Trisura Group Sets Sights on US Expansion through Treasury-Listed Acquisition

The arrangement is poised to significantly alter the US surety market.

According to David Clare, the president and chief executive of Canada’s Trisura Group, the company is aiming to expand its operations in the United States by acquiring a small surety company listed on the Treasury.

Clare has officially verified that Trisura has entered into an agreement for the acquisition of an undisclosed company, subject to regulatory approval.

During the financial results presentation for Trisura’s Q2 2023, the CEO informed analysts that this particular development is a crucial milestone in the company’s endeavour to enhance its presence and influence within the US market.

The inclusion of the Treasury listing offers individuals the opportunity to access a wider range of bond options that are both varied and appealing. According to Clare, this also enables us to have a stronger foothold with our distribution partners.

The concept of “transformational change” within Trisura’s surety business in the United States.

Based in Toronto Trisura is recognised as a prominent surety underwriter within the Canadian market. In addition to its core operations, the speciality insurance provider also provides risk solutions, corporate insurance, and fronting business lines.

According to Clare, the agreement reached in the deal is in line with the company’s other strategic ambitions, such as the services arrangement with a prominent participant in the US assurance industry and the continuous expansion efforts. The author observed that Trisura had surpassed a total of $10 million in premium year-to-date inside the realm of US surety.

Clare conveyed her enthusiasm for the acquisition, emphasising that the “comparatively modest organisation” exhibits potential for Trisura’s assurance operations in the United States.

The speaker mentioned that they would draw a comparison between the current situation with their acquisition of an accepted platform in 2019. This platform was then developed and utilised to enhance their admitted front-end skills, resulting in growth.
This platform is of limited size, hence its contribution to the business at its current stage is not substantial. However, it is anticipated that upon obtaining regulatory licence for this enterprise, it will serve as a specialised financial statement for our United States surety platform.

The Chief Executive Officer (CEO) also emphasised the need of obtaining a Treasury listing as a means of solidifying a more substantial presence within the assurance industry in the United States.

According to Clare, in order to have a significant presence in the US surety market, it is imperative to possess a Treasury listing, which has been absent from our operations for the past few years.

This project has been a focus of our efforts for a considerable duration, and we are eagerly anticipating the completion of the necessary approval processes in order to finalise it.

The climate for mergers and acquisitions (M&A) is characterised by its volatility.
The expansion strategies are being implemented in response to Trisura’s financial performance in the second quarter, which was characterised by a significant rise in sales. Specifically, there was a 43% growth in revenue, with $664 million generated in comparison to $464.6 million in the corresponding quarter of the previous year.

Additionally, Clare emphasised the outcomes achieved by Trisura in the Canadian market, which exhibited a substantial increase of 32% in insurance revenue. Furthermore, Trisura experienced growth in its overall revenue across all lines of business in Canada.

In the United States, Trisura’s fronting business generated $458 million in insurance revenue, exhibiting a 49% increase compared to the same quarter of the previous year.

In the second quarter of 2023, the group reported a combined ratio of 82.9%, a return on equity (ROE) of 26.7%, and an operational ROE of 28.4%.

In addition, the company made an announcement regarding its successful acquisition of $50 million in bought deal financing, which will be utilised to further its ongoing expansion initiatives.

Although Trisura does not completely dismiss the possibility of future acquisitions, Clare acknowledges the presence of a highly unpredictable climate for mergers and acquisitions.

The speaker expressed a continuous evaluation of market opportunities, while emphasising the importance of maintaining a focused and rigorous approach in their assessment. The present setting is intriguing. The current state of volatility is more pronounced than in previous years, which presents a range of evident opportunities.

The assessment of such purchases, both in Canada and the US, is expected to persist. Our preference lies in concentrating on smaller bolt-on acquisitions that can be expanded in conjunction with well-established core skills.

What are your thoughts on Trisura’s expansion plans? Comment in the section below.


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