Hamilton Accelerated Premium Growth as Catastrophe Losses Cut Underwriting Profit
Middle East conflict losses contributed $45.7 million to the insurer’s catastrophe bill.
Hamilton Insurance Group (HG), the specialty insurer and reinsurer, accelerated premium growth in the second quarter while catastrophe losses cut underwriting income by more than half. Gross premiums written rose 16.7% from a year earlier, up from 11.5% growth in the first quarter.
The quarter extended a two-period deterioration in underwriting margins. Hamilton’s combined ratio rose to 95.0% from 89.8% in the first quarter and 87.0% in the fourth quarter, while underwriting income fell 49.4% sequentially to $29.1 million.
Total revenue increased 13.3% to $839.6 million, while net income attributable to common shareholders fell 23.3% to $143.8 million. Annualized return on equity declined to 20.6% from 30.2%. Operating income slipped 2.2% to $158.2 million, though diluted operating earnings rose one cent to $1.56 a share.
Net premiums earned rose 14.6% to $586.0 million, and net premiums written increased 11.8% to $621.7 million. The underwriting result reflected $49.9 million of catastrophe losses, principally tied to the Middle East conflict, after Hamilton recorded none in the first quarter. Its combined ratio worsened 8.2 percentage points from a year earlier as the catastrophe loss ratio increased by the same amount to 8.5%.
International remained Hamilton’s faster-growing segment, with gross premiums written rising 21.8% to $420.1 million and net premiums earned increasing 19.5% to $302.6 million. Its underwriting income fell 66.4% to $9.1 million as catastrophe losses added 11.1 points to the segment’s combined ratio, which reached 97.0%. Bermuda underwriting income declined 50.5% to $20.0 million, and its combined ratio deteriorated to 93.0%.
The underlying loss trend improved despite the catastrophe burden. The current-year attritional loss ratio declined to 53.3% from 54.5% in the first quarter and 56.5% in the fourth quarter. A lower expense ratio partly offset higher losses and acquisition costs, helped by Bermuda substance-based tax credits and premium growth.
Investment returns provided a counterweight to weaker underwriting. Net investment income increased to $141.3 million from $93.6 million in the first quarter, including $115.5 million from the Two Sigma Hamilton Fund. Book value rose to $28.91 a share from $27.42 at March 31, while second-quarter repurchases increased to $22.1 million.