.4 million for the year – both significant increases over the prior periods. Strong results in Canada, accelerating profitability in the US, improved asset liability matching in our Reinsurance business and investment gains produced a 13.4% return on equity, approaching our mid-teens target ahead of plan.
In the context of significant top-line growth in Canada, disciplined underwriting generated a strong 85.5% combined ratio for the year. Our US business maintained its trajectory of growth, binding a new record of $210.7 million of gross premiums and generating $5.7 million in net income in the quarter, almost matching our Canadian quarterly profit.
Our balance sheet is well-funded to support future growth, with flexibility afforded by our 8.7% debt-to-capital ratio.”
Highlights
- EPS of $1.05 in Q4 2020 and $3.28 for the full year compared to $0.47 and $0.69 respectively in 2019.
- Book value per share of $28.23, an increase of 30.8% from December 31, 2019, driven by strong earnings and a book-value accretive equity raise.
- Gross and net written premiums growth of 119.4% and 122.9% in Q4 2020, and 106.7% and 69.2% for the full year was supported by momentum in US fronting and continued growth in Canada.
- Net income of $10.9 million in the quarter and $32.4 million in full year 2020 grew 162.4% and 536.9% compared to prior year, respectively, driven by strong growth and underwriting in Canada, a growing contribution to profitability in the U.S, improved asset liability matching in our Reinsurance business and investment gains.
- ROE of 13.4%, compared to 3.5% in 2019, approaching our mid-teens target despite dilution from our equity raise in May 2020, and achieved in the context of significant growth.
- Premiums grew in our Canadian business by 116.5% in Q4 2020 and 51.5% for the full year. Exceptional surety performance contributed to achieving an 87.3% and 85.5% combined ratio for the quarter and year respectively and a 19.9% ROE.
- Sustained growth in our US business, producing $210.7 million in GPW in the quarter and $647.2 million for the year, contributed to improved net income of $5.7 million and $16.4 million respectively, reaching a 11.7% ROE despite an increase in the capital base.
| Amounts in C$ millions | Q4 2020 | Q4 2019 | Variance | 2020 | 2019 | Variance | ||||||
| Gross premiums written | 314.2 | 143.2 | 119.4 | % | 926.4 | 448.3 | 106.7 | % | ||||
| Net income | 10.9 | 4.2 | 162.4 | % | 32.4 | 5.1 | 536.9 | % | ||||
| EPS - diluted, $ | 1.05 | 0.47 | 123.4 | % | 3.28 | 0.69 | 375.4 | % | ||||
| Adjusted EPS - diluted, $ | 0.96 | 0.57 | 68.4 | % | 3.68 | 1.92 | 91.6 | % | ||||
| Book value per share, $ | 28.23 | 21.58 | 30.8 | % | 28.23 | 21.58 | 30.8 | % | ||||
| Debt-to-Capital ratio | 8.7 | % | 13.5 | % | (4.8pts) | 8.7 | % | 13.5 | % | (4.8pts) | ||
| ROE | 13.4 | % | 3.5 | % | 9.9pts | 13.4 | % | 3.5 | % | 9.9pts | ||
| Adjusted ROE | 15.0 | % | 9.4 | % | 5.6pts | 15.0 | % | 9.4 | % | 5.6pts | ||
| Combined ratio - Canada | 87.3 | % | 82.9 | % | 4.4pts | 85.5 | % | 87.8 | % | (2.3pts) | ||
| Fronting operational ratio - US | 68.5 | % | 78.9 | % | (10.4pts) | 70.6 | % | 88.9 | % | (18.3pts) | ||
COVID-19
- Trisura staff globally continue to work effectively from home. We have introduced safety measures in physical offices in preparation for a gradual return to work acknowledging best practices and local jurisdiction protocols.
- Despite resilience in the quarter and through the year, a recent second wave globally, and a weaker than anticipated economic recovery may threaten momentum.
- Premium generation and claims activity may be impacted depending on the length and depth of the pandemic-related economic slowdown, as well as the effectiveness of government support programs and vaccines. Depending on these factors, premium growth could slow and claims activity could increase.
Insurance Operations
- Disciplined underwriting in Canada, achieving a loss ratio of 25.3% for the year, and strong expense management resulted in a combined ratio of 85.5%.
- Strong growth in our US platform, with GPW of $210.7 million in Q4 2020 compared to $171.0 million in Q3 2020, and fee income of $8.5 million in Q4 2020 compared to $6.4 million in Q3 2020.
- Improved asset-liability matching in our Reinsurance business limited volatility through the year.
Capital
- The minimum capital test (“MCT”) ratio of our Canadian operations was 249% as at December 31, 2020 (258% as at December 31, 2019), which comfortably exceeded regulatory requirements of 150%.
- Trisura Specialty’s capital of $122.6 million USD as at December 31, 2020 ($83.3 million USD as at December 31, 2019) was in excess of the various Company Action Levels of the states in which Trisura Specialty is licensed.
- Consolidated debt-to-capital ratio of 8.7% as at December 31, 2020 is below our long-term target of 20.0%.
Investments
- Investment income was $5.9 million in Q4 2020 and $27.8 million for the year, an increase from a loss of $3.9 million in Q4 2019 and $16.2 million in 2019. These increases were primarily a result of the impact of movements in European interest rates on the longer duration assets supporting our Reinsurance business liabilities, supported by additional interest and dividend income in North America.
- In Canada and the US, interest and dividend income rose 25.8% and 28.2% in Q4 2020 and for the year versus the prior period, respectively. The US portfolio benefited from improved diversification after rebalancing through COVID-related volatility, and increased capital following the equity raise in May 2020.
- Net gains were greater in Q4 2020 and for the year as a result of favourable foreign exchange movements and greater realized gains.
Corporate Development
- Trisura continues to grow its admitted licenses, with 46 state licenses today and the intention of securing admitted licenses in all 50 states.
- In the quarter Trisura bound $11.2 million USD in admitted premiums; we expect the admitted business to be a more significant opportunity for growth in 2021.
- In November 2020, A.M. Best reaffirmed the financial strength rating of A- (Excellent) for both the Canadian and US operations.
Financial Statement Presentation – Update
- We have adjusted our presentation of the Consolidated income statements to reflect a more representative view of our business, removing net underwriting income, which in the context of a business with life reserves on the Balance sheet, diluted the utility of the measure.
- Adjusted EPS and adjusted ROE have been introduced, to adjust for non-recurring items and normalize earnings for core operations, providing a more representative depiction of the run-rate operations of the business.
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 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, 2020 and December 31, 2019
(in thousands of Canadian dollars, except as otherwise noted)
| As at | December 31, 2020 | December 31, 2019 |
| Cash and cash equivalents | 136,519 | 85,905 |
| Investments | 503,684 | 392,617 |
| Premiums and accounts receivable, and other assets | 178,883 | 86,669 |
| Recoverable from reinsurers | 676,972 | 293,068 |
| Deferred acquisition costs | 188,190 | 104,197 |
| Capital assets and intangible assets | 13,907 | 14,477 |
| Deferred tax assets | 8,577 | 1,460 |
| Total assets | 1,706,732 | 978,393 |
| Accounts payable, accrued and other liabilities | 57,343 | 40,916 |
| Reinsurance premiums payable | 151,707 | 80,186 |
| Unearned premiums | 592,711 | 328,091 |
| Unearned reinsurance commissions | 100,281 | 51,291 |
| Unpaid claims and loss adjustment expenses | 487,271 | 257,880 |
| Loan payable | 27,555 | 29,700 |
| Total liabilities | 1,416,868 | 788,064 |
| Shareholders' equity | 289,864 | 190,329 |
| Total liabilities and shareholders' equity | 1,706,732 | 978,393 |
Trisura Group Ltd.
Consolidated Statements of Comprehensive Income
For the three and twelve months ended December 31
(in thousands of Canadian dollars, except as otherwise noted)
| Q4 2020 | Q4 2019 | 2020 | 2019 | |||||
| Gross premiums written | 314,200 | 143,212 | 926,442 | 448,262 | ||||
| Net premiums written | 88,400 | 39,656 | 241,324 | 142,628 | ||||
| Net premiums earned | 51,091 | 29,710 | 160,684 | 107,504 | ||||
| Fee income | 9,659 | 3,575 | 29,719 | 12,206 | ||||
| Net investment income (loss) | 5,922 | (3,868) | 27,779 | 16,243 | ||||
| Settlement from structured insurance assets | - | - | - | 8,077 | ||||
| Net gains (losses) | 2,822 | (92) | 8,450 | 1,572 | ||||
| Total revenues | 69,494 | 29,325 | 226,632 | 145,602 | ||||
| Net claims and loss adjustment expenses | (23,096) | (687) | (72,562) | (49,936) | ||||
| Net commissions | (17,484) | (9,677) | (55,915) | (37,516) | ||||
| Operating expenses | (14,037) | (12,464) | (57,560) | (45,590) | ||||
| Interest expense | (222) | (341) | (1,113) | (1,361) | ||||
| Total claims and expenses | (54,839) | (23,169) | (187,150) | (134,403) | ||||
| Income before income taxes | 14,655 | 6,156 | 39,482 | 11,199 | ||||
| Income tax expense | (3,706) | (1,984) | (7,040) | (6,105) | ||||
| Net income | 10,949 | 4,172 | 32,442 | 5,094 | ||||
| Other comprehensive income (loss) | 2,800 | (1,188) | 96 | 808 | ||||
| Comprehensive income | 13,749 | 2,984 | 32,538 | 5,902 | ||||
Trisura Group Ltd.
Consolidated Statements of Cash Flows
For the three and twelve months ended December 31
(in thousands of Canadian dollars, except as otherwise noted)
| Q4 2020 | Q4 2019 | 2020 | 2019 | |||||
| Net income from operating activities | 10,949 | 4,172 | 32,442 | 5,094 | ||||
| Non-cash items | (3,628) | 11,406 | 2,378 | 9,898 | ||||
| Stock options granted | 189 | 138 | 729 | 502 | ||||
| Change in working capital | 23,958 | 9,744 | 81,412 | 49,726 | ||||
| Realized gains on investments | (1,223) | (60) | (22,666) | (2,860) | ||||
| Income taxes paid | (1,860) | (114) | (9,808) | (2,573) | ||||
| Interest paid | (223) | (354) | (1,144) | (1,410) | ||||
| Net cash from operating activities | 28,162 | 24,932 | 83,343 | 58,377 | ||||
| Proceeds on disposal of investments | 37,776 | 13,805 | 238,827 | 55,452 | ||||
| Purchases of investments | (50,152) | (79,741) | (331,933) | (170,817) | ||||
| Net purchases of capital and intangible assets | (673) | (2,723) | (1,296) | (3,131) | ||||
| Net cash used in investing activities | (13,049) | (68,659) | (94,402) | (118,496) | ||||
| Dividends paid | - | (24) | - | (96) | ||||
| Shares issued | - | - | 65,143 | 55,669 | ||||
| Preferred shares redeemed | - | (1,600) | - | (1,600) | ||||
| Loans received | 11,459 | - | 44,159 | - | ||||
| Repayment of loan payable | (11,459) | - | (44,159) | - | ||||
| Lease payments | (318) | (266) | (1,515) | (1,026) | ||||
| Net cash (used in) from financing activities | (318) | (1,890) | 63,628 | 52,947 | ||||
| Net increase (decrease) in cash | 14,795 | (45,617) | 52,569 | (7,172) | ||||
| Cash at beginning of the period | 124,875 | 131,913 | 85,905 | 95,212 | ||||
| Currency translation | (3,151) | (391) | (1,955) | (2,135) | ||||
| Cash at the end of the period | 136,519 | 85,905 | 136,519 | 85,905 | ||||
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, the Company 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.