Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Hamilton Insurance Group Ltd (NYSE:HG) reported a net income of $400 million for 2024, a 55% increase over the previous year.
• The company achieved a return on average equity of 18.3%, up from 13.9% in the prior year.
• Gross premiums written increased by 24% to over $2.4 billion, indicating strong growth in both international and Bermuda segments.
• Hamilton Insurance Group Ltd (NYSE:HG) achieved a combined ratio of 91.3%, resulting in $149 million of underwriting income despite significant insured loss activity.
• The company received ratings upgrades from major agencies, enhancing its competitive position and opportunities for additional profitable business.

Negative Points

• Hamilton Insurance Group Ltd (NYSE:HG) faced significant catastrophe losses, including $88 million from events like Hurricane Helene and Hurricane Milton.
• The company's fourth-quarter net income decreased to $34 million from $127 million in the same quarter of the previous year.
• The combined ratio for the fourth quarter increased to 95.4% from 90.2% in the fourth quarter of 2023, driven by higher catastrophe losses.
• Investment income for the fourth quarter was significantly lower at $36 million compared to $114 million in the fourth quarter of 2023.
• The company is still assessing loss estimates from recent wildfires, with early views indicating a range of $120 million to $150 million net of reinsurance.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with SHC.

Q: The insurance underlying loss ratio in the quarter was below 51%. Was there anything one-off in there, and how should we think about the margin profile of the international segment going forward? A: (Craig Howie, CFO) There were no large losses in the quarter, and we typically do our property reserve reviews in the 4th quarter. If there were no property events below our catastrophe threshold, that non-cat portion can be taken down. However, I would encourage looking at the full-year number, with a loss ratio in the 53.5% range as a better indication of expected performance.

Q: Can you provide details on the casualty reserves, specifically any adverse movement in prior years in the current quarter? A: (Craig Howie, CFO) There were slight movements in reserves, but they were very modest. In our Bermuda segment, it was about $1 million. Overall, we had $1 million of favorable development in Bermuda for the quarter, and for the full year 2024, we had favorable loss reserve development for the group.

Q: What is Hamilton's interest in leaning into casualty business, particularly in reinsurance, given some peers' balance sheet instability? A: (Pina Albo, CEO) We have been generally underweight on casualty reinsurance but started leaning in more since 2021 when the market turned favorable. With some competitors backing out, it has been an opportunistic time for us, especially with our AM Best upgrade. We are selective in what we write and see this as a very opportunistic time for Hamilton.

Q: Can you provide an update on the competitive environment in property insurance and reinsurance? A: (Pina Albo, CEO) Property insurance, particularly property DNF, has seen multiple quarters of rate increases. Although rates have come off slightly, they remain attractive. In property reinsurance, we saw some competition and slight decreases, but terms, conditions, and attachment points remain attractive. We expect mid-year renewals for loss-impacted accounts to see rate increases.

Q: Regarding Hamilton's Russian war and aviation-related reserves, have there been any meaningful movements? A: (Pina Albo, CEO) We posted a fulsome reserve for the Ukraine loss, covering marine, war, and aviation classes, with a net reserve of $80 million. The majority of our exposure is reinsurance, and we do not write aviation insurance. We feel comfortable with the strength of that reserve.

Q: Can you provide insights into Hamilton Select's pricing power and competitive environment? A: (Pina Albo, CEO) The US ENS market remains attractive, with increased submissions and positive momentum. Our underwriting appetite is well-defined, focusing on small to mid-sized, hard-to-place risks. We see a favorable market environment, particularly in excess casualty, general casualty, and small business space.

Q: How should we think about the split of the California wildfires' estimated losses between segments? A: (Craig Howie, CFO) The California wildfires are predominantly a reinsurance event for us.

Q: Can you explain the larger portion of non-controlling interest in the investment portfolio? A: (Craig Howie, CFO) The non-controlling interest is related to incentive fees on the Two Sigma Hamilton fund, which are trued up each quarter based on results. Strong results in the 4th quarter contributed to this, and all fees are included in the 16.3% full-year return figure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.