CIBCHave a $55.00 target. GLTA
June 1, 2023 Flash Research
TRISURA GROUP LTD.
Investor Day Highlights
Our Take: We felt that the inaugural Investor Day event incorporated a fairly
healthy discussion on growth levers (with an emphasis on the expansion of
Surety and Corporate Insurance lines into the U.S. market) and many other
key themes relevant to the stock. In general, the messaging was broadly
consistent with prior disclosure (i.e., no abrupt changes to forward-looking
guidance or long-term expectations) but drilled down further on nuances of
the model on both sides of the border. We believe that events like these
should certainly help with investor awareness/education, which is an
important element of the story considering Trisura’s status as the only pure-
play, publicly-traded specialty insurer in Canada.
Key Takeaways
• Trisura Group hosted an inaugural Investor Day. The event
consisted of a presentation discussing long-term strategy and market
conditions, followed by a fireside chat involving David Clare (CEO)
and the management teams of both the Canadian and U.S. entities.
• Much of the focus on the Canadian business was the expansion
of Surety and Corporate Insurance lines into the U.S. Although it
remains early days for this initiative (i.e., $14 million of gross
premiums written in 2022), the expansion of these lines into the U.S.
market is driven by a desire to export Trisura’s expertise in writing
these risks into a much deeper market (i.e., 10x the size of the
Canadian market). Replicating the success that the company has
experienced in Canada will be driven by TSU’s ability to grow in a
disciplined way, focus on broker service, be collaborative with
partners and help them find solutions. Establishing a presence in the
market (i.e., staffing up and putting people in the right locations) and
having the capacity to write business are important prerequisites for
success, but soft skills and execution with the broker community are
also paramount.
• U.S. fronting business is sticky and defensible. Despite a gradual
build of new entrants over the last several years, Trisura has found
that its relationships have proven very sticky over time (particularly if
they are serviced well). The company has also had success
defending fronting fees. Some competitors have attempted to steal
share by offering lower fee rates, but Trisura has not lost a single
partner to a competitor. Furthermore, the fronting market itself isn’t
fully saturated, suggesting there is more runway for fronting models
to “take share” from primary insurers.
• Framing how to measure long-term performance. Trisura laid out
a few long-term targets including mid- to high-teens revenue growth
(~15%+), mid- to high-teens operating ROE (~15%+) and mid- to high-
teens BVPS growth (~15%+). The company is also targeting $1 billion
in book value by the end of 2027 (i.e., approximately doubling).