Trisura Group Ltd (TRRSF) Q2 2025 Earnings Call Highlights: Strong Growth Amid Market Challenges
Book Value: Grew 21% to $843 million.
Operating Net Income: $33.3 million, up 6% from last year.
Gross Premiums Written (GPW): $900 million for the quarter.
Primary Lines Growth: 35% increase in the quarter.
Net Insurance Revenue: $195 million, reflecting 18% growth over the prior year.
Combined Ratio: 85.6% for the quarter.
Net Investment Income: $18.9 million, up 11% in the quarter.
Operating EPS: $0.69, reflecting 6.2% growth over the prior year.
Book Value Per Share: $17.63 at June 30, 2025.
Debt-to-Capital Ratio: 13.8% at June 30, 2025.
Release Date: August 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Trisura Group Ltd (TRRSF) reported a strong quarter with an operating ROE of 18% and a 21% increase in book value to a record $843 million.
The Surety line showed significant growth, with gross premiums written increasing by 61% and underwriting income growing over 150%.
The company's primary lines, including Surety, Warranty, and Corporate Insurance, grew by more than 35%, indicating strong momentum.
Investment portfolio increased to $1.6 billion, generating $18.9 million in interest and dividend income, up 12% over the previous year.
Trisura Group Ltd (TRRSF) successfully funded growth initiatives through internal capital and revolver drawings, demonstrating efficient capital management.
Negative Points
Gross premiums written (GPW) were $900 million for the quarter, reflecting a reduction over the prior year due to non-renewed US Programs.
The combined ratio for the group was 85.6%, slightly higher than the prior year, indicating increased costs.
The expense ratio was slightly higher on a consolidated basis due to a shift in business mix towards Trisura Specialty, which has a higher expense ratio.
Softening market conditions in Canadian Fronting and Corporate Insurance lines were noted, with elevated competition impacting growth.
The debt-to-capital ratio increased to 13.8% due to drawdowns on the revolving credit facility, though it remains under the conservative leverage target of 20%.
Q & A Highlights
Q: Can you elaborate on the softening market conditions in the commercial market and how it affects Trisura? A: David Clare, CEO, explained that Trisura operates within Specialty lines, which typically deliver better-than-industry average combined ratios regardless of market conditions. While there are competitive pressures in some areas, Trisura's focus on Surety, which doesn't follow typical market cycles, and its niche areas, allows it to maintain profitability. Clare emphasized that Trisura is pragmatic and focuses on underwriting profitably in attractive niche markets.
Q: What are the competitive pressures in the US Fronting side, and how is Trisura navigating this? A: Clare noted that while there was a surge of new entrants in the US Programs space in 2021 and 2022, this has slowed. The E&S markets and MGA community in the US continue to grow, supporting Trisura's model. Clare mentioned that Trisura has seen strong pipeline opportunities and has not changed its approach, maintaining access to and navigation of the market.
Q: Can you discuss the capital injection into the US Surety and its implications? A: Clare explained that Trisura increased its US Surety balance sheet to $100 million, which is crucial for expanding its bond issuance capabilities. This move demonstrates confidence in the platform and is funded through internal capital and revolver capacity, showcasing Trisura's ability to support growth initiatives without relying on external markets.
Q: How is Trisura managing its leverage ratio, and are there plans to increase it for growth opportunities? A: Clare stated that while Trisura targets a 20% leverage ratio, there is flexibility to increase it for the right opportunities. As Trisura grows and becomes more sophisticated, it may adopt a more market-normal leverage ratio to fund future opportunities.
Q: What is driving the strong growth in the Warranty segment, and is it sustainable? A: Clare highlighted that the 40% growth in Warranty is driven by expanding relationships with existing partners in Canada. While auto sales have contributed to this growth, Clare does not expect 40% growth every quarter but anticipates a strong year overall in Warranty.
Q: How is Trisura's US Programs business performing, and what are the growth drivers? A: Clare noted that the US Programs business saw 12% core growth, driven by existing Programs and some new additions. The E&S market remains healthy, and the MGA community is expanding, supporting growth. While pricing is not a major driver, the firm casualty market provides a mild tailwind.
Q: What is the current mix of property versus casualty in Trisura's US Programs, and how is it positioned? A: Clare explained that the US Programs portfolio is about 25-30% property and 70% casualty. The property book is well-diversified, avoiding concentrated cat risks. This mix allows Trisura to benefit from casualty pricing trends while opportunistically engaging in the property market.
Q: What are the future plans for expanding Trisura's Warranty business into the US? A: Clare mentioned that while expanding the Warranty business into the US is on Trisura's vision board, there are no concrete plans or timelines yet. The focus is on finding the right approach and partners for such an expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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