Hamilton Insurance Group Ltd
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
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Summary Results of Operations
Consolidated Results of Operations
The following is a comparison of selected data for our consolidated results of operations for the three months ended June 30, 2024 and 2023.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands, except per share amounts) | June 30,2024 | June 30,2023 |
| Gross premiums written | $603,304 | $504,960 |
| Net premiums written | $475,068 | $384,708 |
| Net premiums earned | $418,764 | $331,460 |
| Third party fee income(1) | 5,989 | 2,449 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 214,494 | 179,416 |
| Acquisition costs | 96,305 | 76,856 |
| Other underwriting expenses(2) | 48,655 | 42,743 |
| Underwriting income (loss)(3) | 65,299 | 34,894 |
| Net realized and unrealized gains (losses) on investments | 151,251 | 19,406 |
| Net investment income (loss)(4) | 13,720 | 7,291 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) | 164,971 | 26,697 |
| Other income (loss), excluding third party fee income(1) | — | (29) |
| Net foreign exchange gains (losses) | (1,782) | (3,341) |
| Corporate expenses(2) | 16,262 | 6,491 |
| Amortization of intangible assets | 3,317 | 2,305 |
| Interest expense | 6,031 | 5,189 |
| Income tax expense (benefit) | 2,496 | 2,948 |
| Net income (loss) | 200,382 | 41,288 |
| Net income (loss) attributable to non-controlling interest(5) | 69,297 | 4,501 |
| Net income (loss) attributable to common shareholders | $131,085 | $36,787 |
| Diluted income (loss) per share attributable to common shareholders | $1.20 | $0.35 |
| Key Ratios | ||
| Attritional loss ratio - current year | 51.6% | 51.0% |
| Attritional loss ratio - prior year development | (0.4)% | (1.6)% |
| Catastrophe loss ratio - current year | 0.0% | 5.0% |
| Catastrophe loss ratio - prior year development | 0.0% | (0.3)% |
| Loss and loss adjustment expense ratio | 51.2% | 54.1% |
| Acquisition cost ratio | 23.0% | 23.2% |
| Other underwriting expense ratio | 10.2% | 12.2% |
| Combined ratio | 84.4% | 89.5% |
| Return on average common shareholders' equity | 5.9% | 2.1% |
The following table summarizes book value per share and balance sheet data as at June 30, 2024 and March 31, 2024.
| As at | ||
|---|---|---|
| Book Value | June 30,2024 | March 31,2024 |
| Tangible book value per common share | $21.04 | $19.07 |
| Change in tangible book value per common share | 10.3% | |
| Book value per common share | $21.96 | $19.90 |
| Change in book value per common share | 10.4% | |
| Balance Sheet Data | ||
| Total assets | $7,623,103 | $7,349,025 |
| Total shareholders' equity | $2,238,547 | $2,209,505 |
(1) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to other income (loss), the most comparable GAAP financial measure, also included other income (loss), excluding third party fee income of less than $0.1 million for each of the three months ended June 30, 2024 and 2023. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures' for further details.
(2) Other underwriting expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $16.3 million, and $6.5 million for the three months ended June 30, 2024 and 2023, respectively. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures' for further details.
(3) Underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures' for further details.
(4) Net investment income (loss) is presented net of investment management fees.
(5) Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations—Corporate and Other' for further details.
Operating Highlights
The following significant items impacted the consolidated results of operations for the three months ended June 30, 2024 and 2023:
Gross premiums written Gross premiums written were $603.3 million and $505.0 million for the three months ended June 30, 2024 and 2023, respectively. The increase in gross premiums written was primarily driven by our casualty and property reinsurance and casualty, specialty and property insurance classes. The increase was a result of new business, increased participations on existing business and a strong rate environment across multiple classes of business.
Underwriting results The combined ratio was 84.4% and 89.5% for the three months ended June 30, 2024 and 2023, respectively. The decrease was primarily driven by a decrease in the catastrophe loss ratio, other underwriting expense ratio, and acquisition cost ratio, partially offset by an increase in the attritional loss ratio.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $216,053 | 51.6% | $(1,591) | (0.4)% | $214,462 | 51.2% |
| Catastrophe losses | — | 0.0% | 32 | 0.0% | 32 | 0.0% |
| Total | $216,053 | 51.6% | $(1,559) | (0.4)% | $214,494 | 51.2% |
| Attritional losses | $169,177 | 51.0% | $(5,435) | (1.6)% | $163,742 | 49.4% |
| Catastrophe losses | 16,725 | 5.0% | (1,051) | (0.3)% | 15,674 | 4.7% |
| Total | $185,902 | 56.0% | $(6,486) | (1.9)% | $179,416 | 54.1% |
Attritional loss ratio - current year for the three months ended June 30, 2024 was 51.6% compared to 51.0% for the three months ended June 30, 2023, an increase of 0.6 percentage points. The modest increase was primarily driven by a change in business mix, with no large losses for either the three months ended June 30, 2024 or 2023.
Attritional loss ratio - prior year for the three months ended June 30, 2024 was a favorable 0.4% compared to a favorable 1.6% for the three months ended June 30, 2023, an increase of 1.2 percentage points. The attritional loss ratio - prior year for the three months ended June 30, 2024 was primarily driven by favorable development in property classes in both our International and Bermuda segments, casualty classes in our International segment, and specialty classes in our Bermuda segment, partially offset by unfavorable development in specialty classes in our International segment. In addition, casualty business protected by the loss portfolio transfer ("LPT") discussed in Note 6, Reinsurance benefited from $1.0 million in amortization of the associated deferred gain, partially offset by unfavorable development in the underlying reserves of $0.2 million, for a total net positive earnings impact of $0.8 million. The attritional loss ratio - prior year for the three months ended June 30, 2023 was primarily driven by favorable development in property classes in our International segment and specialty classes in our Bermuda segment, partially offset by unfavorable development in specialty classes in our International segment and certain large losses in the Bermuda segment's property and specialty classes.
Catastrophe losses - current year and prior year development for the three months ended June 30, 2024 included $Nil current year losses and an insignificant movement on prior year. Catastrophe losses of $15.7 million for the three months ended June 30, 2023 were driven by severe convective storms in June 2023 ($14.6 million), the wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($2.1 million), partially offset by favorable prior year development of $1.0 million.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $145,183 | $29,981 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 19,788 | (3,284) |
| $164,971 | $26,697 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $69,297 | $4,501 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $145.2 million and $30.0 million for the three months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees.
Net investment income, net of non-controlling interest - TSHF, returned income of $75.9 million and $25.5 million for the three months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees and performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in "Net income attributable to non-controlling interests" in our GAAP financial statements.
TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 4.3% and 1.6% for the three months ended June 30, 2024 and 2023, respectively.
For the three months ended June 30, 2024, gains in TSHF were led by single name equities trading within Two Sigma Spectrum Portfolio, LLC ("STV") and Two Sigma Equity Spectrum Portfolio, LLC (“ESTV”). In single name equities trading, gains were led by U.S. equities within STV, followed by non-U.S. equities within ESTV. Within ESTV, East Asia, China, Europe and Pan-America all made positive contributions to gains. Macroeconomic trading in Two Sigma Futures Portfolio, LLC (“FTV”) also positively contributed to gains in TSHF. Within FTV, equities and currencies made positive contributions to gains, while losses were experienced in commodities, fixed income and credit.
For the three months ended June 30, 2023, gains in TSHF were led by non-U.S. single name equities trading within ESTV. Within ESTV, East Asia and Europe made positive contributions to gains, while losses were experienced in China and Pan America. U.S. single name equities trading within STV also positively contributed to gains. Macroeconomic trading in FTV also experienced gains, led primarily by equities.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $19.8 million and a loss of $3.3 million for the three months ended June 30, 2024 and 2023, respectively. Income for the three months ended June 30, 2024 was primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates in the second quarter of 2024. Losses for the three months ended June 30, 2023 were primarily driven by negative price returns as a result of rising U.S. treasury interest rates, partially offset by investment income on higher yielding assets.
Segment Information
We have determined our reportable business segments based on the information used by management in assessing performance and allocating resources to underwriting operations. We have identified two reportable business segments - International and Bermuda. Each of our identified reportable segments has a Chief Executive Officer who is responsible for the overall profitability of their segment and who regularly reports and is directly accountable to the chief operating decision maker: the Chief Executive Officer of the consolidated group.
We evaluate the performance of reportable segments based on their respective underwriting income or loss. Underwriting income or loss is calculated as net premiums earned less losses and loss adjustment expenses, acquisition costs, and other underwriting expenses (net of third party fee income). General and administrative expenses not incurred by the reportable segments are included in corporate and other expenses as part of the reconciliation of net underwriting income or loss to net income or loss attributable to common shareholders. As we do not manage our assets by reportable segment, investment income and assets are not allocated to reportable segments.
Our core business is underwriting and our underwriting results are reflected in our reportable segments: (1) International, which is comprised of property, casualty and specialty insurance and reinsurance classes of business originating from the Company’s London, Dublin, and Hamilton Select operations; and (2) Bermuda, which is comprised of property, casualty and specialty insurance and reinsurance classes of business originating from Hamilton Re, Bermuda and Hamilton Re US and subsidiaries. We consider many factors, including the nature of each segment’s products, client types, production sources, distribution methods and the regulatory environment, in determining the aggregated operating segments.
Corporate includes net realized and unrealized gains (losses) on investments, net investment income (loss), other income (loss) not incurred by the reportable segments, net foreign exchange gains (losses), general and administrative expenses not incurred by the reportable segments, amortization of intangible assets, interest expense, and income tax expense (benefit).
International Segment
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Gross premiums written | $311,616 | $277,796 |
| Net premiums written | $234,305 | $197,047 |
| Net premiums earned | $215,643 | $176,636 |
| Third party fee income | 3,798 | 2,401 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 112,884 | 87,575 |
| Acquisition costs | 53,157 | 47,260 |
| Other underwriting expenses | 33,972 | 29,540 |
| Underwriting income (loss) | $19,428 | $14,662 |
| Attritional losses - current year | $113,400 | $93,523 |
| Attritional losses - prior year development | (521) | (5,908) |
| Catastrophe losses - current year | — | 1,500 |
| Catastrophe losses - prior year development | 5 | (1,540) |
| Losses and loss adjustment expenses | $112,884 | $87,575 |
| Attritional loss ratio - current year | 52.5% | 52.9% |
| Attritional loss ratio - prior year development | (0.2)% | (3.3)% |
| Catastrophe loss ratio - current year | 0.0% | 0.9% |
| Catastrophe loss ratio - prior year development | 0.0% | (0.9)% |
| Losses and loss adjustment expense ratio | 52.3% | 49.6% |
| Acquisition cost ratio | 24.7% | 26.8% |
| Other underwriting expense ratio | 14.0% | 15.4% |
| Combined ratio | 91.0% | 91.8% |
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $53,540 | $43,188 |
| Casualty | 132,129 | 119,846 |
| Specialty | 125,947 | 114,762 |
| Total | $311,616 | $277,796 |
Gross premiums written increased by $33.8 million, or 12.2%, from $277.8 million for the three months ended June 30, 2023 to $311.6 million for the three months ended June 30, 2024, primarily driven by growth, improved pricing and new business in specialty, casualty and property insurance classes.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $32,689 | $25,452 |
| Casualty | 75,770 | 70,826 |
| Specialty | 107,184 | 80,358 |
| Total | $215,643 | $176,636 |
Net premiums earned increased by $39.0 million, or 22.1%, from $176.6 million for the three months ended June 30, 2023 to $215.6 million for the three months ended June 30, 2024, primarily driven by growth in specialty and property insurance classes. Specialty insurance growth was driven by accident & health, fine art & specie, political violence and marine & energy. Property insurance growth was driven by property binders and D&F.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Third party fee income | $3,798 | $2,401 |
Third party fee income increased by $1.4 million, or 58.2%, from $2.4 million for the three months ended June 30, 2023 to $3.8 million for the three months ended June 30, 2024. The increase was primarily due to more favorable terms of a renewed syndicate management arrangement and an increase in consortium fees.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $113,400 | 52.5% | $(521) | (0.2)% | $112,879 | 52.3% |
| Catastrophe losses | — | 0.0% | 5 | 0.0% | 5 | 0.0% |
| Total | $113,400 | 52.5% | $(516) | (0.2)% | $112,884 | 52.3% |
| Attritional losses | $93,523 | 52.9% | $(5,908) | (3.3)% | $87,615 | 49.6% |
| Catastrophe losses | 1,500 | 0.9% | (1,540) | (0.9)% | (40) | 0.0% |
| Total | $95,023 | 53.8% | $(7,448) | (4.2)% | $87,575 | 49.6% |
The loss ratio for the three months ended June 30, 2024 was 52.3%, compared to 49.6% for the three months ended June 30, 2023, an increase of 2.7 percentage points. The increase was primarily as a result of modest favorable prior year attritional and catastrophe loss development of 0.2% for the three months ended June 30, 2024, compared to favorable prior year attritional and catastrophe loss development of 4.2% for the three months ended June 30, 2023.
Attritional loss ratio - current year for the three months ended June 30, 2024 was 52.5% compared to 52.9% for the three months ended June 30, 2023, a decrease of 0.4 percentage points.
Attritional loss ratio - prior year for the three months ended June 30, 2024 was a favorable 0.2% compared to a favorable 3.3% for the three months ended June 30, 2023, an increase of 3.1 percentage points. The favorable attritional loss ratio - prior year was primarily driven by modest favorable development in property insurance and reinsurance classes, partially offset by unfavorable development in specialty classes. In addition, casualty business protected by the loss portfolio transfer ("LPT") discussed in Note 6, Reinsurance benefited from $1.0 million in amortization of the associated deferred gain, partially offset by unfavorable development in the underlying reserves of $0.2 million, for a total net positive earnings impact of $0.8 million.
Catastrophe losses - current year and prior yearfor the three months ended June 30, 2024 included $Nil current year losses and an insignificant movement on prior year. Catastrophe losses - current year and prior year of less than $0.1 million for the three months ended June 30, 2023 were primarily driven by the severe convective storms in June 2023 ($1.5 million) offset by favorable prior year development of $1.5 million.
| For the Three Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | June 30,2024 | June 30,2023 | June 30,2024 | June 30,2023 | '24 vs '23point r |
| Property | $10,854 | $8,264 | 33.2% | 32.5% | 0.7 |
| Casualty | 12,470 | 16,076 | 16.5% | 22.7% | (6.2) |
| Specialty | 29,833 | 22,920 | 27.8% | 28.5% | (0.7) |
| Total | $53,157 | $47,260 | 24.7% | 26.8% | (2.1) |
For the three months ended June 30, 2024, the acquisition cost ratio was 24.7%, compared to 26.8% for the three months ended June 30, 2023, a decrease of 2.1 percentage points. The decrease was primarily driven by casualty insurance, as a result of a change in the business mix and non-recurring profit commissions recorded in thethree months ended June 30, 2023.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other underwriting expenses | $33,972 | $29,540 |
| Other underwriting expense ratio | 14.0% | 15.4% |
Other underwriting expenses for the three months ended June 30, 2024 were $34.0 million, an increase of $4.4 million, or 15.0%, compared to $29.5 million for the three months ended June 30, 2023. The increase was primarily driven by increased headcount as we built out underwriting teams supporting the corresponding increase in premium volume.
The other underwriting expense ratio for the three months ended June 30, 2024 and 2023 decreased from 15.4% to 14.0%, as a result of the growth in the premium base.
Bermuda Segment
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Gross premiums written | $291,688 | $227,164 |
| Net premiums written | $240,763 | $187,661 |
| Net premiums earned | $203,121 | $154,824 |
| Third party fee income | 2,191 | 48 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 101,610 | 91,841 |
| Acquisition costs | 43,148 | 29,596 |
| Other underwriting expenses | 14,683 | 13,203 |
| Underwriting income (loss) | $45,871 | $20,232 |
| Attritional losses - current year | $102,653 | $75,654 |
| Attritional losses - prior year development | (1,070) | 473 |
| Catastrophe losses - current year | — | 15,225 |
| Catastrophe losses - prior year development | 27 | 489 |
| Losses and loss adjustment expenses | $101,610 | $91,841 |
| Attritional loss ratio - current year | 50.5% | 48.9% |
| Attritional loss ratio - prior year development | (0.5)% | 0.3% |
| Catastrophe loss ratio - current year | 0.0% | 9.8% |
| Catastrophe loss ratio - prior year development | 0.0% | 0.3% |
| Losses and loss adjustment expense ratio | 50.0% | 59.3% |
| Acquisition cost ratio | 21.2% | 19.1% |
| Other underwriting expense ratio | 6.2% | 8.5% |
| Combined ratio | 77.4% | 86.9% |
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $135,021 | $111,487 |
| Casualty | 123,498 | 87,993 |
| Specialty | 33,169 | 27,684 |
| Total | $291,688 | $227,164 |
For the three months ended June 30, 2024, gross premiums written increased by $64.5 million, or 28.4%, from $227.2 million for the three months ended June 30, 2023 to $291.7 million for the three months ended June 30, 2024. The increase was primarily driven by new business, increased participations and a strong rate environment in both our casualty reinsurance and property reinsurance classes.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $73,864 | $56,326 |
| Casualty | 99,467 | 69,613 |
| Specialty | 29,790 | 28,885 |
| Total | $203,121 | $154,824 |
For the three months ended June 30, 2024, the Bermuda segment's net premiums earned increased by $48.3 million, or 31.2%, from $154.8 million for the three months ended June 30, 2023 to $203.1 million for the three months ended June 30, 2024. The increase was primarily driven by new business, volume growth and rate increases in casualty and property reinsurance. The most significant drivers of the increase were general liability, professional lines and property treaty classes.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Third party fee income | $2,191 | $48 |
Third party fee income increased by $2.1 million, from less than $0.1 million for the three months ended June 30, 2023 to $2.2 million for the three months ended June 30, 2024. The increase was primarily driven by certain performance based management fees recognized by Ada Capital Management Limited for services provided to Ada Re, Ltd.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $102,653 | 50.5% | $(1,070) | (0.5)% | $101,583 | 50.0% |
| Catastrophe losses | — | 0.0% | 27 | 0.0% | 27 | 0.0% |
| Total | $102,653 | 50.5% | $(1,043) | (0.5)% | $101,610 | 50.0% |
| Attritional losses | $75,654 | 48.9% | $473 | 0.3% | $76,127 | 49.2% |
| Catastrophe losses | 15,225 | 9.8% | 489 | 0.3% | 15,714 | 10.1% |
| Total | $90,879 | 58.7% | $962 | 0.6% | $91,841 | 59.3% |
The loss ratio for the three months ended June 30, 2024 was 50.0%, compared to 59.3% for the three months ended June 30, 2023, a decrease of 9.3 percentage points. The decrease was primarily driven by lower catastrophe losses for the three months ended June 30, 2024.
Attritional loss ratio - current year for the three months ended June 30, 2024 was 50.5% compared to 48.9% for the three months ended June 30, 2023, an increase of 1.6 percentage points. The increase was primarily driven by a change in business mix, including more proportional business, with no large losses for either the three months ended June 30, 2024 or 2023.
Attritional loss ratio - prior year for the three months ended June 30, 2024 was a favorable 0.5%, compared to an unfavorable 0.3% for the three months ended June 30, 2023, a decrease of 0.8 percentage points. The favorable attritional loss ratio - prior year is primarily driven by modest favorable development across property and specialty classes.
Catastrophe losses - current year and prior yearfor the three months ended June 30, 2024 included $Nil current year losses and an insignificant movement on prior year. Catastrophe losses - current year and prior year of $15.7 million for the three months ended June 30, 2023 were primarily driven by severe convective storms in June 2023 ($13.1 million), wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($2.1 million), in addition to unfavorable prior year development of $0.5 million.
| For the Three Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | June 30,2024 | June 30,2023 | June 30,2024 | June 30,2023 | '24 vs '23point r |
| Property | $9,510 | $6,888 | 12.9% | 12.2% | 0.7 |
| Casualty | 25,545 | 15,025 | 25.7% | 21.6% | 4.1 |
| Specialty | 8,093 | 7,683 | 27.2% | 26.6% | 0.6 |
| Total | $43,148 | $29,596 | 21.2% | 19.1% | 2.1 |
The acquisition cost ratio for the three months ended June 30, 2024 increased to 21.2%, compared to 19.1% for the three months ended June 30, 2023, reflecting the change in the mix of business, including more proportional business written in our casualty reinsurance classes.
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other underwriting expenses | $14,683 | $13,203 |
| Other underwriting expense ratio | 6.2% | 8.5% |
For the three months ended June 30, 2024, other underwriting expenses increased by $1.5 million or 11.2%, from $13.2 million for the three months ended June 30, 2023 to $14.7 million for the three months ended June 30, 2024. The increase was primarily driven by an increase in salary and compensation costs and professional fees.
The other underwriting expense ratios for the three months ended June 30, 2024 and 2023 decreased over the same period from 8.5% for the three months ended June 30, 2023 to 6.2% for the three months ended June 30, 2024, primarily as a result of the growth in premium base and certain performance based management fees recognized by Ada Capital Management Limited in the current quarter for services provided to Ada Re, Ltd.
Corporate and Other
The components of total net realized and unrealized gains (losses) on investments and net investment income (loss) are as follows:
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $145,183 | $29,981 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 19,788 | (3,284) |
| $164,971 | $26,697 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $69,297 | $4,501 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $145.2 million and $30.0 million for the three months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees.
Net investment income, net of non-controlling interest - TSHF, returned income of $75.9 million and $25.5 million for the three months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees and performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in "Net income attributable to non-controlling interests" in our GAAP financial statements.
TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 4.3% and 1.6% for the three months ended June 30, 2024 and 2023, respectively.
For the three months ended June 30, 2024, gains in TSHF were led by single name equities trading within STV and ESTV. In single name equities trading, gains were led by U.S. equities within STV, followed by non-U.S. equities within ESTV. Within ESTV, East Asia, China, Europe and Pan-America all made positive contributions to gains. Macroeconomic trading in FTV also positively contributed to gains in TSHF. Within FTV, equities and currencies made positive contributions to gains, while losses were experienced in commodities, fixed income and credit.
For the three months ended June 30, 2023, gains in TSHF were led by non-U.S. single name equities trading within ESTV. Within ESTV, East Asia and Europe made positive contributions to gains, while losses were experienced in China and Pan America. U.S. single name equities trading within STV also positively contributed to gains. Macroeconomic trading in FTV also experienced gains, led primarily by equities.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $19.8 million and a loss of $3.3 million for the three months ended June 30, 2024 and 2023, respectively. Income for the three months ended June 30, 2024 was primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates in the second quarter of 2024. Losses for the three months ended June 30, 2023 were primarily driven by negative price returns as a result of rising U.S. treasury interest rates, partially offset by investment income on higher yielding assets.
Other Income (Loss)
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other income (loss), excluding third party fee income | $— | $(29) |
Other income (loss), excluding third party fee income, consists of varying insignificant items in each period.
Net Foreign Exchange Gains (Losses)
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Net foreign exchange gains (losses) | $(1,782) | $(3,341) |
Our functional currency is the U.S. Dollar. We may conduct routine underwriting operations or invest a portion of our cash and other investable assets in currencies other than U.S. Dollars. Consequently, we may incur foreign exchange gains and losses in our results of operations.
Foreign exchange losses of $1.8 million and $3.3 million for the three months ended June 30, 2024 and 2023, respectively, primarily related to the remeasurement of insurance-related assets and liabilities denominated in British Pounds, Euro, Japanese Yen, and Australian and Canadian Dollars.
Corporate Expenses
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Corporate expenses | $16,262 | $6,491 |
Corporate expenses for the three months ended June 30, 2024 were $16.3 million, compared to $6.5 million for the three months ended June 30, 2023, an increase of $9.8 million. The increase was primarily driven by $2.5 million of Value Appreciation Pool ("VAP") expense, certain variable performance based compensation costs, an increased headcount and an increase in professional fees associated with operating as a public company.
Amortization of Intangible Assets
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Amortization of intangible assets | $3,317 | $2,305 |
Amortization of intangible assets of $3.3 million and $2.3 million for the three months ended June 30, 2024 and 2023, respectively, relates to internally developed software and intangible assets acquired in a business combination. Amortization expense increased due to the incremental expense associated with additional technology projects.
Interest Expense
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Interest expense | $6,031 | $5,189 |
Interest expense of $6.0 million and $5.2 million for the three months ended June 30, 2024 and 2023, respectively, relates to interest payments and certain administrative fees associated with our term loan and letter of credit facilities. The increase in interest expense is primarily driven by the increase in the Secured Overnight Financing Rate ("SOFR"), which underlies the floating rate associated with the term loan.
Income Tax Expense (Benefit)
| For the Three Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Income tax expense (benefit) | $2,496 | $2,948 |
Income tax expense for the three months ended June 30, 2024 was an expense of $2.5 million, compared to an expense of $2.9 million for the three months ended June 30, 2023, a decrease of $0.5 million. Tax expense for both the three months ended June 30, 2024 and 2023 is primarily driven by withholding taxes on investment income from TS Hamilton Fund.
Consolidated Results of Operations
The following is a comparison of selected data for our consolidated results of operations for the six months ended June 30, 2024 and 2023.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands, except per share amounts) | June 30,2024 | June 30,2023 |
| Gross premiums written | $1,325,245 | $1,043,124 |
| Net premiums written | $989,948 | $733,206 |
| Net premiums earned | $804,067 | $615,362 |
| Third party fee income(1) | 13,470 | 5,452 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 446,846 | 327,977 |
| Acquisition costs | 180,858 | 141,995 |
| Other underwriting expenses(2) | 92,008 | 81,886 |
| Underwriting income (loss)(3) | 97,825 | 68,956 |
| Net realized and unrealized gains (losses) on investments | 406,622 | 54,539 |
| Net investment income (loss)(4) | 26,338 | 9,650 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) | 432,960 | 64,189 |
| Other income (loss), excluding third party fee income(1) | — | — |
| Net foreign exchange gains (losses) | (3,911) | (5,387) |
| Corporate expenses(2) | 27,764 | 13,154 |
| Amortization of intangible assets | 6,569 | 5,075 |
| Interest expense | 11,738 | 10,718 |
| Income tax expense (benefit) | 3,089 | 4,521 |
| Net income (loss) | 477,714 | 94,290 |
| Net income (loss) attributable to non-controlling interest(5) | 189,455 | 6,011 |
| Net income (loss) attributable to common shareholders | $288,259 | $88,279 |
| Diluted income (loss) per share attributable to common shareholders | $2.57 | $0.84 |
| Key Ratios | ||
| Attritional loss ratio - current year | 54.3% | 50.1% |
| Attritional loss ratio - prior year development | 1.3% | (0.6)% |
| Catastrophe loss ratio - current year | 0.0% | 3.6% |
| Catastrophe loss ratio - prior year development | 0.0% | 0.2% |
| Loss and loss adjustment expense ratio | 55.6% | 53.3% |
| Acquisition cost ratio | 22.5% | 23.1% |
| Other underwriting expense ratio | 9.8% | 12.4% |
| Combined ratio | 87.9% | 88.8% |
| Return on average common shareholders' equity | 13.4% | 5.2% |
The following table summarizes book value per share and balance sheet data as at June 30, 2024 and December 31, 2023.
| As at | ||
|---|---|---|
| Book Value | June 30,2024 | December 31,2023 |
| Tangible book value per common share | $21.04 | $17.75 |
| Change in tangible book value per common share | 18.5% | |
| Book value per common share | $21.96 | $18.58 |
| Change in book value per common share | 18.2% | |
| Balance Sheet Data | ||
| Total assets | $7,623,103 | $6,671,355 |
| Total shareholders' equity | $2,238,547 | $2,047,850 |
(1) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to other income (loss), the most comparable GAAP financial measure, also included other income (loss), excluding third party fee income of $Nil for each of the six months ended June 30, 2024 and 2023. Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures" for further details.
(2) Other underwriting expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $27.8 million and $13.2 million for the six months ended June 30, 2024 and 2023, respectively. Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures" for further details.
(3) Underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Measures"' for further details.
(4) Net investment income (loss) is presented net of investment management fees.
(5) Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations—Corporate and Other" for further details.
Operating Highlights
The following significant items impacted the consolidated results of operations for the six months ended June 30, 2024 and 2023:
Gross premiums written Gross premiums written were $1.3 billion and $1.0 billion for the six months ended June 30, 2024 and 2023, respectively. The increase in gross premiums written was primarily driven by our property reinsurance, specialty reinsurance and casualty insurance and reinsurance business. The growth was a result of new business, increased participations on existing business and a strong rate environment across multiple classes of business.
Underwriting results The combined ratio was 87.9% and 88.8% for the six months ended June 30, 2024 and 2023, respectively. The decrease was largely driven by a decrease in the catastrophe loss ratio, other underwriting expense ratio and acquisition cost ratio, partially offset by an increase in the attritional loss ratio.
| For the Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $436,348 | 54.3% | $10,301 | 1.3% | $446,649 | 55.6% |
| Catastrophe losses | — | —% | 197 | —% | 197 | —% |
| Total | $436,348 | 54.3% | $10,498 | 1.3% | $446,846 | 55.6% |
| Attritional losses | $308,452 | 50.1% | $(3,638) | (0.6)% | $304,814 | 49.5% |
| Catastrophe losses | 22,006 | 3.6% | 1,157 | 0.2% | 23,163 | 3.8% |
| Total | $330,458 | 53.7% | $(2,481) | (0.4)% | $327,977 | 53.3% |
Attritional loss ratio - current year for the six months ended June 30, 2024 was 54.3% compared to 50.1% for the six months ended June 30, 2023, an increase of 4.2 percentage points. The increase is primarily driven by losses of $37.9 million arising from the Francis Scott Key Baltimore Bridge collapse, which impacted our insurance and reinsurance classes in both our International and Bermuda segments.
Attritional loss ratio - prior year for the six months ended June 30, 2024 was an unfavorable 1.3% compared to favorable 0.6% for the six months ended June 30, 2023, an increase of 1.9 percentage points. The unfavorable attritional loss ratio - prior year for the six months ended June 30, 2024 was primarily driven by unfavorable development in specialty classes in both our International and Bermuda segments, primarily related to two specific large losses, partially offset by favorable development in our International property insurance and reinsurance classes. In addition, casualty business protected by the LPT benefited from $1.9 million in amortization of the associated deferred gain, partially offset by unfavorable development in the underlying reserves of $0.3 million, for a total net positive earnings impact of $1.6 million. The attritional loss ratio - prior year for the six months ended June 30, 2023 was primarily driven by favorable prior year development in specialty classes in the Bermuda segment and property classes in the International segment, partially offset by unfavorable development in our Bermuda property and casualty classes.
Catastrophe losses - current year and prior year development were $0.2 million and $23.2 million for the six months ended June 30, 2024 and 2023, respectively. Catastrophe losses for the six months ended June 30, 2024 included $Nil current year losses and an insignificant movement on prior year. Catastrophe losses (current and prior year development) for the six months ended June 30, 2023 were driven by severe convective storms in June 2023 ($14.6 million), the wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($7.4 million), and unfavorable prior year development of $1.2 million.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $408,002 | $40,045 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 24,958 | 24,144 |
| $432,960 | $64,189 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $189,455 | $6,011 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $408.0 million and $40.0 million for the six months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees.
Net investment income, net of non-controlling interest - TSHF, net of non-controlling interest, returned income of $218.5 million and $34.0 million for the six months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees and performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in "Net income attributable to non-controlling interests" in our GAAP financial statements.
TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 12.9% and 2.1% for the six months ended June 30, 2024 and 2023, respectively.
For the six months ended June 30, 2024, gains in TSHF were led by macroeconomic trading in FTV. Within FTV, gains were achieved in equities, fixed income, commodities, and currencies while losses were experienced in credit. TSHF also saw gains from single name equities trading within STV and ESTV. In single name equities trading, gains were led by U.S. equities within STV, followed by non-U.S. equities within ESTV. Within ESTV, East Asia, Europe, China, and Pan-America all made positive contributions to gains.
For the six months ended June 30, 2023, TSHF received positive contributions from single name equities trading which was partially offset by losses experienced from macroeconomic trading in FTV. In STV and ESTV, both non-U.S. and U.S. portfolios have contributed positively. In FTV, losses were driven by fixed income and commodities, with equities and currencies trading contributing positive results.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other returned income of $25.0 million and $24.1 million for the six months ended June 30, 2024 and 2023, respectively. The returns are primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates in the year to date.
International Segment
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Gross premiums written | $632,457 | $524,909 |
| Net premiums written | $419,338 | $319,067 |
| Net premiums earned | $412,456 | $326,151 |
| Third party fee income | 7,387 | 5,302 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 229,046 | 157,967 |
| Acquisition costs | 100,876 | 84,452 |
| Other underwriting expenses | 65,174 | 58,002 |
| Underwriting income (loss) | $24,747 | $31,032 |
| Attritional losses - current year | $223,598 | $168,153 |
| Attritional losses - prior year development | 5,251 | (12,241) |
| Catastrophe losses - current year | — | 1,500 |
| Catastrophe losses - prior year development | 197 | 555 |
| Losses and loss adjustment expenses | $229,046 | $157,967 |
| Attritional loss ratio - current year | 54.2% | 51.6% |
| Attritional loss ratio - prior year development | 1.3% | (3.8)% |
| Catastrophe loss ratio - current year | 0.0% | 0.4% |
| Catastrophe loss ratio - prior year development | 0.0% | 0.2% |
| Losses and loss adjustment expense ratio | 55.5% | 48.4% |
| Acquisition cost ratio | 24.5% | 25.9% |
| Other underwriting expense ratio | 14.0% | 16.2% |
| Combined ratio | 94.0% | 90.5% |
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $91,244 | $67,096 |
| Casualty | 253,294 | 212,427 |
| Specialty | 287,919 | 245,386 |
| Total | $632,457 | $524,909 |
Gross premiums written increased by $107.5 million, or 20.5%, from $524.9 million for the six months ended June 30, 2023 to $632.5 million for the six months ended June 30, 2024, primarily driven by growth, improved pricing and new business in casualty insurance, specialty insurance and reinsurance and property insurance classes.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $67,664 | $48,369 |
| Casualty | 148,698 | 128,321 |
| Specialty | 196,094 | 149,461 |
| Total | $412,456 | $326,151 |
For the six months ended June 30, 2024, net premiums earned increased by $86.3 million, or 26.5%, from $326.2 million for the six months ended June 30, 2023 to $412.5 million for the six months ended June 30, 2024. The increase was primarily driven by growth in our specialty insurance classes, in addition to growth in property and casualty insurance classes and specialty reinsurance. Specialty insurance growth was driven by accident & health, fine art & specie, political violence and marine & energy; property insurance growth was driven by property binders and D&F; casualty insurance growth was primarily driven by U.S. excess and surplus lines, professional lines and excess casualty; and specialty reinsurance growth was primarily attributable to treaty reinsurance and surety reinsurance.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Third party fee income | $7,387 | $5,302 |
For the six months ended June 30, 2024, fee income increased by $2.1 million, or 39.3%, from $5.3 million for the six months ended June 30, 2023 to $7.4 million for the six months ended June 30, 2024. The increase was primarily due to more favorable terms of a renewed syndicate management arrangement and an increase in consortium fees.
| For the Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $223,598 | 54.2% | $5,251 | 1.3% | $228,849 | 55.5% |
| Catastrophe losses | — | 0.0% | 197 | 0.0% | 197 | 0.0% |
| Total | $223,598 | 54.2% | $5,448 | 1.3% | $229,046 | 55.5% |
| Attritional losses | $168,153 | 51.6% | $(12,241) | (3.8)% | $155,912 | 47.8% |
| Catastrophe losses | 1,500 | 0.4% | 555 | 0.2% | 2,055 | 0.6% |
| Total | $169,653 | 52.0% | $(11,686) | (3.6)% | $157,967 | 48.4% |
The loss ratio for the six months ended June 30, 2024 was 55.5%, compared to 48.4% for the six months ended June 30, 2023, an increase of 7.1 percentage points. The increase was driven by higher current year attritional losses and unfavorable prior year attritional loss development for the six months ended June 30, 2024, partially offset by a lower level of catastrophe losses for the six months ended June 30, 2024.
Attritional loss ratio - current year for the six months ended June 30, 2024 was 54.2% compared to 51.6% for the six months ended June 30, 2023, an increase of 2.6 percentage points. The increase in the current year attritional loss ratio was primarily driven by $11.8 million of losses arising from the Baltimore Bridge collapse, which impacted our insurance and reinsurance classes, with no comparable large losses for the six months ended June 30, 2023.
Attritional loss ratio - prior year for the six months ended June 30, 2024 was an unfavorable 1.3% compared to a favorable 3.8% for the six months ended June 30, 2023, a decrease of 5.1 percentage points. The unfavorable attritional loss ratio - prior year for the six months ended June 30, 2024 is primarily driven by unfavorable development on two large losses in our specialty insurance class, partially offset by favorable development in our property insurance and reinsurance classes. In addition, casualty business protected by the LPT benefited from $1.9 million in amortization of the associated deferred gain, partially offset by unfavorable development in the underlying reserves of $0.3 million, for a total net positive earnings impact of $1.6 million.
Catastrophe losses - current year and prior year of $0.2 million for the six months ended June 30, 2024 were driven by modest unfavorable prior year development of $0.2 million. Catastrophe losses - current year and prior year of $2.1 million for the six months ended June 30, 2023 were primarily driven by the severe convective storms in June 2023 of $1.5 million and unfavorable prior year development of $0.6 million.
| For the Six Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | June 30,2024 | June 30,2023 | June 30,2024 | June 30,2023 | '24 vs '23point r |
| Property | $22,389 | $16,469 | 33.1% | 34.0% | (0.9) |
| Casualty | 22,212 | 22,896 | 14.9% | 17.8% | (2.9) |
| Specialty | 56,275 | 45,087 | 28.7% | 30.2% | (1.5) |
| Total | $100,876 | $84,452 | 24.5% | 25.9% | (1.4) |
The acquisition cost ratio for the six months ended June 30, 2024 was 24.5%, compared to 25.9% for the six months ended June 30, 2023, a decrease of 1.4 percentage points. The decrease was primarily driven by casualty insurance, as a result of a change in the business mix and non-recurring profit commissions recorded in thesix months ended June 30, 2023.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other underwriting expenses | $65,174 | $58,002 |
| Other underwriting expense ratio | 14.0% | 16.2% |
Other underwriting expenses were $65.2 million for the six months ended June 30, 2024, an increase of $7.2 million, or 12.4%, compared to $58.0 million for the six months ended June 30, 2023. The increase was primarily driven by increases in headcount as we built out underwriting teams supporting the corresponding increase in premium volume, and certain growth related professional and IT costs.
The other underwriting expense ratios for the six months ended June 30, 2024 and 2023 decreased from 16.2% to 14.0% over the same period, as a result of growth in the premium base.
Bermuda Segment
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Gross premiums written | $692,788 | $518,215 |
| Net premiums written | $570,610 | $414,139 |
| Net premiums earned | $391,611 | $289,211 |
| Third party fee income | 6,083 | 150 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 217,800 | 170,010 |
| Acquisition costs | 79,982 | 57,543 |
| Other underwriting expenses | 26,834 | 23,884 |
| Underwriting income (loss) | $73,078 | $37,924 |
| Attritional losses - current year | $212,750 | $140,299 |
| Attritional losses - prior year development | 5,050 | 8,603 |
| Catastrophe losses - current year | — | 20,506 |
| Catastrophe losses - prior year development | — | 602 |
| Losses and loss adjustment expenses | $217,800 | $170,010 |
| Attritional loss ratio - current year | 54.3% | 48.5% |
| Attritional loss ratio - prior year development | 1.3% | 3.0% |
| Catastrophe loss ratio - current year | 0.0% | 7.1% |
| Catastrophe loss ratio - prior year development | 0.0% | 0.2% |
| Losses and loss adjustment expense ratio | 55.6% | 58.8% |
| Acquisition cost ratio | 20.4% | 19.9% |
| Other underwriting expense ratio | 5.3% | 8.2% |
| Combined ratio | 81.3% | 86.9% |
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $325,493 | $243,569 |
| Casualty | 254,226 | 188,818 |
| Specialty | 113,069 | 85,828 |
| Total | $692,788 | $518,215 |
Gross premiums written for the six months ended June 30, 2024 increased by $174.6 million, or 33.7%, from $518.2 million for the six months ended June 30, 2023 to $692.8 million for the six months ended June 30, 2024. The increase was primarily driven by new business, expanded participations and rate increases in property and casualty reinsurance classes. Specialty reinsurance also increased, primarily driven by new business and non-recurring reinstatement premiums.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Property | $145,598 | $103,867 |
| Casualty | 185,649 | 131,540 |
| Specialty | 60,364 | 53,804 |
| Total | $391,611 | $289,211 |
Net premiums earned for the six months ended June 30, 2024 increased by $102.4 million, or 35.4%, from $289.2 million for the six months ended June 30, 2023 to $391.6 million for the six months ended June 30, 2024. The increase was primarily driven by new business, volume growth and rate increases in our casualty and property reinsurance classes. The most significant drivers of this increase were general liability, professional lines and property treaty classes.
| For the Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | Current year | % of net premiums earned | Prior year development | % of net premiums earned | Losses and loss adjustment expenses | % of net premiums earned |
| Attritional losses | $212,750 | 54.3% | $5,050 | 1.3% | $217,800 | 55.6% |
| Catastrophe losses | — | 0.0% | — | 0.0% | — | 0.0% |
| Total | $212,750 | 54.3% | $5,050 | 1.3% | $217,800 | 55.6% |
| Attritional losses | $140,299 | 48.5% | $8,603 | 3.0% | $148,902 | 51.5% |
| Catastrophe losses | 20,506 | 7.1% | 602 | 0.2% | 21,108 | 7.3% |
| Total | $160,805 | 55.6% | $9,205 | 3.2% | $170,010 | 58.8% |
The loss ratio for the six months ended June 30, 2024 was 55.6%, compared to 58.8% for the six months ended June 30, 2023, a decrease of 3.2 percentage points. The decrease was primarily driven by a lower level of catastrophe losses for the six months ended June 30, 2024.
Attritional loss ratio - current year for the six months ended June 30, 2024 was 54.3% compared to 48.5% for the six months ended June 30, 2023, an increase of 5.8 percentage points. The increase in the current year attritional loss ratio was primarily driven by $26.1 million of losses arising from the Baltimore Bridge collapse, which impacted our insurance and reinsurance classes, with no comparable losses for six months ended June 30, 2023.
Attritional loss ratio - prior year for the six months ended June 30, 2024 was an unfavorable 1.3% compared to an unfavorable 3.0% for the six months ended June 30, 2023, a decrease of 1.7 percentage points. The unfavorable attritional loss ratio - prior year was primarily driven by modest unfavorable development across a variety of casualty reinsurance classes and unfavorable development in specialty reinsurance classes relating to one specific large loss.
Catastrophe losses - current year and prior year for the six months ended June 30, 2024 were $Nil. Catastrophe losses - current year and prior year of $21.1 million for the six months ended June 30, 2023 were primarily driven by severe convective storms in June 2023 ($13.1 million), the wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($7.4 million), and unfavorable prior year development of $0.6 million.
| For the Six Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | June 30,2024 | June 30,2023 | June 30,2024 | June 30,2023 | '24 vs '23point r |
| Property | $18,765 | $13,645 | 12.9% | 13.1% | (0.2) |
| Casualty | 46,680 | 28,892 | 25.1% | 22.0% | 3.1 |
| Specialty | 14,537 | 15,006 | 24.1% | 27.9% | (3.8) |
| Total | $79,982 | $57,543 | 20.4% | 19.9% | 0.5 |
The acquisition cost ratio for the six months ended June 30, 2024 was 20.4%, compared to 19.9% for the six months ended June 30, 2023. The modest increase was primarily driven by a change in the mix of business, including more proportional business written in our casualty reinsurance classes.
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other underwriting expenses | $26,834 | $23,884 |
| Other underwriting expense ratio | 5.3% | 8.2% |
Other underwriting expenses for the six months ended June 30, 2024 increased by $3.0 million, or 12.4%, from $23.9 million for the six months ended June 30, 2023 to $26.8 million for the six months ended June 30, 2024. The increase was primarily driven by an increase in salary and compensation costs, an increased headcount, and professional fees.
The other underwriting expense ratios for the six months ended June 30, 2024 and 2023 decreased over the same period to 5.3% from 8.2%, as a result of the growth in premium base and certain performance based management fees recognized by Ada Capital Management Limited in the current period for services provided to Ada Re, Ltd.
Corporate and Other
The components of total net realized and unrealized gains (losses) on investments and net investment income (loss) are as follows:
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $408,002 | $40,045 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 24,958 | 24,144 |
| $432,960 | $64,189 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $189,455 | $6,011 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $408.0 million and $40.0 million for the six months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees.
Net investment income, net of non-controlling interest - TSHF, net of non-controlling interest, returned income of $218.5 million and $34.0 million for the six months ended June 30, 2024 and 2023, respectively. This includes the fund's returns, net of investment management fees and performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in "Net income attributable to non-controlling interests" in our GAAP financial statements.
TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 12.9% and 2.1% for the six months ended June 30, 2024 and 2023, respectively.
For the six months ended June 30, 2024, gains in TSHF were led by macroeconomic trading in FTV. Within FTV, gains were achieved in equities, fixed income, commodities, and currencies while losses were experienced in credit. TSHF also saw gains from single name equities trading within STV and ESTV. In single name equities trading, gains were led by U.S. equities within STV, followed by non-U.S. equities within ESTV. Within ESTV, East Asia, Europe, China, and Pan-America all made positive contributions to gains.
For the six months ended June 30, 2023, TSHF received positive contributions from single name equities trading which was partially offset by losses experienced from macroeconomic trading in FTV. In STV and ESTV, both non-U.S. and U.S. portfolios have contributed positively. In FTV, losses were driven by fixed income and commodities, with equities and currencies trading contributing positive results.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other returned income of $25.0 million and $24.1 million for the six months ended June 30, 2024 and 2023, respectively. The returns are primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates in the year to date.
Other Income (Loss)
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Other income (loss), excluding third party fee income | $— | $— |
Other income (loss), excluding third party fee income, consists of varying insignificant items in each period. There was no other income (loss) for the six months ended June 30, 2024 and 2023.
Net Foreign Exchange Gains (Losses)
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Net foreign exchange gains (losses) | $(3,911) | $(5,387) |
Our functional currency is the U.S. Dollar. We may conduct routine underwriting operations or invest a portion of our cash and other investable assets in currencies other than U.S. Dollars. Consequently, we may incur foreign exchange gains and losses in our results of operations.
Foreign exchange losses of $3.9 million and $5.4 million for the six months ended June 30, 2024 and 2023, respectively, primarily related to the remeasurement of insurance-related assets and liabilities denominated in British Pounds, Euro, Japanese Yen, and Australian and Canadian Dollars.
Corporate Expenses
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Corporate expenses | $27,764 | $13,154 |
Corporate expenses for the six months ended June 30, 2024 were $27.8 million compared to $13.2 million for the six months ended June 30, 2023, an increase of $14.6 million. The increase was primarily driven by $6.2 million of VAP expense, certain variable performance based compensation costs, an increased headcount and an increase in professional fees associated with operating as a public company.
Amortization of Intangible Assets
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Amortization of intangible assets | $6,569 | $5,075 |
Amortization of intangible assets of $6.6 million and $5.1 million for the six months ended June 30, 2024 and 2023, respectively, relates to internally developed software and intangible assets acquired in a business combination. Amortization expense increased due to the incremental expense associated with additional technology projects.
Interest Expense
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Interest expense | $11,738 | $10,718 |
Interest expense of $11.7 million and $10.7 million for the six months ended June 30, 2024 and 2023, respectively, relates to interest payments and certain administrative fees associated with our term loan and letter of credit facilities. The increase in interest expense is primarily driven by the increase in the Secured Overnight Financing Rate ("SOFR"), which underlies the floating rate associated with the term loan.
Income Tax Expense (Benefit)
| For the Six Months Ended | ||
|---|---|---|
| ($ in thousands) | June 30,2024 | June 30,2023 |
| Income tax expense (benefit) | $3,089 | $4,521 |
Income tax expense of $3.1 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively, primarily relates to withholding taxes on investment income from TS Hamilton Fund.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.