Trisura Group (TSE:TSU) reported stable third-quarter operating net income of CAD 35 million as growth in its primary insurance lines and investment income offset higher casualty claims in U.S. Programs.
Operating earnings per share rose 3% to CAD 0.73, and operating return on equity was 16.2%, Chief Financial Officer David Scotland said. Consolidated gross premiums written fell 6% to CAD 802 million, while net insurance revenue increased 3%.
The results came as analysts pressed management on casualty reserve pressure and the potential impact of a service provider’s bankruptcy. Chief Executive Officer David Clare said it was too early to quantify the latter, but that Trisura was larger and better capitalized than it had been during previous events.
Primary lines and investment income support earnings
Surety, Corporate Insurance and Warranty accounted for 65% of net insurance revenue in the quarter, Clare said. Together, the primary lines grew net insurance revenue 12.5% and underwriting income 15.5% to CAD 15 million, according to Scotland.
Surety gross premiums written rose 26%, with growth in both Canada and the U.S. Scotland said approximately 45% of Trisura’s 2026 surety premium is expected to come from its U.S. platform. Clare told analysts that the company expects mid-to-high teens growth in the overall surety business in 2027.
Corporate Insurance gross premiums written increased 13%. Clare said insurance revenue in the business grew 20% and underwriting income more than tripled. Its U.S. platform has not yet broken even, he said, but its performance is improving as it gains scale.
Warranty net insurance revenue grew 14%, although Clare said softer automobile sales were weighing on volumes.
Net investment income rose 18.5% to CAD 24 million. Scotland said the portfolio is growing as Trisura retains more premium in its primary lines, and that reinvestment yields above existing book yields should help lift portfolio income over time.
U.S. Programs faces casualty pressure
The U.S. Programs loss ratio rose to 80.4% in the quarter, reflecting unfavorable claims experience on a small number of casualty programs, including some in runoff, Scotland said. Excluding runoff programs, the ratio would have been in the low 70s, he said.
Trisura has placed certain programs into runoff and is working with managing general agent partners on rate increases. Clare said loss-ratio pressure was split roughly equally between prior-year casualty reserve development and the current accident year. Casualty represents about 65% of the ongoing U.S. Programs book, he said.
The consolidated combined ratio, a measure of claims and expenses relative to premiums, was 87.5%, up 1.5 percentage points from a year earlier. Scotland attributed the increase to U.S. casualty experience.
Separately, exited lines recorded a net loss of CAD 3.9 million as Trisura increased reserves on some runoff commercial auto programs. Clare said exposure in that portfolio has fallen by about half since the company established the line and is expected to continue running off over the next couple of years.
Clare said Trisura is unifying leadership of U.S. Programs and Canadian Fronting under a structured solutions banner and reviewing its portfolios and partners. He expects programs to become a smaller proportion of the business as primary lines expand.
Bankruptcy impact remains uncertain
Clare said a service provider that recently filed for bankruptcy is affiliated with a reinsurer involved in four runoff programs, two of which are in exited lines. He declined to provide a precise estimate of the potential earnings impact, saying the company was still seeking information from the parties involved.
Asked about DryStone, Clare said Trisura has cash collateral from the affiliated reinsurer, which had not declared bankruptcy. He also confirmed that his comparison with a previous event referred to a reinsurance recoverable booked in the fourth quarter of 2022.
“There is not a lot I can say to give you precise figures at this stage,” Clare told analysts, while pointing to Trisura’s larger capital base and diversification.
Book value and capital
Total book value fell 1.6% during the quarter to CAD 989 million, reflecting unrealized bond portfolio losses as yields rose and CAD 9 million in share repurchases, Scotland said. Book value per share nevertheless increased 11% over the preceding 12 months.
Clare put the company’s debt-to-capital ratio at 17.4%, below its 25% long-term target. Scotland said profitable organic growth remains Trisura’s first capital priority, particularly in its U.S. primary lines.
About Trisura Group (TSE:TSU)
Trisura Group Ltd is a Canadian based company engages in the provision of specialty insurance. The company’s operations currently include specialty property and casualty insurance (Surety, Risk Solutions, and Corporate Insurance business lines), underwritten predominantly in Canada. The operating business segments are Trisura Guarantee, Trisura Specialty, and Trisura International. The Trisura Guarantee segment generates maximum revenue, which offers Surety, Risk Solutions and Corporate Insurance products underwritten in Canada as well as the operations of Trisura Warranty.
