Hamilton Insurance Group Ltd. Q3 FY2024 earnings call

• IPO Impact: One year after IPO, transition from private to NYSE-listed firm, with capital deployed into underwriting operations.
• Underwriting Profitability: Third quarter 2024 had net income of $78 million, $29 million underwriting income, and a group combined ratio of 93.6%. Year-to-date combined ratio 89.9% and annualized ROE 22.4%.
• Group Underwriting Committee (GUC): Regular meetings to discuss business performance by underwriting platform and line, emerging risks, risk appetite, and market conditions to inform underwriting decisions.
• Market Renewals: Participated in various reinsurance and insurance renewals events, seen as a valuable and reliable partner, with market discipline remaining strong.
• Growth: Overall growth strong at 17% year-over-year. Bermuda had strong growth due to AM Best upgrade. International growth at a measured clip but focus on pricing and underwriting discipline. Specialty insurance expected to have double-digit growth.
• Competition Response: In London market, cyber has increased competition, with Hamilton standing firm on terms and price. Financial lines and large global property also seeing pricing pressure, but property still has adequate rates with selective targeting.

International Segment

• First 9 months of 2024: Gross premiums written grew to $958 million from $832 million, a 15% increase. Third quarter underwriting income was $5 million with a combined ratio of 97.6%.
• Year-to-date: Acquisition expense ratio decreased 0.9 points to 25.2%, other underwriting expense ratio decreased 2.5 points to 13.8% due to premium base growth.

Bermuda Segment

• First 9 months of 2024: Gross premiums written grew to $921 million from $685 million, a 34% increase. Third quarter underwriting income was $24 million with a combined ratio of 89.4%.
• Third quarter: Increase in combined ratio was due to catastrophe losses, but current year attritional loss ratio decreased 4.1 points to 51.0%.

• Specialty Insurance Growth: Expect double-digit growth in specialty insurance, including in the International segment.
• Bermuda Growth: Bermuda expected to continue growing due to new business, expanded participations, and rate increases in property and casualty reinsurance classes.
• Premium Uplift: Rating upgrade expected to lead to a 10%-15% premium uplift for business, affecting 2024 and beyond.

• Catastrophe Losses: Third quarter had $38 million net losses from Hurricane Helene and other large loss events. Estimated $30 million to $70 million net of reinsurance losses from Hurricane Milton in fourth quarter 2024.
• Unfavorable Casualty Reserve Development: Unfavorable development in casualty segment due to additional claims information received in the quarter.
• Competition Risks: Increased competition in London market for cyber, some financial lines, and large global property placements, putting pressure on pricing in those areas.

Q: Discuss the unfavorable casualty reserve development mentioned.

A: Craig Howie stated the group had favorable prior period development of about $3 million, but unfavorable part was one large loss on the casualty side in the International segment, which occurred in Q4 2023 and additional claims info received in the quarter led to adjustment.

Q: On retention and rating upgrade impact.

A: Pina Albo said higher retention was a stated goal with capital deployed to keep well-priced business. Rating upgrade mostly impacted reinsurance operations, with new business calls and ability to increase line sizes, expecting 10%-15% premium uplift year-to-date and going into 2025.

Q: International underlying loss ratio and growth outlook.

A: Craig Howie said full-year results better gauge, international attritional loss ratio was about 53% in 2023 full year, current is around 54.6% but with some prior year impact. Pina Albo noted International segment had 15% growth YTD, lower in quarter due to underwriting discipline, especially in cyber, but Select part of International still seeing strong E&S market.

Q: Competition in London market and impact on business.

A: Pina Albo said cyber, some financial lines, and large global property placements in London market have increased competition. Cyber has pricing pressure, financial lines D&O also has pricing pressure, but property insurance has had quarterly rate increases since 2017 and is still adequate with selective targeting.

Q: Expense ratio and capital deployment for buybacks.

A: Craig Howie said expense ratio has come down every year since 2019 and still see opportunities for operating leverage to drive it down further. Regarding capital for buybacks, there is flexibility, with $150 million authorization, $10 million used in the quarter, $140 million left.