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Trisura Group Reports 2018 Second Quarter Results

Book Value Per Share Increased to $19.13  

TORONTO, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Trisura Group Ltd. (“Trisura” or “Trisura Group”) (TSX: TSU), a leading international specialty insurance holding company, today announced financial results for the second quarter of 2018.

Greg Morrison, CEO of Trisura, stated, “Our Canadian business continues to demonstrate strong topline growth and profitable underwriting. We are very pleased with the progress of our US business, which received significant support from our distribution partners and the international reinsurance markets, resulting in gross premiums written of over $7 million in the second quarter of 2018, alongside an attractive pipeline of future opportunities. We look forward to continuing to develop across all business lines in the second half of the year.”

Highlights

  • Continued strong premium growth in our Canadian Specialty P&C business, increasing gross premiums written by 18% in both Q2 and YTD driven by Risk Solutions and Corporate Insurance. 
     
  • Significant progress of our US platform, with $7.6 million of gross written premium.
     
  • Profitable underwriting in our Canadian business, producing a 92.5% second quarter combined ratio versus 83.5% in Q2 2017 (and 88.3% compared to 85.5% on a YTD comparison) and driving a 13.2% trailing twelve-month ROE in Canada. 
     
  • Consolidated net income of $1.0 million compared to net income of $1.8 million in Q2 2017. Q2 2018 was impacted by higher claims activity in our Canadian Specialty P&C business and costs of building out our US platform See Section 3 for further detail.
     
  • Basic and diluted EPS of $0.14 for the quarter and $0.42 on a year-to-date basis.
     
  • Book value per share of $19.13, a 5.2% increase over past 12 months.
     
  • A.M. Best reaffirmed the Financial Strength Rating of A- (Excellent) of Trisura Guarantee Insurance with stable outlook and increased the financial size category of Trisura Specialty’s A- (Excellent) rating from VI to VII.
Amounts in millions of Canadian dollars Q2 2018 Q2 2017 variance Q2 2018
YTD
Q2 2017
YTD
variance
Gross Premiums Written 58.7   43.3   35.4 % 93.5   72.0   29.9 %
Net Premiums Written 30.4   27.0   12.6 % 54.3   46.4   16.9 %
Net Underwriting Income 0.0   1.4   (97.2 %) 1.2   2.9   (57.5 %)
Net Investment Income 2.1   1.6   30.5 % 4.0   2.3   70.7 %
Net Income (Loss) 1.0   1.8   (44.1 %) 2.8   (2.3 ) 5.1  
EPS – Basic and Diluted, $ 0.14   0.05*   nm*   0.42   0.05*   nm*  
Book Value Per Share, $ 19.13   18.18   5.2 % 19.13   18.18   5.2 %
Debt-to-Capital Ratio 19.0 % 22.3 % (3.3pts)   19.0 % 22.3 % (3.3pts)  
ROE Trailing Twelve Months 4.1 % n/a   n/a   4.1 % n/a   n/a  
Combined Ratio - Canadian Specialty P&C 92.5 % 83.5 % 9.0pts   88.3 % 85.5 % 2.8pts  
Canadian Specialty P&C ROE - Trailing 12
months
13.2 % 8.6 % 4.6pts   13.2 % 8.6 % 4.6pts  

/EIN News/ -- *Following spin-off from Brookfield Asset Management Inc. on June 22, 2017. Variance is not meaningful.

Underwriting

  • Over $7 million gross premiums written by our new US Specialty P&C business.
     
  • Our Canadian Specialty P&C business generated underwriting profits with a combined ratio of 92.5% compared to 83.5% in Q2 2017 with the increase mainly due to lower favourable prior year claims development in Q2 2018.

Capital

  • The minimum capital test (“MCT”) ratio of our Canadian subsidiary was 227% as at June 30, 2018 (242% as at March 31, 2018), which comfortably exceeds regulatory requirements of 150%. The reduction in MCT was due to a short-term collateral charge which is anticipated to reverse in Q3 2018.
     
  • The capital and surplus in our US subsidiary of $65.1 million as at June 30, 2018 is well in excess of the $19.8 million minimum capital requirements of the Oklahoma Insurance Department.
     
  • Our international subsidiary had capital of $27.9 million as at June 30, 2018 which was well in excess of its regulatory capital requirement of $0.2 million.
     
  • Consolidated debt-to-capital ratio of 19.0% as at June 30, 2018 is below our long-term target maximum of 20%.

Investments

  • Net investment income of $2.1 million compared to $1.6 million in Q2 2017. Interest and dividend income was slightly higher in Q2 2018, as we continued to benefit from the deployed US portfolio. In Canada, investment income reflected a realized gain from the rebalancing of our preferred share portfolio.
     
  • We continued to develop our in-house investment management capabilities including implementation of portfolio administration systems.

About Trisura Group

Trisura Group Ltd. is an international specialty insurance holding company 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: David Clare
Tel: 416 607 2177
Email: david.clare@trisura.com

Trisura Group Ltd.
Consolidated Statements of Financial Position

As at June 30, 2018 and December 31, 2017
(in thousands of Canadian dollars, except as otherwise noted)

As at June 30, 2018 December 31, 2017
 Cash and cash equivalents  97,739  165,675
 Investments  263,298  190,641
 Premiums and accounts receivable, and other assets  31,679  23,172
 Deferred acquisition costs  50,927  40,266
 Recoverable from reinsurers  81,330  65,254
 Capital assets and intangible assets  2,600  2,612
 Deferred tax assets  781  740
Total assets  528,354  488,360
 Accounts payable, accrued and other liabilities  19,092  19,795
 Reinsurance premiums payable  21,732  17,555
 Unearned premiums  148,014  115,357
 Unearned reinsurance commissions  11,076  5,566
 Unpaid claims and loss adjustment expenses  172,074  178,885
 Loan payable  29,700  29,700
Total liabilities  401,688  366,858
Shareholders' equity  126,666  121,502
Total liabilities and shareholders' equity  528,354  488,360

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

    Q2 2018 Q2 2017 Q2 2018 YTD Q2 2017 YTD
 Gross premiums written 58,661   43,336   93,485   71,951  
 Net premiums written 30,378   26,968   54,289   46,434  
 Net premiums earned 21,291   19,948   40,545   37,577  
 Fee income 403   128   3,679   3,057  
Total underwriting revenue 21,694   20,076   44,224   40,634  
 Net claims (4,196 ) (3,072 ) (8,899 ) (7,337 )
 Net commissions (7,448 ) (6,256 ) (15,045 ) (12,888 )
 Premium taxes (1,126 ) (1,093 ) (2,062 ) (1,990 )
 Operating expenses (8,884 ) (8,227 ) (17,005 ) (15,562 )
Net claims and expenses (21,654 ) (18,648 ) (43,011 ) (37,777 )
Net underwriting income 40   1,428   1,213   2,857  
 Net investment income 2,079   1,593   3,989   2,337  
 Foreign exchange (losses) gains (207 ) 130   (324 ) 115  
 Interest expense (235 ) (263 ) (466 ) (539 )
 Change in minority interests   -     -     -   (5,158 )
Income (loss) before income taxes 1,677   2,888   4,412   (388 )
 Income tax expense (693 ) (1,128 ) (1,565 ) (1,887 )
Net income (loss) 984   1,760   2,847   (2,275 )
Other comprehensive income (loss) 1,942   (3,436 ) 2,244   (2,671 )
Comprehensive income (loss) 2,926   (1,676 ) 5,091   (4,946 )

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

    Q2 2018 Q2 2017 Q2 2018 YTD Q2 2017 YTD
Net income (loss) from operating activities 984   1,760   2,847   (2,275 )
Non-cash items to be deducted 1,443   98   2,632   336  
Change in working capital operating items 4,819   14,702   (2,245 ) 8,652  
Realized gains (losses) on AFS investments (191 ) (336 ) 301   (364 )
Income taxes paid   (1,010 ) (967 ) (1,941 ) (5,155 )
Interest paid   (236 ) (256 ) (469 ) (524 )
Net cash from operating activities 5,809   15,001   1,125   670  
Proceeds on disposal of investments 26,356   15,420   32,118   19,832  
Purchases of investments (40,532 ) (115,618 ) (104,749 ) (119,662 )
Net purchases of capital and intangible assets (86 ) (66 ) (315 ) (107 )
Net cash used in investing activities (14,262 ) (100,264 ) (72,946 ) (99,937 )
Change in minority interests   -   -   -   5,158  
Dividends paid (24 ) -   (48 ) -  
Common shares issued -   140,270   -   140,270  
Issuance of new loan payable -   -   29,700   -  
Repayment of note payable -   (36 ) -   (355 )
Repayment of loan payable -   (1000 ) (29,700 ) (3,700 )
Net cash (used in) from financing activities (24 ) 139,234   (48 ) 141,373  
Net (decrease) increase in cash (8,477 ) 53,971   (71,869 ) 42,106  
Cash at beginning of the period 104,627   109,344   165,675   122,096  
Currency translation 1,589   (2,971 ) 3,933   (3,858 )
Cash at the end of the period   97,739   160,344   97,739   160,344  

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.

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