Hamilton Insurance Group's underwriting profit fell sharply in the third quarter, as reserve strengthening linked to the Ukraine conflict pushed its combined ratio up nearly 10 points, despite strong premium growth.
The Bermuda-based specialty insurer and reinsurer reported underwriting income of $15.5 million, down from $64.1 million a year earlier. Its combined ratio rose to 97.3% from 87.8%. Gross premiums written grew 17.3% to $819.7 million.
Strong investment returns kept overall profit high. Hamilton reported operating income of $179.9 million, equivalent to an annualised operating return on equity of 24.9%, largely thanks to $144.7 million from the Two Sigma Hamilton Fund. Net income fell to $81.5 million from $136.2 million.
Catastrophe losses came almost entirely from conflict. Hamilton booked $53.9 million of catastrophe losses, net of reinsurance, in the quarter. That included $47.1 million of adverse prior-year development relating to the Ukraine conflict, and $6.8 million from the Middle East conflict.
Most of the Ukraine-related losses fell in the Bermuda segment, which took $42.6 million of the adverse development. That segment’s combined ratio jumped to 97.7% from 80.7%. Hamilton did not say which classes were affected.
Hamilton also reported one large loss in its specialty and property reinsurance classes, which added to the current-year attritional loss ratio.
The business mix is changing. Hamilton said its higher current-year attritional loss ratio, up 2.1 points to 57.5%, was mainly driven by more casualty reinsurance business, as well as the large loss. More casualty reinsurance also pushed up the acquisition cost ratio by 1.5 points.
Underlying reserves remained favourable outside the war losses. Hamilton released $27.2 million from prior years, mainly in specialty classes.
The International segment, which includes Hamilton’s Lloyd’s operations, grew premiums 20.1% to $456.3 million. Growth came from new and existing business in specialty and casualty insurance and specialty reinsurance, and the segment’s combined ratio was 97.1%. The Bermuda segment grew 13.9% to $363.4 million, mainly from casualty and specialty reinsurance.
Chief executive Pina Albo said the company had delivered consistent performance despite a transitioning market and ongoing geopolitical tensions.
For the first nine months, Hamilton’s combined ratio was 94.1%, with underwriting income of $102.2 million.
Hamilton’s results show how conflict-related losses keep resurfacing years after the events that caused them. The Ukraine development is a reminder that war and political risk exposures can take years to settle, as coverage disputes and legal cases play out.
The move into casualty reinsurance is also notable. As property catastrophe pricing softens, reinsurers looking for growth are turning to casualty, where higher attritional loss ratios and longer development periods bring different risks.
For brokers placing specialty and reinsurance business, Hamilton’s continued double-digit growth shows it remains an active market for both.
