Trisura Group Ltd. ($TSU)

All right. Thanks, Steph, and good morning, everyone, and thank you all for joining our fireside chat this morning with Trisura President and CEO, David Clair. We relaunched research coverage of Trisura at CIBC a few months ago, and we're excited to have the opportunity today to dig into what I think is a very interesting business at a particularly interesting point in time. We'll take a closer look at from both a company-specific perspective and a macro perspective. And before we get started, just a reminder that if you do have any questions, please send them to me over e-mail and I can work them into our conversation. David, thank you for joining us this morning.

Scott. Happy to be here. .

Great. Let's kick off the conversation with Q1 results. Another solid quarter. LTM operating ROE of 17%, book value per share growth of 16.5%. And with 6% gross premium growth and an 84% combined ratio. So from your perspective, what parts of the business stood out in the quarter?

I think from my perspective, what was so nice about Q1 is the continuation of the trends we've been talking about highlighting now for 4 or 5 quarters. I think it's very nice to see a quarter where -- you saw a contribution from a whole bunch of pieces of the business, not any one individual item driving things disproportionately. And really importantly, I think progress, both quantitatively and qualitatively on the types of strategic initiatives that we're really excited about. So I know you mentioned some of the growth in book value, but net insurance revenue growth of about 13%, driven by really strong expansion of our practices in surety, both in Canada and the U.S. This has been something we've been talking about now 5 and 6 years and the progress in this business, especially recently has been substantial. I think if we -- if we combine that with some of the momentum that we've had in licensing and be the infrastructure of the business in the U.S. as well as some of the changes we've made in the team capabilities in Canada, it's just a really nice setup for that business. It came through a little bit on the call, and I'm not sure if people on this call listen to our conference calls, but we also talked a little bit about qualitative progress in our corporate insurance business in the U.S. So as a reminder, we've been taking really successful practices in Canada, replicating those practices in the U.S. Sure, it is the first version of that. And corporate insurance is one now that over the last, let's say, 1 year, 1.5 years, we've been building out a practice in the U.S. this quarter, so Q1 of 2026, we wrote more premium in that quarter than the entire year of 2025 in our U.S. corporate insurance practice. So you're starting to see that inflection in, let's say, momentum in our U.S. corporate insurance practice, still small dollars, still small premium, but really nice to see that change in trajectory in the business. I think beyond that, I know some of these points you're going to talk on later. We've had a real step-up in, I'll say, the quality and mix of our earnings. So investment income has increased 16% on a reported basis, about 19% on a constant currency basis, that's just really constant predictable income that is supporting the business, and it's meaningfully larger than it used to be. And finally, a point I think you'll highlight later on, but we are really proud to get through our largest capital raise to date in the quarter. So we raised about $200 million in investment-grade bonds. This our first index-eligible bond, I think, firing in on all cylinders for that first quarter.

Yes, it seems like the momentum is all pushing in the right direction across all the pieces of the business. So really good to see. As you mentioned, there's a lot to dig in there, and we will do that over the course of the call. But let's start with the last item you touched on there, the $200 million of the senior unsecured notes offering. After you've refinanced the existing notes and pay down the revolver, I think that leaves you with roughly $75 million of incremental liquidity and takes debt to capital up to 17%. So wondering if you could maybe discuss the offering itself and then dig into how you expect to use those additional funds and finish with sort of what the ultimate ceiling or comfort level is for leverage in the business?

Yes. This was a really nice milestone for us as is growing, let's say, maturing company in the capital markets. Our first debt raise back in 2021 was relatively small, non-index eligible not -- also not that widely distributed. This offering was very much the opposite of that. So a $200 million benchmark index eligible size, really, really strong demand on the offering. So I think we were well in excess of 3x oversubscribed for the offering. Candidly, it just shows the magnitude of change in scale and size of the business, presence in the capital markets, an ability for us to fund our growth initiatives more accretively than we have historically. I think you mentioned, we've taken our debt to capital from about 13% to 17%. We still think that's conservative and likely below long-term potential for the business. We've got a stated debt -- debt-to-equity target of about 25%. So the business has a lot of runway from a leverage perspective to continue funding before we reach that level. Most of the net proceeds of this business will be earmarked for our Surety platform in the U.S. I think you can expect us in the next month here before the end of Q2 to be dropping about USD 50 million, USD 50 million into our treasury listed platform in the States, reflective, I think, of our confidence in the growth trajectory of that business and the potential for that platform to meaningfully scale over the next couple of years?

Okay. That is a great segue because I do want to talk about the U.S. Surety business. And I think we can start just by talking about the growth runway and what the balance sheet can support in terms of premium growth and how you think about underwriting leverage in the U.S. Surety business.

Yes. underwriting leverage, it's a really great place to start in these businesses. It's very simple in the surety space. underwriting leverage is relatively straightforward. It's between 1 and 1.5x premiums to capital. So today, we have about just over USD 100 million in our dedicated U.S. balance sheet. That means you can write USD 100 million to USD 150 million. in premium. We're going to drop another $50 million into that platform, so you can lever that up conservatively 1:1. And as you mature the platform as you grow you can move that a little bit closer to, let's say, 1.3, 1.4x. So there's a lot of runway for us here. And candidly, one of the things you see as we strategically invest in this surety platform is we're prefunding that growth, right? The platform today is not fully levered. So we're not at that 1.5x, let's say, premium to capital leverage in that surety business. But there's real benefit for us in the market strategically of signaling that the entity is going to get bigger. So the types of premium, the types of relationships that you have in the surety market, types of opportunities you see are directly correlated with the size of your balance sheet, besides your treasury listing. So for us, there's real benefit here proactively signaling to the market and investing in this platform, let's say, a little bit ahead of the premiums that are coming online. For investors, what that should signal for you is the confidence that we have in building this platform. And then for our broker partners, for our front lines underwriters for our partners in the market signals to them that there is real commitment in this business. it allows us, candidly, to go after a much, much larger market in Canada. So one of the questions I get a lot is what's the market opportunity in the U.S.? And in about 5 years, we're a 27th ranked player in the U.S. markets, that's just under a 1% market share. The U.S. markets are about 10x the size of the Canadian market. And so -- in Canadian dollars, it's about $13 billion in opportunity in the U.S., there's a long runway for us in that market.

Yes. I mean clearly, the growth there has been impressive already. And I think the question that comes up to me is, has that exceeded your expectations in terms of time line to get there? And then even with what you've done so far, I'm curious what the drivers of that growth have been to get to where you are to be the 27th ranked surety underwriter?

Yes. I think candidly, if I was to show you let's say, the plans for the business in 2020 when we first started talking with this. We are ahead of plan in terms of premium production. It's interesting that success, I would credit to the team, the types of people that have joined us and helped us build the business in the last 5 years. We've seen success in the marketplace for that team, taking, let's say, the treasury way that broker-focused, service focused orientation that boots on the ground approach the business. We've had success in building that out. . We've had some good success in bringing on strong distribution partners. So that's driven us to maybe outperform a little bit our premium expectations. The business in the last 5 years has been a bit ahead of our expectations despite, I would say, taking longer than we anticipated to actually license and build the infrastructure of the platform. So that's a really nice narrative, if I can call anything nice about take longer than we hope. It's a nice narrative that the team was able to perform produce premium, build a business, maybe without all the tools that most of our competitors have, which is a fully 50-state licensed big platform. You saw us talk a little bit in the quarter, but the progress we made on licensing, getting those big 5 states onboarded and building up sort of our presence across the U.S. That's just going to build momentum in this practice.

Right. And if we stick on licensing, I mean you said you added to 5 new licenses in Q1. Just for for investors to understand like what is the -- like how long is the process typically to get these licenses? And how quickly can you ramp up once you do get a license in a given state?

Every license, every state is different, and this is the joy of operating in the U.S. Each state has a different insurance department. Each state has a different licensing process. Some states are very simple. In some cases, it's a number of months, a matter of months, 2 to 3 months before you get your license. Some states, the more attractive, more popular states take a long time. And so at the short end, right? When we first acquired our treasury listed Shell in the U.S., we were low single digits in terms of licensing. That was about 2 years ago. . in that 2-year period, we've expanded that licenses down to, I think, 46 or 47 licenses. So there's a real expansion of our presence in the U.S. Those longer states are the ones that we started talking about recently, right? Those really attractive large entities, large places like Florida, Pennsylvania, Illinois, those bigger states. The longest one we think will be California, but we've got relative confidence that starts to arrive in the next couple of quarters. A better question, which is the one you asked is what's the trajectory of growth in that business after you get that license. And again, that depends state by state. But what's really exciting for us is we've been talking about this now with our brokers and with our partners for many years. And many of them are very excited to do business with us in these new states. It depends a little bit on the state as to how quickly you start ramping up. But I would say within a 12-month period, you start to see real contribution from those states as you build up. It depends a little bit on what your staffing model looks like. Do you have people in the state, do you have boots on the ground in that state, what type of projects that are navigated. This is the beauty of surety. It is a very local product and having people in those markets matters a lot. And so we see, for example, in some areas like Illinois, where we have a Chicago office, that license and that trajectory is very quick, where you've got something where -- in Florida, where we don't have an office yet, but we'd look to open one up soon, is maybe a bit longer trajectory of contribution.

And is the goal to eventually have boots on the ground in every state? Or is there sort of less -- is that maybe a less efficient way across the entire country?

No, it would be inefficient for us to have boots on ground in every state, but you do cover let's say, regions of the U.S. from hubs. So you have something in the Northeast, you have certainly something in the Southwest, maybe something in the Southeast, Central as well. So we have offices today Connecticut, Stanford, Connecticut, Chicago, Denver, I think you will see us likely have an office at some stage on the West Coast. So there's natural areas of focus where you're going to cover number of states, multiple states from one part of the country.

Makes sense. And then just to finish up on the licensing, -- can you just remind us, I think, are you at -- there's 5 outstanding and like roughly time line, I think you might obviously mentioned California there, but is there any -- when are you hoping to get how be fully 50 state licensed?

Yes. I think there's always -- I think by the end of the year, we would expect to have, let's say, commercially the licenses that we need to really pursue the business. There's always 1 or 2 that take longer. But I think if we get those large states, which many of them we have achieved now, Texas, Florida, Illinois, Pennsygagia and New York. You add California to that and you commercially got, I think, the type of offering that you need. This is 1 of the reasons you see us talking so openly about dropping more capital into the business? .

Right. I do want to stick on just on the U.S. here here just because I do think it's a big growth engine. I think there's some interest from why here about the competitive landscape in the U.S. Surety business. I think it's maybe a little harder to get because it's sometimes a smaller part of some of these larger businesses of the publicly traded companies, at least. So I was hoping maybe you could give us sort of a quick competitive overview of what the U.S. Surety business is like, whether that's key players, what their strengths are and maybe how you look to compete against them as you look at margin.

So U.S. surety and surety in general is a very attractive part of the market, right? Most large commercial players would have a surety practice that underneath the broader piece of the business. They often don't talk about it directly because it's a small part of their overall business. But many familiar names to everyone on this call, participate in this industry. So if you think about the U.S. top 5 players account for about 42% of the market. So there's a concentration at the top and then a very long tail beyond that. Those players would be people you aren't very familiar with Chubb, Traveler, Zurich, Liberty Mutual, groups that have in common, very, very large balance sheets. And that's a bit of the difference between us and one of the challenges as we sort of build up our ranking and our presence in the U.S., as you get into that larger part of the market, you're competing with people with a lot bigger balance sheets. Usually, they're right in insurance across a whole bunch of different business lines. how their treasury listed balance sheet supporting a broader set of business. The difference in Trisura is that attractive part of business, that surety piece of the business is our main thrust, our main focus of the business. So it's a double-edge sword for us. It's a very attractive high-margin piece of the business that has demonstrated over 20 years in our practice here in Canada, how attractive it is to demonstrate your expertise there? It's a place that's very competitive, both in Canada and the U.S. And so that market, as we build up, the way we compete is candidly that focus and that dedication to just writing of our 3 or 4 lines. Surety is a core pillar of it. And so -- when we talk about competing, when we talk about building a business, this is an execution story, boots on the ground going out and building relationships and building up the business. This is exactly how we build things in Canada from 0 ranked player to a fourth ranked player. The U.S., we went from a 0 ranked player by 27th player in the last 5 years. I think you would expect us over time that success starts to move us up. And that success is going to be driven by our ability to differentially service the brokers to demonstrate our expertise and to show people that we're a permanent player in this market.

Okay. Really helpful overview there. Just last one on the U.S. Security business. I want to touch on the combined ratios, which I think have been on par with the Canadian business recently. Just wondering if there's any structural reason that those shouldn't remain similar to what you've seen in Canada or if it sort of depends ultimately on the specific risks and underwriting and what the exact policies that you have in place there?

No. No, I think on an overall basis, the business economics are pretty comparable between the 2, a little bit will depend on mix between commercial and contract at a high level in a year to year. But when you're modeling these businesses, we think about it very much as a North American practice, that North American practice should have very similar economics across the business. .

Okay. Great. Really helpful. Sticking with Surety but moving north of the border. I do want to talk about sort of the move into larger limit bonding, which I think has been -- you've talked about it a decent amount, and I think there's some optimism that you're positioning yourself for some of these larger nation building projects over time. Could you just give us an update on the larger low maturity business because I think there's a lot of investor interest in the topic.

Yes. It's maybe worth turning back the clock for investors who may be newer to the story. Scott's referencing a concerted effort that we made in the last 12 to 18 months to build out the large limited contracting practice. And historically, Trisura as a fourth rank player in the Canadian surety market has played disproportionately in the small, medium-sized contracting space. So we think -- on average, we have access to about 60% of the surety market in Canada. And we have about 12% to 13% market share on that base -- on that -- of the overall market. . One of the real benefits of us getting larger and you've seen that on a balance sheet basis over the last 5 or 6 years. As we get larger, we've got more capabilities, more appetite for moving up in that surety market. And so the first step for us to do that as we start to see our balance sheet expand was to bring on people with really specific relationships and expertise in that larger limit bonding space. That happened at the beginning of 2025. Since then, we've seen a really interesting influx of, let's say, attention, which is followed by submissions in that larger limit space. And I would say this is a multiyear project, a multiyear effort, where the early innings or the early stages of the potential of this practice have been quite compelling. We've already seen Trisura being included on some conversations on some submissions having opportunities to play in this large limit space. As we continue building the balance sheet and building our practice larger and just get better known in that space, it's intersecting at a really exciting time for the Canadian market broadly, right? I haven't really seen the federal government in the time that we've been at Trisura be this focused on building out infrastructure. if they are successful in enacting that change in investing in this business, the surety market, specifically some of these large limited spaces, but candidly, also the smaller midsized space, it all benefits, right? More capital going into this, more projects, building out our infrastructure, those are all projects that require bonded.

Okay. Yes. There seems like like a bit of good timing on top of a strategic expansion to move up market. So we'll keep a close eye on that one. I have a similar question that I asked on the U.S. business. But just on the competitive landscape in surety as you look to move market, if there's a different approach you need to take, who -- if there are certain other businesses that you think are ripe to take share from? I mean, we probably don't want to put names on them, but like it's strategically how you look to sort of move up market from the way you run your business?

Yes. The first way strategic as we always think about this is let's replicate the success we've had and the strategies we've adopted in the established piece of the business, the small and medium-sized piece of the business. And that's really a focus on demonstrating our expertise and leaning into strong relationships in the broker community. So that's a very natural area. We often are asked by brokers if we can do or play in these other spaces. And historically, the answer has been no. I think the change in the last couple of years is you've seen some changes or additions to senior leadership at Trisura is we've brought on people with real expertise and familiarity in this space. And some of those changes in leadership have catalyzed groups of people moving over to our platform. So an ability to move teams of people over who have focuses in these spaces. That's now given us more credibility in the overall market to take market share to be in those conversations with the larger players in this market. And so without naming names, I think our overt ambition is to move from a fourth ranked player to a second or third ranked player. The people in the Canadian market who occupy those spaces as well as people in fifth, sixth and could play in that larger are all targets for us to be challenging for our seat at the table.

Great. Yes, that makes a ton of sense. So I do want to move -- shift gears into the corporate insurance business. I think in your intro comment, you talked about the business starting to contribute more the U.S. business starting to contribute more meaningfully. I think the line was that the U.S. business grow more premium in Q1 than it did in all of 2025. So I just digging in on that U.S. expansion. Just -- could you just give us a sense of what stage you're at in the expansion of that business and what some of the key benchmarks or metrics you look at in the U.S. as you expand the corporate practice?

Yes. This corporate practice is very much following the playbook of our U.S. [indiscernible] expansion. So the early innings, the early days of that expansion really focus on getting our infrastructure built up. So finally, our rates, filing our forms, building out relationships with regulatory bodies. That's the work that we've been doing 2 years now in the U.S. of building up that base. What's followed in the last year or so is building up the team. So attracting the right type of professionals to the organization who can bring on relationships in that local U.S. market and also fit in with the appetite or the underwriting appetite and approach of Trisura, which is that we are very much a profitability-focused underwriting shop in very specific parts of that market. . Those 2 legs of the stool have now been established. We've got sort of the right level of presence from a licensing perspective, we're getting critical mass on rates and forms being filed across the U.S. And now we're starting to go and build the business. And the one complexity I would highlight in corporate insurance versus say surety is surety is one product, right? You're going out and filing one set of rates and forms, corporate insurance is 4 or 5 products. So it's a bit longer ramp-up for you on that initial build period. Now what we're seeing is you're getting through that investment phase. And I always talk about that that initial period of being about a 3-year period to break even in the business. You're starting to see in Q1 anyways a little bit less of a drag from that U.S. build in corp insurance. And my hope as we go through the rest of the year as you start to see more meaningful premium production, and that creates more meaningful contribution from the U.S. We're not in the stage yet where the U.S. business will be writing anywhere close to comparable combined ratios to the Canadian business, but you put that flag of them saying, okay, this is the first time you've had an improvement in that business in its contribution. So that's really exciting. I think this rural for the U.S. in being substantially larger and we generally think about the 10x rule from an opportunity perspective is very much alive in that corporate insurance space. Important for all of our investors to appreciate the lines of business that we are targeting, the types of practices that we're looking at look very much like our Canadian business. So we are not going out here to try to write something different. The underwriting authorities head office functions are the same for both our Canadian and U.S. practices. So you've got consistency of approach and risk appetite. And there is a massive amount of premium in that U.S. market that we're very excited to compete for.

Yes. I mean, he answered a couple of my questions as we went here. But I do want to sort of maybe for the group or anyone who might not know, can you sort of -- can you touch on that on the lines that you do right in the corporate practice in both Canada and the U.S.

Yes. So we always talk about this. We call it corporate insurance, but this effectively means products that small- and medium-sized enterprise need to operate. This generally means things like management and financial liabilities. So directors and officers insurance, errors and emissions insurance, professional liability, general liability products, Fidelity products. So these are very typical insurance products for businesses. The reason we qualify them as specialty products is that generally the types of clients that we are focused on are smaller entities than, say, public companies. So you're doing a little bit more diligence and work on private enterprises to adjudicate the risks. Your limits are generally smaller than the limits that you're putting out in that larger space. And that practice that we've established here in Canada for a long time is what we're looking to replicate now in the U.S.

Okay. That's helpful. And then as we talk, you mentioned combined ratios and not being fully scaled up. But when you are fully scaled in the U.S., do you expect it sounds like you would expect the combined ratios to align with the Canadian business? Or is there competitive dynamics, given it's a larger market that might impact the profitability?

Yes. I think we tend not to model individual combined ratios for the business because you're allocating expenses across the overall business. But I think the mix, if you were to segment them, combined ratios will be very similar between the 2. The composition of that combined ratio will likely be a bit different. Your loss ratio is probably a bit higher in the U.S., but your expense ratio is a bit lower. So the idea here is that on an aggregate basis, you're building practices that are consistent on a combined ratio despite having maybe different mixes in the composition of that combined ratio.

Okay. Interesting. And then you look further out when you are fully scaled. I do get sort of -- I did get a question on this. And just the potential for operating leverage in the corporate insurance business beyond maybe as you add the U.S. practice, like is there potential for further operating leverage as the full business is scaled up like relative to what you've done historically in the corporate practice -- or again, you might not look at it that way if the expenses are being allocated across the business. But just -- yes, I got a question on operating leverage.

I think that I think at the highest level, I mean, this is a constant focus and question rightly so at Trisura is that we always talk about operating leverage. But the operating leverage we've achieved it maybe is diluted by the continued investments we make in building new platforms. And so we've got this great playbook in front of us, which is to scale the business. And the best rule for insurance companies is the bigger your premium base and balance sheet, the more operational leverage that you can achieve, right? You can scale your appetite, you can scale your premium hopefully on the same group of people. Where I would say the near-term operating leverage comes from our corporate insurance practice is having some contribution from that business. We talked last year at year-end of about a $2 million drag from that corporate insurance practice. That hopefully is starting to move something below $2 million that you've seen some better premium. As that moves kind of through a drag into a contribution, you've got then a business that just naturally is expense ratio lower. And as that expense ratio lowers, that's a really good signal of operating leverage. The question, I think, which is a good one, which is in the longer term, let's say, 3, 4, 5 years from now, could you build a practice on a North American basis that actually looks more efficient than an individual Canadian or an individual U.S. business. I think that's a really good focus for us and a good focus for investors is the more scale this practice becomes, the more natural economies of scale we should be pursuing. And that's a trajectory that most growing insurance companies would point to.

Yes, I think that's an important item to watch. So we will be doing that for sure. Just a reminder to the audience, if you do have questions, you can e-mail them to me and I will work them into our conversation. But we will move on now just to the warranty piece of the business, coming off of a very strong year in 2025 with 33% gross premium growth in warranty. We did still see 9% gross premium growth in Q1, but obviously hard to live up to those big numbers in 2025. So maybe we could just touch on what was behind that outsized growth in 2025 and what the continued growth levers are for warranty as we go forward because the business is still putting up growth?

Yes. We still are very excited about the trajectory of warranty. We think there's a lot of opportunity in that going forward. We saw, I mean, in excess of 30% growth in 2025 in this business, candidly, as a result of us winning some business, launching new programs with existing partners. So you can have these chunky step-ups in growth trajectory for the business as you bring on these new platforms. There's still lots of opportunities for us to bring on new programs or launch new practices with our partners. So I don't think anyone should take the move from 30% to 9% as as any concerning trend on that business. It's just now a much larger practice, right? So you're growing from a larger base. I think this entity has a lot of opportunities to continue growing working with the dealer groups and warranty administrators that we've had for now 20 years.

Okay. Yes. It seems -- I mean, not complaining about the growth, especially against a very elevated base in '25. So good to see that there's still some momentum there. And then if we just think about combined ratios, how should we think about combined ratios for -- in both the short run and the long run in this business, again, almost a similar question on forward-looking operating leverage as well.

Yes. I think combined ratios in the short term for warranty will be a bit elevated. So you'll probably see this in the low to mid-90s for the next quarter or 2. Long term, we think this is a low 90s combined ratio business. It's very structured, right? Warranty unlike some our other products is much more structured and so you're almost designing the product to target that low 90s combined ratio, which you've seen very consistently over the life of our business. I think that in the long term, it returns to that low 90s level, maybe a little bit higher than the kind of 90% that we saw in recent years, but still very attractive as we build this business. .

Okay. I'm just going to keep moving through the segments. I'll move over to Canadian fronting and close off this Trisura specialty portion. Premium growth there certainly been under pressure for the last 5, 6 quarters. But I don't think that really tells the whole story of the health of the business. So maybe you can give us a sense of how the Canadian fronting market has evolved and where we sit today and what sort of you're thinking about the market given the premium growth has been under pressure.

Yes. I think this is a very natural navigation of a changing market, right? What we care about and what our partners care about most is is underwriting profitably. And what we've seen in Canada, maybe uniquely across our practices, Canadian fronting group, is in much more traditional P&C lines of business than the overall practice. This is where you see a lot of competition. And I don't mean competition from other front-end companies, but I mean competition from traditional players from Lloyd's just coming back into the market. So you've got a combination of rate coming down a little bit. You've got a combination of more aggressive behavior from traditional insurance companies. So naturally, we see a little bit of a reduction in top line. The story here, what we focus on is margin and contribution on the bottom line. And that has been pretty steady for us. We also monitor internally pipeline of this business. And we still continue to have a lot of good both conversations and formal dialogue around launching new relationships in this space. So we think that there's still an opportunity to grow this business in the short and medium term. We think that likely is probably not demonstrated in, let's say, the near-term quarters. But given what we're seeing on the on the coal phase of the pipeline and opportunity set that's coming to us, there are a lot of ways for us to grow and develop this business. And I think this is a great example of something that can flex as opportunities arrive. I think naturally, as those opportunities evolve in the context of the market, we're going to find other ways to grow this business. And that's what you see the team focusing on right now.

Okay. That makes sense. And then -- in an environment, sorry, where you have this elevated competition driving lower growth, like those opportunities were -- like where are the -- where are they coming from? If maybe you could just sort of unpack what -- when you say you're seeing more opportunities? Like what does that means at an operating level, like given you're not able to, I guess, profitably chase all of that.

Yes. So I would separate this maybe in nuance. The opportunities we see from a pipeline perspective are people interested in doing business in Canada who don't have let's say, operating entities or capital in the country. And so we're a very natural partner for insurers or reinsurers who are outside of Canada who want to launch a practice here. We've become a very commercial and natural partner for those groups. Those types of opportunities continue to knock on our door. So there are groups, entities who are very interested in building practices, building businesses here in Canada along the same lines of the businesses we've built with other partners who are now seeing maybe a little bit less momentum on rate or opportunity as a result of competition in the marketplace. So despite having some, let's say, top line shrinkage and it's important to note net premiums earned or that insurance revenue line in this business is what we track. Like the gross level is going to move around a lot. That net line is what's going to drive opportunity and profitability in the business. We still see lots of opportunity to bring on new players into the Canadian marketplace. And those are the conversations when I talk about references of new lines of business that P&C space in Canada, which is much, much larger than the specialty line space that we play in today. There's still a lot of groups out there who are interested in building that practice. So market really interestingly today, as the market has quite a bit of capital in it, lots of people are looking for ways to deploy that capital. We've become a very natural partner for groups looking to deploy that capital in Canada who maybe haven't done it in the past.

Okay. Great. That's helpful clarity. So I do want to move now to the U.S. programs business. I would say it's been 5 clean quarters now in a row. The impact of the exited lines look to be pretty firmly in the rearview at this point. So can you just give maybe someone who's more new to the story, just a sense of what some of the changes you made to stabilize things in the last stretch.

Yes. So I think very naturally, tracers in its 20th year, we're an underwriting company. We have a really strong track record of positive reserve development in Canada, a really strong underwriting practice here. we launched a new business, a de novo business in the U.S. in 2018 focused on this program space, which utilizes our coordinates relationships between MGAs and the reinsurance community as well as underwriting our own share of the business. As we grew that business, what we saw, let's say, going into our fifth or sixth year, some of the assumptions that originally we had made around the reserving needed to be revisited. And candidly, that's a very natural evolution of a growing business, especially one as you're growing in sort of an expanding part of a newer market. And we made those adjustments very proactively and very definitively in 2024. So new team, new resources, new infrastructure, looking candidly to make very direct improvements in that practice. We proactively took those adjustments in 2024. I think you're seeing a lot of the industry make some of those adjustments even now and last year. And what it's allowed us to do is focus on the partners and the lines of business, we think are long-term strategic partners of Trisura. Take out those groups, maybe that profitability-wise, we don't think are representative of the opportunity in the business. And that's very easy for us to say in 2024, but I think a lot of people want us to see how that evolved and what you saw through 2025 and now even through Q1 of 2026, is those movements are staying fairly consistent. Those changes are bearing fruit in consistency, predictability, profitability of that business, right? You've got pretty consistent now few quarters of that low to mid-80s combined ratio coming out of that business. That's exactly where we want it to be running.

Okay. Yes, I mean, it clearly looks like things have stabilized, as I mentioned in the question. So there was -- as you mentioned, there was a pause in the growth of new programs that you were adding, but think in the last few quarters that there's been some momentum on adding new programs into the mix. Could you just give us a sense of what type of -- what kind of programs these are? And whether that be the types of business or the MGA partners that you're working with. Yes, it -- a little more color on that would be really helpful.

Yes, it's interesting. We -- this market is one that benefits a lot or utilizes a lot of reinsurance. And some of the comments you made earlier on cycle, I think, is important for people to understand about Trisura, we generally don't follow traditional insurance cycles, right? Our lines of business that we underwrite directly are specialty lines, you're somewhat removed from the broader cycle. Really importantly, U.S. programs actually benefits from soft market cycles. And what I mean by that is the lifeblood of the business or at least a real driver of the business is access to reinsurance partners. What we had seen really starting in 2022, but accelerating 2023 and 2024 was an extremely firm reinsurance market. And so that really lowered our appetite to be launching a bunch of new programs. if the quality and types of reinsurers that are out there are not up to our standards. What we had seen starting at the beginning of 2025 and what we started signaling through some of our commentary was a real shift in reinsurance market appetite. And the area that we've seen it most definitively is the property space. So we hadn't launched a new property program probably in 2 or 3 years in that U.S. program space. All of a sudden in the latter half of last year, you saw us successfully launch a couple of new property programs with really high-quality rated panels of reinsurance. And that theme of higher quality reinsurance being available for both existing partners and potential new partners gives us just a bit more confidence in talking about the growth trajectory of that business. So it's -- it's a real shift in the business, I think, catalyzed by that reinsurance market, which has driven us as we've gone through a number of use maturity milestones in the sophistication of the operations of the business, more confidence to Lean, right? And so we're talking pretty openly now about that business growing kind of mid- to high single digits for 2026. And the upside there, the risk to the upside is does that reinsurance market continue to soften. Does that capacity continue to come into the market? Because we've now got an environment that's a lot more supportive for the model that we've built.

Right. And I think we're seeing even on the midyear renewals, I think I saw earlier this week that the price on the reinsurance pricing certainly still remains certainly soft. So hopefully, that momentum continues for the U.S. program side of the house. that sort of covers off the insurance businesses. So I do want to just quickly pivot over to the investment income. I think you mentioned in your -- you gave us sort of a good summary in your initial comments, but I wanted to sort of talk about the near-term outlook for the investment portfolio. I think yields have generally been pretty stable for you as you look back across the history. We saw maybe some seasonally lower yields in Q1, but just wondering if there's anything structurally different in the approach on the investing side or if you're sort of comfortable with what you're doing at the moment?

Yes. We have been historically very, very conservative on the investment portfolio side. And I think the team has done a really great job of defending yields as we saw last year, especially maybe at the beginning of this year, yields coming down. So a great job of efficiently redeploying targeting that investment-grade bond yields being consistent. I think as we've matured, as we've grown the platform, the natural question is what's the long-term asset allocation model for the business. And I think there's some clear opportunities for us of normalizing our approach maybe versus market peers. We've historically had a much lower equity allocation than broader peers. We've historically not invested that much in alternative products. And so we've avoided any sort of stress here in the market today talking about things like private credit or equity volatility. These really haven't applied to Trisura. As the entity gets larger and continues to grow, I think a more mature spread of risk across the portfolio is a really exciting lever for us to pull to increase those long-term returns in the portfolio. And I think that's -- that's something we talk about a lot. Let's not only actively defend yield, but let's optimize it and talk about where the asset classes are that maybe we've underinvested in or under allocated to in the past. Let's use this position of strength, which candidly, is what we're sitting on, right? A short duration investment grade bond portfolio is a really great source of funds anytime we see market volatility. So end of March, we saw relative equity volatility in in the market, great opportunity for us to increase marginally our equity allocations. Those types of moves which are gradual and appropriately risk-managed. Are the types of things I would expect us to be evolving or navigating over the next year?

Okay. So yes, there's maybe some at the margin upside to yields, if the market gives you the opportunity. So certainly -- certainly something at track there.

Well, and one thing maybe -- we've never talked about really in the past and here some other insurance companies talking about it, but the predictability and magnitude of contribution from a portfolio of investment-grade bonds at Trisura is meaningful. And it's meaningfully different proportionately than what our business used to be. So this is a real change in in predictability and proportion of EPS that's represented by just an investment-grade bond portfolio.

Right. And then maybe if you think about the portfolio as it stands in a short duration, as you -- as things roll over? Or do you feel relatively confident on the fixed income side that you can defend or maintain the sort of like current yield levels with maybe some upside like you mentioned on the margins? Like do you feel going to roll on stay there.

Yes. I'll be the first to acknowledge, Fixed income volatility this year has been dramatic. That's actually given us more opportunities right now, right, because yields all-in yields are actually quite a bit higher. -- than they were at the beginning of the year. So certainly, today, when we talk about deployment and building the business, that expectation for yield consistency is very much there. And we're going to take opportunity of that. We're going to take advantage of that opportunity through the rest of the year. .

Okay. Great. Yes. Certainly, I don't think you get any pushback that the fixed income market has been volatile. So I just wanted to -- as we get closer to the end here and move on to sort of some -- a couple of questions on capital allocation. I think you mentioned in the past, you -- at least you're at least open to inorganic sources of growth, and I think you have like as you mentioned earlier, some room to take on the capital structure to maybe look at something -- some other uses of whether to take the debt to capital up. On the inorganic side, I think you mentioned in the past likely on the smaller side, but I'm curious of how -- what your current thinking is on M&A and whether there's opportunities that could be attractive.

Yes. Our priority is going to continue to be on organic growth. I think maybe different than most P&C companies, and there's a lot of talk these days about the trajectory of P&C companies, especially in the context of a softer market. Trisura has a much different profile and posture than these groups from a growth perspective, right? There's not many entities out there launching de novo practices in sort of complementary business lines. That's going to be the core of our trajectory of growth. That being said, I think we have a great track record historically of being really tactical on inorganic M&A, right, adding licenses, bringing on people, adjudicating sort of parts of the business that we think in 3 or 5 years can be meaningfully moved by pursuing something inorganically. Naturally, as we've gotten larger and built up a big capital base, that opportunity set grows. And I think acknowledging that organic growth continues to be our main focus we will always look for ways to scale the business opportunistically, inorganically. And this type of environment is a great one for us to be looking at that.

Yes, that was going to be my next question. Does this point we're in the cycle, give you more optionality on the inorganic front, and it sounds like -- it sounds like it does at some level.

Yes. I mean, you're seeing it across the broader industry, right? A very natural corollary of the softer market is people look at these these types of acquisitions more openly. I think I think people get a little bit more realistic around valuation in this type of market, and that gives us the specialty space, right? Let's acknowledge these businesses trade at premium multiples because their profitability is generally better than the broader market. And in the last few years, as those returns have been quite strong, it's been rare for people to want to part with those businesses. That may change in these types of environments.

Right. I think that only makes sense. And then just more broadly on capital allocation, is there anything you'd want to share on how you're bouncing in I think growth is organic growth is clearly the focus. But is there anything else that fit into the capital allocation framework or puzzle that you look to communicate?

Yes. I think the strategic items we're always focused on is that organic growth, if we can supplement it tactically with inorganic, we'll look at that. You've seen and we've had some questions around buybacks. So we have been more active on the NCIB, candidly, mostly to offset dilution from equity awards. I don't think you'll see much more than that. Those types of initiatives are going to be our main priorities for the business in the near term. I think longer term, we often get a question around dividends for the business. I think we've got a real opportunity here in the next couple of years to build a differentiated practice in the U.S. for the business. So until we establish those, I think the business is not yet one that you would expect to pay dividends near term. But in the long term and medium term, insurance companies, especially scaled ones start to make a lot of sense as dividend payers.

Okay. That all makes sense. So as we come to the end here, you mentioned multiples in the space. And I think if you look at your own multiple and sort of the downward trajectory it's seen and given that sort of offset that against the growth of the business, which has continued to hold up. I'm wondering like from your seat, what do you think that the market or investors might be misunderstanding when they look at Trisura.

I think we've got -- listen, we've got a core group of really strong, really great partners who are shareholders are Trisura, but there are groups who are maybe more generalists or newer to Trisura who bucket the entity as more of a P&C company than a special company. I think that lack of -- it's tough, right, let's acknowledge we're a small cap in the Canadian market. There aren't a lot of peers for Trisura in the market, right? There's not a lot of entities out there, right, in the mid-80s combined ratio at a high teens ROE for people to come up to. And layer on top of that, these trends of softer markets or concerns around softer market, it's sometimes difficult for people to wrap their head around a P&C business that doesn't necessarily get buffeted by those headwinds. And I think that's the disconnect today, right? You see a practice that by every measure, is performing exactly the way that we hope it will. And the outcome of that is that we've grown the business substantially and growing into a much more let's say, a much lower valuation than we've had historically. We believe we put our head down and keep working on this business, that starts to get recognized. But the first step is for us to educate people on the difference of a specialty practice versus some of maybe the more general practices. And that's the work I think you're going to see us do a little bit more of now, right? The exercises like this, conversations like this, some other efforts that we have are meant to differentiate a little bit for people why Trisura is not a broad generic P&C company and why we have opportunities that are not the same as the broader market.

Right. And I think from my perspective, when I look at it, like you said, if you look at the peer groups that are doing mid- to high-teens ROEs with mid-80s combined ratios, they are trading at a premium multiple and a premium to where you're trading. So I think that if I left the audience if anything, it would be the valuation, like while it might not stand out against other P&C insurers. I think that in the specialty group that there's -- it's certainly an attractive time to take a look at Trisura. So I think we've spent a good amount of time looking at the individual pieces of the business. But if we step back and look at the whole story, I think in summary, if there's anything you could -- outside of what you just said, sort of message to the audience and what you think Trisura is set up for the upcoming -- for the upcoming year, like I think it's a good time to maybe just give us an idea of both 2026 and maybe even like as near term as what the upcoming quarter and how the business is trending?

Yes. I think all of the -- in terms of quarterly check-ins, I think all the trends that we've been talking about for the last 5 quarters remain intact. -- for this quarter. I think people should continue to expect us to be achieving that 15% plus ROE. I think we've obviously demonstrated that we can outperform that. We're very excited that the goal we set out 4 or 5 years ago have reached $1 billion in book value by the end of 2027. We look very well on track for that and hopefully to achieve that a little bit early. I think those types of milestones for people tracking the long-term performance of the entity are really credibility building. And if I take a step back from my seat, the vehicle is in the most powerful position it's ever been. Our balance sheet is the largest ever been. Our infrastructure base is the most significant it's ever been. Our licensing as the broadest it's ever been. We now just need to continue executing in the way that we've been doing it for 20 years. And the risk of that decreases every day. So it's a really exciting time for us at Trisura, and I think we can communicate that pretty clearly for investors.

Excellent. Well, I think that is a perfect time to wrap things up. So David, thank you again joining us this morning, and thank you to everyone who joined the call and send in some questions on what is definitely a busy day in the Canadian markets. So as always, if there's anything anyone wants to discuss in more depth, please feel free to call or e-mail. But again, thank you to everyone who joined and have a great rest of the day.

Thanks, Scott.