Trisura Group Ltd.

Good morning. Welcome to Trishura Group Limited's first quarter 2023 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 applicable Canadian and U.S. securities laws. These statements reflect predictions of future events and trends and do not relate to historic events. They're 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 Treshera's filings with securities regulators. To ask a question during the Q&A session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. Thank you. I'll now turn the call over to David Clare.

Thank you. Good morning, everyone, and welcome. Our business reported strong operating performance in the first quarter, growing insurance revenue 58% compared to Q1 2022 and supporting a 21% operating return on equity. Momentum is sustained as we scale an increasingly diversified specialty insurance platform. Results, again, were particularly strong in Canada, with 33% growth in insurance revenue supported by profitable underwriting. Our US fronting business produced $459 million of insurance revenue, an increase of 71% over the prior year. In Canada, top-line growth was demonstrated across all business lines. Canadian fronting and surety led the way. Fronting driven by a more mature platform and surety by market share gains, as well as contribution from both our sovereign acquisition and U.S. expansion. Corporate insurance continued to benefit from expansion distribution partnerships and stable pricing. We saw our warranty practices grow as auto inventory issues began to rationalize. Importantly, disciplined underwriting drove a 15% loss ratio, an improvement over a strong comparative year supported by our particularly impressive result in surety. We are proud of our 81% combined ratio in the quarter, but did not beat a strong comparative period set in Q1 2021 of 77% due to a higher expense ratio as a result of a shift in mix. I apologize, that reference was the Q1 2022. The Canadian business generated a 28% return on equity. With the expansion of our U.S. fronting expertise, our Canadian entity now generates attractive fee-based earnings to complement a heritage of profitable underwriting income. U.S. fronting generated $459 million in insurance revenue in the quarter, maturation of existing programs drove the top line. Although we generated $53 million in admitted revenue in the quarter, the market continues to drive opportunities to excess and surplus lines. U.S. fronting generated $18 million in fees, a 30% increase, and recorded $36 million of deferred fee income, indicative of future fronting fees to be earned. Loss ratio in the quarter, adjusted for the impact of runoff, increased due to certain reinsurance costs incurred in the quarter, as well as a decrease in yields due to discount claims reserves. Fronting operational ratio, adjusted for the impact of runoff, increased as a result of similar factors. The impacts of IFRS 17 added approximately five points to both loss ratio and fronting operational ratio, which otherwise are within expected ranges. On a last 12-month basis and adjusting for the runoff program, the U.S. produced a 13% operating ROE. A historic rise in interest rates coincided with an increase in capital managed at Trishura. A combination of growth and profitability and a recent capital raise has resulted in increased contributions to the investment portfolio. The combination of higher rates and a larger portfolio has been very positive for the contribution from the investment portfolio. We began realizing these benefits through Q4 and observed continued momentum in Q1, with net investment income increasing 150% over the prior year. We are excited about the enhanced risk-adjusted yields we are capturing for years to come. As we progress our strategic priorities, environmental, social, and governance considerations are front of mind and an important part of Trishura's maturation. We are focused on better communicating existing initiatives and believe we have taken steps in the right direction with enhanced ESG-related disclosure in our management information circular. We also continue to progress in enhancing our ESG commitments, and I'm excited to introduce Annick Lampier, our newest director, to our shareholders at our upcoming AGM. She is an important and skilled addition to our team. We observe continued healthy pricing trends across most lines in the quarter, although expect hardening trends in insurance pricing to balance, although not reverse later this year. This will be informed by the state of the reinsurance market, as well as economic and interest rate trends, and we feel well-equipped to navigate the environment. I should acknowledge our fourth quarter experience and note we expect to see impacts from the runoff through 2023. We will endeavor to share guidance on the expected future impacts as they become available. In response to investor and analyst feedback, we are introducing an investor day on June 1st, immediately following our annual general meeting. We will be introducing the management teams over Canadian and U.S. entities in a fireside chat format, providing the opportunity for investors to meet a broader group of Frasura members. The event will be in person as well as streamed online. We remain committed to disciplined underwriting and structuring standards, as well as conservative reserving. Although we have not seen signs of recession in our results to date, we acknowledge economic risks are skewed to the downside. It is our hope that volatility will provide opportunities for us to win business and strengthen our reputation, and we feel confident that we can navigate any potential changes in economic outlook. We are planning for growth, and with a strong capital base and comparatively greater scale, feel cautiously optimistic for the years ahead. Our equity base has grown to $513 million, a healthy increase from year end and almost reaching levels achieved in Q3. 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. The Q1 results reflect the first quarter of the implementation of IFRS 17, the new accounting standard for insurance contracts, which has been applied retroactively, and as a result, our 2022 results have been restated to reflect the new standard. Q1 2023 also reflects the first quarter of the implementation of IFRS 9, the new accounting standard for financial instruments, which has not been restated retroactively. The new standards have led to a number of changes, particularly with respect to presentation of both the income statement and the balance sheet. Insurance revenue, which replaces gross premiums written as the new top-line revenue balance, was $639 million for the quarter, reflecting growth of 58% over Q1 2022. Insurance service expense, which consists of amortization of insurance acquisition cash flows, such as commissions, claims expense, and other operating costs, increased in the quarter primarily as a result of growth in the business, which has led to an increase in claims and commissions expense. Net expense from reinsurance contracts, which includes both premium paid to reinsurers as well as recoveries from reinsurers, increased as a result of growth in the business, which has led to more reinsurance ceded, particularly from Canadian and U.S. front-end lines. The increase in this balance was lower than that of insurance service expense, as this balance includes recoveries from claims ceded to the reinsurers. Net service resulting Canada for the quarter was greater than the prior year as a result of growth in the business and consistently strong underwriting. Net service results in the U.S. for the quarter was lower than the prior year as a result of losses generated from a program in runoff. Without the impact of the runoff business, insurance service result was greater than the prior year as a result of growth in the business. In Q1 2023, the combined ratio in Canada was 80.7%. In Q1 2023, the front-end operational ratio in the U.S. was over 100% as a result of the runoff programs. Without the impact of that runoff program, it was 86% for the quarter and was impacted by a decline in the yield curve used to discount reserves. Net investment income was greater in Q1 2023 than 2022 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, but also benefited from higher yields. Net loss for investments was $2.2 million in the quarter, primarily as a result of movement on swap agreements used to hedge share-based compensation. excluding the impact of derivatives used to hedge share-based compensation that were gained in the period of $1.6 million. Net finance expense from insurance and reinsurance contracts, which reflects the time value of money and changes the time value of money, was a loss of $4.7 million in Q1 2023, rather than the gain of $700,000 in Q1 2022, which was the result of a decrease in the yield curve used to discount claims reserves in Q1 2023. In Q1 2022, there was an increase in the yield curve used to discount claims reserves, and as a result, the impact to net income was positive in that quarter. Other income, which represents fees for surety services, grew by 19% in the quarter, reflecting growth in the number of surety accounts. Other operating expense grew by 25% in the quarter, reflecting growth in both the Canadian and US operations. Excluding the impact of share-based compensation, which was mitigated through a hedging program, the increase was 17% for the quarter. Income tax expense was lower than the prior year as a result of lower net income before tax. Net income for the group was $14 million for the quarter. Operating net income, which adjusts for certain items to reflect income from core operations and excludes the impact of the runoff business, was $28 million, which is greater than the adjusted net income from Q1 2022 as a result of strong underwriting and growth in the business. Diluted earnings per share was $0.30 a share in Q1 2023, which was lower than the prior year as a result of the runoff program. Operating EPS, which reflects core operations and excludes the impact of the runoff portfolio, was $0.61 a share, reflecting a 24% increase over the prior quarter. Consolidated ROE on a rolling 12-month basis was 4.1% at Q1 2023. However, operating ROE was 20.6%, which was a slight increase over the prior year. The balance sheet has also changed as a result of the implementation of IFRS 17, with premiums receivable, deferred acquisition costs, unpaid claims, and unearned premiums presented together now as a single line item referred to as insurance contract liabilities. In addition to this, reinsurance assets, reinsurance premiums payable, and unearned reinsurance seating commission are now presented as a single line item referred to as reinsurance contract assets. Cash in the period decreased as a result of additional purchases of investments in the Investments have increased as a result of more cash having been deployed into the portfolio, as well as unrealized gains on the portfolio. Reinsurance contract assets have increased as a result of growth in the business in both Canada and the U.S. Insurance contract liabilities have increased also as a result of growth in the insurance revenue in both Canada and the United States. Growth in these balances on the liability side is largely offset by growth in the reinsurance contract asset balance. Equity is greater than the prior year-end as a result of positive net income in the period, as well as unrealized gains on the investment portfolio. In addition to this, implementation of the new standards has led to a one-time increase in equity of $10.3 million as a result of the conversion to IFRS 17, primarily driven by an increase in deferred acquisition costs in Treasury Canada. Book value per share was 11.15 at March 31st, 2023, and is greater than December 31st, 2022, as a result of profit generated from insurance and investment income in the period, as well as unrealized gains and the opening equity adjustment. As at March 31st, 2023, debt to capital was 12.8%, which was lower than December 31st, 2022, as a result of the increase in equity during the period. 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.