Trisura Group Ltd
TSX:TSU
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
31.77
46.38
|
Price Target |
|
We'll email you a reminder when the closing price reaches CAD.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Good morning. Welcome to Trisura Group Ltd First Quarter 2021 Earnings Conference Call. On the call today are David Clare, Chief Executive Officer; and David Scotland, Chief Financial Officer. David Clare will begin by providing a business and strategic update, followed by David Scotland who will discuss financial results for the quarter. Following formal comments, line will be open for analyst questions. I'd like to remind participants in today's comments, including in responding to questions and discussing new initiative related to financial and operating performance. Forward-looking statements may be made including forward-looking statements with the meaning of applicable Canadian and U.S. securities law. These statements reflect predictions of future events and trends and not -- and do not relate to historic events. They are subject to known and unknown risks and future events, and results may differ materially from such statements. For further information on this risk and potential impacts, please see Trisura's filings and securities regulators. [Operator Instructions] I will now turn the call over to David Clare. Please go ahead.
Thank you. Good morning, everyone, and welcome. I'll start with a few comments on our progress in our business plan and provide an update on our strategic initiatives following that. In Q1, we produced our largest quarterly premium to date. As importantly, disciplined underwriting and a business model that focuses on recurring fee income yielded the strongest earnings per share and return on equity in our group's history. This demonstrates the strength of our multi-jurisdictional and multi-line specialty insurance platform as well as the quality of our business today. I should acknowledge that we continue to operate in the midst of a global pandemic and have enjoyed resilience made possible by our committed employees and high-quality partners. All lines experienced strong results in the quarter, with income supported by exceptional underwriting and growth in Canada and continued maturation of business in the U.S, catalyzed by rising interest rates and helped by retention of U.S. fronting premiums we benefited from a positive contribution in our Reinsurance operations. In Canada, the majority of our staff continue to work from home. January 2 wave predicated the closure of our Canadian office to adhere to local guidelines, save for essential staff. We have used the time to expand our footprint in anticipation of a future return. We continue to monitor local guidelines as well as approaches by peers and financial institutions to guide our staff. In Oklahoma City, the base of our U.S. operations, vaccines have been well adopted and most employees have returned to the office on a voluntary basis. We expect the transition to full-time in-office operations over the coming months. Company-wide productivity continues to impress and results reflect that. The industry and our employees, specifically, adapted well to this new paradigm. However, we are keen to recapture the advantages of in-person interactions and hope to benefit from the tools and processes we've adopted in the last year. I'm hopeful that comfort with video conferencing and less reliance on travel will produce efficiencies with internal and inter-office collaboration. Claims have yet to observe a material change related to COVID-19. I believe the ultimate impact is yet to be fully understood and we maintain an increased reserving level on several business lines as a result. In Canada, premiums grew 74% over Q1 2020. We continue to benefit from a hardening market in corporate insurance lines as well as momentum with existing and new distribution partners. New programs, including Fronting, helped Risk Solutions more than double premium over Q1 2020, supported by auto warranty. Gains in market share and new product in Surety drove 33% growth over the prior period. A loss ratio of 13% in the quarter was significantly improved versus Q1 2020, driven by better claims in Corporate Insurance and continued strong results in Surety. Surety loss ratio benefited from continuation of construction activities through economic shutdowns and government support programs. Profitability was amplified by Corporate Insurance's 14% loss ratio. Both lines benefited from significant and favorable prior year reserve development. Our U.S. surety practice continued to progress. We have expanded surety licensed states to 46, as well as submitting a business plan to the treasury department in pursuit of a delisting, a necessary step to participate in the federal bond market in the U.S. We have secured office space in Stamford, Connecticut and are actively building the local team. We are also gaining momentum in Canadian fronting, with opportunities to expand our current presence as well as replicate our U.S. hybrid model. In the quarter, $15 million of premium was generated in Risk Solutions through Fronting, and we continue to evaluate opportunities to grow this business line. We have benefited from our experience in the U.S. in structuring these transactions. Our platform continued -- our U.S. platform continued its trajectory growth in the quarter. Despite strong growth in the prior period and a weaker U.S. dollar, we increased average premium per month to $75 million compared to $70 million in Q4. We recorded $10 million of earned fronting fees and $21 million of deferred fee income at quarter end, indicative of future fees to be earned through our income statement. We have 4 admitted programs, although admitted premium generation of $8 million remains immaterial versus excess and surplus lines. From our original 13 admitted licenses, the team has expanded our ability to write business to 48 states with the expectation of a fully licensed platform in due course. We are actively evaluating admitted programs and acknowledging a ramp-up period -- a longer ramp-up period versus excess and surplus lines, are hopeful to demonstrate progress in the second half of the year. In the quarter, we received an investment-grade Issuer Rating of BBB stable from DBRS. This is a milestone for the company and will provide significant and accretive financing opportunities, important as we observe sustained growth in both the U.S. and Canada. We are in the early stages of our admitted platform build-out, and the opportunity in U.S. surety in the coming years is exciting. This quarter, more than any other, demonstrates the potential of our platform when all segments perform. The company continues to evolve and the increasingly diverse, and fee-based nature of our earnings helps to derisk profitability and supports growth. The hardening market accelerated through the events of 2020, and we expect this trend to sustain in 2021. The combination of established momentum and introduction of admitted capabilities and the launch of a U.S. surety strategy provides ample opportunities for us to grow organically. Federal budgets in Canada and the U.S. continue to highlight infrastructure spending as part of their toolkits, something we would like to see enacted and will support growth in our now North American Surety platform. We remain an insurance company in growth mode and must focus on the skills and practices that brought us to this point, concentration of business lines we know, conservative underwriting and detailed structuring. Claims in our business can experience volatility and severity. We should expect the claims experience approximating historical averages in the long term, strengthened momentum on our current quarter notwithstanding. With that, I'd like to turn it over to David Scotland for a review of the financials.
Thanks, David. I'll now provide a brief walk-through of some financial results for the quarter. GPW for the quarter was $310 million, which reflects growth of 83% over Q1 2020. This reflects growth in the Canadian operations of 74% and growth in the U.S. operations of 86%. Fee income, which is primarily related to fronting fees from our U.S. operations grew by 83%, reflecting growth in fronted premium in the U.S. and an increase in surety accounts in Canada. Net claims in Canada for the period were lower than the prior year as a result of a lower loss ratio of 13%, driven by strong underwriting results across all lines, but with particular improvement in corporate insurance. Net claims in the U.S. for the period were greater than the prior year as a result of growth in the business as well as certain cat losses, which caused the loss ratio to increase to 73% in the quarter. On a consolidated basis, net claims expense in the quarter were lower than the prior year as a result of the Reinsurance business, reflecting claims recoveries associated with discounting of our life annuity reserves. Those life annuity reserves were impacted by a rise in European interest rates in the quarter. It's important to note that the claims movement associated with those life annuity reserves was largely offset by investment losses derived from the securities supporting those liabilities. Net commissions expense increased by 65%, reflecting growth in the business in both the Canadian and U.S. operations. Operating expense in the quarter grew by 40% over Q1 2020. Part of the increase is related to share-based compensation associated with certain outstanding options for which we have now completed a hedging program. The movement of the hedge is reflected in net gains losses on the income statement. Excluding share-based compensation, which has been hedged, operating expense grew by 23% over Q1 2020, reflecting primarily growth in the Canadian operations. Net underwriting income in Canada for Q1 2021 was higher than Q1 2020 as a result of growth in the business as well as a lower loss ratio across all 3 lines. The expense ratio in Canada was also lower than Q1 2020 as a result of certain onetime commission payments from reinsurers associated with modifications of our surety reinsurance program in Canada. The expense ratio was lower as well as a result of improved operational efficiency. Net underwriting income in the U.S. for Q1 2021 was higher than Q1 2020, largely as a result of growth in new and existing programs as well as improved operational efficiency. The combined ratio in Canada was 65%, and the Fronting operational ratio in the U.S. was 67%, both improvements over Q1 2020. Net investment income was in a loss position in Q1 2021 as a result of the increase in European interest rates in the quarter, which impacted the euro-denominated bonds supporting the life annuity reserves. As discussed, the movement in those bonds was largely offset by movement in corresponding claims reserves. In Canada and the U.S., interest and dividend income increased by 2.3% over Q1 2020. The increase was primarily related to an increase in the size of the portfolio associated with growth in operations and the equity raise in 2020 and was mitigated by reduced market yields. Net gains were $3.8 million in the quarter, which was significantly greater than Q1 2020, primarily as a result of our gains in our share-based compensation hedging program. As discussed previously, these gains were largely offset by share-based compensation expense. Income tax expense was $5.7 million in the quarter, which was greater than Q1 2021. This reflects an effective tax rate of approximately 23%, which is in line with expectations. In Q1 2020, we recognized the deferred tax asset related to previously unrecognized tax losses, which resulted in a onetime tax recovery in that quarter. Net income generated from the Reinsurance operations was also greater in Q1 2021 as a result of a favorable ALM mismatch, which occurred in the context of rising European interest rates in the quarter. Net income for the group was $19 million for the quarter, which was greater than Q1 2020 by 130%. The increase was largely driven by increased profitability in both Canada and the U.S. operations as a result of growth and improved operating metrics. This growth in earnings led to improvement in a number of key financial metrics over Q1 2020. Diluted EPS was $1.84 in Q1 2021 and greater than the prior year despite an increase of 1.4 million shares from the equity raise in May of 2020. Consolidated ROE on a rolling 12-month basis was 16% at the end of Q1 2021, which was greater than the rolling 12-month ROE at the end of Q1 2020. Overall, strong growth and improved profitability in both Canada and the U.S. have contributed to an increase in earnings and improved key financial metrics during the quarter. Assets in the quarter grew by $180 million as a result of growth in Canada and the U.S. Recoverables from reinsurers have increased as a result of growth in the U.S. fronting business, where claims liabilities are largely offset by expected recoveries from the reinsurers to whom we see the business. Premiums and accounts receivable and other assets have grown primarily as a result of growth in GPW from the U.S. operations. Growth in this balance is largely offset by growth in reinsurance premiums payable associated with the premium ceded to third-party reinsurers. Liabilities in the quarter grew by $161 million, primarily as a result of growth in unearned premiums and unpaid claims loss adjustment expenses, which have grown as a result of growth in both Canada and the U.S. As was discussed, the growth in these balances is largely offset by growth in reinsurance recoverable. Equity has grown by $18.9 million, reflecting growth in net income, as discussed, as well as growth in other comprehensive income in the quarter. OCI increased in the quarter, primarily as a result of unrealized gains on the investment portfolio, in particular as a result of unrealized gains on equities and preferred shares. This was offset in the quarter by some cumulative translation loss due to the strengthening of the Canadian dollar against the U.S. dollar, which drove lower valuations of capital held outside of Canada. Book value per share was $30.04 at March 31, 2021, and is greater than December 31, 2020, as a result of profit generated in the quarter. As at March 31, debt to capital was 8%, which remains below our long-term target of 20%. The company remains well capitalized, and we expect to have sufficient capital to meet our regulatory capital requirements. David, I'll now turn things back over to you.
Thanks, David. Operator, we'd like to now ask analysts to submit any questions. As a reminder, please maintain one question and one follow-up, after which you re-queue to ask further questions.
[Operator Instructions] Your first question comes from the line of Nik Priebe from CIBC Capital.
I was wondering if you could give us a bit of color on the ramp of admitted premiums in the U.S. business and what that will entail for that platform. Like, will those premiums be sourced from the same network of MGAs as your excess and surplus lines and supported by the same counterparties on the reinsurance side? Just some color on that would be helpful.
Thanks, Nik. It's a good question. Our approach in the admitted market encompasses expansion of current partnerships in the excess and surplus lines to admitted versions of those programs, although it's not limited to that. So there will be examples of program administrators that we work with today in the access and surplus line space who have admitted programs alongside their E&S lines that we'd like to help support. The capacity behind those programs could be from current reinsurers or could be from new reinsurers, but we'll evaluate that in the context of those new programs. I think the bigger opportunity and the broader opportunity in admitted market is programs outside of our current network. But as a start, we'll likely look to our current partners to expand our admitted platform. In the fullness of time, it will be a combination of current partners and new partners in the admitted space.
Got it. Okay. That's helpful. And then my one follow-up. You alluded to the lower loss ratio in the Canadian business in the quarter, but the expense ratio moved lower as well. Just in the context of strong premium growth, how should we think about operating leverage from a longer-term perspective? Naturally, commission expense will grow on a commensurate basis, but is it reasonable to expect headcount growth to lag premium growth there?
A big target for us as we continue to grow our platform is to achieve better operational leverage. You are seeing the benefit of some of that operational leverage in recent quarters as we're seeing better premium production per employee. I would note there are some temporary benefits in some of our expense ratio improvements as a result of some savings in light of COVID-19. Our staff are traveling less. Our staff are marketing in-person less. So that does benefit it somewhat. But if you take a step back in the development of our business, achieving that operational leverage of a broader platform is a real critical component for our maturation. So it is something we'd like to demonstrate, but it will take time.
Your next question comes from the line of Jeff Fenwick from Cormark Securities.
So David, I just want to continue on the questions on the U.S. business. Could you speak to the pipeline you have of program ads down there with the existing E&S operations? Are some of the ones you put on later in the year still ramping? And do you have a good line of sight on some incremental ones to start off or continue through this year?
Yes. Thanks, Jeff. It's a good question. Our pipeline in the excess and surplus lines space, which is where the bulk of our premiums are originated today, is still quite strong. And I would say we're actually seeing more premium or program submissions in the E&S lines than we are in the admitted space today. That's indicative a bit of the market tone or hardening market statistics in the U.S. at the current moment. So I'd say our pipeline remains very strong. We unloaded a number of programs or onboarded a number of programs in Q4 as well as diligence in and onboarded a few programs in Q1 that have yet to start producing premium. For the most part, those are E&S programs. So we do have a few admitted programs in there as well. Those admitted programs take longer to ramp. So the onboarding process, the rate filing process, the administrative process for those admitted programs does take a little bit longer than the E&S lines, but the pipeline remains pretty healthy at this stage.
Okay. And then I just wanted to touch on the loss ratio in the U.S. It's been trending higher for the last few quarters here. I think it was 79% in Q1, and you did reference some U.S. storm activity, but I think this is sort of the third quarter above 75%. Can you just comment on how those programs are trending? Is there just some transitory items in there that might have the loss ratio more elevated than typical? And how should we think about that going forward?
Yes. So we have seen in Q3 and Q4, last year specifically, a spike in the loss ratio in the U.S. business as a result, almost exclusively, of property programs. Those property programs in Q3 and Q4 last year suffered from some what we view as I won't say one-off, but unusual events. So we had some civic unrest losses in our property programs last year as a result of some riots. We had some property losses in a relatively active catastrophe season. And we similarly had property losses in Q1 on a retained portion as a result of this winter storm in Texas. So I would highlight that our loss ratio this quarter is down below 75%, or about 73% in the quarter, which is, again, higher than we'd like to see it. But if you back out the impacts of this winter storm in the quarter, it is much more aligned with what we would expect. I hesitate always to back out any impact of claims because that is a reality of participating in the property market. But I would say that as an industry, the severity and the nature of this winter storm in Q1 surprised a lot of people, us included.
Your next question comes from the line of Cihan Tuncay.
Just with respect to premium growth in the U.S., it sounds like a bunch of new programs and surety are coming online. Just wondering how much around do you think you have to boost premium growth on your current equity base to remain in line with investment grading and stuff like that and how do you look at premium mix going forward as you look at expanding surety versus possibly commercial auto? Just some color on that would be great.
Yes. Thanks, Cihan. It's a good question. I think we've talked a lot in the past about our limits and our targets in the U.S. for premiums to capital thresholds. And we've always thought about that 5:1 premium to capital ratio as the barometer of our capacity in the U.S. You'll note today and in Q4 of last year, we've pierced that 5:1 threshold. Although I would highlight that as a group company, we actually have about $30 million of surplus capital ready to deploy into the U.S. So I view this capital a little bit as fungible between the group entity and the subsidiary entity in the U.S., which allows us to grow with some confidence in the states. The other item that gives us a lot of confidence is our recent DBRS rating. So for us today, operating at an 8% debt to capital ratio is a little bit below our long-term target of 20%. Achieving an investment-grade rating and acknowledging that we are underlevered in -- that we're underlevered at the debt to capital of the group company gives us some visibility or some confidence that in time with an investment-grade rating, we can fund that growth with more efficient capital at the group. The other item that's helpful today is we have a platform in the U.S. that is profitable and then reinvesting its capital in the entity. So we think we've got a lot of levers to pull to continue to support the growth in that U.S. vehicle. I think your second question around premium segmentation or the evolution of this premium in the U.S. It is going to be some time before U.S. surety comes online in a material way in the U.S. We'll probably look at that differently than fronting premiums, aggregated into surety premiums as more appropriate or more indicative of a primary risk-taking business. And in the fullness of time, in the admitted lines, I would expect that we hope to be 50-50 excess and surplus and admitted lines. That will take some time, probably a couple of years. But it is our long-term target to have an equal practice in both admitted and E&S lines.
Your next question comes from the line of Jaeme Gloyn from National Bank.
Yes. The first question is in the Canadian operations. Obviously, a really exceptional quarter here in Canada. Maybe first on the growth side. Can you talk about some of the key factors that are helping drive growth in Q1, and we saw a little bit of that in Q4 as well, and how sustainable those factors are in Canada?
Yes. It's a question that's best looked at individually by business line. I think there are nuances to each business line that are interesting, driving this growth. In Surety, we continue to be successful in taking some market share, but we've also launched new product lines, specifically in home warranty in western Canada, which is helping catalyze some better-than-expected growth. Corporate Insurance continues to benefit somewhat from better pricing in a hard market. But frankly, we have strengthening and expanding relationships with our distribution partners. We have new distribution partners as well as better relationships with the entire or all existing distribution partners, which is helping expand the platform in Corporate Insurance. We've also got a few new products in Corporate Insurance, which has given us more touch points with those distribution partners. In Risk Solutions, this is really indicative of an expansion of our warranty business. So new warranty programs that we diligence and onboarded in 2020 are now coming online and maturing through 2021, which is driving a lot of that top line growth. We also referenced a nascent fronting business in Canada, which is similar to our fronting business in the U.S., both on a pure fronted and a hybrid fronting model, helping to catalyze some of that growth in resolutions. I think from a sustainability perspective, it's tough to comment or provide a lot of specific guidance on these lines. We would say that the growth that we've experienced, we're very happy with, although we expect in time to revert to our normal course growth projections.
Okay. Great. And then -- and shifting back to the U.S. Obviously, the pipeline sounds good and there's significant growth available to you in both E&S and admitted lines. Can you talk about what you're seeing as -- from a demand perspective from the MGA front? There's been a few fronting company start-ups recently. But what are you seeing from the MGAs in terms of their demand to go through the fronting channel and Trisura specifically?
We see some interesting dynamics in the MGA market now in the U.S. I think putting aside for one moment where Trisura fits in the market, the dynamics of the MGA space in the U.S. are very interesting today. I think if you look at the growth rate of MGA-derived premium in the U.S., which is -- it's tough to segment out because it's not necessarily a purely regulated market. That entity or that segment of the market is growing faster than the broader regulated market. And so those MGAs that we work with, we see a lot of opportunity to continue expanding both in new business lines with those MGAs as well as new MGAs themselves. So that space is one that continues to grow. Trisura itself, although we observed a bit of new competition in the fronting space, we've been around now for 4 years in our market and have established pretty good relationships with our current partners as well as hopefully good relationships with our capacity providers. So that nuance, that first-mover advantage in this hybrid fronting model is really benefiting the momentum that we have in the U.S.
Your next question comes from the line of Marcel Mclean from TD Securities.
Okay. So just switching back to the Canadian side for a second. You guys announced a change in the reinsured structure of your Surety business and that you are going to be looking to retain maybe a higher percentage of premiums in that business. Just wondering what drove this decision. Is that a view that the loss rates are -- the low loss rates are here to stay, or just trying to cap potential losses? Or what went on there?
Yes, it's a great question, Marcel. And just to level set for everyone on the call. Our surety practice in Canada has graduated from a combination of graded quota share, reinsurance structure in combination with an excess of loss structure to one that's just reliant now on excess of loss structure. So the net impact of this shift is that we retain more of the premium in our Surety business below that excess of loss structure. And Marcel, this is really indicative of our evolution as a company. It's more traditional and more common for surety entities of substantial size or of significant size to have pure excess of loss structures rather than graded quota shares. So as we grew, we became a larger company, both in Canada and a larger entity globally with the group company. It felt more appropriate to expand into a more traditional reinsurance model. This means that we are increasing retention in business lines that we like, business lines that we know, and surety would be the top of that list. So it's really an evolution of Trisura. We started with that graded share -- graded quota share reinsurance program as a much smaller entity. And now that we've grown up a little bit, it's time to move on to a more mature structure.
Got it. Okay. That makes sense. And then just a follow-up, sticking with Surety. While Surety and Corporate Insurance in Canada, they had real favorable prior year development in the claims there. Can you give more color on that? Is that something you expect to kind of continue for the next few quarters? Or what really caused that?
I would say it's -- in every quarter, we review our reserving practices with external actuaries. And in Q1, we did benefit from some strong performance in 2020. In Surety, these lines are relatively short tail. So you can get visibility on the performance of those lines relatively quickly. And 2020 has turned out to be, so far anyway, a very strong year from an underwriting perspective. That's, for the most part, takedowns of IBNR. In Corporate Insurance, we saw a similar story. Although the difference in Corporate Insurance is those accident years that we are reducing IBNR include both 2020 as well as some years before that. So I would say that the loss ratios you're seeing in Surety and Corporate Insurance, these are not loss ratios that we've never seen before. Certainly, last year in Surety, we observed a 10% loss ratio for the entire year. So it's not uncommon to see these types of loss ratios. Corporate insurance, it's an exceptionally strong loss ratio this quarter. But in the fullness of time, our businesses are expected to write closer to historical averages on our loss ratio. So I don't want to imply in any way that you should expect these types of reserve releases every quarter.
Okay. All right. If I could just sneak a quick one in on the admitted side. You guys are saying that's sort of a second half 2021 story. Are you thinking that like beginning of Q3, you guys will be ready to hit the ground running? And I know you don't look at your businesses on a quarterly basis per se in terms of gross premiums written and whatnot. But do you have a view on what you guys would like to get done in, say, the first 12 months of -- once it starts ramping up? Or can you give any other guidance on that?
Yes. I struggle a bit with this, Marcel, because we are onboarding programs currently. So depending on how much momentum those programs in the admitted space get will determine when and how we see those premiums ramping. I would say we are -- we have been somewhat frustrated by the length of time it takes to get licensed, file rates and expand our platform. I was hopeful to have had that finished at the end of 2020. So we've cleaned up a little bit of that in this first quarter and are now anticipating being fully licensed and ready to operate in the admitted space going forward. That being said, it's a challenging space to predict with a lot of accuracy when and how those premiums come on. I would say that we are evaluating and onboarding admitted programs through Q1. We are evaluating those programs continually now and bring them on board. But when they arrive on our financial statements, it's a little bit tougher to predict with a lot of precision.
Your next question comes from the line of Tom MacKinnon from BMO Capital.
Yes. Jumped on the call late, so just a couple of questions to see maybe you've -- apologies if you've answered them before. First on the favorable reserve development we saw in Canada. I get this thing can jump around, but is there any kind of guidance you can give us as to, perhaps by line, as to what we should be -- how we should be thinking about favorable reserve development in terms of combined ratio points? Certainly, the 14 points we got in the quarter here is probably -- my guess is not necessarily sustainable, but there's some level that is sustainable. The second question would be, did you talk at all about the Texas, or the Uri cat losses, and that impact on your business? And maybe you can elaborate on what kind of rate increases you're seeing in your E&S business in the U.S. and if moving to a Category 8 had any impact in the quarter and what you think going forward. So kind of 4 points there. If you can just maybe tick them off for me, that would be great.
Yes. Thanks, Tom, and I appreciate you joining. I know you've got a lot of traffic in reporting this week. On your first question on prior year reserve development, it is difficult for us to give you some specific guidance on what to model in. I would say the best way for you to think about this is taking a look at our historical averages. We do attempt Trisura to reserve relatively conservatively and to underwrite well. And if you look at our reserve triangles for the past 10 years or so, you can get a good sense of, by business line, what we expect on average annually for reserve development, and that should be a better way for you to model the business than looking at this quarter as sort of the pace center. And the second question on Hurricane Uri. We did have some impact from Hurricane Uri in the quarter that certainly jumped our loss ratio up in the U.S. business above what we would like it to be. On a U.S. dollar basis, that was just over $1 million net to Trisura. So there was some impact from Hurricane Uri. I wouldn't back out all of that impact in making your adjustments for the quarter, as you always expect some load of catastrophe in property insurance. But certainly, that USD 1 million losses was a bit higher than we would normally expect. Your third question -- remind me what your third question is.
Yes. Rate increases you're seeing in U.S. and E&S.
Yes. So the U.S. space is interesting. Our business rights across about 50 different programs in a variety of business lines. Anecdotally, we are seeing some of those business lines with double-digit rate increases. Some of those business lines experienced double-digit rate increases in the prior year, and some of them are in the low to mid-single-digit rate increase line. So we are generally seeing a healthy excess and surplus lines market with rate increases, but the magnitude really differs business line to business line.
And the last one. Is there -- moving to Category 8 in terms of being able to write bigger programs. Have you seen any impact from that yet? Or how should we be thinking about that?
Yes. I would say we do see some impact of this. This is giving us some better opportunities to compete for or attempt to bring on larger programs. This will be more material and more significant for admitted market space as we move more into those lines, but it's certainly helping us go after larger programs in the E&S space too. It's becoming -- if you look at our competitors, if you look at the industry as a whole, it's becoming a bit of a minimum requirement now for people to participate in this market.
Your next question comes from the line of Cihan Tuncay from Stifel.
Just one quick follow-up from me. David, in the past, in the quarter, we talked about really good improving pricing conditions in Canada for Risk Solutions and Corporate Insurance. Just wondering, I know Surety in Canada has lagged pricing versus the U.S. market. But now that you're taking on a little bit more risk in that line and expanding your programs, is that a sign that you're seeing Surety price improvements in Canadian operations? Or how should we think about the pricing, specifically for Surety versus where it's been in the past?
Yes. It's a good question, Cihan. I might just nuance the first part of your comments there. We do see some benefit of hardening markets in some corporate insurance line. I wouldn't say we observed those same dynamics in Risk Solutions. That's a relatively structured group from a pricing perspective and has less impact from the hardening market trends. So I do want to clarify that that's not a space where we're claiming to have a lot of benefit of hardening lines. In the Surety space, I would say it remains a competitive market. We are not seeing significant increases in pricing or really any material increases in pricing in the Surety space. I wouldn't say that our shift in reinsurance structure posture is indicative of some expected change in that line. We do like Surety. We feel that we have an expertise in this line. And as a result of becoming a larger company, felt that it was natural for us to take more share in these premiums that we originated. But I don't want to imply that it's indicative of us expecting or anticipating some market hardening. To the extent that happens, it would be great. But we don't see a lot of evidence for that in the market today.
Presenters, there are no further questions. Please continue.
Thanks very much. I'd like to thank everyone for joining the call. Stay safe, and we will talk to you next quarter.
This concludes today's conference call. Thank you all for participating. You may now disconnect.