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November 6, 2024 Reinsurance No comments

Third Quarter 2024 Financial Supplement

U.S. Markets via PUBT

Hamilton Insurance Group, Ltd. Supplementary Financial Information

September 30, 2024

Investor Contact

[email protected]

Hamilton Insurance Group, Ltd.
Table of Contents
	Page
I.Basis of Presentation	1

Financial Highlights

	Financial Highlights	4
	Key Operating and Financial Metrics	5
III.	Summary Consolidated Results
	Statements of Operations	6
	Consolidated Balance Sheets	7
	Reconciliation of Consolidated GAAP Balance Sheet to Unconsolidated Balance Sheet	8
	Net Investment Return	9
	Fixed Maturity andShort-TermInvestments	10
IV. Segment Results
	Consolidated Underwriting Results	11
	5Q Consolidated Underwriting Results - Group	13
	5Q Underwriting Results - International	14
	5Q Underwriting Results - Bermuda	15
V.	Other Information
	Modeled Exposure to Catastrophe Losses (PML)	16
	Non-GAAPMeasures	17

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 conceour 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;

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 Bermuda-based 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 downtuof 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.

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.

Financial Highlights

	Three Months Ended September 30,		Nine Months Ended September 30,			Year Ended
($ in thousands)		2024			2023			2024			2023	2023
Net income (loss) attributable to common shareholders	$	78,250	$	43,583	$	366,509	$	131,862	$	258,727
Underwriting income (loss)
Gross premiums written	$	553,401	$	474,123	$	1,878,645	$	1,517,247	$	1,951,038
Net premiums written		477,896			383,566			1,467,843			1,116,772	1,480,438
Net premiums earned		448,795			337,036			1,252,862			952,398	1,318,533
Underwriting income (loss)	$	29,094	$	24,866	$	126,920	$	93,823	$	129,851

Key Ratios:
Attritional loss ratio - current year	53.2 %	54.8 %	53.9 %	51.8 %	52.2 %
Attritional loss ratio - prior year development	(0.7)%	(0.1)%	0.6 %	(0.4)%	(0.8)%
Catastrophe loss ratio - current year	11.5 %	3.9 %	4.1 %	3.7 %	3.2 %
Catastrophe loss ratio - prior year development	(3.0)%		(1.8)%		(1.1)%	(0.5)%	(0.4)%
Loss and loss adjustment expense ratio	61.0 %	56.8 %	57.5 %	54.6 %	54.2 %
Acquisition cost ratio	22.8 %	23.3 %	22.6 %	23.2 %	23.4 %
Other underwriting expense ratio	9.8 %		12.5 %		9.8 %	12.4 %	12.5 %
Combined ratio	93.6 %	92.6 %	89.9 %	90.2 %	90.1 %

Investments
Total assets	$	7,826,547	$	6,504,604	$	7,826,547	$	6,504,604	$	6,671,355
Total cash and invested assets(1)		4,618,287			3,755,971			4,618,287			3,755,971		3,981,676
Total investment return(2)		82,773			46,347			326,278			104,524		218,506
Two Sigma Hamilton Fund
Total net realized and unrealized gains (losses) on investments and net investment		(28,291)			60,404			379,712			100,448		143,655
income (loss) - TSHF
Net income (loss) attributable to non-controlling interest - TSHF		(17,215)			9,065			172,240			15,076		21,560
	$	(11,076)	$	51,339	$	207,472	$	85,372	$	122,095
Two Sigma Hamilton Fund return, net of investment management fees and performance
	(0.6)%			3.1 %			12.2 %			5.3 %		7.6 %
incentive allocations
Fixed income, short term investments and cash and cash equivalents
Total net realized and unrealized gains (losses) on investments and net investment	$	93,849	$	(4,992)	$	118,806	$	19,152	$	96,411
income (loss) - other

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.

Financial Highlights

Key Operating and Financial Metrics

	Three Months Ended September 30,		Nine Months Ended September 30,			Year Ended
($ in thousands, except per share amounts)		2024			2023			2024			2023	2023
Income (loss) per share attributable to common shareholders - basic	$	0.77	$	0.42	$	3.45	$	1.27	$	2.47
Income (loss) per share attributable to common shareholders - diluted	$	0.74	$	0.41	$	3.33	$	1.26	$	2.44
Weighted average common shares outstanding - basic		101,934			103,704			106,240			103,711	104,563
Weighted average common shares outstanding - diluted		106,359			105,424			110,226			104,971	106,203
Retuon average common shareholders' equity - annualized		13.8 %			9.8 %			22.4 %			10.2 %	13.9 %
		September 30,			December 31,
		2024			2023
Closing common shareholders' equity, less intangible assets	$	2,219,185	$	1,956,854
Closing common shareholders' equity	$	2,313,626	$	2,047,850
Closing common shares outstanding		101,392,722			110,225,103
Tangible book value per common share	$	21.89	$	17.75
Book value per common share	$	22.82	$	18.58
Year-to-date change in tangible book value per common share		23.3%			16.0%
Year-to-datechange in book value per common share		22.8%			15.1%

Summary Consolidated Results

Statements of Operations

	Three Months Ended September 30,		Nine Months Ended September 30,			Year Ended
($ in thousands, except per share amounts)		2024			2023			2024			2023	2023
Revenues
Gross premiums written	$	553,401	$	474,123	$	1,878,645	$	1,517,247	$	1,951,038
Reinsurance premiums ceded		(75,505)			(90,557)			(410,802)			(400,475)	(470,600)
........................................................................................................................Net premiums written		477,896			383,566			1,467,843			1,116,772	1,480,438
Net change in unearned premiums		(29,101)			(46,530)			(214,981)			(164,374)	(161,905)
........................................................................................................................Net premiums earned		448,795			337,036			1,252,862			952,398	1,318,533
Net realized and unrealized gains (losses) on investments		48,228			47,343			454,851			101,881	209,610
Net investment income (loss)		17,330			8,069			43,667			17,719	30,456
Total net realized and unrealized gains (losses) on investments and net investment		65,558			55,412			498,518			119,600	240,066
income (loss)
Third party fee income		4,464			2,301			17,934			7,753	18,234
Other income (loss), excludingthird-partyfee income		-			85			-			85	397
Net foreign exchange gains (losses)		(5,973)			1,432			(9,883)			(3,953)	(6,185)
..................................................................................................................................Total revenues		512,844			396,266			1,759,431			1,075,883	1,571,045
Expenses
Losses and loss adjustment expenses		273,632			191,577			720,478			519,554	714,603
Acquisition costs		102,201			78,537			283,059			220,532	309,148
Other underwriting expenses		48,332			44,357			140,339			126,242	183,165
Corporate expenses		14,060			18,678			41,825			31,833	76,691
Amortization of intangible assets		5,204			2,794			11,773			7,869	10,783
Interest expense		5,351			5,288			17,090			16,007	21,434
.................................................................................................................................Total expenses		448,780			341,231			1,214,564			922,037	1,315,824
Income (loss) before income tax		64,064			55,035			544,867			153,846	255,221
Income tax expense (benefit)		3,029			2,387			6,118			6,908	(25,066)
.............................................................................................................................Net income (loss)		61,035			52,648			538,749			146,938	280,287
Net income (loss) attributable tonon-controllinginterest		(17,215)			9,065			172,240			15,076	21,560
Net income (loss) and other comprehensive income (loss) attributable to common	$	78,250	$	43,583	$	366,509	$	131,862	$	258,727
shareholders
Per share data
Income (loss) per share attributable to common shareholders - basic	$	0.77	$	0.42	$	3.45	$	1.27	$	2.47
Income (loss) per share attributable to common shareholders - diluted	$	0.74	$	0.41	$	3.33	$	1.26	$	2.44
Retuon average common shareholders' equity - annualized		13.8 %			9.8 %			22.4 %			10.2 %	13.9 %

Summary Consolidated Results

Consolidated Balance Sheets

		September 30,			June 30,			March 31,			December 31,		September 30,
($ in thousands, except share information)		2024			2024			2024			2023		2023
Assets
Fixed maturity investments, at fair value (amortized cost September 30, 2024: $2,306,168)	$	2,320,184	$	2,068,930	$	1,877,130	$	1,831,268	$	1,631,471
Short-term investments, at fair value (amortized cost September 30, 2024: $506,244)		507,947			463,542			352,068			428,878		348,968
Investments in Two Sigma Funds, at fair value (cost September 30, 2024: $829,606)		932,787			923,682			953,659			851,470		979,986
Total investments		3,760,918			3,456,154			3,182,857			3,111,616		2,960,425
Cash and cash equivalents		957,372			1,016,573			1,085,038			794,509		804,548
Restricted cash and cash equivalents		93,883			98,279			95,565			106,351		98,979
Premiums receivable		885,744			933,211			856,111			658,363		689,042
Paid losses recoverable		146,008			147,690			169,469			145,202		138,314
Deferred acquisition costs		205,953			203,279			190,883			156,895		151,314
Unpaid losses and loss adjustment expenses recoverable		1,190,465			1,160,309			1,167,504			1,161,077		1,157,123
Receivables for investments sold		39,079			12,307			17,777			42,419		19,044
Prepaid reinsurance		260,174			299,574			285,984			194,306		232,211
Intangible assets		94,441			94,410			92,651			90,996		89,589
Other assets		192,510			201,317			205,186			209,621		164,015
...............................................................................................................................................................................Total assets	$	7,826,547		$	7,623,103		$	7,349,025		$	6,671,355	$	6,504,604
Liabilities, non-controlling interest, and shareholders' equity
Liabilities
Reserve for losses and loss adjustment expenses	$	3,434,800	$	3,242,893	$	3,148,782	$	3,030,037	$	2,948,822
Unearned premiums		1,192,071			1,202,371			1,132,477			911,222		951,596
Reinsurance balances payable		334,511			399,633			367,123			272,310		367,954
Payables for investments purchased		172,905			111,280			55,071			66,606		117,836
Term loan, net of issuance costs		149,916			149,887			149,859			149,830		149,801
Accounts payable and accrued expenses		168,658			158,187			155,684			186,887		159,681
Payables to related parties		-			43,030			75,797			6,480		9,060
..........................................................................................................................................................................Total liabilities		5,452,861			5,307,281			5,084,793			4,623,372		4,704,750
Non-controllinginterest - TS Hamilton Fund		60,060			77,275			54,727			133		129
Shareholders' equity
Common shares:
Class A, authorized (September 30, 2024: 26,944,807), par value $0.01; issued and outstanding (September 30,		178			195			286			286		305
2024: 17,820,078)
Class B, authorized (September 30, 2024: 79,677,932), par value $0.01; issued and outstanding (September		637			574			568			560		427
30, 2024: 63,668,995)
Class C, authorized (September 30, 2024: 19,903,649), par value $0.01; issued and outstanding (September		199			250			255			255		305
30, 2024: 19,903,649)
Additionalpaid-in-capital		1,172,331			1,171,585			1,255,055			1,249,817		1,128,553
Accumulated other comprehensive loss		(4,441)			(4,441)			(4,441)			(4,441)		(4,441)
Retained earnings		1,144,722			1,070,384			957,782			801,373		674,576
Total shareholders' equity		2,313,626			2,238,547			2,209,505			2,047,850		1,799,725
Total liabilities,non-controllinginterest, and shareholders' equity	$	7,826,547	$	7,623,103	$	7,349,025	$	6,671,355	$	6,504,604

Summary Consolidated Results

Reconciliation of Consolidated GAAP Balance Sheet to Unconsolidated Balance Sheet

				September 30, 2024
	Consolidated GAAP			Two Sigma			Unconsolidated
			Hamilton Fund
($ in thousands)		Balance Sheet			Balances			Balance Sheet(1)
Assets
Fixed maturity investments, at fair value	$	2,320,184	$	-	$	2,320,184
Short-terminvestments, at fair value		507,947			(507,947)			-
Investments in Two Sigma Funds, at fair value		932,787			886,861			1,819,648
.........................................................................................................................................................................................................................Total investments		3,760,918			378,914			4,139,832
Cash and cash equivalents		957,372			(560,757)			396,615
Restricted cash and cash equivalents		93,883			-			93,883
Premiums receivable		885,744			-			885,744
Paid losses recoverable		146,008			-			146,008
Deferred acquisition costs		205,953			-			205,953
Unpaid losses and loss adjustment expenses recoverable		1,190,465			-			1,190,465
Receivables for investments sold		39,079			(28,977)			10,102
Prepaid reinsurance		260,174			-			260,174
Intangible assets		94,441			-			94,441
Other assets		192,510			(1,184)			191,326
.................................................................................................................................................................................................................................Total assets	$	7,826,547		$	(212,004)		$	7,614,543
Liabilities, non-controlling interest, and shareholders' equity
Liabilities
Reserve for losses and loss adjustment expenses	$	3,434,800	$	-	$	3,434,800
Unearned premiums		1,192,071			-			1,192,071
Reinsurance balances payable		334,511			-			334,511
Payables for investments purchased		172,905			(151,754)			21,151
Term loan, net of issuance costs		149,916			-			149,916
Accounts payable and accrued expenses		168,658			(190)			168,468
............................................................................................................................................................................................................................Total liabilities		5,452,861			(151,944)			5,300,917
Non-controllinginterest - TS Hamilton Fund		60,060			(60,060)			-
Shareholders' equity
Common shares:
Class A, par value $0.01		178			-			178
Class B, par value $0.01		637			-			637
Class C, par value $0.01		199			-			199
Additionalpaid-in-capital		1,172,331			-			1,172,331
Accumulated other comprehensive loss		(4,441)			-			(4,441)
Retained earnings		1,144,722			-			1,144,722
......................................................................................................................................................................................................Total shareholders' equity		2,313,626			-			2,313,626
Total liabilities, non-controlling interest, and shareholders' equity
$	7,826,547		$	(212,004)		$	7,614,543

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.

Attachments

Disclaimer

Hamilton Insurance Group Ltd. published this content on November 06, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 07, 2024 at 00:25:23.720.

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