Hamilton Reports 2023 Fourth Quarter Results

Rhea-AI Summary

Hamilton Insurance Group, Ltd. (NYSE: HG) announced strong financial results for Q4 and full year 2023, showcasing a net income of $126.9 million for Q4 and $258.7 million for the full year. The company reported a return on average equity of 26.4% for Q4 and 13.9% for the full year, with gross premiums written of $433.8 million for Q4 and $1,951.0 million for the full year. The combined ratio stood at 90.2% for Q4 and 90.1% for the full year.

Positive

• Strong financial results for Q4 and full year 2023 with net income of $126.9 million for Q4 and $258.7 million for the full year.
• Return on average equity reported at 26.4% for Q4 and 13.9% for the full year.
• Gross premiums written at $433.8 million for Q4 and $1,951.0 million for the full year.
• Combined ratio of 90.2% for Q4 and 90.1% for the full year.
• Positive growth in net premiums written and earned across International and Bermuda Segments.
• Investments and shareholders' equity increased with total invested assets and cash at $4.0 billion and total shareholders' equity at $2.0 billion.
• Book value per share increased to $18.58 compared to $16.14 in 2022, marking a 15.1% growth.

Negative

• None.

Insights

Financial Analyst

The reported financial results by Hamilton Insurance Group show a substantial year-over-year improvement. A notable net income increase of $356.7 million from a loss in the previous year to a profit indicates a significant turnaround. The combined ratio, a key indicator of profitability in the insurance industry, improved from 102.8% to 90.1%, suggesting effective cost management and underwriting discipline. The annualized return on average equity (ROAE) of 13.9% for the full year, compared to a negative return in the previous year, reflects a robust recovery in profitability.

From an investment perspective, the increase in book value per share by 15.1% is a strong signal of value creation for shareholders. The growth in gross premiums written, both in the International and Bermuda Segments, indicates market expansion and possibly improved pricing conditions. However, it's important to monitor the sustainability of these growth rates and the potential for market saturation or increased competition.

It's also worth noting the income tax benefit of $35.1 million, which has positively impacted net income due to the enactment of the Bermuda Corporate Income Tax Act of 2023. Investors should consider the potential for future tax changes that could affect profitability.

Insurance Industry Analyst

The reported combined ratio of 90.1% is significantly lower than the 100% breakeven point; this indicates that Hamilton is earning more in premiums than it's paying out in claims and expenses, which is commendable in the current market. The decrease in catastrophe loss ratio from the previous year suggests either a lower incidence of catastrophic events or better risk management and reinsurance strategies.

Hamilton's growth in gross premiums written and net premiums earned across both segments is indicative of successful expansion efforts and could be attributed to strategic underwriting and favorable market conditions. However, the increase in net investment income is also significant, as it suggests an effective investment strategy, particularly with the Two Sigma Hamilton Fund's contribution.

Despite the positive results, the slight uptick in the combined ratio for the fourth quarter compared to the same period last year might raise questions about whether expense management or loss ratios could be further optimized.

Risk Management Analyst

The catastrophe losses reported, including those from the Hawaii wildfires and the March Storms, highlight the importance of robust risk management practices in the insurance industry. Hamilton's ability to maintain a combined ratio below 100% despite these losses suggests effective use of reinsurance and other risk mitigation strategies.

Additionally, the favorable attritional loss ratio improvements suggest that Hamilton is experiencing lower than expected claims costs, which could be due to conservative reserving practices or an improved risk selection process. The favorable prior year reserve development indicates that claims reserves set aside in previous years were higher than necessary, which may release capital for future underwriting opportunities or return to shareholders.

Investors should appreciate the company's risk management but remain vigilant about potential future risks that could impact the loss ratios, such as climate change, which could lead to more frequent or severe catastrophic events.

PEMBROKE, Bermuda--(BUSINESS WIRE)-- Hamilton Insurance Group, Ltd. (NYSE: HG; “Hamilton” or “The Company”) today announced financial results for the fourth quarter ended December 31, 2023.

Consolidated Highlights – Fourth Quarter

• Net income of $126.9 million;
• Annualized return on average equity of 26.4%;
• Income tax benefit of $35.1 million, or 7.1% annualized return on average equity, reflecting the enactment of the Bermuda Corporate Income Tax Act of 2023;
• Gross premiums written of $433.8 million and net premiums earned of $366.1 million;
• Combined ratio of 90.2%, including 1.8 points of catastrophe losses;
• Underwriting income of $36.0 million;
• Net investment income of $113.8 million comprised of fixed income, short term and cash and cash equivalents return of $77.1 million and Two Sigma Hamilton Fund return of $36.7 million; and
• Corporate expenses of $44.9 million, which includes $18.9 million of compensation costs related to the Value Appreciation Pool, and $12.9 million of other compensation costs.

Consolidated Highlights – Full Year

• Net income of $258.7 million;
• Return on average equity of 13.9%;
• Income tax benefit of $35.1 million, or 1.8% return on average equity, reflecting the enactment of the Bermuda Corporate Income Tax Act of 2023;
• Gross premiums written of $1,951.0 million and net premiums earned of $1,318.5 million;
• Combined ratio of 90.1%, including 2.8 points of catastrophe losses;
• Underwriting income of $129.9 million;
• Net investment income of $218.3 million comprised of Two Sigma Hamilton Fund return of $122.1 million, and fixed income, short term and cash and cash equivalents return of $96.2 million; and
• Corporate expenses of $76.7 million, which includes $30.3 million of compensation costs related to the Value Appreciation Pool.

Commenting on the financial results, Pina Albo, CEO of Hamilton, said:

“2023 was a year that truly exemplified the transformation of Hamilton’s business. Our talented team demonstrated our ability to deliver strong results and grow at the right time and in the right lines, all while strengthening our relationships with brokers and clients.”

	For the Three Months Ended
($ in thousands, except for per share amounts and percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	433,791			$	341,252			$	92,539
Net premiums written		363,666				283,376				80,290
Net premiums earned		366,135				312,247				53,888
Underwriting income (loss)	$	36,028			$	38,605			$	(2,577	)
Combined ratio		90.2	%			87.6	%			2.6	%
Net income (loss) attributable to common shareholders	$	126,865			$	(59,017	)		$	185,882
Income (loss) per share attributable to common shareholders - diluted	$	1.15			$	(0.57	)
Book value per common share	$	18.58			$	16.14
Change in book value per share		7.1	%			(3.4	%)
Return on average common equity - annualized		26.4	%			(13.9	%)

	For the Three Months Ended
Key Ratios	December 31, 2023			December 31, 2022			Change
Attritional loss ratio - current year	53.2	%		57.8	%		(4.6	%)
Attritional loss ratio - prior year	(1.7	%)		(4.7	%)		3.0	%
Catastrophe loss ratio - current year	1.9	%		(0.7	%)		2.6	%
Catastrophe loss ratio - prior year	(0.1	%)		(0.8	%)		0.7	%
Loss and loss adjustment expense ratio	53.3	%		51.6	%		1.7	%
Acquisition cost ratio	24.2	%		24.5	%		(0.3	%)
Other underwriting expense ratio	12.7	%		11.5	%		1.2	%
Combined ratio	90.2	%		87.6	%		2.6	%

• Gross premiums written increased by $92.5 million, or 27.1%, to $433.8 million with an increase of $39.2 million, or 16.7% in the International Segment, and $53.3 million, or 49.9% in the Bermuda Segment.
• Net premiums written increased by $80.3 million, or 28.3%, to $363.7 million with an increase of $27.5 million, or 14.5% in the International Segment, and $52.8 million, or 56.0% in the Bermuda Segment.
• Net premiums earned increased by $53.9 million, or 17.3%, to $366.1 million with an increase of $25.9 million, or 15.0% in the International Segment, and $28.0 million, or 20.1% in the Bermuda Segment.
• Catastrophe losses (current and prior year), net of reinsurance, were $6.5 million, or 1.8 points, driven by the Hawaii wildfires and the March Storms, partially offset by favorable prior year development.
• Net favorable attritional prior year reserve development was $6.4 million.

	For the Years Ended
($ in thousands, except for per share amounts and percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	1,951,038			$	1,646,673			$	304,365
Net premiums written		1,480,438				1,221,864				258,574
Net premiums earned		1,318,533				1,143,714				174,819
Underwriting income (loss)	$	129,851			$	(31,717	)		$	161,568
Combined ratio		90.1	%			102.8	%			(12.7	%)
Net income (loss) attributable to common shareholders	$	258,727			$	(97,999	)		$	356,726
Income (loss) per share attributable to common shareholders - diluted	$	2.44			$	(0.95	)
Book value per common share	$	18.58			$	16.14
Change in book value per share		15.1	%			(5.6	%)
Return on average common equity		13.9	%			(5.7	%)

	For the Years Ended
Key Ratios	December 31, 2023			December 31, 2022			Change
Attritional loss ratio - current year	52.2	%		51.8	%		0.4	%
Attritional loss ratio - prior year	(0.8	%)		(0.3	%)		(0.5	%)
Catastrophe loss ratio - current year	3.2	%		16.3	%		(13.1	%)
Catastrophe loss ratio - prior year	(0.4	%)		(1.5	%)		1.1	%
Loss and loss adjustment expense ratio	54.2	%		66.3	%		(12.1	%)
Acquisition cost ratio	23.4	%		23.7	%		(0.3	%)
Other underwriting expense ratio	12.5	%		12.8	%		(0.3	%)
Combined ratio	90.1	%		102.8	%		(12.7	%)

• Gross premiums written increased by $304.4 million, or 18.5%, to $2.0 billion with an increase of $172.3 million, or 18.5% in the International Segment, and $132.1 million, or 18.5% in the Bermuda Segment.
• Net premiums written increased by $258.6 million, or 21.2%, to $1.5 billion with an increase of $134.6 million, or 21.2% in the International Segment, and $123.9 million, or 21.1% in the Bermuda Segment.
• Net premiums earned increased by $174.8 million, or 15.3%, to $1.3 billion with an increase of $80.5 million, or 12.9% in the International Segment, and $94.4 million, or 18.1% in the Bermuda Segment.
• Catastrophe losses (current and prior year), net of reinsurance, were $36.9 million, or 2.8 points, driven by the Hawaii wildfires, the March Storms, the severe convective storms in June 2023, Hurricane Idalia and the Vermont Floods, partially offset by favorable prior year development.
• Net favorable attritional prior year reserve development was $10.4 million.

Segment Underwriting Results – Fourth Quarter

International Segment	For the Three Months Ended
($ in thousands, except for percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	273,472			$	234,273			$	39,199
Net premiums written		216,712				189,195				27,517
Net premiums earned		198,725				172,846				25,879
Underwriting income (loss)	$	1,867			$	15,650			$	(13,783	)
Key ratios
Attritional loss ratio - current year		54.5	%			60.0	%			(5.5	%)
Attritional loss ratio - prior year		(1.4	%)			(8.1	%)			6.7	%
Catastrophe loss ratio - current year		0.0	%			(1.2	%)			1.2	%
Catastrophe loss ratio - prior year		0.4	%			(1.2	%)			1.6	%
Loss and loss adjustment expense ratio		53.5	%			49.5	%			4.0	%
Acquisition cost ratio		27.7	%			27.8	%			(0.1	%)
Other underwriting expense ratio		17.9	%			13.6	%			4.3	%
Combined ratio		99.1	%			90.9	%			8.2	%

• Gross premiums written increased by $39.2 million, or 16.7%, to $273.5 million, primarily driven by growth in specialty insurance and reinsurance classes and casualty insurance classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $0.8 million, driven by prior year catastrophe losses.
• Net favorable attritional prior year reserve development was $2.7 million or 1.4 points driven by reserve releases on our property and casualty classes of business.
• The acquisition cost ratio decreased by 0.1 points in the fourth quarter, compared to the same period in 2022.
• The other underwriting expense ratio increased by 4.3 points in the fourth quarter, compared to the same period in 2022, resulting from higher incentive compensation costs.

Bermuda Segment	For the Three Months Ended
($ in thousands, except for percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	160,319			$	106,979			$	53,340
Net premiums written		146,954				94,181				52,773
Net premiums earned		167,410				139,401				28,009
Underwriting income (loss)	$	34,161			$	22,955			$	11,206
Key ratios
Attritional loss ratio - current year		51.8	%			55.1	%			(3.3	%)
Attritional loss ratio - prior year		(2.2	%)			(0.5	%)			(1.7	%)
Catastrophe loss ratio - current year		4.1	%			0.0	%			4.1	%
Catastrophe loss ratio - prior year		(0.7	%)			(0.3	%)			(0.4	%)
Loss and loss adjustment expense ratio		53.0	%			54.3	%			(1.3	%)
Acquisition cost ratio		20.1	%			20.4	%			(0.3	%)
Other underwriting expense ratio		6.5	%			8.9	%			(2.4	%)
Combined ratio		79.6	%			83.6	%			(4.0	%)

• Gross premiums written increased by $53.3 million, or 49.9%, to $160.3 million, primarily attributable to increases related to expanded participation and improved pricing on the renewed casualty reinsurance classes and new business.
• Catastrophe losses (current and prior year), net of reinsurance, were $5.7 million, driven by the Hawaii wildfires and the March storms, partially offset by favorable prior year development.
• Net favorable attritional prior year reserve development was $3.7 million or 2.2 points driven by specialty classes of business.
• The acquisition cost ratio decreased by 0.3 points in the fourth quarter, compared to the same period in 2022.
• The other underwriting expense ratio decreased by 2.4 points in the fourth quarter compared to the same period in 2022. The decrease was primarily driven by performance based management fees generated by our third party capital manager, Ada Capital Management Limited, partially offset by higher incentive compensation costs.

Segment Underwriting Results – Full Year

International Segment	For the Years Ended
($ in thousands, except for percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	1,105,522			$	933,241			$	172,281
Net premiums written		770,399				635,773				134,626
Net premiums earned		703,508				623,047				80,461
Underwriting income (loss)	$	36,956			$	20,183			$	16,773
Key ratios
Attritional loss ratio - current year		53.2	%			50.9	%			2.3	%
Attritional loss ratio - prior year		(3.5	%)			(4.8	%)			1.3	%
Catastrophe loss ratio - current year		1.5	%			7.2	%			(5.7	%)
Catastrophe loss ratio - prior year		0.3	%			0.5	%			(0.2	%)
Loss and loss adjustment expense ratio		51.5	%			53.8	%			(2.3	%)
Acquisition cost ratio		26.5	%			27.4	%			(0.9	%)
Other underwriting expense ratio		16.7	%			15.5	%			1.2	%
Combined ratio		94.7	%			96.7	%			(2.0	%)

• Gross premiums written increased by $172.3 million, or 18.5%, to $1.1 billion, primarily driven by growth in specialty insurance and reinsurance classes and casualty insurance classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $12.6 million, driven by the Vermont Floods, Hurricane Idalia, the Hawaii wildfires, the severe convective storms in June 2023 and prior year catastrophe losses.
• Net favorable attritional prior year reserve development was $24.4 million or 3.5 points driven by reserve releases on our property and specialty classes of business.
• The acquisition cost ratio decreased by 0.9 points compared to the same period in 2022 primarily driven by a change in business mix.
• The other underwriting expense ratio increased by 1.2 points compared to the same period in 2022, resulting from higher incentive compensation costs.

Bermuda Segment	For the Years Ended
($ in thousands, except for percentages)	December 31, 2023				December 31, 2022				Change
Gross premiums written	$	845,516			$	713,432			$	132,084
Net premiums written		710,039				586,091				123,948
Net premiums earned		615,025				520,667				94,358
Underwriting income (loss)	$	92,895			$	(51,900	)		$	144,795
Key ratios
Attritional loss ratio - current year		51.1	%			52.9	%			(1.8	%)
Attritional loss ratio - prior year		2.3	%			5.1	%			(2.8	%)
Catastrophe loss ratio - current year		5.1	%			27.1	%			(22.0	%)
Catastrophe loss ratio - prior year		(1.2	%)			(3.9	%)			2.7	%
Loss and loss adjustment expense ratio		57.3	%			81.2	%			(23.9	%)
Acquisition cost ratio		19.9	%			19.3	%			0.6	%
Other underwriting expense ratio		7.7	%			9.4	%			(1.7	%)
Combined ratio		84.9	%			109.9	%			(25.0	%)

• Gross premiums written increased by $132.1 million, or 18.5%, to $845.5 million, primarily attributable to new business opportunities and rate increases in casualty reinsurance classes and property insurance classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $24.3 million, driven by the March Storms, the Hawaii wildfires, the severe convective storms in June 2023, Hurricane Idalia and the Vermont Floods, offset by favorable prior year catastrophe losses.
• Net unfavorable attritional prior year reserve development was $14.0 million or 2.3 points driven by property and casualty classes of business, partially offset by favorable development in specialty classes.
• The acquisition cost ratio increased by 0.6 points compared to the same period in 2022.
• The other underwriting expense ratio decreased by 1.7 points compared to the same period in 2022. The decrease was primarily driven by performance based management fees generated by our third party capital manager, Ada Capital Management Limited, partially offset by higher incentive compensation costs.

Investments and Shareholders’ Equity as of December 31, 2023

• Total invested assets and cash of $4.0 billion compared to $3.4 billion at December 31, 2022.
• Total shareholders’ equity of $2.0 billion compared to $1.7 billion at December 31, 2022.
• Book value per share of $18.58 compared to $16.14 at December 31, 2022, an increase of 15.1%.

Conference Call Details and Additional Information

Conference Call Information

Hamilton will host a conference call to discuss its financial results on Thursday, March 7, 2024, at 10:00 a.m. ET. The conference call can be accessed by dialing 1-855-761-5600 (US toll free), or 1-646-307-1097, and entering the conference ID 6439207.

A live, audio webcast of the conference call will also be available through the Investors portal of the Company’s website at investors.hamiltongroup.com.

A replay of the audio conference call will be available at investors.hamiltongroup.com or by dialing 1-800-770-2030 (U.S. toll free) and entering the conference ID 6439207.

Additional Information

In addition to the information provided in the Company's earnings release, we have also made available supplementary financial information and an investor presentation which may be referred to during the conference call and will be available on the Company’s website at investors.hamiltongroup.com.

About Hamilton Insurance Group, Ltd.

Hamilton is a Bermuda-headquartered company that underwrites specialty insurance and reinsurance risks on a global basis through its wholly owned subsidiaries. Its three underwriting platforms: Hamilton Global Specialty, Hamilton Re and Hamilton Select, each with dedicated and experienced leadership, provide us with access to diversified and profitable markets around the world.

For more information about Hamilton Insurance Group, visit our website at www.hamiltongroup.com or on LinkedIn at Hamilton.

Consolidated Balance Sheet

($ in thousands)	December 31, 2023				December 31, 2022
Assets
Fixed maturity investments, at fair value (amortized cost 2023: $1,867,499; 2022: $1,348,684)	$	1,831,268			$	1,259,476
Short-term investments, at fair value (amortized cost 2023: $427,437; 2022: $285,130)		428,878				286,111
Investments in Two Sigma Funds, at fair value (cost 2023: $770,191; 2022: $731,100)		851,470				740,736
Total investments		3,111,616				2,286,323
Cash and cash equivalents		794,509				1,076,420
Restricted cash and cash equivalents		106,351				130,783
Premiums receivable		658,363				522,670
Paid losses recoverable		145,202				90,655
Deferred acquisition costs		156,895				115,147
Unpaid losses and loss adjustment expenses recoverable		1,161,077				1,177,863
Receivables for investments sold		42,419				371
Prepaid reinsurance		194,306				164,313
Intangible assets		90,996				86,958
Other assets		209,621				167,462
Total assets	$	6,671,355			$	5,818,965
Liabilities, non-controlling interest, and shareholders' equity
Liabilities
Reserve for losses and loss adjustment expenses	$	3,030,037			$	2,856,275
Unearned premiums		911,222				718,188
Reinsurance balances payable		272,310				244,320
Payables for investments purchased		66,606				48,095
Term loan, net of issuance costs		149,830				149,715
Accounts payable and accrued expenses		186,887				138,050
Payables to related parties		6,480				20
Total liabilities		4,623,372				4,154,663
Non-controlling interest – TS Hamilton Fund		133				119
Shareholders’ equity
Common shares:
Class A, authorized (2023: 28,644,807 and 2022: 53,993,690), par value $0.01; issued and outstanding (2023: 28,644,807 and 2022: 30,520,078)		286				305
Class B, authorized (2023: 72,337,352 and 2022: 50,480,684), par value $0.01; issued and outstanding (2023: 56,036,067 and 2022: 42,042,155)		560				420
Class C, authorized (2023: 25,544,229 and 2022: 30,525,626), par value $0.01; issued and outstanding (2023: 25,544,229 and 2022: 30,525,626)		255				305
Additional paid-in capital		1,249,817				1,120,242
Accumulated other comprehensive loss		(4,441	)			(4,441	)
Retained earnings		801,373				547,352
Total shareholders' equity		2,047,850				1,664,183
Total liabilities, non-controlling interest, and shareholders' equity	$	6,671,355			$	5,818,965

Consolidated Statement of Operations

	Three Months Ended December 31,								Years Ended December 31,
($ in thousands, except per share information)	2023				2022				2023				2022
Revenues
Gross premiums written	$	433,791			$	341,252			$	1,951,038			$	1,646,673
Reinsurance premiums ceded		(70,125	)			(57,876	)			(470,600	)			(424,809	)
Net premiums written		363,666				283,376				1,480,438				1,221,864
Net change in unearned premiums		2,469				28,871				(161,905	)			(78,150	)
Net premiums earned		366,135				312,247				1,318,533				1,143,714
Net realized and unrealized gains (losses) on investments		107,517				(60,280	)			209,399				86,357
Net investment income (loss)		12,737				695				30,456				(21,487	)
Total net realized and unrealized gains (losses) on investments and net investment income (loss)		120,254				(59,585	)			239,855				64,870
Net gain on sale of equity method investment		211				6,991				211				6,991
Other income (loss)		10,792				2,199				18,631				11,316
Net foreign exchange gains (losses)		(2,230	)			(9,245	)			(6,185	)			6,137
Total revenues		495,162				252,607				1,571,045				1,233,028
Expenses
Losses and loss adjustment expenses		195,049				161,318				714,603				758,333
Acquisition costs		88,615				76,394				309,148				271,189
General and administrative expenses		101,781				42,392				259,856				177,682
Impairment of goodwill		—				24,082				—				24,082
Amortization of intangible assets		2,914				2,957				10,783				12,832
Interest expense		5,428				4,485				21,434				15,741
Total expenses		393,787				311,628				1,315,824				1,259,859
Income (loss) before income tax		101,375				(59,021	)			255,221				(26,831	)
Income tax expense (benefit)		(31,974	)			1				(25,066	)			3,104
Net income (loss)		133,349				(59,022	)			280,287				(29,935	)
Net income (loss) attributable to non-controlling interest		6,484				(5	)			21,560				68,064
Net income (loss) and other comprehensive income (loss) attributable to common shareholders	$	126,865			$	(59,017	)		$	258,727			$	(97,999	)
Per share data
Basic income (loss) per share attributable to common shareholders	$	1.18			$	(0.57	)		$	2.47			$	(0.95	)
Diluted income (loss) per share attributable to common shareholders	$	1.15			$	(0.57	)		$	2.44			$	(0.95	)

Non-GAAP Financial Measures Reconciliation

We present our results of operations in a way that we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting income (loss), a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. We believe that non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Where appropriate, reconciliations of our non-GAAP measures to the most comparable GAAP figures are included below.

Underwriting Income (Loss)

We calculate underwriting income (loss) on a pre-tax basis as net premiums earned less losses and loss adjustment expenses, acquisition costs and other underwriting expenses (net of third party fee income). We believe that this measure of our performance focuses on the core fundamental performance of the Company’s reportable segments in any given period and is not distorted by investment market conditions, corporate expense allocations or income tax effects.

The following table reconciles underwriting income (loss) to net income (loss), the most comparable GAAP financial measure:

	For the Three Months Ended								For the Years Ended
($ in thousands)	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Underwriting income (loss)	$	36,028			$	38,605			$	129,851			$	(31,717	)
Total net realized and unrealized gains (losses) on investments and net investment income (loss)		120,254				(59,585	)			239,855				64,870
Net gain on sale of equity method investment		211				6,991				211				6,991
Other income (loss), excluding third party fee income		312				(55	)			397				(315	)
Net foreign exchange gains (losses)		(2,230	)			(9,245	)			(6,185	)			6,137
Corporate expenses		(44,858	)			(4,208	)			(76,691	)			(20,142	)
Impairment of goodwill		—				(24,082	)			—				(24,082	)
Amortization of intangible assets		(2,914	)			(2,957	)			(10,783	)			(12,832	)
Interest expense		(5,428	)			(4,485	)			(21,434	)			(15,741	)
Income tax (expense) benefit		31,974				(1	)			25,066				(3,104	)
Net income (loss), prior to non-controlling interest	$	133,349			$	(59,022	)		$	280,287			$	(29,935	)

Third Party Fee Income

Third party fee income includes income that is incremental and/or directly attributable to our underwriting operations. It is primarily comprised of fees earned by the International Segment for management services provided to third party syndicates and consortia and by the Bermuda Segment for performance based management fees generated by our third party capital manager, Ada Capital Management Limited. We believe that this measure is a relevant component of our underwriting income (loss).

The following table reconciles third party fee income to other income, the most comparable GAAP financial measure:

	For the Three Months Ended							For the Years Ended
($ in thousands)	December 31, 2023			December 31, 2022				December 31, 2023			December 31, 2022
Third party fee income	$	10,480		$	2,254			$	18,234		$	11,631
Other income (loss), excluding third party fee income		312			(55	)			397			(315	)
Other income (loss)	$	10,792		$	2,199			$	18,631		$	11,316

Other Underwriting Expenses

Other underwriting expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in Note 10, Segment Reporting in the consolidated financial statements, it is considered a non-GAAP financial measure when presented elsewhere.

Corporate expenses include holding company costs necessary to support our reportable segments. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from other underwriting expenses, and therefore, underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to other underwriting expenses, also includes corporate expenses.

The following table reconciles other underwriting expenses to general and administrative expenses, the most comparable GAAP financial measure:

	For the Three Months Ended						For the Years Ended
($ in thousands)	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Other underwriting expenses	$	56,923		$	38,184		$	183,165		$	157,540
Corporate expenses		44,858			4,208			76,691			20,142
General and administrative expenses	$	101,781		$	42,392		$	259,856		$	177,682

Special Note Regarding Forward-Looking Statements

This information may contain forward-looking statements which reflect the Company's current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on management's current expectations and beliefs concerning future developments and their potential effects upon Hamilton. There can be no assurance that future developments affecting Hamilton will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts. These forward-looking statements are not a guarantee of future performance and involve risk and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including the following:

• our results of operations and financial condition could be adversely affected by unpredictable catastrophic events, global climate change or emerging claim and coverage issues;
• our business could be materially adversely affected if we do not accurately assess our underwriting risk, our reserves are inadequate to cover our actual losses, our models or assessments and pricing of risks are incorrect or we lose important broker relationships;
• the insurance and reinsurance business is historically cyclical and the pricing and terms for our products may decline, which would affect our profitability and ability to maintain or grow premiums;
• we have significant foreign operations that expose us to certain additional risks, including foreign currency risks and political risk;
• we do not control the allocations to and/or the performance of the Two Sigma Hamilton Fund, LLC ("TS Hamilton Fund")’s investment portfolio, and its performance depends on the ability of its investment manager, Two Sigma, to select and manage appropriate investments and we have a limited ability to withdraw our capital accounts;
• Two Sigma Principals, LLC, Two Sigma and their respective affiliates have potential conflicts of interest that could adversely affect us;
• the historical performance of Two Sigma Investments, LP ("Two Sigma") is not necessarily indicative of the future results of the TS Hamilton Fund’s investment portfolio or of our future results;
• our ability to manage risks associated with macroeconomic conditions resulting from geopolitical and global economic events, including public health crises, current or anticipated military conflicts, terrorism, sanctions, rising energy prices, inflation and interest rates and other global events;
• our ability to compete successfully with more established competitors and risks relating to consolidation in the reinsurance and insurance industries;
• downgrades, potential downgrades or other negative actions by rating agencies;
• our dependence on key executives, including the potential loss of Bermudian personnel as a result of Bermuda employment restrictions, and the inability to attract qualified personnel, particularly in very competitive hiring conditions;
• our dependence on letter of credit facilities that may not be available on commercially acceptable terms;
• our potential need for additional capital in the future and the potential unavailability of such capital to us on favorable terms or at all;
• the suspension or revocation of our subsidiaries’ insurance licenses;
• risks associated with our investment strategy, including such risks being greater than those faced by competitors;
• changes in the regulatory environment and the potential for greater regulatory scrutiny of the Company going forward;
• a cyclical downturn of the reinsurance industry;
• operational failures, failure of information systems or failure to protect the confidentiality of customer information, including by service providers, or losses due to defaults, errors or omissions by third parties or our affiliates;
• we are a holding company with no direct operations, and our insurance and reinsurance subsidiaries’ ability to pay dividends and other distributions to us is restricted by law;
• risks relating to our ability to identify and execute opportunities for growth or our ability to complete transactions as planned or realize the anticipated benefits of our acquisitions or other investments;
• our potentially becoming subject to U.S. federal income taxation, Bermuda taxation or other taxes as a result of a change of tax laws or otherwise;
• the potential characterization of us and/or any of our subsidiaries as a passive foreign investment company, or PFIC;
• our potentially becoming subject to U.S. withholding and information reporting requirements under the U.S. Foreign Account Tax Compliance Act, or FATCA, provisions;
• our costs will increase as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations;
• if we were to identify a material weakness and were unable to remediate such material weakness, or fail to achieve and maintain effective internal controls, our operating results and financial condition could be impacted and the market price of our Class B common shares may be negatively affected;
• the lack of a prior public market for our Class B common shares means our share price may be volatile and anti-takeover provisions contained in our organizational documents could delay management changes;
• the potential that the market price of our Class B common shares could decline due to future sales of shares by our existing shareholders;
• applicable insurance laws, which could make it difficult to effect a change of control of our company;
• investors may have difficulties in serving process or enforcing judgments against us in the United States; and
• other factors affecting future results disclosed in the Company’s filing with the SEC, including the Form 10-K.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240306774801/en/

Jon Levenson & Darian Niforatos

Investor.Relations@hamiltongroup.com

Media contact:

Kelly Corday Ferris

kelly.ferris@hamiltongroup.com

Source: Hamilton Insurance Group, Ltd.

FAQ

What is Hamilton Insurance Group's ticker symbol?

Hamilton Insurance Group's ticker symbol is HG.

What was Hamilton Insurance Group's net income for the fourth quarter of 2023?

Hamilton Insurance Group reported a net income of $126.9 million for the fourth quarter of 2023.

What was Hamilton Insurance Group's return on average equity for the full year 2023?

Hamilton Insurance Group reported a return on average equity of 13.9% for the full year 2023.

How much were Hamilton Insurance Group's gross premiums written for the full year 2023?

Hamilton Insurance Group's gross premiums written were $1,951.0 million for the full year 2023.

What was Hamilton Insurance Group's combined ratio for the fourth quarter of 2023?

Hamilton Insurance Group's combined ratio was 90.2% for the fourth quarter of 2023.