TSX:TSU - Post Discussion
Post by
retiredcf on Nov 10, 2024 9:05am
RBC 2
Their upside scenario target is $54.00. Once again, huge cut and paste problems. GLTA
Outperform
TSX: TSU; CAD 43.42
Price Target CAD 49.00 ↓ 52.00
Trisura Group Ltd.
Q3 in line overall, mixed growth trends by segment
Our view
Overall Q3 results were relatively in line with Trisura Specialty (formerly the Canada unit) performing well again across the board. We viewed the U.S. Programs unit as more mixed as growth was dragged down by program exits and an operational fronting ratio that was a bit higher than 1H24 levels. U.S. surety premiums were notable in Q3. We think that Trisura is positioned for growth and solid profitability. Book value grew nicely on a sequential basis and its capital ratios (debt/cap. and premium/capital ratio) improved vs. recent quarters.
Key points:
Estimates & Price Target:
Our 2024 EPS estimate goes to $2.63 (from $2.65) on modest Q4 assumption tweaks. We are revising our 2025 EPS forecast to $2.95 (from $3.05) on reduced investment income and premium growth assumptions. We are introducing a 2026 EPS estimate of $3.30. We are revising our price target to $49 (from $52) which is now based on 2.7x our ending 2025 book value per share estimate (previously 3.0x). Our price target reflects a reduced multiple on our slightly lower EPS trajectory
Q3 results: Trisura reported Q3/24 operating EPS of $0.68 vs. $0.67 in Q3/23, which matched our $0.68 estimate and was $0.01/share ahead of the $0.67 consensus expectation. Both operating segments were in line with our estimates on an operating basis.
Key Takeaways:
Operating income for the Trisura Specialty segment totaled $21.7 mm vs. $21.1 mm. The combined ratio for Trisura Specialty was 85.6% vs. 75.0%, which was close to our 85.0% assumption. Gross written premiums at Trisura Specialty grew +15.2% y/y to $278.4 mm vs. $241.7 mm (RBC estimate was +20.0%) while net written premiums rose +19.2% y/y to $158.5 mm (RBC estimate was +16.7%). Overall operating income for U.S. Programs totaled $12.7 mm vs. $11.4 million last year. The U.S. fronting operational ratio (ex items) was 87.4% and the reported operating fronting operational ratio was 95.0%. The company guided to a low 80s operating fronting ratio for this unit in the near term. Gross written premiums declined 7.4% y/y to $489.3 mm vs. $528.2 mm last year (RBC estimate was -1.0%) as there was a drag from several nonrenewed programs that didn’t meet their risk appetite (ex that impact GWP would have been up around 20%). Net written premiums were $47.2 mm vs. $40.2 mm.
1) Net written premium growth trends strong across both segments; 2) Sequential book value growth was healthy; and 3) Trisura Specialty combined ratio again in the mid 80s.
1) U.S. Programs operational fronting ratio ticked up; 2)Gross written premium growth decelerated from recent quarters; and 3) Investment income didn't show sequential growth.
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