10q10k10q10k.net

What changed in Hamilton Insurance Group, Ltd.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Hamilton Insurance Group, Ltd.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+607 added−688 removedSource: 10-K (2025-02-27) vs 10-K (2024-03-07)

Top changes in Hamilton Insurance Group, Ltd.'s 2024 10-K

607 paragraphs added · 688 removed · 471 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

184 edited+70 added−142 removed374 unchanged
Biggest changeTo the extent Hamilton Re contributes capital other than at the beginning of a fiscal year or withdraws capital other than at the end of a fiscal year, the additional incentive allocation hurdle with respect to such capital is prorated. 62 The fees paid related to management of the TS Hamilton Fund are as follows: Years Ended Month Ended Year Ended December 31, December 31, November 30, ($ in thousands) 2023 2022 2021 2021 Management fees $ 45,184 $ 53,103 $ 4,318 $ 48,693 Incentive fees 21,546 68,049 — 51,309 Additional incentive fees — — — 10,320 Total incentive fees 21,546 68,049 — 61,629 Total $ 66,730 $ 121,152 $ 4,318 $ 110,322 The TS Hamilton Fund invests in various commingled investment vehicles.
Biggest changeFor the Years Ended December 31, ($ in thousands) 2024 2023 2022 Management fees $ 46,910 $ 45,184 $ 53,103 Incentive fees 132,492 21,546 68,409 Additional incentive fees 80,194 — — Total incentive fees 212,686 21,546 68,409 Total $ 259,596 $ 66,730 $ 121,152 The TS Hamilton Fund invests in various commingled investment vehicles.
Reinsurance intermediaries may also continue to consolidate, potentially adversely impacting our ability to access business and distribute our products. As the insurance industry consolidates, we expect competition for customers to become more intense, and sourcing and properly servicing each customer to become even more important.
Insurance and reinsurance intermediaries may also continue to consolidate, potentially adversely impacting our ability to access business and distribute our products. As the insurance industry consolidates, we expect competition for customers to become more intense, and sourcing and properly servicing each customer to become even more important.
Additionally, while we strive to manage our invested capital in a manner consistent with publicly-established sustainability guidelines, we may not meet certain shareholders’ criteria for such investments or the performance of 55 such investments may be adversely impacted by laws (including certain U.S. state laws) that limit or discourage government-affiliated asset managers from ESG-driven investments or differ from what it may have been if not managed in a manner consistent with sustainability guidelines.
Additionally, while we strive to manage our invested capital in a manner consistent with publicly-established sustainability guidelines, we may not meet certain shareholders’ criteria for such investments or the performance of such investments may be adversely impacted by laws (including certain U.S. state laws) that 55 limit or discourage government-affiliated asset managers from ESG-driven investments or differ from what it may have been if not managed in a manner consistent with sustainability guidelines.
Such risks include the investment of significant time and resources; the possibility that these efforts will be not be successful; the possibility that the marketplace does not accept our products or services, or that we are unable to retain clients that adopt our new products or services; and the risk of additional liabilities associated with these efforts.
Such risks include the investment of significant time and resources; the possibility that these efforts will not be successful; the possibility that the marketplace does not accept our products or services, or that we are unable to retain clients that adopt our new products or services; and the risk of additional liabilities associated with these efforts.
Person for U.S. federal income tax purposes or (z) any other person or entity that is treated for U.S. federal income tax purposes as if it were one of the foregoing. For purposes of this discussion, the term “U.S. Holder” means a U.S. Person other than a partnership who beneficially owns Class B common shares. U.S.
Person for U.S. federal income tax purposes or (z) any other person or entity that is treated for U.S. federal income tax purposes as if it were one of the foregoing. For purposes of this discussion, the term “U.S. Holder” means a U.S. Person other than a partnership who beneficially owns Class B common shares.
However, the 2017 Act limits the insurance income exception to a non-U.S. insurance company that is a qualifying insurance corporation that would be taxable as an insurance company if it were a U.S. corporation and maintains insurance liabilities of more than 25% of such company’s assets for a taxable year (the “25% Test”) or maintains insurance liabilities that at least equal or exceed 10% of its assets, is predominantly engaged in an insurance business and satisfies a facts-and-circumstances test that requires a showing that the failure to exceed the 25% threshold is due to runoff-related or rating-related circumstances (the “10% Test,” and together with the 25% Test, the 71 “Reserve Test”).
However, the 2017 Act limits the insurance income exception to a non-U.S. insurance company that is a qualifying insurance corporation that would be taxable as an insurance company if it were a U.S. corporation and maintains insurance liabilities of more than 25% of such company’s assets for a taxable year (the “25% Test”) or maintains insurance liabilities that at least equal or exceed 10% of its assets, is predominantly engaged in an insurance business and satisfies a facts-and-circumstances test that requires a showing that the failure to exceed the 25% threshold is due to runoff-related or rating-related circumstances (the “10% Test,” and together with the 25% Test, the “Reserve Test”).
Under certain circumstances, if we or our subsidiaries fail to comply with these covenants or meet these financial ratios, the noteholders or the lenders could declare a default and demand immediate repayment of all amounts owed to them or, where applicable, cancel their commitments to lend or issue letters of credit or, where the reimbursement obligations are unsecured, require us to pledge collateral or, where the reimbursement obligations are secured, require us to pledge additional or a different type of collateral.
Under certain circumstances, if we or our subsidiaries fail to comply with these covenants or meet these financial ratios, the lenders could declare a default and demand immediate repayment of all amounts owed to them or, where applicable, cancel their commitments to lend or issue letters of credit or, where the reimbursement obligations are unsecured, require us to pledge collateral or, where the reimbursement obligations are secured, require us to pledge additional or a different type of collateral.
Even without becoming a completely outdated strategy or Technique, a given strategy’s or Technique’s effectiveness may decay in an unpredictable fashion for any number of reasons, including, but not 66 limited to, an increase in the amount of assets managed, the sharing of such strategy or Technique with other clients or affiliates, the use of similar strategies or Techniques by other market participants and/or market dynamic shifts over time.
Even without becoming a completely outdated strategy or Technique, a given strategy’s or Technique’s effectiveness may decay in an unpredictable fashion for any number of reasons, including, but not limited to, an increase in the amount of assets managed, the sharing of such strategy or Technique with other clients or affiliates, the use of similar strategies or Techniques by other market participants and/or market dynamic shifts over time.
The operations of Syndicate 4000 and 1947 are supervised by Lloyd’s, with the Lloyd’s Franchise Board being required to approve Syndicate business plans, including maximum underwriting capacity, and may require changes to any business plan presented to it or additional capital to be provided to support underwriting. Lloyd’s also imposes various charges and assessments on its member companies.
The operations of Syndicate 4000 and 1947 are supervised by Lloyd’s, with the Lloyd’s Franchise 79 Board being required to approve Syndicate business plans, including maximum underwriting capacity, and may require changes to any business plan presented to it or additional capital to be provided to support underwriting. Lloyd’s also imposes various charges and assessments on its member companies.
In addition, because of the legal uncertainties relating to how the 2021 Regulations will be interpreted and the form in which the proposed 2021 Regulations may be finalized, no assurance can be given that the Company will not qualify as a PFIC under final IRS guidance or any future regulatory proposal or interpretation that may be subsequently introduced and promulgated.
In addition, because of the legal uncertainties relating to how the 2021 Regulations will be interpreted and the form in which the proposed 2021 Regulations may be finalized, no 72 assurance can be given that the Company will not qualify as a PFIC under final IRS guidance or any future regulatory proposal or interpretation that may be subsequently introduced and promulgated.
In addition, because the use of leverage will allow the TS Hamilton Fund control of or exposure to positions worth significantly more than the margin or collateral posted for such positions, the amount that the TS Hamilton Fund may lose in the event of adverse price movements will be high in relation to the amount of this margin or collateral amount, and could exceed the value of the assets of the TS Hamilton Fund.
In addition, because the use of leverage will allow the TS Hamilton Fund control of or exposure to positions worth significantly more than the margin or collateral posted for such positions, the amount that the TS 68 Hamilton Fund may lose in the event of adverse price movements will be high in relation to the amount of this margin or collateral amount, and could exceed the value of the assets of the TS Hamilton Fund.
Certain action or inaction by third parties, such as executing broker-dealers or clearing broker-dealers, may materially impact our ability to effect short sale transactions in the TS Hamilton Fund’s investment portfolio. Risks Relating to Taxation—U.S. Tax Risks For purposes of this discussion, the term “U.S.
Certain action or inaction by third parties, such as executing broker-dealers or clearing broker-dealers, may materially impact our ability to effect short sale transactions in the TS Hamilton Fund’s investment portfolio. 70 Risks Relating to Taxation—U.S. Tax Risks For purposes of this discussion, the term “U.S.
Dividends paid by the Company generally may constitute QDI if (i) the Class B common shares are readily tradeable on an established securities market in the United States, and (ii) the Company is not treated as a PFIC for the taxable year such dividends are paid and the preceding taxable year. Under current U.S.
Any dividends paid by the Company generally may constitute QDI if (i) the Class B common shares are readily tradeable on an established securities market in the United States, and (ii) the Company is not treated as a PFIC for the taxable year such dividends are paid and the preceding taxable year. Under current U.S.
It is possible that individual jurisdiction or cross-border regulatory developments could adversely differentiate Bermuda, the jurisdiction in which we are subject to group supervision, or could exclude Bermuda-based companies from benefits such as market access, mutual recognition or reciprocal rights made available to other jurisdictions, which could adversely impact us.
Furthermore, it is possible that individual jurisdiction or cross-border regulatory developments could adversely differentiate Bermuda, the jurisdiction in which we are subject to group supervision, or could exclude Bermuda-based companies from benefits such as market access, mutual recognition or reciprocal rights made available to other jurisdictions, which could adversely impact us.
Unanticipated higher inflation could also lead to higher interest rates, which would negatively impact the value of our fixed income securities and potentially other investments. 57 In recent years, we have experienced an increase in loss costs as a result of relatively high inflation in several locations in which we have exposure.
Unanticipated higher inflation could also lead to higher interest rates, which would negatively impact the value of our fixed income securities and potentially other investments. In recent years, we have experienced an increase in loss costs as a result of relatively high inflation in several locations in which we have exposure.
Two Sigma may determine not to hedge against certain risks, and certain risks exist that cannot be hedged. The TS Hamilton Fund is expected to engage in short selling, which would expose it to the potential for large losses. The TS Hamilton Fund’s investment program includes a significant amount of short selling.
Two Sigma may determine not to hedge against certain risks, and certain risks exist that cannot be hedged. 69 The TS Hamilton Fund is expected to engage in short selling, which would expose it to the potential for large losses. The TS Hamilton Fund’s investment program includes a significant amount of short selling.
New regulations or pronouncements interpreting or clarifying such rules may be forthcoming as well. The Company cannot be certain if, when or in what form such regulations or pronouncements may be provided and whether such guidance will have a retroactive effect. 70 The Company and/or its non-U.S. subsidiaries may become subject to U.S. federal income taxation.
New regulations or pronouncements interpreting or clarifying such rules may be forthcoming as well. The Company cannot be certain if, when or in what form such regulations or pronouncements may be provided and whether such guidance will have a retroactive effect. The Company and/or its non-U.S. subsidiaries may become subject to U.S. federal income taxation.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims costs; • claims development patterns by line of business, as well as frequency and severity trends; • pricing for our products; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends. 46 These variables are affected by both internal and external events that could increase our exposure to losses, and we continually monitor our loss reserves using new information on reported claims and a variety of statistical techniques and modeling simulations.
As part of the reserving process, we review historical data and consider the impact of such factors as: • claims inflation, which is the sustained increase in cost of raw materials, labor, medical services and other components of claims costs; • claims development patterns by line of business, as well as frequency and severity trends; • pricing for our products; • legislative activity; • social and economic patterns; and • litigation, judicial and regulatory trends. 48 These variables are affected by both internal and external events that could increase our exposure to losses, and we continually monitor our loss reserves using new information on reported claims and a variety of statistical techniques and modeling simulations.
The TS Hamilton Fund’s trading and investment activities are not limited to these strategies and Techniques and the TS Hamilton Fund is permitted to pursue any investment strategy and/or Technique that Two Sigma determines in its sole discretion to be appropriate for the TS Hamilton Fund from time to time.
The TS Hamilton Fund’s trading and investment activities are not limited to 64 these strategies and Techniques and the TS Hamilton Fund is permitted to pursue any investment strategy and/or Technique that Two Sigma determines in its sole discretion to be appropriate for the TS Hamilton Fund from time to time.
Therefore, investors in the TS Hamilton Fund, including Hamilton Re, do not and will not have the benefit of the protections afforded by such registration and regulation. We face risks associated with our reliance on Two Sigma, as investment manager of the TS Hamilton Fund.
Therefore, investors in the TS Hamilton Fund, including Hamilton Re, do not and will not have the benefit of the protections afforded by such registration and regulation. 63 We face risks associated with our reliance on Two Sigma, as investment manager of the TS Hamilton Fund.
Tax Reform The Tax Cuts and Jobs Act (the “2017 Act”) included certain provisions intended to eliminate certain perceived tax advantages of companies (including insurance companies) that have legal domiciles outside the United States, but have certain U.S. connections, and U.S. Persons investing in such companies.
The Tax Cuts and Jobs Act (the “2017 Act”) included certain provisions intended to eliminate certain perceived tax advantages of companies (including insurance companies) that have legal domiciles outside the United States, but have certain U.S. connections, and U.S. Persons investing in such companies.
Although we attempt to take measures to manage the risks of investing in changing interest rate environments, we may not be able to mitigate interest rate or credit spread sensitivity effectively. 61 We do not have control over the TS Hamilton Fund.
Although we attempt to take measures to manage the risks of investing in changing interest rate environments, we may not be able to mitigate interest rate or credit spread sensitivity effectively. We do not have control over the TS Hamilton Fund.
The rates of tax are 4% for property casualty insurance premiums and 1% for reinsurance premiums. U.S. Holders will be subject to adverse tax consequences if the Company is considered a PFIC for U.S. federal income tax purposes.
The rates of tax are 4% for property casualty insurance premiums and 1% for reinsurance premiums. 71 U.S. Holders will be subject to adverse tax consequences if the Company is considered a PFIC for U.S. federal income tax purposes.
However, our Class C common shares will automatically convert into shares of our Class B common shares, on a share-for-share basis, upon future transfers (unless transferred to a permitted transferee as provided in our Bye-laws).
Our Class C common shares will automatically convert into shares of our Class B common shares, on a share-for-share basis, upon future transfers (unless transferred to a permitted transferee as provided in our Bye-laws).
Two Sigma’s reliance on technology may expose the TS Hamilton Fund to other risks associated with the use of technology, such as software or hardware malfunction, security breach, virus or other operational risks.
Two Sigma’s reliance on technology may expose the TS Hamilton Fund to other risks 67 associated with the use of technology, such as software or hardware malfunction, security breach, virus or other operational risks.
Holder may be subject to Code Section 1248 rules. 73 Additionally, Code Section 1248, in conjunction with the RPII rules, also applies to the sale or exchange of shares in a non-U.S. corporation if the non-U.S. corporation would be treated as a CFC for RPII purposes regardless of whether the shareholder owns, directly, indirectly through certain non-U.S. entities or constructively, 10% or more of the voting power of such non-U.S. corporation or the 20% Gross Income Exception or 20% Ownership Exception applies.
Holder may be subject to Code Section 1248 rules. 74 Additionally, Code Section 1248, in conjunction with the RPII rules, also applies to the sale or exchange of shares in a non-U.S. corporation if the non-U.S. corporation would be treated as a CFC for RPII purposes regardless of whether the shareholder owns, directly, indirectly through certain non-U.S. entities or constructively, 10% or more of the voting power of such non-U.S. corporation or the 20% Gross Income Exception or 20% Ownership Exception applies.
For more information on risks related to the cybersecurity, privacy and data protection regulatory environment, see the section titled “ ––Risks Related to the Regulatory Environment––Our business is subject to cybersecurity, privacy and data protection laws, regulations, rules, standards and contractual obligations in the jurisdictions in which we operate, which we can increase the cost of doing business, compliance risks and potential liability .” We cannot ensure that any limitations of liability provisions in our agreements with clients, service providers and other third parties with which we do business would be enforceable or adequate or otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a cyber-attack, security breach or other similar incident.
For more information on risks related to the cybersecurity, privacy and data protection regulatory environment, see the section titled " ––Risks Related to Regulation––Our business is subject to cybersecurity, privacy and data protection laws, regulations, rules, standards and contractual obligations in the jurisdictions in which we operate, which can increase the cost of doing business, compliance risks and potential liability ." 53 We cannot ensure that any limitations of liability provisions in our agreements with clients, service providers and other third parties with which we do business would be enforceable or adequate or otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a cyber-attack, security breach or other similar incident.
This exemption is only available to an "MNE Group" (i) that has constituent entities located in five or fewer jurisdictions outside the "reference jurisdiction" (ii) that has, with respect to all constituent entities in all jurisdictions except the "reference jurisdiction," less than EUR 50 million in tangible assets, and 76 (iii) no parent entity is required to apply an income inclusion rule ("IIR") with respect to a constituent entity of the "MNE Group" located in Bermuda.
This exemption is only available to an "MNE Group" (i) that has constituent entities located in five or fewer jurisdictions outside the "reference jurisdiction" (ii) that has, with respect to all constituent entities in all jurisdictions except the "reference jurisdiction," less than EUR 50 million in tangible assets, and 77 (iii) no parent entity is required to apply an income inclusion rule ("IIR") with respect to a constituent entity of the "MNE Group" located in Bermuda.
Holders, including individuals, generally will be subject to U.S. federal income taxation at a current maximum rate of 37% (not including the Medicare contribution tax) upon their receipt of dividend income from the Company unless such dividends constitute “qualified dividend income” or QDI (as defined in the Code). QDI received by non-corporate U.S.
Holders, including individuals, generally will be subject to U.S. federal income taxation at a current maximum rate of 37% (not including the Medicare contribution tax) upon their receipt of dividend income from the Company, if any, unless such dividends constitute “qualified dividend income” or QDI (as defined in the Code). QDI received by non-corporate U.S.
Investors are urged to consult their tax advisors regarding the effects of these rules on a disposition of Class B common shares. Dividends from the Company may not satisfy the requirements for “qualified dividend income,” and therefore may not be eligible for the reduced rates of U.S. federal income tax applicable to such income. Non-corporate U.S.
Investors are urged to consult their tax advisors regarding the effects of these rules on a disposition of Class B common shares. Dividends from the Company, if any, may not satisfy the requirements for “qualified dividend income,” and therefore may not be eligible for the reduced rates of U.S. federal income tax applicable to such income. Non-corporate U.S.
Although we take steps to protect our intellectual property, we cannot be certain that the steps we have taken will be sufficient or effective to prevent the unauthorized access, use, copying, reverse engineering, infringement, misappropriation or other violation of our intellectual property, including by third parties who may use our intellectual property to develop products, services or technology that compete with ours.
While we take steps to protect our intellectual property, we cannot be certain that the steps we have taken will be sufficient or effective to prevent the unauthorized access, use, copying, reverse engineering, infringement, misappropriation or other violation of our intellectual property, including by third parties who may use our intellectual property to develop products, services or technology that compete with ours.
The Bye-laws provide that holders of our common shares waive all claims or rights of action that they might have, individually or in the Company’s right, against any director or officer for any act or failure to act in the performance of such director’s or officer’s duties, except with respect to any fraud or dishonesty of such director or officer. 87 Item 1B.
The Bye-laws provide that holders of our common shares waive all claims or rights of action that they might have, individually or in the Company’s right, against any director or officer for any act or failure to act in the performance of such director’s or officer’s duties, except with respect to any fraud or dishonesty of such director or officer. 85 Item 1B.
Shareholder, in which case such U.S. Holder may be subject to taxation under the CFC rules. 72 U.S. Persons who own or are treated as owning Class B common shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of RPII of the Company's non-U.S. subsidiaries.
Shareholder, in which case such U.S. Holder may be subject to taxation under the CFC rules. 73 U.S. Persons who own or are treated as owning Class B common shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of RPII of the Company's non-U.S. subsidiaries.
The Exchange Act requires us to file annual, quarterly and current reports with respect to our business and financial condition within specified time periods and to prepare a proxy statement with respect to our annual meeting of shareholders. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures, and internal controls over financial reporting.
For example, the Exchange Act requires us to file annual, quarterly and current reports with respect to our business and financial condition within specified time periods and to prepare a proxy statement with respect to our annual meeting of shareholders. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures, and internal controls over financial reporting.
Hamilton Re is required to maintain the lesser of (a) $1.8 billion or (b) 60% of Hamilton Insurance Group’s net tangible assets in the TS Hamilton Fund for the Commitment Period, subject to certain circumstances and the liquidity options described below, with the Commitment Period ending on June 30, 2026.
Hamilton Re is required to maintain the lesser of (a) $1.8 billion or (b) 60% of Hamilton Insurance Group’s net tangible assets in the TS Hamilton Fund for the Commitment Period, subject to certain circumstances and the liquidity options described below, with the Commitment Period ending on June 30, 2027.
Assuming that the Company acts solely as a group holding company and is not engaged in any (re)insurance, or other, trade, it is not expected to be treated as carrying on a trade in the United Kingdom through a permanent establishment.
Assuming that the Company acts solely as a group holding company and is not engaged in any insurance or reinsurance, or other, trade, it is not expected to be treated as carrying on a trade in the United Kingdom through a permanent establishment.
Any decision to declare and pay dividends in the future will be made at the sole discretion of our Board of Directors and will depend on, among others, our results of operations, financial condition, cash requirements, contractual restrictions pursuant to our debt agreements, our indebtedness, restrictions imposed by applicable law and other factors that our Board of Directors may deem relevant, including applicable law.
Any decision to declare and pay dividends in the future will be made at the sole discretion of our Board of Directors and will depend on, among others, our results of operations, financial condition, cash requirements, contractual restrictions pursuant to our debt agreements, our indebtedness, restrictions imposed by applicable law and other factors that our Board of Directors may deem relevant, including, but not limited to, applicable law.
U.S. laws and regulations that may be applicable to us include economic trade sanctions laws and regulations administered by the Office of Foreign Assets Control, or OFAC, as well as certain laws administered by the U.S. Department of State.
U.S. laws and regulations that may be applicable to us, including economic trade sanctions, laws and regulations administered by the Office of Foreign Assets Control, or OFAC, as well as certain laws administered by the U.S. Department of State.
Further, extreme market volatility may leave us unable to react to market events in a prudent manner consistent with our historical practices in dealing with more orderly markets. Separately, the occurrence of large claims may force us to liquidate securities at an inopportune time, which may cause us to realize capital losses.
Further, extreme market volatility may leave us unable to react to market events in a prudent manner consistent with our historical practices in dealing with more orderly markets. Separately, the occurrence of large claims may force us to liquidate securities or other investments at an inopportune time, which may cause us to realize capital losses.
The Council of the European Union also temporarily added Bermuda to its “grey list” from February 2022 until October 2022. The “grey list” is a list of jurisdictions that have made sufficient commitments to reform their tax practices but remain subject to close monitoring while they are executing on their commitments.
The Council of the European Union also temporarily added Bermuda to its “grey list” from February 2022 until October 2022. The “grey list” is a list of jurisdictions that have made sufficient commitments to reform their tax practices but remain subject to close monitoring while they are executing on their commitments. Bermuda taxation applicable to the Company.
While management is not aware of any cyber-attack, security breach or other similar incident that has had a material effect on our operations, there can be no assurances that such an incident that could have a material impact on us will not occur in the future.
While management is not aware of any cyber-attack, security breach or other similar incident that has had a material effect on our operations, financial condition or reputation, there can be no assurances that such an incident that could have a material impact on us will not occur in the future.
Bermuda taxation applicable to the Company The Government of Bermuda has recently passed the Corporate Income Tax Act 2023, conforming to the OECD BEPS Pillar 2 framework, which will impose corporate income tax on certain Bermuda-based entities for fiscal years beginning on or after January 1, 2025.
The Government of Bermuda has recently passed the Corporate Income Tax Act 2023, conforming to the OECD BEPS Pillar 2 framework, which will impose corporate income tax on certain Bermuda-based entities for fiscal years beginning on or after January 1, 2025.
In the United States, there are numerous federal, state and local cybersecurity, privacy and data protection laws, regulations and rules governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information, including federal and state cybersecurity, privacy and data protection laws, data breach notification laws, and data disposal laws.
Just within the United States, there are numerous federal, state and local cybersecurity, privacy and data protection laws, regulations and rules governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information, including federal and state cybersecurity, privacy and data protection laws, data breach notification laws, and data disposal laws.
Holders of the Class B common shares. 74 Risks Relating to Taxation—U.K. Tax Risks Changes to the U.K. corporate tax treatment of the Company could adversely impact the Company’s tax liability.
Holders of the Class B common shares. 75 Risks Relating to Taxation—U.K. Tax Risks Changes to the U.K. corporate tax treatment of the Company could adversely impact the Company’s tax liability.
Provided there are no material changes in circumstances which impact a DPT charge during 2023, the Company will not notify HMRC of a potential liability to DPT for the current year. 75 U.K. transfer pricing regime and similar provisions could adversely impact the Company’s tax liability.
Provided there are no material changes in circumstances which impact a DPT charge during 2025, the Company will not notify HMRC of a potential liability to DPT for the current year. 76 U.K. transfer pricing regime and similar provisions could adversely impact the Company’s tax liability.
Furthermore, we expect that our exposure to this uncertainty may grow as our “long-tail” casualty reserves grow, because within some of these policies claims can be made for many years, making them more susceptible to these trends than our traditional property or catastrophe business, which is typically more “short-tail.” While we continually seek to improve the effectiveness of our contracts and claims capabilities, we may fail to mitigate our exposure to these growing uncertainties.
Furthermore, we expect that our exposure to this uncertainty may grow as our "long-tail" casualty reserves grow, because within some of these policies claims can be made for many years, making them more susceptible to these trends than our traditional property or catastrophe business, which is typically more "short-tail." While we continually seek to improve the effectiveness of our contracts and claims capabilities, we may fail to mitigate our exposure to these growing uncertainties.
Risks Relating to Taxation – OECD BEPS Pillar 2 On July 11, 2023, the U.K. passed legislation conforming to the OECD BEPS Pillar 2 framework which is effective for U.K. domiciled entities beginning on January 1, 2024.
On July 11, 2023, the U.K. passed legislation conforming to the OECD BEPS Pillar 2 framework which is effective for U.K. domiciled entities beginning on January 1, 2024.
For instance, the following uncertainties may have an impact on the adequacy of our reserves: • When a claim is received, it may take considerable time to appreciate fully the extent of the covered loss suffered by the insured, and consequently, estimates of loss associated with specific claims can increase over time as new information emerges, which could cause the reserves for the claim to become inadequate; • New theories of liability are enforced retroactively from time to time by courts; • Changing jury sentiment; • Volatility in the financial markets, economic events and other external factors may result in an increase in the number of claims and/or severity of the claims reported.
For instance, the following uncertainties may have an impact on the adequacy of our reserves: • When a claim is received, it may take considerable time to appreciate fully the extent of the covered loss suffered by the insured, and consequently, estimates of loss associated with specific claims can increase over time as new information emerges, which could cause the reserves for the claim to become inadequate; • Court enforcement of new theories of liability; • Changing jury sentiment; • Deterioration or volatility in the financial markets, economic events, general economic conditions and other external factors may result in an increase in the number of claims and/or severity of the claims reported.
Risks Relating to Taxation––Bermuda Tax Risks We may become subject to additional tax compliance in Bermuda and other countries should Bermuda be reinstated on the E.U.’s list of non-cooperative jurisdictions for tax purposes.
Risks Relating to Taxation––Bermuda Tax Risks We may become subject to additional tax compliance in Bermuda and other countries should Bermuda be reinstated on the EU’s list of non-cooperative jurisdictions for tax purposes.
If we lose the ability to use a domain name, whether due to trademark claims, failure to renew the applicable registration, or any other cause, we may be forced to market our services under a new domain name, which could diminish our brand or cause us to incur significant expenses to purchase rights to the domain name in question.
If we lose the ability to use trademarks or trade names, whether due to a trademark claim, the failure to renew the applicable registration, or any other cause, we may be forced to market our services under a new name, which could diminish our brand or cause us to incur significant expenses to purchase rights to the name in question.
The law includes a provision that exempts consolidated groups from the UTPR until January 1, 2030 so long as they operate in six or less jurisdictions and have less than EUR 50 million in tangible assets. The U.K. is expected to pass legislation during 2024 to be effective January 1, 2025.
The law includes a provision that exempts consolidated groups from the UTPR until January 1, 2030 so long as they operate in six or less jurisdictions and have less than EUR 50 million in tangible assets. The U.K. passed legislation during 2024, effective January 1, 2025.
In accordance with industry practice, we generally pay amounts owed on claims under our insurance and reinsurance contracts to intermediaries, including agents and brokers, and these intermediaries, in turn, pay these amounts to the clients that have purchased insurance or reinsurance from us.
Our reliance on intermediaries subjects us to their credit risk. In accordance with industry practice, we generally pay amounts owed on claims under our insurance and reinsurance contracts to intermediaries, including agents and brokers, and these intermediaries, in turn, pay these amounts to the clients that have purchased insurance or reinsurance from us.
Takeover protections in the Bye-laws may discourage takeover offers which would be considered favorable and that could in turn adversely affect the value of the Class B common shares.
These provisions in our Bye-laws may discourage takeover offers which would be considered favorable and that could in turn adversely affect the value of the Class B common shares.
Price movements of instruments in which the TS Hamilton Fund trades are influenced by, among other things, interest rates, changing supply and demand relationships, increased risk of default (by government and private issuers, service providers and counterparties), inability to purchase and sell assets or otherwise settle transactions, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. 68 In addition, governments from time to time intervene, directly and by regulation, in certain markets.
Price movements of instruments in which the TS Hamilton Fund trades are influenced by, among other things, interest rates, changing supply and demand relationships, increased risk of default (by government and private issuers, service providers and counterparties), inability to purchase and sell assets or otherwise settle transactions, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies.
Treasury Department guidance, the Class B common shares would be treated as readily tradeable on an established securities market if they are listed on the New York Stock Exchange ("NYSE"), as the Class B common shares are.
Treasury Department guidance, the Class B common shares would be treated as readily tradeable on an established securities market if they are listed on the NYSE, as the Class B common shares are.
Cybersecurity threats and incidents have increased in recent years in frequency, levels of persistence, sophistication and intensity, and we may be subject to heightened cyber-related risks. Our business depends on the proper functioning and availability of our information technology platform, including communications and data processing systems, our proprietary systems, and systems of our third-party service providers.
Cybersecurity threats and incidents have increased in recent years in frequency, levels of persistence, sophistication and intensity, heightening our cyber-related risks. Our business depends on the proper functioning and availability of our information technology platform, including communications and data processing systems, our proprietary systems, and systems of our third-party service providers.
Any cybersecurity incident, including system failure, cyber-attacks, security breaches, disruption by malware or other damage, with respect to our or our service providers’ information technology systems, could interrupt or delay our operations, result in a violation of applicable cybersecurity, privacy, data protection or other laws, regulations, rules, standards or contractual obligations, damage our reputation, cause a loss of customers or expose sensitive customer data, give rise to civil litigation, injunctions, damages, monetary fines or other penalties, subject us to additional regulatory scrutiny or notification obligations, and/or increase our compliance costs, any of which could adversely affect our business, financial conditions and results of operations. 53 Further, the cybersecurity, privacy and data protection regulatory environment is evolving, and it is likely that the costs of complying with new or developing regulatory requirements will increase.
Any cybersecurity incident, including system failure, cyber-attacks, security breaches, disruption by malware or other damage, with respect to our or our service providers’ information technology systems, could interrupt or delay our operations, result in a violation of applicable cybersecurity, privacy, data protection or other laws, regulations, rules, standards or contractual obligations, damage our reputation, cause a loss of customers or expose sensitive customer data, give rise to civil litigation, injunctions, damages, monetary fines or other penalties, subject us to additional regulatory scrutiny or notification obligations, and/or increase our compliance costs, any of which could adversely affect our business, financial conditions and results of operations.
This could have a material effect on certain of our investments. 60 For instance, our investment portfolio (and, specifically, the valuations of investment assets it holds) has been, and is likely to continue to be, adversely affected as a result of market valuations impacted by significant events such as the COVID-19 pandemic and any other public health crisis, the Ukraine conflict and other global economic and geopolitical uncertainty regarding their outcomes.
For instance, our investment portfolio (and, specifically, the valuations of investment assets it holds) has been, and is likely to continue to be, adversely affected as a result of market valuations impacted by significant events such as the COVID-19 pandemic and any other public health crisis, the Ukraine conflict and other global economic and geopolitical uncertainty regarding their outcomes.
We have implemented and maintain what we believe to be reasonable security measures, but we cannot guarantee that the controls and procedures we or third parties have in place to protect or recover our respective systems and the information stored on such systems will be effective, successful or sufficiently rapid to avoid harm to our business.
Despite implementing what we believe to be reasonable security measures, we cannot guarantee that the controls and 52 procedures we or third parties have in place to protect or recover our respective systems and the information stored on such systems will be effective or sufficiently rapid to avoid harm to our business.
While we regularly review the financial condition of our reinsurers and currently believe their condition is strong, it is possible that one or more of our reinsurers will be adversely affected by future significant losses or economic events, causing them to be unable or unwilling to pay amounts owed to us.
While we regularly review the financial condition of our reinsurers and currently believe their condition is strong, it is possible that one or more of our reinsurers could be adversely affected by future significant losses or economic events, causing them to be unable or unwilling to fulfill their obligations to us.
Each Class A common share and Class B common share is entitled to one vote per share, while the Class C common shares have no voting rights, except as otherwise required by law.
Each Class A common share and Class B common share is generally entitled to one vote per share as outlined above, while our Class C common shares have no voting rights, except as otherwise required by law.
In addition to insurance and financial industry regulations, our activities are also subject to relevant economic and trade sanctions, money laundering regulations, and anti-corruption laws which may increase the costs of regulatory compliance, limit or restrict our ability to do business or engage in certain regulated activities, or subject us to the possibility of regulatory actions or proceedings.
We are also subject to a wide variety of laws and regulations, such as insurance and financial industry regulations, economic and trade sanctions, money laundering regulations, and anti-corruption laws, which may increase the costs of regulatory compliance, limit or restrict our ability to do business or engage in certain regulated activities, or subject us to the possibility of regulatory actions or proceedings.
Two Sigma employs substantial leverage on behalf of the TS Hamilton Fund. Such leverage is achieved by borrowing funds from U.S. and non-U.S. brokers, banks, dealers and other lenders, purchasing or selling instruments on margin or with collateral and using options, futures, forward contracts, swaps and various other forms of derivatives and other instruments which have substantial embedded leverage.
Such leverage is achieved by borrowing funds from U.S. and non-U.S. brokers, banks, dealers and other lenders, purchasing or selling instruments on margin or with collateral and using options, futures, forward contracts, swaps and various other forms of derivatives and other instruments which have substantial embedded leverage.
Although we continually monitor our policies and procedures to ensure compliance, faulty judgments, simple errors or mistakes, or the failure of our personnel to adhere to established policies and procedures could result in our failure to comply with applicable laws or regulations which could result in significant liabilities, penalties or other losses and significantly harm our business and results of operations.
Although we continually monitor our policies and procedures to ensure compliance, a faulty judgment, simple error or mistake or other failure of our personnel to adhere to established policies and procedures could result in our failure to comply with applicable laws or regulations which could result in significant liabilities, penalties or other losses and significantly harm our business and results of operations.
Furthermore, notwithstanding any capital holdback, we may decide to return to our investors all or a portion of the third-party capital held by entities we manage as collateral prior to the maturity specified in the terms of the particular underlying transactional documents. A return of capital to our investors is final.
Furthermore, we may decide to return to our investors all or a portion of the third-party capital held by these entities as collateral prior to the maturity specified in the terms of the particular underlying transactional documents.
In addition, our Board of Directors may, in its absolute discretion, make adjustments to the voting power of its shares to the extent necessary or advisable in order (i) to prevent (or reduce the magnitude of) a share voting limitation violation and (ii) to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company or any shareholder or its affiliates.
In addition, our Board of Directors may, in its absolute discretion, make adjustments to the voting power of its shares to the extent necessary or advisable in order (i) to prevent (or reduce the magnitude of) a share voting limitation violation and (ii) to avoid adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company or any shareholder or its affiliates. 83 The multiple class structure of our common shares may limit investors’ ability to influence corporate matters.
As a result, if we release collateral early and capital is returned to our investors, we may not have sufficient collateral to pay any future claims associated with such losses in the event losses are significantly larger than we anticipated.
As 60 return of capital to our investors is final, if we release collateral early we may not have sufficient collateral to pay any future claims associated with such losses in the event losses are significantly larger than we anticipated.
Market volatility can make it difficult to value certain securities if their trading becomes infrequent. Depending on market conditions, we could incur substantial additional realized and unrealized investment losses in future periods.
Market volatility can make it difficult to value certain securities if their trading becomes infrequent. Depending on market conditions, we could incur substantial additional realized and unrealized investment losses in future periods. This could have a material effect on certain of our investments.
Such intervention often is intended directly to influence prices and can, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations.
In addition, governments from time to time intervene, directly and by regulation, in certain markets. Such intervention often is intended directly to influence prices and can, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations.
As discussed further below, we are contractually required to maintain an investment in the TS Hamilton Fund pursuant to the Commitment Agreement (as defined below), which represents a material portion of our investment portfolio, and which Commitment Agreement remains in effect in accordance with its terms even if the TS Hamilton Fund incurs substantial losses or otherwise does not meet our investment objectives.
As discussed further below, we are contractually required to maintain an investment in the TS Hamilton Fund pursuant to the Commitment Agreement, which represents a material portion of our investment portfolio, and which Commitment Agreement remains in effect in accordance with its terms even if the TS Hamilton Fund incurs substantial losses or otherwise does not meet our investment objectives. 61 We maintain a fixed income portfolio which could be impacted by interest rate and credit risk.
We may from time to time modify our business and strategic plan, and these changes could adversely affect us and our financial condition.
In addition, we may from time to time modify our business and strategic plan without shareholder approval and these changes could adversely affect us and our financial condition.
Our compliance efforts are further complicated by the fact that cybersecurity, privacy and data protection laws, regulations, rules and standards around the world are rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions.
Our compliance efforts are further complicated by the fact that Privacy and Information Security Laws around the world are rapidly evolving, may be subject to uncertain or inconsistent interpretations and enforcement, and may conflict among various jurisdictions.
Further, the Commitment Agreement provides that none of Two Sigma, the Managing Member or TS Hamilton Fund are responsible for any performance of their obligations thereunder to the extent such obligations would reasonably conflict with their fiduciary duties to other clients or investors in such clients or are reasonably expected to result in materially adverse legal or regulatory risk, as determined in any such party’s sole discretion on the advice of its internal or external counsel. 65 Two Sigma and its affiliates engage in other business ventures and investment opportunities that will not be allocated equitably among us and such other business ventures.
Further, the Commitment Agreement provides that none of Two Sigma, the Managing Member or TS Hamilton Fund are responsible for any performance of their obligations thereunder to the extent such obligations would reasonably conflict with their fiduciary duties to other clients or investors in such clients or are reasonably expected to result in materially adverse legal or regulatory risk, as determined in any such party’s sole discretion on the advice of its internal or external counsel.
Although we attempt to manage our exposure to such events through a multitude of approaches, including geographic diversification, geographic limits, individual policy limits, exclusions or limitations from coverage, purchase of reinsurance and expansion of supportive collateralized capacity, the availability of these management tools may be dependent on market factors and, to the extent available, may not respond in the way that we expect.
Although we attempt to manage our exposure to such events through a multitude of approaches, including geographic diversification, geographic limits, individual policy limits, exclusions or limitations from coverage, purchase of reinsurance and expansion of supportive collateralized capacity, the availability of these management tools may be dependent on market factors and, to the extent available, may not respond in the way that we expect. 49 Our most material natural catastrophe accumulation risks are from Atlantic Hurricanes and U.S Mainland Earthquakes.
Risks associated with implementing or changing our business strategies and initiatives, including risks related to developing or enhancing our operations, controls and other infrastructure, may not have an impact on our publicly reported results until many years after implementation.
The risks associated with such changes, including risks related to developing or enhancing our operations, controls and other infrastructure may not have an impact on our publicly reported results until many years after implementation.
(with the exception of Hamilton Insurance Designated Activity Company ("HIDAC"), which has a U.K. branch and pays U.K. corporation tax on its U.K. profits).
(with the exception of HIDAC), which has a U.K. branch and pays U.K. corporation tax on its U.K. profits).
Best or an order from the BMA, as described above under “ ––We do not have control over the TS Hamilton Fund. ” Additionally, because the Commitment Agreement requires that we invest a certain amount of capital in the TS Hamilton Fund and the LLCA does not permit us to replace the Managing Member or require that the Managing Member replace Two Sigma as the investment manager of the TS Hamilton Fund, we have limited flexibility to change our investment strategy or manage our investments outside of the TS Hamilton Fund or with a different investment manager, which could have a negative impact on our returns.
Best or an order from the BMA, as described above under “––We do not have control over the TS Hamilton Fund.” Additionally, because the Commitment Agreement requires that we invest a certain amount of capital in the TS Hamilton Fund and the LLCA does not permit us to replace the Managing Member or require that the Managing Member replace Two Sigma as the investment manager of the TS Hamilton Fund, we have limited flexibility to change our investment strategy or manage our investments outside of the TS Hamilton Fund or with a different investment manager, which could have a negative impact on our returns. 65 Should the TS Hamilton Fund be terminated by the Managing Member, all assets will be liquidated in accordance with the terms set out in the LLCA and we will no longer receive returns in connection with this investment.
For example, to the extent that Two Sigma decides to liquidate or “delever” all or any portion of another client’s portfolio for any reason, such liquidation or deleveraging is likely to adversely affect positions held by the TS Hamilton Fund or the TS Hamilton Fund’s ability to liquidate or delever the same or similar positions, whether or not Two Sigma has made the independent decision to liquidate or delever the TS Hamilton Fund’s portfolios.
For example, to the extent that Two Sigma decides to liquidate or “delever” all or any portion of another client’s portfolio for any reason, such liquidation or deleveraging is likely to adversely affect positions held by the TS Hamilton Fund or the TS Hamilton Fund’s ability to liquidate or delever the same or similar positions, whether or not Two Sigma has made the independent decision to liquidate or delever the TS Hamilton Fund’s portfolios. 66 The historical performance of Two Sigma (including the TS Hamilton Fund) should not be considered as indicative of the future results of the TS Hamilton Fund’s investment portfolio or of our future results.
There can be no guarantee that Hamilton Group will be successful in accomplishing the tasks necessary to execute its proposed strategy, or that it will be able to execute the strategy within the time frame or in the manner outlined in its prospectus.
There can be no guarantee that we will be successful in accomplishing the tasks necessary to execute our proposed strategy, or that we will be able to execute the strategy within the time frame or in the manner outlined.
If the TS Hamilton Fund is terminated, there can be no assurance that we will be able to replace Two Sigma as our investment manager or achieve investment results comparable or better than those achieved by the TS Hamilton Fund.
If the TS Hamilton Fund is terminated, there can be no assurance that we will be able to replace Two Sigma as our investment manager or achieve investment results comparable or better than those achieved by the TS Hamilton Fund. See also “—We do not have control over the TS Hamilton Fund” above.

… 316 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

14 edited+6 added−1 removed8 unchanged
Biggest changeCybersecurity risks are identified and addressed in myriad ways, including implementing internal IT general controls, our Global Head of IT Operations & Chief Information Security Officer (“CISO”) participating in the Chief Information Security Officers Committee of Lloyd’s Market Association and other communities to stay current on cybersecurity matters affecting the insurance industry, conducting internal IT audits around Hamilton’s cyber security posture, and conducting scenario-based cybersecurity risk assessments to ensure the right controls are in place to address identified risks.
Biggest changeAdditionally, to stay current on cybersecurity matters affecting the insurance industry and the marketplace in general, our Chief Information Security Officer & Global Head of IT Operations ("CISO") is an active member of the ISC2 organization and regularly participates in cybersecurity-focused conferences and forums, including serving on the Chief Information Security Officers Committee of Lloyd’s Market Association.
To protect against, detect, and respond to cybersecurity incidents, we, among other things, require our employees to undergo annual cybersecurity awareness training, monitor emerging laws and regulations related to data protection and information security, utilize a variety of multilayered technical tools to conduct proactive privacy and cybersecurity vulnerability assessments of our systems and applications, including scanning for and resolving open tickets.
To protect against, detect, and respond to cybersecurity incidents, we, among other things, require our employees to undergo annual cybersecurity awareness training, monitor emerging laws and regulations related to data protection and information security and utilize a variety of multilayered technical tools to conduct proactive privacy and cybersecurity vulnerability assessments of our systems and applications, including scanning for and resolving open tickets.
Our CISO has two decades of professional experience in various senior roles, such as Linux information systems engineer, Senior Network Engineer, Director of IT, Senior Leader Infrastructure Engineering and VP/CTO, within the financial services industry. He holds a Bachelor’s degree in computer and network science and an electronics engineering degree.
Our CISO has two decades of professional experience in various senior roles, such as Linux information systems engineer, Senior Network Engineer, Director of IT, Senior Leader Infrastructure Engineering and VP/CTO, within the financial services industry. He holds a Bachelor’s degree in computer and network science and an electronics engineering degree. 87
The Risk Committee escalates important issues identified in these reports to our Audit Committee, to which our full Board of Directors, while having responsibility for risk management oversight generally, has delegated primary oversight of cybersecurity risks.
The Risk Committee escalates important issues identified in these reports to our Audit Committee, to which our full Board of Directors, while having ultimate responsibility for risk management oversight generally, has delegated primary oversight of cybersecurity risks.
This involves regularly testing, as part of our business continuity and disaster recovery strategies, our ability to restore our systems if they are impacted by a cybersecurity event or incident. As part of the above processes, we annually engage third-party advisors to perform penetration tests against our infrastructure.
This involves regularly testing, as part of our business continuity and disaster recovery strategies, our ability to restore our systems if they are impacted by a cybersecurity event or incident. In addition, as part of the foregoing processes, we annually engage third-party advisors to perform penetration tests against our infrastructure.
He holds a Bachelor of Science degree in electronics and communications engineering, holds a Master’s degree in computer science, and serves as a director on the board of ACORD, which is an organization responsible for setting digital standards for insurance and reinsurance companies globally.
He holds a Bachelor of Science degree in electronics and communications engineering, holds a Master’s degree in computer science, is a Certified Information Systems Security Professional and serves as a director on the board of ACORD, which is an organization responsible for setting digital standards for insurance and reinsurance companies globally.
Senior management, including our Chief Technology Officer & Chief Data Officer (“CTO”) and our CISO, in coordination with our legal and compliance teams, are responsible for implementing these measures, as well as being involved in all aspects of incident response and breach management processes.
Senior management, including our Chief Technology Officer & Chief Data Officer ("CTO") and our CISO, in coordination with our legal and compliance teams, are responsible for implementing our cybersecurity risk management program, as well as being involved in all aspects of incident response and breach management processes.
The responses in these questionnaires are then reviewed by our CISO and assessed against a checklist of minimum requirements that must be met for Hamilton to consider the service provider to be a vendor of trust whose services may be used by our organization. Thereafter, we annually follow up with approved vendors for updated certifications.
The responses in these questionnaires are then reviewed by our CISO and assessed against a checklist of minimum requirements that must be met for Hamilton to consider the service provider to be a vendor of trust whose services may be used by our organization.
Although we identify and respond to small security events and risks as a normal part of our cybersecurity risk management processes, to date, there are no significant previous risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect Hamilton, including its business strategy, results of operations, or financial condition.
Although we identify and respond to small security events and risks as a normal part of our cybersecurity risk management processes, to date, we are not aware of any direct or third-party cybersecurity incidents or otherwise identified any ongoing or previous risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect Hamilton, including its business strategy, results of operations, or financial condition.
This includes reporting, on a quarterly basis and as significant matters arise, about existing and new cybersecurity risks, how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents (if any), and status on key information security initiatives.
This includes reporting, on a quarterly basis and as significant matters arise, about existing and new cybersecurity risks, how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents (if any), and status on key information security initiatives. The Audit Committee convenes prior to each quarterly Board meeting to discuss cybersecurity risks and other information security matters.
There can be no guarantee that (i) our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective or (ii) that there will not be incidents in the future or that they will not materially affect us, including our strategy, results of operations, or financial condition.
While there have been no material cybersecurity incidents that have affected Hamilton for the period covered by this annual report, there can be no guarantee that (i) our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective or (ii) that there will not be incidents in the future or that they will not materially affect us, including our strategy, results of operations, or financial condition.
(See “Risks Related to Our Business and Industry – We are subject to cybersecurity risks, including cyber-attacks, security breaches and other similar incidents with respect to our and our service providers’ information technology systems, which could result in regulatory scrutiny, legal liability or reputational harm, and we may incur increasing costs to minimize those risks." ) 88 Cybersecurity Governance Cybersecurity is important to our Board of Directors and management.
For a further discussion of the risks associated with cybersecurity threats see "Risk Factors — Risks Related to Our Business and Industry—We are subject to cybersecurity risks, including cyber-attacks, security breaches and other similar incidents with respect to our and our service providers’ information technology systems, which could result in regulatory scrutiny, legal liability or reputational harm, and we may incur increasing costs to minimize those risks” and "Risk Factors—Risks Related to Regulation — Our business is subject to cybersecurity, privacy and data protection laws, rules and regulations in the jurisdictions in which we operate, which can increase the cost of doing business, compliance risks and potential liability." Cybersecurity Board Oversight and Governance Cybersecurity is important to our Board of Directors and management.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We prioritize assessing, identifying, and managing material risks associated with “cybersecurity threats,” as such term is defined in Item 106(a) of Regulation S-K. These risks include operational risks, fraud, extortion, and loss of confidential data. Identifying, assessing, and managing cybersecurity risk is integrated into our overall enterprise risk management systems and processes.
Item 1C. Cybersecurity Managing risk related to cybersecurity is a top priority for Hamilton, and we concentrate on assessing, identifying, and managing material risks associated with “cybersecurity threats,” as such term is defined in Item 106(a) of Regulation S-K.
The members of senior management involved in managing our material risks from cybersecurity threats have extensive cybersecurity and IT experience.
The Audit Committee also periodically reviews our processes and policies for managing material risks from cybersecurity threats. Any material risks, cybersecurity incidents or other matters are subsequently discussed with the full Board at the Board meeting. The members of senior management involved in managing our material risks from cybersecurity threats have extensive cybersecurity and IT experience.
Removed
The Audit Committee reports cybersecurity risks and other security matters to the full Board of Directors through a process in which it convenes the day before each quarterly Board meeting, it discusses cybersecurity matters with the full Board at the Board meeting, and its two chairpersons recap these discussions the following day.
Added
Both our management and Board of Directors recognize the importance of developing, implementing and maintaining appropriate cybersecurity measures and, as described below, are actively involved in cybersecurity and overall enterprise risk management. Cybersecurity Risk Management and Strategy We maintain a cybersecurity risk management program that is an important part of, and integrated into, our enterprise risk management function.
Added
The program is designed to assess, identify, manage and protect our information systems and data from unauthorized access, use, disclosure, disruption, modification or destruction. Identifying, assessing, and managing cybersecurity risk shares common methodologies, reporting channels and governance processes that apply across our risk management process, including other legal, compliance, strategic, operational and financial risk areas.
Added
We have implemented and maintain several safeguards and processes designed to identify cybersecurity risks and protect our information systems from cybersecurity threats. For example, we have implemented internal IT general controls such as data encryption, monitoring, data storage, identity / authentication controls and anti-malware and anti-virus solutions.
Added
We also routinely conduct internal IT audits around our cybersecurity posture as well as scenario-based cybersecurity risk assessments to ensure the right controls are in place to address identified risks.
Added
Thereafter, we annually follow up with approved vendors for updated certifications. 86 As discussed above, we maintain an incident response plan to address cybersecurity incidents, which identifies key stakeholders, defines escalation processes and sets the thresholds above which our cybersecurity, legal and crisis management teams will inform senior management as well as our Board of Directors of a cybersecurity incident.
Added
For cybersecurity incidents below these crisis thresholds, we maintain subordinate incident response plans and standard operating procedures used by our security incident response team.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings The information required by this Item relating to legal proceedings is incorporated herein by reference to information included in Note 16, Commitments and Contingencies of the accompanying notes to our audited consolidated financial statements. Item 4. Mine Safety Disclosures None. 89 Part II
Biggest changeItem 3. Legal Proceedings The information required by this Item relating to legal proceedings is incorporated herein by reference to information included in Note 15, Commitments and Contingencies of the accompanying notes to our accompanying audited consolidated financial statements. Item 4. Mine Safety Disclosures None. 88 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+4 added−11 removed2 unchanged
Biggest changeThese figures do not represent the actual number of beneficial owners of our common shares because shares are frequently held in "street name" by securities dealers and others for the benefit of beneficial owners who may vote the shares. Dividends We have not declared or paid any dividends on Class B common shares to date.
Biggest changeAs of February 20, 2025, there were approximately 2, 154 and 3 holders of record of our Class A, B and C common shares, respectively. These figures do not represent the actual number of beneficial owners of our common shares because shares are frequently held in "street name" by securities dealers and other financial institutions on behalf of our shareholders.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Number of Holders Our common shares began trading on the NYSE under the symbol “HG” on November 13, 2023. Prior to that time, there was no public market for our common shares.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Number of Holders Our Class B common shares began trading on the NYSE under the symbol "HG" on November 13, 2023. Prior to that time, there was no public market for our common shares.
Performance Graph The following graph compares the cumulative total shareholder return on our Class B common shares from November 14, 2023 to December 31, 2023, to the cumulative total return, assuming reinvestment of dividends, of (1) S&P 500 Composite Stock Index (“S&P 500”) and (2) the S&P 500 Property & Casualty Insurance Index ("S&P 500 P&C").
Performance Graph The following graph compares the cumulative total shareholder return on our Class B common shares from November 13, 2023 to December 31, 2024, to the cumulative total return, assuming reinvestment of dividends, of (1) S&P 500 Composite Stock Index ("S&P 500") and (2) the S&P 500 Property & Casualty Insurance Index ("S&P 500 P&C").
The share price performance presented below is not necessarily indicative of future results. 90 Recent Sales of Unregistered Securities Set forth below is information regarding securities issued or granted by us during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act.
The share price performance presented below is not necessarily indicative of future results. 89 Issuer Repurchases of Equity Securities Set forth below is information regarding securities issued or granted by us during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act.
Our future ability to pay cash dividends on our Class B common shares may also be limited by the terms of any future debt securities, preferred shares or credit facilities.
Our ability to pay cash dividends on our Class B common shares may also be limited by the terms of the existing (or future) agreements governing our indebtedness as well as any future debt securities we may issue.
Removed
As of March 1, 2024, there were approximately 4, 272 and 4 holders of record of our Class A, B and C common shares, respectively.
Added
Our Class A and Class C common shares are not listed or traded on any securities exchange and there is currently no established public trading market for our Class A or C common shares. Dividends We have not declared or paid any dividends on any class of our common shares to date.
Removed
During the period covered by this Annual Report on Form 10-K, pursuant to the Company’s 2013 Equity Incentive Plan, we issued 779,905 shares at a weighted average price of $13.74 per share to certain employees and directors.
Added
Shares purchased under publicly announced repurchase program (1) Other shares purchased (2) Total shares purchased Maximum $ amount still available under repurchase program ($ in thousands, except per share information) Shares Average price per share Shares Average price per share Shares Average price per share Available for repurchase $ 139,998 October 1 - 31, 2024 — $ — — $ — — $ — $ 139,998 November 1 - 30, 2024 251,595 $ 18.56 500,195 $ 17.80 751,790 $ 18.05 $ 135,328 December 1 - 31, 2024 704,169 $ 19.01 — $ — 704,169 $ 19.01 $ 121,942 Total 955,764 500,195 1,455,959 $ 121,942 (1) On August 7, 2024, the Board of Directors authorized the repurchase of the Company's common shares in the aggregate amount of $150 million (the “Authorization”).
Removed
During the period covered by this Annual Report on Form 10-K, a total of 342,500 warrants with an exercise price of $10.00 were exercised, resulting in a net issuance of 271,097 Class B shares. No underwriters were involved in the foregoing issuance of securities.
Added
The Company may repurchase shares through open market repurchases and/or privately negotiated transactions. The Authorization will expire when the Company has repurchased the full value of shares authorized, unless terminated earlier by the Board of Directors. To the extent there is any repurchase activity under the Authorization, it is disclosed in Note 11, Share Capital .
Removed
The issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans. The shares of common stock issued upon the exercise of stock options or warrants are deemed to be restricted securities.
Added
Repurchases under the Authorization totaled $18.1 million for the quarter ended December 31, 2024. (2) Other shares purchased represents common shares repurchased and cancelled in respect of withholding tax obligations on vested awards. Item 6. Reserved 90
Removed
All recipients either received adequate information about us or had access, through employment or other relationships, to such information.
Removed
Use of Proceeds from Initial Public Offering On November 14, 2023, we closed our initial public offering (“IPO”), in which 6,250,000 Class B common shares were issued and sold by the Company and 8,750,000 existing Class B common shares were sold by the Company's shareholders.
Removed
On November 22, 2023, as part of the IPO, an additional 1,500,000 existing shares were sold by the Company's shareholders pursuant to the exercise of the underwriters’ option to purchase additional shares of our Class B common shares.
Removed
The public offering price of the common shares sold in the IPO was $15.00 per share resulting in net proceeds received by us from the IPO of approximately $80.6 million, after deducting underwriting discounts and commissions and specific incremental expenses directly attributable to the IPO.
Removed
The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-275000), as amended, which was declared effective by the SEC on November 9, 2023. Barclays Capital Inc. and Morgan Stanley & Co. LLC acted as joint lead book-running managers of the IPO.
Removed
There has been no material change in the planned use of proceeds from our IPO as described in our prospectus dated November 9, 2023 and filed with the SEC on November 13, 2023 in connection with our IPO.
Removed
Issuer Purchases of Equity Securities During the period covered by this Annual Report on Form 10-K, the Company repurchased 163,758 Class B common shares. Item 6. Reserved 91

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

257 edited+53 added−58 removed99 unchanged
Biggest changeFor the Years Ended ($ in thousands, except per share amounts) December 31, 2023 December 31, 2022 November 30, 2021 Gross premiums written $ 1,951,038 $ 1,646,673 $ 1,446,551 Net premiums written $ 1,480,438 $ 1,221,864 $ 1,085,428 Net premiums earned $ 1,318,533 $ 1,143,714 $ 942,549 Third party fee income (1) 18,234 11,631 21,022 Claims and Expenses Losses and loss adjustment expenses 714,603 758,333 640,560 Acquisition costs 309,148 271,189 229,213 Other underwriting expenses (2) 183,165 157,540 149,822 Underwriting income (loss) (3) 129,851 (31,717) (56,024) Net realized and unrealized gains (losses) on investments 209,399 86,357 352,193 Net investment income (loss) (4) 30,456 (21,487) (43,217) Total net realized and unrealized gains (losses) on investments and net investment income (loss) 239,855 64,870 308,976 Net gain on sale of equity method investment 211 6,991 54,557 Other income (loss), excluding third party fee income (1) 397 (315) (11) Net foreign exchange gains (losses) (6,185) 6,137 6,442 Corporate expenses (2) 76,691 20,142 22,472 Impairment of goodwill — 24,082 936 Amortization of intangible assets 10,783 12,832 13,431 Interest expense 21,434 15,741 14,897 Income tax expense (benefit) (25,066) 3,104 12,365 Net income (loss) 280,287 (29,935) 249,839 Net income (loss) attributable to non-controlling interest (5) 21,560 68,064 61,660 Net income (loss) attributable to common shareholders $ 258,727 $ (97,999) $ 188,179 Diluted income (loss) per share attributable to common shareholders $ 2.44 $ (0.95) $ 1.82 Key Ratios Attritional loss ratio - current year 52.2 % 51.8 % 51.1 % Attritional loss ratio - prior year development (0.8) % (0.3) % (0.9) % Catastrophe loss ratio - current year 3.2 % 16.3 % 15.7 % Catastrophe loss ratio - prior year development (0.4) % (1.5) % 2.1 % Loss and loss adjustment expense ratio 54.2 % 66.3 % 68.0 % Acquisition cost ratio 23.4 % 23.7 % 24.3 % Other underwriting expense ratio 12.5 % 12.8 % 13.7 % Combined ratio 90.1 % 102.8 % 106.0 % Return on average common shareholders' equity 13.9 % (5.7) % 11.1 % 108 As at Book Value December 31, 2023 December 31, 2022 November 30, 2021 Tangible book value per common share $ 17.75 $ 15.30 $ 16.29 Change in tangible book value per common share 16.0 % (4.1) % 12.7 % Book value per common share $ 18.58 $ 16.14 $ 17.43 Change in book value per common share 15.1 % (5.6) % 11.9 % Balance Sheet Data Total assets $ 6,671,355 $ 5,818,965 $ 5,611,607 Total shareholders' equity $ 2,047,850 $ 1,664,183 $ 1,787,445 (1) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K.
Biggest changeSee Note 4, Fair Value in the accompanying audited consolidated financial statements for further detail. 106 Consolidated Results of Operations The following is a comparison of selected data for our consolidated results of operations: For the Years Ended December 31, ($ in thousands, except per share amounts) 2024 2023 2022 Gross premiums written $ 2,422,582 $ 1,951,038 $ 1,646,673 Net premiums written $ 1,921,169 $ 1,480,438 $ 1,221,864 Net premiums earned $ 1,734,729 $ 1,318,533 $ 1,143,714 Third party fee income (1) 23,752 18,234 11,631 Claims and Expenses Losses and loss adjustment expenses 1,010,173 714,603 758,333 Acquisition costs 388,931 309,148 271,189 Other underwriting expenses (2) 210,013 183,165 157,540 Underwriting income (loss) (3) 149,364 129,851 (31,717) Net realized and unrealized gains (losses) on investments 511,407 209,610 93,348 Net investment income (loss) (4) 63,267 30,456 (21,487) Total net realized and unrealized gains (losses) on investments and net investment income (loss) 574,674 240,066 71,861 Other income (loss), excluding third party fee income (1) — 397 (315) Net foreign exchange gains (losses) (3,231) (6,185) 6,137 Corporate expenses (2) 61,111 76,691 20,142 Impairment of goodwill — — 24,082 Amortization of intangible assets 15,520 10,783 12,832 Interest expense 22,616 21,434 15,741 Income tax expense (benefit) 8,402 (25,066) 3,104 Net income (loss) 613,158 280,287 (29,935) Net income (loss) attributable to non-controlling interest (5) 212,729 21,560 68,064 Net income (loss) attributable to common shareholders $ 400,429 $ 258,727 $ (97,999) Diluted income (loss) per share attributable to common shareholders $ 3.67 $ 2.44 $ (0.95) Key Ratios Attritional loss ratio - current year 53.1 % 52.2 % 51.8 % Attritional loss ratio - prior year development 0.0 % (0.8) % (0.3) % Catastrophe loss ratio - current year 6.3 % 3.2 % 16.3 % Catastrophe loss ratio - prior year development (1.2) % (0.4) % (1.5) % Loss and loss adjustment expense ratio 58.2 % 54.2 % 66.3 % Acquisition cost ratio 22.4 % 23.4 % 23.7 % Other underwriting expense ratio 10.7 % 12.5 % 12.8 % Combined ratio 91.3 % 90.1 % 102.8 % Return on average common shareholders' equity 18.3 % 13.9 % (5.7) % 107 The following table summarizes book value per share and balance sheet data: As at December 31, Book Value 2024 2023 2022 Tangible book value per common share $ 22.03 $ 17.75 $ 15.30 Change in tangible book value per common share 24.1 % 16.0 % (4.1) % Book value per common share $ 22.95 $ 18.58 $ 16.14 Change in book value per common share 23.5 % 15.1 % (5.6) % Balance Sheet Data Total assets $ 7,796,033 $ 6,671,355 $ 5,818,965 Total shareholders' equity $ 2,328,709 $ 2,047,850 $ 1,664,183 (1) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K.
E&S market. We believe it presents meaningful and profitable growth opportunities in the near to long term, further expanding our footprint in the U.S. E&S market. • Bermuda: Bermuda consists of the Hamilton Re platform, made up of Hamilton Re and Hamilton Re US.
We believe it presents meaningful and profitable growth opportunities in the near-to-long term, further expanding our footprint in the U.S. E&S market. • Bermuda : Bermuda consists of the Hamilton Re platform, made up of Hamilton Re and Hamilton Re US.
Accelerating a loss reporting pattern (i.e. shortening the claim tail) results in lower ultimate losses, as the estimated proportion of losses already incurred would be higher, and vice versa. Management believes that the illustrated sensitivities are indicative of the materiality of these key actuarial assumptions to management’s best estimate of loss and loss adjustment expense reserves.
Accelerating a loss reporting pattern (i.e. shortening the claim tail) results in lower ultimate losses, as the estimated proportion of losses already incurred would be higher, and vice versa. Management believes that the illustrated sensitivities are indicative of the materiality of these key actuarial assumptions to management’s best estimate of losses and loss adjustment expense reserves.
The decrease was primarily driven by a lower level of catastrophe losses in the current year. The attritional loss ratio - current year for the year ended December 31, 2023 was 51.1% compared to 52.9% for the year ended December 31, 2022, a decrease of 1.8 percentage points.
The decrease was primarily driven by a lower level of catastrophe losses in the current year. Attritional loss ratio - current year for the year ended December 31, 2023 was 51.1% compared to 52.9% for the year ended December 31, 2022, a decrease of 1.8 percentage points.
The attritional loss ratio - prior year for the year ended December 31, 2023 was an unfavorable 2.3% compared to an unfavorable 5.1% for the year ended December 31, 2022, a decrease of 2.8 percentage points.
Attritional loss ratio - prior year for the year ended December 31, 2023 was an unfavorable 2.3% compared to an unfavorable 5.1% for the year ended December 31, 2022, a decrease of 2.8 percentage points.
Within ESTV, trading was most profitable in Europe, followed by East Asia and Pan-America, while China experienced losses. Within FTV, losses were driven by commodities, fixed income, and equities, partially offset by gains in currencies and credit.
Within ESTV, trading was most profitable in Europe, followed by East Asia and Pan-America, while China experienced losses. Within FTV, losses were driven by commodities, fixed income, and equities, partially offset by gains in currencies and credit.
For the year ended December 31, 2022, TS Hamilton Fund generated positive returns in single name equities trading in STV, partially offset by losses in macroeconomic trading in FTV. Gains were led by U.S. single name equities in STV, followed by non-U.S. equities in ESTV.
For the year ended December 31, 2022, TS Hamilton Fund generated positive returns in single name equities trading in STV, partially offset by losses in macroeconomic trading in FTV. Gains were led by U.S. single name equities in STV, followed by non-U.S. equities in ESTV.
Loss Ratio Catastrophe Loss Ratio – current year is the catastrophe losses incurred by the company relating to the current year divided by net premiums earned. Catastrophe Loss Ratio – prior year development is the catastrophe losses incurred by the company relating to prior years divided by net premiums earned.
Catastrophe Loss Ratio – current year is the catastrophe losses incurred by the company relating to the current year divided by net premiums earned. Catastrophe Loss Ratio – prior year development is the catastrophe losses incurred by the company relating to prior years divided by net premiums earned.
Attritional Loss Ratio – current year is the attritional losses incurred by the company relating to the current year divided by net premiums earned. Attritional Loss Ratio – prior year development is the attritional losses incurred by the company relating to prior years divided by net premiums earned.
Loss Ratio Attritional Loss Ratio – current year is the attritional losses incurred by the company relating to the current year divided by net premiums earned. Attritional Loss Ratio – prior year development is the attritional losses incurred by the company relating to prior years divided by net premiums earned.
The Company’s investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. The Company also invests in the TS Hamilton Fund, a Delaware limited liability company.
The Company’s investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. The Company also invests in TS Hamilton Fund, a Delaware limited liability company.
Reserve for unpaid losses and loss adjustment expenses The Company establishes loss reserves using actuarial models, historical insurance industry loss ratio experience and loss development patterns to estimate its ultimate liability of all losses and loss adjustment expenses incurred with respect to premiums earned on the contracts at a given point in time.
Reserve for Losses and Loss Adjustment Expenses Reserve for unpaid losses and loss adjustment expenses The Company establishes loss reserves using actuarial models, historical insurance industry loss ratio experience and loss development patterns to estimate its ultimate liability of all losses and loss adjustment expenses incurred with respect to premiums earned on the contracts at a given point in time.
See Critical Accounting Estimates – Ceded reinsurance and unpaid losses and loss adjustment expenses recoverable in the audited consolidated financial statements and related notes thereto included in this Form 10-K for a detailed discussion of the Company’s risks related to ceded reinsurance agreements and the Company’s process to evaluate the financial condition of its reinsurers.
See Critical Accounting Estimates – Ceded reinsurance and unpaid losses and loss adjustment expenses recoverable in the accompanying audited consolidated financial statements and related notes thereto included in this Form 10-K for a detailed discussion of the Company’s risks related to ceded reinsurance agreements and the Company’s process to evaluate the financial condition of its reinsurers.
The actuarial methodologies used to perform the quarterly reserving analysis that determines our estimate of the ultimate reserve for losses and loss adjustment expenses for each exposure group include: • Initial expected loss ratio (“IELR”) method: The IELR method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each underwriting year.
The actuarial methodologies used to perform the quarterly reserving analysis that determines our estimate of the ultimate reserve for losses and loss adjustment expenses for each exposure group include: • Initial expected loss ratio ("IELR") method: The IELR method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each underwriting year.
The ultimate effects of an inflationary or deflationary period are subject to high uncertainty and cannot be accurately estimated until the actual costs are known. 95 In the wake of a catastrophe loss there is a risk of specific inflationary pressures in the local economy, which is considered in our catastrophe loss models.
The ultimate effects of an inflationary or deflationary period are subject to high uncertainty and cannot be accurately estimated until the actual costs are known. In the wake of a catastrophe loss there is a risk of specific inflationary pressures in the local economy, which is considered in our catastrophe loss models.
In addition, casualty business protected by the LPT benefited from $4.2 million in amortization of the associated deferred gain and favorable development in the underlying reserves of $0.8 million, for a total net positive earnings impact of $5.0 million. See Note 8, Reinsurance , for further discussion of the LPT.
In addition, casualty business protected by the LPT benefited from $4.2 million in amortization of the associated deferred gain and favorable development in the underlying reserves of $0.8 million, for a total net positive earnings impact of $5.0 million. See Note 7, Reinsurance , for further discussion of the LPT.
The act is a response to the OECD Pillar 2 worldwide minimum tax that would otherwise require a top-up tax be paid on Bermuda-sourced income to non-Bermuda jurisdictions such that a 15% minimum effective tax rate is achieved for Hamilton Group’s Bermuda entities.
The act is a response to the OECD Pillar 2 worldwide minimum tax that would otherwise require a top-up tax be paid on Bermuda-sourced income to non-Bermuda jurisdictions such that a 15% minimum effective tax rate ("ETR") is achieved for Hamilton Group’s Bermuda entities.
The Master Agreement contains events of default customary for facilities of this type. In the facility letter, 140 Hamilton Re makes representations and warranties that are customary for facilities of this type and agrees that it will comply with certain informational and other undertakings.
The Master Agreement contains events of default customary for facilities of this type. In the facility letter, Hamilton Re makes representations and warranties that are customary for facilities of this type and agrees that it will comply with certain informational and other undertakings.
These critical accounting estimates should be read in conjunction with the Notes to the audited consolidated financial statements, including Note 2, Summary of Significant Accounting Policies , for a full understanding of the Company’s accounting policies.
These critical accounting estimates should be read in conjunction with the notes to the accompanying audited consolidated financial statements, including Note 2, Summary of Significant Accounting Policies , for a full understanding of the Company’s accounting policies.
We experienced unfavorable prior year development for the year ended December 31, 2023 of $14.0 million, primarily driven by unfavorable prior year reserve development in property and casualty classes of business, partially offset by favorable development in specialty classes of business.
We experienced unfavorable prior year development for the year ended December 31, 2023 of $14.0 million, primarily driven by unfavorable development in property and casualty classes of business, partially offset by favorable development in specialty classes of business.
This compared to unfavorable attritional loss prior year development for the year ended December 31, 2022 of $26.6 million, primarily driven by unfavorable prior year reserve development across discontinued casualty classes of business.
This compared to unfavorable attritional loss prior year development for the year ended December 31, 2022 of $26.6 million, primarily driven by unfavorable development across discontinued casualty classes of business.
Syndicate 4000, a leading Lloyd’s syndicate, generates a significant portion of premium from the U.S. E&S market and has ranked among the most profitable and least volatile syndicates at Lloyd’s over the last 10 years. • Hamilton Select, our recently launched U.S. domestic E&S carrier, writes casualty insurance for small to mid-sized clients in the hard-to-place niche of the U.S.
Syndicate 4000, a leading Lloyd’s syndicate, generates a significant portion of premium from the U.S. E&S market and has ranked among the most profitable and least volatile syndicates at Lloyd’s over the last 10 years. • Hamilton Select, our U.S. domestic E&S carrier, writes casualty insurance for small to mid-sized clients in the hard-to-place niche of the U.S. E&S market.
While this measure is presented in Note 10, Segment Reporting, it is considered a non-GAAP financial measure when presented elsewhere. Corporate expenses include holding company costs necessary to support our reportable segments. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from other underwriting expenses, and therefore, underwriting income (loss).
While this measure is presented in Note 9, Segment Reporting, it is considered a non-GAAP financial measure when presented elsewhere. Corporate expenses include holding company costs necessary to support our reportable segments. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from other underwriting expenses, and therefore, underwriting income (loss).
For a portion of the Company’s insurance business, which comprises 57% of total gross premiums written, a fixed premium specified in the policy is recorded when the policy incepts. This premium may be adjusted if underlying insured values change. Management actively monitors underlying insured values and any resulting premium adjustments are recognized in the period in which they are determined.
For a portion of the Company’s insurance business, which comprises 53% of total gross premiums written, a fixed premium specified in the policy is recorded when the policy incepts. This premium may be adjusted if underlying insured values change. Management actively monitors underlying insured values and any resulting premium adjustments are recognized in the period in which they are determined.
In the event that the Company’s reinsurers are unable to meet their obligations under these reinsurance agreements or are able to successfully challenge losses ceded by the Company under the contracts, the Company will not be able to realize the full value of the unpaid losses and loss adjustment expense recoverable balance and will be liable for such defaulted amounts.
In the event that the Company’s reinsurers are unable to meet their obligations under these reinsurance agreements or are able to successfully challenge losses ceded by the Company under the contracts, the Company will not be able to realize the full value of the unpaid losses and loss adjustment expenses recoverable balance and will be liable for such defaulted amounts.
The Company's high quality and liquid fixed maturity and short-term investments portfolio is structured to focus primarily on the preservation of capital and the availability of liquidity to meet the Company’s claims obligations, to be well diversified across market sectors, and to generate relatively attractive returns on a risk-adjusted basis over time.
The Company's high quality and liquid fixed maturities and short-term investments portfolio is structured to focus primarily on the preservation of capital and the availability of liquidity to meet the Company’s claims obligations, to be well diversified across market sectors, and to generate relatively attractive returns on a risk-adjusted basis over time.
Combined Ratio Combined Ratio is a measure of our underwriting profitability and is expressed as the sum of the losses and loss adjustment expense ratio, acquisition cost ratio and other underwriting expense ratio.
Combined Ratio Combined Ratio is a measure of our underwriting profitability and is expressed as the sum of the loss and loss adjustment expense ratio, acquisition cost ratio and other underwriting expense ratio.
The Company believes that the recorded reserve for losses and loss adjustment expenses represents management’s best estimate of the cost to settle the ultimate liabilities based on information available at December 31, 2023. See Critical Accounting Estimates — Reserve for Losses and Loss Adjustment Expenses for a detailed discussion of losses and loss adjustment expenses.
The Company believes that the recorded reserve for losses and loss adjustment expenses represents management’s best estimate of the cost to settle the ultimate liabilities based on information available at December 31, 2024. See Critical Accounting Estimates — Reserve for Losses and Loss Adjustment Expenses for a detailed discussion of losses and loss adjustment expenses.
A higher expected loss ratio results in a higher ultimate loss estimate, and vice versa; and • changes to the loss development patterns used in the Company’s reserving process at December 31, 2023, which represent claims reporting that is either slower or faster than the reporting patterns used.
A higher expected loss ratio results in a higher ultimate loss estimate, and vice versa; and • changes to the loss development patterns used in the Company’s reserving process at December 31, 2024, which represent claims reporting that is either slower or faster than the reporting patterns used.
For both short and long-tail lines, management supplements these general approaches with analytically based judgments. Sensitivity Analysis While management believes that the reserve for losses and loss adjustment expenses at December 31, 2023 is adequate, new information, events or circumstances may result in ultimate losses that are materially greater or less than initially recorded.
For both short and long-tail lines, management supplements these general approaches with analytically based judgments. 101 Sensitivity Analysis While management believes that the reserve for losses and loss adjustment expenses at December 31, 2024 is adequate, new information, events or circumstances may result in ultimate losses that are materially greater or less than initially recorded.
Leveraging our disciplined underwriting approach, balance sheet strength and flexibility, and real-time technology prowess, we can respond dynamically to capture opportunities as markets evolve. 94 One of our key strategic priorities is sustainable underwriting profitability on the business we write. Our data-driven and disciplined underwriting processes position us to intelligently price and structure our products and our business portfolio.
Leveraging our disciplined underwriting approach, balance sheet strength and flexibility and real-time technology prowess, we can respond dynamically to capture opportunities as markets evolve. One of our key strategic priorities is sustainable underwriting profitability across the business we write. Our data-driven and disciplined underwriting processes position us to intelligently price and structure our products and our business portfolio.
The tables below summarize, by reportable segment, the effect of reasonably likely scenarios on the key actuarial assumptions used to estimate the Company’s reserve for losses and loss adjustment expenses at December 31, 2023.
The tables below summarize, by reportable segment, the effect of reasonably likely scenarios on the key actuarial assumptions used to estimate the Company’s reserve for losses and loss adjustment expenses at December 31, 2024.
The decrease was primarily driven by higher volumes of business written in casualty insurance and property insurance lines that benefit from favorable overriding commission offset or lower acquisition costs, and other changes in the business mix.
The decrease was primarily driven by higher volumes of business written in casualty insurance and property insurance classes that benefit from favorable overriding commission offset or lower acquisition costs, and other changes in the business mix.
Liquidity and Capital Resources Liquidity Liquidity is a measure of a company’s ability to generate cash flows sufficient to meet the short-term and long-term cash requirements of its business operations. The Company manages liquidity at the holding company and operating subsidiary levels.
Liquidity and Capital Resources Liquidity Liquidity is a measure of a company’s ability to generate cash flows sufficient to meet the short-term and long-term cash requirements of its business operations. The Company manages liquidity at the holding company and operating subsidiary level.
The decrease in the current year attritional loss ratio was primarily driven by a generally lower level of current year attritional losses, partially offset by certain specific losses affecting casualty and property insurance and casualty and specialty reinsurance lines.
The decrease in the current year attritional loss ratio was primarily driven by a generally lower level of current year attritional losses, partially offset by certain specific losses affecting casualty and property insurance and casualty and specialty reinsurance classes.
However, a significant portion of the total cash and investments balances held were invested in TS Hamilton Fund as collateral for the investments held by the underlying trading vehicles, as shown in the tables under the “TS Hamilton Fund” discussion.
However, a significant portion of the total cash and investments balances held were invested in TS Hamilton Fund as collateral for the investments held by the underlying trading vehicles, as shown in the tables under the "TS Hamilton Fund" discussion.
Reserve for Losses and Loss Adjustment Expenses Overview The estimated reserve for losses and loss adjustment expenses (“loss reserves”) represents management’s best estimate of the unpaid portion of the Company’s ultimate liability for losses and loss adjustment expenses for insured and reinsured events that have occurred at or before the balance sheet date, based on its assessment of facts and circumstances known at that particular point in time.
Reserve for Losses and Loss Adjustment Expenses Overview The estimated reserve for losses and loss adjustment expenses ("loss reserves") represents management’s best estimate of the unpaid portion of the Company’s ultimate liability for losses and loss adjustment expenses for insured and reinsured events that have occurred at or before the balance sheet date, based on its assessment of facts and circumstances known at that particular point in time.
The reconciliation to other income (loss), the most comparable GAAP financial measure, also included other income (loss), excluding third party fee income of $0.4 million and $(0.3) million for the years ended December 31, 2023 and 2022, respectively, and less than $0.1 million for each of the years ended November 30, 2021, 2020 and 2019.
The reconciliation to other income (loss), the most comparable GAAP financial measure, also included other income (loss), excluding third party fee income of $Nil, $0.4 million and $(0.3) million for the years ended December 31, 2024, 2023 and 2022, respectively, and less than $0.1 million for each of the years ended November 30, 2021 and 2020.
(also “Easton Re”), which provide the Company's operating platforms with multi-year risk transfer capacity of $200 million to protect against named storm risk in the United States and earthquake risk in the United States and Canada. The risk period for Easton Re is from January 1, 2024 to December 31, 2026.
("Easton Re"), which provide the Company's operating platforms with multi-year risk transfer capacity of $200 million to protect against named storm risk in the United States and earthquake risk in the United States and Canada. The risk period for Easton Re is from January 1, 2024 to December 31, 2026.
IBNR IBNR estimates are necessary due to the potential development on reported claims and the reporting time lag between when a loss event occurs and when it is actually reported (the “reporting lag”).
IBNR IBNR estimates are necessary due to the potential development on reported claims and the reporting time lag between when a loss event occurs and when it is actually reported (the "reporting lag").
The scenarios shown in the tables illustrate the effect of: • changes to the expected loss ratio selections used at December 31, 2023, which represent loss ratio point increases or decreases to the expected loss ratios used.
The scenarios shown in the tables illustrate the effect of: • changes to the expected loss ratio selections used at December 31, 2024, which represent loss ratio point increases or decreases to the expected loss ratios used.
In addition, the Board of Directors may limit a shareholder’s voting rights when it deems it appropriate to do so to avoid certain material adverse tax, legal or regulatory consequences to the Company or any direct or indirect shareholder or its affiliates.
In addition, the Board of Directors may, in its absolute discretion, limit a shareholder’s voting rights when it deems it appropriate to do so to avoid certain material adverse tax, legal or regulatory consequences to the Company, any subsidiary of the Company, or any direct or indirect shareholder or its affiliates.
On December 27, 2023, Bermuda enacted a 15% corporate income tax that will generally become effective on January 1, 2025. The legislation defers the effective tax date until 2030 for Bermuda companies that meet certain requirements. The Company expects to meet those requirements to remain exempt until 2030.
On December 27, 2023, Bermuda enacted a 15% corporate income tax that generally became effective on January 1, 2025. The legislation defers the effective tax date until 2030 for Bermuda companies that meet certain requirements. The Company expects to meet those requirements to remain exempt until 2030.
There were no non-investment grade securities in the fixed maturity and short-term trading portfolio. The average credit quality of the Company’s fixed maturities and short-term investments trading portfolio, excluding short-term investments held by the TS Hamilton Fund, at December 31, 2023 and 2022 was Aa3.
There were no non-investment grade securities in the fixed maturities and short-term investments trading portfolio. The average credit quality of the Company’s fixed maturities and short-term investments trading portfolio, excluding short-term investments held by the TS Hamilton Fund, at December 31, 2024 and 2023 was Aa3.
The decrease was primarily driven by favorable prior year development in both the Bermuda and International specialty classes and International property classes, partially offset by unfavorable development in Bermuda property classes and casualty classes in both our Bermuda and International segments.
The decrease was primarily driven by favorable development in both the Bermuda and International specialty classes and International property classes, partially offset by unfavorable development in Bermuda property classes and casualty classes in both our Bermuda and International segments.
Hamilton Re has a commitment with TS Hamilton Fund to maintain an amount up to the lesser of (i) $1.8 billion or (ii) 60% of Hamilton Insurance Group’s net tangible assets in TS Hamilton Fund, such lesser amount, the “Minimum Commitment Amount”, for a three-year period (the "Initial Term") and for rolling three-year periods thereafter (each such three-year period the "Commitment Period"), subject to certain circumstances and the liquidity options described below, with the Commitment Period ending on June 30, 2026.
Hamilton Re has a commitment with TS Hamilton Fund to maintain an amount up to the lesser of (i) $1.8 billion or (ii) 60% of Hamilton Insurance Group’s net tangible assets in TS Hamilton Fund, such lesser amount, the "Minimum Commitment Amount", for a three-year period (the "Initial Term") and for rolling three-year periods thereafter (each such three-year period the "Commitment Period"), subject to certain circumstances and the liquidity options described below, with the Commitment Period ending on June 30, 2027.
Fair Value of Investments Fixed maturity and short-term investments trading portfolio The Company elects the fair value option for all of the fixed maturity securities and short-term investments in its trading portfolio and certain other investments and recognizes the changes in net realized and unrealized gains (losses) on investments in its consolidated statements of operations.
Fair Value of Investments Fixed maturity and short-term investments trading portfolio The Company elects the fair value option for its fixed maturities and short-term investments trading portfolio and certain other investments and recognizes the changes in net realized and unrealized gains (losses) on investments in its consolidated statements of operations.
Management believes that each of the Company’s insurance subsidiaries and branches exceeded the minimum solvency, capital and surplus requirements in their applicable jurisdictions at December 31, 2023. Certain of the subsidiaries and branches are required to file Financial Condition Reports (“FCR”), with their regulators, which provide details on solvency and financial performance.
Management believes that each of the Company’s insurance subsidiaries and branches exceeded the minimum solvency, capital and surplus requirements in their applicable jurisdictions at December 31, 2024. Certain of the subsidiaries and branches are required to file Financial Condition Reports ("FCR"), with their regulators, which provide details on solvency and financial performance.
The TS Hamilton Fund investment strategy is focused on delivering non-market correlated investment income and total return through all market cycles while maintaining appropriate portfolio liquidity and credit quality to meet the requirements of customers, rating agencies and regulators. Cash and Investments At December 31, 2023 and 2022, total cash and investments was $4.0 billion and $3.5 billion, respectively.
The TS Hamilton Fund investment strategy is focused on delivering non-market correlated investment income and total return through all market cycles while maintaining appropriate portfolio liquidity and credit quality to meet the requirements of customers, rating agencies and regulators. Cash and Investments At December 31, 2024 and 2023, total cash and investments was $4.9 billion and $4.0 billion, respectively.
The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $76.7 million, $20.1 million, $22.5 million, $22.9 million and $22.0 million for the years ended December 31, 2023 and 2022, and November 30, 2021, 2020 and 2019, respectively.
The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $61.1 million, $76.7 million, $20.1 million, $22.5 million and $22.9 million for the years ended December 31, 2024, 2023 and 2022, and November 30, 2021 and 2020, respectively.
The expected average duration of the Company’s fixed maturities and short-term investments trading portfolio increased modestly to 3.3 years at December 31, 2023 from 3.2 years at December 31, 2022. 135 TS Hamilton Fund Although Two Sigma has broad discretion to allocate invested assets to different opportunities, the current strategy is focused on highly diversified liquid positions in global equities, futures and foreign exchange markets.
The expected average duration of the Company’s fixed maturities and short-term investments trading portfolio increased modestly to 3.4 years at December 31, 2024 from 3.3 years at December 31, 2023. 133 TS Hamilton Fund Although Two Sigma has broad discretion to allocate invested assets to different opportunities, the current strategy is focused on highly diversified liquid positions in global equities, futures and foreign exchange markets.
All or a portion of the loan issued under the renegotiated Facility bears interest at either (a) the Base Rate plus the Applicable Margin or (b) the Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus the Applicable Margin, at the Company's discretion.
All or a portion of the loan issued under the Facility bears interest at either (a) the Base Rate plus the Applicable Margin or (b) the Adjusted Term Secured Overnight Financing Rate ("SOFR") plus the Applicable Margin, at the Company's discretion.
On October 26, 2023, Hamilton Re amended its letter of credit facility agreement with UBS AG ("UBS") under which UBS and certain of its affiliates agreed to make available to Hamilton Re a secured letter of credit facility of $100 million for a term that will expire on October 26, 2024.
On October 25, 2024, Hamilton Re amended its letter of credit facility agreement with UBS AG ("UBS") under which UBS and certain of its affiliates agreed to make available to Hamilton Re a secured letter of credit facility of $100 million for a term that will expire on October 25, 2025.
However, each holder of Class A common shares and Class B common shares is limited to voting (directly, indirectly or constructively, as determined for U.S. federal income tax purposes) that number of common shares equal to 9.5% of the total combined voting power of all classes of shares of the Company (or, in the case of a class vote by the holders of the Class B common shares, such as in respect of the election or removal of directors other than for directors who are appointed by certain shareholders pursuant to the Shareholders Agreement and the Bye-laws, a maximum of 14.92% of the total combined voting power).
However, each holder of Class A common shares and Class B common shares is limited to voting (directly, indirectly or constructively, as determined for U.S. federal income tax purposes) that number of common shares equal to 9.5% of the total combined voting power of all classes of shares of the Company (or, in the case of a class vote by the holders of our Class B common shares, such as in respect of the election or removal of directors other than for directors who are appointed by certain shareholders pursuant to the Shareholders Agreement and our Bye-laws, a maximum of 14.92% of the total combined voting power, calculated by multiplying (a) 9.5% and (b) the quotient of dividing (x) the total number of directors by (y) the number of directors elected by holders of Class B common shares).
We maintain trusted and long-standing relationships with our clients and brokers, who we believe will continue to provide us with increased access to attractive business. We see growth opportunities in both the insurance and reinsurance markets in which we operate and intend to pursue disciplined growth across all our underwriting platforms. In recent years the U.S.
We maintain trusted and long-standing relationships with our clients and brokers, who we believe will continue to provide us with increased access to attractive business. We see growth opportunities in both the insurance and reinsurance markets in which we operate and intend to pursue disciplined growth across our underwriting platforms.
Where required, these FCRs are posted on the Company’s website. The regulations governing the Company’s principal operating subsidiaries’ ability to pay dividends and to maintain certain measures of solvency and liquidity and requirements to file FCRs are discussed in Note 18, Statutory Requirements to the Company’s audited consolidated financial statements in this Form 10-K.
Where required, these FCRs are posted on the Company’s website. The regulations governing the Company’s principal operating subsidiaries’ ability to pay dividends and to maintain certain measures of solvency and liquidity are discussed in Note 17, Statutory Requirements in the Company's audited consolidated financial statements as included in this Form 10-K.
In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled "Special Note Regarding Forward-Looking Statements" and "Risk Factors" in this Annual Report.
In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections entitled "Special Note Regarding Forward-Looking Statements" and "Risk Factors" in the Form 10-K.
A combined ratio under 100% indicates an underwriting profit, while a combined ratio over 100% indicates an underwriting loss. 132 Financial Condition, Liquidity and Capital Resources Financial Condition Investment Philosophy The Company maintains two segregated investment portfolios: a fixed maturity and short-term investments trading portfolio and an investment in TS Hamilton Fund.
A combined ratio under 100% indicates an underwriting profit, while a combined ratio over 100% indicates an underwriting loss. 130 Financial Condition, Liquidity and Capital Resources Financial Condition Investment Philosophy The Company maintains two segregated investment portfolios: a fixed maturities and short-term investments trading portfolio and an investment in Two Sigma Hamilton Fund ("TS Hamilton Fund").
On June 23, 2022, the Company and Hamilton Re amended and restated their unsecured credit agreement with a syndication of lenders (the “Unsecured Facility").
On June 23, 2022, Hamilton Group and Hamilton Re amended and restated their unsecured credit agreement with a syndication of lenders (the "Unsecured Facility").
Our strong, sustainable underwriting operations are complemented by our unique investment portfolio, which consists of the Two Sigma Hamilton Fund, LLC, a Delaware limited liability company ("TS Hamilton Fund" or "TSHF"), and our investment grade fixed income portfolio which is currently benefiting from strong interest rates.
Our strong, sustainable underwriting operations are complemented by our unique investment portfolio, which consists of the Two Sigma Hamilton Fund, LLC ("TS Hamilton Fund" or "TSHF"), and our investment grade fixed income portfolio, which is currently benefiting from strong interest rates.
Effects of Inflation Historically, inflation has not had a material effect on the Company’s consolidated results of operations. However, global economic inflation has recently increased and there is a risk that it will remain elevated for an extended period.
Effects of Inflation Historically, inflation has not had a material effect on the Company’s consolidated results of operations. However, over the last several years, global economic inflation has increased, and there is a risk that it will remain elevated for an extended period.
Gross premiums written on a fixed premium basis accounted for 30.2%, 28.6% and 29.7% of the Company’s gross premiums written for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. Some of this business is written through MGAs, third parties granted authority to bind risks on the Company’s behalf in accordance with defined underwriting guidelines.
Gross premiums written on a fixed premium basis accounted for 26.9%, 30.2% and 28.6% of the Company’s gross premiums written for the years ended December 31, 2024, 2023 and 2022, respectively. Some of this business is written through MGAs, third parties granted authority to bind risks on the Company’s behalf in accordance with defined underwriting guidelines.
Refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures ” for further details. (3) Other underwriting expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K.
Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures' for further details. (3) Other underwriting expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K.
Refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures ” for further details. (4) Underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. Refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures ” for further details.
Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures' for further details. (4) Underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. Refer to 'Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures' for further details.
We do not undertake any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. 92 Index To Management's Discussion and Analysis of Financial Condition and Results of Operations Page Overview 94 Selected Consolidated Financial Data 97 Summary of Critical Accounting Estimates 98 Reserve for Losses and Loss Adjustment Expenses 98 Premiums Written and Earned 103 Ceded Reinsurance and Unpaid Losses and Loss Adjustment Expenses Recoverable 105 Fair Value of Investments 106 Summary Results of Operations 108 Key Operating and Financial Metrics 129 Non-GAAP Measures 130 Financial Condition, Liquidity and Capital Resources 133 Financial Condition 133 Cash and Investments 133 Liquidity and Capital Resources 137 Financial Strength Ratings 142 Reserve for Claims and Claim Expenses 142 Contractual Obligations and Commitments 143 Transactions with Related Parties 143 93 Overview We are a global specialty insurance and reinsurance company founded in Bermuda in 2013, enhanced by data and technology, focused on producing sustainable underwriting profitability and delivering significant shareholder value.
We do not undertake any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this document even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made. 91 Index To Management's Discussion and Analysis of Financial Condition and Results of Operations Page Overview 93 Selected Consolidated Financial Data 96 Summary of Critical Accounting Estimates 98 Reserve for Losses and Loss Adjustment Expenses 98 Premiums Written and Earned 103 Ceded Reinsurance and Unpaid Losses and Loss Adjustment Expenses Recoverable 104 Fair Value of Investments 105 Summary Results of Operations 107 Key Operating and Financial Metrics 127 Non-GAAP Measures 129 Financial Condition, Liquidity and Capital Resources 131 Financial Condition 131 Cash and Investments 131 Liquidity and Capital Resources 135 Financial Strength Ratings 141 Reserve for Losses and Loss Adjustment Expenses 141 Contractual Obligations and Commitments 142 Transactions with Related Parties 142 92 Overview We are a global specialty insurance and reinsurance company founded in Bermuda in 2013, enhanced by data and technology, focused on producing sustainable underwriting profitability and delivering significant shareholder value.
The facility bears a fee of 140 basis points on the total available capacity. In addition, on October 27, 2023, Hamilton Re amended the $230 million unsecured letter of credit facility agreement that it utilizes to provide Funds at Lloyd's ("FAL") ("FAL LOC Facility") to support the FAL requirements of Syndicate 4000.
The facility bears a fee of 140 basis points on the total available capacity. In addition, on October 28, 2024, Hamilton Re amended the unsecured letter of credit facility agreement that it utilizes to provide Funds at Lloyd's ("FAL") ("FAL LOC Facility") to support the FAL requirements of Syndicate 4000.
Best and Kroll Bond Rating Agency. These ratings are publicly announced, are available directly from the agencies' websites, and are also published on the Company’s website. Financial strength ratings represent the independent opinions of the rating agencies as to the relative creditworthiness of a company and its capacity to meet the obligations of its insurance and reinsurance contracts.
Best, Fitch Ratings and Kroll Bond Rating Agency. These ratings are publicly announced, and are available directly from the agencies' websites. Financial strength ratings represent the independent opinions of the rating agencies as to the relative creditworthiness of a company and its capacity to meet the obligations of its insurance and reinsurance contracts.
The cash and short-term investment balances are not managed by the Company, nor can they be removed from TS Hamilton Fund as they support the underlying investment strategies within the three trading vehicles. 136 The following table represents the total assets and total liabilities of TS Hamilton Fund at December 31, 2023 and 2022.
The cash and short-term investment balances are not managed by the Company, nor can they be removed from TS Hamilton Fund as they support the underlying investment strategies within the three trading vehicles. The following table represents the total assets and total liabilities of TS Hamilton Fund.
We harness multiple drivers to create shareholder value, including diverse underwriting operations supported by proprietary technology and a team of over 500 full-time employees, a strong balance sheet, and a unique investment management relationship with Two Sigma. We operate globally, with underwriting operations in Lloyd’s, Ireland, Bermuda, and the United States.
We harness multiple drivers to create shareholder value, including diverse underwriting operations supported by proprietary technology and a team of over 600 full-time employees, a strong balance sheet, and a unique investment management relationship with Two Sigma. We operate globally, with underwriting operations in London, Dublin, Bermuda and across the United States.
Capacity is provided by Barclays Bank PLC, ING Bank N.V., London Branch, and Bank of Montreal, London Branch. The FAL LOC Facility was increased to $230 million for an additional one year term that expires on October 27, 2024. The facility bears a fee of 162.5 basis points on the borrowed amount.
Capacity is provided by Barclays Bank PLC, ING Bank N.V., London Branch, and Bank of Montreal, London Branch. The FAL LOC Facility of $230 million was renewed for an additional one year term that expires on October 28, 2025. The facility bears a fee of 162.5 basis points on the borrowed amount.
Inflation is subject to many macroeconomic factors beyond our control, including global banking policy, political risks, supply chain issues, and the continuing impact of the COVID-19 pandemic. An inflationary economy may result in higher claims and claims expenses, negatively impact the performance of our fixed income security investment portfolio, or increase our operating expenses, among other unfavorable effects.
Inflation is subject to many macroeconomic factors beyond our control, including global banking policy, political risks and supply chain issues. An inflationary economy may result in higher losses and loss adjustment expenses, negatively impact the performance of our fixed income security investment portfolio, or increase our operating expenses, among other unfavorable effects.
On August 8, 2023, letter of credit capacity under this facility was increased to $200 million. At all times during which it is a party to the facility, Hamilton Re is obligated to pledge to CitiBank Europe cash and/or securities with a value that equals or exceeds the aggregate face amount of its then-outstanding letters of credit.
On November 15, 2024, letter of credit capacity under this facility was increased to $250 million. At all times during which it is a party to the facility, Hamilton Re is obligated to pledge to CitiBank Europe cash and/or securities with a value that equals or exceeds the aggregate face amount of its then-outstanding letters of credit.
On a consolidated basis, reinsurance premiums ceded represented 24.1%, 25.8% and 25.0% of gross premiums written for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. Ceded reinsurance contracts do not relieve the Company of its primary obligation to policyholders.
On a consolidated basis, reinsurance premiums ceded represented 20.7%, 24.1% and 25.8% of gross premiums written for the years ended December 31, 2024, 2023 and 2022, respectively. Ceded reinsurance contracts do not relieve the Company of its primary obligation to policyholders.
In addition, casualty business protected by the LPT benefited from favorable development of $5.1 million and $1.9 million in amortization of the associated deferred gain, for a total net positive earnings impact of $7.0 million. See Note 8, Reinsurance , in our audited consolidated financial statements for further discussion of the LPT.
In addition, casualty business protected by the LPT benefited from $4.2 million in amortization of the associated deferred gain and favorable development in the underlying reserves of $0.8 million, for a total net positive earnings impact of $5.0 million. See Note 7, Reinsurance , in the accompanying audited consolidated financial statements for further discussion of the LPT.
Loss reserves reflect both claims that have been reported to the Company (“case reserves”) and claims that have been incurred but not reported to the Company (“IBNR”). Loss reserves are complex estimates, not an exact calculation of liabilities.
Loss reserves reflect both claims that have been reported to the Company ("case reserves") and claims that have been incurred but not reported to the Company ("IBNR"). Loss reserves are complex estimates, not an exact calculation of liabilities.
Management believes that its significant cash flows from operations and high quality liquid investment portfolio will provide sufficient liquidity for the foreseeable future. At December 31, 2023 and 2022, total unrestricted cash and cash equivalents were $794.5 million and $1.1 billion, respectively, and total restricted cash and cash equivalents were $106.4 million and $130.8 million, respectively.
Management believes that its significant cash flows from operations and high quality liquid investment portfolio will provide sufficient liquidity for the foreseeable future. At December 31, 2024 and 2023, total unrestricted cash and cash equivalents were $996.5 million and $794.5 million, respectively, and total restricted cash and cash equivalents were $104.4 million and $106.4 million, respectively.
The average yield to maturity on the Company’s fixed maturities and short-term investments trading portfolio decreased modestly to 4.5% at December 31, 2023 from 4.7% at December 31, 2022.
The average yield to maturity on the Company’s fixed maturities and short-term investments trading portfolio increased to 4.7% at December 31, 2024 from 4.5% at December 31, 2023.
Net cash inflows for the year ended December 31, 2023 were driven by the proceeds of shares issued in connection with the Company's Initial Public Offering ("IPO"), partially offset by incentive allocations paid to TS Hamilton Fund.
Net cash provided by financing activities for the year ended December 31, 2023 was primarily driven by the proceeds of shares issued in connection with the Company's Initial Public Offering ("IPO"), partially offset by incentive allocations paid to TS Hamilton Fund.
See Note 1, Organization for further details. 105 Estimation methodology Amounts for unpaid losses and loss adjustment expenses recoverable from reinsurers are estimated in a manner consistent with the reserve for losses and loss adjustment expenses associated with the related assumed business and the contractual terms of the reinsurance agreement.
Estimation methodology Amounts for unpaid losses and loss adjustment expenses recoverable from reinsurers are estimated in a manner consistent with the reserve for losses and loss adjustment expenses associated with the related assumed business and the contractual terms of the reinsurance agreement.
Reserve for Claims and Claim Expenses Paid and unpaid losses and loss adjustment expenses recoverable In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claim events by reinsuring certain levels of risk with other reinsurers.
Ceded Reinsurance and Unpaid losses and Loss Adjustment Expenses Recoverable Overview In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claim events by reinsuring certain levels of risk with other reinsurers.
The table below reconciles third party fee income to other income, the most comparable GAAP financial measure: For the Years Ended December 31, November 30, ($ in thousands) 2023 2022 2021 Third party fee income $ 18,234 $ 11,631 $ 21,022 Other income (loss), excluding third party fee income 397 (315) (11) Other income (loss) $ 18,631 $ 11,316 $ 21,011 131 Other Underwriting Expenses Other underwriting expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations.
The table below reconciles third party fee income to other income (loss), the most comparable GAAP financial measure: For the Years Ended December 31, ($ in thousands) 2024 2023 2022 Third party fee income $ 23,752 $ 18,234 $ 11,631 Other income (loss), excluding third party fee income — 397 (315) Other income (loss) $ 23,752 $ 18,631 $ 11,316 129 Other Underwriting Expenses Other underwriting expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations.

… 288 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+3 added−5 removed16 unchanged
Biggest changeDollars) Interest Rate Shift in Basis Points December 31, 2023 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,323,482 $2,291,642 $2,260,146 $2,228,959 $2,197,980 Percentage change in fair value 2.8 % 1.4 % — % (1.4) % (2.8) % Net increase (decrease) in fair value $63,336 $31,496 $— $(31,187) $(62,166) (Expressed in thousands of U.S.
Biggest changeThe following tables summarize the aggregate hypothetical increase (decrease) in the fair value of the Company’s fixed maturity trading portfolio and short-term investments from an immediate parallel shift in the treasury yield curve, assuming credit spreads remain constant, and reflecting the use of an immediate time horizon, since this presents the worst-case scenario: ($ in thousands) Interest Rate Shift in Basis Points December 31, 2024 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,961,034 $2,917,688 $2,874,972 $2,831,836 $2,789,189 Percentage change in fair value 3.0% 1.5% —% (1.5)% (3.0)% Net increase (decrease) in fair value $86,062 $42,716 $— $(43,136) $(85,783) ($ in thousands) Interest Rate Shift in Basis Points December 31, 2023 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,323,482 $2,291,642 $2,260,146 $2,228,959 $2,197,980 Percentage change in fair value 2.8% 1.4% —% (1.4)% (2.8)% Net increase (decrease) in fair value $63,336 $31,496 $— $(31,187) $(62,166) 143 Credit Spread Risk The Company considers the impact of credit spread movements on the fair value of our fixed maturity and short-term investments trading portfolio.
The sensitivity analysis performed at December 31, 2023 and 2022 presents hypothetical changes in cash flows, earnings and fair values of market sensitive instruments which were held by the Company on those dates in response to changes in valuation inputs selected by the Company.
The sensitivity analysis performed at December 31, 2024 and 2023 presents hypothetical changes in cash flows, earnings and fair values of market sensitive instruments which were held by the Company on those dates in response to changes in valuation inputs selected by the Company.
Assuming a hypothetical 10% and 30% increase or decrease in the value of our investments in Two Sigma Funds as of December 31, 2023, the carrying value of these investments would have increased or decreased by approximately $85.1 million and $255.4 million, pre-tax, respectively. Foreign Currency Risk The Company’s functional currency for consolidated reporting is the U.S. dollar.
Assuming the same hypothetical 10% and 30% increase or decrease as of December 31, 2023, the carrying value of our investments in Two Sigma Funds would have increased or decreased by approximately $85.1 million and $255.4 million, pre-tax, respectively. Foreign Currency Risk The Company’s functional currency for consolidated reporting is the U.S. Dollar.
We performed a sensitivity analysis to estimate the effects that market risk exposures could have on the future earnings, fair values or cash flows at December 31, 2023 and 2022.
We performed a sensitivity analysis to estimate the effects that market risk exposures could have on the future earnings, fair values or cash flows at December 31, 2024 and 2023.
An inflationary economy may result in higher claims and claims expenses, negatively impact the performance of our fixed income security investment portfolio, or increase our operating expenses, among other unfavorable effects. The ultimate effects of an inflationary or deflationary period are subject to high uncertainty and cannot be accurately estimated until the actual costs are known.
An inflationary economy may result in higher losses and loss adjustment expenses, negatively impact the performance of our fixed income security investment portfolio, or increase our operating expenses, among other unfavorable effects. The ultimate effects of an inflationary or deflationary period are subject to high uncertainty and cannot be accurately estimated until the actual costs are known.
Recent Accounting Pronouncements At December 31, 2023, there were no recently issued accounting pronouncements that have not yet been adopted that management expects would have a material impact on the Company’s results of operations, financial condition or liquidity. See Note 2(s), Recent Accounting Pronouncements in the audited consolidated financial statements.
Recent Accounting Pronouncements At December 31, 2024, there were no recently issued accounting pronouncements that have not yet been adopted that management expects would have a material impact on the Company’s results of operations, financial condition or liquidity. See Note 2(r), Recent Accounting Pronouncements in the accompanying audited consolidated financial statements.
However, global economic inflation has recently increased and there is a risk that it will remain elevated for an extended period. Inflation is subject to many macroeconomic factors beyond our control, including global banking policy, political risks, supply chain issues, and the continuing impact of the COVID-19 pandemic.
However, over the last several years, global economic inflation has increased, and there is a risk that it will remain elevated for an extended period. Inflation is subject to many macroeconomic factors beyond our control, including global banking policy, political risks and supply chain issues.
Dollars) -10% +10% GBP $ 3.5 $ (3.5) JPY (0.2) 0.2 EUR (1.5) 1.5 CAD (2.7) 2.7 AUD $ (1.6) $ 1.6 Effects of Inflation Historically, inflation has not had a material effect on the Company’s consolidated results of operations.
Dollar against select foreign currencies would have had on the carrying value of our net assets: December 31, 2024 2023 ($ in millions) -10% +10% -10% +10% GBP $ (2.0) $ 2.0 $ 3.5 $ (3.5) JPY (0.7) 0.7 (0.2) 0.2 EUR (6.3) 6.3 (1.5) 1.5 CAD (2.6) 2.6 (2.7) 2.7 AUD $ (1.0) $ 1.0 $ (1.6) $ 1.6 Effects of Inflation Historically, inflation has not had a material effect on the Company’s consolidated results of operations.
Generally, the Company will match its projected non-U.S. dollar foreign currency underwriting related assets and liabilities with investments and cash in the same currencies to manage our exposure to foreign currency fluctuations and reduce the volatility of foreign exchange gains and losses on our results of operations.
Dollar foreign currency underwriting related assets and liabilities with investments and cash in the same currencies to manage our exposure to foreign currency fluctuations and reduce the volatility of foreign exchange gains and losses on our results of operations. 144 See Note 2(k) Foreign Exchange in the accompanying audited consolidated financial statements for additional information.
Dollars) Credit Spread Shift in Basis Points December 31, 2023 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,295,013 $2,277,611 $2,260,146 $2,242,600 $2,224,888 Percentage change in fair value 1.5 % 0.8 % — % (0.8) % (1.6) % Net increase (decrease) in fair value $34,867 $17,465 $— $(17,546) $(35,258) (Expressed in thousands of U.S.
The following tables summarize the aggregate hypothetical increase (decrease) in the fair value of the Company’s fixed maturity trading portfolio and short-term investments from an immediate parallel shift in credit spreads, assuming the treasury yield curve remains constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: ($ in thousands) Credit Spread Shift in Basis Points December 31, 2024 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,930,844 $2,902,803 $2,874,972 $2,846,318 $2,817,766 Percentage change in fair value 1.9% 1.0% —% (1.0)% (2.0)% Net increase (decrease) in fair value $55,872 $27,831 $— $(28,654) $(57,206) ($ in thousands) Credit Spread Shift in Basis Points December 31, 2023 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $2,295,013 $2,277,611 $2,260,146 $2,242,600 $2,224,888 Percentage change in fair value 1.5% 0.8% —% (0.8)% (1.6)% Net increase (decrease) in fair value $34,867 $17,465 $— $(17,546) $(35,258) Investment in Two Sigma Funds At December 31, 2024, we hold investments in the following Two Sigma Funds: FTV, STV and ESTV.
Removed
The following tables summarize the aggregate hypothetical increase (decrease) in the fair value of the Company’s fixed maturity and short-term investments trading portfolio from an immediate parallel shift in the treasury yield curve, assuming credit spreads remain constant, and reflecting the use of an immediate time horizon, since this presents the worst-case scenario: (Expressed in thousands of U.S.
Added
Assuming a hypothetical 10% and 30% increase or decrease in the value of our investments in Two Sigma Funds as of December 31, 2024, the carrying value of these investments would have increased or decreased by approximately $93.9 million and $281.8 million, pre-tax, respectively.
Removed
Dollars) Interest Rate Shift in Basis Points December 31, 2022 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $1,589,719 $1,567,448 $1,545,587 $1,524,092 $1,502,992 Percentage change in fair value 2.9 % 1.4 % — % (1.4) % (2.8) % Net increase (decrease) in fair value $44,132 $21,861 $— $(21,495) $(42,595) 144 Credit Spread Risk The Company considers the impact of credit spread movements on the fair value of our fixed maturity and short-term investments trading portfolio.
Added
Generally, the Company will match its projected non-U.S.
Removed
The following tables summarize the aggregate hypothetical increase (decrease) in the fair value of the Company’s fixed maturity investments and short-term investments trading portfolio from an immediate parallel shift in credit spreads, assuming the treasury yield curve remains constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: (Expressed in thousands of U.S.
Added
The following table summarizes the estimated effects that a hypothetical 10% movement in the value of the U.S.
Removed
Dollars) Credit Spread Shift in Basis Points December 31, 2022 -100 -50 Base 50 100 Fair value of fixed income securities and short-term investments $1,569,513 $1,557,501 $1,545,587 $1,533,742 $1,522,005 Percentage change in fair value 1.5 % 0.8 % — % (0.8) % (1.5) % Net increase (decrease) in fair value $23,926 $11,914 $— $(11,845) $(23,582) Investment in Two Sigma Funds We hold investments in the following Two Sigma Funds: FTV, STV and ESTV.
Removed
See Note 2(1) Foreign Exchange in the audited consolidated financial statements for additional information. 145 The following table summarizes the estimated effects that a hypothetical 10% movement in the value of the U.S. dollar against select foreign currencies would have had on the carrying value of our net assets: December 31, 2023 (Expressed in millions of U.S.

Other HG 10-K year-over-year comparisons