Hamilton Insurance Group (HG) Q1 2025 Earnings Call May 08, 2025 09:00 AM ET Speaker0 Hello, and welcome to the Hamilton Insurance Group Earnings Conference Call. As a reminder, this call is being webcast and will also be available for replay with links on the Hamilton Investor Relations website. I'd now like to turn the call over to Darian Nifferatos, Vice President, Investor Relations and Finance. Please go ahead. Speaker1 Thanks, operator. Hi, everyone, and welcome to the Hamilton Insurance Group First Q ...

Financial Data and Key Metrics Changes - The company reported net income of $418 million or $1.04 per share, with an annualized return on beginning of year equity of 19.9% [12] - Operating earnings were $405 million or $1.01 per share, yielding an annualized return on beginning of year equity of 19.3% [13] - The calendar year combined ratio was 90.9%, with the current accident year combined ratio excluding catastrophic losses at 87.2% [13] - Stockholders' equity increased by more than $500 million or 6.2% over the beginning of the year, reaching a record $8.9 billion [21] Business Line Data and Key Metrics Changes - The insurance segment grew net premiums written to a record of more than $3.1 billion, with a 10.2% increase to $2.7 billion in the insurance segment [16] - The Reinsurance and Monoline Access segment grew 8.2% to a record quarter of $439 million, with growth in property and excess workers' compensation [16] - The expense ratio improved to 27.8%, benefiting from the growth in net premiums earned [15] Market Data and Key Metrics Changes - The company experienced significant industry-wide catastrophic activity, particularly from California wildfires, impacting the loss ratio by 3.7% or $111 million [14] - The current accident year loss ratio excluding catastrophic losses was 59.4%, representing a 30 basis point increase over the prior year [14] Company Strategy and Development Direction - The company aims to create value and emphasizes the importance of avoiding backward steps in value creation [9] - Management highlighted the resilience of the business model, indicating it is built to perform well in both favorable and challenging environments [8] - The company is focused on maintaining rate adequacy while growing the business, particularly in specialty workers' compensation and property lines [24][27] Management's Comments on Operating Environment and Future Outlook - Management noted the current environment is characterized by volatility across political, social, economic, and natural disaster fronts [6][7] - The company remains optimistic about the balance of 2025, indicating strong performance despite challenges [37] - Management is closely monitoring the impact of tariffs on loss costs and pricing strategies [30][61] Other Important Information - The company anticipates investment fund income may be at the lower end of the quarterly range of $10 million to $20 million in the next quarter due to recent market volatility [18] - The credit quality of the investment portfolio remains strong at AA minus, with a duration increase from 2.6 years to 2.7 years [19] Q&A Session Summary Question: What areas contributed to the short tail lines being up 13%? - Management indicated opportunities in property lines and accident and health (A and H) space as significant drivers [41] Question: Can you elaborate on the property pricing trends? - Management noted that while there is competition, they continue to see opportunities to push rates in the property market [44] Question: What is the outlook for reinsurance combined ratios? - Management expressed satisfaction with the current performance but acknowledged uncertainty about future conditions [46] Question: Can you provide details on reserve movements in the insurance segment? - The insurance segment experienced $11 million unfavorable prior year development, while reinsurance was favorable by $12 million [53] Question: How are tariffs impacting loss ratios? - Management stated that tariffs could potentially drive up loss costs, but quantifying the impact is premature at this time [85] Question: What is the growth outlook for specialty workers' compensation? - Management indicated that they see continued growth opportunities in specialty workers' compensation due to less competition [92] Question: How does the company view the impact of social inflation and pricing levels? - Management is encouraged by recent discipline in the market but remains cautious about future pricing trends [79]