Trisura Group Ltd.

Good morning. Welcome to Treasurer Group Limited's fourth quarter and annual 2024 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 period. 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 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. At this time, all participants are in a listen-only mode. To ask a question during the question and answer session, you'll need to press star 1-1 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is also being recorded. Thank you. I'll now turn the call over to David Clare.

Thank you. Good morning, everyone, and welcome. We continue to benefit from a focus on specialty insurance, with profitable underwriting and structuring in niche lines of business. Momentum persisted in 2024, with mid-teens growth across surety, corporate insurance, and warranty, while the combination of Canadian fronting and U.S. programs grew 11% as we scale in Canada and curate our portfolio in the U.S. Underwriting strength yielded an 89% annual combined ratio, and alongside increased investment returns and favorable foreign exchange, we drove book value per share growth of 26%. We achieved record operating and reported net income of $136 million and $119 million this year. Operating and reported bid return on equity of 19% and 17% respectively exceeded our mid-teens target and demonstrate resilience through growth. These results, 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. Trishura Specialty's strength continued. The most significant piece of our business achieved 19% growth and an annual operating combined ratio of 84%. We finished the year strong with a 79% operating combined ratio in the quarter, demonstrating continued underwriting excellence. We are expanding lines of business we know well and aim to provide consistent support to distribution partners. Surety maintained a track record of underwriting excellence, achieving a 15% annual loss ratio while expanding into the U.S. U.S. Surety grew 197% in 2024, broadening our presence and relationships. By Q3 2024, we were ranked in the top 35 of U.S. Sureties, up from a 51 rank at the end of 2023. This represents significant progress in a market meaningfully larger than Canada and a testament to the strength of our team. Warranty and Canadian fronting continue to grow their contribution to earnings as both business lines expand. We are seeing momentum in our warranty lines as auto purchasing normalizes and we gain market share with our partners. In U.S. corporate insurance, we began binding premium this year, growing our broker network and building out our infrastructure. Despite the investment in both nascent U.S. platforms, Trishura's specialty grew operating net income 20% in 2024, supporting a 25% operating return on equity despite an MCT of 276%. U.S. programs benefit from a secular trend of growth in MGAs, and Trishura remains uniquely positioned to source, structure, and monitor program business with distribution partners and reinsurers. We believe the diversification of our portfolio, strong rating, size and permanence of capital make Treasura a preferred partner in the market, with over $2 billion in premium and $90 million in fee income across 70 programs. As our platform matures, we strategically exited relationships where we did not see a path to appropriate profitability. Although we were disappointed in the impact of exited lines in the quarter, we feel confident about profitability of the platform in the future. Growth of our ongoing programs was 27% for the year, with an 81% operating combined ratio, demonstrating that both growth and profitability remain the expectation. We have had questions about exposure to recent fires in California. We do not anticipate an impact from this tragic event as we have strategically avoided homeowner's business in the state. Our investment portfolio performed well in 2024, growing investment income 30% and contributing to book value growth through mark-to-market gains. Our portfolio maintains a conservative posture with the highest proportion of investment grade and investment-grade corporate and government bonds in our history. As we look to the future, we remain committed to the pursuit of profitable growth, expanding primary lines where we have underwriting expertise, and maintaining a diverse program and fronted business to generate stable fee income. Above-average underwriting profitability combined with enhanced investment income is expected to drive consistent increases in shareholders' equity. Expansion of surety and corporate insurance to the U.S., built on a history of disciplined underwriting over the last two decades. The market opportunity is exciting and significantly larger than Canada. As nascent U.S. platforms mature, we anticipate they will equal or exceed the contributions to earnings of their Canadian counterparts. With $75 million in U.S. surety premium and an expectation for a 2025 combined ratio comparable to our Canadian practice, we have early evidence of how attractive geographic extension can be. Growing scale has allowed an expansion of appetite in Canadian surety as we move into larger limit contractor bonding. Recent strategic hires added expertise that allowed Trishura to target parts of the market we have historically not participated in. A greater breadth of offering has already resulted in more touch points with our broker partners. Inorganic growth has been an important part of Trishura's evolution. U.S. acquisitions, book rollovers, and strategic hires have provided access to new markets amplified growth, and expanded our capabilities. We continue to pursue and are well positioned to execute more significant M&A should it align with our risk appetite and meet our return thresholds. Our strategic initiatives are well funded. Our capital base of $785 million is the highest in our company's history. Debt capacity of almost $100 million and expanded 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 Trishura did not raise capital, as we expand with the benefit of internally generated capital. Progress made through 2024 and our optimism for 2025 has reinforced our expectations of premium growth, operating return on equity, and book value per share growth in excess of 15%. targeting a billion dollars in book value by the end of 2027. We remain committed to the principles that have driven profitable growth and compounding book value, a strategic focus in specialty insurance, experienced, profitable underwriting, consistent support, and exceptional service for distribution and capacity partners, and a conservative approach to growth, risk appetite, and structuring. We expect continued growth and 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. 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 walkthrough of financial results. Consolidated ROE on a rolling 12-month basis was 16.9% at Q4 2024, which improved over the prior year due to improved profitability from U.S. programs and ongoing strong results from Trishura Specialty. Operating ROE was 19.4%, which also exceeds our mid-teens target. Insurance revenue was $794 million for the quarter and $3.1 billion year-to-date, reflecting growth of 5.2% and 11.8%, respectively, over the prior year. Insurance revenue in primary lines, consisting of surety, corporate insurance, and warranty, grew 18% for the quarter and 14% for the year, which are the lines where profit margin on GPW is the highest. The combined ratio for the group was 96.7% for the quarter and 88.8% for the full year, which improved over the prior year as strong profitability and trishare specialty offset the impact of exited lines. Trishura took decisive actions in 2024 to non-renew certain underperforming programs and to strengthen reserves for those programs at a prudent level, addressing frequency and severity trends observed industry-wide. Exited lines refers to certain programs which have been non-renewed and put into runoff. We do not expect a meaningful impact from exited lines in future quarters. The operating combined ratio of Trishura was 81.5% for the quarter and 82.9% for the full year. For the quarter, this is lower than the prior year as a result of a lower loss ratio in 2024 for all segments. For the full year, the operating combined ratio was slightly higher than 2023 as a result of a higher expense ratio driven partly by startup costs associated with US corporate insurance and US surety, as well as greater retention of US programs, which contributed to a higher expense ratio. This was offset by a lower loss ratio on a year-to-date basis. Operating insurance service result for the quarter was greater than the prior year as a result of a lower loss ratio and growth in the business. Operating insurance service result was greater than the prior year for the year-to-date period as a result of growth in the business and continued strong underwriting profitability. That investment income of $17 million increased by 5.8% for the quarter and took 29.8% year-to-date as a result of an increase in the size of the investment portfolio, but also benefiting from higher risk-adjusted yields. Net gains were $2.9 million for the quarter and $27 million for the year-to-date period, primarily as a result of unrealized gains on equity and fixed income investments held at fair value through profit and loss under IFRS 9, as well as foreign currency gains. Our effective tax rate was 24% for the quarter and 25% for the year-to-date period, reflecting the composition of taxable income between Canada and the US. Overall, net income for the group was $19.3 million for the quarter and $119 million year-to-date. Operating net income, which adjusts for certain items to reflect income from core operations and excludes the impact of non-recurring items and unrealized gains, was $38.2 million for the quarter and $135.9 million year-to-date, which is greater than the prior year for both periods as a result of growth in the business, continued strong underwriting performance, and growth in net investment income. Earnings per share was $0.40 a share in the quarter and $2.45 a share for the year-to-date period, which was greater than the prior year as a result of growth in the business, a lower loss ratio, higher net investment income, and higher net gains for the year-to-date period. Operating EPS, which reflects core operations and excludes the impact of non-recurring items and unrealized gains, was $0.79 per share for the quarter and $2.80 year-to-date, reflecting growth of 46% and 20% respectively over the prior year. EPS contributed to a 5.1% increase in book value for the quarter and a 26% increase in book value per share over the prior year, resulting in book value per share of $16.40 of December 31, 2024. Book value per share also increased as a result of unrealized gains on the investment portfolio and foreign exchange gains. Book value at December 31st, 2024 was $785 million and 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 and an increase in the US dollar. As of December 31st, 2024, debt to capital was 11%, which was greater than the prior year as a result of additional borrowing from the revolving credit facility in the period, offset by an increase in book value. 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.