Trisura Group Ltd T.TSU

TD 2

[retiredcf]

Maintain their $61.00 target. GLTA

Trisura Group Ltd.

(TSU-T) C$42.70

Q4/21: Strong GPW Growth; Elevated Claims; Legacy Reinsur. Exit Event

Trisura reported Q4/21 EPS of $0.24, down 7% y/y and below our $0.37 estimate (consensus: $0.37). The company booked a $2.6mm charge related to the exit of its legacy reinsurance business. Adjusted EPS and ROE (TTM) were $0.31 (up 33% y/ y) and 18.8%, respectively. BVPS was up 23% y/y and 2% sequentially.

Relative to our estimates, gross premiums written (GPW) were much higher-than- expected in Canada (fronted premium in RS), offset by higher claims in Surety and the U.S.

Impact: MIXED (strong top-line momentum should not be overshadowed by elevated claims)

U.S.: GPW growth was very strong (up 13% q/q; 39% y/y; higher-than-expected), with E&S premiums up over $28mm from LQ and admitted premiums continued to grow ($23.7mm vs $19.3mm LQ). We believe the rollout of the admitted program could provide another step-function in the Trisura growth story, which is expected to begin to ramp up throughout 2022 and reach a 50/50 split of E&S/admitted in the fullness of time. At 82.1%, the loss ratio was up from prior periods related to late Q3/21 weather-event claims being pulled into Q4/21 (seasonality).

Canada: The Canadian business continued to post very strong GPW growth across the board, with premiums up 85% y/y. The significant increase in RS GPW (up 123% y/y) mostly reflects $96mm (vs. $18mm LY) from fronting arrangements (recently launched). The elevated loss ratio in Surety relates to one large claim (contractor insolvency) and is not indicative of future claims, in our view.

TD Investment Conclusion

We expect Trisura's momentum to continue, reflecting the company's strong growth profile and ROE. We continue to like the company based on our view of its: 1) relative underlying earnings and price stability as a P&C insurer; 2) rapidly growing earnings profile, especially in the U.S. (early days of launching into admitted market and Surety in the U.S.); and 3) relative valuation compared with peers (KNSL and RLI are trading at higher multiples, but have similar EPS growth and ROE profiles). We believe the stock price weakness on the earnings miss provides a good opportunity for investors to buy given the momentum in the top-line and nuances within the elevated claims rates.

[ghostzapper]

It appears one doesn't have to be in a hurry to add.

[domcolumba]

Retire I have been investing for almost 30 years and one thing that I've learned by experience, Never, ever listen to analysts. Read the quarterly earnings reports and attend the AGMs because the analysts know little more than an average investor who does his due diligence. Dom Ps I have a buy at $30. The trend is your friend.

[retiredcf]

I've also been investing for over 30 years and there's no question that some analysts are certainly better than others. But when your livlihood depends on the accuracy of your predictions and when there is a general consensus across the board, stocks can do well. Huge volatility in the markets right now adds to the drama and even the slightest hiccup can lead to severe punishment as we'

[domcolumba]

Retiredfc TSU almost hit my target today. An acquaintance of mine was a CEO of a mining company that was bought by Yamana and then Agnico several years ago. He appeared on BNN several times. One day he said that most analysts talk through the side of their mouths. It has also been my personal experience. Stay in gold for now. Dom

[ghostzapper]

Should a guy be buying TSU or looking elsewhere? 

[domcolumba]

Ghost TSU has to be nearing its low for 2022. I'm waiting for $30. ABX and TXG are a safe bet in gold.

[ghostzapper]

I will revisit TSU later.  Something popped up last week that needed attention (investment $).  I don't have much gold exposure right now.  AEM took out KL and K took out GBR and I didn't move onward with AEM or K.  I own GBRR in the gold space and that is about it. 

[ghostzapper]

I reentered after the most recent TD update.  No sense getting too spooked after one quarter.

[domcolumba]

retiredcf I picked up 3K TSU today in the $29s. Sure glad I did not buy back on Feb 15th with the Raymond James OUTPERFORM rating. TSU closed at $38.50  that day and look at it now down 24%. Dom