Hamilton Insurance (US:HG)2025-05-08 14:02Financial Data and Key Metrics Changes - Hamilton Insurance Group reported a net income of $81 million for Q1 2025, representing a 13.7% annualized return on average equity, compared to $157 million and 29.5% in Q1 2024 [19][22] - The gross premiums written increased by 17% to $843 million from $722 million year-over-year [21][28] - The combined ratio rose to 111.6% from 91.5% in the prior year, primarily due to catastrophe losses [22][27] - The attritional loss ratio decreased by 5.3 points to 51.9% compared to the first quarter last year [23][28] Business Line Data and Key Metrics Changes - The Bermuda segment's gross premiums written grew by 18% to $473 million, driven by casualty and property classes [27] - The International segment's gross premiums written increased by 15% to $370 million, primarily due to growth in property, casualty, and specialty insurance classes [25][26] - The Bermuda segment reported an underwriting loss of $59 million, while the International segment had an underwriting income of $1 million [25][27] Market Data and Key Metrics Changes - The catastrophe loss ratio for the quarter was 30.2%, with net losses from California wildfires estimated at $143 million [5][22] - The company noted that the property cat business remains attractively priced with improved terms and conditions [9][15] Company Strategy and Development Direction - Hamilton is focusing on selective growth in the casualty line, leveraging its AM Best rating upgrade to capture new business opportunities [8][10] - The company aims to maintain a disciplined approach to underwriting, particularly in casualty, by building strong relationships with key clients [10][54] - Management expressed confidence in navigating economic uncertainties and maintaining double-digit growth in the top line [16][18] Management Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic and geopolitical uncertainties, including tariffs and potential recession impacts, but remains optimistic about the insurance market's resilience [16][18] - The company anticipates manageable exposure to loss cost inflation, particularly in property lines, and is prepared to adjust its strategies accordingly [17][18] Other Important Information - Total net investment income for Q1 was $167 million, up from $148 million in the same quarter last year [28][29] - The company repurchased $10 million of shares during the quarter, with $112 million remaining under its share repurchase authorization [30][31] Q&A Session Summary Question: Insights on casualty line of business and loss trend assumptions - Management noted strong client response to the AM Best upgrade, with casualty premium growth of $40 million in Q1, indicating low to mid-teens loss trends [37][38] Question: Clarification on combined ratio and attritional loss ratio movements - Management explained that current year attritional loss picks align with expectations, influenced by the mix of business, and advised looking at full-year 2024 loss ratios for guidance [40][42] Question: Impact of business mix on expense ratio - Management indicated that the increase in acquisition expenses was due to a shift in business mix and profit commissions, while other underwriting expenses are expected to decline as the book scales [48][50] Question: Clarification on Two Sigma returns - Management confirmed that the Two Sigma return of 7.9% was year-to-date through April, with a 5.5% return reported through March [56][70] Question: Buyback strategy and growth outlook - Management stated that there are no constraints on growth or buybacks, emphasizing sufficient capital for both initiatives [60][61]