Investors Are Eyeing This Insurance Stock That Catapulted Amid COVID

Insurance stocks can be a great choice for an investment portfolio, as they not only have the potential to provide long-term gains, but can also work when the market is volatile. And while the ongoing pandemic has been able to crumble quite a few enterprises, there has been one particular insurance firm that it has not been able to slow down. Its stocks, in fact, rocketed by a whopping 219 per cent over the past 12 months.

This year, most companies are expected to shift the focus of their core strategies from the products and services they offer to the markets that they serve, an impact of which will fall on the insurance industry. Experts, meanwhile, believe that amid rising cases of coronavirus infections that continue to hamper economies, the world could benefit from a high-performing insurance industry.

Among its peers in the insurance and financial services sector, Trisura Group Ltd stood out for a number of reasons. While its recent stock performance remained robust, its net income swelled by about a substantial 131 per cent year-over-year (YoY) in the first quarter of fiscal 2021. Its book value per share also expanded by 41.5 per cent year-over-year.

How Trisura Group Ltd’s (TSX:TSU) Operations Catapulted Over The Years

Trisura Group started its business operations in Canada in 2006 and has a sturdy track record of profitable operations. It made its public debut in 2017 after Brookfield Asset Management spun off the insurance services provider to Brookfield shareholders.

Over the years, the company has diversified. It currently specializes in surety, corporate insurance, reinsurance and risk segments of the property and casualty insurance sector.

In 2019, Trisura Group took over 21st Century Preferred Insurance and a year later, in 2020, it accumulated additional financial heft by issuing more shares, including a US$ 67.5 million offering.

Trisura Group’s Robust Stock Performance

1-year chart of stock performance, volume and moving average of Trisura Group (Source: EODHD/Others)

Stocks of Trisura Group closed at C$ 152.53 apiece on Wednesday, May 19, recording a significant 225 per cent growth from its 52-week low of C$ 46.84 (May 19, 2020).

Outperforming the sector of S&P TSX Property & Casualty Insurance (Sub Industry Index), TSU stock catapulted by 71 per cent year-to-date (YTD).

Continuing its rally, Trisura scrip rocketed by 33 per cent in the past one month and surged by 28 per cent quarter-to-date (QTD). Trisura Group's market cap currently stands at C$ 1.6 billion, and it holds a debt-to-equity (D/E) ratio of 0.12.

While the company does not pay a dividend as of now, its current return on equity is a notable 17.5 per cent and its return on assets is 2.9 per cent, as per TMX.

Trisura Group’s Latest Financials

On the financial front, Trisura Group’s net income expanded to US$ 19.3 million in the first quarter of fiscal 2021. Its diluted earnings per share, meanwhile, surged by 95.7 per cent YoY to C$ 1.84.

The company’s total revenues amounted to C$ 64.9 million in Q1 FY21, significantly up from that of C$ 44.6 million in Q1 2020. Its cash and cash equivalents valued at C$ 129.6 million in the latest quarter.

Bottomline

The global insurance industry is estimated to expand from US$ 4474.49 billion in 2020 to US$ 5050.31 billion in 2021, as per the Insurance Global Market Report 2021. The expansion will be at a compound annual growth rate (CAGR) of about 13 per cent.

Meanwhile, EODHD/Others reports that TD Securities has raised its price target for Trisura stock to C$ 180 and has given it a 'buy' rating. The National Bank Financial, on the other hand, lifted its price objective on the shares of Trisura to C$ 205 and gave it an 'outperform' rating.  

As companies are likely to rearrange their operations to rebound from the COVID-19 crisis, the global insurance industry is projected to grow further. By 2025, the market might reach US$ 6390.73 billion at a CAGR of six per cent. 

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.