Trisura Group Ltd.

Good morning and welcome to Tricera Group's Limited Third 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'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 the Canadian and U.S. securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks and future events, and 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. And as a reminder, to ask a question during the Q&A session, you will need to press star 1-1 on your telephone keypad. Thank you. I'll now turn the call over to David Clare.

Thank you. Good morning, everyone, and welcome. Our business extended its track record of performance in the third quarter, growing premiums 59% compared to Q3 2021 and supporting a 20% return on equity through continued investment in infrastructure. Momentum has sustained as we scale an increasingly diversified specialty insurance platform. Results, again, were particularly strong in Canada, with 24% premium growth in the quarter, supported by profitable underwriting. U.S. premiums stepped up significantly and reached a new record, increasing 79% over the third 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 U.S. continued in the quarter, although we see a reduced pace of increases versus last year. Mid-teens growth in the top line in corporate insurance was driven by expansion of programs and sustained momentum with distribution partners, as well as a healthy but mitigating rate environment. Similar top-line growth in surety benefited from tailwinds in established lines and expansion of our U.S. practice. Importantly, loss ratio of 17% improved year-over-year, driven by profitable underwriting across all lines. We are proud of our combined ratio in the quarter of 83%, but did not beat a spectacular level set in Q3 2021 of 79%. The Canadian platform posted a striking 31% return on equity and grew net income 9% over the prior year. It's important to note that Canadian results in Q3 2021 were exceptionally strong, with single-digit loss ratio insured in that period. 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 income. U.S. fronting bound a quarterly record of $466 million in Q3 2022. Maturation of existing program strove top line supplemented by onboarding of new programs. U.S. fronting generated $18 million in fees and recorded $41 million of deferred fee income, indicative of future fronting fees to be earned. Loss ratio in the quarter increased slightly due to an evolving business mix, while fronting operational ratio increased to 83% as a result of an increase in reinsurance purchases in the quarter and a shift in mix of business as a larger share of net underwriting income was generated from businesses with a higher retention ratio. It is important to note that our U.S. earnings lag premium production as fees are earned, and we expect higher reinsurance costs to sustain in the fourth quarter. Near-term results will be comparable to this quarter, and we expect to experience the benefit of premium growth in earnings in 2023 and beyond. On a last 12 months basis, the US produced a 14% return on equity in line with prior year result as a result of the corresponding growth in infrastructure over the period and capital contributions. Although we wrote $52 million in admitted premiums in the quarter, the market continued to drive opportunities to access and surplus lines. As discussed in our last call, the strength of our growth catalyzed the capital raised in the quarter. We take the responsibility of deploying capital on our investors' behalf seriously, and we have made early strides in deploying over half the capital raised into securities that attract yields in support of significant premium growth. Interest and dividend income increased 54% over Q3 2021, the result of larger portfolio and increasing investment yields. The continued increases in interest rates drove unrealized losses in our fixed income portfolios, though the impact was mitigated through a short duration posture and favorable foreign exchange. We are fortunate to have a significant and consistent flow of capital to invest, enhanced by the maturation of our existing short-duration portfolio of investments. Prevailing bond yields are even more accretive to portfolio yields than last quarter, meaning we are improving our base of interest and dividend income on a risk-adjusted basis for years to come. At the end of the quarter, we close the acquisition of Sovereign General's Canadian Surety business. We are excited to welcome a number of new employees to our organization as a result of the transaction and look forward to continuing to grow our presence and surety in North America. Although relatively small, this is a great example of the types of inorganic opportunities we are keen to pursue, expansion of practices we know through structures we have experience navigating. This quarter, our results do not reflect the signs of a potential recession, but we are alert and remain committed to our underwriting and structuring standards. as well as conservative reserving. It is our hope that volatility will provide opportunities to win business and strengthen our reputation. We continue to plan for growth, and with a renewed capital base and comparatively greater scale, we feel cautiously optimistic for the years ahead. 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 more 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 $644 million for the quarter, which reflects growth of 59% over Q3 2021. Net claims expense in the quarter was greater than the prior year, primarily as a result of growth in the business. We experienced a claims recovery in 2021 associated with our life annuity reserves, which has since been nobated and which reduced claims expense in that quarter. Net commissions expense increased by 64% 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 of higher commissions. Operating expense in the quarter grew by 49% over Q3 2021, reflecting growth in both the Canadian and U.S. operations. Net underwriting income in Canada for Q3 was greater than the prior year as a result of growth in the business. The underwriting income in the U.S. for Q3 2022 was greater than Q3 2021 as a result of growth in the business, but mitigated by reinsurance purchases in the quarter. In Q3 2022, the combined ratio in Canada was 83%, and the front-end operational ratio in the U.S. was also 83%. With the innovation of the Life Annuity Reserve in Q4 2021, we are now able to calculate a meaningful combined ratio on a consolidated basis. In Q3 2022, the combined ratio was 82%. Net investment income in the quarter was greater in Q3 2022 than Q3 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, but also benefited from higher yields. Net investment income in 2021 was negatively impacted as a result of movement in the investment supporting the life annuity reserves, which was offset by corresponding movement in claims expense in that quarter. Net gains were $3.7 million in the quarter, primarily as a result of realized gains on investments exposed during the period and foreign exchange movements, which were both greater than Q3 2021. Income tax expense was approximately the same in Q3 2022 compared to Q3 2021 as a result of a tax adjustment in Q3 2021, which elevated tax expense in that period. Net income for the group was $23.7 million in the quarter, which was greater than Q3 2021 as a result of growth in the business and strong underwriting. Diluted earnings per share was $0.51 a share in Q3 2022, which was greater than Q3 2021. Consolidated ROE on a rolling 12-month basis was 19.9% at the end of Q3 2022, which was approximately the same as the rolling 12-month ROE at the end of Q3 2021. Assets year-to-date grew by $1.2 billion. Cash in the period increased as a result of the equity offering in the quarter and certain proceeds of which were used to pay down the revolving credit facility. Investments have increased as a result of the equity offering, though were offset by unrealized losses incurred in the period. Premiums and accounts receivable and other assets has grown as a result of growth in GPW, particularly in the U.S. over the most recent quarter. Recoverable from reinsurers have increased primarily as a result of growth in the U.S.-fronted business, as well as certain fronted 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 $998 million, primarily as a result of growth in unearned premiums and unpaid claims and loss adjustment expense, 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, and other liabilities have decreased in the period as a result of settlement of assets from the novation in 2021, as well as a number of large payments in the period. Equity is greater than the prior year end, reflecting the impact of the equity offering and growth in net income, offset by a 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. Though in Q3, this was mitigated by a strengthening of the US dollar, which drove higher Canadian dollar valuations of capital we hold outside of Canada. Book value per share was $11.47 at September 30, 2022, and is greater than September 30, 2021, as a result of the equity offering, as well as profit generated year-to-date and mitigated by unrealized losses on the investment portfolio in the quarter. As of September 30, 2022, debt-to-capital was 12.5%, which was lower than at June 30, 2022, as a result of the equity offering. 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.