Trisura Group Ltd.

Good morning. Welcome to TriShare Group Limited first quarter 2022 earnings conference call. On the call today are David Clare, Chief Executive Officer, and David Scotland, Chief Financial Officer. David Clare will begin by providing a business and strategic update, followed by David Scotland, who will discuss financial results for the quarter and year. Following formal comments, lines will be open for analyst questions. I'd like to remind participants that in today's comments, including in responding to questions and in discussing new initiatives, related to financial and operating performance. Forward-looking statements may be made, including forward-looking statements within the meaning of applicable Canadian and U.S. securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risk in future events, and results may differ materially from such statements. For further information on these risks and their potential impacts, please see TRISHERA's filings with the securities regulators. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star 0. Thank you. I'll now turn the call over to David Clare.

Thank you. Good morning, everyone, and welcome. Our business performed well through Q1 of 2021, growing premiums 55% compared to Q1 of 2021. Sorry, that was Q1 2022. We recorded our highest quarterly net income to date of $21 million, supporting a 19% return on equity, despite continued investment in infrastructure. Our team continues to demonstrate momentum as we scale an increasingly diversified specialty insurance platform. Results, again, were particularly strong in Canada, with 63% premium growth in the quarter, supported by profitable underwriting. An acceleration of growth in the U.S. drove premiums to a new quarterly record, increasing 52% over the first quarter of 2021. In Canada, the standout continues to be risk solutions, where fronting and warranty programs drove an 82% rate of growth in the quarter. It is striking to observe the growth in contribution to earnings from risk solutions, with a 216% increase in NUI returns versus Q1 of 2021. 48% growth in corporate insurance was supported by expansion of programs and sustained momentum with distribution partners, as well as a healthy but mitigating rate environment. Surety growth of 34% was strong, as the business benefits from tailwinds in established lines and expansion of a U.S. practice. Importantly, loss ratio in Canada of 16% improved sequentially, driven by strong experience in risk solutions. Combined ratio in the quarter was 79.5% compared to 65% in Q1 2021, a very strong result in the context of a comparable period that benefited from significant one-time items. The Canadian platform maintained a strong 30% return on equity and grew net income 24% over the prior year. With the expansion of our U.S.-style fronting, our Canadian entity now generates attractive fee-based earnings to complement the heritage of profitable underwriting. We have made progress in our U.S. surety platform, which contributed $2.5 million of premium in the quarter, following the addition of experienced team members in Stanford, Denver, and Philadelphia. We are excited by the potential of expanding our surety line to a larger market with promising infrastructure tailwind. That being said, we continue to navigate regulatory licensing and expect a muted contribution from U.S. surety in the near term. U.S. fronting grew premiums 52% over Q1 2021, Maturation of existing programs drove top line. U.S. fronting generated $342 million in gross premiums written and $14 million in fronting fees. We recorded $29 million of deferred fee income at the end of the quarter, indicative of future fees to be earned. Loss ratio in the quarter decreased as we benefit from diversification, while fronting operational ratio increased from a shift in midst of business as a larger share of net underwriting income was generated from business with a higher retention rate. The market continued to drive opportunities to exit surplus lines, although we wrote $34 million in admitted premium in the quarter. Similar to our Canadian platform, the U.S. business may exhibit seasonality, making sequential comparisons less relevant than when the business was in startup mode. Annual growth potential remains strong, and we view results on a 12-month basis. The strength of our growth has catalyzed historic levels of hiring, though we admittedly face the same difficulties in hiring that many industries are facing today. An important focus through this expansion continues to be increasing operational leverage while maintaining appropriate resources to manage and underwrite the business. Interest and dividend income increased 24% over Q1 of 2021, the result of a larger portfolio as we grow the insurance business. The substantial increase in interest rates year-to-date drove unrealized losses in our fixed income portfolios, though the impact was mitigated through a short-duration posture and positive contribution from equity allocations. Although we never like to see a reduction in portfolio value, the market is presenting us with opportunities to deploy capital at yields not seen since 2018. As a growing company, we are fortunate to have significant and consistent flow of capital to invest, enhanced by the maturation of our existing short-duration portfolio of investments. Prevailing bond yields are accretive to current portfolio yields, meaning that we are improving our base of interest and dividend income on a risk-adjusted basis for years to come. The hardening market in corporate lines in Canada and E&S lines in the U.S. continued in the quarter, although we see reduced pace of increase versus last year. The majority of our growth has been achieved through enhanced distribution relationships and new volume, and as such, we expect to navigate eventual rate normalization smoothly. Although excess and surplus markets remain strong, our admitted capabilities will be important going forward, with the continued expansion of admitted lines maturation of Canadian fronting, and launch of a U.S. surety strategy, we have ample and attractive opportunities to grow. Our platforms have become complementary sources of lead generation for one another, and as we gain market share in one geography, our presence and capabilities of companion offices provide opportunities to generate new business and service partners across the border. Increasingly diverse and fee-based earnings help reduce volatility and supports our access to capital. As we execute on our priorities through 2022, environmental, social, and governance considerations are front of mind, an important part of Trishura's development. We are focused on better communicating existing initiatives and believe we have taken a step in the right direction with enhanced ESG-related disclosure in our management information circular. I'm excited to introduce Janice Midden, our newest director to shareholders at our upcoming AGM, an important and skilled addition to our team. We remain an insurance company in growth mode and must focus on the skills and practices that brought us to this point, concentration in business lines we know, conservative underwriting, and detailed structuring. As we've acknowledged in the past, our business can experience volatility and severity in claims, but importantly, an increasing proportion of our business is now derived from fee-based earning sources. With that, I'd like to turn it over to David Scotland for a detailed review of financial results.

Thanks, David. I'll now provide a brief walkthrough of some financial results for the quarter. Gross return premiums was $481 million for the quarter, which reflects growth at 55% over Q1 2021. Fee income, which is primarily related to fronting fees from our U.S. operations, grew by 32% in the quarter, reflecting growth of fronting premium in the U.S. Net claims expense in the quarter was greater than the prior year, primarily as a result of growth in the business. We also experienced a claims recovery in Q1 2021 associated with our life annuity reserves, which have since been novated, with reduced claims experience in that quarter. Next, commissions expense increased by 100% in the quarter, reflecting growth in the business in both the Canadian and U.S. operations, as well as a shift in business mix towards certain lines with higher commissions. Operating expense in the quarter grew by 24% over Q1 2021, reflecting growth in both the Canadian and U.S. operations. Net underwriting income in Canada for Q1 was approximately the same as the prior year as a result of growth in the business and mitigated by an exceptionally low combined ratio in Q1 of the prior year. Net underwriting income for the U.S. in Q1 2022 was greater than Q1 2021, largely as a result of growth in new and existing programs. In Q1 2022, the combined ratio in Canada was 79.5% and the fronting operational in the U.S. was 75%. With the novation of the life annuity reserves in Q4 2021, we are now able to calculate a meaningful combined ratio on a consolidated basis. In Q1 2022, that combined ratio of the company was 72%. Net investment income was greater in Q1 2022 than Q1 2021 as a result of an increase in interest and dividend income. The increase is primarily related to an increase in the size of the investment portfolio associated with growth in operations and contributions to capital from the debt offering in June of 2021. Net investment income in Q1 2021 was in a loss position as a result of movement in that quarter in the investment supporting the life annuity reserves, which was offset by the corresponding movement in claims expense in that quarter. Net gains were in a loss position of $500,000 in the quarter, which was less than Q1 2021, largely as a result of movement in derivatives used to hedge share-based compensation. Income tax expense increased in Q1 2022 compared with Q1 2021, reflecting higher net income before tax in the quarter and similar effective tax rate. Net income for the group was $21 million in the quarter, which was greater than Q1 2021 as a result of growth in the business. Diluted EPS was $0.50 a share in Q1 2022, which was greater than Q1 2021. Consolidated ROE on a rolling 12-month basis was 19% at the end of Q1 2022, which was greater than the rolling 12-month ROE at the end of Q1 2021. Assets in the year-to-date period grew by $11 million. Cash in the quarter decreased as a result of a large number of payments in the quarter, as well as deployment of cash to the investment portfolio. Investments have decreased, deflecting the transfer of assets from the novation in 2021, as well as unrealized losses incurred in the period. Recoverable from reinsurers have increased primarily as a result of growth in the U.S. front-end business, where claims liabilities are largely offset by expected recoveries from the reinsurers to whom we see the business. Liabilities in the year-to-date period grew by $13 million, primarily as a result of growth in unearned premium and unpaid claims and loss adjustment expenses, which has grown as a result of growth in both Canada and the U.S., As discussed, growth in these balances is largely offset by growth in reinsurance recoverables. This is also offset by a reduction in accounts payable accrued in other liabilities as a result of the settlement of assets from the novation in 2021, as well as a large number of payments in the quarter. Equity is approximately the same at year-end, reflecting growth in net income offset by a reduction in other comprehensive income. Other comprehensive incomes decreased in 2022, primarily as a result of unrealized losses on the bond portfolio due to rising interest rates. Book value per share was $8.56 at March 31, 2022, and is greater than March 31, 2021, as a result of profits generated year-to-date and mitigated by the unrealized losses on the investment portfolio in the quarter. As of March 31, 2022, debt-to-capital was 17.4%, which increased after last year's debt offering but remains below our long-term target of 20%. The company remains well-capitalized, and we expect to have sufficient capital to meet our regulatory capital requirements. David, I'll now turn things back over to you.