AM Best: Trisura’s underwriting leverage less elevated after premium growth moderation

By Michael Loney

July 7 - (The Insurer) - AM Best has affirmed the ratings of Canadian specialty insurance provider Trisura, noting that recent moderation in premium growth has resulted in underwriting leverage metrics that closely align with industry norms.

The A-minus financial strength rating and a-minus long-term issuer credit ratings of Trisura Specialty Insurance Company, Trisura Insurance Company, Bricktown Specialty Insurance Company and Trisura Guarantee Insurance Company were affirmed

AM Best also affirmed the A-minus financial strength and a-minus long-term issuer credit ratings of New Jersey-based First Founders Assurance Company (FFAC).

The outlook on the ratings is stable.

The ratings acknowledge improvement in Trisura’s overall balance sheet strength assessment, supported by the strongest level of risk-adjusted capitalisation.

Additionally, the group’s capital base has grown significantly over the recent five-year period, driven by several public capital raises and “very strong” earnings growth, which more than tripled in the recent three-year period, AM Best said.

“This growth in equity has supported the group’s overall growth and its expansion into the admitted U.S. market. While underwriting leverage was previously elevated due to an accelerated growth period, recent moderation in premium growth, combined with capital expansion, has resulted in leverage metrics that closely align with industry norms,” AM Best said.

AM Best added that financial flexibility is strong with moderate levels of debt and very strong interest coverage.

The rating agency said that Trisura’s operating performance benefits from the diversification in its earnings from fronting fee income, underwriting income and investment income, while its business profile recognises the diversification afforded by its diversified North American footprint.

Trisura provides specialty insurance in the surety, warranty, corporate insurance, program and fronting business lines.

The ratings also acknowledge the significant capital and operational support FFAC receives from Trisura and its strategic importance to its U.S. surety operations.

In the second quarter of 2024, Trisura contributed $55 million of capital to FFAC and is seeking to continue to expand FFAC’s licensing to all 50 states.