Hamilton Insurance Group Aktie

Hello, everyone. Thank you for joining us, and welcome to the First Quarter 2026 Hamilton Insurance Group Limited Earnings Call. [Operator Instructions] As a reminder, this call is being webcast and will also be available for replay with links on the Hamilton Investor Relations website.

I will now hand the conference over to Darian Niforatos, Head of Investor Relations. Darian, please go ahead.

Thanks, operator. Hi, everyone, and thank you for joining our earnings call. Before we begin, please note that certain statements made during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed. These risks are provided in our earnings release and SEC filings. We will also refer to certain non-GAAP financial measures, which are reconciled to the most directly comparable GAAP measures in our earnings release and financial supplement available on our website at investors.hamiltongroup.com.

Now I'll introduce the Hamilton executives leading today's call, Pina Albo, Group Chief Executive Officer; and Craig Howie, Group Chief Financial Officer. We are also joined by other members of the Hamilton management team.

With that, I'll hand it over to Pina.

Thank you, Darian, and hello, everyone. Let me start by welcoming you to Hamilton's First Quarter 2026 Earnings Conference Call. We're very pleased with our performance this quarter, particularly in the context of a global economic and geopolitical environment that has become more complex and volatile and an insurance market that remains competitive. Pricing across parts of the industry continues to come under pressure, so underwriting discipline takes center stage. In this context, we continue to stay true to our strong culture of cycle management this quarter, writing the business we wanted to write at pricing and terms that met our return requirements and stepping away from business that did not.

We believe that sticking to this disciplined approach will continue to help us produce the kinds of results we have delivered since going public in 2023. On that note, Hamilton delivered very solid results in the first quarter with net income of $134 million, equal to an annualized return on average equity of 19%. This result was underpinned by an attritional loss ratio of 54.5%, strong investment income of $94 million and thoughtful growth with gross premiums written increasing by 11% for the quarter.

While this growth was more measured than in prior periods, it was selective, targeted and fully aligned with the view we shared with you last quarter. Let me start with a few broader market observations before I walk through our segment results. Starting with reinsurance renewals. As you will have heard, record levels of industry capital both traditional and ILF and manageable cat losses impacted the April 1 renewals, which largely involved property cat reinsurance in the Asia Pacific region.

While this region does not form a large part of our book, we saw a continuation of the competitive pricing experienced at January 1 with outcomes broadly in line with expectations. Having said that, while pricing levels deteriorated, they were still risk adequate and structures, terms and conditions remained largely intact. Other renewals in the quarter outside of this region, we're also competitive, but we were satisfied with the book we wrote and the signings we achieved.

As for the upcoming midyear renewals, which are largely property driven, given robust capital positions, we expect pricing pressure to be similar to what we experienced so far this year. It is important to note that softening is coming off historic highs, so we expect margins, particularly in our portfolio, which is largely U.S.-driven to remain above our thresholds. In reinsurance, we will continue to execute our strategy of supporting key clients with whom we have a broad trading relationship.

That said, in this environment, growth for growth's sake is not the objective, at least not ours. Margin preservation, attachment points and terms and conditions, which we expect to remain largely untouched matter far more and that philosophy will guide our underwriting decisions and our portfolio.

Moving on to the broader geopolitical environment. The ongoing conflict in the Middle East is yet another reminder of the uncertainty embedded in today's risk landscape, which has implications for our industry. On a line of business level, based on what we have observed to date, direct insured losses are concentrated primarily in the specialty insurance classes such as marine hull and political violence, which we write. Losses will continue as long as the conflict does and may also impact reinsurance programs going forward.

At this time, for Hamilton, our exposure remains manageable as we have always been mindful of the capacity we deploy in that region. The conflict in the Middle East may also have broader ramifications for our industry, namely inflationary pressures. We will continue to monitor this closely and make adjustments as warranted.

Moving on to the segments. Let's take a look at the top line growth this quarter for Bermuda and International. In Bermuda, which renews about 1/3 of its business during the first quarter, we wrote $497 million in gross premiums an increase of 5% over last year. Our most significant driver of growth came from casualty reinsurance. Some of this is attributable to business found in prior quarters earning through and the rest from business written during the quarter where we had the ability to increase our modest shares on accounts where underlying rates are still attractive as well as some new business.

Our casualty strategy remains unchanged. We focus on counterparties with a strong underwriting and claims culture who keep meaningful net retentions and with whom we enjoy broad trading relationships. Where those characteristics are not present, we are comfortable passing on the opportunity. I also want to highlight our recently announced casualty reinsurance sidecar, which reflects a proactive approach to capital and portfolio management. This structure allows Hamilton to support targeted casualty reinsurance growth while providing us with an additional source of fee income.

The sidecar will provide reinsurance capital over a multiyear period with ceded premium over the duration of the structure projected to be about $300 million. Craig will discuss this in more detail shortly.

Moving on to property reinsurance in Bermuda. Premiums fell compared to the same period last year, mainly because of substantial nonrecurring reinstatement premiums resulting from the California wall fires in the first quarter of 2025. If these reinstatement premiums are excluded, property reinsurance writings during the quarter would have been largely flat, reflecting a disciplined approach in this market.

Our specialty reinsurance line grew 2.7%, we grew our financial risk treaty account, both new and renewal business, but pulled back in multiline accounts which were not as attractive. On the insurance side of our Bermuda book, we also reduced writings in our large account property D&F book as we were not satisfied with the pricing.

Now turning to our International segment, which houses Hamilton Global Specialty and Hamilton Select. International gross premiums written grew 20% over the prior period. Starting with Hamilton Global Specialty, gross premiums written were up 20%, driven by specialty and casualty classes specifically in the core classes such as Accident & Health and M&A, which benefited from some seasonality in these lines and the continued earn-out from the prior underwriting year.

At the same time, we pulled back writings in our property binders and D&F lines where we saw rate reductions we were unwilling to support. Overall, our pricing assessments and underwriting framework continue to indicate that we are comfortable with the margins we are achieving on the business we are writing, but our teams are being more selective in many lines.

And finally, a few words on Hamilton Select, our U.S. E&S platform. This business is all casualty insurance and grew 17% this quarter driven by excess casualty, general casualty and small business where we still see attractive pricing, terms and conditions. Growth in professional and medical professional lines on the other hand, was muted given the competitive pricing environment. Overall, for the quarter, Hamilton demonstrated a continued ability to manage the underwriting cycle appropriately. While submission flow remains healthy across many products we write, we were disciplined in binding only those risks that met our underwriting and pricing requirements. As a result, growth varied by KLAS, which we view as the right outcome in the current environment.

Stepping back, our message is a simple one. While the market still offers pockets of attractive business, it is 1 where cycle management is key. In other words, it is not a market where every opportunity should be written nor 1 where top line growth alone should be encouraged. This is a market where risk and client selection and the fortitude to walk away will serve as differentiators that ensure underwriting performance. It is a market that plays to Hamilton's thoughtful and disciplined approach and its culture of prioritizing sustainable profitability, strategic growth and thoughtful capital deployment.

With that, I'll turn the call over to Craig to walk through the financial results in more detail.

Thank you, Pina, and hello, everyone. Hamilton is off to a strong start for 2026 with net income of $134 million or $1.31 per diluted share and an annualized return on average equity of 19% in the first quarter of 2026. We had operating income of $167 million, equal to $1.64 per diluted share producing an annualized operating return on average equity of 24%. As a reminder, our operating income excludes net realized and unrealized gains and losses on fixed maturity and short-term investments and foreign exchange gains and losses. but it does include the results of the 2 Sigma Hamilton fund.

These results compare favorably to the first quarter of 2025, where we reported net income of $81 million or $0.77 per diluted share, operating income of $49 million or $0.47 per diluted share and annualized returns on average equity of 14% for net income and 8% for operating income.

Moving on to our underwriting results. For the first quarter of 2026, gross premiums written increased to $940 million compared to $843 million this time last year, an increase of 11%. Each of our platforms, Hamilton Global Specialty, Hamilton Select and Hamilton Ray pursued thoughtful strategic growth in areas presenting strong returns, while pulling back from lines with less attractive risk-adjusted returns to maintain discipline and enhance overall profitability.

Hamilton had underwriting income of $58 million for the first quarter compared to an underwriting loss of $58 million in the first quarter last year. The group combined ratio was 89.8% compared to 111.6% in the first quarter of 2025. In the first quarter, loss ratio improved to 56.9%, down 22.3 points from 79.2% in the prior period. The improvement was driven by no catastrophe losses in the quarter compared to about 30 points of catastrophe losses in the first quarter last year, primarily due to the California wildfires. This was partially offset by a higher attritional loss ratio of 54.5% compared to 51.9% in the prior period.

As a reminder, this increase in attritional loss was within expectations, given our guidance of 55% expected for the full year of 2026 after making a change to our large loss threshold that we announced last quarter. We also had unfavorable prior year development of $14 million, driven by an increase in reserves for the Baltimore Bridge. The expense ratio increased 0.5 points to 32.9% compared to 32.4% in the first quarter of last year. The increase was driven by higher acquisition costs, partially offset by a decrease in other underwriting expenses which included benefits from the Bermuda substance-based tax credit and third-party performance fee income.

Next, I'll go through the first quarter results by segment. Let's start with the International segment, which includes our specialty insurance businesses, Hamilton Global Specialty and Hamilton Select. For the first quarter of 2026, International grew premium to $443 million, up from $370 million, an increase of 20%. This was primarily driven by growth in our specialty and casualty insurance classes. International had underwriting income of $7 million and a combined ratio of 97.5% compared to underwriting income of $1 million and a combined ratio of 99.7% in the first quarter last year.

The decrease in the combined ratio was primarily related to no catastrophe losses in the quarter, whereas the first quarter of 2025 had about 12 points driven by the California wildfires. This was partially offset by the current and prior year attritional loss ratios and the expense ratio. The current year attritional loss ratio was 54.9% or 2.8 points higher than the prior period. The increase was anticipated given our changing business mix and the large loss threshold change we announced last quarter. We still expect this ratio to be about 54.5% for the full year 2026.

The prior year attritional loss ratio was an unfavorable 1.4 points due to the increase in the Baltimore Bridge reserve estimate. The expense ratio increased 2.1 points to 41.2% compared to 39.1% in the first quarter last year. The increase was primarily driven by the acquisition cost ratio due to changing business mix.

I will now turn to the Bermuda segment, which held us Hamilton Re and Hamilton Re U.S., the entities that predominantly write reinsurance business. For the first quarter of 2026, Bermuda grew premium to $497 million, up from $473 million, an increase of 5%. The increase was primarily driven by new and existing business in casualty reinsurance classes. Bermuda had underwriting income of $51 million and a combined ratio of 81.8% compared to an underwriting loss of $59 million and a combined ratio of 122.8% in the first quarter last year.

The decrease in combined ratio was primarily related to no catastrophe losses in the quarter, whereas the first quarter of 2025 had about 47 points of catastrophe losses related to the California wildfires. The Bermuda segment also saw a decrease in expense ratio, partially offset by an increase in the current and prior year attritional loss ratios.

The Bermuda current era attritional loss ratio increased 2.1 points to 53.9% in the first quarter compared to 51.8% in the first quarter last year. Similar to my comments in international, this increase was anticipated given our changing business mix and the large loss threshold change we announced last quarter. We still expect to Bermuda current year attritional loss ratio to be about 56% for the full year 2026. The prior year attritional loss ratio was an unfavorable 3.6 points due to an increase in the Baltimore Bridge reserve estimate.

The Bermuda expense ratio decreased by 1.9 points to 24.3% compared to 26.2% in the first quarter of 2025 driven by a decrease in the other underwriting expense ratio related to the Bermuda substance-based tax credit and increased third-party performance fee income. This was partially offset by the acquisition cost ratio due to a change in business mix.

The Bermuda segment results also reflected our new casualty reinsurance sidecar, which Pina mentioned in her comments. This sidecar enhances our ability to support casualty reinsurance underwriting through scalable and efficient capital solutions, and it also provides Hamilton with an additional source of fee income. Premium sessions to the sidecar began in the first quarter of 2026 and will continue over a multiyear period and are expected to total about $300 million. You may have noticed that Bermuda retained about 74% of its gross premium written in the first quarter of 2026 compared to 79% in the first quarter of 2025, reflecting the premiums ceded to the sidecar.

Now turning to investment income. Total net investment income for the first quarter was $94 million compared to investment income of $167 million in the first quarter of 2025. The fixed income portfolio, short-term investments and cash produced a gain of $1 million for the quarter compared to a gain of $64 million in the first quarter of 2025.

As a reminder, this result includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio. The new money yield was 4.3% on fixed income investments purchased this quarter and the duration of the portfolio is now 3.7 years. The average yield to maturity on this portfolio was 4.5% compared to 4.1% at year-end 2025.

The 2 Sigma Hamilton Fund produced a $93 million net return for the first quarter equal to 4.3% compared to $104 million or 5.5% in the first quarter last year. The 2 Sigma Hamilton fund made up about 38% of our total investments, including cash investments at March 31, 2026.

Now turning to capital management. As a reminder, we declared a $200 million special dividend in February, which was paid in March. We also repurchased $20 million of shares in the first quarter of 2026. We still have $159 million remaining under our share repurchase authorization. Both the special dividend and the share repurchases reflect our ongoing commitment to active and effective capital management.

Next, I have some comments on our strong balance sheet. Total assets were $9.9 billion at March 31, 2026, up 3% from $9.6 billion at year-end 2025. Total investments in cash were $5.9 billion at March 31. Shareholders' equity for the group was $2.7 billion at the end of the first quarter. Our book value per share was $27.42 at March 31, 2026, up 3% from year-end 2025 after adjusting for the impact of the $2 per share special dividend we paid in March.

In conclusion, we are very pleased with Hamilton's start to the year. Our balance sheet remains strong. Our attritional loss ratios are tracking where we expect them to, and we believe we are well positioned to continue delivering attractive returns even as market conditions evolve.

Thank you. And with that, we'll open up the call for your questions.

[Operator Instructions] Your first question comes from the line of Christian Getz with Wells Fargo.

My first question is on the PYD. Pina, you laid out the Iran conflict exposure, and it sounds like it's manageable, but did you guys take any development in the quarter itself or either through the cat line or PYD?

Craig, why don't you talk about the PID and then I can cover ran or kick off on a round.

Sure. Let's start with the PYD. The PYD was 1 event person. It was the Baltimore bridge. It was $14 million. It was 2.4 points in total. So it was literally 1 event. But I will provide a little bit more color around the Baltimore Bridge loss, which happened in 2024. The industry loss estimate at that point in time was $1 billion to $3 billion. We had initially posted a conservative reserve at the high end of that range. But after ongoing feedback and specific renewal information during 2025, that indicated an industry loss estimate of $1.5 billion.

So we adjusted our reserve down to about a $2 billion industry loss estimate range. However, in light of the new recently announced settlement of that loss, we have taken our reserve back to our original ultimate loss estimate of $38 million and that increased our prior period development this quarter by $14 million or 2.4 points in the first quarter. We did not take into account any potential subrogation on this loss.

And as you know, we have a history of overall favorable prior year loss development each and every year since the inception of the company. There was no offset to this prior period development in Q1 since we did not complete any reserve studies in the quarter. You may recall that we do our reserve studies or they are completed in quarters 2, 3 and 4. Over to you, Pina to talk about that ramp.

Yes. So just briefly on around here. In Q1, the losses were driven by specialty insurance classes, which we write in our international segment out of Lloyd's, of course. Those are predominantly political violence and terror covers and marine lines. We continue to provide some selective coverage in that region at appropriate rates. because we offer our products on an international basis, but we're mindful of our total exposure. And in fact, we're very mindful of the fact that there are some areas in the world that are more prone to conflict than others. so we adjust our risk appetite accordingly and we carry appropriate outwards protection.

But in Q1, the losses came from specialty insurance. And Craig, over to you.

Yes, just on the Middle East conflict, our exposures in the first quarter did not meet or exceed our new large loss or catastrophe loss thresholds of $10 million. The exposure, as Pina said, was really related to insurance lines. And as this conflict continues, the loss exposures are expected to continue as well. we would expect to include those losses in our catastrophe loss line going forward, consistent with the way we reported our loss estimates for Ukraine.

Got it. And then for my second question, could you maybe elaborate on your appetite for Florida renewals? It sounds like pricing is going to be down mid-double digits kind of similar to 6/1. But that -- there has been a lot of like port reform, which is probably providing a benefit on loss trends. So how are you guys thinking about growth there just given like the expected price dynamics currently?

Yes, I'll take that, Harten. So the upcoming 6/1 renewals are largely Florida driven and the 7/1 renewals are largely national accounts. Regarding the Florida-only market, this is not a big part of our portfolio, and I don't expect that to change at this coming 6: 1. We do, however, use our AR, our third-party capital arm to service Florida renewals, and that will be the vehicle that we use to address Florida this renewal as well or predominantly. Our focus is on key clients at the 7/1 renewals, and these are clients with whom we enjoy broad trading relationships, so across classes.

We expect pricing at midyear to be more of the same, but we also expect the terms, conditions and attachment points to largely hold. And just as a reminder here, the pricing, again, as I said earlier, comes off historic highs after the market reset that where pricing went up materially, so even with some pricing pressure at 7/1, we expect the rates on the accounts that we renew to be more than adequate.

Our next question comes from the line of Daniel Cohen with BMO Capital Markets.

My first question is maybe just on an update on how Select, 17% still a really strong result there. Just wondering, is it really the only weak spot you're seeing in your book is just professional lines or then maybe also just checking in on if there's an update to the smaller to midsized E&S property rollout that you're all looking into?

Sure. I'll take that. yes, we're really, really pleased with the continued development of our Hamilton Select platform. As we said, our growth was predominantly in casualty lines, so excess casualty, the general casualty products and contractors, small business, there, we're seeing still very healthy terms, conditions and pricing where we wrote less business in select were, again, as I said, medical and professional lines because we just didn't like the pricing that we were seeing.

Our property launch just got started. So that's a Q2 update to give you. But I think what we can say in general about property in the E&S market is on the large accounts, the shared and layered business. We don't write that in select, but we see that in the group on that business. And as I said in the call, we are seeing pricing pressure, and we've reduced our book as a result. If we just don't see it meet our threshold, we will not write it. On the smaller to midsize property business, which we also write in Hamilton Global Specialty and we'll focus on and select, we're seeing there, the rates are still holding up. So we'll have more to report on our Q2 property launch at Select in Q2.

Okay. And then maybe just a follow-up on reserves. Is there anything with the review process that's changed there, just given -- I know you've always had the property category specialty by quarter, but last 1Q, there was some favorability and now it sounds like maybe nothing moved ex Baltimore. So has anything changed there? Or am I just misinterpreting something?

Good question. Nothing has really changed. We still do our casualty reserve study or complete our casualty reserve studies in the second quarter, specialty in the third quarter and property in the fourth quarter. And we really don't expect to see much in the first quarter after going through the full study at year-end and going through and comparing with our outside actuarial views at year end. So we really don't expect to see much in the first quarter.

As I said, the only thing that we saw this first quarter was new information that we got about the settlement for the Baltimore Bridge, and that's the reason we took that prior period development.

And then was there anything in the prior year quarter that was unusual, I guess, just when we look at the favorability last year or is that, yes.

Sorry, Daniel, the only thing I would say is we are quick to react to information, new information that we see. So if something happens within a quarter, that's outside of our reserve studies, we would be quick to react to that. but that would have to be new and additional information to react.

Okay. That makes sense. And then maybe just on the third-party fee income in Bermuda, Is there an update on what the quarterly run rate should be following the sidecar? Or is that still kind of the same expectation?

No. So I'll share with you. We have 2 components to that fee income. We still have performance fee income from Atari, which is our ILS property cat platform. that favorable development from lower catastrophe losses last year still continues to come through this year. That is tracked as a contra expense in our other underwriting expenses. And then you mentioned the new casualty side car. That fee income will come through as profit commissions and those profit commissions received will offset the acquisition cost ratio, and that's similar to the way that we treat other profit commissions today as well.

Our next question comes from the line of Patrick Marshall with Citi.

First question, how worried should we be about the knock-on effects of the accelerating property rate declines with regard to property premium reestimates and midyear renewal pricing?

Yes. Thank you. I'll take that. It's a quick answer. We don't expect to see any material adjustments from that. It's still a very profitable line for us.

Okay. And then are there any material MGA relationships that would potentially impact volume if rate trends persist?

I'll take that to you, Patrick. Thanks. Just by way of context, we do bind our business predominantly in Hamilton Global Specialty via what you'd call cover holders or MGAs, right? This is a common method of acquisition in the Lloyd's market. the majority of our relationships are, however, long-standing ones where tried and tested relationships, none of our MGA relationships are of a size or have parameters that would expect to -- expect any kind of outsized premium adjustments. And we have a pretty tight oversight and control and governance mechanism for these relationships. So I hope that answers your question.

One last one, if I could sneak it in. With the rapid deterioration in fundamentals in certain markets potentially make inorganic growth more difficult to contemplate at this time?

At this stage in the market, as I said in the call, there is not -- it is a differentiated market. We are still seeing opportunity across a number of classes that we write, and we will continue to focus our efforts on those classes where risk-adjusted returns are still attractive and where returns do not meet our threshold, then we will reduce our ratings in those costs. So it's really not a one-size-fits-all market. It's differentiated, and I think that's where our underwriters shine with risk selection, with appropriate capital deployment, so we feel comfortable in this market and navigating this market now.

Yes. My question was more oriented towards -- sorry, maybe I didn't say clearly inorganic growth.

Inorganic growth, sorry. Yes. So again, I think, well, we are still -- are you asking about our inorganic growth ambitions or others. Just to clarify.

I'd say -- I'd say yours, but I'd be interested if you had a broader thought on broader industry inorganic growth welcome that as well.

Fair enough. So you mean broader inorganic growth, you have seen that already during the course of 2025. I think markets that are struggling to find growth in our portfolio may continue to look for inorganic growth opportunities during the course of 2026. That would not be unheard of. And as for us, we did do 1 acquisition, at least in my tenure at Hamilton, and that was a game changer for us. Our bar for inorganic is incredibly high. and it will continue to stay high. We still feel very comfortable about our organic opportunities.

Our next question comes from the line of Tommy McJoynt with KBW.

The increased mix of the casualty business has driven the acquisition cost ratio higher on a year-over-year basis. Is the level that we're at in the first quarter a good run rate to use going forward? Or could there be a further uptick in that acquisition cost ratio to the extent that casualty continues to grow faster than property.

Tommy, this is Craig. I appreciate the question. I would say the majority of this is change in business mix, okay? So let's go through the 2 segments. If you look at a Bermuda, Bermuda rates about 1/3 of its book in the first quarter, we wrote more specialty and casualty business and less property, for example. Although if you look, although it appears as if the acquisition expense ratio was higher year-over-year, first quarter to first quarter, if you look at where it was at the fourth quarter of 2025, it's right in line with where we would expect for this business mix, and we really don't expect the business mix to change very much from here on the Bermuda side.

On international, we wrote our specialty business this period compared to the period last year. For example, as Pina said, we wrote more accident and health business, almost double what we did a year ago. And that carries a higher acquisition expense ratio or commission ratio. Similarly, we wrote less property, which again would have a lower cost ratio.

So again, it's based on business mix. That's what's really driving the acquisition expense ratio. similar to the loss ratios that we said before, each line has its own loss ratio. We have a separate loss pick for that line. Acquisition expenses are the same way. The metrics where we see where we can potentially benefit would be an improvement in our other underwriting expense ratio, something that we've been able to do every year since 2019.

And then thinking about property reinsurance ratings in the second and the third quarter, can you talk a little bit about your account mix in terms of whether a lot of the counter partners are negotiating with were loss-affected accounts last year, non-loss-affected, the business that you're writing, how typically high up in the tower? Or is it lower layer? Maybe just give us some metrics around that, I can help us think about the ability to write and grow property reinsurance and the upcoming renewals.

Again, the upcoming renewals are the 6/1s and 7/1s, again, on the 6/1s, which is largely Florida. There, I do not see us changing our appetite on Florida domestic covers, that is more the realm of our age. So our sidecar, which would participate in those classes. In terms of the 7/1s, which are the national account business. There -- it's across the board. We will look very -- we will look across layers and support our clients where it makes sense for us where we're seeing appropriate risk-adjusted returns and also in the context of the broad trading relationships that we have. We're not chasing lower layers. We're not chasing aggregate covers. So we're trying to keep true to our underwriting, which is broad-based across key clients. in layers that we -- where we enjoy the pricing that is still more than risk adequate.

[Operator Instructions] Our next question comes from the line of Matt Carletti with Citizens.

Most of my questions asked and answered. I just have a numbers follow-up. Pina. I think you said in Bermuda, property growth would have basically been flat ex reinstatement. So I just want to make sure I'm kind of lining it up right in the supplement. Is that about $30 million is what we're talking about in terms of what the reinstatements are in the year ago period.

Craig, do you want to take. Property re was flat this quarter. Craig, do you want to take?

I can give you the numbers, Matt. The reinstatement payment the reinstatement premium for Bermuda, and it's essentially property anyway, was $26 million. So the growth in Bermuda ex reinstatement premiums would have been 11% instead of 5%, but property growth ex reinstatement premiums would have been minus 2%.

Our next question comes from the line of Christian Getz with Wells Fargo.

I just had a 2-sigma question. Can you just remind us the reporting cadence of that? Is it live as in like whatever the Q2 results are, is what the return is -- just -- I'm just thinking about the equity drawdown in the Q1, if there's ramifications for the 2 sigma trends in the second half sorry, in the Q2.

So Hershan, as you know, we announced the 2 segment results on a quarterly basis with no lag just like the rest of our portfolio. And so our monthly results even that we received, we don't have the monthly results for April at this point in time. As you know, 2 segments historically outperformed in a volatile market. You saw that already in the first quarter. I know that's history, but with a 13% annualized net return since the inception of the fund in 2014, we feel like we still have a very good relationship with our 2 Sigma partnership.

And then just 1 more. I guess on the -- so it sounds like property cat, like there's going to be maybe lower growth opportunities just given the pricing dynamics. So how should we kind of think about buybacks as we kind of get to the second half? Is your shares continue to trade at an attractive valuation could we see a more elevated level? Or how should we think about maybe even the use of another special dividend later on in the year?

Look, Preston, I'm sorry. Thank you for the question. First of all, the special dividend was really an active and effective way for us to return capital quickly to our shareholders. And as you know, we bought back $20 million of shares in the first quarter. We had the flexibility and the ability to do both of those, meaning both dividends and buybacks. We have a track record of being good stewards of capital. And quite frankly, if we see strong business opportunities, we're going to deploy our capital there. For example, we've been able to grow our premium each and every year at double-digit levels each and every year since 2017.

Otherwise, what we'll do is we'll continue to return some of that excess capital to shareholders, and that could be through a special dividend or buybacks throughout the rest of the year. We have $159 million remaining on our share repurchase authorization, and we plan to use that to buy back shares as we see that being still accretive.

There are no further questions, and we have reached the end of the Q&A session. I will now turn the call back to Pina Albo, for closing remarks.

So maybe just to wrap up here. We are very pleased with our performance this quarter and remain confident in our strategy and the talent we have in our positioning going forward. We want to thank you all for your continued interest and support of the company and look forward to speaking to you again soon.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the Hamilton Insurance Group Earnings Conference Call. As a reminder, this call is being webcast and will also be available for replay with links on the Hamilton Investor Relations website.

I'd now like to turn the call over to Darian Niforatos, Vice President, Investor Relations and Finance. Please go ahead.

Thanks, operator. Hi, everyone, and welcome to the Hamilton Insurance Group Fourth Quarter 2025 Earnings Conference Call. The Hamilton executives leading today's call are Pina Albo, Group Chief Executive Officer; and Craig Howie, Group Chief Financial Officer. We are also joined by other members of the Hamilton management team.

Before we begin, Note that Hamilton financial disclosures, including our earnings release contain important information regarding forward-looking statements. Management comments regarding potential future developments are subject to the risks and uncertainties as detailed. Management may also refer to certain non-GAAP financial measures. These items are reconciled in our earnings release and financial supplement. With that, I'll hand it over to Pina.

Thank you, Darian. Hello, everyone, and thank you for joining us. As we begin today's call, I want to take a moment to reflect on how far we've come at Hamilton. We've been a public company since November of 2023. And since then, we've delivered consistently strong results, results that allowed tangible book value per share to grow 67% since the IPO. That's a remarkable achievement by anyone's measure.

With that intro, and before I share more details on our quarterly results, there are 3 key drivers I'd like to point to that underpin the sustainability of our performance. First, the Hamilton team, namely our strong operational and underwriting culture. Our underwriters are technical and experienced in cycle management, leaning in, when and where rates, terms and conditions are attractive and leaning out when and where this is not the case. This approach has allowed us to post another year of record performance in 2025, so kudos to you, Team Hamilton.

Second, our success is rooted in relationships, namely those we've built with clients and brokers across our hybrid platform. For reinsurance, our key client strategy which involves supporting targeted partners across multiple lines, has created broad and resilient trading relationships, allowing us to secure the signings we target even in competitive environments. Across our insurance platforms, our specialized product offering and technical expertise, serve as strong differentiators positioning us well with our producers.

And last but not least, our strong capital position. Our balance sheet remains robust with low debt leverage, prudent reserves and strong financial strength ratings, all of which support our business and our performance.

Now let me move on to our results. In 2025, Hamilton delivered record net income of $577 million or a return on average equity of 22%. We grew gross premiums written 21% to a record $2.9 billion. We reported a combined ratio of 92.9% and grew tangible book value per share by 25%. Again, these results reflect not only our skilled risk selection, commitment to cycle management and strong broker and client relationships, but also the overall strength and stability of the organization we've built. After several hard market years, we now find ourselves in a transitioning market. but importantly, one that still provides ample pockets of attractive opportunities for underwriters like ours who are technical, astute and nimble, a perfect segue to our fourth quarter highlights.

We continue to deliver excellent top line growth this quarter with gross premiums written increasing 23%. In so doing, we focused on business where pricing and terms remained compelling and backed away from business which did not meet our return hurdles. Again, the fact that we are nimble and diversified across insurance, reinsurance and multiple lines of business allows us to do that.

Let me break down how this approach showed up across our 3 underwriting platforms. Starting with Bermuda. Our Bermuda segment grew 27% this quarter, driven by casualty reinsurance, which is predominantly written on a quota share basis. This business continues to enjoy healthy underlying rate increases, which in turn flow through to us. Our growth this quarter came from a combination of new business written earlier in the year earning in, largely general liability and professional lines and expanded participations on renewal business with our targeted key clients. As a reminder, unlike many of our peers, our growth in casualty was recent, started from a small base and occurred during a period when underlying rates have been improving considerably.

Turning to the property book we write in Bermuda and evidencing the flip side cycle management, we continued to reduce our participations on large property D&F insurance accounts where competition was strong and consequently, pricing did not meet our required thresholds.

Moving to international, which houses Hamilton Global Specialty and Hamilton Select, gross premiums written grew 20% in the quarter. Starting with Hamilton Global Specialty, gross premiums written were up 21%, driven by specialty and casualty classes in lines where we leaned into attractive opportunities. For example, we grew mergers and acquisitions and marine lines with a particular boost from the recent launch of our new marine cargo offering. On the other hand, and similar to what we did in Bermuda, we pared back our writings of large property D&F insurance accounts, which should not meet our return expectations.

And finally, Hamilton Select, our U.S. E&S platform, which focused solely on casualty classes in 2025 grew 19% in the quarter. Growth was driven by excess casualty, products and contractors and small business, where we were able to secure attractive pricing, terms and conditions, but we wrote less professional liability business as we were not satisfied with the pricing environment. Now that is cycle management in action.

Let me now turn to the January 1 renewal season. Overall, we entered the renewal period from a position of strength. Our capital is robust, our underwriting discipline unwavering and our relationships with clients and brokers strong. Consequently, this was a constructive renewal for us, one, where we were able to deploy capital while protecting margins.

Starting with property cat. The renewal season was defined by abundant capacity and strong competition, particularly on the higher layers. As you will have heard from my peers, pricing for global property catastrophe business declined at 1/1, but discipline prevailed to keep terms, conditions and attachment points largely consistent with post reset levels. We focused our capital deployment on well-performing property accounts where risk-adjusted pricing remained attractive. We also leveraged cost-effective retrocession where we benefited from double-digit rate reductions to maintain adequate margins even as headline rates declined.

Turning to casualty. Competition on casualty reinsurance was more measured. Going into 1/1, strong underlying insurance rate increases that flow through to the proportional business we support continues apace and cedent commissions were generally flat. In fact, given the attractiveness of underlying rates, some cedents chose to retain more of their own business, but we still managed to grow our modest shares on core key clients a factor that contributed to our growth. As I have said in prior calls, our focus in the casualty area continues to be on those clients who retain a large percentage of their business provide us good data and continue to invest in their in-house claims handling.

In Specialty Reinsurance, conditions remained favorable for buyers with increased reinsurer appetite and limited growth opportunities overall, though the picture varied meaningfully by class. Our key client cross-class engagement shone through here, providing some increased signings and new business opportunities, including in our relatively new credit bond and political risk offering. Overall, for 1/1, the good news for us was that we were able to secure our targeted signings in a competitive market where even our clients were looking to retain more of their own business net.

As I look further into 2026, we expect the market to remain competitive, but that pricing across the lines of business that we target to remain largely risk adequate. Consequently, while we are confident in our ability to continue to find attractive opportunities, I expect our growth going forward to be more measured than it was in the past. In other words, in areas where the market gets too competitive, we will not chase top line at the expense of the bottom line. This disciplined approach will ensure we deliver sustainable results.

And with that, I'll turn the call over to Craig for some more depth into our financials for the quarter and 2025.

Thank you, Pina, and hello, everyone. In 2025, Hamilton had a very strong year of financial results with record net income of $577 million, 44% above the $400 million of net income in 2024. We had a return on average equity of 22% compared to 18% in the prior year and we grew book value per share by 24% over the prior year to a record $28.50. For the fourth quarter of 2025, Hamilton reported net income of $172 million, equal to $1.69 per diluted share, producing an annualized return on average equity of 25%. We had operating income of $168 million, equal to $1.65 per diluted share, producing an annualized operating return on average equity of 25%.

These results include strong underwriting income, solid investment returns as well as a tax benefit from the reversal of valuation allowances against some of our deferred tax assets and the Bermuda substance-based tax credit. Without these 2 tax items, the annualized operating return on average equity would still have been a healthy 18%. I will discuss this more in detail shortly.

These quarterly results compare favorably to 2024 fourth quarter net income of $34 million or $0.32 per diluted share, an annualized return on average equity of 6% and operating income of $87 million or $0.82 per diluted share and an annualized operating return on average equity of 15%. Before I move on to our underwriting results, I want to talk through the 2 tax items: One, the Bermuda substance-based tax credit; and two, the tax benefit in our income tax line.

The Bermuda Tax Credit Act became effective on December 11. Under this framework, we quantify for the new substance-based tax credit which is designed to reward insurers that demonstrate meaningful local economic activity in Bermuda. As a reminder, this credit enhances the competitive advantage for Hamilton since we're exempt from the permit of 15% global minimum tax until the year 2030. The credit is driven by both jobs based and expense-based components and is applied against the Bermuda Group's tax liability. The program includes a transition schedule, allowing recognition of 50% of the credit in 2025, 75% in 2026 and the full 100% benefit for fiscal years beginning in 2027.

In 2025, we accrued the full credit in the fourth quarter when the Bermuda tax law was passed. Going forward, we will accrue the credit over a 12-month period, reporting it quarterly based on qualifying payroll and eligible expenses. In our financial statements, the credit flows through as a counter expense to the other underwriting expense and corporate expense line items. For 2025, we recorded a Bermuda substance-based tax credit of $20.7 million. In the Bermuda segment, this was a $17.3 million offset to the other underwriting expenses and in corporate expenses, a $3.4 million offset. For 2026, all things staying about the same, we would expect a Bermuda credit of about $27 million based on a 75% phase-in for the year. We will also no longer have a value appreciation pool expense in 2026 since the VAP program ended in 2025.

Turning to the tax benefit on our income tax line. We recorded a net tax benefit of $28 million arising from the net release of valuation allowances against deferred tax assets in the United Kingdom and the United States jurisdictions, which had previously accumulated deferred tax assets due to tax net operating loss carryforwards. This tax benefit came through the income tax line on our income statement.

Moving on to underwriting results. For the full year of 2025, Hamilton continued to grow its top line at an impressive double-digit rate. Our gross premiums written increased to a record $2.9 billion compared to $2.4 billion this time last year, an increase of 21%. Each of our platforms, Hamilton Global Specialty, Hamilton Select and Hamilton Re expanding where there are attractive opportunities and pulled back from underperforming lines to maintain margins and drive profitability. In terms of underwriting performance, our 2025 year-end combined ratio was 92%.

Now for some more detail on our quarterly underwriting figures. Hamilton had an underwriting income of $76 million for the fourth quarter compared to underwriting income of $22 million in the fourth quarter last year. The group combined ratio was 87.0%, compared to 95.4% in the fourth quarter of 2024. In the fourth quarter, our loss ratio improved to 54.6%, down 5.5 points from 60.1% in the prior period. The improvement was driven by meaningfully lower net catastrophe losses, which were 9.0 points better than the fourth quarter of 2024. This was partially offset by higher attritional losses of 56.5% compared to 51.2% in the prior period. The increase in attritional was driven by more large losses compared to the same period in 2024 and a change in business mix, including increased casualty reinsurance business.

For the full year 2025, the attritional loss ratio was 54.4% compared to 53.1% in 2024 for the same reasons. In the fourth quarter of 2025, we had favorable prior year attritional development of 3.1 points, driven by property and specialty classes. This compares to 1.3 points of favorable development in the fourth quarter of last year. The expense ratio decreased 2.9 points to 32.4% compared to 35.3% in the fourth quarter last year. The decrease was mainly driven by the Bermuda substance-based tax credit and third-party fee income, which offsets other underwriting expenses.

Before I turn to segment results, I wanted to provide guidance on some items for 2026. Beginning in 2026, we are increasing our catastrophe and headline loss threshold from the current $5 million to $10 million. This revised threshold is at a level that is commensurate with the size of Hamilton now, focusing on events that are truly headline losses. This means the attritional loss ratio will now include all losses of less than $10 million. We would expect the attritional loss ratio to run at about 55% in 2026. On expenses, we expect our other underwriting expense ratio to continue to decrease incrementally in 2026 and our corporate expenses to run between $45 million and $50 million for the year.

Next, I'll go through the fourth quarter results by segment. Let's start with the International segment, which includes our specialty insurance businesses, Hamilton Global Specialty and Hamilton Select. In the fourth quarter, International had underwriting income of $12 million and a combined ratio of 96.0% compared to underwriting income of $9 million and a combined ratio of 96.3% and in the fourth quarter last year. The decrease in the combined ratio was primarily related to the loss ratio decreasing 1.7 points, partially offset by the expense ratio. The current year attritional loss ratio was 5.5 points higher than the prior period due to large loss activity in the quarter, while the prior period had no large loss activity. The prior year attritional loss ratio was a favorable 2.3 points. This was driven by favorable development in our property and specialty classes. The expense ratio increased 1.4 points to 42.0% compared to 40.6% in the fourth quarter last year. The increase was primarily driven by the acquisition cost ratio due to less ceding commissions and more profit commissions and a decrease in third-party management fee income. Other underwriting expenses were down 2.3 points.

Moving to some full year figures. In 2025, International grew to $1.5 billion, up from $1.3 billion an increase of 16%. This was driven by growth across all classes, property, specialty and casualty. The 2025 year-end combined ratio was 95.7% compared to 95.6% for 2024. The full year 2025 current year attritional loss ratio was 54.0% compared to 53.5% in 2024 due to a change in business mix. Given the revised threshold for our catastrophe and headline large losses, we would expect our International segment to have an attritional loss ratio of around 54.5% in 2026.

I will now turn to the Bermuda segment, which helps us Hamilton Re and Hamilton Re U.S., the entities that predominantly write reinsurance business. In the fourth quarter, Bermuda had underwriting income of $63 million and a combined ratio of 76.4% compared to underwriting income of $13 million and a combined ratio of 94.3% in the fourth quarter last year. The decrease in the combined ratio was primarily related to lower catastrophe losses and lower expenses in the quarter, partially offset by increase in the current year attritional loss ratio. The Bermuda current year attritional loss ratio increased 5.0 points to 56.7% in the fourth quarter compared to 51.7% in the fourth quarter last year. This was primarily driven by more large losses in the quarter compared to the same period in 2024 and a change in business mix, including an increase in the casualty reinsurance business.

The Bermuda prior year attritional loss ratio was a favorable 4.1 points. This was primarily driven by favorable development in our property class. The Bermuda expense ratio decreased by 8.3 points to 21.2% compared to 29.5% in the fourth quarter of 2024, driven by a decrease in the other underwriting expense ratio primarily due to the Bermuda substance-based tax credit of $17 million and increased third-party performance-based fee income, partially offset by the acquisition cost ratio due to a change in business mix.

Moving to some full year figures. In 2025, Bermuda grew to $1.4 billion, up from $1.1 billion, an increase of 26%. The increase was primarily driven by new and existing business in casualty and specialty reinsurance classes. The 2025 year-end combined ratio was 90.9% and compared to 87.0% in 2024. The full year 2025 current year attritional loss ratio was 54.6% compared to 52.7%. The increase was due to more large losses and business mix shifting towards casualty reinsurance, which carries a higher attritional loss ratio. Given the business mix shift and the revised threshold for our catastrophe and headline losses, we would expect an attritional loss ratio of about 56% for our Bermuda segment in 2026.

Now turning to investment income. Total net investment income for the fourth quarter of 2025 was $98 million compared to investment income of $36 million in the fourth quarter of 2024. The fixed income portfolio, short-term investments in cash produced a gain of $42 million in the quarter compared to a loss of $31 million in the fourth quarter of 2024. As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio. The fixed income portfolio had a return of 1.2% or $38 million and a new money yield of 4.2% on the fixed income investments purchased this quarter. The duration of the portfolio remains at 3.4 years. The average yield to maturity on this portfolio was 4.1% compared to 4.7% at year-end 2024. The average credit quality of the portfolio remains strong at AA3.

The 2-segment Hamilton Fund produced a $56 million net return for the fourth quarter of 2025, equal to 2.6%. For the full year 2025, the fund had a net return of 16.0% or $301 million. The 2-segment Hamilton fund made up about 37% of our total investments, including cash investments at December 31, 2025, compared to 39% at December 31, 2024.

Now turning to capital management. As you may have noted in our fourth quarter earnings release, we announced that Hamilton's Board of Directors has declared a special dividend of $2 per common share which will result in an aggregate payment of approximately $206 million. The decision to pay a special dividend was based on the company's record earnings in 2025 and our excellent capital position. This dividend represents an effective way of returning excess capital to our shareholders. For the full year of 2025, we also repurchased $93 million worth of shares at an average price of $22.13 per share. Even with the special dividend, we are able to continue repurchasing shares under our current share repurchase authorization, which remains in effect with unutilized limit of $178 million. Both the special dividend and the share repurchases reflect our ongoing commitment for active and effective capital management.

Next, I have some comments on our strong balance sheet at the end of 2025. Total assets were $9.6 billion at December 31, 2025, up 23% from $7.8 billion at year-end 2024. Total investments in cash were $52 billion at December 31, an increase of 24% from $4.8 billion at year-end 2024. Shareholders' equity for the group was $2.8 billion at the end of 2025, which was a 21% increase from year-end 2024. Our book value per share was $28 at December 31, 2025, up 24% from year-end 2024. Thank you. And with that, we'll open up the call for your questions.

[Operator Instructions] Our first question comes from the line of Hristian Getsov with Wells Fargo.

Congrats on the strong quarter. My first question is on the underlying loss ratio guide for 2026, the 55% for the full year if you didn't change the cat definition, the threshold, what would that look like versus the 54.4% we saw in 2025? And given the definitional change, is there a new cat load handling will manage to for each of the segments?

Hristian, first of all, thanks for the question. So first of all, we did guide to that increase over the full year 2025, which was 54.4%. The majority of that increase is the change in the threshold that we have. The business mix for 2026 will remain about the same. So we would expect the attritional to have remained about the same, but that's the change in our threshold from the $5 million to the $10 million threshold is what's taking that loss pick up to the 55% guidance. As far as catastrophe losses, our catastrophe losses will come down slightly, but they'll still be in the range of about 6% to 7% for our catastrophe losses for the year.

Got it. All that makes sense. And then can you just give a little bit more color in deciding to deploy a special dividend? I would think where your share is at currently, I mean, the gap has closed versus book value, but it's still close to or a little bit below I guess, why not like buy back more of your shares? Is this just a more effective way to get rid of excess capital since it could be an ROE drag? Or how should we kind of like think about that? And should we expect maybe a more modest level of buybacks in 2026 just given the deployment of the special?

Good question. What I would say to you is we have the flexibility to do both of these things. And after a record year of earnings, we decided to return a portion of our excess capital a special dividend is an active and an effective way of returning that capital quickly to our shareholders. But we will also be able to continue buying back shares. As you know, we bought back $93 million worth of shares in 2025, and we still have the ability to buy back under our authorization. We still have $178 million to be able to do that. We have a really strong track record of being good stewards of capital. And when we see and have strong business opportunities to deploy that capital there, we're going to do that. As you know, for example, we've been able to do that by growing our premiums at double-digit levels every year since 2017. But otherwise, we're going to return some of this excess capital to our shareholders. And that's what we're doing here with the special dividend as well as the share buybacks, we have the ability to do both.

Got it. And if I could just sneak in one more. On the US Life platform. The growth is moderating a little bit, but in part, that's likely due to a higher base you're growing off. But are you seeing any signs of increased competition on the casualty side from MGH fronting companies or other independent carriers. We've heard a lot of competition on the property side, but I'm not sure if you're seeing that on the casualty side as well.

I'll take that, Hristian, and thanks for the question. Firstly, I think it's important to note that the growth that we saw on Hamilton Select this quarter is completely in line and year-to-date isn't completely in line with what our expectations were. We continue to see robust pricing, particularly in the areas where we grew more this year. That was the one I mentioned, the excess casualty products and contractors and small business. In terms of increased competition, where we're seeing that is on the professional line side, and that's where we wrote less of this business this quarter. Overall, I think if I take a step back and look at Select, again, completely in line with plans. It is an incredibly important growth engine for us given the strength of the team that we've assembled there and the relationships they have, you'll notice some recent hire recently that we announced that we'll be launching in the property space and that will concentrate on the smaller to midsize property business where we're not seeing the robust competition that we've seen in the large account space where we have shed business. I hope that answered your question.

Your next question comes from the line of Tommy McJoynt with KBW.

What is the optimal premium leverage that you'd like to manage to? And is that changing as the portfolio mix leans heavier toward casualty growth after a period when property growth was stronger.

Tommy, it's Craig. Our premium leverage hasn't really changed very much. We've been retaining about 80% of the business on a net basis. But over time, your point is valid. As we go into a transitioning type market, one of the things that we don't want to do is just blindly edge up on the premium leverage for that purpose. You may recall in 2024, we essentially retained more of our business because we had primary proceeds from the IPO that we wanted to put to work. And in 2025, we actually were able to buy a little bit more reinsurance coverage for the overall book because of the quality of business that we had been putting on the books gave us the ability to get lower rates for that reinsurance purchases. So we've been able to do that. And over time, we've been able to retain that retention rate has stayed right around 80%.

Okay. Got it. And then maybe a question on the data center opportunity. A lot of carriers have been asked about it, and then it's going to be a great need for capital over the coming years. I guess the question is, do you guys have sort of the expertise to play in that niche? Are there little pockets of opportunities there? Or is it a great large opportunity? What are you guys doing on the data center side?

I'll take that one. We are certainly seeing some more of that business, and we see it as an opportunity, and we're taking up some of these opportunities. For example, writing some physical damage where it only covers and does not cover business interruption. I think that although this is an opportunity, and we will lean in with our expertise that we have in-house, what we are also a little bit cautious here on accumulation, a, particularly on the large data centers. So we're monitoring that very closely when we look at our writing and b, also the whole business interruption area. Again, the physical damage cover we're now offering on the insurance side does not include business interruption. So we're looking at this as an opportunity but also looking at it very cautiously with those factors in mind.

Our next question comes from the line of Daniel Cohen with BMO Capital Markets.

First one, maybe just on reserves, if you could just add a little more color on the years and the classes that the property and specialty favorability came from this quarter. And then maybe just anything on how casualty reserves move this quarter and if there's been any change in loss trend there?

Daniel. So first of all, overall, our reserves were favorable for the quarter. None of that came from Casualty. So overall, Casualty was flat for the quarter with no movement. So this was another year of favorable reserve development for Hamilton, something that we've been able to achieve each and every year since the inception of the company. But to your point, yes, the favorable development this quarter came from property and specialty, mostly from the property side. What we typically do on the property side is take a look at those reserves that have been in place or have matured over a period of time for over 2 years when we take a look at that and some of those we were able to release in the fourth quarter and throughout the year as well. We actually have a reserve review done by an outside actuary twice a year on our book of business, and we consequently take a look at their guidance that they see when they're looking at industry levels as well as other clients or other peers of ours. And it gives us an indication of where we stand against what an outside actuary would look at and we remain above the midpoint of their estimate consistently year after year.

Great. And then on the casualty reinsurance side, you just mentioned preferring clients with good data in-house claims handling. I was just wondering, could you add more color on maybe what differentiates those clients versus maybe some others in the marketplace and whether or not Hamilton is embedding their own conservative margin on top of where their seeds are picking?

Yes, I'll take that question. So just maybe a little bit of background. Again, we started from a very low base when it came to Casualty business and in the context of our AM Best first positive outlook and then or upgrade, we had targeted in advance the clients that we wished to support on the Casualty side. And these are clients that we knew well already from property and specialty placements that we enjoy with them. And those clients there provide us robust data. So we can see what they're doing in terms of limits management, pricing versus what they're seeing in trends. We look at it with respect to what we're seeing and what we anticipate trending to be. So that already is one tick.

Then we look at how robustly they handle their claims in-house and how quickly they resolve these claims. So all in all, those are the kinds of clients we target when we look at our reinsurance support. And we -- because we are able to support them broadly across classes, that makes these relationships very resilient.

And then also, I think if I could sneak one more just on the corporate expense line. Craig, I think you said there's going to be no more value appreciation pool expenses there. So outside of the tailwind from the Bermuda tax credit, should we expect this line to continue to tick down? Or how should we think about that?

Yes, Daniel. Certainly, that's exactly what you would expect. Certainly, the value appreciation pool had expired the second tranche of that pole vested in November of 2025. So the VAP is no longer there. and the guidance that I've given in the prepared remarks, we think we can expect corporate expenses to be in the range of $45 million to $50 million.

Your next question comes from the line of Matthew Heimermann with Citi.

Your next question comes from the line of Justin Lee with Barclays.

The first one I had was just on the 2-segment Hamilton fund. I believe in previous quarters, you guys gave sort of the year-to-date month to date returns. And maybe I might have missed it, but I was just wondering if you guys can provide what returns were as of January?

Yes. Justin, this is Craig. With respect to us having earlier reporting than we've had in the past, it's not as meaningful now for us to provide that type of guidance anymore. So going forward, we're going to report these results on a quarterly basis with no lag just like we do with the rest of our portfolio. What I will tell you is that 2 Sigma has historically outperformed in a volatile market. And as you know, we've been very fortunate to have the partnership that we have with 2 Sigma [indiscernible]. We've had a 13% average annualized return every year since the inception of fund in 2014. And the fund has never had a calendar year loss. So again, going forward, we'll report this on a quarterly basis with the same as the rest of our portfolio.

Got it. And second one, just more high level. I appreciate your comments around sort of scaling back on sort of the large property side and focusing on areas that are still getting relatively better pricing versus loss cost. And on the other hand, I'm sort of seeing data points that suggest that maybe on the primary side, the pressures on property, maybe sort of permeating onto the general liability and other lines of casualty side on the pricing front. So I was wondering if you can kind of help me square sort of these 2 dynamics and how you guys are sort of thinking about growth? I understand it's going to be more measured as you said, but just a little bit more color there would be helpful.

Sure. I'll take that, and thank you for the question. Firstly, on the property side, again, you are right, where we are seeing the most pressure is on those large insurance accounts, those large scheduled accounts, and that's where you have seen us pare back our writings consistent with our disciplined approach to underwriting. On the middle market and the smaller property accounts, we're not seeing that level of pressure, or pricing pressure. So we're still seeing some attractive opportunities there, and that's where we're seeing some growth, and that's where our new underwriting offering in Hamilton Select will lean into. So that's on property.

On the casualty side, we are still seeing some healthy increases on the insurance side of the equation. And that is actually supported by the fact that a lot of our cedents, and I mentioned that in my prepared remarks, seeing these robust pricing increases or keeping more of their business net. They are also confident that, that pricing is keeping pace with the trend that we're seeing out there. So we don't see any signs of that casualty pricing abating. And as long as it is in that area where it's keeping pace with trend or we feel it is, we will continue to look at that business.

Our next question comes from the line of David Samar with Citizens.

On the special dividend, what would be the source of funds there? Is that cash already on hand or from the 2 Sigma fund or fixed income portfolio or maybe a mix of those?

David, this is Craig. Yes, it's from available cash on hand as well as the fixed income portfolio.

And then are you able to provide any color on the elevated large losses in both segments from the quarter?

Sure. I can do that. So essentially, what happened this quarter in fourth quarter of 2025 is we had more large losses in this quarter than we did in the fourth quarter of 2024. The largest loss that we had this quarter was a [indiscernible] loss. It impacted both segments for us in our specialty class of business. And this is exactly the reason why we changed the threshold in our catastrophe and large headline loss is the capture of these truly headline losses. We wanted to make sure that we gave guidance on what that impact would be going forward. That's why we gave the guidance going forward for the attritional loss ratio. But essentially, because of these types of losses that come through, it was impacting our attritional loss ratio up and down just based on some of these large losses, and we wanted to make sure that we're taking that into account.

[Operator Instructions] Our next question comes from the line of Matthew Heimermann with Citi.

Apologies for earlier. I guess first question would be with respect to the Bermuda tax credit and the significant savings or offset to expenses you're getting there, I'm curious if there's any thoughts around potentially reinvesting some of that incremental savings on a go-forward basis, either in new -- for new priorities or accelerating existing investments that might already be on your road map?

Yes. Thanks, Matt. The credit is really designed to reward insurers that demonstrate meaningful local economic activity in Bermuda. This credit really keeps Bermuda as an attractive place to do business. And there's 2 components that we're able to take advantage of under this credit, which are jobs-based and expense-based components. We're going to continue to invest in our projects, our operations and our technology to operate at scale in Bermuda. And for a company in the size of Hamilton, we have a large footprint, a significant presence in Bermuda with over 100 people in our office there, and we also hold all of our board meetings in Bermuda. So while we're not specifically designating these funds to a particular purpose, they will serve to reduce our overall operating expenses. And again, this shows up as a contract expense in our other underwriting expenses in the Bermuda segment as well as in our corporate expenses.

And Matt, maybe I'll just add on to that. I think if you look at our history, we have a very strong track record of investing in our underwriting capabilities and in adding new lines of business whether it's on the reinsurance side, over the years, most rely in our credit and bond offering, but also prior to that by adding for risk and proportional and also on the insurance side by adding attractive lines of business that in our Hamilton Global Specialty platform or also in Hamilton select. So I think you will see that continue in our future.

I guess the other question would be just can you remind us the guiding principles that you have with respect to technology and underwriting to help us better frame as you invest in new technologies and implement AI in more use cases, just how to frame that.

Sure. I'll take that. And Craig, if you want to add anything to be my guess. But I think you start with the fact that we have, and we're very proud of the fact that we have very robust underwriting tools and underwriting frameworks that are regularly calibrated for what we're seeing in the market. And we calibrate them because we meet very regularly as a team, both on the platform side, but at the executive level and then across the group to share insights, monitor pricing expectations and all of that gets retooled into our underwriting tools. If I segue from there to how we're embracing AI, I can say that we are embracing AI. I think I've mentioned on a couple of prior calls that we are already deploying AI in several use places across our platform, both on the underwriting and the claims side. The use cases are predominantly for efficiency purposes. And what that means is it allows us to extract data, populate our underwriting work benches, summarize some very complex reports. And what that does is it allows us to get to more business, more quickly. In Hamilton Select, you will have heard in addition to this populating of work benches, we're looking to roll out, in the course of 2026, a smart queuing feature which will allow us to triage the risk better, that means not only just getting more hits at bat, but getting more swings at balls, we know we're going to hit. So that is how we look at AI. I think the other thing you should know in this context is our guiding principle here is to ensure at the same time as we're embracing AI that we have robust control framework in place to avoid any unintended consequences of this new technology.

One of the things -- just one quick follow-up. One of the things I'm struggling with is one of the benefits clearly is efficiency, productivity, and you mentioned that, and obviously, that can take the form of doing more with same or doing the same with last and many permutations. So I'm curious when you think about the efficiency savings, like how concentrated they are to like Bermuda relative to the rest of your platform, and I'm kind of asking that in the context of just talking about the tax credits, which are supposed to spur investment there, and this obviously allows you to do both less. Just curious if those are in conflict with the other specifically, but more broadly, as we think about how you staff and how you invest, like how that might look differently around your platform?

Yes. I mean we've not yet come up with a number of what terms of savings we're going to achieve in dollar terms from this technology. But we are seeing benefits of the technology across all 3 platforms. In Bermuda, we've been deploying AI technology for a couple of years now, and we're also using it increasingly, again, across our Hamilton Select and Hamilton Global Specialty platforms for our insurance business. Over time, we will continue to see the benefit of this technology, but it's across all 3 of our platforms.

Thank you. That will conclude our question-and-answer session for today. I'll now turn the call back over to Pina Albo.

Thank you. I want to just take a minute to thank everybody here for joining our call today and for engaging with us as you have. We are once again incredibly proud of the results we achieved this year, and we look forward to speaking to you in the very near future. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to the Third Quarter 2025 Hamilton Insurance Group Limited Conference Call. [Operator Instructions]

I will now hand the conference over to Darian Niforatos, Vice President, Investor Relations and Finance. Darian, please go ahead.

Thanks, operator. Hi, everyone, and welcome to the Hamilton Insurance Group third quarter 2025 earnings conference call. The Hamilton executives leading today's call are Pina Albo, Group Chief Executive Officer; and Craig Howie, Group Chief Financial Officer. We are also joined by other members of the Hamilton management team.

Before we begin, note that Hamilton financial disclosures, including our earnings release, contain important information regarding forward-looking statements. Management comments regarding potential future developments are subject to the risks and uncertainties as detailed. Management may also refer to certain non-GAAP financial measures. These items are reconciled in our earnings release and financial supplement.

With that, I'll hand it over to Pina.

Thank you, Darian, and welcome to everyone joining us today. I'm pleased to report that Hamilton had another very strong quarter with $136 million of net income, representing an annualized return on average equity of 21%.

This impressive result started with strong performance from our core activity, namely underwriting, where we reported a combined ratio of 87.8% and underwriting income of $64 million in the quarter. These results are a direct consequence of the balanced and diversified portfolio that we have curated over the years as well as our disciplined underwriting approach.

Investment income of $98 million was also significant this quarter with contributions from both our Two Sigma Hamilton Fund and our fixed income portfolios. So in short, both our underwriting and investment played a part in our excellent results this quarter.

Before providing more commentary on our performance and reflections on the market in general, I want to speak to some of our recent management appointments. Hamilton continues to shine as a true magnet for top-tier talent. In addition to developing and promoting from within our ranks, we continue to attract exceptional leaders from outside the organization.

On the latter note, we were thrilled to welcome Mike Mulray as Chief Underwriting Officer at Hamilton Select. Mike brings over 25 years of underwriting expertise and strong market relationships, which will prove opportune as we continue to grow our U.S. E&S platform.

With respect to drawing from our bench strength, we are also delighted to announce the well-deserved promotion of Susan Steinhoff to Chief Underwriting Officer of Hamilton Re effective January 1, 2026. Susan has more than 20 years of industry experience and is one of the longest-serving underwriters at Hamilton, having joined the company in 2014.

Turning now to some of our highlights for the third quarter. Hamilton continues to deliver strong top line growth with gross premiums written increasing by 26% in the quarter. While the market is experiencing some pressure in pockets, it is still an attractive place to do business for disciplined and discerning underwriters who know how to navigate it and pick the most attractive spots.

Our diversified portfolio has allowed us to flex across insurance and reinsurance and multiple lines of business in response to market realities. This means we were able to grow where rates, terms and conditions were still attractive and backed away from business where this was not the case.

Let me walk you through this dynamic in each of our 3 underwriting platforms to illustrate the point. Starting with Bermuda. Our Bermuda segment grew 40% this quarter, driven by casualty and, to a lesser extent, specialty reinsurance classes. The increase in casualty reinsurance this quarter was a combination of access to new market opportunities, a larger renewal moving from Q2 to Q3 as well as the benefit of expanded participations on select renewals written earlier in the year.

The majority of our growth was attributed to general liability and multiline classes, which we write predominantly on a proportional basis and which have been getting the benefit of strong underlying rate improvements. Regarding specialty reinsurance, we continue to see momentum in our new credit, bond and political risk lines where risk-adjusted returns are attractive.

Turning now to the property insurance book we write in Bermuda on the other hand, we did see increased competition on larger property accounts after several years of compounding increases. Consistent with our disciplined underwriting culture, we were very selective and consequently wrote less of this business. That said, we do still see risks in this space that provide attractive underwriting margins, so we continue to support those accounts.

Moving to our International segment, which houses Hamilton Global Specialty and Hamilton Select, gross premiums written grew 17% in the quarter. Starting with Hamilton Global Specialty, which includes our Lloyd's operation, gross premiums written were up 16% with a select part of our property insurance book leading the charge.

More specifically, consistent with the approach taken in Bermuda, we have been more selective on larger property accounts, but we're able to grow on the back of new distribution channels that focus on smaller property risks, which are subject to less competition and where risk-adjusted returns remain attractive.

We also grew in select specialty and casualty classes such as mergers and acquisitions, marine cargo, political risks and fine art and species, where our specialized teams were able to achieve attractive margins. On the flip side and consistent with our disciplined underwriting culture, we reduced our writing in lines experiencing increased pricing pressure such as political violence and some areas of professional lines.

Turning next to our U.S. E&S platform, Hamilton Select. It grew 26% this quarter, led by 50% growth in our casualty lines. We continue to see healthy submission flows at Hamilton Select and a favorable momentum in our casualty segments, especially excess casualty, general casualty and small business classes where rates and terms remain attractive. On the other hand, and consistent with our adherence to cycle management, we reduced our writings in some areas of professional lines where rates were less attractive.

Looking out to the foreseeable future, I'd like to share a few high-level thoughts on the market environment in general, starting with U.S. E&S insurance, which accounts for a significant portion of our insurance portfolio.

As you have heard from others, the growth and attractiveness of the U.S. E&S market has given rise to increased interest and competition, which we also expect going forward. Starting with property E&S insurance, we expect small to mid-market accounts to see increased competition but hold up better than large accounts. Large accounts are expected to continue to experience pricing pressure. But as we demonstrated, we are not afraid to be responsible and back away in order to safeguard the profitability of our book.

Casualty E&S business is expected to continue to show momentum with attractive rate increases persisting, albeit at a slower clip. The majority of our E&S book consists of casualty and specialty classes, which is good news for us. Also worthy of note is the fact that our domestic E&S carrier, Hamilton Select, is focused predominantly on small to midsized hard-to-place niche business where we differentiate ourselves with our expertise, tailored solutions and responsiveness.

In summary, while the U.S. E&S market is expected to experience more competition, it is a nuanced market. Given our established and recognized expertise, our strong underwriting culture and market relationships, it remains a market where we see opportunity for attractive growth, albeit at a more moderate pace than in previous quarters.

I'll now turn briefly to the reinsurance market, particularly the upcoming January 1 renewals. We expect the upcoming January 1 reinsurance renewals to be more of the same. Regarding property cat reinsurance, we expect supply to outpace demand and some cedents to retain more business. Consequently, we're expecting rate pressure similar to what we have seen in the course of 2025, especially on upper layers of property cat programs.

However, given the significant rate increases, which started with the 2023 market reset, we believe that absolute pricing levels will remain attractive and terms, conditions and attachment points to remain intact. Consequently, we expect to continue supporting and in some cases, even increasing our participations for our key clients. As for casualty reinsurance, our expectations are more differentiated.

In general, we expect casualty books with poorer performance to see commission decreases, while commissions on better performing books are expected to remain flat. Having increased our portfolio in recent years with targeted clients, predominantly on the back of our AM Best upgrade, we expect our growth in casualty going forward to be more moderate. We have now had the benefit of the upgrade for over a year and our assumptions in both pricing and reserving provide prudent guardrails for this class.

The specialty reinsurance market involves a mixed bag of products, but since historical performance has been good overall, we expect many peers and some new entrants to target growth in their specialty portfolios. We have an established offering with clients we have been supporting for years and expect to continue to support them going forward, given that we have relationships with many of them that span multiple classes.

In addition to having a well-balanced portfolio with a broad product offering, Hamilton is viewed as a reliable and creative partner by our clients and brokers. Our ability to provide solutions, especially when others retrench, has helped us grow at the right time and in the right lines and remains a key differentiator to our success.

Our upgraded rating puts us on par with many of our larger peers and our responsiveness and underwriting culture allows us to compete responsibly and write the business we want.

In closing, I'm proud of our team's performance, their ability to navigate this transitioning market and the resilience we have demonstrated as a group. We have a talented team of professionals with years of experience and are building a business for the long run.

In times like these, our underwriters know when to lean in and when to back away so that we can continue delivering market-leading bottom line results and a consistently healthy growth in book value per share. I am extraordinarily proud to be part of Hamilton, an organization that is nimble, acts responsibly and knows how to capitalize on opportunities throughout market cycles.

With that, I'll turn the call over to Craig for a detailed review of our financial results.

Thank you, Pina, and hello, everyone. Hamilton had another strong quarter of financial results with net income of $136 million, equal to $1.32 per diluted share, producing an annualized return on average equity of 21%. We had operating income of $123 million, equal to $1.20 per diluted share. producing an annualized operating return on average equity of 19%. We also increased book value per share by 6% in the quarter and 18% year-to-date to a record $27.06.

These results compare favorably to net income of $78 million or $0.74 per diluted share, an annualized return on average equity of 14% and operating income of $17 million or $0.16 per diluted share and an annualized operating return on average equity of 3% in the third quarter of 2024.

For our underwriting results, Hamilton continues to grow its top line at an impressive double-digit rate. Our 2025 year-to-date gross premiums written increased to $2.3 billion compared to $1.9 billion this time last year, an increase of 20%.

All 3 of our operating platforms, Hamilton Global Specialty, Hamilton Select and Hamilton Re were able to strategically grow in the lines of business that were most attractive while shrinking those lines that did not meet our underwriting targets. In terms of our underwriting performance, our year-to-date combined ratio was 95.2%.

Now for some more detail on our quarterly underwriting figures. Hamilton had underwriting income of $64 million for the third quarter compared to underwriting income of $29 million in the third quarter last year. The group combined ratio was 87.8% compared to 93.6% in the third quarter of 2024.

In the third quarter, the loss ratio decreased 7.7 points to 53.3% compared to 61.0% in the prior period. The decrease was primarily driven by no catastrophe losses in the quarter compared to 8.5 points of catastrophe losses during the same period last year.

This was partially offset by an increase in the current year attritional loss ratio, which was 55.4% compared to 53.2% in the prior period. The increase was driven by a change in business mix toward casualty reinsurance and a specific large loss in our Bermuda segment, which I'll cover shortly in my segment comments.

We had favorable prior year attritional development of 2.1 points in the quarter, driven by the property and specialty classes. This compares to 0.7 points of favorable development in the third quarter last year. The expense ratio increased 1.9 points to 34.5% compared to 32.6% in the third quarter last year.

The increase was mainly driven by higher acquisition expenses related to business mix changes and higher other underwriting expenses, primarily related to an accrual for variable performance-based compensation costs. As always, I'd encourage you to use the full year 2024 attritional loss and expense ratios as an indication for where we expect the current book to perform.

Next, I'll go through our third quarter results by reporting segment. Let's start with the International segment, which includes our specialty insurance businesses, Hamilton Global Specialty and Hamilton Select.

Year-to-date gross premiums written in 2025 grew to $1.1 billion, up from $1.0 billion, an increase of 14%. This was primarily driven by growth in all classes, meaning our property, specialty and casualty classes.

Moving to some quarterly figures. In the third quarter, International had underwriting income of $12 million and a combined ratio of 95.4% compared to underwriting income of $5 million and a combined ratio of 97.6% in the third quarter last year. The improvement in the combined ratio was primarily related to the loss ratio decreasing by 4.7 points due to no catastrophe losses in the quarter, partially offset by the expense ratio.

The prior year attritional loss ratio was favorable by 2.2 points. This was driven by favorable development in the property class. The expense ratio increased 2.5 points to 42.3% compared to 39.8% in the third quarter last year.

The increase was primarily driven by the other underwriting expense ratio due to an accrual for variable performance-based compensation costs, foreign exchange and a decrease in third-party management fee income. As a reminder, effective July 1, 2025, we ceased managing third-party syndicates for fee income.

I'll now turn to the Bermuda segment, which houses Hamilton Re and Hamilton Re U.S., the entities that predominantly write our reinsurance business. Year-to-date gross premiums written in 2025 grew to $1.2 billion, up from $0.9 billion, an increase of 26%. The increase was primarily driven by new and existing business in casualty and property reinsurance classes, including nonrecurring reinstatement premiums related to the California wildfires.

In the third quarter of 2025, Bermuda had underwriting income of $52 million and a combined ratio of 80.7% compared to underwriting income of $24 million and a combined ratio of 89.4% in the third quarter last year. The improvement in the combined ratio was primarily related to no catastrophe losses in the quarter, partially offset by an increase in the current year attritional loss ratio and the acquisition expense ratio.

The Bermuda current year attritional loss ratio increased 4.6 points to 55.6% in the third quarter compared to 51.0% in the third quarter last year due to a change in business mix, including more casualty reinsurance business and due to one large loss related to the Martinez refinery fire. In the third quarter, the industry loss estimate for this event nearly doubled from the original March estimate, adding 2.8 points to the attritional loss ratio in the third quarter.

The Bermuda prior year attritional loss ratio was favorable by 2.1 points. This was primarily driven by favorable development in the specialty and property reinsurance classes. The Bermuda expense ratio increased by 2.0 points to 27.2% compared to 25.2% in the third quarter of 2024. This was driven by an increase in the acquisition cost ratio due to a change in business mix, partially offset by a decrease in the other underwriting expense ratio.

Similar to my comment about group ratios, I'd encourage you to use the full year 2024 attritional loss and expense ratios for the segments as a guide for how we expect the current segment books to perform.

Now turning to investment income. Total net investment income for the third quarter was $98 million compared to investment income of $83 million in the third quarter of 2024. The fixed income portfolio, short-term investments and cash produced a gain of $43 million for the quarter compared to a gain of $94 million in the third quarter of 2024. As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio.

The fixed income portfolio had a return of 1.4% in the quarter or $39 million and a new money yield of 4.2% on investments purchased this quarter. The duration of the portfolio was 3.3 years. The average yield to maturity on this portfolio was 4.1%. The average credit quality of the portfolio remains strong at Aa3.

The Two Sigma Hamilton Fund produced a $54 million gain or 2.6% for the third quarter of 2025. The fund had a net return of 13.0% through the first 9 months of 2025. The latest estimate we have for the Two Sigma Hamilton Fund year-to-date performance was 14% through October 31, 2025, or an increase of 1% in October. At this stage, the fund is ahead of achieving our planned target of 10% for the full year. The Two Sigma Hamilton Fund made up about 37% of our total investments, including cash investments at September 30 compared to 39% at December 31, 2024.

Now turning to capital management. In 2024, we announced a $150 million share repurchase authorization by the Hamilton Board of Directors. During the third quarter of 2025, we were able to repurchase $40 million of shares. All shares purchased were accretive to shareholders, book value per share, earnings per share and return on equity.

The Board has recently authorized an additional $150 million in share repurchases so that in total, we now have $186 million remaining. With that, we're able to continue repurchasing shares and growing the business, all while maintaining our strong capital position even during times of uncertainty.

Next, I have some comments on our strong balance sheet. Total assets were $9.2 billion at September 30, 2025, up 18% from $7.8 billion at year-end 2024. Total investments in cash were $5.7 billion at September 30, an increase of 19% from $4.8 billion at year-end 2024. Shareholders' equity for the group was $2.7 billion at the end of the third quarter, which was a 14% increase from year-end 2024. Our book value per share was $27.06 at September 30, 2025, up 18% from year-end 2024.

Thank you. And with that, we'll open the call for your questions.

[Operator Instructions] Your first question comes from the line of Hristian Getsov with Wells Fargo.

Okay. My first question is on the Bermuda underlying loss ratio. So if I exclude the refinery fire, so it ticked up about 1.8 points year-over-year. And I understand in part that's a little bit driven by mix towards casualty. But I guess as we go into '26 in casualty, just given what they're seeing in terms of rate versus kind of the rest of the book, particularly property, like how should we think about that underlying margin trending as we kind of see that mix shift continue?

This is Craig. We certainly see that the same exact thing that you're seeing is that is a mix of business. That's what's driving that loss pick. So again, because of mix of business, you're going to see that change in the loss ratio. You'll also see the change in the acquisition expense ratio.

What I would say to you is it really depends on the continuous change in the mix of business, but we still continue to write a diversified book of business, and we continue to grow property as well as specialty in the same book. So what I would say is continue to look at it in the same realm that you're looking at it on a year-to-date basis for this year, not necessarily on a quarterly basis.

Got it. And then in terms of -- can you guys maybe provide a little bit color on changes you're seeing in loss trends, particularly within your casualty insurance and reinsurance portfolio versus prior quarters? And maybe if you could provide some further color on how you're managing those exposures.

I mean we understand that line is getting good rate, but it's obviously for a good reason just given what you're seeing with social inflation. But like what's kind of your process in managing those exposures away from just generally keeping limits a little bit lower?

Yes. Why don't I take that? We have seen some growth both in our reinsurance portfolio and also to a lesser extent in our insurance portfolio on the casualty classes. From the reinsurance portfolio, let's remember, we started from a very, very low base of casualty. And although we've had growth, that growth has been in recent years when the rates have improved.

We have a very strong feedback loop across pricing -- underwriting, pricing and reserving. And those are the guardrails that we operate in when we are looking to onboard this kind of business. We still feel comfortable that the rate increases that we are seeing in casualty are keeping place with a trend. So -- and that actually same view transcends to our casualty insurance book.

If you look just at Hamilton Select, we have a significant growth in casualty insurance in our Select operations. Remember, however, that is a very specific book of hard-to-place niche business. And there, we get to tailor the coverages and set pricing terms. And there, we also see attractive increases in casualty pricing, and that's what makes us comfortable to write this business.

Just one note, just to back up from just a moment to remember, we're an underwriting shop. So we have this ability to lean in when the leaning is good and back away when it's less the case. So if I look just across property, when property increased back in the reset, our -- we leaned into property and grew our book on a group basis by 60%.

On the casualty side, again, starting from a low base, when casualty pricing started getting better, we leaned into casualty and grew our casualty business from about 2022 onwards by around 80%. However, that was always done in the context of a well-balanced portfolio. So if you look at our total casualty writing today versus 2022, it's more or less the same as a percentage of our portfolio. That's how we manage this business.

Your next question comes from the line of Daniel Cohen with BMO.

I think I'll start in the Bermuda casualty growth, just unpacking this number. Can you maybe quantify the larger renewal moving from 2Q to 3Q, so we can get a normalized sense of that impact? And also if there was a meaningful AM Best contribution that you'd like to call out as we think of growth getting more moderate in this line?

Sure. Why don't I start with that one? Maybe just by way of background again, the AM Best upgrade was a gamechanger for this organization, and it came at a very opportune time and increased opportunities for us across several lines of business, including casualty. It was also a very important validation of how far Hamilton has evolved as a company. So that's by way of background on AM Best. I'm going to let Craig to dive in more detail on the numbers here. So Craig, over to you.

Thanks, Pina. We continue to see new and renewal business since the upgrade, and we continue to see top line premium based on our written patterns coming through our financials, some of which is attributable to the rating upgrade from AM Best. As you're aware, a large portion of this business is pro rata casualty reinsurance business.

So when you look at that, the way it's booked on a GAAP basis, GAAP accounting basis throughout the year, you can take an example, if we wrote $40 million of business at January 1, you would expect to see $10 million come through each quarter on a pro rata basis. Having said that, we saw about $50 million recorded in the third quarter. We expect to see a similar amount come through again in the fourth quarter.

And after that, it would be difficult probably to attribute either any renewal business strictly to the rating upgrade compared to our ongoing client relationships. And then, the other thing that you asked about was specifically the renewal that changed from period to period. We had a renewal that changed from the second quarter renewal to a third quarter renewal, and that was about $20 million of the growth in Bermuda this quarter, again, in the casualty line.

And then switching gears to Hamilton Select. I think you said 26% growth there and still healthy submission flows, but that is quite the decel from the first half of '25. Is that just you pulling back from professional lines? Or are rates impacting that step down as well?

Sorry, I'll take that one. That growth of 26% this quarter for Select it involved a 50% growth in casualty, where we're seeing the most opportunity. It involves writing less of some business that we thought was not attractively priced. But that growth, that 26% growth is completely in line with our plans.

Okay. And if I could sneak one more in on just the fee income, so we get a better sense of that after the Lloyd's MGA moving out. Is this quarter the right run rate for that number? Or should we be thinking about that going to 0 over time, just in international?

Okay. I'll kick off here, Dan. Maybe just by way of background, and then I'm going to have Craig talk about the modeling part. We derive fee income from our -- the consortia business that we write out of London. Now this is business -- these are business arrangements, where others have recognized our expertise in certain classes and allow us to write on their behalf. In other words, they're leveraging our core competency, which is underwriting, and we're driving fee income from that.

The same is the case for our third-party capital operation where we also derive fee income. The third-party syndicate management was part of our 2019 acquisition and the decision to cease managing that third-party syndicates was made because unlike underwriting, it's not a core -- not seen as core to our operations, and that is why we ceased that. But Craig, why don't I pass to you for general how to model fee income?

I think as Pina said, on the international side, Dan, that was your specific question. I think what you should expect going forward is about $2 million per quarter. On the Bermuda side, as you may recall, for our iOS platform, A, [indiscernible] we booked or plan for about $0.5 million per quarter. So for the full group, about $2.5 million per quarter. That's a baseline. That's before any performance-based fees, which are a little bit harder to plan for. So about $2.5 million per quarter for the group.

Your next question comes from the line of Bob Hung with Morgan Stanley.

This is Sid on for Bob. Going back to Hamilton Select, you guys mentioned the new Chief Underwriting Officer you guys hired. Can you just give some color on like what are the objectives for the business going forward and how we should think about growth and underwriting profitability there?

Sure, Bob. I'll take that one. We're actually thrilled to have onboarded Mike to our Hamilton Select operations. Many of us have interacted with Mike in, for years, in different capacities, and Craig worked directly with him when he was at Everest. So he's a known quantity to this group.

And just as a reminder, Hamilton Select, the operation he's joining, the book there is purely U.S. E&S. We do not write admitted business. And Select's objectives in that class are no different than the objectives of our other underwriting platforms, and they start with producing sustainable underwriting profitability.

So in the context of our underwriting strategy, our disciplined underwriting culture and our reserve philosophy, we're confident that Hamilton Select is going to continue to thrive and are, again, thrilled to have Mike on board.

And then kind of just looking a little bit more broadly, I was wondering what you guys are seeing in the like MGA market space and any competition there? Any color you can give would be helpful.

Yes. Certainly, as you've seen or heard from others in the market, some of those MGAs are providing increased competition in the U.S. insurance market. Just as a reminder, we only have a limited amount of MGA relationships, and they're predominantly out of our London operations. And these are relationships that we've had for several years, so tried and tested. We do not give away the pen. For example, at Hamilton Select, that is all our own underwriting, but we do see some irresponsible behavior in the market with those players out there. We don't let them hold our pen.

Your next question comes from the line of [ Patrick Marshall ] with Citi.

Just a quick question on your disclosure around the decreased duration in your portfolio and how it relates to your increase in casualty? And how should we think about kind of where the property -- where your portfolio will move if your casualty mix goes forward -- increases going forward?

Go ahead, Craig.

Patrick, this is Craig. So first of all, the duration of the overall fixed income portfolio only just -- it basically just ticked down from 3.4 years to 3.3 years. It's really more of a rounding.

But I agree with you, as we go longer in the portfolio or business mix change more towards casualty. But what you just heard Pina say is our mix really hasn't changed overall. Our book is still fully diversified and the amount of casualty business we're writing now compared to just 3 years ago is about the same mix in our book. So I really don't see a major change in the overall duration of the entire fixed income portfolio.

And then one follow-on. Can you offer any color on the nature of the large losses noted in the press release?

Sure, Patrick. The large loss that we had mentioned in the press release was part of my prepared comments in the call as well. It was related to the Martinez refinery fire. That was a first quarter event. The initial loss estimates of that event were in the $300 million to $800 million range for an industry loss.

What we saw in September is that industry loss nearly doubled. And as a result, we revised our estimate in the third quarter for that event. We didn't see any really other -- any significant large losses in the quarter and any other exposure that we had was manageable and included within our attritional loss picks. That was the largest loss. And again, it was about 2.8 points in the Bermuda segment and about 2.2 points on the group.

[Operator Instructions] Your next question comes from the line of Tommy McJoynt from KBW.

With the rate softening and really heightened competition in property lines and in light of the strong opportunity set that it sounds like you still see in casualty and specialty, would you be surprised if property written premium declined in 2026?

Hi, Tommy, Pina here. I'll take that. So let's start with property cat. We do expect to see, as I mentioned in the call, some more competition on property cat in the upper layers. But let's not forget where we started from, right? Rates went up dramatically since the 2023 reset. Terms, conditions and attachment points also improved.

And while we're seeing some downward pressure on the cat rates in recent renewals, certainly, they're nowhere near the increases we achieved since 2023. So the way we look at it is, is that business still producing an attractive risk-adjusted return? And if it is, we will continue to write it. And if we have some opportunity, we might even increase our writing of property cat on select clients.

In the insurance space, I think what you're going to see is what I said earlier on the larger accounts, those larger shared and layer accounts on the insurance side, we're expecting to see increased competition because they also enjoy back-to-back increases. So that drew attention. You can probably see us reducing there.

But on the property insurance side, we have a couple, as I mentioned, of new initiatives in the U.S. E&S space where we're targeting the smaller to midsized property risks, which are still getting attractively priced, and you can see some growth continuing there. Does that answer your question?

Yes, that does. And then switching over, looking at the expense ratio and perhaps more specifically the acquisition cost ratio, you attributed the increase year-over-year to the business mix shift as casualty reinsurance has seen outsized growth.

Because there is the lag between written and earned, how much more and how many more quarters should we expect the acquisition cost ratio to continue increasing year-over-year? Or is there a terminal acquisition cost ratio that you should get to with the current business mix?

Tommy, this is Craig. What I would say to you is, again, if you look at where we are on a year-to-date basis compared to where we were for a full year last year, you're seeing a slight uptick, again, because of more casualty business, because of more pro rata business that we've been writing this year. But it's not a huge change. So instead of looking at quarter-to-quarter where you might see some lumpiness.

Again, if you look at year-to-date numbers compared to the full year last year, you're just going to see a slight uptick on those acquisition expenses, again, because of the mix of business. So it will continue to come in as we write more business. But as Tina just said about property on that previous question, if we continue to write property, that will keep that ratio down as well.

Your next question is a follow-up from Daniel Cohen with BMO.

Just one quick one on. Do you have an early estimate of your exposure to the cats quarter-to-date just on Jamaica and maybe yesterday's Louisville plane tragedy?

Daniel, this is Craig. A little too early to talk about the plane tragedy from yesterday. I know it's -- it was a plane crash that crushed into a couple of commercial buildings, but a little too early to know about that loss.

As far as Hurricane Melissa goes through the Caribbean, we don't have much exposure on that type of a loss that would go through that environment, although it was a very devastating loss and a lot of loss of lives, the industry loss estimate for property and other things for insurance losses is not that great, and we don't expect to have much exposure there at all.

There are no further questions at this time. I will now turn the call back to Pina Albo for closing remarks.

Well, I just want to thank everybody who took the time to join us today to discuss our excellent results for the quarter, and we look forward to speaking to you again with our year-end results in due course. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and welcome to the Hamilton Insurance Group Earnings Conference Call. As a reminder, this call is being webcast and will also be available for replay with links on the Hamilton Investor Relations website.

I'd now like to turn the call over to Darian Niforatos, Vice President, Investor Relations and Finance. Please go ahead.

Thanks, operator. Hi, everyone, and welcome to the Hamilton Insurance Group Second Quarter 2025 Earnings Conference Call. The Hamilton executives leading today's call are Pina Albo, Group Chief Executive Officer; and Craig Howie, Group Chief Financial Officer. We are also joined by other members of the Hamilton management team.

Before we begin, note that Hamilton financial disclosures, including our earnings release, contain important information regarding forward-looking statements. Management comments regarding potential future developments are subject to the risks and uncertainties as detailed. Management may also refer to certain non-GAAP financial measures. These items are reconciled in our earnings release and financial supplement.

With that, I'll hand it over to Pina.

Thank you, Darian, and hello, everyone. I'm excited to report another profitable quarter for Hamilton, including excellent underwriting results with a combined ratio of 86.8% and underwriting income of $67 million. Investment income was also significant in this quarter at $149 million, reflecting strong returns from both the Two Sigma Hamilton Fund and our fixed income portfolio. Bottom line, net income was $187 million for the quarter, representing an impressive annualized return on average equity of 30.2%.

Before providing some more commentary on the quarter, I want to take a minute to speak about our recently announced management appointments. Megan Graves, CEO of Hamilton Re, decided to retire after 5 years of transformational leadership. Megan will be missed, and we're incredibly grateful for her many contributions to Hamilton's growth and success during her tenure.

As we announced and as part of a seamless execution of our succession planning, Adrian Daws, CEO of Hamilton Global Specialty, will succeed Megan as CEO of Hamilton Re from September 1. At the same time, Alex Baker, our Group Chief Risk Officer, will take over from Adrian as CEO of Hamilton Global Specialty. Adrian and Alex are both seasoned industry professionals with strong track records and a clear alignment to our strategy. Given this and the strength of our broader Hamilton team, we are confident about continuing our positive performance trajectory.

Additionally, Tim Duffin, currently our Chief Underwriting Officer for Bermuda, will step into a newly created role of Group Chief Underwriting Officer as of January 1, 2026. Tim's proven leadership, business acumen and strong industry relationships will provide further positive direction and momentum for our company. These appointments reflect the depth and breadth of talent in our organization. They also reinforce our commitment to our strategic imperative of being a magnet for talent by providing growth opportunities to employees within our organization. We are very pleased and indeed privileged to have such strong leaders in our group.

While still on the topic of being a magnet for talent, it is important to note that in addition to being able to promote from within, we have also had great success in attracting exceptionally qualified external leaders for open positions, most recently for the positions of Group Chief Information Officer and Group Chief Risk Officer. We recently announced the appointment of Raymond Karrenbauer as Group Chief Information Officer. Ray has years of relevant industry experience and will join us in September.

We have also hired Russ Buckley as Group Chief Risk Officer. Russ is an experienced industry professional who is known to many on our executive management team, including me, as we have worked together in the past. Russ will be joining us shortly.

Turning now to some of the highlights of our impressive second quarter results. Hamilton delivered strong top line growth with gross premiums written increasing by 18% in the quarter. This growth is reflective of the fact that we are still overall in an attractive underwriting environment and as always, focused on proactive cycle management. This means that we leaned into areas or specific deals where the returns were attractive and pared back our writings or exited deals where this was not the case.

Bermuda led the way on growth, up 26%, driven predominantly by targeted casualty reinsurance business and new specialty reinsurance classes, both of which benefited from our AM Best rating upgrade to A. More specifically, I can share that premiums directly tied to the rating upgrade were approximately $50 million in the second quarter and include growth in select casualty classes that are seeing healthy rate increases and in our new credit bond and political risk offerings, which are classified as specialty and had a great take-up this quarter.

We also moderately grew our position in property tax during the 6/1 and 7/1 renewals, a combination of increased participations on our existing portfolio and new business. On the flip side and consistent with what I said earlier about cycle management, we decreased our writings in property D&F insurance and certain specialty reinsurance classes which did not meet our return thresholds.

Moving on to our International segment, which houses Hamilton Global Specialty and Hamilton Select, gross premiums written grew 11% in the quarter. Starting with Hamilton Global Specialty, gross premiums written were up 7%, which reflects targeted underwriting actions as the market evolves into one requiring a higher level of discipline. For example, we reduced our writings in cyber insurance, where pricing did not meet our hurdle rates, at the same time, with over 20 lines of business in Hamilton Global Specialty, we targeted growth in areas which are more attractive, for example, personal accident business, which is well priced and where we are a respected market leader.

Hamilton Select continued its strong trajectory with growth of 52% over the same quarter last year. We are seeing a healthy flow of business into our U.S. E&S operation. This reflects the relevance of our offerings, the talent in our operations and the relationships we enjoy with our producers. As you've heard from others, professional lines classes continue to experience some pricing pressure, so we wrote less of that business in Select again this quarter. On the other hand, pricing in excess casualty, general casualty and small business remains attractive, so we directed more of our growth towards those lines where we can also retain tighter terms.

Next, I'll speak to the recent reinsurance renewals. However, I will be brief as I'm sure most of you will have heard a similar story from our peers. As we reflect on the midyear renewals, there was a healthy balance of supply and demand. Property catastrophe deals saw some rate pressure midyear, particularly in the middle and upper layers of core non-loss affected programs. Despite this, since we are coming off of historical highs and the effects of the market reset of 2023, pricing for cat business still remains attractive with terms and conditions holding firm and attachment points even increasing in some instances.

The casualty market remains attractive, as you've heard from others, with continued strong underlying rate increases. And while not a big part of our portfolio, we are also starting to see rates flatten out in the D&O space. Our strong underwriting top line continues to drive growth in our balance sheet with our investment portfolio growing along with our loss reserves. With respect to the latter, and as we have consistently said, we remain vigilant on our loss reserve position so that we can continue to preserve our ability to have favorable reserve development, something we have experienced every year since the inception of this company.

As we have mentioned before, the second quarter is when we conduct our regularly scheduled review of casualty reserves. Following this quarter's casualty review, we decided to strengthen some of our casualty reserves by $18 million in Bermuda, which was mainly related to discontinued business. We also released some event-specific property reserves this quarter as the claims experience has trended more favorably compared to our initial more prudent estimates. Overall, our reserve development was favorable for the quarter and year-to-date.

In closing my remarks, I just want to say how proud I am of the results we delivered this quarter and that I look favorably to the foreseeable future for several reasons: our well-diversified and well-scaled platforms, our strong balance sheet and ratings, the strong client and broker relationships we have established and last, but by no means least, the world-class team of Hamilton professionals who know how to navigate all market cycles. While the market may be coming off historic highs in some areas, there is no one market, and the key is to focus on rate adequacy. It is still an attractive place to do business, particularly for astute and disciplined underwriting organizations like ours.

With that, I will turn the call over to Craig.

Thank you, Pina, and hello, everyone. Hamilton had another strong quarter with net income of $187 million equal to $1.79 per diluted share, producing an annualized return on average equity of 30.2%. We had operating income of $162 million, equal to $1.55 per diluted share, producing an annualized operating return on average equity of 26.1%. We also increased book value per share by 8.3% this quarter to a record $25.55. These results compare to net income of $131 million or $1.20 per diluted share and annualized return on average equity of 23.6% and operating income of $136 million or $1.24 per diluted share and annualized operating return on average equity of 24.4% in the second quarter of 2024.

Turning to our underwriting results. Hamilton continues to grow top line at an impressive double-digit rate. In the first half of 2025, gross premiums written increased to $1.6 billion compared to $1.3 billion this time last year, an increase of 17%. Our first half combined ratio was 99.1%. All 3 of our operating platforms, Hamilton Global Specialty, Hamilton Select and Hamilton Re, were able to strategically grow in lines of business that were most attractive while shrinking those lines that did not meet our underwriting targets.

Now for some more detail on our quarterly underwriting figures. Hamilton had underwriting income of $67 million in the second quarter compared to underwriting income of $65 million in the second quarter of last year. The group combined ratio was 86.8% compared to 84.4% in the second quarter of 2024. In the second quarter, the loss ratio increased 1.6 points to 52.8% compared to 51.2% in the prior period. The increase was primarily driven by the current year attritional loss ratio, which was 53.0% compared to 51.6% in the prior period. This increase was driven by a change in business mix toward the casualty class and a specific large loss in our Bermuda segment, which I'll cover shortly.

We had favorable prior year attritional development of 0.5 points in the quarter, driven by specialty and property classes, offset by certain casualty classes, which I'll discuss when I cover the segments. This compares to 0.4 points of favorable development in the second quarter of last year. The expense ratio increased 0.8 points to 34.0% compared to 33.2% in the second quarter of last year. The increase was mainly driven by the acquisition expense ratio due to the shift in mix of business. As always, I'd encourage you to use the full year 2024 attritional loss and expense ratios as an indication of where we expect the current book to perform.

Next, I'll go through the second quarter results by reporting segments. Let's start with the International segment, which includes our specialty insurance businesses, Hamilton Global Specialty and Hamilton Select. For the first half of 2025, International gross premiums written grew to $715 million from $632 million, an increase of 13%. This was primarily driven by growth in all classes, meaning our property, casualty and specialty classes.

In the second quarter, International had underwriting income of $27 million and a combined ratio of 89.3% compared to underwriting income of $19 million and a combined ratio of 91.0% in the second quarter last year. The decrease in the combined ratio was primarily related to the loss ratio decreasing by 3 points, mainly due to favorable prior year development, partially offset by higher expense ratio. The prior year attritional loss ratio decreased by 2.8 points compared to the second quarter of last year. This was driven by favorable development in all classes, meaning our property, specialty and casualty classes.

The expense ratio increased 1.3 points to 40.0% compared to 38.7% in the second quarter of last year. The increase was primarily driven by the acquisition expense ratio due to increased profit commissions and a change in business mix.

I will now turn to the Bermuda segment, which houses Hamilton Re and Hamilton Re U.S., the entities that predominantly write our reinsurance business. For the first half of 2025, Bermuda gross premiums written grew to $841 million from $693 million, an increase of 21%. The increase was primarily driven by both new and existing business in casualty and property reinsurance classes, including nonrecurring reinstatement premiums related to the California wildfires.

In the second quarter of 2025, Bermuda had underwriting income of $40 million and a combined ratio of 84.3% compared to underwriting income of $46 million and a combined ratio of 77.4% in the second quarter of last year. The increase in the combined ratio was primarily related to the loss ratio with increases on the current year and prior year attritional loss ratios. The acquisition expense ratio was also higher than the second quarter of last year.

The Bermuda current year attritional loss ratio increased 3.7 points to 54.2% in the second quarter compared to 50.5% in the second quarter of last year due to a change in business mix, including more casualty reinsurance business and the Air India airline loss this quarter. The Bermuda prior year attritional loss ratio increased 2.5 points to 2.0 points in 2025 compared to a favorable 0.5 points in the second quarter of last year.

As Pina mentioned, in the second quarter, we did our regularly scheduled casualty reserve reviews, which resulted in an $18 million charge on certain casualty lines, with the majority coming from our discontinued lines of business. This represents only about 1% of our casualty reserves and about 0.5% of our total reserve position. To be clear, we completed our casualty reserve reviews and strengthened our reserves based on our own review and not because of any third-party review. Our actions are consistent with our reserving philosophy of being quick to react to adverse development trends and slow to release reserves until we have more certainty.

The Bermuda expense ratio increased by 0.6 points to 28.0% compared to 27.4% in the second quarter of 2024. This was driven by an increase in the acquisition expense ratio due to the change in business mix, partially offset by a decrease in the other underwriting expense ratio. Similar to my comment about the group ratios, I'd encourage you to use the full year 2024 attritional loss and expense ratios for the segments as a guide for how we expect the current segment books to perform.

Now turning to investment income. Total investment income for the second quarter of 2025 was $149 million compared to investment income of $96 million in the second quarter of 2024. The fixed income portfolio, short-term investments and cash produced a gain of $62 million for the quarter compared to a gain of $20 million in the second quarter of 2024. As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio. The fixed income portfolio had a return of 2.2% in the quarter or $58 million and a new money yield of 4.3% on investments purchased this quarter.

The duration of the portfolio was 3.4 years. The average yield to maturity on this portfolio was 4.3% compared to 4.7% at year-end 2024. The average credit quality of the portfolio remains strong at Aa3. The Two Sigma Hamilton Fund produced an $87 million gain or 4.4% for the second quarter of 2025. The fund had a net return of 10.1% through the first half of 2025. The latest estimate we have for the Two Sigma Hamilton Fund year-to-date performance was 8.2% through July 31, 2025, a decrease of about 1.9% in July. At this stage, the fund is still ahead of achieving our planned target of 10% for the year. The Two Sigma Hamilton Fund made up about 39% of our total investments, including cash investments at June 30 compared to 40% at March 31, 2025.

Now turning to capital management. In 2024, we announced a $150 million share repurchase authorization by the Hamilton Board of Directors. During the second quarter of 2025, we put a 10b5-1 share repurchase plan in place. With that, we were able to repurchase $35 million of shares this quarter. After the close of the quarter, we repurchased an additional $15 million of shares as of the end of July. All shares were purchased at a discount to book value. With $62 million remaining under our share repurchase authorization, we're able to continue repurchasing shares and growing the business, all while maintaining our strong capital position even during times of uncertainty. We will revisit additional share repurchase authorizations in the future as appropriate.

Next, I have some comments on our strong balance sheet. Total assets were $8.9 billion at June 30, 2025, up 14% from $7.8 billion at year-end 2024. Total investments in cash were $5.3 billion at June 30, an increase of 11% from $4.8 billion at year-end 2024. Shareholders' equity for the group was $2.6 billion at the end of the second quarter, which was a 10% increase from year-end 2024. Our book value per share was $25.55 at June 30, 2025, up 11% from year-end 2024.

Thank you. And with that, we'll open up the call for your questions.

[Operator Instructions]. And our first question comes from the line of Hristian Getsov with Wells Fargo.

Can you provide more color around the reserve increases in the discontinued lines in terms of what accident years was that? And were those covered by your LPT? And then sticking with that, with the casualty reserve review done, did that lead to any change in your underlying loss picks, particularly like on the Bermuda side? Because I think it's a little bit hard for us to see since you didn't quantify the Air India loss, like how much uptick there was versus the prior year?

I'm going to just lead off very high level, and then I'm going to pass the baton over to Craig. I think it's really important to note that the amount of increase overall was modest here in the context of our annual review of this line. Craig is going to give you more detail on that. And as you rightly pointed out, the increase stems from lines of business that we discontinued as part of the strategic transformation. You might recall when I joined in 2018, the first thing we did was take a look at the entire portfolio, and we re-underwrote that entire portfolio, exiting a number of lines, and that is what this stems from. Craig, do you want to add on top of that?

Yes. Sure, Pina. First of all, this is $18 million. It's a very manageable number for us. It represents about 0.5 point of our overall reserve position, about 1% of our total casualty reserves. As Pina mentioned, it comes from discontinued lines of business, business that we no longer write, things like commercial auto and clients that we no longer do business with. So that's what it relates to.

Hristian, you asked with respect to the years. The years are 2020 and prior. And you also asked whether it was impacted by the LPT. We do not have a loss portfolio transfer with the Bermuda book. This was essentially all related to the Bermuda book. The casualty reserves in the International segment were favorable throughout this process and review. I think your other question was also, did this cause us to change any of our loss picks? The answer is, no, it did not cause us to change any of our loss picks for this. What we essentially did was we reviewed all the runoff patterns for these discontinued lines, and that's what it impacted.

You may recall in the third quarter last year we actually did make a change in our casualty reserves for the social inflation impacted lines of business. We did that in the third quarter, and that continued into the fourth quarter and into 2025. So those changes were made in the third quarter in 2024.

The other thing you may want to just know, one large loss that we had this quarter with respect to those reserves which is impacting the attritional loss line was the Air India loss. We took a $6 million charge for that loss. We booked the full limit on our exposure for that loss this quarter, and that was out of the Bermuda segment. The Bermuda segment writes aviation reinsurance. It does not write aviation insurance.

Got it. And then for my follow-up, can you talk about what you saw in the quarter in terms of property pricing, particularly for your portfolio? And maybe if you could quantify how much of your property book skews towards large accounts versus SME? And then if you want to go a step further, if you could maybe potentially size the property exposure in your E&S portfolio?

I'll lead with that one, Hristian. Our property pricing -- let's start with insurance first. As I noted in my prepared remarks, we did see some pressure on property D&S insurance, and we saw that both in our International book and in our Bermuda book. And as a result of that -- I mean, it's still very attractive pricing. Let's start with that. This is coming off of like 7 straight years of price increases. However, we don't want to be responsible for driving the market down, so we were very disciplined there. And these are in part, but not exclusively. The stuff we would come off of is the larger business, where we're seeing the most pricing pressure. The business we stayed on was where we saw less pressure, and that's probably midsized to smaller accounts. That's on the insurance side.

On the -- in terms of our Hamilton Select, that's where we write the smallest risk. We are not writing property in that entity at this time. Did you -- and then I don't know -- but in terms of property on the reinsurance side, there -- you've heard a lot about that from my peers. I think it's fair to say that property pricing midyear was very deal specific, ranging from minus 15% to plus 50%, depending on loss history and peril exposure. That business is -- that we're reinsuring is coming off of historic highs, still benefiting from the market reset, the higher attachment points, the tighter terms and conditions that we saw starting 2023. So that business, we still view as attractive. And we, as I mentioned in the call, moderately grew our property cat portfolio at midyear.

Your next question comes from the line of Michael Zaremski with BMO Capital Markets.

It's Dan on for Mike. Maybe just sticking with the Select business. I think that business performed a little bit better quarter-over-quarter just in terms of the absolute growth rate. Just want to understand maybe, are you guys seeing a lot of MGA competition in your Select business? Or how should we think about that growth capability for the rest of the year?

Yes, happy to take that. Yes, we're very, very happy about the development of our Hamilton Select business. Again, the take-up for that line -- for the products that we offer is very high, and that's a testament to the strength of our team. We saw -- we're still seeing a healthy flow of business into our operations. And we're leaning into the areas, as I mentioned, would be general casualty, excess casualty and small business where the rates are more attractive. Pared back a little bit on professional lines, which is still under pressure. We do not support MGAs in the Hamilton Select portfolio at all. We do all the underwriting in-house. We are seeing some impact from MGAs and perhaps them being more aggressive. However, in our specific niche of hard to place, we are still seeing a very healthy flow of business, and we're comfortable with how we're underwriting it.

That's helpful. And maybe just going to the Bermuda casualty growth. I think you had like $80 million AMS target from that upgrade. And I heard -- I believe it was around $50 million or so in this quarter. Just wondering if you could maybe give us a new outlook on that number for the year.

Yes. Let me talk about that a little bit more generically. Then I'll get specifically to that question here. Firstly, I think, as you've heard from many of our peers, casualty and specifically general casualty, excess casualty is experiencing probably the strongest rate increases in the market. We're growing that both in the insurance side, but predominantly -- the predominant casualty growth came this quarter on the casualty reinsurance side. And there are a number of reasons for that and a number of reasons that we feel comfortable with that growth.

As you may recall from previous calls, we are growing from a much smaller base than many of our peers. We are growing on the back of that AM Best rating upgrade that gives us access to business that we have been targeting for years at a time where some markets, who perhaps were overexposed on the softer years, are paring back, so giving us that opportunity to move in when pricing, as I said earlier, is probably at the highest we've seen for some time.

Our focus here is really selectively on our top-tier key clients that we support across many classes. These are clients that we've identified as having strong underwriting cultures, that take the rate, that limit their line sizes, that have strong claim teams, and importantly, keep a significant retention of this business. We ensure they have skin in the game. Also, our participations are rather modest. We want to make sure we have a diversified portfolio we're growing in, and each deal is actuarially reviewed. Probably a little bit more than you wanted to know, but I think it's important to give you context around the growth.

Again, we benefited significantly from this AM Best upgrade. We told you we thought we'd do $80 million again this year as we did last year. We did $40 million in the first quarter, $50 million in this quarter. So we're slightly ahead of where we thought we were going to be. But as I look forward into the future, having had the benefit of this upgrade now for a full year, you will see much more moderate growth as we've gone through an entire cycle already. Having said that, you will see that premium -- that strong premium on the back of strong rate increases continue to earn in.

Great. That's helpful. And then maybe for Craig on share repurchase levels. That pace accelerated a little bit versus 1Q, and I understand there was some timing nuance just given the filing status and the window that was open for that. And then heard $15 million in July. So I was just wondering, is this the right run rate for the future? And just wondering how we could think about that with wind season coming up.

So first of all, I appreciate the question. I guess the answer is it depends, right? So first, we put a 10b5-1 share repurchase plan in place this quarter, which allowed us to continue buying for the entire quarter. So that was the difference between that and Q1, as you mentioned. We buy back these shares for a couple of reasons. One is capital management, and the other is to take advantage of the share price because we think that the company is currently undervalued.

So if those conditions stay, we will continue to buy because we think it's accretive. We think it's accretive to all shareholders, it's accretive to earnings per share, it's accretive to book value per share, it's accretive to ROE. We're going to be able to continue to buy. We have plenty of capital to be able to do that. But I will tell you that we will be diligent about buybacks during the wind season as it progresses.

[Operator Instructions]. And your next question comes from the line of Tommy McJoynt with KBW.

One quick one. Are you guys still fighting premium growth headwinds against those discontinued lines that you called out from the transformation process? Or that's been long last and you're just truing up the reserves now?

Tom, with respect to premium growth, first of all, I think -- we've shared this in the past. Last year, we were able to grow our premium by 24%, okay? So far this year through the first half, we've grown 17%. So we're still expecting double-digit growth in premium, albeit at lower levels than what you've seen in the past, okay? So as a reminder, we've been able to grow this book at double-digit premium growth every year since 2017. But at the end of the day, we've established a culture of underwriting discipline that's allowed us -- that will be reflected over time, and it's really allowed us to consider when and where we want to grow our book for the best risk-adjusted returns.

Okay. Got it. And then was the – the higher profit commission that you called out that drove the higher expense ratio, was that an anomaly this quarter? Or is that a reset in those agreements? And is the level in 2Q a good one to assume going forward?

So the way the profit commission works is it's based on the underlying book of business. If the underlying book of business performs properly and there's a profit commission on certain lines of business, it's not on all lines, but as those continue to perform, that's when you'll see that come through. You'll typically see it at the same time we try to accrue it in the same quarter that, that profit commission is earned. So again, it's on certain lines of business. It could be in the International segment or it could be in the Bermuda segment depending on those lines. So it's not a normal run rate.

Your next question comes from the line of Hristian Getsov with Wells Fargo.

I just had one follow-up. Was there any change in your reserves related to the U.K. verdict on the Russia-Ukraine aviation losses?

Hristian, this quarter, there was no change in our reserve for the quarter. We booked, as a reminder, a fulsome reserve 3 years ago in 2022 taking into account all the potential losses, including aviation. And at this point, there's no new certainty around those potential losses for us to make a change in our loss estimate this quarter.

Got you. And then just one more follow-up. I noticed your interest expense dropped by $1 million quarter-over-quarter, but your debt was essentially flat. What was the driver of that?

So first, let me go back to the other question real quickly about the Ukraine expense. One of the things I will say is that we did book a loss 3 years ago at $79 million. We still have about 75% of that held in reserves as IBNR. So just to answer that question first. As far as the interest expense goes, I appreciate you asking that question. It's a multifactor answer. One is the SOFR rate, which is where our term loan is based, is a floating rate, and that rate is down about 100 basis points year-over-year. So that's number one.

Second, we had 2 reductions in our margin around our letters of credit, one, because of our ratings upgrade, and two, because of our banking partners have really recognized our credit story. And when we renewed those facilities, we got lower rates. So certainly, we are a better credit than we were even 3 years ago.

Your next question comes from the line of Michael Zaremski with BMO Capital Markets.

My follow-up is just on the total company underwriting expense ratio. Just wondering -- I know there's some headwinds in the acquisition costs just given mix, but trying to understand that other expense ratio story and just maybe how that can grind down over time and your focus on that. Some improvement year-to-date, not as much as last year, but just updating on that timeline.

Yes. Understood. So Dan, the acquisition expense ratio -- so the expense ratio itself is based on 2 components: acquisition expense ratio and other underwriting expenses. The acquisition expense ratio is really based on mix of business. That's why you're seeing a change in that, and that's what we're attributing that increase to the acquisition expense ratios to be that as well as the profit commissions. So that's what you're seeing there. But as we expect to continue, our margin improvement is in the other underwriting expenses. That's something that we have control over, and that ratio has declined each and every year since 2019.

If you look at the whole picture -- you've heard me say this before about going back and looking at the full year 2024. Right now, the full year 2024 for our total expense ratio was 33.1%. And where are we year-to-date in 2025? We're at 33.2%. So we're really right on target for what I would say if you look at it from a full year perspective.

Your next question comes from the line of Matthew Carletti with Citizens Capital Markets.

Just a quick one probably for Craig. Just how should we be thinking about tax rate going forward?

Matt, a great question. You may recall -- from an overall standpoint, taxes is something that we're very focused on. We think we still have a strategic competitive advantage from the standpoint of the global minimum tax from the standpoint that we are deferred for 5 years. We do not start paying global minimum tax until the year 2030. So our current effective tax rate is still in the low single digits compared to the 15% global minimum tax rate. So again, from our standpoint, it's a 5-year deferral for that.

Thank you. That will conclude our question-and-answer session for today. Now I'll turn the call back over to Pina Albo. You may begin.

I just want to thank everybody for joining us on our call today. We appreciate the opportunity of sharing our story and the positive trajectory that we're on and also the opportunity to answer your questions. We look forward to speaking to you again next quarter.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.