Q1 2025 Hamilton Insurance Group Ltd Earnings Call
Investor Relations website.
Diane: I'd now like to turn the call over to Diane <unk>, Vice President Investor Relations and Finance. Please go ahead.
Craig Howey: From an other underwriting expense ratio standpoint, that is not the same. What I would say to you is that is something that we have control over, and as we continue to scale up our book, we would expect those other underwriting expense ratio to continue to decline, which it has declined. That ratio has declined each and every year since 2010. Okay, got it.
Speaker Change: Hello and welcome to the Hamilton Insurance Group Earnings Conference call. As your reminder, this call is being broadcast and will also be available for replay with links on the Hamilton Investor Relations website. I now like to turn the call over to Darian Niferados, Vice President, Investor Relations and Finance. Please go ahead.
Speaker Change: Thanks, Operator, hi, everyone and welcome to the Hamilton Insurance Group first quarter 2025 earnings Conference call. The Hamilton executives, leading today's call are peanut Albo group, Chief Executive Officer, and Craig Howie Group Chief Financial Officer, We are also <unk>.
Diane: <unk> by other members of the Hamilton management team.
Speaker Change: Thanks, operator. Hi, everyone, and welcome to the Hamilton Insurance Group first quarter 2025 earnings conference call.
Diane: Before we begin note that Hamilton financial disclosures, including our earnings release contain important information regarding forward looking statements management comments regarding potential future developments are subject to the risks and uncertainties as detailed management may also refer to certain non-GAAP financial measures. These items.
Pina Albo: And then switching gears, your comments sounded pretty positive on the casualty growth opportunity. When we listen to, you know, some of your peers across the insurance reinsurance space, you know, we hear instances of significant amounts of non-renewals across various casualty businesses. When you feel like you're gaining market share on the casualty side, is the way you get comfortable around winning that business, is it just price? Is it you know, a change in terms of conditions? What gives you, you know, conviction that the casualty business you guys are winning is indeed good business?
Speaker Change: The Hamilton Executives leading today's call are Pina Albo, Group Chief Executive Officer, and Craig Howey, Group Chief Financial Officer. We are also joined by other members of the Hamilton Management Team.
Speaker Change: Before we begin, note that Hamilton financial disclosures, including our earnings release, contain important information regarding forward-looking statements.
Diane: Our reconciled in our earnings release and financial supplement with that I'll hand, it over to Peter.
Peter: Thank you Darren and Hello, everyone. Let me start by welcoming you all to Hamilton's first quarter 2025 conference calls.
Speaker Change: Management comments regarding potential future developments are subject to the risks and uncertainties as detailed. Management may also refer to certain non-GAAP financial measures. These items are reconciled in our earnings release and financial supplement. With that, I'll hand it over to PINA.
Speaker Change: I'm very pleased to report another profitable quarter for Hamilton. Despite the fact that global insured catastrophe losses were over $55 billion for the quarter, driven primarily by the California wildfires.
Pina Albo: Hi there. I'll take that.
Pina Albo: So I think when you look at a number of our peers, they've been around for a lot longer than we have. So they're firstly their exposure to those casualty classes and also the amounts that they have written significantly larger than ours. We only started really leaning in and again, modestly into the casualty space, you know, in end of 2020, 2021. So, and that's when underlying rates started picking up. With the benefit of this AM Best upgrade, you know, we are, it's very opportune because as some of our clients who have this longer tail exposure or are over lined or cutting back or backing out, we are being given the opportunity to see the business.
Pina Alba: Thank you, Dorian, and hello everyone. Let me start by welcoming you all to Hamilton's first quarter 2025 conference call.
Speaker Change: Starting with the headline results our catastrophe loss ratio. This quarter was 32%, which includes our California wildfire net loss estimate of $143 million.
Pina Alba: I'm very pleased to report another profitable quarter for Hamilton, despite the fact that global insured catastrophe losses were over $55 billion for the quarter, driven primarily by the California wildfires.
Speaker Change: This number is net of reinsurance and reinstatement premiums and does not take into account any potential recovery benefits for example for subrogation.
Pina Alba: Starting with the headline results. Our catastrophe loss ratio this quarter was 30.2%, which includes our California wildfire net loss estimate of $143 million.
Speaker Change: Also as a reminder, this estimate is within the $120 million to $150 million range, which we announced during last quarter's earnings call.
Pina Alba: This number is net of reinsurance and reinstatement premiums and does not take into account any potential recovery benefits, for example, for subrogation.
Speaker Change: Notwithstanding the catastrophe losses, Hamilton had a very strong start to the year.
Speaker Change: Our attritional loss ratio was 51, 9% exemplifying the stability of our underlying book, which is running where we would expect.
Pina Albo: And again, we see a lot more business than we actually write. Again, we have targeted the clients that we want to do business with in advance and those are the ones that we seek and try to do business with. So ours is a very selective approach. And again, I think it's also important to note that even on, you know, some of this growth you're seeing, it's not massive line sizes. We are, we have smaller line sizes on these accounts, but over a swath of accounts that gives us the balance. So I'm going to have 1 to 2% share on some of these quota shares.
Pina Alba: Also, as a reminder, this estimate is within the 120 to 150 million range which we announced during last quarter's earnings call.
Speaker Change: Our gross premiums written increased by 17% in the first quarter.
Pina Alba: Notwithstanding the catastrophe losses, Hamilton had a very strong start to the year. Our nutritional loss ratio was 51.9%, exemplifying the stability of our underlying book, which is running where we would expect.
Speaker Change: Investment results were significant with a total investment return of $167 million, a result that more than offsets our catastrophe losses.
Speaker Change: Finally in terms of headline numbers, our net income of $81 million represents a 13, 7% annualized return on average equity for the first quarter.
Pina Alba: Our gross premiums written increased by 17% in the first quarter. Investment results were significant with a total investment return of $167 million, a result that more than offsets our catastrophe losses.
Pina Albo: So that's how we are getting comfortable with, with the growth at this time.
Speaker Change: I would now like to focus on our two reporting segments, particularly their topline growth this quarter.
Tommy McJoint: 16 and then this last one to sneak in.
Pina Alba: Finally, in terms of headline numbers, our net income of $81 million represents a 13.7% annualized return on average equity for the first quarter.
Speaker Change: Each of our segments, Bermuda, which is comprised of Hamilton re and Hamilton re U S and international which houses Hamilton global specialty and Hamilton select enjoyed double digit growth.
Mike Zaremsky: Just want to clarify the two sigma return. I think the 7.9% was that a year date return with an annualized return? Could you clarify what that number is referring to? That's our year-to-date return through the end of April. So, in other words, it was 5.5% through the end of March. That number that we gave on the call was through the...
Pina Alba: I would now like to focus on our two reporting segments, particularly their top line growth in this quarter.
Speaker Change: Starting with Hamilton re which renews approximately 40% of its business during the first quarter we.
Pina Alba: Each of our segments, Vermuda, which is comprised of Hamilton Re and Hamilton Re-US, and International which houses Hamilton Global Specialty and Hamilton Select, enjoyed double-digit growth.
Speaker Change: We wrote $473 million in gross premiums an increase of 18% over last year.
Mike Zaremsky: Thank you.
Elyse Greenspan: As a reminder, to ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead, your line is open. Hi, thanks. Good morning. My first question is on the buyback, right? You guys bought back $10 million in the quarter. Obviously, you know, shares still trading below book. As you guys think about growth outlook, I think you mentioned PINA, you know, continuing to talk, you know, think you guys can, you know, hit double digit top line growth as you think about that, you know, pricing and competitive views as well.
Speaker Change: This increase was primarily driven by casualty and property classes.
Pina Alba: Starting with Hamilton Re, which renews approximately 40% of its business during the first quarter. We wrote $473 million in gross premiums, an increase of 18% over last year.
Speaker Change: In casualty, we continue to take advantage of two things.
Speaker Change: First the favorable market environment with tighter limits and stronger underlying rates and second our a M best rating upgrade to <unk>.
This increase was primarily driven by casualty and property classes.
Speaker Change: The latter led to new business as well as opportunities for us to increase our number of our line sizes on our renewal business across both our Hamilton re Bermuda and our U S underwriting platforms.
Pina Alba: In casualty, we continue to take advantage of two things. First, the favorable market environment with tighter limits and stronger underlying rates, and second, our AM best rating upgrade to A.
Speaker Change: In property a significant portion of the increase was related to reinstatement premiums from the California wildfires.
Elyse Greenspan: How do you think about just growth needs, you know, capital for growth needs, I'm sorry, and balancing, you know, incremental capital return with where your shares are trading?
Pina Alba: The latter led to new business, as well as opportunities for us to increase a number of the line sizes on our renewal business across both our Hamilton Rebermuda and our US underwriting platforms.
Speaker Change: That said we were also successful with some targeted new business growth and therefore still showed growth over the prior year when excluding reinstatement premiums.
Craig Howey: Hi, Elise, this is Craig. Thanks for the question. First of all, I would say, yes, the buybacks this period were only $10 million. And when I say only $10 million, it was a very short open window for us during this period because of the year-end financials coming out later and then just having a very short open window. We still have plenty of capital for both growth, as well as continuing to buy back shares even in an uncertain marketplace like this, and especially at the valuation of where our shares trade.
Pina Alba: In property, a significant portion of the increase was related to reinstatement premiums from the California wildfires.
Speaker Change: In general we feel property cat business is still attractively priced and it also enjoys the improved terms and conditions and higher attachment points from the market reset in 2023.
Pina Alba: That said, we were also successful with some targeted new business growth, and therefore still showed growth over the prior year when excluding reinstatement premiums.
Speaker Change: Before I move on to international I'd like to say a few words, specifically about Hamilton <unk> recent growth in casualty.
Pina Alba: In general, we feel property cat business is still attractively priced, and it also enjoys the improved terms and conditions and higher attachment points from the market reset in 2023.
Speaker Change: Again, we view the current casualty environment as attractive so we continue to lean in albeit in a highly selective and disciplined manner.
Craig Howey: So, don't see any constraints on a growth or a And then you guys had mentioned, you know, I think having another $80 million this year, right, from the AM Best upgrade in terms of premiums, what did you guys see in the Q1 and is the expectation still that we'll see, you know, $80 million this year? I think I mentioned we track the new business or additional line sizes that are related to our upgrade. In the first quarter, I think I mentioned we did $40 million. That's predominantly casualty. There is some specialty class in there as well, but it's not a major part of that.
Speaker Change: By selective I mean that we focus on building strong relationships with key clients with whom we enjoy a broad trading relationship.
Speaker Change: Before I move on to international, I'd like to say a few words specifically about Hamilton RE's recent growth in casualty.
Speaker Change: Again, we view the current casualty environment as attractive so we continue to lean in, albeit in a highly selective and disciplined manner.
Speaker Change: And on becoming a more relevant trading partner with them.
Speaker Change: Key target casualty clients for Hamilton or those that have a very strong underwriting and claims handling culture.
Speaker Change: By selective, I mean that we focus on building strong relationships with key clients, with whom we enjoy a broad trading relationship, and on becoming a more relevant trading partner with them.
Our good actively managing market cycles.
Speaker Change: And keep a significant amount of their exposure net thus ensuring alignment of interest.
Speaker Change: By disciplined I mean that each casualty deal is actuarially, you've reviewed with a view of risk and a loss ratio that is independent from those of our Seedings and brokers and reflects what we believe to be a cautious view of loss trends, including social inflation.
Speaker Change: He target cash to clients for Hamilton are those that have a very strong underwriting and claims handling culture, are good at actively managing market cycles, and keep a significant amount of their exposure net, thus ensuring alignment of the interest.
Craig Howey: So $40 million in the first quarter. So I guess all I can say to that is that we are comfortable with the previous guidance we gave of $80 million for the year, based on that, for sure.
Speaker Change: Moving to our international segment, we wrote $370 million of gross premiums an increase of 15% over the prior year.
Elyse Greenspan: And then one last one on reserves, Craig, you highlighted the favorable development in the quarter.
Speaker Change: By discipline, I mean that each casualty deal is actuarially reviewed with a view of risk and a loss ratio that is independent from those of our sedents and brokers and reflects what we believe to be a cautious view of loss trends including social inflation.
Craig Howey: I guess two things was, were there any adverse development, right, that the releases offset or was it just releases? And then what accident years was that concentrated in? So first of all, it was predominantly property and specialty that we released. There were some casualty reserves, roughly a million dollars, that were unfavorable during the quarter, but that was not what was driving the favorable development for sure.
Speaker Change: This growth was primarily due to the healthy flow of U S. E&S business, we saw in the quarter.
Speaker Change: U S E N S makes up the majority of the business we write in international.
Speaker Change: Moving to our international segment, we wrote 370 million of gross premiums an increase 15% over the prior year
Speaker Change: Our product diversification and expertise in both Hamilton global specialty in Hamilton select allow us to grow in the areas, we deemed most attractive and shrink or exit those where we do not believe we are getting adequate rate.
Speaker Change: This growth was primarily due to the healthy flow of US E&S business we saw in the quarter. US E&S makes up the majority of the business we write in international.
Speaker Change: Hamilton Global specialty, which is the largest contributor to the international segment increased most in property and specialty classes.
Craig Howey: What we did see this quarter, you may recall, we don't really complete any of our reserve studies in the first quarter. What we saw were a couple claims that were settled, that were settled for less than what we had reserved for. An example was one of the claims settled at half of the industry loss estimate. So we were able to reduce our reserves upon that settlement and reflect that in our favorable development in the quarter. That's essentially what came through.
Speaker Change: Our product diversification and expertise in both Hamilton Global Specialty and Hamilton Select allow us to grow in the areas we deem most attractive and shrink or exit those where we do not believe we are getting adequate rate.
Speaker Change: In property, we grew most with a particular longstanding account, which has been very profitable for us historically.
Speaker Change: In specialty we grew most and personal accident fine art, and specie and marine lines, where our expertise is well recognized.
Speaker Change: Hamilton Global Specialty, which is the largest contributor to the international segment increased most in property and specialty classes.
Speaker Change: As a reminder, Hamilton global specialty houses, our Lloyd's underwriting operation Hamilton Syndicate 4000.
Craig Howey: from a catastrophe standpoint. We also went back and looked at Hurricane Ian. That review was not completed in the fourth quarter with the rest of our property reviews that were done in the fourth quarter of 2024, but when we reviewed that in the first quarter, we determined that we could adjust or lower that reserve estimate. But we do still hold IB&R for that event that happened.
Speaker Change: In property, we grew most with a particular longstanding account which has been very profitable for us historically. In specialty, we grew most in personal accident, fine art and species, and marine lines where our expertise is well recognized.
Speaker Change: A few weeks ago, we reported our 2020 for Lloyds results and I'm proud to say that our syndicate remains in the enviable position of being amongst the syndicates with the highest profitability and lowest volatility over a 10 year period.
Speaker Change: As a reminder, Hamilton Global Specialty houses our Lloyds Underwriting Operation Hamilton Syndicate 4,000.
Speaker Change: We have a consistently strong track record at Lloyd's and each year, we continue to build on that success.
Speaker Change: A few weeks ago we reported our 2024 Lloyd's results and I'm proud to say that our syndicate remains in the enviable position of being amongst the syndicates with the highest profitability and lowest volatility over a 10-year period.
Elyse Greenspan: Thank you.
Speaker Change: Lastly, the international segment includes Hamilton select are hard to place U S. E&S platform, which grew 51% this quarter.
Mike Zaremsky: Our next question comes from Mike Seremsky from BMO. Please go ahead. Your line is open. Great, just a couple quick follow ups.
Speaker Change: Our strongest growth came from excess casualty products and contractors and general casualty classes.
Mike Zaremsky: Craig on the short window for buybacks. Just curious, is Hamilton Group's window shorter than most companies? If you can remind us kind of the technicalities around, you know, when the 10k comes out or how that works? Yeah, it's really when we released our 10, at the time we released our 10k, and after we had our board meeting was later in the process than some of our other peers, so maybe a couple weeks shorter, that will, that will change in the future. Number one, and the reason I said that is, is our board dates were set prior to becoming a public company.
Speaker Change: We have a consistently strong track record at Lloyds and each year we continue to build on that success.
Speaker Change: We are keeping a sharp eye on pricing trends in all of our offerings and we will adjust our underwriting appetite as needed.
Speaker Change: Lastly, the International Segment includes Hamilton Select, our hard-to-place US E&S platform which grew 51% this quarter. Our strongest growth came from excess casualty, products and contractors, and general casualty classes.
Speaker Change: I will now turn to the April one and upcoming mid year reinsurance renewals.
Speaker Change: I will be brief as I'm sure you've heard plenty of commentary regarding movements in rates trends and the like on earlier calls.
Speaker Change: We are keeping a sharp eye on pricing trends in all of our offerings and we'll adjust our underwriting appetite as needed.
Speaker Change: Regarding the four one renewals, which are largely Japanese accounts attachment points and terms and conditions remained relatively stable.
Speaker Change: I will now turn to the April 1 and upcoming bid-deer Reinsurance Renewals.
Speaker Change: Pricing saw some modest decreases as expected because this market is largely decoupled from the losses seen in the U S.
Craig Howey: So we were just a little bit later in the process than many of our peers, and we actually filed in the 1st week of March was when we filed the K. What I would say to you now is we are an accelerated filer. So, in other words, those, those reports are going out faster and we will have a longer. Got it.
Speaker Change: I will be brief as I'm sure you've heard plenty of commentary regarding movements and rates, trends, and the like on earlier calls.
Speaker Change: For U S for one property cat renewals consistent with what we said last quarter loss free U S programs renewed with modest rate reductions while loss affected programs experienced rate increases.
Speaker Change: Regarding the 4-1 renewals, which are largely Japanese accounts, attachment points, and terms and conditions remained relatively stable.
Speaker Change: Pricing saw some modest decreases as expected because this market is largely decoupled from the losses seen in the US.
Speaker Change: There were a handful of casualty renewals at four one and market discipline remains there too with rates largely keeping pace with loss costs.
Craig Howey: And one more, probably for you, Craig, on the Two Sigma returns. Are you apprised of those returns kind of on a monthly basis, or do you find out like towards the end of the quarter or after the quarter? Or is it, you know, I'm just curious on the kind of how those returns are shared with you all. Yeah, we have those returns on a monthly basis, which is why I gave in my remarks on the call. I gave the number at the end of April because that that was the latest information that we had on the two Sigma account.
Speaker Change: For US 41 property cat renewals, consistent with what we said last quarter, lost free US programs renewed with modest rate reductions, while loss affected programs experienced rate increases.
Speaker Change: As for the upcoming mid year renewals, which are largely property driven we are seeing increased demand and stable supply.
Speaker Change: This will likely result in pricing being similar to what we experienced so far this year.
Speaker Change: There were a handful of casualty renewals at 4-1 and market discipline remained there too with rates largely keeping pace with loss costs.
Speaker Change: Loss affected accounts, we'll see rate increases and it is important to note that a number of the larger accounts affected by the wildfires and the 'twenty 'twenty four hurricanes are renewing in this period.
Speaker Change: As for the upcoming mid-year renewals, which are largely property driven, we are seeing increased demand and stable supply.
Craig Howey: That's that's the reason we we give that to you during the call.
Mike Zaremsky: Perfect, thank you.
Speaker Change: This will likely result in pricing being similar to what we experienced so far this year.
Speaker Change: Before I turn the call over to Craig I'd like to address the continued economic and geopolitical uncertainty the world is facing particularly the more recently announced tariffs and the potential for a recession.
Matt Carletti: Our next question comes from Matt Carletti from Citizens. Please go ahead, your line is open. Thanks. Good morning. Just a question on the XCAT accident year loss ratio. There were a couple, a few large risk losses in the quarter.
Speaker Change: Loss-affected accounts will see rate increases, and it is important to note that a number of the larger accounts affected by the wildfires and the 2024 hurricanes are renewing in this period.
Craig Howie: Regarding tariffs it is still early days, but it is important to note that they have an indirect impact on our business as we are a financial services provider.
Craig Howey: We've heard about it on some other calls, like the American Airlines crash, a couple energy sector items. Is there any noise from whether those or others, any kind of large risk losses in those numbers this quarter, or are they pretty clean devoid of that? Hi Matt, I would say certainly we have exposure to those losses that you've heard from other people with respect to aviation. We didn't have any significant aviation losses this quarter. They were included in our current attritional loss picks. Just as a reminder, we write aviation reinsurance. We do not write aviation insurance.
Speaker Change: Before I turn the call over to Craig, I'd like to address the continued economic and geopolitical uncertainty the world is facing, particularly the more recently announced tariffs and the potential for a recession.
Craig Howie: While there remains much uncertainty around tariff policies and their impact. We are currently anticipating that the primary impact will be loss cost inflation in certain lines and the secondary impact could be to the broader trading environment.
Speaker Change: Regarding tariffs, it is still early days, but it is important to note that they have an indirect impact on our business as we are a financial services provider.
Craig Howie: When we think about potential loss cost inflation, we believe our exposure is most materially in property lines. However, we perceive this exposure as very manageable at the present time.
Speaker Change: While there remains much uncertainty around care of policies and their impacts, we are currently anticipating that the primary impact will be lost cost inflation in certain lines and the secondary impact could be to the broader trading environment.
Craig Howey: As far as the other large losses, the fires, yes, again, exposure to those events, but manageable and again included in our current year attrition.
Craig Howie: And we have the framework in the models already in place and fully operational to react to this risk as it develops.
Speaker Change: When we think about potential loss cost inflation, we believe our exposure is most material in property lines.
Matt Carletti: Thank you. Appreciate it.
Craig Howie: When it comes to the broader trading environment. We are used to thinking about this kind of risk and we'll continue to monitor it closely and react accordingly.
Operator: Thank you.
Pina Albo: That will conclude our question and answer session for today.
Speaker Change: However, we perceive this exposure as very manageable at the present time and we have the framework and the models already in place and fully operational to react to this risk as it develops.
Pina Albo: Now I'll turn the call back over to Pina Elbow. Thank you again for being with us today and we look forward to speaking to you again soon.
Craig Howie: Regarding the possibility of a recession as you will have heard from many of my peers insurance and reinsurance are not luxury purchases and therefore, rather resilient in this context.
Speaker Change: When it comes to the broader trading environment, we are used to thinking about this kind of risk and will continue to monitor it closely and react accordingly.
Operator: This concludes today's conference call. Thank you for your participation.
Operator: You may now disconnect.
Craig Howie: Against this backdrop, we believe we are still in an attractive trading environment are capable of navigating risk and are therefore able to enjoy thoughtful and selective double digit growth in our top line.
Speaker Change: Regarding the possibility of recession, as you will have heard from many of my peers, insurance and reinsurance are not luxury purchases and therefore rather resilient in this context.
Craig Howie: Our attritional loss ratios the barometer of the health of our underlying business are stable and we have an experienced and disciplined team and a strong balance sheet.
Speaker Change: Against this backdrop, we believe we are still in an attractive trading environment, are capable of navigating risk and are therefore able to enjoy thoughtful and selective double-digit growth in our top line.
Craig Howie: With that I will now turn the call over to Craig to go over our financial results in more detail.
Speaker Change: Our traditional loss ratios, the barometer of the health of our underlying business, our stable, and we have an experienced and disciplined team and a strong balance sheet.
Craig Howie: Thank you Peter and Hello, everyone.
Craig Howie: Hamilton is off to a strong start for the year with net income of $81 million equal to 77 per diluted share producing an annualized return on average equity of 13, 7%.
Craig Howey: With that, I will now turn the call over to Craig to go over our financial results in more detail.
Craig Howie: We also increased book value per share to $23.59.
Thank you, Pena, and hello everyone.
Craig Howie: This compares to net income of $157 million or $1.38 per diluted share and an annualized return on average equity of 29, 5% in the first quarter of 2024.
Craig Howey: Hamilton is off to a strong start for the year, with net income of 81 million dollars equal to 77 cents per diluted share, producing an annualized return on average equity of 13.7%.
Craig Howie: Before I move on to details around our underwriting and investment income components for the quarter I wanted to point out some new metrics, we've added to our financial supplement disclosures this quarter.
Craig Howey: We also increased book value per share to $23.59. This compares to net income of $157 million or $1.38 per diluted share and an annualized return on average equity of 29.5% in the first quarter of 2024.
Craig Howie: We are now reporting operating income operating income per share and operating return on average equity.
Craig Howie: We define operating income as net income, excluding one net realized and unrealized gains or losses on investments and our fixed maturity and short term investment portfolios and to foreign exchange gains or losses.
Speaker Change: Before I move on to details around our underwriting and investment income components for the quarter, I wanted to point out some new metrics we've added to our financial supplement disclosures this quarter.
Speaker Change: We are now reporting operating income, operating income per share, and operating return on average equity.
Craig Howie: To clarify we are including the realized and unrealized gains or losses from the two Sigma Hamilton farmed and our definition of operating income.
Speaker Change: We define operating income as net income, excluding one, net realized and unrealized gains or losses on investments in our fixed maturity and short-term investment portfolios, and two, foreign exchange gains or losses.
Craig Howie: We understand that many of you have asked for a disclosure of operating income to more readily compare Hamilton with some of our peers.
Craig Howie: While I will not discuss operating income in any more detail on today's call. We will begin providing commentary around this result next quarter in the meantime, if you have any questions. Please feel free to reach out to Investor Relations.
Speaker Change: To clarify, we are including the realized and unrealized gains and losses from the two Sigma Hamilton Fund in our definition of operating income.
Speaker Change: We understand that many of you have asked for a disclosure of operating income to more readily compare Hamilton with some of our peers.
Craig Howie: Moving on to our underwriting results Hamilton continues to grow its top line at a thoughtful double digit rate as Peter mentioned, our first quarter 2025, gross premiums written increased to $843 million compared to $722 million. This time last year, an increase of 17%.
Speaker Change: While I will not discuss operating income in any more detail on today's call, we will begin providing commentary around this result next quarter. In the meantime, if you have any questions, please feel free to reach out to Investor Relations.
Craig Howie: Both of our reporting segments International and Bermuda continue to lean into favorable market conditions.
Speaker Change: Moving on to our underwriting results, Hamilton continues to grow its top line at a thoughtful double-digit rate. As Pena mentioned, our first quarter 2025 gross premiums written increased to $843 million, compared to $722 million this time last year, an increase of 17%.
Craig Howie: For the first quarter Hamilton had a $58 million underwriting loss, primarily driven by the California wildfire catastrophe loss estimate in the quarter.
Craig Howie: This is compared to underwriting income of $33 million in the first quarter last year.
Speaker Change: Both our reporting segments international and Bermuda continue to lean into favorable market conditions.
Craig Howie: The group combined ratio was 111, 6% compared to 91, 5% in the first quarter of 2024.
Speaker Change: For the first quarter, Hamilton had a $58 million underwriting loss primarily driven by the California wildfire catastrophe loss estimate in the quarter. This is compared to underwriting income of $33 million in the first quarter last year.
Craig Howie: Again, the increase in the combined ratio was primarily driven by the catastrophe losses.
Craig Howie: Starting with the loss ratio in the first quarter the loss ratio increased to 18 nine points to 79, 2% compared to 63% in the prior period.
Speaker Change: The Group Combined Ratio was 111.6% compared to 91.5% in the first quarter of 2024. Again, the increase in the Combined Ratio was primarily driven by the catastrophe losses.
Craig Howie: The increase was primarily driven by $151 million were 32 points of net current and prior year catastrophe losses, primarily driven by the California wildfires.
Speaker Change: Starting with the loss ratio, in the first quarter, the loss ratio increased 18.9 points to 79.2% compared to 60.3% in the prior period.
Craig Howie: This compares to catastrophe losses of less than a half a million dollars reported in the first quarter last year.
Craig Howie: The Attritional loss ratio was 51, 9% a decrease of five three points compared to the first quarter last year.
Speaker Change: The increase was primarily driven by $151 million or 30.2 points of net current and prior your catastrophe losses, primarily driven by the California wildfires.
Craig Howie: The primary reason for the decrease was the first quarter of 2024 included the Baltimore Bridge loss.
Speaker Change: This compares to catastrophe losses of less than a half a million dollars reported in the first quarter last year.
Craig Howie: Again, our underlying diversified book of business continues to perform well.
Speaker Change: The nutritional loss ratio was 51.9%, a decrease of 5.3 points compared to the first quarter last year.
Craig Howie: We had favorable prior year Attritional development of two nine points driven predominantly by specialty and property classes.
Speaker Change: The primary reason for the decrease was the first quarter of 2024 included the Baltimore bridge loss. Again, our underlying diversified book of business continues to perform well.
Craig Howie: This compares to three one points of unfavorable development in the first quarter last year.
Craig Howie: The expense ratio increased 1.2 points to 32, 4% compared to 31, 2% in the first quarter last year with acquisition costs being slightly higher.
Speaker Change: We had favorable prior year attireional development of 2.9 points driven predominantly by specialty and property classes. This compares to 3.1 points of unfavorable development in the first quarter last year.
Craig Howie: Other underwriting expenses being slightly lower.
Craig Howie: The increase in acquisition expenses was mainly driven by higher profit commissions and a change in business mix.
Speaker Change: The expense ratio increased 1.2 points to 32.4% compared to 31.2% in the first quarter last year with the acquisition costs being slightly higher and other underwriting expenses being slightly lower.
Craig Howie: As always I'd encourage you to use the full year of 2020 for Attritional loss and expense ratios as an indication of where we expect the current book to perform.
Craig Howie: Next I'll go through the first quarter results by reporting segment.
Speaker Change: The increase in acquisition expenses was mainly driven by higher profit commissions and a change in business mix.
Craig Howie: Let's start with the international segment, which includes our specialty insurance businesses, I'm, hoping global specialty and Hamilton select.
Speaker Change: As always, I'd encourage you to use the full year 2024 attracional loss and expense ratios as an indication of where we expect the current book to perform.
Craig Howie: For the first quarter of 2025 International gross premiums written grew to $370 million from $321 million an increase of 15%.
Speaker Change: Next, I'll go through the first quarter results by reporting segment.
Speaker Change: Let's start with the international segment which includes our specialty insurance businesses, Hamilton Global Specialty, and Hamilton Select.
Craig Howie: This was driven by growth in our property casualty and specialty insurance classes.
Craig Howie: International had net underwriting income of $1 million and a combined ratio of 99, 7%.
Speaker Change: For the first quarter of 2025, international gross premiums written grew to $370 million from $321 million and increased to 15%.
Craig Howie: Compared to underwriting income of $5 million and a combined ratio of 97, 2% in the first quarter last year.
Speaker Change: This was driven by growth in our property, casualty, and specialty insurance classes.
Craig Howie: The increase in the combined ratio was primarily related to catastrophe losses in the quarter.
Speaker Change: International had an underwriting income of $1 million and a combined ratio of 99.7%.
Craig Howie: International had $29 million of net catastrophe losses completely driven by the California wildfires compared to negligible net catastrophe losses in the first quarter of 2024.
Speaker Change: Compared to underwriting income of $5 million and a combined ratio of 97.2% in the first quarter last year.
Craig Howie: The international current year Attritional loss ratio decreased three nine points to 52, 1% in the first quarter compared to 56.0% in the first quarter last year, which included the Baltimore Bridge laws.
Craig Howie: The expense ratio increased by 0.9 points to 39, 1% compared to 38, 2% in the first quarter last year.
Craig Howie: The increase in the expense ratio was primarily driven by increased profit commissions included in the acquisition expense ratio, partially offset by a lower other underwriting expense ratio.
Craig Howie: I will now turn to the Bermuda segment, which houses Hamilton re and Hamilton re U S entities that predominantly right our reinsurance business.
Craig Howie: For the first quarter of 2025, Bermuda gross premiums written grew to $473 million from $401 million an increase of 18%.
Craig Howie: The increase was primarily driven by new and existing business and casualty and property reinsurance classes, including nonrecurring reinstatement premiums related to the California wildfires.
Craig Howie: Bermuda had an underwriting loss of $59 million and a combined ratio of 122, 8% compared to underwriting income of $27 million and 85, 5% combined ratio in the first quarter last year.
Craig Howie: The increase in the combined ratio was primarily related to catastrophe losses in the quarter.
Craig Howie: Bermuda had $121 million of net catastrophe losses, primarily driven by the California wildfires of $131 million and partially offset by favorable prior year catastrophe development of $9 million. This compares to no net catastrophe losses in the first quarter of 2024.
Craig Howie: Sure.
Craig Howie: The Bermuda current year Attritional loss ratio decreased by six six points to 51, 8% in the first quarter compared to 58, 4% in the first quarter last year, which included the Baltimore Bridge loss.
Craig Howie: The Bermuda expense ratio increased by two three points to 26, 2% compared to 23, 9% in the first quarter of 2024 due to a change in business mix, specifically, an increase in quota share business and reduced performance based management fees.
Craig Howie: Actually offset by growth in the premium base.
Craig Howie: Now turning to investment income.
Craig Howie: Total net investment income for the first quarter was $167 million compared to investment income of $148 million in the first quarter of 2024.
Craig Howie: The fixed income portfolio short term investments and cash produced a gain of $64 million in the quarter compared to a gain of $5 million in the first quarter of 2024.
Craig Howie: As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio.
Craig Howie: The fixed income portfolio had a return of two 4% or $59 million and a new money yield of four 8% on investments purchased this quarter.
Craig Howie: The duration of the portfolio remains at three four years.
Craig Howie: The average yield to maturity on this portfolio was four 5% compared to four 7% at year end 2024.
Craig Howie: The average credit quality of the portfolio remains strong at double a three.
Craig Howie: The two Sigma Hamilton from produced a $104 million gain were five 5% for the first quarter of 2025 compared to a $143 million gain were eight 3% in the first quarter last year.
Craig Howie: The latest estimate we have for the two Sigma Hamilton from year to date performance was seven 9% through April 32025.
Craig Howie: The two Sigma Hamilton fund made up about 40% of our total investments, including cash investments at March 31, compared to 39% at December 31 2024.
Craig Howie: In the second quarter of 2024, we announced a $150 million share repurchase authorization by the Hamilton Board of directors. During the first quarter of 2025, we used $10 million of that authorization to repurchase shares that were priced below book value.
Craig Howie: With $112 million remaining under our share repurchase authorization, we are able to continue repurchasing shares.
Craig Howie: Knowing the book of business, all while maintaining our strong capital position even during times of uncertainty.
Craig Howie: Next I'll have some comments on our strong balance sheet.
Craig Howie: Total assets were $8 3 billion at March 31, 2025 up 7% from $7 $8 billion at year end 2024.
Craig Howie: Total investments and cash were $5 billion at March 31, an increase of 4% from the $4 $8 billion at year end 2024.
Craig Howie: Shareholders' equity for the group was $2 $4 billion at the end of the first quarter, which was a 3% increase from the $2 $3 billion at year end 2024.
Craig Howie: Our book value per share was $23 59 at March 31, 2025 up 3% from year end 2024.
Craig Howie: Thank you and with that we'll open up the call for your questions.
Speaker Change: To ask a question. Please press star followed by the number one on your telephone keypad. We ask that you. Please limit yourself to one question plus one follow up and then rejoin the queue for any additional questions.
Speaker Change: Our first question comes from Mike Zaremski from BMO. Please go ahead. Your line is open.
Mike Zaremski: Hey, good morning.
Speaker Change: Our first question.
Mike Zaremski: Maybe more broad question on.
Mike Zaremski: On the casualty line of business.
Speaker Change: Pina hurt.
Speaker Change: I heard your comments about the a M best upgrade.
Speaker Change: Which I, which I believe unlocks.
Speaker Change: On the casualty reinsurance side.
Speaker Change: Look at more business and it also sounded like you all were on top of that.
Speaker Change: Playing some offense.
Speaker Change: And that line of business to make maybe in both reinsurance and insurance.
Speaker Change: Curious.
Speaker Change: If you if you could offer any any maybe high level thoughts on.
Speaker Change: What loss trend assumptions, you and or your students are are are applying.
Speaker Change: Is it low.
Speaker Change: Low double digit in single digits I don't know if there's any context you can offer.
Speaker Change: Brought up social inflation.
Speaker Change: Earlier, it seems to still be kind of a key question, we get from from investors. That's why I asked.
Speaker Change: Okay.
Mike Zaremski: Great Mike what I'd, just start generically and then I'm going to get to that specific question at the end I think I'm going to start by saying we are.
Mike Zaremski: Very happy about the client and broker response to our a M best upgrade.
Mike Zaremski: And what we've seen as a result, both in terms of new business and the opportunity to upsize what were traditionally rather.
Mike Zaremski: All participations on casualty in the past.
Mike Zaremski: Just for some flavor, we grew 40 million of casualty premium in the first quarter that the predominant source of premium in the first quarter on the back of that Ambev upgrade predominantly casualty premium am.
Mike Zaremski: And what we're saying is that the market conditions remained very attractive double digit keeping place with trend for the lines that we're writing so I'm going to stay in those lines, we're seeing low to mid teens on our clients.
Mike Zaremski: Books.
Mike Zaremski: We're very very selective about the clients as I mentioned that we are targeting for casualty growth.
Mike Zaremski: And those parameters that I've set out about the underwriting culture, the claims culture and and specifically their willingness to retain a significant portion of their book are very key components to the clients that we are that we are partnering with here.
Mike Zaremski: So all in all we think that our the opportunity of this a M. Best upgrade are coming at a time, where underlying market conditions are strong on casualty and where others. Perhaps are still backing away because they may have been outsized gives us a very particular opportunity at this time.
Mike Zaremski: Okay.
Speaker Change: Got it that's help on kind of the pricing levels.
Mike Zaremski: Let me kind of back end, assuming loss cost is probably a little lower than that.
Switching gears a bit.
Mike Zaremski: Yeah.
Mike Zaremski: The overall combined ratio just to be clear.
Mike Zaremski: In line with.
Mike Zaremski: What consensus was expecting and I know, there's always kind of movement, an expense ratio an attritional loss ratio and it was good to see a lot of reserve releases too, but the underlying loss ratio was.
Mike Zaremski: A bit higher than expected consensus wise in both segments.
Mike Zaremski: I know that.
Mike Zaremski: And the mix I think international on casualty.
Mike Zaremski: It grew a lot I think in Bermuda, but doesn't it.
Mike Zaremski: Casualty didn't grow.
Mike Zaremski: A proportion that much international.
Speaker Change: I assumed casualty would have a higher attritional loss ratio. So just curious any any color or any guidance you want to offer on weather.
Speaker Change: One of the movement in the Attritional loss ratio, we should not run rate or or maybe its just quarterly.
Speaker Change: Normal fluctuations thanks.
Speaker Change: Hi, Mike This is Craig I'll take that question.
Speaker Change: Current year Attritional loss picks for the first quarter are in line with our expectations for sure it really depends on the mix of business.
Speaker Change: For example, writing more casualty or more pro rata business would carry a higher loss pick and Thats, what youre seeing here I also want to remind you you may recall that we increased our 2020 for casualty loss picks in the third quarter last year. When we saw indications of higher social inflation and that continues in our loss picks for 2025.
Speaker Change: What I would tell you again I would I would tell you to look at the full year of 2024 and loss ratios as a guide for how we expect our current book to perform.
Speaker Change: Okay got it helpful and I'll just sneak one last one in.
Speaker Change: Did you.
Speaker Change: You wont quantify the reinstatement premium level this quarter I don't feel like I saw it in the release.
Mike Zaremski: We did Mike we put it into the press release as well was $17 million.
Speaker Change: On a net basis between the two between reinsurance and insurance.
Mike Zaremski: With that thank you.
Speaker Change: Our next question comes from Thomas joined from K B W. Please go ahead. Your line is open.
Thomas: Hey, good morning, guys. Thanks for taking our questions.
Thomas: When you talk about the shift in the business mix can you talk about.
Thomas: How thats impacting the expense ratio it came in a little bit different than we were expecting and if you could break it down by perhaps the two pieces of that expense ratio that would be helpful. Thanks.
Speaker Change: Okay Thomas.
Speaker Change: What I would say to you from an overall perspective, it does impact your acquisition expenses.
Speaker Change: And Thats really where youre seeing this from a business mix perspective, the acquisition expenses went up for two reasons one is business mix.
Speaker Change: And two is profit commissions.
Speaker Change: Other words that better and better paid out that gets included in the acquisition expense ratio, but from a business mix standpoint, as I. Just said Bermuda you saw write more casualty business and more pro rata business. So both of which would have higher acquisition costs.
Speaker Change: And on the international side, I would point to something like property binders that would have a higher acquisition cost. So that is clearly in line with the business mix the change in business mix from in other underwriting expense ratio standpoint that is not the same.
Speaker Change: I would say to you is that is something that we have control over and as we continue to scale up our book.
Speaker Change: We would expect.
Speaker Change: Other underwriting expense ratio to continue to decline, which it has declined that ratio has declined to each and every year since 2019.
Speaker Change: Yeah.
Speaker Change: Okay got it.
Speaker Change: And then switching gears your comments sounded pretty positive on the casualty growth opportunity.
Speaker Change: When we listen to some of your peers across the insurance and reinsurance space.
Speaker Change: We hear instances in the amount of non renewals across various casualty businesses.
Speaker Change: When you feel like you're gaining market share in the casualty side is the way you get comfortable around winning that business is it price is it.
Speaker Change: A change in terms of conditions that what gives you conviction that the casualty business you guys are winning is indeed good business.
Speaker Change: Hi, there I'll take that so.
Speaker Change: So I think when you look at a number of our peers.
Speaker Change: Been around for a lot longer than we have so there.
Speaker Change: Firstly their exposure to those casualty classes and also the amount that they are.
Speaker Change: They have written.
Speaker Change: Significantly larger than ours, we only started really leaning in and again modestly into the casualty space.
Speaker Change: End of 2000, 22021, so and that's when Mark went underlying rates started picking up with.
Speaker Change: With the benefit of this a M best upgrade.
Speaker Change: We are it's very opportune because as some of our clients who have this longer tail exposure or our overlying are cutting back or backing out.
Speaker Change: We are being given the opportunity to see the business and again, we see a lot more business than we are actually right again, we have targeted the clients that we want to do business with in advance and those are the ones that we seek and try to do business with so ours is a very selective approach.
Speaker Change: <unk>.
Speaker Change: And again I think it's also important to note that even on some of this growth you're seeing it's not massive line sizes. We are we have a smaller line sizes on these account, but over a swath of accounts that gives us the balance so 1% to 2% share on somebody's quota share. So that's how we are getting comfortable.
Speaker Change: With with the growth at this time.
Speaker Change: Thanks, Dana and then this last one to sneak in just wanted to clarify the Tuesday, when I return I think the seven 9% was that.
Speaker Change: Year to date returns at an annualized return could you clarify what that number is referring to.
Speaker Change: That's our year to date return through the end of April so in other words it was five 5%.
Speaker Change: Through the end of March that number that we gave on the call was through the end of April.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead. Your line is open.
Elyse Greenspan: Hi, Thanks, good morning.
Elyse Greenspan: My first question is on the buyback like you guys bought back $10 million in the quarter. Obviously shares are still trading below book as you guys think about growth outlook. I think you mentioned peanut continuing to talk you know think you can guys can hit double digit topline growth as you think about that.
Elyse Greenspan: Pricing and competitive views as well and how.
Speaker Change: How do you think about just growth needs.
Speaker Change: Capital for growth needs I'm, sorry, and balancing you know incremental capital return with where your shares are trading.
Yeah.
Speaker Change: Hi, Luis this is Craig. Thanks for the question first of all I would say, yes. The buybacks this period were.
Speaker Change: Only $10 million and when I say only $10 million. It was a very short open window for us during this period because of the year end financials coming out.
And then just having a very short open window.
Speaker Change: We still have plenty of capital for both growth as well as continuing to buyback shares even in an uncertain market places like this and.
Speaker Change: And especially at the valuation of where our shares traded today, so don't see any constraints on our growth or our buyback side.
Speaker Change: And then you guys had mentioned.
Speaker Change: I think having another $80 million this year right from the.
Speaker Change: The am best upgrade.
Speaker Change: In terms of premiums what did you guys see in the Q1 and is the expectation still that we'll see.
Speaker Change: $80 million this year.
Speaker Change: Thanks, Louise I think I mentioned, we wrote an additional but we track the new business or additional line sizes that are related to our upgrade and in the first quarter. I think I mentioned, we did 40 million. That's predominantly casualty there is some specialty class in there as well, but it's not.
Speaker Change: A major part of that's a $40 million in the first quarter. So I guess all I can say to that is that we are comfortable with the previous guidance, we gave of $80 million for the year based on that for sure.
Speaker Change: And then one last one on reserves Craig you highlighted by the <unk>.
Speaker Change: <unk> development in the quarter.
Speaker Change: I guess two things was were there any adverse development right that the releases offset or was it just releases in and then what what accident years was that concentrated in.
Speaker Change: So first of all it was predominantly casualty.
Speaker Change: Sorry permanently property and specialty that we released there were some casualty reserves roughly $1 million that were unfavorable during the quarter, but that was not what was driving the favorable development for sure.
Speaker Change: What you what we did see this quarter you may recall, we don't really complete any of our reserve studies in the first quarter.
Speaker Change: What we saw were a couple of claims that were settled.
Speaker Change: That were settled for less than what we had reserved for.
Speaker Change: An example was one of the claims that are about half of the industry loss estimates. So we were able to reduce our reserves upon that settlement and reflect that in our favorable development in the quarter. That's essentially what came through from a catastrophe standpoint.
Speaker Change: We also went back and looked at Hurricane Ian.
Speaker Change: That review was not completed in the fourth quarter with the rest of our property reviews that were done in the fourth quarter of 2024.
Speaker Change: When we review that in the first quarter, we determined that we could adjust or lower that reserve estimate, but we do still hold IV in order for that event that happened in 2022 hurricane there.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mike Zaremski from BMO. Please go ahead. Your line is open.
Speaker Change: Okay, Great just a.
Speaker Change: Couple of quick follow ups.
Craig.
Speaker Change: The short window for buybacks.
Speaker Change: I'm just curious.
Speaker Change: Hamilton groups window.
Speaker Change: Later than most companies.
Speaker Change: If it is if you could remind us kind of the technicalities around when the 10-K comes out or how that works.
Speaker Change: Yes, it's really when we released our 10 at the time, we released our 10-K and after we had our board meeting was later in the process than some of our other peers. So maybe a couple of week shorter.
Speaker Change: That will.
Speaker Change: That will change in the future number one and the reason I say that as is our board.
Speaker Change: It's we're set prior to becoming a public company. So we were just a little bit later in the process than many of our peers and we actually filed in the first week of March was when we filed the K what I would say to you now is we are an accelerated filer. So in other words does those reports are going faster.
Speaker Change: And we will have a longer open window to be able to buy back those shares.
Speaker Change: Okay got it and one more probably for you Craig.
Speaker Change: On the.
Speaker Change: Two Sigma returns.
Speaker Change: Or are you are you apprised of those returns kind of on a monthly basis or do you find out like towards the end of the quarter or after the quarter or is it is it I'm just curious on that kind of how those returns are shared with that thank.
Speaker Change: You all.
Speaker Change: Yes, we have those returns on a monthly basis, which is why I gave.
Speaker Change: My remarks on the call I gave the number at the end of April because that was the latest information that we had on the two Sigma account. That's that's the reason we give that to you.
Speaker Change: Okay.
Speaker Change: Perfect. Thank you.
Speaker Change: Our next question comes from Matt <unk> from citizens. Please go ahead. Your line is open.
Matt: Thanks, Good morning.
Speaker Change: Quick question on the <unk>.
Matt: The accident year loss ratio.
Matt: There were a couple a few large risk losses in the quarter, we put about another call agenda American Airlines crash energy sector item is there any noise from weather.
Matt: One of those or others.
Matt: A large risk losses in those numbers this quarter or are they.
Matt: Pretty clean to avoid that.
Matt: Hi, Matt.
Speaker Change: I would say certainly we have exposure to those losses that you have heard from from other people with respect to aviation we didn't have any significant aviation losses this quarter.
Matt: They were included in our current Attritional loss picks.
Matt: Just as a reminder, we write aviation reinsurance, we do not write aviation insurance.
Matt: As far as the other large losses the fires, yes, again exposure to those events, but manageable and again included in our current year Attritional loss pegs.
Matt: Great. Thank you I appreciate it.
Matt: Yeah.
Matt: Thank you that will conclude our question and answer session for today now I'll turn the call back over to Panna Aldo.
Panna Aldo: Thank you again for being with US today, and we look forward to speaking to you again soon.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.