On March 6, 2024, Hamilton Insurance Group Ltd (HG, Financial) released its 8-K filing, detailing a strong performance for the fourth quarter and full year ended December 31, 2023. The company, a global specialty insurance and reinsurance provider with operations in Lloyd's, Ireland, Bermuda, and the United States, operates through Hamilton Global Specialty, Hamilton Select, and Hamilton Re, categorized into International and Bermuda business segments.
Financial Performance and Challenges
Hamilton Insurance Group Ltd (HG, Financial) reported a net income of $126.9 million for the fourth quarter, a significant improvement from a net loss of $59.0 million in the same quarter of the previous year. This performance was bolstered by an income tax benefit of $35.1 million, reflecting the enactment of the Bermuda Corporate Income Tax Act of 2023. The company's annualized return on average equity stood at an impressive 26.4% for the quarter.
Despite these strong results, the company faced challenges, including catastrophe losses amounting to 1.8 points of the combined ratio, driven by events such as the Hawaii wildfires and March Storms. However, these were partially offset by favorable prior year development. The company's combined ratio, a key measure of underwriting profitability, was 90.2%, including the impact of catastrophe losses. This ratio indicates that the company spent less than it earned in premiums after accounting for claims and expenses, which is a positive indicator for profitability.
Annual Overview and Segment Performance
For the full year, Hamilton Insurance Group Ltd (HG, Financial) achieved a net income of $258.7 million, with a return on average equity of 13.9%. Gross premiums written saw a substantial increase of 18.5% to $1.95 billion, and net premiums earned rose by 15.3% to $1.32 billion. The full-year combined ratio improved significantly to 90.1%, down from 102.8% in the previous year, reflecting a strong underwriting performance.
The International Segment reported a 16.7% increase in gross premiums written to $273.5 million for the quarter, driven by growth in specialty insurance and reinsurance classes, as well as casualty insurance classes. The Bermuda Segment saw an even more significant increase of 49.9% in gross premiums written to $160.3 million, attributable to expanded participation and improved pricing on renewed casualty reinsurance classes and new business.
Investments and Equity
Hamilton Insurance Group Ltd (HG, Financial)'s investment income for the quarter was $113.8 million, with the Two Sigma Hamilton Fund contributing $36.7 million. Total invested assets and cash stood at $4.0 billion as of December 31, 2023, up from $3.4 billion at the end of the previous year. Total shareholders’ equity also increased to $2.0 billion from $1.7 billion, and book value per share rose to $18.58 from $16.14, marking a 15.1% increase.
CEO Pina Albo commented on the results, stating,
“2023 was a year that truly exemplified the transformation of Hamilton’s business. Our talented team demonstrated our ability to deliver strong results and grow at the right time and in the right lines, all while strengthening our relationships with brokers and clients.”
Hamilton Insurance Group Ltd (HG, Financial)'s robust performance in the fourth quarter and full year 2023 is a testament to the company's strategic positioning and operational efficiency. The results highlight the company's resilience in the face of challenges and its ability to capitalize on favorable market conditions. For value investors, the company's improved underwriting income, strong return on equity, and increased book value per share are particularly noteworthy, indicating a solid financial foundation and potential for continued growth.
For more detailed information, including financial tables and segment results, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Hamilton Insurance Group Ltd for further details.
