Hamilton Insurance Group, Ltd.

quarter 2025 earnings conference call. The Hamilton executives leading today's call are Pina Alba, 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, contain 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'll hand it over to Pina.

Thank you, Darian, and hello, everyone. Let me start by welcoming you all to Hamilton's first quarter 2025 conference call. I'm very pleased to report another profitable quarter for Hamilton, despite the fact that global insured catastrophe losses were over $55 billion for the quarter, driven primarily by the California wildfires. Starting with the headline results, our catastrophe loss ratio this quarter was 30.2%, which includes our California wildfire net loss estimate of $143 million. This number is net reinsurance and reinstatement premiums and does not take into account any potential recovery benefits for example for subrogation also as a reminder this estimate is within the 120 to 150 million range which we announced during last quarter's earnings call notwithstanding the catastrophe losses Hamilton had a very strong start to the year Our attritional loss ratio was 51.9%, exemplifying the stability of our underlying book, which is running where we would expect. Our gross premiums written increased by 17% in the first quarter. Investment results were significant, with a total investment return of $167 million, a result that more than offsets our catastrophe losses. Finally, in terms of headline numbers, Our net income of $81 million represents a 13.7% annualized return on average equity for the first quarter. I would now like to focus on our two reporting segments, particularly their top-line growth this quarter. Each of our segments, Bermuda, which is comprised of Hamilton Re and Hamilton ReUS, and International, which houses Hamilton Global Specialty and Hamilton Select, enjoyed double-digit growth starting with hamilton reed which renews approximately 40 percent of its business during the first quarter we wrote 473 million dollars in gross premiums an increase of 18 percent over last year this increase was primarily driven by casualty and property classes in casualty we continue to take advantage of two things first the favorable market environment with tighter limits and stronger underlying rates, and second, our AM best rating upgrade to A. The latter led to new business as well as opportunities for us to increase a number of the line sizes on our renewal business across both our Hamilton ReBermuda and our U.S. underwriting platforms. In property, a significant portion of the increase was related to reinstatement premiums from the California wildfires. That said, we were also successful with some targeted new business growth and therefore still showed growth over the prior year when excluding reinstatement premiums. In general, we feel property cat business is still attractively priced and it also enjoys the improved terms and conditions and higher attachment points from the market reset in 2023. Before I move on to international, I'd like to say a few words specifically about Hamilton Re's recent growth in casualty. Again, we view the current casualty environment as attractive, so we continue to lean in, albeit in a highly selective and disciplined manner. By selective, I mean that we focus on building strong relationships with key clients with whom we enjoy a broad trading relationship and on becoming a more relevant trading partner with them. Key target cash-to-client for Hamilton are those that have a very strong underwriting and claims handling culture, are good at actively managing market cycles, and keep a significant amount of their exposure net. thus ensuring alignment of interest. By disciplined, I mean that each casualty deal is actuarially reviewed with a view of risk and a loss ratio that is independent from those of our seedants and brokers and reflects what we believe to be a cautious view of loss trends, including social inflation. Moving to our international segment, we wrote $370 million of gross premiums an increase of 15% over the prior year. This growth was primarily due to the healthy flow of U.S. E&S business we saw in the quarter. U.S. E&S makes up the majority of the business we write in international. Our product diversification and expertise in both Hamilton Global Specialty and Hamilton Select allow us to grow in the areas we deem most attractive and shrink or exit those where we do not believe we are getting adequate rate. Hamilton Global Specialty, which is the largest contributor to the international segment, increased most in property and specialty classes. In property, we grew most with a particular longstanding account, which has been very profitable for us historically. In specialty, we grew most in personal accident, fine art and specie, and marine lines where our expertise is well recognized. As a reminder, Hamilton Global Specialty houses our Lloyd's underwriting operation, Hamilton Syndicate 4000. A few weeks ago, we reported our 2024 Lloyd's results, and I'm proud to say that our syndicate remains in the enviable position of being amongst the syndicates with the highest profitability and lowest volatility over a 10-year period. We have a consistently strong track record at Lloyds, and each year we continue to build on that success. Lastly, the international segment includes Hamilton Select, our hard-to-place U.S. E&S platform, which grew 51% this quarter. Our strongest growth came from excess casualty, products and contractors, and general casualty classes. We are keeping a sharp eye on pricing trends in all of our offerings and will adjust our underwriting appetite as needed. I will now turn to the April 1 and upcoming mid-year reinsurance renewals. I will be brief, as I'm sure you've heard plenty of commentary regarding movements in rates, trends, and the like on earlier calls. Regarding the 4-1 renewals, which are largely Japanese accounts, Attachment points and terms and conditions remained relatively stable. Pricing saw some modest decreases, as expected, because this market is largely decoupled from the losses seen in the U.S. For U.S. 4-1 property cap renewals, consistent with what we said last quarter, loss-free U.S. programs renewed with modest rate reductions, while loss-affected programs experienced rate increases. There were a handful of casualty renewals at 4-1 and market discipline remained there too, with rates largely keeping pace with loss costs. As for the upcoming mid-year renewals, which are largely property driven, we are seeing increased demand and stable supply. This will likely result in pricing being similar to what we experienced so far this year. Loss affected accounts will see rate increases And it is important to note that a number of the larger accounts affected by the wildfires and the 2024 hurricanes are renewing in this period. Before I turn the call over to Craig, I'd like to address the continued economic and geopolitical uncertainty the world is facing, particularly the more recently announced tariffs and the potential for a recession. Regarding tariffs, it is still early days but it is important to note that they have an indirect impact on our business as we are a financial services provider. While there remains much uncertainty around tariff policies and their impacts, we are currently anticipating that the primary impact will be lost cost inflation in certain lines, and the secondary impact could be to the broader trading environment. When we think about potential loss cost inflation, we believe our exposure is most material in property lines. However, we perceive this exposure as very manageable at the present time, and we have the framework and the models already in place and fully operational to react to this risk as it develops. When it comes to the broader trading environment, we are used to thinking about this kind of risk, and will continue to monitor it closely and react accordingly. Regarding the possibility of a recession, as you will have heard from many of my peers, insurance and reinsurance are not luxury purchases and therefore rather resilient in this context. Against this backdrop, we believe we are still in an attractive trading environment, are capable of navigating risk, and are therefore able to enjoy thoughtful and selective double digit growth in our top line. Our attritional loss ratios, the barometer of the health of our underlying business are stable, and we have an experienced and disciplined team and a strong balance sheet. With that, I will now turn the call over to Craig to go over our financial results in more detail.

Thank you, Pina, and hello, everyone. Hamilton is off to a strong start for the year, with net income of $81 million equal to 77 cents per diluted share, producing an annualized return on average equity of 13.7%. We also increased book value per share to $23.59. This compares to net income of $157 million, or $1.38 per diluted share, and an annualized return on average equity of 29.5% in the first quarter of 2024. Before I move on to details around our underwriting and investment income components for the quarter, I wanted to point out some new metrics we've added to our financial supplement disclosures this quarter. We are now reporting operating income, operating income per share, and operating return on average equity. We define operating income as net income, excluding one, net realized and unrealized gains or losses on investments in our fixed maturity and short-term investment portfolios, and two, foreign exchange gains or losses. To clarify, we are including the realized and unrealized gains and losses from the Two Sigma Hamilton Fund in our definition of operating income. We understand that many of you have asked for a disclosure of operating income to more readily compare Hamilton with some of our peers. While I will not discuss operating income in any more detail on today's call, we will begin providing commentary around this result next quarter. In the meantime, if you have any questions, please feel free to reach out to Investor Relations. Moving on to our underwriting results, Hamilton continues to grow its top line at a thoughtful double-digit rate. As Pina mentioned, our first quarter 2025 gross premiums written increased to $843 million compared to $722 million this time last year, an increase of 17%. Both our reporting segments, International and Bermuda, continue to lean into favorable market conditions. For the first quarter, Hamilton had a $58 million underwriting loss primarily driven by the California wildfire catastrophe loss estimate in the quarter. This is compared to underwriting income of $33 million in the first quarter last year. The group combined ratio was 111.6% compared to 91.5% in the first quarter of 2024. Again, the increase in the combined ratio was primarily driven by the catastrophe losses. Starting with the loss ratio, in the first quarter, the loss ratio increased 18.9 points to 79.2% compared to 60.3% in the prior period. The increase was primarily driven by $151 million worth 30.2 points of net current and prior year catastrophe losses, primarily driven by the California wildfires. This compares to catastrophe losses of less than a half a million dollars reported in the first quarter last year. The attritional loss ratio was 51.9%, a decrease of 5.3 points compared to the first quarter last year. The primary reason for the decrease was the first quarter of 2024 included the Baltimore Bridge loss. Again, our underlying diversified book of business continues to perform well. We had favorable prior year attritional development of 2.9 points driven predominantly by specialty and property classes. This compares to 3.1 points of unfavorable development in the first quarter last year. The expense ratio increased 1.2 points to 32.4% compared to 31.2% in the first quarter last year, with acquisition costs being slightly higher and other underwriting expenses being slightly lower. The increase in acquisition expenses was mainly driven by higher profit commissions and a change in business mix. As always, I'd encourage you to use the full year 2024 attritional loss and expense ratios as an indication of where we expect the current book to perform. Next, I'll go through the first quarter results by reporting segment. Let's start with the international segment, which includes our specialty insurance businesses, Hamilton Global Specialty, and Hamilton Select. For the first quarter of 2025, international gross premiums written grew to $370 million from $321 million, an increase of 15%. This was driven by growth in our property, casualty, and specialty insurance classes. International had an underwriting income of $1 million and a combined ratio of 99.7%. compared to underwriting income of $5 million and a combined ratio of 97.2% in the first quarter last year. The increase in the combined ratio was primarily related to catastrophe losses in the quarter. International had $29 million of net catastrophe losses completely driven by the California wildfires compared to negligible net catastrophe losses in the first quarter of 2024. The international current year attritional loss ratio decreased 3.9 points to 52.1% in the first quarter, compared to 56.0% in the first quarter last year, which included the Baltimore Bridge loss. The expense ratio increased by 0.9 points to 39.1% compared to 38.2% in the first quarter last year. The increase in the expense ratio was primarily driven by increased profit commissions included in the acquisition expense ratio, partially offset by a lower other underwriting expense ratio. I will now turn to the Bermuda segment, which houses Hamilton Re and Hamilton Re US, the entities that predominantly write our reinsurance business. For the first quarter of 2025, Bermuda gross premiums written grew to $473 million from $401 million, an increase of 18%. The increase was primarily driven by new and existing business and casualty and property reinsurance classes, including non-recurring reinstatement premiums related to the California wildfires. Bermuda had an underwriting loss of $59 million and a combined ratio of 122.8% compared to underwriting income of $27 million and an 85.5% combined ratio in the first quarter last year. The increase in the combined ratio was primarily related to catastrophe losses in the quarter. Bermuda had $121 million of net catastrophe losses primarily driven by the California wildfires of $131 million and partially offset by favorable prior year catastrophe development of $9 million. This compares to no net catastrophe losses in the first quarter of 2024. The Bermuda current year attritional loss ratio decreased by 6.6 points to 51.8% in the first quarter compared to 58.4% in the first quarter last year, which included the Baltimore Bridge loss. The Bermuda expense ratio increased by 2.3 points to 26.2% compared to 23.9% in the first quarter of 2024 due to a change in business mix specifically an increase in quarter share business, and reduced performance-based management fees, partially offset by growth in the premium base. Now turning to investment income. Total net investment income for the first quarter was $167 million, compared to investment income of $148 million in the first quarter of 2024. The fixed income portfolio, short-term investments, and cash produced a gain of $64 million in the quarter compared to a gain of $5 million in the first quarter of 2024. 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. The fixed income portfolio had a return of 2.4% or $59 million and a new money yield of 4.8% on investments purchased this quarter. The duration of the portfolio remains at 3.4 years. The average yield to maturity on this portfolio was 4.5% compared to 4.7% at year-end 2024. The average credit quality of the portfolio remains strong at AA3. The Two Sigma Hamilton Fund produced a $104 million gain, or 5.5%, for the first quarter of 2025. compared to a $143 million gain, or 8.3% in the first quarter last year. The latest estimate we have for the Two Sigma Hamilton Fund year-to-date performance was 7.9% through April 30th, 2025. The Two Sigma Hamilton Fund made up about 40% of our total investments, including cash investments, at March 31st, compared to 39% at December 31st, 2024. In the second quarter of 2024, we announced a $150 million share repurchase authorization by the Hamilton Board of Directors. During the first quarter of 2025, we used $10 million of that authorization to repurchase shares that were priced below book value. With $112 million remaining under our share repurchase authorization, we are able to continue repurchasing shares growing the book of business, all while maintaining our strong capital position, even during times of uncertainty. Next, I have some comments on our strong balance sheet. Total assets were $8.3 billion at March 31st, 2025, up 7% from $7.8 billion at year-end 2024. Total investments in cash were $5 billion at March 31st, an increase of 4% from the $4.8 billion at year-end 2024. Shareholders' equity for the group was $2.4 billion at the end of the first quarter, which was a 3% increase from the $2.3 billion at year-end 2024. Our book value per share was $23.59 at March 31st, 2025, up 3% from year-end 2024. Thank you. And with that, we'll open up the call for your questions.