Hamilton Q3 net income falls 40% on Ukraine claims

Hamilton Insurance Group earned $81.5 million in the third quarter, down 40% from $136.2 million a year earlier, after additional provisions for Ukraine conflict claims weighed on underwriting, the Bermudian insurer and reinsurer said Oct. 29.

Underwriting income fell to $15.5 million from $64.1 million and the combined ratio deteriorated to 97.3% from 87.8%. Catastrophe losses net of reinsurance were $53.9 million, including $47.1 million of adverse development on prior-year Ukraine conflict claims and $6.8 million related to the Middle East conflict. Those were partly offset by $27.2 million of favorable development on prior-year attritional claims, mainly in specialty classes.

A due-diligence question for allocators is how much of Hamilton's earnings rests on one external manager when its fixed-income, short-term and cash investments lost $56.3 million. Net investment income was $88.4 million, comprising $144.7 million of returns in the Two Sigma Hamilton Fund offset by those losses. That left investment income 5.7 times underwriting income of $15.5 million.

Operating income was $179.9 million, or $1.78 per diluted share. That equals an annualized operating return on average equity of 24.9%, while the annualized return based on net income was 11.3%. Gross premiums written rose 17.3% to $819.7 million and net premiums earned rose 13.1% to $591.3 million.

Hamilton Re, the Bermuda segment, earned $6.6 million of underwriting income, down from $52.3 million a year earlier. It absorbed $42.6 million of additional Ukraine losses as its mix moved toward casualty reinsurance, pushing its combined ratio to 97.7% from 80.7%. Bermuda gross premiums written rose 13.9% to $363.4 million, while international gross premiums written grew 20.1% to $456.3 million, with underwriting income of $9 million, down from $11.8 million.