# Hamilton Insurance Group, Ltd. (HG) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Hamilton Insurance Group, Ltd.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1593275/000159327524000028/hg-20231231.htm
Accession: 0001593275-24-000028
Filing date: 2024-03-07
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/HG/
All MD&A years: /company/HG/mda/
Next year: /company/HG/mda/fy2024/ (FY 2024)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the “Selected Consolidated Financial Data” and our audited consolidated financial statements and related notes thereto 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. 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

[[GREPCENT_TABLE]]
[["","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"]]
[[/GREPCENT_TABLE]]

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 intend to continue growing our diverse book of business by responding to changing market conditions, prudently managing our capital, and driving sustainable shareholder returns.

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 operate three principal underwriting platforms (Hamilton Global Specialty, Hamilton Select and Hamilton Re) that are categorized into two reporting business segments (International and Bermuda):

•International: International consists of business written out of our Lloyd’s syndicate and subsidiaries based in the United Kingdom, Ireland, and the United States, and includes the Hamilton Global Specialty and Hamilton Select platforms.

•Hamilton Global Specialty focuses predominantly on commercial specialty and casualty insurance for

medium to large-sized accounts and specialty reinsurance products written by Lloyd’s Syndicate 4000

and HIDAC. 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. 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. Hamilton Re writes property, casualty and specialty reinsurance business on a global basis and also offers high excess Bermuda market specialty insurance products, predominantly for large U.S. commercial risks. Hamilton Re US writes casualty and specialty reinsurance business on a global basis.

Our International segment includes both the Hamilton Global Specialty and Hamilton Select platforms. Hamilton Global Specialty focuses predominantly on commercial specialty and casualty insurance products for medium to large-sized accounts and specialty reinsurance for a variety of global insurance companies. Its business is distributed via Lloyd’s Syndicate 4000 and HIDAC in Ireland.

Hamilton Select, our recently launched U.S. domestic E&S carrier, writes casualty insurance for small to midsized commercial clients in the hard-to-place niche of the U.S. E&S market. Hamilton Select does not write any property business.

Our Bermuda segment encompasses the Hamilton Re platform on which we write property, casualty and specialty reinsurance business on a global basis as well as high excess insurance products, predominantly to large U.S.-based commercial clients. Hamilton Re US writes casualty and specialty reinsurance business predominantly for U.S.-domiciled insurers.

We seek to prudently manage our capital with the objective of effectively navigating different market conditions and generating strong underwriting margins throughout all market cycles. Our scaled and diversified platforms and product offerings, and our broad industry relationships provide significant opportunity to underwrite our chosen classes of property, casualty and specialty insurance and reinsurance as market opportunities arise. 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. 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. E&S market has benefited from a strong rate environment and increased submissions as business has shifted into the non-admitted market from the admitted market. Non-admitted insurers are able to cover unique and hard-to-place risks because they have flexibility of rate and form and can accommodate the unique needs of insureds who are unable to obtain coverage from admitted carriers. We believe the access our three underwriting platforms have to U.S. E&S insurance business will allow us to build a robust and diversified book of business and achieve our profitable growth objectives throughout various market cycles.

Reinsurance business offers a particularly attractive opportunity given the favorable rating environment and reduction of capacity at this time in the cycle and is expected to accelerate growth opportunities for us in the near term. A number of factors, including economic and social inflation, combined with higher interest rates and increases in the frequency and severity of natural catastrophe events in recent years, have created a supply/demand imbalance and are driving the most favorable market conditions seen in decades. We are a recognized market with deep client and broker relationships and have low counter-party credit concentration with many of our insurance partners, providing ample headroom for us to grow. We are well positioned to deploy capital quickly, efficiently and profitably through writing more reinsurance business, as well as retaining more of our own business.

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. We plan to continue to optimize our investment portfolio through a balanced allocation of invested assets and maintain the flexibility to adjust this allocation as needed. We believe our strategy of disciplined underwriting growth, balanced with our investment platform, will drive our ability to create shareholder value.

We have a unique and long-term investment management relationship with Two Sigma. Founded in 2001, Two Sigma aims to consistently generate alpha in liquid global markets across a range of conditions using a disciplined, scientific approach and managed approximately $60 billion of assets across affiliates at December 31, 2023. The TS Hamilton Fund is a dedicated fund-of-one managed by Two Sigma with exposures to certain Two Sigma macro and equity strategies and is designed to provide low-correlated absolute returns, primarily by combining multiple hedged and leveraged systematic investment strategies with proprietary risk management investment optimization and execution techniques. The TS Hamilton Fund invests in a broad set of financial instruments and is primarily focused on liquid strategies in global equity, FX markets, exchange-listed and over the counter options (and their underlying instruments) and other derivatives. This liquidity profile fits well with our business, while also providing the benefit of access to a dedicated fund-of-one.

Two Sigma has broad discretion to allocate invested assets to different opportunities. Its current investments include FTV, STV and ESTV. 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.

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. 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. 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. Similarly, the Company incorporates the anticipated effects of inflation in our ultimate estimate of the reserves for unpaid losses and loss adjustment expenses on certain long-tail lines of business. As with general economic inflation, the actual effects of inflation on reserves for losses and loss adjustment expenses and results of operations cannot be accurately known until all of the underlying claims are ultimately settled.

Taxes

On December 27, 2023, the Bermuda Government enacted a 15% corporate income tax that will generally become effective for Bermuda domiciled entities on or after January 1, 2025. The legislation defers the effective date until January 1, 2030 for so long as the consolidated group operates in six or fewer jurisdictions, has less than €50 million in tangible assets and none of its Bermuda entities are subject to the Income Inclusion Rule in any other jurisdiction. 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. Hamilton Group expects to be exempt from the worldwide minimum tax until January 1, 2030, pursuant to an exemption similar to that available in Bermuda. The act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime, and, as a result, the Company has recorded a deferred tax benefit of $35.1 million in the quarter ended December 31, 2023.

96

SELECTED CONSOLIDATED FINANCIAL DATA

In 2022, the Company changed its fiscal year from November 30 to December 31. References to the current year in this document refer to the calendar year ended December 31, 2023. The following tables set forth our selected consolidated financial data and other financial information at the end of and for each of the years in the five-year period ended December 31, 2023. The selected consolidated financial data should be read in conjunction with our consolidated audited financial statements and related notes thereto and the other information in this Form 10-K.

Results of Operations

[[GREPCENT_TABLE]]
[["($ in thousands, except shares and per share amounts)","For the Years Ended"],["December 31,","","November 30,"],["2023","","2022","","2021","","2020","","2019"],["Gross premiums written","$","1,951,038","","","$","1,646,673","","","$","1,446,551","","","$","1,086,540","","","$","730,941"],["Net premiums written","1,480,438","","","1,221,864","","","1,085,428","","","729,323","","","489,467"],["Net premiums earned","1,318,533","","","1,143,714","","","942,549","","","707,461","","","457,391"],["Net realized and unrealized gains (losses) on investments","209,399","","","86,357","","","352,193","","","5,701","","","243,876"],["Net investment income (loss)(1)","30,456","","","(21,487)","","","(43,217)","","","(38,600)","","","(39,629)"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss)","239,855","","","64,870","","","308,976","","","(32,899)","","","204,247"],["Third party fee income(2)","18,234","","","11,631","","","21,022","","","15,625","","","5,988"],["Losses and loss adjustment expenses","714,603","","","758,333","","","640,560","","","505,269","","","390,416"],["Acquisition costs","309,148","","","271,189","","","229,213","","","168,327","","","108,277"],["Other underwriting expenses(3)","183,165","","","157,540","","","149,822","","","126,869","","","83,103"],["Underwriting income (loss)(4)","129,851","","","(31,717)","","","(56,024)","","","(77,379)","","","(118,417)"],["Net income (loss)","280,287","","","(29,935)","","","249,839","","","(185,517)","","","35,397"],["Net income (loss) attributable to non-controlling interest (5)","21,560","","","68,064","","","61,660","","","24,930","","","67,825"],["Net income (loss) attributable to common shareholders","$","258,727","","","$","(97,999)","","","$","188,179","","","$","(210,447)","","","$","(32,428)"],["Diluted income (loss) per share attributable to common shareholders","2.44","","","$","(0.95)","","","$","1.82","","","$","(2.05)","","","$","(0.32)"],["Combined ratio","90.1","%","","102.8","%","","106.0","%","","110.9","%","","126.0","%"],["Return on average common shareholders' equity","13.9","%","","(5.7)","%","","11.1","%","","(12.4)","%","","(1.8)","%"]]
[[/GREPCENT_TABLE]]

(1) Net investment income (loss) is presented net of investment management fees.

(2) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. 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. 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. 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. 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.

(5) Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations - Corporate and Other'” for further details.

97

SELECTED CONSOLIDATED FINANCIAL DATA

Balance Sheet Data

[[GREPCENT_TABLE]]
[["($ in thousands, except shares and per share amounts)","As at"],["December 31,","","November 30,"],["2023","","2022","","2021","","2020","","2019"],["Total investments","3,111,616","","2,286,323","","2,464,622","","2,174,586","","1,973,938"],["Cash and cash equivalents","794,509","","1,076,420","","797,793","","642,838","","825,084"],["Total investments and cash and cash equivalents","3,906,125","","3,362,743","","3,262,415","","2,817,424","","2,799,022"],["Total assets","6,671,355","","5,818,965","","5,611,607","","4,905,363","","4,928,154"],["Reserve for losses and loss adjustment expenses","3,030,037","","2,856,275","","2,379,027","","2,054,628","","1,957,989"],["Unearned premiums","911,222","","718,188","","620,994","","479,529","","505,350"],["Term loan, net of issuance costs","149,830","","149,715","","149,875","","149,682","","149,488"],["Total shareholders' equity","$","2,047,850","","$","1,664,183","","$","1,787,445","","$","1,596,750","","$","1,801,765"],["Common shares outstanding","110,225,103","","103,087,859","","102,540,769","","102,454,307","","102,218,585"],["Tangible book value per common share","$","17.75","","$","15.30","","$","16.29","","$","14.46","","$","16.42"],["Book value per common share","$","18.58","","$","16.14","","$","17.43","","$","15.58","","$","17.63"]]
[[/GREPCENT_TABLE]]

Summary of Critical Accounting Estimates

The Company’s audited consolidated financial statements have been prepared in accordance with U.S. GAAP and include certain amounts that are inherently uncertain and judgmental in nature. As a result, management is required to make best estimates and assumptions that affect the reported amounts.

The following discussion addresses those accounting policies and estimates that we believe are most critical to our operations and require the most difficult, subjective and complex judgment. Actual events that differ significantly from the underlying assumptions and estimates used in these statements may result in materially favorable or unfavorable adjustments to prior estimates that affect our results of operations, financial condition and liquidity. The sensitivity estimates that follow are based on the Company’s assessment of reasonably likely outcomes.

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.

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. 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 reviews loss reserve estimates at each quarterly reporting date and considers all significant facts and circumstances known at that particular point in time. As additional experience and other data becomes available and/or laws and legal interpretations change, management may adjust previous estimates. Adjustments are recognized in the period in which they are determined and may impact that period's underwriting results either favorably (when current estimates are lower than previous estimates) or unfavorably (when current estimates are higher than previous estimates).

98

Gross loss reserves for each of the reportable segments, segregated between case reserves and IBNR, by reserve class, as at December 31, 2023 and 2022, respectively, are shown below:

[[GREPCENT_TABLE]]
[["","2023","","2022"],["($ in thousands)","International","","Bermuda","","Total","","International","","Bermuda","","Total"],["Case reserves:"],["Property","$","65,161","","","$","162,480","","","$","227,641","","","$","118,224","","","$","189,840","","","$","308,064"],["Casualty","226,749","","","173,903","","","400,652","","","230,134","","","134,194","","","364,328"],["Specialty","147,825","","","49,814","","","197,639","","","100,882","","","48,864","","","149,746"],["Total case reserves","439,735","","","386,197","","","825,932","","","449,240","","","372,898","","","822,138"],["IBNR:"],["Property","106,044","","","154,093","","","260,137","","","144,357","","","193,944","","","338,301"],["Casualty","784,796","","","550,048","","","1,334,844","","","649,402","","","471,196","","","1,120,598"],["Specialty","366,895","","","215,807","","","582,702","","","327,328","","","225,650","","","552,978"],["Total IBNR","1,257,735","","","919,948","","","2,177,683","","","1,121,087","","","890,790","","","2,011,877"],["Total Other","19,952","","","6,470","","","26,422","","","12,083","","","10,177","","","22,260"],["Total reserves","$","1,717,422","","","$","1,312,615","","","$","3,030,037","","","$","1,582,410","","","$","1,273,865","","","$","2,856,275"]]
[[/GREPCENT_TABLE]]

Case Reserves

With respect to insurance business, the Company is generally notified of losses by brokers and/or insureds. The Company’s claims personnel use this and other relevant information to estimate ultimate covered losses arising from the claim, including the cost of claims adjustment administration and settlement, including any legal or other fees. These estimates reflect the judgment of the Company’s claims personnel based on their experience and knowledge, the nature of the specific claim and, where appropriate, the advice of legal counsel, third party claims administrators and loss adjusters. In syndicated markets, such as Lloyd’s, the Company’s case reserves may also be based in part on information provided by the lead insurer.

With respect to reinsurance business, the Company is typically notified of losses by brokers and/or ceding companies. For excess of loss contracts, the Company is typically notified of insured losses on specific contracts in the form of an individual loss notification and records a case reserve for the estimated ultimate liability arising from the claim. For contracts written on a proportional basis, the Company typically receives aggregated claims information in the form of a loss bordereaux and records a case reserve for the estimated ultimate liability arising from the claim based on that information. Proportional reinsurance contracts typically require that losses in excess of pre-defined amounts be separately notified so that the Company can adequately evaluate them. The Company’s claims department evaluates each specific loss notification received and, based on their knowledge and experience, may record additional case reserves when a ceding company’s reserve for a claim is considered inadequate. The Company also undertakes cedant audits, using outsourced legal and industry experience where necessary. This allows the Company to review different cedants’ claims handling practices, understand the level of prudence employed by different cedants and ensure that reserves are consistent with exposures, adequately established, and properly reported in a timely manner.

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”). Reporting lags may arise from a number of factors, including but not limited to the nature of the loss, the use of intermediaries and the complexity of the claims adjusting process. The lack of specific information means the Company must make estimates. IBNR is calculated by deducting incurred losses (i.e. paid losses and case reserves) from management’s best estimate of the ultimate losses. Unlike case reserves, which are established at the contract level, IBNR reserves are generally established at an aggregate level and cannot be identified as reserves for a particular loss event or contract.

99

Reserving Methodology

When conducting actuarial analysis, management organizes the Company’s recorded reserves into exposure groupings based on reasonably homogeneous loss development characteristics, underwriting years and reserving classes. Management periodically reviews the exposure groupings and may make changes to the groupings over time as the Company’s business changes.

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 estimated loss ratio may be based on pricing information and/or industry data and/or historical claims experience revalued to the year under review;

•Bornhuetter-Ferguson method: The Bornhuetter-Ferguson method uses as a starting point an assumed IELR and blends in the loss ratio, which is implied by the claims experience to date using benchmark loss development patterns on paid claims data or reported claims data. Although the method tends to provide less volatile indications at early stages of development and reflects changes in the external environment, it can be slow to react to emerging loss development and may, if the IELR proves to be inaccurate, produce loss estimates which take longer to converge with the final settlement value of loss; and

•Loss development method: The loss development method uses actual loss data and the historical development profiles on older underwriting years to project more recent, less developed years to their ultimate position.

Our actuaries may use other approaches in addition to those described, and supplement these methods with judgement where they deem appropriate, depending upon the characteristics of the class of business and available data.

For certain significant events, such as natural catastrophes or large man-made catastrophic events, traditional actuarial methods may not be suitable for estimating losses for reasons that may include lack of claims data or the existence of additional risks related to the specific event circumstances. For example, the estimates of loss reserves related to hurricanes and earthquakes can be affected by factors including, but not limited to, the inability to access portions of impacted areas, infrastructure disruptions, the complexity of the loss scenario, legal and regulatory uncertainties, complexities involved in estimating business interruption losses and additional living expenses, the impact of demand surge, fraud, and the limitations on available information. For hurricanes, additional complex coverage factors may include determining whether damage was caused by flooding or wind, evaluating general liability and pollution exposures and mold damage. Other recent examples include possible claims arising from the COVID-19 pandemic and the Ukraine conflict, where additional risks included material uncertainties around whether insured loss events had occurred, the timing of such events, and uncertainty over how contract wording applies in the case of insurance and reinsurance policies.

The timing of events can also affect the level of information available to the Company to estimate loss reserves for that reporting period, and therefore the reserving methods adopted. For example, for events occurring near the end of a reporting period, greater reliance may be placed on information derived from catastrophe models, and, where available and relevant, additional quantitative and qualitative exposure analyses, reports and communications of ground up losses from ceding companies, and development patterns for historically similar events. Due to the inherent uncertainty in estimating losses from such events, these estimates are subject to variability, which increases with the severity and complexity of the underlying event.

In addition to the Company’s quarterly reserving process, an independent actuarial review is carried out semi-annually by a leading independent actuarial consulting firm in order to provide additional insight into the reserving process, specific industry trends and the overall level of the Company’s loss reserves. Management reviews the information provided in the independent actuarial review in determining its own best estimate of reserves.

Management believes that it is prudent in its reserving assumptions and methodologies. However, we cannot be certain that our ultimate loss payments will not vary, perhaps materially, from the initial estimates made. We note that the process of estimating required reserves, by its very nature, involves uncertainty and therefore the ultimate claims may fall outside the actuarial range. The level of uncertainty can be influenced by many factors, including but not limited to unknown future in-claim value inflation, the existence of coverage with long duration reporting patterns, changes in the speed of claims data being received and processed, contractual uncertainties for unusual claim events, as well as the other factors previously discussed.

100

If we determine that adjustments to an earlier estimate are appropriate, such adjustments are recorded in the reporting period in which they are identified and may have a significant favorable or unfavorable impact on that period’s results of operations. We regularly review and update these estimates using the most current information available.

Management’s Best Estimate

The Company’s recorded reserves at each reporting date reflect management’s best estimate of ultimate reserve for losses and loss adjustment expenses at that date. Management completes quarterly reserve studies for each exposure group for its Bermuda and International segments. Management analyzes significant variances between internal and external actuarial estimates, as well as any relevant additional market, underwriting or claims data that may be available and relevant for setting management’s best estimate of ultimate reserves. As a result of these considerations, the selected reserve estimate may be higher or lower than the external actuarial indicated estimate.

The Company’s best estimates are point estimates within a range of reasonable actuarial estimates. To provide an indication of the possible size of this range, in the following table we have compared the point estimate for net losses and loss adjustment expenses recorded by each reportable segment with a range of reasonable actuarial estimates at December 31, 2023:

[[GREPCENT_TABLE]]
[["","2023"],["($ in thousands)","Recorded Point Estimate","","High","","Low"],["International","$","836,155","","","$","976,600","","","$","681,500"],["Bermuda","1,032,805","","","$","1,141,200","","","$","883,000"],["Net reserve for losses and loss adjustment expenses","$","1,868,960"]]
[[/GREPCENT_TABLE]]

It is important to note that the ‘High’ and ‘Low’ estimates above are not intended to be “worst-case” or “best-case” scenarios, and it is possible that final settlements of the reserves for these losses and loss adjustment expenses could fall outside of these ranges.

It is not appropriate to add together the ranges of each reportable segment in an effort to determine a high and low range around the Company’s total reserve for losses and loss adjustment expenses.

Prior Year Reserve Development

Prior year reserve development arises from changes to estimates for losses and loss adjustment expenses related to loss events that occurred in previous periods. Favorable prior year reserve development indicates that current estimates are lower than previous estimates, while unfavorable prior year reserve development indicates that current estimates are higher than previous estimates. The following table presents net prior year reserve development by reportable segment:

[[GREPCENT_TABLE]]
[["","Net (favorable) unfavorable prior year reserve development"],["($ in thousands)","International","","Bermuda","","Total"],["Year ended December 31, 2023","$","(22,498)","","","$","6,881","","","$","(15,617)"],["Year ended December 31, 2022","(26,833)","","","6,230","","","(20,603)"],["Year ended November 30, 2021(1)","$","12,600","","","$","(821)","","","$","11,779"]]
[[/GREPCENT_TABLE]]

(1) Includes the U.S. GAAP accounting impact of a loss portfolio transfer purchased in 2020.

For a detailed discussion of net (favorable) unfavorable prior year reserve development by reportable segment for the years ended December 31, 2023 and 2022, and November 30, 2021 see Results of Operations.

101

Claim Tail Analysis

One of the key selection characteristics for loss exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short-tail lines, for example, property classes. On the other hand, business in which claims tend to take longer to be reported and settled are commonly referred to as long-tail lines, for example, casualty classes.

Although estimates of ultimate losses for short-tail business are usually inherently more certain than for medium and long-tail business, significant judgment is still required. Additionally, the inherent uncertainties relating to catastrophe events add further complexity to potential exposure estimation. Further, the Company uses MGAs and other producers for certain business, which can delay the receipt of loss information.

Although the Company uses similar actuarial methodologies for both short-tail and long-tail lines in respect of non-headline loss events, the faster reporting of experience for the short-tail lines allows management to have greater confidence in its estimates of ultimate losses for short-tail lines at an earlier stage than for long-tail lines. As a result, the Company’s estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for headline loss events, generally exhibit less volatility than those for the longer tail lines. For longer tail lines, management utilizes exposure-based methods to estimate the Company’s ultimate losses, especially for immature years. 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.

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 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. 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. 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. The degree of stress applied to the expected loss ratio and loss development patterns were selected to be illustrative, and should not be considered to be “best case” or “worst case” for these assumptions. As such, it is important to recognize that future variations may be more or less than the amounts shown in the following table.

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The effect of reasonably likely changes in the two key assumptions used to estimate the gross reserve for losses and loss adjustment expenses at December 31, 2023 was as follows:

[[GREPCENT_TABLE]]
[["($ in thousands)","Sensitivity of Gross Reserve for Losses and Loss Adjustment Expenses"],["December 31, 2023"],["Assumptions","Higher Expected Loss Ratios","","Slower Loss Development Patterns","","Lower Expected Loss Ratios","","Faster Loss Development Patterns"],["Reserving class selected assumptions:"],["Property","5%","","+1 Q","","(5)%","","-1 Q"],["Casualty","5%","","+2 Q","","(5)%","","-2 Q"],["Specialty","5%","","+1 Q","","(5)%","","-1 Q"],["International Segment"],["Increase (decrease) in loss reserves:"],["Property","$","3,246","","","$","5,709","","","$","(3,199)","","","$","(4,833)"],["Casualty","33,287","","","70,926","","","(29,016)","","","(64,705)"],["Specialty","18,401","","","30,437","","","(16,883)","","","(29,179)"],["Bermuda Segment"],["Increase (decrease) in loss reserves:"],["Property","$","13,759","","","$","10,592","","","$","(13,225)","","","$","(8,390)"],["Casualty","44,743","","","20,405","","","(41,268)","","","(17,014)"],["Specialty","12,901","","","6,579","","","(12,212)","","","(6,080)"]]
[[/GREPCENT_TABLE]]

The results show the cumulative increase (decrease) in loss reserves across all years. Each of the impacts set forth is estimated individually, without consideration for any correlation among key assumptions or among reserve classes. Therefore, it would be inappropriate to take each of the amounts and add them together in an attempt to estimate total volatility. Additionally, it is noted that in some instances, for example, the projection of catastrophe estimates, development patterns are not appropriate as more bespoke techniques are used.

Premiums Written and Earned

Gross Premiums Written

Revenues primarily consist of insurance and reinsurance premiums generated by the Company’s underwriting operations. Recognition of gross premiums written varies by policy or contract type.

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. 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.

The remainder of the Company’s insurance business is written on a line slip or proportional basis, where the Company assumes an agreed proportion of the premiums and losses of a particular risk or group of risks along with other unrelated insurers. As premiums for this business are not identified in the policy, estimated premiums are recorded at the inception of the policy based on information provided by clients through brokers. Management reviews these premium estimates on a quarterly basis and any premium estimate adjustments are recognized in the period in which they are determined. Gross premiums written on a line slip or proportional basis accounted for 26.8%, 28.4% and 27.1% of the Company’s gross premiums written for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively.

103

The Company’s reinsurance business, which comprises 43% of total gross premiums written, generally provides cover to cedants on an excess of loss or on a proportional basis. In most cases, cedants seek protection for business that they have not yet written when they enter into agreements and therefore cedants must estimate the underlying premiums that they will cede to the Company.

For proportional reinsurance contracts, the Company shares proportionally in both the premiums and losses of the cedant and pays the cedant a commission to cover the cedant’s acquisition costs. Gross premiums written are recognized on a quarterly basis as the underlying contracts incept over the term of the contract, based on estimates received from ceding companies. Management reviews these premium estimates on a quarterly basis and evaluates their reasonability in light of actual premiums reported by the cedants and brokers, supplemented by the Company’s own estimates based on experience and familiarity with each market.

As a result of this review process, any adjustments to premium estimates are recognized in the period in which they are determined. Changes in premium estimates could be material to gross premiums written in the period. Changes in premium estimates could also be material to net premiums earned in the period in which they are determined as any adjustment may be substantially or fully earned. Gross premiums written for proportional reinsurance contracts, including adjustments to premium estimates established in prior years, accounted for 20.7%, 19.0% and 18.1% of the Company’s gross premiums written for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively.

For excess of loss reinsurance contracts, the Company is typically exposed to loss events in excess of a predetermined dollar amount or loss ratio and receives a fixed or an initial minimum deposit premium. For excess of loss reinsurance contracts, minimum deposit premiums are generally considered to be the best estimate of premiums at the inception of the contract. The minimum deposit premium is typically adjusted at the end of the contract period to reflect changes in the underlying risks in force during the contract period. Any adjustments to minimum or deposit premiums are recognized in the period in which they are determined. Gross premiums written for excess of loss reinsurance contracts accounted for 22.3%, 24.0% and 25.1% of the Company’s gross premiums written for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively.

Many of the Company’s excess of loss reinsurance contracts also include provisions for automatic reinstatement of coverage in the event of a loss that has exhausted the initial amount of cover provided. Reinstatement premiums are recognized as written premium when a loss event occurs where coverage limits for the remaining life of the contract are reinstated under the contract.

Net Premiums Earned

Premiums are earned evenly over the period in which the Company is exposed to the underlying risk. Changes in circumstances subsequent to contract inception can impact the term of each earning period. For example, when exposure limits for a contract are reached, any associated unearned premiums are recognized as fully earned.

Fixed premium insurance policies and excess of loss reinsurance contracts are generally written on a “losses occurring” or “claims made” basis. Consequently, premiums are earned evenly over the contract term, which is typically 12 months.

Line slip or proportional insurance policies and proportional reinsurance contracts are generally written on a “risks attaching” basis, covering claims that relate to the underlying policies written during the terms of these contracts. As the underlying business incepts throughout the contract term, which is typically one year, and the underlying business typically has a one-year coverage period, these premiums are generally earned over a 24-month period.

104

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. 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. 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.

The Company enters into proportional or quota share treaties, whereby the Company cedes a portion of its premiums and losses related to a certain class or classes of business to a reinsurer, and into excess of loss or facultative reinsurance agreements, whereby the Company is reinsured for a specific event or exposure, often for amounts in excess of a predetermined dollar amount.

The Company’s reinsurance business also obtains reinsurance whereby another reinsurer contractually agrees to indemnify it for all or a portion of the reinsurance risks underwritten. Such arrangements, where one reinsurer provides reinsurance to another reinsurer, are usually referred to as retrocessional reinsurance arrangements and help to reduce exposure to large losses and manage risk. In addition, the Company’s reinsurance business participates in “common account” retrocessional arrangements for certain pro rata treaties. Such arrangements reduce the effect of individual or aggregate losses to all companies participating on such treaties, including the reinsurers and the ceding company.

On February 6, 2020, the Company entered into a loss portfolio transfer agreement (the "LPT"), under which the insurance liabilities arising from certain casualty risks for the Lloyd's Years of Account ("YOA") 2016, 2017 and 2018 were retroceded to a third party in exchange for total premium of $72.1 million. This transaction was accounted for as retroactive reinsurance under which cumulative ceded losses exceeding the LPT premium are recognized as a deferred gain liability and amortized into income over the settlement period of the ceded reserves in proportion to cumulative losses collected over the estimated ultimate reinsurance recoverable. The amount of the deferral is recalculated each reporting period based on updated ultimate loss estimates. Consequently, cumulative adverse development subsequent to the signing of the LPT may result in significant losses from operations until periods when the deferred gain is recognized as a benefit to earnings.

In December 2020, Hamilton Group sponsored an industry loss index-triggered catastrophe bond through the issuance of Series 2020-1 Class A Principal-at-Risk Variable Rate Notes by Singapore-domiciled Easton Re Pte, Ltd. (“Easton Re”), which provided the Company's operating platforms with multi-year risk transfer capacity of $150 million to protect against named storm and earthquake risk in the United States. The risk period for Easton Re was from January 1, 2021 to December 31, 2023. The Company recorded reinsurance premiums ceded of $7.2 million, $6.3 million and $7.8 million during the years ended December 31, 2023 and 2022, and the year ended November 30, 2021, respectively.

In December 2023, Hamilton Group sponsored a new industry loss index-triggered catastrophe bond through the issuance of Series 2024-1 Class A Principal-at-Risk Variable Rate Notes by Bermuda-domiciled Easton Re Ltd. (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. 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. Estimating unpaid losses and loss adjustment expenses recoverable can be more subjective than estimating the underlying reserve for losses and loss adjustment expenses, discussed above. In particular, unpaid losses and loss adjustment expenses recoverable may be affected by deemed inuring reinsurance, industry losses reported by various statistical reporting services, and the magnitude of the Company’s recorded IBNR reserves, amongst other factors. Amounts for unpaid losses and loss adjustment expenses recoverable are recorded as assets, predicated on the reinsurers’ ability to meet their obligations under the reinsurance agreements.

The majority of the balance that the Company has estimated and accrued as unpaid losses and loss adjustment expenses recoverable will not be due for collection until some point in the future. The amounts recoverable that will ultimately be collected are subject to uncertainty due to the ultimate ability and willingness of reinsurers to pay the Company’s claims at a future point in time, for reasons including insolvency or elective run-off, contractual dispute and various other reasons.

To help mitigate these risks, the Company maintains a list of approved reinsurers, performs credit risk assessments for potential new reinsurers, regularly monitors the financial condition of approved reinsurers with consideration for events which may have a material impact on their creditworthiness and monitors concentrations of credit risk. This assessment considers a wide range of individual attributes, including a review of the counterparty’s financial strength, industry position and other qualitative factors. If reinsurers do not meet certain specified requirements, they are required to provide the Company with collateral.

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.

The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the “exit price”). Instruments that the Company owns are marked to bid prices. Fair value measurements are not adjusted for transaction costs.

Fair value measurement accounting guidance also establishes a fair value hierarchy that prioritizes the inputs to the respective valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The three levels of the fair value hierarchy are:

•Level 1 – inputs that reflect unadjusted quoted prices in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date;

•Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and

•Level 3 – Inputs that are both significant to the fair value measurement and unobservable.

The Company’s fixed maturity and short-term investments trading portfolio are primarily priced using pricing services, such as index providers and pricing vendors, as well as broker quotations. In general, the pricing vendors provide pricing for a high volume of liquid securities that are actively traded. For securities that do not trade on an exchange, the pricing services generally utilize market data and other observable inputs in matrix pricing models to determine prices. Observable inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, bids, offers, reference data and industry and economic events. Index pricing generally relies on market traders as the primary source for pricing; however, models are also utilized to provide prices for all index eligible securities. The models use a variety of observable inputs such as benchmark yields, transactional data, dealer runs, broker-dealer quotes and corporate actions. Prices are generally verified using third party data. Securities which are priced by an index provider are generally included in the index. In general, broker-dealers value

106

securities through their trading desks based on observable inputs. The methodologies used include mapping securities based on trade data, bids or offers, observed spreads, and performance on newly issued securities. Broker-dealers also determine valuations by observing secondary trading of similar securities. Prices obtained from broker quotations are considered non-binding; however, they are based on observable inputs and by observing secondary trading of similar securities obtained from active, non-distressed markets. The Company considers these Level 2 inputs as they are corroborated with other market observable inputs.

All of the Company’s fixed maturities and short-term investments in its trading portfolio are considered to be valued using Level 2 inputs in the fair value hierarchy. See Note 4, Fair Value in our audited consolidated financial statements for further detail.

Change in Financial Year

On January 17, 2022, the Company changed its fiscal year from November 30 to December 31. References to the current year in this document refer to the calendar year ended December 31, 2023. As a result, our comparative prior periods consist of the twelve month period from January 1, 2022 to December 31, 2022, the one-month transition period ended December 31, 2021, and the twelve month period from December 1, 2020 to November 30, 2021. The one month transition period ended December 31, 2021 and the comparative one month period ended December 31, 2020 are presented in our results of operations tables under the header Change in Financial Year - Stub Period Results.

107

Consolidated Results of Operations

The following is a comparison of selected data for our consolidated results of operations for the years ended December 31, 2023 and 2022, and November 30, 2021 and book value per share and balance sheet data as at December 31, 2023 and 2022 and November 30, 2021.

[[GREPCENT_TABLE]]
[["","For 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","","","","","$","942,549"],["Third party fee income(1)","18,234","","","11,631","","","","","21,022"],["Claims and Expenses"],["Losses and loss adjustment expenses","714,603","","","758,333","","","","","640,560"],["Acquisition costs","309,148","","","271,189","","","","","229,213"],["Other underwriting expenses(2)","183,165","","","157,540","","","","","149,822"],["Underwriting income (loss)(3)","129,851","","","(31,717)","","","","","(56,024)"],["Net realized and unrealized gains (losses) on investments","209,399","","","86,357","","","","","352,193"],["Net investment income (loss)(4)","30,456","","","(21,487)","","","","","(43,217)"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss)","239,855","","","64,870","","","","","308,976"],["Net gain on sale of equity method investment","211","","","6,991","","","","","54,557"],["Other income (loss), excluding third party fee income(1)","397","","","(315)","","","","","(11)"],["Net foreign exchange gains (losses)","(6,185)","","","6,137","","","","","6,442"],["Corporate expenses(2)","76,691","","","20,142","","","","","22,472"],["Impairment of goodwill","\u2014","","","24,082","","","","","936"],["Amortization of intangible assets","10,783","","","12,832","","","","","13,431"],["Interest expense","21,434","","","15,741","","","","","14,897"],["Income tax expense (benefit)","(25,066)","","","3,104","","","","","12,365"],["Net income (loss)","280,287","","","(29,935)","","","","","249,839"],["Net income (loss) attributable to non-controlling interest(5)","21,560","","","68,064","","","","","61,660"],["Net income (loss) attributable to common shareholders","$","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","%"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","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"]]
[[/GREPCENT_TABLE]]

(1) Third party fee income is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. 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, $(0.3) million and less than $0.1 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures" for further details.

(2) Other underwriting expenses is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $76.7 million, $20.1 million, and $22.5 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures" for further details.

(3) 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.

(4) Net investment income (loss) is presented net of investment management fees.

(5) Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Results of Operations—Corporate and Other" for further details.

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Operating Highlights

The following significant items impacted the consolidated results of operations for the years ended December 31, 2023 and 2022 and November 30, 2021:

Gross Premiums Written

Gross premiums written were $2.0 billion, $1.6 billion and $1.4 billion for the years ended December 31, 2023 and 2022 and November 30, 2021, respectively. The increase in gross premiums written in each successive year was primarily driven by expansion into additional classes, notably casualty reinsurance and specialty insurance, increased participation on existing business and rate increases across multiple classes of business.

Underwriting results

The combined ratio was 90.1% and 102.8% for the years ended December 31, 2023 and 2022, respectively. The decrease was primarily driven by lower catastrophe losses as described further below under Losses and Loss Adjustment Expenses. The decrease in the combined ratio from 106.0% for the year ended November 30, 2021 to 102.8% for the year ended December 31, 2022 was primarily driven by a lower percentage contribution from catastrophe losses as described further below under Losses and Loss Adjustment Expenses, and a decrease in our other underwriting expense ratio.

Losses and Loss Adjustment Expenses

[[GREPCENT_TABLE]]
[["($ in thousands)","","Current year","","% of net premiums earned","","Prior year development","","% of net premiums earned","","Losses and loss adjustment expenses","","% of net premiums earned"],["December 31, 2023"],["Attritional losses","","$","688,144","","","52.2","%","","$","(10,443)","","","(0.8)","%","","$","677,701","","","51.4","%"],["Catastrophe losses","","42,076","","","3.2","%","","(5,174)","","","(0.4)","%","","36,902","","","2.8","%"],["Total","","$","730,220","","","55.4","%","","$","(15,617)","","","(1.2)","%","","$","714,603","","","54.2","%"],["December 31, 2022"],["Attritional losses","","$","592,676","","","51.8","%","","$","(3,216)","","","(0.3)","%","","$","589,460","","","51.5","%"],["Catastrophe losses","","186,260","","","16.3","%","","(17,387)","","","(1.5)","%","","168,873","","","14.8","%"],["Total","","$","778,936","","","68.1","%","","$","(20,603)","","","(1.8)","%","","$","758,333","","","66.3","%"],["November 30, 2021"],["Attritional losses","","$","481,292","","","51.1","%","","$","(8,126)","","","(0.9)","%","","$","473,166","","","50.2","%"],["Catastrophe losses","","147,489","","","15.7","%","","19,905","","","2.1","%","","167,394","","","17.8","%"],["Total","","$","628,781","","","66.8","%","","$","11,779","","","1.2","%","","$","640,560","","","68.0","%"]]
[[/GREPCENT_TABLE]]

Attritional loss ratio - current year for the year ended December 31, 2023 was 52.2%, compared to 51.8% for the year ended December 31, 2022, an increase of 0.4 percentage points. The modest increase is attributable to certain large loss events in our specialty classes impacting both our International and Bermuda segments. The attritional loss ratio - current year for the year ended December 31, 2022 was 51.8% compared to 51.1% for the year ended November 30, 2021, an increase of 0.7 percentage points. The increase is largely attributable to changes in business mix during 2022.

110

Attritional loss ratio - prior year for the year ended December 31, 2023 was a favorable 0.8% compared to a favorable 0.3% for the year ended December 31, 2022, a decrease of 0.5 percentage points. 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. 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. The attritional loss ratio - prior year for the year ended December 31, 2022 was a favorable 0.3% compared to a favorable 0.9% for the year ended November 30, 2021, an increase of 0.6 percentage points. The increase was primarily driven by unfavorable prior year development in discontinued casualty classes in the Bermuda segment, partially offset by favorable development across all classes of business in the International segment. 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.

Impact of catastrophe events Catastrophe losses - current and prior year development were $36.9 million, $168.9 million and $167.4 million for the years ended December 31, 2023 and 2022 and November 30, 2021, respectively. Catastrophe losses for the year ended December 31, 2023 were driven by the Hawaii wildfires ($12.0 million), the wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($11.0 million), severe convective storms in June 2023 ($7.6 million), Hurricane Idalia ($6.5 million), and the Vermont floods ($5.0 million), partially offset by favorable prior year development of $5.2 million. Catastrophe losses - current and prior year development for the year ended December 31, 2022 were driven by the Ukraine conflict ($79.6 million), Hurricane Ian ($77.5 million), Australian East Coast floods ($16.6 million), KwaZulu-Natal floods ($8.3 million), and Typhoon Nanmadol ($4.3 million), partially offset by favorable prior year development of $17.4 million. Catastrophe losses - current and prior year development for the year ended November 30, 2021 were driven by Hurricane Ida ($67.9 million), the Bernd European floods ($38.1 million), Winter Storm Uri ($34.4 million), and COVID-19 ($7.1 million), in addition to unfavorable prior year development of $19.9 million.

Total Net Realized and Unrealized Gains (Losses) on Investments and Net Investment Income (Loss)

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1)","$","143,655","","","$","145,238","","","","","$","327,028"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other","96,200","","","(80,368)","","","","","(18,052)"],["","$","239,855","","","$","64,870","","","","","$","308,976"],["Net income (loss) attributable to non-controlling interest - TSHF","$","21,560","","","$","68,064","","","","","$","61,660"]]
[[/GREPCENT_TABLE]]

(1) Prior to non-controlling interest performance incentive allocation

Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF, prior to non-controlling interest, returned income of $143.7 million, $145.2 million and $327.0 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This includes the fund's returns, net of investment management fees.

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Net investment income, net of non-controlling interest - TSHF, net of non-controlling interest, returned income of $122.1 million, $77.2 million and $265.4 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This includes the fund's returns, net of investment management fees as well as performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in “Net income attributable to non-controlling interests” in our GAAP financial statements.

TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 7.6%, 4.6% and 17.7% for each of the years ended December 31, 2023 and 2022, and November 30, 2021, respectively.

TS Hamilton Fund, through its investments in Two Sigma Futures Portfolio, LLC (FTV), Two Sigma Spectrum Portfolio, LLC (STV) and Two Sigma Equity Spectrum Portfolio, LLC (ESTV), (together, the “Two Sigma Funds”), seeks to achieve absolute dollar-denominated returns on a substantial capital base, primarily by combining multiple hedged and leveraged systematic investment strategies with proprietary risk management and execution techniques. These systematic strategies include, but are not limited to, technical and statistically-based, fundamental-based, event-based, market condition-based and spread-based strategies as well as contributor-based and/or sentiment-based strategies and blended strategies. FTV primarily utilizes systematic strategies to gain broad macro exposure to FX, fixed income, equity and credit indices and commodities, predominantly by trading futures, spots, forwards, options, swaps, cash bonds and exchange traded products. STV primarily utilizes systematic strategies to trade U.S.-listed equity securities and related instruments and derivatives. ESTV primarily utilizes systematic strategies to trade non-U.S.-listed equity securities and related instruments and derivatives.

For the year ended December 31, 2023, TS Hamilton Fund generated positive returns in single name equities trading in STV and ESTV, partially offset by losses in macroeconomic trading in FTV. In single name equities trading, STV and ESTV both made positive contributions. 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. In macroeconomic activities, FTV generated positive results in equities trading, partially offset by losses from fixed income trading, commodities trading, and currencies trading.

For the year ended November 30, 2021, TS Hamilton Fund generated positive returns in each of the three underlying Two Sigma Funds. Gains were led by trading in FTV, followed by U.S. single name equities in STV, and then non-U.S. equities in ESTV. In FTV, positive returns were generated in commodities and equities trading, partially offset by losses in currencies and fixed income.

Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other returned income of $96.2 million and a loss of $80.4 million and $18.1 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This is primarily comprised of returns on our fixed maturity securities trading portfolio. During the year ended December 31, 2023, the fixed maturity securities trading portfolio produced positive returns as the rate of rising interest rates slowed and reinvested funds generated higher yields. During the year ended December 31, 2022, the negative mark-to-market impact of rising interest rates and other macroeconomic factors offset investment yield, giving rise to non-credit related net investment losses. During the year ended November 30, 2021, the fixed maturity securities trading portfolio also experienced net losses due to the negative mark-to-market impact of rising interest rates. The year ended November 30, 2021 was also negatively impacted by a loss on equity method investment of $7.3 million related to our interest in Attune, recorded under the equity method of accounting, prior to its sale on September 20, 2021.

Net gain on sale of equity method investment On September 20, 2021, a purchaser acquired Attune, a joint venture in which the Company had a one-third interest. Proceeds of sale were settled on closing, and the net gain on sale of equity method investment of $54.6 million was recorded in the statement of operations for year ended November 30, 2021. In the years ended December 31, 2023 and 2022, escrow funds of $0.2 million and $7.0 million were received and recorded in the statement of operations, recognizing an incremental net gain on sale of equity method investment relating to the same transaction.

112

Impairment of goodwill

In the years ended December 31, 2023, December 31, 2022 and November 30, 2021, the Company recorded impairment charges of $Nil, $24.1 million and $0.9 million, respectively, primarily arising from the annual goodwill impairment assessment. As at each of December 31, 2023 and 2022, there was $Nil goodwill on the balance sheet.

Segment Information

We have determined our reportable business segments based on the information used by management in assessing performance and allocating resources to underwriting operations. We have identified two reportable business segments - International and Bermuda. Each of our identified reportable segments has a Chief Executive Officer who is responsible for the overall profitability of their segment and who regularly reports and is directly accountable to the chief operating decision maker: the Chief Executive Officer of the consolidated group.

We evaluate reportable segment performance based on their respective underwriting income or loss. Underwriting income or loss is calculated as net premiums earned less losses and loss adjustment expenses, acquisition costs, and other underwriting expenses, net of third party fee income. General and administrative expenses not incurred by the reportable segments are included in corporate and other expenses as part of the reconciliation of net underwriting income or loss to net income or loss attributable to common shareholders. As we do not manage our assets by reportable segment, investment income and assets are not allocated to reportable segments.

Our core business is underwriting and our underwriting results are reflected in our reportable segments: (1) International, which is comprised of property, casualty and specialty insurance and reinsurance classes of business originating from the Company’s London, Dublin, and Hamilton Select operations; and (2) Bermuda, which is comprised of property, casualty and specialty insurance and reinsurance classes of business originating from Hamilton Re, Bermuda and Hamilton Re US and subsidiaries. We consider many factors, including the nature of each segment’s products, client types, production sources, distribution methods and the regulatory environment, in determining the aggregated operating segments.

Corporate includes net realized and unrealized gains (losses) on investments, net investment income (loss), net gain on sale of equity method investment, other income (loss) not incurred by the reportable segments, net foreign exchange gains (losses), general and administrative expenses not incurred by the reportable segments, impairment of goodwill, amortization of intangible assets, interest expense, and income tax expense (benefit).

113

International Segment

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Gross premiums written","$","1,105,522","","","$","933,241","","","","","$","892,292"],["Net premiums written","$","770,399","","","$","635,773","","","","","$","640,816"],["Net premiums earned","$","703,508","","","$","623,047","","","","","$","557,139"],["Third party fee income","9,685","","","11,430","","","","","20,672"],["Claims and Expenses"],["Losses and loss adjustment expenses","362,137","","","335,484","","","","","352,859"],["Acquisition costs","186,698","","","170,571","","","","","154,969"],["Other underwriting expenses","127,402","","","108,239","","","","","112,055"],["Underwriting income (loss)","$","36,956","","","$","20,183","","","","","$","(42,072)"],["Attritional losses - current year","$","373,949","","","$","317,199","","","","","$","280,922"],["Attritional losses - prior year development","(24,415)","","","(29,800)","","","","","674"],["Catastrophe losses - current year","10,686","","","45,118","","","","","59,337"],["Catastrophe losses - prior year development","1,917","","","2,967","","","","","11,926"],["Losses and loss adjustment expenses","$","362,137","","","$","335,484","","","","","$","352,859"],["Attritional loss ratio - current year","53.2","%","","50.9","%","","","","50.4","%"],["Attritional loss ratio - prior year development","(3.5)","%","","(4.8)","%","","","","0.1","%"],["Catastrophe loss ratio - current year","1.5","%","","7.2","%","","","","10.7","%"],["Catastrophe loss ratio - prior year development","0.3","%","","0.5","%","","","","2.1","%"],["Losses and loss adjustment expense ratio","51.5","%","","53.8","%","","","","63.3","%"],["Acquisition cost ratio","26.5","%","","27.4","%","","","","27.8","%"],["Other underwriting expense ratio","16.7","%","","15.5","%","","","","16.4","%"],["Combined ratio","94.7","%","","96.7","%","","","","107.5","%"]]
[[/GREPCENT_TABLE]]

Gross Premiums Written

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Property","$","134,450","","","$","127,424","","","","","$","197,471"],["Casualty","490,465","","","463,397","","","","","323,192"],["Specialty","480,607","","","342,420","","","","","371,629"],["Total","$","1,105,522","","","$","933,241","","","","","$","892,292"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, gross premiums written increased by $172.3 million, or 18.5%, from $933.2 million for the year ended December 31, 2022 to $1.1 billion for the year ended December 31, 2023, primarily driven by growth and improved pricing across specialty insurance classes of business, with additional contributions from growth in casualty insurance and specialty reinsurance classes and hardening rates on property insurance classes.

For the year ended December 31, 2022, gross premiums written increased by $40.9 million, or 4.6%, from $892.3 million for the year ended November 30, 2021 to $933.2 million for the year ended December 31, 2022, primarily driven by growth and improved pricing across most casualty and specialty insurance classes of business. This was partially offset by decreases in property reinsurance classes of business as a result of strategic withdrawals.

114

Net Premiums Earned

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Property","$","104,789","","","$","111,134","","","","$","141,872"],["Casualty","269,921","","","248,588","","","","175,230"],["Specialty","328,798","","","263,325","","","","240,037"],["Total","$","703,508","","","$","623,047","","","","","$","557,139"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, net premiums earned increased by $80.5 million, or 12.9%, from $623.0 million for the year ended December 31, 2022 to $703.5 million for the year ended December 31, 2023, reflecting growth in our specialty insurance business, primarily as the result of increases in political risks and political violence from our war and terror product, as well as growth in marine and personal accident lines, and growth in our casualty insurance business, including professional lines.

For the year ended December 31, 2022, net premiums earned increased by $65.9 million, or 11.8%, from $557.1 million for the year ended November 30, 2021 to $623.0 million for the year ended December 31, 2022, reflecting growth in net premiums written on our casualty business, particularly for environmental and cyber books of business. We also saw growth in our specialty business driven by growth in fine art & specie and marine & energy books. This was partially offset by a decrease in our property reinsurance classes of business as a result of strategic withdrawals.

Third Party Fee Income

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Third party fee income","$","9,685","","","$","11,430","","","","","$","20,672"]]
[[/GREPCENT_TABLE]]

Fee income of $9.7 million for the year ended December 31, 2023 decreased by $1.7 million, or 15.3%, compared to $11.4 million for the year ended December 31, 2022. The decrease was primarily driven by a reduction in the number of third party syndicates under management and the discontinuation of certain consortium arrangements.

Fee income of $11.4 million for the year ended December 31, 2022 decreased by $9.2 million, or 44.7%, compared to $20.7 million for the year ended November 30, 2021. The decrease was primarily comprised of $3.7 million related to a reduction in the number of third party syndicates under management, $1.4 million related to a decrease in consortium fees and an aggregate decrease of $4.7 million in one-off or discontinued fees relating to projects with a finite term.

115

Losses and Loss Adjustment Expenses

[[GREPCENT_TABLE]]
[["($ in thousands)","","Current year","","% of net premiums earned","","Prior year development","","% of net premiums earned","","Losses and loss adjustment expenses","","% of net premiums earned"],["December 31, 2023"],["Attritional losses","","$","373,949","","","53.2","%","","$","(24,415)","","","(3.5)","%","","$","349,534","","","49.7","%"],["Catastrophe losses","","10,686","","","1.5","%","","1,917","","","0.3","%","","$","12,603","","","1.8","%"],["Total","","$","384,635","","","54.7","%","","$","(22,498)","","","(3.2)","%","","$","362,137","","","51.5","%"],["December 31, 2022"],["Attritional losses","","$","317,199","","","50.9","%","","$","(29,800)","","","(4.8)","%","","$","287,399","","","46.1","%"],["Catastrophe losses","","45,118","","","7.2","%","","2,967","","","0.5","%","","48,085","","","7.7","%"],["Total","","$","362,317","","","58.1","%","","$","(26,833)","","","(4.3)","%","","$","335,484","","","53.8","%"],["November 30, 2021"],["Attritional losses","","$","280,922","","","50.4","%","","$","674","","","0.1","%","","$","281,596","","","50.5","%"],["Catastrophe losses","","59,337","","","10.7","%","","11,926","","","2.1","%","","71,263","","","12.8","%"],["Total","","$","340,259","","","61.1","%","","$","12,600","","","2.2","%","","$","352,859","","","63.3","%"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2023 versus Year Ended December 31, 2022

The loss ratio for the year ended December 31, 2023 was 51.5%, compared to 53.8% for the year ended December 31, 2022, a decrease of 2.3 percentage points. 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 53.2% compared to 50.9% for the year ended December 31, 2022, an increase of 2.3 percentage points. The increase in the current year attritional loss ratio primarily arose from three specific large losses in our specialty classes compared to fewer comparable events in the prior year.

The attritional loss ratio - prior year for the year ended December 31, 2023 was a favorable 3.5% compared to a favorable 4.8% for the year ended December 31, 2022, an increase of 1.3 percentage points. We experienced favorable prior year development for the year ended December 31, 2023 of $24.4 million, primarily driven by property and specialty lines. This compared to favorable prior year development for the year ended December 31, 2022 of $29.8 million across most classes of business. 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.

Catastrophe losses - current year and prior year of $12.6 million for the year ended December 31, 2023 were driven by the Vermont floods ($4.5 million), Hurricane Idalia ($2.9 million), Hawaii wildfires ($2.8 million), and other wind events ($0.5 million), in addition to unfavorable prior year development of $1.9 million. Catastrophe losses - current year and prior year of $48.1 million for the year ended December 31, 2022 were primarily driven by the Ukraine conflict ($22.5 million), Hurricane Ian ($15.3 million), the KwaZulu-Natal floods ($4.6 million), and the Australian East Coast floods ($2.7 million), in addition to unfavorable prior year development of $3.0 million.

Year Ended December 31, 2022 versus Year Ended November 30, 2021

The loss ratio for the year ended December 31, 2022 was 53.8%, compared to 63.3% for the year ended November 30, 2021, a decrease of 9.5 percentage points. The decrease was driven by favorable prior year development on attritional losses and a lower level of catastrophe losses.

The attritional loss ratio - current year for the year ended December 31, 2022 was 50.9% compared to 50.4% for the year ended November 30, 2021, an increase of 0.5 percentage points. The modest increase in the current year attritional loss ratio primarily arose from changes in business mix.

116

The attritional loss ratio - prior year for the year ended December 31, 2022 was a favorable 4.8% compared to an unfavorable 0.1% for the year ended November 30, 2021, a decrease of 4.9 percentage points. We experienced favorable prior year development for the year ended December 31, 2022 of $29.8 million across most classes of business. 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. This compared to unfavorable prior year development for the year ended November 30, 2021 of $0.7 million, primarily driven by casualty business protected by the LPT, which experienced unfavorable development of $32.6 million, partially offset by $18.0 million in amortization of the associated deferred gain (for a total net negative earnings impact of $14.6 million) and favorable prior year development on the remainder of the book of business. See Note 8, Reinsurance, in our audited consolidated financial statements for further discussion of the LPT.

Catastrophe losses - current year and prior year of $48.1 million for the year ended December 31, 2022 were primarily driven by the Ukraine conflict ($22.5 million), Hurricane Ian ($15.3 million), the KwaZulu-Natal floods ($4.6 million), and the Australian East Coast floods ($2.7 million), in addition to unfavorable prior year development of $3.0 million. Catastrophe losses - current year and prior year development of $71.3 million for the year ended November 30, 2021 were primarily driven by Hurricane Ida ($32.3 million), Winter Storm Uri ($13.5 million), COVID-19 ($7.1 million), and the Bernd European Floods ($6.4 million), in addition to unfavorable prior year development of $11.9 million.

Acquisition Costs

[[GREPCENT_TABLE]]
[["($ in thousands)","For the Years Ended"],["Acquisition Costs","","% of Net Premiums Earned"],["December 31, 2023","","December 31, 2022","","November 30, 2021","","December 31, 2023","","December 31, 2022","","November 30, 2021","","'23 vs '22point r","","'22 vs '21point r"],["Property","$","34,968","","","$","39,606","","","$","48,697","","","33.4%","","35.6%","","34.3%","","(2.2)","","1.3"],["Casualty","49,994","","","53,768","","","43,084","","","18.5%","","21.6%","","24.6%","","(3.1)","","(3.0)"],["Specialty","101,736","","","77,197","","","63,188","","","30.9%","","29.3%","","26.3%","","1.6","","3.0"],["Total","$","186,698","","","$","170,571","","","$","154,969","","","26.5%","","27.4%","","27.8%","","(0.9)","","(0.4)"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, the acquisition cost ratio was 26.5%, compared to 27.4% for the year ended December 31, 2022, a decrease of 0.9 percentage points. 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.

For the year ended December 31, 2022, the acquisition cost ratio was 27.4% compared to 27.8% for the year ended November 30, 2021, a decrease of 0.4 percentage points. The modest decrease was primarily driven by changes in the mix of business.

117

Other Underwriting Expenses and Other Underwriting Expense Ratios

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Other underwriting expenses","$","127,402","","$","108,239","","","","$","112,055"],["Other underwriting expense ratio","16.7","%","","15.5","%","","","","16.4","%"]]
[[/GREPCENT_TABLE]]

Other underwriting expenses are general and administrative costs incurred by our reportable segments.

Other underwriting expenses were $127.4 million for the year ended December 31, 2023, an increase of $19.2 million, or 17.7%, compared to $108.2 million for the year ended December 31, 2022. The increase was primarily driven by increases in headcount as we built out underwriting teams supporting the corresponding increase in premium volume and certain variable performance based compensation costs.

Other underwriting expenses were $108.2 million for the year ended December 31, 2022, a decrease of $3.8 million, or 3.4%, compared to $112.1 million for the year ended November 30, 2021. The decrease was primarily driven by a reduction in professional service fees and technology costs related to systems implementation and integration, as consulting fees declined with the completion of various projects.

The other underwriting expense ratios for the years ended December 31, 2023 and 2022, and the year ended November 30, 2021, remained stable over the same period at 16.7%, 15.5% and 16.4% respectively, as a result of the growth in our premium base.

118

Bermuda Segment

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Gross premiums written","$","845,516","","","$","713,432","","","","","$","554,259"],["Net premiums written","$","710,039","","","$","586,091","","","","","$","444,612"],["Net premiums earned","$","615,025","","","$","520,667","","","","","$","385,410"],["Third party fee income","8,549","","","201","","","","","350"],["Claims and Expenses"],["Losses and loss adjustment expenses","352,466","","","422,849","","","","","287,701"],["Acquisition costs","122,450","","","100,618","","","","","74,244"],["Other underwriting expenses","55,763","","","49,301","","","","","37,767"],["Underwriting income (loss)","$","92,895","","","$","(51,900)","","","","","$","(13,952)"],["Attritional losses - current year","$","314,195","","","$","275,477","","","","","$","200,370"],["Attritional losses - prior year development","13,972","","","26,584","","","","","(8,800)"],["Catastrophe losses - current year","31,390","","","141,142","","","","","88,152"],["Catastrophe losses - prior year development","(7,091)","","","(20,354)","","","","","7,979"],["Losses and loss adjustment expenses","$","352,466","","","$","422,849","","","","","$","287,701"],["Attritional loss ratio - current year","51.1","%","","52.9","%","","","","52.0","%"],["Attritional loss ratio - prior year development","2.3","%","","5.1","%","","","","(2.3)","%"],["Catastrophe loss ratio - current year","5.1","%","","27.1","%","","","","22.8","%"],["Catastrophe loss ratio - prior year development","(1.2)","%","","(3.9)","%","","","","2.1","%"],["Losses and loss adjustment expense ratio","57.3","%","","81.2","%","","","","74.6","%"],["Acquisition cost ratio","19.9","%","","19.3","%","","","","19.3","%"],["Other underwriting expense ratio","7.7","%","","9.4","%","","","","9.7","%"],["Combined ratio","84.9","%","","109.9","%","","","","103.6","%"]]
[[/GREPCENT_TABLE]]

Gross Premiums Written

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Property","$","318,297","","","$","309,051","","","","","$","281,795"],["Casualty","402,731","","","262,795","","","","","154,927"],["Specialty","124,488","","","141,586","","","","","117,537"],["Total","$","845,516","","","$","713,432","","","","","$","554,259"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, gross premiums written increased by $132.1 million, or 18.5%, from $713.4 million for the year ended December 31, 2022 to $845.5 million for the year ended December 31, 2023. The increase was driven by new business, volume growth and rate increases in casualty reinsurance and property insurance classes of business, partially offset by non-recurring specialty reinsurance reinstatement premiums recorded in the prior year and the strategic decision to exit certain property reinsurance business.

For the year ended December 31, 2022, gross premiums written increased by $159.2 million or 28.7% from $554.3 million for the year ended November 30, 2021 to $713.4 million for the year ended December 31, 2022. The increase was primarily driven by volume growth and rate increases in casualty reinsurance classes of business.

119

Net Premiums Earned

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Property","$","220,659","","","$","233,426","","","","","$","196,258"],["Casualty","290,035","","","175,647","","","","","95,271"],["Specialty","104,331","","","111,594","","","","","93,881"],["Total","$","615,025","","","$","520,667","","","","","$","385,410"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, net premiums earned increased by $94.4 million, or 18.1% from $520.7 million for the year ended December 31, 2022 to $615.0 million for the year ended December 31, 2023, reflecting growth in net premiums written in our casualty reinsurance classes, driven by continued growth across the majority of our casualty reinsurance classes, primarily general liability and professional liability. This was partially offset by strategic withdrawals from certain property reinsurance classes of business and non-recurring reinstatement premiums recorded in the prior year.

For the year ended December 31, 2022, net premiums earned increased by $135.3 million, or 35.1%, from $385.4 million for the year ended November 30, 2021 to $520.7 million for the year ended December 31, 2022, reflecting increases in casualty reinsurance classes of business including professional liability, general liability and umbrella & excess casualty. We also saw additional business and a hardening market in our property classes.

Third Party Fee Income

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Third party fee income (expense)","$","8,549","","","$","201","","","","","$","350"]]
[[/GREPCENT_TABLE]]

Fee income of $8.5 million for the year ended December 31, 2023 increased by $8.3 million, compared to $0.2 million for the year ended December 31, 2022 and $0.4 million for the year ended November 30, 2021. The current year increase was primarily driven by certain performance based management fees recognized by Ada Capital Management Limited for services provided to Ada Re, Ltd.

120

Losses and Loss Adjustment Expenses

[[GREPCENT_TABLE]]
[["($ in thousands)","Current year","","% of net premiums earned","","Prior year development","","% of net premiums earned","","Losses and loss adjustment expenses","","% of net premiums earned"],["December 31, 2023"],["Attritional losses","$","314,195","","","51.1","%","","$","13,972","","","2.3","%","","$","328,167","","","53.4","%"],["Catastrophe losses","31,390","","","5.1","%","","(7,091)","","","(1.2)","%","","24,299","","","3.9","%"],["Total","$","345,585","","","56.2","%","","$","6,881","","","1.1","%","","$","352,466","","","57.3","%"],["December 31, 2022"],["Attritional losses","$","275,477","","","52.9","%","","$","26,584","","","5.1","%","","$","302,061","","","58.0","%"],["Catastrophe losses","141,142","","","27.1","%","","(20,354)","","","(3.9)","%","","120,788","","","23.2","%"],["Total","$","416,619","","","80.0","%","","$","6,230","","","1.2","%","","$","422,849","","","81.2","%"],["November 30, 2021"],["Attritional losses","$","200,370","","","52.0","%","","$","(8,800)","","","(2.3)","%","","$","191,570","","","49.7","%"],["Catastrophe losses","88,152","","","22.8","%","","7,979","","","2.1","%","","96,131","","","24.9","%"],["Total","$","288,522","","","74.8","%","","$","(821)","","","(0.2)","%","","$","287,701","","","74.6","%"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2023 versus Year Ended December 31, 2022

The loss ratio for the year ended December 31, 2023 was 57.3%, compared to 81.2% for the year ended December 31, 2022, a decrease of 23.9 percentage points. 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 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 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. 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. 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.

Catastrophe losses - current year and prior year of $24.3 million for the year ended December 31, 2023 were primarily driven by wind and thunderstorm events which impacted states in both the Southern and Midwest U.S. during March 2023 ($11.0 million), the Hawaii wildfires ($9.2 million), severe convective storms in June 2023 ($7.1 million), Hurricane Idalia ($3.6 million) and various flood events ($0.5 million), partially offset by favorable prior year development of $7.1 million. Catastrophe losses - current year and prior year of $120.8 million for the year ended December 31, 2022 were primarily driven by Hurricane Ian ($62.2 million), the Ukraine conflict ($57.1 million), Australian East Coast floods ($13.9 million), Typhoon Nanmadol ($4.3 million) and KwaZulu-Natal floods ($3.7 million), partially offset by favorable prior year development of $20.4 million.

121

Year Ended December 31, 2022 versus Year Ended November 30, 2021

The loss ratio for the year ended December 31, 2022 was 81.2%, compared to 74.6% for the year ended November 30, 2021, an increase of 6.6 percentage points. The increase was primarily driven by unfavorable attritional prior year development on discontinued classes of business.

The attritional loss ratio - current year for the year ended December 31, 2022 was 52.9% compared to 52.0% for the year ended November 30, 2021, an increase of 0.9 percentage points. The modest increase in the current year attritional loss ratio primarily arose from a greater relative volume of casualty business, which has a relatively higher attritional loss ratio but lower volatility, compared to other classes of business.

The attritional loss ratio - prior year for the year ended December 31, 2022 was an unfavorable 5.1% compared to a favorable 2.3% for the year ended November 30, 2021, an increase of 7.4 percentage points. We experienced unfavorable 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 favorable prior year attritional loss development for the year ended November 30, 2021 of $8.8 million, primarily driven by favorable prior year reserve development in specialty and property classes of business.

Catastrophe losses - current year and prior year of $120.8 million for the year ended December 31, 2022 were primarily driven by Hurricane Ian ($62.2 million), the Ukraine conflict ($57.1 million), Australian East Coast floods ($13.9 million), Typhoon Nanmadol ($4.3 million) and KwaZulu-Natal floods ($3.7 million), partially offset by favorable prior year development of $20.4 million. Catastrophe losses - current year and prior year of $96.1 million for the year ended November 30, 2021 were driven by Hurricane Ida ($35.6 million), the Bernd European floods ($31.7 million), and Winter Storm Uri ($20.9 million), in addition to unfavorable prior year development of $8.0 million.

Acquisition Costs

[[GREPCENT_TABLE]]
[["($ in thousands)","For the Years Ended"],["Acquisition Costs","","% of Net Premiums Earned"],["December 31, 2023","","December 31, 2022","","November 30, 2021","","December 31, 2023","","December 31, 2022","","November 30, 2021","","'23 vs '22point r","","'22 vs '21point r"],["Property","$","26,947","","","$","36,686","","","$","28,303","","","12.2%","","15.7%","","14.4%","","(3.5)","","1.3"],["Casualty","68,615","","","35,643","","","11,431","","","23.7%","","20.3%","","12.0%","","3.4","","8.3"],["Specialty","26,888","","","28,289","","","34,510","","","25.8%","","25.3%","","36.8%","","0.5","","(11.5)"],["Total","$","122,450","","","$","100,618","","","$","74,244","","","19.9%","","19.3%","","19.3%","","0.6","","\u2014"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2023, the acquisition cost ratio increased to 19.9%, compared to 19.3% for the year ended December 31, 2022, reflecting the impact of higher reinstatement premiums earned by specialty reinsurance lines in the prior period and a change in business mix in casualty insurance and reinsurance lines.

For the year ended December 31, 2022, the acquisition cost ratio remained flat at 19.3% compared to 19.3% for the year ended November 30, 2021, reflecting offsetting factors, such as a change in the mix of business and the impact of reinstatement premiums.

122

Other Underwriting Expenses and Other Underwriting Expense Ratios

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Other underwriting expenses","$","55,763","","","$","49,301","","","","","$","37,767"],["Other underwriting expense ratio","7.7","%","","9.4","%","","","","9.7","%"]]
[[/GREPCENT_TABLE]]

Other underwriting expenses are general and administrative costs incurred by our reportable segments.

Other underwriting expenses were $55.8 million for the year ended December 31, 2023, an increase of $6.5 million, or 13.1%, compared to $49.3 million for the year ended December 31, 2022. The increase was primarily driven by increases in certain variable performance based compensation costs.

Other underwriting expenses were $49.3 million for the year ended December 31, 2022, an increase of $11.5 million, or 30.5%, compared to $37.8 million for the year ended November 30, 2021, primarily as a result of additional headcount supporting the increase in premium volume driven by our expansion into new classes of business.

The other underwriting expense ratios for the years ended December 31, 2023, December 31, 2022 and November 30, 2021 decreased over the same period at 7.7%, 9.4% and 9.7% as a result of the growth in premium base and our continued focus on expense management.

Corporate and Other

Total Net Realized and Unrealized Gains (Losses) on Investments and Net Investment Income (Loss)

The components of total net realized and unrealized gains (losses) on investments and net investment income (loss) are as follows:

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF(1)","$","143,655","","","$","145,238","","","","","$","327,028"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other","96,200","","","(80,368)","","","","","(18,052)"],["","$","239,855","","","$","64,870","","","","","$","308,976"],["Net income (loss) attributable to non-controlling interest - TSHF","$","21,560","","","$","68,064","","","","","$","61,660"]]
[[/GREPCENT_TABLE]]

(1) Prior to non-controlling interest performance incentive allocation

Total net realized and unrealized gains (losses) on investments and net investment income (loss) - TSHF, prior to non-controlling interest, returned income of $143.7 million, $145.2 million and $327.0 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This includes the fund's returns, net of investment management fees.

Net investment income, net of non-controlling interest - TSHF, net of non-controlling interest, returned income of $122.1 million, $77.2 million and $265.4 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This includes the fund's returns, net of investment management fees as well as performance incentive allocations. The aggregate incentive allocation to which the investment manager is entitled is included in “Net income attributable to non-controlling interests” in our GAAP financial statements.

123

TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of 7.6%, 4.6% and 17.7% for each of the years ended December 31, 2023 and 2022, and November 30, 2021, respectively.

For the year ended December 31, 2023, TS Hamilton Fund generated positive returns in single name equities trading in STV and ESTV, partially offset by losses in macroeconomic trading in FTV. In single name equities trading, STV and ESTV both made positive contributions. 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. In macroeconomic activities, FTV generated positive results in equities trading, partially offset by losses from fixed income trading, commodities trading, and currencies trading.

For the year ended November 30, 2021, TS Hamilton Fund generated positive returns in each of the three underlying Two Sigma Funds. Gains were led by trading in FTV, followed by U.S. single name equities in STV, and then non-U.S. equities in ESTV. In FTV, positive returns were generated in commodities and equities trading, partially offset by losses in currencies and fixed income.

Total net realized and unrealized gains (losses) on investments and net investment income (loss) - other, returned income of $96.2 million, and a loss of $80.4 million and $18.1 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. This is primarily comprised of returns on our fixed maturity securities trading portfolio.

During the year ended December 31, 2023, the fixed maturity securities trading portfolio produced positive returns as the rate of rising interest rates slowed and reinvested funds generated higher yields. During the year ended December 31, 2022, the negative mark-to-market impact of rising interest rates and other macroeconomic factors offset investment yield, giving rise to non-credit related net investment losses. During the year ended November 30, 2021, the fixed maturity securities trading portfolio also experienced net losses due to the negative mark-to-market impact of rising interest rates. The year ended November 30, 2021 was also negatively impacted by a loss on equity method investment of $7.3 million, related to our interest in Attune, recorded under the equity method of accounting, prior to its sale on September 20, 2021.

Net Gain on Sale of Equity Method Investment

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Net gain on sale of equity method investment","$","211","","","$","6,991","","","","","$","54,557"]]
[[/GREPCENT_TABLE]]

On September 20, 2021, a purchaser acquired Attune, a joint venture in which the Company had a one-third interest. Proceeds of sale were settled on closing and the net gain on sale of equity method investment of $54.6 million was recorded in the statement of operations for year ended November 30, 2021. In the years ended December 31, 2023 and 2022, escrow funds of $0.2 million and $7.0 million, respectively, were received and recorded in the statement of operations, recognizing an incremental net gain on sale of equity method investment relating to the same transaction.

Other Income (Loss)

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Other income (loss), excluding third party fee income","$","397","","","$","(315)","","","","","$","(11)"]]
[[/GREPCENT_TABLE]]

Other income (loss), excluding third party fee income, consists of varying insignificant items in each period.

124

Net Foreign Exchange Gains (Losses)

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Net foreign exchange gains (losses)","$","(6,185)","","","$","6,137","","","","","$","6,442"]]
[[/GREPCENT_TABLE]]

Our functional currency is the U.S. dollar. We may conduct routine underwriting operations or invest a portion of our cash and other investable assets in currencies other than U.S. dollars. Consequently, we may incur foreign exchange gains and losses in our results of operations.

Foreign exchange losses of $6.2 million for the year ended December 31, 2023 primarily arose from the weakening of the U.S. dollar against the British pound, Euro and Yen. Foreign exchange gains of $6.1 million and $6.4 million for the years ended December 31, 2022 and November 30, 2021, respectively, primarily arose from the strengthening of the U.S. dollar against the same currencies.

Corporate Expenses

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Corporate expenses","$","76,691","","","$","20,142","","","","","$","22,472"]]
[[/GREPCENT_TABLE]]

Corporate expenses are general and administrative costs incurred outside of our reportable segments. We may periodically reassess allocations between corporate and other underwriting expenses to better reflect the nature of the underlying expense.

Corporate expenses for the years ended December 31, 2023 and 2022, and November 30, 2021, were $76.7 million, $20.1 million and $22.5 million, respectively, and typically consist of certain executive and Board compensation costs and professional fees.

Corporate expenses for the year ended December 31, 2023 increased by $56.5 million over the prior year, primarily driven by $30.4 million of share based compensation expense related to the Value Appreciation Pool ("VAP"). An additional $4.2 million of expense was recorded as an adjustment to retained earnings in "Share compensation expense" in the second quarter of 2023, for a total year to date VAP expense of $34.5 million at December 31, 2023. The remainder of the increase was primarily driven by certain variable performance based compensation costs.

Impairment of Goodwill

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Impairment of goodwill","$","\u2014","","","$","24,082","","","","","$","936"]]
[[/GREPCENT_TABLE]]

In the years ended December 31, 2023 and 2022, and November 30, 2021, the Company recorded impairment charges of $Nil, $24.1 million and $0.9 million, respectively, primarily arising from the annual goodwill impairment assessment. As of December 31, 2023 and 2022, there was $Nil goodwill recorded on the balance sheet.

125

Amortization of Intangible Assets

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Amortization of intangible assets","$","10,783","","","$","12,832","","","","","$","13,431"]]
[[/GREPCENT_TABLE]]

Amortization of intangible assets of $10.8 million, $12.8 million and $13.4 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively, relates to internally developed software and intangible assets acquired in a business combination. Amortization expense decreased as there have been no subsequent additions to acquired assets and the shorter-lived assets become fully amortized.

Interest Expense

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Interest expense","$","21,434","","","$","15,741","","","","","$","14,897"]]
[[/GREPCENT_TABLE]]

Interest expense of $21.4 million, $15.7 million and $14.9 million for the years ended December 31, 2023 and 2022, and November 30, 2021, respectively, relates to interest payments and certain administrative fees associated with our term loan and letter of credit facilities. The increase in interest expense is primarily driven by the increase in the Secured Overnight Financing Rate (“SOFR”), which underlies the floating rate associated with the term loan.

Income Tax Expense (Benefit)

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","","","November 30, 2021"],["Income tax expense (benefit)","$","(25,066)","","","$","3,104","","","","","$","12,365"]]
[[/GREPCENT_TABLE]]

The Company's subsidiaries and branches operate in jurisdictions that are subject to tax, specifically, the United Kingdom, Ireland and the United States. Our effective income tax rate may therefore fluctuate significantly, depending on the relative contribution of each jurisdiction to pre-tax income or loss within the Company in any given period.

Hamilton Group and its Bermuda domiciled subsidiaries were not subject to income tax in Bermuda in 2023 and prior. 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. The legislation included a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime with respect to which the Company has recorded a deferred tax asset.

The tax benefit of $25.1 million for the year ended December 31, 2023 is driven by the economic transition adjustment, with respect to which the Company has recorded a deferred tax asset in the fourth quarter of 2023 of $35.1 million, partially offset by withholding taxes on investment income from the TS Hamilton Fund. Tax expense of $3.1 million and $12.4 million for the years ended December 31, 2022, and November 30, 2021, respectively, primarily relates to withholding taxes on investment income from the TS Hamilton Fund.

126

Change in Financial Year - Stub Period Results

The following is a comparison of selected data for our consolidated results of operations for the one month periods ended December 31, 2021 and 2020 and book value per share and balance sheet data as at December 31, 2021 and 2020.

[[GREPCENT_TABLE]]
[["","For the One Month Ended"],["($ in thousands, except per share amounts)","December 31, 2021","","December 31, 2020"],["Gross premiums written","$","121,813","","","$","88,521"],["Net premiums written","$","97,921","","","$","74,126"],["Net premiums earned","$","98,631","","","$","67,498"],["Third party fee income","1,349","","","1,849"],["Claims and Expenses"],["Losses and loss adjustment expenses","56,650","","","44,925"],["Acquisition costs","23,992","","","17,534"],["Other underwriting expenses","13,857","","","12,107"],["Underwriting income (loss)","$","5,481","","","$","(5,219)"],["Net realized and unrealized gains (losses) on investments","(33,526)","","","91,813"],["Net investment income (loss)","(3,222)","","","(4,570)"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss)","$","(36,748)","","","$","87,243"],["Net income (loss)","(35,890)","","","78,616"],["Net income (loss) attributable to non-controlling interest","(3)","","","15,195"],["Net income (loss) attributable to common shareholders","$","(35,887)","","","$","63,421"],["Diluted income (loss) per share attributable to common shareholders","$","(0.35)","","","$","0.61"],["Key Ratios"],["Attritional loss ratio - current year","48.0","%","","42.5","%"],["Attritional loss ratio - prior year development","\u2014","%","","\u2014","%"],["Catastrophe loss ratio - current year","9.4","%","","\u2014","%"],["Catastrophe loss ratio - prior year development","\u2014","%","","24.0","%"],["Loss and loss adjustment expense ratio","57.4","%","","66.5","%"],["Acquisition cost ratio","24.3","%","","26.0","%"],["Other underwriting expense ratio","12.7","%","","15.2","%"],["Combined ratio","94.4","%","","107.7","%"],["Return on average common shareholders' equity","(2.0)","%","","3.9","%"],["","As at"],["Book Value","December 31, 2021","","December 31, 2020"],["Tangible book value per common share","$","15.95","","","$","15.11"],["Book value per common share","$","17.09","","","$","16.23"],["Balance Sheet Data"],["Total assets","$","5,442,674","","","$","4,858,096"],["Total shareholders' equity","$","1,752,601","","","$","1,660,949"]]
[[/GREPCENT_TABLE]]

127

The following significant items impacted the consolidated results of operations for the one month periods ended December 31, 2021 and 2020:

Gross premiums written Gross premiums written were $121.8 million and $88.5 million for the one month ended December 31, 2021 and 2020, respectively. The increase in gross premiums written was primarily driven by expansion into additional classes, increased participation on existing business and rate increases across multiple classes of business.

Underwriting results The combined ratio was 94.4% and 107.7% for the one month ended December 31, 2021 and December 31, 2020, respectively. The decrease was primarily driven by a lower level of catastrophe losses and a decrease in our other underwriting expense ratio.

[[GREPCENT_TABLE]]
[["($ in thousands)","","Current year","","% of net premiums earned","","Prior year development","","% of net premiums earned","","Losses and loss adjustment expenses","","% of net premiums earned"],["December 31, 2021"],["Attritional losses","","$","47,327","","","48.0","%","","$","\u2014","","","\u2014","%","","$","47,327","","","48.0","%"],["Catastrophe losses","","9,323","","","9.4","%","","\u2014","","","\u2014","%","","9,323","","","9.4","%"],["Total","","$","56,650","","","57.4","%","","$","\u2014","","","\u2014","%","","$","56,650","","","57.4","%"],["December 31, 2020"],["Attritional losses","","$","28,698","","","42.5","%","","$","\u2014","","","\u2014","%","","$","28,698","","","42.5","%"],["Catastrophe losses","","\u2014","","","\u2014","%","","16,227","","","24.0","%","","16,227","","","24.0","%"],["Total","","$","28,698","","","42.5","%","","$","16,227","","","24.0","%","","$","44,925","","","66.5","%"]]
[[/GREPCENT_TABLE]]

The loss ratio for the month ended December 31, 2021 was 57.4%, compared to 66.5% for the month ended December 31, 2020, a decrease of 9.1 percentage points. The decrease was primarily driven by a lower level of catastrophe losses, partially offset by a higher level of current year attritional losses.

Catastrophe losses - current year and prior year of $9.3 million for the month ended December 31, 2021 were primarily driven by windstorm event PCS 2176 ($7.9 million) and COVID-19 ($1.5 million). Catastrophe losses - current year and prior year of $16.2 million for the month ended December 31, 2020 were primarily driven by Hurricanes Laura, Sally and Zeta ($16.0 million).

Total net realized and unrealized gains (losses) on investments and net investment income (loss) consisted of a loss of $36.7 million and income of $87.2 million for the one month ended December 31, 2021 and 2020, respectively.

TS Hamilton Fund produced returns, net of investment management fees and performance incentive allocations, of (2.1%) and 4.3% for the one month ended December 31, 2021 and 2020, respectively.

128

Key Operating and Financial Metrics

The Company has identified the following metrics as key measures of the Company’s performance:

Book Value per Common Share

Management believes that book value is an important indicator of value provided to common shareholders and aligns the Company’s and most investors’ long term objectives. We calculate book value per common share as total common shareholders’ equity divided by the total number of common shares outstanding at the point in time.

[[GREPCENT_TABLE]]
[["","As at"],["($ in thousands, except for share and per share amounts)","December 31, 2023","","December 31, 2022"],["Closing common shareholders' equity","2,047,850","","","1,664,183"],["Closing common shares outstanding","110,225,103","","","103,087,859"],["Book value per common share","$","18.58","","","$","16.14"]]
[[/GREPCENT_TABLE]]

Book value per common share was $18.58 at December 31, 2023, a $2.44 or 15.1% increase from the Company’s book value per common share of $16.14 at December 31, 2022. The increase in book value per common share was primarily driven by the Company’s net income attributable to common shareholders.

Tangible Book Value per Common Share

Management believes that tangible book value is an indicator of value provided to common shareholders and aligns the company’s and most investors’ long term objectives. We calculate tangible book value per common share as total common shareholders’ equity less intangible assets, divided by the total number of common shares outstanding at the point in time.

[[GREPCENT_TABLE]]
[["","As at"],["($ in thousands, except for share and per share amounts)","December 31, 2023","","December 31, 2022"],["Closing common shareholders' equity","2,047,850","","","1,664,183"],["Intangible assets","90,996","","","86,958"],["Closing common shareholders' equity, less intangible assets","1,956,854","","","1,577,225"],["Closing common shares outstanding","110,225,103","","","103,087,859"],["Tangible book value per common share","$","17.75","","","$","15.30"]]
[[/GREPCENT_TABLE]]

Tangible book value per common share was $17.75 at December 31, 2023, a $2.45 or 16.0% increase from the Company’s tangible book value per common share of $15.30 at December 31, 2022. The increase in tangible book value per common share was primarily driven by the Company’s net income attributable to common shareholders.

129

Return on Average Common Shareholders' Equity

Management believes that return on average common shareholders’ equity or ("ROACE") is an important indicator of the Company’s profitability and financial efficiency. We calculate it by dividing net income (loss) attributable to common shareholders by average common shareholders' equity for the corresponding period.

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","November 30, 2021"],["Net income (loss) attributable to common shareholders","258,727","","","(97,999)","","","188,179"],["Average common shareholders' equity for the period","1,856,017","","","1,708,392","","","1,692,098"],["Return on average common shareholders' equity","13.9","%","","(5.7)","%","","11.1","%"]]
[[/GREPCENT_TABLE]]

ROACE was 13.9% for the year ended December 31, 2023, compared to (5.7)% and 11.1% for the years ended December 31, 2022 and November 30, 2021, respectively. ROACE for the year ended December 31, 2023 was primarily driven by the Company's net income attributable to common shareholders. The change in ROACE for the years ended December 31, 2022 and November 30, 2021 was primarily driven by the Company's net income or loss attributable to common shareholders in the period.

Non-GAAP Measures

We present our results of operations in a way that we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate its performance. Some of the measurements are considered non-GAAP financial measures under SEC rules and regulations. In this Form 10-K, we present underwriting income (loss), a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. We believe that non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. Where appropriate, reconciliations of our non-GAAP measures to the most comparable GAAP figures are included below.

Underwriting Income (Loss)

We calculate underwriting income (loss) on a pre-tax basis as net premiums earned less losses and loss adjustment expenses, acquisition costs and other underwriting expenses (net of third party fee income). We believe that this measure of our performance focuses on the core fundamental performance of the Company’s reportable segments in any given period and is not distorted by investment market conditions, corporate expense allocations or income tax effects.

130

The following table reconciles underwriting income (loss) to net income (loss), the most comparable GAAP financial measure:

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["","December 31,","","November 30,"],["($ in thousands)","2023","","2022","","2021"],["Underwriting income (loss)","$","129,851","","","$","(31,717)","","","$","(56,024)"],["Total net realized and unrealized gains (losses) on investments and net investment income (loss)","239,855","","","64,870","","","308,976"],["Net gain on sale of equity method investment","211","","","6,991","","","54,557"],["Other income (loss), excluding third party fee income","397","","","(315)","","","(11)"],["Net foreign exchange gains (losses)","(6,185)","","","6,137","","","6,442"],["Corporate expenses","(76,691)","","","(20,142)","","","(22,472)"],["Impairment of goodwill","\u2014","","","(24,082)","","","(936)"],["Amortization of intangible assets","(10,783)","","","(12,832)","","","(13,431)"],["Interest expense","(21,434)","","","(15,741)","","","(14,897)"],["Income tax (expense) benefit","25,066","","","(3,104)","","","(12,365)"],["Net income (loss), prior to non-controlling interest","$","280,287","","","$","(29,935)","","","$","249,839"]]
[[/GREPCENT_TABLE]]

Third Party Fee Income

Third party fee income includes income that is incremental and/or directly attributable to our underwriting operations. It is primarily comprised of fees earned by the International segment for management services provided to third party syndicates and consortia and by the Bermuda segment for performance based management fees generated by our third party capital manager, Ada Capital Management Limited. We believe that this measure is a relevant component of our underwriting income (loss).

The table below reconciles third party fee income to other income, the most comparable GAAP financial measure:

[[GREPCENT_TABLE]]
[["","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"]]
[[/GREPCENT_TABLE]]

131

Other Underwriting Expenses

Other underwriting expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. 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). General and administrative expenses, the most comparable GAAP financial measure to other underwriting expenses, also includes corporate expenses.

The following table reconciles other underwriting expenses to general and administrative expenses, the most comparable GAAP financial measure:

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["","December 31,","","November 30,"],["($ in thousands)","2023","","2022","","2021"],["Other underwriting expenses","$","183,165","","","$","157,540","","","$","149,822"],["Corporate expenses","76,691","","","20,142","","","22,472"],["General and administrative expenses","$","259,856","","","$","177,682","","","$","172,294"]]
[[/GREPCENT_TABLE]]

Other Underwriting Expense Ratio

Other Underwriting Expense Ratio is a measure of the other underwriting expenses (net of third party fee income) incurred by the Company and is expressed as a percentage of net premiums earned.

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.

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.

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. 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.

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 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. 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. The Commitment Period consists of a three-year rolling term that automatically renews on an annual basis unless Hamilton Re or the Managing Member provide advance notice of non-renewal. Two Sigma is an SEC registered investment adviser specializing in quantitative analysis. 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. 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.

[[GREPCENT_TABLE]]
[["","As at"],["($ in thousands)","December 31, 2023","","December 31, 2022"],["Fixed maturity investments, at fair value","$","1,831,268","","","46","%","","$","1,259,476","","","36","%"],["Short-term investments, at fair value","428,878","","","11","%","","286,111","","","8","%"],["","2,260,146","","","57","%","","1,545,587","","","44","%"],["Investments in Two Sigma Funds, at fair value","851,470","","","21","%","","740,736","","","21","%"],["Total investments","3,111,616","","","78","%","","2,286,323","","","65","%"],["Cash and cash equivalents","794,509","","","20","%","","1,076,420","","","31","%"],["Restricted cash and cash equivalents","106,351","","","2","%","","130,783","","","4","%"],["Total cash","900,860","","","22","%","","1,207,203","","","35","%"],["Total cash & investments","$","4,012,476","","","100","%","","$","3,493,526","","","100","%"]]
[[/GREPCENT_TABLE]]

Total cash and investments increased from $3.5 billion at December 31, 2022 to $4.0 billion at December 31, 2023. The increase was primarily driven by increases in both the fixed maturity investments as we deployed more cash into the fixed maturity portfolio to take advantage of higher interest rates, and in the TS Hamilton Fund, primarily due to positive investment returns for the year ended December 31, 2023. The TS Hamilton Fund represents $1.8 billion of the total cash and investments at both December 31, 2023 and 2022.

133

Fixed Maturity and Short-term Investments - Trading

The Company’s fixed maturity portfolio and short-term investments at December 31, 2023 and 2022 are as follows:

[[GREPCENT_TABLE]]
[["","2023"],["($ in thousands)","Amortized Cost","","Gross Unrealized Gains","","Gross Unrealized Losses","","Fair Value"],["Fixed maturities:"],["U.S. government treasuries","$","717,134","","","$","5,137","","","$","(14,021)","","","$","708,250"],["U.S. states, territories and municipalities","4,656","","","\u2014","","","(286)","","","4,370"],["Non-U.S. sovereign governments and supranationals","55,662","","","2,175","","","(1,591)","","","56,246"],["Corporate","877,493","","","8,443","","","(22,060)","","","863,876"],["Residential mortgage-backed securities - Agency","180,661","","","435","","","(12,583)","","","168,513"],["Residential mortgage-backed securities - Non-agency","5,639","","","16","","","(671)","","","4,984"],["Commercial mortgage-backed securities - Non-agency","11,473","","","\u2014","","","(1,050)","","","10,423"],["Other asset-backed securities","14,781","","","20","","","(195)","","","14,606"],["Total fixed maturities","1,867,499","","","16,226","","","(52,457)","","","1,831,268"],["Short-term investments","427,437","","","1,441","","","\u2014","","","428,878"],["Total","$","2,294,936","","","$","17,667","","","$","(52,457)","","","$","2,260,146"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2022"],["($ in thousands)","Amortized Cost","","Gross Unrealized Gains","","Gross Unrealized Losses","","Fair Value"],["Fixed maturities:"],["U.S. government treasuries","$","498,841","","","$","99","","","$","(27,089)","","","$","471,851"],["U.S. states, territories and municipalities","4,741","","","\u2014","","","(434)","","","4,307"],["Non-U.S. sovereign governments and supranationals","14,191","","","363","","","(1,602)","","","12,952"],["Corporate","690,900","","","363","","","(43,786)","","","647,477"],["Residential mortgage-backed securities - Agency","111,234","","","\u2014","","","(14,824)","","","96,410"],["Residential mortgage-backed securities - Non-agency","5,147","","","\u2014","","","(772)","","","4,375"],["Commercial mortgage-backed securities - Agency","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Commercial mortgage-backed securities - Non-agency","10,283","","","\u2014","","","(1,064)","","","9,219"],["Other asset-backed securities","13,347","","","1","","","(463)","","","12,885"],["Total fixed maturities","1,348,684","","","826","","","(90,034)","","","1,259,476"],["Short-term investments","285,130","","","986","","","(5)","","","286,111"],["Total","$","1,633,814","","","$","1,812","","","$","(90,039)","","","$","1,545,587"]]
[[/GREPCENT_TABLE]]

The fair value of the Company’s fixed maturity portfolio and short-term investments increased from $1.5 billion at December 31, 2022 to $2.3 billion at December 31, 2023. The increase was driven by an increase in our fixed maturity portfolio as we continued to deploy excess cash into the fixed maturity portfolio to take advantage of higher interest rates.

$428.9 million and $264.1 million of the short-term investments balance at December 31, 2023 and 2022, respectively, is held within TS Hamilton Fund. The cash and short-term investment balances within TS Hamilton Fund 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 balance may fluctuate significantly from period to period as a result of movements in the underlying funds. See discussion below for further details on assets within TS Hamilton Fund.

134

The fair values and weighted-average credit ratings of our fixed maturity trading portfolio and short-term investments by type at December 31, 2023 and 2022 were as follows:

[[GREPCENT_TABLE]]
[["","2023","","2022"],["($ in thousands)","Fair Value","","% of Total","","Weighted average credit rating","","Fair Value","","% of Total","","Weighted average credit rating"],["Fixed maturities:"],["U.S. government treasuries","$","708,250","","","31","%","","Aaa","","$","471,851","","","30","%","","Aaa"],["U.S. states, territories and municipalities","4,370","","","\u2014","%","","Aa2","","4,307","","","\u2014","%","","Aa2"],["Non-U.S. sovereign governments and supranationals","56,246","","","2","%","","Aa2","","12,952","","","1","%","","Aa1"],["Corporate","863,876","","","39","%","","A3","","647,477","","","42","%","","A2"],["Residential mortgage-backed securities - Agency","168,513","","","7","%","","Aaa","","96,410","","","6","%","","Aaa"],["Residential mortgage-backed securities - Non-agency","4,984","","","\u2014","%","","Aaa","","4,375","","","\u2014","%","","Aaa"],["Commercial mortgage-backed securities - Non-agency","10,423","","","1","%","","Aa1","","9,219","","","1","%","","Aa1"],["Other asset-backed securities","14,606","","","1","%","","Aaa","","12,885","","","1","%","","Aa3"],["Total fixed maturities","1,831,268","","","81","%","","Aa3","","1,259,476","","","81","%","","Aa3"],["Short-term investments","428,878","","","19","%","","Aaa","","286,111","","","19","%","","Aaa"],["Total fixed maturities and short-term investments","$","2,260,146","","","100","%","","Aa2","","$","1,545,587","","","100","%","","Aa2"],["Fixed maturity and short-term investment credit quality summary:"],["Investment grade","","","100.0","%","","","","","","100","%"],["Non-investment grade","","","\u2014","%","","","","","","\u2014","%"],["Total","","","100.0","%","","","","","","100","%"]]
[[/GREPCENT_TABLE]]

The average credit quality, the average yield to maturity and the expected average duration 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 were as follows:

[[GREPCENT_TABLE]]
[["","2023","","2022"],["Average credit quality","Aa3","","Aa3"],["Average yield to maturity","4.5%","","4.7%"],["Expected average duration (in years)","3.3","","3.2"]]
[[/GREPCENT_TABLE]]

At December 31, 2023 and 2022, approximately 100% of the Company’s fixed maturity and short-term investments trading portfolio were rated investment grade (Baa2 or higher) by third party rating services. 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.

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 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. Through its investments in Two Sigma Futures Portfolio, LLC ("FTV"), Two Sigma Spectrum Portfolio, LLC ("STV") and Two Sigma Equity Spectrum Portfolio, LLC ("ESTV"), we seek to achieve absolute dollar denominated returns on a substantial capital base primarily by combining multiple hedged and leveraged systematic investment strategies with proprietary risk management and execution techniques. These systematic strategies include, but are not limited to, technical and statistically-based, fundamental-based, event-based, market condition-based and spread-based strategies as well as contributor-based and/or sentiment-based strategies and blended strategies. FTV primarily utilizes systematic strategies to gain broad macro exposure to FX, fixed income, equity and credit indices and commodities, predominantly by trading futures, spots, forwards, options, swaps, cash bonds and exchange traded products. STV primarily utilizes systematic strategies to trade U.S.-listed equity securities and related instruments and derivatives. ESTV primarily utilizes systematic strategies to trade non-U.S.-listed equity securities and related instruments and derivatives. At December 31, 2023, the Company owns a 21.1%, 16.2% and 8.8% interest in each of the FTV, STV and ESTV funds, respectively.

TS Hamilton Fund invests in Two Sigma Funds ("Two Sigma Funds"), which are stated at their estimated fair values, which generally represent the Company’s proportionate interest in the members’ equity of the Two Sigma Funds as reported by the respective funds based on the net asset value ("NAV") provided by the fund administrator. The Company accounts for its investment in Two Sigma Funds under the variable interest model at NAV as a practical expedient for fair value in the consolidated balance sheets.

The Company’s investments in Two Sigma Funds at December 31, 2023 and 2022 are as follows:

[[GREPCENT_TABLE]]
[["","2023","","2022"],["($ in thousands)","Cost","","Net Unrealized Gains (Losses)","","Fair Value","","Cost","","Net Unrealized Gains (Losses)","","Fair Value"],["Two Sigma Futures Portfolio, LLC (FTV)","$","433,911","","","$","(38,105)","","","$","395,806","","","$","438,625","","","$","(95,213)","","","$","343,412"],["Two Sigma Spectrum Portfolio, LLC (STV)","193,299","","","88,228","","","281,527","","","171,135","","","57,982","","","229,117"],["Two Sigma Equity Spectrum Portfolio, LLC (ESTV)","142,981","","","31,156","","","174,137","","","121,340","","","46,867","","","168,207"],["Total","$","770,191","","","$","81,279","","","$","851,470","","","$","731,100","","","$","9,636","","","$","740,736"]]
[[/GREPCENT_TABLE]]

The increase in the total fair value of the Company’s investments in Two Sigma Funds from $740.7 million at December 31, 2022 to $851.5 million at December 31, 2023 is primarily driven by collateral management within TS Hamilton Fund, along with an overall increase in the TS Hamilton Fund market value due to positive returns. The total net assets managed in TS Hamilton Fund represent our investment in and exposure to Two Sigma Funds’ investment strategies. However, as part of Two Sigma’s collateral management processes, any capital not required to be held within one of the specific trading vehicles is held in cash or short-term investments within TS Hamilton Fund as shown in the following table. 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. Creditors or beneficial interest holders of TS Hamilton Fund have no recourse to the general credit of the Company as the Company’s obligation is limited to the amount of its committed investment.

[[GREPCENT_TABLE]]
[["($ in thousands)","2023","","2022"],["Assets"],["Cash and cash equivalents","$","479,255","","","$","800,239"],["Short-term investments","428,878","","","264,104"],["Investments in Two Sigma Funds, at fair value","851,470","","","740,736"],["Receivables for investments sold","41,087","","","\u2014"],["Interest and dividends receivable","966","","","2,076"],["Total assets","1,801,656","","1,807,155"],["Liabilities"],["Accounts payable and accrued expenses","191","","","291"],["Withdrawal payable","6,480","","","145,738"],["Payable for investments purchased","62,440","","48,095"],["Total liabilities","69,111","","194,124"],["Total net assets managed by TS Hamilton Fund","$","1,732,545","","$","1,613,031"]]
[[/GREPCENT_TABLE]]

Total net assets in TS Hamilton Fund were $1.7 billion and $1.6 billion at December 31, 2023 and 2022, respectively.

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.

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.

Holding Company

As a holding company, Hamilton Insurance Group, Ltd. has no operations of its own and its assets consist primarily of investments in its subsidiaries. Accordingly, Hamilton Insurance Group, Ltd.’s future cash flows depend on the availability of dividends or other statutorily permissible distributions, such as returns of capital, from its subsidiaries. The ability to pay such dividends and/or distributions is limited by the applicable laws and regulations of the various countries and states in which the Company’s subsidiaries operate (refer to Note 18, Statutory Requirements in the audited consolidated financial statements for further details), as well as the need to maintain capital levels to adequately support insurance and reinsurance operations, and to preserve financial strength ratings issued by independent rating agencies.

During the years ended December 31, 2023 and 2022, and the year ended November 30, 2021, Hamilton Insurance Group, Ltd. received $44.0 million, $137.0 million, and $30.0 million, respectively, of distributions from its subsidiaries. Hamilton Insurance Group, Ltd.’s primary use of funds is interest payments on debt and credit facilities, capital investments in subsidiaries, and payment of corporate operating expenses. Management believes the dividend distribution capacity of Hamilton Insurance Group, Ltd.’s subsidiaries, which was estimated at $471.6 million at December 31, 2023, will provide Hamilton Insurance Group, Ltd. with sufficient liquidity for the foreseeable future.

137

Operating Subsidiaries

Hamilton Insurance Group, Ltd.’s operating subsidiaries primarily derive cash from the net inflow of premiums less claim payments related to underwriting activities and from net investment income. Historically, these cash receipts have been sufficient to fund the operating expenses of these subsidiaries, as well as to fund dividend payments to Hamilton Insurance Group, Ltd. The subsidiaries’ remaining cash flows are generally invested into the investment portfolio. The remaining cash flows have also been used to fund common share repurchases and to fund acquisitions in recent years.

The operating subsidiaries’ insurance and reinsurance business inherently provides liquidity, as premiums are received in advance (sometimes substantially in advance) of the time losses are paid. However, the amount of cash required to fund loss payments can fluctuate significantly from period to period, due to the low frequency and high severity nature of certain types of business written. As such, cash flows from operating activities may vary significantly between periods.

The payment of dividends by operating subsidiaries is, under certain circumstances, limited by the applicable laws and regulations in the various jurisdictions in which the subsidiaries operate. In addition, insurance laws require the insurance subsidiaries to maintain certain measures of solvency and liquidity. 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. 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.

Consolidated Cash Flows

Consolidated cash flows from operating, investing and financing activities in the years ended December 31, 2023 and 2022, and November 30, 2021 were as follows:

[[GREPCENT_TABLE]]
[["","For the Years Ended"],["($ in thousands)","December 31, 2023","","December 31, 2022","","November 30, 2021"],["Total cash provided by (used in):"],["Operating activities","$","283,155","","","$","190,927","","","$","226,529"],["Investing activities","(652,088)","","","133,102","","","137,824"],["Financing activities","59,016","","","(69,617)","","","(67,996)"],["Effect of exchange rate changes on cash","3,574","","","(11,335)","","","(1,508)"],["Net increase (decrease) in cash and cash equivalents","$","(306,343)","","","$","243,077","","","$","294,849"]]
[[/GREPCENT_TABLE]]

Net cash provided by (used in) operating activities was $283.2 million, $190.9 million and $226.5 million in the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. Cash inflows from insurance and reinsurance operations typically include premiums, net of acquisition costs, and reinsurance recoverables. Cash outflows principally include payments of losses and loss expenses, payments of premiums to reinsurers and operating expenses. Cash provided by operating activities fluctuates due to timing differences between the collection of premiums and reinsurance recoverables and the payment of losses and loss adjustment expenses, and the payment of premiums to reinsurers.

Net cash provided by (used in) investing activities was $(652.1) million, $133.1 million and $137.8 million in the years ended December 31, 2023 and 2022, and November 30, 2021, respectively, primarily driven by the timing of investing activities and the net proceeds of both turnover and new investment in our fixed maturity and short-term investments.

138

Net cash provided by (used in) financing activities was $59.0 million, $(69.6) million and $(68.0) million in the years ended December 31, 2023 and 2022, and November 30, 2021, respectively. 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. Allocations paid to TS Hamilton Fund were the primary drivers of the net financing cash outflows in each of the years ended December 31, 2022 and November 30, 2021.

The Company believes that annual positive cash flows from operating activities will be sufficient to cover claims payments, absent a series of additional large catastrophic loss activity. However, should claim payment obligations accelerate beyond the Company’s ability to fund payments from operating cash flows, the Company would utilize cash and cash equivalent balances and/or liquidate a portion of the Company’s trading investment portfolio and/or access certain credit facilities. The Company’s trading portfolio is heavily weighted towards conservative, high quality and highly liquid securities.

In addition, if necessary, the Company generally has two options related to liquidating a portion of the investment portfolio in the TS Hamilton Fund, subject to Hamilton Re’s minimum investment commitment, which are as follows:

•Monthly liquidity - Subject to certain conditions, Hamilton Re may request a whole or partial withdrawal of its capital account, no later than fifteen days prior to the end of a calendar month, effective as of the last day of such calendar month.

•Daily liquidity - Subject to certain limited circumstances, including the need to meet obligations pursuant to Hamilton Re’s underwriting operations, Hamilton Re may request a withdrawal of all or a portion of its capital account upon at least one business day’s written notice of such withdrawal request date to the Managing Member. Claim payments pertaining to any such large catastrophic event would be paid out over a period spanning many months.

Capital Resources

Management monitors the Company’s capital adequacy on a regular basis and seeks to adjust its capital according to the needs of the business. In particular, the Company requires capital sufficient to meet or exceed the capital adequacy ratios established by rating agencies for maintenance of appropriate financial strength ratings and the capital adequacy tests performed by regulatory authorities. From time to time, rating agencies and regulatory authorities may make changes in their models and methodologies, which could increase the amount of capital the Company requires. The Company may seek to raise additional capital or return capital to shareholders through some combination of common share repurchases and cash dividends. In the normal course of operations, management may from time to time evaluate additional share or debt issuances given prevailing market conditions and capital management strategies. In addition, the Company enters into agreements with financial institutions to obtain letter of credit facilities for the benefit of its operating subsidiaries to support their business operations. Management believes that the Company holds sufficient capital to allow it to take advantage of market opportunities and to maintain its financial strength ratings and comply with various local statutory regulations.

The following table summarizes consolidated shareholders' equity:

[[GREPCENT_TABLE]]
[["","As at"],["(Expressed in thousands of U.S. Dollars)","December 31, 2023","","December 31, 2022"],["Shareholders' equity","2,047,850","","","1,664,183"]]
[[/GREPCENT_TABLE]]

The Company’s consolidated shareholders' equity was $2.0 billion at December 31, 2023, an increase of 23.1% compared to $1.7 billion at December 31, 2022. The major factors contributing to the increase in consolidated shareholders' equity during the period ended December 31, 2023 were:

•$258.7 million of net income (loss) and other comprehensive income (loss) attributable to common shareholders for the year ended December 31, 2023;

•$80.6 million of additional paid-in capital related to the net proceeds of shares issued in connection with the Company's fourth-quarter IPO; and

•$44.4 million of additional paid-in capital related to the Company's share based compensation program.

139

Debt

On June 23, 2022, the Company renewed its unsecured $150 million term loan credit arrangement, as amended from time to time (the "Facility"), with various lenders as arranged by Wells Fargo Securities, LLC. 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. In the event of default, an additional 2% interest in excess of (a) or (b) will be levied, not to exceed the highest rate permissible under applicable law, and certain types of loans may not be available for borrowing by the Company under the Facility. The Facility matures on June 23, 2025, unless accelerated pursuant to the terms of the Facility, and it contains usual and customary representations, warranties, conditions and covenants for bank loan facilities of this type. The Facility also contains certain financial covenants which cap the ratio of consolidated debt to capital and require that the Company maintain a certain minimum consolidated net worth. The net worth requirement is recalculated effective as of the end of each fiscal quarter. As of December 31, 2023, the outstanding loan balance was $150.0 million, the fair value was $151.0 million, the unamortized issuance costs were $0.2 million, and the Company was in compliance with all covenants.

Debt issuance costs are amortized over the period during which the Facility is outstanding, as an offset to investment income. The Company amortized debt issuance costs of $0.1 million or less in each of the years ended December 31, 2023 and 2022, and the year ended November 30, 2021.

Common Shares

The Company’s authorized and issued share capital at December 31, 2023 and 2022 is comprised as follows:

[[GREPCENT_TABLE]]
[["($s in thousands, except share and per share amounts)"],["Authorized:"],["Common shares of $0.01 par value each (2023: 150,000,000 and 2022: 135,000,000)"],["Issued, outstanding and fully paid:","2023","","2022"],["Class A common shares (2023: 28,644,807 and 2022: 30,520,078)","$","286","","","$","305"],["Class B common shares (2023: 56,036,067 and 2022: 42,042,155)","560","","","420"],["Class C common shares (2023: 25,544,229 and 2022: 30,525,626)","255","","","305"],["Total","$","1,101","","","$","1,030"]]
[[/GREPCENT_TABLE]]

In general, holders of Class A common shares and Class B common shares have one vote for each common share held while the Class C common shares have no voting rights, except as required by law. 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). 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.

Credit Facilities

The Company has several available letter of credit facilities and a revolving loan facility provided by commercial banks. The letter of credit facilities are utilized to provide collateral to reinsureds of Hamilton Re and its affiliates to the extent required under reinsurance agreements and to support capital requirements at Lloyd’s.

On December 5, 2018 and December 27, 2018, Hamilton Re Ltd entered into a Master Agreement for Issuance of Payment Instruments and a Facility Letter for Issuance of Payment Instruments respectively, with CitiBank Europe Plc ("CitiBank Europe"), under which CitiBank Europe agreed to provide an uncommitted secured letter of credit facility for the issuance of standby letters of credit or similar instruments in multiple currencies. 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. The Master Agreement contains events of default customary for facilities of this type. In the facility letter,

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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.

On June 23, 2022, the Company and Hamilton Re amended and restated their unsecured credit agreement with a syndication of lenders (the “Unsecured Facility"). Under the Unsecured Facility, the lenders have agreed to provide up to an aggregate of $415 million of letter of credit capacity for Hamilton Re, up to $150 million of which may be utilized for revolving loans to be issued to the Company. To the extent such loans are issued, the available letter of credit capacity shall decrease proportionally, such that the aggregate credit exposure for the lenders under the credit agreement is $415 million. Capacity is provided by Wells Fargo, National Association, Truist Bank, BMO Harris Bank N.A., Commerzbank AG, New York Branch, HSBC Bank USA, N. A., and Barclays Bank PLC. Unless renewed or otherwise terminated in accordance with its terms, the Unsecured Facility is scheduled to terminate on June 23, 2025. At December 31, 2023, there were no loan amounts outstanding under this facility.

On August 11, 2023, Hamilton Re and HIDAC amended their committed letter of credit facility agreement with Bank of Montreal ("BMO"), with the Company as guarantor, under which BMO agreed to make available a secured letter of credit facility of $50 million for a term that will expire on August 13, 2024. The facility bears a fee of 40 basis points for letters of credit issued and 15 basis points on any unutilized portion of the facility.

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. 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. 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.

The Company’s obligations under its credit facilities require the Company, Hamilton Re and the other parties thereto to comply with various financial and reporting covenants. All applicable entities were in compliance with all such covenants at December 31, 2023.

The Company anticipates renewing its existing credit facilities at their stated expiry dates on materially similar terms to the expiring.

Certain of the Company's credit facilities are secured by pledged interests in the TS Hamilton Fund or the Company's fixed income security portfolio or cash. The Company’s credit facilities at December 31, 2023, and associated securities pledged, were as follows:

[[GREPCENT_TABLE]]
[["($s in thousands)","2023"],["Available letter of credit and revolving loan facilities - commitments","$","995,000"],["Available letter of credit and revolving loan facilities - in use","694,681"],["Security pledged under letter of credit and revolving loan facilities:"],["Pledged interests in TS Hamilton Fund","$","241,711"],["Pledged interests in fixed income portfolio","229,387"],["Cash","1,624"]]
[[/GREPCENT_TABLE]]

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Financial Strength Ratings

The Company’s principal insurance and reinsurance operating subsidiaries are assigned financial strength ratings from internationally recognized rating agencies, including A.M. 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. Independent ratings are one of the important factors that establish a competitive position in insurance and reinsurance markets. The rating agencies consider many factors in determining the financial strength rating of an insurance company, including the relative level of statutory surplus necessary to support the business operations of the company. These ratings are based on factors considered by the rating agencies to be relevant to policyholders, agents and intermediaries and are not directed toward the protection of investors. Ratings are not recommendations to buy, sell or hold securities.

On May 26, 2023, A.M. Best, an internationally recognized agency, affirmed its financial strength rating of “A-” (Excellent) and Long-Term Issuer Credit Ratings of “a-” (Excellent) of Hamilton Re and Hamilton Insurance DAC, each a wholly owned subsidiary of Hamilton. The outlooks on these ratings were changed to "positive" from "stable" on April 22, 2022.

On July 25, 2023, Kroll Bond Rating Agency, an internationally recognized agency, affirmed its insurance financial strength rating of “A” of Hamilton Re and the “BBB+” issuer rating of Hamilton Insurance Group, Ltd. The outlook on these ratings was changed to "positive" from "stable" on July 6, 2022.

On December 13, 2023, S&P Global, an internationally recognized agency, increased its financial strength rating of the Lloyd's market from "A+" to "AA-" with a stable outlook.

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. 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.

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. Loss reserves do not represent an exact calculation of the liability. Estimates of ultimate liabilities are contingent on many future events and the eventual actual outcome of these events may be substantially different from the assumptions underlying the reserve estimates. 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.

See Note 9, Reserve for Losses and Loss Adjustment Expenses to the audited consolidated financial statements for the reconciliation of the gross and net reserve for losses and loss adjustment expenses and for a discussion of prior year reserve development.

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Contractual Obligations and Commitments

At December 31, 2023, contractual obligations and commitments by period due were:

[[GREPCENT_TABLE]]
[["","","Payment Due by Year"],["(Expressed in thousands of U.S. Dollars)","","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["Debt(1)","","$","150,000","","","$","\u2014","","","$","150,000","","","$","\u2014","","","$","\u2014"],["Estimated interest payments(1)","","27,150","","","10,980","","","16,170","","","\u2014","","","\u2014"],["Total debt obligations","","177,150","","","10,980","","","166,170","","","\u2014","","","\u2014"],["Losses and loss adjustment expenses(2)","","3,030,037","","","981,726","","","1,007,852","","","470,324","","","570,135"],["Operating lease obligations(3)","","7,247","","","3,078","","","3,182","","","987","","","\u2014"],["Total","","$","3,214,434","","","$","995,784","","","$","1,177,204","","","$","471,311","","","$","570,135"]]
[[/GREPCENT_TABLE]]

(1) Estimated debt payments have been calculated in the above table with reference to the interest rate in effect at December 31, 2023. Refer to Note 11, Debt and Credit Facilities in the audited consolidated financial statements for further details.

(2) Losses and loss adjustment expenses are presented gross of estimated recoveries. The amount and timing of associated cash flows are subject to significant judgement based on the best information currently available and actual settlement may vary significantly from the estimates presented above. Refer to Critical Accounting Estimates, Losses and Loss Adjustment Expenses for further detail.    

(3) Refer to Note 16, Commitments and Contingencies for further detail on our lease commitments.

Transactions with Related Parties

The discussion of transactions with related parties is included in Note 17, Related Party Transactions in the Company’s audited consolidated financial statements.

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