Trisura Group eyes US expansion with Treasury-listed acquisition

The deal agreement will 'transform' its US surety business

Trisura Group eyes US expansion with Treasury-listed acquisition

Insurance News

By Gia Snape

Canada’s Trisura Group is setting its sights on further expansion in the United States through the purchase of a small Treasury-listed surety company, according to its president and chief executive David Clare.

Clare confirmed that Trisura has signed an agreement to acquire an unnamed firm, pending regulatory approval.

“This is an important step in our journey to become a more significant player in the US market,” the CEO told analysts during Trisura’s Q2 2023 financial results presentation.

“The Treasury listing provides access to broader, more diversified and an attractive array of bonding opportunities. It also allows us to gain traction with our distribution partners,” Clare said.

‘Transformational change’ in Trisura’s US surety business

Toronto-based Trisura is one of the largest surety writers in Canada. The specialty insurance provider also offers risk solutions, corporate insurance, and fronting business lines.

The deal agreement aligns well with the company’s other strategic initiatives, Clare said, including a services arrangement with a major US surety participant and ongoing expansion efforts. He noted that Trisura has exceeded $10 million of premium year-to-date in US surety.

Clare expressed excitement over the acquisition, saying the “relatively small entity” holds promise for Trisura’s US surety operations.

“I would compare this to our 2019 acquisition of an admitted platform that we subsequently expanded and then used to grow our admitted front-end capabilities,” he said.

“This is a relatively small platform, so not a significant add to the business at this stage. But we’re expecting that, as we get through regulatory approval for this business, that it will act as a dedicated balance sheet for our US surety platform.”

The CEO also pointed out the importance of a Treasury listing in establishing a deeper foothold in the US surety market.

“To be a real player in the US surety market, a Treasury listing is required, and that’s something that we’ve been operating without for the last couple of years,” Clare said.

“This is something we’ve been working on for some time and we are very excited to get through the approvals required to close it.”

‘Volatile’ environment for M&A

The growth plans come on the back of Trisura’s second quarter performance, driven by a 43% increase in revenue ($664 million compared to $464.6 million in the prior-year quarter).

Clare also highlighted results for Trisura in Canada, where it saw a 32% growth in insurance revenue and top-line growth across all lines.

In the US, Trisura’s fronting business produced $458 million in insurance revenue, higher by 49% than the same quarter last year.

The group posted a combined ratio of 82.9%, an ROE of 26.7% and operating ROE of 28.4% in Q2 2023.

Separately, it announced it has secured $50 million in bought deal financing to bolster its expansion efforts.

While Trisura isn’t ruling out future opportunities for acquisitions, Clare did take note of a volatile environment for M&A.

“We’re always reviewing opportunities in the market, although we try to be pretty disciplined in what we look into,” he said. “This is an interesting environment. It’s more volatile than it has been in years past and that obviously surfaces a number of opportunities.

“I think we will continue to evaluate those, both in Canada and the US, but these types of smaller bolt-on acquisitions that we can then grow alongside established core competencies are where we like to focus on.”

Do you have anything to say about Trisura’s expansion plans? Sound off in the comments below.

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