Hamilton Insurance Group, Ltd. Price & Performance (HG)

Thank you, John, and hello, everyone. Let me start by welcoming you to Hamilton's Hamilton year and fourth quarter twenty twenty four earnings call. In terms of previewing our call today, I will focus my comments on the full year with Craig providing more details on our financial results in a moment. Before covering our results though, it's important to note that the risks we cover remain prevalent around the world. And we are unfortunately reminded of this all too often. The devastating and deadly wildfires which recently took place in Los Angeles, represent just one of the many risks affecting individuals, families and communities. Our thoughts are with all those who have been affected and our heartfelt thanks to the first responders. We are doing our part by working swiftly to compensate our clients for their financial losses. And we take pride in delivering on our promises and helping those affected. We are still assessing our loss estimates. But our early views indicate a range of $170,000,000 net of reinsurance and reinstatement premiums. This is based on an industry insured loss range of $35,000,000,000 to $45,000,000,000 Our loss estimate for this event is within our modeled in this case about 0.3%. [indiscernible] The estimated losses for this event will be reported in the company's first quarter twenty twenty five financial results.

Turning to 2024, there was no shortage of similarly destructive natural catastrophes. With approximately $140,000,000,000 in insured industry catastrophe losses. Despite this backdrop, and the collapse of the Francis Scott Key Bridge in Baltimore, earlier in the year Hamilton completed an outstanding first full year as a public company. Our financial results were excellent for both of our reporting segments. [indiscernible] and both segments continued to grow thoughtfully and profitably. As a group, we had gross premiums written of over $2,400,000,000 an increase of 24% over 2023. Our combined ratio was an impressive 91.3% resulting in nearly $150,000,000 of underwriting income again in a year with significant insured loss activity. One of the reasons for this underwriting results is the diversification of our business. For the full year 2024, Hamilton's business was split 45% casualty, 30% specialty and 25% property. Investment results were also exceptional. With total investment return of $360,000,000 The combined result was a net income to common shareholders of $400,000,000 representing an 18.3% return on average equity and a 23.5% growth in book value per share for the year. We are very proud of these results as they are a testament to the disciplined execution of our strategy and our strong underwriting During 2024, we focused specifically on executing the objectives we set out during our IPO process.

Namely strategic growth, achieved by raising and then deploying capital into a robust insurance and reinsurance marketplace. Second, maintaining a sharp eye on underwriting profitability third, achieving ratings upgrades and fourth, being good stewards of capital. Let me touch on each of these in turn. Both of our underwriting segments, International, which houses our insurance focused platforms, Hamilton Global Specialty and Hamilton Select, and Bermuda which houses our reinsurance focused platform Hamilton Re had strong results. Reflecting a growing and well diversified book of business. Our larger segment, International, wrote $1,300,000,000 of gross premiums and reported a 95.6% combined ratio. An excellent result, which is also reflective of the diversified lower volatility portfolio that we have built there over time. As mentioned, within international, where we write the majority of our specialty insurance we have two underwriting platforms. Hamilton Global Specialty which includes Lloyd's Syndicate 4,000, and Hamilton Select, our specialized underwriting platform for hard to place U. S. E and S business.

Hamilton Global Specialty wrote $1,200,000,000 of gross premiums during 2024, continuing a path of thoughtful double digit growth. Hamilton Select which is still in its early stages of development, wrote $117,000,000 in premiums during the year, a number which is slightly ahead of where we thought it would be and reflective of the momentum they have achieved in the strong U. S. E and S market where they source their business. [indiscernible] Our Bermuda segment, which is comprised of Hamilton Re, wrote $1,100,000,000 in gross premiums and reported a combined ratio of 87% for the full year 2024. The second consecutive year with a combined ratio in the 80s. Hamilton Re's business is predominantly reinsurance, and well balanced between casualty, property and specialty classes. Our very strong relationships with key global and national clients has allowed us to put together a very well diversified book of business. Bermuda remains one of the key global centers for reinsurance and insurance and we have a strong team in place Specific to Bermuda Insurance, we wrote approximately $130,000,000 in gross premiums during 2024 split roughly fifty-fifty [indiscernible] In addition to posting excellent financial results in '20 were also gratified by the recognition provided to Hamilton by the three global rating agencies, A and BEST, and KBRA.

In April of this year, Hamilton Re received an upgrade to A from AM Best, that in July received an initial published rating of A- from Fitch. In July, Hamilton Re Hamilton had its A rating affirmed by KBRA. Ratings are very important to our customers and broker partners. And as we have discussed in prior calls, these higher ratings which are now on par with many of our larger global peers, have and will continue to afford Hamilton opportunities for additional profitable business. Our fourth significant objective for 2024 was to be responsible stewards of shareholder capital. To that end, we repurchased a number of shares below book value an action which resulted in a notable increase in shareholder value. During 2024, we repurchased 10,600,000.0 shares at a total cost of $138,000,000 This includes both open market repurchases and a large single repurchase We of course hope that our shares will not always be undervalued, but when they are, we have the capital and are well positioned to act decisively. Turning now to the important January 1 reinsurance renewals. An annual renewal date for a sizable percentage of the global reinsurance [indiscernible] By this time, you will have heard quite a bit about the movement in rates across various classes and territories, So I will only provide brief comments on this in a few moments.

What I would like to say now is that Hamilton fared very well at our January 1 renewals, The work we have done in establishing and nurturing relationships with key clients resulted in strong signings and enabled us to continue building a diverse portfolio we believe will deliver attractive returns. For Property Cat, we saw the dynamic described by many of our peers with an oversupply of capacity at oneone and rates experiencing some downward pressure. That said, the step change in terms of terms and conditions specifically the elevated attachment points remained intact. A very important For Casualty Re, while commissions generally remained flat, underlying rates continue to improve and will flow through to us since the majority of our business is quota share. Regarding specialty reinsurance, this segment has a number of diverse lines of business and the results were therefore a mixed bag. With some classes more competitive than others. One area where we did well involves our recently launched credit bond and political risk reinsurance offering. Which met with keen interest from many of our clients and was entered into at an opportune time in the market. While we will provide more detail in our first quarter call, for now, suffice it to say, that the take up on our new offering exceeded our expectations.

Looking ahead to the mid year property cat renewals, we anticipate a higher level of demand Also, given that many programs impacted by the wildfires and twenty twenty four hurricanes renew mid year, we expect an increase in rates for loss affected accounts. Otherwise, we expect stable renewals. Given the strength of our balance sheet and our strong talent base, as well as the client relationships we have built we are well positioned for the year ahead. Moving away from Bermuda, and back to our International segment, although January 1 is not the same milestone date given that insurance business renews throughout the year, the first quarter is still important in setting the tone. In the early days of 2025, we continue to see attractive opportunities across many classes within our international portfolio. In particular, in some of the specialty insurance lines of business, which have long had a natural home in Lloyd's. We will, for example, continue to expand our marine offering which includes hull, liability and cargo lines, the Lloyd's market has a robust ecosystem for marine classes built over many years and Syndicate four thousand is an active participant with a skilled team in place. We also see opportunities to grow our property insurance line and have recently added underwriting talent in this area.

Syndicate4000's long term performance versus the market has been [indiscernible] We are home to a well regarded team of specialist underwriters who are in many cases considered leaders in their field. The team is laser focused on bottom line profitability and has developed a resilient and diversified book focused on specialty and casualty insurance lines. The delivery of low volatility and cross cycle profitability has been achieved by enforcing underwriting discipline, a across over 20 lines of business spanning casualty, specialty including marine and property classes. As for our Hamilton Select platform, which again is focused on hard to place small to midsize commercial casualty risks in The U. S. E and S market we continue to see strong and increasing submission flow and attractive opportunities, particularly in general and excess casualty. Despite increased competition in the E and S space, pricing levels remain attractive for the risks we are writing and we see sufficient growth opportunities for our business. I will conclude with a few comments on our loss reserves. We are proud of the continued strength of our reserves which stems from our disciplined, reserving philosophy.

In this context, we are happy to report that 2024 marks the eleventh consecutive year of favorable reserve development for Hamilton. As you know, we have our reserves reviewed by an external actuary twice a year and it was gratifying to see that following their recently completed fourth quarter review of our reserves, our surplus above their best estimate has increased. We continue to monitor and adjust for inflationary trends, notably U. S. Social inflation in a number of our casualty lines, and have well established processes to ensure reserving, planning and pricing incorporates what we believe to be appropriate loss trend assumptions. In conclusion, I feel proud of what Hamilton has achieved and I am excited about our business prospects and the potential to continue producing strong financial returns. The hard work the team has put in over the years and its culture of underwriting and operational discipline has positioned us well. We have a well diversified global book of business focused on some of the best priced classes of business efficient operating platforms in the locations that matter to our [indiscernible] a very strong balance sheet, and a world class team who are collaborative, and motivated to achieve our shared goals.

With that, I'll now turn the call over to Craig.

Thank you, Pina, and hello, everyone.

Hamilton had a record year with 2024 net income of $400,000,000 up 55% over the prior year. And a return on average equity of 18.3% compared to 13.9% in the prior year. As a result of active share repurchases, we also grew book value per share by 24% over the prior year. The company had another very strong year of premium growth in an attractive market environment record underwriting income, and strong investment returns to close out an excellent full year financial result in 2024. [indiscernible] For the fourth quarter of twenty twenty four, Hamilton reported net income of $34,000,000 equal to $0.32 per diluted share producing an annualized return on average equity of 5.8%. This compares to net income of $127,000,000 or $1.15 per diluted share and an annualized return on average equity of 26.4% the fourth quarter of twenty twenty three. As a reminder, the fourth quarter twenty twenty three included an income tax benefit of 7.1% on annualized return on equity or $35,000,000 and significantly lower catastrophe losses. With those numbers as highlights, let me provide some additional detail around our underwriting and investment income components for and for the full year. Starting with underwriting results. Hamilton continues to grow its top line at an impressive double digit rate In fact, our compound annual growth rate from 2020 to 2024 was 22%.

For the full year 2024, gross premiums written increased to a record $2,400,000,000 compared to $2,000,000,000 this time last year. An increase of 24%. All three of our underwriting platforms Hamilton Select Hamilton, and Hamilton Re continue to take advantage of attractive market conditions all of which contributed Starting with some quarterly underwriting figures, Underwriting income for the group was $22,000,000 for the fourth quarter. Compared to underwriting income of $36,000,000 in the fourth quarter last year. The group combined ratio was 95.4% compared to 90.2% in the fourth quarter of twenty twenty three. In terms of combined ratio components, the loss ratio increased due to catastrophe losses in the quarter partially offset by a decrease in the overall expense ratio. In the fourth quarter, the loss ratio increased 6.8 points to 60.1% compared to 53.3% the prior period.

The increase was primarily driven by $49,000,000 or 10.2 points of net current and prior year catastrophe losses made up of Hurricane Hamilton, for $38,000,000 and Hurricane Helene for $19,000,000 partially offset by favorable prior year development of $8,000,000 This compares to $7,000,000 or 1.8 points of catastrophe losses reported in the fourth quarter last year. We had favorable prior year attritional development of 1.3 points driven mostly by property lines. This compares to 1.7 points of favorable development in the fourth quarter last year. So as Pina highlighted earlier, we continue our track record of favorable loss reserve development each year since the inception of the company. Next, I'd like to go through some of our twenty twenty four year end underwriting metrics.

For the full year 2024, underwriting income for the group was a record $149,000,000 compared to underwriting income of $130,000,000 in 2023. The group combined ratio was 91.3% compared to 90.1% in 2023. The nominal increase in the combined ratio was due to increased catastrophe losses and attritional losses partially offset by a decrease in the expense ratio. The loss ratio increased four points to 58.2% compared to 54.2% in 2023.

The increase was primarily driven by $88,000,000 or 5.1 points of net current and prior year catastrophe losses made up of Hurricane Helene, for $53,000,000 Hurricane Milton for $38,000,000 The Calgary hailstorms for $13,000,000 and Hurricane Debbie for $6,000,000 partially offset by favorable prior year development of $21,000,000 This compares to $37,000,000 or 2.8 points of net current and prior year catastrophe losses in 2023. The attritional loss ratio was 53.1% an increase of 0.9 points compared to the full year 2023. The primary reason for the increase was due to 2.2 points related to the Baltimore Bridge loss in the first quarter of the year.

The expense ratio decreased 2.8 points to 33.1% compared to 35.9% in the full year of 2023. The decrease in the full year 2024 expense ratio was mainly driven by improved operating leverage, due to growth in our earned premium base. As always, I'd encourage you to use the full year 2024 attritional loss and expense ratios as an indication for where we expect the current book to perform. As for corporate expenses, there was an increase in the variable expenses However, this is associated with our long term incentive compensation plan which is based on performance over a three year period and compensation costs related to the value appreciation pool. For the full year 2024, corporate expenses were $61,000,000 Going forward, this number should come down to about $50,000,000 to $55,000,000 per year. Next, let's look at the results by segment. Let's start with the International segment. Which includes our specialty insurance businesses, Hamilton Global Specialty, and Hamilton Select. For the full year 2024, international gross premiums written grew to $1,300,000,000 from $1,100,000,000 an increase of 18%. This was primarily driven by growth in both new and existing business and improved pricing in casualty and property insurance classes, and specialty reinsurance and insurance classes.

In 2024, international had record underwriting income of $39,000,000 and a combined ratio of 95.6%, compared to underwriting income of $37,000,000 and a combined ratio of 94.7% in 2023. A very stable result year over year which is what we expect from the diversified insurance portfolio that we've constructed. The attritional loss ratio increased 0.3 points to 53.5% compared to 53.2% in 2023.

In other words, very consistent year over year. The international acquisition expense ratio decreased two points to 24.5% compared to 26.5% for the full year 2023. The decrease was primarily driven by reduced profit commissions and higher ceding commission income.

The other underwriting expense ratio decreased 1.8 points to 14.9% compared to 16.7% in the full year 2023 as a result of growth in the premium base. Moving to some quarterly figures. For the fourth quarter, International had underwriting income of $9,000,000 dollars and a combined ratio of 96.3%. Compared to underwriting income of $2,000,000 and a combined ratio of 99.1% in the fourth quarter last year. The international current year attritional loss ratio decreased 3.7 points to 50.8% in the fourth quarter compared to 54.5% in the fourth quarter last year. The decrease was primarily driven by favorable experience on the property classes as the fourth quarter is when we do our property reserve reviews. I'll now turn to the Bermuda segment. Which houses Hamilton Rea, and Hamilton Re U. S. The entities that predominantly write our reinsurance business. For the full year 2024, Bermuda gross premiums written grew to $1,100,000,000 from $846,000,000 last year an increase of 32%. The increase was primarily driven by new business, expanded participations on existing business, and rate increases in casualty, property and specialty reinsurance classes. Approximately $80,000,000 of growth during 2024 was directly tied to our AM Best rating upgrade. We expect a similar power amount of growth resulting from the upgrade during 2025, for total growth of about $160,000,000 in gross premiums written.

In 2024, Bermuda had record underwriting income compared to underwriting income of $93,000,000 and an 84.9% combined ratio in 2023. The increase in the full year combined ratio was primarily related to catastrophe losses in the year.

Bermuda had $61,000,000 or 7.2 points of net catastrophe losses in 2024 compared to $24,000,000 The Bermuda current year attritional loss ratio increased 1.6 points to 52.7% in 2024.

This was primarily driven by 3.1 points from the Baltimore Bridge loss.

The Bermuda acquisition expense ratio increased slightly by 0.4 points to 20.3%. Compared to 19.9% in 2023. Primarily due to business mix. The other underwriting expense ratio decreased 1.4 points to 6.3% compared to 7.7% in the full year 2023. As a result of growth in our premium base. Moving to a few of the quarterly figures. For the fourth quarter, Bermuda had an underwriting income of $13,000,000 and a combined ratio of 94.3% compared to underwriting income of $34,000,000 and a 79.6% combined ratio in the Fourth Quarter Last Year. The Increase In The Combined Ratio Was Primarily Related To Catastrophe Losses In Bermuda had $32,000,000 of net catastrophe losses in the fourth quarter of twenty twenty four compared to $6,000,000 of net catastrophe losses in the fourth quarter of twenty twenty three. The current year attritional loss ratio was 51.7% which was generally flat compared to last year. Now turning to investment income for the quarter. Total net investment income for the fourth quarter was $36,000,000 compared to investment income of $114,000,000 in the fourth quarter of twenty twenty three. The fixed income portfolio, short term investments and cash produced a loss of $31,000,000 in the quarter compared to a gain of $77,000,000 in the fourth quarter of twenty twenty three.

As a reminder, this includes the realized and unrealized gains and losses that Hamilton reports through net income as part of our trading investment portfolio. During the fourth quarter, the rising treasury yields produced a mark to market loss in our fixed income bond portfolio. The new money yield was 4.7% on investments purchased This quarter, The duration of the portfolio was three point four years at 12/31/2024, compared to three point three years at the end of twenty twenty three. The Two Sigma Hamilton Fund produced a $67,000,000 gain or 3.7% for the fourth quarter of twenty twenty four compared to a $37,000,000 gain or two point Turning to some full year 2024 investment figures. Total investment income in 2024 was $362,000,000 compared to $219,000,000 in 2023.

The fixed income portfolio short term investments and cash produced income of $87,000,000 compared to $96,000,000 in 2023. Average yield to maturity on this portfolio was 4.7% compared to 4.5% at year end 2023. The average credit quality of portfolio remained strong at AA3. For the full year 2024, the Two Sigma Hamilton Fund had a return of 16.3% or $274,000,000 compared to 7.6% or $122,000,000 for 2023. We still plan for 10% annual return from the Fund but we've actually seen total annualized average returns of about 13% since the inception of the fund in 2014.

The latest estimate we have for the Two Sigma Hamilton Fund year to date performance The Two Sigma Hamilton Fund made up about 39% of our total investments, including cash investments at December 31, 2024 compared to 43% at 12/31/2023. Turning to share buybacks. In the second quarter, we announced a $150,000,000 share repurchase authorization by the Hamilton Board Directors, During the fourth quarter, we used $18,000,000 of that authorization We're able to continue repurchasing shares and growing the business all while maintaining our strong capital position. During 2024, we repurchased $28,000,000 of common shares on the open market at an average price of $18.89 per share. Based on our book value per common share of $22.95 at December 31, the shares were repurchased at about an 18% discount [indiscernible] We still have $122,000,000 remaining for purchase under the share repurchase authorization. Additionally, in May 2024, we repurchased a large block of shares from a founding investor at a 40% discount to book value. Including this block repurchase, we bought back a total of $138,000,000 of common shares during 2024. Next, I have some comments on the strength of our balance sheet. Total assets were $7,800,000,000 at year end 2024, up 17% from $6,700,000,000 at year end 2023.

Total investments in cash were $4,800,000,000 at year end 2024, an increase of 20% from the $4,000,000,000 at year end 2023. Shareholders' equity for the group was $2,300,000,000 at the end of the fourth quarter which was a 14% increase from year end 2023. Our book value per share was $22.95 at 12/30/2024 up an impressive 23.5% from $18.58 at year end 2023. Thank you. And with that, Our first question comes from Elyse Greenspan from Wells Fargo. Hi, thanks. The insurance underlying loss ratio right in the quarter was below 51%. Craig, I know you typically like to say like look at the full year, but that does seem like a pretty good number. Was there anything one off in there, any kind of catch up or favorability in the first March of the year? And just do we think about just kind of go forward margin profile of the international segment? Hi, Elyse. Thanks for the question. I would say there's two things. One is, first of all, related, there were really no an absence of large losses.

So there were really no large losses in the quarter. That's number one. Number two is we typically do our property reserve reviews in the fourth quarter. So what you can do is if there were no property events, in other words, that would be below our catastrophe threshold, an item that we would normally include in our attritional loss estimate. That non cat portion can be taken down in the fourth quarter. But as you said, I would encourage you to look at the full year number and loss ratio attritional loss ratio in the 53.5% range. Is a much better indication of how we would expect that book that current book to perform.

Thanks. And then my follow-up on the casualty reserves. I know you guys called out some adverse movement in prior years in the current quarter. What lines and years was that in? And can you just give us a sense of the magnitude of the casualty movement in the fourth quarter?

Yes. So Luis, I can. You're always going to have slight movements in reserves And I can tell you, we did say modest. This is very modest. Some of these numbers are very small. It was in our Bermuda segment It was about $1,000,000 is what we're talking about here. A very small number. We had $2,000,000 of favorable development on basically property as well. So overall, we had $1,000,000 of favorable development in Bermuda for the quarter. From a group overall perspective, we produced favorable reserve development in the quarter as well. And we also for full year 2024, had favorable loss reserve development for the group. And as Pina said, each and every year since the inception of the company. We get our reserves reviewed twice a year by our outside actuaries and I have to say we're very comfortable in our overall reserve position.

Got it. Thanks for the color. Our next question comes from Alex Scott from Barclays. Please go ahead. Your line is open.

Hi. First one I have is just your interest and willingness to lean into some of this casualty that's out there, particularly in reinsurance. I mean, seems like some of your peers haven't had as much balance sheet stability and There may be opportunities that arise there. Do you feel like price adequacy to be done in terms of pricing at the primary level?

Thanks. I'll take that question. Maybe just a little bit of historical context here. We have been generally underweight on the casualty reinsurance side at Hamilton. We only started leaning in a little bit more starting in 2021 when the market started turning more favorable and then always with very small line sizes, You were right to note that recently some competitors have backed out of the space. I can't tell you, perhaps they felt they were had larger exposures. But that actually was a very opportunistic time for us because that gave us the opportunity to look at a lot more business, particularly with the benefit of our A. M. Best Upgrade. So We Are Seeing Everything We Want To See Now And Have The Ability To Write The Business That We Want To Write, We Are Very Select Support. We Look For Clients That Keep A Business Net On Their Books That Underwrite The Class Properly. So We Actually See This As A Very Opportunistic Time For Hamilton and we're excited about it.

That's very helpful.

Second one I had is maybe more on the property side. I'd just be interested in in if you have an update on what you're seeing in the competitive environment on property. There's a lot of talk around some of the Lloyd's London syndicates beginning to get a little more aggressive. We're were hearing conversation last quarter. What do you see in there How are you feeling about price adequacy? And with the ratings upgrade, is this still a pretty attractive place to grow on the property side?

So looking at property insurance, I mean, a particularly on the property D and F side, that has come off of multiple quarters of rate increases. Quarter quarter of rate increases. There we have an offering on both in our Lloyd Syndicate, but also in our Bermuda platform. And even though that's come off a little bit more recently, it's come off of all time highs So we still see the rates as attractive. And again, we underwrite this business each and every submission on our own merits. In terms of property reinsurance, business, there, we we saw some competition at oneone some slight decrease in property cat as we did oneone, but rates were still attractive. And let's not forget, the terms, conditions and attachment points of this business remained very attractive. As we look to our mid year renewals, a lot of the accounts that were impacted both by the wildfires and also by the twenty twenty four hurricanes they're up for renewal in midyear. So there we have increases and we have the capital, the team and the discipline to write it. Thank you.

Our next question comes from Michael Zaremski from BMO Capital Markets.

Hey, good morning. Thanks. First question on reserves, maybe specifically Hamilton's Russian war, aviation related reserves and I do appreciate this may be a trippy tricky topic to fully unpack. But Would you be able to kind of add any color if there's been any meaningful movements We've got a number of questions from folks given one peer.

Made a major change given there's ongoing litigation? Thanks.

I'm happy to kick off. Craig will certainly fill in all my blanks. So we're talking about the Ukraine loss. I think it's important to remind you that when we posted a reserve for that loss, it was a very fulsome reserve. We reserved for marine classes, for war classes, for aviation classes, and we posted a number of $80,000,000 net to us. That figure today is still 80% ID and R the majority of our exposure is reinsurance. We do not write aviation insurance. And we still feel very comfortable about the strength of that reserve. Craig, do you have anything to add to that? The only thing I would say, as we continually reassess that reserve and the only thing I would say is that we are following all the developments with respect to the aviation exposures.

But at the end of the day, we do feel comfortable with our current reserve. Okay. That's a very helpful answer. Maybe switching gears to Harold's Hamilton, I know it's small, fast growing But I was just curious, on Hamilton Select, You Be Able To Kind Of Touch On Pricing Power There? Our Understanding Is That Margins Are Excellent In That Kind Of Sandbox And Pricing Even In Casualty Has Been Kind Of Decelerating A Bit Unlike The The Cash The Non E And S Casualty Marketplace, But Just Curious If There Competitive Commentary There.

Let Me Start With The Backdrop In General Of The U. S. E and S market space. It is still an incredibly attractive market. In general. We we are seeing increased submissions to our platform [indiscernible] Our underwriting appetite is very well defined. We are in the small to midsized hard to place space. Where it's a space where we put out specific limits. We can attach specific exclusions. And so it's something we underwrite very carefully.

In the business that we're seeing, particularly in the excess casualty, general casualty and also in the small business space, we are still seeing a favorable market environment and we are underwriting each one of those risks on their merit.

Okay.

Great. And just lastly, Any comments or insights you've seen the devastating California wildfires now plus has passed. Are you seeing any actual new demand from from primary insurers looking to buy additional reinsurance So a lot of these programs, as I said, will come up for renewal midyear.

I think that the wildfire is usually part of a larger program So we have not yet seen any submissions asking for increased capacity for that. I think what you will see is, people will underwrite this exposure much more carefully. As both on the insurance side as well as the reinsurance side. And you might see some insurance players, reduce their writings in California. So it's still early days here. But that would be how I'd see that. [indiscernible] Our next question comes from Matt Carletti from Citizens JMP. Please go ahead. Your line is open.

Thanks. Good morning.

First question on the California fires, the $120,000,000 to $150,000,000 estimate you provided, how should we think about just a very rough split of how that might fall between the segments?

Thanks, Matt. This is Craig. I would say, rough it's predominantly a reinsurance event for us.

Okay, perfect. And then secondly, I guess, Craig, probably a question for you on the investment portfolio. Mean, obviously, Two Sigma was very strong, but even with that, the NECI seemed like a much larger portion of that than in prior quarters. You just help us understand that? Is there some kind of a true up for the annual number or just how we should what lens we should do that through? Yes, Matt, you're absolutely right. The way that that works is, it's related to the incentive fees, the non controlling interest is related to the incentive fees on the Two Sigma Hamilton foreign. It is trued up each quarter it really depends on the results and certainly strong results in the 16.3% all of those fees are included in that number for the full year. All right. Perfect. Thank you.

Our next question comes from Tommy McJoynt from KBW. Please go ahead. Your line is good morning. The gross written premium growth has been really strong. But also getting some benefit on the net to gross ratio continuing to increase. In both segments really.

How much higher can that go? I guess, is that a function of taking quota share down or buying less XOL protection? Could you put any numbers around that?

Yes.

Tom, this is Craig.

I wanted to I'll explain to you first. In other words, the reason it grew, the gross to net position or net to gross position depending on how you want to look at it, the reason it grew was it remember, we took in some primary proceeds from the IPO a year ago.

And we wanted to use those primary proceeds to do two things. One is to grow the book, but also to retain more of that business. So we do think going forward, I think for at least this year, you should expect it to be relatively flat. From where we are today, but it is something that we would look to do going forward as well.

To increase our operating leverage.

Okay, got it. And then another revenue line, the third party fee income has continued to see some nice growth.

Could you just remind me, is that AUM driven or is it profit contingent driven? And so just as you think about the outlook for that revenue line into 2025, how do you think about that? Yes. So that fee income is is delivered. The reason you've seen good results is the performance fees that we get on some of the that we have from our iOS platform. In other words, we do get a management fee. So that's a base fee. That's all we plan for, for the year. We do not plan for example the performance fees.

But that really depends on the catastrophe activity throughout the year. Is what you would see that variability in that performance fee income.

Got it.

We have no further questions. That will conclude our question and answer session for today. I'd like to turn the call back over to the presenters for any closing remarks. Okay. Well, I just like to thank you all for joining us on this call today. Believe it or not, the next quarter is right around the corner. So we look forward to talking to you all again This concludes today's conference call. Thank you for your participation. You may now disconnect.