Hamilton Insurance Group, Ltd. Q2 FY2025 earnings call

• Management appointments: Megan Graves retired as CEO of Hamilton Re, Adrian Daws succeeded her, Alex Baker took over from Adrian as CEO of Hamilton Global Specialty, and Tim Duffin became Group Chief Underwriting Officer. Also, Raymond Karrenbauer was appointed Group Chief Information Officer and Russ Buckley as Group Chief Risk Officer.
• Second quarter highlights: Gross premiums written increased by 18%, with Bermuda up 26% driven by casualty reinsurance and new specialty reinsurance classes, and International segment gross premiums written grew 11%. Hamilton Select had 52% growth. Property catastrophe deals had rate pressure but pricing remained attractive. Conducted casualty reserve review, strengthening some reserves in Bermuda and releasing event-specific property reserves.
• Investment income: Total investment income was $149 million in the second quarter of 2025, with the fixed income portfolio and Two Sigma Hamilton Fund contributing significantly.

International segment

• First half of 2025: Gross premiums written grew to $715 million from $632 million, an increase of 13%. In the second quarter, underwriting income was $27 million with a combined ratio of 89.3% compared to underwriting income of $19 million and a combined ratio of 91.0% in the second quarter of last year. The decrease in the combined ratio was mainly due to a 3-point decrease in the loss ratio from favorable prior year development, offset by a 1.3-point increase in the expense ratio.

Bermuda segment

• First half of 2025: Gross premiums written grew to $841 million from $693 million, an increase of 21%. In the second quarter, underwriting income was $40 million with a combined ratio of 84.3% compared to underwriting income of $46 million and a combined ratio of 77.4% in the second quarter of last year. The increase in the combined ratio was due to increases in the current year and prior year attritional loss ratios, and a higher acquisition expense ratio. A $18 million charge was made on certain casualty lines in the second quarter.

• Confident about continuing positive performance trajectory due to well-diversified and scaled platforms, strong balance sheet and ratings, and world-class team.
• Focus on rate adequacy, still an attractive business environment, especially for disciplined underwriting organizations like Hamilton.

• Market cycle fluctuations may impact business.
• Decreased writings in property D&F insurance and certain specialty reinsurance classes that did not meet return thresholds.

Q: Can you provide more color around the reserve increases in the discontinued lines in terms of what accident years was that? And were those covered by your LPT? And then sticking with that, with the casualty reserve review done, did that lead to any change in your underlying loss picks, particularly like on the Bermuda side? Because I think it's a little bit hard for us to see since you didn't quantify the Air India loss, like how much uptick there was versus the prior year?

A: Pina Albo led off generally and passed to Craig William Howie. Craig explained the $18 million increase was from discontinued lines, related to 2020 and prior years, no LPT with Bermuda book, and did not change loss picks, with the Air India loss causing an increase in Bermuda current year attritional loss ratio.

Q: Can you talk about what you saw in the quarter in terms of property pricing, particularly for your portfolio? And maybe if you could quantify how much of your property book skews towards large accounts versus SME? And then if you want to go a step further, if you could maybe potentially size the property exposure in your E&S portfolio?

A: Pina Albo said property insurance pricing had pressure on property D&S, with larger accounts having more pressure and midsized to smaller accounts less affected, and property reinsurance pricing was deal specific but still attractive.

Q: Maybe just sticking with the Select business. I think that business performed a little bit better quarter-over-quarter just in terms of the absolute growth rate. Just want to understand maybe, are you guys seeing a lot of MGA competition in your Select business? Or how should we think about that growth capability for the rest of the year?

A: Pina Albo said Hamilton Select business had healthy flow of business, does not support MGAs in the portfolio, and is comfortable with underwriting in specific niche.

Q: Just wondering if you could maybe give us a new outlook on that number for the year regarding the Bermuda casualty growth from the AM Best upgrade.

A: Giuseppina Carmela Albo said benefited from AM Best upgrade, ahead of initial expectations, with more moderate growth ahead but strong premium income continuing.

Q: Is this the right run rate for the future? And just wondering how we could think about that with wind season coming up.

A: Craig William Howie said share repurchase rate depends on conditions, 10b5-1 plan allowed full quarter buying, will adjust based on circumstances.

Q: Was there any change in your reserves related to the U.K. verdict on the Russia-Ukraine aviation losses?

A: Craig William Howie said no change in reserves this quarter, as 2022 already had fulsome reserve for potential losses.

Q: I noticed your interest expense dropped by $1 million quarter-over-quarter, but your debt was essentially flat. What was the driver of that?

A: Craig William Howie explained it was due to SOFR rate decrease and lower信用证保证金导致利息支出减少.

Q: Just how should we be thinking about tax rate going forward?

A: Craig William Howie said global minimum tax has 5-year deferral, current effective tax rate is low.