HG Hamilton Insurance Group Ltd

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