Trisura Group Ltd.

Thank you. Good morning, everyone, and welcome.

The third quarter continued our momentum from the first-half of the year, producing again our largest premiums to-date following sequential records in Q1 and Q2. Importantly, disciplined underwriting and a front-end model that generates recurring fee income yielded strong earnings per share and a 20% return on equity, the highest in our history.

Our team continues to demonstrate strength and a healthy pipeline of opportunities, as we scale an increasingly sophisticated and diversified specialty insurance platform. Results were particularly strong in Canada with 110% premium growth supported by profitable underwriting.

Momentum was sustained in the U.S., as premiums in the quarter grew 52% over the third quarter of 2020. We observed significant increases across all lines in Canada.

The standalone growth was again risk solutions, where expanded fronting arrangements, and new warranty programs drove 155% rate of growth versus 2020. Corporate insurance continues to benefit from a hard market and momentum with distribution partners, producing 97% growth over the prior period.

Surety growth of 49% was similarly strong as the business benefits from tailwinds in our established lines, and expansion of a U.S. practice and new home warranty products.

More importantly, loss ratio of 18% improved versus a 28% achieved in Q3 2020, driven by strong experience in corporate insurance and continued strength in surety and risk solutions. Surety’s 8% loss ratio this year continues to sustain better than average profitability, amplified by greater retention as a result of our new reinsurance program.

Profitability was enhanced in risk solutions, high risk solutions 18% loss ratio, and a quadrupling of underwriting income in the line as warranty programs mature, and we observe a growing contribution from new funding arrangements. Combined ratio in the quarter was 79%, an improvement versus Q3 2020, due primarily to the comparative strength of corporate insurance and risk solutions, and improved expense ratio.

Net underwriting income increased 330% in the quarter, a striking increase and the combined result of the factors already described. Taking into account investment income, the Canadian platform produced a return on equity of over 30%.

Our U.S. surety practice continued to progress.

We've expanded surety licensed states to 48, and we bound approximately $2 million in premium in the quarter. We have continued to hire adding staff in both Stanford and Denver.

Our U.S. fronting platform grew 52% over 2020, maturation of existing programs and new relationships drove the top-line.

Premiums averaged $87 million per month compared to $74 million in Q2. U.S.

fronting generated $261 million in gross premiums written in the quarter, and $11 million in fronting fees. Importantly, we recorded $24 million of deferred fee income at the end of the quarter, indicative of future fees to be earned.

Our reinsurance result was a loss in the quarter, driven by a one-time $1 million loss on the sale of our structured insurance asset. Although, we realize a loss on the sale today, we benefit from the simplification of our international operations, including reduced compliance costs and improved liquidity from a unique asset.

Strong matching and a favorable interest rate environment in our annuity portfolio, which we continue to own, coupled with seeded premium for our U.S. operations mitigated that loss.

The strength of our growth has catalyzed the historic level of hiring. An important focus through this expansion continues to be increasing operational leverage, while maintaining appropriate resources to manage and underwrite our business.

Our premium per employee has increased, driven mainly by risk solutions, as fronting the warranty programs carry large premium basis on a smaller staff contingent. Excluding assets back in our life annuity policies, portfolio performance was marginally positive in Q3, as investment income offset price volatility.

We have driven a pullback in equity markets in late September, driven by fears of slowing growth, inflation and withdrawal of accommodative monetary policy. Rising rates negatively impacted fixed income positions, though, it is important to note we've mitigated that impact for maintaining a short duration, approximately three years across the North American portfolios.

Interest and dividend income increased year-over-year, the result of growth in our business and corresponding growth in our portfolio. We continue to allocate conservatively, acknowledging a challenging yield environment.

We balance our risk appetite between the prevailing rate environment and required yields of our portfolios. Reinvestment risk threatens interest and dividend income and threat of inflation limits our appetite for longer duration credit.

Despite these dynamics, we continue to defend an approximate 3% yield on our investment portfolio. The hardening market continued in the quarter and we expect this trend to sustain through 2021.

Although, access in surplus markets remain strong, the introduction of admitted capabilities will be important as the market normalizes. The launch of the U.S.

surety strategy and [Technical Difficulty] provides opportunities to continue to grow organically. Increasingly diverse and fee-based earnings help to reduce volatility and supports growth and access to capital.

Growth and performance in Canada has been a highlight this year, and has provided momentum for the enterprise beyond the profitable maturation, demonstrating the U.S. fronting.

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.

It must be acknowledged that claims and experience can experience volatility and severity, we should expect the claims to experience approximating historical averages in the long-term. With that, I'd like to turn it over to Dave Scotland, for a more detailed review of the financial results.

Thanks, David. I'll now provide a brief walkthrough of some financial results for the quarter.

Gross written premium was $405 million in the quarter, which reflects growth of 69% over Q3 2020. Fee income, which is primarily related to fronting fees from our U.S.

operations grew by 71% for the quarter, reflecting growth of fronting premium in the U.S. and an increase in surety accounts in Canada.

Net claims in Canada for the quarter were greater than the prior year, as a result of growth in the business despite a lower loss ratio. Net claims in the U.S.

for the quarter were greater than the prior year, also as a result of growth in the business. While there too [ph] the loss ratio decreased, in this case as a result of fewer weather related claims.

On a consolidated basis, net claims expense in the quarter was greater than the prior year for the reasons described. Net commissions' expense increased by 96% in the quarter, reflecting growth in the business in both the Canadian and U.S.

operations. Operating expense in the quarter grew by 14% over Q3 2020.

Part of the operating expense is related to share-based compensation associated with certain outstanding options, for which we have introduced a hedging program. The movement of the hedge is reflected in net gains on the income statement.

Excluding share-based compensation, which has been hedged operating expenses grew by 38% over Q3 2020, reflecting primarily growth in the Canadian operations. Net underwriting income in Canada for Q3 was higher than the prior year, as a result of growth in the business and the lower loss and expense ratios.

Net underwriting income in the U.S. for Q3 2021 was higher than Q3 2020, largely as a result of growth in new and existing programs, as well as improved operational efficiency.

In q3 2021, the combined ratio in Canada was 79% and the fronting operational ratio in the U.S. was 73%.

Net investment income was lower in Q3 2021, as a result of the sale of the structured insurance assets and our international operations, as well as the increase in European interest rates during the year, which impacted the year denominated bonds we are putting in our life annuity reserves. The movement in those bonds was largely offset by movement in corresponding claims reserves.

Interest and dividend income increased by 19.6% over Q3, 2020. That increase was primarily related to an increase in the size of the portfolio associated with growth in operations and contributions to capital from the debt offering in June 2021, and was mitigated by reduced market yields.

Net gains were $2.1 million in the quarter which was less than Q3 2020, largely as a result of FX movement. Income tax expense was $6.5 million in the quarter which was greater than Q3 2020, reflecting growth in the business.

Net income generated from the reinsurance operations was also greater in Q3 2021, as a result of a slight favorable asset liability mismatch, which occurred in the context of rising European interest rates, and in general, improved asset liability matching in 2021, compared to 2020. Net income for the group was $16.1 million for the quarter which was greater than Q3 2020 by 146%.

The increase was largely driven by increased profitability in both the Canadian and U.S. operations as a result of growth and improved operating metrics.

Diluted EPS was $0.38 in Q3 2021, which was greater than the prior year. Consolidated ROE on a rolling 12-month basis was 20.4% at the end of Q3 2021, which was greater than the rolling 12-months ROE at the end of Q3 2020.

Overall, strong growth and improve profitability in both Canada and the U.S. has contributed to an increase in earnings and improvement in key financial metrics during the year.

Assets in the year-to-date period grew by $869 million as a result of growth in Canada and the U.S. Recoverable for reinsurers have increased primarily as a result of growth in the U.S.

fronting business, where claims liabilities are largely offset by expected recoveries from the reinsurers to whom we seed the business. Investments have grown, reflecting the additional capital generated as a result of the debt offering in Q2 2021, as well as capital generated from operations.

Liabilities in the year-to-date period grew $809 million, primarily as a result of growth in unearned premiums and unpaid claims and loss adjustment expenses, which have grown as a result of growth in both Canada and the U.S. As was discussed, growth in these balances is largely offset by growth in the reinsurance recoverables.

Equity has grown for the year by $60 million, reflecting growth in net income as well as growth in other comprehensive income. Other comprehensive income increased in 2021 primarily as a result of unrealized gains in the investment portfolio.

June cumulative translation gain has also contributed to the strengthening of the U.S. currency against the Canadian dollar, which drove up valuations of capital held outside Canada.

Book value per share with $8.49 at September 30 2021, and is greater than December 30 2020, as a result of profit generated year-to-date, and unrealized gains on the investment portfolio. As of September 30 2021, the debt to capital ratio was 17.7%, which has increased after the debt offering in the second quarter but remained 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.

Thanks, David. Operator, we would take questions now.

Okay, thanks. Just wondering if you could give us a bit of an update on the ramp of admitted lines in the U.S.

It looks like a bit more of a meaningful volume, the premiums were bound in the quarter. Could you just give us a sense of how that pipeline appears to be building as we enter Q4 here?

Yeah, I think you're right. We wrote $19 million in admitted premium in the quarter, which is a step up over both Q1 and Q2.

We are starting to see more momentum in this space, as we've found a few more programs in those admitted lines. I will say, we do expect the majority of our premiums to remain or still be generated from the excess and surplus lines.

Although, through Q4 and Q1, we're expecting that there is a bigger contribution from those admitted lines. I think, generally, as a comment on the industry, we continue to see a focus on and more opportunities in the access and surplus lines.

But the work that we've done in broadening our licenses in the admitted space, as well as now binding about 10 programs in that admitted platform should drive some momentum through the rest of this year and into next.

Okay. And then, staying on the U.S.

platform, fronting fees as a percentage of seated premiums was a little bit below trend in the quarter. I think it was at 5.1%.

But was there anything to call out there? Or, is that just a product of normal variability?

And will that ratio be impacted at all by the ramp of admitted premiums?

Yeah. So, there are a few things to call out here that are impacting both the fronting fee ratio as well as a few of the other KPIs that we track.

So in the quarter, we do purchase some items in Q2 or sorry in Q3 that could impact this including cat cover. So those types of purchases that are one-off tend to impact and lower those types of ratios.

We do see that coming through this quarter. If you look through our results to the deferred fee income lines, you'll see that we've got a very healthy increase in that deferred fee income.

And we're still expecting fee income in the U.S. platform to be between that 5% and 6% level, despite that sort of hit this quarter that's gotten a little bit lower.

The ramp up in the admitted platform, we would expect the economics of that platform to be very comparable to the economics of our ENS platform. The fronting fees, in general should be comparable.

The only area that you'd see somewhat of a difference in those fronting fees is to extent you start writing much larger programs. So, if you see a program in excess of $50 million, you might have rationale to have a bit lower fronting fee, although at this stage, the fronting fees are very comparable between the two.

Understood. Okay, thanks for taking my questions.

I'll pass the line.

Hi, good morning, everybody. So David, just wanted to focus back on the U.S.

program growth there. Could you just sort of speak to the diversification of the programs you're seeing now?

And the new ones you added, is that -- it looks like it's expanding just in different areas, so what's your comfort level of moving into some of these other lines?

Yeah, I would say at a high level, Jeff, we still have the same target for segmentation of our business in the U.S. So that's roughly 60-40 between casualty and property.

The expansion of our lines reflects that target pretty closely. Although, you'll see, there's been sort of growth in some of our larger lines, commercial transportation, commercial multi-peril, that's driving some of this increase in programs.

At a high level, that's what I would expect the platform to continue evolving to. And for the most part, the programs that we're bringing on this quarter, as well as through Q2 and Q1 have been hewing to that segmentation.

Okay. And then maybe it's worth touching on just the cadence of that.

I think there's a nice step up here through the third quarter in terms of new programs. I know, they tend to take a few months for that to ramp, so maybe some expectations around how those come on board for you through the end of the year and into next?

And then, maybe a bit around the timing on some of the renewals now. And are we going -- maybe as you get bigger here, have fewer of the quarters, like we saw in Q2, where you're transitioning out of others and waiting for others to ramp, and it causes a bit more of a disruption.

I’d imagine that's going to kind of slowly fall away in the future.

Yeah, I would say at a high level on an annual basis, we target adding between 12 and 15 programs on a net basis every year. And so, we're sort of on track for that trend this year.

I would say that as we get larger and more diversified, it's going to be natural for there to be in our portfolio in terms of programs. But as you say, the idea would be that as we get larger, and again, as we continue this diversification, it smooths that line of sort of premiums across our programs.

The entity from a momentum perspective, from a timing perspective, you're right, it does take some time for us to ramp up any of those programs, once they come on board. So it's usually depending on the business line and the type of business admitted or ENS.

It's usually between three and eight months, three to nine months for those programs being put on and generating sort of the level of premium that we think is appropriate. So you're starting to see the benefit of those coming on now in Q3, of those programs we put on in Q1 and Q2.

The new programs that we've got on in Q3 really aren't contributing significantly at this stage. But you'd hope that some of that momentum comes through at the end of Q4 and then into 2022.

Great. That's helpful color and that's all I had.

Thanks.

Yeah, thanks very much. Good morning.

Just a couple of questions. First, to start with Canada, top-line really crushing it here, pretty solid across the board.

I mean, what's driving this? And how sustainable is it?

I mean, I think the strength of your Canadian franchise, which I think sometimes goes unnoticed. So maybe you can explain why you think you're getting such great top-line growth and how sustainable it is?

Yeah. Thanks very much for the question, Tom.

It's a great point, the strength of this Canadian platform we think is a real highlight of this year. I think anytime you see growth in the magnitude that we're experiencing in Canada, it's a great narrative and made more so by the profitability that this platform is generating.

The reality is there is a few tailwinds in the Canadian business that differ by line, that are driving the momentum in this business. In corporate insurance, we're benefiting from increased and broader relationships with distribution partners.

That includes brokers and MGAs, as well as some tailwinds from a hard market or hardening market. So we are seeing the benefit of rate increases in corporate insurance line.

In the surety practice, we've got a few items that are driving better growth in the business. So the surety industry as a whole is having a strong year and as a result the momentum in our products, as well as momentum with distribution partners where we're able to grow a little bit better than the broader industry.

Amplifying that right now is obviously the launch of our U.S. surety platform, which is adding about $2 million of premium this quarter, as well as a new presence in New Home Warranty.

So, both of those are newer products that are adding an amplifying to that growth rate. And finally on risk solutions, the big standout and growth in the quarter.

Obviously, auto warranty programs that we've put on in the last couple years are demonstrating some maturation, which is driving premium growth. And those new fronting programs that we talked about a lot last quarter starting to develop in a meaningful way.

So in the quarter, $46 million of additional fronting premium was added in that risk solutions group. So, I do want to acknowledge the strength of all these platforms, and frankly, the strength of the team in Canada in navigating that growth.

I will say, on a normalized basis, we certainly don't expect 110% growth every year, we would expect that to normalize back to the levels that we saw, sort of on a long-term basis in Canada. So you've got sort of mid-teens to low 20% growth depending on your business line, although we do enjoy the step up that we've experienced this year.

Great. That's helpful.

And then if I go to the U.S., and if I look at the absolute fee income, you had deferred fee income was up quarter-over-quarter, which I think would drive an increase in absolute level of fee income booked in the quarter. But it’s still quarter-over-quarter.

So maybe explain some of those nuances that would have happened in the third quarter that would have driven this observation I'm making?

Yeah, so the nuance you're seeing there, Tom is really coming down to timing differences. So if you think about the earnings pattern of fee income, it's very similar to the earnings pattern of premium recognition.

And the timing of when those premiums are coming on in the last 12-months really matters for how that premium income or that fee income is earned. So you'll notice we had a bit slower growth in Q2, and the timing of some of these premiums in coming on has arrived more at the later end of the quarter, which drives a little bit different earnings pattern when you get down into the nuances of fee income.

So that's driving that absolute dollar amount of earned fee income quarter-over-quarter. But really importantly, what we can look to for momentum and for comfort on the trajectory of those numbers is the deferred fee income line.

So if you look at deferred fee income in the quarter, indicative of future fee income to be earned, we've actually hit our highest level ever. So we're just below $24 million in deferred fee income.

And that should be earned pretty normally over the next 12-months.

So, it's suffice to say if we look at the increases in the deferred fee income really mean that fee income will generally increase. And you put you might get noise if you're just going to look at increases quarter-over-quarter.

Does that summarize what you're trying to say?

That's exactly right.

Okay. And the last one, just in terms of retention in the U.S.

maybe around 7%, but year-to-date it's been 8%, and I think it was more like 8% in the quarter prior. How should we be thinking about retention?

Yeah, so we still target our retention between 5% and 10% in the U.S. We have seen some opportunities to increase that retention on mature programs that we see are operating very profitably.

We will be opportunistic on those programs, as the platform has evolved and has gotten a little bit there, we've obviously become more comfortable in taking those retentions. And so, I would expect the average across the platform, depending on the quarter and the business next will still be in that 5% to 10% range, although we're more comfortable these days, taking a little bit above that 5% low-end range.

Okay. Thank you very much.

Okay. Thank you.

Nearly going back to the U.S. side, with those eight new programs added, are you able to provide the split of which of those were admitted versus ENS of the six or of the eight?

Yeah, the majority of those would be ENS. Although, there's a couple in there that are admitted.

We don't have that split in our materials, but it's safe to say that we are still seeing more submissions and more opportunities in ENS space than admitted.

Okay. So, with the admitted, it sounds like you guys are kind of getting enough programs at this point online to start your ramp, as expected probably next quarter, even this quarter we saw a nice step up in premium.

Just in terms of guidance, I know, it's kind of hard, because it's still early days. But, anything you can give maybe why you arranged what you expect for 2022 in terms of admitted premiums, or any fees and offer there?

Yeah, as a starting point, I would take what our quarterly premiums are this quarter and maybe take a look on where we come into for Q4, and take that as a base annualized rate for those admitted premium levels in 2022. And hopefully, that ramp continues.

But as a starting point, that should be a good place to base your estimates. The reality is the admitted ramp up is a bit slower than the ENS.

So I struggled to give you perfect guidance on that. But I think as a starting point, that's a good place to anchor yourself.

Okay. And then, what about expenses in the U.S.?

How should we think about that? Is there going to be a higher expense growth related to this?

Or, is there not a lot of incremental since you already have a lot of those MGA relationships? How do we think about that?

Yes, so the investments that we've been making in the admitted platform, the increases in expenses, we've been addressing this year. So a lot of those in terms of licensing and in terms of filing rates have been established and addressed through this year.

I would say, in general, as we expand this platform, both in the admitted and ENS space, the more programs and premium we get, we'll have to make some investments around monitoring and administration of those programs. But there is operational leverage as you do that.

So, from a modeling perspective, Marcel, what I would be thinking about is taking your OpEx or your G&A line as a percentage of gross written premiums, and hopefully seeing that demonstrate some improvements as the top-line ramps.

Okay. That’s helpful.

And one last one for me on the Canadian side. In risk solutions, I was taking a look at -- if you strip out the new fronting premium, it looks like gross premiums written were up only about 6% year-over-year, assuming that there was no funding premiums in Q3, 20.

Is the fronting premiums -- are they being generated at the expense of other premiums? Or we try to think of them as one of the same?

How do we think about growth, maybe excluding the fronting going forward?

Yeah, I certainly don't want to imply that fronting premiums in any way are taken away from growth in the rest of the platform. These are very separate businesses, very separate platforms from a growth perspective.

You do see some nuances, some variability in quarter-to-quarter growth in the warranty programs. You're seeing some of that come through last year and this year, so that variability relates to COVID, opening or closing the types of dealerships that distribute some of these warranty products.

So it's a tough comparison year-over-year. Q3 2020, was actually a big quarter for warranty because of a backup in premiums that were not written in Q2 2020.

So that comparison year-over-year is a tough one, that we've done the last beat. So I'd expect that on a normalized basis going forward to have a little bit easier time comparing quarter-over-quarter or year-over-year.

But you've got some noise, it's still a legacy of the scenario we're in with COVID.

Okay. All right.

That's great. Thanks for that.

Yeah. Thanks.

Good morning. A bit of a different theme one of the gross growth strategies is to pursue inorganic or M&A as well as like strategic partnerships to grow the business.

Can you elaborate a little bit on what you're seeing maybe in the pipeline there or some high level comments on what you would expect in maybe the near-term on that front?

Yeah, thanks, Jim. I would say, our narrative and approach here is pretty consistent to the last couple quarters.

We do think that at some stage, it would be an interesting strategy and attractive strategy for us to add capacity and scale through inorganic acquisitions. Although, our criteria for those acquisitions are quite strict.

And at this stage, we've not yet been able to find a partnership or a target that is either transactable or available for us to pursue. That being said, I think we've got a lot of great opportunities on the organic side that we continue to pursue.

And so in the background, we will continue to evaluate supplemental growth through inorganic, while we prioritize that organic trajectory. The challenge today, frankly, is that a lot of these lines and lines that we are writing the lines that we’re focused on, the areas that we would expand into are very attractive lines to be in.

So many of the owners of these assets are holding the entities closer today than they used to which makes inorganic expansion more difficult.

Great. And then the second one on the U.S.

surety strategy. Can you elaborate on how that's progressing?

And what are some of the next steps here in the coming quarters, that's going to show the expansion of that platform?

Yeah. The U.S.

platform, the U.S. surety platform is still relatively early stage.

So we're very much in buildout mode. In the U.S., you've seen us invest in teams and physical locations in the States.

And we're going to continue building that out. So I would expect us to open up more offices, more physical presence in the U.S., as well as building out the team.

The other nuance that we'll have to navigate in the States is around licensing and treasury listing. Those types of initiatives will be important for us to continue to navigate as we build that U.S.

practice. So in terms of monitoring that process or that buildout, it would be both expansion of physical presence, as well as progress in achieving things like T-listing, and additional balance sheets.

So we're still pretty early stage in that buildout. This is a platform and a strategy that we've got full commitment to and are expecting to be a significant part of the business in the long-term.

But today, it's relatively early.

Great. Thank you.

Thanks. Just one question, you mentioned monitoring I guess your MGAs, you’re auditing, monitoring.

Can you just talk about putting some more investment in there? Has anything changed in the way that you have done the monitoring in terms of frequency, the number of auditors that you have, anything to just to help support that nothing has changed despite the growth that you've experienced over the past year?

Yeah, I would say that our process for monitoring, Stephen, it's very similar. So every program that we write, we audit a random sampling of files, usually between five and 10 every month.

So we've got a team that continues to do that. I would say the comments I'm making around growth and investment in that monitoring function don't really pertain to the method of the monitoring, but really the fact that we no longer have 30 programs or 40 programs, or up to 61 programs.

And so that function just takes more people. And so for us to reliably and practically have a handle on the underwriting and the performance of our programs that are in force, we just want to make sure that we've got the right amount of people looking at them.

And so that's a function that's very important for us, as we take risk, and view ourselves as underwriters of these programs, and would like to continue differentiating ourselves that way.

I presume the Canadian operations. So, the Canadian operations now with the fronting fee model and MGA relationships, that's getting similar monitoring.

Is it done by the same group? Or, is it divided by geography?

They're a separate groups today. Although, the infrastructure and sort of processes that they follow are very similar.

More and more as we grow these platforms, as we grow the entity, as a whole, I'd like the vehicle to become more sort of collaborative across North America, but today, reflective of different regulatory environments, reflective of slightly different opportunity sets, the groups are run separately.

Okay. That's great.

Thanks, guys.

Thanks very much, operator, and thanks everyone for joining today. If you have any further questions, don't hesitate to reach out to myself or Dave Scotland or Bryan Sinclair.