Trisura Group’s hybrid fronting carrier platform was a significant generator of top line growth for its Canadian financial services parent in Q4 2020, contributing gross written premiums of $210.7mn and fee income of $8.4mn.

Trisura Group

That represented a more than doubling of GWP from $95.4mn in the prior-year period, with fee income up from $3.1mn. There was also a jump in deferred fee income at the quarter’s end, from $8.3mn at 31 December 2019 to $18.3mn.

With the Michael Beasley-run platform operating as a participatory fronting carrier, net written premiums for the fourth quarter were $17.6mn, representing a retention rate of 8.4 percent.

In its financials, Trisura Group said that the increase in GWP and NWP was driven by the addition of new programs as well as the maturation of existing programs.

Trisura demonstrates strong program premium and fee growth

The retention rate for the fourth quarter was up from 5.9 percent in the prior-year period, which was attributed to a more mature business mix and selective increased retention on renewed programs.

The program platform continues to target retention of between 5 and 10 percent on all new programs, and then will consider ceding that retention to its captive reinsurer.

Trisura’s hybrid fronting carrier platform did report an increased loss ratio for the quarter, climbing from 60.9 percent to 75.9 percent, which it put down to storm activity.

It contributed comprehensive income of $2.1mn to its parent for the quarter, compared to a loss in the prior-year period.

For the full-year there was also a higher loss ratio –  74.0 percent, up from 63.2 percent – which included the impact of civil unrest losses and storms.

Over the 12 month period, GWP surged 145.2 percent to $647.2mn, with NWP up 199.1 percent to $43.9mn, reflecting a retention rate that climbed from 5.6 percent to 6.8 percent.

The full-year comprehensive income contribution was up 566 percent to $14.9mn.

Trisura's program business mix by GPW

Commenting on the performance of the hybrid fronting business, Trisura Group president and CEO David Clare said: “If 2019 demonstrated the potential of our US fronting entity, 2020 achieved much of what was promised in our early years.

“Following acceleration of premium in 2019, consecutive capital injections and significant growth in the team, the fronting platform increased fee income and produced healthy returns despite its early stage of maturity.

“We have grown premium and net income in every quarter and anticipate growth to continue. Introducing admitted capabilities through the acquisition and expansion of new licences is expected to support this growth.”

He also commented on the use of Trisura’s reinsurance arm as part of the hybrid fronting model, with $13.0mn of premium ceded to the captive vehicle, a figure that is expected to grow in 2021 as it utilises the vehicle more in its retention on programs.

Clare highlighted the improved fronting operational ratio reported by the platform of 68.5 percent for the quarter (Q4 2019: 78.9 percent) and 70.6 percent for the year (2019: 84.8 percent), which reflected growth in net earned premium and fronting fees as the business built scale.

Trisura launched its fronting platform as an E&S carrier but has since added admitted capabilities in 46 states.

The carrier has strong relationships with leading reinsurers, with Swiss Re, Munich Re, Lloyd’s and RenaissanceRe all understood to be meaningful players on its panels.