Trisura Group Reports Second Quarter 2017 Results

TORONTO, ONTARIO–(Marketwired – Aug. 10, 2017) – Trisura Group Ltd. („Trisura” or „Trisura Group”) (TSX:TSU) today announced financial results for the quarter ended June 30, 2017 and new management appointments, including the appointment of Jimmy Doyle as Chief Financial Officer.

„Trisura had an excellent quarter. We began trading on the TSX, delivered solid results in our Canadian operations, and continued to develop our international operations. Our new US entity, Trisura Specialty Insurance Company, received its license to operate as a non-admitted surplus line insurer in all states in the US. We are now focused on gaining a rating for Trisura Specialty Insurance Company to enhance our ability to source business.” said Greg Morrison, CEO of Trisura.

Second Quarter 2017 Financial Results

Q2 2017 Highlights

  • Strong growth in Q2 across both gross and net premiums written, increasing 25% and 8% respectively compared to the same period in 2016 driven by increased activity in our Risk Solutions group at Trisura Guarantee Insurance Company („Trisura Guarantee”).
  • Consistent underwriting results with net underwriting income of $3.3 million compared to $2.8 million in Q2 2016, driven by strong underwriting performance at Trisura Guarantee.
  • Combined ratio of 84% and ROE of 13.8% at Trisura Guarantee.
  • Net income of $1.8 million compared to $2.4 million in Q2 2016 with the reduction due to corporate expenses related to the spinoff of Trisura (the „spinoff”) and the launch of our US platform.
  • Continued development of our US platform, with the receipt of our US license to operate as a non-admitted surplus line insurer subsequent to quarter-end.
  • Strong capital position with increase in shareholders’ equity of $34.8 million since December 31, 2016 principally as a result of the cash injection made by Brookfield Asset Management Inc. („Brookfield”), prior to the spinoff.
$ 000 Q2 2017 Q2 2016 $ Variance
Gross premiums written 43,336 34,548 8,788
Net premiums written 26,968 24,973 1,995
Net underwriting income – P&C Business 3,266 2,658 608
Combined Ratio – P&C Business 84.2% 85.8% (1.6%)
ROE on P&C Business over past 12 months 13.8% 17.3% (3.5%)
Net underwriting income (loss) 1,428 1,497 (69)
Net investment income 1,593 1,818 (225)
Net income (loss) 1,760 2,443 (683)
Comprehensive (loss) income (1,676) 4,732 (6,408)
Shareholders’ Equity (Q2 as at Dec 31, 2016) 105,703 70,888 34,815
Earnings per common share, basic and diluted, $ 0.30* n/a
Book value per share $ 18.18 n/a

* $0.30275 EPS for the quarter ended June 30, 2017 attributable to Brookfield Asset Management Inc. prior to spinoff on June 22, 2017 and to Trisura shareholders post-spinoff.

Note: P&C Business reflects Trisura Guarantee operations only. ROE is calculated on comprehensive income of Trisura Guarantee. See M&DA for further details.

Capital

  • The minimum capital test („MCT”) ratio of Trisura Guarantee was 266% as at June 30, 2017 (272% as at December 31, 2016), which comfortably exceeds regulatory requirements of 150%.
  • Trisura International Insurance Company („Trisura International”)’s capital of $25.7 million as at June 30, 2017 was well in excess of its regulatory capital requirement of $0.3 million.
  • Trisura Group had a debt-to-capital ratio of 22.3% as at June 30, 2017 compared to 32.5% as at December 31, 2016 with the reduction reflecting the continuing repayment of Trisura’s bank loan and the capital contribution at spinoff.

Investments

  • Trisura’s investment income in Q2 2017 was $1.6 million, compared to $1.8 million in Q2 2016.

Management Appointments

Trisura Group continued to develop its management team and group infrastructure in anticipation of future growth. Jimmy Doyle, currently the Chief Risk Officer of Trisura and the head of Trisura International, has been appointed Chief Financial Officer of Trisura to succeed Allen Taylor. Mr. Doyle’s Chief Risk Officer role at Trisura will be incorporated into his mandate as CFO. David Scotland, currently Vice President, Finance & Controller at Trisura Guarantee, will be taking on the additional role of Vice President, Finance at Trisura, assisting Mr. Doyle as CFO.

„Allen Taylor was instrumental in our spinoff, and oversaw our initial quarterly results as a standalone public company; we appreciate the valuable work he has done for Trisura.” said Greg Morrison. „Jimmy Doyle and David Scotland have been very involved within Trisura’s businesses for many years. We look forward to Jimmy and David playing a strong leadership role in the financial management of Trisura, as we continue to execute our growth strategy.”

These management appointments will take effect on August 15, 2017 and the services agreement between Brookfield and Trisura under which Brookfield provided CFO services to Trisura will be terminated at that time.

Investment Committee and Management Services Agreement

The Board of Directors of Trisura has formed an Investment Committee (the „IC”) comprised of independent directors Paul Gallagher, Bart Hedges, and David Nowak to oversee the investments of Trisura Group. The IC has approved a management services agreement with Trisura’s largest shareholder, Partners Value Investments LP („PVI”). Pursuant to this agreement, PVI will provide David Clare to act as Chief Investment Officer of Trisura Group. The management services agreement will be reviewed annually and is cancellable on 30 days’ notice.

About Trisura Group

Trisura Group Ltd. is a leading 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, Trisura International Insurance and Trisura Specialty Insurance Company. 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.

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.

Trisura Group Ltd.
Consolidated Statements of Financial Position
Unaudited, C$ thousands
As at June 30, 2017 and December 31, 2016
$ 000 2017 Q2 2016 Q4
Cash and cash equivalents 160,344 122,096
Investments 190,151 194,393
Premiums and accounts receivable and other 24,388 22,069
Deferred acquisition costs 35,306 30,985
Recoverable from reinsurers 57,317 47,120
Fixed and intangible assets 1,964 2,116
Deferred tax assets 647 622
Total assets 470,117 419,401
Accounts payable, accrued and other liabilities 18,483 25,434
Reinsurance premiums payable 13,448 13,461
Unearned premiums 107,119 90,612
Unearned reinsurance commissions 7,094 4,928
Unpaid claims and loss adjustment expenses 166,670 163,970
Loan payable 30,400 34,100
Minority interests 21,200 16,008
Total liabilities 364,414 348,513
Shareholders’ equity 105,703 70,888
Total liabilities and shareholders’ equity 470,117 419,401
Trisura Group Ltd.
Consolidated Statements of Operating Results
Unaudited, C$ thousands
For the three-month and six-month periods ended June 30
$ 000 Q2 2017 Q2 2016 Q2 2017 YTD Q2 2016 YTD
Gross premiums written 43,336 34,548 71,951 59,928
Net premiums written 26,968 24,973 46,434 42,263
Net premiums earned 19,948 17,818 37,577 33,478
Fee income 128 95 3,057 3,046
Total underwriting revenue 20,076 17,913 40,634 36,524
Net claims 3,072 5,839 7,337 14,260
Net commissions 6,256 5,775 12,888 11,715
Premium taxes 1,093 860 1,990 1,596
Operating expenses 8,227 3,942 15,562 10,472
Net claims and expenses 18,648 16,416 37,777 38,043
Net underwriting income (loss) 1,428 1,497 2,857 (1,519)
Net investment income 1,593 1,818 2,337 8,031
Foreign exchange gains (losses) 130 (26) 115 (178)
Interest expense (263) (539)
Change in minority interests (5,158) (160)
Income (loss) before income taxes 2,888 3,289 (388) 6,174
Income tax expense (1,128) (846) (1,887) (1,760)
Net income (loss) 1,760 2,443 (2,275) 4,414
Other comprehensive (loss) income (3,436) 2,289 (2,671) (4,468)
Comprehensive (loss) income (1,676) 4,732 (4,946) (54)
Trisura Group Ltd.
Consolidated Statements of Cash Flows
Unaudited, C$ thousands
For the three-month and six-month periods ended June 30
$ 000 Q2 2017 Q2 2016 Q2 2017 YTD Q2 2016 YTD
Net income (loss) from operating activities 1,760 2,442 (2,275) 4,414
Non-cash items to be deducted:
Depreciation and amortization 175 143 290 271
Unrealized (losses) gains (77) (363) 46 (493)
Change in minority interests 5,158 160
Change in working capital operating items 14,702 (2,385) 8,652 (1,104)
Realized (losses) on AFS assets (336) (957) (364) (1,040)
Income taxes paid (967) (1,775) (5,155) (1,797)
Interest paid (256) (524) (4)
Net cash from (used in) operating activities 15,001 (2,895) 5,828 407
Proceeds on disposal of investments 15,420 31,208 19,832 31,503
Purchases of investments (115,618) (16,938) (119,662) (18,890)
Sales (purchases) of capital assets (66) (706) (107) (799)
Net cash (used in) from investing activities (100,264) 13,564 (99,937) 11,814
Dividends paid (1,643) (1,643)
Shares issued 140,270 140,270
Shares redeemed (2,000) (2,000)
Repayment of notes payable (36) (34) (355) (274)
Repayment of loans payable (1,000) 212 (3,700) (6,641)
Net cash from (used in) financing activities 139,234 (3,465) 136,215 (10,558)
Net increase (decrease) in cash 53,971 7,204 42,106 1,663
Cash at beginning of the period 109,344 91,237 122,096 101,388
Currency translation (2,971) (933) (3,858) (5,543)
Cash at the end of the period 160,344 97,508 160,344 97,508