Specialty insurer Trisura Group has reported a net loss of $40.3 million for the fourth quarter of 2022 due in large part to a $81.5 million write down of reinsurance recoverables relating to a contract dispute.
Trisura explained that it had a “disagreement over obligations” under one particular quota share reinsurance contract, which has since been put into accelerated run-off.
Higher catastrophe reinsurance costs had the effect of depleting collateral and contributed to the write down, although the company assures that no further impact to recoverables will occur on this program, and says the reinsurer in question does not participate in any other of its programs.
“We are exploring all available remedies with all parties involved in order to mitigate the loss we have experienced, and have taken steps to implement policy and organizational changes in the US,” Trisura reported.
Despite the impact of the write down, Trisura still reported net income of $24.7 million for the full year in 2022.
Additionally, its adjusted net income grew by 79.3% in Q4 and by 34.0% over the year to $83.0 million, driven by profitable growth in Canada and core operations in the US.
Gross written premiums in Canada increased by 13.9% in the quarter and by 29.7% for the full year, with strong underwriting performance across all lines contributing to a combined ratio of 83.5% in the quarter and 81.9% for the full year, as well as an ROE of 30.2% in Q4.
In the US, meanwhile, premiums increased 52.3% over Q4 to $446.8 million and fee income increased 62.5% to $19.4 million. For the full year GPW of $1.7 billion rose 70.3% compared to 2021, which Trisura said was the result of “maturing and new programs.”
Looking ahead, Trisura acknowledged that it may still experience “one-time costs” from exiting its disputed reinsurance program over the next year, but said that it will “ultimately benefit from savings related to reinsurance costs, and a further reduction of catastrophe exposed business.”
“Notwithstanding the impact of this write down, Trisura is a larger, more diversified entity than at any stage in our history,” said David Clare, President and CEO of Trisura. “We believe firmly that this is an isolated event, and are confident in our ability to scale the platform profitably in the long term.”
Trisura further assured that its “remaining reinsurance recoverables are high quality,” with 83% represented by rated reinsurers and the remainder being “appropriately collateralized.”
