Hamilton Insurance Group Ltd
For the period ended Sep 30, 2024. Filed Nov 7, 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.
Sep 30, 2024 · Filed Nov 7, 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:
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands, except per share amounts) | 2024 | 2023 |
| Gross premiums written | $553,401 | $474,123 |
| Net premiums written | $477,896 | $383,566 |
| Net premiums earned | $448,795 | $337,036 |
| Third party fee income(1) | 4,464 | 2,301 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 273,632 | 191,577 |
| Acquisition costs | 102,201 | 78,537 |
| Other underwriting expenses(2) | 48,332 | 44,357 |
| Underwriting income (loss)(3) | 29,094 | 24,866 |
| Net realized and unrealized gains (losses) on investments | 48,228 | 47,343 |
| Net investment income (loss)(4) | 17,330 | 8,069 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) | 65,558 | 55,412 |
| Other income (loss), excluding third party fee income(1) | — | 85 |
| Net foreign exchange gains (losses) | (5,973) | 1,432 |
| Corporate expenses(2) | 14,060 | 18,678 |
| Amortization of intangible assets | 5,204 | 2,794 |
| Interest expense | 5,351 | 5,288 |
| Income tax expense (benefit) | 3,029 | 2,387 |
| Net income (loss) | 61,035 | 52,648 |
| Net income (loss) attributable to non-controlling interest(5) | (17,215) | 9,065 |
| Net income (loss) attributable to common shareholders | $78,250 | $43,583 |
| Diluted income (loss) per share attributable to common shareholders | $0.74 | $0.41 |
| Key Ratios | ||
| Attritional loss ratio - current year | 53.2% | 54.8% |
| Attritional loss ratio - prior year development | (0.7)% | (0.1)% |
| Catastrophe loss ratio - current year | 11.5% | 3.9% |
| Catastrophe loss ratio - prior year development | (3.0)% | (1.8)% |
| Loss and loss adjustment expense ratio | 61.0% | 56.8% |
| Acquisition cost ratio | 22.8% | 23.3% |
| Other underwriting expense ratio | 9.8% | 12.5% |
| Combined ratio | 93.6% | 92.6% |
| Return on average common shareholders' equity | 3.4% | 2.5% |
The following table summarizes book value per share and balance sheet data:
| As at | ||
|---|---|---|
| Book Value | September 30,2024 | June 30,2024 |
| Tangible book value per common share | $21.89 | $21.04 |
| Change in tangible book value per common share | 4.0% | |
| Book value per common share | $22.82 | $21.96 |
| Change in book value per common share | 3.9% | |
| Balance Sheet Data | ||
| Total assets | $7,826,547 | $7,623,103 |
| Total shareholders' equity | $2,313,626 | $2,238,547 |
(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 $0.1 million or less for each of the three months ended September 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 $14.1 million, and $18.7 million for the three months ended September 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 September 30, 2024 and 2023:
Gross premiums written Gross premiums written were $553.4 million and $474.1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in gross premiums written was primarily driven by our casualty, specialty and property reinsurance and property insurance classes. The increase was a result of new business, increased participations on existing business and a strong rate environment across multiple classes of business.
Underwriting results The combined ratio was 93.6% and 92.6% for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily driven by an increase in the catastrophe loss ratio, partially offset by a decrease in the other underwriting expense ratio, attritional loss ratio and acquisition cost ratio.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $238,554 | 53.2% | $(3,209) | (0.7)% | $235,345 | 52.5% |
| Catastrophe losses | 51,699 | 11.5% | (13,412) | (3.0)% | 38,287 | 8.5% |
| Total | $290,253 | 64.7% | $(16,621) | (3.7)% | $273,632 | 61.0% |
| Attritional losses | $184,774 | 54.8% | $(413) | (0.1)% | $184,361 | 54.7% |
| Catastrophe losses | 13,226 | 3.9% | (6,010) | (1.8)% | 7,216 | 2.1% |
| Total | $198,000 | 58.7% | $(6,423) | (1.9)% | $191,577 | 56.8% |
Attritional loss ratio - current year for the three months ended September 30, 2024 was 53.2% compared to 54.8% for the three months ended September 30, 2023, a decrease of 1.6 percentage points. The decrease was primarily driven by no large losses for the three months ended September 30, 2024, partially offset by a modest increase in the loss ratio for certain casualty classes as a result of social inflation.
Attritional loss ratio - prior year for the three months ended September 30, 2024 was a favorable 0.7% compared to a favorable 0.1% for the three months ended September 30, 2023, a decrease of 0.6 percentage points. The attritional loss ratio - prior year for the three months ended September 30, 2024 was primarily driven by favorable development in property and specialty classes in both our International and Bermuda segments, partially offset by unfavorable development in casualty classes in both our International and Bermuda segments. In addition, casualty business protected by the loss portfolio transfer ("LPT") discussed in Note 7, Reinsurance, recorded a gain of $1.1 million. The attritional loss ratio - prior year for the three months ended September 30, 2023 in both the International and Bermuda segments was primarily driven by favorable prior year development in specialty classes. This was partially offset by unfavorable development in casualty classes in each of the International and Bermuda segments and property classes in the Bermuda segment.
Catastrophe losses - current year and prior year development were $38.3 million and $7.2 million for the three months ended September 30, 2024 and 2023, respectively. Catastrophe losses for the three months ended September 30, 2024 were driven by Hurricane Helene ($33.9 million), the Calgary hailstorms ($12.3 million), and Hurricane Debby ($5.5 million), partially offset by favorable prior year development of $13.4 million. Catastrophe losses for the three months ended September 30, 2023 were driven by the Hawaii wildfires ($8.4 million), Hurricane Idalia ($6.6 million), the Vermont floods ($5.0 million) and certain smaller wind events ($0.2 million), partially offset by favorable development in respect of the June 2023 severe convective storms ($6.9 million) and favorable prior year development of $6.0 million.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $(28,291) | $60,404 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 93,849 | (4,992) |
| $65,558 | $55,412 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $(17,215) | $9,065 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned a loss of $28.3 million and income of $60.4 million for the three months ended September 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 a loss of $11.1 million and income of $51.3 million for the three months ended September 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 (loss) 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 (0.6)% and 3.1% for the three months ended September 30, 2024 and 2023, respectively.
For the three months ended September 30, 2024, losses in TSHF were led by macroeconomic trading in Two Sigma Futures Portfolio, LLC (“FTV”). Within FTV, losses were experienced in equities, currencies, and fixed income. In single name equities trading, TSHF saw positive contributions from non-U.S. equities within Two Sigma Equity Spectrum Portfolio, LLC (“ESTV”), which were partially offset by losses from U.S. equities within Two Sigma Spectrum Portfolio, LLC ("STV"). Within ESTV, gains were led by Europe, East Asia, and Pan-America, in decreasing order.
For the three months ended September 30, 2023, TSHF generated positive returns in single name equities trading and macroeconomic trading. Gains were led by U.S. single name equities within STV, followed by macroeconomic trading in FTV, and then non-U.S. equities within ESTV. FTV gains primarily related to fixed income securities and commodities, while losses were driven by equities, credit and currencies. In ESTV, trading was profitable in East Asia and Pan-America, but not in Europe or China.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $93.8 million and a loss of $5.0 million for the three months ended September 30, 2024 and 2023, respectively. Income for the three months ended September 30, 2024 was primarily driven by investment income on higher yielding assets and positive mark-to-market returns as a result of decreasing U.S. treasury interest rates in the period. Losses for the three months ended September 30, 2023 were primarily driven by the negative mark-to-market impact of rising U.S. treasury interest rates and other macroeconomic factors offsetting investment yield.
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
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Gross premiums written | $325,525 | $307,140 |
| Net premiums written | $268,106 | $234,621 |
| Net premiums earned | $225,244 | $178,632 |
| Third party fee income | 4,170 | 2,115 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 130,135 | 97,820 |
| Acquisition costs | 59,713 | 47,236 |
| Other underwriting expenses | 34,143 | 31,634 |
| Underwriting income (loss) | $5,423 | $4,057 |
| Attritional losses - current year | $124,519 | $97,554 |
| Attritional losses - prior year development | (3,279) | (9,495) |
| Catastrophe losses - current year | 14,384 | 9,169 |
| Catastrophe losses - prior year development | (5,489) | 592 |
| Losses and loss adjustment expenses | $130,135 | $97,820 |
| Attritional loss ratio - current year | 55.3% | 54.6% |
| Attritional loss ratio - prior year development | (1.5)% | (5.3)% |
| Catastrophe loss ratio - current year | 6.4% | 5.1% |
| Catastrophe loss ratio - prior year development | (2.4)% | 0.4% |
| Losses and loss adjustment expense ratio | 57.8% | 54.8% |
| Acquisition cost ratio | 26.5% | 26.4% |
| Other underwriting expense ratio | 13.3% | 16.5% |
| Combined ratio | 97.6% | 97.7% |
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $51,441 | $40,609 |
| Casualty | 144,107 | 146,005 |
| Specialty | 129,977 | 120,526 |
| Total | $325,525 | $307,140 |
Gross premiums written increased by $18.4 million, or 6.0%, from $307.1 million for the three months ended September 30, 2023 to $325.5 million for the three months ended September 30, 2024, primarily driven by growth and improved pricing in property insurance and specialty insurance and reinsurance classes.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $37,033 | $28,028 |
| Casualty | 86,062 | 62,254 |
| Specialty | 102,149 | 88,350 |
| Total | $225,244 | $178,632 |
Net premiums earned increased by $46.6 million, or 26.1%, from $178.6 million for the three months ended September 30, 2023 to $225.2 million for the three months ended September 30, 2024. The increase was primarily driven by growth in casualty and property insurance classes and specialty insurance and reinsurance classes. Casualty insurance growth was primarily driven by U.S. excess and surplus lines, mergers & acquisitions, professional lines, environmental and U.S. energy; property insurance growth was driven by property binders; specialty insurance growth was primarily driven by accident & health and political violence; and specialty reinsurance growth was primarily attributable to surety reinsurance.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Third party fee income | $4,170 | $2,115 |
Third party fee income increased by $2.1 million, or 97.2%, from $2.1 million for the three months ended September 30, 2023 to $4.2 million for the three months ended September 30, 2024. The increase was primarily due to favorable terms of a renewed syndicate management arrangement and an increase in consortium fees.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $124,519 | 55.3% | $(3,279) | (1.5)% | $121,240 | 53.8% |
| Catastrophe losses | 14,384 | 6.4% | (5,489) | (2.4)% | 8,895 | 4.0% |
| Total | $138,903 | 61.7% | $(8,768) | (3.9)% | $130,135 | 57.8% |
| Attritional losses | $97,554 | 54.6% | $(9,495) | (5.3)% | $88,059 | 49.3% |
| Catastrophe losses | 9,169 | 5.1% | 592 | 0.4% | 9,761 | 5.5% |
| Total | $106,723 | 59.7% | $(8,903) | (4.9)% | $97,820 | 54.8% |
The loss ratio for the three months ended September 30, 2024 was 57.8%, compared to 54.8% for the three months ended September 30, 2023, an increase of 3.0 percentage points. The increase was primarily driven by higher current year catastrophe and attritional losses, and a lower contribution from favorable prior year development for the three months ended September 30, 2024.
Attritional loss ratio - current year for the three months ended September 30, 2024 was 55.3% compared to 54.6% for the three months ended September 30, 2023, an increase of 0.7 percentage points. The increase was driven by a change in business mix and a modest increase in the loss ratio for certain casualty insurance classes as a result of social inflation.
Attritional loss ratio - prior year for the three months ended September 30, 2024 was a favorable 1.5% compared to a favorable 5.3% for the three months ended September 30, 2023, an increase of 3.8 percentage points. The favorable attritional loss ratio - prior year for the three months ended September 30, 2024 was primarily driven by favorable development in property insurance and specialty reinsurance classes, partially offset by unfavorable development in certain casualty insurance classes, including one specific large loss. In addition, casualty business protected by the LPT discussed in Note 7, Reinsurance, recorded a gain of $1.1 million.
Catastrophe losses - current year and prior year were $8.9 million and $9.8 million for the three months ended September 30, 2024 and 2023, respectively. Catastrophe losses for the three months ended September 30, 2024 were driven by Hurricane Helene ($12.9 million) and Hurricane Debby ($1.5 million), partially offset by favorable prior year development of $5.5 million. Catastrophe losses for the three months ended September 30, 2023 were primarily driven by the Vermont floods ($4.5 million), Hurricane Idalia ($3.0 million), the Hawaii wildfires ($2.7 million) and unfavorable prior year development of $0.6 million, partially offset by favorable development on the June 2023 severe convective storms ($1.0 million).
| Three Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | September 30,2024 | September 30,2023 | September 30,2024 | September 30,2023 | '24 vs '23point r |
| Property | $13,269 | $9,936 | 35.8% | 35.5% | 0.3 |
| Casualty | 15,404 | 11,169 | 17.9% | 17.9% | — |
| Specialty | 31,040 | 26,131 | 30.4% | 29.6% | 0.8 |
| Total | $59,713 | $47,236 | 26.5% | 26.4% | 0.1 |
For the three months ended September 30, 2024, the acquisition cost ratio was 26.5%, compared to 26.4% for the three months ended September 30, 2023, an increase of 0.1 percentage points. The modest increase was primarily driven by property insurance and specialty reinsurance classes as a result of changes in business mix.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other underwriting expenses | $34,143 | $31,634 |
| Other underwriting expense ratio | 13.3% | 16.5% |
Other underwriting expenses for the three months ended September 30, 2024 were $34.1 million, an increase of $2.5 million, or 7.9%, compared to $31.6 million for the three months ended September 30, 2023. The increase was primarily driven by an increase in salary and compensation costs, IT costs and professional fees.
The other underwriting expense ratio for the three months ended September 30, 2024 and 2023 decreased over the same period from 16.5% to 13.3% , primarily as a result of the growth in the premium base.
Bermuda Segment
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Gross premiums written | $227,876 | $166,983 |
| Net premiums written | $209,790 | $148,945 |
| Net premiums earned | $223,551 | $158,404 |
| Third party fee income | 294 | 186 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 143,497 | 93,757 |
| Acquisition costs | 42,488 | 31,301 |
| Other underwriting expenses | 14,189 | 12,723 |
| Underwriting income (loss) | $23,671 | $20,809 |
| Attritional losses - current year | $114,035 | $87,220 |
| Attritional losses - prior year development | 70 | 9,082 |
| Catastrophe losses - current year | 37,315 | 4,057 |
| Catastrophe losses - prior year development | (7,923) | (6,602) |
| Losses and loss adjustment expenses | $143,497 | $93,757 |
| Attritional loss ratio - current year | 51.0% | 55.1% |
| Attritional loss ratio - prior year development | 0.0% | 5.7% |
| Catastrophe loss ratio - current year | 16.7% | 2.6% |
| Catastrophe loss ratio - prior year development | (3.5)% | (4.2)% |
| Losses and loss adjustment expense ratio | 64.2% | 59.2% |
| Acquisition cost ratio | 19.0% | 19.8% |
| Other underwriting expense ratio | 6.2% | 7.9% |
| Combined ratio | 89.4% | 86.9% |
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $68,560 | $52,394 |
| Casualty | 128,891 | 96,219 |
| Specialty | 30,425 | 18,370 |
| Total | $227,876 | $166,983 |
For the three months ended September 30, 2024, gross premiums written increased by $60.9 million, or 36.5%, from $167.0 million for the three months ended September 30, 2023 to $227.9 million for the three months ended September 30, 2024. The increase was primarily driven by new business, increased participations and a strong rate environment in our casualty reinsurance, property reinsurance and specialty reinsurance classes.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $84,733 | $58,508 |
| Casualty | 107,886 | 74,094 |
| Specialty | 30,932 | 25,802 |
| Total | $223,551 | $158,404 |
For the three months ended September 30, 2024, the Bermuda segment's net premiums earned increased by $65.1 million, or 41.1%, from $158.4 million for the three months ended September 30, 2023 to $223.6 million for the three months ended September 30, 2024. The increase was primarily driven by new business, volume growth and a strong rate environment in casualty reinsurance and property reinsurance. The most significant drivers of the increase were general liability, professional lines and property treaty classes.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Third party fee income | $294 | $186 |
Third party fee income increased by $0.1 million, from $0.2 million for the three months ended September 30, 2023 to $0.3 million for the three months ended September 30, 2024.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $114,035 | 51.0% | $70 | 0.0% | $114,105 | 51.0% |
| Catastrophe losses | 37,315 | 16.7% | (7,923) | (3.5)% | 29,392 | 13.2% |
| Total | $151,350 | 67.7% | $(7,853) | (3.5)% | $143,497 | 64.2% |
| Attritional losses | $87,220 | 55.1% | $9,082 | 5.7% | $96,302 | 60.8% |
| Catastrophe losses | 4,057 | 2.6% | (6,602) | (4.2)% | (2,545) | (1.6)% |
| Total | $91,277 | 57.7% | $2,480 | 1.5% | $93,757 | 59.2% |
The loss ratio for the three months ended September 30, 2024 was 64.2%, compared to 59.2% for the three months ended September 30, 2023, an increase of 5.0 percentage points. The increase was primarily driven by higher catastrophe losses, partially offset by lower current and prior year attritional losses for the three months ended September 30, 2024.
Attritional loss ratio - current year for the three months ended September 30, 2024 was 51.0% compared to 55.1% for the three months ended September 30, 2023, a decrease of 4.1 percentage points. The decrease was primarily driven by a change in business mix and no large losses for the three months ended September 30, 2024, partially offset by a modest increase in the loss ratio for certain casualty reinsurance classes as a result of social inflation.
Attritional loss ratio - prior year for the three months ended September 30, 2024 was Nil, compared to an unfavorable 5.7% for the three months ended September 30, 2023, a decrease of 5.7 percentage points. The attritional loss ratio - prior year for the three months ended September 30, 2024 was primarily driven by an increase in casualty reinsurance, partially offset by favorable development in property and specialty classes.
Catastrophe losses - current year and prior year were $29.4 million for the three months ended September 30, 2024 and favorable development of $2.5 million for the three months ended September 30, 2023. Catastrophe losses for the three months ended September 30, 2024 were driven by Hurricane Helene ($21.0 million), the Calgary hailstorms ($12.3 million), and Hurricane Debby ($4.0 million), partially offset by favorable prior year development of $7.9 million. Catastrophe losses for the three months ended September 30, 2023 were primarily driven by favorable development on the June 2023 severe convective storms ($5.9 million) and favorable prior year development of $6.6 million, partially offset by the Hawaii wildfires ($5.7 million), Hurricane Idalia ($3.6 million), and various smaller wind and flood events ($0.7 million).
| Three Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | September 30,2024 | September 30,2023 | September 30,2024 | September 30,2023 | '24 vs '23point r |
| Property | $9,255 | $7,280 | 10.9% | 12.4% | (1.5) |
| Casualty | 26,194 | 17,788 | 24.3% | 24.0% | 0.3 |
| Specialty | 7,039 | 6,233 | 22.8% | 24.2% | (1.4) |
| Total | $42,488 | $31,301 | 19.0% | 19.8% | (0.8) |
The acquisition cost ratio for the three months ended September 30, 2024 decreased to 19.0%, compared to 19.8% for the three months ended September 30, 2023. The decrease was primarily driven by the change in business mix.
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other underwriting expenses | $14,189 | $12,723 |
| Other underwriting expense ratio | 6.2% | 7.9% |
For the three months ended September 30, 2024, other underwriting expenses increased by $1.5 million or 11.5%, from $12.7 million for the three months ended September 30, 2023 to $14.2 million for the three months ended September 30, 2024. The increase was primarily driven by an increase in salary and compensation costs and professional fees.
The other underwriting expense ratios for the three months ended September 30, 2024 and 2023 decreased over the same period from 7.9% to 6.2%, as a result of the growth in premium base.
Corporate and Other
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $(28,291) | $60,404 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 93,849 | (4,992) |
| $65,558 | $55,412 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $(17,215) | $9,065 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned a loss of $28.3 million and income of $60.4 million for the three months ended September 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 a loss of $11.1 million and income of $51.3 million for the three months ended September 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 (loss) 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 (0.6)% and 3.1% for the three months ended September 30, 2024 and 2023, respectively.
For the three months ended September 30, 2024, losses in TSHF were led by macroeconomic trading in FTV. Within FTV, losses were experienced in equities, currencies, and fixed income. In single name equities trading, TSHF saw positive contributions from non-U.S. equities within ESTV, which were partially offset by losses from U.S. equities within STV. Within ESTV, gains were led by Europe, East Asia, and Pan-America, in decreasing order.
For the three months ended September 30, 2023, TSHF generated positive returns in single name equities trading and macroeconomic trading. Gains were led by U.S. single name equities within STV, followed by macroeconomic trading in FTV, and then non-U.S. equities within ESTV. FTV gains primarily related to fixed income securities and commodities, while losses were driven by equities, credit and currencies. In ESTV, trading was profitable in East Asia and Pan-America, but not in Europe or China.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $93.8 million and a loss of $5.0 million for the three months ended September 30, 2024 and 2023, respectively. Income for the three months ended September 30, 2024 was primarily driven by investment income on higher yielding assets and positive mark-to-market returns as a result of decreasing U.S. treasury interest rates in the period. Losses for the three months ended September 30, 2023 were primarily driven by the negative mark-to-market impact of rising U.S. treasury interest rates and other macroeconomic factors offsetting investment yield.
Other Income (Loss)
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other income (loss), excluding third party fee income | $— | $85 |
Other income (loss), excluding third party fee income, consists of varying insignificant items in each period. There was no other income (loss) for the three months ended September 30, 2024.
Net Foreign Exchange Gains (Losses)
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Net foreign exchange gains (losses) | $(5,973) | $1,432 |
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 $6.0 million and gains $1.4 million for the three months ended September 30, 2024 and 2023, respectively, primarily related to the remeasurement of insurance-related assets and liabilities denominated in British Pounds, Euro, Japanese Yen, and Australian and Canadian Dollars.
Corporate Expenses
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Corporate expenses | $14,060 | $18,678 |
Corporate expenses for the three months ended September 30, 2024 were $14.1 million, compared to $18.7 million for the three months ended September 30, 2023, a decrease of $4.6 million. The decrease was primarily driven by $1.9 million of Value Appreciation Pool ("VAP") expense recorded for the three months ended September 30, 2024, compared to $11.2 million of VAP expense recorded for the three months ended September 30, 2023, partially offset by certain variable performance based compensation costs, an increased headcount and an increase in professional fees associated with operating as a public company.
Amortization of Intangible Assets
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Amortization of intangible assets | $5,204 | $2,794 |
Amortization of intangible assets of $5.2 million and $2.8 million for the three months ended September 30, 2024 and 2023, respectively, relates to internally developed software and intangible assets acquired in a business combination. Amortization expense increased due to the incremental expense associated with additional technology projects.
Interest Expense
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Interest expense | $5,351 | $5,288 |
Interest expense of $5.4 million and $5.3 million for the three months ended September 30, 2024 and 2023, respectively, relates to interest payments and certain administrative fees associated with our term loan and letter of credit facilities.
Income Tax Expense (Benefit)
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Income tax expense (benefit) | $3,029 | $2,387 |
Income tax expense for the three months ended September 30, 2024 was $3.0 million, compared to $2.4 million for the three months ended September 30, 2023, an increase of $0.6 million. Tax expense for both the three months ended September 30, 2024 and 2023 was primarily driven by withholding taxes on investment income from TS Hamilton Fund.
Consolidated Results of Operations
The following is a comparison of selected data for our consolidated results of operations:
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands, except per share amounts) | 2024 | 2023 |
| Gross premiums written | $1,878,645 | $1,517,247 |
| Net premiums written | $1,467,843 | $1,116,772 |
| Net premiums earned | $1,252,862 | $952,398 |
| Third party fee income(1) | 17,934 | 7,753 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 720,478 | 519,554 |
| Acquisition costs | 283,059 | 220,532 |
| Other underwriting expenses(2) | 140,339 | 126,242 |
| Underwriting income (loss)(3) | 126,920 | 93,823 |
| Net realized and unrealized gains (losses) on investments | 454,851 | 101,881 |
| Net investment income (loss)(4) | 43,667 | 17,719 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) | 498,518 | 119,600 |
| Other income (loss), excluding third party fee income(1) | — | 85 |
| Net foreign exchange gains (losses) | (9,883) | (3,953) |
| Corporate expenses(2) | 41,825 | 31,833 |
| Amortization of intangible assets | 11,773 | 7,869 |
| Interest expense | 17,090 | 16,007 |
| Income tax expense (benefit) | 6,118 | 6,908 |
| Net income (loss) | 538,749 | 146,938 |
| Net income (loss) attributable to non-controlling interest(5) | 172,240 | 15,076 |
| Net income (loss) attributable to common shareholders | $366,509 | $131,862 |
| Diluted income (loss) per share attributable to common shareholders | $3.33 | $1.26 |
| Key Ratios | ||
| Attritional loss ratio - current year | 53.9% | 51.8% |
| Attritional loss ratio - prior year development | 0.6% | (0.4)% |
| Catastrophe loss ratio - current year | 4.1% | 3.7% |
| Catastrophe loss ratio - prior year development | (1.1)% | (0.5)% |
| Loss and loss adjustment expense ratio | 57.5% | 54.6% |
| Acquisition cost ratio | 22.6% | 23.2% |
| Other underwriting expense ratio | 9.8% | 12.4% |
| Combined ratio | 89.9% | 90.2% |
| Return on average common shareholders' equity | 16.8% | 7.6% |
The following table summarizes book value per share and balance sheet data:
| As at | ||
|---|---|---|
| Book Value | September 30,2024 | December 31,2023 |
| Tangible book value per common share | $21.89 | $17.75 |
| Change in tangible book value per common share | 23.3% | |
| Book value per common share | $22.82 | $18.58 |
| Change in book value per common share | 22.8% | |
| Balance Sheet Data | ||
| Total assets | $7,826,547 | $6,671,355 |
| Total shareholders' equity | $2,313,626 | $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 and $0.1 million for the nine months ended September 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 $41.8 million and $31.8 million for the nine months ended September 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 nine months ended September 30, 2024 and 2023:
Gross premiums written Gross premiums written were $1.9 billion and $1.5 billion for the nine months ended September 30, 2024 and 2023, respectively. The increase in gross premiums written was primarily driven by our property reinsurance, casualty reinsurance, specialty reinsurance and casualty insurance business. The growth was a result of new business, increased participations on existing business and a strong rate environment across multiple classes of business.
Underwriting results The combined ratio was 89.9% and 90.2% for the nine months ended September 30, 2024 and 2023, respectively. The decrease was largely driven by a decrease in the other underwriting expense ratio, acquisition cost ratio, and catastrophe loss ratio, partially offset by an increase in the attritional loss ratio.
| For the Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $674,903 | 53.9% | $7,091 | 0.6% | $681,994 | 54.5% |
| Catastrophe losses | 51,699 | 4.1% | (13,215) | (1.1)% | 38,484 | 3.0% |
| Total | $726,602 | 58.0% | $(6,124) | (0.5)% | $720,478 | 57.5% |
| Attritional losses | $493,224 | 51.8% | $(4,049) | (0.4)% | $489,175 | 51.4% |
| Catastrophe losses | 35,233 | 3.7% | (4,854) | (0.5)% | 30,379 | 3.2% |
| Total | $528,457 | 55.5% | $(8,903) | (0.9)% | $519,554 | 54.6% |
Attritional loss ratio - current year for the nine months ended September 30, 2024 was 53.9% compared to 51.8% for the nine months ended September 30, 2023, an increase of 2.1 percentage points. The increase was primarily driven by losses of $37.9 million, or 3.0 points, 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 nine months ended September 30, 2024 was an unfavorable 0.6% compared to favorable 0.4% for the nine months ended September 30, 2023, an increase of 1.0 percentage point. The attritional loss ratio - prior year for the nine months ended September 30, 2024 was primarily driven by unfavorable development in casualty classes in both our International and Bermuda segments and specialty insurance classes in our International segment, partially offset by favorable development in our International and Bermuda property classes. In addition, casualty business protected by the LPT discussed in Note 7, Reinsurance, benefited from favorable development in the underlying reserves of $1.4 million and $1.3 million in amortization of the associated deferred gain, for a total net positive earnings impact of $2.7 million. The attritional loss ratio - prior year for the nine months ended September 30, 2023 was primarily driven by favorable prior year development in specialty classes in the International and Bermuda segments, partially offset by unfavorable development in our Bermuda property and casualty classes. In addition, casualty business protected by the LPT discussed in Note 7, Reinsurance, benefited from $2.5 million in amortization of the associated deferred gain and favorable development in the underlying reserves of $1.5 million, for a total net positive earnings impact of $4.0 million.
Catastrophe losses - current year and prior year development were $38.5 million and $30.4 million for the nine months ended September 30, 2024 and 2023, respectively. Catastrophe losses for the nine months ended September 30, 2024 were driven by Hurricane Helene ($33.9 million), the Calgary hailstorms ($12.3 million), and Hurricane Debby ($5.5 million), partially offset by favorable prior year development of $13.2 million. Catastrophe losses for the nine months ended September 30, 2023 were driven by the Hawaii wildfires ($8.4 million), severe convective storms in June 2023 ($7.7 million), the wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($7.6 million), Hurricane Idalia ($6.6 million), and the Vermont floods ($5.0 million), partially offset by favorable prior year development of $4.9 million.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $379,712 | $100,448 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 118,806 | 19,152 |
| $498,518 | $119,600 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $172,240 | $15,076 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $379.7 million and $100.4 million for the nine months ended September 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 $207.5 million and $85.4 million for the nine months ended September 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 (loss) 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 12.2% and 5.3% for the nine months ended September 30, 2024 and 2023, respectively.
For the nine months ended September 30, 2024, gains in TSHF were led by macroeconomic trading in FTV. Within FTV, gains were achieved in equities, commodities, fixed income, and credit, while losses were experienced in currencies. 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, Pan-America and China all made positive contributions to gains, in decreasing order.
For the nine months ended September 30, 2023, TSHF generated positive returns in single name equities trading, partially offset by losses in macroeconomic trading. In single name equities trading, U.S. equities within STV and non-U.S. equities within ESTV both made positive contributions. Within ESTV, trading was most profitable in East Asia, followed by Europe, China and Pan-America. Within FTV, gains were driven by currencies, equities and credit, while losses related to commodities and fixed income.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other returned income of $118.8 million and $19.2 million for the nine months ended September 30, 2024 and 2023, respectively. Income for the nine months ended September 30, 2024 was primarily driven by investment income on higher yielding assets and positive mark-to-market returns as a result of decreasing U.S. treasury interest rates in the period. Income for the nine months ended September 30, 2023 was primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates.
International Segment
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Gross premiums written | $957,981 | $832,049 |
| Net premiums written | $687,444 | $553,687 |
| Net premiums earned | $637,700 | $504,784 |
| Third party fee income | 11,557 | 7,417 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 359,181 | 255,787 |
| Acquisition costs | 160,589 | 131,688 |
| Other underwriting expenses | 99,317 | 89,635 |
| Underwriting income (loss) | $30,170 | $35,091 |
| Attritional losses - current year | $348,117 | $265,706 |
| Attritional losses - prior year development | 1,972 | (21,734) |
| Catastrophe losses - current year | 14,384 | 10,669 |
| Catastrophe losses - prior year development | (5,292) | 1,146 |
| Losses and loss adjustment expenses | $359,181 | $255,787 |
| Attritional loss ratio - current year | 54.6% | 52.6% |
| Attritional loss ratio - prior year development | 0.3% | (4.3)% |
| Catastrophe loss ratio - current year | 2.2% | 2.2% |
| Catastrophe loss ratio - prior year development | (0.8)% | 0.2% |
| Losses and loss adjustment expense ratio | 56.3% | 50.7% |
| Acquisition cost ratio | 25.2% | 26.1% |
| Other underwriting expense ratio | 13.8% | 16.3% |
| Combined ratio | 95.3% | 93.1% |
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $142,685 | $107,706 |
| Casualty | 397,400 | 358,431 |
| Specialty | 417,896 | 365,912 |
| Total | $957,981 | $832,049 |
Gross premiums written increased by $125.9 million, or 15.1%, from $832.0 million for the nine months ended September 30, 2023 to $958.0 million for the nine months ended September 30, 2024, primarily driven by growth, improved pricing and new business in casualty and property insurance classes and specialty reinsurance and insurance classes.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $104,697 | $76,398 |
| Casualty | 234,760 | 190,355 |
| Specialty | 298,243 | 238,031 |
| Total | $637,700 | $504,784 |
For the nine months ended September 30, 2024, net premiums earned increased by $132.9 million, or 26.3%, from $504.8 million for the nine months ended September 30, 2023 to $637.7 million for the nine months ended September 30, 2024. The increase was driven by growth in our specialty, casualty and property insurance classes, in addition to growth in the specialty reinsurance class. Specialty insurance growth was primarily driven by accident & health, political violence, fine art & specie, and marine & energy; casualty insurance growth was primarily driven by U.S. excess and surplus lines, professional lines and excess casualty; property insurance growth was driven by property binders and D&F; and specialty reinsurance growth was primarily attributable to surety reinsurance and treaty reinsurance.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Third party fee income | $11,557 | $7,417 |
For the nine months ended September 30, 2024, fee income increased by $4.1 million, or 55.8%, from $7.4 million for the nine months ended September 30, 2023 to $11.6 million for the nine months ended September 30, 2024. The increase was primarily due to favorable terms of a renewed syndicate management arrangement and an increase in consortium fees.
| For the Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $348,117 | 54.6% | $1,972 | 0.3% | $350,089 | 54.9% |
| Catastrophe losses | 14,384 | 2.2% | (5,292) | (0.8)% | 9,092 | 1.4% |
| Total | $362,501 | 56.8% | $(3,320) | (0.5)% | $359,181 | 56.3% |
| Attritional losses | $265,706 | 52.6% | $(21,734) | (4.3)% | $243,972 | 48.3% |
| Catastrophe losses | 10,669 | 2.2% | 1,146 | 0.2% | 11,815 | 2.4% |
| Total | $276,375 | 54.8% | $(20,588) | (4.1)% | $255,787 | 50.7% |
The loss ratio for the nine months ended September 30, 2024 was 56.3%, compared to 50.7% for the nine months ended September 30, 2023, an increase of 5.6 percentage points. The increase was driven by a lower contribution from favorable prior year development and higher current year attritional losses for the nine months ended September 30, 2024.
Attritional loss ratio - current year for the nine months ended September 30, 2024 was 54.6% compared to 52.6% for the nine months ended September 30, 2023, an increase of 2.0 percentage points. The increase was primarily driven by losses of $11.8 million, or 1.9 points, arising from the Baltimore Bridge collapse.
Attritional loss ratio - prior year for the nine months ended September 30, 2024 wasan unfavorable 0.3% compared to a favorable 4.3% for the nine months ended September 30, 2023, an increase of 4.6 percentage points. The unfavorable attritional loss ratio - prior year for the nine months ended September 30, 2024 was primarily driven by unfavorable development in specialty insurance classes, impacted by two large losses, and casualty insurance classes, impacted by one specific large loss, partially offset by favorable development in our property insurance and reinsurance classes. In addition, casualty business protected by the LPT discussed in Note 7, Reinsurance, benefited from favorable development in the underlying reserves of $1.4 million and $1.3 million in amortization of the associated deferred gain, for a total net positive earnings impact of $2.7 million.
Catastrophe losses - current year and prior year were $9.1 million and $11.8 million for the nine months ended September 30, 2024 and 2023, respectively. Catastrophe losses for the nine months ended September 30, 2024 were driven by Hurricane Helene ($12.9 million) and Hurricane Debby ($1.5 million), partially offset by favorable prior year development of $5.3 million. Catastrophe losses for the nine months ended September 30, 2023 were primarily driven by the Vermont floods ($4.5 million), Hurricane Idalia ($3.0 million), the Hawaii wildfires ($2.7 million) and certain other wind events ($0.5 million), in addition to unfavorable prior year development of $1.1 million.
| Nine Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | September 30,2024 | September 30,2023 | September 30,2024 | September 30,2023 | '24 vs '23point r |
| Property | $35,658 | $26,405 | 34.1% | 34.6% | (0.5) |
| Casualty | 37,616 | 34,066 | 16.0% | 17.9% | (1.9) |
| Specialty | 87,315 | 71,217 | 29.3% | 29.9% | (0.6) |
| Total | $160,589 | $131,688 | 25.2% | 26.1% | (0.9) |
The acquisition cost ratio for the nine months ended September 30, 2024 was 25.2%, compared to 26.1% for the nine months ended September 30, 2023, a decrease of 0.9 percentage points. The decrease was primarily driven by casualty insurance, as a result of a change in the business mix and non-recurring profit commissions recorded in the nine months ended September 30, 2023.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other underwriting expenses | $99,317 | $89,635 |
| Other underwriting expense ratio | 13.8% | 16.3% |
Other underwriting expenses were $99.3 million for the nine months ended September 30, 2024, an increase of $9.7 million, or 10.8%, compared to $89.6 million for the nine months ended September 30, 2023. The increase was primarily driven by increases in headcount as we built out underwriting teams supporting the corresponding increase in premium volume, and certain growth related professional and IT costs.
The other underwriting expense ratios for the nine months ended September 30, 2024 and 2023 decreased over the same period from 16.3% to 13.8%, primarily as a result of growth in the premium base.
Bermuda Segment
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Gross premiums written | $920,664 | $685,198 |
| Net premiums written | $780,399 | $563,085 |
| Net premiums earned | $615,162 | $447,614 |
| Third party fee income | 6,377 | 336 |
| Claims and Expenses | ||
| Losses and loss adjustment expenses | 361,297 | 263,767 |
| Acquisition costs | 122,470 | 88,844 |
| Other underwriting expenses | 41,022 | 36,607 |
| Underwriting income (loss) | $96,750 | $58,732 |
| Attritional losses - current year | $326,786 | $227,518 |
| Attritional losses - prior year development | 5,119 | 17,685 |
| Catastrophe losses - current year | 37,315 | 24,564 |
| Catastrophe losses - prior year development | (7,923) | (6,000) |
| Losses and loss adjustment expenses | $361,297 | $263,767 |
| Attritional loss ratio - current year | 53.1% | 50.8% |
| Attritional loss ratio - prior year development | 0.8% | 4.0% |
| Catastrophe loss ratio - current year | 6.1% | 5.4% |
| Catastrophe loss ratio - prior year development | (1.3)% | (1.3)% |
| Losses and loss adjustment expense ratio | 58.7% | 58.9% |
| Acquisition cost ratio | 19.9% | 19.8% |
| Other underwriting expense ratio | 5.6% | 8.1% |
| Combined ratio | 84.2% | 86.8% |
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $394,053 | $295,962 |
| Casualty | 383,117 | 285,038 |
| Specialty | 143,494 | 104,198 |
| Total | $920,664 | $685,198 |
Gross premiums written for the nine months ended September 30, 2024 increased by $235.5 million, or 34.4%, from $685.2 million for the nine months ended September 30, 2023 to $920.7 million for the nine months ended September 30, 2024. The increase was primarily driven by new business, expanded participations and rate increases in property and casualty reinsurance classes. Specialty reinsurance also increased, primarily driven by new business and non-recurring reinstatement premiums.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Property | $230,331 | $162,374 |
| Casualty | 293,535 | 205,634 |
| Specialty | 91,296 | 79,606 |
| Total | $615,162 | $447,614 |
Net premiums earned for the nine months ended September 30, 2024 increased by $167.5 million, or 37.4%, from $447.6 million for the nine months ended September 30, 2023 to $615.2 million for the nine months ended September 30, 2024. The increase was primarily driven by new business, volume growth and rate increases in our casualty and property reinsurance classes. The most significant drivers of this increase were general liability, professional lines and property treaty classes.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Third party fee income | $6,377 | $336 |
Third party fee income increased by $6.0 million, from $0.3 million for the nine months ended September 30, 2023 to $6.4 million for the nine months ended September 30, 2024. The increase was primarily driven by certain performance based management fees recognized by Ada Capital Management Limited for services provided to Ada Re, Ltd.
| For the Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| ($ 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 | $326,786 | 53.1% | $5,119 | 0.8% | $331,905 | 53.9% |
| Catastrophe losses | 37,315 | 6.1% | (7,923) | (1.3)% | 29,392 | 4.8% |
| Total | $364,101 | 59.2% | $(2,804) | (0.5)% | $361,297 | 58.7% |
| Attritional losses | $227,518 | 50.8% | $17,685 | 4.0% | $245,203 | 54.8% |
| Catastrophe losses | 24,564 | 5.4% | (6,000) | (1.3)% | 18,564 | 4.1% |
| Total | $252,082 | 56.2% | $11,685 | 2.7% | $263,767 | 58.9% |
The loss ratio for the nine months ended September 30, 2024 was 58.7%, compared to 58.9% for the nine months ended September 30, 2023, a decrease of 0.2 percentage points. The modest decrease was primarily driven by lower prior year attritional loss development, partially offset by a higher current year attritional loss ratio for the nine months ended September 30, 2024.
Attritional loss ratio - current year for the nine months ended September 30, 2024 was 53.1% compared to 50.8% for the nine months ended September 30, 2023, an increase of 2.3 percentage points. The increase was primarily driven by losses of $26.1 million, or 4.2 points, arising from the Baltimore Bridge collapse.
Attritional loss ratio - prior year for the nine months ended September 30, 2024 was an unfavorable 0.8% compared to an unfavorable 4.0% for the nine months ended September 30, 2023, a decrease of 3.2 percentage points. The unfavorable attritional loss ratio - prior year for the nine months ended September 30, 2024 was primarily driven by a modest increase in certain casualty classes, partially offset by favorable development in property reinsurance and insurance classes.
Catastrophe losses - current year and prior year were $29.4 million and $18.6 million for the nine months ended September 30, 2024 and 2023, respectively. Catastrophe losses for the nine months ended September 30, 2024 were driven by Hurricane Helene ($21.0 million), the Calgary hailstorms ($12.3 million), and Hurricane Debby ($4.0 million), partially offset by favorable prior year development of $7.9 million. Catastrophe losses for the nine months ended September 30, 2023 were primarily driven by wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($7.6 million), severe convective storms in June 2023 ($7.2 million), the Hawaii wildfires ($5.7 million), Hurricane Idalia ($3.6 million), and smaller flood events ($0.5 million), partially offset by favorable prior year development of $6.0 million.
| Nine Months Ended | |||||
|---|---|---|---|---|---|
| Acquisition Costs · % of Net Premiums Earned | |||||
| ($ in thousands) | September 30,2024 | September 30,2023 | September 30,2024 | September 30,2023 | '24 vs '23point r |
| Property | $28,019 | $20,924 | 12.2% | 12.9% | (0.7) |
| Casualty | 72,875 | 46,681 | 24.8% | 22.7% | 2.1 |
| Specialty | 21,576 | 21,239 | 23.6% | 26.7% | (3.1) |
| Total | $122,470 | $88,844 | 19.9% | 19.8% | 0.1 |
The acquisition cost ratio for the nine months ended September 30, 2024 was 19.9%, compared to 19.8% for the nine months ended September 30, 2023. The modest increase was primarily driven by a change in the mix of business, including more proportional business written in our casualty reinsurance classes.
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other underwriting expenses | $41,022 | $36,607 |
| Other underwriting expense ratio | 5.6% | 8.1% |
Other underwriting expenses for the nine months ended September 30, 2024 increased by $4.4 million, or 12.1%, from $36.6 million for the nine months ended September 30, 2023 to $41.0 million for the nine months ended September 30, 2024. The increase was primarily driven by an increase in salary and compensation costs, an increased headcount, and professional fees.
The other underwriting expense ratios for the nine months ended September 30, 2024 and 2023 decreased over the same period from 8.1% to 5.6%, as a result of the growth in premium base and certain performance based management fees recognized by Ada Capital Management Limited in the current period for services provided to Ada Re, Ltd.
Corporate and Other
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1) | $379,712 | $100,448 |
| Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other | 118,806 | 19,152 |
| $498,518 | $119,600 | |
| Net income (loss) attributable to non-controlling interest - TSHF | $172,240 | $15,076 |
Total net realized and unrealized gains (losses) on investments and net investment income (loss) -TSHF, prior to non-controlling interest, returned income of $379.7 million and $100.4 million for the nine months ended September 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 $207.5 million and $85.4 million for the nine months ended September 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 (loss) 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 12.2% and 5.3% for the nine months ended September 30, 2024 and 2023, respectively.
For the nine months ended September 30, 2024, gains in TSHF were led by macroeconomic trading in FTV. Within FTV, gains were achieved in equities, commodities, fixed income, and credit, while losses were experienced in currencies. 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, Pan-America and China all made positive contributions to gains, in decreasing order.
For the nine months ended September 30, 2023, TSHF generated positive returns in single name equities trading, partially offset by losses in macroeconomic trading. In single name equities trading, U.S. equities within STV and non-U.S. equities within ESTV both made positive contributions. Within ESTV, trading was most profitable in East Asia, followed by Europe, China and Pan-America. Within FTV, gains were driven by currencies, equities and credit, while losses related to commodities and fixed income.
Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $118.8 million and $19.2 million for the nine months ended September 30, 2024 and 2023, respectively. Income for the nine months ended September 30, 2024 was primarily driven by investment income on higher yielding assets and positive mark-to-market returns as a result of decreasing U.S. treasury interest rates in the period. Income for the nine months ended September 30, 2023 was primarily driven by investment income on higher yielding assets, partially offset by negative price returns as a result of rising U.S. treasury interest rates.
Other Income (Loss)
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Other income (loss), excluding third party fee income | $— | $85 |
Other income (loss), excluding third party fee income, consists of varying insignificant items in each period. There was no other income (loss) for the nine months ended September 30, 2024.
Net Foreign Exchange Gains (Losses)
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Net foreign exchange gains (losses) | $(9,883) | $(3,953) |
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 $9.9 million and $4.0 million for the nine months ended September 30, 2024 and 2023, respectively, primarily related to the remeasurement of insurance-related assets and liabilities denominated in British Pounds, Euro, Japanese Yen, and Australian and Canadian Dollars.
Corporate Expenses
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Corporate expenses | $41,825 | $31,833 |
Corporate expenses for the nine months ended September 30, 2024 were $41.8 million compared to $31.8 million for the nine months ended September 30, 2023, an increase of $10.0 million. The increase was primarily driven by certain variable performance based compensation costs, an increased headcount and an increase in professional fees associated with operating as a public company, partially offset by a decrease in VAP expense.
Amortization of Intangible Assets
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Amortization of intangible assets | $11,773 | $7,869 |
Amortization of intangible assets of $11.8 million and $7.9 million for the nine months ended September 30, 2024 and 2023, respectively, relates to internally developed software and intangible assets acquired in a business combination. Amortization expense increased due to the incremental expense associated with additional technology projects.
Interest Expense
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Interest expense | $17,090 | $16,007 |
Interest expense of $17.1 million and $16.0 million for the nine months ended September 30, 2024 and 2023, respectively, relates to interest payments and certain administrative fees associated with our term loan and letter of credit facilities. The increase in interest expense was primarily driven by the increase in the Secured Overnight Financing Rate ("SOFR"), which underlies the floating rate associated with the term loan.
Income Tax Expense (Benefit)
| Nine Months Ended | ||
|---|---|---|
| September 30, | ||
| ($ in thousands) | 2024 | 2023 |
| Income tax expense (benefit) | $6,118 | $6,908 |
Income tax expense for the nine months ended September 30, 2024 was $6.1 million, compared to $6.9 million for the nine months ended September 30, 2023, a decrease of $0.8 million. Tax expense for both the nine months ended September 30, 2024 and 2023 was primarily driven by 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.