Annual
Report
2024
Letter to our Shareholders
Trisura continues to benefit from a focus on specialty insurance, demonstrating profitable underwriting
and structuring in niche lines of business, and achieving strong operational results while expanding.
Momentum continued in 2024 with revenue growing 14% across Surety, Corporate Insurance and
Warranty (our lines with the highest profitability margin), while Canadian Fronting and US Programs grew
11% as we scale the platform in Canada and curate our portfolio in the US. Underwriting strength
yielded an 89% combined ratio and alongside increased investment returns and favourable foreign
exchange, drove book value per share growth of 26%. This exceeded our 5-year compound annual
growth rate of 25%.
We achieved record Operating and Net Income of $136 million and $119 million respectively this year.
Reported and Operating return on equity of 17% and 19% respectively exceeded our mid-teens target
and demonstrated resilience through growth. Our expanding footprint and relevance with partners,
alongside our highest ever capital base of $785 million, have driven meaningful progress towards our
goal of being a North American specialty insurer of scale.
OPERATING AND FINANCIAL HIGHLIGHTS
Trisura Specialty continued to build momentum, expanding lines of business we know well and providing
consistent support to distribution partners through the cycle, achieving 19% growth in the year. Our
Surety operations maintained a track record of underwriting excellence, achieving a 15% Loss ratio while
expanding into the US. Warranty and Canadian Fronting operations continued to grow their contribution
to earnings as both business lines expanded. Corporate Insurance grew over the prior year and delivered
a strong 28% Loss ratio in the context of a balancing market – demonstrating our ability to grow and
underwrite through the cycle.
We made exciting progress on growth initiatives in 2024. Our US Surety platform grew premiums by
197%, broadened its presence and licensing, and developed significant distribution relationships. By Q3
2024 we were ranking in the top 35 sureties in the US up from 51 at the end of 2023 – significant
progress in a market meaningfully larger than Canada. We further capitalized our Treasury listed balance
sheet, setting the stage for dedicated infrastructure.
In US Corporate Insurance we began binding premium, growing our broker network and building our
infrastructure. Despite the investment in both nascent US platforms, Trisura Specialty grew Operating
net income 20% in 2024, supporting a 25% Operating return on equity.
US Programs benefit from a secular trend of growth in Managing General Agents (“MGAs”) as Trisura
remains uniquely positioned to source, structure, and monitor program business with distribution
partners and reinsurers across Excess and Surplus and Admitted markets. We believe the diversification
of our portfolio, strong rating, size and permanence of capital make Trisura a preferred partner to the US
MGA market, with over $2 billion in revenue and $91 million in fee income across 70 programs.
As our platform continues to mature we non-renewed certain programs and strategically exited
relationships where we did not see a path to appropriate profitability. Beyond these non-renewals,
Trisura 2024 Annual Report | Letter to our Shareholders
we took decisive actions to strengthen reserves to prudent levels. Through comprehensive analysis, we
proactively addressed increasing frequency and severity trends observed industrywide, driven by both
social and economic inflation in liability lines.
Growth of US Programs excluding certain non-renewed programs was 27% for the year, and our
ongoing portfolio of US Programs generated an 81% Operating combined ratio, demonstrating that
both growth and profitability remain the expectation.
Our investment portfolio performed well in 2024, growing investment income by 30% and contributing
to book value growth through mark-to-market gains. Profitable growth alongside higher rates allowed
Trisura to secure higher yields through deployment, while reducing volatility. Our portfolio maintains
the highest proportion of investment grade corporate and government bonds of any time in our
history.
We continue to invest in our team, elevating long-tenured management to drive best practices, as well
as lead our growth initiatives. I would like to congratulate Richard Grant on taking leadership of
underwriting across Trisura Group, as well as stepping in as CEO of Trisura Specialty. Chris Sekine, the
former CEO of Trisura Specialty, is continuing his involvement as an Executive Director across
subsidiary boards and maintains involvement in strategic initiatives in surety, reinsurance and
distribution. Trisura Group’s board has evolved as well, and in 2024 we benefitted from the
contributions of our two newest directors, Lilia Sham and Sacha Haque.
SPECIALTY INSURANCE OPERATING ENVIRONMENT
North American Specialty Insurance and US MGA premiums continue to grow faster than the broader
Insurance market. We believe our focus in these areas will drive differentiated growth and profitability
in the long term.
Reinsurance markets have been challenging over the past two years, but capacity was more available
as we progressed through 2024. We observed orderly renewals in our reinsurance programs in the
year and for January 1, 2025. In the US, property markets showed balance following the dislocation of
2022 and 2023. In some cases, we observed rate reductions in the property reinsurance market as
capacity returned. Casualty reserve adequacy has been a focus in the industry as social and economic
inflation have impacted claims. We expect a continued focus on casualty trends which may drive
pricing in casualty even as property balances. US Program submissions continue to favour the E&S
market, a trend we expect to continue as complexity, risk and inflationary trends are sustained.
Surety markets remain highly competitive, but are supported by stability in interest rates, an optimistic
economic environment and commitments to increased infrastructure spending. Corporate Insurance
markets have balanced following strength in recent years, while Warranty is benefitting from better
auto inventory and consumer spending as interest rates normalize in Canada.
We expect Trisura to perform well across the insurance cycle. We have enhanced scale and
diversification in primary lines, which is expected to outperform traditional lines through hard and soft
markets. The majority of our growth in 2024 was in these areas, where our profitability margin is the
highest. Balancing our established platform, US Programs and Canadian fronting can benefit from
greater reinsurance capacity typical in soft markets.
Trisura 2024 Annual Report | Letter to our Shareholders
In Surety, Corporate Insurance and Warranty we continue to take a targeted, long-term approach to
lines where we have deep expertise. Our US Programs and Canadian Fronting platforms represent a
diverse and uncorrelated portfolio of business that benefits from its broad posture and structured
retention. In all our segments, we intend to act as a consistent partner through the cycle.
STRATEGIC PRIORITIES
We remain committed to the pursuit of profitable growth, expanding Primary lines where we have
underwriting expertise and developing a diverse program and fronted business to generate stable fee
income. Above average and growing underwriting profitability alongside enhanced investment income
is expected to drive consistent increases in book value. We continue to pursue our target of $1 billion
in book value by the end of 2027.
The expansion of Surety and Corporate Insurance to the US builds on a history of disciplined
underwriting over the last two decades. We continue to grow our US footprint with teams across
multiple regions, where local expertise is supported by established infrastructure, risk management and
underwriting experience. Our risk appetite is consistently applied across North America, though the
market opportunity is significantly larger in the US. As nascent US platforms mature we anticipate they
will equal or exceed the contributions to earnings of their Canadian counterparts. With $75 million in
US Surety premium in 2024 and an expectation for a combined ratio in 2025 comparable to our
Canadian surety operations, we have early evidence of how attractive geographic expansion can be.
Growing scale has catalyzed an expansion of appetite in Canadian Surety as we move into larger limit
bonding. Recent strategic hires added expertise that allow Trisura to target parts of the market we
have not historically participated in. A greater breadth of offering has already resulted in more
touchpoints with broker partners.
While most MGA premium is placed with primary insurers, the portion addressed by highly reinsured
models like ours continues to grow. We are the third largest participant in this market in the US with an
estimated 10% market share. In recent years we have taken steps to curate our program portfolio,
prioritizing partners we expect to grow profitably over the long term and removing exposure to lines
no longer within our risk appetite. We are confident in the path forward and excited to demonstrate
the potential of the portfolio.
Inorganic growth levers have been an important part of Trisura’s evolution. US acquisitions, book
rollovers and strategic hires have provided access to new markets, amplified growth, and expanded
capabilities. We continue to pursue and are well-positioned to execute more significant inorganic
opportunities should they align with our risk appetite and meet our return thresholds.
Our strategic initiatives are well-funded – Trisura’s capital base of $785 million is the highest in the
company’s history. Debt capacity approaching $100 million below our 20% debt-to-capital target and
expanding earnings represent support for both organic and inorganic initiatives. An attractive but
measured growth profile in addition to strong profitability establishes a self-funding posture in the near
term. 2024 marked the first year since 2018 that Trisura did not raise capital, as we expanded with the
benefit of internally generated capital.
Progress made through 2024 and our optimism for 2025 has reinforced our expectations of premium
growth, operating ROE and book value per share growth in excess of 15%, targeting $1 billion in book
value by the end of 2027.
Trisura 2024 Annual Report | Letter to our Shareholders
CLOSING
Our earnings are supported by an attractive and diverse mix of underwriting income, fee income, and
stable investment income. Through substantial growth we have expanded earnings and maintained a
high teens return on equity. We continue to expect a greater degree of stability in our earnings
growth, enhanced by portfolio curation in US Programs and a prudent approach to reserving.
We remain committed to the principles that have driven profitable growth and compounding book
value: a strategic focus in specialty insurance, buoyed by structural tailwinds; experienced, profitable
underwriting; consistent support and exceptional service for our distribution and capacity partners;
and, a conservative approach to growth, risk appetite and reinsurance structuring.
We continue to plan for growth and expect that market volatility will provide opportunities to win
business and strengthen our reputation. Our capital base is the strongest in our history and we
continue to expand - we are optimistic for the years ahead.
Thank you to our employees, brokers, partners and shareholders for the continued support in pursuing
our goal of becoming a North American specialty insurer of scale.
Sincerely,
President and CEO
Trisura Group Ltd.
February 13, 2025
David Clare
Trisura 2024 Annual Report | Letter to our Shareholders
Trisura Group Ltd.
Management’s Discussion and Analysis
For the year ended December 31, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our Management’s Discussion and Analysis (“MD&A”) is provided to enable a reader to assess the results of operations
and financial condition of Trisura Group Ltd. for the twelve months ended December 31, 2024. This MD&A should be read
in conjunction with our audited Consolidated Financial Statements for the year ended December 31, 2024.
Unless the context indicates otherwise, references in this MD&A to the “Company” refer to Trisura Group Ltd. and
references to “us”, “we” or “our” refer to the Company and its subsidiaries and consolidated entities.
The Company’s Consolidated Financial Statements are in Canadian dollars and are prepared in accordance with IFRS
Accounting Standards (“IFRS”) as issued by the International Accounting Standards Board. In this MD&A, all references to
“$” are to Canadian dollars unless otherwise specified or the context otherwise requires.
This MD&A is dated February 13, 2025. Additional information is available on SEDAR+ at www.sedarplus.ca.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
1
TRISURA GROUP LTD.
TABLE OF CONTENTS
SECTION 1 – OVERVIEW ..................................................................................................................................................................................
3
OUR BUSINESS .........................................................................................................................................................................................
3
SECTION 2 – FINANCIAL HIGHLIGHTS .......................................................................................................................................................
4
SECTION 3 – FINANCIAL PERFORMANCE REVIEW .................................................................................................................................
5
CONSOLIDATED PERFORMANCE ........................................................................................................................................................
5
SPECIALTY P&C .......................................................................................................................................................................................
8
TRISURA SPECIALTY ...............................................................................................................................................................................
9
TRISURA US PROGRAMS .......................................................................................................................................................................
16
CORPORATE AND OTHER .....................................................................................................................................................................
22
NON-OPERATING RESULTS ...................................................................................................................................................................
22
SECTION 4 – INVESTMENT PERFORMANCE REVIEW .............................................................................................................................
23
OVERVIEW ..................................................................................................................................................................................................
23
INVESTMENT PERFORMANCE ............................................................................................................................................................
23
SECTION 5 – OUTLOOK & STRATEGY .........................................................................................................................................................
25
INDUSTRY ...................................................................................................................................................................................................
25
OUTLOOK AND STRATEGY ....................................................................................................................................................................
26
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE ............................................................................................................................
27
SECTION 6 – FINANCIAL CONDITION REVIEW ..........................................................................................................................................
29
BALANCE SHEET ANALYSIS ..................................................................................................................................................................
29
SUMMARY OF CASH AND INVESTMENTS .........................................................................................................................................
30
SHARE CAPITAL ........................................................................................................................................................................................
31
LIQUIDITY ....................................................................................................................................................................................................
32
CAPITAL .......................................................................................................................................................................................................
32
RATINGS ......................................................................................................................................................................................................
32
SECTION 7 – CASH FLOW SUMMARY ..........................................................................................................................................................
33
SECTION 8 – SUMMARY OF RESULTS .........................................................................................................................................................
35
SELECTED QUARTERLY RESULTS ......................................................................................................................................................
35
SELECTED ANNUAL RESULTS ..............................................................................................................................................................
36
SECTION 9 – RISK MANAGEMENT ................................................................................................................................................................
37
CORPORATE GOVERNANCE ................................................................................................................................................................
37
RISKS AND UNCERTAINTIES .................................................................................................................................................................
38
SEGMENTED REPORTING .....................................................................................................................................................................
51
CONTRACTUAL OBLIGATIONS ..............................................................................................................................................................
51
FINANCIAL INSTRUMENTS ....................................................................................................................................................................
52
ACCOUNTING ESTIMATES .....................................................................................................................................................................
52
SECTION 10 – ACCOUNTING AND DISCLOSURE MATTERS .................................................................................................................
53
DISCLOSURE CONTROLS AND PROCEDURES
................................................................................................................................
53
INTERNAL CONTROLS OVER FINANCIAL REPORTING .................................................................................................................
53
OPERATING METRICS AND OTHER FINANCIAL MEASURES .......................................................................................................
54
NON-IFRS FINANCIAL MEASURES AND OTHER FINANCIAL MEASURES .................................................................................
56
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION ...........................................................................................
66
GLOSSARY OF ABBREVIATIONS ..........................................................................................................................................................
67
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
2
TRISURA GROUP LTD.
SECTION 1 – OVERVIEW
OUR BUSINESS
Our Company is a leading specialty insurance provider operating in the Surety, Warranty, Corporate Insurance, Program
and Fronting business lines of the market. Our operating subsidiaries include Canadian and US specialty insurance
companies. Our Canadian specialty insurance subsidiary started writing business in 2006 and has a strong underwriting
track record over its 18 years of operation. Our US specialty insurance company has participated as a highly reinsured
entity in the non-admitted markets since early 2018 and is licensed as an excess and surplus lines insurer in Oklahoma
with the ability to write business across 50 states. Our US specialty insurance company can also write business on an
admitted basis in 49 states. We continue the process of applying for licenses in the remaining state.
Our Company has an experienced management team, strong partnerships with brokers, program administrators and
reinsurers, and a specialized underwriting focus. We plan to grow by building our business in the US and Canada, both
organically and through strategic acquisitions. We believe our Company can capitalize on favourable market conditions
through our multi-line and multi-jurisdictional platform.
Effective Q2 2024, we have refined the naming convention used for our operating segments. What was previously
referred to as Trisura Canada has been renamed Trisura Specialty and includes US generated business in the Surety and
Corporate Insurance lines. Trisura US has been renamed Trisura US Programs, acknowledging the range of structures in
the segment. There have been no changes to what is operationally reflected in the two segments.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
3
TRISURA GROUP LTD.
SECTION 2 – FINANCIAL HIGHLIGHTS IN Q4 2024
ü
Book value reached a new record of $785.3 million and BVPS(1) reached $16.44 increasing by 5.1% for the quarter
and 26.3% over Q4 2023, the combined result of earnings from Trisura Specialty, unrealized gains and foreign
exchange.
ü
ROE(1) was 16.9% at Q4 2024. Operating ROE(2) of 19.4% was strong, although slightly lower than Q4 2023, as
profitability from core operations(3) continued, but Shareholders' equity increased disproportionately from unrealized
gains and foreign exchange.
ü
Net income of $19.3 million increased 70.1% compared to Q4 2023 as a result of growth in the business, higher Net
investment income, as well as a lower Loss ratio(2). Operating net income(4) of $38.2 million increased 47.6% over
Q4 2023, as a result of growth in the business, a lower Loss ratio and higher Net investment income.
ü
Insurance revenue of $794.2 million, increased by 5.2% compared to Q4 2023, reflecting stronger growth from
Surety and Warranty in particular. Trisura’s Primary lines (Surety, Corporate Insurance and Warranty) grew by
17.7% in the quarter, which are the lines of business where the profitability margin on GPW(1) is the highest.
ü
The Operating combined ratio(2) for TGL was 81.5% for the quarter reflecting a lower Loss ratio than the prior year,
driven by strong results in Surety and Corporate Insurance, slightly offset by investments in our US expansion. The
Combined ratio was 96.7% in the quarter, which improved over the prior year as strong profitability in Trisura
Specialty offset the impacts of Exited lines(5).
ü
EPS of $0.40 in the quarter was greater than Q4 2023, as a result of growth in the business, higher Net investment
income, and improved profitability. EPS in the quarter was impacted by a higher Loss ratio associated with Exited
lines. Operating EPS(2) of $0.79 in the quarter increased by 46.3% demonstrating the strength of core operations
through continued growth and profitability.
ü
Trisura Specialty:
•
The Operating combined ratio of 79.4% was strong, and lower than Q4 2023 largely as a result of a lower
Loss ratio, driven by profitable underwriting in Surety and Corporate Insurance.
•
Net income of $32.1 million increased by 53.3% over the prior year and drove a 27.4% ROE. Operating net
income of $27.2 million increased 40.6% over Q4 2023 and drove a 24.9% Operating ROE, a reduction from
recent levels partially driven by a larger equity base.
ü
Trisura US Programs:
•
Growth of US Programs Insurance revenue was 26.4% in the quarter, excluding certain non-renewed
programs in the year, indicative of ongoing business and reflecting continued momentum and potential of the
platform.
ü
Net investment income growth of 5.8% in the quarter was driven by a larger investment portfolio.
ü
In the quarter, Trisura continued the process of expanding the US Corporate Insurance and US Surety licensing
and rate filing for our new Treasury Listed entity.
(1)
These are supplementary financial measures. Refer to Section 10 – Accounting and Disclosure Matters for its composition.
(2)
These are non-IFRS ratios. Non-IFRS ratios are not standardized under the financial reporting framework used to prepare the financial
statements of the Company to which the ratio relates and might not be comparable to similar ratios disclosed by other companies. See non-IFRS
ratios in Section 10 – Accounting and Disclosure Matters for details on composition, as well as each non-IFRS financial measure used as a
component of the ratio, and an explanation of how it provides useful information to an investor.
(3)
See Section 10 – Accounting and Disclosure Matters, definition of Operating Net Income, for further explanation of “core operations”.
(4)
These are non-IFRS financial measures. Non-IFRS financial measures are not standardized financial measures under the financial reporting
framework used to prepare the financial statements of the Company to which the measure relates and might not be comparable to similar
financial measures disclosed by other companies. See Section 10 – Accounting and Disclosure Matters for details and an explanation of how it
provides useful information to an investor.
(5)
Please refer to Table 3.11 for details on composition of Exited lines.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
4
TRISURA GROUP LTD.
SECTION 3 – FINANCIAL PERFORMANCE REVIEW
CONSOLIDATED PERFORMANCE
Table 3.1
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
794,162 754,953 39,209
5.2% 3,118,322 2,789,187 329,135
11.8%
Operating ISR(1)
41,264
26,932 14,332
53.2% 155,035 131,545 23,490
17.9%
ISR
13,787
4,159
9,628
231.5% 116,232
85,335 30,897
36.2%
Net insurance finance (expenses) income
(1,107)
(4,205)
3,098
(73.7%) (10,790) (10,116)
(674)
6.7%
Other income
508
727
(219)
(30.1%)
7,506
7,654
(148)
(1.9%)
Other operating expenses
(7,011)
(8,261)
1,250
(15.1%) (35,962) (31,371) (4,591)
14.6%
Net underwriting income(1)
6,177
(7,580) 13,757 (181.5%)
76,986
51,502 25,484
49.5%
Net investment income
17,138
16,206
932
5.8%
67,045
51,669 15,376
29.8%
Net gains (losses)
2,886
9,058 (6,172)
(68.1%)
24,699
(8,763) 33,462
nm
Operating expenses corporate
207
(2,085)
2,292
nm
(6,970)
(1,576) (5,394)
342.3%
Other finance costs
(947)
(565)
(382)
67.6%
(3,270)
(2,409)
(861)
35.7%
Income before income taxes
25,461
15,034
9,396
62.5% 158,490
90,423 72,806
80.5%
Income tax expense
(6,208)
(3,714) (2,494)
67.2% (39,575) (23,482) (16,093)
68.5%
Net income
19,253
11,320
7,933
70.1% 118,915
66,941 51,974
77.6%
Non-operating adjustments
18,928
14,555
4,373
30.0%
16,935
43,260 (26,325)
(60.9%)
Operating net income(1)
38,181
25,875 12,306
47.6% 135,850 110,201 25,649
23.3%
Operating loss ratio(2)
31.7%
44.4%
(12.7pts)
32.9%
34.9%
(2.0pts)
Operating expense ratio(2)
49.8%
43.7%
6.1pts
50.0%
47.0%
3.0pts
Operating combined ratio
81.5%
88.1%
(6.6pts)
82.9%
81.9%
1.0pts
Combined ratio
96.7%
105.4%
(8.7pts)
88.8%
91.2%
(2.4pts)
EPS - diluted - in dollars
0.40
0.23
0.17
73.9%
2.45
1.42
1.03
72.5%
OEPS - diluted - in dollars
0.79
0.54
0.25
46.3%
2.80
2.34
0.46
19.7%
BVPS – in dollars
16.44
13.02
3.42
26.3%
16.44
13.02
3.42
26.3%
Debt-to-capital ratio(3)
11.1%
10.8%
n/a
0.3pts
11.1%
10.8%
n/a
0.3pts
ROE
16.9%
12.2%
n/a
4.7pts
16.9%
12.2%
n/a
4.7pts
Operating ROE(2)
19.4%
20.0%
n/a
(0.6pts)
19.4%
20.0%
n/a
(0.6pts)
(1)
This is a non-IFRS financial measure. See Section 10 – Accounting and Disclosure Matters for details on composition and an explanation of
how it provides useful information to an investor.
(2)
This is a non-IFRS ratio. See Section 10 – Accounting and Disclosure Matters and Other Financial Measures for details on its composition, as
well as each non-IFRS financial measure used as a component of this ratio, and an explanation of how it provides useful information to an
investor.
(3)
This is a supplementary financial measure. See Section 10 – Accounting and Disclosure Matters for its composition.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
5
TRISURA GROUP LTD.
CONSOLIDATED PERFORMANCE (CONTINUED)
Refer to Section 10 – Accounting and Disclosure Matters for details regarding the composition of the line items presented
below.
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue increased in the quarter
compared to the prior year as a result of growth in
Trisura Specialty led by the expansion in Surety
and Warranty. Primary lines grew by 17.7% in the
quarter.
• Insurance revenue increased in the YTD period
led by Trisura Specialty in particular by the
expansion in Surety, Canadian Fronting, and
Warranty. Primary lines grew by 13.9% for the
YTD period.
Operating insurance
service result
• Operating insurance service result increased in the quarter and YTD period as a result of growth in the
business and a lower loss ratio, offset by higher US Corporate Insurance and US Surety start-up costs.
Insurance service
result
• Insurance service result increased in the quarter and YTD period as a result of growth in the business
and a lower loss ratio, offset by higher US Corporate Insurance and US Surety start-up costs. In Q4 2024
US Programs experienced higher claims activity on certain programs included in Exited lines. Programs
included in Exited lines are non-renewed, are not considered part of core operations and therefore not
included in Operating results.
Net insurance finance
(expense) income
• Net insurance finance expense in Q4 2024 was
lower than Q4 2023 as a result of the impact of an
increase in the yield curve in Q4 2024, which
offset the impact of the unwind of the discount.
• Net insurance finance expense for the YTD
period was greater than the prior year as a result
of a greater impact from downward movement of
the yield curve on a YTD basis in 2024.
Other income
• Other income consists of fees for surety services and was approximately the same as the prior year,
reflecting a similar amount of fee generating activity over the periods. Q1 is the most significant quarter
for surety fee income.
Other operating
expenses
• Other operating expenses decreased for the
quarter over the prior year as a result of lower
costs in US Programs due to lower variable
compensation costs.
• Other operating expenses increased for the YTD
period as a result of growth in the business as well
as US Corporate Insurance and US Surety start-
up costs.
Net underwriting
income
• Net underwriting income was greater in the quarter and YTD period as a result of growth in the
business and a lower loss ratio, offset by the impact of Exited lines.
Net investment
income and Net
gains (losses)
• See Section 4 – Investment Performance Review.
Operating expenses
corporate
• Operating expenses corporate for Q4 2024 was
a recovery as a result of the impact of movement
in the value of SBC, as the change in value of our
share price led to a decrease in the value of
certain outstanding options and other forms of
SBC. The movement in SBC was mitigated
through
a
program
using
derivatives,
the
movement of which is presented in Net gains
(losses). The impact of Corporate and other costs,
net of mitigation is shown in Section 3 - Financial
Performance Review, Corporate and Other.
• Operating expenses corporate excluding SBC(1)
increased 27.4% in the quarter as a result of
growth in the business.
• Operating expenses corporate for the YTD
period grew as a result of the impact of movement
in the value of SBC. The growth in Operating
expenses corporate was impacted by SBC, as the
change in value of our share price led to an
increase in the value of certain outstanding
options and other forms of SBC.
• Operating expenses corporate excluding SBC(1)
were approximately the same in 2024 as 2023.
Other finance costs
• Debt servicing costs were greater in the quarter and YTD periods than the prior year as a result of a
higher amount of debt outstanding.
(1)
Operating expenses corporate excluding SBC is a non-IFRS financial measure, see Table 10.1 in Section 10 – Accounting and Disclosure
Matters for details on composition.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
6
TRISURA GROUP LTD.
CONSOLIDATED PERFORMANCE (CONTINUED)
Q4 2024 vs Q4 2023
2024 vs 2023
Income tax expense
• Income tax expense was greater in the quarter and YTD period compared to 2023 as a result of higher
Net income before taxes. The effective tax rate was approximately the same in 2024 as 2023.
• For additional information, see Note 20 of the Consolidated Financial Statements.
Net income
• Net income was greater in the quarter as a result
of growth in the business, higher Net investment
income, as well as a lower Loss ratio. Net income
was impacted by the performance of US
Programs, where certain programs included in
Exited lines, experienced higher loss ratios.
These programs no longer fit within Trisura’s risk
appetite. As Exited lines do not reflect the
performance of core operations, their impact is
shown separately and is not included in Operating
results.
• Net income was greater for the YTD period as a
result of growth in the business, higher Net gains
(losses) for the year, higher Net investment
income, and a lower Loss ratio. The results for the
YTD period were also impacted by Exited lines.
Non-operating
adjustments
• Non-operating
adjustments
in
2024
were
primarily related to the impact of Exited lines, and
were greater than the prior year. Non-operating
adjustments in 2023 were primarily related to
costs associated with the run-off program.
• Non-operating adjustments decreased in the
YTD period compared to the prior year due to the
impact of a run-off program in 2023 being greater
than the impact of Exited lines in 2024.
Operating net income
• Operating net income, which excludes non-operating items such as the impact of Exited lines in 2024
and the run-off program in 2023, and other items not considered part of core operations, increased in the
quarter and YTD period as a result of growth in the business, a lower Loss ratio than the prior year and
growth in Net investment income.
Operating loss ratio
• The Operating loss ratio for the quarter was
lower than the prior year as a result of lower Loss
ratios at both Trisura Specialty and US Programs.
• The Operating loss ratio for the YTD period was
lower than the prior year as a result of a lower
Loss ratio at Trisura US Programs.
Operating expense
ratio
• The Operating expense ratio for the quarter and YTD period was higher than the prior year as a result
of greater retention from Trisura US Programs, which leads to a higher Expense ratio, as well as US
Corporate Insurance and US Surety start-up costs.
Operating combined
ratio
• The Operating combined ratio was lower in Q4
2024 compared to the prior year as a result of a
lower Loss ratio.
• The Combined ratio was slightly higher than the
prior year for the YTD period as a result of greater
retention from Trisura US Programs, which leads
to a higher Expense ratio, as well as US
Corporate Insurance and US Surety start-up
costs, but reflected strong results in both years.
Combined ratio
• The Combined ratio was lower in the quarter and YTD period compared to the prior year as a result of a
lower Loss ratio, while Expense ratio was approximately the same as the prior year.
EPS
• EPS of $0.40 in the quarter was greater than the
prior year as a result of growth in the business,
higher Net investment income, and a lower Loss
ratio, offset by higher shares outstanding. EPS in
the quarter was also impacted by a higher Loss
ratio associated with Exited lines.
• EPS of $2.45 for the YTD period was greater than
the prior year as a result of growth in the
business, higher Net gains (losses) for the year,
higher Net investment income, and a lower Loss
ratio.
Operating EPS
• Operating EPS is meant to reflect EPS, adjusted for certain items to normalize earnings in order to
reflect our core operations. A detailed reconciliation between EPS and Operating EPS is included in
Section 10 – Accounting and Disclosure Matters, under Non-IFRS ratios.
• Operating EPS grew in the quarter and YTD period, primarily due to growth in the business in both
Trisura Specialty and the Trisura US Programs, higher Net investment income and a lower Loss ratio
offset by higher shares outstanding.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
7
TRISURA GROUP LTD.
CONSOLIDATED PERFORMANCE (CONTINUED)
Q4 2024 vs Q4 2023
2024 vs 2023
BVPS
• BVPS increased by 26.3% over Q4 2023 primarily as a result of strong earnings from the operations of
Trisura Specialty, higher Net investment income, and unrealized gains on the investment portfolio and
foreign exchange movement.
Debt-to-capital ratio
• The Company's Q4 2024 Debt-to-capital ratio was higher than Q4 2023 due to additional funds drawn
from the revolving credit facility to further capitalize our US Surety platform, partially offset by the increase
to Shareholders' equity from positive net income and unrealized gains on the investment portfolio.
• The Debt-to-capital ratio was below the Company's long-term target of 20.0%.
ROE
• ROE increased compared to the prior year primarily due to improved profitability at US Programs.
Operating ROE
• Operating ROE was slightly lower than Q4 2023, as strong profitability from core operations continued,
but was partially offset by disproportionately higher Shareholders' equity as a result of unrealized gains
and foreign exchange.
SPECIALTY P&C
Our Specialty P&C business consists of Surety and Corporate Insurance, written in Canada and the US, as well as
Warranty and Canadian Fronting. Together these lines are referred to as Trisura Specialty. Our Specialty P&C business
also consists of a broad range of admitted and surplus lines in the US focused on the programs space written through a
highly reinsured model, referred to as the Trisura US Programs.
The table below provides a split of our Specialty P&C Insurance revenue for Q4 2024.
Table 3.2
Insurance revenue
Q4 2024
Q4 2023
% growth over
prior year
2024
2023
% growth over
prior year
Surety
48,818
36,393
34.1 %
177,096
142,421
24.3 %
Corporate Insurance
45,343
42,277
7.3 %
175,403
165,541
6.0 %
Warranty
31,779
28,371
12.0 %
122,627
109,172
12.3 %
Canadian Fronting
132,746
120,367
10.3 %
505,601
407,700
24.0 %
US Programs
535,476
527,545
1.5%
2,137,595
1,964,353
8.8%
Total Insurance revenue
794,162
754,953
5.2%
3,118,322
2,789,187
11.8%
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
8
TRISURA GROUP LTD.
TRISURA SPECIALTY
The table below presents financial highlights for our Trisura Specialty operations.
Table 3.3
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
258,686 227,408 31,278
13.8% 980,727 824,834 155,893
18.9%
Operating ISR(1)
31,536
21,959
9,577
43.6%
97,137
86,618 10,519
12.1%
ISR
34,636
20,753 13,883
66.9%
98,544
90,008
8,536
9.5%
Net insurance finance income (expenses)
(633)
(2,107)
1,474
(70.0%)
(5,170)
(4,146) (1,024)
24.7%
Other income(2)
508
727
(219)
(30.1%)
7,506
7,654
(148)
(1.9%)
Other operating expenses
(4,720)
(3,877)
(843)
21.7% (21,343) (16,814) (4,529)
26.9%
Net underwriting income
29,791
15,496 14,295
92.2%
79,537
76,702
2,835
3.7%
Net income
32,076
20,929 11,147
53.3%
96,285
73,002 23,283
31.9%
Non-operating adjustments
(4,860)
(1,573) (3,287)
209.0%
(8,575)
242 (8,817)
nm
Operating net income
27,216
19,356
7,860
40.6%
87,710
73,244 14,466
19.8%
Operating loss ratio
12.9 %
19.2 %
(6.3pts)
16.4 %
16.1 %
0.3pts
Operating expense ratio
66.5 %
64.1 %
2.4pts
67.2 %
65.4 %
1.8pts
Operating combined ratio
79.4 %
83.3 %
(3.9pts)
83.6 %
81.5 %
2.1pts
ROE
27.4 %
29.1 %
(1.7pts)
27.4 %
29.1 %
(1.7pts)
Operating ROE
24.9 %
29.2 %
(4.3pts)
24.9 %
29.2 %
(4.3pts)
(1)
This is a non-IFRS financial measure. See Table 10.6 in Section 10 – Accounting and Disclosure Matters for details on composition and an
explanation of how it provides useful information to an investor.
(2)
Other income, refers to fees for surety services.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
9
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue increased in the quarter
driven by Surety and Warranty. Primary lines
(Surety, Corporate Insurance, and Warranty) grew
by 17.7% in the quarter.
• Insurance revenue growth continued across all
lines in the YTD period, led by Surety.
Operating insurance
service result
• Operating insurance service result was greater
than the prior year for the quarter as a result of
growth in the business and a lower Loss ratio,
offset by higher US Corporate Insurance and US
Surety start-up costs.
• Operating insurance service result was greater
than the prior year for the YTD period as a result
of growth in the business, offset by a higher Loss
ratio and higher US Corporate Insurance and US
Surety start-up costs.
Insurance service
result
• Insurance service result increased for the
quarter as a result of growth in the business, and
a lower Loss ratio, offset by higher US Corporate
Insurance and US Surety start-up costs.
• Insurance service result increased for the YTD
period as a result of growth in the business, offset
by a higher Loss ratio and higher US Corporate
Insurance and US Surety start-up costs.
Net insurance finance
income (expenses)
• Net insurance finance income (expenses) for
the quarter was lower than the prior year as a
result of the impact of a larger downward shift in
the yield curve in Q4 2023 than Q4 2024.
• Net insurance finance income (expenses) for
the YTD period was greater than the prior year as
a result of growth in net insurance contract
liabilities, as well as the impact of a larger
downward shift in the yield curve in 2024 than
2023.
Other income
• Other income, which reflects fees for surety services, was approximately the same as the prior year
which reflects a similar level of fee-generating activity for the quarter and YTD periods.
Other operating
expenses
• Other operating expenses increased for the quarter and YTD periods as a result of growth in the
business.
Net underwriting
income
• Net underwriting income increased for the
quarter as a result of growth in the business and a
lower Loss ratio.
• Net underwriting income increased for the YTD
period as a result of growth in the business, offset
by a slightly higher Combined ratio.
Net income
• Net income grew in the quarter as a result of
growth in the business, a lower Loss ratio, and
higher Net investment income, offset by lower Net
gains (losses).
• Net income grew in the YTD period as a result of
growth in the business, higher Net investment
income, and higher Net gains (losses), offset by a
slightly higher Combined ratio.
Non-operating
adjustments
• Non-operating adjustments for the quarter were
primarily related to net gains from the investment
portfolio in 2024 and 2023 as well as certain
favourable non-recurring recoveries in 2024,
which were backed out of operating results.
• Non-operating adjustments for the YTD period
were primarily related to Net gains from the
investment portfolio in 2024 which were greater
than
Net
gains
in
2023.
Non-operating
adjustments in 2023 also included the impact of
backing out non-recurring surety revenue.
Operating net income
• Operating net income grew for the quarter and YTD period as a result of growth in the business, strong
underwriting and higher Net investment income. Revenue generation combined with disciplined
underwriting demonstrated the benefit of our specialty focus and the ability of our platform to perform
across product lines, geographies and market cycles.
Operating loss ratio
• The Operating loss ratio decreased in the
quarter as a result of lower Loss ratios in Surety
and Corporate Insurance.
• The Operating loss ratio increased slightly in the
YTD period primarily as a result of a higher Loss
ratio in Corporate Insurance, however remains
strong on an absolute basis.
Operating expense
ratio
• The Operating expense ratio in the quarter and YTD period was greater than the prior year as a result
of a shift in the business mix towards fronting, which has a higher Expense ratio, as well as start-up costs
associated with US Corporate Insurance and US Surety.
Operating combined
ratio
• The Operating combined ratio in the quarter
was lower than the prior year as a result of a
lower Loss ratio.
• The Operating combined ratio in the YTD period
was greater than the prior year as a result of
higher Loss and Expense ratios, but remains
strong on an absolute basis.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
10
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Q4 2024 vs Q4 2023
2024 vs 2023
ROE
• ROE was slightly lower than the prior year, as strong profitability continued, but was offset by a larger
equity base.
Operating ROE
• Operating ROE was lower than the prior year, as strong profitability continued, but was offset by a larger
equity base.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
11
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Surety
The main products offered by our Surety business line are:
ü
Contract surety bonds, such as performance and labour and material payment bonds, primarily for the construction
industry;
ü
Commercial surety bonds, such as license and permit, tax and excise, and fiduciary bonds, which are issued on
behalf of commercial enterprises and professionals to governments, regulatory bodies or courts to guarantee
compliance with legal or fiduciary obligations;
ü
Developer surety bonds, comprising mainly bonds to secure real estate developers’ legislated deposit and warranty
obligations on residential projects; and
ü
New home warranty insurance for residential homes.
Table 3.4
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
48,818
36,393
12,425
34.1 %
177,096
142,421
34,675
24.3 %
Insurance service result
18,640
4,290
14,350
334.5%
41,709
29,544
12,165
41.2%
Loss ratio
6.6 %
28.0 %
(21.4pts)
14.5 %
16.3 %
(1.8pts)
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue grew significantly in the quarter and YTD period driven by growth in our US Surety
platform and contract surety in Canada which continued to be positively impacted by increased
construction values. In the quarter and YTD period, premium from US Surety continued to benefit from a
new distribution relationship and experienced growth in existing operations.
Insurance service
result
• Insurance service result grew significantly in the quarter and YTD period as a result of growth in the
business and a lower Loss ratio.
Loss ratio
• The Loss ratio was lower for the quarter and YTD period compared to the prior year as a result of lower
claims activity in the periods.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
12
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Corporate Insurance
The main products offered by our Corporate Insurance business are Directors’ & Officers’ insurance for private, non-profit
and public enterprises, professional liability insurance for both enterprises and professionals, technology and cyber liability
insurance for enterprises, commercial package insurance for both enterprises and professionals and fidelity insurance for
both commercial enterprises and financial institutions.
Table 3.5
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
45,343
42,277
3,066
7.3%
175,403
165,541
9,862
6.0%
Insurance service result
6,786
6,859
(73)
(1.1%)
21,995
27,802
(5,807)
(20.9%)
Loss ratio
21.5 %
33.8 %
(12.3pts)
28.1 %
24.7 %
3.4pts
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue grew in the quarter and YTD period due to new business growth, stable policy
retentions, and continued support from our distribution partners, despite balancing market conditions in
certain segments of the line.
Insurance service
result
• Insurance service result was lower in the
quarter than the prior year as a result of additional
costs associated with the build-out of US
Corporate Insurance partly offset by a lower Loss
ratio.
• Insurance service result was lower in the YTD
period than the prior year as a result of the Loss
ratio returning to a more normalized level, as well
as additional costs associated with the build-out of
US Corporate Insurance.
Loss ratio
• The Loss ratio was lower in the quarter as a
result of lower claims activity.
• The Loss ratio was higher for the YTD period as
a result of more normalized claims activity,
although it remains within long term expectations.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
13
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Warranty
Warranty includes specialty insurance contracts which are structured to meet the requirements of program administrators,
managing general agents, captive insurance companies, and affinity groups. Our Warranty business consists primarily of
warranty programs in the automotive and consumer goods space. Warranty also sells products which serve as
complementary products to our insurance policies.
Table 3.6
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
31,779
28,371
3,408
12.0 %
122,627
109,172
13,455
12.3 %
Insurance service result
3,031
3,340
(309)
(9.3%)
14,056
11,246
2,810
25.0%
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue increased in the quarter and YTD period compared to the prior year as a result of
several programs which are continuing to mature and expansion of an existing program in the quarter.
Certain Warranty programs have experienced growth as a result of automobile sales increasing in the
periods.
Insurance service
result
• Insurance service result was lower than the
prior year for the quarter primarily due to higher
claims activity on certain programs.
• Insurance service result was greater for the YTD
period compared to the prior year as a result of
growth in the business and improved profitability
on certain programs.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
14
TRISURA GROUP LTD.
TRISURA SPECIALTY (CONTINUED)
Canadian Fronting
Canadian Fronting includes fronting for reinsurers through licensed brokers and MGAs, which the company began writing
in 2020. For fronted business in the Canadian operations, we generally target a fronting fee in the range of 4.0% to 8.0%
of GPW depending on the nature of the arrangement.
Table 3.7
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
132,746
120,367
12,379
10.3%
505,601
407,700
97,901
24.0%
Insurance service result
6,179
6,264
(85)
(1.4%)
22,853
21,416
1,437
6.7%
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue increased in the quarter and YTD period compared to the prior year as a result of
growth in the business due to platform maturation and new business.
Insurance service
result
• Insurance service result was slightly lower for
the quarter as a result of a higher Loss ratio on
certain programs for which Trisura Specialty
retains risk.
• Insurance service result was greater for the YTD
period as a result of growth in the business,
partially offset by a higher Loss ratio on certain
programs for which Trisura Specialty retains risk.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
15
TRISURA GROUP LTD.
TRISURA US PROGRAMS
Our US Programs platform functions as a non-admitted surplus line insurer in all states, with the ability to write admitted
business in 49 states, participating as a highly reinsured program insurer with a fee-based business model.
Our US Programs operations continued to grow Insurance revenue, producing $535.5 million in the quarter and $2,137.6
million for the YTD period across 70 programs. The graph below shows the evolution of Insurance revenue, Fee income(1),
and the number of programs bound in the US. Amounts are presented in millions of Canadian dollars.
$16.3
$146.3
$450.2
$838.8
$1,388.3
$1,964.4
$2,137.6
$527.5
$535.5
$0.9
$8.0
$24.4
$43.0
$66.9
$79.9
$91.4
$22.2
$23.7
Insurance revenue
Fee income earned
2018
2019
2020
2021
2022
2023
2024
Q4 2023
Q4 2024
Number
of
Programs
Bound
14
29
48
62
69
74
70
74
70
(1)
Fee income is a non-IFRS financial measure. See Section 10 – Accounting and Disclosure Matters for details and an explanation of how it
provides useful information to an investor.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
16
TRISURA GROUP LTD.
TRISURA US PROGRAMS (CONTINUED)
The charts below provide a segmentation by class of business of our US Programs Insurance revenue for Q4 2024.
Insurance Revenue Insurance Revenue
Q4 2024(1) Q4 2024 YTD(1)
Commercial Auto
23.7%
Commercial
Multiple - Peril
19.0%
Homeowners Multiple - Peril
5.7%
Primary and Excess
Casualty
32.6%
Other
19.0%
Commercial Auto
22.4%
Commercial
Multiple - Peril
20.0%
Homeowners Multiple - Peril
4.7%
Primary and Excess
Casualty
34.8%
Other
18.1%
(1)
“Other” includes Allied Lines – Flood, Auto Physical Damage, Burglary and Theft, Boiler and Machinery, Dwelling Fire, Farmowners Multiple –
Peril, Inland Marine, MonoLine Property, Prepaid Legal, Private Auto, Product Liability, and Surety.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
17
TRISURA GROUP LTD.
TRISURA US PROGRAMS (CONTINUED)
The table below presents financial highlights for our Trisura US Programs operations.
Table 3.8(1)
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue
535,476 527,545
7,931
1.5% 2,137,595 1,964,353 173,242
8.8%
Fee income(2)
23,725
22,199
1,526
6.9%
91,384
79,860 11,524
14.4%
Fees as a % of ceded premium(3)
5.2 %
5.0 %
4.8 %
4.7 %
Retention rate(3)
8.6 %
6.8 %
10.1 %
5.7 %
ROE
7.3 %
(1.0%)
7.3 %
(1.0%)
Operating ROE
16.7 %
13.6 %
16.7 %
13.6 %
(1)
All ratios in Table 3.8 include both Trisura US Ongoing Programs and Exited lines.
(2)
Fee income is a component of Net income (expense) from reinsurance contracts assets, see Table 10.12 for its composition.
(3)
This is a non-IFRS ratio. See Table 10.24 in Section 10 – Accounting and Disclosure Matters for details on composition.
The table below shows Deferred fee income as at December 31, 2024, compared to December 31, 2023.
Table 3.9
As at
December 31, 2024
December 31, 2023
$ variance
% variance
Deferred fee income
41,865
39,854
2,011
5.0%
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue grew in the quarter and YTD period primarily as a result of maturing programs, offset
by the impact of non-renewed programs.
• Growth of US Programs Insurance revenue excluding certain non-renewed programs was 26.4% for the
quarter and 27.0% for the YTD period, indicative of ongoing business.
• In the quarter $150.3 million of Insurance
revenue was generated by admitted programs
compared to $93.6 million in Q4 2023.
• For the YTD period, $472.6 million of Insurance
revenue was generated by admitted programs,
compared to $282.6 million in YTD 2023.
Fee income
• Fee income in our Trisura US Programs operations reflects fronting fees received from reinsurers which
are recognized over the life of the insurance contracts with which they are associated.
• The earnings pattern of Fee income is similar to that of Insurance revenue, and is reflected as part of Net
income (expense) from reinsurance contracts assets.
• Fee income grew in the quarter and YTD period as a result of premium growth over the past year, as well
as higher average fronting fees.
Fees as a % of ceded
premium
• Fees as a percentage of ceded premium increased compared to the prior quarter and YTD period as a
result of an evolution of the platform towards programs with higher average fees.
Retention rate
• The Retention rate was greater for the quarter and YTD period than the prior year which reflects a
greater average retention from programs written in 2024 than 2023. Lower reinsurance costs in 2024 than
2023 also contributed to the increase.
• We target a quota share retention between 5.0% and 15.0% on all programs, and have been selectively
increasing retentions on programs as we continue to grow.
ROE
• ROE was 7.3%, as a result of the impact of Exited lines and was greater than the prior year as a result of
the impact of the 2023 run-off program.
Operating ROE
• Operating ROE was 16.7%, which is greater than the prior year due to growth in the business and
improved profitability, partially offset by growth in infrastructure and higher Shareholders' equity.
Deferred fee income
• Deferred fee income, a precursor to earned fees reached $41.9 million.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
18
TRISURA GROUP LTD.
TRISURA US PROGRAMS (CONTINUED)
Trisura US Ongoing Programs
The table below presents financial highlights for our Trisura US Ongoing Programs(1) operations. The results of this table
exclude the impact from Exited lines. Refer to Table 3.11 for details on composition of Exited lines. Comparative year and
prior quarters were not restated to exclude the Exited lines.
Table 3.10
Q4 2024
Q4 2023
$
variance
%
variance
2024
2023
$
variance
%
variance
Insurance revenue(2)
470,020 527,545 (57,525)
(10.9%) 2,072,139 1,964,353 107,786
5.5%
Fee income(2)
21,177
22,199 (1,022)
(4.6%)
88,836
79,860
8,976
11.2%
Operating ISR(3)
9,728
4,973
4,755
95.6%
57,898
44,927 12,971
28.9%
ISR(2)
9,728 (16,594) 26,322
nm
48,265
(4,673) 52,938
nm
Net insurance finance income (expenses)
(474)
(2,098)
1,624
(77.4%)
(5,620)
(5,970)
350
(5.9%)
Other operating expenses
(2,291)
(4,384)
2,093
(47.7%) (14,619) (14,557)
(62)
0.4%
Net underwriting income
6,963 (23,076) 30,039
nm
28,026 (25,200) 53,226
nm
Net income(2)
10,054
(8,862) 18,916
nm
46,462
(1,090) 47,552
nm
Non-operating adjustments
1,659
14,663 (13,004)
(88.7%)
4,869
39,768 (34,899)
(87.8%)
Operating net income(4)
11,713
5,801
5,912
101.9%
51,331
38,678 12,653
32.7%
Operating loss ratio(5)
80.3 %
108.7 %
72.5 %
86.0 %
Operating expense ratio(5)
6.5 %
(8.3%)
8.7 %
(3.2) %
Operating combined ratio(5)
86.8 %
100.4 %
81.2 %
82.8 %
Operating FOR(5)
90.7 %
100.3 %
86.9 %
88.8 %
(1)
Trisura US Ongoing Programs excludes the impact of Exited lines, as presented in Table 3.11. The figures presented in Table 3.11 represent
non-IFRS ratios and financial measures. See Section 10 – Accounting and Disclosure Matters for details on composition and an explanation of
how it provides useful information to an investor.
(2)
These metrics exclude the impact of Exited lines.
(3)
This is a non-IFRS financial measure. See Table 10.6 in Section 10 – Accounting and Disclosure Matters for details on composition and an
explanation of how it provides useful information to an investor.
(4)
This is a non-IFRS financial measure. See Table 10.4 in Section 10 – Accounting and Disclosure Matters for details on composition and an
explanation of how it provides useful information to an investor.
(5)
The ratios contained in Table 3.10 reflect non-operating adjustments with the ratios for Trisura US Ongoing Programs. These are non-IFRS
ratios. See Section 10 – Accounting and Disclosure Matters, Table 10.22, and Other Financial Measures for details on its composition, as well
as each non-IFRS financial measure used as a component of this ratio, and an explanation of how it provides useful information to an investor.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
19
TRISURA GROUP LTD.
TRISURA US PROGRAMS (CONTINUED)
Q4 2024 vs Q4 2023
2024 vs 2023
Insurance revenue
• Insurance revenue in the quarter was lower than
the prior year as a result of the impact of non-
renewed programs.
• Insurance revenue grew in the YTD period
primarily as a result of maturing programs, offset by
the impact of non-renewed programs.
• Growth of US Programs Insurance revenue excluding certain non-renewed programs was 26.4% for the
quarter and 27.0% for the YTD period, indicative of ongoing business.
Fee income
• Fee income in the quarter was lower than the
prior year as a result of the impact of non-renewed
programs, which have not been removed from
comparative quarters. Excluding Exited lines from
2024 and 2023, Fee income grew by 13.0%.
• Fee income grew in the YTD period as a result of
premium growth over the past year, as well as
higher average fronting fees.
Operating insurance
service result
• Operating insurance service result for the quarter and YTD period was greater than the prior year as a
result of growth in the business, a lower Loss ratio in 2024 and the impact of lower reinsurance costs.
Insurance service
result
• Insurance service result for the quarter and YTD period was greater than the prior year as a result of
growth in the business, and the impact of a run-off program in 2023.
Net insurance
finance income
(expenses)
• Net insurance finance income (expenses) was
lower than the prior year as a result of the impact
of an upward shift in the yield curve in the quarter,
compared to a downward shift in the yield curve in
Q4 2023.
• Net insurance finance income (expenses) was
approximately the same as the prior year as a result
of a similar impact from the unwind of discounting,
and similar movement in the yield curve.
Other operating
expenses
• Other operating expenses decreased in the
quarter primarily as a result of lower variable
compensation costs.
• Other operating expenses for the YTD period
were approximately the same as the prior year
reflecting growth in the business, offset by lower
variable compensation costs in Q4 2024.
Net underwriting
income
• Net underwriting income for the quarter and YTD period was greater than the prior year as a result of
growth in the business, and the impact of a run-off program in 2023.
Net income
• Net income was higher for the quarter compared
to the prior year as a result of growth in the
business and losses from a run-off program in
2023.
• Net income was higher for the YTD period
compared to the prior year as a result of growth in
the business, higher Net investment income, higher
Net gains (losses), and losses from a run-off
program in 2023.
Non-operating
adjustments
• Non-operating adjustments in Q4 2024 were
primarily related to Net gains (losses), which were
lower than the Non-operating adjustments in Q4
2023, which were primarily related to losses from
the run-off program.
• Non-operating adjustments for the YTD period are
primarily related to Non-recurring items and Net
gains (losses), which were lower than the Non-
operating adjustments in 2023, which were primarily
related to losses from a run-off program.
Operating net
income
• Operating net income was higher in the quarter
compared to the prior year as a result of growth in
the business, and a lower Loss ratio.
• Operating net income was higher in the YTD
period as a result of growth in the business, a lower
Loss ratio, and higher Net investment income.
Operating loss ratio
• The Operating loss ratio was lower in Q4 and YTD 2024 than the prior year as a result of higher
reinsurance costs in 2023, which impacted the Loss ratio by reducing net premiums earned, as well as
higher claims activity in 2023. In Q4 2024, claims were impacted by 6% points related to south east wind
events in the second half of the year. When the impact of the programs referred to as Exited lines are
removed from the YTD results, rather than Q4 only as reflected in the Operating loss ratio, the Operating
loss ratio for the full year is 58.3%.
Operating expense
ratio
• The Operating expense ratio is presented net of Fee income, and can therefore become a recovery in
instances where fees exceed other acquisition and operating expenses.
• The Operating expense ratio was greater in the quarter and YTD period than the prior year as a result of
greater retention from US Programs, which leads to a higher Expense ratio.
Operating combined
ratio
• The Operating combined ratio improved over the prior year for the quarter as a result of a lower Loss ratio
in 2024, partially offset by a higher Expense ratio.
Operating FOR
• The Operating FOR was improved for the quarter and YTD period over the prior year as a result of a lower
Loss ratio, and lower reinsurance costs.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
20
TRISURA GROUP LTD.
TRISURA US PROGRAMS (CONTINUED)
Exited Lines
Beginning Q4 2024 the Company is presenting the impact of certain programs referred to as Exited lines, which have had
a significant impact on the results, separately from Operating results. Exited lines refer to certain programs which have
non-renewed and have been put into run-off. These programs no longer fit within Trisura’s risk appetite. This could be due
to a change in the risk profile of the business written through the programs or due to a strategic decision to modify our risk
appetite. The results of these programs are considered non-operating as they are no longer part of the core business and
are not expected to have a significant impact going forward. Comparative year and prior quarters were not restated to
exclude the Exited lines. In 2024, $226.8 million of GPW was generated from Exited lines. In the quarter, Exited lines
generated negative premium, the result of policy cancellations.
We are continuously monitoring these lines of business, ensuring our reserves estimates are reasonable and appropriate.
The table below presents financial highlights for Exited lines.
Table 3.11
Q4 2024
GPW
(1,232)
Insurance revenue
65,456
Net premiums earned
8,517
Fee income
2,548
Net claims(1)
(40,963)
Net expenses
(679)
ISR(1)
(30,577)
Income tax benefit (expense)
6,421
Net income (loss) from Exited lines
(24,156)
(1) Net claims and ISR are shown on an undiscounted basis and exclude the impact of any risk adjustment.
The table below reconciles ISR and Net income (loss) from Trisura US Ongoing Programs and Exited lines to Trisura US
Programs.
Table 3.12
Q4 2024
Q4 2023
2024
2023
ISR, Trisura US Ongoing Programs
9,728
(16,594)
48,265
(4,673)
ISR from Exited lines
(30,577)
-
(30,577)
-
ISR, Trisura US Programs
(20,849)
(16,594)
17,688
(4,673)
Net income (loss), Trisura US Ongoing Programs
10,054
(8,862)
46,462
(1,090)
Net income (loss) from Exited lines
(24,156)
-
(24,156)
-
Net income (loss), Trisura US Programs
(14,102)
(8,862)
22,306
(1,090)
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
21
TRISURA GROUP LTD.
CORPORATE AND OTHER
Our corporate results represent expenses that do not relate specifically to any one segment of the Company as well as
debt servicing costs and certain gains and losses on derivatives instruments used to mitigate the movement of SBC.
Table 3.13
Q4 2024
Q4 2023
$ variance
2024
2023
$ variance
Corporate expenses
(632)
(494)
(138)
(3,463)
(3,575)
112
SBC, net of derivatives used to mitigate the impact
(517)
(345)
(172)
(1,839)
(1,528)
(311)
Net expenses(1)
(1,149)
(839)
(310)
(5,302)
(5,103)
(199)
(1)
Refer to Table 10.27 for details to reconcile to Note 19 – Segmented Information in the Company’s Consolidated Financial Statements.
Q4 2024 vs Q4 2023
2024 vs 2023
Corporate expenses
• Corporate expenses, were approximately the same in 2024 as 2023.
SBC, net of
derivatives used to
mitigate the impact
• SBC includes payments to directors and senior management and can be impacted by movement in the
share price. As a result, we employ a strategy using derivatives to mitigate volatility. SBC is presented net
of the impact of this mitigation strategy.
• SBC, net of derivatives for the quarter and YTD period increased slightly as a result of growth in the
business.
NON-OPERATING RESULTS
Non-operating results includes items which are not representative of our core business, such as Net gains (losses), the
impact of movement in the yield curve included in Finance income (expense) from insurance/reinsurance contracts, and
Exited lines. Adjustments also include items which may not be recurring.
Table 3.14(1)
Q4 2024
Q4 2023
$ variance
2024
2023
$ variance
Non-recurring items
(2,283)
18,680
(20,963)
8,013
37,443
(29,430)
Impact of exited lines
24,156
-
24,156
24,156
-
24,156
Movement in yield curve
(294)
1,594
(1,888)
908
559
349
Net gains (losses)
(2,034)
(6,887)
4,853
(18,720)
6,665
(25,385)
Impact of SBC
(617)
1,168
(1,785)
2,578
(1,407)
3,985
Non-operating results
18,928
14,555
4,373
16,935
43,260
(26,325)
(1) Numbers in Table 3.14 are shown net of tax.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
22
TRISURA GROUP LTD.
SECTION 4 – INVESTMENT PERFORMANCE REVIEW
OVERVIEW
The Company’s investment policy seeks to achieve attractive total returns without incurring an undue level of investment
risk while supporting our liabilities and maintaining strong regulatory and economic capital levels. We take a centralized
investment approach across all subsidiary portfolios and invest with a global posture.
INVESTMENT PERFORMANCE
Net Investment Income
Table 4.1
Q4 2024
Q4 2023
$ variance
2024
2023
$ variance
Net investment income
17,138
16,206
932
67,045
51,669
15,376
Net gains (losses) excl. derivative losses (gains)(1)
4,242
7,814
(3,572)
23,031
(5,322)
28,353
Investment income excl. derivatives(2)
21,380
24,020
(2,640)
90,076
46,347
43,729
(1)
This is a non-IFRS financial measure. See Table 10.7 in Section 10 – Accounting and Disclosure Matters for details to reconcile to Note 19 –
Segmented Information in the Consolidated Financial Statements.
(2)
Total investment income excluding derivative losses (gains) is a non-IFRS financial measure and is equal to the sum of Net investment
income, Net gains (losses) excluding derivative losses (gains).
Q4 2024 vs Q4 2023
2024 vs 2023
Net investment
income
• Net investment income is driven by interest and dividend income on invested assets, the majority of
which are investment grade bonds.
• Net investment income was greater than the
prior year for the quarter as a result of a larger
investment portfolio.
• Net investment income was greater than the
prior year for the YTD period as a result of a larger
investment portfolio and higher portfolio yields.
Net gains (losses)
excluding derivative
losses (gains)
• Net gains (losses) excluding derivative losses (gains) represent realized gains and losses from sales
of investments, unrealized gains and losses on securities held that are classified as FVTPL, the impact of
foreign exchange related to the investment portfolio and the operations of the business, and gains and
losses on derivative instruments, with the exception of those mitigating SBC.
• Net gains (losses) were less than the prior year
for the quarter due to unrealized losses on
securities classified as FVTPL offset by net
foreign currency gains which were the result of
strengthening of the US dollar.
• Net gains (losses) were greater than the prior
year for the YTD period due to unrealized gains
on securities classified as FVTPL, as equity and
fixed income investments increased in value. On a
YTD basis, foreign currency gains were driven by
strengthening of the US dollar.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
23
TRISURA GROUP LTD.
INVESTMENT PERFORMANCE (CONTINUED)
Other comprehensive income (loss)
Table 4.2
Q4 2024
Q4 2023
$ variance
2024
2023
$ variance
Unrealized gains (losses) in OCI
(8,326)
14,520
(22,846)
14,186
12,848
1,338
Cumulative translation gains (losses)
25,519
(6,067)
31,586
29,657
(6,520)
36,177
Other comprehensive income (loss)
17,193
8,453
8,740
43,843
6,328
37,515
Q4 2024 vs Q4 2023
2024 vs 2023
Unrealized gains
(losses) in OCI
• Unrealized gains (losses) in OCI reflect the mark to market impact of securities characterized as
FVOCI.
• Unrealized gains (losses) in OCI was negative
for the quarter as a result of a decrease in the
value of investment grade bonds.
• Unrealized gains (losses) in OCI was positive
for the YTD period as a result of a increase in the
value of preferred shares and investment grade
bonds.
Cumulative
translation gains
(losses)
• Foreign exchange differences arising from the translation of the financial statements of international
operations to Canadian dollars are recognized as cumulative translation gains or losses, which are also a
component of OCI.
• Cumulative translation gains (losses) for the quarter and YTD period reflected the strengthening of the
US dollar against the Canadian currency, driving higher Canadian dollar valuations of capital held outside
of Canada.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
24
TRISURA GROUP LTD.
SECTION 5 – OUTLOOK & STRATEGY
INDUSTRY
The specialty insurance market offers products and services that are not written by most insurance companies. The risks
covered by specialty insurance policies generally require specialist underwriting knowledge and technical financial and
actuarial expertise. Specialty lines are niche segments of the market that tend to involve more complex risks and a more
concentrated set of competitors. Consequently, these risks are difficult to place in the standard insurance market where
many carriers are unable or unwilling to underwrite them. As a result, specialty insurers have more pricing and policy form
flexibility than traditional market insurers whose prices and policy forms are subject to authorization and approval by
insurance regulators. Specialty lines are less commoditized areas of the market where relationships, product expertise
and product structure are not easily replicated. For this reason, specialty insurers have historically, and are expected to
continue to outperform the standard markets by having lower claims ratios and combined ratios than traditional insurance
companies.
In contrast to the standard P&C insurance market, which is divided almost evenly between personal and commercial lines,
specialty insurers are focused almost exclusively on commercial lines. Even within the commercial sector, the business
mix of the specialty insurers can vary significantly from that of the overall P&C industry. Although no standard definition for
the specialty insurance market exists, some common examples of business written by specialty insurers include non-
standard insurance, niche market segments (such as Surety, D&O and E&O) and products that require tailored
underwriting. Many insurance groups with a specialty focus have several different carriers and licenses and allocate
business between these carriers depending on market conditions and regulatory requirements. The agency channel is the
primary distribution channel for specialty insurance. Managing general agents often serve an important role in helping
carriers distribute specialty insurance products.
The specialty market is more fragmented than the broader P&C industry. In the US, it is estimated that the top ten excess
and surplus participants capture less than 33% market share, with the top 25 averaging 2% market share. An estimated
$86.5 billion USD of excess and surplus insurance direct premiums were written in 2023 (excluding Lloyd’s), growth of
15% year-on-year, compared with the broader P&C industry which grew by 11% year-on-year to $968.5 billion USD. In
Canada, specialty market(1) growth was estimated to be 8% year-on-year for 2023 to $9.1 billion in direct written
premium(2), as compared to the P&C industry at 7% growth and $95.5 billion in direct written premium. Direct written
premium is a measure of Gross written premium, which excludes assumed premium, and is a commonly used metric in
the industry.
(1)
Growth figures for the specialty market in Canada include Boiler and Machinery, Credit, Credit Protection, Fidelity, Hail, Legal Expense, Cyber
Liability, Directors and Officers Liability, Excess Liability, Professional Liability, Umbrella Liability, Pollution Liability, Surety, Equipment
Warranty, and Marine. Market data is based on the latest available data from MSA Research Inc. (FY 2023).
(2)
This is a non-IFRS financial measure. Non-IFRS financial measures are not standardized financial measures under the financial reporting
framework used to prepare the financial statements of the Company to which the measure relates and might not be comparable to similar
financial measures disclosed by other companies. See Section 10 – Accounting and Disclosure Matters for details and an explanation of how it
provides useful information to an investor.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
25
TRISURA GROUP LTD.
OUTLOOK AND STRATEGY
Our Company has an experienced management team with strong industry relationships and excellent reputations with
rating agencies, insurance regulators and business partners. We have operated in the Canadian Specialty P&C insurance
market for more than 18 years, establishing a conservative underwriting and investing track record.
In Canada, we have built our brand through serving our clients, brokers and institutional partners as a leading provider of
niche specialty insurance products. We will continue to build out our product offerings in existing and new niche segments
of the market with suitably skilled underwriters and professionals. We remain committed to our broker distribution channel
to promote and sell insurance products. We are selective in partnering with a limited brokerage force, focusing its efforts
on leading brokerage firms in the industry with expertise in specialty lines. This distribution network currently comprises
over 167 major international, national and regional brokerage firms operating across Canada in all provinces and
territories as well as boutique niche brokers with a focus on specialty lines. We have expanded our surety and corporate
insurance offerings to the US, as part of the Company’s growing US Surety and Corporate Insurance business.
Our US Programs business is demonstrating scale and profitability. It is licensed as a domestic excess and surplus lines
insurer in Oklahoma operating as a non-admitted surplus lines insurer in all states, and as an admitted carrier in 49 states.
It is our belief that conditions are favourable for the continued growth of our US Programs platform, which operates using
a high proportion of reinsurance resulting in a fee-based business model. Our focus is to source high quality business
opportunities by partnering with a core base of established and well-managed program administrators. From our
experience to date, these program administrators welcome our capacity.
Furthermore, we continue to benefit from a strong supply of highly rated or high quality reinsurance capacity keen to
partner with us to gain exposure to this business, allowing us to cede the majority of the risk on policies to these
reinsurers on commercially favourable terms. We are confident that this platform will generate attractive, stable fee
income while maintaining an appropriate risk position, right-sizing underwriting risk and aligning our interests with our
program distribution partners and capacity providers.
We will continue to develop our distribution network, building on our existing partner network in Canada and the US and
our core base of program administrators in the US. Our Company will strive to increase the penetration of our products
with our partners by providing the support they require to enhance the effectiveness of their sales and marketing efforts.
We actively consider strategic acquisitions on an opportunistic basis and pursue those that fit with our strategic plan.
Building on the knowledge and expertise of our existing operations, we intend to target businesses in Canada or the US
that operate in similar niches of the specialty insurance market, or that can expand our offering. The recent closing of a
US treasury listed surety acquisition, is a demonstration of the willingness and capabilities our team has to pursue these
acquisitions.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
26
TRISURA GROUP LTD.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (“ESG”)
We believe that acting responsibly toward all stakeholders is fundamental to operating a productive, profitable and
sustainable business. This underlies our philosophy of conducting business with a long-term perspective in a sustainable
and ethical manner.
The Company's revolving credit facility includes a sustainability-linked loan (“SLL”) structure. This structure allows for the
borrowing rate to be adjusted based on the achievement of certain key performance indicators (“KPI”). As a first of its kind
for insurers in Canada, the SLL is linked to our ambition to further incorporate ESG considerations into our investment
activities. The structure introduces an incentive mechanism tied to KPIs around our responsible activities, including
disclosure.
In connection with the SLL, we have implemented a Responsible Investing Policy applicable to our investment portfolio,
which mandates the inclusion of ESG factors into our investment decisions, starting with the due diligence of a potential
investment through to the ultimate exit process. As part of the policy, during the initial due diligence phase, we utilize both
internal and third-party research to identify material ESG risks and opportunities relevant to the potential investment. By
the end of 2024, our policy applied to at least 70% of our investment portfolio. Our goal is to align disclosure of our
responsible investing activities in accordance with a recognized framework.
Environmental
Climate change is one of the greatest challenges of our times. Countries, including United Kingdom, United States,
Germany, Italy, France and Japan, have committed to achieving net-zero emissions by 2050. Canada has made intensive
efforts to target 40-50 percent emission reduction by 2030. Climate-related risks are strategically relevant to our business
over time.
Although the Company’s property exposure is primarily reinsured, physical and weather-related risks have an impact on
the property-exposed business that the Company retains, and we continue to adapt our business to the impacts of climate
change through enhanced catastrophe modelling, adjustments to pricing practices related to severe weather, continuing to
refine how we select property-exposed business and structure appropriate reinsurance coverage.
Social
We recognize the importance of taking responsibility for charitable efforts, both globally and within the communities in
which we operate.
We value our employees, actively seek opportunities to develop them and to ensure they are engaged. We are committed
to fostering, cultivating, and preserving a culture of diversity and inclusion. Equity and inclusion are imperative to our
business. To that effect, the Company has developed an equity framework, which Trisura intends to implement.
In order to provide our clients with the products and services they require and to ensure that we make informed
underwriting and claims decisions, it is necessary that we obtain private information about our clients and/or their
businesses. We take all necessary and reasonable precautions to protect the privacy of the information provided to us by
our clients. We use manual and electronic controls to protect personal information that has been entrusted to us. These
controls include restricted access to our premises, user authentication, encryption, firewall technology and the use of
detection software.
We have a Cyber Security Incident Response Policy that communicates the overall process and guidelines for the
identification, reporting and response to cyber security events, incidents and data breach at the Company. It is intended to
help us respond to a security event or incident in a way that is consistent with our obligations, including legal obligations,
to our customers, colleagues, and shareholders.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
27
TRISURA GROUP LTD.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (“ESG”) (CONTINUED)
Governance
The Board has ultimate oversight of ESG strategy, which includes oversight of climate related risks and opportunities. The
Board receives regular updates on the Company’s ESG initiatives throughout the year.
The Governance Committee is responsible for implementing the board diversity policy, monitoring progress towards the
achievement of its objectives and recommending to the Board any necessary changes that should be made to the policy.
The Board committed to meeting the gender diversity target of at least 30% of Directors identifying as women. With the
election of Sacha Haque at our 2024 annual meeting of shareholders the Board has exceeded this target with 4 out of 9
Directors identifying as women.
Refer to our Management Information Circular dated April 12, 2024 for detailed information on Governance.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
28
TRISURA GROUP LTD.
SECTION 6 – FINANCIAL CONDITION REVIEW
BALANCE SHEET ANALYSIS
Table 6.1
As at
December 31, 2024
December 31, 2023
$ variance
Cash and cash equivalents
270,378
604,016
(333,638)
Investments
1,434,534
890,157
544,377
Other assets
42,392
53,712
(11,320)
Reinsurance contract assets
2,771,163
2,003,589
767,574
Capital assets and intangible assets
29,383
16,657
12,726
Deferred tax assets
44,043
16,314
27,729
Total assets
4,591,893
3,584,445
1,007,448
Insurance contract liabilities
3,546,053
2,769,951
776,102
Other liabilities
162,302
120,065
42,237
Loan payable
98,272
75,000
23,272
Total liabilities
3,806,627
2,965,016
841,611
Shareholders’ equity
785,266
619,429
165,837
Total liabilities and shareholders’ equity
4,591,893
3,584,445
1,007,448
December 31, 2024 vs December 31, 2023
Cash and cash
equivalents
• Cash and cash equivalents has decreased as a result of cash having been deployed to the investment
portfolio, as well as cash held on balance sheet as collateral being transferred to collateral trust accounts.
Investments
• Investments have increased as a result of additional cash deployed to the investment portfolio, as well
as unrealized gains in the portfolio.
Other assets
• Other assets have decreased largely as a result of a decrease in tax recoveries, which is offset by an
increase in Deferred tax assets.
Reinsurance contract
assets
• Reinsurance contract assets have increased largely as a result of growth in the business, as well as an
increase in Assets for remaining coverage, due to a transfer of collateral to trust accounts. These
recoverables are monitored in accordance with the Company’s reinsurance risk management policies and
generally, are owing from reinsurers with A.M. Best ratings of A- or higher or who otherwise have posted
an agreed upon level of collateral.
Capital assets and
intangible assets
• Capital assets have increased as a result of an increase in Intangible assets related to the acquisition of
the new Treasury Listed surety company.
Deferred tax assets
• Deferred tax assets have increased as a result of a reallocation between current and deferred tax
recoveries, and are offset by a decrease in Other assets.
Insurance contract
liabilities
• Insurance contract liabilities have increased as a result of growth in Insurance revenue in both Trisura
Specialty and US Programs.
Other liabilities
• Other liabilities have increased as a result of holding more deposits in trust related to the Surety
business line.
Loan payable
• Loan payable increased as additional funds were drawn from the revolving credit facility.
Shareholders' equity
• Shareholders’ equity at December 31, 2024 has increased from December 31, 2023 due to movement
in retained earnings as a result of positive net income in the period.
• Shareholders' equity also increased due to increases in other comprehensive income from unrealized
gains on the investment portfolio as well as the impact of foreign exchange movement which was positive
for the YTD period as a result of strengthening of the US dollar.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
29
TRISURA GROUP LTD.
SUMMARY OF CASH AND INVESTMENTS
Our $1.7 billion investment portfolio consists of cash and cash equivalents, short-term securities, government and
corporate bonds, preferred shares, common shares, and alternative investments. Approximately 96% of our fixed income
holdings are highly liquid(1), investment grade bonds(2).
Investment Portfolio by Asset Class
Fixed Income Securities by Rating(3)
Cash, Cash
Equivalents
and Short Term
Securities,
16.7%
Government
Bonds, 5.2%
Corporate Bonds
and Other Fixed
Income, 63.7%
Alternatives, 4.0%
Preferred Shares, 7.7%
Common Shares, 2.7%
AAA,
2.4%
AA,
11.7%
A,
41.5%
BBB,
40.0%
High Yield,
4.4%
Table 6.2
By asset class
December 31, 2024
December 31, 2023
Cash, cash equivalents and short-term securities
16.7 %
40.9 %
Government bonds
5.2 %
5.3 %
Corporate bonds and other fixed income
63.7 %
39.8 %
Alternatives
4.0 %
3.8 %
Preferred shares
7.7 %
7.7 %
Common shares
2.7 %
2.5 %
Table 6.3
By rating
December 31, 2024
December 31, 2023
AAA
2.4 %
6.4 %
AA
11.7 %
11.8 %
A
41.5 %
38.8 %
BBB
40.0 %
36.2 %
High Yield
4.4 %
6.8 %
(1)
Highly liquid refers to the Company’s ability to sell a fixed income investment within a short period of time.
(2)
Investment grade bonds refers to all bonds rated ‘BBB-’ and higher.
(3)
This is a supplementary financial measure. Composition: balance for each credit rating, divided by total balance for fixed income investments.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
30
TRISURA GROUP LTD.
SHARE CAPITAL
Our authorized share capital consists of: (i) an unlimited number of common shares; (ii) an unlimited number of non-voting
shares; and (iii) an unlimited number of preference shares (issuable in series).
On August 21, 2023, the Company completed a public offering of 1,620,000 common shares. As at December 31, 2024,
47,779,021 common shares were issued and outstanding.
On December 6, 2024, the Company initiated a normal course issuer bid ("NCIB") program to purchase for cancellation
during the next twelve months up to 3% of the Company's issued and outstanding common shares. As at December 31,
2024, no shares were repurchased.
As at December 31, 2024, 1,556,645 options were outstanding which could be converted to common shares (including
unvested options). As at December 31, 2024, 191,749 RSU’s were outstanding which could be converted to common
shares (including unvested RSUs).
Table 6.4
Q4 2024
Change in %
2024
Change in %
BVPS, beginning of period
$15.64
n/a
$13.02
n/a
Net income
$0.40
2.6 %
$2.49
19.1 %
Realized and unrealized gains (losses), net of tax
($0.17)
(1.1) %
$0.28
2.1 %
Cumulative translation gains (losses)
$0.54
3.5 %
$0.60
4.6 %
Net impact of share-based compensation
$0.03
0.2 %
$0.05
0.4 %
BVPS, end of period
$16.44
5.1 %
$16.44
26.3 %
BVPS increase over time(1)
4.59
4.91
5.40
7.06
8.70
10.76
13.02
16.44
2017
2018
2019
2020
2021
2022
2023
2024
0.00
5.00
10.00
15.00
20.00
(1)
Adjusted to reflect the four-for-one stock split effective July 9, 2021. Per-share disclosures prior to July 9, 2021 are presented on a post-split
basis.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
31
TRISURA GROUP LTD.
LIQUIDITY
Both short-term and long-term liquidity sources are available to the Company. Short-term liquidity sources immediately
available include: (i) cash and cash equivalents (see Balance Sheet); (ii) our portfolio of highly rated, highly liquid
investments (see Note 4 of the Consolidated Financial Statements); (iii) cash flow from operating activities which include
receipt of insurance revenue and investment income (see Statements of Cash Flows) and; (iv) bank loan facilities
including our revolving credit facility (see Note 14 of the Consolidated Financial Statements). These funds are used
primarily to pay claims and operating expenses, service the Company’s Loan payable and purchase investments to
support claims reserves and capital requirements.
CAPITAL
The MCT ratio(1) of Trisura’s regulated Canadian operating subsidiary was 276% as at December 31, 2024 (251% as at
December 31, 2023), which comfortably exceeds the 150% regulatory requirements prescribed by OSFI, as well as the
Company’s internal target(2).
As at December 31, 2024, the RBC(3) of the regulated US insurance companies of Trisura are expected to be in excess of
the various company action levels of the states in which they are licensed. Calculations are finalized as statutory returns
are completed.
The Company is well-capitalized and we expect to have sufficient capital to meet our regulatory capital requirements, and
fund our operations.
The Company’s debt-to-capital ratio of 11.1% as at December 31, 2024 (10.8% as at December 31, 2023), was below the
Company’s long-term target of 20.0%.
In 2024, the Company increased the size of its revolving credit facility to $75 million, and drew down $23.2 million to
support further capitalization of our new US Surety balance sheet. In Q3 2023, the Company issued a Letter of Credit
through its banking facility, which lowered the undrawn capacity by $13.5 million. The letter of credit was drawn in relation
to a partnership arrangement to support the growth of the Company’s US Surety operations and remains outstanding.
.
RATINGS
Trisura’s regulated Canadian operating subsidiary has been rated A- (Excellent) by A.M. Best since 2012. Trisura’s
regulated US operating subsidiary obtained an A- (Excellent) rating from A.M. Best in September 2017. A.M Best
increased the financial size category of the Trisura entities from VIII to IX (US $250 million to US $500 million capital) in
December 2021, based on the Company’s consolidated balance sheet.
Table 6.5
A.M. Best
DBRS
Latest review
April 18, 2024
December 11, 2024
Outlook
Stable
Positive
Credit ratings
Financial strength ratings - principal Canadian operating subsidiary
A- (Excellent)
A (Low)
Financial strength ratings - principal US operating subsidiary
A- (Excellent)
A (Low)
Senior Unsecured Notes rating - Trisura Group Ltd.
n/a
BBB
(1)
This measure is calculated in accordance with the Office of the Superintendent of Financial Institutions Canada’s (OSFI’s) Guideline A,
Minimum Capital Test.
(2)
This target is in accordance with OSFI’s Guideline A-4, Regulatory Capital and Internal Capital Targets.
(3)
This measure is calculated in accordance with the National Association of Insurance Commissioners, (“NAIC”) Risk Based Capital (“RBC”) for
Insurers Model Act.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
32
TRISURA GROUP LTD.
SECTION 7 – CASH FLOW SUMMARY
Table 7.1
Q4 2024
Q4 2023
$ variance
2024
2023
$ variance
Net income
19,253
11,320
7,933
118,915
66,941
51,974
Non-cash items
(3,127)
(11,727)
8,600
(20,517)
5,264
(25,781)
Change in working capital
102,620
100,302
2,318
68,598
194,038
(125,440)
Realized gains (losses)
(784)
1,769
(2,553)
(2,314)
3,950
(6,264)
Income taxes paid
(16,609)
(1,736)
(14,873)
(42,316)
(9,841)
(32,475)
Interest paid
(984)
(1,115)
131
(2,640)
(2,439)
(201)
Net cash flows from (used in) operating activities
100,369
98,813
1,556
119,726
257,913
(138,187)
Proceeds on disposal of investments
140,380
12,894
127,486
342,306
102,492
239,814
Purchases of investments
(221,476)
(41,001)
(180,475)
(795,269)
(219,121)
(576,148)
Acquisition of subsidiary
-
-
-
(15,015)
-
(15,015)
Net purchases of capital and intangible assets
(647)
32
(679)
(3,835)
(714)
(3,121)
Net cash flows from (used in) investing activities
(81,743)
(28,075)
(53,668)
(471,813)
(117,343)
(354,470)
Shares issued
-
(63)
63
2,989
51,507
(48,518)
Shares purchased under RSU plan
922
436
486
(2,215)
(1,409)
(806)
Loans received
-
-
-
46,607
-
46,607
Loans repaid
-
-
-
(23,335)
-
(23,335)
Principal portion of lease payments
(234)
(510)
276
(2,006)
(2,034)
28
Net cash flows from (used in) financing activities
688
(137)
825
22,040
48,064
(26,024)
Net increase (decrease) in cash and cash
equivalents during the period
19,314
70,601
(51,287)
(330,047)
188,634
(518,681)
Cash and cash equivalents, beginning of year
262,850
531,484
(268,634)
604,016
406,368
197,648
Currency translation
(11,786)
1,931
(13,717)
(3,591)
9,014
(12,605)
Cash and cash equivalents, end of year
270,378
604,016
(333,638)
270,378
604,016
(333,638)
CASH FLOW SUMMARY (CONTINUED)
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
33
TRISURA GROUP LTD.
Q4 2024 vs Q4 2023
2024 vs 2023
Net cash flows from
(used in) operating
activities
• Net cash flows from (used in) operating
activities was positive for the quarter as a result
of positive Net income and a positive Change in
working capital in both Trisura Specialty and US
Programs.
• Net cash flows from (used in) operating
activities was positive for the YTD period as a
result of positive Net income and working capital.
• Net cash flow from (used in) operating
activities was higher than 2023 for the quarter as
a result of a larger change in working capital in
2024 and higher Net income.
• Net cash flow from (used in) operating
activities was lower than 2023 for the full year,
primarily as a result of a lower change in working
capital.
Net cash flows from
(used in) investing
activities
• Net cash flows from (used in) investing activities in 2024 reflected primarily the purchase and
disposal of portfolio investments in operating subsidiaries, and was higher than 2023 for both the quarter
and YTD periods.
• In Q4 and YTD 2024, Proceeds on disposal of investments were greater than 2023, as there were more
disposals during 2024. Purchases of investments were greater in Q4 and YTD 2024 than in 2023 as a
result of more purchases in 2024, partially related to the deployment of funds in the new Treasury listed
Surety company.
• Acquisition of subsidiary refers to the acquisition of the new Treasury Listed surety company.
Net cash flows from
(used in) financing
activities
• Net cash flows from (used in) financing
activities was approximately the same as 2023
for the quarter reflecting shares purchased as part
of the Company's RSU program.
• Net cash flows from (used in) financing
activities was lower than 2023 for the YTD period
as 2023 included the proceeds of an equity
issuance.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
34
TRISURA GROUP LTD.
SECTION 8 – SUMMARY OF RESULTS
SELECTED QUARTERLY RESULTS
Table 8.1
Insurance revenue
794,162
807,645
772,249
744,266
754,953
730,714
664,420
639,100
Insurance service result
13,787
35,592
31,405
35,448
4,159
24,749
39,712
16,715
Net income (loss)
19,253
36,088
27,141
36,433
11,320
14,838
26,807
13,976
EPS, basic (in dollars)
0.40
0.76
0.57
0.77
0.23
0.32
0.58
0.30
EPS, diluted (in dollars)
0.40
0.74
0.56
0.75
0.23
0.31
0.57
0.30
Total assets
4,591,893 4,111,127 3,919,393
3,736,787
3,584,445
3,404,909
3,120,190
2,977,074
Total non-current financial liabilities(1)
75,000
75,000
75,000
75,000
75,000
75,000
75,000
75,000
2024
2023
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
(1)
See Note 14 in the Company’s Consolidated Financial Statements for details on Loan payable.
Insurance revenue
• Insurance revenue has generally grown over time, and quarter over quarter reflecting growth in the
business. Insurance revenue was lower in Q1 2024 than Q4 2023 reflecting some seasonality in the
business with Q4 2023 being particularly high.
• Insurance revenue in Q4 2024 was lower than Q3 2024 as a result of lower premium generation from
US Programs in the quarter.
Insurance service
result
• Insurance service result has generally grown when compared to the prior year, reflecting growth in the
business, with some exceptions.
• Insurance service result in Q4 2024 was greater than Q4 2023 as a result of growth in the business,
and improved profitability, reflected in a lower Combined ratio. Insurance service result in Q3 2024 was
greater than Q3 2023, due to growth in the business, as well as the impact of a run-off program in Q3
2023. Insurance service result in Q2 2024 was lower than Q2 2023 as a result of a positive impact from a
run-off program in Q2 2023, which caused Insurance service result to be particularly high in that quarter.
In Q1 2024, Insurance service result was greater than Q1 2023, reflecting growth in the business and a
smaller impact from a run-off program in Q1 2024 than Q1 2023.
Net income (loss)
• Net income (loss) has generally grown quarter over quarter, but also experienced volatility quarter over
quarter as a result of Net gains (losses) on the investment portfolio. Net income (loss) has also been
impacted as a result of the impact of a run-off program in 2023.
• Net income in Q4 2024 was greater than Q4 2023, as a result of growth in the business, improved
profitability reflected in a lower combined ratio, and higher net investment income, offset by lower net
gains (losses). Net income in Q3 2024 was greater than Q3 2023 as a result of growth in the business,
the impact of a run-off program in Q3 2023, as well as greater Net gains (losses) on the investment
portfolio in Q3 2024. Net income in Q2 2024 was greater than Q2 2023 as a result of growth in the
business, despite Net income in Q2 2023 being unusually high as a result of a positive impact in that
quarter from a run-off program. Net income in Q1 2024 was greater than the prior year reflecting growth
in the business and a smaller impact from a run-off program in Q1 2024.
EPS, basic
EPS, diluted
• EPS, Basic (in dollars) and EPS, diluted (in dollars), have been impacted by the same factors as Net
income (loss).
Total assets
• Total assets have generally grown over time and quarter over quarter as the business has grown.
Total non-current
financial liabilities
• Total non-current financial liabilities reflect outstanding debt which has not changed during 2024 or
2023.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
35
TRISURA GROUP LTD.
SELECTED ANNUAL RESULTS
Table 8.2
Insurance service result
116,232
85,335
29,186
Net income
118,915
66,941
27,795
EPS, basic (in dollars)
2.49
1.44
0.64
EPS, diluted (in dollars)
2.45
1.42
0.63
Total assets
4,591,893
3,584,445
2,798,865
Total non-current financial liabilities(2)
75,000
75,000
75,000
2024
2023
2022(1)
Insurance revenue
3,118,322
2,789,187
2,014,915
(1)
Amounts have been restated to reflect the adoption of IFRS 17, but not IFRS 9 which is applied prospectively with effect from January 1, 2023.
See Section 10 – Accounting and Disclosure Matters.
(2)
See Note 14 in the Company’s Consolidated Financial Statements for details on Loan payable.
Selected Annual
Results
• The balances presented above have generally grown over time, reflecting growth in the business.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
36
TRISURA GROUP LTD.
SECTION 9 – RISK MANAGEMENT
Our Company has developed an enterprise risk management framework and internal controls processes to identify,
measure, monitor and mitigate risk. This framework is central to our business decision making including the business we
choose to write and the business we choose to decline. Furthermore, for the business we write the risk management
framework informs our determination of whether to retain the risk fully or to apply risk mitigation measures such as
reinsurance.
CORPORATE GOVERNANCE
The Board of Directors is responsible for oversight of risk management and internal control systems and policies. The
Board of Directors has established Board of Directors level risk committees at group and subsidiary levels, whose
members are mostly independent of management. These committees meet quarterly to oversee and challenge the
development and effectiveness of risk management frameworks and priorities and to review risk reporting. The Group
Risk Management function, under the direction of the Group Chief Risk Officer, promotes sound and effective risk
management across the Company by (i) ensuring that effective processes are in place to identify, assess, monitor,
manage and report the risks to which the Company is or might be exposed, (ii) facilitating the setting of risk tolerances,
limits and appetite by the Board and (iii) providing comprehensive and timely information on material risks which enables
the Board and the Risk Committee to understand the overall risk profile of the Company. The Group Chief Risk Officer
liaises with Risk Officers at subsidiary levels to develop consistency of approach with respect to risk identification,
assessment, monitoring, management and reporting tailored to the operations of the subsidiaries. All Risk Officers at
group and subsidiary levels report directly to their relevant risk committees. In addition, there are management level risk
and underwriting committees at group and subsidiary levels with escalation processes to Board of Directors level
committees.
roup Ltd. Board of Directors Trisura Group Ltd. Risk Committee Group Risk Ma
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
37
TRISURA GROUP LTD.
CORPORATE GOVERNANCE (CONTINUED)
The following factors in addition to the other information set forth in this MD&A and in the Company’s Consolidated
Financial Statements and Annual Information Form should be considered in assessing the risks to the Company and the
industry and markets in which we operate. If any of the following risks occur our business, financial condition, results of
operations and prospects would likely suffer. The following list of risks are those that the Company believes are the most
significant. They are not the only risks that we face or may face in the future and other risks may emerge that could have a
material adverse effect on our financial condition and results of operations.
RISKS AND UNCERTAINTIES
Highly Competitive Specialty Insurance Business
The specialty insurance business is highly competitive. Elements of competition include pricing, availability and quality of
products, capacity, quality and speed of service, credit and financial strength ratings, financial strength, distribution and
technology systems and technical expertise. Our Company competes with many other insurance companies. Many of
these competitors are larger and have greater financial resources than are available to our Company and have a greater
ability to compete on the basis of price. Some of our competitors may offer a broader range of policy administration or
other services or be willing to take on significantly more underwriting risk. Any increase in competition in this segment,
especially by one or more larger companies, could materially and adversely affect our Company’s business, financial
condition, results of operations and prospects. Competitors may also acquire distributors to our detriment. Consolidation
amongst insurance companies and distribution partners could also impact our ability to compete. As competitors introduce
new products and as new competitors enter the market, our Company may encounter additional and more intense
competition. Technological change implemented by insurers or new market entrants can result in a change to the
competitive landscape and adversely impact our ability to compete. There can be no assurance that we will continue to
increase revenues or be profitable. To a large degree, future revenues of our Company are dependent upon our ability to
continue to develop and market our products and to enhance the capabilities of our products to meet changes in customer
needs in a competitive marketplace. We seek to manage competition risks by fostering strong relationships with our
distribution partners and by focusing on their needs, delivering excellence in service and providing valuable product
expertise.
Cyclical and Volatile Nature of Insurance Industry
The financial performance of the insurance industry has historically tended to fluctuate in cyclical patterns of “soft” markets
characterized generally by increased competition, resulting in lower premium rates and underwriting standards, followed
by “hard” markets characterized generally by lessening competition, stricter underwriting standards and increasing
premium rates. The profitability of insurance companies tends to follow this cyclical market pattern with profitability
generally increasing in hard markets and decreasing in soft markets. These factors could result in fluctuations in the
underwriting results and net income of our Company. Many of these factors are beyond our Company’s control. The
profitability of specialty insurers can also be affected significantly by many factors, including regulatory regimes,
developing trends in tort and class action litigation, adoption of consumer initiatives regarding premium rates or claims
handling procedures, and privacy and consumer protection laws that prevent insurers from assessing risk, or factors that
have a high correlation with risks considered, such as credit scoring. An economic downturn in those jurisdictions in which
our Company writes business or otherwise conducts business activities, or adverse political conditions, could result in less
demand for specialty insurance and lower policy premiums.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
38
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Risk of Economic Downturn
The insurance policies that we underwrite are exposed to various risks that may increase during economic downturns,
recessions, or other periods of turmoil in the economy. These scenarios of economic turmoil can result in lower premium
volumes due to reduced insurance spending, fewer construction starts, lower discretionary spending, slower growth for
insureds, and other causes. These scenarios may also result in an increase in claims expense driven by reduced access
and increased cost of credit for policyholders, insolvencies of policyholders, inflation, reduced spending on controls by
policyholders, increases in crime and other factors that may impact policyholders. The Company reviews pricing
assumptions regularly to ensure that they reflect up-to-date claims experience and expected future changes in that
experience, as well as market conditions. The Company further mitigates the impact of pricing risk through the
employment of experienced underwriting staff. The Company applies risk management practices, including the use of
reinsurance, monitoring and regularly reviewing its portfolio of insurance risks in order to make adjustments as needed in
order to ensure exposures are within appropriate tolerances.
Our investment portfolio is also sensitive to volatile economic conditions. Changes in interest rates, credit spreads, foreign
exchange rates, inflation, and other changes in market prices may cause realized and unrealized losses. Rising interest
rates generally result in mark to market losses in our fixed income portfolio which can take years to resolve as bonds
mature and are replaced by higher yielding securities. A recession or other economic downturn could also result in
investment losses due to changes in market prices of held securities in any asset class or credit events. See Note 23.2
(Credit risk) and Note 23.4 (Market risk) to the Consolidated Financial Statements for more information on the
management of this risk.
Risk of Inflation
Claims costs associated with the insurance policies that we sell are exposed to inflation that can increase the cost of
fulfilling our obligations under those policies whether related to new claims or related to unpaid claims reserves. These
inflationary processes may be generalized and related to the inflation in the general economy or may be localized to a
particular class of business for example as construction cost inflation or trends in tort and class action litigation. Inflation
may increase the cost of reinsurance. Inflation may also increase the costs of running our Company including increased
wages, rent, utilities and other expenses. High inflation has led to tightening of monetary policy in the countries in which
we do business, which could pose a risk to economic growth. Growth in our investments may not keep pace with rising
claims and other expenses due to inflation. The Company reviews pricing assumptions regularly to ensure that they reflect
up-to-date claims experience and other expenses. However, if market forces in our competitive insurance industry prevent
fully passing on cost increases to the customer or if implemented risk mitigation strategies are inadequate or not timely,
results of operations or financial condition could deteriorate.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
39
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Reliance on Distribution Partners, Capacity Providers and Program Administrators
Trisura Specialty distributes its products primarily through a network of distribution partners. These distribution partners
also sell our competitors’ products and may, subject to certain limitations, reduce or stop selling our products altogether.
Strong competition exists among insurers for distribution partners with demonstrated ability to sell insurance products.
Premium volume and profitability could be materially adversely affected if there is a material decrease in the number of
distribution partners that choose to sell our Company’s products. Trisura offers fronting arrangements to capacity
providers that want to access specific insurance business. Capacity providers may be under common control with a
particular program administrator or may be independent. An independent capacity provider may reinsure a single book or
multiple books with various program administrators. A single program administrator may control a single book with one
capacity provider or multiple books with various capacity providers. Other specialty insurance companies may compete
with Trisura for this business. These capacity providers and program administrators may choose to enter into fronting
arrangements with Trisura’s competitors or program administrators, or capacity providers may terminate fronting
arrangements with Trisura if they no longer need access to its fronting capacity or for other reasons.
Consolidation among capacity providers could also reduce the availability of capacity available to our Company. A
significant decrease in business from any of these distribution partners, capacity providers or program administrators
would cause our Company to lose premiums and require us to find other partners to replace those lost premiums. We
seek to manage these risks by using a diversified group of distribution partners, capacity providers and program
administers. We further foster strong relationships with our business partners by delivering excellence in service and
product expertise. Where we have granted binding authority to our distribution partners and program administrators we
limit such authority to agreed underwriting guidelines and monitor the business underwritten. Nonetheless, situations
could arise where binding authority business could result in unanticipated losses that have a significant impact on our
results of operations and financial condition.
Insurance Risks:
Insurance risk is the risk that the ultimate cost of claims and loss adjustment expense, as well as acquisition expenses,
related to insurance contracts will exceed premiums received in respect of those contracts. This could occur where the
frequency or severity of claims is greater than expected. Some additional components of insurance risk such as product
and pricing risk, concentrations of insurance risk and exposure to large losses, and estimates of loss reserves are
described below.
For more information on insurance risk and the management of insurance risk see Note 2.2 (Insurance contracts), Note
7.1 (Roll-forward of net liability for insurance contracts showing LRC and LIC), and Note 23.1 (Insurance risk) to the
Consolidated Financial Statements.
1 – Product and Pricing
The pricing process relies on estimates of future loss costs and loss adjustment expenses. If we do not accurately assess
and price for the risks assumed in our insurance policies, profitability could be negatively affected. On the other hand,
setting premiums too high could impact competitiveness and growth. We price our products considering numerous factors,
including claims frequency and severity trends, product line expense ratios, special risk factors, reinsurance costs, the
capital required to support the product line, the investment income earned on that capital, and the competitive landscape
of the insurance markets where we compete. Our Company’s pricing processes are designed to ensure an appropriate
return on capital. These factors are reviewed and adjusted periodically to ensure they reflect the current environment. For
example, technological change implemented by insureds could change the profile of the risks insured by our policies. Our
Company seeks to manage this risk through the effective use of underwriting policies and guidelines, and by disciplined
risk selection. Careful oversight is applied and guidelines are reviewed to reflect emerging trends. Insurance risk is further
mitigated through effective claims and expense management and through the use of reinsurance.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
40
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
2 – Concentration of insurance risk and exposure to large losses
Concentration risk is the risk that our Company’s insurance products are concentrated within a particular geographic area,
industry, class of business, or insured, thereby increasing the exposure of our Company to a single event or a series of
related events. Unexpected large losses may result from events such as the unforeseen failure of a large contractor, as a
result of accumulations of large numbers of insurance or reinsurance contracts exposed to similar perils, adverse
economic conditions, exposure to mass torts, terrorism, natural or man-made catastrophes or global pandemics. Climate
change may increase the frequency or severity on natural catastrophes. Large losses could also be the result of future
unforeseen changes in the legal environment that could broaden our insurance coverage beyond the policy’s original
intent. Exposure could also aggregate through cyber-attacks whether directly covered under our policies or through “silent
cyber” where potential losses are not specifically included nor excluded in the policy wording. Certain policy exclusions
could also be found to be unenforceable. When a large loss or a concentration of losses is identified, we may be required
to strengthen reserves which could decrease earnings in that period. We seek to mitigate this risk through monitoring and
modeling techniques to review the portfolio for concentration and aggregation of risks and through the purchase of
reinsurance. We make adjustments as needed in order to ensure exposures are within tolerances. The active
management of our reinsurance programs and collateral requirements is also an important element in maintaining net
claims exposures within the Company’s risk tolerance.
3 – Estimates of Loss Reserves
The liability for unpaid claims and loss adjustment expense represents an estimate of the ultimate cost of all claims
incurred but not paid by the statement of financial position date. The reserving process employed in determining future
claims and loss adjustment expense payments includes consideration of individual case claims and loss adjustment
expense estimates on open reported claims as well as provisions for future development of such estimates and claims
and loss adjustment expense related to incurred but not reported claims. Under IFRS 17, further provisions are made for
the time value of money by applying discount rates based on risk free yield curves, adjusted to reflect the characteristics
of the cash flows and the liquidity of the insurance contracts. The Company uses qualified actuaries in its reserving
processes.
In estimating liabilities for incurred claims, a range of actuarial techniques are used. Typically, these techniques consider
historical loss development factors and payment patterns. They require the use of assumptions relating to future
development of claims and loss adjustment expense, future rates of claims frequency and severity, claims inflation, the
level of insurance fraud, payment patterns and reinsurance recoveries, taking into consideration the nature of the
insurance policies. Most or all of these factors are not directly quantifiable, particularly on a prospective basis, and the
effects of these and unforeseen factors could negatively impact our Company’s ability to accurately assess the reserves
required for the policies that we write. Typically, the delay to ultimate settlement of claims increases the uncertainty of the
estimate of the ultimate cost of those claims and loss adjustment expense. The uncertainty in estimation tends to be
higher for long-tail lines where information typically emerges over time. The measurement of insurance contract liabilities
includes a risk adjustment for non-financial risk to be applied to the present value of the estimated future cash flows. The
risk adjustment is our Company’s compensation for bearing the uncertainty relating to non-financial risk. The non-financial
risk pertains to the amount and timing of cash flows as our Company fulfills insurance contracts. The liabilities for incurred
claims are reviewed regularly and evaluated in light of emerging claims experience and changing circumstances.
Nonetheless, although our Company’s management believes our overall reserve levels as at the date of the financial
statements are adequate to meet our obligations under existing policies, actual losses may deviate, perhaps substantially,
from the reserves reflected in our Company’s financial statements. To the extent reserves prove to be inadequate, our
Company would have to increase such reserves and incur a charge to earnings.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
41
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Availability and Cost of Reinsurance
Our reinsurance arrangements are with a number of reinsurers. A decline in the availability of reinsurance or an increase
in the cost of reinsurance could increase costs or materially impact the amount of business we could underwrite. There
can be no assurance that developments may not occur in the future which might cause a shortage of reinsurance capacity
in those classes of business which we underwrite.
Ability to Recover Amounts Due from Reinsurers
Our Company uses reinsurance in the ordinary course of business to reduce its exposure to any one claim or event under
the policies we issue. Reinsurance is also a key component of the Trisura hybrid fronting model. Reinsurance does not
relieve our Company of its obligations to policyholders. Our Company is ultimately at risk on the limits of coverage
provided under insurance policies we write, regardless of whether we have ceded a portion of this exposure to reinsurers.
If a reinsurer is unwilling or unable to satisfy its obligations, our Company does not have the right to correspondingly
reduce its claims payment obligations. A reinsurer may be unwilling or unable to satisfy its obligations to our Company for
multiple reasons, including due to disagreement over the reinsurer’s obligations under a reinsurance contract, or a
financial failure of the reinsurer.
If our Company fails to realize a reinsurance recoverable owed under these arrangements our financial condition could be
materially and adversely affected. The Company has a reinsurance risk management policy in place to manage the credit
risk associated with Recoverables from reinsurers including criteria for using licensed reinsurers, minimum credit ratings
and concentration limits. When the Company uses un-registered or un-rated reinsurers, agreed upon collateral is used to
manage credit risk.
For more information on reinsurance and the Company’s management of its recoverable amounts due from reinsurers,
see Note 7.3 – Reinsurance contracts, Note 7.2 (Roll-forward of net asset for reinsurance contracts held showing Asset
for remaining coverage (ARC) and Asset for incurred claims (AIC)), and Note 23.2 (Credit risk) to the Consolidated
Financial Statements.
Financial Risks:
The significant financial risks are credit risk, liquidity risk and market risk (comprising currency risk, interest rate risk and
other price risks such as equity risk). The notes to our Company’s Consolidated Financial Statements provide further
detail on these risks and the ways in which we monitor and control these risks. To the extent that those risks emerge, they
could have a material adverse effect on our Company’s business, financial condition and performance.
1 – Credit Risk
Credit risk is the risk that a party to a financial instrument will fail to discharge an obligation and cause our Company to
incur a financial loss. Credit risk arises mainly from investments in bonds and short-term securities, and balances
receivable from insurance brokers and reinsurers. Concentrations of credit risk can arise from exposures to a single
debtor, a group of related debtors or groups of debtors that have similar risk characteristics, for example they may operate
in the same or similar industries. For premiums receivable, our Company uses insurance brokers, managing general
agents, and program administrators as intermediaries for the distribution of its product offerings and is therefore subject to
the risk that these agents fail to remit the premiums they have collected on its behalf. With respect to credit risk associated
with recoveries under reinsurance contracts, see the section “Ability to Recover Amounts Due from Reinsurers”. Our
investment policies mitigate credit risk through requirements relating to type, credit quality, size and duration of permitted
investments among other factors. Management monitors credit quality on an ongoing basis. For premiums receivable, the
Company monitors accounts receivable and follows up all past due amounts to ensure satisfactory collection
arrangements are in place. See Note 23.2 (Credit risk) to the Consolidated Financial Statements for more information on
the management of credit risk.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
42
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
2 – Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities
that are settled by delivering cash or another financial asset. Generally, our Company’s financial liabilities are settled by
delivering cash from the cash flow generated from its operations to satisfy its liquidity requirements, which are primarily
operating expenses and claims and loss adjustment payments. By their nature, the timing and quantum of claims and loss
adjustment payments are subject to significant uncertainty and are estimated actuarially. Although our Company has
reinsurance treaties in place under which a portion of the claim payments may be recovered, including by way of set off
against premiums payable to the reinsurers, such recoveries usually follow the making of payments and often delays of a
number of months can occur. Hence our Company must have access to sufficient liquid resources to fund gross amounts
payable when required. To manage its liquidity requirements, the Company keeps some of its assets in cash and cash
equivalents and has a highly rated, highly liquid investment portfolio. The Company’s investment policy sets out credit
quality criteria and has limits on single issuer exposures. See Note 23.3 (Liquidity risk) to the Consolidated Financial
Statements for more information on the management of liquidity risk.
3 – Market Risk
Exposure to this risk results from business activities including investment transactions involving the purchase or sale of
financial instruments. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices which could be driven by financial market conditions, general economic conditions,
political conditions, or other factors. Market risk includes currency risk, interest rate risk and other price risks such as
equity risk. See Note 23.4 (Market risk) of the Consolidated Financial Statements for more information on the
management of market risk.
i) Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. Our Company has operations in the United States and Canada and therefore has exposure to
currency risk arising from fluctuations in exchange rates of the Canadian dollar against the USD. The Company also has
currency risk as a result of holding investments in the Company’s Canadian operations denominated in USD. The foreign
currency positions of the Company are monitored regularly and the Company may use derivatives to manage foreign
exchange risks.
ii) Interest Rate Risk
Interest rate risk is the potential for financial loss resulting from changes in interest rates. Bonds and preferred shares are
subject to interest rate risk although, in the case of bonds, to the extent they are held to maturity, the risk is limited to the
reinvestment yield being different from the original yield to maturity. The fair value of bonds generally changes inversely
with changes in market rates of interest, with greater impact to bonds with longer durations. The Company’s unpaid claims
balance is also subject to interest rate risk which typically acts as a natural hedge to the interest rate of the asset portfolio.
The Company manages its interest rate risk through its investment policy which considers average duration of bonds held
as well as asset liability matching.
iii) Equity Price Risk
Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The
Company’s exposure to equity price risk is managed and mitigated through its investment policy which sets out maximum
exposures to equities at aggregate and per issuer levels as well as requiring diversification across different industry
sectors.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
43
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Cyber-Security
Our information technology systems may be subject to cyber terrorism intended to obtain unauthorized access to our
proprietary information, destroy data or disable, degrade or sabotage our systems, often through the introduction of
computer malware, social engineering, cyber-attacks and other means, and could originate from a wide variety of sources,
including internal, known or unknown third parties. If our information systems are compromised, do not operate or are
disabled, this could have a material adverse effect on our business prospects, financial condition, or results of operations.
Additionally, if our information systems are compromised and personally identifiable information is released, there could
be regulatory reporting obligations leading to material reputational harm or even litigation. In order to mitigate these risks,
we have taken proactive actions and are continuously enhancing our cyber-security posture through strong network
security , network monitoring, third party vulnerability assessments, employee training and awareness, data backups,
disaster recovery testing, cyber-security incident planning and table-top exercises.
Credit Ratings
Rating agencies evaluate our ability to honour financial obligations and for our insurance subsidiaries, our ability to pay
claims. The ratings are subject to periodic review using, among other things, proprietary capital adequacy models, and are
subject to revision or withdrawal at any time. Ratings are an important factor in establishing and maintaining our
competitive position in the specialty insurance market and especially in commercial insurance. See the Company’s Annual
Information Form for more information on credit ratings.
There can be no assurances that Trisura will be able to maintain its current ratings. Any downgrade in these ratings would
likely adversely affect our business through the loss of certain existing and potential policyholders to other companies with
higher ratings, and through certain insurance brokerage firms with which we now do business seeking a higher rated
issuing carrier to write their business. A downgrade of our issuer credit rating could result in materially higher borrowing
cost. Credit downgrades could impact our ability to raise capital or increase the cost of capital we can raise.
Risks of pandemics epidemics and other public health emergencies
Existing or future outbreaks of pandemics, epidemics, and infectious diseases could have a material adverse effect on the
economy, on our ability to operate, on our financial condition and on results of operations. The nature and extent of the
impact of such events as well as any response to them are highly uncertain and difficult to predict. There can be no
assurance that strategies implemented by the company or governments to address these risks will mitigate the adverse
impacts related to an outbreak.
Such developments may result in a material adverse effect on our assets, liquidity, financial condition and the operating
results of our insurance business due to its impact on the economy and global financial markets. There can be no
assurance that strategies to address these risks will mitigate any adverse impacts related to pandemics, epidemics or
public health emergencies.
Negative Publicity in the Specialty Insurance Industry
A number of our Company’s products and services are ultimately distributed to individual consumers. From time to time,
consumer advocacy groups or the media may focus attention on products and service of the specialty insurance industry
or our Company, thereby subjecting the specialty insurance industry or our Company to periodic negative publicity.
Negative publicity may also result in increased regulation and legislative scrutiny of practices in the specialty insurance
industry as well as increased litigation. Such consequences may increase our Company’s costs of doing business and
adversely affect our Company’s profitability by impeding our ability to market our products and services or increasing the
regulatory burdens under which our Company operates.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
44
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Reliance on Key Personnel and Talent Retention
The success of our Company depends upon the personal efforts of our senior management. The loss of the services of
such key personnel could have a material adverse effect on the operations of our Company. In addition, our Company’s
continued growth depends on our ability to attract and retain skilled management and employees and the ability of our key
personnel to manage our Company’s growth. Recruiting and retaining skilled personnel is costly and highly competitive. If
our Company fails to retain, hire, train and integrate qualified employees and contractors, we may not be able to maintain
and expand our business. Certain key personnel are not bound by non-competition covenants. If such personnel depart
our Company and subsequently compete with our Company or determine to devote significantly more time to other
business interests, such activities could have a material adverse effect on our Company’s business, financial condition
and performance. The Company’s strategies to manage this risk include succession planning for key employees,
employee engagement surveys and third-party compensation reviews.
Litigation Risk
The Company is subject to claims and litigation in the ordinary course of business resulting from alleged errors and
omissions in placing specialty insurance and in handling claims. The placement of specialty insurance and the handling of
claims involve substantial amounts of money. Since negligence claims against our Company may allege our Company’s
potential liability for all or part of the amounts in question, claimants may seek large damage awards and these claims can
involve significant defense costs. Claims of negligence against our Company could include, for example, errors and
omissions or intentional wrongful acts by the Company’s employees or agents, in the adjudication of claims, in the placing
of coverage, in the handling of consumer complaints, in failing to appropriately and adequately disclose insurer fee
arrangements to consumers, or in the handling of funds that we hold for our customers on a fiduciary basis. It is not
always possible to prevent or detect errors and omissions, and the precautions our Company takes may not be effective in
all cases. In addition to litigation associated with our insurance policies, we also face risk associated with general
corporate and commercial litigation. To the extent that these risks emerge, they could have a material adverse effect on
our Company’s business, financial condition and performance. In addition, litigation may harm our Company’s reputation
or divert management resources away from operating our business.
Holding Company
Trisura Group Ltd. is a holding company and its material assets consist primarily of interests in our operating subsidiaries.
Consequently, we depend on distributions and other payments from our operating businesses to provide us with the funds
necessary to meet our holding company financial obligations. Our operating businesses are legally distinct from Trisura
Group Ltd. and some of them are or may become restricted in their ability to pay dividends and distributions or otherwise
make funds available to Trisura Group Ltd. pursuant to local law, regulatory requirements and their contractual
agreements, including agreements governing their financing arrangements. Our operating businesses are generally
required to meet their policyholder and other obligations before making distributions to Trisura Group Ltd.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
45
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Adverse Effects of Regulatory Changes
The specialty insurance industry is heavily regulated. Changes in the regulations governing the specialty insurance
industry in any jurisdiction in which we operate, or increased regulations, may significantly affect the operations and
financial results of our Company. Our Company is subject to the laws, rules and regulations of the jurisdictions in which
we carry on business, including Canada, the US and Barbados. These laws, rules and regulations cover many aspects of
our business, the assets in which we may invest, the levels of capital and surplus and the standards of solvency that we
must maintain, and the amounts of dividends which we may declare and pay. Changes to laws, rules or regulations are
difficult to predict and could materially adversely affect our Company’s business, results of operations and financial
condition. In addition, more restrictive laws, rules or regulations may be adopted in the future that could make compliance
more difficult or expensive. Our principal Canadian regulated insurance company is regulated by OSFI and other
provincial regulators in the provinces in which it conducts business. Our principal US operating subsidiaries are regulated
by the Department of Insurance in Oklahoma and the New Jersey Department of Banking and Insurance, as well as other
state regulatory agencies in which they conduct business. Each of these regulators has broad supervisory and regulatory
powers available to them in connection with licenses, solvency capital requirements, investments, dividends, corporate
governance, requirements for key personnel, conduct of business rules, periodic examinations and reporting
requirements. The regulators have the authority to take enforcement actions and impose sanctions, including directing the
regulated entity to refrain from a course of action or to perform acts necessary to remedy situations, imposing fines or
assessments and the withdrawal of authorization. In certain circumstances, the regulators may take control of regulated
insurance or reinsurance companies. There is no guarantee that these regulators would not take such actions under
certain circumstances with respect to our Canadian or US operating entities. The imposition of such actions could have a
material adverse effect on our business, financial condition and performance.
Change of Control Restrictions of US Insurance Laws
The laws of the State of Oklahoma, where a principal operating subsidiary is domiciled, require prior approval by the
Department of Insurance in Oklahoma of any change of control of an insurer. “Control” is defined as the possession, direct
or indirect, of the power to direct or cause the direction of the management and policies of the regulated insurance
company, whether through the ownership of voting securities, by contract or otherwise. Control is presumed to exist
through the direct or indirect ownership of 10% or more of the voting securities of an insurance company domiciled in
Oklahoma or any entity that controls an insurance company domiciled in Oklahoma. Any person wishing to acquire
“control” of our Company would first be required to obtain the approval of the Department of Insurance in Oklahoma or file
appropriate disclaimers. These laws may discourage potential acquisition proposals and may delay, deter or prevent a
change of control of our Company, including through transactions (and in particular, unsolicited transactions), that some or
all of our shareholders might consider to be desirable.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
46
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Regulatory Challenges to Use of Fronting Arrangements
Trisura enters into arrangements under which it permits its licensed status to be used in partnerships with high quality
and/or collateralized reinsurers to issue insurance policies originated by program administrators or brokers. The program
administrator underwrites (consistent with rates and forms agreed to by Trisura and its reinsurers), and administers the
business, and the reinsurers reinsure a large portion of the risks. This is considered a hybrid “fronting” arrangement. In
some instances, all insurance risk is ceded. Trisura receives a fee, and shares its proportionate share in the profits or
losses of the business it writes with the reinsurers. Some insurance regulators may object to Trisura’s fronting
arrangements.
Notwithstanding the state law restrictions on ceding insurers, the Non-admitted and Reinsurance Reform Act contained in
the United States Dodd-Frank Wall Street Reform and Consumer Protection Act (the “NRRA”) provides that all laws of a
ceding insurer’s nondomestic state (except those with respect to taxes and assessments on insurers or insurance income)
are pre-empted to the extent that they otherwise apply the laws of the state to reinsurance agreements of nondomestic
ceding insurers. The NRRA places the power to regulate reinsurer financial solvency primarily with the reinsurer’s
domiciliary state and requires credit for reinsurance to be recognized for a nondomestic ceding company if it is allowed by
the ceding company’s domiciliary state. A state insurance regulator might not view the NRRA as pre-empting a state
regulator’s determination that an unauthorized reinsurer must obtain a license or that a statute prohibits Trisura from
engaging in a fronting business. However, such a determination or a conflict between state law and the NRRA could
cause regulatory uncertainty about Trisura’s fronting business, which could have a material and adverse effect on our
business, financial condition, results of operations and prospects.
Future Acquisitions
Part of our Company’s growth strategy involves seeking acquisition opportunities. We face competition for acquisitions,
including from our competitors, many of whom will have greater financial resources than us. There can be no assurance
that we will complete acquisitions. In addition, future acquisitions will likely involve some or all of the following risks, which
could materially and adversely affect our Company’s business, financial condition or results of operations: the difficulty of
integrating the acquired operations and personnel into our current operations; potential disruption of our current
operations; diversion of resources, including our Company’s management’s time and attention; the difficulty of managing
the growth of a larger organization; the risk of not attaining expected benefits; the risk of entering markets in which we
have little experience; the risk of becoming involved in labour, commercial or regulatory disputes or litigation related to the
new enterprise; the risk of environmental or other liabilities associated with the acquired business; and the risk of a
change of control resulting from an acquisition triggering rights of third parties or government agencies under contracts
with, or authorizations held by, the operating business being acquired. It is possible that due diligence investigations into
businesses being acquired may fail to uncover all material risks, or to identify a change of control trigger in a material
contract or authorization, or that a contractual counterparty or government agency may take a different view on the
interpretation of such a provision to that taken by us, thereby resulting in a dispute.
Inability to Generate Necessary Amount of Cash to Service Existing Debt
Our Company’s ability to pay principal and interest on our outstanding debt will depend on its future financial performance.
Our Company’s ability to generate cash will depend on many factors, some of which may be beyond its control, including
general economic, financial and regulatory conditions. If our Company cannot generate enough cash flow in the future to
service its debt or cannot renew the credit facility or other outstanding debt on its existing terms, it may need to refinance
its debt, obtain additional financing (on terms that may be less favourable than existing financing terms) or sell assets. Our
Company might not be able to implement any of these strategies on satisfactory terms or on a timely basis, if at all. If our
Company is unable to meet its debt service obligations or comply with its covenants, a default under the credit facility of
other outstanding debt would result.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
47
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Future Capital Requirements
Our Company’s future capital requirements will depend upon many factors, including the performance of the Canadian
operations, continued development of our US business, and the status of competition and regulatory and rating agency
requirements. There can be no assurance that financing will be available to our Company on acceptable terms, or at all.
Actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn could make it
more difficult to obtain financing on favourable terms. If additional funds are raised by issuing equity securities, dilution to
our existing shareholders will result. If adequate funds are not available, our Company may be required to delay, scale
back or abandon growth plans. An inability to obtain financing or similar financial support could have a material adverse
effect on our Company’s business, financial condition and results of operations.
Potential Volatility of Common Share Price
The market price for the Common Shares may be volatile and subject to wide fluctuations in response to numerous
factors, many of which are beyond our Company’s control, including, but not limited to, the following: (i) actual or
anticipated fluctuations in our Company’s quarterly results of operations; (ii) changes in estimates of our Company’s future
financial performance; (iii) recommendations by securities research analysts; (iv) changes in the economic performance or
market valuations of other issuers that investors deem comparable to our Company; (v) the addition or departure of our
executive officers and other key personnel; (vi) sales or anticipated sales of additional Common Shares; (vii) significant
acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our
Company or our competitors; (viii) actual or prospective changes in government laws, rules or regulations affecting our
businesses; (ix) the general state of the securities markets; (x) changes and developments in general economic, political,
or social conditions, including as a result of global pandemics and the global economic shutdown; (xi) the depth and
liquidity of the market for the Common Shares; (xii) news reports relating to trends, concerns, technological or competitive
developments, regulatory changes and other related issues in our industry or target markets; and (xiii) the materialization
of other risks described in this section.
Financial markets have in the past experienced significant price and volume fluctuations that have particularly affected the
market prices of equity securities of public entities and that have, in many cases, been unrelated to the operating
performance, underlying asset values or prospects of such entities. Accordingly, the market price of the Common Shares
may decline even if our Company’s operating results, underlying asset values or prospects have not changed.
Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be
other than temporary, which may result in impairment losses. As well, certain institutional investors may base their
investment decisions on consideration of our Company’s environmental, governance and social practices and
performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may
result in limited or no investment in the Common Shares by those institutions, which could materially adversely affect the
trading price of the Common Shares. There can be no assurance that fluctuations in price and volume will not occur. If
such increased levels of volatility and market turmoil continue for a protracted period of time, our Company’s operations
and the trading price of the Common Shares may be materially adversely affected.
Small Company Liquidity Risk
Trisura is a relatively small company in terms of market capitalization. As such, the share price of the Common Shares
may be more volatile than the shares of larger, more established companies. The Common Shares may trade less
frequently and in smaller volume than shares of large companies. As a result, it may be difficult to buy or sell the Common
Shares in a timely fashion relative to buying or selling shares of large companies on the secondary market. We may also
have relatively few Common Shares outstanding at any given time, so a sale or purchase of Common Shares may have a
greater impact on the price of the Common Shares.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
48
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Future Sales of Substantial Amount of Share Capital
The articles of incorporation, as amended, of Trisura provide that the Company may issue an unlimited number of
Common Shares, an unlimited number of non-voting shares and an unlimited number of preference shares (issuable in
series), subject to the rules of any stock exchange on which Trisura’s securities may be listed from time to time. If Trisura
was to issue any additional Common Shares, non-voting shares or preference shares, or such other classes of authorized
shares that are convertible or exchangeable for Common Shares, the percentage ownership of existing holders may be
reduced and diluted. We cannot foresee the terms and conditions of any future offerings of our securities nor the effect of
such offerings on the market price of the Common Shares. Any issuance of a significant percentage of Trisura’s securities,
or the perception that such issuances may occur, could have a material adverse effect on the market price of the Common
Shares and limit our ability to fund our operations through capital raising transactions in the future. The Board of Directors
has the authority to issue non-voting shares and preference shares and determine the price, designation, rights (including
voting and dividend rights), preferences, privileges, restrictions and conditions of the preference shares, and to determine
to whom non-voting and preference shares shall be issued.
Business Interruption from Unpredictable Catastrophic Events
Our company’s operations may be subject to losses resulting from the disruption in operations. Regular functioning of our
operations may be disrupted by natural catastrophes such as hurricanes, windstorms, earthquakes, hailstorms,
explosions, severe winter weather and fires, by man-made catastrophic events include hostilities, terrorist acts, riots,
crashes and derailments, by a disruption in key suppliers for example power grids, internet service providers, and cloud
computing providers, or by an epidemic or pandemic. Certain events may also cause damage to our Company’s physical
property or may impact key personnel or trading positions. Our Company maintains business continuity plans and
technology disaster recovery plans. If these plans cannot be put into action or are in-effective or do not take such events
into account, losses may further increase.
Dependence on Technology
Our Company is heavily dependent on systems technology to process large volumes of transactions and our business
would suffer if the technology employed is inadequate or inappropriate to support current and future business needs and
objectives. To ensure our Company is able to effectively respond to potential technology failures and mitigate the inherent
risk, our Company maintains technology disaster recovery plans for each of our operating companies.
Climate Change Risk
We are exposed to the physical risks associated with climate change which could impact the frequency and severity of
severe weather events. We are also exposed to risks related to managing the shift to a lower carbon economy which may
cause changes in asset values in some sectors as well as increase the legal and reputational risks of Trisura and its
policyholders related to the perceived management of climate related risks. The occurrence of any of these events could
result in an increase in the frequency or severity of insured claims, business disruption, reductions in the value of
investments, litigation against Trisura, and reputational damage.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
49
TRISURA GROUP LTD.
RISKS AND UNCERTAINTIES (CONTINUED)
Third Party Risk
We engage in significant arrangements with third party suppliers, vendors, and business partners. We also rely on
capacity providers and program administrators. Third parties are exposed to risks as part of their operations. Third parties
may fail or may face incidents that could compromise their ability to provide service to Trisura or could expose confidential
information. We are exposed to the potential failure on the part of any of these parties, whether through error, fraud, crime,
failure to comply with regulatory standards, failure to comply with internal policies, business disruption or otherwise. An
economic downturn, supply chain disruption, and other global political, economic, or social conditions could increase
supplier failure risk. Failure of the power grid, telephone system, internet service providers and other utilities in the regions
in which we operate could disrupt our operations and lead to substantial reputational damage.
The internal processes that we have in place may not be effective in all cases at identifying or mitigating these situations
in time. It is not always possible to identify and correct these failures or replace suppliers quickly or economically. In such
a case, our reputation, financial condition and results of operations could be negatively impacted. Depending on the length
of the failure, significant opportunity costs could also be incurred.
We manage third party risk throughout the lifecycle of our relationships from due diligence through ongoing monitoring
and maintenance of the relationship to ultimate termination. Due diligence and ongoing management are proportionate to
the level of criticality of each relationship.
Model Risk
We rely on estimates and models in the course of our business whether internal models or vendor models. These models
have a high degree of uncertainty and are based on historical data, scenarios and judgement that may not accurately
reflect future conditions. For example, models are used in the estimation of Probable Maximal Loss in the contract surety
and property business, in informing reinsurance purchase decisions, in investment decisions, in pricing, and in reserving.
Models estimates could deviate materially from actual experience and thereby have a material negative impact on our
financial condition and results of operations.
Taxation Risk
Our Company is subject to income taxes and premium taxes in the jurisdictions in which we carry on business, including
Canada, the US and Barbados. Changes to tax laws or the interpretation of these tax laws by government authorities
prospectively or retrospectively could have a material adverse impact on our profitability. Deferred tax assets are only
recognized to the extent that it is probable that they will be realized. Estimates are used to determine the value of the
deferred tax asset balance based on the assumption that the Company will generate taxable income in future years.
Estimates are used to determine the taxes payable balance based on applicable tax legislation. If our Company were not
to achieve the expected level of profitability, the deferred tax asset may not be realized which could have a material
negative impact on our financial condition and results of operations.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
50
TRISURA GROUP LTD.
SEGMENTED REPORTING
Table 9.1
As at
December 31, 2024
Trisura Specialty
Trisura US Programs
Corporate and other
Total(1)
Assets(2)
1,503,011
3,045,012
43,870
4,591,893
Liabilities(2)
1,000,568
2,730,669
75,390
3,806,627
Shareholders’ Equity(2)
502,443
314,343
(31,520)
785,266
Book Value Per Share, $
10.52
6.58
(0.66)
16.44
Table 9.2
As at
December 31, 2023
Trisura Specialty
Trisura US Programs
Corporate and other
Total(1)
Assets(2)
1,008,169
2,463,918
112,358
3,584,445
Liabilities(2)
718,385
2,193,711
52,920
2,965,016
Shareholders’ Equity(2)
289,784
270,207
59,438
619,429
Book Value Per Share, $
6.09
5.68
1.25
13.02
(1)
Total reflects the Group's Assets, Liabilities, and Book Value Per Share.
(2)
Individual segmented amounts are supplementary financial measures. The total amount is presented in the Consolidated Financial
Statements.
CONTRACTUAL OBLIGATIONS
Table 9.3
As at December 31, 2024
Payments due by period
Total
Less than 1 year
1 - 5 Years
Thereafter
Debt outstanding
98,272
23,272
75,000
-
Interest payments on debt(1)
3,041
2,050
990
-
Lease liabilities(2)
10,598
2,754
5,498
2,346
Insurance contract liabilities - LIC
2,978,681
1,241,821
1,469,288
267,572
Unfunded commitments
18,724
18,724
-
-
Total contractual obligations
3,109,316
1,288,621
1,550,776
269,918
Table 9.4
As at December 31, 2023
Payments due by period
Total
Less than 1 year
1 - 5 Years
Thereafter
Debt outstanding
75,000
-
75,000
-
Interest payments on debt(1)
4,952
1,981
2,971
-
Lease liabilities(2)
10,908
2,571
5,737
2,600
Insurance contract liabilities - LIC
2,069,108
1,151,710
814,663
102,735
Unfunded commitments
22,666
22,666
-
-
Total contractual obligations
2,182,634
1,178,928
898,371
105,335
(1)
Based on the Company's fixed borrowing rate on the outstanding senior unsecured notes and the interest due on the Company's revolving
credit facility. For details, see Note 14 in the Company's Consolidated Financial Statements.
(2)
See Note 9 in the Company's Consolidated Financial Statements for details on Leases.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
51
TRISURA GROUP LTD.
FINANCIAL INSTRUMENTS
See Notes 4, 5, 6, 17, and 18 in the Company’s Consolidated Financial Statements for financial statement classification of
the change in fair value of financial instruments, significant assumptions made in determining the fair values, amounts of
income, expenses, gains and losses associated with the instruments.
ACCOUNTING ESTIMATES
The preparation of Consolidated Financial Statements in accordance with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the
years presented.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the Consolidated financial statements is included below. Any changes in estimates are recorded in the year
in which they are determined. Accordingly, actual results may differ from these and other estimates thereby impacting
future financial statements.
Reference to our Consolidated Financial Statements for the year ended December 31, 2024:
Description
Reference
Valuation of insurance contract liabilities, reinsurance contract assets
Note 2.2
Measurement of recoverable from reinsurers
Note 2.2
Impairment of goodwill
Note 21(b)
Valuation of level 3 assets
Note 2.3
ECL calculations
Note 2.3
Impairment of financial assets
Note 2.3
Measurement of income taxes, recoverability of deferred tax assets
Note 2.7 and Note 20
See Note 3 in the Company’s Consolidated Financial Statements for further detail on accounting estimates.
See Note 2 in the Company’s Consolidated Financial Statements for future accounting policy changes including
accounting policy changes related to IAS 12 – Income taxes, International tax reform – Pillar Two Model Rules.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
52
TRISURA GROUP LTD.
SECTION 10 – ACCOUNTING AND DISCLOSURE MATTERS
DISCLOSURE CONTROLS AND PROCEDURES
We maintain information systems, procedures and controls to ensure that new information disclosed externally is
complete, reliable and timely. Management of the Company, at the direction and under the supervision of the Chief
Executive Officer and the Chief Financial Officer of the Company evaluated the effectiveness of the Company’s
“disclosure controls and procedures” (as defined in “National Instrument 52-109 - Certification of Disclosure in Issuers’
Annual and Interim Filings” (“NI 52-109”)) as at December 31, 2024, and have concluded that the disclosure controls and
procedures are effective.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
The control framework used to design the Company’s internal control over financial reporting is the Internal Control –
Integrated Framework (2013), published by The Committee of Sponsoring Organizations of the Treadway Commission
(COSO). We maintain “internal control over financial reporting” (as defined in NI 52-109) and the Chief Executive Officer
and the Chief Financial Officer of the Company have concluded that the internal controls have been designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS. Management has evaluated whether there were changes in our internal control over
financial reporting during the year ended December 31, 2024 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting and has determined that there have been no such changes.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
53
TRISURA GROUP LTD.
OPERATING METRICS AND OTHER FINANCIAL MEASURES
We use operating metrics and other financial measures to assess our operating performance.
BVPS
Shareholders’ equity, divided by total number of shares outstanding. Used to calculate the per-
share value of a company based on equity available to common shareholders.
Ceded Premiums
Written
Premiums ceded to reinsurers in the period. Used by Management for internal measurement,
budgeting and forecasting purposes. Management views the figure to be useful forward-looking
information to measure growth and profitability.
Combined Ratio
The sum of the Loss ratio and the Expense ratio. The difference between 100% and the combined
ratio represents underwriting income as a percentage of NPE, or underwriting margin. A Combined
ratio under 100% indicates a profitable underwriting result. A Combined ratio over 100% indicates
an unprofitable underwriting result. A measure to evaluate pre-tax underwriting profitability.
Debt-to-Capital
Ratio
Total Debt outstanding at the end of the reporting period, divided by the sum of: Debt outstanding
balance and Shareholders’ equity. A measure used to assess the Company’s financial leverage.
Deferred Fee
Income
Reflects unrecognized revenue associated with Fee income and is expected to be earned over the
lifetime of the associated policies. A precursor to Net income (expense) from reinsurance
contracts assets, which can be used to assist with estimates of future pre-tax underwriting
profitability.
Expense Ratio
Net expenses, net of Fee income, as a percentage of NPE. A measure to evaluate pre-tax
underwriting profitability.
Fee Income
A portion of Net income (expense) from reinsurance contracts assets, which reflects fees received
from reinsurers paid in exchange for fronting services. A measure used to evaluate profitability.
Fees as a
Percentage of
Ceded Premium
Fee income, adjusted to reflect the portion of fee income bound in a period, rather than recognized
as revenue in a period, divided by Ceded Premiums Written excluding certain non-recurring items.
Illustrates the rate of fee income generated from ceded premium, and can supplement
measurements of pre-tax underwriting profitability.
FOR
The sum of Net claims and loss adjustment expenses and Net expenses divided by the sum of
NPE and Fee income. A measure of pre-tax underwriting profitability.
Gross Premiums
Written
Insurance revenue, adjusted to reflect insurance revenue bound in the period inclusive of any
portion of that premium not yet recognized as revenue. Used by Management for internal
measurement, budgeting and forecasting purposes. Management views the figure to be useful
forward-looking information to measure growth.
Loss Ratio
Net claims and loss adjustment expenses as a percentage of NPE. A measure of claims used to
evaluate pre-tax underwriting profitability.
LTM Average
Equity
Shareholders’ equity over the last twelve month period, adjusted for significant capital transactions
and equity raises, if appropriate. A measure used in calculating ROE and Operating ROE.
MCT
Our regulated Canadian operations report the results of its MCT as prescribed by OSFI’s
Guideline A — Minimum Capital Test, as amended, restated or supplemented from time to time.
MCT determines the supervisory regulatory capital levels required by our regulated Canadian
operations.
Net Claims and
Loss Adjustment
Expenses
The portion of Insurance service expenses related to movement in the Liability for Incurred claims,
less the portion of Net income (expense) from reinsurance contracts assets related to the Asset for
incurred claims, plus the Finance income (expenses) from insurance/reinsurance contracts. A
measure of pre-tax underwriting profitability.
Net Commission
Expense
The portion of Insurance service expenses related to gross commissions, less the portion of Net
income (expense) from reinsurance contracts assets related to ceded commissions. A measure of
pre-tax underwriting profitability.
Net expenses
Net commission expense, plus other directly attributable expenses and insurance acquisition cash
flows excluding commission, plus Other operating expenses (net of Other income, which reflects
surety fee income, in our Trisura Specialty operations). A measure of pre-tax underwriting
profitability.
Metrics/Measures
Definition and Usefulness
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
54
TRISURA GROUP LTD.
Net Premiums
Earned
The sum of Net Premiums Written and an adjustment to reflect the portion of Net Premiums
Written that has been recognized as revenue in a given period. Used by Management for internal
measurement, budgeting and forecasting purposes. Management views the figure to be useful to
measure growth and profitability.
Net Premiums
Written
The difference of Gross Written Premium less Ceded Premiums Written. Used by Management for
internal measurement, budgeting and forecasting purposes. Management views the figure to be
useful forward-looking information to measure growth and profitability.
Net Underwriting
Income
Insurance Service Result, plus Other operating expenses, plus Other income and Finance income
(expenses) from insurance/reinsurance contracts. A measure of pre-tax underwriting profitability.
Non-recurring
items
Non-recurring items refers to items which are not expected to recur on an ongoing basis and are
not representative of core operations of the business. Examples include run-off costs, non-
recurring surety revenues, the impact of certain changes in Fronting reinsurance structures, or
system implementation costs. Non-recurring items are a component of Non-operating items and
are used to calculate Operating metrics.
Operating
Insurance Service
Result
Insurance service result, incorporating the adjustments to Operating net income, which impact the
Insurance service result, in order to reflect our core operations. A measure of pre-tax underwriting
profitability.
Operating Loss
Ratio, Operating
Expense Ratio,
Operating
Combined Ratio
The Operating loss ratio and Operating expense ratio are equal to the Loss ratio and Expense
ratio respectively, adjusted for the applicable non-operating adjustments to the financial measures
which are inputs to calculating those ratios and correspond to those applies to Operating net
underwriting income. Operating combined ratio is equal to the sum of Operating loss ratio and
Operating expense ratio. These ratios are measures used to evaluate pre-tax underwriting
profitability.
Operating Net
Income
Net income, adjusted to remove impact of certain items, referred to as Non-operating items, to
normalize earnings in order to reflect our specialty operations, which are considered core
operations and better reflects our underlying business performance over time. Items which are not
core to operations include Net gains (losses), the impact of movement in the yield curve included
in Finance income (expense) from insurance/reinsurance contracts, and Exited Lines. Adjustments
also include items which may not be recurring, such as loss from run-off programs, non-recurring
surety revenue, and certain tax adjustments. Adjustments also include SBC. A measure of after-
tax profitability, used in calculating Operating EPS and Operating ROE.
Operating Net
Underwriting
Income
Net underwriting income, incorporating the adjustments to Operating net income, which impact the
Net underwriting income, in order to reflect our core operations. A measure of pre-tax underwriting
profitability.
Operating ROE
ROE calculated using Operating net income for the twelve month period preceding the reporting
date. An alternate measure of after-tax profitability, adjusted for certain items to normalize
earnings to core operations in order to reflect our operations.
RBC
Our regulated US operations report the results of its RBC as prescribed by the NAIC’s Risk-Based
Capital for Insurers Model Act, as amended, restated or supplemented from time to time. RBC
determines the statutory minimum amount of capital required by our regulated US operations.
Retention Rate
NPW as a percentage of GPW. A measure of gross written premium that is not ceded to
reinsurers, which can be used to evaluate insurance risk.
ROE
Net income for the twelve month period preceding the reporting date, divided by LTM Average
Equity. A historical measure of after-tax profitability.
Metrics/Measures
Definition and Usefulness
These operating metrics and other financial measures are operating performance measures that highlight trends in our
core business or are required ratios used to measure compliance with OSFI and other regulatory standards. Our
Company also believes that securities analysts, investors and other interested parties use these operating metrics to
compare our Company’s performance against others in the specialty insurance industry. Our Company’s management
also uses these operating metrics and other financial measures in order to facilitate operating performance comparisons
from period to period, to prepare annual operating budgets and to determine components of management compensation.
Such operating metrics and other financial measures should not be considered as the sole indicators of our performance
and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in
accordance with IFRS.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
55
TRISURA GROUP LTD.
NON-IFRS FINANCIAL MEASURES AND OTHER FINANCIAL MEASURES
We report certain financial information using non-IFRS financial measures. Non-IFRS financial measures do not have
standardized meanings prescribed by IFRS and may not be comparable to similar measures used by other companies in
our industry. They are used by management and financial analysts to assess our performance.
Further, they provide users with an enhanced understanding of our results and related trends and increase transparency
and clarity into the core results of the business.
Section
Non-GAAP financial measure
Closest GAAP measures
3.1
Net underwriting income
Insurance service result
Operating net underwriting income
Insurance service result
Operating insurance service result
Insurance service result
Operating net income
Net income
Non-IFRS Financial Measures
Table 10.1 – Other operating expenses excluding SBC: useful to show growth in expenses excluding volatility from SBC due to movement in our
share price, as we attempt to mitigate this item through the use of derivatives, whose offsetting movement is reflected in Net gains (losses).
Q4 2024
Q4 2023
2024
2023
Operating expenses corporate, as presented in the financial statements,
note 19
207
(2,085)
(6,970)
(1,576)
Less: SBC
(839)
1,589
3,507
(1,914)
Operating expenses corporate excluding SBC
(632)
(496)
(3,463)
(3,490)
Year-over-year % increase, Operating expenses corporate
(109.9) %
342.3 %
Year-over-year % increase, Operating expenses corporate excluding SBC
27.4 %
(0.8) %
Table 10.2 – Reconciliation of reported Net income to Operating net income(1): reflects Net income, adjusted for certain items to normalize earnings
to core operations in order to reflect our specialty operations.
Q4 2024
Q4 2023
2024
2023
Net income, see Table 3.1
19,253
11,320
118,915
66,941
Adjustments
Non-recurring Surety revenues
-
-
-
(4,596)
Impact of certain changes in Fronting reinsurance structures
-
-
1,435
-
Loss from run-off program
-
19,196
3,714
47,229
Non-recurring items
(3,100)
4,549
3,565
4,549
Impact of Exited lines
30,577
-
30,577
-
Impact of SBC, see Table 10.1
(839)
1,589
3,507
(1,914)
Impact of movement in yield curve within Finance income (expenses) from
insurance and reinsurance contracts
(396)
2,071
1,207
723
Net (gains) losses, see Table 3.1
(2,886)
(9,058)
(24,699)
8,763
Tax impact of above items, and other tax adjustments
(4,428)
(3,792)
(2,371)
(11,494)
Operating net income, as presented in Table 3.1
38,181
25,875
135,850
110,201
(1)
Operating net income, a component of Operating EPS, is a non-IFRS financial measure (details on Operating EPS presented in Table 10.17).
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
56
TRISURA GROUP LTD.
Table 10.3 – Reconciliation of reported Trisura Specialty Net income to Operating net income: reflects Net income, adjusted for certain items to
normalize earnings to core operations in order to reflect our Trisura Specialty operations.
Q4 2024
Q4 2023
2024
2023
Net income
32,076
20,929
96,285
73,002
Adjustments
Non-recurring Surety revenues
-
-
-
(4,596)
Impact of certain changes in Fronting reinsurance structures
-
-
1,435
-
Non-recurring items
(3,100)
1,206
(2,842)
1,206
Impact of movement in yield curve within Finance income (expenses) from
insurance and reinsurance contracts
(38)
1,480
1,020
495
Net (gains) losses
(3,476)
(4,822)
(11,260)
3,224
Tax impact of above items, and other tax adjustments
1,754
563
3,072
(87)
Operating net income
27,216
19,356
87,710
73,244
Table 10.4 – Reconciliation of reported Trisura US Programs Net income to Operating net income: reflects Net income, adjusted for certain items
to normalize earnings to core operations in order to reflect our Trisura US Programs operations.
Q4 2024
Q4 2023
2024
2023
Net income
(14,102)
(8,862)
22,306
(1,090)
Adjustments
Loss from run-off program
-
19,196
3,714
47,229
Non-recurring items
-
3,116
5,919
3,116
Impact of exited lines
30,577
-
30,577
-
Impact of movement in yield curve within Finance income (expenses) from
insurance and reinsurance contracts
(358)
591
185
228
Net (gains) losses
2,437
(4,389)
(4,872)
(252)
Tax impact of above items, and other tax adjustments
(6,841)
(3,851)
(6,498)
(10,553)
Operating net income
11,713
5,801
51,331
38,678
Table 10.5 – Reconciliation of reported Insurance service result to Operating insurance service result: reflects Insurance service result, adjusted
for certain items to normalize earnings to core operations in order to reflect our specialty operations.
Q4 2024
Q4 2023
2024
2023
Insurance service result, see Table 3.1
13,787
4,159
116,232
85,335
Adjustments
Non-recurring Surety revenues
-
-
-
(4,596)
Loss from run-off program
-
19,196
3,714
47,229
Impact of exited lines
30,577
-
30,577
-
Impact of certain changes in Fronting reinsurance structures
-
-
1,435
-
Non-recurring items
(3,100)
3,577
3,077
3,577
Operating insurance service result, as presented in Table 3.1
41,264
26,932
155,035
131,545
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
57
TRISURA GROUP LTD.
Table 10.6 – Reconciliation of reported Trisura Specialty and Trisura US Programs Insurance service result to Operating insurance service
result: reflects Insurance service result, adjusted for certain items to normalize earnings to core operations in order to reflect our Trisura Specialty and
Trisura US Programs operations.
Trisura Specialty
Q4 2024
Q4 2023
2024
2023
Insurance service result
34,636
20,753
98,544
90,008
Adjustments
Non-recurring Surety revenues
-
-
-
(4,596)
Impact of certain changes in Fronting reinsurance structures
-
-
1,435
-
Non-recurring items
(3,100)
1,206
(2,842)
1,206
Operating insurance service result
31,536
21,959
97,137
86,618
Trisura US Programs
Q4 2024
Q4 2023
2024
2023
Insurance service result(1)
(20,849)
(16,594)
17,688
(4,673)
Adjustments
Impact of Exited lines
30,577
-
30,577
-
Loss from run-off program
-
19,196
3,714
47,229
Non-recurring items
-
2,371
5,919
2,371
Operating insurance service result
9,728
4,973
57,898
44,927
(1)
Trisura US Programs figures for Q4 2023 and 2023 include $14 and ($78), respectively, of Insurance service expenses previously classified as
Corporate and Other.
Table 10.7 – Reconciliation of Net gains (losses) to Net gains (losses) excluding derivative losses (gains) from SBC mitigation: represents
realized gains and losses, impact of foreign exchange related to investment portfolio.
Q4 2024
Q4 2023
2024
2023
Net gains (losses), as presented in Table 3.1
2,886
9,058
24,699
(8,763)
Derivative losses (gains) from SBC mitigation, from Table 10.27
1,356
(1,244)
(1,668)
3,441
Net gains (losses) excluding derivative losses (gains), as presented in
Table 4.1
4,242
7,814
23,031
(5,322)
Table 10.8 – Reconciliation of Average equity(1) to LTM average equity(2): LTM average equity is used in calculating Operating ROE.
Q4 2024
Q4 2023
Average equity
702,348
556,538
Adjustments: days in quarter proration
(336)
(6,866)
LTM average equity, as presented in Table 10.18
702,012
549,672
(1)
Average equity is calculated as the sum of opening equity and closing equity over the last twelve months, divided by two.
(2)
LTM average equity, a component of ROE and Operating ROE, is a non-IFRS financial measure (details on ROE and Operating ROE presented in
Table 10.18.
Table 10.9 – Reconciliation of Insurance revenue to GPW, NPW, and NPE
Insurance
revenue
Change in
unearned gross
premiums
Gross
premiums
written
Reinsurance
premiums
ceded
Net premiums
written
Change in
unearned net
premiums
Net premiums
earned
For the three months ended December 31, 2024
Trisura Specialty
258,686
15,515
274,201
(121,355)
152,846
(22,476)
130,370
Trisura US
Programs
535,476
(96,190)
439,286
(401,574)
37,712
20,757
58,469
For the three months ended December 31, 2023
Trisura Specialty
227,408
46,686
274,094
(132,575)
141,519
(32,143)
109,376
Trisura US
Programs
527,545
(62,444)
465,101
(433,426)
31,675
(202)
31,473
For the twelve months ended December 31, 2024
Trisura Specialty
980,727
108,061
1,088,788
(508,746)
580,042
(98,849)
481,193
Trisura US
Programs
2,137,595
(66,008)
2,071,587
(1,863,348)
208,239
(2,345)
205,894
For the twelve months ended December 31, 2023
Trisura Specialty
824,834
109,221
934,055
(453,674)
480,381
(75,946)
404,435
Trisura US
Programs
1,964,353
72,942
2,037,295
(1,920,445)
116,850
66,290
183,140
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
58
TRISURA GROUP LTD.
Table 10.10 – Net underwriting income – Trisura Specialty
Q4 2024
Q4 2023
2024
2023
Line items, as presented in the financial statements, note 19:
Insurance service result
34,636
20,753
98,544
90,008
Other operating expenses
(4,720)
(3,877)
(21,343)
(16,814)
Other income
508
727
7,506
7,654
Net insurance finance expenses
(633)
(2,107)
(5,170)
(4,146)
Net underwriting income
29,791
15,496
79,537
76,702
Adjustments
Non-recurring Surety revenues
-
-
-
(4,596)
Impact of certain changes in Fronting reinsurance structures
-
-
1,435
-
Non-recurring items
(3,100)
1,206
(2,842)
1,206
Impact of movement in yield curve within Finance income (expenses) from
insurance and reinsurance contracts
(38)
1,480
1,020
495
Operating net underwriting income
26,653
18,182
79,150
73,807
Table 10.11 – Net underwriting income – Trisura US Programs
Q4 2024
Q4 2023
2024
2023
Line items, as presented in the financial statements, note 19:
Insurance service result(1)
(20,849)
(16,594)
17,688
(4,673)
Other operating expenses
(2,291)
(4,384)
(14,619)
(14,557)
Net insurance finance expenses
(474)
(2,098)
(5,620)
(5,970)
Net underwriting income
(23,614)
(23,076)
(2,551)
(25,200)
Adjustments
Loss from run-off program
-
19,196
3,714
47,229
Impact of Exited lines
30,577
-
30,577
-
Non-recurring items
-
3,116
5,919
3,116
Impact of movement in yield curve within Finance income (expenses) from
insurance and reinsurance contracts
(358)
591
185
228
Operating net underwriting income
6,605
(173)
37,844
25,373
(1)
Trisura US Programs figures for Q4 2023 and 2023 include $14 and ($78), respectively, of Insurance service expenses previously classified as
Corporate and Other.
Table 10.12 – Reconciliation of Net income (expense) from reinsurance contracts assets to Fee income – Trisura US Programs
Q4 2024
Q4 2023
2024
2023
Net income (expense) from reinsurance contracts assets, as presented in the
financial statements, note 19
87,677
(103,661)
(131,200)
(267,142)
Less: Ceded commissions, ceded claims, ceded premiums earned, and other
directly attributable expenses – reinsurance
(63,952)
125,860
222,584
347,002
Fee income, as presented in Table 3.8
23,725
22,199
91,384
79,860
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
59
TRISURA GROUP LTD.
Table 10.13 – Reconciliation of Insurance service expenses and Net income (expense) from reinsurance contracts assets to Net claims and
loss adjustment expenses – Trisura Specialty: used in the calculation of Net underwriting income and Loss ratio.
Q4 2024
Q4 2023
2024
2023
Insurance service expenses, as presented in the financial statements, note 19
(237,997)
(174,689)
(759,403)
(543,362)
Finance expenses from insurance contracts, as presented in the financial
statements, note 19
(1,988)
(5,983)
(16,885)
(11,888)
Subtotal
(239,985)
(180,672)
(776,288)
(555,250)
Less: Gross commissions and other directly attributable expenses
100,194
87,033
387,007
326,070
Gross claims and loss adjustment expenses
(139,791)
(93,639)
(389,281)
(229,180)
Net income (expense) from reinsurance contracts assets, as presented in the
financial statements, note 19
13,947
(31,966)
(122,780)
(191,464)
Finance income from reinsurance contracts, as presented in the financial
statements, note 19
1,355
3,876
11,715
7,742
Subtotal
15,302
(28,090)
(111,065)
(183,722)
Less: Ceded commissions and ceded premiums earned
107,854
99,203
420,091
347,981
Ceded claims and loss adjustment expenses
123,156
71,113
309,026
164,259
Net claims and loss adjustment expenses
(16,635)
(22,526)
(80,255)
(64,921)
Table 10.14 – Reconciliation of Insurance service expenses and Net income (expense) from reinsurance contracts assets to Net claims and
loss adjustment expenses – Trisura US Programs: used in the calculation of Net underwriting income and Loss ratio.
Q4 2024
Q4 2023
2024
2023
Insurance service expenses, as presented in the financial statements, note 19(1)
(644,002)
(440,478)
(1,988,707)
(1,701,884)
Finance expenses from insurance contracts, as presented in the financial
statements, note 19
(5,027)
(21,733)
(61,637)
(63,987)
Subtotal
(649,029)
(462,211)
(2,050,344)
(1,765,871)
Less: Gross commissions and other directly attributable expenses(1)
103,557
92,462
464,875
411,876
Gross claims and loss adjustment expenses
(545,472)
(369,749)
(1,585,469)
(1,353,995)
Net income (expense) from reinsurance contracts assets, as presented in the
financial statements, note 19
87,677
(103,661)
(131,200)
(267,142)
Finance income from reinsurance contracts, as presented in the financial
statements, note 19
4,553
19,635
56,017
58,017
Subtotal
92,230
(84,026)
(75,183)
(209,125)
Less: Ceded commissions, ceded premiums earned, and Fee income
372,521
396,124
1,468,372
1,380,725
Ceded claims and loss adjustment expenses
464,751
312,098
1,393,189
1,171,600
Net claims and loss adjustment expenses
(80,721)
(57,651)
(192,280)
(182,395)
(1)
Trisura US Programs figures for Q4 2023 and 2023 include $14 and ($78), respectively, of Insurance service expenses previously classified as
Corporate and Other.
Table 10.15 – Reconciliation of Insurance service expenses and Net income (expense) from reinsurance contracts assets to Net expenses –
Trisura Specialty: used in the calculation of Net underwriting income and Expense ratio.
Q4 2024
Q4 2023
2024
2023
Insurance service expenses, as presented in the financial statements, note 19
(237,997)
(174,689)
(759,403)
(543,362)
Less: Gross claims and loss adjustment expenses (net of Finance income
(expenses) from insurance contracts)
137,807
87,656
372,398
217,292
Gross commissions and other directly attributable expenses
(100,190)
(87,033)
(387,005)
(326,070)
Net income (expense) from reinsurance contracts assets, as presented in the
financial statements, note 19
13,947
(31,966)
(122,780)
(191,464)
Less: Ceded claims and loss adjustment expenses (net of Finance income
(expenses) from reinsurance contracts) and ceded premiums earned
6,511
50,796
202,221
263,882
Ceded commissions
20,458
18,830
79,441
72,418
Net commissions and other directly attributable expenses
(79,732)
(68,203)
(307,564)
(253,652)
Other income, as presented in the financial statements, note 19
508
727
7,506
7,654
Other operating expenses, as presented in the financial statements, note 19
(4,720)
(3,877)
(21,343)
(16,814)
Net expenses
(83,944)
(71,353)
(321,401)
(262,812)
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
60
TRISURA GROUP LTD.
Table 10.16 – Reconciliation of Insurance service expenses and Net income (expense) from reinsurance contracts assets to Net expenses –
Trisura US Programs: used in the calculation of Net underwriting income and FOR.
Q4 2024
Q4 2023
2024
2023
Insurance service expenses, as presented in the financial statements, note 19(1)
(644,002)
(440,478)
(1,988,707)
(1,701,884)
Less: Gross claims and loss adjustment expenses (net of Finance income
(expenses) from insurance contracts)
540,445
348,016
1,523,831
1,290,008
Gross commissions and other directly attributable expenses
(103,557)
(92,462)
(464,876)
(411,876)
Net income (expense) from reinsurance contracts assets, as presented in the
financial statements, note 19
87,677
(103,661)
(131,200)
(267,142)
Less: Ceded claims and loss adjustment expenses (net of Finance income
(expenses) from reinsurance contracts), ceded premiums earned, and Fee
income
(6,915)
181,411
503,145
587,770
Ceded commissions
80,762
77,750
371,945
320,628
Net commissions and other directly attributable expenses
(22,795)
(14,712)
(92,931)
(91,248)
Other operating expenses, as presented in the financial statements, note 19
(2,291)
(4,384)
(14,619)
(14,557)
Net expenses(1)
(25,086)
(19,096)
(107,550)
(105,805)
(1)
Trisura US Programs figures for Q4 2023 and 2023 include $14 and ($78), respectively, of Insurance service expenses previously classified as
Corporate and Other.
Non-IFRS Ratios
Table 10.17 – Operating earnings per common share: reflect EPS, adjusted for certain items to normalize earnings to core operations in order to
reflect our specialty operations; a measure of after-tax profitability.
Q4 2024
Q4 2023
2024
2023
Operating net income
38,181
25,875
135,850
110,201
Weighted-average number of common shares outstanding – basic
(in thousands of shares)
47,779
47,579
47,707
46,529
Operating earnings per common share – basic (in dollars)
0.80
0.54
2.85
2.37
Operating net income
38,181
25,875
135,850
110,201
Weighted-average number of common shares outstanding – diluted
(in thousands of shares)
48,597
48,349
48,523
47,296
Operating earnings per common share – diluted (in dollars)
0.79
0.54
2.80
2.34
Table 10.18 – ROE and Operating ROE: a measure of the Company’s use of equity.
Q4 2024
Q4 2023
LTM net income
118,915
66,941
LTM average equity, from Table 10.8
702,012
549,672
ROE
16.9 %
12.2 %
Operating LTM net income(1), from Table 10.2
135,850
110,201
Operating LTM ROE(1)
19.4 %
20.0 %
(1)
Operating LTM net income, a component of Operating LTM ROE, is a non-IFRS financial measure.
Table 10.19 – Trisura Specialty ROE and Operating ROE: a measure of Trisura Specialty’s use of equity.
Q4 2024
Q4 2023
LTM net income(1)
94,356
73,002
LTM average equity(1)
343,443
251,130
ROE
27.4 %
29.1 %
Operating LTM net income(1)
85,782
73,244
Operating LTM ROE
24.9 %
29.2 %
(1)
LTM net income, LTM average equity, and Operating LTM net income balances exclude the impact of the US Treasury Listed entity.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
61
TRISURA GROUP LTD.
Table 10.20 – Trisura US Programs ROE and Operating ROE: a measure of Trisura US Programs' use of equity.
Q4 2024
Q4 2023
LTM net income
22,306
(1,090)
Currency translation
(281)
(1,700)
Subtotal
22,025
(2,790)
LTM average equity(1)
303,079
272,072
ROE
7.3 %
(1.0) %
LTM net income
22,306
(1,090)
Non-operating adjustments
29,025
39,768
Currency translation
(796)
(1,712)
Operating LTM net income
50,534
36,966
Operating LTM ROE
16.7 %
13.6 %
(1)
LTM average equity balances have been translated at the average USD:CAD foreign exchange rate over the last 12 months from the corresponding
period-end dates.
Table 10.21 – Combined ratio – Trisura Specialty
Q4 2024
Q4 2023
2024
2023
Net premiums earned, as presented in Table 10.9
130,370
109,376
481,193
404,435
Non-operating adjustments
(1,100)
-
1,435
(4,596)
Operating net premiums earned
129,270
109,376
482,628
399,839
Net claims and loss adjustment expenses, as presented in Table 10.13
16,635
22,526
80,255
64,921
Non-operating adjustments
38
(1,480)
(1,020)
(495)
Operating net claims and loss adjustment expenses
16,673
21,046
79,235
64,426
Net expenses, as presented in Table 10.15
83,944
71,353
321,401
262,812
Non-operating adjustments
2,000
(1,206)
2,842
(1,206)
Operating net expenses
85,944
70,147
324,243
261,606
Loss ratio
12.8 %
20.6 %
16.7 %
16.1 %
Expense ratio
64.4 %
65.2 %
66.8 %
65.0 %
Combined ratio
77.2 %
85.8 %
83.5 %
81.1 %
Operating loss ratio
12.9 %
19.2 %
16.4 %
16.1 %
Operating expense ratio
66.5 %
64.1 %
67.2 %
65.4 %
Operating combined ratio
79.4 %
83.3 %
83.6 %
81.5 %
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
62
TRISURA GROUP LTD.
Table 10.22 – Combined ratio and FOR – Trisura US Programs
Q4 2024
Q4 2023
2024
2023
Net premiums earned, as presented in Table 10.9
58,469
31,473
205,894
183,140
Non-operating adjustments
(8,517)
11,423
(4,956)
(36,005)
Operating net premiums earned
49,952
42,896
200,938
147,135
Fee income, as presented in Table 10.12
23,725
22,199
91,384
79,860
Non-operating adjustments
(2,548)
-
(2,548)
(50)
Operating fee income
21,177
22,199
88,836
79,810
Net claims and loss adjustment expenses, as presented in Table 10.14
80,721
57,651
192,280
182,395
Non-operating adjustments
(40,605)
(11,043)
(46,671)
(55,900)
Operating net claims and loss adjustment expenses
40,116
46,608
145,609
126,495
Net expenses, as presented in Table 10.16
25,086
19,096
107,550
105,805
Non-operating adjustments
(679)
(436)
(1,228)
(30,726)
Operating net expenses
24,407
18,660
106,322
75,079
Loss ratio
138.1 %
183.2 %
93.4 %
99.6 %
Expense ratio
2.3 %
(9.8) %
7.9 %
14.1 %
Combined ratio
140.4 %
173.4 %
140.4 %
173.4 %
Operating loss ratio
80.3 %
108.7 %
72.5 %
86.0 %
Operating expense ratio
6.5 %
(8.3) %
8.7 %
(3.2) %
Operating combined ratio
86.8 %
100.4 %
81.2 %
82.8 %
FOR
128.7 %
143.0 %
100.9 %
109.6 %
Operating FOR
90.7 %
100.3 %
86.9 %
88.8 %
Table 10.23 – Combined ratio – Consolidated
Q4 2024
Q4 2023
2024
2023
Net premiums earned, as presented in Tables 10.21 and 10.22
188,839
140,849
687,087
587,575
Non-operating adjustments
(9,617)
11,423
(3,521)
(40,601)
Operating net premiums earned
179,222
152,272
683,566
546,974
Fee income, as presented in Table 10.22
23,725
22,199
91,384
79,860
Non-operating adjustments
(2,548)
-
(2,548)
(50)
Operating fee income
21,177
22,199
88,836
79,810
Net claims and loss adjustment expenses, as presented in Tables 10.21 and 10.22
97,356
80,177
272,535
247,316
Non-operating adjustments
(40,567)
(12,523)
(47,692)
(56,395)
Operating net claims and loss adjustment expenses
56,789
67,654
224,843
190,921
Net expenses, as presented in Tables 10.21 and 10.22
109,030
90,449
428,951
368,617
Non-operating adjustments
1,321
(1,642)
1,614
(31,932)
Operating net expenses
110,351
88,807
430,565
336,685
Loss ratio
51.6 %
61.3 %
39.7 %
42.1 %
Expense ratio
45.2 %
44.1 %
49.1 %
49.1 %
Combined ratio
96.7 %
105.4 %
88.8 %
91.2 %
Operating loss ratio
31.7 %
44.4 %
32.9 %
34.9 %
Operating expense ratio
49.8 %
43.7 %
50.0 %
47.0 %
Operating combined ratio
81.5 %
88.1 %
82.9 %
81.9 %
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
63
TRISURA GROUP LTD.
Table 10.24 – Retention rate and Fees as a percentage of ceded premium – Trisura US Programs
Q4 2024
Q4 2023
2024
2023
Retention rate
Net premiums written, as presented in Table 10.9
37,712
31,675
208,239
116,850
Gross premiums written, as presented in Table 10.9
439,286
465,101
2,071,587
2,037,295
Retention rate
8.6 %
6.8 %
10.1 %
5.7 %
Fees as a percentage of ceded premium
Gross fee income
20,696
21,389
89,994
87,057
Ceded written premium, as presented in Table 10.9
401,574
433,426
1,863,348
1,920,445
Adjustment: non-recurring items
938
(8,189)
(3,941)
(75,707)
Ceded written premium excluding certain non-recurring items
402,512
425,237
1,859,407
1,844,738
Fees as a percentage of ceded premium
5.2 %
5.0 %
4.8 %
4.7 %
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
64
TRISURA GROUP LTD.
Additional Information
Table 10.25 – Reconciliation of Note 19 – Segmented information in the Company’s Consolidated Financial Statements to results including tax
impacts (as per MD&A Table 3.3 and 3.8)
For the three months ended December 31, 2024
For the twelve months ended December 31, 2024
FS Note 19 – Net
income before tax
Tax impact
MD&A Table 3.3 and
3.8 – Net income
FS Note 19 – Net
income before tax
Tax impact
MD&A Table 3.3 and
3.8 – Net income
Trisura Specialty
43,319
(11,243)
32,076
128,891
(32,606)
96,285
Trisura US Programs
(19,365)
5,263
(14,102)
28,479
(6,173)
22,306
Table 10.26 – Reconciliation of Note 19 – Segmented information in the Company’s Consolidated Financial Statements to results including tax
impacts (as per MD&A Table 3.3 and 3.8)
For the three months ended December 31, 2023
For the twelve months ended December 31, 2023
FS Note 19 – Net
income before tax
Tax impact
MD&A Table 3.3 and
3.8 – Net income
FS Note 19 – Net
income before tax
Tax impact
MD&A Table 3.3 and
3.8 – Net income
Trisura Specialty
28,152
(7,223)
20,929
98,469
(25,467)
73,002
Trisura US Programs
(11,558)
2,696
(8,862)
(1,588)
498
(1,090)
Corporate and Other
Table 10.27 – Reconciliation of Note 19 – Segmented information in the Company’s Consolidated Financial Statements to Section 3 –
Corporate and Other, Table 3.13
Q4 2024
Q4 2023
2024
2023
Other operating expenses Corporate and other, as presented in Note 19
207
(2,085)
(6,970)
(1,576)
Insurance service expenses - Reinsurance
-
2
-
(86)
Derivative (losses) gains from mitigation strategies(1)
(1,356)
1,244
1,668
(3,441)
Net expenses, as presented in Table 3.13
(1,149)
(839)
(5,302)
(5,103)
(1)
Derivative (losses) gains from SBC mitigation are presented in Net gains (losses) in the Consolidated Financial Statements.
Table 10.28 – Reconciliation from SBC, gross of mitigation strategies to SBC, net of mitigation strategies
Q4 2024
Q4 2023
2024
2023
SBC, gross of mitigation strategies(1)
839
(1,589)
(3,507)
1,913
Add: Derivative (losses) gains from mitigation strategies(2)
(1,356)
1,244
1,668
(3,441)
SBC, net of mitigation strategies as presented in Table 3.13
(517)
(345)
(1,839)
(1,528)
(1)
Included in Other operating expenses in Corporate and Other segment of FS Note 19.
(2)
Derivative (losses) gains from mitigation strategies are presented in Net gains (losses) in the Consolidated Financial Statements.
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
65
TRISURA GROUP LTD.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This MD&A contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-
looking statements” within the meaning of applicable Canadian securities legislation. 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 our 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”,
“potential” 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: 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; insurance risks including pricing risk, concentration risk and exposure to large losses, and risks
associated with estimates of loss reserves; 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 and availability and cost of reinsurance; 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; risks associated with reliance on distribution
partners, capacity providers and program administrators; third party risks; risk that models used to manage the business
do not function as expected; climate change risk; risk of economic downturn; risk of inflation; risks relating to cyber-
security; risks relating to credit ratings; 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 and information, investors and others should carefully consider the foregoing factors and other
uncertainties and potential events. Except as required by law, our Company 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.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
66
TRISURA GROUP LTD.
GLOSSARY OF ABBREVIATIONS
AFS
Available for Sale Financial Asset
BVPS
Book Value Per Share
D&O
Directors’ and Officers’ insurance
E&O
Errors and Omissions Insurance
EPS
Diluted Earnings Per Share
Exited lines
Exited lines refer to certain programs which have non-renewed and have been put into run-
off. These programs no longer fit within Trisura's risk appetite.
FOR
Fronting Operational Ratio
Fronted lines
Fronted lines are referring to US Fronting and Canadian Fronting
FVTPL
Fair Value Through Profit & Loss
FVTOCI
Fair Value Through Other Comprehensive Income
GPW
Gross Premium Written
ISR
Insurance Service Result
LAE
Loss Adjustment Expenses
LTM
Last Twelve Months
MCT
Minimum Capital Test
MGA
Managing General Agent
n/a
not applicable
Net gains (losses)
Net gains (losses) is inclusive of Net credit impairment reversals (losses)
nm
not meaningful
NPE
Net Premiums Earned
NPW
Net Premium Written
NUI
Net Underwriting Income
OCI
Other Comprehensive Income
OEPS
Diluted Operating Earnings Per Share
Operating expenses
Corporate
Operating expenses Corporate refers only to the portion of Other operating expenses relates
to Corporate and Other.
Other operating
expenses
Other operating expenses refers only to portion of Other operating expenses that relates to
Trisura Specialty and Trisura US Programs.
Primary lines
Primary lines are lines of insurance business not classified as fronting, such as Surety,
Corporate Insurance, and Warranty.
pts
Percentage points
Q1, Q2, Q3, Q4
The three months ended March 31, June 30, September 30 and December 31 respectively
Q2 YTD
The six months ended June 30
Q3 YTD
The nine months ended September 30
Q4 YTD
The twelve months ended December 31
ROE
Return on Shareholders’ Equity over the last twelve months
RSUs
Equity-settled restricted share units
USD
United States Dollar
YTD
Year to Date
Abbreviation
Description
TRISURA GROUP LTD.
Management’s Discussion and Analysis for the year ended 2024
(in thousands of Canadian dollars, except per share numbers and as otherwise noted)
67
TRISURA GROUP LTD.
Trisura Group Ltd.
Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
Deloitte LLP
Bay Adelaide East
8 Adelaide Street West
Suite 200
Toronto ON M5H 0A9
Canada
Tel: 416-601-6150
Fax: 416-601-6151
www.deloitte.ca
Independent Auditor’s Report
To the Shareholders and the Board of Directors of
Trisura Group Ltd.
Opinion
We have audited the consolidated financial statements of Trisura Group Ltd. (the “Company”), which
comprise the consolidated statements of financial position as at December 31, 2024 and 2023, and the
consolidated statements of income, comprehensive income, changes in equity and cash flows for the years
ended December 31, 2024 and 2023, and notes to the consolidated financial statements, including material
accounting policy information (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2024 and 2023, and its financial performance and its cash
flows for the years ended December 31, 2024 and 2023 in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board (“IASB”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian
GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in
Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of
the consolidated financial statements for the year ended December 31, 2024. This matter was addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Insurance Contract Liabilities - Refer to Notes 2.2(a), 3.1(b) and 7 to the financial statements
Key Audit Matter Description
The Company establishes an insurance contract liability for its property and casualty insurance business.
The liability for the incurred claims component of the insurance contract liabilities represents an estimate
of the ultimate cost of all claims incurred but not paid by the statement of financial position date. The
estimation process employed in determining future claims and loss adjustment expense payments includes
consideration of individual case estimates of claims and loss adjustment expense payments on reported
claims, provision for future development of case estimates on reported claims, and a provision for claims
and loss adjustment expense related to incurred but not reported (“IBNR”) claims.
In estimating the IBNR claims liabilities, the Company uses a range of actuarial methodologies which
consider assumptions related to historical loss development factors and payment patterns. While there are
several assumptions used in determining the IBNR claims liabilities, the assumptions with the highest
degree of subjectivity related to the future development of claims and loss adjustment expenses that have
not yet been reported and payment patterns (“significant assumptions”). Auditing the selection of the
actuarial methodologies and the significant assumptions involves a high degree of subjectivity in applying
audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of
audit effort, including the involvement of actuarial specialists.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the selection of the actuarial methodologies and the significant
assumptions used to value the IBNR claims liabilities for the property and casualty insurance business
included the following, among others:
On a sample basis, tested the completeness and accuracy of the underlying data used to determine
the IBNR claims liabilities.
With the assistance of actuarial specialists, evaluated management’s actuarial methodologies and
the significant assumptions in accordance with actuarial principles and practices under generally
accepted actuarial standards of practice.
With the assistance of actuarial specialists, developed independent estimates for the IBNR claims
liabilities for selected lines of business and compared our estimates to management's estimates.
Other Information
Management is responsible for the other information. The other information comprises:
Management’s Discussion and Analysis
The information, other than the financial statements and our auditor’s report thereon, in the
Annual Report
Financial Supplement
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon. In connection with our audit of the financial statements,
our responsibility is to read the other information identified above and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis, Annual Report, and Financial Supplement prior to the
date of this auditor’s report. If, based on the work we have performed on this other information, we
conclude that there is a material misstatement of this other information, we are required to report that
fact in this auditor’s report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS Accounting Standards as issued by the IASB, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business units within the Company as a basis for forming an
opinion on the financial statements. We are responsible for the direction, supervision and review of the
audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Jonathon Dueck.
Chartered Professional Accountants
Licensed Public Accountants
February 13, 2025
Table of contents for the Consolidated Financial Statements of Trisura Group Ltd.
Consolidated Statements of Financial Position ..................................................................................................................................... 3
Consolidated Statements of Income ....................................................................................................................................................... 4
Consolidated Statements of Comprehensive Income .......................................................................................................................... 5
Consolidated Statements of Changes in Equity .................................................................................................................................... 6
Consolidated Statements of Cash Flows ............................................................................................................................................... 7
Notes to the Consolidated Financial Statements .................................................................................................................................. 8
TRISURA GROUP LTD.
Consolidated Financial Statements
2
As at
Note
December 31, 2024
December 31, 2023
Assets
Cash and cash equivalents
270,378
604,016
Investments
4,6
1,434,534
890,157
Other assets
8
42,392
53,712
Reinsurance contract assets
7.2
2,771,163
2,003,589
Capital assets and intangible assets
9,10,11
29,383
16,657
Deferred tax assets
20
44,043
16,314
Total assets
4,591,893
3,584,445
Liabilities
Insurance contract liabilities
7.1
3,546,053
2,769,951
Other liabilities
12
162,302
120,065
Loan payable
14
98,272
75,000
3,806,627
2,965,016
Shareholders’ equity
Common shares
15
481,797
481,023
Contributed surplus
9,796
7,491
Retained earnings
262,489
143,574
Accumulated other comprehensive income (loss)
31,184
(12,659)
785,266
619,429
Total liabilities and shareholders’ equity
4,591,893
3,584,445
See accompanying notes to the Consolidated Financial Statements
On behalf of the Board
George Myhal
David Clare
Director
Director
TRISURA GROUP LTD.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars, except as otherwise noted)
3
For the twelve months ended December 31,
Note
2024
2023
Insurance revenue
7.1
3,118,322
2,789,187
Insurance service expenses
(2,748,110)
(2,245,246)
Net income (expense) from reinsurance contracts assets
7.2
(253,980)
(458,606)
Insurance service result
116,232
85,335
Net investment income (loss)
17
67,045
51,669
Net gains (losses)
18
26,996
(9,658)
Net credit impairment reversals (losses)
4.2
(2,297)
895
Total investment income (loss)
91,744
42,906
Finance income (expenses) from insurance contracts
(78,522)
(75,875)
Finance income (expenses) from reinsurance contracts
67,732
65,759
Net insurance finance income (expenses)
(10,790)
(10,116)
Net financial result
80,954
32,790
Net insurance and financial result
197,186
118,125
Other income
7,506
7,654
Other operating expenses
(42,932)
(32,947)
Other finance costs
(3,270)
(2,409)
Income before income taxes
158,490
90,423
Income tax expense
20
(39,575)
(23,482)
Net income attributable to shareholders
118,915
66,941
Weighted average number of common shares outstanding
during the year (in thousands) – basic
47,707
46,529
Earnings per common share (in dollars) – basic
16
2.49
1.44
Earnings per common share (in dollars) – diluted
16
2.45
1.42
See accompanying notes to the Consolidated Financial Statements
TRISURA GROUP LTD.
Consolidated Statements of Income
(in thousands of Canadian dollars, except as otherwise noted)
4
For the twelve months ended December 31,
Note
2024
2023
Net income attributable to shareholders
118,915
66,941
Items that may be or are reclassified subsequently to Net income
Net unrealized gains (losses) on FVOCI investments
8,838
17,632
Income tax benefit (expense)
(3,027)
(4,185)
FVOCI amounts
5,811
13,447
Net realized losses (gains)
1,821
(1,156)
Net credit impairment losses (reversals)
4.2
2,297
(895)
Income tax expense (benefit)
(757)
260
Items reclassified to Net income
3,361
(1,791)
Net unrealized gains (losses) on FVOCI investments
6,493
1,169
Net realized gains (losses) on FVOCI investments
284
273
Income tax benefit (expense) on FVOCI investments
(1,763)
(250)
Items that will not be reclassified to Net income
5,014
1,192
Items other than Cumulative translation gains (losses)
14,186
12,848
Cumulative translation gains (losses)
29,657
(6,520)
Other comprehensive income (loss)
43,843
6,328
Total comprehensive income
162,758
73,269
See accompanying notes to the Consolidated Financial Statements
TRISURA GROUP LTD.
Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars, except as otherwise noted)
5
Note
Common
shares
Contributed
surplus
Retained
earnings
Accumulated other
comprehensive
income (loss)
(net of income taxes)
Total
Balance as at January 1, 2024
481,023
7,491
143,574
(12,659)
619,429
Net income
-
-
118,915
-
118,915
Other comprehensive income (loss)
-
-
-
43,843
43,843
Total comprehensive income
-
-
118,915
43,843
162,758
Share issuance
15
2,989
-
-
-
2,989
Shares purchased under Restricted
Share Units (“RSUs”) plan
15
(2,215)
-
-
-
(2,215)
Share based payments
-
2,305
-
-
2,305
Balance as at December 31, 2024
481,797
9,796
262,489
31,184
785,266
Common
shares
Contributed
surplus
Retained
earnings
Accumulated other
comprehensive loss
(net of income taxes)
Total
Balance at January 1, 2023,
as restated
430,262
5,743
76,633
(18,987)
493,651
Net income
-
-
66,941
-
66,941
Other comprehensive income (loss)
-
-
-
6,328
6,328
Total comprehensive income
-
-
66,941
6,328
73,269
Share issuance
15
52,170
-
-
-
52,170
Shares purchased under Restricted
Share Units (“RSUs”) plan
15
(1,409)
-
-
-
(1,409)
Share based payments
-
1,748
-
-
1,748
Balance as at December 31, 2023
481,023
7,491
143,574
(12,659)
619,429
See accompanying notes to the Consolidated Financial Statements
TRISURA GROUP LTD.
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars, except as otherwise noted)
6
For the twelve months ended December 31,
Note
2024
2023
Operating activities
Net income
118,915
66,941
Items not involving cash:
Depreciation and amortization
1,434
1,661
Unrealized losses (gains)
(25,766)
3,231
Net credit impairment losses (reversals)
4.2
2,297
(895)
Stock options granted
1,518
1,267
Change in working capital
22
68,598
194,038
Realized losses (gains) on investments
(2,314)
3,950
Income taxes paid
(42,316)
(9,841)
Interest paid
(2,640)
(2,439)
Net cash flows from (used in) operating activities
119,726
257,913
Investing activities
Proceeds on disposal of investments
342,306
102,492
Purchases of investments
(795,269)
(219,121)
Purchases of capital assets
(3,398)
(277)
Acquisition of subsidiary
21
(15,015)
-
Purchases of intangible assets
(437)
(437)
Net cash flows from (used in) investing activities
(471,813)
(117,343)
Financing activities
Shares issued
15
2,989
51,507
Shares purchased under RSU plan
15
(2,215)
(1,409)
Loans received
14
46,607
-
Loans repaid
14
(23,335)
-
Principal portion of lease payments
(2,006)
(2,034)
Net cash flows from (used in) financing activities
22,040
48,064
Net increase (decrease) in cash and cash equivalents during the year
(330,047)
188,634
Cash, beginning of year
559,741
381,485
Cash equivalents, beginning of year
44,275
24,883
Cash and cash equivalents, beginning of year
604,016
406,368
Impact of foreign exchange on cash and cash equivalents
(3,591)
9,014
Cash, end of year
250,383
559,741
Cash equivalents, end of year
19,995
44,275
Cash and cash equivalents, end of year
270,378
604,016
See accompanying notes to the Consolidated Financial Statements
TRISURA GROUP LTD.
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars, except as otherwise noted)
7
Trisura Group Ltd. (the “Company”) was incorporated under the Business Corporations Act (Ontario) (the “Act”) on January 27,
2017. The Company’s head office is located at 333 Bay Street, Suite 1610, Box 22, Toronto Ontario, M5H 2R2.
The Company has investments in wholly owned subsidiaries through which it conducts insurance operations. Those operations
are primarily in Canada and the United States.
The Company’s Canadian business operates as a Canadian property and casualty insurance company, licensed in all provinces
and territories. Certain lines of the Canadian business operate as a fronting carrier with a large portion of gross premiums written
ceded to reinsurers. The Company's US business is a domestic surplus lines insurer that can write business as a non-admitted
surplus line insurer in all states and admitted business in most states. A large portion of the US business operates as a hybrid
fronting carrier where a large portion of its gross premiums written are ceded to reinsurers.
The common shares of the Company are publicly traded on the Toronto Stock Exchange under the symbol “TSU”.
Note 2 – Summary of material accounting policies
2.1
Basis of presentation
These Consolidated Financial Statements have been prepared in accordance with IFRS Accounting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”).
The Consolidated Financial Statements comprise the financial results of the Company and all entities controlled by the
Company, on a consolidated basis of presentation. All intra-group transactions, balances, income and expenses are eliminated
in full on consolidation. In accordance with IFRS, presentation of assets and liabilities on the Consolidated Statements of
Financial Position is in order of liquidity. The Company’s functional and presentation currency is Canadian dollars.
These Consolidated Financial Statements were authorized for issuance by the Company’s Board of Directors on February 13,
2025.
2.2
Insurance Contracts
Classification of Insurance Contracts
When significant insurance risk exists, the Company’s products are classified at contract inception as insurance contracts.
Significant insurance risk exists when the Company agrees to compensate policyholders of the contract or ceding companies for
specified uncertain future events that adversely affect the policyholder and whose amount and timing is unknown. The level of
insurance risk is assessed by considering whether there are any scenarios with commercial substance in which the Company is
required to pay significant additional benefits. These benefits are those which exceed the amounts payable if no insured or
reinsured event were to occur.
Measurement model
There are two main measurement models to account for insurance contracts: the general measurement model ("GMM") and the
premium allocation approach ("PAA"). Under the GMM, insurance contracts must be valued using current estimates of
discounted future cash flows, an explicit risk adjustment for non-financial risk, and a contractual service margin that reflects the
present value of the expected profit from fulfilling the contracts which is to be recognized into income over the coverage period.
The PAA is a more simplified measurement model that is to be applied to insurance contracts with coverage periods of one year
or less or where the liability for remaining coverage ("LRC") under the PAA is not materially different to the LRC under the GMM.
The Company uses a model for evaluating whether the LRC under the GMM differs materially from the LRC under the PAA for
any insurance contracts with a coverage period greater than one year, and based on management’s analysis, no material
differences in LRC were noted. Accordingly, the Company is applying PAA to all its insurance contracts.
The Company measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance
contracts that it issues, however, adapted to reflect the features of reinsurance contracts that differ from insurance contracts
issued, for example the recognition of expenses or reduction in expenses rather than revenue. For reinsurance contracts, on
initial recognition, the Company measures the asset for remaining coverage ("ARC") at the amount of ceding premiums paid.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 1 – The Company
8
The Company measures the carrying amount of the LRC at the end of each reporting period as the LRC at the beginning of the
year, plus premiums received in the year, minus insurance acquisition cash flows paid, plus any amounts relating to the
amortization of the acquisition cash flows recognized as an expense in the reporting period for the Company, plus any
adjustment to the financing component, where applicable, minus the amount recognized as insurance revenue for the coverage
period, minus any investment component paid or transferred to the liability for incurred claims.
Insurance contract liabilities
The liability for incurred claims ("LIC") represents an estimate of the ultimate cost of all claims incurred but not paid by the
Statement of Financial Position date.
Insurance contract liabilities - judgment, assumptions and estimation uncertainty
The estimation process employed in determining future claims and loss adjustment expense ("LAE") payments includes
consideration of individual case estimates of claims and LAE payments on reported claims, provision for future development of
case estimates on reported claims, and provision for claims and LAE related to incurred but not reported ("IBNR") claims.
Further provisions are made for the time value of money. The Company uses qualified actuaries in its reserving processes.
In estimating the IBNR claims, the Company uses a range of actuarial methodologies which consider assumptions related to
historical loss development factors and payment patterns. While there are several assumptions that go into determining the
IBNR claims, significant management judgment is applied regarding the use of assumptions relating to future development of
claims and LAE that have not yet been reported, future rates of claims frequency and severity, claims inflation, payment patterns
and reinsurance recoveries, taking into consideration the circumstances of the Company and the nature of the insurance
policies. Typically, the delay to ultimate settlement of claims increases the uncertainty of the estimate of the ultimate cost to
settle the LIC balance.
As a result of the uncertainly in estimation, actual future claims and LAE payments may deviate in quantum and timing, perhaps
materially, from the liability recorded in the LIC on the Consolidated Statements of Financial Position. The LIC is reviewed
regularly and evaluated in light of emerging claims experience and changing circumstances. Any resulting adjustments to the
estimates of the ultimate liability are recorded as Insurance service expense in the year in which such changes are made.
Discounting of insurance contract liabilities
Estimates of future cash flows are discounted to reflect the time value of money and financial risks related to those cash flows.
The Company discounts estimates of future cash flows using risk-free yield curves adjusted to reflect the characteristics of the
cash flows and the liquidity of the insurance contracts.
Discount rates applied for discounting of future cash flows are listed below:
As at December 31, 2024
As at December 31, 2023
Insurance contracts issued
and reinsurance contracts
Currency
1
year
5
years
10
years
20
years
30
years
1
year
5
years
10
years
20
years
30
years
CAD
3.82%
4.20%
4.73%
5.07%
4.97%
5.39%
4.75%
4.79%
4.91%
4.78%
USD
4.72%
5.17%
5.32%
4.98%
4.92%
6.02%
4.72%
4.54%
4.21%
3.97%
Risk adjustment
The measurement of insurance contract liabilities includes a risk adjustment for non-financial risk to be applied to the present
value of the estimated future cash flows. The risk adjustment is the Company’s compensation for bearing the uncertainty relating
to non-financial risk. The non-financial risk pertains to the amount and timing of cash flows as the Company fulfils insurance
contracts. The risk adjustment replaces the provision for adverse deviation. The Company is applying a quantile approach for its
non-financial risks. As at December 31, 2024, the liability for incurred claims, including the risk adjustment, was calculated at a
73% level of confidence (December 31, 2023 - 73%).
For reinsurance contract assets, the risk adjustment for non-financial risk represents the amount of risk being transferred by the
Company to the reinsurer.
Onerous contracts
To determine if a group of contracts are onerous, the Company considers facts and circumstances based on the expected
fulfillment cash flows, pricing data, the outcomes of similar contracts, and the operating and regulatory environment. At initial
recognition, the Company assumes that no contracts are onerous, unless facts and circumstances indicate otherwise, as all the
Company’s contracts meet the PAA criteria. If at any time during the coverage period, the facts and circumstances indicate that a
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
9
group of insurance contracts is onerous, the Company establishes a loss component as the difference between fulfillment cash
flows that relate to the remaining coverage of the group over the carrying amount of the LRC of the group.
Insurance acquisition cash flows
Insurance acquisition cash flows consist of costs of selling, underwriting, and starting a group of insurance contracts (issued or
expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the group belongs. The
Company defers insurance acquisition cash flows and these expenses are recognized as insurance service expenses as the
related premiums are recognized as Insurance revenue.
Insurance revenue and Insurance service expenses
The Company recognizes insurance revenue for each period over the coverage period of a group of contracts. The Company
recognizes groups of insurance contracts from the earliest of the following: the beginning of the coverage period of the group of
contracts, the date when the first payment from a policyholder in the group is due, or for a group of onerous contracts, when the
group becomes onerous. Premiums are earned over the terms of the related policies, generally on a pro rata basis. There are
some instances where premiums are earned over the term of the policy in accordance with the risk profile of those policies with
more premiums being earned when the risk exposure from the policy is greatest.
Insurance service expenses consist of amortization of insurance acquisition cash flows, incurred claims and other insurance
expenses, and losses on onerous groups of contracts and reversals of such losses.
In the normal course of business, the Company enters into fronting arrangements with third parties, whereby the Company
assumes the insurance risk but then cedes all or most of the risk to other insurers and reinsurers. In certain instances, security
arrangements are established to offset the Company’s risk exposure. Fronting arrangements do not discharge the Company as
the primary insurer for its obligations to policyholders.
Presentation and disclosures
Presentation of insurance and reinsurance related items in the Consolidated statements of income include:
•
Income and expenses from insurance contracts issued is presented separately from net income (expense) from
reinsurance contract assets,
•
All directly attributable insurance acquisition expenses are included in the insurance service expenses line item, while
the remainder of expenses is recorded under other operating expenses.
The Company has presented separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance
contracts issued that are assets, groups of insurance contracts issued that are liabilities, reinsurance contracts that are assets
and groups of reinsurance contracts that are liabilities, if any.
Reinsurance contracts
Reinsurance contracts are measured on the same basis as insurance contracts, but adapted to reflect the features of insurance
contracts that differ from reinsurance contracts. A group of reinsurance contracts that covers the losses of separate insurance
contracts on a proportionate basis is recognized at the later of the beginning of the coverage period of the group, or the initial
recognition of any underlying contract, and in all other cases, from the beginning of the coverage period of the group of
contracts.
The Company uses reinsurance in the ordinary course of business to reduce its exposure to any one claim or event under the
policies it issues. A large portion of this reinsurance is affected under reinsurance agreements known as treaty reinsurance. In
some instances, it is negotiated on a facultative (one-off) basis for individual policies, generally when the exposures under these
policies are not sufficiently mitigated by the treaty reinsurance.
The Company’s fronting operations cede the majority of the insurance revenue generated through it to third-party reinsurers. As
such, Reinsurance contract assets are significant to the Company’s financial position, and the associated credit risk is monitored
each reporting period.
Reinsurance does not relieve the Company of its obligations to policyholders. The Company’s obligation to pay policyholders is
not contingent on the reinsurers paying, or honouring its contractual obligations. For this reason, the Company evaluates the
financial condition of its reinsurers and monitors concentration of credit risk to minimize its exposure to losses from reinsurer
insolvencies or contract disputes. Reinsurers providing reinsurance policies are generally required to have a minimum A.M. Best
credit rating of A- at the inception of each policy or are otherwise required to post agreed upon levels of collateral. Unlicensed
reinsurers must post an agreed upon level of collateral.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
10
Reinsurance contract assets - judgment, assumptions and estimation uncertainty
Reinsurance contract assets, including the Assets for Incurred Claims (“AIC”), are determined using methodologies similar to
that of insurance contract liabilities, including the LIC, and require the use of judgment and contain estimation uncertainty in a
similar manner to those required to measure the LIC. For reinsurance contract assets, there is also estimation uncertainty and
judgment included in the calculation of the provision for reinsurance non-performance. Measurement of recoverable from
reinsurers, of which the AIC is a part of, involves estimation.
Level of aggregation
The level of aggregation for the Company is determined firstly by dividing the business written into portfolios. Portfolios comprise
contracts with similar risks which are managed together. Portfolios are further divided based on expected profitability at inception
into three categories: onerous contracts, contracts with no significant possibility of becoming onerous, and the remainder.
Net income or expense from reinsurance contracts
The Company presents on the face of the statements of income and comprehensive income, the income and expenses from a
group of reinsurance contracts, other than insurance finance income or expenses, as a single amount, including the amounts
expected to be recovered from reinsurers. Ceding commissions that are not contingent on claims of the underlying contracts
issued reduce ceding premiums and are accounted for as part of reinsurance expenses. The Company recognizes reinsurance
expenses based on the passage of time over the coverage period of a group of contracts.
Contract boundary
The Company includes in the measurement of a group of insurance contracts all the future cash flows within the boundary of
each contract in the group. Cash flows are within the boundary of an insurance contract if they arise from substantive rights and
obligations that exist during the reporting period in which the Company can compel the policyholder to pay the premiums, or in
which the Company has a substantive obligation to provide the policyholder with services. A substantive obligation to provide
services ends when the Company has the practical ability to reassess the risks of the particular policyholder and, as a result, can
set a price or level of benefits that fully reflects those risks or when both of the following criteria are satisfied: the Company has
the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a result, can set
a price or level of benefits that fully reflects the risk of that portfolio and the pricing of the premiums for coverage up to the date
when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date.
Insurance finance income and expense
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising
from the effect of the time value of money and changes in the time value of money, and the effect of financial risk and changes in
financial risk.
The Company records insurance finance income or expenses on insurance contracts issued in net income, including the impact
of changes in market interest rates on the value of the insurance assets and liabilities. The Company’s related financial assets
backing the portfolios are predominantly measured at FVOCI.
Critical accounting judgments and estimates
Judgment is involved in applying the accounting policies used to prepare financial statements. For insurance and reinsurance
contracts, judgments are used to determine whether contracts should be classified as insurance or investment contracts. For
LRC, LIC, ARC and AIC, judgments are used:
•
to determine whether groups of contracts are onerous;
•
in assessing the most appropriate technique to estimate insurance liabilities for the claims incurred. In certain instances,
different techniques or a combination of techniques have been selected for individual accident years or groups of
accident years within the same type of contracts. Other key circumstances affecting the reliability of assumptions
include variation in interest rates, cost of capital, delays in settlement and changes in foreign currency exchange rates;
•
when selecting discount rates to apply to insurance liabilities. Estimates of future cash flows are discounted to reflect
time value of money and financial risks related to those cash flows;
•
to identify the methods and assumptions used to determine the risk adjustment for non-financial risk;
•
in determining whether contracts which are greater than one year qualify for PAA;
•
in determining which contracts constitute a portfolio, and in determining the materiality threshold and the coverage
period on certain contracts.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
11
2.3
Financial Instruments
Financial assets must be classified and measured at fair value, with changes in fair value through profit and loss (“FVTPL”) as
they arise, unless certain criteria are met for classifying and measuring the asset at either amortized cost or fair value through
other comprehensive income (“FVOCI”).
Classification and measurement
Financial assets are classified as amortized cost, FVOCI, or FVTPL based on the Company’s business model for managing the
assets and the asset’s contractual cash flow characteristics. Judgment is used in determining the classification.
The Company’s classification of its significant financial instruments is as follows:
Financial instruments
Classification
Investments
Common shares and Alternatives
FVTPL
Preferred shares
FVTPL or FVOCI – equity instruments
Fixed income
FVTPL or FVOCI – debt instruments
Derivatives
FVTPL
Other financial assets
Amortized cost
Financial liabilities
Amortized cost
Classifications of financial instruments
i)
Fair Value Through Profit or Loss (“FVTPL”)
Financial assets in this category are those that are managed in a fair value business model, or that have been designated by
management upon initial recognition, or are mandatorily required to be measured at fair value. This category includes debt
instruments whose cash flow characteristics fail the Solely Payments of Principal and Interest (“SPPI”) test or are not held within
a business model whose objective is either to collect contractual cash flows, or both to collect contractual cash flows and sell.
FVTPL financial instruments are carried at fair value and recognized on the trade date, with the changes in fair value recognized
in net income. Transaction costs related to FVTPL financial instruments are expensed in net investment income.
ii)
Fair Value Through Other Comprehensive Income (“FVOCI”)
The Company applies this category for debt instruments measured at FVOCI when both of the following conditions are met: the
instrument is held within a business model, the objective of which is both collecting contractual cash flows and selling financial
assets, and the contractual terms of the financial asset meet the SPPI test.
Debt instruments in this category are those that are intended to be held to collect contractual cash flows and which may be sold
in response to needs for liquidity or in response to changes in market conditions.
The Company also applies the category equity instruments when the following conditions are met: the instrument is not held for
trading, passes the SPPI test, and the Company has elected the OCI option for the instrument.
These instruments largely comprise certain Preferred shares. Instruments in this category are those that are intended to be held
to collect contractual cash flows and which may be sold in response to needs for liquidity or in response to changes in market
conditions.
FVOCI financial instruments are carried at fair value and recognized on the trade date, with changes in fair value recorded as
unrealized gains/losses in other comprehensive income. Transaction costs related to financial instruments classified as FVOCI
are capitalized on initial recognition and, where applicable, amortized to interest income using the effective interest method.
iii)
Amortized Cost
Debt instruments are held at amortized cost if both of the following conditions are met: the instruments are held within a
business model with the objective of holding the instrument to collect the contractual cash flows, and the contractual terms of the
debt instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
12
Financial instruments are held at amortized cost when they have fixed or determinable payments and are not quoted in an active
market. Transaction costs are capitalized on initial recognition and are recognized in investment income using the effective
interest rate method. The Company has classified the financial instruments included in other assets (excluding derivative assets)
as amortized cost. Derivative assets which are grouped with other assets are carried at fair value.
Derecognition of financial assets
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Company has transferred substantially all the risks and rewards of ownership. Except for preferred shares
that are classified as FVOCI, any gain or loss arising on derecognition is recognized directly in net income and presented in
realized gains or losses on investments. For preferred shares classified as FVOCI, any gain or loss arising on derecognition
remains in OCI and will not be reclassified to Net income.
Financial liabilities, such as Loan payable and other liabilities are measured at amortized cost. Derivative liabilities and cash-
settled Share based payments, which are grouped with other liabilities, are carried at fair value
Subsequent Measurement
i)
Financial assets at FVTPL
Financial assets at FVTPL are recorded in the Statement of Financial Position at fair value. Changes in fair value are recorded in
net income. Interest earned on assets mandatorily required to be measured at FVTPL is recorded using a contractual interest
rate on an effective interest rate basis. Dividend income from equity instruments measured at FVTPL is recorded in net income
as net investment income when the right to the payment has been established.
ii)
Debt instruments at FVOCI
FVOCI debt instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value
recognized in OCI. Interest income and foreign exchange gains and losses are recognized in net income in the same manner as
for financial assets measured at amortized cost. On derecognition, cumulative gains or losses previously recognized in OCI are
reclassified from OCI to net income.
iii)
Equity instruments at FVOCI
FVOCI equity instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value
recognized in OCI. Foreign exchange gains and losses are included as unrealized gains (losses) within OCI. Dividend income is
recognized in net income in the same manner as for financial assets measured at amortized cost. No impairment or ECL
calculation is performed for FVOCI equity instruments. On derecognition, cumulative gains or losses previously recognized in
OCI are not reclassified from OCI to net income.
iv)
Measurement of fair values
The Company has an established control framework with respect to the measurement of fair values by management, which
includes input from the Company’s third-party investment managers.
When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair
values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques.
Investments carried at fair value are classified in accordance with a valuation hierarchy that reflects the significance of the inputs
used in determining their fair value. Under Level 1 of this hierarchy, fair value is derived from unadjusted quoted prices in active
markets for identical investments. Under Level 2, fair value is derived from market inputs that are directly or indirectly
observable, other than unadjusted quoted prices for identical investments. Level 2 financial instruments comprise fixed income
securities such as over the counter bonds and derivative financial instruments such as foreign currency forwards, equity and
interest rate swap agreements which are not considered as actively traded or for which fair values are based on valuation
techniques. Inputs used in their valuation include prevailing market rates for fixed income securities with similar characteristics
and risk profiles.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
13
Valuation of Level 3 assets
Under Level 3, fair value is derived from inputs, some of which are not based on observable market data.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the
change has occurred.
Significant unobservable inputs and valuation adjustments are regularly reviewed. If third party information, such as broker
quotes or pricing services, is used to measure fair values, then the evidence obtained from the third parties is assessed in light
of the requirements of IFRS, including the level in the fair value hierarchy in which such investments should be classified.
If the inputs used to measure the fair value of an asset or a liability is categorized in different levels of the fair value hierarchy,
then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input
that is significant to the entire measurement.
Valuation of Level 3 assets - assumptions and estimation uncertainty
Valuation of Level 3 assets involves assumptions and estimation uncertainty to determine appropriate valuation methodology
and valuation inputs.
Impairment of financial assets
Management assesses financial instruments for objective evidence of impairment at each reporting date and there are inherent
risks and uncertainties in performing this assessment of impairment loss, including factors such as general economic conditions
and issuers’ financial conditions.
Impairment of financial assets - judgment, assumptions and estimation uncertainty
The measurement of impairment losses across relevant financial assets requires judgment, assumptions and estimation
uncertainty, for the estimation of the amount and timing of future cash flows when determining impairment losses and the
assessment of a significant increase in credit risk. These estimates are driven by the outcome of modelled ECL scenarios and
the relevant inputs used.
Expected credit loss (“ECL”)
ECL is based on probability of default, loss given default and exposure at default inputs and takes into account the expected
timing of the loss. The ECL model also incorporates forward-looking economic information. The Company records an allowance
for ECLs for all debt instruments measured at amortized cost or FVOCI. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive,
discounted at the appropriate effective interest rate.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months
(“12-month ECL”). For those credit exposures for which there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the
timing of the default (“a lifetime ECL” or LTECL).
The majority of the Company’s debt instruments at FVOCI comprise quoted bonds that are graded in the top investment
category and, therefore, are considered to be low credit risk investments. It is the Company’s policy to measure such
instruments on a 12-month ECL basis.
ECL - assumptions and estimation uncertainty
Significant assumptions are made with respect to the allowance for ECL. The ECL model incorporates forward-looking economic
information. The economic environment gives rise to uncertainty and affects significant estimates and assumptions made, such
as the allowance for expected credit losses.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
14
The effective interest rate method
Interest income is recorded using the effective interest rate (“EIR”) method for all financial assets measured at amortized cost.
Interest income on interest bearing financial assets measured at FVOCI is also recorded using the EIR method. The EIR is the
rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or, when appropriate, a
shorter period, to the gross carrying amount of the financial asset.
The EIR (and therefore, the amortized cost of the financial asset) is calculated by taking into account transaction costs and any
discount or premium on acquisition of the financial asset as well as fees and costs that are an integral part of the EIR. The
Company recognizes interest income using a rate of return that represents the best estimate of a constant rate of return over the
expected life of the debt instrument.
Derivative financial instruments
Derivative financial instruments are classified as FVTPL. All derivatives are carried as assets when the fair values are positive
and as liabilities when the fair values are negative.
Derivative financial instruments are typically entered into with the intention to settle in the near future. These instruments are
recorded at fair value. Based on market prices, fair value adjustments and realized gains or losses are recognized in Net gains
(losses) in the Consolidated Statements of Income.
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the Consolidated Statements of Financial Position only
when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to
realize the assets and settle the liability simultaneously.
2.4
Cash and cash equivalents
Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The Company has
classified cash and cash equivalents at amortized cost, which approximates fair value.
2.5
Capital assets
Capital assets are carried at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of
these assets using the following rates and methods:
Office equipment
30% – 40%, declining balance; or 3-5 years, straight-line
Furniture and fixtures
20% – 25%, declining balance; or 3-5 years, straight-line
Leasehold improvements
Straight-line over the term of the lease
Right-of-use (“ROU”) assets are measured at cost less accumulated depreciation and impairment losses.
The ROU assets are depreciated over the earlier of the end of the useful life of the underlying asset or the end of the term of the
underlying lease contracts. The lease liability is measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
Short-term leases or leases of low-value assets are accounted for by recognizing the lease payments associated with those
leases as an expense on a straight-line basis over the term of the leases.
The carrying amounts of the Company’s non-financial assets are assessed at each Statement of Financial Position date to
determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated and the carrying value is reduced to the estimated recoverable amount by means of an impairment charge to net
income. The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use.
2.6
Intangible assets
Intangible assets are carried at cost less accumulated amortization. Amortization is provided over the estimated useful lives of
those assets. A 40% amortization rate and the declining balance method of amortization; or 3 years, straight-line method of
amortization are applied to computer software. A 20% amortization rate and the declining balance method of amortization are
applied to the customer lists recorded as intangible assets. Licenses and goodwill have indefinite useful lives and are not
amortized.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
15
2.7
Income taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method of tax allocation, deferred
income tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets
and liabilities, and are measured using the tax rates and laws that are expected to be in effect in the periods in which the
deferred income tax assets or liabilities are expected to be settled or realized, where those tax rates and laws have been
substantively enacted.
Deferred tax assets are only recognized to the extent that it is probable that they will be realized.
Income taxes – assumptions and estimation uncertainty
Estimates are used to determine the value of the deferred tax asset balance based on the assumption that the Company will
generate taxable income in future years. Estimates are used to determine the taxes payable balance based on applicable tax
legislation. For items in other comprehensive income (loss) ("OCI"), the related tax is also presented in other comprehensive
income (loss). To the extent that the Company's interpretations of tax laws differ from those of tax authorities or that the timing of
realization of deferred tax assets is not as expected, the provision for income taxes may increase or decrease in future periods
to reflect actual experience.
2.8
Foreign currency
a)
Functional and presentation currency
The Company’s functional and presentation currency is Canadian dollars. Foreign currency transactions are translated into
Canadian dollars at the foreign exchange rate in effect on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency are translated into the functional currency at the exchange rate
in effect at the Statement of Financial Position date. Foreign exchange differences arising on translation are recognized in net
income. Foreign currency non-monetary assets and liabilities which are measured at historical cost are recorded at the
exchange rate in effect at the date of transaction. Foreign currency non-monetary assets and liabilities which are measured at
fair value are recorded at the exchange rate in effect at the date that fair value was determined.
For debt securities with fixed maturities classified as FVOCI, foreign exchange differences resulting from changes in amortized
cost are recognized in net income, while foreign exchange differences arising from unrealized fair value gains and losses are
included as unrealized gains (losses) within other comprehensive income (loss). For other financial instruments classified as
FVOCI, foreign exchange differences are included as unrealized gains (losses) within other comprehensive income (loss).
b)
Financial statements of foreign operations
For foreign operations that have a functional currency other than Canadian dollars, the results and financial position of such
operations are translated into Canadian dollars. Assets and liabilities of the foreign operations are translated at the foreign
exchange rates in effect at the Statement of Financial Position date, and income and expenses are translated at average rates
approximating the foreign exchange rates in effect at the dates of the transactions.
Foreign exchange differences arising from the translation to Canadian dollars are recognized as cumulative translation
adjustment in other comprehensive income (loss).
2.9
Transaction costs
The Company accounts for transaction costs that are incremental and directly attributable to an equity transaction as a
deduction from equity.
2.10
Share based compensation
The Company’s accounting policies with respect to share based compensation are in accordance with IFRS 2, Share based
payment.
a)
Equity-settled stock option plan
The Company maintains an equity-settled stock option plan, which is described in Note 26.1. The value of equity-settled stock
options is measured at the grant date, and the cost is recognized in other operating expenses as an expense over the vesting
period. Obligations related to equity-settled stock option plans are recorded in shareholders’ equity as contributed surplus. Any
consideration paid by stock option holders to exercise the options increases share capital. The Company uses the Black-
Scholes model to measure the fair value of stock options. Inputs to the model include a volatility measure, a risk-free rate and
expected life of the options.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
16
b)
Cash-settled share based plan
The Company maintains a cash-settled share based plan, which is described in Note 26.2. The cost of cash-settled share based
options is recognized in other operating expenses as an expense over the vesting period. Obligations related to cash-settled
share based plans are recorded as liabilities at fair value in other liabilities. At each reporting date, obligations related to the plan
are re-measured at fair value with reference to the fair value of the Company’s stock price and the number of units that have
vested. The corresponding share based compensation expense or recovery is recognized over the vesting period. The Company
uses the Black-Scholes model to measure the fair value of cash-settled share based options. Inputs to the model include a
volatility measure, a risk-free rate and expected life of the options.
c)
Deferred share units plan (“DSU”)
The Company has adopted a non-employee director DSU plan, which is described in Note 26.3. This entitles the participants to
receive, following the end of the director’s tenure as a member of the Board, an amount equivalent to the value of a common
share at settlement, for each DSU unit that the participant holds. Obligations related to the plan are recorded as liabilities at fair
value in other liabilities, and re-measured at each reporting date at fair value with reference to the fair value of the Company’s
stock price and the number of units that have vested. The cost of the DSUs is recognized in other operating expenses in the
period they are awarded.
d)
Equity-settled restricted share units plan (“RSU”)
The Company has adopted an RSU plan, which is described in Note 26.4. This entitles certain employees to receive RSUs
based on the market value of the Company’s common shares at the grant date. These RSUs typically vest over the course of
three years, however in some instances the vesting period may differ. Obligations related to the equity-settled RSU plan are
recorded in shareholders’ equity as contributed surplus. The cost of the RSUs is recognized in other operating expenses over
the course of the vesting period.
2.11
New and amended standards and interpretations
a) IFRS 18 – Presentation and Disclosures in Financial Statements
In April 2024, the IASB issued IFRS 18 Presentation and Disclosures in Financial Statements, which will replace IAS 1
Presentation of Financial Statements. IFRS 18 enhances disclosure requirements in the following areas: the statement of profit
and loss, aggregation and disaggregation of financial information, and management-defined performance measures. IFRS 18 is
effective for annual reporting periods beginning on or after January 1, 2027, and will be applied retrospectively. The Company is
currently assessing potential impacts of this new standard on the presentation and disclosure in the financial statements.
b) IAS 12 - Income Taxes, International Tax Reform - Pillar Two Model Rules
In May 2023, the IASB issued International Tax Reform - Pillar Two Model Rules, which amended IAS 12, Income Taxes, for
fiscal years on or after December 31, 2023. The Company has applied the mandatory temporary exception in IAS 12 from
recognizing and disclosing deferred tax assets and liabilities related to the Pillar Two top-up taxes. Pillar Two legislation has
been enacted or substantively enacted in certain jurisdictions in which the Company operates.
The Company has performed an assessment of the potential exposure to Pillar Two income taxes. This assessment is based on
the most recent Country-by-Country reporting and financial performance of the Company's constituent entities. Based on the
assessment conducted, the Company qualifies for the transitional safe harbour in all jurisdictions in which it operates, and
management is not aware of any circumstances under which this might change. Therefore, the Group has concluded there is no
material impact from the implementation of Pillar Two top-up taxes.
The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet
effective.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 2 – Summary of material accounting policies (Continued)
17
The preparation of Consolidated Financial Statements in accordance with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the years presented.
3.1
Critical accounting judgments in applying the Company’s accounting policies
Judgments are used in applying the accounting policies used to prepare financial statements. Those judgments affect the
carrying amount of certain assets and liabilities and the reported amounts of revenues and expenses recorded during the year.
Judgment area
Description
Reference
a) Insurance and
reinsurance contracts
Judgment is used to determine the following:
i)
Classification of insurance contracts:
•
whether contracts should be classified as insurance or investment contracts
ii) Onerous contracts:
•
whether groups of contracts are onerous;
iii) LIC and AIC measurement:
•
assessing the most appropriate technique to estimate insurance liabilities
for the claims incurred, as well as reinsurance assets for incurred claims. In
certain instances, different techniques or a combination of techniques have
been selected for individual accident years or groups of accident years
within the same type of contracts. Other key circumstances affecting the
reliability of assumptions include variation in interest rates, cost of capital,
delays in settlement and changes in foreign currency exchange rates.
iv) Discounting of insurance contract liabilities and reinsurance contract assets:
•
selecting discount rates to apply to insurance liabilities and insurance
assets. Estimates of future cash flows are discounted to reflect the time
value of money and financial risks related to those cash flows.
v) Risk adjustment:
•
the methods and assumptions used to determine the risk adjustment for
non-financial risk;
vi) Measurement model:
•
whether contracts which are greater than one year qualify for PAA;
•
For PAA, judgment is also used in determining the materiality threshold and
the coverage period on certain contracts;
vii) Level of aggregation:
•
which contracts constitute a portfolio.
Note 2.2
b) Financial assets
Judgment is used in determining the classification of financial assets as FVOCI,
FVTPL or amortized cost. The measurement of impairment losses across relevant
financial assets requires judgment, assumptions and estimation uncertainty, for the
estimation of the amount and timing of future cash flows when determining
impairment losses and the assessment of a significant increase in credit risk.
Note 2.3
c) Determination of
reportable segments
and allocation
methodology in the
presentation of
segmented information
Judgment is used in the determination of reportable operating segments, as well as
in allocating operating expenses by segment.
Note 19
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 3 – Critical accounting judgments and estimates in applying accounting policies
18
3.2
Assumptions and estimation uncertainty
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in
the Consolidated financial statements is included below. Any changes in estimates are recorded in the year in which they are
determined. Accordingly, actual results may differ from these and other estimates thereby impacting future financial statements:
Description
Reference
(a) Valuation of insurance contract liabilities, reinsurance contract assets
Note 2.2
(b) Measurement of recoverable from reinsurers
Note 2.2 and Note 23.2(d)
(c) Impairment of goodwill
Note 21(b)
(d) Valuation of level 3 assets
Note 2.3 and Note 6
(e) ECL calculations
Note 2.3 and Note 4.2
(f) Impairment of financial assets
Note 2.3 and Note 4.2
(g) Measurement of income taxes, recoverability of deferred tax assets
Note 2.7, 2.11(b) and Note 20
Note 4 – Investments
4.1
Classification of cash and investments
The following table presents the classification of cash and cash equivalents, short-term securities and investments:
As at December 31, 2024
FVOCI
FVTPL
Amortized Cost
Total
Cash and cash equivalents
-
-
270,378
270,378
Investments
Short-term securities
-
-
14,339
14,339
Fixed income (1)
1,020,114
150,235
4,500
1,174,849
Common shares
-
45,704
-
45,704
Preferred shares
69,702
61,561
-
131,263
Alternatives
-
68,379
-
68,379
Total investments
1,089,816
325,879
18,839
1,434,534
Total cash, cash equivalents and investments
1,089,816
325,879
289,217
1,704,912
As at December 31, 2023
FVOCI
FVTPL
Amortized Cost
Total
Cash and cash equivalents
-
-
604,016
604,016
Investments
Short-term securities
-
-
7,500
7,500
Fixed income (1)
527,880
144,815
2,500
675,195
Common shares
-
35,412
-
35,412
Preferred shares
50,068
65,204
-
115,272
Alternatives
-
56,778
-
56,778
Total investments
577,948
302,209
10,000
890,157
Total cash, cash equivalents and investments
577,948
302,209
614,016
1,494,173
(1) As at December 31, 2024, included in Fixed income are exchange-traded debt funds amounting to 140,793 (December 31, 2023 -
$138,754).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 3 – Critical accounting judgments and estimates in applying accounting policies (Continued)
19
4.2
Unrealized gains and losses and carrying value of investments
The amortized cost and carrying value of investments as at December 31, 2024 and December 31, 2023 were as follows:
As at December 31, 2024
FVTPL
investments
FVOCI and amortized cost investments
Total
investments
At carrying
value
Amortized
cost
Unrealized
gains
Unrealized
losses
Carrying
value
At carrying
value
Short-term securities
-
14,339
-
-
14,339
14,339
Fixed income
150,235 1,028,404
-
(3,790) 1,024,614
1,174,849
Common shares
45,704
-
-
-
-
45,704
Preferred shares
61,561
69,710
-
(8)
69,702
131,263
Alternatives
68,379
-
-
-
-
68,379
325,879 1,112,453
-
(3,798) 1,108,655
1,434,534
As at December 31, 2023
FVTPL
investments
FVOCI and amortized cost investments
Total
investments
At carrying
value
Amortized
cost
Unrealized
gains
Unrealized
losses
Carrying
value
At carrying
value
Short-term securities
-
7,500
-
-
7,500
7,500
Fixed income
144,815
543,868
-
(13,488)
530,380
675,195
Common shares
35,412
-
-
-
-
35,412
Preferred shares
65,204
56,303
-
(6,235)
50,068
115,272
Alternatives
56,778
-
-
-
-
56,778
302,209
607,671
-
(19,723)
587,948
890,157
The ECL of $5,589 as at December 31, 2024 (December 31, 2023 – $3,292) does not reduce the carrying amount of these
investments in the Consolidated Statements of Financial Position. The movement in ECL is recognized in other comprehensive
income (loss) as net credit impairment reversals (losses).
Impairment losses on financial investments subject to impairment assessment
For the twelve months ended December 31, 2024 and 2023, an analysis of changes in the fair value and the corresponding ECL
is as follows:
For the year ended Dec. 31, 2024
For the year ended Dec. 31, 2023
12mECL
LTECL
Total
12mECL
LTECL
Total
Beginning fair value
527,130
750
527,880
441,932
656
442,588
New assets purchased
723,527
-
723,527
164,300
-
164,300
Assets derecognized or matured
(262,250)
-
(262,250)
(85,662)
(542)
(86,204)
Change in fair value
1,955
(702)
1,253
12,693
(479)
12,214
Net foreign exchange income (loss)
29,704
-
29,704
(5,018)
-
(5,018)
Movement between 12mECL and LTECL
(4,504)
4,504
-
(1,115)
1,115
-
Ending fair value
1,015,562
4,552 1,020,114
527,130
750
527,880
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 4 – Investments (Continued)
20
For the year ended Dec. 31, 2024
For the year ended Dec. 31, 2023
12mECL
LTECL
Total
12mECL
LTECL
Total
Beginning ECL
3,193
99
3,292
3,935
252
4,187
New assets purchased
2,317
-
2,317
572
-
572
Assets derecognized or matured
(297)
-
(297)
(225)
(251)
(476)
Movement in ECL
(709)
986
277
(824)
(167)
(991)
Movement between 12mECL and LTECL
(981)
981
-
(265)
265
-
Ending ECL
3,523
2,066
5,589
3,193
99
3,292
4.3
Pledged assets
In the normal course of insurance and reinsurance operations, the Company must secure its obligations under certain insurance
and reinsurance contracts by collateralizing them with letters of credit or trust arrangements. As at December 31, 2024, the
Company has pledged cash, cash equivalents and short-term deposits amounting to $111 (December 31, 2023 – $479), under
insurance and reinsurance trust arrangements and are therefore not readily available for general use by the Company.
As at December 31, 2024, the Company pledged $11,790 (December 31, 2023 – $7,212) of fixed income investments, and $611
(December 31, 2023 – $nil) of cash and cash equivalents, as security deposits to various US state insurance departments to be
held in trust for various states and are therefore not readily available for general use by the Company.
Note 5 – Fair value and notional amount of derivatives
The following sets out the fair value and notional amount of derivatives as at December 31, 2024 and December 31, 2023:
As at
December 31, 2024
December 31, 2023
Fair value
Fair value
Notional
amount
Asset
Liability
Notional
amount
Asset
Liability
Foreign currency contracts
Forwards
136,744
-
1,611
136,312
1,052
-
Equity contracts
Swap agreement
12,990
12,530
-
11,088
10,907
-
149,734
12,530
1,611
147,400
11,959
-
Term to maturity
less than one year
149,734
12,530
1,611
136,762
2,396
-
from one to five years
-
-
-
10,638
9,563
-
The Company uses foreign currency forward contracts to reduce its exposure to fluctuations in the exchange rates that could
arise from its USD, EUR and GBP denominated investments, including investments in subsidiaries. The notional amounts of the
forwards as at December 31, 2024 are $76,157 USD (December 31, 2023 – $97,664 USD), €1,603 EUR (December 31, 2023 –
€1,477 EUR) and £1,240 GBP (December 31, 2023 – £2,349 GBP). The Company also uses swap agreements to mitigate
exposure to equity market fluctuations associated with its share based compensation. These derivatives are recorded at fair
value (see Note 6, Note 8, Note 12) and gains and losses are recorded in Net gains (losses) (see Note 18).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 4 – Investments (Continued)
21
The following sets out the financial instruments classified in accordance with the fair value hierarchy as at December 31, 2024
and December 31, 2023:
As at December 31, 2024
Total fair value
Level 1
Level 2
Level 3
Fixed income
1,170,349
-
1,170,349
-
Common shares
45,704
45,704
-
-
Preferred shares
131,263
120,931
10,332
-
Alternatives
68,379
-
-
68,379
Total investments
1,415,695
166,635
1,180,681
68,379
Derivative financial assets
12,530
-
12,530
-
Total assets
1,428,225
166,635
1,193,211
68,379
Derivative financial liabilities
1,611
-
1,611
-
Total liabilities
1,611
-
1,611
-
As at December 31, 2023
Total fair value
Level 1
Level 2
Level 3
Fixed income
672,695
-
672,695
-
Common shares
35,412
35,412
-
-
Preferred shares
115,272
115,272
-
-
Alternatives
56,778
-
-
56,778
Total investments
880,157
150,684
672,695
56,778
Derivative financial assets
11,959
-
11,959
-
Total assets
892,116
150,684
684,654
56,778
The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in
Level 3 of the hierarchy as at December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Balance at beginning of year
56,778
47,139
Realized and unrealized gains (losses)
(1,011)
(5,787)
Purchase of securities
10,153
16,378
Sale of securities
(2,676)
-
Foreign exchange
5,135
(952)
Balance at end of year
68,379
56,778
The following table presents quantitative information about the significant fair value inputs utilized by the Company for Level 3
assets:
Fair value as at December 31, 2024
Fair value as at December 31, 2023
Valuation technique
Private equity funds
68,379
56,778
Net asset value (1)
(1) Based on the net asset value of the equity fund and market transactions which approximate the fair value of the investment.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 6 – Fair value measurement
22
7.1 Roll-forward of net liability for insurance contracts ("ICL") issued showing LRC and LIC
Insurance operations
2024
LRC
LIC
Total
Present value
of future
cash flows
Risk adj. for
non-financial
risk
Opening balance of ICL, as at January 1, 2024
700,843
1,841,713
227,395
2,769,951
Insurance revenue
(3,118,322)
-
-
(3,118,322)
Insurance service expenses:
Incurred claims and other directly attributable expenses
57,431
1,619,315
128,132
1,804,878
Changes that relate to past service
-
185,772
(37,315)
148,457
Insurance acquisition cash flows amortization
794,775
-
-
794,775
Insurance service result from insurance contracts
(2,266,116)
1,805,087
90,817
(370,212)
Finance expense (income) from insurance contracts
-
78,522
-
78,522
Effects of exchange rate movements
30,907
155,267
20,806
206,980
Total amounts recognized in comprehensive income
(2,235,209)
2,038,876
111,623
(84,710)
Cash flows:
Premiums received
2,913,889
-
-
2,913,889
Claims and other directly attributable expenses paid
-
(1,240,926)
-
(1,240,926)
Insurance acquisition cash flows
(812,151)
-
-
(812,151)
Total cash flows
2,101,738
(1,240,926)
-
860,812
Ending balance of ICL, as at December 31, 2024
567,372
2,639,663
339,018
3,546,053
Insurance operations
2023
LRC
LIC
Total
Present value
of future
cash flows
Risk adj. for
non-financial
risk
Opening balance of ICL, as at January 1, 2023
654,686
1,349,319
161,098
2,165,103
Insurance revenue
(2,789,187)
-
-
(2,789,187)
Insurance service expenses:
Incurred claims and other directly attributable expenses
48,782
1,346,982
126,212
1,521,976
Changes that relate to past service
-
61,981
(55,398)
6,583
Insurance acquisition cash flows amortization
716,687
-
-
716,687
Insurance service result from insurance contracts
(2,023,718)
1,408,963
70,814
(543,941)
Finance expense (income) from insurance contracts
-
75,875
-
75,875
Effects of exchange rate movements
(10,784)
(35,003)
(4,517)
(50,304)
Total amounts recognized in comprehensive income
(2,034,502)
1,449,835
66,297
(518,370)
Cash flows:
Premiums received
2,817,549
-
-
2,817,549
Claims and other directly attributable expenses paid
-
(957,441)
-
(957,441)
Insurance acquisition cash flows
(736,890)
-
-
(736,890)
Total cash flows
2,080,659
(957,441)
-
1,123,218
Ending balance of ICL, as at December 31, 2023
700,843
1,841,713
227,395
2,769,951
For the risk adjustment level of confidence and discount rates applied for discounting of future cash flows, see Note 2.2.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 7 – Insurance and reinsurance contracts
23
7.2 Roll-forward of net asset for reinsurance contracts held ("RCA") showing ARC and AIC
2024
Reinsurance contracts held
ARC
AIC
Total
Present value
of future
cash flows
Risk adj. for
non-financial
risk
Opening reinsurance contract assets
300,000
1,590,376
201,599
2,091,975
Opening reinsurance contract liabilities
(88,386)
-
-
(88,386)
Net opening balance, as at January 1, 2024
211,614
1,590,376
201,599
2,003,589
Allocation of reinsurance premiums
(ceding premiums paid)
(2,431,236)
-
-
(2,431,236)
Claims recovered:
Amounts recoverable for incurred claims and
other directly attributable expenses
545,338
1,400,929
113,137
2,059,404
Changes to amounts recoverable for incurred claims
-
152,577
(34,725)
117,852
Net income (expense) from reinsurance contracts assets
(1,885,898)
1,553,506
78,412
(253,980)
Finance income (expense) from reinsurance contracts
-
67,732
-
67,732
Effects of exchange rate movements
19,832
139,648
18,840
178,320
Total amounts recognized in comprehensive income
(1,866,066)
1,760,886
97,252
(7,928)
Cash flows:
Premiums paid, net of ceding commissions, claims
recovered, and other directly attributable expenses paid
1,848,144
(1,072,642)
-
775,502
Total cash flows
1,848,144
(1,072,642)
-
775,502
Ending balance of RCA, as at December 31, 2024
193,692
2,278,620
298,851
2,771,163
2023
Reinsurance contracts held
ARC
AIC
Total
Present value
of future
cash flows
Risk adj. for
non-financial
risk
Opening reinsurance contract assets
245,681
1,162,668
141,963
1,550,312
Opening reinsurance contract liabilities
(22,513)
-
-
(22,513)
Net opening balance, as at January 1, 2023
223,168
1,162,668
141,963
1,527,799
Allocation of reinsurance premiums
(2,120,754)
-
-
(2,120,754)
Claims recovered:
Amounts recoverable for incurred claims and
other directly attributable expenses
415,017
1,119,566
112,934
1,647,517
Changes to amounts recoverable for incurred claims
-
63,791
(49,160)
14,631
Net income (expense) from reinsurance contracts assets
(1,705,737)
1,183,357
63,774
(458,606)
Finance income (expense) from reinsurance contracts
-
65,759
-
65,759
Effects of exchange rate movements
(5,642)
(31,709)
(4,138)
(41,489)
Total amounts recognized in comprehensive income
(1,711,379)
1,217,407
59,636
(434,336)
Cash flows:
Premiums paid, net of ceding commissions, and
other directly attributable expenses paid
1,699,825
(789,699)
-
910,126
Total cash flows
1,699,825
(789,699)
-
910,126
Ending balance of RCA, as at December 31, 2023
211,614
1,590,376
201,599
2,003,589
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 7 – Insurance and reinsurance contracts (Continued)
24
7.3 Reinsurance Contracts
The Company uses reinsurance in the ordinary course of business to reduce its exposure to any one claim or event under the
policies it issues. A large portion of this reinsurance is affected under reinsurance agreements known as treaty reinsurance. In
some instances, it is negotiated on a facultative (one-off) basis for individual policies, generally when the exposures under these
policies are not sufficiently mitigated by the treaty reinsurance.
The Company’s fronting operations cede the majority of the insurance revenue generated through it to third-party reinsurers. As
such, reinsurance contract assets are significant to the Company’s financial position, and the associated credit risk is monitored
each reporting period.
Reinsurance does not relieve the Company of its obligations to policyholders. The Company’s obligation to pay policyholders is
not contingent on the reinsurers paying, or honouring its contractual obligations. For this reason, the Company evaluates the
financial condition of its reinsurers and monitors the concentration of credit risk to minimize its exposure to losses from reinsurer
insolvencies or contract disputes. Reinsurers providing reinsurance policies are generally required to have a minimum A.M. Best
credit rating of A- at the inception of each policy or are otherwise required to post agreed upon levels of collateral. Unlicensed
reinsurers must post an agreed upon level of collateral.
There is a provision for reinsurer non-performance of $13,507 as at December 31, 2024 (December 31, 2023 – $14,472).
Note 8 – Other assets
As at December 31, 2024 and December 31, 2023, other assets consist of:
As at
December 31, 2024
December 31, 2023
Accrued investment income
14,000
6,929
Derivative financial assets
12,530
11,959
Tax recoveries
4,118
23,954
Prepaid expenses
2,711
2,008
Other assets
9,033
8,862
42,392
53,712
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 7 – Insurance and reinsurance contracts (Continued)
25
Note 9 – Leases
The Company leases office premises for its own use. As at December 31, 2024, ROU assets of $8,613 (December 31, 2023 –
$9,042) are recorded in Capital assets and intangible assets, along with $20,770 (December 31, 2023 – $7,615) of other capital
assets and intangible assets.
Information about leases for which the Company is a lessee is presented below:
As at
December 31, 2024
December 31, 2023
Right-of-use assets
Premises
Premises
Balance, beginning of year
9,042
11,109
Additions
1,549
465
Depreciation
(2,239)
(2,325)
Disposals
(74)
(109)
Foreign exchange
335
(98)
Balance, end of year
8,613
9,042
As at
December 31, 2024
December 31, 2023
Lease liabilities maturity analysis
Less than one year
2,754
2,571
One to five years
5,498
5,737
More than five years
2,346
2,600
Total undiscounted lease liabilities
10,598
10,908
Lease liabilities included in the Statements of Financial Position
9,302
9,698
Total cash outflow for leases recognized in the Statements of Cash Flows
2,415
2,371
Amounts recognized in Consolidated Statements of Income
for the years ended
December 31, 2024
December 31, 2023
Interest on lease liabilities
408
338
Expenses relating to leases of low-value assets
-
8
Income from subleasing right-of-use assets
7
34
Note 10 – Capital assets
The Company’s capital assets consist of the following as at December 31, 2024 and December 31, 2023:
As at December 31, 2024
As at December 31, 2023
Cost
Accumulated
depreciation
Carrying
value
Cost
Accumulated
depreciation
Carrying
value
Leasehold improvements
4,366
(2,200)
2,166
2,986
(1,638)
1,348
Office equipment
4,245
(2,677)
1,568
3,226
(1,864)
1,362
Furniture and fixtures
1,949
(897)
1,052
1,202
(631)
571
10,560
(5,774)
4,786
7,414
(4,133)
3,281
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
26
Note 11 – Intangible assets
The Company’s intangible assets consist of the following as at December 31, 2024 and December 31, 2023:
December 31, 2024
December 31, 2023
Computer
software
Customer
list
Licenses
Goodwill
Total
Computer
software
Customer
list
Licenses
Total
Opening,
carrying value
597
1,069
2,668
-
4,334
387
1,336
2,732
4,455
Additions
437
-
-
10,847
11,284
437
-
-
437
Amortization
(313)
(214)
-
-
(527)
(227)
(267)
-
(494)
Foreign exchange
-
-
232
661
893
-
-
(64)
(64)
Closing,
carrying value
721
855
2,900
11,508
15,984
597
1,069
2,668
4,334
Note 12 – Other liabilities
As at December 31, 2024 and December 31, 2023, other liabilities consist of:
Deposits in trust (1)
100,608
51,083
Accrued liabilities
27,224
26,457
Share based payment plan
11,301
9,742
Lease liabilities
9,302
9,698
Taxes payable
6,722
15,133
Derivative financial liabilities
1,611
-
Deferred tax liabilities
694
-
Other liabilities
4,840
7,952
162,302
120,065
As at
December 31, 2024
December 31, 2023
(1) The Company periodically holds deposits in trust from counterparties as a form of collateral.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
27
Note 13 – Capital management
The Company’s capital is its shareholders’ equity, which consists of common shares, contributed surplus, retained earnings and
accumulated other comprehensive income (loss). The Company reviews its capital structure on a regular basis to ensure an
appropriate capital structure in keeping with all regulatory, business and shareholder obligations.
Oversight of the capital of the Company rests with management and the board of directors. Their objectives are twofold: (i) to
ensure the Company is prudently capitalized relative to the amount and type of risks assumed and the requirements established
by the laws and regulations applicable to the Company’s regulated subsidiaries; and (ii) to ensure shareholders receive an
appropriate return on their investment.
In Canada, under guidelines established by the Office of the Superintendent of Financial Institutions which apply to the regulated
Canadian insurance company of Trisura Specialty, Canadian property and casualty insurance companies must maintain
minimum levels of capital as determined in accordance with a prescribed test, the minimum capital test (“MCT”), which
expresses available capital (actual capital plus or minus specified adjustments) as a percentage of required capital. Companies
are expected to maintain MCT level of at least 150% and are further required to establish their own target MCT level based on
the nature of their operations and the business they write. Management, with the board of directors’ approval, has established
Trisura Specialty’s target MCT level in accordance with these requirements.
In the US, regulated insurance companies are subject to externally imposed regulatory capital requirements by either the
Oklahoma Insurance Department or the New Jersey Department of Banking and Insurance, depending on the state in which the
Trisura entity is domesticated. A requirement of the regulators is that the US insurance companies’ Risk Based Capital exceed
certain minimum thresholds as well as Company Action Levels ("CALs"), below which the companies would have to notify the
regulators. In addition, the Company’s carriers are subject to the various capital requirements of each US state in which it is
licensed.
Note 14 – Loan Payable
14.1
Loan payable
The Company maintains a five-year revolving credit facility (the “Facility”) with a Canadian Schedule I bank (the “Bank”) which
allows for drawings of up to $75,000 (December 31, 2023 – $50,000). Under this arrangement, the Company is able to draw
funds in the form of Canadian prime rate advances, base rate advances, Canadian Overnight Repo Rate Average ("CORRA")
loans or Secured Overnight Financing Rate ("SOFR") loans. The interest rate is based on the Canadian prime rate, base rate,
CORRA or SOFR loans rate, plus a margin. The loan balance is accounted for at amortized cost, which is equal to the carrying
value. The minimum required annual payment consists only of interest, with no mandatory principal payments required.
In Q3 2023, the Company issued a Letter of Credit for $13,500 through this facility. As at December 31, 2024, the loan balance is
$23,272 (December 31, 2023 – $nil). The undrawn capacity is $38,228 (December 31, 2023 – $36,500).
As part of the covenants of the current loan arrangement, the Company is required to maintain certain financial ratios, which
were fully met as at December 31, 2024 and December 31, 2023.
14.2
Senior unsecured notes
In June 2021, the Company completed an offering of senior unsecured notes (the “Notes”), with a principal amount of $75,000,
which will mature on June 11, 2026. The Notes bear interest at a fixed annual rate of 2.64%. Interest is payable in semi-annual
instalments which commenced on December 11, 2021. The Notes are direct unsecured obligations and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company.
The following table provides details of the total debt outstanding as at December 31, 2024 and December 31, 2023.
Carrying value
Maturity date
Term
(years)
Fixed
rate
Coupon
(payment)
Principal
amount
Dec. 31, 2024 Dec. 31, 2023
Revolving credit facility
23,272
23,272
-
Senior unsecured notes
June 11, 2026
5
2.64 %
Jun, Dec
75,000
75,000
75,000
98,272
98,272
75,000
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
28
Note 15 – Share capital
The Company’s authorized share capital consists of: (i) an unlimited number of common shares; (ii) an unlimited number of non-
voting shares; and (iii) an unlimited number of preference shares (issuable in series). As at December 31, 2024 and
December 31, 2023, no non-voting shares were issued and no preferred shares are outstanding.
In August 2023, the Company completed a public offering of 1,620,000 common shares for gross proceeds of $53,298. The
Company incurred costs of $2,132 in commission paid to underwriters as well as $371 of costs directly attributable to the share
issuance, which have been deducted from equity. As at December 31, 2023, the net impact of the share issuance was an
increase in common shares of $51,458, net of tax impact of $663 related to the share issuance costs.
For the twelve months ended December 31, 2024, 199,986 stock options (December 31, 2023 – 77,798 stock options) issued
under the Company’s existing stock option plan were exercised. Consideration paid by stock option holders to exercise the
options resulted in an increase to share capital.
The Company commenced a normal course issuer bid (“NCIB”) effective December 6, 2024 to December 5, 2025, to purchase
up to 1,433,371 of its common shares. The purchase of the Company’s common shares is intended to offset dilution resulting
from the issuance of common shares pursuant to the Company’s equity incentive programs. During the twelve months ended
December 31, 2024, the Company did not repurchase and subsequently cancel any common shares under the NCIB.
The following table shows the common shares issued and outstanding, excluding treasury shares:
As at
December 31, 2024
December 31, 2023
Number of
common shares
Amount
(in thousands)
Number of
common shares
Amount
(in thousands)
Balance, beginning of year
47,439,770
481,023
45,783,528
430,262
Shares under RSUs plan
(23,854)
(2,215)
(41,556)
(1,409)
Common shares issued
199,986
2,989
1,697,798
52,170
Balance, end of year
47,615,902
481,797
47,439,770
481,023
As part of the RSUs plan, the Company purchases its own shares which are classified as treasury shares and the costs of these
shares are recorded as a reduction to equity. As at December 31, 2024, the Company has an aggregate of 47,779,021 common
shares (December 31, 2023 – 47,579,035 common shares) outstanding, which includes 163,119 treasury shares (December 31,
2023 – 139,265 treasury shares).
Note 16 – Earnings per share
Basic earnings per common share are calculated by dividing the net income attributable to common shareholders for the
reporting period by the weighted-average number of common shares.
Diluted earnings per share is calculated by dividing the net income attributable to common shareholders for the reporting period
by the weighted-average number of common shares adjusted for the effects of all dilutive potential common shares, which
consist of stock options.
Twelve months ended December 31
2024
2023
Net income attributable to common shareholders
118,915
66,941
Weighted-average number of common shares outstanding (in shares)
47,707,201
46,528,778
EPS – basic (in dollars)
2.49
1.44
Dilutive effect of the conversion of options on common shares (in shares)
815,634
766,998
Diluted weighted-average number of common shares outstanding (in shares)
48,522,835
47,295,776
EPS – diluted (in dollars)
2.45
1.42
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
29
Note 17 – Net investment income (loss)
Twelve months ended December 31
2024
2023
Cash and cash equivalents, and short-term securities
19,006
16,874
FVOCI bonds
34,105
20,334
FVTPL bonds
7,396
6,372
Interest income
60,507
43,580
FVTPL common shares
2,724
4,234
FVTPL preferred shares
3,878
3,837
FVOCI preferred shares
3,464
2,777
Dividend income
10,066
10,848
Investment expenses
(3,528)
(2,759)
Net investment income (loss)
67,045
51,669
Note 18 – Net gains (losses)
Twelve months ended December 31
2024
2023
FVOCI financial instruments:
FVOCI fixed income
1,712
(1,004)
FVTPL financial instruments:
FVTPL fixed income
939
3,419
FVTPL equity securities
14,645
1,969
FVTPL alternatives
(831)
(5,741)
16,465
(1,357)
Derivatives (1):
Swap agreements
1,053
(3,625)
Embedded derivatives
(630)
724
Net foreign currency gains (losses)
10,108
(5,400)
Net gains (losses)
26,996
(9,658)
(1) Excluding foreign currency contracts, which are reported in the line Net foreign currency gains (losses).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
30
Note 19 – Segmented information
As at December 31, 2024, the Company has two reportable segments. The operations of Trisura Specialty (formerly Trisura
Canada) comprise Surety and Corporate Insurance business underwritten in both Canada and the United States, as well as Risk
Solutions and Fronting products primarily underwritten in Canada. Trisura US Programs (formerly Trisura US) provides specialty
fronting insurance solutions underwritten in the United States. There have been no changes to what is operationally reflected in
the two segments. Judgment is used in the determination of segments, as well as in allocating operating expenses by segment.
The following tables show the results for the twelve months ended December 31, 2024 and 2023:
Twelve Months Ended December 31, 2024
Trisura
Specialty
Trisura US
Programs
Corporate
and Other
Total
Insurance revenue
980,727
2,137,595
-
3,118,322
Insurance service expenses
(759,403)
(1,988,707)
-
(2,748,110)
Net income (expense) from reinsurance contracts assets
(122,780)
(131,200)
-
(253,980)
Insurance service result
98,544
17,688
-
116,232
Net investment income (loss)
38,329
26,335
2,381
67,045
Net gains (losses)
13,890
4,839
8,267
26,996
Net credit impairment reversals (losses)
(2,630)
33
300
(2,297)
Total investment income (loss)
49,589
31,207
10,948
91,744
Finance income (expenses) from insurance contracts
(16,885)
(61,637)
-
(78,522)
Finance income (expenses) from reinsurance contracts
11,715
56,017
-
67,732
Net insurance finance income (expenses)
(5,170)
(5,620)
-
(10,790)
Net financial result
44,419
25,587
10,948
80,954
Net insurance and financial result
142,963
43,275
10,948
197,186
Other income
7,506
-
-
7,506
Other operating expenses
(21,343)
(14,619)
(6,970)
(42,932)
Other finance costs
(235)
(177)
(2,858)
(3,270)
Income before income taxes
128,891
28,479
1,120
158,490
Twelve Months Ended December 31, 2023
Trisura
Specialty
Trisura US
Programs
Corporate
and Other
Total
Insurance revenue
824,834
1,964,353
-
2,789,187
Insurance service expenses
(543,362)
(1,701,806)
(78)
(2,245,246)
Net income (expense) from reinsurance contracts assets
(191,464)
(267,142)
-
(458,606)
Insurance service result
90,008
(4,595)
(78)
85,335
Net investment income (loss)
25,214
23,387
3,068
51,669
Net gains (losses)
(3,523)
(157)
(5,978)
(9,658)
Net credit impairment reversals (losses)
299
409
187
895
Total investment income (loss)
21,990
23,639
(2,723)
42,906
Finance income (expenses) from insurance contracts
(11,888)
(63,987)
-
(75,875)
Finance income (expenses) from reinsurance contracts
7,742
58,017
-
65,759
Net insurance finance income (expenses)
(4,146)
(5,970)
-
(10,116)
Net financial result
17,844
17,669
(2,723)
32,790
Net insurance and financial result
107,852
13,074
(2,801)
118,125
Other income
7,654
-
-
7,654
Other operating expenses
(16,814)
(14,557)
(1,576)
(32,947)
Other finance costs
(223)
(105)
(2,081)
(2,409)
Income (loss) before income taxes
98,469
(1,588)
(6,458)
90,423
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
31
Note 19 – Segmented information (Continued)
As at December 31, 2024
Trisura
Specialty
Trisura US
Programs
Corporate
and Other
Total
Assets
1,503,011
3,045,012
43,870
4,591,893
Liabilities
1,000,568
2,730,669
75,390
3,806,627
As at December 31, 2023
Trisura
Specialty
Trisura US
Programs
Corporate
and Other
Total
Assets
1,008,169
2,463,918
112,358
3,584,445
Liabilities
718,385
2,193,711
52,920
2,965,016
Note 20 – Income taxes
Statements of
Financial Position
Statements of
Comprehensive Income
December 31,
2024
December 31,
2023
December 31,
2024
December 31,
2023
Deferred taxes related to:
Loss available for carry forward
2,460
3,159
704
(2,097)
Net insurance contract liabilities
12,190
13,995
2,919
(10,572)
Deferred expenses for tax purposes
30,440
1,056
(28,329)
8,927
Investments – unrealized gains and losses
4,008
4,344
665
2,347
49,098
22,554
(24,041)
(1,395)
Less deferred taxes related to:
Deferred revenues for tax purposes
(5,478)
(6,101)
(1,102)
390
Capital, intangible and other assets
(273)
(139)
122
(423)
(5,751)
(6,240)
(980)
(33)
Deferred income taxes
43,347
16,314
(25,021)
(1,428)
Reported in:
Deferred tax assets
44,043
16,314
-
-
Deferred tax liabilities
(696)
-
-
-
Income tax (recovery) expense reported to net income
-
-
(24,540)
(2,822)
Income tax (recovery) expense reported to OCI
-
-
(481)
2,056
Income tax recovery reported to retained earnings
-
-
-
(662)
The Company exercises judgment in estimating the provision for income taxes.
A deferred income tax asset is recognized only to the extent that realization of the related income tax benefit through future
taxable profits is probable. Management has assessed the recoverability of the deferred income tax asset carrying values based
on future years’ taxable income projections and believes the carrying values of the deferred income tax assets as at December
31, 2024 and December 31, 2023 are recoverable.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
32
The following shows the major components of income tax expense (benefit) for the twelve months ended December 31, 2024
and 2023:
Twelve months ended December 31
2024
2023
Current tax expense (benefit)
64,115
26,304
Deferred tax expense (benefit)
(24,540)
(2,822)
Income tax expense (benefit)
39,575
23,482
Income taxes recorded in other comprehensive income (loss):
Net changes in unrealized gains (losses) on FVOCI investments
3,695
2,129
Reclassification of net gains (losses) on FVOCI investments
2,333
(260)
Origination and reversal of temporary differences
(481)
2,056
Total income tax expense (benefit) recorded in
other comprehensive income (loss)
5,547
3,925
The following is a reconciliation of income taxes calculated at the statutory income tax rate to the income tax provision included
in the Consolidated Statements of Income for the twelve months ended December 31, 2024 and 2023:
Twelve months ended December 31
2024
2023
Income before income taxes
158,490
90,423
Statutory income tax rate
26.5%
26.5%
42,000
23,962
Variations due to:
Permanent differences
(758)
(1,399)
International operations subject to different tax rates
(1,891)
1,125
Unrecognized tax loss
614
116
Rate differentials:
Change in future rate
-
(5)
True up
(390)
(317)
Income tax expense (benefit)
39,575
23,482
The permanent differences relate primarily to investment income or losses that are non-taxable or taxed at rates lower than the
statutory income tax rate, such as non-taxable dividend income and capital gains. In certain circumstances, permanent
differences relate to expenses not deductible for tax purposes.
As at December 31, 2024, the Company has unused tax losses of $9,284 (December 31, 2023 – $10,689), which will expire in
the following years:
December 31, 2024
2043
6,928
2044
2,356
9,284
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 20 – Income taxes (Continued)
33
Note 21 – Acquisition and goodwill
a) Acquisition
On March 15, 2024, the Company closed its acquisition of 100% of the issued share capital of First Founders Assurance
Company (“FFAC”), for cash consideration of $18.8 million. FFAC is a US Treasury listed surety company and is a business as
defined by IFRS 3 Business Combinations. This acquisition will allow the Company to access a broader portion of a larger surety
market within the US, resulting in increased insurance revenue.
The initial amounts assigned to the identifiable assets acquired, goodwill and liabilities assumed on March 15, 2024 are as set
out in the table below.
Cash and cash equivalents
3,791
Investments
6,359
Other assets
83
Insurance contract liabilities
(888)
Other liabilities
(1,372)
Total identifiable assets and liabilities assumed
7,973
Goodwill
10,833
Total consideration transferred in cash
18,806
Cash outflow arising on acquisition:
Cash consideration
18,806
Less: cash and cash equivalents acquired
(3,791)
Net cash flow on acquisition
15,015
The goodwill represents the excess of the purchase price over the fair value of the net assets, and is attributable to the future
economic benefits and other synergies expected from the Treasury listing certificate obtained and other assets acquired that are
not individually identified and separately recognized in the acquisition. None of the goodwill is expected to be deductible for
income tax purposes.
b) Impairment testing of goodwill
The Company determines whether goodwill is impaired at least annually and when events or changes in circumstances indicate
that the carrying amounts may not be recoverable at the cash generating unit ("CGU") level. For this acquisition, the CGU is the
net assets of the consolidated US holding company that holds FFAC and the newly written surety business associated with the
FFAC license.
The annual impairment test for the CGU was performed as at December 31, 2024, which included a qualitative assessment of
impairment indicators, and a quantitative test by comparing the carrying amount of this group of assets to their recoverable
amount, which has been determined based on a value in use calculation using the following key estimates and assumptions:
•
Cash flow projections for the next four years are based on financial budget and forecasts, determined using budgeted
margins based on past performance and management expectations for the CGU and the industry;
•
Cash flow projections for the fifth future year are extrapolated using an estimated terminal value growth rate of 3%,
based mainly on US gross domestic product growth, and is consistent with reported industry trends;
•
Pre-tax discount rate is set at 11%, based on the US P&C industry average cost of debt.
The key assumptions used to determine the recoverable amount were tested for sensitivity by applying a reasonably possible
change to those assumptions. The sensitivity analysis did not result in an impairment of the CGU.
No impairment loss on goodwill has been recognized for this CGU for the year ended December 31, 2024.
Impairment of goodwill - assumptions and estimation uncertainty
Determining any impairment of goodwill involves assumptions and estimation uncertainty regarding the assessment of
impairment indicators including cash flow projections, growth rates, and economic factors.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
34
Note 22 – Additional information on the Consolidated Statements of Cash Flows
The following table shows the changes in working capital for the twelve months ended December 31, 2024 and December 31,
2023:
For the twelve months ended December 31,
2024
2023
Insurance contract liabilities
775,215
604,848
Leases and accrued liabilities
50,004
46,387
Income taxes
23,288
18,842
Other operating liabilities
5,063
398
Other operating assets
(17,398)
(647)
Reinsurance contract assets
(767,574)
(475,790)
68,598
194,038
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
35
As a provider of insurance products, effective risk management is critical to the Company’s ability to protect the interests of its
stakeholders. The most significant risks include those associated with insurance and reinsurance contracts and holding financial
instruments. The Company has policies and procedures governing the identification, measurement, monitoring, mitigating and
controlling of risks associated with insurance contracts and holding financial instruments. The most significant risk associated
with insurance contracts is insurance risk, which includes pricing risk, concentration risk and reserving risk. The significant risks
associated with financial instruments are credit risk, liquidity risk and market risk (comprising currency risk, interest rate risk and
other price risks such as equity risk). Sensitivity analyses are performed on these significant risks which could impact the
Company’s results and financial condition. Results of the sensitivity analyses should only be viewed as directional estimates as
they can differ materially from actual results.
The following sections describe how the Company manages its insurance risk and risks associated with financial instruments.
23.1
Insurance risk
Insurance risk is the risk that the ultimate cost of claims, as well as acquisition expenses, related to insurance contracts will
exceed premiums received in respect of those contracts. This could occur because either the frequency or severity of claims is
greater than expected.
The Company’s objective for managing insurance risk is to mitigate the risk while continuing to grow and to achieve profitable
underwriting results within its identified product lines. Senior management seeks to achieve this objective through effective use
of underwriting and pricing policies, procedures and guidelines, which it has developed for pricing and issuing bonds and
policies. In addition, careful oversight is applied to the underwriting process to ensure that these policies, procedures and
guidelines are followed. Furthermore, the Company regularly reviews its underwriting practices to ensure that they reflect
emerging trends in its existing business and in the marketplace. Insurance risk is further mitigated through effective claims and
expense management, and through the use of reinsurance.
The insurance risks associated with insurance contracts underwritten by the Company are subject to a number of variables such
as estimated loss ratios and estimated claims settlement costs, which are sensitive to various assumptions which can impact the
estimation of claims liabilities (see Note 2.2).
There were no significant changes in the Group’s objectives, policies and processes for managing risk and the methods used to
measure risk compared to the previous period.
Some additional factors that impact insurance risk include pricing risk, reserving risk, and concentration risk, which are described
below:
a)
Pricing risk
Pricing risk is the risk that an insurance product has been priced using assumptions about claims activity that are different from
the actual experience of that product line. The Company mitigates the impact of pricing risk through the use of guidelines, which
are designed such that premium rates take into account claims frequency and severity, expense levels, investment returns and
profit margins required to support a particular product line. The Company reviews pricing assumptions regularly to ensure that
they reflect up-to-date claims experience and expected future changes in that experience, as well as market conditions. The
Company further mitigates the impact of pricing risk through the employment of experienced underwriting staff.
b)
Reserving risk
Reserving risk is the risk that future claims arising on past exposure periods exceed the liability recorded in respect of Liability
for incurred claims. The Company’s management of reserving risk is discussed in Note 3.1(a).
c)
Concentration of insurance risk
Concentration risk is the risk that the Company’s insurance products are concentrated within a particular geographic area,
particular class of business, or a particular insured, thereby increasing the exposure of the Company to a single event or a series
of related events. Concentration of risk could arise as a result of accumulations of large numbers of insurance or reinsurance
contracts exposed to similar perils, classes of business or geographic areas.
To mitigate the impact of concentration of risk, the Company applies risk management practices, including the use of
reinsurance, monitoring and modelling techniques, and regularly reviews its portfolio of insurance risks for concentration and
aggregation of risks and makes adjustments as needed in order to ensure exposures are within tolerances. The active
management of its reinsurance programs and collateral requirements is also an important element in maintaining net claims
exposures and concentration and aggregation risks within the Company’s risk tolerance.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management
36
The following table shows the mix of the Company’s insurance policies by product line and geography, which reflects the
Company’s diversification of insurance risk:
December 31, 2024
December 31, 2023
Canada
US
Canada
US
Surety
93,685
83,411
121,018
21,403
Corporate Insurance
175,272
131
165,541
-
Warranty
122,627
-
109,172
-
US Programs and Canadian Fronting
505,601
2,137,595
407,700
1,964,353
Insurance revenues
897,185
2,221,137
803,431
1,985,756
d)
Sensitivity to insurance risk
The insurance risks associated with the lines of business underwritten by the Company are sensitive to various assumptions
which can impact the estimation of the liability for incurred claims. The relevant risk variables for the Company’s estimation of the
liability for incurred claims are subject to assumptions that impact the ultimate value of the estimated loss ratio as well as the
estimated claims settlement costs. The loss ratio is used to calculate losses of the Company as a percentage of insurance
revenue, after taking into account the impact of reinsurance. Below is an analysis showing the impact of a 5% increase in the
loss ratio, as a percentage of insurance revenue, before and after taking into account the impact of reinsurance, and a 5%
increase in claims settlement costs of claims reserves, based on an increase in the current LIC and AIC balances. Such
variances in the estimation were considered reasonably possible during the twelve months ended December 31, 2024 and 2023.
The impacts described in the table below are independent of one another. A 5% decrease to the loss ratio and a 5% decrease in
claims settlement costs would have the opposite effect on profit before tax and shareholders’ equity.
Dec.31,
2024
Dec.31,
2023
Dec.31,
2024
Dec.31,
2023
Dec.31,
2024
Dec.31,
2023
Dec.31,
2024
Dec.31,
2023
Sensitivity factor
Impact on profit
before tax, gross of
reinsurance
Impact on profit
before tax, net of
reinsurance
Impact on
shareholders’ equity,
gross of reinsurance
Impact on
shareholders’ equity,
net of reinsurance
5% increase to
loss ratio
(158,043) (145,429)
(34,107)
(28,897) (122,611) (113,011)
(26,037)
(22,041)
5% increase to claims
settlement costs
(207,102) (156,567)
(27,520)
(21,955) (162,139) (122,793)
(21,862)
(17,382)
e)
Prior year claims development
The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for each
successive accident year at each reporting date, together with cumulative payments to date.
In setting claims provisions, the Company gives consideration to the probability and magnitude of future experience being more
adverse than assumed which is reflected in the risk adjustment. In general, the uncertainty associated with the ultimate cost of
settling claims is greatest when the claim is at an early stage of development. As claims develop, the ultimate cost of claims
becomes more certain.
The following table presents the net cumulative claim payments to date and estimate of net undiscounted liabilities for incurred
claims, including effect of the risk adjustment for non-financial risk, at the end of the year:
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
37
Net claims loss development
Accident year
All prior
years
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total
Estimate of net
ultimate claims
incurred
18,997 28,378 21,741 23,207 36,330 55,965 96,758 166,838 232,183 253,117
One year later
15,878 26,772 19,059 20,121 33,230 56,892 91,307 178,721 226,247
Two years later
14,365 26,380 17,409 19,916 31,277 59,785 108,120 202,495
Three years later
14,421 25,826 16,467 19,492 30,371 62,596 121,049
Four years later
13,340 26,739 15,222 19,276 31,656 68,550
Five years later
12,730 26,198 14,698 18,150 32,723
Six years later
12,682 25,867 14,323 18,587
Seven years later
12,640 25,980 14,191
Eight years later
12,358 25,758
Nine years later
12,619
Estimate of net
ultimate claim
incurred
12,619 25,758 14,191 18,587 32,723 68,550 121,049 202,495 226,247 253,117
Cumulative claim
payments to date
(11,976) (24,604) (13,495) (16,619) (29,171) (57,701) (86,092) (143,442) (130,539) (59,972)
Net undiscounted LIC
2,201
643
1,154
696
1,968
3,552 10,849 34,957 59,053 95,708 193,145 403,926
Effect of discounting
(49)
(31)
(58)
(46)
(112)
(334)
(1,573)
(4,140)
(7,645) (11,388) (17,496) (42,872)
Effect of the risk
adjustment for
non-financial risk
221
66
111
67
174
383
1,631
4,143
7,646 10,094 15,620
40,156
Total net LIC
2,373
678
1,207
717
2,030
3,601 10,907 34,960 59,054 94,414 191,269 401,210
Reconciliation to Note 7.1 Roll-forward of net ICL showing LIC and Note 7.2 Roll-forward of net RCA showing AIC
As at December 31, 2024
Note
Estimates of the
present value of
future cash flows
Risk adjustment
Total
Insurance contract liabilities - LIC
7.1
2,639,663
339,018
2,978,681
Reinsurance contract assets - AIC
7.2
(2,278,620)
(298,851)
(2,577,471)
Total net LIC
23.1(e)
361,043
40,167
401,210
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
38
23.2
Credit risk
Credit risk is the risk that a party to a financial instrument will fail to discharge an obligation and cause the Company to incur a
financial loss. Credit risk arises mainly from investments in bonds and short-term securities, and balances receivable from
insurance brokers and reinsurers.
For fixed income securities, the Company manages its credit risk by placing limits on its exposure to a single counterparty, by
reference to the credit rating of the counterparty or based on the collateral supporting the counterparty risk. Management also
limits its aggregate fixed income securities credit risk by placing limits on aggregate values of securities at different credit rating
levels. Management monitors credit quality of its fixed income securities on an on-going basis through its reviews of the
investment portfolio.
For Premiums receivable, which form a component of the LRC, the Company uses insurance brokers, managing general agents,
and program administrators as intermediaries for the distribution of its product offerings and is therefore subject to the risk that
these intermediaries fail to remit the premiums they have collected on its behalf. The Company primarily deals with
intermediaries with which it has entered into a contract that details, among other things, the intermediary’s responsibilities and
payment obligations. These intermediaries are typically regulated and licensed by insurance regulators. Further, the Company
monitors receivables and follows up on all past due amounts to ensure satisfactory collection arrangements are in place.
For balances receivable from reinsurers, which form a component of the Reinsurance Contract Assets, the Company applies its
reinsurance risk management policy to manage the associated credit risk. The Company is ultimately at risk on the limits of
coverage provided under its product offerings, regardless of whether it has ceded a portion of this exposure to reinsurers. If a
reinsurer is unwilling or unable to satisfy its obligations, the Company does not have the right to correspondingly reduce its
claims payment obligations. The Company’s reinsurance is well-diversified and controls are in place to manage exposure to
reinsurance counterparties.
The Company uses both licensed and unlicensed reinsurers. When using licensed reinsurers, the Company generally uses
those with an A.M. Best credit rating of A-, and management monitors these ratings on a regular basis. If the reinsurer has an
A.M. Best rating of below A- an agreed upon level of collateral is provided. Furthermore, the Company’s reinsurance risk
management policy places limits on the participation of individual reinsurers in the Company’s reinsurance arrangements. These
participations and limits are reviewed regularly.
When the Company uses an unlicensed or unrated reinsurer an agreed upon level of collateral is required, generally in the form
of a custodial account secured under a reinsurance security agreement, a letter of credit or other forms of security acceptable to
the Company.
Derivative assets and other assets are monitored with reference to the credit quality of the counterparty, and an impairment
allowance is made if deemed appropriate.
The nature of the Company’s exposure to credit risks and its objectives, policies and processes used to manage and measure
the risks have not changed from the previous period.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
39
a)
Maximum exposure to credit risk of the Company
The following table sets out the Company’s maximum exposure to credit risk related to financial instruments. The maximum
credit exposure is the carrying value of the asset net of any allowances for losses.
As at
December 31, 2024
December 31, 2023
Cash and cash equivalents, and short-term securities
284,717
611,516
Fixed income
1,174,849
675,195
Accrued investment income
14,000
6,929
Reinsurance contract assets - AIC
2,577,471
1,791,975
Derivative assets
12,530
11,959
Other assets
9,033
8,861
4,072,600
3,106,435
b)
Concentration of credit risk of the Company
Concentrations of credit risk can arise from exposures to a single debtor, a group of related debtors or groups of debtors that
have similar risk characteristics, for example they may operate in the same or similar industries. The following table provides
details of the carrying value of fixed income securities by industry sector:
As at
December 31, 2024
December 31, 2023
Fixed income
Fixed income
Financial
384,804
229,844
Real Estate
137,150
50,999
Consumer Discretionary
100,437
30,891
Government
87,866
79,450
Energy
83,604
50,211
Industrial
73,393
54,732
Automotive
59,574
39,875
Consumer Staples
54,497
31,729
Telecom Services
48,969
45,135
Utility
46,827
17,501
Power & Pipelines
42,997
20,139
Other
54,731
24,689
Total credit risk exposure
1,174,849
675,195
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
40
c)
Asset quality on financial assets
The following table summarizes the credit ratings for fixed income securities, cash equivalents and short-term securities:
As at
December 31, 2024
December 31, 2023
Fixed income securities – underlying items
AAA
28,754
43,372
AA
124,139
79,398
A
503,068
261,909
BBB
466,799
244,683
Below BBB
52,089
45,833
Total
1,174,849
675,195
Cash equivalents and short-term securities
R-1 (high)
29,995
51,775
R-1 (medium)
4,339
-
Total
34,334
51,775
1,209,183
726,970
d)
Recoverable from reinsurers
The following table shows a breakdown of the reinsurance contract assets (which includes reinsurance payable), and
corresponding collateral held, by A.M. Best rating of the reinsurers:
As at
December 31, 2024
December 31, 2023
A.M. Best rating
Reinsurance
contract assets
Collateral held (1)
Reinsurance
contract assets
Collateral held (1)
A++
211,039
-
160,009
-
A+
1,074,359
90,118
783,430
31,274
A
250,879
134,430
298,578
114,010
A-
387,514
76,319
345,585
65,683
B++
45,631
79,280
76,747
77,311
Below B++
133,012
149,444
17,997
19,797
Unrated
668,729
770,766
321,243
369,318
2,771,163
1,300,357
2,003,589
677,393
(1) Collateral held excludes certain forms of collateral for a total of $56,847 received after December 31, 2024 (December 31, 2023 -
$8,876).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
41
23.3
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that
are settled by delivering cash or another financial asset. Liquidity risk may arise from a number of potential areas including, for
example, duration mismatch between assets and liabilities.
Generally, the Company’s financial liabilities are settled by delivering cash and it is able to rely on the cash flow generated from
its operations to satisfy its liquidity requirements, which are primarily operating expenses and claim payments.
By their nature, the timing and quantum of claims payments are subject to significant uncertainty and are estimated actuarially
as set out in Note 3.1(a). Although the Company has reinsurance treaties in place under which a portion of the claims payments
may be recovered, including by way of set off against premiums payable to the reinsurers, such recoveries usually follow the
making of payments and often delays of a number of months can occur. This timing difference between gross cash outflows and
expected reinsurance recoveries gives rise to liquidity risk. Hence the Company must have access to sufficient liquid resources
to fund gross amounts payable when required.
To manage its liquidity requirements, the Company maintains a minimum balance of cash and cash equivalents, and short-term
securities and a highly rated, highly liquid investment portfolio. The Company’s investment policy sets out credit quality criteria
and has limits on single issuer exposures. In addition, the investment policy stipulates average duration targets.
The following tables set out the Company’s financial assets and liabilities by contractual maturity, and summarize the maturity
profile of groups of insurance contracts issued that are liabilities and reinsurance contracts that are assets of the Company.
As at December 31, 2024
Up to 1
year
1 to 5
years
Over 5
years
No specific
maturity
Total
Cash and cash equivalents, short-term securities
24,292
-
-
246,086
270,378
Investments
146,814
479,140
587,354
221,226
1,434,534
Other financial assets
39,681
-
-
-
39,681
Reinsurance contract assets - AIC
1,081,147
1,266,512
229,812
-
2,577,471
Financial and insurance assets
1,291,934
1,745,652
817,166
467,312
4,322,064
As at December 31, 2023
Up to 1 year
1 to 5
years
Over 5
years
No specific
maturity
Total
Cash and cash equivalents, short-term securities
44,275
-
-
559,741
604,016
Investments
101,168
436,720
168,432
183,837
890,157
Other financial assets
36,654
15,050
-
-
51,704
Reinsurance contract assets - AIC
1,010,528
698,680
82,767
-
1,791,975
Financial and insurance assets
1,192,625
1,150,450
251,199
743,578
3,337,852
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
42
As at December 31, 2024
Up to 1 year
1 to 5
years
Over 5
years
No specific
maturity
Total
Financial liabilities
102,411
-
-
59,891
162,302
Loan payable
23,272
75,000
-
-
98,272
Insurance contract liabilities - LIC
1,241,821
1,469,288
267,572
-
2,978,681
Financial and insurance liabilities
1,367,504
1,544,288
267,572
59,891
3,239,255
As at December 31, 2023
Up to 1 year
1 to 5
years
Over 5
years
No specific
maturity
Total
Financial liabilities
96,713
-
-
23,352
120,065
Loan payable
-
75,000
-
-
75,000
Insurance contract liabilities - LIC
1,151,710
814,663
102,735
-
2,069,108
Financial and insurance liabilities
1,248,423
889,663
102,735
23,352
2,264,173
23.4
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk includes currency risk, interest rate risk and other price risks such as equity price risk.
a)
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates. The Company faces currency risk as a result of having operations primarily in the United States and
Canada and therefore has exposure to currency risk arising from fluctuations in exchange rates of the Canadian dollar against
the United States dollar. The Company also has currency risk as a result of having investments in the Company’s Canadian
operations denominated in foreign currencies. The foreign currency positions of the Company are monitored regularly and the
Company uses derivatives throughout the year to manage foreign exchange risks where appropriate.
i)
Exposure to currency risk
The Company manages its currency risk through its investment policy which considers duration of investments held as well as
asset liability matching.
The following table summarizes the net currency exposure of Canadian domiciled entities categorized by major currency. The
balances in the table below are presented in the foreign currency indicated:
USD
EUR
GBP
BRL
As at December 31,
2024
2023
2024
2023
2024
2023
2024
2023
Cash and Investments
87,121 132,912
1,611
1,498
1,233
2,406
3,971
4,411
Less: foreign-currency
derivatives, notional amount
(76,157)
(97,664)
(1,603)
(1,477)
(1,240)
(2,349)
-
-
Total net exposure
10,964
35,248
8
21
-
57
3,971
4,411
The following table summarizes the carrying value of net assets of US domiciled entities in their functional currency of USD.
USD
As at December 31,
2024
2023
Consolidated net assets of US domiciled entities
291,599 205,503
Less: foreign-currency derivatives, notional amount
(18,031)
-
Total net exposure
273,568 205,503
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
43
ii)
Sensitivity to currency risk
Impact on comprehensive income and shareholders’ equity
As at December 31,
2024
2023
2024
2023
Sensitivity factor
10% increase in
CAD versus USD
10% decrease in
CAD versus USD
USD investments supporting Canadian domiciled entities
(1,053)
(3,114)
1,159
3,428
Consolidated net assets of subsidiaries
(28,122)
(19,624)
30,939
21,601
b)
Interest rate risk
Interest rate risk is the potential for financial loss resulting from changes in interest rates. Fixed income investments, and
preferred shares are subject to interest rate risk although, in the case of fixed income investments, to the extent they are held to
maturity, the risk is limited to the reinvestment yield being different from the original yield to maturity. The fair value of bonds
changes inversely with changes in market rates of interest, with greater impact to bonds with longer durations. The Company’s
discounted Insurance contract liabilities - LIC and Reinsurance contract assets - AIC are also subject to interest rate risk.
In respect of insurance or reinsurance contract assets or liabilities for remaining coverage, the Company expects that the time
between providing each part of the coverage and the related premium due date is no more than a year apart, and so the time
value of money is not required to be taken into account. In respect of insurance contract assets or liabilities for incurred claims, if
cash flows are expected to be paid or received more than one year from the date the claims are incurred, then the insurance or
reinsurance contract liability or asset would be adjusted using a discount rate updated at end of each reporting period, resulting
in the balance being sensitive to interest rate movements.
The Company manages its interest rate risk through its investment policy which considers duration of investments held as well
as asset liability matching.
As at December 31, 2024
Sensitivity factor
Fixed income
(including
preferred shares)
Reinsurance
contract
assets
Insurance
contract
liabilities
Impact on
profit
before tax
Impact on
equity
100 basis point increase in the yield
curve (1)
(51,359)
(55,918)
64,617
(42,660)
(32,108)
100 basis point decrease in the yield
curve (1)
51,384
59,037
(68,055)
42,366
31,899
As at December 31, 2023
Sensitivity factor
Fixed income
(including
preferred shares)
Reinsurance
contract
assets
Insurance
contract
liabilities
Impact on
profit
before tax
Impact on
equity
100 basis point increase in the yield
curve (1)
(23,433)
(25,294)
29,759
(18,968)
(14,303)
100 basis point decrease in the yield
curve (1)
23,433
26,318
(30,988)
18,763
14,145
(1)
Assumes parallel shift in the yield curve, and all other variables remain constant.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
44
c)
Equity price risk
Equity price risk is the uncertainty associated with the valuation of financial assets arising from changes in equity markets.
The Company’s exposure to equity price risk is managed and mitigated through its investment policy which sets out maximum
exposures to equities at aggregate and per issuer levels as well as requiring diversification across different industry sectors.
As at December 31,
2024
2023
Sensitivity factor
Impact on net income (1)
10% increase in equity prices (1)
6,828
5,196
10% decrease in equity prices (1)
(6,828)
(5,196)
(1)
The methodology used to calculate the change is based on 10% of the fair value of the equities (excluding preferred shares and
any funds which hold predominantly fixed income securities), net of tax, at the Statement of Financial Position dates.
Note 24 – Benefits
The Company has established and contributes to a number of group retirement savings plan arrangements under which the
Company makes contributions. Contributions are charged to other operating expenses and are recognized as incurred.
Note 25 – Key management personnel
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly, including any executive officers or directors of the Company.
The following transactions were carried out with key management personnel:
For the twelve months ended December 31,
2024
2023
Salaries and other employee benefits
4,244
3,804
Share based payments
3,957
(1,432)
For 2023, the share based payments amount is a recovery due to movement in the underlying share price.
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
Note 23 – Risk management (Continued)
45
Note 26 – Share based compensation
26.1
Equity-settled stock options
The Company currently administers a stock option plan. Under the stock option plan, the exercise price of each stock option will
be established at the time that the option is granted. It is expected that the vesting period will normally be 20% per year over five
years and the expiry date of stock options granted will not exceed ten years, however in some instances the vesting period may
differ.
The following is a continuity schedule of stock options outstanding as at December 31, 2024 and 2023:
December 31, 2024
December 31, 2023
Number of
options
Weighted average
exercise price
(in dollars)
Number of
options
Weighted average
exercise price
(in dollars)
Outstanding, beginning of year
1,598,078
16.62
1,541,639
14.83
Exercised during the year
(199,986)
12.15
(77,798)
7.34
Granted during the year
158,553
39.78
134,237
31.85
Outstanding, end of year
1,556,645
19.56
1,598,078
16.62
As at December 31, 2024, the outstanding stock options consist of the following:
Exercise price range per share
(in dollars)
Number of options
outstanding
Range for average
remaining contractual life
(in years)
Number of options
exercisable
31 to 45
449,660
7.19 to 9.91
110,798
16 to 30
222,135
6.01 to 6.14
107,820
0 to 15
834,850
2.64 to 5.15
761,694
As at December 31, 2023, the outstanding stock options consist of the following:
Exercise price range per share
(in dollars)
Number of options
outstanding
Range for average
remaining contractual life
(in years)
Number of options
exercisable
31 to 45
134,237
9.24 to 9.87
-
16 to 30
261,391
7.01 to 7.14
89,908
0 to 15
987,586
3.64 to 6.15
737,086
As at December 31, 2024, 980,312 (December 31, 2023 – 875,967) equity-based stock options were vested. As at
December 31, 2024, the Company had recorded $5,683 (December 31, 2023 – $4,725) in share reserve related to the options in
the contributed surplus balance of the Consolidated Statements of Financial Position. For the year ended December 31, 2024,
the Company recorded $1,518 (December 31, 2023 – $1,266) of expense related to the options, in other operating expenses.
The fair value of the options issued were determined using the Black-Scholes option pricing model. Inputs to the model include
expected volatility, option life and risk free rate. The volatility estimate was based on the historical volatility of the Company’s
stock price. The weighted average fair value of stock options issued in 2024 at the measurement date was $13.00 (in dollars)
(December 31, 2023 – $9.71 (in dollars)).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
46
Note 26 – Share based compensation (Continued)
26.2
Cash-settled stock options
As at December 31, 2024, 187,480 options were outstanding (December 31, 2023 –187,480) which had been issued to officers
of the Company by the board of directors as part of a cash-settled share based payment plan, with a vesting period of 20% per
year over five years, and an expiration date of ten years. As at December 31, 2024, 183,956 options were vested (December 31,
2023 – 180,432). As at December 31, 2024, the Company had recorded $6,113 (December 31, 2023 – $5,198) in liabilities
related to the options in the Consolidated Statements of Financial Position. For the year ended December 31, 2024, the
Company recorded $915 of loss (December 31, 2023 – $2,006 gain) related to the options, in other operating expenses. The fair
value of the options issued were determined using the Black-Scholes option pricing model. Inputs to the model include expected
volatility, option life and risk free rate. The volatility estimate was based on the historical volatility of the Company’s stock price.
As at December 31, 2024, the weighted average fair value of share options issued was $32.62 (in dollars) (December 31, 2023
– $27.84 (in dollars)).
26.3
Cash-settled DSUs
DSUs are awarded to certain directors of the Company at the market value of the Company’s common shares at the grant date.
These DSUs are awarded in lieu of directors fees at the option of the Directors. Each DSU entitles the holder to receive an
amount equivalent to the value of a common share at settlement. As at December 31, 2024, 133,096 (December 31, 2023 –
133,665) DSUs were awarded to directors who are not employees of the Company or one of its affiliates.
The following table shows the movement in the number of DSUs issued during the year:
For the twelve months ended December 31,
2024 (in units)
2023 (in units)
Opening balance
133,665
120,673
Granted during the year
12,822
12,992
Exercised during the year
(13,391)
-
Ending balance
133,096
133,665
As at December 31, 2024, 13,391 units had been exercised (December 31, 2023 – nil) and $5,188 (December 31, 2023 –
$4,545) had been recorded as liabilities. The liability was measured based on the fair value of the common shares of the
Company at December 31, 2024. For the year ended December 31, 2024, the Company recorded $1,216 of loss (December 31,
2023 – $931 of gain) related to the DSUs in other operating expenses.
26.4
Equity-settled RSUs
The Company awards certain employees RSUs based on the fair value of the Company’s common shares at the grant date.
These RSUs will typically vest over three years, however in some instances the vesting period may differ.
The following table shows the RSUs issued and outstanding as at December 31, 2024 and 2023:
As at
December 31, 2024 (in units)
December 31, 2023 (in units)
Outstanding, beginning of year
172,225
130,669
Vested during the year
(95,525)
(69,422)
Cancelled during the year
(4,330)
(2,386)
Granted during the year
119,379
113,364
Outstanding, end of year
191,749
172,225
During the year ended December 31, 2024, compensation expense of $4,493 (December 31, 2023 – $2,970) related to the
RSUs was recorded in other operating expenses.
Note 27 – Commitments
The Company has entered into commitments related to the funding of investments. These commitments are generally payable
on demand based on the funding needs of the private equity investments and subject to the terms and conditions of each limited
partnership agreement.
As at December 31, 2024, the unfunded commitments for the Company are $18,724 (December 31, 2023 – $22,666).
TRISURA GROUP LTD.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except as otherwise noted)
47
CORPORATE INFORMATION
DIRECTORS
CORPORATE OFFICE
George Myhal1
Bay Adelaide Centre
Chair of the Board
333 Bay Street, Suite 1610
Toronto, Ontario
Paul Gallagher2
M5H 2R2
Corporate Director
Telephone:
(416) 214-2555
Facsimile:
(416) 214-9597
Barton Hedges3
Corporate Director
REGISTRAR AND TRANSFER AGENT
Robert Taylor
TSX Trust Company
Corporate Director
301 - 100 Adelaide Street West
Toronto, ON
David Clare
M5H 4H1
Corporate Director
Telephone:
(416) 682-3860 or
toll free within North America
Janice Madon (800) 387-0825
Corporate Director
Facsimile:
(888) 249-6189
Website:
www.tsxtrust.com
Anik Lanthier
E-mail:
shareholderinquiries@tmx.com
Corporate Director
Lilia Sham
Corporate Director
Sacha Haque
Corporate Director
1. Chair of the Governance and Compensation Committee
EXCHANGE LISTING
2. Chair of the Audit Committee
TSX Stock Symbol: TSU
3. Chair of the Investment and Risk Committee
OFFICERS
David Clare
Richard Grant
President and Chief Executive Officer
Chief Underwriting Officer
Chief Investment Officer President and Chief Executive Officer
Trisura Guarantee Insurance Company
David Scotland
Chief Financial Officer
Phillip Shirtliff
Chief Risk Officer
Michael Beasley
President and Chief Executive Officer
Trisura Specialty Insurance Company
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