Hamilton Insurance (HG) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights Consolidated Highlights – Second Quarter 2025 Hamilton reported a strong second quarter with net income of $187.4 million, driven by robust underwriting performance, reflected in a combined ratio of 86.8%, and significant net investment income of $148.7 million. Gross premiums written grew by 18.0% year-over-year, and the company returned value to shareholders through $35.0 million in share repurchases Q2 2025 Key Financial Metrics | Metric | Value | Change vs Q2 2024 | | :--- | :--- | :--- | | Net Income | $187.4 million | +$56.3 million | | Diluted EPS | $1.79 | +$0.59 | | Gross Premiums Written | $712.0 million | +18.0% | | Net Premiums Earned | $511.2 million | +22.1% | | Combined Ratio | 86.8% | +2.4 pts | | Underwriting Income | $67.5 million | +$2.2 million | | Annualized ROAE | 30.2% | +6.6 pts | - Net investment income for the quarter was $148.7 million, with significant contributions from both the Two Sigma Hamilton Fund ($87.1 million) and the fixed income portfolio ($61.6 million)[5] - The company repurchased $35.0 million of its common shares during the second quarter of 2025[5] Consolidated Highlights – Year-to-Date 2025 For the first six months of 2025, Hamilton's net income was $268.3 million. Performance was significantly impacted by $142.8 million in net California wildfire losses, which drove the combined ratio to 99.1%. Despite this, gross premiums written increased by 17.4% to $1.6 billion, and book value per share grew 11.3% from year-end 2024 YTD 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Income | $268.3 million | | Diluted EPS | $2.56 | | Gross Premiums Written | $1.6 billion | | Combined Ratio | 99.1% | | Underwriting Income | $9.2 million | | Annualized ROAE | 22.0% | - Underwriting results for the year-to-date period were heavily impacted by California wildfire losses of $142.8 million, net of reinsurance and reinstatement premiums[5] - Book value per share increased to $25.55, an 11.3% increase compared to December 31, 2024[5] - Total share repurchases for the year reached $45.3 million[5] Underwriting Results Consolidated Underwriting Results The company's consolidated underwriting results show strong premium growth in both Q2 and YTD. However, the YTD underwriting income of $9.2 million was significantly lower than the prior year, primarily due to $152.0 million in catastrophe losses from California wildfires and severe storms, which increased the combined ratio to 99.1% Second Quarter 2025 In Q2 2025, consolidated gross premiums written increased by 18.0% to $712.0 million, with growth in both the International and Bermuda segments. Underwriting income remained stable at $67.5 million, while the combined ratio increased slightly by 2.4 points to 86.8%, driven by a higher acquisition cost ratio and a change in business mix Q2 2025 Consolidated Underwriting Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $712.0M | $603.3M | +18.0% | | Net Premiums Earned | $511.2M | $418.8M | +22.1% | | Underwriting Income | $67.5M | $65.3M | +3.3% | | Combined Ratio | 86.8% | 84.4% | +2.4 pts | - The attritional loss ratio increased by 1.4 points to 53.0%, primarily due to a change in business mix, including more casualty reinsurance business[6] - Net catastrophe losses for the quarter were minimal at $1.5 million, driven by severe convective storms but largely offset by favorable prior year development[6] Year-to-Date 2025 For the first half of 2025, consolidated gross premiums written grew 17.4% to $1.6 billion. However, underwriting income fell sharply to $9.2 million from $97.8 million in the prior year period. This was due to significant catastrophe losses of $152.0 million, primarily from California wildfires, which pushed the combined ratio up by 11.2 points to 99.1% YTD 2025 Consolidated Underwriting Performance | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $1.56B | $1.33B | +17.4% | | Net Premiums Earned | $1.01B | $804.1M | +25.6% | | Underwriting Income | $9.2M | $97.8M | -90.6% | | Combined Ratio | 99.1% | 87.9% | +11.2 pts | - The year-to-date catastrophe loss ratio was 16.8%, driven by California wildfires ($159.7 million) and severe convective storms ($9.9 million), partially offset by favorable prior year development[10] - The current year attritional loss ratio improved by 1.8 points to 52.5%, benefiting from a reduced impact of large losses compared to the 2024 period, which included the Baltimore Bridge collapse[10] Segment Underwriting Results Both the International and Bermuda segments achieved double-digit growth in gross premiums written for Q2 and YTD. The International segment improved its combined ratio in Q2 to 89.3%. The Bermuda segment's YTD results were heavily impacted by California wildfire losses, resulting in an underwriting loss and a combined ratio of 103.6% International Segment - Q2 2025 The International Segment's gross premiums written grew 10.6% to $344.8 million in Q2 2025, driven by property, casualty, and specialty lines. Underwriting income increased to $27.1 million, and the combined ratio improved by 1.7 points to 89.3%, aided by a lower loss ratio International Segment Q2 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $344.8M | $311.6M | +10.6% | | Underwriting Income | $27.1M | $19.4M | +39.6% | | Combined Ratio | 89.3% | 91.0% | -1.7 pts | - The loss and loss adjustment expense ratio decreased by 3.0 points, driven by favorable prior year reserve development of $7.7 million in property, specialty, and casualty classes[8] International Segment - YTD 2025 For the first half of 2025, the International Segment's gross premiums written increased by 13.0% to $714.8 million. Underwriting income was stable at $27.9 million, but the combined ratio slightly increased to 94.4% due to a 6.2 point impact from catastrophe losses, primarily from California wildfires International Segment YTD Performance | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $714.8M | $632.5M | +13.0% | | Underwriting Income | $27.9M | $24.7M | +12.9% | | Combined Ratio | 94.4% | 94.0% | +0.4 pts | - Catastrophe losses, net of reinsurance, were $30.2 million for the period, driven by California wildfires and severe convective storms[12] Bermuda Segment - Q2 2025 The Bermuda Segment reported strong premium growth of 25.9% to $367.2 million in Q2 2025, led by casualty and property reinsurance. However, underwriting income decreased to $40.3 million from $45.9 million, and the combined ratio rose 6.9 points to 84.3%, primarily due to a higher attritional loss ratio from a business mix shift and a large specialty loss Bermuda Segment Q2 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $367.2M | $291.7M | +25.9% | | Underwriting Income | $40.3M | $45.9M | -12.1% | | Combined Ratio | 84.3% | 77.4% | +6.9 pts | - The current year attritional loss ratio increased by 3.7 points to 54.2%, driven by a change in business mix towards casualty reinsurance and a large specialty reinsurance loss[9] Bermuda Segment - YTD 2025 Year-to-date, the Bermuda Segment's gross premiums written grew 21.3% to $840.6 million. The segment recorded an underwriting loss of $18.7 million, a significant reversal from a $73.1 million gain in the prior year. This was caused by $121.9 million in catastrophe losses, mainly from the California wildfires, which drove the combined ratio up 22.3 points to 103.6% Bermuda Segment YTD Performance | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Premiums Written | $840.6M | $692.8M | +21.3% | | Underwriting Income (Loss) | $(18.7)M | $73.1M | N/A | | Combined Ratio | 103.6% | 81.3% | +22.3 pts | - Catastrophe losses for the period were $121.9 million, primarily driven by the California wildfires and severe convective storms[15] Investments and Shareholders' Equity Financial Position as of June 30, 2025 As of June 30, 2025, Hamilton's financial position strengthened, with total invested assets and cash increasing to $5.3 billion. Total shareholders' equity grew to $2.6 billion, and book value per share rose by 11.3% to $25.55 since year-end 2024 Key Balance Sheet Items | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Invested Assets and Cash | $5.3 billion | $4.8 billion | | Total Shareholders' Equity | $2.6 billion | $2.3 billion | | Book Value Per Share | $25.55 | $22.95 | Financial Statements Consolidated Balance Sheet The consolidated balance sheet as of June 30, 2025, shows total assets of $8.91 billion, up from $7.80 billion at year-end 2024. This growth was driven by increases in total investments and premiums receivable. Total liabilities also increased to $6.29 billion, primarily due to higher reserves for losses and unearned premiums, while total shareholders' equity grew to $2.56 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Investments | $4,459,380 | $3,814,353 | | Cash and cash equivalents | $985,649 | $996,493 | | Total Assets | $8,913,050 | $7,796,033 | | Reserve for losses | $3,984,281 | $3,532,491 | | Unearned premiums | $1,414,344 | $1,122,277 | | Total Liabilities | $6,285,167 | $5,467,196 | | Total Shareholders' Equity | $2,558,591 | $2,328,709 | Consolidated Statement of Operations For the six months ended June 30, 2025, total revenues increased to $1.51 billion from $1.25 billion in the prior year, driven by higher net premiums earned and investment gains. However, a significant increase in losses and loss adjustment expenses to $665.2 million, largely due to catastrophes, led to a decrease in net income attributable to common shareholders to $268.3 million from $288.3 million year-over-year Statement of Operations Summary - Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Net Premiums Earned | $1,010,091 | $804,067 | | Total Revenues | $1,509,550 | $1,246,586 | | Losses and loss adjustment expenses | $665,163 | $446,846 | | Total Expenses | $1,054,615 | $765,783 | | Net Income (attributable to common shareholders) | $268,288 | $288,259 | Non-GAAP Financial Measures Reconciliation Operating Income Reconciliation The company provides a reconciliation of GAAP Net Income to non-GAAP Operating Income, which excludes net realized and unrealized gains/losses on certain investments and foreign exchange effects. For Q2 2025, Operating Income was $161.8 million compared to GAAP Net Income of $187.4 million. For YTD 2025, Operating Income was $211.2 million versus GAAP Net Income of $268.3 million Reconciliation of Net Income to Operating Income (in thousands) | Description | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Net income attributable to common shareholders (GAAP) | $187,415 | $268,288 | | Adjustments for investment gains/losses & FX | $(25,612) | $(57,097) | | Operating income attributable to common shareholders (Non-GAAP) | $161,803 | $211,191 | - The company believes operating income is a meaningful measure for evaluating performance as it removes the volatility of investment market fluctuations and foreign exchange movements[26][27] Underwriting Income Reconciliation Underwriting income, a non-GAAP measure, is reconciled to GAAP net income. It is calculated as net premiums earned less losses, acquisition costs, and other underwriting expenses. For Q2 2025, underwriting income was $67.5 million, and for YTD 2025, it was $9.2 million. This measure focuses on the core underwriting performance separate from investment and corporate activities - Underwriting income is defined as net premiums earned less losses and loss adjustment expenses, acquisition costs, and other underwriting expenses. It excludes investment results, corporate expenses, and taxes to focus on core underwriting profitability[30] Reconciliation of Underwriting Income to Net Income (in thousands) | Description | Q2 2025 | YTD 2025 | | :--- | :--- | :--- | | Underwriting income (loss) (Non-GAAP) | $67,459 | $9,199 | | Total net investment gains/income | $229,101 | $496,822 | | Corporate, interest, tax & other expenses | $(28,774) | $(56,968) | | Net income (loss), prior to non-controlling interest (GAAP) | $267,786 | $449,053 | Other Non-GAAP Definitions The report defines several key non-GAAP ratios used to measure performance. These include various loss ratios (attritional, catastrophe), the other underwriting expense ratio, and the combined ratio, which is a primary indicator of underwriting profitability - The Combined Ratio is the sum of the loss ratio, acquisition cost ratio, and other underwriting expense ratio. A ratio below 100% indicates an underwriting profit[40] - Loss Ratios are broken down into four components: Attritional (current and prior year) and Catastrophe (current and prior year) to provide more detail on loss sources[38][39] - Other Underwriting Expenses are general and administrative expenses directly attributable to underwriting operations, excluding corporate holding company costs[34][35] Forward-Looking Statements and Risk Factors Forward-Looking Statements and Risk Factors This section contains standard safe harbor language, cautioning that forward-looking statements are not guarantees of future performance and are subject to numerous risks and uncertainties. It refers investors to the company's Form 10-K for a detailed discussion of risk factors, including unpredictable catastrophic events, competition, reserve adequacy, and macroeconomic conditions - The company cautions that statements about strategy, plans, and projections are forward-looking and subject to change, with no assurance that management's expectations will be achieved[41] - Key risks highlighted include: unpredictable catastrophic events and climate change, competition, adequacy of loss reserves, cybersecurity threats, and the cyclical nature of the insurance business[42] - Additional risks involve the performance of the Two Sigma Hamilton Fund, regulatory changes, dependence on key executives, and potential tax implications[46] Corporate Information Conference Call and Additional Information Hamilton will host a conference call on August 7, 2025, at 9:00 a.m. Eastern Time to discuss the financial results. A live webcast and supplementary financial information will be available on the company's investor relations website - A conference call to discuss Q2 2025 financial results is scheduled for August 7, 2025, at 9:00 a.m. ET[16] - A live audio webcast and supplementary materials will be accessible through the investor portal on the company's website[17][18]