Hamilton Insurance Group, Ltd.

Thank you, Operator, and welcome all to the Hamilton Insurance Group Fourth Quarter and Year-End 2024 Earnings Conference Call. The Hamilton executives leading today's call are Pina Albo, Group Chief Executive Officer, and Craig Howey, Group Chief Financial Officer. We are also joined by other members of the Hamilton Management Team. Before we begin, note that Hamilton financial disclosures, including our earnings release, include important information regarding forward-looking statements. Management comments regarding potential future developments are subject to the risks and uncertainties as detailed. Management may also refer to certain non-GAAP financial measures. These items are reconciled in our earnings release and financial supplement. With that, I turn the call over to Pina Albo, Hamilton CEO.

Thank you, John, and hello, everyone. Let me start by welcoming you to Hamilton's full year and fourth quarter 2024 earnings call. In terms of previewing our call today, I will focus my comments on the full year, with Craig providing more details on our financial results in a moment. Before covering our results, though, it's important to note that the risks we cover remain prevalent around the world, and we are unfortunately reminded of this all too often. The devastating and deadly wildfires, which recently took place in Los Angeles, represent just one of the many risks affecting individuals, families and communities. Our thoughts are with all those who have been affected and our heartfelt thanks to the first responders. We are doing our part by working swiftly to compensate our clients for their financial losses, and we take pride in delivering on our promises and helping those affected. We are still assessing our loss estimates, but our early views indicate a range of $120 million to $150 million net of reinsurance and reinstatement premiums. This is based on an industry-insured loss range of $35 billion to $45 billion. Our loss estimate for this event is within our modeled expectations for market share, in this case, about 0.3%. The estimated losses for this event will be reported in the company's first quarter 2025 financial results. Turning to 2024, there was no shortage of similarly destructive natural catastrophes, with approximately $140 billion in insured industry catastrophe losses. Despite this backdrop and the collapse of the Francis Scott Key Bridge in Baltimore earlier in the year, Hamilton completed an outstanding first full year as a public company. Our financial results were excellent for both of our reporting segments, international and Bermuda, and both segments continued to grow thoughtfully and profitably. As a group, we had growth premiums written of over $2.4 billion, an increase of 24% over 2023. Our combined ratio was an impressive 91.3%, resulting in nearly $150 million of underwriting income, again, in a year with significant insured loss activity. One of the reasons for this underwriting result is the diversification of our business. For the full year 2024, Hamilton's business was split 45% casualty, 30% specialty, and 25% property. Investment results were also exceptional. With total investment return of $360 million, the combined result was a net income to common shareholders of $400 million, representing an .3% return on average equity and a .5% growth in book value per share for the year. We are very proud of these results, as they are a testament to the disciplined execution of our strategy and our strong underwriting culture. During 2024, we focused specifically on executing the objectives we set out during our IPO process, namely strategic growth, achieved by raising and then deploying capital into a robust insurance and reinsurance marketplace. Second, maintaining a sharp eye on underwriting profitability. Third, achieving ratings upgrades. And fourth, being good stewards of capital. Let me touch on each of these in turn. Both of our underwriting segments, International, which houses our insurance-focused platforms, Hamilton Global Specialty and Hamilton Select, and Bermuda, which houses our reinsurance-focused platform, Hamilton Re, had strong results, reflecting a growing and well-diversified book of business. For the full year 2024, our larger segment, International, wrote 1.3 billion of gross premiums and reported a .6% combined ratio, an excellent result, which is also reflective of the diversified, lower-volatility portfolio that we have built there over time. As mentioned, within International, where we write the majority of our specialty insurance business, we have two underwriting platforms, Hamilton Global Specialty, which includes Lloyds Syndicate 4000, and Hamilton Select, our specialized underwriting platform for -to-place US E&S business. Hamilton Global Specialty wrote 1.2 billion of gross premiums during 2024, continuing a path of thoughtful double-digit growth. Hamilton Select, which is still in its early stages of development, wrote 117 million in premiums during the year, a number which is slightly ahead of where we thought it would be and reflective of the momentum they have achieved in the strong US E&S market where they sourced their business. Our Bermuda segment, which is comprised of Hamilton Re and Hamilton Re US, wrote 1.1 billion in gross premiums and reported a combined ratio of 87% for the full year 2024, the second consecutive year with a combined ratio in the 80s. Hamilton Re's business is predominantly reinsurance and well-balanced between casualty, property and specialty classes. Our very strong relationships with key global and national clients has allowed us to put together a very well-diversified book of business. Bermuda remains one of the key global centres for reinsurance and insurance, and we have a strong team in place for both offerings. Specific to Bermuda Insurance, we wrote approximately 130 million in gross premiums during 2024, split roughly 50-50 property and casualty. In addition to posting excellent financial results in 2024, we were also gratified by the recognition provided to Hamilton by the three global rating agencies, AM Best, Fitch and KBRA. In April of this year, Hamilton Re received an upgrade to A from AM Best that in July received an initial published rating of A- from Fitch. In July, Hamilton Re also had its A rating affirmed by KBRA. Ratings are very important to our customers and broker partners, and as we have discussed in prior calls, these higher ratings, which are now on par with many of our larger global peers, have and will continue to afford Hamilton opportunities for additional profitable business. Our fourth significant objective for 2024 was to be responsible stewards of shareholder capital. To that end, we repurchased a number of shares below book value, an action which resulted in a notable increase in shareholder value. During 2024, we repurchased 10.6 million shares at a total cost of $138 million. This includes both open market repurchases and a large single repurchase from a founding investor. We, of course, hope that our shares will not always be undervalued, but when they are, we have the capital and are well positioned to act decisively. Turning now to the important January 1 reinsurance renewals, an annual renewal date for a sizable percentage of the global reinsurance treaty market. By this time, you will have heard quite a bit about the movement in rates across various classes and territories, so I will only provide brief comments on this in a few moments. What I would like to say now is that Hamilton fared very well at our January 1 renewals. The work we have done in establishing and nurturing relationships with key clients resulted in strong signings and enabled us to continue building a diverse portfolio that we believe will deliver attractive returns. For property cat, we saw the dynamics described by many of our peers with an oversupply of capacity at 1-1 and rates experiencing some downward pressure. That said, the step change in terms of terms and conditions and specifically the elevated attachment points remained intact, a very important point. For casualty re, while commissions generally remain flat, underlying rates continue to improve and will flow through to us since the majority of our business is quota share. Regarding specialty reinsurance, this segment has a number of diverse lines of business and the results were therefore a mixed bag, with some classes more competitive than others. One area where we did well involves our recently launched credit bond and political risk reinsurance offering, which met with keen interest from many of our clients and was entered into at an opportune time in the market. While we will provide more detail in our first quarter call, for now, suffice it to say that the take-up on our new offering exceeded our expectations. Looking ahead to the mid-year property cap renewals, we anticipate a higher level of demand. Also, given that many programs impacted by the wildfires and 2024 hurricanes renew mid-year, we expect an increase in rates for loss-affected accounts. Otherwise, we expect stable renewals. Given the strength of our balance sheet and our strong talent base, as well as the client relationships we have built, we are well positioned for the year ahead. Moving away from Bermuda and back to our international segment, although January 1 is not the same milestone date given that insurance business renews throughout the year, the first quarter is still important in setting the tone. In the early days of 2025, we continue to see attractive opportunities across many classes within our international portfolio. In particular, in some of the specialty insurance lines of business which have long had a natural home in Lloyds. We will, for example, continue to expand our marine offering which includes hull, liability and cargo lines. The Lloyds market has a robust ecosystem for marine classes built over many years, and Syndicate 4000 is an active participant with a skilled team in place. We also see opportunities to grow our property insurance lines and have recently added underwriting talent in this area. Syndicate 4000's long-term performance versus the market has been strong with profitable and stable returns. We are home to a well-regarded team of specialist underwriters who are, in many cases, considered leaders in their field. The team is laser-focused on bottom-line profitability and has developed a resilient and diversified book focused on specialty and casualty insurance lines. The delivery of low volatility and cross-cycle profitability has been achieved by enforcing underwriting discipline across over 20 lines of business spanning casualty, specialty, including marine and property classes. As for our Hamilton Select platform, which again is focused on hard to place small to mid-size commercial casualty risks in the U.S. ENS market, we continue to see strong and increasing submission flow and attractive opportunities, particularly in general and excess casualty. Despite increased competition in the ENS space, pricing levels remain attractive for the risks we are writing, and we see sufficient growth opportunities for our business. I will conclude with a few comments on our loss reserves. We are proud of the continued strength of our reserves, which stems from our disciplined reserving philosophy. In this context, we are happy to report that 2024 marks the 11th consecutive year of favorable reserve development for Hamilton. As you know, we have our reserves reviewed by an external actuary twice a year, and it was gratifying to see that following their recently completed fourth quarter review of our reserves, our surplus above their best estimate has increased. We continue to monitor and adjust for inflationary trends, notably U.S. social inflation, in a number of our casualty lines and have well-established processes to ensure that our reserving, planning, and pricing incorporates what we believe to be appropriate loss trend assumptions. In conclusion, I feel proud of what Hamilton has achieved, and I am excited about our business prospects and the potential to continue producing strong financial returns. The hard work the team has put in over the years and its culture of underwriting and operational discipline has positioned us well. We have a well-diversified global book of business focused on some of the best-priced classes of business, efficient operating platforms in the locations that matter to our customers, a very strong balance sheet, and a world-class team who are collaborative and motivated to achieve our shared goals. With that, I'll now turn the call over to Craig.

Thank you, Pina, and hello everyone. Hamilton had a record year with 2024 net income of $400 million, up 55% over the prior year, and a return on average equity of .3% compared to .9% in the prior year. As a result of active share repurchases, we also grew book value per share by 24% over the prior year. The company had another very strong year of premium growth in an attractive market environment, record underwriting income, and strong investment returns to close out an excellent full-year financial result in 2024. For the fourth quarter of 2024, Hamilton reported net income of $34 million equal to 32 cents per diluted share, producing an annualized return on average equity of 5.8%. This compares to net income of $127 million, or $1.15 per diluted share, and an annualized return on average equity of .4% in the fourth quarter of 2023. As a reminder, the fourth quarter of 2023 included an income tax benefit of .1% on annualized return on equity, worth $35 million, and significantly lower catastrophe losses. With those numbers as highlights, let me provide some additional detail around our underwriting and investment income components for the quarter and for the full year. Starting with underwriting results, Hamilton continues to grow its top line at an impressive double-digit rate. In fact, our compound annual growth rate from 2020 to 2024 was 22%. For the full year of 2024, gross premiums written increased to a record $2.4 billion compared to $2 billion this time last year, an increase of 24%. All three of our underwriting platforms, Hamilton Global Specialty, Hamilton Select, and Hamilton Re, continue to take advantage of attractive market conditions, all of which contributed to our profitable growth. Starting with some quarterly underwriting figures, underwriting income for the group was $22 million for the fourth quarter compared to underwriting income of $36 million in the fourth quarter last year. The group combined ratio was .4% compared to .2% in the fourth quarter of 2023. In terms of combined ratio components, the loss ratio increase due to catastrophe losses in the quarter partially offset by a decrease in the overall expense ratio. In the fourth quarter, the loss ratio increased 6.8 points to .1% compared to .3% in the prior period. The increase was primarily driven by $49 million, or 10.2 points, of net current and prior year catastrophe losses made up of Hurricane Milton for $38 million and Hurricane Helene for $19 million, partially offset by favorable prior year development of $8 million. This compares to $7 million, or 1.8 points, of catastrophe losses reported in the fourth quarter last year. We had favorable prior year attritional development of 1.3 points, driven mostly by property lines. This compares to 1.7 points of favorable development in the fourth quarter last year. So, as Pina highlighted earlier, we continue our track record of favorable loss reserve development each year since the inception of the company. Next, I'd like to go through some of our 2024 year-end underwriting metrics. For the full year of 2024, underwriting income for the group was a record $149 million compared to underwriting income of $130 million in 2023. The group combined ratio was .3% compared to .1% in 2023. The nominal increase in the combined ratio was due to increased catastrophe losses and attritional losses, partially offset by a decrease in the expense ratio. The loss ratio increased 4 points to .2% compared to .2% in 2023. The increase was primarily driven by $88 million, or 5.1 points, of net current and prior year catastrophe losses made up of Hurricane Helene for $53 million, Hurricane Milton for $38 million, the Calgary hailstorms for $13 million, and Hurricane Debbie for $6 million, partially offset by favorable prior year development of $21 million. This compares to $37 million, or 2.8 points, of net current and prior year catastrophe losses in 2023. The attritional loss ratio was 53.1%, an increase of 0.9 points compared to the full year of 2023. The primary reason for the increase was due to 2.2 points related to the Baltimore Bridge loss in the first quarter of the year. The expense ratio decreased 2.8 points to .1% compared to .9% in the full year of 2023. The decrease in the full year of 2024 expense ratio was mainly driven by improved operating leverage due to growth in our earned premium base. As always, I'd encourage you to use the full year 2024 attritional loss and expense ratios as an indication for where we expect the current book to perform. As for corporate expenses, there was an increase in the variable expenses. However, this is associated with our long-term incentive compensation plan, which is based on performance over a three-year period and compensation costs related to the value appreciation pool. For the full year 2024, corporate expenses were $61 million. Going forward, this number should come down to about $50 to $55 million per year. Next, let's look at the results by segment. Let's start with the international segment, which includes our specialty insurance businesses, Hamilton Global Specialty and Hamilton Select. For the full year 2024, international gross premiums written grew to $1.3 billion from $1.1 billion, an increase of 18%. This was primarily driven by growth in both new and existing business and improved pricing in casualty and property insurance classes and specialty reinsurance and insurance classes. In 2024, international had a record underwriting income of $39 million and a combined ratio of .6% compared to underwriting income of $37 million and a combined ratio of .7% in 2023. A very stable result year over year, which is what we expect from the diversified insurance portfolio that we've constructed. The attritional loss ratio increased 0.3 points to .5% compared to .2% in 2023. In other words, very consistent year over year. The international acquisition expense ratio decreased 2 points to .5% compared to .5% for the full year 2023. The decrease was primarily driven by reduced profit commissions and higher seating commission income. The other underwriting expense ratio decreased 1.8 points to .9% compared to .7% in the full year 2023 as a result of growth in the premium base. Moving to some quarterly figures for the 4th quarter, international had underwriting income of $9 million and a combined ratio of 96.3%. Compared to underwriting income of $2 million and a combined ratio of .1% in the 4th quarter last year. The international current year attritional loss ratio decreased 3.7 points to .8% in the 4th quarter compared to .5% in the 4th quarter last year. The decrease was primarily driven by favorable experience on the property classes as the 4th quarter is when we do our property reserve reviews. I'll now turn to the Bermuda segment, which houses Hamilton Re and Hamilton Re US, the entities that predominantly write our reinsurance business. For the full year 2024, Bermuda gross premiums written grew to $1.1 billion from $846 million last year, an increase of 32%. The increase was primarily driven by new business, expanded participations on existing business and rate increases in casualty, property and specialty reinsurance classes. Approximately $80 million of growth during 2024 was directly tied to our AM best rating upgrade. We expect a similar dollar amount of growth resulting from the upgrade during 2025 for total growth of about $160 million in gross premiums written. In 2024, Bermuda had record underwriting income of $110 million and a combined ratio of .0% compared to underwriting income of $93 million and an .9% combined ratio in 2023. The increase in the full year combined ratio was primarily related to catastrophe losses in the year. Bermuda had $61 million or 7.2 points of net catastrophe losses in 2024 compared to $24 million and 3.9 points in 2023. The Bermuda current year attritional loss ratio increased 1.6 points to .7% in 2024. This was primarily driven by 3.1 points from the Baltimore bridge loss. The Bermuda acquisition expense ratio increased slightly by 0.4 points to .3% compared to .9% in 2023, primarily due to business mix. The other underwriting expense ratio decreased 1.4 points to .3% compared to .7% in the full year 2023 as a result of growth in our premium base. Moving to a few of the quarterly figures. For the fourth quarter, Bermuda had an underwriting income of $13 million and a combined ratio of .3% compared to underwriting income of $34 million and a .6% combined ratio in the fourth quarter last year. The increase in the combined ratio was primarily related to catastrophe losses in the quarter. Bermuda had $32 million of net catastrophe losses in the fourth quarter of 2024 compared to $6 million of net catastrophe losses in the fourth quarter of 2023. The current year attritional loss ratio was 51.7%, which was generally flat compared to last year. Now, turning to investment income for the quarter. Total net investment income for the fourth quarter was $36 million compared to investment income of $114 million in the fourth quarter of 2023. The fixed income portfolio, short-term investments in cash produce a loss of $31 million in the quarter compared to a gain of $77 million in the fourth quarter of 2023. As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio. During the fourth quarter, the rising treasury yields produced a -to-market loss in our fixed income bond portfolio. The new money yield was .7% on investments purchased this quarter. The duration of the portfolio was 3.4 years at December 31, 2024 compared to 3.3 years at the end of 2023. The Two Sigma Hamilton Fund produced a $67 million gain or .7% for the fourth quarter of 2024 compared to a $37 million gain or .2% in the fourth quarter of 2023. Turning to some full year of 2024 investment figures, total investment income in 2024 was $362 million compared to $219 million in 2023. The fixed income portfolio, short-term investments in cash produced income of $87 million compared to $96 million in 2023. The average yield to maturity on this portfolio was .7% compared to .5% at year end 2023. The average credit quality of portfolio remains strong at AA3. For the full year of 2024, the Two Sigma Hamilton Fund had a return of .3% or $274 million compared to .6% or $122 million for 2023. We still plan for 10% annual return from the fund, but we've actually seen total annualized average returns of about 13% since the inception of the fund in 2014. The latest estimate we have for the Two Sigma Hamilton Fund -to-date performance was .6% for January 31, 2025. The Two Sigma Hamilton Fund made up about 39% of our total investments, including cash investments at December 31, 2024, compared to 43% at December 31, 2023. Turning to share buybacks, in the second quarter, we announced a $150 million share repurchase authorization by the Hamilton Board of Directors. During the fourth quarter, we used $18 million of that authorization to repurchase shares. We're able to continue repurchasing shares and growing the business, all while maintaining our strong capital position. During 2024, we repurchased $28 million of common shares on the open market at an average price of $18.89 per share. Based on our book value per common share of $22.95 at December 31, the shares were repurchased at about an 18% discount to book value. We still have $122 million remaining for purchase under the share repurchase authorization. Additionally, in May 2024, we repurchased a large block of shares from a founding investor at a 40% discount to book value. Including this block repurchase, we bought back a total of $138 million of common shares during 2024. Next, I have some comments on the strength of our balance sheet. Total assets were $7.8 billion at year end 2024, up 17% from $6.7 billion at year end 2023. Total investments in cash were $4.8 billion at year end 2024, an increase of 20% from the $4 billion at year end 2023. Shareholders' equity for the group was $2.3 billion at the end of the fourth quarter, which was a 14% increase from year end 2023. Our book value per share was $22.95 at December 31, 2024, up an impressive .5% from $18.58 at year end 2023. Thank you, and with that, we'll open up the call for your questions.

To ask a question, you'll need to press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question plus one follow up and then rejoin the queue for any further questions. Our first question comes from Elise Greenspan from Wells Fargo. Please go ahead. Your line is open.

Hi, thanks. The insurance underlying loss ratio, right, in the quarter was below 51%. Craig, I know you typically like to say, like, look at the full year, but that does seem like a pretty good number. Was there anything one off in there, any kind of catch up or favorability, you know, in the first three quarters of the year? And just how do we think about just kind of go forward, you know, margin profile of, you know, the international segment?

Hi, Elise. Thanks for the question. I would say that's two things. One is, first of all, related to, we're really no absence of large losses. So there were really no large losses in the quarter. That's number one. Number two is we typically do our property reserve reviews in the fourth quarter. So what you can do is if there were no property events, in other words, that would be below our catastrophe threshold, you know, an item that we would normally include in our attritional loss estimate, that non-cap portion can be taken down in the fourth quarter. But as you said, I would encourage you to look at the full year number and, you know, loss ratio, attritional loss ratio in the .5% range is a much better indication of how we would expect that book, that current book to perform.

Thanks. And then my follow up on the casualty reserves, I know you guys called out some adverse movement in prior years in the current quarter. What lines and accident years was that in? And can you just give us, you know, a sense of the magnitude of the casualty movement in the fourth quarter?

Yes, at least I can. You know, you're always going to have slight movements in reserves. And I can tell you, we did say modest. This is very modest. Some of these numbers are very small. It was in our Bermuda segment. It was about $1 million is what we're talking about here. It's a very small number. We had $2 million of favorable development on basically property as well. So overall, we had $1 million of favorable development in Bermuda. For the quarter from a group overall perspective, we were, we produced favorable reserve development in the quarter as well. And we also for full year 2024 had favorable loss reserve development for the group. And as Pena said, each and every year since the inception of the company, we get our reserves reviewed, you know, twice a year by our outside actuaries. And I have to say, we're very comfortable in our overall reserve position.

Got it. Thanks for the color.

Our next question comes from Alex Scott from Barclays. Please go ahead. Your line is open.

Hi. First one I have for you is just your interest and willingness to lean into some of this casualty business that's out there, particularly in reinsurance. I mean, seems like some of your peers haven't had as much balance sheet stability. And there may be opportunities that arise there. Do you feel like price adequacy is where it needs to be? Is there still a lot more work that needs to be done in terms of pricing at the primary level?

Thanks. I'll take that question. Maybe just a little bit of historical context here. We have been generally underweight on the casualty reinsurance side at Hamilton. We only started leaning in a little bit more starting in 2021 when the market started turning more favorable and then always with very small line sizes. You were right to note that recently some competitors have backed out of the space. I can't tell you, perhaps they felt they had larger exposures, but that actually was a very opportunistic time for us because that gave us the opportunity to look at a lot more business, particularly with the benefit of our AM best upgrade. So we are seeing everything we want to see now and have the ability to write the business that we want to write. We are very selective in what we write. We are selective with the clients that we support. We look for clients that keep a business net on their books that underwrite the class properly. So we actually see this as a very opportunistic time for Hamilton and we're excited about it.

That's very helpful. The second one I had for you is more on the property side. I'd just be interested in if you have an update on what you're seeing in the competitive environment on property. There's a lot of talk around some of the Lloyds of London syndicates beginning to get a little more aggressive. You know, we were hearing conversation last quarter. What do you see in there? How are you feeling about price adequacy? With the ratings upgrade, is this still a pretty attractive place to grow on the property side?

So looking at property insurance, particularly on the property DNF side, that has come off of multiple quarters of rate increases. Quarter after quarter of rate increases. There we have an offering on both in our Lloyds syndicate but also in our Bermuda platform. And even though that's come off a little bit more recently, it's come off of all time highs. So we still see the rates as attractive. And again, we underwrite this business, you know, each and every submission on our own merits. In terms of property reinsurance business, there we, you know, we saw some competition at 1-1. Some, you know, some slight decrease in property caps as we did 1-1, but rates were still, you know, attractive. And let's not forget the terms, conditions and attachment points of this business remained very attractive. As we look to our mid-year renewals, a lot of the accounts that were impacted both by the wildfires and also by the 2024 hurricanes, they're up for renewal, you know, in mid-year. So there we expect those loss impacted accounts to have increases and we have the capital, the team and the discipline to write it.

Thank you.

Our next question comes from Michael Zuremski from BMO Capital Markets. Please go ahead. Your line is open.

Hey, morning. Thanks. First question on reserves, maybe specifically, Hamilton's Russian war, aviation related reserves. And I do appreciate this may be a tricky topic to fully unpack. But would you be able to kind of add any color if there's been any meaningful movements? You know, we've got a number of questions from folks given one peer made a major change given there's ongoing litigation. Thanks.

I'm happy to kick off. Craig will certainly fill in all my blanks. So we're talking about the Ukraine loss. I think it's important to remind you that when we posted a reserve for that loss, it was a very fulsome reserve. We reserved for marine classes, for war classes, for aviation classes, and we posted a number of 80 million net to us. That figure today is still 80% IV&R. The majority of our exposure is reinsurance. We do not write aviation insurance and we still feel very comfortable about the strength of that reserve. Craig, do you have anything to add to that?

The only thing I would say, and as we continually reassess that reserve, and the only thing I would say is that we are following all the developments with respect to the aviation exposures. But at the end of the day, we do feel comfortable with our current reserve.

Okay, that's a very helpful answer. Maybe switching gears to Hamilton Select. I know it's, you know, small, fast growing. But I'm just curious on Hamilton Select, would you be able to kind of touch on pricing power there? Our understanding is that margins are excellent in that kind of sandbox and pricing, even in casualty, has been kind of decelerating a bit, unlike the non-ENS casualty marketplace. But just curious if there are any competitive commentary there.

Yeah, let me start with the background in general of the US ENS market space. It is still an incredibly attractive market in general. We are seeing increased submissions to our platform from quarter to quarter. So that is also very positive of momentum. Our underwriting appetite is, you know, very well defined. We are in the small to mid-sized, hard to place space, where it's a space where, you know, we put out specific limits, we can attach specific exclusions. And so it's something we underwrite very carefully in the business that we're seeing, particularly in the excess casualty, general casualty, and also in the small business space. We are still seeing a favorable market environment and we are underwriting each one of those risks on their merit.

Okay, great. And just lastly, any comments or insights you've seen of the devastating California wildfires now, you know, about a month plus has passed. Are you seeing any actual new demand from a primary insurer looking to buy additional reassurance?

So a lot of these programs, as I said, will come up for renewal mid-year. I think that the wildfire is usually part of a larger program. So we have not yet seen, you know, any submissions asking for increased capacity for that. I think what you will see is people will underwrite this exposure much more carefully. As both on the insurance side as well as the reinsurance side. And you might see some insurance players reduce their writings in California. So it's still early days here, but that would be how I

would see that.

Thank you, Ms.

Keller. Our next question comes from Matt Carletti from CitizensJMP. Please go ahead. Your line is open.

Thanks. Good morning. First question on the California fires, the 120 to 150 estimate you provided. How should we think about just a very rough split of how that might fall between the segments?

Thanks, Matt. This is Craig. I would say roughly it's predominantly a reinsurance event for us.

Okay, perfect. And then secondly, I guess Craig, probably a question for you on the investment portfolio. I mean, obviously, two sigma was very strong. But even with that, the NCI seemed like a much larger portion of that than in prior quarters. Can you just help us understand that? Is there some kind of a true up for the annual number or just how we should, what lens we should do that through?

Yeah, Matt, you're absolutely right. The way that that works is it's related to the incentive fees. The non-controlling interest is related to the incentive fees on the two sigma Hamilton farm. It is true to each quarter, but it really depends on the results and certainly strong results in the fourth quarter of the year. Just to remind you, this is all included in the net number that I provided, the 16.3%. All of those fees are included in that number for the full year.

All right, perfect. Thank you.

For any additional questions, please press star followed by one on your telephone keypad. Our next question comes from Tommy McJoynt from KBW. Please go ahead. Your line is open.

Hey, good morning. The gross written premium growth has been really strong, but also getting some benefit on the net to gross ratio continuing to increase in both segments really. How much higher can that go? I guess, is that a function of taking quota share down or buying less XOL protection? Can you put any numbers around that?

Yes, this is Greg. I wanted to, I'll explain to you first. In other words, the reason it grew, the gross to net position or net to gross position, depending on how you want to look at it. The reason it grew was, if you remember, we took in some primary proceeds from the IPO a year ago. And we wanted to use those primary proceeds to do two things. One is to grow the book, but also to retain more of that business. So we do think, you know, going forward, I think for at least this year, you should expect it to be relatively flat from where we are today. But it is something that we would look to do going forward as well to increase our operating leverage.

Okay, got it. And then another revenue line, the third party fee income has continued to see some nice growth. If you just remind me, is that AUM driven or is it profit contingent driven? And so just as you think about the outlook for that revenue line into 2025, how do you think about that?

Yeah, so that that that fee income is delivered. The reason you've seen good results is the performance fees that we get on some of the that we have from our iOS platform. So, in other words, we do get a management fee. So that's a base fee. That's all we plan for for the year. We do not plan for example, the performance fees. But that really depends on the catastrophe activity throughout the year is what you would see that variability in that performance

fee income.

Got it. Thank you.

We have no further questions that will conclude our question and answer session for today. I'd like to turn the call back over to the presenters for any closing remarks.

Okay, well, I just like to thank you all for joining us on this call today. Believe it or not, the next quarter is right around the corner. So we look forward to talking to you all again soon. Thank you. This concludes today's

conference call. Thank you for your participation. You may now disconnect.