Q2 2026 Trisura Group Ltd Earnings Call

August 7, 2026

Speaker #1: Good morning. Welcome to Trisura Group Limited's second quarter 2026 earnings conference call. On the call today are David Claire, Chief Executive Officer, and David Scotland, Chief Financial Officer.

Operator: Good morning. Welcome to Trisura Group Ltd.'s Q2 2026 Earnings Conference Call. On the call today are David Clare, Chief Executive Officer, and David Scotland, Chief Financial Officer. David Clare will begin by providing a business and strategic update, followed by David Scotland, who will discuss financial results for the period. Following formal comments, lines will be open for analyst questions. I'd like to remind participants that in today's comments, including in responding to questions and in discussing new initiatives related to financial and operating performance, forward-looking statements may be made, including forward-looking statements within the meaning of applicable Canadian and US securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks, and future events and results may differ materially from such statements.

Speaker #1: David Claire will begin by providing a business and strategic update, followed by David Scotland, who will discuss financial results for the period. Following formal comments, lines will be open for analyst questions.

Speaker #1: I'd like to remind participants that in today's comments, including in responding to questions and in discussing new initiatives related to financial and operating performance, forward-looking statements may be made, including forward-looking statements within the meaning of applicable Canadian and U.S.

Speaker #1: These statements reflect predictions of future events and trends and do not relate to historical events. They are subject to known and unknown risks, and future events and results may differ materially from such statements.

Speaker #1: For further information on these risks and their potential impacts, please see Trisura's filings with securities regulators. To ask a question during the Q&A session, you'll need to press star, 11, on your telephone.

Operator: For further information on these risks and their potential impacts, please see Trisura's filings with securities regulators. To ask a question during the Q&A session, you'll need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. Thank you. I'll now turn the call over to David Clare.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star, 11, again. Please be advised that today's conference is being recorded.

Speaker #1: Thank you. I'll now turn the call over to David Claire.

Speaker #2: Thank you, operator. Good morning, everyone, and welcome. In Q2, we extended the consistent execution and momentum of recent quarters. We achieved a significant milestone, surpassing $1 billion in book value and reaching our 2027 target ahead of schedule.

David Clare: Thank you, operator. Good morning, everyone, and welcome. In Q2, we extended the consistent execution and momentum of recent quarters. We achieved a significant milestone, surpassing CAD 1 billion in book value, reaching our 2027 target ahead of schedule, underscored by disciplined, profitable underwriting, and strong growth in investor returns. Underwriting performance was robust, with a combined ratio below 85%, driving double-digit growth in earnings, while book value per share grew more than 20%, reaching over CAD 21 per share. Our evolution continues as we write proportionally more primary lines business with attractive, durable margins as we expand in both established and emerging platforms. Primary lines, Surety, Corporate Insurance, and Warranty remain our foundation, growing 7% in the quarter. Surety underwriting income rose 44%, supported by a strong loss ratio of 17%. Growth continued across key segments.

Speaker #2: Underscored by disciplined, profitable underwriting, and strong growth in investment returns. Underwriting performance was robust, with a combined ratio below 85%, driving double-digit growth in earnings while book value per share grew more than 20%, reaching over $21 per share.

Speaker #2: Our evolution continues, as we write proportionally more primary lines business with attractive, durable margins, as we expand in both established and emerging platforms. Primary lines, surety, corporate insurance, and warranty remain our foundation, growing 7% in the quarter.

Speaker #2: Surety underwriting income grows 44%, supported by a strong loss ratio of 17%. Growth continued across key segments, in Canada, investments made in new capabilities are bearing fruit, demonstrated by increased submission activity in larger-limit contract surety opportunities.

David Clare: In Canada, investments made in new capabilities are bearing fruit, demonstrated by increased submission activity and larger limit contract Surety opportunities. While in the US, we injected further capital in our treasury-listed balance sheet to support underwriting across a more widely licensed platform. We added licenses in California, Minnesota, and Hawaii, and look forward to building our presence. Corporate Insurance delivered solid growth and higher underwriting income, with premium accelerating and underwriting income up 60%. Our US team is gaining traction, supported by adept navigation of a competitive market in Canada, where we continue to grow. Progress in US Corporate Insurance follows our Surety playbook, expanding in areas we know and attracting experienced talent, supported by a centralized head office. While still early, this platform is expected to contribute meaningfully to profitability and scale over time.

Speaker #2: While in the U.S., we injected further capital in our Treasury-listed balance sheet to support underwriting across a more widely licensed platform. We added licenses in California, Minnesota, and Hawaii, and look forward to building our presence.

Speaker #2: Corporate insurance delivered solid growth and higher underwriting income, with premium accelerating and underwriting income up 60%. Our U.S. team is gaining traction, supported by adept navigation of a competitive market in Canada, where we continue to grow.

Speaker #2: Progress in U.S. corporate insurance follows our surety playbook, expanding in areas we know and attracting experienced talent, supported by a centralized head office. While still early, this platform is expected to contribute meaningfully to profitability and scale over time.

Speaker #2: Warranty net insurance revenue increased 19%, reflecting the earned premium impact of stronger GPW in prior periods. Business mix is expected to drive a slightly higher-than-historic combined ratio for the remainder of the year, while elevated claims experience on select programs are expected to normalize.

David Clare: Warranty net insurance revenue increased 19%, reflecting the earned premium impact of stronger GPW in prior periods. Business mix is expected to drive a slightly higher than historic combined ratio for the remainder of the year, while elevated claims experience on select programs are expected to normalize. A consistent approach in U.S. programs has resulted in a strong contribution to our results. We achieved an 80% combined ratio benefiting from steady performance and continued investment in infrastructure. Our scale, permanent capital and diversification differentiate Trisura as a preferred partner for strong profitability-focused MGAs. We have seen several recent opportunities to expand relationships in the U.S. to our Canadian platform, a unique advantage of our North American posture. Canadian fronting underwriting income was steady at about CAD 5 million, modestly higher than Q2 2025, despite pressure from softening market and increased competition.

Speaker #2: A consistent approach in U.S. programs has resulted in a strong contribution to our results. We achieved an 80% combined ratio, benefiting from steady performance and continued investment in infrastructure.

Speaker #2: Our scale, permanent capital, and diversification differentiate Trisura as a preferred partner for strong, profitability-focused MGAs. We have seen several recent opportunities to expand relationships in the U.S.

Speaker #2: to our Canadian platform. A unique advantage of our North American posture. Canadian fronting underwriting income was steady at about $5 million, modestly higher than Q2 2025 despite pressure from softening market and increased competition.

Speaker #2: We expect decreased premium this year in Canadian fronting, but remain committed to the line and its potential to grow profitably over the long term.

David Clare: We expect decreased premium this year on Canadian fronting, but remain committed to the line and its potential to grow profitably over the long term. We have continued to onboard new partners, building a pipeline that we expect will support premium over the coming quarters. Trisura has scaled meaningfully, and we believe the opportunity ahead is significant. We remain committed to the pursuit of profitable growth through expansion of our primary lines and curation of a diverse, high-quality portfolio of programs and fronting business. Above average underwriting profitability, combined with enhanced investment income, is expected to drive consistent increases in shareholders' equity. We are celebrating our 20th year at Trisura, and it is striking to achieve our goal of CAD 1 billion in equity on that anniversary. Decades of underwriting experience underpin our continued expansion in both Canada and the U.S.

Speaker #2: We have continued to onboard new partners, building a pipeline that we expect will support premium over the coming quarters. Trisura has scaled meaningfully, and we believe the opportunity ahead is significant.

Speaker #2: We remain committed to the pursuit of profitable growth through expansion of our primary lines and curation of a diverse, high-quality portfolio of programs and fronted business.

Speaker #2: Above-average underwriting is expected to drive consistent increases in shareholders' equity. We are celebrating our 20th year at Trisura, and it is striking to achieve our goal of $1 billion in equity on that anniversary.

Speaker #2: Decades of underwriting experience underpin our continued expansion, in both Canada and the U.S., and as our U.S. platforms mature, we expect them to equal or exceed the earnings contribution of their Canadian counterparts.

David Clare: As our U.S. platforms mature, we expect them to equal or exceed the earnings contribution of their Canadian counterparts. We continue to invest in our future, attracting senior management talent to our organization. This includes our new North American leader of Corporate Insurance, Derek Stafford, who joined us to spearhead growth and expansion of appetite across North America. The opportunity to build our U.S. presence and expand our share in Canada is significant. We are looking forward to the years ahead. Our AI pilot programs have shown strong adoption and promising results in multiple areas of the organization. Proof of concept initiatives in underwriting, actuarial, and Surety are demonstrating efficiency gains with human oversight maintained throughout. We continue to build on this momentum as we work towards broader rollout.

Speaker #2: We continue to invest in our future, attracting senior management talent to our organization. This includes our new North American leader of corporate insurance, Derek Spafford, who joined us to spearhead growth and expansion of appetite across North America.

Speaker #2: The opportunity to build our U.S. presence and expand our share in Canada is significant. We are looking forward to the years ahead. Our AI pilot programs have shown strong adoption and promising results in multiple areas of the organization.

Speaker #2: Proof of concept initiatives and underwriting actuarial and surety are demonstrating efficiency gains with human oversight maintained throughout. We continue to build on this momentum as we work towards broader rollout.

Speaker #2: Our goals are clear: scaling profitably in primary lines, expanding deliberately in the U.S., and maintaining the discipline that has underpinned our track record. The structural tailwinds supporting surety remain intact, as our practice establishes a larger presence across North America.

David Clare: Our goals are clear: scaling profitably in primary lines, expanding deliberately in the U.S., and maintaining discipline that has underpinned our track record. The structural tailwinds supporting Surety remain intact as our practice establishes a larger presence across North America. Our U.S. Corporate Insurance platform is gaining traction. Q2 exceeded Q1 premium with momentum building. Primary lines continue to grow at attractive margins, and investment income is adding meaningfully to the quality and predictability of earnings. We believe we are well-equipped to navigate cycles. The backdrop for Surety is constructive, and despite softening trends in Corporate Insurance, our specialty approach continues to generate opportunities to grow profitably. We are significant consumers of reinsurance, and increasingly supportive markets create opportunities to optimize reinsurance programs, build partnerships, and expand our impact.

Speaker #2: Our U.S. corporate insurance platform is gaining traction. Q2 exceeded Q1 premium with momentum building. Primary lines continue to grow at attractive margins, and investment income is adding meaningfully to the quality and predictability of earnings.

Speaker #2: We believe we are well-equipped to navigate cycles. The backdrop for surety is constructive, and despite softening trends in corporate insurance, our specialty approach continues to generate opportunities to grow profitably.

Speaker #2: We are significant consumers of reinsurance, and increasingly supportive markets create opportunities to optimize reinsurance programs, build partnerships, and expand our impact. Trisura's increasingly diversified earnings base, strong capital position, collaborative culture, and investment in technology and talent position us well for the next phase of growth.

David Clare: Trisura's increasingly diversified earnings base, strong capital position, collaborative culture, and investment in technology and talent position us well for the next phase of growth. With that, I'd like to turn it over to David Scotland for a detailed review of financial results.

Speaker #2: With that, I'd like to turn it over to David Scotland for a detailed review of financial results.

Speaker #3: Thanks, David. I'll now provide a walk-through of financial results for the quarter, as well as provide some additional perspective on our evolving mix of business and our capital position.

David Scotland: Thanks, David. I'll now provide a walkthrough of financial results for the quarter, as well as provide some additional perspective on our evolving mix of business and our capital position. The second quarter represented another profitable quarter for Trisura and reflected continued progress in the evolution of our platform. Operating earnings per share was CAD 0.76 for the quarter, up 10%, contributing to a solid operating return on equity of 16.7%, comfortably above our mid-teens target. Underwriting results were strong. Net investment income continued to increase, and book value per share grew further in the quarter, up 20% year over year. While reported top-line growth was mixed, we believe the underlying momentum of the business remains healthy. Our primary line businesses continue to generate attractive growth and underwriting profitability. While competitive conditions in Canadian fronting and timing-related factors in Surety drove a modest decline in premium for the quarter.

Speaker #3: The second quarter represented another profitable quarter for Trisura and reflected continued progress in the evolution of our platform. Operating earnings per share was $76 for the quarter, up 10%, contributing to a solid operating return on equity of $16.7%, comfortably above our mid-teens target.

Speaker #3: Underwriting results were strong, net investment income continued to increase, and book value per share grew further in the quarter, up 20% year over year.

Speaker #3: While reported top-line growth was mixed, we believe the underlying momentum of the business remains healthy. Our primary lines businesses continue to generate attractive growth and underwriting profitability, while competitive conditions in Canadian fronting and timing-related factors in surety drove a modest decline in premium for the quarter.

Speaker #3: Net insurance revenue increased by 1%, reflecting the continued growth in primary lines of $6.6%, partially offset by contraction in Canadian fronting. In addition, year over year, premium comparisons in surety were affected by an unusually strong prior-year quarter that benefited from timing effects related to new distribution relationships.

David Scotland: Net insurance revenue increased by 1%, reflecting the continued growth in primary lines of 6.6%, partially offset by contraction in Canadian fronting. Year-over-year premium comparisons in Surety were affected by an unusually strong prior year quarter that benefited from timing effects related to new distribution relationships. We are encouraged by the continued momentum in primary lines, which represent more than two-thirds of net premiums written over the last 12 months. Comprising Surety, Corporate Insurance, and Warranty, these businesses represent the historic foundation of Trisura and continue to be central to our long-term growth strategy and profitability. The mix of premiums continues to shift towards businesses that generate more profitability per dollar of premium and where we are investing the most for future growth. We expect our primary lines to achieve mid-teens growth in net insurance revenue for the full year.

Speaker #3: We are encouraged by the continued momentum in primary lines, which represent more than two-thirds of net premiums written over the last 12 months. Comprising surety, corporate insurance, and warranty, these businesses represent the historic foundation of Trisura and continue to be central to our long-term growth strategy and profitability.

Speaker #3: The mix of premiums continues to shift towards businesses that generate more profitability per dollar of premium, and where we are investing the most for future growth.

Speaker #3: We expect our primary lines to achieve mid-teens growth in net insurance revenue for the full year. The unusually strong surety comparison that affected the second quarter is expected to normalize over the balance of the year, and we remain encouraged by opportunities in corporate insurance.

David Scotland: The unusually strong Surety comparison that affected the second quarter is expected to normalize over the balance of the year. We remain encouraged by opportunities in Corporate Insurance. Canadian fronting pressured premium growth in the quarter. We continue to believe fronting offers attractive long-term opportunities and maintain a healthy pipeline. Our Surety business continues to benefit from momentum in both Canada and the US. Approximately 45% of our Surety premium in 2026 is expected to be generated from our US platform, and we continue to see strong partner engagement, with Trisura ranked among the top 30 US Surety writers. During the quarter, we contributed an additional $50 million in capital to our treasury-listed balance sheet, building on the momentum of recent state licensing additions, including California, positioning the platform for further expansion.

Speaker #3: In Canada, we continue to believe fronting offers attractive long-term opportunities and maintain a healthy pipeline. Our surety business continues to benefit from momentum in both Canada and the U.S.

Speaker #3: Approximately 45% of our surety premium in 2026 is expected to be generated from our U.S. platform, and we continue to see strong partner engagement with Trisura ranked among the top 30 U.S.

Speaker #3: Surety writers. During the quarter, we contributed an additional $50 million USD in capital to our treasury-listed balance sheet, building on the momentum of recent state licensing additions, including California, positioning the platform for further expansion.

Speaker #3: Given the size of the market opportunity, we expect to continue supporting the platform through disciplined and measured capital deployment over time. Importantly, the economics of our U.S.

David Scotland: Given the size of the market opportunity, we expect to continue supporting the platform through disciplined and measured capital deployment over time. Importantly, the economics of our U.S. Surety business are broadly consistent with those of our Canadian platform. While business mix differs modestly, returns remain attractive, and we continue to see significant opportunity for profitable growth. Corporate Insurance also continued to make progress in the quarter. While still relatively small, our U.S. Corporate Insurance platform continues to build scale, and we remain encouraged by its trajectory. We expect it to increasingly contribute to underwriting income and grow its relevance to our top line. Turning to profitability, our underwriting performance remained strong in the quarter with a consolidated combined ratio of 84.9%. The loss ratio in the quarter remained solid and within our expectations, with modest decrease in prior year reflecting a lower loss ratio in Surety and U.S. programs.

Speaker #3: surety business are broadly consistent with those of our Canadian platform. While business mix differs modestly, returns remain attractive, and we continue to see significant opportunity for profitable growth.

Speaker #3: Corporate insurance also continued to make progress in the quarter. While still relatively small, our U.S. corporate insurance platform continues to build scale, and we remain encouraged by its trajectory.

Speaker #3: We expect it to increasingly contribute to underwriting income and grow its relevance to our top line. Turning to profitability, our underwriting performance remained strong in the quarter, with a consolidated combined ratio of 84.9%.

Speaker #3: The loss ratio in the quarter remained solid and within our expectations, with a modest decrease from the prior year, reflecting a lower loss ratio in surety and U.S.

Speaker #3: programs. The expense ratio was consistent with the prior year, and when that and within expectations for the quarter. Underwriting income increased in the quarter, reflecting business growth and strong contributions from surety and corporate insurance.

David Scotland: The expense ratio was consistent with the prior year and within expectations for the quarter. Underwriting income increased in the quarter, reflecting business growth and strong contributions from Surety and Corporate Insurance. We are pleased with the quality of the business being written across the portfolio, and our underwriting performance continues to support our mid-teens operating ROE objective. Net investment income of CAD 22 million increased by 18% in the quarter, driven by new cash deployment to the investment portfolio. Investment income is becoming an increasingly meaningful contributor to earnings as the business scales and provides additional diversification alongside our underwriting results. Our operating effective tax rate was 24.7% in the quarter, resulting from the composition of taxable income between Canada and the U.S. Overall, Operating Net Income for the quarter grew 10.7% to CAD 36.8 million, reflecting consistent profitable underwriting and growing net investment income.

Speaker #3: We are pleased with the quality of the business being written across the portfolio, and our underwriting performance continues to support our mid-teens operating ROE objectives.

Speaker #3: Net investment income of $22 million increased by 18% in the quarter, driven by new cash deployment to the investment portfolio. Investment income is becoming an increasingly meaningful contributor to earnings as the business scales and provides additional diversification alongside our underwriting results.

Speaker #3: Our operating effective tax rate was 24.7% in the quarter, resulting from the composition of taxable income between Canada and the U.S. Overall, operating net income for the quarter grew 10.7% to $36.8 million, reflecting consistent, profitable underwriting and growing net investment income.

Speaker #3: Non-operating results in the quarter primarily consisted of unrealized gains on the investment portfolio. Exit lines had an immaterial impact on net income in the quarter.

David Scotland: Non-operating results in the quarter primarily consisted of unrealized gains on the investment portfolio. Exit lines had an immaterial impact to net income in the quarter. Turning to capital, David highlighted earlier that our book value exceeded CAD 1 billion during the quarter, achieving the objective we had previously established for the end of 2027, more than one year ahead of schedule. We are pleased with that achievement and view it as a reflection of the continued compounding of the business through profitable underwriting, disciplined capital allocation, and consistent execution over time. Book value has grown at an average rate of 26% for the last five years. As the organization scales, a larger capital base provides increasing flexibility to support organic growth initiatives, particularly across our U.S. primary lines, while creating additional opportunities to deploy capital in a disciplined manner.

Speaker #3: Turning to capital, David highlighted earlier that our book value exceeded $1 billion during the quarter, achieving the objective we had previously established for the end of 2027 more than one year ahead of schedule.

Speaker #3: We are pleased with that achievement and view it as a reflection of the continued compounding of the business through profitable underwriting, disciplined capital allocation, and consistent execution over time.

Speaker #3: Book value has grown at an average rate of $26% for the last five years. As the organization scales, a larger capital base provides increasing flexibility to support organic growth initiatives, particularly across our U.S.

Speaker #3: primary lines. While creating additional opportunities to deploy capital in a disciplined manner. Our balance sheet remains conservatively positioned, with debt-to-capital ratio of 16.5%, well below our long-term target of 25%, providing meaningful financial flexibility.

David Scotland: Our balance sheet remains conservatively positioned with debt to capital ratio of 16.5%, well below our long-term target of 25%, providing meaningful financial flexibility. The company remains well capitalized and with capacity to meet regulatory requirements and support growth. As we progress through 2026, we believe our diversified specialty platform, strong capital, and 20-year track record of disciplined underwriting position us well for the opportunities ahead. We remain focused on deploying capital thoughtfully, growing profitably, and compounding long-term shareholder value. David, I'll now turn things back over to you.

Speaker #3: The company remains well-capitalized and with capacity to meet regulatory requirements and support growth. As we progress through 2026, we believe our diversified specialty platform, strong capital, and 20-year track record of disciplined underwriting position us well for the opportunities ahead.

Speaker #3: We remain focused on deploying capital thoughtfully, growing profitably, and compounding long-term shareholder value. David, I'll now turn things back over to you.

Speaker #2: Thanks, Dave. Operator, we'd now take questions.

David Clare: Thanks, Dave. Operator, we'd now take questions.

Speaker #1: As a reminder, we'd like to ask a question at this time. Please press star, 11, on your telephone, and wait for your name to be announced.

Operator: As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Doug Young with Desjardins. Your line is now open.

Speaker #1: To withdraw your question, please press star, 11, again. Our first question comes from Doug Young with Desjardins. Your line is now open.

Doug Young: Hi, good morning. Yeah, you dropped $50 million into the US sub. Sounds like in the comments here, you're fairly bullish on the outlook for the US Surety and just the corporate build beyond what you've achieved already. Maybe just hoping you can dig a little bit into what drove the capital injection and what you're expecting in both of these two US markets over the coming year. If you have any examples of wins you could throw out, that would be helpful as well.

Speaker #4: Hi. Good morning. Just going to be so yeah, you dropped $50 million, US, into the U.S. sub. Sounds like you're on the comments here.

Speaker #4: You're fairly bullish on the outlook for the U.S. surety and just the corporate build beyond what you've achieved already. So maybe just hoping you can dig a little bit into what drove the capital injection and what you're expecting in both of these two U.S. segments.

Speaker #4: markets over the coming year. And if you have any examples of wins you could throw out, that would be helpful as well.

Speaker #2: Thanks, Doug. I think it's fair to say we are encouraged and excited by the trajectory of that U.S. business. A couple of factors throughout the decision to increase capital or inject capital into that surety balance sheet specifically.

David Clare: Thanks, Doug. I think it's fair to say we are encouraged and excited by the trajectory of that US business. A couple of factors drove the decision to increase capital or inject capital into that Surety balance sheet specifically. First and foremost, we are seeing good momentum on the expansion of our licenses, which just builds the infrastructure backbone of our practice. The types of opportunities that we are eligible for in the market can be directly tied to the amount of capital in the balance sheet that we have in that US Surety platform. In some ways, what we're doing is balancing the opportunity and pipeline that we see with the types of credentials we want the team to have out in the market. The more capital that we have in that balance sheet, the more opportunities, candidly, we can see.

Speaker #2: First and foremost, we are seeing good momentum on the expansion of our licenses, which just builds the infrastructure backbone of our practice. The types of opportunities that we are eligible for in the market can be directly tied to the amount of capital in the balance sheet that we have in that U.S.

Speaker #2: surety platform. So in some ways, what we're doing is balancing the opportunity and pipeline that we see with the types of credentials we want the team to have out in the market.

Speaker #2: The more capital that we have in that balance sheet, the more opportunities, candidly, we can see. And so, the balance is making sure that we are funding that balance sheet responsibly and giving the team a good pipeline of opportunities to go out and pursue.

David Clare: The balance is making sure that we are funding that balance sheet responsibly and giving the team a good pipeline of opportunities to go out and pursue. I think as we talked about and as Dave referenced, we are seeing quite a good pipeline of opportunities for the remainder of the year. Dave reiterated our expectation that our full year mid-teens premium growth target for that Surety platform is still intact, which will drive a healthy amount of growth in the latter half of the year. Anecdotally, examples of wins or premiums coming on, it is very typical. There is nothing dramatic happening across the platform, but a very typical build and execution by the team of going out and winning business day to day and hand to hand with the brokers that we work with.

Speaker #2: I think, as we talked about and as Dave referenced, we are seeing quite a good pipeline of opportunities for the remainder of the year.

Speaker #2: Dave reiterated our expectation that our full year mid-teens premium growth target for that surety platform is still intact. Which will drive a healthy amount of growth in the latter half of the year.

Speaker #2: Anecdotally, examples of wins or premiums coming on, it's very typical. There's nothing dramatic happening across the platform, but a very typical build and execution by the team of going out and winning business day-to-day and hand-to-hand with the brokers that we work with.

Speaker #2: I think the build of our licenses is going to support that going forward, and we're excited to see that progress.

David Clare: I think the build of our licenses is going to support that going forward, and we're excited to see that progress.

Speaker #4: Perfect. And then yeah, I think it's been a little while since you kind of embarked on going up market in Canada, and it sounds like you're gaining some momentum, sorry, in the surety market by going up market in the surety market.

Doug Young: Perfect. I think it's been a little while since you've embarked on going up market in Canada, and it sounds like you're gaining some momentum, sorry, in the Surety market by going up market in the Surety market. I think you've got some new distribution partners. Can you talk a bit about the momentum that you're seeing on that side and the opportunity from going up market in Canada on the Surety side?

Speaker #4: Can you talk I think you've got some new distribution partners. Can you talk a bit about the momentum that you're seeing on that side and the opportunity about from going up market in Canada in the surety side?

Speaker #2: Yeah, this is an exciting development for Trisura. It's been probably 18 months or so since we started talking about this initiative to grow into that larger limit space.

David Clare: Yeah. This is an exciting development for Trisura. It's been probably 18 months or so since we started talking about this initiative to grow into that larger limit space. It does take a while to credentialize yourself in the market and earn those opportunities. What we're seeing very definitively this year is a stepped function change in the types of submissions we're receiving, so opportunities to compete for business on that larger limit space. I think from an update perspective or from a progress perspective, we're very happy to see that development, and it's justifying and credentializing the investments we made in the team. The outlook for the Surety industry in Canada is kind of exciting right now. There's a lot of commitments being made at the federal level and some other government levels for infrastructure spend.

Speaker #2: It does take a while to credentialize yourself in the market and earn those opportunities, but what we're seeing very definitively this year is a stepped function change in the types of submissions we're receiving.

Speaker #2: So, opportunities to compete for business in that larger limit space. I think from an update perspective, or from a progress perspective, we're very happy to see that development, and it's justifying and credentializing the investments we made in the team.

Speaker #2: The outlook for the surety industry in Canada is kind of exciting right now. There's a lot of commitments being made at the federal level and some other government levels for infrastructure spend.

Speaker #2: We think in the next few years, those likely disproportionately benefit that larger end of the market. And so we're keen to build our presence there.

David Clare: We think in the next few years, those likely disproportionately benefit that larger end of the market. We're keen to build our presence there.

Speaker #4: Okay. And then the last one for me, just on the obviously, there's softening going on in the corporate side. Can you talk a bit about what you're seeing?

Doug Young: Okay. The last one for me, obviously there's softening going on in the corporate side. Can you talk a bit about what you're seeing? Because you were able to grow in the Corporate Insurance, and part of that, I would assume, is some of that U.S., but it seems like you were able even to grow in the Canadian Corporate Insurance market despite the softening environment. Can you talk a bit about what you're seeing there, and any signs that you're starting to see maybe more rational activity in the corporate market and potential prices stabilizing and potentially going up?

Speaker #4: Because you were able to grow in the corporate insurance, and part of that, I would assume, is some of that US, but it seems like you were able to even to grow in the Canadian corporate insurance market despite the softening environment.

Speaker #4: Can you talk a bit about what you're seeing there? And are there any signs that you're starting to see maybe more rational activity in the corporate market, potential kind of prices stabilizing and potentially going up?

Speaker #2: I would say in our part of the market, Doug, which it tends to be the more specialized risks in that corporate insurance market, you see a little bit less dramatic moves in prices.

David Clare: I would say in our part of the market, Doug, which tends to be the more specialized risks in that Corporate Insurance market, you see a little bit less dramatic moves in prices. Certainly, we see competitive pressure in the market, but the moves that you see, let's say, in the commoditized or broad P&C market are not as material in that specialty line space. That's the first thing that I would say. I think you're right, that our ability to grow in this line is a combination of a really strong opportunity and trajectory in our U.S. platform, and that opportunity is market agnostic. We're simply building share in a market that we know and are excited to build. It's being supported by pretty strong execution of our Canadian team in the specialty line space.

Speaker #2: Certainly, we see competitive pressure in the market, but the moves that you see, let's say, in the commoditized or broad team C market are not as material in that specialty line space.

Speaker #2: So that's the first thing that I would say. I think you're right that our ability to grow in this line is a combination of a really strong opportunity and trajectory in our US platform and that opportunity is market agnostic.

Speaker #2: We're simply building share in a market that we know and are excited to build. It's been supported by pretty strong execution of our Canadian team and the specialty line space.

Speaker #2: So I wouldn't say this is a function of a change in trajectory of the market or a change in the pricing environment of the market.

David Clare: I wouldn't say this is a function of a change in trajectory of the market or a change in the pricing environment of the market. What you're seeing here is a bit of a benefit of the specialty focus that the team has that is now being amplified by just more scale in the U.S. I mean, anecdotally, I think you and I have talked about this in the past. Q1 was our biggest quarter previously for that U.S. Corporate Insurance platform. Q2 exceeded that. June was our biggest month yet in that practice, the momentum is building. It's a unique position that Trisura has because not only are we building within our expertise in a Canadian specialty market, we've got an opportunity to replicate that geographically, which is, I'll say, less impacted by the timing nuances of any cycle.

Speaker #2: What you're seeing here is a bit of a benefit of the specialty focus that the team has, which is now being amplified by just more scale in the U.S.

Speaker #2: I mean, anecdotally, I think you and I have talked about this in the past. Q1 was our biggest quarter previously for that US surety or US corporate insurance platform.

Speaker #2: Q2 exceeded that. June was our biggest month yet in that practice. So the momentum is building. So it's a unique position that Trisura has because not only are we building sort of within our expertise in a Canadian specialty market, we've got an opportunity to replicate that geographically, which is, I'll say, less impacted by the timing nuances of any cycle.

Speaker #4: I appreciate the color. Thank you.

Doug Young: Appreciate the color. Thank you.

Speaker #1: Our next question comes from Bart Ziarski with RBC Capital Markets.

Operator: Our next question comes from Bart Dziarski with RBC Capital Markets.

Speaker #3: Great. Thanks. And good morning, everyone. Just to begin with surety, congrats on the California license. I think now you're fully licensed, at least definitely in the major states.

Bart Dziarski: Great. Thanks, and good morning, everyone. Just beginning with Surety, congrats on the California license. I think now you're fully licensed, at least definitely in the major states. Could you talk us through about the ramp time in that state specifically, and then maybe more broadly, now that you have licenses in pretty much all states, does that change conversations on the ground with clients? Thanks.

Speaker #3: So could you talk us through about the ramp time in that state specifically and then maybe more broadly? Now that you have licenses in pretty much all states, does that change conversations on the ground with clients?

Speaker #3: Thanks.

Speaker #2: Thanks, Bart. I think, first off, we are very excited to have received California, and this is maybe a bit ahead of where we expected.

David Clare: Thanks, Bart. I think first off, we are very excited to have received California. This is maybe a bit ahead of where we expected. You are smart to ask about the ramp-up and the rollout post receiving our license. There's a process that we go through to file our rates, which is happening right now. That can be a few months of process. I expect you're not really going to see the direct impact from California until sometime next year. It does change the conversation, right? This is a real catalyst for us to go out and talk to our distribution partners. You've now lapped a few months, if not quarters, of having some of those larger licenses in places like Florida and Texas.

Speaker #2: You are smart to ask about the ramp up and the rollout post receiving our license. There's a process that we go through to file our rates, which is happening right now.

Speaker #2: That can be a few months of process. So expect you're not really going to see the direct impact from California until sometime next year, but it does change the conversation, right?

Speaker #2: This is a real catalyst for us to go out and talk to our distribution partners. You've now lapped a few months, if not quarters, of having some of those larger licenses in places like Florida and Texas.

Speaker #2: And as you say, at 48 licenses, we would view this as a very fully licensed platform, which is why you see the confidence for us in putting capital into the entity.

David Clare: As you say, at 48 licenses, we would view this as a very fully licensed platform, which is why you see the confidence for us in putting capital into the entity. We continue to bring on new brokerage partners, and we continue to bring on new opportunities in that Surety space. These are just great points of conversation to increase excitement in that part of the market. We think that Surety opportunity in the US remains very significant, and now finally, we can hopefully stop talking about licenses in which states we're waiting on each month and focus on building the business.

Speaker #2: We continue to bring on new brokerage partners, and we continue to bring on new opportunities in that surety space. These are just great points of conversation to increase excitement in that part of the market.

Speaker #2: We think that surety opportunity in the US remains very, very significant and now finally we can hopefully stop talking about licenses and which states we're waiting on each month and focus on building the business.

Speaker #3: Got it. Super helpful. Thanks, David. And then maybe zooming out a bit more strategically, as you focus on primary lines and you're seeing longer-term attractive growth opportunities there, how should we think about the strategic fit if you will of the US programs and Canadian fronting businesses to your business over the medium to long term?

Bart Dziarski: Got it. Super helpful. Thanks, David. Then maybe zooming out a bit more strategically, as you focus on primary lines and you're seeing longer-term attractive growth opportunities there, how should we think about the strategic fit, if you will, of the US programs and Canadian fronting businesses to your business over the medium to long term?

Speaker #2: I think these practices continue to be really great avenues for us to show up in the market in a different way and provide solutions to our partners.

David Clare: I think these practices continue to be really great avenues for us to show up in the market in a different way and provide solutions to our partners. One of the reasons we focus on and have built the business in the way that we have is as a complementary mix of business across these platforms. We're able to touch brokers in different ways in Canada with our Canadian fronting practice. We're able to provide solutions to a really broad swath of the market in the US. One of the reasons you hear us highlighting and talking about primary lines, maybe disproportionately in the last couple of quarters, is we like to remind people that the majority of the business and the historic success of the business has come from there.

Speaker #2: So one of the reasons we focus on and have built the business in the way that we have is there's a complementary mix of business across these platforms.

Speaker #2: We're able to touch brokers in different ways in Canada with our Canadian fronting practice. We're able to provide solutions to a really broad swath of the market in the U.S.

Speaker #2: One of the reasons you hear us highlighting and talking about primary lines may be disproportionately in the last couple of quarters is we like to remind people that the majority of the business and the historic success of the business has come from there.

Speaker #2: It doesn't in any way reduce the excitement or importance we have of these other lines of business, but we should highlight sort of the majority of the growth, profitability, people, and capital continue to be in those primary lines.

David Clare: It doesn't in any way reduce the excitement or importance we have of these other lines of business, we should highlight sort of the majority of the growth, profitability, people, and capital continue to be in those primary lines. We're building what I would say is a more durable, more exciting platform now that has really great components of market participation across now Surety, Corporate Insurance, Warranty, supplemented by these diverse platforms in Canadian fronting and US programs. As you can see, when these programs or when these parts of the business run well and stably, they are really great contributors to not only the bottom line, but our presence and narrative in the market.

Speaker #2: We're building what I would say is a more durable, more exciting platform now that has really great components of market participation across now surety corporate insurance, warranty, supplemented by these diverse platforms in Canadian fronting and US programs.

Speaker #2: As you can see, when these programs or these parts of the business run well and stably, they are really great contributors not only to the bottom line, but also to our presence and narrative in the market.

Speaker #3: That makes a lot of sense. Thanks, David.

Bart Dziarski: That makes a lot of sense. Thanks, David.

Speaker #1: Our next question comes from Tom McKinnon with BMO Capital.

Operator: Our next question comes from Tom MacKinnon with BMO Capital.

Speaker #2: Yeah, thanks. Good morning. Just following on a little bit on that conversation. Generally, with respect to Canadian fronting, I mean, it's kind of not primary, but it is a good contributor to underwriting income it does.

Tom MacKinnon: Yeah, thanks. Good morning. Following on a little bit on that conversation, generally with respect to Canadian fronting, it is kind of not primary, but it is a good contributor to underwriting income. It contributes more than warranty and Corporate Insurance. How should we be thinking about the underwriting income that you do get from that? I would add that it jumps around in terms of its top-line capabilities, but it certainly is a good contributor to your underwriting income. Maybe you can talk about the outlook. Two things here. What do you see for net insurance revenue going forward for Canadian fronting? And more importantly, do you think the combined ratio will sort of stay at this 77% level that we are seeing in the Q2, despite what you have noted as being probably a bit more competitive marketplace? Thanks.

Speaker #2: It contributes more than warranty and corporate insurance. So how should we be thinking about the underwriting income that you do get from that? I would add that it augments it jumps around in terms of it's top line capabilities, but it's certainly is a good contributor to your underwriting income so maybe you can talk about the outlook two things here.

Speaker #2: What do you see for net insurance revenue going forward for this for Canadian fronting and more importantly, how do you think the combined ratio will sort of stay at this 77% level that we've that we're seeing in the second quarter despite what you've noted as being probably a bit more competitive marketplace?

Speaker #2: Thanks, Tom. I appreciate the question. I think it's important to note that despite maybe some top-line volatility in Canadian fronting, we remain very committed to that line and expect quite a few opportunities to come out of that.

David Clare: Thanks, Tom. Appreciate the question. I think it is important to note that despite maybe some top-line volatility in Canadian fronting, we remain very committed to that line and expect quite a few opportunities to come out of that. Anecdotally, we continue to onboard new opportunities in this space. You have actually seen us nuance or adjust retention across the Canadian fronting portfolio, which is why you see maybe a bit better underwriting income. I think pragmatically, if you look to the rest of the year, some of that pressure in Gross Premium Written may pressure underwriting income. I do not expect in the long term that trend to continue. I think the amount of opportunities, the amount of touch points that we have in the market here, it is going to continue to be a platform that adds that underwriting income.

Speaker #2: Anecdotally, we continue to onboard new opportunities in this space. You've actually seen us nuance or adjust retention across the Canadian fronting portfolio, which is why you see maybe a bit better underwriting income.

Speaker #2: I think, pragmatically, if you look to the rest of the year, some of that pressure in gross premium written may pressure underwriting income, but I don't expect, in the long term, that trend to continue.

Speaker #2: I think the amount of opportunities the amount of touch points that we have in the market here is going to continue to be a platform that adds that underwriting income.

Speaker #2: I think the comparison you make to something like a corporate insurance or a warranty specifically in the quarter, those types of those types of comparisons may evolve over time.

David Clare: I think the comparison you make to something like a Corporate Insurance or a Warranty specifically in the quarter, those types of comparisons may evolve over time. Corporate Insurance is growing its net underwriting income by about 60% this quarter. I think that trajectory will continue. I don't in any way want to imply that a reduction in top line in Canadian fronting reduces our excitement for the trajectory and potential of that business over time.

Speaker #2: I mean, corporate insurance is growing its net underwriting income by about 60% this quarter, so I think that that trajectory will continue. But I don't in any way want to imply that a reduction in top line in Canadian fronting reduces our excitement for the trajectory and potential of that business over time.

Speaker #1: Great. Thanks. Our next question comes from Jeff Fenwick with ATB Cormorant Capital Markets.

Tom MacKinnon: Great. Thanks.

Operator: Our next question comes from Jeff Fenwick with ATB Cormark Capital Markets.

Speaker #4: Hi, good morning. One of the start off asking about the growth in the corporate lines in the US and Dave, maybe you could speak to one of the primary gating factors there around that growth ramp.

Jeff Fenwick: Hi. Good morning. Wanted to start off asking about the growth in the corporate lines in the US, Dave, maybe you could speak to what are the primary gating factors there around that growth ramp? Surety was certainly a very heavy lift. It seems like it's a little more straightforward with respect to a corporate lines practice. Is it about building broker relationships primarily? Is there some time and effort around administrative side of things? Is it more just about taking a cautious approach as you build that footprint? Help us understand that.

Speaker #4: We know surety was certainly a very heavy lift. It seems like it's a little more straightforward with respect to a corporate lines practice. Is it about building broker relationships primarily?

Speaker #4: Is there some time and effort around administrative side of things? Or is it more just about taking a cautious approach as you build that footprint?

Speaker #4: Help us understand that.

Speaker #2: Yeah, it's funny, Jeff. Sadly, and I hate to say this, surety from a licensing and build perspective was almost a bit simpler than corporate insurance because what we're doing in corporate insurance is across multiple product lines.

David Clare: It's funny, Jeff. Sadly, and I hate to say this, Surety from a licensing and build perspective was almost a bit simpler than Corporate Insurance, because what we're doing in Corporate Insurance is across multiple product lines. The licensing from a state licensing perspective, we've achieved quite a wide set of licensing given the history and infrastructure we have in our US balance sheets. What we don't have, and what you've seen us building over the last few years, is our rate filings and our process there. A lot of that product development work is getting done. In many cases, it's a lot more complete today than it was last year, and that's why you're seeing the momentum build in that practice.

Speaker #2: So the licensing from a state licensing perspective, we've achieved quite a wide set of licensing given the history and infrastructure we have in our US balance sheets.

Speaker #2: But what we don't have and what you've seen us building over the last few years is our rate filings and our process there. So a lot of that a lot of that product development work is getting done in many cases.

Speaker #2: It's a lot more complete today than it was last year. And that's why you're seeing the momentum build in that practice. As you say, once that product development work gets behind us, it becomes a process of building relationships with brokers, bringing on sort of the right broker relationships to build in the long term.

David Clare: As you say, once that product development work gets behind us, it becomes a process of building relationships with brokers, bringing on sort of the right broker relationships to build in the long term. All this is tempered candidly by sort of a cautious approach in building a business. Anytime we're building something, especially in a new geography or a new space, the first couple of years, we are not pressuring people to chase premium. We want to make sure that we build things profitably. I know it's probably not the answer you expected, that this was a more complex build than Surety, but given the number of products we offer there's a lot of regulatory filing to get through on a product development side. We, for the most part, are through most of that.

Speaker #2: And all this is tempered candidly by sort of a cautious approach in building a business. Anytime we're building something, especially in a new geography or a new space, the first couple of years we are not pressuring people to chase premium.

Speaker #2: We want to make sure that we build things profitably. So I know it's probably not the answer you expected that this was a more complex build than surety, but given the number of products we offer there, there's a lot of regulatory filing to get through on a product development side.

Speaker #2: We, for the most part, are through most of that. There's a few more products we'd like to get out there. And now can focus on building that broker relationship and the onboarding of premium.

David Clare: There's a few more products we'd like to get out there, and now can focus on building that broker relationship and the onboarding of premium.

Speaker #4: Helpful. Thank you. And then you did cite calling out surpassing that billion-dollar mark in terms of total book value of the business. And we've spoken in the past about improving your ratings and improving your size category, and sometimes that's by segment or sometimes that's by regional balance sheet.

Jeff Fenwick: Helpful. Thank you. You did say, calling out surpassing that billion-dollar mark in terms of total book value of the business, and we've spoken in the past about improving your ratings, improving your size category, and sometimes that's by segment, and sometimes that's by regional balance sheet. Are there opportunities here to open a wider set of clientele as you gain this kind of scale?

Speaker #4: But are there opportunities here to open a wider set of clientele as you gain this kind of scale?

Speaker #2: Yeah, I think anytime Jeff that we see the business increasing in relevance and scale, there's opportunities for us to do more. The formal hurdles that you talked about in terms of rating or size category, those are going to continue.

David Clare: Yeah, I think anytime, Jeff, that we see the business increasing in relevance and scale, there's opportunities for us to do more. The formal hurdles that you talked about in terms of rating or size category, those are going to continue being impactful and important. I think the next significant one in the US is $750 million will bump us up another size category. You're starting to approach that. The other area where this is more impactful, maybe strategically or internally at Trisura, is this increased amount of capital and balance sheet size allows us to expand the business in exciting ways, right? We're talking about optimizing retention across the portfolios. We're talking about larger limit opportunities in surety. We're talking about moving upmarket in corporate insurance. None of that is really possible at the smaller balance sheet side.

Speaker #2: Being impactful and important, I think the next significant one in the US is US 750 million dollars. We'll bump us up another size category.

Speaker #2: So, you're starting to approach that. The other area where this is more impactful, maybe strategically or internally at Trisura, is that this increased amount of capital and balance sheet size allows us to expand the business in exciting ways, right?

Speaker #2: We're talking about optimizing retention across the portfolios. We're talking about larger limit opportunities in surety. We're talking about moving up market. In corporate insurance, none of that is really plausible at the smaller balance sheet side.

Speaker #2: And so not only is it exciting from a, let's say, a milestone or a mark in the sand for us to pass that billion dollar mark, it's a tangible demonstration of the more significant size of the entity, which is now being expressed through broader product offerings being able to show up in a more significant way in the markets that we play.

David Clare: Not only is it exciting from a, let's say, a milestone or a mark in the sand for us to pass that billion-dollar mark, it's a tangible demonstration of the more significant size of the entity, which is now being expressed through broader product offerings, being able to show up in a more significant way in the markets that we play. It's a great narrative and great story for Trisura, and candidly, we're just so proud of the team for achieving this as far ahead of target as they have.

Speaker #2: So it's a great it's a great narrative and great story for Trisura and candidly, we're just so proud of the team for achieving this as far ahead of target as they have.

Speaker #4: Great. Thanks for that color. That's all I had.

Jeff Fenwick: Great. Thanks for that color. That's all I had.

Speaker #1: Our next question comes from Mario Mandelka with TD Securities.

Operator: Our next question comes from Mario Mendonca with TD Cowen.

Speaker #5: Good morning. Help me reconcile two comments you made in your opening remarks. You suggested that target ROE is something in the mid-teens. Reconcile that with the idea that you're approaching 17% today with a balance sheet that I think you've offered consistently.

Mario Mendonca: Good morning. Help me reconcile two comments you made in your opening remarks. You suggested that the appropriate ROE or the target ROE is something in the mid-teens. Reconcile that with the idea that you're approaching 17 today with a balance sheet that I think you've offered consistently is, you're overcapitalized right now. You've pre-funded particularly the Surety balance sheet. If you're approaching 17 today, but you're sitting on a lot of excess capital or excess premium capacity, why wouldn't the sort of long-term expected ROE for this company be something in the high teens, if not like 20%?

Speaker #5: You're over capitalized right now. You've pre-funded particularly the balance sheet, the surety balance sheet. So if you're approaching 17 today, but you're sitting on a lot of excess capital or excess premium capacity, why wouldn't the sort of long-term expected ROE for this company be something in the high teens if not like 20%?

Speaker #2: Mario, I think it's a great question and it talks a lot to sort of timing and timeframe of when those ROEs are achieved. I think you've highlighted a really interesting lever for us to pull in this platform in that a good amount of capital today is what I'll call under premiumed.

David Clare: Mario, I think it's a great question, and it talks a lot to sort of timing and timeframe of when those ROEs are achieved. I think you've highlighted a really interesting lever for us to pull in this platform in that a good amount of capital today is what I'll call under-premiumed. If that capital was to earn the type of returns that we've demonstrated in deployed capital across the rest of the platform, there's quite an accretive impact on that ROE, which you've seen us achieve in the past, right? As you referenced, we've been in the high teens before on an ROE basis. I think what you're hearing from us is a pragmatic and conservative view of the path to building to what that level of ROE could be, in that in the intervening years, we need to make sure that we're investing for that build.

Speaker #2: And if that capital was to earn the type of returns that we've demonstrated in deployed capital across the rest of the platform, there's quite an accretive impact on that ROE, which you've seen us achieve in the past, right?

Speaker #2: As you referenced, we've been in the high teens before on an ROE basis. I think what you're hearing from us is a pragmatic and conservative view of the path to building, to what that level of ROE could be.

Speaker #2: In that in the intervening years, we need to make sure that we're investing for that build. So what you're highlighting, I think, is the North Star of the management team here and everyone who works to build Trisura, which is we want to increase and optimize that level of ROE to do that in the short term we think making these investments are going to drive a little bit of dilution to that ROE, which in the long term as you say should drive something a bit better.

David Clare: What you're highlighting, I think, is the North Star of the management team here and everyone who works to build Trisura, which is we want to increase and optimize that level of ROE. To do that in the short term, we think making these investments are going to drive a little bit of dilution to that ROE, which in the long term, as you say, should drive something a bit better.

Speaker #5: So when I think about it, there’s two competing interests, as you said, at your desk, David, and think about this company. I can see sort of two competing interests for me.

Mario Mendonca: When I think about these, there's two competing interests as you sit at your desk, David, and think about this company. I can see sort of two competing interests for me. One would be drive the ROE higher as you grow the premiums into the capital base. The second would be just continue to add a bunch more capital to grow the business over the long term. You've got those two competing interests. The question is this: Over the next, say, 3 years, which one wins out? Continuing to add more capital to fuel long-term growth, or sort of harvest this capital and drive the ROE higher? My impression from listening to you over the last year or two is you're predisposed to growing this business. Is that right?

Speaker #5: One would be drive the ROE higher as you grow the premiums into the capital base. The second would be just continue to add a bunch more capital to grow the business over the long term.

Speaker #5: So you've got those two competing interests. The question is this, over the next, say, three years, which one wins out? Continuing to add more capital to feel long-term growth or sort of harvest this capital and drive the ROE higher?

Speaker #5: My impression from listening to you over the last year or two is you’re predisposed to growing this business. Is that right?

Speaker #2: I think it's fair, Mario. Our historic posture in Trisura has always been to pursue growth and grow the platform. And candidly, what's surprised me in the time that I've been here has been the magnitude of opportunities that we've been able to pursue, which the impact of pursuing those opportunities obviously delays or nuances the types of ROEs that you achieve.

David Clare: I think it's fair, Mario. Our historic posture in Trisura has always been to pursue growth and grow the platform. Candidly, what surprised me in the time that I've been here has been the magnitude of opportunities that we've been able to pursue, which the impact of pursuing those opportunities obviously delays or nuances the types of ROEs that you achieve. I would always rather be in a scenario where we've got exciting opportunities to invest in than a scenario where I'm optimizing in a perfect way ROE because I haven't got great things to invest in. My hope and my expectation for this platform is that the building component of the nascent platforms that we've invested in is generally behind us. If you think about Corporate Insurance or Surety, both of those platforms have a lot of the infrastructure established already.

Speaker #2: So I would always rather be in a scenario where we've got exciting opportunities to invest in than a scenario where I'm optimizing in a perfect way ROE because I haven't got great things to invest in.

Speaker #2: My hope and my expectation for this platform is that the building component of the nascent platforms that we've invested in is generally behind us.

Speaker #2: So if you think about corporate insurance or surety, both of those platforms have a lot of the infrastructure established already, so that investment phase seems to be a bit behind us.

David Clare: That investment phase seems to be a bit behind us. The question is, what's the opportunity set that we have in front of us from a premium standpoint, and what's the efficient frontier of pre-funding that opportunity set and optimizing ROE? That's always the balance that we're trying to strike as capital allocators. I'm always going to want to pursue growth for the long-term sort of expansion of this business, which to your point prioritizes a bit of that ROE dilution. We've been very fortunate through this investment phase, through this growth. We've actually been achieving very strong ROEs. I don't want to imply in any way that pursuing this growth negates or dilutes what is an attractive ROE. I think the nuance around the edges is optimizing it for now means in the long term, we make investments today that pay off in a few years.

Speaker #2: The question is: What's the opportunity set that we have in front of us from a premium standpoint, and what's the efficient frontier of pre-funding that opportunity set and optimizing ROE?

Speaker #2: That's always the balance that we're trying to strike as capital allocators. I'm always going to want to pursue growth for the long-term sort of expansion of this business, which, to your point, prioritizes a bit of that ROE dilution.

Speaker #2: But we've been very fortunate. Through this investment phase, through this growth, we've actually been achieving very, very strong returns. That pursuing this growth negates or dilutes what is an attractive ROE.

Speaker #2: I think the nuance around the edges is optimizing it for now means in the long term we make investments today that pay off in a few years.

Speaker #5: So, bottom line: growth is the priority, with the proviso that ROE always stays at least in the mid-teens. That's maybe a nice, simple way to think of it.

Mario Mendonca: Bottom line, growth is the priority with the proviso that the ROE always stays at least mid-teens. That's maybe a nice, simple way to think of it.

Speaker #2: That's it. Profitable growth is our priority.

David Clare: That's it. Profitable growth is our priority.

Speaker #5: Okay. Thank you.

Mario Mendonca: Okay. Thank you.

Speaker #1: Just a reminder, if you'd like to ask a question at this time, please press star, 11 on your touchdown phone. Our next question comes from Jamie Gloin with NBCCM.

Operator: As a reminder, if you'd like to ask a question at this time, please press star 11 on your touchtone phone. Our next question comes from Jaeme Gloyn with NBCCM.

Speaker #4: Yes, thanks. Just wanted to clarify or just get a clearer picture on the US balance sheets. With this latest drop in, what is the level of the US surety balance sheet?

Jaeme Gloyn: Yeah, thanks. Just wanted to clarify or just get a clear picture on the US balance sheets. With this latest drop in, what is the level of the US surety balance sheets? Also, what is the level of the US corporate balance sheet? What are the next thresholds that would get you into a different SNAC bracket in terms of the markets that you want to compete in?

Speaker #4: Also, what is the level of the U.S. corporate balance sheet? And then, what are the next thresholds that would get you into a different bracket, in terms of the markets that you want to compete in?

Speaker #2: So, the U.S. balance sheet today is $150 million dedicated to surety. The corporate insurance practice actually writes, or benefits from, the established program's balance sheets.

David Clare: The US balance sheet today is $150 million dedicated to surety. The Corporate Insurance practice actually writes or benefits from the established programs balance sheet. We don't separate that one out. Candidly, every dollar of capital that we drop into that US surety balance sheet just gives us more opportunity to write in that US entity. There's no set thresholds formally in the marketplace. I think what you're going to see, Jaeme, is as our opportunities from a premium perspective increase, we're going to keep investing and dropping capital into that platform.

Speaker #2: So we don't separate that one out. Candidly, every dollar or every dollar of capital that we drop into that US surety balance sheet just gives us more opportunity to write in that US entity.

Speaker #2: There's no set thresholds formally in the marketplace. I think what you're going to see, Jame, is as our opportunities from a premium perspective increase, we're going to keep investing and dropping capital into that platform.

Speaker #2: Really importantly, from my perspective, the accretion or dilution of that drop-down in capital going forward starts to get better for us because, as you can see, most of the capital that we've dropped into this entity has been either internally generated or leverage capacity.

David Clare: Really importantly, from my perspective, the accretion or dilution of that drop-down in capital going forward starts to get better for us because as you can see, most of the capital that we've dropped into this entity has been either internally generated or leverage capacity, which drives a lot better return on that capital in time as it earns. There's no set target from a balance sheet size perspective of that US Surety entity. I will just say, and I'm sure some of the guys on my Surety team are listening, the bigger the better in time as long as we can justify the premium. We think that we have a lot of that capital now either in-house or at levers that we can pull very quickly.

Speaker #2: Which drives a lot better return on that capital in time as it earns. So there's no set target from a balance sheet size perspective of that US surety entity.

Speaker #2: I will just say—and I'm sure some of the guys on my surety team are listening—the bigger, the better, in time, as long as we can justify the premium.

Speaker #2: And we think that we have a lot of that capital now either in-house or at levers that we can pull very, very quickly.

Speaker #4: Yeah, okay, understood on that. Second question would just be on the—let's go on the investment income—healthy growth this quarter. Maybe you can talk about what the outlook for that investment income line is, going forward?

Jaeme Gloyn: Yeah. Okay. Understood on that. Second question would just be on the, let's go on the investment income. Healthy growth this quarter. Maybe you can talk about what the outlook for that investment income line is going forward. How do yields look? Is there more opportunity to continue to optimize that as the balance sheet in both the specialty business and the US businesses grow?

Speaker #4: How do yields look? Is there more opportunity to continue optimizing that as the balance sheet in both the specialty business and the U.S. businesses grow?

Speaker #2: It's been a great story. Watching the growth in that investment income line and the contribution to earnings. I think we're fortunate in that we as a North American platform are benefiting from some relatively more attractive yields in the US market than Canada.

David Clare: It's been a great story watching the growth in that investment income line and the contribution to earnings. I think we're fortunate in that we, as a North American platform, are benefiting from some relatively more attractive yields in the US market than Canada. We still continue to think that despite our, I'll say, relatively high level of book yields, deployed yields are still very attractive right now. I think outlook for this investment income line continues to be pretty exciting, mostly because the majority of our growth is coming from these primary lines, which tends to contribute more directly to the investment income portfolio. Outside of those types of trends, the only item I would highlight is we are probably disproportionately allocated to an investment-grade bond portfolio. I think our allocations to things like equities, alternatives, or non-fixed income is quite low versus most.

Speaker #2: So we still continue to think that despite our I'll say relatively high level of book yields, deployed yields are still very attractive. Right now, I think outlook for this investment income line continues to be pretty exciting, mostly because the majority of our growth is coming from these primary lines.

Speaker #2: Which tends to contribute more directly to the investment income portfolio. Outside of those types of trends, the only item I would highlight is we are probably disproportionately allocated to an investment-grade bond portfolio.

Speaker #2: I think our allocations to things like equities alternatives or non-fixed income is quite low versus most. So the only discussion or change you could see in the future is at what stage would it be appropriate to normalize that and if we did, could we expect a better set of returns?

David Clare: The only discussion or change you could see in the future is at what stage would it be appropriate to normalize that. If we did, could we expect a better set of returns? That's a discussion that we approach very cautiously because as we've sort of demonstrated, the types of returns that we can achieve with this conservative portfolio, with where yields are right now, are quite strong.

Speaker #2: That's a discussion that we approach very, very cautiously because, as we've sort of demonstrated, the types of returns that we can achieve with this conservative portfolio, with where yields are right now, are quite strong.

Speaker #4: Great. Thank you.

Jaeme Gloyn: Great. Thank you.

Speaker #2: Thanks, Jim.

David Clare: Thanks, Jaeme.

Speaker #1: That concludes today's question-and-answer session. I'd now like to turn the call back over to David Claire for closing remarks.

Operator: That concludes today's question and answer session. I'd like to turn the call back to David Clare for closing remarks.

Speaker #2: Thank you very much, everyone, for joining today. And thank you to many of what I know are our team who are joining the call today.

David Clare: Thank you very much, everyone, for joining today, and thank you for many of what I know our team are on joining the call today. We're very proud to be celebrating both our 20th anniversary and this milestone of CAD 1 billion, and we're looking forward to continuing to progress and evolve with you. Thank you.

Speaker #2: We're very, very proud to be celebrating both our 20th anniversary and this milestone of a billion dollars. And we're looking forward to continuing to progress and evolve with you.

Speaker #2: Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Q2 2026 Trisura Group Ltd Earnings Call

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