Hamilton Insurance Group (HG)

Specialty insurance company Hamilton Insurance Group (NYSE:HG) announced better-than-expected revenue in Q3 CY2025, with sales up 30.2% year on year to $667.7 million. Its GAAP profit of $1.32 per share was 64.8% above analysts’ consensus estimates.

Company Overview

Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE:HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.

This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. The primary headwind remains the immense and concentrated exposure to large-scale catastrophe losses, as the growing impact of climate change challenges traditional risk models and creates significant earnings volatility. Additionally, they face the risk of adverse prior-year reserve development, where claims prove more costly than anticipated, while the eventual influx of new capital from alternative sources threatens to soften the market and compress future returns.

Hamilton Insurance Group competes with established specialty insurers and reinsurers including Arch Capital Group Ltd., AXIS Capital Holdings Limited, Beazley plc, Hiscox Ltd, Lancashire Holdings Limited, Markel Corporation, and RenaissanceRe Holdings Ltd., as well as various Lloyd's syndicates that operate in the specialty insurance market.

In general, insurance companies earn revenue from three primary sources. The first is the core insurance business itself, often called underwriting and represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Hamilton Insurance Group’s annualized revenue growth rate of 43.9% over the last two years was incredible for an insurance business.

This quarter, Hamilton Insurance Group reported wonderful year-on-year revenue growth of 30.2%, and its $667.7 million of revenue exceeded Wall Street’s estimates by 10.3%.

Net premiums earned made up 78.4% of the company’s total revenue during the last four years, meaning insurance operations are Hamilton Insurance Group’s largest source of revenue.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

Hamilton Insurance Group’s net premiums earned has grown at a 26.2% annualized rate over the last two years, much better than the broader insurance industry but slower than its total revenue.

Hamilton Insurance Group produced $523 million of net premiums earned in Q3, up a hearty 16.5% year on year. But this wasn’t enough juice to meet Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

The combined ratio sums the costs of underwriting (salaries, commissions, overhead) as well as what an insurer pays out in claims (losses) and divides it by net premiums earned. If a company boasts a combined ratio under 100%, it is underwriting profitably. If above 100%, it is losing money on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last two years, Hamilton Insurance Group’s combined ratio has increased by 5.4 percentage points, going from 90% to 95.4%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Hamilton Insurance Group’s combined ratio came in at 87.8% this quarter, falling short of analysts’ expectations by 50 basis points (100 basis points = 1 percentage point). This result was 5.8 percentage points better than the same quarter last year.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

To investors’ benefit, Hamilton Insurance Group’s BVPS grew at an exceptional 24.9% annual clip over the last two years.

Over the next 12 months, Consensus estimates call for Hamilton Insurance Group’s BVPS to grow by 12.1% to $26.37, solid growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Hamilton Insurance Group currently has $149.7 million of debt and $2.66 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.1×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

It was good to see Hamilton Insurance Group beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 11.4% to $26.23 immediately after reporting.

Updated: December 3, 2025 at 11:54 PM EST

Before investing in or passing on Hamilton Insurance Group, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Hamilton Insurance Group isn’t a terrible business, but it doesn’t pass our bar. Although the company’s net premiums earned growth was exceptional over the last two years, the downside is its projected EPS for the next year is lacking. On top of that, the company’s declining EPS over the last one years makes it a less attractive asset to the public markets.

Hamilton Insurance Group’s P/B ratio based on the next 12 months is 1x. This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $28.79 on the company (compared to the current share price of $26.26).