Hamilton posts net income as it eyes share buyback

Hamilton posts net income as it eyes share buyback | Insurance Business New Zealand

Reinsurance

Hamilton posts net income as it eyes share buyback

It was its sixth consecutive quarter of underwriting profitability

Reinsurance

By
Staff reporter

Hamilton Insurance Group, the name behind Hamilton Re, has revealed its financial results for the first quarter of 2024. The company reported a net income of $157.2 million and maintained a streak of profitability in its underwriting operations, marking its sixth consecutive quarter of underwriting income.

“I am very proud of Hamilton’s financial results for the first quarter. Not only did we generate strong underwriting and investment returns but also this quarter marks our sixth consecutive quarter of underwriting profitability,” Hamilton CEO Pina Albo (pictured) said.

“I am also extremely pleased about our ability to take advantage of market opportunities with another quarter of double-digit growth, a momentum we expect will be enhanced by our recent AM Best ratings upgrade.”

Key financial indicators for Hamilton showed marked improvements. Gross premiums written during the quarter increased by 34.1% to $721.9 million compared to the first quarter of 2023. Net premiums earned followed suit, rising 35.7% to $385.3 million. The company’s combined ratio—an indicator of underwriting profitability—was ultimately favorable at 91.5%.

Hamilton also reported underwriting income of $32.5 million and net investment income of $147.8 million. The latter included significant contributions from the Two Sigma Hamilton Fund at $142.7 million and returns from fixed income, short-term investments, and cash equivalents at $5.2 million. Corporate expenses for the quarter were reported at $11.5 million, which included $3.7 million related to compensation costs from the Value Appreciation Pool.

In a strategic move to further enhance shareholder value, Hamilton also entered into an agreement to repurchase 9,124,729 Class A common shares from funds affiliated with Blackstone Alternative Solutions LLC (BAS) at a price of $12.00 per share. This represents a 12.0% discount to the 30-day volume weighted average price of the company’s Class B common shares.

The total cost of the repurchase is $109,496,748, which was funded by a loan under Hamilton’s revolving credit facility to be repaid with withdrawals from the Two Sigma Hamilton Fund. The transaction is expected to close on May 10, with the repurchased shares to be cancelled, lowering the total outstanding shares to 101,878,284.

“This transaction allows BAS to fully exit an investment that was made over 10 years ago, resulting in meaningful earnings per share, book value per share, and ROE accretion to Hamilton shareholders,” Albo said.

“Along with the strength of our first quarter earnings, and our recent AM Best rating upgrade, this transaction should create significant value for our shareholders, while not impeding our plans for strategic growth in both specialty insurance and reinsurance at this favorable time in the market cycle.”