Hamilton Insurance Group, Ltd. HG

Hamilton Insurance Group, Ltd. (NYSE: HG) — deep-value analysis

Date: 2026-09-02 · Reference price: … (close 2026-09-01) · Market cap: 3.456 bn. USD · Reporting currency = price currency = USD Primary sources: 10-K FY2025 (filed 2026-02-25, CIK 1593275), 10-Q Q1 2026 (2026-05-06), 10-Q Q2 2026 (2026-08-07), 10-K FY2024 (2025-02-27), DEF 14A (2026-03-24), data pack rapoarte/deep/data-pack-HG-20260902.md, simulation rapoarte/deep/mc-HG-20260902.json. PRIOR GBL score (tracker, evaluated 2026-07-26): 61.0% — MONITOR (Graham 5.5 · Buffett 5.5 · Lynch 6.5 = 17.5/30; F-Score 6.0; denominator 59).

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Executive summary

Hamilton is a Bermuda specialty insurer/reinsurer, listed on the NYSE in November 2023, that operates across three underwriting platforms — Syndicate 4000 at Lloyd's and HIDAC Dublin (the International segment), Hamilton Re and Ada Re (the Bermuda segment), plus Hamilton Select (US E&S) — and that invests a third of its invested assets in a "fund of one" quant vehicle managed by Two Sigma. In 2025 it wrote gross premiums of 2,923.1 mn. USD (… versus 2024), delivered a 92.9% combined ratio and net profit attributable to common shareholders of 576.7 mn. USD, i.e. an ROE of 22.4% and 24.2% growth in book value per share, to … (10-K FY2025, "Selected Consolidated Financial Data," lines 1067-1073 and 1290-1300 of the filing text).

The thesis is simple and has a single pressure point. The company trades at 6.1x the last four quarters' profit and at 1.21x book value (… at 06/30/2026), at an FCFE yield of 16.7%. In two and a half years since the IPO it has cut share count by 10.5% (110.2 mn. → 98.6 mn.), repurchased a block of 9.1 mn. Class A shares from the Blackstone group at …/share in May 2024 — 15% below that day's market price and roughly 0.61x book value at the time — and paid its first-ever dividend, a special one of …/share (205.7 mn. USD) in March 2026. This is exactly the capital-allocation profile Thorndike looks for.

The pressure point: of the 824.9 mn. USD of 2025 pre-tax profit, only 148.8 mn. (18%) comes from underwriting; 775.1 mn. comes from investments, and 564.3 mn. of that is produced by the Two Sigma fund — of which Two Sigma retains 263.3 mn. as an incentive allocation (Note 5 and Note 15 of the 10-K, lines 2865-2871 and 2754-2755). That's 46.7% of the fund's gross result, plus a 2.5%/year management fee (52.6 mn. in 2025). The "minority interest" of 263.4 mn. USD on the income statement is not a minority shareholder — it's the fund manager's success fee, paid in cash and fully withdrawn every year (the balance-sheet NCI balance at 12/31/2025: 172 thousand USD). Any model that starts from "net income" without passing through this filter overstates value by ~45%.

The second point: the technical result is deteriorating right now. Q2 2026's combined ratio was 95.0% versus 86.8% in Q2 2025 (10-Q Q2 2026, line 1024), with 45.7 mn. USD of catastrophe losses from the Middle East conflict and unfavorable prior-year reserve development. Over the first six months of 2026, reserve development has been unfavorable by 17.3 mn. USD, after three consecutive years of favorable releases (64.9 mn. in 2025, 20.4 mn. in 2024, 15.6 mn. in 2023). The casualty line has produced unfavorable development in each of the last three years — 3.4 mn., 14.2 mn., 27.7 mn. — against a backdrop of a casualty IBNR reserve that grew 31.3% in a year, to 2,204.5 mn. USD.

Estimated value. Normalized owner earnings: 430 mn. USD/year (…/diluted share), obtained by normalizing the combined ratio to 93.3%, the Two Sigma fund's net return to 10% (versus 16.0% and 16.3% realized) and applying an average 11% tax rate to anticipate the 15% Bermuda rate from 2030. Five independent models give a range from … to … margin of safety, with a median of … and a Monte Carlo median (20,000 scenarios) of …. The range is wide precisely because the earnings base is bifurcated: if Two Sigma continues at 15… net, the stock is worth 60-…; if the fund reverts to 6… and the combined ratio rises to 96%, it's worth about what it costs today.

Verdict: BUY, SMALL POSITION (2… of portfolio), with a preference for adding below 32-…. The price paid is defended by book value (1.21x, with 79% of assets in cash and mid-rating bonds), but the thesis depends on an investment-management contract the company doesn't control and which renews on three-year periods. This isn't a position to concentrate on. Partial convergence with the prior GBL score of 61% — the tracker is right to say "monitor," but for incomplete reasons (see the last chapter).

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