Hamilton Insurance (HG) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Results Consolidated Highlights – First Quarter Hamilton reported $80.9 million net income and 13.7% ROAE, despite significant wildfire losses leading to a 111.6% combined ratio - Achieved net income of $81 million despite industry insured catastrophe losses being well above the historical average[2] Q1 2025 Key Financial Metrics | Metric | Value | Change vs Q1 2024 | | :--- | :--- | :--- | | Net Income | $80.9 million | - | | Operating Income | $49.4 million | - | | Gross Premiums Written | $843.3 million | +16.8% | | Net Premiums Earned | $498.9 million | +29.5% | | Combined Ratio | 111.6% | - | | Underwriting Loss | $58.3 million | - | | Annualized ROAE | 13.7% | - | | Book Value Per Share | $23.59 | +2.8% vs Dec 31, 2024 | - The company repurchased $10.3 million of its common shares in the first quarter of 2025[3] Consolidated Financial Results Analysis Q1 2025 consolidated results show a profitability decline due to a $58.3 million underwriting loss from $150.5 million wildfire losses, despite premium growth Consolidated Results Comparison (Q1 2025 vs Q1 2024) | ($ in millions, except ratios) | March 31, 2025 | March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gross premiums written | $843.3 million | $721.9 million | $121.4 million | | Net premiums earned | $498.9 million | $385.3 million | $113.6 million | | Underwriting income (loss) | $(58.3) million | $32.5 million | $(90.8) million | | Net income | $80.9 million | $157.2 million | $(76.3) million | | Combined ratio | 111.6% | 91.5% | 20.1 pts | - Catastrophe losses, net of reinsurance, were $150.5 million, driven by the California wildfires ($159.7 million), partially offset by favorable prior year development[4] - The current year attritional loss ratio improved by 5.3 points to 51.9%, mainly due to the absence of large losses comparable to the Francis Scott Key Baltimore Bridge collapse in Q1 2024[4] - Gross premiums written increased by 16.8%, with growth of 15.3% in the International Segment and 18.0% in the Bermuda Segment[4] Segment Performance International Segment International Segment gross premiums grew 15.3% to $370.0 million, but underwriting income fell to $0.8 million due to $29.0 million wildfire losses International Segment Results (Q1 2025 vs Q1 2024) | ($ in millions, except ratios) | March 31, 2025 | March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gross premiums written | $370.0 million | $320.8 million | $49.1 million | | Underwriting income (loss) | $0.8 million | $5.3 million | $(4.5) million | | Combined ratio | 99.7% | 97.2% | 2.5 pts | - The current year attritional loss ratio improved by 3.9 points to 52.1%, mainly due to the absence of large losses compared to Q1 2024, which was impacted by the Baltimore Bridge collapse[5] - The segment incurred $29.0 million in catastrophe losses from the California wildfires[5] Bermuda Segment Bermuda Segment gross premiums grew 18.0% to $473.3 million, but incurred a $59.1 million underwriting loss due to $121.4 million wildfire losses Bermuda Segment Results (Q1 2025 vs Q1 2024) | ($ in millions, except ratios) | March 31, 2025 | March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Gross premiums written | $473.3 million | $401.1 million | $72.2 million | | Underwriting income (loss) | $(59.1) million | $27.2 million | $(86.3) million | | Combined ratio | 122.8% | 85.5% | 37.3 pts | - Gross premiums written growth was driven by new and existing business in casualty and property reinsurance classes, including non-recurring reinstatement premiums from the wildfires[8] - Catastrophe losses were $121.4 million, primarily driven by the California wildfires[8] Financial Position and Statements Investments and Shareholders' Equity As of March 31, 2025, total invested assets and cash increased to $5.0 billion, with shareholders' equity reaching $2.4 billion Key Balance Sheet Items (as of March 31, 2025) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total invested assets and cash | $5.0 billion | $4.8 billion | | Total shareholders' equity | $2.4 billion | $2.3 billion | | Book value per share | $23.59 | $22.95 | Consolidated Balance Sheet As of March 31, 2025, total assets grew to $8.34 billion, driven by investments, while total liabilities and shareholders' equity also increased Balance Sheet Summary | ($ in billions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $4.17 billion | $3.81 billion | | Total assets | $8.34 billion | $7.80 billion | | Total liabilities | $5.90 billion | $5.47 billion | | Total shareholders' equity | $2.40 billion | $2.33 billion | Consolidated Statement of Operations Q1 2025 net premiums earned grew 29.5% to $498.9 million, but increased losses led to net income decreasing to $80.9 million Statement of Operations Summary | ($ in millions, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net premiums earned | $498.9 million | $385.3 million | | Total revenues | $768.8 million | $658.6 million | | Losses and loss adjustment expenses | $395.2 million | $232.4 million | | Net income attributable to common shareholders | $80.9 million | $157.2 million | | Diluted income per share | $0.77 | $1.38 | Non-GAAP Financial Measures Reconciliation of Operating Income Operating income, a non-GAAP measure, decreased to $49.4 million in Q1 2025, reflecting adjustments for investment gains/losses and foreign exchange - Operating income is a non-GAAP measure that excludes net realized and unrealized gains/losses on fixed maturity and short-term investments, and net foreign exchange gains/losses from GAAP net income[19] Reconciliation of Net Income to Operating Income | ($ in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income attributable to common shareholders | $80.9 million | $157.2 million | | Adjustments (Investments & FX) | $(31.5) million | $18.1 million | | Operating income attributable to common shareholders | $49.4 million | $175.2 million | Reconciliation of Underwriting Income (Loss) Underwriting income (loss), a non-GAAP measure, shifted to a $58.3 million loss in Q1 2025, reflecting core insurance segment performance - Underwriting income (loss) is calculated on a pre-tax basis as net premiums earned less losses, acquisition costs, and other underwriting expenses to focus on the core performance of the reportable segments[24] Underwriting Income (Loss) Reconciliation to Net Income | ($ in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Underwriting income (loss) | $(58.3) million | $32.5 million | | Total net investment results | $267.7 million | $268.0 million | | Corporate, interest & other expenses | $(25.1) million | $(23.1) million | | Income tax (expense) benefit | $(3.2) million | $(0.6) million | | Net income (loss), prior to non-controlling interest | $181.3 million | $277.3 million | Other Non-GAAP Definitions This section defines non-GAAP metrics like 'Other Underwriting Expenses,' 'Third Party Fee Income,' and the 'Combined Ratio' for performance clarity - Third Party Fee Income is primarily comprised of management services fees from the International Segment and performance-based fees from the Bermuda Segment[26] - Other Underwriting Expenses are general and administrative expenses directly attributable to underwriting operations, excluding holding company costs[28][29] - The Combined Ratio is the sum of the loss ratio, acquisition cost ratio, and other underwriting expense ratio, serving as a key measure of underwriting profitability[34] Additional Information and Disclosures Conference Call Information A conference call and webcast are scheduled for May 8, 2025, at 9:00 a.m. ET to discuss Q1 financial results - A conference call to discuss financial results is scheduled for Thursday, May 8, 2025, at 9:00 a.m. Eastern Time[9] - A live audio webcast and supplementary financial information will be accessible through the Investors portal on the company's website[10][11] Forward-Looking Statements & Risk Factors Forward-looking statements are subject to risks including catastrophic events, climate change, competition, and investment portfolio performance - Forward-looking statements are subject to risks and uncertainties and are not guarantees of future performance[35] - Key risk factors include unpredictable catastrophic events, global climate change, and emerging claim/coverage issues[36] - The company faces risks related to its investment strategy, including its inability to control allocations to or performance of the Two Sigma Hamilton Fund[40] - Other cited risks include the cyclical nature of the insurance business, competition, cybersecurity threats, and regulatory changes[36]