Trisura Group Ltd. — Management Reports 2021

Feb 11, 2021

Trisura Group Ltd.

Management's Discussion and Analysis For the year ended December 31, 2020

MANAGEMENT'S DISCUSSION AND ANALYSIS

Our Management's Discussion and Analysis ("MD&A") is provided to enable a reader to assess the results of operations and financial condition of Trisura Group Ltd. for the three and twelve months ended December 31, 2020. This MD&A should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2020.

Unless the context indicates otherwise, references in this MD&A to the "Company" refer to Trisura Group Ltd. and references to "us," "we" or "our" refer to the Company and its subsidiaries and consolidated entities.

The Company's Consolidated Financial Statements are in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. In this MD&A, all references to "$" are to Canadian dollars unless otherwise specified or the context otherwise requires.

This MD&A is dated February 10, 2021. Additional information is available on SEDAR at www.sedar.com.

TRISURA GROUP LTD.

Management's Discussion and Analysis for the year ended 2020

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

TABLE OF CONTENTS

Section 1 – Overview 3
•Our Business
Section 2 – Financial Highlights 4
Section 3 – Financial Review 5
•Income Statement Analysis
•Balance Sheet Analysis
•Share Capital
•Liquidity
•Capital
Section 4 – Performance Review 9
•Specialty P&C
•Canada
•United States
•Reinsurance
•Corporate
Section 5 – Investment Performance Review 20
•Overview
•Summary of Investment Portfolio
•Investment Performance
Section 6 – Outlook & Strategy 23
•Industry
•Outlook and Strategy
Section 7 – Risk Management 25
•Corporate Governance
•Risks and Uncertainties
Section 8 – Other Information 37
•Ratings
•Cash Flow Summary
•Segmented Reporting
•Contractual Obligations
•Financial Instruments
•Related Party Transactions
•Accounting Estimates
Section 9 – Summary of Results40
•Selected Quarterly Results
•Selected Annual Results
Section 10 – Accounting and Disclosure Matters41
•Disclosure Controls and Procedures
•Internal Controls over Financial Reporting
•Operating Metrics
•Non-IFRS Financial Measures
•Special Note Regarding Forward-Looking Information

• Glossary of Abbreviations

SECTION 1 - OVERVIEW

OUR BUSINESS

Our Company is a leading international specialty insurance provider operating in the Surety, Risk Solutions, Corporate Insurance, Fronting and Reinsurance niche segments of the market. Our operating subsidiaries include a Canadian specialty insurance company, a US specialty insurance company and an international reinsurance company. Our Canadian specialty insurance subsidiary started writing business in 2006 and has a strong underwriting track record over its 14 years of operation. Our US specialty insurance company has participated as a hybrid fronting entity in the non-admitted markets since early 2018 and is licensed as an excess and surplus lines insurer in Oklahoma with the ability to write business across 50 states. Our US specialty insurance company can also write business on an admitted basis in most states. Our international Reinsurance business has been in operation in Barbados for more than 18 years and has commenced writing new business in support of our US subsidiary.

Our Company has an experienced management team, strong partnerships with brokers, program administrators and reinsurers, and a specialized underwriting focus. We plan to grow by building our business in the US and through expansion of our Canadian business both organically and through strategic acquisitions. We believe our Company can capitalize on favourable market conditions through our multi-line and multi-jurisdictional platform.

In 2019, the Company closed its acquisition of 21st Century Preferred Insurance Company and completed its redomestication from Pennsylvania to Oklahoma. We have expanded our admitted licenses, which now includes licenses in 46 states. We continue the process of applying for licenses in the remaining states.

SECTION 2 – FINANCIAL HIGHLIGHTS IN Q4 AND FULL YEAR 2020

• ✓ $10.9 million of net income in the quarter and $32.4 million for the full year, a substantial improvement over the previous periods, driven by stronger results in Canada, accelerating profitability in the US, and improved asset liability matching in our Reinsurance business.
• ✓ EPS of $1.05 the quarter and $3.28 for the full year compared to $0.47 and $0.69 respectively in 2019.
• ✓ ROE of 13.4% increased from 3.5% at Q4 2019. Consolidated ROE approached our mid-teens target despite dilution from our equity raise in May 2020 and was achieved in the context of significant growth.
• ✓ BVPS of $28.23 was an increase of 30.8% over the previous year, the result of strong earnings and a book-value accretive equity raise.
• ✓ Continued strong performance of our operations in Canada and the US.
  • Canada:
    • GPW and NPE growth of 116.5% and 53.9% respectively in Q4 2020 reflected accelerating growth in challenging markets through strengthened distribution relationships, and the benefit of hardening conditions in certain lines of business.
    • NUI growth of 14.4% over Q4 2019 and 58.5% for the full year, was a result of sustained premium growth across all lines and strong claims experience in Surety.
    • In the context of significant growth, combined ratios remained strong with ratios of 87.3% and 85.5% for Q4 2020 and the full year. Full year results compare well to the corresponding 2019 full year of 87.8%, the result of a similar loss ratio and an improved expense ratio.
    • Q4 2020 NI of $6.0 million increased 22.7% over Q4 2019 and full year NI of $19.9 million grew by 25.4%, generating a strong 19.9% ROE.
  • United States:
    • Sustained growth in GPW reaching a new high of $210.7 million in the quarter, a $39.6 million increase over Q3 2020. Full year premiums grew by $383.3 million or 145.2% over 2019.
    • Net income of $5.7 million in the quarter and $16.4 million for the full year, demonstrate the potential of the fronting model; quarterly net income almost matched Canada after three years of operations.
    • Accelerating profitability generated an ROE of 11.7% despite an increase in the capital base.
    • Continued growth in deferred fee income, a precursor to earned fees, reached $18.3 million at December 31, 2020.
    • The fronting operational ratio of 68.5% in the quarter and 70.6% for the full year is materially improved versus the corresponding periods in 2019 reflecting growth in NPE and fronting fees as the business builds scale.
• ✓ Improved asset liability matching for the full year in our Reinsurance business resulted in better profitability, mitigated by volatility through redeployment of investments in Q2.
• ✓ Interest and dividend income in our Canadian and US portfolios increased by 25.8% in Q4 2020 and 28.2% in the full year, despite a continued reduction in yields in the fixed income markets.

COVID-19 Update

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 to be a global pandemic. To date, there have been restrictions on the conduct of business in many jurisdictions and the global movement of people and certain goods. We are closely monitoring developments related to COVID-19, including the existing and potential impact on the economy and global financial markets. Although COVID-19 has had minimal impact on our business to date, given the ongoing and dynamic nature of the circumstances surrounding COVID-19 and continuing uncertainty of its magnitude, outcome and duration, the longer-term impact of the COVID-19 pandemic on our Company, our insurance business or our financial results, if any, is difficult to predict. These impacts may differ in magnitude depending on a number of scenarios, which we continue to monitor and take into consideration in our decision making. See Section 7 – Risk Management.

SECTION 3 – FINANCIAL REVIEW

INCOME STATEMENT ANALYSIS

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	314,200	143,212	170,988	119.4%	926,442	448,262	478,180	106.7%
Net premiums written	88,400	39,656	48,744	122.9%	241,324	142,628	98,696	69.2%
Net premiums earned	51,091	29,710	21,381	72.0%	160,684	107,504	53,180	49.5%
Fee income	9,659	3,575	6,084	170.2%	29,719	12,206	17,513	143.5%
Net investment income(loss)	5,922	(3,868)	9,790	nm	27,779	16,243	11,536	71.0%
Settlement fromstructured insuranceassets	-	-	-	n/a	-	8,077	(8,077)	nm
Net gains (losses)	2,822	(92)	2,914	nm	8,450	1,572	6,878	437.5%
Total revenues	69,494	29,325	40,169	137.0%	226,632	145,602	81,030	55.7%
Net claims and lossadjustment expenses	(23,096)	(687)	(22,409)	nm	(72,562)	(49,936)	(22,626)	45.3%
Net commissions	(17,484)	(9,677)	(7,807)	80.7%	(55,915)	(37,516)	(18,399)	49.0%
Operating expenses	(14,037)	(12,464)	(1,573)	12.6%	(57,560)	(45,590)	(11,970)	26.3%
Interest expense	(222)	(341)	119	(34.9%)	(1,113)	(1,361)	248	(18.2%)
Total claims andexpenses	(54,839)	(23,169)	(31,670)	136.7%	(187,150)	(134,403)	(52,747)	39.2%
Income before incometaxes	14,655	6,156	8,499	138.1%	39,482	11,199	28,283	252.5%
Income tax expense	(3,706)	(1,984)	(1,722)	86.8%	(7,040)	(6,105)	(935)	15.3%
Net income	10,949	4,172	6,777	162.4%	32,442	5,094	27,348	536.9%
Other comprehensiveincome (loss)	2,800	(1,188)	3,988	nm	96	808	(712)	(88.1%)
Comprehensive income	13,749	2,984	10,765	360.8%	32,538	5,902	26,636	451.3%
Earnings per commonshare - diluted - indollars	1.05	0.47	0.58	123.9%	3.28	0.69	2.59	375.4%
Adjusted earnings percommon share - diluted- in dollars (1)	0.96	0.57	0.39	68.4%	3.68	1.92	1.76	91.7%
Book value per share -in dollars	28.23	21.58	6.65	30.8%	28.23	21.58	6.65	30.8%
ROE(1)	13.4%	3.5%	n/a	9.9pts	13.4%	3.5%	n/a	9.9pts
Adjusted ROE(1)	15.0%	9.4%	n/a	5.6pts	15.0%	9.4%	n/a	5.6pts

(1) See Non-IFRS financial measures in Section 10 – Accounting and Disclosure Matters.

Premium Revenue and Fee Income

Premium growth continued for the quarter and full year period with GPW more than doubling over the comparable periods in 2019 driven by continued acceleration in the US and growth in Canada. NPW growth for the quarter and the full year was significant, but full year growth was lower than growth in GPW due to the high percentage of business ceded to reinsurers. Strength in NPE growth for the quarter and the full year was supported by the US as earned premium in 2019 was comparatively lower during the US business' first years of operation. NPE growth was also supported by our Canadian lines, where strong growth continued. The increase in fee income in both the quarter and full year periods was driven primarily by fronting fees from the US, supported by consistent fee income in Canada.

Net Claims

Net claims in the quarter were greater than 2019, reflecting claims expense in 2020 associated with our life annuity reserves. Importantly, a significant portion of these reserve increases associated with the annuity reserves are offset by investment income (see Section 5 – Investment Performance Review). Net claims in the quarter grew for the US and Canada primarily reflecting growth in the business. With the exception of the impact of the life annuity reserves, net claims expense grew in the full year period in line with growth of the business with a majority of the increase represented by the US operations and Corporate Insurance, mitigated by strong claims experience in Surety.

Operating Expenses

Operating expenses in Q4 2020 were comparable to Q4 2019. The increase in operating expenses for the full year was driven by share-based compensation, as the increasing value of our share price led to an increase in the value of certain outstanding options. Excluding share-based compensation, operating expenses increased 20.3% in the quarter and 15.8% in the YTD periods, reflective primarily of growth in the US operations. Management expects that the impact of share-based compensation should be mitigated going forward as we have completed a program to hedge market exposure of sharebased compensation.

Net Commissions

Net commissions expense has grown for the quarter by 80.7% and for the full year by 49.0% as a result of growth in GPW. Growth of Net commissions is in line with the growth in Net premiums earned, which is to be expected.

Net Investment Income

See Section 5 – Investment Performance Review.

Other Comprehensive Income (Loss)

See Section 5 – Investment Performance Review.

Income Tax Expense

In Q4 2020, the effective tax rate was approximately 25.2% which is in line with expectations. For the full year, the effective tax rate was 17.8% due to the recognition of a Deferred tax asset in Q1 2020 related to previously unrecognized tax losses. For additional information see Note 27 of the Consolidated Financial Statements.

Net Income

Net income for the quarter and full year was higher than prior year primarily as a result of maturation of the US platform, and strong growth in Canada. For the full year period, results were also supported by improved asset liability matching in the Reinsurance business compared to the prior year.

EPS, Adjusted EPS, BVPS, Adjusted ROE and ROE

Quarterly diluted EPS of $1.05 compares favourably to $0.47 in Q4 2019 and improved as a result of growth, a stronger contribution from our fronting operations in the US, and realized gains, and mitigated by an increase in the average number of shares outstanding following our equity raise in May 2020. EPS of $3.28 was greater than $0.69 in the prior year, as a result of growth in the Canadian and US operations, as well as improved asset liability matching in the Reinsurance operations. BVPS of $28.23 was an increase of 30.8% over Q4 2019, as a result of an increase in net income over the prior year, as well as an equity raise in 2020 which was accretive to BVPS.

We have introduced Adjusted EPS, a measure meant to adjust for non-recurring items and normalize earnings for core operations to reflect the potential of our North American specialty operations. A detailed bridge between EPS and Adjusted EPS is included in Section 10 – Accounting and Disclosure Matters. Adjusted EPS grew by 68.4% in Q4 2020 compared to Q4 2019, less than growth in EPS, due to the impact of Net gains (losses). For the full year, Adjusted EPS grew by 91.6%, less than growth in EPS primarily as a result of the adjustment for the impact of the annuity reserves.

BALANCE SHEET ANALYSIS

As at	December 31, 2020	December 31, 2019	$ variance
Cash and cash equivalents	136,519	85,905	50,614
Investments	503,684	392,617	111,067
Premiums and accounts receivable, and other assets	178,883	86,669	92,214
Recoverable from reinsurers	676,972	293,068	383,904
Deferred acquisition costs	188,190	104,197	83,993
Capital assets and intangible assets	13,907	14,477	(570)
Deferred tax assets	8,577	1,460	7,117
Total assets	1,706,732	978,393	728,339
Accounts payable, accrued and other liabilities	57,343	40,916	16,427
Reinsurance premiums payable	151,707	80,186	71,521
Unearned premiums	592,711	328,091	264,620
Unearned reinsurance commissions	100,281	51,291	48,990
Unpaid claims and loss adjustment expenses	487,271	257,880	229,391
Loan payable	27,555	29,700	(2,145)
Total liabilities	1,416,868	788,064	628,804
Shareholders' equity	289,864	190,329	99,535
Total liabilities and shareholders' equity	1,706,732	978,393	728,339

Total assets at December 31, 2020 were $728.3 million higher than at December 31, 2019 as a result of growth across our Specialty P&C businesses as well as our equity raise in May 2020. The growth in the US has led to increases across a number of categories, particularly Recoverables from reinsurers which has grown alongside growth in premium and ceded premium. The nature of the fronted operations of the US business generate significant Recoverables from reinsurers, which increase alongside an increase in Unearned premiums and Unpaid claims and loss adjustment expenses. These recoverables are regularly monitored in accordance with the Company's reinsurance risk management policies and are generally owing from reinsurers with A.M. Best ratings of A- or higher or are otherwise fully collateralized. Investments also increased significantly as funds from the equity raise were invested.

Deferred tax assets increased as a result of the recognition of the deferred tax asset associated with previously unrecognized tax losses (see Note 27 of the Consolidated Financial Statements).

The main drivers of liability increases were Unearned premiums, and Unpaid claims and loss adjustment expenses primarily as a result of business growth in the US. These increases are partially offset by an increase in Recoverable from reinsurers.

SHARE CAPITAL

Our authorized share capital consists of: (i) an unlimited number of common shares; (ii) an unlimited number of non-voting shares; and (iii) an unlimited number of preference shares (issuable in series).

In Q2 2020, the Company completed a $65.1 million equity raise, to support growth in the US. The Company issued an additional 1,449,250 shares.

In Q3 2019, the Company completed a $55.7 million equity raise, to support growth in the US, as well as to further improve asset liability matching at Trisura International. The Company issued an additional 2,197,939 shares.

As at December 31, 2020, 10,268,869 common shares were issued and outstanding.

LIQUIDITY

Both short-term and long-term liquidity sources are available to the Company. Short-term liquidity sources immediately available include: (i) cash and cash equivalents, (ii) our portfolio of highly rated, highly liquid investments; (iii) cash flow from operating activities which include receipt of net premiums, fee income and investment income and; (iv) bank loan facilities including our revolving credit facility (see Note 20 to the Consolidated Financial Statements). These funds are used primarily to pay claims and operating expenses, service the Company's credit facility and purchase investments to support claims reserves and capital requirements.

CAPITAL

The MCT ratio of Trisura Canada was 249% at December 31, 2020 (258% as at December 31, 2019), which comfortably exceeds the 150% regulatory requirements prescribed by OSFI, as well as the Company's internal targets.

Trisura US's capital and surplus of $122.6 million USD as at December 31, 2020 ($83.3 million USD as at December 31, 2019) was in excess of the various Company Action Levels of the states in which it is licensed.

Trisura International's capital of $10.3 million USD as at December 31, 2020 ($14.2 million USD as at December 31, 2019) was sufficient to meet the FSC's regulatory capital requirement.

The Company's debt-to-capital ratio of 8.7% as at December 31, 2020 (13.5% as at December 31, 2019), was below our long-term target debt-to-capital ratio of 20.0% as a result of our May equity raise and growth in book value from strong earnings.

The Company is well-capitalized and we expect to have sufficient capital to meet our regulatory capital requirements, fund our operations and support our current business plans.

SECTION 4 – PERFORMANCE REVIEW

SPECIALTY P&C

Our Specialty P&C business consists of our Surety, Risk Solutions, and Corporate Insurance business lines which we write in Canada and a broad range of surplus lines in the US written through a fronting model, referred to as US Fronting.

The tables and charts below provide a segmentation of our Specialty P&C GPW and NPW for the fourth quarter and full year of 2020 and 2019, respectively. Our US operation produced 69.9% of GPW in 2020 having commenced writing business in Q1 2018. Premium growth was also supported by momentum in Canada across all lines in the quarter and full year periods.

GPW	Q4 2020	Q4 2019	% growthover prioryear	2020	2019	% growthover prioryear
Surety	18,572	14,514	28.0%	71,575	59,028	21.3%
Risk Solutions	59,432	19,565	203.8%	137,717	77,838	76.9%
Corporate Insurance	25,519	13,730	85.9%	69,843	47,373	47.4%
US Fronting	210,654	95,371	120.9%	647,183	263,911	145.2%
Total GPW	314,177	143,180	119.4%	926,318	448,150	106.7%

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

Total NPW more than doubled in the quarter and grew by 69.7% in the full year period, with growth led by US Fronting, Risk Solutions and Corporate Insurance. Our US operations continued to cede premium to our Reinsurance business in the quarter, resulting in premium generation for our Reinsurance business in 2020 for the first time since entering run-off. In certain tables, the premiums ceded to the reinsurance business are grouped with US Fronting to better reflect the result of the business, and are identified as such.

NPW	Q4 2020	Q4 2019	% growth overprior year	2020	2019	% growth overprior year
Surety	12,447	9,213	35.1%	44,723	40,400	10.7%
Risk Solutions	40,329	15,119	166.7%	103,622	52,444	97.6%
Corporate Insurance	17,996	9,711	85.3%	48,941	34,995	39.9%
US Fronting	13,151	5,228	151.5%	30,922	14,328	115.8%
Reinsurance	4,477	-	nm	13,116	-	nm
Total NPW	88,400	39,271	125.1%	241,324	142,167	69.7%

CANADA

The table below presents financial highlights for our Canadian operations.

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	103,523	47,809	55,714	116.5%	279,135	184,239	94,896	51.5%
Net premiums written	70,772	34,043	36,729	107.9%	197,286	127,839	69,447	54.3%
Net premiums earned	41,177	26,754	14,423	53.9%	133,535	100,510	33,025	32.9%
Fee income	1,046	472	574	121.6%	5,027	4,246	781	18.4%
Net underwriting revenue	42,223	27,226	14,997	55.1%	138,562	104,756	33,806	32.3%
Net underwriting income	5,215	4,562	653	14.3%	19,433	12,265	7,168	58.4%
Net investment income	1,863	2,010	(147)	(7.3%)	7,842	7,796	46	0.6%
Net income	5,965	4,864	1,101	22.6%	19,865	15,842	4,023	25.4%
Comprehensive income	12,136	5,883	6,253	106.3%	19,419	19,242	177	0.9%
Loss ratio: current accident year	25.2%	25.0%		0.2pts	27.6%	27.1%		0.5pts
Loss ratio: prior years' development	4.8%	(3.2%)		8.0pts	(2.3%)	(2.6%)		0.3pts
Loss ratio	30.0%	21.8%		8.2pts	25.3%	24.5%		0.8pts
Expense ratio	57.3%	61.1%		(3.8pts)	60.2%	63.3%		(3.1pts)
Combined ratio	87.3%	82.9%		4.4pts	85.5%	87.8%		(2.3pts)
ROE	19.9%	19.1%		0.8pts	19.9%	19.1%		0.8pts

In the quarter and full year periods GPW growth was substantial across all lines led by Risk Solutions and Corporate Insurance. Risk Solutions continued to benefit from the addition of new programs and fronting relationships. Corporate insurance has benefitted from a hardening insurance market with improved pricing and growth in distribution partnerships. Growth in Surety primarily reflects continued expansion of our market share as well as product expansion.

In Q4 2020 and for the full year 2020, growth in NPE was the result of the factors discussed above.

Increases in Fee income in Q4 2020 reflected product expansion in Surety, specifically into new home warranty products. Growth in fee income for 2020 was the result of growth in surety accounts, as well as expansion of certain new home warranty products that generate fee income.

The loss ratio of 30.0% for Q4 2020 and 25.3% for full year increased over both periods for 2019. This was primarily driven by an increase in the loss ratio in Corporate Insurance which offset the strong improvement in the Surety loss ratio for both Q4 and the full year. The expense ratio decreased to 57.3% for Q4 2020 compared to 61.1% for Q4 2019, as a result of operational leverage and increased profit sharing from Surety reinsurers. The expense ratio fell to 60.2% for 2020 compared to 63.3% for 2019. The improved expense ratio for the full year reflects improved operational leverage, a reduction in certain operational costs due to the COVID-19 shutdown, as well as the impact of profit sharing arrangements with our reinsurers. In Q4 2020, the combined ratio was greater than Q4 2019 as a result of a higher loss ratio, and for the full year 2020 the combined ratio was lower than 2019 as a result of the lower expense ratio.

Net underwriting income for Q4 2020 experienced growth of 14.3% and full year 2020 experienced growth of 58.4%, a result of growth across all lines, an improved loss ratio in surety and the impact of profit sharing arrangements with our reinsurers.

Investment income for both Q4 2020 and full year 2020 was comparable to the corresponding periods in 2019. See Section 5 – Investment Performance Review for further discussion.

Strong operating results resulted in strong growth in net income of 22.6% for Q4 2020 and 25.4% for the full year.

Surety

The main products offered by our Surety business line are:

• ✓ Contract surety bonds, such as performance and labour and material payment bonds, primarily for the construction industry;
• ✓ Commercial surety bonds, such as license and permit, tax and excise, and fiduciary bonds, which are issued on behalf of commercial enterprises and professionals to governments, regulatory bodies or courts to guarantee compliance with legal or fiduciary obligations; and
• ✓ Developer surety bonds, comprising mainly bonds to secure real estate developers' legislated deposit and warranty obligations on residential projects.

In Q4, Surety accounted for 5.9% and 14.1% of our overall GPW and NPW, respectively. For the full year, Surety accounted for 7.7% and 18.5% of overall GPW and NPW, respectively.

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	18,572	14,514	4,058	28.0%	71,575	59,028	12,547	21.3%
Net premiums written	12,447	9,213	3,234	35.1%	44,723	40,400	4,323	10.7%
Net premiums earned	10,232	9,425	807	8.6%	40,103	37,358	2,745	7.4%
Fee income	1,046	472	574	121.6%	5,027	4,241	786	18.5%
Net underwriting revenue	11,278	9,897	1,381	14.0%	45,130	41,599	3,531	8.5%
Net underwriting income	4,914	1,364	3,550	260.3%	14,789	5,543	9,246	166.8%
Loss ratio: current accident year	8.5%	35.2%		(26.7pts)	14.6%	31.4%		(16.8pts)
Loss ratio: prior years' development	3.4%	(9.1%)		12.5pts	(4.2%)	(7.0%)		2.8pts
Loss ratio	11.9%	26.1%		(14.2pts)	10.4%	24.4%		(14.0pts)

Q4 2020 Surety GPW demonstrated strong 28.0% growth over Q4 2019. Full year premiums growth was significant, at 21.3% over 2019. The growth has been primarily driven by our expansion of our Developer surety products in western Canada and continued growth in Commercial Surety attributed to large bonds issued for new accounts, as well as growth with distribution partnerships.

The growth in NPW was strong in Q4 as a result of the growth in new home warranty products, a component of the developer surety business, in the quarter. Growth in NPW for the year was primarily a result of growth in Commercial and Developer surety, and was lower than growth in GPW as a result of a number of large bonds which have been issued during the period where proportionately more premium is ceded to reinsurers. Growth in NPE for Q4 2020 and full year was primarily the result of growth in Commercial and Developer surety.

For Q4 2020 and full year, Surety experienced a lower claims ratio than Q4 2019 and full year 2019, as a result of fewer claims than the prior period. Since the beginning of the COVID-19 pandemic, most construction projects have been deemed essential through the economic shutdowns and contractors have continued working. This has had a positive impact on the loss ratio.

Net underwriting income for the quarter increased to $4.9 million compared to $1.4 million in Q4 2019 driven by growth, and an improved loss ratio in the quarter. 2020 net underwriting income reflected both our growth and improvements in loss ratios over 2019.

Risk Solutions

Risk Solutions includes specialty insurance contracts which are structured, in some cases through fronting arrangements, to meet the specific requirements of program administrators, managing general agents, captive insurance companies, affinity groups and reinsurers. Our Risk Solutions business line consists primarily of warranty programs.

In 2018, the Company incorporated Trisura Warranty Services Inc. ("Trisura Warranty"), and in Q1 2019 purchased an existing book of warranty contracts from a third party, which Trisura Warranty will continue to administer. Trisura Warranty has begun to sell warranty products which will serve as a complimentary business to the insurance products sold through Trisura Canada. Financial results of Trisura Warranty are currently not material and are grouped with the Canadian Specialty P&C results, as part of Risk Solutions for the purpose of the MD&A.

In Q4 2020, Risk Solutions accounted for 19.0% and 45.6% of our overall GPW and NPW, respectively. For the full year, Risk Solutions accounted for 14.9% and 43.0% of our overall GPW and NPW, respectively.

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	59,432	19,565	39,867	203.8%	137,717	77,838	59,879	76.9%
Net premiums written	40,329	15,119	25,210	166.7%	103,622	52,444	51,178	97.6%
Net premiums earned	18,120	8,768	9,352	106.7%	51,696	31,193	20,503	65.7%
Fee income	-	-	-	nm	-	5	(5)	nm
Net underwriting revenue	18,120	8,768	9,352	106.7%	51,696	31,198	20,498	65.7%
Net underwriting income	572	974	(402)	(41.3%)	4,788	3,131	1,657	52.9%
Loss ratio: current accident year	22.0%	31.2%		(9.2pts)	23.8%	29.8%		(6.0pts)
Loss ratio: prior years' development	4.9%	(9.8%)		14.7pts	(1.2%)	(8.3%)		7.1pts
Loss ratio	26.9%	21.4%		5.5pts	22.6%	21.5%		1.1pts

Risk solutions GPW and NPW for Q4 2020 increased significantly over Q4 2019 from the addition of new programs in the warranty space, and revenue from fronting arrangements. Year over year growth has been primarily due to the addition of new programs, supplemented by growth in existing programs as economic shutdowns normalized in the latter half of the year.

Year over year growth in NPE was driven by maturation of the portfolio resulting in greater earned premiums from programs written in prior years, as well as the impact of the new programs.

In Q4 2020 the loss ratio increased compared to the same period in the prior year, largely due to an adjustment to an existing reserve for a program that is in run-off. Claims on active programs continued to be in line with expectations. The 2020 loss ratio for the full year was similar to that of 2019.

Net underwriting income in Q4 2020 was below Q4 2019 primarily as a result of an increase in the loss ratio. Net underwriting income for 2020 was ahead of 2019 as a result of growth in the business, and in particular related to maturation of longer term policies written in prior years where earnings have been deferred.

Corporate Insurance

The main products offered by our Corporate Insurance business line are Directors' & Officers' insurance for public, private and non-profit enterprises, professional liability insurance for both enterprises and professionals, technology and cyber liability insurance for enterprises commercial package insurance for both enterprises and professionals and fidelity insurance for both commercial enterprises and financial institutions.

In Q4 2020 Corporate Insurance represented 8.1% and 20.3% of our overall GPW and NPW respectively. For the full year, Corporate Insurance represented 7.5% and 20.3% of our overall GPW and NPW respectively.

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	25,519	13,730	11,789	85.9%	69,843	47,373	22,470	47.4%
Net premiums written	17,996	9,711	8,285	85.3%	48,941	34,995	13,946	39.9%
Net premiums earned	12,825	8,563	4,262	49.8%	41,736	31,960	9,776	30.6%
Net underwriting revenue	12,825	8,563	4,262	49.8%	41,736	31,960	9,776	30.6%
Net underwriting (loss) income	(271)	2,226	(2,497)	(112.2%)	(144)	3,591	(3,735)	(104.0%)
Loss ratio: current accident year	43.1%	27.6%		15.5pts	44.6%	35.4%		9.2pts
Loss ratio: prior years' development	5.7%	(10.0%)		15.7pts	(1.7%)	(8.1%)		6.4pts
Loss ratio	48.8%	17.6%		31.2pts	42.9%	27.3%		15.6pts

GPW, NPW and NPE grew strongly in Q4 and on a full year basis. This was due to new business growth, stable policy retention, increasing rates in many lines of business as well as business from partnerships with certain MGAs, where the Company cedes a larger portion of the business to reinsurers on some of the partnerships.

In the quarter, the loss ratio increased from Q4 2019, with higher current accident year losses as well as an increase in prior years' development. Current accident year loss ratio has increased, in part to reflect the uncertainty related to potential COVID-19 related claims. An increase in certain claims from prior accident years resulted in an increase in prior years' development loss ratio. The magnitude of growth experienced by Corporate Insurance also impacted the current accident year loss ratio, as new business bound was reserved for at a higher rate than prior years to reflect the uncertainty related to the current economic environment. Should the economic climate become more certain, the current year loss ratio may return to previous levels. For the full year, the loss ratio increased due to increased severity of certain claims and less favourable prior years' development. It is important to note that a portion of this prior years' development accrued under an older reinsurance structure where our net retention was higher. This structure was amended in 2016.

The dynamics described above resulted in a small Net underwriting loss in Q4 2020 and the full year period.

UNITED STATES

Our US company is a non-admitted surplus line insurer in all states, operating as a hybrid fronting carrier with a fee-based business model. We are actively expanding our admitted licenses, with licenses in 46 states and the intention of gaining admitted licenses across all 50 states in time.

Our US company continued to accelerate premium generation, producing GPW of $210.7 million in Q4 2020 across 48 programs. The graph below shows the evolution of GPW, fee income earned (1), and the number of programs bound in the US.

(1) Fee income earned excludes fees earned on premiums ceded to captive reinsurance operations.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

The charts below provide a segmentation by class of business of our US GPW and NPW for Q4 2020 and 2020. The charts include premiums ceded to the captive reinsurance operations.

(1) "Other" includes Auto Physical Damage, Allied Lines – Flood, MonoLine Property and Inland Marine.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

The table below presents financial highlights for our US operations. The table includes premiums ceded to the captive reinsurance operations, and excludes fronting fees earned on premiums ceded to the captive reinsurance operations.

	Q4 2020	Q4 2019	$variance	%variance	2020	2019	$variance	%variance
Gross premiums written	210,654	95,371	115,283	120.9%	647,183	263,911	383,272	145.2%
Net premiums written	17,605	5,583	12,022	215.3%	43,915	14,683	29,232	199.1%
Net premiums earned	9,891	2,924	6,967	238.2%	27,026	6,887	20,139	292.4%
Fee income	8,449	3,103	5,346	172.3%	24,375	7,960	16,415	206.2%
Net underwriting revenue	18,340	6,027	12,313	204.3%	51,401	14,847	36,554	246.2%
Net underwriting income	5,780	1,272	4,508	354.4%	15,113	2,252	12,861	571.1%
Net investment income	1,158	896	262	29.2%	3,880	2,112	1,768	83.7%
Net income	5,710	1,570	4,140	263.7%	16,382	3,816	12,566	329.3%
Comprehensive income(loss)(1)	2,136	(281)	2,417	nm	14,908	2,239	12,669	565.8%
Loss ratio	75.9%	60.9%			74.0%	63.2%
Retention rate	8.4%	5.9%			6.8%	5.6%
Fees as percentage of cededpremium	6.0%	5.8%			5.8%	5.7%
Fronting operational ratio	68.5%	78.9%			70.6%	84.8%
ROE(2)	11.7%	5.0%			11.7%	5.0%

(1) Comprehensive income (loss) includes the impact of cumulative translation adjustments.

(2) ROE excludes premiums ceded to the captive reinsurance operations.

The table below shows Deferred fee income as at Q4 2020, compared to Q4 2019.

As at	December 31, 2020	December 31, 2019	$ variance
Deferred fee income	18,306	8,286	10,020

GPW and NPW grew significantly over the prior year period for both the quarter and full year. The increase was a result of the addition of new programs as well as maturation of existing programs. Growth in NPW was higher than growth in GPW in Q4 2020 and for the full year as our US operations wrote more business in the period with a higher retention. In the quarter, $11.2 million USD of premium were generated by admitted programs.

The US operations retained 8.4% of GPW in Q4 2020 and 6.8% for the full year inclusive of GPW retained by our reinsurance operations. The remainder of which was ceded to third party reinsurers. The increase in retention in both periods reflects a more mature business mix and selective increased retention on renewed programs. We continue to target retention between 5.0% and 10.0% on all new programs, after which we contemplate ceding to our captive reinsurer. Fees as a percentage of ceded premium were 6.0% in Q4 2020 and 5.8% for the full year which is comparable to 2019. The results in this section are inclusive of any premiums ceded to our Reinsurance operations.

NPE has grown significantly in both the quarter and full year periods over 2019 as a result of the growth in premium written throughout 2019 and 2020 from both new and maturing programs. Fee income in the US reflects fronting fees received from reinsurers which are recognized over the life of the insurance contracts with which they are associated. The earnings pattern of fee income is similar to that of net premium earned. Earned fronting fees (Fee income) have grown strongly over the comparable periods in 2019 reaching $8.4 million in the quarter, and $24.4 million for the full year, a result of the significant growth in premiums in 2020 and their associated fee income.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

The loss ratio increased for Q4 and the full year as US property business experienced losses associated with civil unrest and storm activity in the quarter. Excluding these events which are associated with more volatile lines of business, the loss ratio continues to be in line with expectations, supporting profitability.

The fronting operational ratio continued to improve to 68.5% in the quarter and 70.6% for the full year, significantly better than in 2019 reflecting growth in NPE and fronting fees as the business builds scale.

Increases in investment income reflect a larger pool of assets as a result of the equity raises as well as reinvested earnings. Net Income increased in Q4 and in the full year over the same periods in 2019, primarily as a result of increased fee income as program volume and program partners continued to grow.

Our US operations continued its trend of growing profitability, achieving an 11.7% ROE, following a significant increase in equity in Q2 2020.

REINSURANCE

Our Reinsurance business ceased writing third party business in 2008 but previously wrote quota share reinsurance (prospective), loss portfolio transfers (retrospective) and niche, specialty contracts covering international risks across multiple commercial lines. Currently our international Reinsurance business is managing its remaining portfolio of in-force reinsurance contracts, and has commenced writing business in support of our US operations.

The remaining in-force portfolio of third-party reinsurance contracts is dominated by one large life annuity reinsurance contract denominated in Euros. We measure the performance of our Reinsurance business by reference to net income in order to capture (i) the change in annuity reserves which is included in claims expense; (ii) the offsetting change in the value of the supporting assets, which is included in net investment income as these supporting assets are designated FVTPL.

	Q4 2020	Q4 2019	$ variance	2020	2019	$ variance
Net (loss) income from life annuity	(611)	163	(774)	(4,588)	(15,773)	11,185
Settlement from structured insuranceassets	-	-	-	-	8,077	(8,077)
Operating expenses and other (1)	(731)	(531)	(200)	(2,131)	(786)	(1,345)
Net loss from legacy reinsurance	(1,342)	(368)	(974)	(6,719)	(8,482)	1,763
Net income from reinsurance assumedfrom US Fronting	168	21	147	501	3	498
Net loss before tax	(1,174)	(347)	(827)	(6,218)	(8,479)	2,261

(1) Includes operating and other expenses, operational income from legacy property casualty business currently in run-off, and certain gains/losses.

Net loss from legacy reinsurance in the quarter was driven by a slight mismatch in asset liability matching, and updated actuarial assumptions adopted in the quarter. Our asset liability matching is a market-based program and can experience volatility alongside volatile markets. Net loss from legacy reinsurance for the full year 2020 was lower than 2019 as a result of improved asset liability matching over the course of the year. To further strengthen our asset liability matching in 2020 we appointed a specialist external investment manager for this portfolio effective April 1, 2020. Following volatility experienced through the transition in Q2 2020, our new portfolio manager achieved improved matching in the remainder of the year, demonstrated by the improved full year results.

Operating expenses and other in the quarter were higher than 2019 due to higher FX losses in 2020, as well as the impact of greater investment income in 2019 than 2020. In the full year period, Operating expenses and other was higher than 2019 as the prior year benefitted from higher investment income and FX gains.

In Q4 2020 and for the full year 2020, positive net income has been generated from the reinsurance assumed in support of the US operations.

CORPORATE

Our corporate results represent expenses that do not relate specifically to any one business line of the Company as well as debt servicing costs and certain derivative gains and losses on hedging instruments.

In Q4 2020 and full year periods corporate expenses were lower than Q4 2019 and full year 2019 due to lower compensation costs, which were higher in prior periods as a result of certain staffing transition costs, as well as an updated allocation of certain expenses to subsidiaries.

Share-based compensation includes payment to directors and senior management and is impacted by movement in the share price. Share-based compensation was lower in Q4 2020 compared to Q4 2019 because of the comparatively lower increase in the value of our share price, and the increased effectiveness of our share-based compensation hedging program. Importantly, we have completed the hedging program for share-based compensation and expect that it will mitigate future share-based compensation volatility. Derivative gains of $0.6 million for Q4 2020 and $2.3 for the full year are included in the Share-based compensation line below. Derivative gains and losses are presented in Net gains on the Consolidated Financial Statements.

Debt servicing costs declined in Q4 and full year period as we benefitted from lower prevailing interest rates on our revolving credit facility.

	Q4 2020	Q4 2019	$ variance	2020	2019	$ variance
Corporate expenses	(240)	(327)	87	(1,109)	(2,102)	993
Share-based compensation	(180)	(1,231)	1,051	(5,184)	(2,099)	(3,085)
Debt servicing	(120)	(257)	137	(663)	(1,039)	376
Corporate	(540)	(1,815)	1,275	(6,956)	(5,240)	(1,716)

SECTION 5 – INVESTMENT PERFORMANCE REVIEW

OVERVIEW

The Company's investment policy seeks to achieve attractive total returns without incurring an undue level of investment risk while supporting our liabilities and maintaining strong regulatory and economic capital levels. We take a centralized investment approach across all subsidiary portfolios and invest with a global posture.

SUMMARY OF INVESTMENT PORTFOLIO

Our $640.2 million investment portfolio consists of cash and cash equivalents, short-term securities, government and corporate bonds, preferred shares, common shares and a small amount of alternative investments. Over ninety percent of our fixed income holdings are highly liquid, investment grade bonds.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

INVESTMENT PERFORMANCE

Investment Income

	Q4 2020	Q4 2019	$ variance	2020	2019	$ variance
Canada	1,863	2,010	(147)	7,842	7,796	46
United States	1,158	665	493	3,880	2,112	1,768
Reinsurance Operations	2,689	(6,543)	9,232	15,594	6,335	9,259
Corporate	212	-	212	463	-	463
Investment income (loss)	5,922	(3,868)	9,790	27,779	16,243	11,536
Net gains (losses)	2,822	(92)	2,914	8,450	1,572	6,878
Net investment income (loss)	8,744	(3,960)	12,704	36,229	17,815	18,414
Settlement from structured insurance assets	-	-	-	-	8,077	(8,077)
Total	8,744	(3,960)	12,704	36,229	25,892	10,337

The Company's operations currently include Specialty P&C insurance in Canada and the US, and international reinsurance. These businesses focus on different market segments, geographic regions and risks and can be subject to different regulatory investment requirements and accordingly, hold different assets and currencies to support their liabilities. Consequently, investment returns are most appropriately viewed at a business unit level.

Following the equity raise in May 2020, and subsequent deployment of funds to support growth in the US, some excess capital is being managed at Trisura Group in a conservative manner. Net Investment income is driven by interest and dividend income on portfolio assets. The market-based yield of the Trisura Group portfolio as at December 31, 2020 was 3.4%. We expect to allocate additional capital to the US platform from Trisura Group as growth continues.

Canadian investment income is driven by interest and dividend income on portfolio assets. Net investment income in the quarter and for the year was stable, benefitting from increased interest and dividend income in the full year, partially offset by an adjustment to cost allocation associated with investment management fees charged from Trisura Group. The marketbased yield of the Canadian portfolio as at December 31, 2020 was 3.6% (Q4 2019 – 4.1%). We continue to diversify the Canadian portfolio, having introduced additional alternative investments in Q4 2020, which are expected to enhance portfolio yield and grow as a portion of the portfolio going forward.

In the quarter we continued to normalize the US portfolio to include allocations to asset classes beyond investment grade bonds. The market-based yield of the US portfolio as at December 31, 2020 was 3.4% (Q4 2019 – 3.5%). Investment income, which is primarily driven by interest income on this portfolio of bonds, grew in Q4 2020 and for the year as growth in operations led to an increase in the size of our investment portfolio, alongside the deployment of new capital from the equity raise in Q2 2020.

In the Reinsurance portfolio, Euro-denominated bonds supporting the life annuity reserves are held at FVTPL. Investment income increased as interest rates fell through Q4 and full year 2020. Importantly, these investment gains were offset by reserve strengthening on the life annuity reserves. The market-based yield of the Reinsurance portfolio as at December 31, 2020 was 1.5% (Q4 2019 – 1.7%).

Net gains include realized gains and losses from sales of investments in the investment portfolio, the impact of foreign exchange related to the investment portfolio and the operations of the business, impairments and any derivative gain or loss. Net gains were greater in Q4 2020 and for the year as a result of favourable foreign exchange movements and greater realized gains.

Other Comprehensive Income (Loss) ("OCI")

	Q4 2020	Q4 2019	$ variance	2020	2019	$ variance
Unrealized gains in OCI	10,853	936	9,917	4,942	5,717	(775)
Cumulative translation	(8,053)	(2,124)	(5,929)	(4,846)	(4,909)	63
Other Comprehensive Income (Loss)	2,800	(1,188)	3,988	96	808	(712)

The Company records unrealized gains and losses in the market value of its AFS assets through OCI. The mark to market impact of these assets on OCI was positive in Q4 2020 and for the year, driven by unrealized gains in the fixed income, preferred share and equity portfolios in both Canada and the US.

Foreign exchange differences arising from the translation of the financial statements of Trisura International and Trisura US to Canadian dollars are recognized as cumulative translation gains or losses, which are also a component of OCI. Cumulative translation losses in Q4 2020 and for the year were due to the strengthening of the Canadian currency against the US dollar, driving lower Canadian dollar valuations of capital held outside of Canada.

Refer to Notes 7 and 8 in the Consolidated Financial Statements for more detail on the components of investment returns.

SECTION 6 – OUTLOOK & STRATEGY

INDUSTRY

The specialty insurance market offers products and services that are not written by most insurance companies. The risks covered by specialty insurance policies generally require specialist underwriting knowledge and technical financial and actuarial expertise. Specialty lines are niche segments of the market that tend to involve more complex risks and a more concentrated set of competitors. Consequently, these risks are difficult to place in the standard insurance market where many carriers are unable or unwilling to underwrite them. As a result, specialty insurers have more pricing and policy form flexibility than traditional market insurers whose prices and policy forms are subject to authorization and approval by insurance regulators. Specialty lines are less commoditized areas of the market where relationships, product expertise and product structure are not easily replicated. For this reason, specialty insurers have historically, and are expected to continue to outperform the standard markets by having lower claims ratios and combined ratios than traditional insurance companies.

In contrast to the standard P&C insurance market, which is divided almost evenly between personal and commercial lines, specialty insurers are focused almost exclusively on commercial lines. Even within the commercial sector, the business mix of the specialty insurers can vary significantly from that of the overall P&C industry. Although no standard definition for the specialty insurance market exists, some common examples of business written by specialty insurers include non-standard insurance, niche market segments (such as Surety, D&O and E&O) and products that require tailored underwriting. Many insurance groups with a specialty focus have several different carriers and licenses and allocate business between these carriers depending on market conditions and regulatory requirements. The agency channel is the primary distribution channel for specialty insurance. Managing general agents often serve an important role in helping carriers distribute specialty insurance products.

In the US, the excess and surplus insurance industry is more fragmented than the standard marketplace. It is estimated that the top ten players capture just under 40% of market share, with the top 25 players averaging two percent market share positions. An estimated $55.5 billion of excess and surplus insurance direct premiums were written in 2019, exhibiting significant growth compared to the broader P&C industry, expanding by 11.2%. From 2000 until 2019, the average combined ratio for excess and surplus markets was 97.0% versus 101.7% for the P&C industry.

OUTLOOK AND STRATEGY

Our Company has an experienced management team with strong industry relationships and excellent reputations with rating agencies, insurance regulators and business partners. We have operated in the Canadian specialty P&C insurance market for more than 14 years and in the international specialty reinsurance market for over 18 years, establishing a conservative underwriting and investing track record.

In Canada, we have built our brand through serving our clients, brokers and institutional partners as a leading provider of niche specialty insurance products. We will continue to build out our product offerings in existing and new niche segments of the market with suitably skilled underwriters and professionals. We remain committed to our broker distribution channel to promote and sell insurance products. We are selective in partnering with a limited brokerage force, focusing its efforts on leading brokerage firms in the industry with expertise in specialty lines. This distribution network currently comprises over 150 major international, national and regional brokerage firms operating across Canada in all provinces and territories as well as boutique niche brokers with a focus on specialty lines.

Our US business is now fully operational and demonstrating scale and profitability. It is licensed as a domestic excess and surplus lines insurer in Oklahoma operating as a non-admitted surplus lines insurer in all states, and as an admitted carrier in 46 states. We are in the process of obtaining admitted licenses in all remaining states. It is our belief that conditions are favourable for the continued growth of our US platform, which operates as a hybrid fronting carrier using a fee-based business model. Our focus is to source high quality business opportunities by partnering with a core base of established and well-managed program administrators. From our experience to date these program administrators welcome our new capacity as there is currently a lack of fronting carriers and the products and arrangements currently offered to them by the existing market do not always meet the needs of their business and clients.

Furthermore, we continue to benefit form a strong supply of highly rated international reinsurance capacity keen to partner with us to gain exposure to this business, allowing us to cede the majority of the risk on policies to these reinsurers on commercially favourable terms. This belief has been supported by our experience in the market through 2019 and 2020. We are confident that this platform will generate attractive, stable fee income while maintaining a small risk position, rightsizing underwriting risk and aligning our interests with our program distribution partners and capacity providers. Our US business is already the largest component of GPW, and as we continue to grow, we expect that it will become an increasingly significant contributor to profitability.

We will continue to develop our distribution network, building on our existing partner network in Canada and our core base of program administrators in the US. Our Company will strive to increase the penetration of our products with our partners by providing the support they require to enhance the effectiveness of their sales and marketing efforts.

We also intend to consider acquisitions on an opportunistic basis and pursue those that fit with our strategic plan. Building on the knowledge and expertise of our existing operations, we intend to initially target businesses in the US that operate in similar niches of the specialty insurance market, or that can expand our licensing. The closing of 21st Century Preferred Insurance Company is a demonstration of the willingness and capabilities our team has to pursue these acquisitions. Additionally, our Reinsurance business has commenced writing new business in support of our US operations.

SECTION 7 – RISK MANAGEMENT

Our Company has developed an enterprise risk management framework and internal controls processes to identify, measure, monitor and mitigate risk. This framework is central to our business decision making including the business we choose to write and the business we choose to decline. Furthermore, for the business we write the risk management framework informs our determination of whether to retain the risk fully or to apply risk mitigation measures such as reinsurance.

CORPORATE GOVERNANCE

The Board of Directors is responsible for oversight of risk management and internal control systems and policies. The Board of Directors has established Board of Directors level risk committees at group and subsidiary levels, whose members are mostly independent of management. These committees meet quarterly to oversee and challenge the development and effectiveness of risk management frameworks and priorities and to review risk reporting. The Group Risk Management function, under the direction of the Group Chief Risk Officer, promotes sound and effective risk management across the Company by (i) ensuring that effective processes are in place to identify, assess, monitor, manage and report the risks to which the Company is or might be exposed, (ii) facilitating the setting of risk tolerances, limits and appetite by the Board and (iii) providing comprehensive and timely information on material risks which enables the Board and the Risk Committee to understand the overall risk profile of the Company. The Group Chief Risk Officer liaises with Risk Officers at subsidiary levels to develop consistency of approach with respect to risk identifying, assessing, monitoring, managing and reporting tailored to the operations of the subsidiaries. All Risk Officers at group and subsidiary levels report directly to their relevant risk committees. In addition, there are management level risk and underwriting committees at group and subsidiary levels with escalation processes to Board of Directors level committees.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

The following factors in addition to the other information set forth in this MD&A and in the Company's Consolidated Financial Statements and Annual Information Form should be considered in assessing the risks to the Company and the industry and markets in which we operate. If any of the following risks occur our financial condition and results of operations would likely suffer. The following list of risks are those that the Company believes are the most significant. They are not the only risks that we face or may face in the future and other risks may emerge that could have a material adverse effect on our financial condition and results of operations.

RISKS AND UNCERTAINTIES

Highly Competitive Specialty Insurance Business

The specialty insurance business is highly competitive. Elements of competition include pricing, availability and quality of products, capacity, quality and speed of service, ratings, financial strength, distribution and technology systems and technical expertise. Our Company competes with many other insurance companies. Many of these competitors are larger and have greater financial resources than are available to our Company and have a greater ability to compete on the basis of price. Some of our competitors may offer a broader range of policy administration or other services or be willing to take on significantly more underwriting risk. Any increase in competition in this segment, especially by one or more larger companies, could materially and adversely affect our Company's business, financial condition, results of operations and prospects. Competitors may also acquire distributors to our detriment. Consolidation amongst insurance companies and distribution partners could also impact our ability to compete. As competitors introduce new products and as new competitors enter the market, our Company may encounter additional and more intense competition. Technological change implemented by insurers or new market entrants can result in a change to the competitive landscape and adversely impact our ability to compete. There can be no assurance that we will continue to increase revenues or be profitable. To a large degree, future revenues of our Company are dependent upon our ability to continue to develop and market our products and to enhance the capabilities of our products to meet changes in customer needs. We seek to manage competition risks by fostering strong relationships with our distribution partners and by focusing on their needs, delivering excellence in service and providing valuable product expertise.

Cyclical and Volatile Nature of Insurance Industry

The financial performance of the insurance industry has historically tended to fluctuate in cyclical patterns of ''soft'' markets characterized generally by increased competition, resulting in lower premium rates and underwriting standards, followed by ''hard'' markets characterized generally by lessening competition, stricter underwriting standards and increasing premium rates. Our Company's profitability tends to follow this cyclical market pattern with profitability generally increasing in hard markets and decreasing in soft markets. These factors could result in fluctuations in the underwriting results and net income of our Company. Historically, the results of companies in the specialty insurance industry have been subject to significant fluctuations and uncertainties. Many of these factors are beyond our Company's control. The profitability of specialty insurers can be affected significantly by many factors, including regulatory regimes, developing trends in tort and class action litigation, adoption of consumer initiatives regarding premium rates or claims handling procedures, and privacy and consumer protection laws that prevent insurers from assessing risk, or factors that have a high correlation with risks considered, such as credit scoring. An economic downturn in those jurisdictions in which our Company writes business or otherwise conducts business activities, or adverse political conditions, could result in less demand for specialty insurance and lower policy premiums.

Risks Associated with the COVID-19 Pandemic

The rapid spread of the COVID-19 coronavirus, which was declared by the World Health Organization to be a pandemic on March 11, 2020, and actions taken by government authorities globally in response to COVID-19, have interrupted business activities and supply chains; disrupted travel; contributed to significant volatility in the financial markets; resulted in lower interest rates; impacted social conditions; and adversely impacted local, regional, national and international economic conditions as well as the labour market. As a result of the rapid spread of COVID-19, many companies and various governments have imposed restrictions on business activity and travel which may continue and could expand. The Company has largely transitioned to a remote work environment as a result of the COVID-19 pandemic, with limited impact to the

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

Company's workforce. Governments and central banks around the world have enacted fiscal and monetary stimulus measures to counteract the effects of the COVID-19 pandemic and various other response measures, however, the overall magnitude and long-term effectiveness of these actions remain uncertain. Given the ongoing and dynamic nature of the circumstances surrounding COVID-19, it is difficult to predict how significant the impact of COVID-19, including any responses to it, will be on the global economy and our Company or for how long any disruptions are likely to continue.

The nature and extent of such impacts will depend on future developments, which are highly uncertain, rapidly evolving and difficult to predict, including new information which may emerge concerning the severity of COVID-19. Additional actions may be taken to contain COVID-19 or treat its impact, such as re-imposing previously lifted measures or putting in place additional restrictions. The pace, availability, distribution and acceptance of effective vaccines could also affect the impact of COVID-19. Such developments may result in a material adverse effect on our assets, liquidity, financial condition and the operating results of our insurance business due to its impact on the economy and global financial markets there can be no assurance that strategies to address these risks will mitigate the adverse impacts related to the outbreak.

Reliance on distribution partners, capacity providers and program administrators ("PAs")

Trisura Guarantee distributes its products primarily through a network of distribution partners. These distribution partners also sell our competitors' products and may, subject to certain limitations, reduce or stop selling our products altogether. Strong competition exists among insurers for distribution partners with demonstrated ability to sell insurance products. Premium volume and profitability could be materially adversely affected if there is a material decrease in the number of distribution partners that choose to sell our Company's products. Trisura Specialty offers fronting arrangements to capacity providers that want to access specific US specialty insurance business. Capacity providers may be under common control with a particular PA or may be independent. An independent capacity provider may reinsure a single book or multiple books with various PAs. A single PA may control a single book with one capacity provider or multiple books with various capacity providers. Other specialty insurance companies may compete with Trisura Specialty for this business. These capacity providers and PAs may choose to enter into fronting arrangements with Trisura Specialty's competitors or PAs, or capacity providers may terminate fronting arrangements with Trisura Specialty if they no longer need access to its fronting capacity or for other reasons.

Consolidation among capacity providers could also reduce the availability of capacity available to our Company. A significant decrease in business from any of these distribution partners, capacity providers or PAs would cause our Company to lose premiums and require us to find other partners to replace those lost premiums. We seek to manage these risks by using a diversified group of distribution partners, capacity providers and program administers. We further foster strong relationships with our business partners by delivering excellence in service and product expertise. Where we have granted binding authority to our distribution partners and PAs we limit such authority to agreed underwriting guidelines and monitor the business underwritten. Nonetheless, situations could arise where binding authority business could result in losses and have a have a significant impact on our results of operations and financial condition.

A.M. Best Ratings

Rating agencies evaluate insurance companies based on their ability to pay claims. The ratings of A.M. Best are subject to periodic review using, among other things, proprietary capital adequacy models, and are subject to revision or withdrawal at any time. A.M. Best ratings are directed toward the concerns of policyholders and insurance agencies and are not intended for the protection of investors or as a recommendation to buy, hold or sell securities. Ratings are an important factor in establishing and maintaining our competitive position in the specialty insurance market and especially in commercial insurance. Each of Trisura Guarantee and Trisura Specialty have been assigned a financial strength rating of A- (Excellent) by A.M. Best with stable outlook. There can be no assurances that Trisura Guarantee or Trisura Specialty will be able to maintain these ratings. Any downgrade in these ratings would likely adversely affect our business through the loss of certain existing and potential policyholders to other companies with higher ratings, and through certain insurance brokerage firms with which we now do business seeking a higher rated issuing carrier to write their business.

Insurance Risks:

Insurance risk is the risk that the ultimate cost of claims and loss adjustment expense, as well as acquisition expenses, related to insurance contracts will exceed premiums received in respect of those contracts. This could occur where the frequency or severity of claims is greater than expected. For Life and Annuity policies, insurance risk may also include differences between expected and actual experience for policyholder behaviour, lapse, longevity, mortality, morbidity and the timing of claims. Some additional components of insurance risk such as product and pricing risk, concentrations of insurance risk and exposure to large losses, and estimates of loss reserves are described below.

For more information on insurance risk and the management of insurance risk see Note 2.4 (Insurance contracts), Note 11 (Unearned premiums), Note 9 (Unpaid claims and loss adjustment expenses), and Note 15.1 (Insurance risk) to the Consolidated Financial Statements.

1 - Product and Pricing

The pricing process relies on estimates of future loss costs and loss adjustment expenses. If we do not accurately assess and price for the risks assumed in our insurance policies, profitability could be negatively affected. On the other hand, setting premiums too high could impact competitiveness and growth. We price our products considering numerous factors, including claims frequency and severity trends, product line expense ratios, special risk factors, reinsurance costs, the capital required to support the product line, the investment income earned on that capital, and the competitive landscape of the insurance markets where we compete. Our Company's pricing processes are designed to ensure an appropriate return on capital. These factors are reviewed and adjusted periodically to ensure they reflect the current environment. Our Company seeks to manage this risk through the effective use of underwriting policies and guidelines, and by disciplined risk selection. Careful oversight is applied and guidelines are reviewed to reflect emerging trends. Insurance risk is further mitigated through effective claims and expense management and through the use of reinsurance. Technological change implemented by insureds could change the profile of the risks insured by our policies.

2 - Concentration of insurance risk and exposure to large losses

Concentration risk is the risk that our Company's insurance products are concentrated within a particular geographic area, industry, class of business, or insured, thereby increasing the exposure of our Company to a single event or a series of related events. Unexpected large losses may result from events such as the unforeseen failure of a large contractor, as a result of accumulations of large numbers of insurance or reinsurance contracts exposed to similar perils, adverse economic conditions, exposure to mass torts, terrorism, or natural or man-made catastrophes. Climate change may increase the frequency or severity on natural catastrophes. Large losses could also be the result of future unforeseen changes in the legal environment that could broaden our insurance coverage beyond the policy's original intent. Exposure could also aggregate through cyber-attacks where directly covered under our policies or through "silent cyber" where potential losses are not specifically included nor excluded in the policy wording. Certain policy exclusions could also be found to be unenforceable. When a large loss is identified, we may be required to strengthen reserves which could decrease earnings in that period. We seek to mitigate this risk through monitoring and modeling techniques to review the portfolio for concentration and aggregation of risks and through the purchase of reinsurance. We make adjustments as needed in order to ensure exposures are within tolerances. The active management of our reinsurance programs and collateral requirements is also an important element in maintaining net claims exposures within the Company's risk tolerance.

3 - Estimates of Loss Reserves

The liability for unpaid claims and loss adjustment expense ("LAE") represents an estimate of the ultimate cost of all claims incurred but not paid by the statement of financial position date. The reserving process employed in determining future claims and LAE payments includes consideration of individual case claims and LAE estimates on open reported claims as well as provisions for future development of such estimates and claims and LAE related to incurred but not reported claims. In some instances, further provisions are made for the time value of money by applying discount rates based on projected investment income from the assets supporting this liability. The Company uses qualified actuaries in its reserving processes.

In estimating unpaid claims and LAE, a range of actuarial techniques are used. Typically, these techniques consider historical loss development factors and payment patterns. They require the use of assumptions relating to future development of claims and LAE, future rates of claims frequency and severity, claims inflation, the level of insurance fraud, payment patterns and reinsurance recoveries, taking into consideration the nature of the insurance policies. For Life and Annuity policies, the reserve process typically includes estimates of lapse, future policyholder behaviour, longevity, mortality, morbidity, the timing of claim payments and discount rates. Most or all of these factors are not directly quantifiable, particularly on a prospective basis, and the effects of these and unforeseen factors could negatively impact our Company's ability to accurately assess the reserves required for the policies that we write. Typically, the delay to ultimate settlement of claims increases the uncertainty of the estimate of the ultimate cost of those claims and LAE. The uncertainty in estimation tends to be higher for long-tail lines where information typically emerges over time. For the reinsurance business, the time lag in obtaining information from ceding insurers as well as differing reserve practices employed by ceding insurers can further increase the uncertainty of the estimate. In certain circumstances, explicit actuarial margins are included in the reserves in recognition of the inherent uncertainty of the estimates and the possibility of deterioration in experience relative to expectation in relation to claims development, investment return rates and recoverability of reinsurance balances. The reserves for unpaid claims and LAE are reviewed regularly and evaluated in light of emerging claims experience and changing circumstances. Nonetheless, although our Company's management believes our overall reserve levels as at the date of the financial statements are adequate to meet our obligations under existing policies, actual losses may deviate, perhaps substantially, from the reserves reflected in our Company's financial statements. To the extent reserves prove to be inadequate, our Company would have to increase such reserves and incur a charge to earnings.

Availability of Reinsurance

Our reinsurance arrangements are with a limited number of reinsurers. A decline in the availability of reinsurance or increases in the cost of reinsurance could increase costs or materially impact the amount of business we could underwrite. There can be no assurance that developments may not occur in the future which might cause a shortage of reinsurance capacity in those classes of business which we underwrite.

Ability to recover amounts due from reinsurers

Our Company uses reinsurance in the ordinary course of business to reduce its exposure to any one claim or event under the policies we issue. Reinsurance is also a key component of the Trisura Specialty hybrid fronting model. Reinsurance does not relieve our Company of its obligations to policyholders. Our Company is ultimately at risk on the limits of coverage provided under insurance policies we write, regardless of whether we have ceded a portion of this exposure to reinsurers. If a reinsurer is unwilling or unable to satisfy its obligations, our Company does not have the right to correspondingly reduce its claims payment obligations.

If our Company fails to realize a reinsurance recoverable owed under these arrangements our financial condition could be materially and adversely affected. The Company has a reinsurance risk management policy in place to manage the credit risk associated with recoverables from reinsurers including requirements for using licensed reinsurers, minimum credit ratings and concentration limits. When the Company uses un-registered or un-rated reinsurers, collateral is used to manage credit risk.

For more information on reinsurance and the Company's management of its recoverable amounts due from reinsurers, see Note 15.2 (Credit risk) and Note 16 (Reinsurance) to the Consolidated Financial Statements.

Financial Risks:

The significant financial risks are credit risk, liquidity risk and market risk (comprising currency risk, interest rate risk and other price risks such as equity risk). The notes to our Company's Consolidated Financial Statements provide further detail on these risks and the ways in which we monitor and control these risks. To the extent that those risks emerge, they could have a material adverse effect on our Company's business, financial condition and performance.

1 - Credit Risk

Credit risk is the risk that a party to a financial instrument will fail to discharge an obligation and cause our Company to incur a financial loss. Credit risk arises mainly from investments in bonds and short-term securities, the structured insurance assets, and balances receivable from insurance brokers and reinsurers. Concentrations of credit risk can arise from exposures to a single debtor, a group of related debtors or groups of debtors that have similar risk characteristics, for example they may operate in the same or similar industries. For premiums receivable, our Company uses insurance brokers, managing general agents, and PAs as intermediaries for the distribution of its product offerings and is therefore subject to the risk that these agents fail to remit the premiums they have collected on its behalf. With respect to credit risk associated with recoveries under reinsurance contracts, see the section "Ability to recover amounts due from reinsurers". Our investment policies mitigate credit risk through requirements relating to type, credit quality, size and duration of permitted investments among other factors. Management monitors credit quality on an ongoing basis. For premiums receivable, the Company monitors accounts receivable and follows-up all past due amounts to ensure satisfactory collection arrangements are in place. See Note 15.2 (Credit risk) to the Consolidated Financial Statements for more information on the management of credit risk.

2 – Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Generally, our Company's financial liabilities are settled by delivering cash from the cash flow generated from its operations to satisfy its liquidity requirements, which are primarily operating expenses and claims and loss adjustment payments. By their nature, the timing and quantum of claims and loss adjustment payments are subject to significant uncertainty and are estimated actuarially. Although our Company has reinsurance treaties in place under which a portion of the claim payments may be recovered, including by way of set off against premiums payable to the reinsurers, such recoveries usually follow the making of payments and often delays of a number of months can occur. Hence our Company must have access to sufficient liquid resources to fund gross amounts payable when required. Our Company periodically pledges assets under insurance and reinsurance trust arrangements which are therefore not readily available for general use by our Company. To manage its liquidity requirements, the Company keeps some of its assets in cash and cash equivalents and has a highly rated, highly liquid investment portfolio. The Company's investment policy sets out credit quality criteria and has limits on single issuer exposures. In addition, the investment policy stipulates average duration of bonds relative to average duration of claim liabilities. See Note 15.3 (Liquidity risk) to the Consolidated Financial Statements for more information on the management of liquidity risk.

3 - Market Risk

Exposure to this risk results from business activities including investment transactions involving the purchase or sale of financial instruments. Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices which could be driven by financial market conditions, general economic conditions, political conditions, or other factors. Market risk includes currency risk, interest rate risk and other price risks such as equity risk. See Note 15.4 (Market risk) of the Consolidated Financial Statements for more information on the management of market risk.

i) Currency Risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our Company has operations in the United States and Canada, as well as European exposure through its reinsurance operations and therefore has exposure to currency risk arising from fluctuations in exchange rates of the Canadian dollar and Euro against the USD. The Company also has currency risk as a result of holding investments in the Company's Canadian operations denominated in USD. The foreign currency positions of the Company are monitored regularly and the Company may use derivatives to manage foreign exchange risks where material unmatched foreign exchange positions exist in the investment portfolio.

ii) Interest Rate Risk

Interest rate risk is the potential for financial loss resulting from changes in interest rates. Bonds, structured insurance assets and preferred shares are subject to interest rate risk although, in the case of bonds, to the extent they are held to maturity, the risk is limited to the reinvestment yield being different from the original yield to maturity. The fair value of bonds generally changes inversely with changes in market rates of interest, with greater impact to bonds with longer durations. The Company's unpaid claims balance is also subject to interest rate risk, in particular the Company's life annuity reserves which have longer durations. The Company manages its interest rate risk through its investment policy which considers average duration of bonds held and maximum maturity limit as well as asset liability matching.

iii) Equity Price Risk

Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company's exposure to equity price risk is managed and mitigated through its investment policy which sets out maximum exposures to equities at aggregate and per issuer levels as well as requiring diversification across different industry sectors.

Negative Publicity in the Specialty Insurance Industry

A number of our Company's products and services are ultimately distributed to individual consumers. From time to time, consumer advocacy groups or the media may focus attention on products and service of the specialty insurance industry or our Company, thereby subjecting the specialty insurance industry or our Company to periodic negative publicity. Negative publicity may also result in increased regulation and legislative scrutiny of practices in the specialty insurance industry as well as increased litigation. Such consequences may increase our Company's costs of doing business and adversely affect our Company's profitability by impeding our ability to market our products and services or increasing the regulatory burdens under which our Company operates.

Reliance on Key Personnel

The success of our Company depends upon the personal efforts of our senior management. The loss of the services of such key personnel could have a material adverse effect on the operations of our Company. In addition, our Company's continued growth depends on our ability to attract and retain skilled management and employees and the ability of our key personnel to manage our Company's growth. Recruiting and retaining skilled personnel is costly and highly competitive. If our Company fails to retain, hire, train and integrate qualified employees and contractors, we may not be able to maintain and expand our business. Certain key personnel are not bound by non-competition covenants. If such personnel depart our

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

Company and subsequently compete with our Company or determine to devote significantly more time to other business interests, such activities could have a material adverse effect on our Company's business, financial condition and performance. The Company's strategies to manage this risk include succession planning for key employees, employee engagement surveys and third-party compensation reviews.

Litigation Risk

The Company is subject to claims and litigation in the ordinary course of business resulting from alleged errors and omissions in placing specialty insurance and handling claims. The placement of specialty insurance and the handling of claims involve substantial amounts of money. Since negligence claims against our Company may allege our Company's potential liability for all or part of the amounts in question, claimants may seek large damage awards and these claims can involve significant defense costs. Claims of negligence against our Company could include, for example, errors and omissions or intentional wrongful acts by the Company's employees or agents, in the adjudication of claims, in the placing of coverage, in the handling of consumer complaints, in failing to appropriately and adequately disclose insurer fee arrangements to consumers, or in the handling of funds that we hold for our customers on a fiduciary basis. It is not always possible to prevent or detect errors and omissions, and the precautions our Company takes may not be effective in all cases. In addition to litigation associated with our insurance policies, we also face risk associated with general corporate and commercial litigation. To the extent that these risks emerge, they could have a material adverse effect on our Company's business, financial condition and performance. In addition, litigation may harm our Company's reputation or divert management resources away from operating our business.

Holding Company

Trisura Group is a holding company and its material assets consist primarily of interests in our operating subsidiaries. Consequently, we depend on distributions and other payments from our operating businesses to provide us with the funds necessary to meet our holding company financial obligations. Our operating businesses are legally distinct from Trisura Group and some of them are or may become restricted in their ability to pay dividends and distributions or otherwise make funds available to Trisura Group pursuant to local law, regulatory requirements and their contractual agreements, including agreements governing their financing arrangements. Our operating businesses are generally required to meet their policyholder and other obligations before making distributions to Trisura Group.

Adverse Effects of Regulatory Changes

The specialty insurance industry is heavily regulated. Changes in the regulations governing the specialty insurance industry in any jurisdiction in which we operate, or increased regulations, may significantly affect the operations and financial results of our Company. Our Company is subject to the laws, rules and regulations of the jurisdictions in which we carry on business, including Canada, the US and Barbados. These laws, rules and regulations cover many aspects of our business, the assets in which we may invest, the levels of capital and surplus and the standards of solvency that we must maintain, and the amounts of dividends which we may declare and pay. Changes to laws, rules or regulations are difficult to predict and could materially adversely affect our Company's business, results of operations and financial condition. In addition, more restrictive laws, rules or regulations may be adopted in the future that could make compliance more difficult or expensive. Trisura Guarantee is regulated by OSFI and other provincial regulators in the provinces in which it conducts business. Trisura Specialty is regulated by the Department of Insurance in Oklahoma, as well as other state regulatory agencies in which it conducts business. Trisura International Insurance is regulated by the Financial Services Commission in Barbados. Each of these regulators has broad supervisory and regulatory powers available to them in connection with licenses, solvency capital requirements, investments, dividends, corporate governance, requirements for key personnel, conduct of business rules, periodic examinations and reporting requirements. The regulators have the authority to take enforcement actions and impose sanctions, including directing the regulated entity to refrain from a course of action or to perform acts necessary to remedy situations, imposing fines and the withdrawal of authorization. In certain circumstances, the regulators may take control of regulated insurance or reinsurance companies. There is no guarantee that these regulators would not take such actions under certain circumstances with respect to Trisura Guarantee, Trisura Specialty or Trisura International Insurance. The imposition of such actions could have a material adverse effect on our business, financial condition and performance.

Change of Control Restrictions of US Insurance Laws

The laws of the State of Oklahoma, where Trisura Specialty is domiciled, require prior approval by the Department of Insurance in Oklahoma of any change of control of an insurer. ''Control'' is defined as the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the regulated insurance company, whether through the ownership of voting securities, by contract or otherwise. Control is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of an insurance company domiciled in Oklahoma or any entity that controls an insurance company domiciled in Oklahoma. Any person wishing to acquire ''control'' of our Company would first be required to obtain the approval of the Department of Insurance in Oklahoma or file appropriate disclaimers. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of our Company, including through transactions (and in particular, unsolicited transactions), that some or all of our shareholders might consider to be desirable.

Regulatory Challenges to Use of Fronting Arrangements

Trisura Specialty enters into arrangements under which it permits its licensed status to be used in partnerships with high quality and collateralized reinsurers to issue insurance policies originated by PAs. The PA underwrites (consistent with rates and forms agreed to by Trisura Specialty and its reinsurers), and administers the business, a third party administrator is hired by Trisura Specialty to settle all claims, and the reinsurer(s) reinsure, on average, 90% to 100% of the risks. This is considered a hybrid "fronting" arrangement. Trisura Specialty receives a ceding fee, and shares its proportionate share in the profits or losses of the business it writes with the reinsurer(s). Some state insurance regulators may object to Trisura Specialty's fronting arrangements.

Notwithstanding these state law restrictions on ceding insurers, the Nonadmitted and Reinsurance Reform Act contained in the United States Dodd-Frank Wall Street Reform and Consumer Protection Act (the ''NRRA'') provides that all laws of a ceding insurer's nondomestic state (except those with respect to taxes and assessments on insurers or insurance income) are pre-empted to the extent that they otherwise apply the laws of the state to reinsurance agreements of nondomestic ceding insurers. The NRRA places the power to regulate reinsurer financial solvency primarily with the reinsurer's domiciliary state and requires credit for reinsurance to be recognized for a nondomestic ceding company if it is allowed by the ceding company's domiciliary state. A state insurance regulator might not view the NRRA as pre-empting a state regulator's determination that an unauthorized reinsurer must obtain a license or that a statute prohibits Trisura Specialty from engaging in a fronting business. However, such a determination or a conflict between state law and the NRRA could cause regulatory uncertainty about Trisura Specialty's fronting business, which could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Future Acquisitions

A key part of our Company's growth strategy involves seeking acquisition opportunities. We face competition for acquisitions, including from our competitors, many of whom will have greater financial resources than us. There can be no assurance that we will complete acquisitions. In addition, future acquisitions will likely involve some or all of the following risks, which could materially and adversely affect our Company's business, financial condition or results of operations: the difficulty of integrating the acquired operations and personnel into our current operations; potential disruption of our current operations; diversion of resources, including our Company's management's time and attention; the difficulty of managing the growth of a larger organization; the risk of not attaining expected benefits; the risk of entering markets in which we have little experience; the risk of becoming involved in labour, commercial or regulatory disputes or litigation related to the new enterprise; the risk of environmental or other liabilities associated with the acquired business; and the risk of a change of control resulting from an acquisition triggering rights of third parties or government agencies under contracts with, or authorizations held by, the operating business being acquired. It is possible that due diligence investigations into businesses being acquired may fail to uncover all material risks, or to identify a change of control trigger in a material contract or authorization, or that a contractual counterparty or government agency may take a different view on the interpretation of such a provision to that taken by us, thereby resulting in a dispute.

Inability to Generate Necessary Amount of Cash to Service Existing Debt

Our Company's ability to pay principal and interest on our credit facility will depend on its future financial performance. Our Company's ability to generate cash will depend on many factors, some of which may be beyond its control, including general economic, financial and regulatory conditions. If our Company cannot generate enough cash flow in the future to service its debt or cannot renew the credit facility on its existing terms, it may need to refinance its debt, obtain additional financing (on terms that may be less favourable than existing financing terms) or sell assets. Our Company might not be able to implement any of these strategies on satisfactory terms or on a timely basis, if at all. If our Company is unable to meet its debt service obligations or comply with its covenants, a default under the credit facility would result.

Future Capital Requirements

Our Company's future capital requirements will depend upon many factors, including the performance of Trisura Guarantee, continued development of our US business, and the status of competition and regulatory and rating agency requirements. There can be no assurance that financing will be available to our Company on acceptable terms, or at all. If additional funds are raised by issuing equity securities, dilution to our existing shareholders will result. If adequate funds are not available, our Company may be required to delay, scale back or abandon growth plans. An inability to obtain financing or similar financial support could have a material adverse effect on our Company's business, financial condition and results of operations.

Potential Volatility of Common Share Price

The market price for the Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond our Company's control, including, but not limited to, the following: (i) actual or anticipated fluctuations in our Company's quarterly results of operations; (ii) changes in estimates of our Company's future financial performance; (iii) recommendations by securities research analysts; (iv) changes in the economic performance or market valuations of other issuers that investors deem comparable to our Company; (v) the addition or departure of our executive officers and other key personnel; (vi) sales or anticipated sales of additional Common Shares; (vii) significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our Company or our competitors; (viii) actual or prospective changes in government laws, rules or regulations affecting our businesses; (ix) the general state of the securities markets; (x) changes and developments in general economic, political, or social conditions, including as a result of COVID-19 and the global economic shutdown; (xi) the depth and liquidity of the market for the Common Shares; (xii) news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in our industry or target markets; and (xiii) the materialization of other risks described in this section.

Financial markets have in the past experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of public entities and that have, in many cases, been unrelated to the operating performance, underlying asset values or prospects of such entities. Accordingly, the market price of the Common Shares may decline even if our Company's operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. As well, certain institutional investors may base their investment decisions on consideration of our Company's governance and social practices and performance against such institutions' respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in the Common Shares by those institutions, which could materially adversely affect the trading price of the Common Shares. There can be no assurance that fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, our Company's operations and the trading price of the Common Shares may be materially adversely affected.

Small Company Liquidity Risk

Trisura Group is a relatively small company in terms of market capitalization. As such, the share price of the Common Shares may be more volatile than the shares of larger, more established companies. The Common Shares may trade less frequently and in smaller volume than shares of large companies. As a result, it may be difficult to buy or sell the Common Shares in a timely fashion relative to buying or selling shares of large companies on the secondary market. We may also have relatively few Common Shares outstanding at any given time, so a sale or purchase of Common Shares may have a greater impact on the price of the Common Shares.

Future Sales of Substantial Amount of Share Capital

The articles of incorporation, as amended, of Trisura Group provide that Trisura Group may issue an unlimited number of Common Shares, an unlimited number of non-voting shares and an unlimited number of preference shares (issuable in series), subject to the rules of any stock exchange on which Trisura Group's securities may be listed from time to time. If Trisura Group was to issue any additional Common Shares, non-voting shares or preference shares, or such other classes of authorized shares that are convertible or exchangeable for Common Shares, the percentage ownership of existing holders may be reduced and diluted. We cannot foresee the terms and conditions of any future offerings of our securities nor the effect of such offerings on the market price of the Common Shares. Any issuance of a significant percentage of Trisura Group's securities, or the perception that such issuances may occur, could have a material adverse effect on the market price of the Common Shares and limit our ability to fund our operations through capital raising transactions in the future. The Board of Directors has the authority to issue non-voting shares and preference shares and determine the price, designation, rights (including voting and dividend rights), preferences, privileges, restrictions and conditions of the preference shares, and to determine to whom non-voting and preference shares shall be issued.

Business Interruption from Unpredictable Catastrophic Events

Our company's operations may be subject to losses resulting from the disruption in operations. Regular functioning of our operations may be disrupted by natural catastrophes such as hurricanes, windstorms, earthquakes, hailstorms, explosions, severe winter weather and fires, by man-made catastrophic events include hostilities, terrorist acts, riots, crashes and derailments, by a disruption in key suppliers for example power grids, internet service providers, and cloud computing providers, or by an epidemic or pandemic. Certain events may also cause damage to our Company's physical property or may impact key personnel or trading positions. Our Company maintains business continuity plans and technology disaster recovery plans. If these plans cannot be put into action or are in-effective or do not take such events into account, losses may further increase.

Dependence on Technology

Our Company is heavily dependent on systems technology to process large volumes of transactions and our business would suffer if the technology employed is inadequate or inappropriate to support current and future business needs and objectives. To ensure our Company is able to effectively respond to potential technology failures and mitigate the inherent risk, our Company maintains technology disaster recovery plans for each of our operating companies.

Cyber-Security

Our information technology systems may be subject to cyber terrorism intended to obtain unauthorized access to our proprietary information, destroy data or disable, degrade or sabotage our systems, often through the introduction of computer malware, social engineering, cyber-attacks and other means, and could originate from a wide variety of sources, including internal or unknown third parties. If our information systems are compromised, do not operate or are disabled, this could have a material adverse effect on our business prospects, financial condition, or results of operations. Additionally, if our information systems are compromised and personally identifiable information is released, there could be regulatory reporting obligations leading to material reputational harm or even litigation. We seek to mitigate this risk through strong network security, network monitoring, third party vulnerability assessments, employee training and awareness, data backups, disaster recovery planning, and privacy breach planning.

Other Operational Risks

Through the course of our business we rely on employees, systems, distribution partners, third party vendors and service providers. We are exposed to the potential failure on the part of any of these parties, whether through error, fraud, crime, failure to comply with regulatory standards, failure to comply with internal policies or otherwise. It is not always possible to identify and correct these failures and the internal processes that we have in place may not be effective in all cases at identifying or mitigating these situations in time. In such a case, our reputation, financial condition and results of operations could be negatively impacted. We rely on estimates and models in the course of our business whether internal models or vendor models. These models have a high degree of uncertainty and are based on historical data, scenarios and judgement that may not accurately reflect future conditions. For example, models are used in the estimation of Probable Maximal Loss for contract surety account, in informing reinsurance purchase decisions, in investment decisions, in pricing, and in reserving. Models estimates could deviate materially from actual experience and thereby have a material negative impact on our financial condition and results of operations.

Taxation Risk

Our Company is subject to income taxes and premium taxes in the jurisdictions in which we carry on business, including Canada, the US and Barbados. Changes to tax laws or the interpretation of these tax laws by government authorities prospectively or retrospectively could have a material adverse impact our profitability. Deferred tax assets are only recognized to the extent that it is probable that they will be realized. Estimates are used to determine the value of the deferred tax asset balance based on the assumption that the Company will generate taxable income in future years. Estimates are used to determine the taxes payable balance based on applicable tax legislation. If our Company were not to achieve the expected level of profitability, the deferred tax asset may not be realized which could have a material negative impact on our financial condition and results of operations.

SECTION 8 – OTHER INFORMATION

RATINGS

Trisura Canada has been rated A- (Excellent) by A.M. Best since 2012. This rating was reaffirmed with stable outlook by A.M. Best in November 2020. Trisura US obtained an A- (Excellent) rating with stable outlook from A.M. Best in September 2017, which was reaffirmed in November 2020. A.M Best increased the financial size category of Trisura US from VII to VIII (US $50 million to US $100 million capital) in November 2020.

CASH FLOW SUMMARY

	Q4 2020	Q4 2019	$ variance	2020	2019	$ variance
Net income from operating activities	10,949	4,172	6,777	32,442	5,094	27,348
Non-cash items	(3,439)	11,544	(14,983)	3,107	10,400	(7,293)
Change in working capital	23,958	9,744	14,214	81,412	49,726	31,686
Realized gains on investments	(1,223)	(60)	(1,163)	(22,666)	(2,860)	(19,806)
Income taxes paid	(1,860)	(114)	(1,746)	(9,808)	(2,573)	(7,235)
Interest paid	(223)	(354)	131	(1,144)	(1,410)	266
Net cash from operating activities	28,162	24,932	3,230	83,343	58,377	24,966
Proceeds on disposal of investments	37,776	13,805	23,971	238,827	55,452	183,375
Purchases of investments	(50,152)	(79,741)	29,589	(331,933)	(170,817)	(161,116)
Net purchases of capital and intangible assets	(673)	(2,723)	2,050	(1,296)	(3,131)	1,835
Net cash used in investing activities	(13,049)	(68,659)	55,610	(94,402)	(118,496)	24,094
Dividends paid	-	(24)	24	-	(96)	96
Shares issued	-	-	-	65,143	55,669	9,474
Preferred shares redeemed	-	(1,600)	1,600	-	(1,600)	1,600
Loans received	11,459	-	11,459	44,159	-	44,159
Repayment of loan payable	(11,459)	-	(11,459)	(44,159)	-	(44,159)
Lease payments	(318)	(266)	(52)	(1,515)	(1,026)	(489)
Net cash (used in) from financing activities	(318)	(1,890)	1,572	63,628	52,947	10,681
Net increase (decrease) in cash	14,795	(45,617)	60,412	52,569	(7,172)	59,741
Cash at beginning of the period	124,875	131,913	(7,038)	85,905	95,212	(9,307)
Currency translation	(3,151)	(391)	(2,760)	(1,955)	(2,135)	180
Cash at the end of the period	136,519	85,905	50,614	136,519	85,905	50,614

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

Net cash used in investing activities in Q4 2020 and 2020 as well as Q4 2019 and 2019 reflected the purchase and disposal of portfolio investments in all three principal operating subsidiaries. In Q4 2020, purchases of investments were lower than Q4 2019, as Q4 2019 included a number of new investments associated with the equity raise in Q3 2019. Disposals of investments were greater in Q4 2020 than in Q4 2019 as a result of a higher rotation of investments in the portfolio than in the prior year. In 2020 purchases and disposals of investments increased relative to 2019 reflecting a larger investment portfolio following the equity raises in 2019 and 2020, and a higher rotation of securities throughout the investments portfolios relative to the prior year.

Net cash (used in) from financing activities was lower in Q4 2020 than Q4 2019, as Q4 2019 included funds used to redeem the outstanding preferred shares. In Q4 2020, there was movement in Loans received and Repayment of loans payable, which reflected a shift in borrowing from the Company's credit facility, to its margin facility with the same bank. The purpose of the shift was to achieve a lower borrowing rate. In 2020 movement in Net cash (used in) from financing activities was greater than Q4 2019 YTD as a result of a larger equity offering in 2020 than in 2019. Full year 2020 also included the repayment of the outstanding CAD denominated Loan payable balance, which was replaced with a new Loan payable balance denominated in USD.

In Q4 2020 the increase in Net cash from operating activities was primarily related to an increase in cash generated from operating activities at our Canadian operations. In 2020 the increase in Net cash from operating activities was primarily related to an increase in cash generated from operating activities at our US operations, which generated more cash from operations in 2020 than in 2019, largely as a result of growth in the business. Net cash from operating activities was lower in 2020 in our Reinsurance operations as a result of higher cash inflows associated with the repayment of certain outstanding receivables in Q3 2019.

As at	December 31, 2020
	Trisura Canada	Trisura US	Trisura International	Corporate (1)	Total (2)
Assets	541,603	1,021,020	121,347	22,762	1,706,732
Liabilities	431,858	864,983	108,295	11,732	1,416,868
Shareholders' Equity	109,745	156,037	13,052	11,030	289,864
Book Value Per Share, $ (3)	10.69	15.20	1.27	1.06	28.23

SEGMENTED REPORTING

(1) Corporate includes consolidation adjustments.

(2) Total reflects the Group's Assets, Liabilities, and Book Value Per Share after consolidation adjustments.

(3) Number of common shares used in the calculation of book value per share equals to the Group's total number of common shares outstanding as at December 31, 2020.

As at	December 31, 2019
	Trisura Canada	Trisura US	Trisura International (1)	Corporate (2)	Total (3)
Assets	424,009	444,763	104,169	5,452	978,393
Liabilities	333,681	336,608	85,766	32,009	788,064
Shareholders' Equity	90,328	108,155	18,403	(26,557)	190,329
Book Value Per Share, $ (4)	10.24	12.26	2.09	(3.01)	21.58

(1) Includes the assets and liabilities of its intermediary holding company.

(2) Corporate includes consolidation adjustments.

(3) Total reflects the Group's Assets, Liabilities, and Book Value Per Share after consolidation adjustments.

(4) Number of common shares used in the calculation of book value per share equals to the Group's total number of common shares outstanding as at December 31, 2019.

CONTRACTUAL OBLIGATIONS

As at December 31, 2020	Payments due by period
	Total	Less than 1 year1 – 5 years		Thereafter
Loans payable (1)	27,555	11,459	16,096	-
Interest payments on debt (2)	995	397	598	-
Lease liabilities	10,278	1,566	6,212	2,500
Total contractual obligations	38,828	13,422	22,906	2,500

(1) See Note 20 in the Company's Consolidated Financial Statements for details on Loan payable.

(2) Based on the Company's most recent borrowing rate on the outstanding loan payable.

On April 1, 2020, the Company's five-year revolving credit facility was amended to increase the Company's borrowing capacity from $35,000 to $50,000.

As at December 31, 2019	Payments due by period
	Total	Less than 1 year	1 – 5 years	Thereafter
Loans payable	29,700	-	29,700	-
Interest payments on debt (1)	3,258	1,019	2,239	-
Lease liabilities	11,132	1,656	6,650	2,826
Total contractual obligations	44,090	2,675	38,589	2,826

(1) Based on the Company's most recent borrowing rate on the outstanding loan payable.

FINANCIAL INSTRUMENTS

See Notes 4, 5, 6, 7, and 8 in the Company's Consolidated Financial Statements for financial statement classification of the change in fair value of financial instruments, significant assumptions made in determining the fair values, amounts of income, expenses, gains and losses associated with the instruments.

RELATED PARTY TRANSACTIONS

See Note 25 in the Company's Consolidated Financial Statements.

ACCOUNTING ESTIMATES

See Note 3 in the Company's Consolidated Financial Statements for accounting estimates on unpaid claims, level 3 investments, as well as the provisions on income taxes.

SECTION 9 – SUMMARY OF RESULTS

SELECTED QUARTERLY RESULTS

	2020				2019
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Gross premiums written	314,200	239,607	202,683	169,952	143,212	114,354	109,313	81,383
Net premiums written andother revenue	98,059	71,195	52,748	49,041	43,231	39,959	38,885	32,759
Total revenues	69,494	60,095	52,455	44,588	29,325	42,752	34,038	39,487
Net income (loss)attributable toshareholders	10,949	6,535	6,587	8,371	4,172	2,543	(4,138)	2,517
EPS, basic (in dollars)	1.07	0.64	0.69	0.95	0.47	0.37	(0.63)	0.38
EPS, diluted (in dollars)	1.05	0.62	0.68	0.94	0.47	0.37	(0.63)	0.37
Distributions or cashdividends per-share	-	-	-	-	$0.375	$0.375	$0.375	$ 0.375
Total assets	1,706,732	1,517,516	1,327,613	1,143,064	978,393	886,893	750,472	667,922
Total non-currentfinancial liabilities (1)	16,096	28,869	29,494	33,704	29,700	29,700	29,700	29,700

SELECTED ANNUAL RESULTS

	2020	2019	2018
Gross premiums written	926,442	448,262	103,278
Net premiums written and other revenue	271,043	154,834	120,199
Total revenues	226,632	137,525	103,278
Net income attributable to shareholders	32,442	5,094	8,638
EPS, basic (in dollars)	3.33	0.69	1.29
EPS, diluted (in dollars)	3.28	0.69	1.27
Distributions or cash dividends per-share	-	1.50	1.50
Total assets	1,706,732	978,393	600,982
Total non-current financial liabilities (1)	16,096	29,700	29,700

(1) See Note 20 in the Company's Consolidated Financial Statements for details on Loan payable.

SECTION 10 – ACCOUNTING AND DISCLOSURE MATTERS

DISCLOSURE CONTROLS AND PROCEDURES

We maintain information systems, procedures and controls to ensure that new information disclosed externally is complete, reliable and timely. Management of the Company, at the direction and under the supervision of the Chief Executive Officer and the Chief Financial Officer of the Company evaluated the effectiveness of the Company's "disclosure controls and procedures" (as defined in "National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings" ("NI 52-109")) as at December 31, 2020, and have concluded that the disclosure controls and procedures are operating effectively.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

We maintain "internal control over financial reporting" (as defined in NI 52-109) and the Chief Executive Officer and the Chief Financial Officer of the Company have concluded that the internal controls have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management has evaluated whether there were changes in our internal control over financial reporting during the year ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting and has determined that there have been no such changes.

OPERATING METRICS

We use operating metrics to assess our operating performance.

Operating Metrics	Definition
Combined Ratio	The sum of the loss ratio and the expense ratio. The difference between 100% and thecombined ratio represents underwriting income as a percentage of NPE, or underwritingmargin. A combined ratio under 100% indicates a profitable underwriting result. A combinedratio over 100% indicates an unprofitable underwriting result.
Expense Ratio	All expenses incurred (net of fee income in our Canadian operations) as a percentage of NPE.
Fees as Percentageof Ceded Premium	Writtenfee income divided by ceded written premium.
Fronting OperationalRatio	The sum of claims, acquisition costsand operating expenses divided by the sum of NPE andfronting fees.
Loss Ratio	Net claims and loss adjustment expenses incurred as a percentage of NPE.
ROE	Net income for the twelvemonth period preceding the reporting date, divided by the averagecommon shareholders'equity over the same period, adjusted for significant capitaltransactions, if appropriate.
Adjusted ROE	ROE calculated using Adjusted net income.
Adjusted Net Income	Net income, adjusted to remove impact of non-recurring itemsand normalize earnings for coreoperations.
MCT	Our Canadian operationsreport the results of itsMCT as prescribed by OSFI's GuidelineA—Minimum Capital Test for FederallyRegulated Property and Casualty Insurance Companies,as amended, restated or supplemented from time to time. MCT determines the supervisoryregulatory capital levels required by our Canadian operations.
Retained Premium(%)	NPW as a percentage of GPW.
Rolling averageequity	Shareholders'equity over twelve monthperiod, adjusted for significant capital transactions, ifappropriate.
Net UnderwritingRevenue	The sum of net premiums earned and fee income earned.
Net UnderwritingIncome	Net underwriting revenue, less net claims and loss adjustment expenses, net commissions,and operating expenses.

These operating metrics are operating performance measures that highlight trends in our core business or are required ratios used to measure compliance with OSFI and other regulatory standards. Our Company also believes that securities analysts, investors and other interested parties use these operating metrics to compare our Company's performance against others in the specialty insurance industry. Our Company's management also uses these operating metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Such operating metrics should not be considered as the sole indicators of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS.

NON-IFRS FINANCIAL MEASURES

We report certain financial information using non-IFRS financial measures. Non-IFRS financial measures do not have standardized meanings prescribed by IFRS and may not be comparable to similar measures used by other companies in our industry. They are used by management and financial analysts to assess our performance.

Further, they provide users with an enhanced understanding of our results and related trends, and increase transparency and clarity into the core results of the business.

Adjusted Earnings per Common Share

	Q4 2020	Q4 2019	2020	2019
Net income	10,949	4,172	32,442	5,094
Adjustments, net of tax
Add: impact of share-based compensation expenses (net of tax)	548	1,042	5,490	1,727
Less: net (gains) losses (net of tax)	(2,050)	107	(6,119)	(1,291)
Less: settlement from structured insurance assets (net of tax)	-	-	-	(7,293)
Add: impact of Annuity reserve losses (gains)	592	(191)	4,588	15,773
Adjusted net income	10,039	5,130	36,401	14,010
Less: dividends declared on preferred shares, net of tax	-	(24)	-	(96)
Adjusted net income attributable to shareholders	10,039	5,106	36,401	13,914
Weighted-average number of common shares outstanding - basic(in thousands of shares)	10,269	8,820	9,733	7,213
Adjusted earnings per common share – basic - in dollars	$0.98	$0.58	$3.74	$1.93
Weighted-average number of common shares outstanding - diluted(in thousands of shares)	10,474	8,884	9,893	7,245
Adjusted earnings per common share – diluted - in dollars	$0.96	$0.57	$3.68	$1.92

ROE and Adjusted ROE

	2020	2019
Rolling net income attributable to shareholders	32,442	5,094
Adjusted net income attributable to shareholders	36,401	13,914
Rolling average equity	241,488	147,153
ROE	13.4%	3.5%
Adjusted ROE	15.0%	9.4%

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains "forward-looking information" within the meaning of Canadian provincial securities laws and "forwardlooking statements" within the meaning of applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include words such as "expects," "likely," "anticipates," "plans," "believes," "estimates," "seeks," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could".

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forwardlooking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of our Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: developments related to COVID-19, including the impact of COVID-19 on the economy and global financial markets; the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behaviour of financial markets, including fluctuations in interest and foreign exchange rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the ability to appropriately manage human capital; the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; governmental investigations; litigation; changes in tax laws; changes in capital requirements; changes in reinsurance arrangements; ability to collect amounts owed; catastrophic events, such as earthquakes, hurricanes or pandemics; the possible impact of international conflicts and other developments including terrorist acts and cyberterrorism; and other risks and factors detailed from time to time in our documents filed with securities regulators in Canada.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Company undertakes no obligation to publicly update or revise any forwardlooking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

(in thousands of Canadian dollars, except per share numbers and as otherwise noted)

GLOSSARY OF ABBREVIATIONS

Abbreviation	Description
AFS	AvailableforSale Financial Asset
BVPS	Book Value Per Share
D&O	Directors' and Officers' insurance
E&O	Errors and Omissions Insurance
EPS	Earnings Per Share
FVTPL	Fair Value Through Profit & Loss
GPW	Gross Premium Written
MCT	Minimum Capital Test
MGA	Managing General Agent
n/a	not applicable
nm	not meaningful
NPE	Net PremiumsEarned
NPW	Net Premium Written
NUI	Net Underwriting Income
OCI	Other Comprehensive Income
pts	Percentage points
Q1,Q2, Q3, Q4	The three monthsended March 31,June 30, September 30 and December 31respectively
Q2YTD	The six months ended June 30
Q3YTD	The nine months ended September 30
Q4 YTD	The twelve months ended December 31
ROE	Return on Shareholders' Equity
USD	United States Dollar
YTD	Year to Date