Trisura Group Ltd.

(TSU-T) C$42.35

US Specialty Insurer Files For IPO: Compare and Contrast vs TSU Event

Last week, U.S. specialty insurer 'Skyward Specialty Insurance Group' (Skyward), a subsidiary of Westaim, filed an S-1 to go public. In this report, we compare and contrast its business versus Trisura.


Skyward (formerly known as Houston International Insurance Group) provides a broad array of commercial P&C coverage on both an admitted and non-admitted (E&S) basis, primarily in the U.S. Over the past couple of years, the company has undergone a number of changes including exiting certain lines (e.g., specialty workers' comp, lawyers' professional liability, auto dealers programs, etc.) and launching new underwriting divisions, units, and product lines (cannabis industry, excess liability in E&S, new captive solutions, etc.), as well as increasing its Surety operations (Aegis acquisition).

While the business overlap between Skyward and Trisura may be somewhat limited (partially attributable to the niche areas they operate in), with a lack of publicly-traded specialty insurance comps, it may at least provide another data point when tracking comparables. Skyward and TSU's U.S. business have written a similar amount of gross premiums written (GPW) YTD, however, TSU appears to be on a much faster growth trajectory (Exhibit 1). That being said, a notable difference is that TSU's U.S. business cedes off the vast majority (90%+) of the premiums it generates to reinsurance partners in exchange for a fee ('fronting'), whereas Skyward retains over 50% of the premiums it writes. Thus, the economics driving the two businesses is notably different.

TD Investment Conclusion

Trisura appears to be regaining momentum, as it continues to demonstrate its 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). The company has achieved impressive growth over the past 3-5 years, which we believe supports our outlook of the earnings trajectory in 2023 and beyond.