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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Trisura Group Ltd.    TSU   CA89679A2092

TRISURA GROUP LTD.

(TSU)
  Report
Delayed Quote. Delayed Toronto Stock Exchange - 01/26 04:00:00 pm
89.77 CAD   +3.08%
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Trisura : Reports First Quarter 2020 Results

05/06/2020 | 05:02pm EST

TORONTO, May 06, 2020 (GLOBE NEWSWIRE) -- 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$ millionsQ1 2020 Q1 2019Variance 
Gross premiums written 170.0  81.4108.8% 
Net premiums written 41.5  28.446.1% 
Net underwriting income (loss) 0.6  (8.3)nm 
Net investment income 8.5  4.397.9% 
Net income 8.4  2.5232.6% 
EPS - diluted, $ 0.94 0.37154.9% 
Book value per share, $ 21.2 20.44.0% 
Debt-to-Capital ratio15.3% 18.0%(2.7pts) 
LTM ROE6.8% 7.2%(0.4pts) 
Combined ratio - Canada82.0% 83.5%(1.5pts) 
LTM ROE - Canada19.3% 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 Sinclair
Tel: 416 607 2135
Email: bryan.sinclair@trisura.com


Trisura Group Ltd.
Consolidated Statements of Financial Position

As at March 31, 2020 and December 31, 2019
(in thousands of Canadian dollars, except as otherwise noted)

As atMarch 31, 2020December 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) Income
For the three months ended March 31
(in thousands of Canadian dollars, except as otherwise noted)

 Q1 2020Q1 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 Flows
For the three months ended March 31
(in thousands of Canadian dollars, except as otherwise noted)

 Q1 2020Q1 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.jpg

Source: Trisura Group Ltd

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Financials
Sales 2020 853 M 670 M 670 M
Net income 2020 29,0 M 22,8 M 22,8 M
Net Debt 2020 - - -
P/E ratio 2020 30,6x
Yield 2020 -
Capitalization 922 M 725 M 724 M
Capi. / Sales 2020 1,08x
Capi. / Sales 2021 0,81x
Nbr of Employees 159
Free-Float 87,9%
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Trisura Group Ltd. Technical Analysis Chart | TSU | CA89679A2092 | MarketScreener
Technical analysis trends TRISURA GROUP LTD.
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TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 8
Average target price 113,88 CAD
Last Close Price 89,77 CAD
Spread / Highest target 79,3%
Spread / Average Target 26,9%
Spread / Lowest Target 11,4%
EPS Revisions
Managers and Directors
NameTitle
David Clare President, Chief Executive Officer & Director
George E. Myhal Chairman
Jimmy Doyle Chief Financial & Risk Officer
Gregory E. A. Morrison Director
paul Gallagher Independent Director
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