Hamilton Reports 2024 Second Quarter Results

Net Income of $131 million; Seven Consecutive Quarters of Underwriting Income

Hamilton Insurance Group, Ltd. (NYSE: HG; “Hamilton” or “the Company”) today announced financial results for the second quarter ended June 30, 2024.

Commenting on the financial results, Pina Albo, CEO of Hamilton, said:

“This was an outstanding quarter for Hamilton by any metric. We reported $131.1 million of net income, equating to an annualized return on average equity of 23.6%. We recorded an all-time low combined ratio of 84.4%, had strong net investment income of $95.7 million, and continued our targeted growth in this favorable market environment.

I am exceptionally proud of the Hamilton team for remaining laser focused on underwriting profitability and strategic growth, as well as realizing the objectives we shared with investors in the context of our IPO in November of last year.”

Consolidated Highlights – Second Quarter

• Net income of $131.1 million, or $1.20 per diluted share;
• Annualized return on average equity of 23.6%;
• Gross premiums written of $603.3 million, an increase of 19.5% compared to the second quarter of 2023;
• Net premiums earned of $418.8 million, an increase of 26.3% compared to the second quarter of 2023;
• Combined ratio of 84.4%;
• Underwriting income of $65.3 million;
• Net investment income of $95.7 million, comprised of Two Sigma Hamilton Fund returns of $75.9 million, and fixed income, short term, cash and cash equivalent returns of $19.8 million;
• Corporate expenses of $16.3 million, which includes $2.5 million of compensation costs related to the Value Appreciation Pool; and
• On May 8, 2024, the Company entered into an agreement to repurchase 9,124,729 Class A common shares at $12.00 per share. The total purchase price was $109.5 million.

Consolidated Highlights – Year to Date

• Net income of $288.3 million;
• Annualized return on average equity of 26.9%;
• Gross premiums written of $1,325.2 million, an increase of 27.0% compared to the same period in 2023;
• Net premiums earned of $804.1 million, an increase of 30.7% compared to the same period in 2023;
• Combined ratio of 87.9%;
• Underwriting income of $97.8 million;
• Net investment income of $243.5 million comprised of Two Sigma Hamilton Fund returns of $218.5 million, and fixed income, short term and cash and cash equivalents returns of $25.0 million;
• Corporate expenses of $27.8 million, which includes $6.2 million of compensation costs related to the Value Appreciation Pool; and
• Book value per share of $21.96, an increase of 18.2% compared to December 31, 2023.

Consolidated Underwriting Results – Second Quarter

 

For the Three Months Ended

($ in thousands, except for per share amounts and percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

603,304

 

 

$

504,960

 

 

$

98,344

Net premiums written

 

475,068

 

 

 

384,708

 

 

 

90,360

Net premiums earned

 

418,764

 

 

 

331,460

 

 

 

87,304

Underwriting income (loss)

$

65,299

 

 

$

34,894

 

 

$

30,405

Combined ratio

 

84.4

%

 

 

89.5

%

 

(5.1 pts)

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

131,085

 

 

$

36,787

 

 

$

94,298

Income (loss) per share attributable to common shareholders - diluted

$

1.20

 

 

$

0.35

 

 

 

Book value per common share

$

21.96

 

 

$

16.90

 

 

 

Change in book value per common share

 

10.4

%

 

 

2.1

%

 

 

 

 

 

 

 

 

Return on average common equity - annualized

 

23.6

%

 

 

8.5

%

 

 

 

For the Three Months Ended

Key Ratios

June 30, 2024

 

June 30, 2023

 

Change

Attritional loss ratio - current year

51.6

%

 

51.0

%

 

0.6 pts

Attritional loss ratio - prior year

(0.4

%)

 

(1.6

%)

 

1.2 pts

Catastrophe loss ratio - current year

0.0

%

 

5.0

%

 

(5.0 pts)

Catastrophe loss ratio - prior year

0.0

%

 

(0.3

%)

 

0.3 pts

Loss and loss adjustment expense ratio

51.2

%

 

54.1

%

 

(2.9 pts)

Acquisition cost ratio

23.0

%

 

23.2

%

 

(0.2 pts)

Other underwriting expense ratio

10.2

%

 

12.2

%

 

(2.0 pts)

Combined ratio

84.4

%

 

89.5

%

 

(5.1 pts)

• Gross premiums written increased by $98.3 million, or 19.5%, to $603.3 million with an increase of $33.8 million, or 12.2%, in the International Segment, and $64.5 million, or 28.4%, in the Bermuda Segment.
• Net premiums written increased by $90.4 million, or 23.5%, to $475.1 million with an increase of $37.3 million, or 18.9%, in the International Segment, and $53.1 million, or 28.3%, in the Bermuda Segment.
• Net premiums earned increased by $87.3 million, or 26.3%, to $418.8 million with an increase of $39.0 million, or 22.1%, in the International Segment, and $48.3 million, or 31.2%, in the Bermuda Segment.
• Net favorable attritional prior year reserve development, net of reinsurance, was $1.6 million, primarily driven by favorable development in property classes in both our International and Bermuda segments.
• Catastrophe losses (current and prior year), net of reinsurance, were $Nil.
• The acquisition cost ratio decreased by 0.2 points compared to the same period in 2023.
• The other underwriting expense ratio decreased 2.0 points compared to the same period in 2023, primarily driven by an increase in net premiums earned and increased third party fee income, which offsets the other underwriting expense ratio.

International Segment Underwriting Results – Second Quarter

International Segment

For the Three Months Ended

($ in thousands, except for percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

311,616

 

 

$

277,796

 

 

$

33,820

Net premiums written

 

234,305

 

 

 

197,047

 

 

 

37,258

Net premiums earned

 

215,643

 

 

 

176,636

 

 

 

39,007

Underwriting income (loss)

$

19,428

 

 

$

14,662

 

 

$

4,766

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

Attritional loss ratio - current year

 

52.5

%

 

 

52.9

%

 

(0.4 pts)

Attritional loss ratio - prior year

 

(0.2

%)

 

 

(3.3

%)

 

3.1 pts

Catastrophe loss ratio - current year

 

0.0

%

 

 

0.9

%

 

(0.9 pts)

Catastrophe loss ratio - prior year

 

0.0

%

 

 

(0.9

%)

 

0.9 pts

Loss and loss adjustment expense ratio

 

52.3

%

 

 

49.6

%

 

2.7 pts

Acquisition cost ratio

 

24.7

%

 

 

26.8

%

 

(2.1 pts)

Other underwriting expense ratio

 

14.0

%

 

 

15.4

%

 

(1.4 pts)

Combined ratio

 

91.0

%

 

 

91.8

%

 

(0.8 pts)

• Gross premiums written increased by $33.8 million, or 12.2%, to $311.6 million, primarily driven by growth, improved pricing and new business in specialty, casualty and property insurance classes.
• Net favorable attritional prior year reserve development, net of reinsurance, was $0.5 million.
• Catastrophe losses (current and prior year), net of reinsurance, were $Nil.
• The acquisition cost ratio decreased by 2.1 points compared to the same period in 2023, primarily driven by a change in the business mix.
• The other underwriting expense ratio decreased by 1.4 points compared to the same period in 2023, primarily driven by an increase in net premiums earned.

Bermuda Segment Underwriting Results – Second Quarter

Bermuda Segment

For the Three Months Ended

($ in thousands, except for percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

291,688

 

 

$

227,164

 

 

$

64,524

Net premiums written

 

240,763

 

 

 

187,661

 

 

 

53,102

Net premiums earned

 

203,121

 

 

 

154,824

 

 

 

48,297

Underwriting income (loss)

$

45,871

 

 

$

20,232

 

 

$

25,639

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

Attritional loss ratio - current year

 

50.5

%

 

 

48.9

%

 

1.6 pts

Attritional loss ratio - prior year

 

(0.5

%)

 

 

0.3

%

 

(0.8 pts)

Catastrophe loss ratio - current year

 

0.0

%

 

 

9.8

%

 

(9.8 pts)

Catastrophe loss ratio - prior year

 

0.0

%

 

 

0.3

%

 

(0.3 pts)

Loss and loss adjustment expense ratio

 

50.0

%

 

 

59.3

%

 

(9.3 pts)

Acquisition cost ratio

 

21.2

%

 

 

19.1

%

 

2.1 pts

Other underwriting expense ratio

 

6.2

%

 

 

8.5

%

 

(2.3 pts)

Combined ratio

 

77.4

%

 

 

86.9

%

 

(9.5 pts)

• Gross premiums written increased by $64.5 million, or 28.4%, to $291.7 million, primarily driven by new business, increased participations and a strong rate environment in both our casualty reinsurance and property reinsurance classes.
• Net favorable attritional prior year reserve development, net of reinsurance, was $1.1 million, primarily driven by modest favorable development across property and specialty classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $Nil.
• The acquisition cost ratio increased by 2.1 points compared to the same period in 2023, primarily driven by a change in the mix of business.
• The other underwriting expense ratio decreased by 2.3 points compared to the same period in 2023. The decrease was primarily driven by an increase in net premiums earned and by performance based management fees generated by our third party capital manager, which offsets the other underwriting expense ratio.

Consolidated Underwriting Results – Year to Date

 

For the Six Months Ended

($ in thousands, except for per share amounts and percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

1,325,245

 

 

$

1,043,124

 

 

$

282,121

Net premiums written

 

989,948

 

 

 

733,206

 

 

 

256,742

Net premiums earned

 

804,067

 

 

 

615,362

 

 

 

188,705

Underwriting income (loss)

$

97,825

 

 

$

68,956

 

 

$

28,869

Combined ratio

 

87.9

%

 

 

88.8

%

 

 

(0.9%)

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

$

288,259

 

 

$

88,279

 

 

$

199,980

Income (loss) per share attributable to common shareholders - diluted

$

2.57

 

 

$

0.84

 

 

 

Book value per common share

$

21.96

 

 

$

16.90

 

 

 

Change in book value per share

 

18.2

%

 

 

4.7

%

 

 

 

 

 

 

 

 

Return on average common equity - annualized

 

26.9

%

 

 

10.3

%

 

 

 

For the Six Months Ended

Key Ratios

June 30, 2024

 

June 30, 2023

 

Change

Attritional loss ratio - current year

54.3

%

 

50.1

%

 

4.2

%

Attritional loss ratio - prior year

1.3

%

 

(0.6

%)

 

1.9

%

Catastrophe loss ratio - current year

0.0

%

 

3.6

%

 

(3.6

%)

Catastrophe loss ratio - prior year

0.0

%

 

0.2

%

 

(0.2

%)

Loss and loss adjustment expense ratio

55.6

%

 

53.3

%

 

2.3

%

Acquisition cost ratio

22.5

%

 

23.1

%

 

(0.6

%)

Other underwriting expense ratio

9.8

%

 

12.4

%

 

(2.6

%)

Combined ratio

87.9

%

 

88.8

%

 

(0.9

%)

• Gross premiums written increased by $282.1 million, or 27.0%, to $1,325.2 million, with an increase of $107.5 million, or 20.5%, in the International Segment, and $174.6 million, or 33.7%, in the Bermuda Segment.
• Net premiums written increased by $256.7 million, or 35.0%, to $989.9 million, with an increase of $100.3 million, or 31.4%, in the International Segment, and $156.5 million, or 37.8%, in the Bermuda Segment.
• Net premiums earned increased by $188.7 million, or 30.7%, to $804.1 million, with an increase of $86.3 million, or 26.5%, in the International Segment, and $102.4 million, or 35.4%, in the Bermuda Segment.
• The attritional loss ratio (current year), net of reinsurance, was 54.3%. The increase of 4.2 points compared to the same period in 2023 was primarily driven by losses of $37.9 million, or 4.7 points, arising from the Francis Scott Key Baltimore Bridge collapse.
• Net unfavorable attritional prior year reserve development, net of reinsurance, was $10.3 million, primarily driven by two specific large losses on our specialty insurance and reinsurance classes, partially offset by favorable development in our International property insurance and reinsurance classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $0.2 million.
• The acquisition cost ratio decreased by 0.6 points compared to the same period in 2023.
• The other underwriting expense ratio decreased 2.6 points compared to the same period in 2023, primarily driven by an increase in net premiums earned and increased third party fee income, which offsets the other underwriting expense ratio.

International Segment Underwriting Results – Year to Date

International Segment

For the Six Months Ended

($ in thousands, except for percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

632,457

 

 

$

524,909

 

 

$

107,548

 

Net premiums written

 

419,338

 

 

 

319,067

 

 

 

100,271

 

Net premiums earned

 

412,456

 

 

 

326,151

 

 

 

86,305

 

Underwriting income (loss)

$

24,747

 

 

$

31,032

 

 

$

(6,285

)

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

Attritional loss ratio - current year

 

54.2

%

 

 

51.6

%

 

 

2.6

%

Attritional loss ratio - prior year

 

1.3

%

 

 

(3.8

%)

 

 

5.1

%

Catastrophe loss ratio - current year

 

0.0

%

 

 

0.4

%

 

 

(0.4

%)

Catastrophe loss ratio - prior year

 

0.0

%

 

 

0.2

%

 

 

(0.2

%)

Loss and loss adjustment expense ratio

 

55.5

%

 

 

48.4

%

 

 

7.1

%

Acquisition cost ratio

 

24.5

%

 

 

25.9

%

 

 

(1.4

%)

Other underwriting expense ratio

 

14.0

%

 

 

16.2

%

 

 

(2.2

%)

Combined ratio

 

94.0

%

 

 

90.5

%

 

 

3.5

%

• Gross premiums written increased by $107.5 million, or 20.5%, to $632.5 million, primarily driven by growth, improved pricing and new business in casualty insurance, specialty insurance and reinsurance and property insurance classes.
• The attritional loss ratio (current year), net of reinsurance, was 54.2%. The increase of 2.6 points compared to the same period in 2023 was primarily driven by losses of $11.8 million, or 2.9 points, arising from the Baltimore Bridge collapse.
• Net unfavorable attritional prior year reserve development was $5.3 million, primarily driven by two specific large losses on our specialty insurance class, partially offset by favorable development in our property classes.
• Catastrophe losses (current and prior year), net of reinsurance, were $0.2 million.
• The acquisition cost ratio decreased by 1.4 points compared to the same period in 2023.
• The other underwriting expense ratio decreased by 2.2 points compared to the same period in 2023, primarily driven by an increase in net premiums earned.

Bermuda Segment Underwriting Results – Year to Date

Bermuda Segment

For the Six Months Ended

($ in thousands, except for percentages)

June 30, 2024

 

June 30, 2023

 

Change

Gross premiums written

$

692,788

 

 

$

518,215

 

 

$

174,573

 

Net premiums written

 

570,610

 

 

 

414,139

 

 

 

156,471

 

Net premiums earned

 

391,611

 

 

 

289,211

 

 

 

102,400

 

Underwriting income (loss)

$

73,078

 

 

$

37,924

 

 

$

35,154

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

Attritional loss ratio - current year

 

54.3

%

 

 

48.5

%

 

 

5.8

%

Attritional loss ratio - prior year

 

1.3

%

 

 

3.0

%

 

 

(1.7

%)

Catastrophe loss ratio - current year

 

0.0

%

 

 

7.1

%

 

 

(7.1

%)

Catastrophe loss ratio - prior year

 

0.0

%

 

 

0.2

%

 

 

(0.2

%)

Loss and loss adjustment expense ratio

 

55.6

%

 

 

58.8

%

 

 

(3.2

%)

Acquisition cost ratio

 

20.4

%

 

 

19.9

%

 

 

0.5

%

Other underwriting expense ratio

 

5.3

%

 

 

8.2

%

 

 

(2.9

%)

Combined ratio

 

81.3

%

 

 

86.9

%

 

 

(5.6

%)

• Gross premiums written increased by $174.6 million, or 33.7%, to $692.8 million, primarily driven by new business, expanded participations and rate increases in property and casualty reinsurance classes.
• The attritional loss ratio (current year), net of reinsurance, was 54.3%. The increase of 5.8 points compared to the same period in 2023 was primarily driven by losses of $26.1 million, or 6.7 points, arising from the Baltimore Bridge collapse.
• Net unfavorable attritional prior year reserve development, net of reinsurance, was $5.1 million, primarily driven by modest unfavorable development across a variety of casualty reinsurance classes and unfavorable development in specialty reinsurance classes relating to one specific large loss.
• Catastrophe losses (current and prior year), net of reinsurance, were $Nil.
• The acquisition cost ratio increased by 0.5 points compared to the same period in 2023.
• The other underwriting expense ratio decreased by 2.9 points compared to the same period in 2023. The decrease was primarily driven by an increase in net premiums earned and by performance based management fees generated by our third party capital manager, which offsets the other underwriting expense ratio.

Investments and Shareholders’ Equity as of June 30, 2024

• Total invested assets and cash of $4.4 billion compared to $4.0 billion at December 31, 2023.
• Total shareholders’ equity of $2.2 billion compared to $2.0 billion at December 31, 2023.
• Book value per share of $21.96 compared to $18.58 at December 31, 2023, an increase of 18.2%.

Conference Call Details and Additional Information

Conference Call Information

Hamilton will host a conference call to discuss its financial results on Thursday, August 8, 2024, at 10:00 am ET. The conference call can be accessed by dialing 1-646-960-0308 (US toll free), or 1-888-350-3870, and entering the conference ID 6439207.

A live, audio webcast of the conference call will also be available through the Investors portal of the Company’s website at investors.hamiltongroup.com.

For access to either the conference call or webcast, please dial in/login a few minutes in advance to complete any necessary registration.

A replay of the audio conference call will be available at investors.hamiltongroup.com or by dialing 1-609-800-9909 (US toll free) and entering the conference ID 6439207.

Additional Information

In addition to the information provided in the Company's earnings release, we have also made available supplementary financial information and an investor presentation which may be referred to during the conference call and will be available on the Company’s website at investors.hamiltongroup.com.

About Hamilton Insurance Group, Ltd.

Hamilton is a Bermuda-headquartered company that underwrites specialty insurance and reinsurance risks on a global basis through its wholly owned subsidiaries. Its three underwriting platforms: Hamilton Global Specialty, Hamilton Re and Hamilton Select, each with dedicated and experienced leadership, provide us with access to diversified and profitable markets around the world.

For more information about Hamilton Insurance Group, visit our website at www.hamiltongroup.com or on LinkedIn at Hamilton.

Consolidated Balance Sheet

($ in thousands)

June 30, 2024

 

December 31, 2023

Assets

 

 

 

Fixed maturity investments, at fair value

 

(amortized cost 2024: $2,119,739; 2023: $1,867,499)

$

2,068,930

 

$

1,831,268

 

Short-term investments, at fair value (amortized cost 2024: $461,525; 2023: $427,437)

 

463,542

 

 

 

428,878

 

Investments in Two Sigma Funds, at fair value (cost 2024: $711,236; 2023: $770,191)

 

923,682

 

 

 

851,470

 

Total investments

 

3,456,154

 

 

 

3,111,616

 

Cash and cash equivalents

 

1,016,573

 

 

 

794,509

 

Restricted cash and cash equivalents

 

98,279

 

 

 

106,351

 

Premiums receivable

 

933,211

 

 

 

658,363

 

Paid losses recoverable

 

147,690

 

 

 

145,202

 

Deferred acquisition costs

 

203,279

 

 

 

156,895

 

Unpaid losses and loss adjustment expenses recoverable

 

1,160,309

 

 

 

1,161,077

 

Receivables for investments sold

 

12,307

 

 

 

42,419

 

Prepaid reinsurance

 

299,574

 

 

 

194,306

 

Intangible assets

 

94,410

 

 

 

90,996

 

Other assets

 

201,317

 

 

 

209,621

 

Total assets

$

7,623,103

 

 

$

6,671,355

 

 

 

 

 

Liabilities, non-controlling interest, and shareholders' equity

 

 

 

Liabilities

 

 

 

Reserve for losses and loss adjustment expenses

$

3,242,893

 

 

$

3,030,037

 

Unearned premiums

 

1,202,371

 

 

 

911,222

 

Reinsurance balances payable

 

399,633

 

 

 

272,310

 

Payables for investments purchased

 

111,280

 

 

 

66,606

 

Term loan, net of issuance costs

 

149,887

 

 

 

149,830

 

Accounts payable and accrued expenses

 

158,187

 

 

 

186,887

 

Payables to related parties

 

43,030

 

 

 

6,480

 

Total liabilities

 

5,307,281

 

 

 

4,623,372

 

 

 

 

 

Non-controlling interest – TS Hamilton Fund

 

77,275

 

 

 

133

 

 

 

 

 

Shareholders’ equity

 

 

 

Common shares:

 

 

 

Class A, authorized (2024 and 2023: 28,644,807), par value $0.01;

 

issued and outstanding (2024: 19,520,078 and 2023: 28,644,807)

 

195

 

 

286

 

Class B, authorized (2024: 72,837,352 and 2023: 72,337,352), par value $0.01;

 

issued and outstanding (2024: 57,358,464 and 2023: 56,036,067)

 

574

 

 

560

 

Class C, authorized (2024: 25,044,229 and 2023: 25,544,229), par value $0.01;

 

issued and outstanding (2024: 25,044,229 and 2023: 25,544,229)

 

250

 

 

255

 

Additional paid-in capital

 

1,171,585

 

 

 

1,249,817

 

Accumulated other comprehensive loss

 

(4,441

)

 

 

(4,441

)

Retained earnings

 

1,070,384

 

 

 

801,373

 

Total shareholders' equity

 

2,238,547

 

 

 

2,047,850

 

 

 

 

 

Total liabilities, non-controlling interest, and shareholders' equity

$

7,623,103

 

 

$

6,671,355

 

Consolidated Statement of Operations

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

($ in thousands, except per share information)

2024

 

2023

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

Gross premiums written

$

603,304

 

 

$

504,960

 

 

$

1,325,245

 

 

$

1,043,124

 

Reinsurance premiums ceded

 

(128,236

)

 

 

(120,252

)

 

 

(335,297

)

 

 

(309,918

)

Net premiums written

 

475,068

 

 

 

384,708

 

 

 

989,948

 

 

 

733,206

 

 

 

 

 

 

 

 

 

Net change in unearned premiums

 

(56,304

)

 

 

(53,248

)

 

 

(185,881

)

 

 

(117,844

)

Net premiums earned

 

418,764

 

 

 

331,460

 

 

 

804,067

 

 

 

615,362

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses) on investments

 

151,251

 

 

 

19,406

 

 

 

406,622

 

 

 

54,539

 

Net investment income (loss)

 

13,720

 

 

 

7,291

 

 

 

26,338

 

 

 

9,650

 

Total net realized and unrealized gains (losses) on investments and net investment income (loss)

 

164,971

 

 

 

26,697

 

 

 

432,960

 

 

 

64,189

 

 

 

 

 

 

 

 

 

Other income (loss)

 

5,989

 

 

 

2,420

 

 

 

13,470

 

 

 

5,452

 

Net foreign exchange gains (losses)

 

(1,782

)

 

 

(3,341

)

 

 

(3,911

)

 

 

(5,387

)

Total revenues

 

587,942

 

 

 

357,236

 

 

 

1,246,586

 

 

 

679,616

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

214,494

 

 

 

179,416

 

 

 

446,846

 

 

 

327,977

 

Acquisition costs

 

96,305

 

 

 

76,856

 

 

 

180,858

 

 

 

141,995

 

General and administrative expenses

 

64,917

 

 

 

49,234

 

 

 

119,772

 

 

 

95,040

 

Amortization of intangible assets

 

3,317

 

 

 

2,305

 

 

 

6,569

 

 

 

5,075

 

Interest expense

 

6,031

 

 

 

5,189

 

 

 

11,738

 

 

 

10,718

 

Total expenses

 

385,064

 

 

 

313,000

 

 

 

765,783

 

 

 

580,805

 

 

 

 

 

 

 

 

 

Income (loss) before income tax

 

202,878

 

 

 

44,236

 

 

 

480,803

 

 

 

98,811

 

Income tax expense (benefit)

 

2,496

 

 

 

2,948

 

 

 

3,089

 

 

 

4,521

 

Net income (loss)

 

200,382

 

 

 

41,288

 

 

 

477,714

 

 

 

94,290

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to non-controlling interest

 

69,297

 

 

 

4,501

 

 

 

189,455

 

 

 

6,011

 

 

 

 

 

 

 

 

 

Net income (loss) and other comprehensive income (loss) attributable to common shareholders

$

131,085

 

 

$

36,787

 

 

$

288,259

 

 

$

88,279

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

Basic income (loss) per share attributable to common shareholders

$

1.24

 

 

$

0.35

 

 

$

2.66

 

 

$

0.85

 

Diluted income (loss) per share attributable to common shareholders

$

1.20

 

 

$

0.35

 

 

$

2.57

 

 

$

0.84

 

Non-GAAP Financial Measures Reconciliation

We present our results of operations in a way that we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting income (loss), a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. We believe that non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Where appropriate, reconciliations of our non-GAAP measures to the most comparable GAAP figures are included below.

Underwriting Income (Loss)

We calculate underwriting income (loss) on a pre-tax basis as net premiums earned less losses and loss adjustment expenses, acquisition costs and other underwriting expenses (net of third party fee income). We believe that this measure of our performance focuses on the core fundamental performance of the Company’s reportable segments in any given period and is not distorted by investment market conditions, corporate expense allocations or income tax effects.

The following table reconciles underwriting income (loss) to net income (loss), the most comparable GAAP financial measure:

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

($ in thousands)

2024

 

2023

 

2024

 

2023

Underwriting income (loss)

$

65,299

 

 

$

34,894

 

 

$

97,825

 

 

$

68,956

 

Total net realized and unrealized gains (losses) on investments and net investment income (loss)

 

164,971

 

 

 

26,697

 

 

 

432,960

 

 

 

64,189

 

Other income (loss), excluding third party fee income

 

—

 

 

 

(29

)

 

 

—

 

 

 

—

 

Net foreign exchange gains (losses)

 

(1,782

)

 

 

(3,341

)

 

 

(3,911

)

 

 

(5,387

)

Corporate expenses

 

(16,262

)

 

 

(6,491

)

 

 

(27,764

)

 

 

(13,154

)

Amortization of intangible assets

 

(3,317

)

 

 

(2,305

)

 

 

(6,569

)

 

 

(5,075

)

Interest expense

 

(6,031

)

 

 

(5,189

)

 

 

(11,738

)

 

 

(10,718

)

Income tax (expense) benefit

 

(2,496

)

 

 

(2,948

)

 

 

(3,089

)

 

 

(4,521

)

Net income (loss), prior to non-controlling interest

$

200,382

 

 

$

41,288

 

 

$

477,714

 

 

$

94,290

 

Third Party Fee Income

Third party fee income includes income that is incremental and/or directly attributable to our underwriting operations. It is primarily comprised of fees earned by the International Segment for management services provided to third party syndicates and consortia and by the Bermuda Segment for performance based management fees generated by our third party capital manager, Ada Capital Management Limited. We believe that this measure is a relevant component of our underwriting income (loss).

The following table reconciles third party fee income to other income, the most comparable GAAP financial measure:

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

($ in thousands)

2024

 

2023

 

2024

 

2023

Third party fee income

$

5,989

 

$

2,449

 

 

$

13,470

 

$

5,452

Other income (loss), excluding third party fee income

 

—

 

 

(29

)

 

 

—

 

 

—

Other income (loss)

$

5,989

 

$

2,420

 

 

$

13,470

 

$

5,452

Other Underwriting Expenses

Other underwriting expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in Note 8, Segment Reporting, in the unaudited condensed consolidated financial statements, it is considered a non-GAAP financial measure when presented elsewhere.

Corporate expenses include holding company costs necessary to support our reportable segments. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from other underwriting expenses, and therefore, underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to other underwriting expenses, also includes corporate expenses.

The following table reconciles other underwriting expenses to general and administrative expenses, the most comparable GAAP financial measure:

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

($ in thousands)

2024

 

2023

 

2024

 

2023

Other underwriting expenses

$

48,655

 

$

42,743

 

$

92,008

 

$

81,886

Corporate expenses

 

16,262

 

 

6,491

 

 

27,764

 

 

13,154

General and administrative expenses

$

64,917

 

$

49,234

 

$

119,772

 

$

95,040

Special Note Regarding Forward-Looking Statements

This information includes “forward looking statements” pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of terms such as “believes,” “expects,” “may,” “will,” “target,” “should,” “could,” “would,” “seeks,” “intends,” “plans,” “contemplates,” “estimates,” or “anticipates,” or similar expressions which concern our strategy, plans, projections or intentions. These forward-looking statements appear in a number of places throughout and relate to matters such as our industry, growth strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. By their nature, forward-looking statements: speak only as of the date they are made; are not statements of historical fact or guarantees of future performance; and are subject to risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties, and other important factors that could cause our actual results to differ materially from the forward-looking statements contained herein. Such risks, uncertainties, and other important factors include, among others, the risks, uncertainties and factors set forth in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) and other subsequent periodic reports filed with the Securities and Exchange Commission and the following:

• our results of operations and financial condition could be adversely affected by unpredictable catastrophic events, global climate change or emerging claim and coverage issues;
• our business could be materially adversely affected if we do not accurately assess our underwriting risk, our reserves are inadequate to cover our actual losses, our models or assessments and pricing of risks are incorrect or we lose important broker relationships;
• the insurance and reinsurance business is historically cyclical and the pricing and terms for our products may decline, which would affect our profitability and ability to maintain or grow premiums;
• we have significant foreign operations that expose us to certain additional risks, including foreign currency risks and political risk;
• we do not control the allocations to and/or the performance of the Two Sigma Hamilton Fund, LLC ("TS Hamilton Fund")’s investment portfolio, and its performance depends on the ability of its investment manager, Two Sigma Investments, LP ("Two Sigma"), to select and manage appropriate investments and we have a limited ability to withdraw our capital accounts;
• Two Sigma Principals, LLC, Two Sigma and their respective affiliates have potential conflicts of interest that could adversely affect us;
• the historical performance of Two Sigma is not necessarily indicative of the future results of the TS Hamilton Fund’s investment portfolio or of our future results;
• our ability to manage risks associated with macroeconomic conditions resulting from geopolitical and global economic events, including public health crises, current or anticipated military conflicts, terrorism, sanctions, rising energy prices, inflation and interest rates and other global events;
• our ability to compete successfully with more established competitors and risks relating to consolidation in the reinsurance and insurance industries;
• downgrades, potential downgrades or other negative actions by rating agencies;
• our dependence on key executives, including the potential loss of Bermudian personnel as a result of Bermuda employment restrictions, and the inability to attract qualified personnel, particularly in very competitive hiring conditions;
• our dependence on letter of credit facilities that may not be available on commercially acceptable terms;
• our potential need for additional capital in the future and the potential unavailability of such capital to us on favorable terms or at all;
• the suspension or revocation of our subsidiaries’ insurance licenses;
• risks associated with our investment strategy, including such risks being greater than those faced by competitors;
• changes in the regulatory environment and the potential for greater regulatory scrutiny of the Company going forward;
• a cyclical downturn of the reinsurance industry;
• operational failures, failure of information systems or failure to protect the confidentiality of customer information, including by service providers, or losses due to defaults, errors or omissions by third parties or our affiliates;
• we are a holding company with no direct operations, and our insurance and reinsurance subsidiaries’ ability to pay dividends and other distributions to us is restricted by law;
• risks relating to our ability to identify and execute opportunities for growth or our ability to complete transactions as planned or realize the anticipated benefits of our acquisitions or other investments;
• our potentially becoming subject to U.S. federal income taxation, Bermuda taxation or other taxes as a result of a change of tax laws or otherwise;
• the potential characterization of us and/or any of our subsidiaries as a passive foreign investment company, or PFIC;
• our potentially becoming subject to U.S. withholding and information reporting requirements under the U.S. Foreign Account Tax Compliance Act, or FATCA, provisions;
• our costs will increase as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations;
• if we were to identify a material weakness and were unable to remediate such material weakness, or fail to achieve and maintain effective internal controls, our operating results and financial condition could be impacted and the market price of our Class B common shares may be negatively affected;
• the lack of a prior public market for our Class B common shares means our share price may be volatile and anti-takeover provisions contained in our organizational documents could delay management changes;
• the potential that the market price of our Class B common shares could decline due to future sales of shares by our existing shareholders;
• applicable insurance laws, which could make it difficult to effect a change of control of our company; and
• investors may have difficulties in serving process or enforcing judgments against us in the United States.

There may be other factors that could cause our actual results to differ materially from the forward-looking statements, including factors disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. You should evaluate all forward-looking statements made herein in the context of these risks and uncertainties.

You should read this information completely and with the understanding that actual future results may be materially different from expectations. We caution you that the risks, uncertainties, and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits, or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements contained herein apply only as of the date hereof and are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807651554/en/

Investor contacts: Jon Levenson & Darian Niforatos [e-mail]

Media contact: Kelly Corday Ferris [e-mail]