Hamilton Insurance Group, Ltd. Supplementary Financial Information
March 31, 2024
Investor Contact
Investor.Relations@hamiltongroup.com
Hamilton Insurance Group, Ltd. | |
Table of Contents | |
Page | |
III. | ||
Reconciliation of Consolidated GAAP Balance Sheet to Unconsolidated Balance Sheet | ||
Net Investment Return | 9 | |
Fixed Maturity and Short-TermInvestments | 10 | |
IV. Segment Results | ||
Consolidated Underwriting Results | 11 | |
5Q Consolidated Underwriting Results - Group | 12 | |
5Q Underwriting Results - International | 13 | |
5Q Underwriting Results - Bermuda | 14 | |
V. | Other Information | |
Modeled Exposure to Catastrophe Losses (PML) | 15 | |
Non-GAAPMeasures | 16 |
Basis of Presentation
All financial information contained herein is unaudited, however, certain information relating to the consolidated balance sheet at the most recent year end is derived from or agrees to audited financial information. Unless otherwise noted, all data is in thousands, except for share and per share amounts and ratio information.
This information is being provided for informational purposes only. It should be read in conjunction with the documents filed by Hamilton Insurance Group, Inc. ("Hamilton") with the U.S Securities and Exchange Commission, including its Form 10-Q.
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;
1
Basis of Presentation (continued)
Special Note Regarding Forward-Looking Statements (continued)
- 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 and other subsequent periodic reports filed with the Securities and Exchange Commission. You should evaluate all forward-looking statements made herein in the context of these risks and uncertainties.
2
Basis of Presentation (continued)
Special Note Regarding Forward-Looking Statements (continued)
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.
3
Financial Highlights
Three Months Ended March 31, | |||||
($ in thousands) | 2024 | 2023 | |||
Net income (loss) attributable to common shareholders | $ | 157,174 | $ | 51,492 | |
Underwriting income (loss) | |||||
Gross premiums written | $ | 721,941 | $ | 538,164 | |
Net premiums written | 514,880 | 348,498 | |||
Net premiums earned | 385,303 | 283,902 | |||
Underwriting income (loss) | $ | 32,522 | $ | 34,063 |
Key Ratios: | |||
Attritional loss ratio - current year | 57.2% | 49.1% | |
Attritional loss ratio - prior year development | 3.1% | 0.6% | |
Catastrophe loss ratio - current year | 0.0% | 1.8% | |
Catastrophe loss ratio - prior year development | 0.0% | 0.8% | |
Loss and loss adjustment expense ratio | 60.3% | 52.3% | |
Acquisition cost ratio | 21.9% | 22.9% | |
Other underwriting expense ratio | 9.3% | 12.7% | |
Combined ratio | 91.5% | 87.9% | |
Investments | |||||
Total assets | $ | 7,349,025 | $ | 6,114,260 | |
Total cash and invested assets(1) | 4,195,642 | 3,482,726 | |||
Total investment return(2) | $ | 147,831 | $ | 35,982 | |
Two Sigma Hamilton Fund | |||||
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF | $ | 262,821 | $ | 10,064 | |
Net income (loss) attributable to non-controllinginterest - TSHF | 120,158 | 1,510 | |||
$ | 142,663 | $ | 8,554 | ||
Two Sigma Hamilton Fund return, net of investment management fees and performance incentive allocations | |||||
8.3% | 0.5% | ||||
Fixed income, short term investments and cash and cash equivalents | |||||
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | $ | 5,168 | $ | 27,428 |
- Total cash and total investments, plus receivables for investments sold, less payables for investments purchased, payables to related parties (TSHF) and non-controlling interest (TSHF).
- Net realized and unrealized gains (losses) on investments, plus net investment income (loss), less non-controlling interest.
4
Financial Highlights
Key Operating and Financial Metrics
Three Months Ended March 31, | |||||
($ in thousands, except per share amounts) | 2024 | 2023 | |||
Income (loss) per share attributable to common shareholders - basic | $ | 1.42 | $ | 0.50 | |
Income (loss) per share attributable to common shareholders - diluted | $ | 1.38 | $ | 0.49 | |
Weighted average common shares outstanding - basic | 110,921 | 103,732 | |||
Weighted average common shares outstanding - diluted | 114,246 | 104,625 | |||
Return on average common shareholders' equity - annualized | 29.5% | 12.2% | |||
At March 31, | At December 31, | ||||
2024 | 2023 | ||||
Closing common shareholders' equity less intangible assets | $ | 2,116,854 | $ | 1,956,854 | |
Closing common shareholders' equity | $ | 2,209,505 | $ | 2,047,850 | |
Tangible book value per common share | $ | 19.07 | $ | 17.75 | |
Book value per common share | $ | 19.90 | $ | 18.58 | |
Year-to-datechange in tangible book value per common share | 7.4% | 16.0% | |||
Year-to-datechange in book value per common share | 7.1% | 15.1% |
5
Summary Consolidated Results
Statements of Operations
($ in thousands, except per share amounts) | Three Months Ended March 31, | ||||
2024 | 2023 | ||||
Revenues | |||||
Gross premiums written | $ | 721,941 | $ | 538,164 | |
Reinsurance premiums ceded | (207,061) | (189,666) | |||
.......................................................................................................................................................................................................Net premiums written | 514,880 | 348,498 | |||
Net change in unearned premiums | (129,577) | (64,596) | |||
......................................................................................................................................................................................................Net premiums earned | 385,303 | 283,902 | |||
Net realized and unrealized gains (losses) on investments | 255,371 | 35,133 | |||
Net investment income (loss) | 12,618 | 2,359 | |||
.................................................................Total net realized and unrealized gains (losses) on investments and net investment income (loss) | 267,989 | 37,492 | |||
Third party fee income | 7,478 | 3,004 | |||
Other income (loss), excluding third-partyfee income | - | 29 | |||
Net foreign exchange gains (losses) | (2,125) | (2,046) | |||
................................................................................................................................................................................................................Total revenues | 658,645 | 322,381 | |||
Expenses | |||||
Losses and loss adjustment expenses | 232,352 | 148,561 | |||
Acquisition costs | 84,554 | 65,140 | |||
Other underwriting expenses | 43,353 | 39,142 | |||
Corporate expenses | 11,502 | 6,664 | |||
Amortization of intangible assets | 3,252 | 2,770 | |||
Interest expense | 5,708 | 5,529 | |||
................................................................................................................................................................................................................Total expenses | 380,721 | 267,806 | |||
Income (loss) before income tax | 277,924 | 54,575 | |||
Income tax expense (benefit) | 592 | 1,573 | |||
...........................................................................................................................................................................................................Net income (loss) | 277,332 | 53,002 | |||
Net income (loss) attributable to non-controllinginterest | 120,158 | 1,510 | |||
Net income (loss) and other comprehensive income (loss) attributable to common shareholders | $ | 157,174 | $ | 51,492 | |
Per share data | |||||
Income (loss) per share attributable to common shareholders - basic | $ | 1.42 | $ | 0.50 | |
Income (loss) per share attributable to common shareholders - diluted | $ | 1.38 | $ | 0.49 | |
Return on average common shareholders' equity - annualized | 29.5% | 12.2% |
6
Summary Consolidated Results
Consolidated Balance Sheets
At March 31, | At December 31, | At September 30, | At June 30, | At March 31, | ||||||||||
($ in thousands) | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||
Assets | ||||||||||||||
Fixed maturity investments, at fair value (amortized cost March 31, 2024: 1,926,329) | $ | 1,877,130 | $ | 1,831,268 | $ | 1,631,471 | $ | 1,451,249 | $ | 1,377,937 | ||||
Short-term investments, at fair value (amortized cost March 31, 2024: 351,035) | 352,068 | 428,878 | 348,968 | 336,587 | 387,826 | |||||||||
Investments in Two Sigma Funds, at fair value (cost March 31, 2024: 753,967) | 953,659 | 851,470 | 979,986 | 868,486 | 656,643 | |||||||||
................................................................................................................................Total investments | 3,182,857 | 3,111,616 | 2,960,425 | 2,656,322 | 2,422,406 | |||||||||
Cash and cash equivalents | 1,085,038 | 794,509 | 804,548 | 818,522 | 945,610 | |||||||||
Restricted cash and cash equivalents | 95,565 | 106,351 | 98,979 | 106,696 | 139,205 | |||||||||
Premiums receivable | 856,111 | 658,363 | 689,042 | 756,275 | 659,722 | |||||||||
Paid losses recoverable | 169,469 | 145,202 | 138,314 | 132,528 | 72,091 | |||||||||
Deferred acquisition costs | 190,883 | 156,895 | 151,314 | 145,280 | 136,094 | |||||||||
Unpaid losses and loss adjustment expenses recoverable | 1,167,504 | 1,161,077 | 1,157,123 | 1,162,940 | 1,192,283 | |||||||||
Receivables for investments sold | 17,777 | 42,419 | 19,044 | 36 | 33,618 | |||||||||
Prepaid reinsurance | 285,984 | 194,306 | 232,211 | 251,818 | 251,727 | |||||||||
Intangible assets | 92,651 | 90,996 | 89,589 | 88,770 | 87,026 | |||||||||
Other assets | 205,186 | 209,621 | 164,015 | 161,364 | 174,478 | |||||||||
........................................................................................................................................Total assets | $ | 7,349,025 | $ | 6,671,355 | $ | 6,504,604 | $ | 6,280,551 | $ | 6,114,260 | ||||
Liabilities, non-controlling interest, and shareholders' equity | ||||||||||||||
Liabilities | ||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 3,148,782 | $ | 3,030,037 | $ | 2,948,822 | $ | 2,899,100 | $ | 2,891,512 | ||||
Unearned premiums | 1,132,477 | 911,222 | 951,596 | 924,723 | 871,333 | |||||||||
Reinsurance balances payable | 367,123 | 272,310 | 367,954 | 381,678 | 313,286 | |||||||||
Payables for investments purchased | 55,071 | 66,606 | 117,836 | 18,670 | 53,889 | |||||||||
Term loan, net of issuance costs | 149,859 | 149,830 | 149,801 | 149,772 | 149,744 | |||||||||
Accounts payable and accrued expenses | 155,684 | 186,887 | 159,681 | 149,833 | 113,832 | |||||||||
Payables to related parties | 75,797 | 6,480 | 9,060 | 4,497 | 4,104 | |||||||||
....................................................................................................................................Total liabilities | 5,084,793 | 4,623,372 | 4,704,750 | 4,528,273 | 4,397,700 | |||||||||
Non-controllinginterest - TS Hamilton Fund | 54,727 | 133 | 129 | 124 | 120 | |||||||||
Shareholders' equity | ||||||||||||||
Common shares: | ||||||||||||||
Class A, authorized (March 31, 2024: 28,644,807), par value 0.01; issued and outstanding | 286 | 286 | 305 | 305 | 305 | |||||||||
(March 31, 2024: 28,644,807) | ||||||||||||||
Class B, authorized (March 31, 2024: 72,337,352), par value 0.01; issued and outstanding | 568 | 560 | 427 | 426 | 427 | |||||||||
(March 31, 2024: 56,813,977) | ||||||||||||||
Class C, authorized (March 31, 2024: 25,544,229), par value 0.01; issued and outstanding | 255 | 255 | 305 | 305 | 305 | |||||||||
(March 31, 2024: 25,544,229) | ||||||||||||||
Additional paid-in-capital | 1,255,055 | 1,249,817 | 1,128,553 | 1,124,566 | 1,121,334 | |||||||||
Accumulated other comprehensive loss | (4,441) | (4,441) | (4,441) | (4,441) | (4,441) | |||||||||
Retained earnings | 957,782 | 801,373 | 674,576 | 630,993 | 598,510 | |||||||||
..............................................................................................................Total shareholders' equity | 2,209,505 | 2,047,850 | 1,799,725 | 1,752,154 | 1,716,440 | |||||||||
Total liabilities, non-controlling interest, and shareholders' equity | ||||||||||||||
$ | 7,349,025 | $ | 6,671,355 | $ | 6,504,604 | $ | 6,280,551 | $ | 6,114,260 | |||||
7
Summary Consolidated Results
Reconciliation of Consolidated GAAP Balance Sheet to Unconsolidated Balance Sheet
At March 31, 2024 | ||||||||
Consolidated | Two Sigma | Unconsolidated | ||||||
GAAP Balance | Hamilton Fund | |||||||
($ in thousands) | Balance Sheet(1) | |||||||
Sheet | Balances | |||||||
Assets | ||||||||
Fixed maturity investments, at fair value | $ | 1,877,130 | $ | - | $ | 1,877,130 | ||
Short-terminvestments, at fair value | 352,068 | (348,155) | 3,913 | |||||
Investments in Two Sigma Funds, at fair value | 953,659 | 911,182 | 1,864,841 | |||||
.................................................................................................................................................................................................................Total investments | 3,182,857 | 563,027 | 3,745,884 | |||||
Cash and cash equivalents | 1,085,038 | (706,969) | 378,069 | |||||
Restricted cash and cash equivalents | 95,565 | - | 95,565 | |||||
Premiums receivable | 856,111 | - | 856,111 | |||||
Paid losses recoverable | 169,469 | - | 169,469 | |||||
Deferred acquisition costs | 190,883 | - | 190,883 | |||||
Unpaid losses and loss adjustment expenses recoverable | 1,167,504 | - | 1,167,504 | |||||
Receivables for investments sold | 17,777 | (13,868) | 3,909 | |||||
Prepaid reinsurance | 285,984 | - | 285,984 | |||||
Intangible assets | 92,651 | - | 92,651 | |||||
Other assets | 205,186 | (1,024) | 204,162 | |||||
.........................................................................................................................................................................................................................Total assets | $ | 7,349,025 | $ | (158,834) | $ | 7,190,191 | ||
Liabilities, non-controlling interest, and shareholders' equity | ||||||||
Liabilities | ||||||||
Reserve for losses and loss adjustment expenses | $ | 3,148,782 | $ | - | $ | 3,148,782 | ||
Unearned premiums | 1,132,477 | - | 1,132,477 | |||||
Reinsurance balances payable | 367,123 | - | 367,123 | |||||
Payables for investments purchased | 55,071 | (28,132) | 26,939 | |||||
Term loan, net of issuance costs | 149,859 | - | 149,859 | |||||
Accounts payable and accrued expenses | 155,684 | (178) | 155,506 | |||||
Payables to related parties | 75,797 | (75,797) | - | |||||
....................................................................................................................................................................................................................Total liabilities | 5,084,793 | (104,107) | 4,980,686 | |||||
Non-controllinginterest - TS Hamilton Fund | 54,727 | (54,727) | - | |||||
Shareholders' equity | ||||||||
Common shares: | ||||||||
Class A, par value $0.01 | 286 | - | 286 | |||||
Class B, par value $0.01 | 568 | - | 568 | |||||
Class C, par value $0.01 | 255 | - | 255 | |||||
Additional paid-in-capital | 1,255,055 | - | 1,255,055 | |||||
Accumulated other comprehensive loss | (4,441) | - | (4,441) | |||||
Retained earnings | 957,782 | - | 957,782 | |||||
..............................................................................................................................................................................................Total shareholders' equity | 2,209,505 | - | 2,209,505 | |||||
Total liabilities, non-controlling interest, and shareholders' equity | ||||||||
$ | 7,349,025 | $ | (158,834) | $ | 7,190,191 | |||
- We present our balance sheet on an unconsolidated basis above which we believe is meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. The unconsolidated balances are non-GAAP financial measures, with the above table providing an appropriate reconciliation to comparable GAAP measures.
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Hamilton Insurance Group Ltd. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 20:30:34 UTC.