Trisura Group Ltd.

Good morning. Welcome to Trashura Group's second 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. Following formal comments, lines will be open for analyst questions. I 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. security laws. These statements reflect predictions of future events and trends and do not relate to historical events. They're subject to known and unknown risk in future events, and the results may differ materially from such statements. For further information on these risks and their potential impacts, please see Treasurer's Filings with Securities Regulators. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. Thank you. I'll now turn the call over to David Clare.

Thank you. Good morning, everyone. and welcome. Our business continued to perform well in the second quarter, growing premium 77% compared to Q2 2021 and supporting a 19% return on equity through continued investment in infrastructure. Momentum is sustained as we scale an increasingly diversified specialty insurance platform. Results again were particularly strong in Canada, with 36% premium growth in the quarter supported by profitable underwriting. US premiums stepped up significantly, and reached a new record, increasing 103% over the second quarter of 2021. In Canada, disciplined underwriting produced strong profitability, while fronting drove increasingly diverse earnings. We have observed standout growth in earnings from Risk Solutions, the largest contributor to Canadian underwriting income in the quarter. The favorable market in corporate lines in Canada and E&S lines in the US continued in the quarter, although we see a reduced pace of rate increases versus last year. The majority of our growth has been achieved to enhance distribution relationships and new volume, and as such, we expect to navigate eventual rate normalization smoothly. 68% growth in top-line and corporate insurance was driven by expansion of programs and sustained momentum with distribution partners, as well as the healthy but mitigating rate environment discussed. Surety growth of 17% was strong, as the business benefits from tailwinds in established lines and expansion of our U.S. practice. Importantly, loss ratio of 14% in Canada improved sequentially, driven by profitable underwriting across all groups. Combined ratio in quarter was 81%, compared to 83% in Q2 2021, a very strong result. The Canadian platform posted a striking 32% return on equity and grew net income 70% over the prior year. With the extension of our U.S. front-end expertise in Canada, our Canadian entity now generates attractive fee-based earnings to complement a heritage of profitable underwriting. U.S. fronting more than doubled premium over Q2 2021. Maturation of existing programs drove top line, supplemented by onboarding of new programs. U.S. fronting generated $448 million in gross premiums written and $15 million in fronting fees. We recorded $35 million in deferred fee income at the end of the quarter, indicative of future fees to be earned. Loss ratio in the quarter increased slightly due to an evolving business myth, while fronting operational ratio increased to 82% as a result of higher retention and significant investments in staffing and infrastructure. We also noted an increase in certain reinsurance costs, which has impacted the fronting operational ratio. It is important to note that our U.S. earnings will lag premium production as fees are earned, the corollary being that near-term results will be comparable to this quarter. We expect to experience the benefit of this premium growth in earnings in 2023 and beyond. On the last 12-month basis, the US produced a 14% ROE in line with the prior year as a result of corresponding growth in infrastructure over the period and two significant capital injections. Given the rapid growth in the US and the amount of capital recently downstream, we're encouraged to see the quarterly annualized ROE at 16%. Although we wrote $44 million in admitted premiums in the quarter, the market continued to drive opportunities to excess and surplus lines. The strength of our growth catalyzed our recent capital raise, which will support the expansion of our platform. I would like to thank our partners for the continued confidence. We do not take the prospect of raising equity lightly and look forward to deploying our new capital efficiently on your behalf. Interest and dividend income increased 38% over Q2 2021, the result of a larger portfolio as we grow our platform. The continued increase in interest rates drove unrealized losses in our fixed income portfolios, though the impact was mitigated through a short duration posture. As a growing company supported by a recent capital raise, we are in a unique position to deploy investment funds at yields not seen since 2018. We are fortunate to have a significant and consistent flow of capital to invest, enhanced by the maturation of our existing short duration portfolio investments. Prevailing bond yields are accretive to portfolio yield, meaning that we are improving our base of interest and dividend income on a risk adjusted basis for years to come. Our platforms have become complementary sources of opportunities for one another. As we gain market share in one geography, our presence in and capabilities of companion offices provide opportunities to generate new business and service our partners in both Canada and the US. In the quarter, we observed this on both the distribution and capacity side as opportunities to collaborate with distribution agents and reinsurers were shared between Canada and the US. We remain an insurance company in growth mode and must focus on the skills and discipline that brought us to this point. Concentration and business lines we know, conservative underwriting and detailed structuring. We are navigating a volatile environment now armed with a larger capital base and renewed debt capacity. We are in a better position than ever before to support our partners and grow our business. In the context of strong results, it is always worth acknowledging that our business can experience volatility and severity in claims. As we continue to grow, we strive to increase the proportion of our businesses' drive from recurring or 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 premium was $642 million for the quarter, which reflects growth of 77% over Q2 2021. Net claims expense for the quarter was greater than the prior year, primarily as a result of growth in the business. We also experienced a claims recovery in 2021 associated with our life annuity reserves, which have since been novated and which reduced claims expense in that quarter. Net commission expense increased by 68% 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 22% over Q2 2021, reflecting growth in both the Canadian and the US operations. Net underwriting income in Canada for Q2 was greater than the prior year as a result of growth in the business and a lower loss ratio. Net underwriting income for the US for Q2 2022 was lower than Q2 2021 as a result of a higher loss ratio and an additional catastrophe reinsurance payment made in the quarter. In Q2, the combined ratio in Canada was 81% and the front-end operational ratio in the U.S. was 82%. With the innovation of our life annuity reserves in Q4 2021, we are now able to calculate a meaningful combined ratio on a consolidated basis. In Q2, that combined ratio for the company was 79%. Net investment income was greater in Q2 2022 than 2021 as a result of an increase in interest and dividend income. The increase was primarily related to an increase in the size of the investment portfolio. Net investment income in 2021 was also negatively impacted as a result of movement in the investment supporting the life annuity reserves, which was offset by the corresponding movement in claims expense in that quarter. Net gains were $1.4 million in the quarter as a result of realized gains on investments disposed of during the period. This was less than the net gains of Q2 2021, largely as a result of movement in derivatives used to hedge share-based compensation, which were greater in that quarter. Income tax expense increased in Q2 2022 compared to 2021, reflecting higher net income before tax in the quarter and the impact of a tax recovery in 2021 with reduced income tax expense in that quarter. Net income for the group was $20 million in the quarter, which was greater than 2021 as a result of growth in the business. Diluted EPS with $0.48 a share in Q2 2022, which was greater than 2021. Consolidated ROE on a rolling 12-month basis was 19% at the end of Q2 2022, which was greater than the rolling 12-month ROE at the end of Q2 2021. Assets year-to-date grew by $489 million. Cash in the period increased as a result of the drawing of $30 million from our revolving credit facility. Investments have decreased, reflecting the transfer of assets from the Novation in 2021, as well as unrealized losses incurred in the period. Premiums in accounts receivable and other assets has grown as a result of growth in GPW, particularly in the U.S. over this most recent quarter. Recoverables from reinsurers have increased primarily as a result of growth in the U.S. printing business, as well as certain printing programs in Canada, 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 $491 million, primarily as a result of growth in under-premiums and unpaid claims and loss adjustment expenses, which have 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. Accounts payable accrued in other liabilities has decreased in the period as a result of the settlement of assets from the Novation in 2021, as well as a number of large payments in the period. Equity is approximately the same as year end, reflecting growth in net income offset by reduction in other comprehensive income. Other comprehensive income decreased in 2022, primarily as a result of unrealized losses on the bond portfolio due to rising interest rates. Book value per share was $8.62 at June 30th, 2022, which is greater than June 30th, 2021, as a result of profit generated year to date and mitigated by unrealized losses in the investment portfolio over the quarter. Over the, yeah, over the quarter. As at June 30, 2022, the debt-to-capital ratio was 22.7% as a result of a drop in the company's revolving credit facilities. However, following the equity raise in July of $144 million of net proceeds, the company's debt-to-capital ratio was below our 20% target. The company remains well-capitalized, and we expect to have sufficient capital to meet our regulatory capital requirements. David, I'll turn things back over to you.