Good morning, and welcome to Trisura Group Ltd.'s third quarter 2022 earnings conference call. On the call today are David Clare, Chief Executive Officer, and David Scotland, Chief Financial Officer. David Clare will begin by providing a business and strategic update, followed by David Scotland, who will discuss financial results for the quarter. Following formal comments, lines will be open for analyst questions. I'd like to remind participants that in today's comments, including in responding to questions and in discussing new initiatives related to financial and operating performance, forward-looking statements may be made, including forward-looking statements within the meaning of applicable Canadian and U.S. securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They're subject to known and unknown risks and future events, and results may differ materially from such statements.
For further information on these risks and their potential impacts, please see Trisura's filings with securities regulators. As a reminder, to ask a question during the Q&A session, you will need to press star one one on your telephone keypad. Thank you. I'll now turn the call over to David Clare.
Thank you. Good morning, everyone, and welcome. Our business extended its track record of performance in the third quarter, growing premiums 59% compared to Q3 2021 and supported a 20% return on equity through continued investment in infrastructure. Momentum has sustained as we scale an increasingly diversified specialty insurance platform. Results again were particularly strong in Canada, with 24% premium growth in the quarter supported by profitable underwriting. U.S. premiums stepped up significantly and reached a new record, increasing 79% over the third quarter of 2021. In Canada, disciplined underwriting produced strong profitability while fronting drove increasingly diverse earnings. We have observed standout growth in earnings from risk solutions, the largest contributor to Canadian underwriting income in the quarter. The favorable market in corporate lines in Canada and E&S lines in the U.S. continued in the quarter.
Although we see a reduced pace of increases versus last year. Mid-teens growth in the top line in Corporate Insurance was driven by expansion of programs and sustained momentum with distribution partners, as well as a healthy but mitigating rate environment. Similar top-line growth in Surety benefited from tailwinds in established lines and expansion of our U.S. practice. Importantly, loss ratio of 17% improved year-over-year, driven by profitable underwriting across all lines. We are proud of our combined ratio in the quarter of 83%, but did not beat a spectacular level set in Q3 2021 of 79%. The Canadian platform posted a striking 31% return on equity and grew net income 9% over the prior year. It's important to note the Canadian results in Q3 2021 were exceptionally strong, with single-digit loss ratio in Surety in that period.
With the extension of our U.S fronting expertise in Canada, our heritage, our Canadian entity now generates attractive fee-based earnings to complement the heritage of profitable underwriting income. US fronting found a quarterly record of $466 million in Q3 2022. Maturation of existing programs drove top line, supplemented by onboarding of new programs. U.S fronting generated $18 million in fees and recorded $41 million of deferred fee income, indicative of future fronting fees to be earned. Loss ratio in the quarter increased slightly due to an evolving business mix, while fronting operational ratio increased to 83% as a result of an increase in reinsurance purchases in the quarter and a shift in mix of business as a larger share of net underwriting income was generated from businesses with a higher retention ratio.
It is important to note that our U.S earnings lag premium production as fees are earned, and we expect higher reinsurance costs to sustain in the fourth quarter. Near-term results will be comparable to this quarter, and we expect to experience the benefit of premium growth in earnings in 2023 and beyond. On a last twelve months basis, the U.S produced a 14% return on equity, in line with prior year result as a result of the corresponding growth in infrastructure over the period and capital contributions. Although we wrote $52 million in admitted premiums in the quarter, the market continued to drive opportunities to excess and surplus lines. As discussed on our last call, the strength of our growth catalyzed a capital raise in the quarter.
We take the responsibility of deploying capital on our investors' behalf seriously, and we have made early strides in deploying over half the capital raise into securities at attractive yields in support of significant premium growth. Interest and dividend income increased 54% over Q3 2021, the result of larger portfolio and increasing investment yields. The continued increases in interest rates drove unrealized losses in our fixed income portfolios, though the impact was mitigated through a short duration posture and favorable foreign exchange. We are fortunate to have a significant and consistent flow of capital to invest, enhanced by the maturation of our existing short duration portfolio of investments. Prevailing bond yields are even more accretive to portfolio yield than last quarter, meaning we are improving our base of interest in dividend income on a risk-adjusted basis for years to come.
At the end of the quarter, we closed the acquisition of Sovereign General's Canadian Surety business. We are excited to welcome a number of new employees to our organization as a result of the transaction and look forward to continuing to grow our presence in Surety in North America. Although relatively small, this is a great example of the types of inorganic opportunities we are keen to pursue.
Expansion of practices we know through structures we have experience navigating. This quarter, our results do not reflect the signs of potential recession, but we are alert and remain committed to our underwriting and structuring standards as well as conservative reserving. It is our hope that volatility will provide opportunities to win business and strengthen our reputation. We continue to plan for growth.
With a renewed capital base and comparably greater scale, we feel cautiously optimistic for the years ahead. As we continue to grow, we strive to increase the proportion of our businesses derived from recurring or fee-based earning sources. With that, I'd like to turn it over to David Scotland for a more detailed review of financial results.
Thanks, David. I'll now provide a brief walkthrough of some financial results for the quarter. Gross written premiums was CAD 644 million for the quarter, which reflects growth of 59% over Q3 2021. Net claims expense in the quarter was greater than the prior year, primarily as a result of growth in the business. We experienced a claims recovery in 2021 associated with our life annuity reserves, which has since been novated and which reduced claims expense in that quarter.
Net commissions expense increased by 64% in the quarter, reflecting growth in the business in both the Canadian and US operations, as well as a shift in business mix towards certain lines of higher commissions. Operating expense in the quarter grew by 49% over Q3 2021, reflecting growth in both the Canadian and U.S operations.
Net underwriting income in Canada for Q3 was greater than the prior year as a result of growth in the business. Net underwriting income in the U.S for Q3 2022 was greater than Q3 2021 as a result of growth in the business, but mitigated by reinsurance purchases in the quarter. In Q3 2022, the combined ratio in Canada was 83%, and the fronting operational ratio in the U.S was also 83%. With the novation of the life annuity reserve in Q4 2021, we are now able to calculate a meaningful combined ratio on a consolidated basis. In Q3 2022, the combined ratio was 82%. Net investment income in the quarter was greater in Q3 2022 than Q3 2021 as a result of an increase in interest in dividend income.
The increase was primarily related to an increase in the size of the investment portfolio, but also benefited from higher yields. Net investment income in 2021 was negatively impacted as a result of movement in the investments supporting the life annuity reserve, which was offset by a corresponding movement in claims expense in that quarter.
Net gains were CAD 3.7 million in the quarter, primarily as a result of realized gains on investments disposed of during the period and foreign exchange movement, which were both greater than Q3 2021. Income tax expense was approximately the same in Q3 2022 compared to Q3 2021 as a result of a tax adjustment in Q3 2021, which elevated tax expense in that period.
Net income for the group was CAD 23.7 million in the quarter, which was greater than Q3 2021 as a result of growth in the business and strong underwriting. Diluted earnings per share was CAD 0.51 a share in Q3 2022, which was greater than Q3 2021. Consolidated ROE on a rolling twelve-month basis was 19.9% at the end of Q3 2022, which was approximately the same as the rolling twelve-month ROE at the end of Q3 2021.
Assets year to date grew by CAD 1.2 billion. Cash in the period increased as a result of the equity offering in the quarter, and certain proceeds of which were used to pay down the revolving credit facility. Investments have increased as a result of the equity offering, though were offset by unrealized losses incurred in the period.
Premiums and accounts receivable and other assets has grown as a result of growth in GPW, particularly in the U.S over the most recent quarter. Recoverable from reinsurers have increased primarily as a result of growth in the U.S fronting business, as well as certain fronted programs in Canada, where claims liabilities are largely offset by expected recoveries from the reinsurers to whom we cede the business.
Liabilities in the year-to-date period grew by CAD 998 million, primarily as a result of growth in unearned premiums and unpaid claims and loss adjustment expense, which have grown as a result of growth in both Canada and the U.S. As discussed, growth in these balances is largely offset by growth in reinsurance recoverables.
Accounts payable, accrued and other liabilities has decreased in the period as a result of settlement of assets from the novation in 2021, as well as a number of large payments in the period. Equity is greater than the prior year-end, reflecting the impact of the equity offering and growth in net income, offset by a reduction in other comprehensive income.
Other comprehensive income decreased in 2022, primarily as a result of unrealized losses on the bond portfolio due to rising interest rates, though in Q3 this was mitigated by a strengthening of the U.S dollar, which showed higher Canadian dollar valuations of capital we hold outside of Canada.
Book value per share was CAD 11.47 at September thirtieth, 2022, and is greater than September thirtieth, 2021, as a result of the equity offering, as well as profit generated year to date and mitigated by unrealized losses on the investment portfolio in the quarter.
As of September thirtieth, 2022, debt to capital was 12.5%, which was lower than at June thirtieth, 2022, as a result of the equity offering. The company remains well capitalized and we expect to have sufficient capital to meet our regular regulatory capital requirements. David, I'll now turn things back over to you.
Thank you, David. Operator, we'd now take questions.
Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press star one one. Please stand by while we compile the Q&A roster. Our first question coming from the line of Nik Priebe from CIBC. Your line is open.
Okay, thanks. Good morning. Some of the U.S. insurers have suggested that professional liability lines like D&O have become increasingly competitive lately. Are you seeing any evidence of that on the Canadian side of the border in your Corporate Insurance segment?
Hi, Nick. Many of the comments that you're referencing would apply to a broader, more commoditized D&O market than where we play in the Canadian space. I will say our comments about rates in Canada would certainly indicate that rate increases are mitigating versus years past, but our focus in the market in Corporate Insurance in Canada is a little bit more nuanced and specialized than sort of the broader or larger market trends would imply in the U.S. Certainly, I would agree that the hardening market or hard market that we've seen in the last couple years is mitigating. I wouldn't necessarily apply those exact trends in the U.S. D&O market to our Canadian Corporate Insurance lines.
Okay, that's helpful. How do you feel about rate adequacy more broadly across the various lines that you participated in the U.S, you know, just in the context of elevated inflation on the property side and social inflation with casualty. Do you feel that rate increases on balance are still keeping pace with loss cost trends?
It's a great question, Nik. We've seen a lot of discussion on this in the industry, and certainly we see a continued healthy environment in the E&S lines that we participate in. I think the ultimate answer will depend a little bit on the line of business that we're referencing.
Certainly we have seen healthy rate increases and healthy rate environments continue both in the quarter and for the year-to-date period in the lines that we participate in. I think that we have confidence in the rate adequacy that we're seeing at this stage, but it is an environment that is moving very quickly. I'd hesitate to put too much prediction out there, but certainly we feel very strongly about the business that we're putting on in this environment.
Okay. Okay, fair enough. Last one for me before I pass to line. The structure of the surety acquisition was interesting, being done on a renewal rights basis. Do you see many other opportunities to acquire renewal rights on subscale portfolios like the Sovereign business out there? Or are these types of transactions, you know, essentially few and far between?
These types of transactions are rare. Now that being said, this is our third iteration or third version of a transaction like this. We do have a bit of a track record of finding them successfully. I don't wanna imply that there's a bunch out there waiting for us to transact upon.
Certainly if we can find them, we will pursue them and sort of compete for them appropriately. They're tough to find. We're very happy and excited to have been able to close that Sovereign transaction. I think it's a great example of our team finding opportunities to continue growing in this environment and a great way for us to find some new team members at the same time.
Okay, very good. That's it for me. I'll pass the line. Thank you.
Thanks, Nik.
Thank you. One moment for our next question. Now next question coming from the line of Jeff Fenwick with Cormark Securities.
Hi, good morning, everyone. David, I just wanted to start with the U.S business here and noting the program count does continue to build. Obviously you had a very big step up in volume through the mid part of the year. Maybe just give us a bit of color on that base of programs you have today. Are you still continuing to maybe churn through some of them and seeing some performance stronger than others? Maybe just a broader comment on the MGA market in general, and are you seeing behavior there just continuing to be rational on the quality of business they're generating, remaining very strong?
Yeah. We continue to see higher than industry level growth in that MGA channel. I would say we also continue to see increase in sophistication of the MGA space in general in the U.S. That's an environment and a set of partners that we feel very strongly about. Certainly our group of partners we're very happy with and very committed to.
I would say from a program cadence perspective, you're seeing net additions of our programs quarter-over-quarter, but we continue to optimize or rationalize our portfolio. We haven't seen any rationalizations of the portfolio as a result of specific performance concerns this quarter. Most of the rationalizations or net program reductions that we saw in this quarter, like last quarter, were simply programs that were just not up to scale.
Relatively small programs that just didn't meet our expectations for premium. We're very happy with how the portfolio is performing at this stage and would expect to continue to see that through 2023.
To your point on the cadence of adds, so you think, you know, obviously there's been a huge rate of growth here, but still a lot of capacity to add from your perspective in terms of areas where you want to write and be active.
Yeah. I would say our expectation sort of a program adds is pretty consistent year-over-year. The one difference now for us may be that we have an ability to target a little bit larger programs in 2023. Hopefully we have success in going out there and finding a little bit bigger partners as we've gotten both a larger capital base and a larger AM Best size rating.
You've been working on building an admitted lines presence in the U.S., and I know it's been a long journey to get all the licensing in place and some of the regulatory stuff that you need to begin to push there. Where are you in that process, and how are you feeling in terms of that area heading into 2023?
Yeah, the admitted lines have been a bit slower to grow in our practice than certainly we anticipated when we first set up the entity. That's as a result of disproportionate strength in the E&S market, which as we've discussed, we're very happy to both support and see.
I would say, our position continues to be that the investment in the infrastructure of the admitted platform will serve us well in the long term. Eventually, we would expect the market to balance at some stage. Whether that balance is at a higher proportional E&S rate than it started is sort of up in the air right now. We do think at some stage it will serve both us and our partners to have a very mature and sophisticated admitted presence. That's what we've been building up over the past couple of years now. We feel very good about that presence today, despite it being a little bit smaller than we hoped from a premium standpoint at this stage.
Okay, great. That's all I had. Thank you.
Thanks, Jeff.
Thank you. One moment for next question. Our next question coming from the line of Marcel McLean with TD Securities. The line is open.
Okay, thank you. I just want to follow up on the acquisition of fronting. This was your first one in a little while. Just curious, is it Surety that you'd be focusing on specifically for these tuck-ins, or could we see it across different lines that you guys operate in?
Hey, Marcel. No, it wouldn't be limited to Surety. I would say my comments in the preamble to this call would align with the fact that we like business lines we have familiarity with. That includes Surety, but it also includes a broader set of opportunities.
There certainly would be appetite on our side to pursue things beyond the Surety landscape, although we are very fortunate in this quarter to be able to find something within that Surety space. The short answer to your question is there's a broader appetite to the extent it fits within those characteristics of both business and partnerships that we're familiar with.
Okay, great. Just another one on Surety, actually. In the past, you've referenced that your operators have a 12-18 month backlog. Even if we do head into a slower environment, growth should still remain pretty good there. Just curious on that backlog. Is this a committed backlog or could this dry up pretty quickly if we do enter the slower environment?
It's tough to tell Marcel because the backlog generally is pretty solid from a 12- to 18-month perspective. The work that they are completing usually is related to infrastructure construction, which has a longer time horizon than, say, traditional sort of single family home residential.
These are contractors that are working in the infrastructure space, not generally sort of shorter duration projects. That backlog should be pretty solid. The environment that we're in right now is sort of uncertain on how and when a recession, if that does come, manifests itself. I'd struggle a little bit to predict how our contractors' backlogs behave in that environment.
I would have pretty good confidence that the projects that are started and that are underway, those would continue regardless of the economic environment. We'd certainly evaluate things as that evolves.
Okay. All right. Thank you for that. That's it for me.
Thanks, Marcel.
Thank you. One moment for our next question. Our next question coming from the line of Jaeme Gloyn. Your line is open.
Yes, good morning.
Hey, Jaeme.
First question, just, with a couple of months under your belt at this point, I'm curious to learn how the At-Bay program is developing and progressing. Are you seeing results that would be in line or better than maybe what you were expecting when you initially launched that program?
Yeah, I would say we're very happy with that partnership. We're very impressed with the professionalism and the quality of the team at At-Bay. Certainly the momentum that we're seeing in their success in binding premiums has been positive and certainly aligned with our internal expectations of the program at this stage. We're very excited and happy for that partnership.
To follow up on that, when you were answering Jeff's earlier question about, you know, program adds in the market today, what are you seeing in terms of pipeline on that relationship side and the ability to access some larger clients? Just trying to get a sense as to what you're seeing. Is that pipeline bigger today than what it was a couple quarters ago? Are you seeing a lot more larger sized clients than a couple of quarters ago? How has that evolved?
No, I would say it's fairly consistent in terms of the split of both volume and size of submissions that we're receiving. On average, since we started the business back in 2018, we've obviously seen a little bit of a change in the submission flow, both in terms of size and business line. In the last couple quarters, it's been fairly consistent, which is to say it's been a healthy pipeline that we're sort of excited to pursue.
Okay, great. Also wanted to follow up on the Surety question from the previous line of questioning just around, you know, looks like, you know, growth and premiums are gonna be fairly stable here near term. I'm wondering within the context of this current environment, have you made any changes to your underwriting standards or criteria? Or is there any sort of like tightening up as we think about sort of credit tightening, as you're looking at some new contractors or even your existing pool of contractors? What's been the shift or any changes on that front to maintain profitability in that book?
Yeah, I would say this is a constantly evolving process. There's no one set of hard and fast underwriting rules that we follow. Our underwriters are pretty experienced in adjudicating and evaluating the contractors that we work with. That process does change in the context of the job that's being evaluated, in the context of the contractor, in the context of the economic environment.
I don't wanna imply that we are necessarily tightening up standards today versus in the past, because frankly, we're always quite detailed and diligent about how we're underwriting. We haven't seen, I would say, a change in the quality of our partners at this stage in the economic cycle, but we're certainly very aware of the headlines that everyone today is reading in the market.
Okay, great. If I think about the Canadian business as a whole, you know, historically speaking, this would be like a high, mid- to high-80s combined ratio business. Generally speaking, you know, obviously, you know, we can swing around a little bit, but generally mid- to high-80s.
With fronting now becoming a much larger piece of the equation, is it safer or is it more likely to think about this business as being low 80s or maybe even like 80 flat or below as fronting continues to gain scale? How are you guys thinking about the profitability of that business, you know, longer term, like let's say 2023, 2024, as opposed to just over the next couple of quarters?
Yeah. I think, Jaeme, you've identified an interesting trend, which is that the fronting platform has been accretive to our operational results in Canada. Now that being said, I would be at this stage a bit reticent to start to put out a forecast of how significantly that can change our sort of talked about or our long-term average combined ratios. There is going to be a little bit of an evolution here as we evolve the business.
That being said, we've certainly seen the benefit of that in the last couple of quarters, but that benefit has also come alongside a very strong performance in the surety and corporate insurance lines. Until we see kind of those long term averages level out, I'm gonna stay consistent with the guidance that we've talked about on combined ratio.
Understand that as this business evolves, there are sort of evolving proportions of contribution to our net underwriting income and therefore our combined ratio.
Okay, great. I'll requeue. Thank you.
Thanks.
Thank you. As a reminder, ladies and gentlemen, to ask question, you will need to press star one one. One moment for our next question. Now next question coming from the line of Tom MacKinnon with BMO. Your line is open.
Thanks. Morning. Question, two questions. One with respect to the tax rate was a little bit lower in the quarter. I think you've been kind of running more like 20%, operating tax rate around 26-ish%. It was maybe 22%. How should we be thinking about that going forward? What may have caused that lower rate in the quarter? I have a follow-up with respect to the U.S. operations. Thanks.
Yeah, I might pass that tax question over to David Scotland.
Yeah. Hi, Tom. We had some adjustments, sort of one-time adjustments in the quarter, sort of a book to tax adjustment, which you can sort of see in the rate rec. I would say that our tax rate in the quarter was a little lower than what we would expect it to be on a go-forward basis.
How should we be thinking about the tax rate then on a go forward basis? 25%-26% range?
Actually even a bit lower than that, right? Because the rate in the U.S is 21% and ours is 26, so, you know, roughly proportionate to where the income is generated. Yeah, somewhere in between those two.
Okay, that's great. Thanks. Just looking at the fronting operational ratio in the US, I understand there it was elevated to some extent just on additional kind of internal spend. I'm wondering if you can give some color as to how we should be thinking about that ratio going forward, and how those spends will be trending and how that kind of translates into like improving operational leverage, if you will, in the US.
Yeah. We've seen pretty substantial growth in the U.S., especially in Q2 and Q3 of this year. Both as a reflection of and anticipation of that growth, we've been investing a bit in that platform. You've seen a little bit of an increase in operational expenses for the U.S. as we've built out a bigger infrastructure platform and hired to support that higher premium level.
Alongside that, you've also seen us purchase some reinsurance to protect our balance sheet and establish the risk corridors that we're comfortable with. You're seeing those impacts or those investments elevate that fronting operational ratio, specifically in Q3. You've got a low 80s% fronting operational ratio. I would expect that those same trends impact the fronting operational ratio in Q4. You'll likely see a low 80s% fronting operational ratio in Q4.
Now that being said, we would anticipate, given the earnings pattern of fees, the premium that we've been putting on, you'd start to see that mitigate through 2023. We think about that long-term average target for fronting operational ratio hopefully being in the mid-seventies, and you'd hopefully see that accrete over 2023 back down to that level. Certainly that's something we'll keep both you and our investors very up to speed with in our comments.
Okay, thanks for that.
Thank you. One moment, please, for our next question. Our next question coming from the line of Marcel McLean with TD Securities. Your line is open.
Sorry. My question was around that fronting operational ratio and the reinsurance purchase, but you just covered it. Thank you.
Thanks, Marcel.
Thank you. One moment for our next question in the queue. Our next question coming from the line of Stephen Boland with Raymond James. Your line is open.
Morning. Just wanna make sure I heard your comments right about Q4 for the U.S. business. That the profitability should be similar or the net underwriting income should be similar. Is that what you stated?
Yeah. I was just speaking directly to fronting operational ratio.
Okay.
There's gonna be some impacts on net underwriting income based on growth in the business. On a ratio perspective, I would expect that certainly the fronting operational ratio looks a lot like Q3.
Okay. Maybe a longer-term question on the U.S. business because, you know, when we look at, we've all seen the robust kind of premium growth. I mean, what is your, I would say, 2- or 3-year vision for this business? Is it, you know?
I mean, obviously you're getting into the admitted, you're still doing good business in the E&S, but, you know, is this, you know, you're going to probably be, what, $1.6-$1.7 billion maybe in premium this year. You know, is this a $5 billion business in, you know, three years kind of thing? What is your longer term vision for the U.S. business?
Yeah. It's a great question, Stephen, because frankly this industry and this business has grown faster than we originally planned for, and that's been a factor of a few secular tailwinds in the market, both higher growth in the MGA community, higher growth in the E&S lines in the U.S.
So we're certainly very happy to see that. The other factor that has impacted this is the higher proportion of fronting companies supplying capacity to the MGA community. We would certainly hope and anticipate that all of those trends continue. As you referenced, the other factor that really hasn't contributed at this stage is the admitted platform or the admitted premiums that we would hope to produce.
I would certainly say that our growth rates from a mathematical perspective will likely mitigate just given the size of the platform today versus historical. We would be targeting 20% levels of growth on an annual basis going forward, acknowledging that the macro environment still feels fairly uncertain at this stage, but that we also have these secular tailwinds that are specific to our business model and the areas of the market that we play in.
Okay. That's all for me. Thanks, guys.
Thank you. I'm showing we have a follow-up question. One moment, please. Follow-up question from Jaeme Gloyn with NBF. Your line is open.
Yep. Thanks. I just wanted to, actually first just make sure I heard the last answer correctly, targeting at least 20% annual growth going forward, given the secular tailwinds like, you know, the MGA market, E&S growth rates, you know, things like that. Is that? Did I get that right?
Yeah, that's fair, Jaeme.
Okay, great. I did wanna follow up on the U.S. surety business. Looks like it was called out in this MD&A as contributing to surety growth. Has it reached a level where it's, let's say, break even? Can you discuss how much it is contributing at this point and what you're seeing from growth in the U.S. surety platform with your recent adds in various states and growing that business?
Yeah. At this stage it's still relatively small. We see $2-3 million a quarter coming from the U.S. surety platform. Although I would say, it's not yet break even on sort of a fully costed basis. It is improving rapidly. And that's a business that we think has a lot of potential and a lot of runway to grow. At this stage, still a bit of, an investment period for that U.S. surety platform.
The team has done a great job in carving out a presence for relatively nascent operation in the U.S., and we think there's a lot of runway to grow there. Now that being said, U.S. surety is a very competitive market, and that's an area that we likely won't see, the type of rapid rise you'd see in business lines like fronting.
We do think it will be a very impactful contributor to the business over the long term.
Okay, great. Just in terms of that CAD 2-3 million per quarter, is that really coming from, let's say, one of the offices you added at the beginning? Or are you seeing this come from from all of the offices set up? Or maybe a little bit of, you know, color around how that, how your investments are driving the top line.
Yeah. We're happy to say it's a good mix of contribution from both current and new offices. The teams and the people that we're hiring have done a really great job of bringing on business, what we believe is good business in a relatively quick way. Obviously, the earlier offices have a few more people in them. They're contributing proportionally more of the business, but new offices are not slouching in terms of their contribution, which is great to see.
Okay. That's amazing. Thanks very much, guys.
Thank you.
Thank you. Also remind the ladies and gentlemen to ask a question, please press star one one. All right. I see no further questions in queue. I will now turn the call back over to David Clare for any closing remarks.
Thank you very much, operator, and thank you everyone for dialing in. We'll talk to you next quarter.
Ladies and gentlemen, that does conclude conference for today. Thank you for your participation. You may now disconnect. Goodbye.