HAMILTON INSURANCE GROUP...Credited by the Insurance Hall of Fame with facilitating the...
Transcript of HAMILTON INSURANCE GROUP...Credited by the Insurance Hall of Fame with facilitating the...
HAMILTON INSURANCE
GROUPJANUARY 2017
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INTRODUCTION AND HIGHLIGHTS
BOARD OF DIRECTORS AND EXECUTIVE COMMITTEE
INSURANCE AND REINSURANCE OPERATIONS
TWO SIGMA
APPENDIX
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Table of Contents
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Introduction and Highlights
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MISSION: WE’RE WRITING THE FUTURE OF RISK
We’re a Bermuda-based holding company for insurance and reinsurance operations doing business on a
worldwide basis.
WHAT YOU SHOULD KNOW ABOUT HAMILTON
We’re executing a strategy to leverage analytics and research to create superior underwriting and investment
value for our clients and shareholders.
Hamilton was launched in December 2013 by investors led by insurance industry veteran Brian Duperreault.
As of December 31, 2016, Hamilton has over $1.6 billion in shareholders’ equity.
We’re differentiated by: Experienced, successful leadership and management
Our relationship with Two Sigma, a technology and investment company
No legacy (financial or systems) issues
Hamilton Insurance Group
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A Powerful Partnership
BRIAN DUPERREAULT
Forty year illustrious industry career includes serving as President & CEO, Marsh & McLennan Companies; non Executive Chairman of ACE Limited, and CEO and President of ACE Limited; various senior executive positions at American International Group (AIG)
Board positions include Blue Marble Microinsurance, International Insurance Society, and IESE Business School
Credited by the Insurance Hall of Fame with facilitating the transformation of Bermuda from a small, reinsurance-focused market into a global insurance center
A New York-based technology and investment company with unique experience and capabilities in the area of advanced analytics which they apply to data-driven investing
Assets under management of over $40 billion
Generated positive alpha and net returns every year since inception—13 consecutive years
1,000+ employees, two thirds of whom are modelers
Has distinguished itself as an innovator and a leader in investment management
Hamilton combines distinguished, experienced management and a high-
performing quantitative partner to grow its business and deliver superior
value to its clients and shareholders.
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Hamilton Today
Led by industry renowned management and Board
Committed to our long-term strategy
Superior financial strength
Meets or exceeds profitability expectations
Expert risk management
Consistent performance through severe market volatility
Disciplined growth
Attracts exceptional talent
Unique partnership with Two Sigma, a leading technology and investment company
Poised to continue to generate superior returns
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Bermuda-based Class 4
property and casualty
(re)insurer
Established book of business
in fifth year of growth
Shareholder’s equity of $1.5
billion at December 31, 2016
Wrote $255 million of gross
premiums in 2016;
forecast to write approximately
$290 million in 2017
Rated “A-” (Excellent) with a
stable outlook by A.M. Best
Hamilton at a Glance
Global licenses and imprimatur
of Lloyd’s iconic brand
Hamilton Underwriting Limited,
a Lloyd’s Managing Agency,
controls Syndicate 3334
Approved by Lloyd’s to write
$150 million of premiums for the
2017 Year of Account and to
add two new lines of business
– Marine Liability and War &
Terror.
Benefits from Lloyd’s ratings
from A.M. Best “A” (Excellent);
S&P “A+” (Strong); and Fitch
“AA-” (Very Strong)
Business conducted through:
• Hamilton Insurance Company (Delaware – admitted)
• Hamilton Specialty Insurance Company (Delaware – E&S)
In partnership with Two Sigma,
aims to deliver cutting-edge
analytics and technology to
agents and brokers resulting in
improved transaction efficiency
and underwriting results
Estimated gross premiums
written for 2016 is approximately
$110 million
Benefits from Hamilton’s A.M.
Best Group Rating of “A-” and
Financial Size Category of “XIII”
Hamilton leverages Two Sigma’s data analytics and modeling skills to advance the science of underwriting risk
Manages majority of Hamilton’s invested assets in its proprietary funds
Entities affiliated with principals of Two Sigma are significant shareholders at Hamilton
Partnership with Hamilton
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Hamilton’s Growth in BV and SE
Hamilton was funded pursuant to a private placement offering at $10.00 per share on December 23, 2013
Certain founding shareholders exercised a $250 million greenshoe right, effective January 1, 2015
BOOK VALUE PER SHARE CONSOLIDATED SHAREHOLDERS’ EQUITY
$15.91 $16.01 $1,632$1,621
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Board of Directors and Executive Committee
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Industry-Renowned Leadership
BOARD OF DIRECTORS
David Brown – Chairman, Finance and Governance CommitteeChief Executive Officer of Flagstone Re 2005 – 2012Chief Executive Officer, Centre Solutions 1994–1997Chairman of the Board of Bermuda Stock Exchange
Mark BarrenecheaCEO, CTO and board member of OpenTextBoard member of Dick’s Sporting GoodsFormerly president, CEO and board member of Silicon Graphics International Corporation; vice president, technology and business development of Tesseract Corporation; and senior vice president of applications development of OracleNamed Top New CEO of the Year by Canadian Business magazine in 2015Earned BSc in computer science from Saint Michael’s College in Vermont
Brian Duperreault – Chairman & CEO, Hamilton Insurance GroupForty year illustrious industry career includes serving as President & CEO, Marsh & McLennan Companies; non Executive Chairman of ACE Limited, and CEO and President of ACE Limited; various senior executive positions at American International Group (AIG)Board positions include Blue Marble Microinsurance, International Insurance Society, and IESE Business School
Brad CooperSince 1990, Managing Partner and founding partner of Capital Z PartnersPrior to Capital Z, an investment banker in the Financial Institutions Group of Salomon Brothers
Board member of Make a Wish Foundation of Metro New York
Bill Freda – Chairman, Audit CommitteeRetired as Vice Chairman, Deloitte LLP after a distinguished 40 year career with the firm Member of the Board of Directors of The Guardian Insurance Company of America and State Street Corporation
Tom Hill – Chairman, Investment CommitteePresident and CEO of the Hedge Funds Solutions Group, a Vice Chairman of The Blackstone Group and Member of the Board of The Blackstone Group Management
Began career at First Boston, becoming one of the co-founders of its Mergers & Acquisitions Department
Board memberships include the Council on Foreign Relations and Lincoln Center Theatre
Russ Fradin Lead Independent Director of Best Buy Co., Inc., and Operating Partner of private equity firm Clayton, Dubilier & RiceFormerly President and Chief Executive Officer of SunGard Data Systems; Chief Executive Officer of the BISYS Group; and Chairman and Chief Executive Officer of Aon Hewitt, where he oversaw merger between Aon Consulting and Hewitt AssociatesHeld senior positions at Automatic Data Processing and McKinsey & CompanyEarned MBA from Harvard Business School and BSc in Economics and Finance from The Wharton School at the University of Pennsylvania
Joan Lamm-TennantChief Executive Officer of Blue Marble Microinsurance, an insurance industry collaborative announced in January 2015 to provide protection to the underservedPrior to Blue Marble, served as Global Chief Economist and Risk Strategist, Guy Carpenter & Company, LLCFaculty Member of the Wharton School, University of Pennsylvania
Steve PacalaFrederick D. Petrie Professor of Ecology and Evolutionary Biology at Princeton University; Director of the Princeton Environmental InstituteRecipient of the MacArthur Award, Mercer Award and the David Starr Jordan PrizeMember of the American Academy of Arts and Sciences and the National Academy of Sciences
John Overdeck – Chairman, Underwriting and Risk CommitteeCo-founder of Two Sigma and former Managing Director, D.E. Shaw & Co.International Mathematics Olympiad Silver Medalist for the US who holds a B.S. in Mathematics (with distinction) and an M.S. in Statistics from Stanford UniversityServes on the Boards of the Robin Hood Foundation, the Institute for Advanced Study and is the Vice Chair of the National Museum of Mathematics
Pauline RichardsCOO of Armour Group Holdings LimitedFormer CFO of Lombard Odier Darier Hentsch (Bermuda)Member of the Boards of Wyndham Worldwide and Apollo Global Management and a past member of Cendant Corporation and Butterfield Bank
David Siegel – Chairman, Compensation Committee Co-founder of Two Sigma and former Chief Technology Officer and Managing Director, Tudor Investment Corporation
First Chief Information Officer, D.E. Shaw & Co.
A graduate of Princeton University who holds a PhD in computer science from the Massachusetts Institute of Technology (MIT)
Board memberships include the Scratch Foundation, NYC First, NAF, and the Cornell Tech Board of Overseers; serves as a trustee of Carnegie Hall
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Executive CommitteeBrian Duperreault – Chairman & CEO, Hamilton Insurance Group
Forty year illustrious industry career includes serving as President & CEO, Marsh & McLennan Companies; non Executive Chairman of ACE Limited, and CEO and President of ACE Limited; various senior executive positions at American International Group (AIG)
Board positions include Blue Marble Microinsurance, International Insurance Society, and IESE Business School
Jonathan Reiss – CFO
Member of the founding management team with 24 years’ experience in the insurance industry
Insurance Practice Leader at EY Bermuda (2006–2012)
19 years at EY, including 12 at Partner level dedicated to serving insurance industry clients
Seraina Macia – CEO, Hamilton USAFormerly held senior positions at AIG (CEO and EVP of Regional Management and Operations), AIG EMEA (CEO and President), XL Insurance North America (CEO), Zurich North America Commercial Specialties (President), Zurich Insurance Group (Head of Investor Relations) and NZB NeueZuercher Bank (Founding Partner)
Member of Board of Directors of Credit Suisse Group
Holds chartered Financial Analyst Designation
Victoria Guest – General Counsel
Member of the founding management team with 10 years’ experience in the insurance industry and 23 years of experience in corporate law
GC of Ariel Holdings (2009–2012)
GC of RAM Holdings (2006–2009)
Dermot O’Donohoe – CEO, Hamilton Underwriting Limited
Held various positions in Torus Group (now Starstone) including Transitional Group CEO and CEO Torus International (2009-2013)
18 years at XL Group in various positions, including Global Head of Specialty
Former member of Council of Lloyd’s (2007-2009); a Chartered Insurer (ACII)
Wendy Davis Johnson – Chief Communications Officer
Over 25 years’ experience in marketing communications and brand development
For the last 10 years, has been providing communications consulting services to corporate and non-profit organizations
Former SVP, Global Communications, ACE Group
Bob Deutsch – Chief Strategy Officer, Hamilton Insurance Group
35 year industry career includes founder and CEO of Ironshore Inc., EVP and CFO of CNA Financial Corporation, a founder of Executive Risk and President of its insurance subsidiaries as well as Chief Actuary and CFO
Fellow of the Casualty Actuarial Society
Current Board member of Wilton Re; past Board memberships include Beazley Furlong, Chaucer, Darwin, Enstar US and Platinum
Kathleen Reardon – CEO, Hamilton Re
Member of the founding management team with more than 20 years’ experience in the insurance industry
Fellow of the Casualty Actuarial Society
CUO International of ACE Tempest Re (2005–2012)
Chair, Women in Reinsurance (Bermuda)
Pete Skerlj – Chief Risk Officer
Member of the founding management team with 20 years’ experience in risk and analytics
Fellow of the Casualty Actuarial Society
As a Catastrophe Modeling Consultant at Q Re, created a property retro portfolio management and pricing framework
Previous experience includes senior positions with Lancashire Insurance, Partner Re Global and Applied Research Associates
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Insurance and Reinsurance Operations
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Bermuda-based Class 4 property and casualty (re)insurer
Established book of business in fifth year of growth
Shareholder’s equity of $1.5 billion as of December 31, 2016
Wrote $255 million of gross premiums in 2016; forecast to write approximately $290 million in 2017
Maintains a conservative risk profile, limiting PML to 15% of shareholder’s equity in the US and 10% for the rest of the world
Manages risk exposures through a combination of third-party models and HARP (Hamilton Analytics and Risk Platform), a proprietary risk management platform that:
• is a collection of software tools used to build, optimize and analyze Hamilton Re’s risk portfolio;
• simulates 200,000 iterations (rolls of the die) of loss scenarios, over a multi-year window; and
• is fully embedded in the frontline risk selection and pricing process.
Rated “A-” (Excellent) with a stable outlook by A.M. Best
Hamilton Re
OVERVIEW GROSS PREMIUMS WRITTEN(1)
Kathleen ReardonCEO, Hamilton Re
(1)Pie charts reflect in-force portfolio as of July 1, 2016
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Hamilton at Lloyd’s
OVERVIEW ACTUAL 2016 GPW
PLANNED 2017 GPW
Global licenses of Lloyd’s iconic brand
On April 1, 2015, Hamilton purchased a Lloyd’s Managing Agent, Sportscover Underwriting Limited (subsequently renamed Hamilton Underwriting Limited)
Hamilton Underwriting Limited currently manages Lloyd’s Syndicate 3334
Syndicate 3334 is marketed as Hamilton at Lloyd’s
Solvency II compliant, with no capital loadings applied
Approved by Lloyd’s to write $150m of premiums for the 2017 Year of Account and to add two lines of business in 2017 (Marine Liability and War & Terror)
Received approval from Lloyd’s in 2016 to acquire renewal rights for CNA Hardy’s A&H account
Credit ratings:
• A.M. Best: “A” (Excellent)
• S&P: “A+” (Strong)
• Fitch: “AA-” (Very Strong)
Dermot O’Donohoe CEO, Hamilton Underwriting Limited
Professional lines/Casualty22%
Property19%
Treaty Reinsurance24%
Space10%
Specialty25%
Professional lines/Casualty20%
Property14%
Treaty Reinsurance24%
Space8%
Specialty28%
Marine6%
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Hamilton USA
Business conducted through:
• Hamilton Insurance Company (Delaware – admitted)
licensed in 49 states and the District of Columbia
• Hamilton Specialty Insurance Company (Delaware – E&S)
eligible surplus lines insurer in 49 states and the District of Columbia
In partnership with Two Sigma, aims to deliver cutting-edge analytics and technology to agents and brokers resulting in improved transaction efficiency and underwriting results
Offers products to commercial lines customers with exceptional ease of submission and management for distribution partners.
In partnership with AIG and Two Sigma, launched Attune:
• A technology platform that accelerates the vision of using analytics and technology to improve efficiency, reduce costs and strengthen underwriting for small business in the US.
• Admitted business owners policies to be written in 1Q 2017
• AIG’s excess products for main street and specialty business to be introduced later in 2017
• Other lines of business including Workers Comp and Auto coming in 2018
Launched MyAttune, a mobile friendly platform that rates, quotes and binds in a few minutes
Strategic review underway to expand Hamilton’s No-Hands-Touch-the-Trade approach to other segments of business Hamilton USA will achieve its 2016 planned premium objective of $110M
Benefits from Hamilton’s A.M. Best Group Rating of “A-” and Financial Size Category of “XIII”
ESTIMATED GWP 2016OVERVIEW
Seraina MaciaCEO, Hamilton USA
Property66%
Admitted BOP2%
Excess Liability2%
GL30%
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Attune is building a market leading, technology-based platform in the $80 billion SME market
Initial book to represent approx. $300 million in premium
Represents an unprecedented partnership that leverages data science, technology, brand awareness and extensive claims data
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Will be synonymous with innovation, ease of use, speed, customer centricity and partnership.
Will meet the needs of a diverse customer base while maximizing cross-sell opportunities through AIG’s vast product offering and Hamilton USA’s underwriting methodology and user experience, creating a complete and efficient business insurance solution.
Will offer a fully streamlined, straight-through processing insurance buying experience for SMEs regardless of how they choose to purchase insurance, including new and emerging distribution partners.
Will use external data and scalable technology to eliminate the need to ask underwriting questions, remove human bias, prefill data, reduce frictional costs, increase transactional velocity, and target and retain more profitable business. Advanced analytics will improve risk selection, pricing efficacy, claims management and overall portfolio optimization.
BRAND
PRODUCT
DISTRIBUTION
DATA & TECHNOLOGY
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Two Sigma
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Deploy and seek to continuously improve intelligent investment management systems first created in 2001
Manage over $40 billion of assets for a global, diversified client base in absolute return and benchmark-relative investment mandates(2)
Trade equities, futures, FX, and derivatives in 40+ countries utilizing a highly diversified set of systematic strategies
Tap the talents of 1000+ employees headquartered in New York with additional offices in Houston, London, and Hong Kong(2)
Operate as a Registered Investment Adviser with the SEC(3)
Computing Power & Data:
4,500+ servers in our computing environment, with 87,000 vCPUs and 1,000 terabytes of memory
22+petabytes of data and growing
10K+ data sources including public and proprietary
Human Capital
2600 person years of R&D
Two thirds of staff consist of Engineers and Modelers
60% non-financial backgrounds
97% voluntary employee retention, since inception
Performance(4)
Created positive net alpha every year since our inception (13 Years)
99% of our investors have earned positive alpha
85% positive (net alpha) product quarters
WHAT WE DO
WHERE WE ARE TODAY
Two Sigma(1) is a process-driven, systematic investment manager primarily focused on global liquid markets. Two Sigma applies its technology and expertise in financial markets to seek to consistently generate uncorrelated alpha across a wide range of market conditions.
Note: For illustration purposes only. Not an offer to buy or sell securities. Two Sigma may modify its investment approach and portfolio parameters in the future in any manner that it believes is consistent with its fiduciary duty to its clients. There is no guarantee that Two Sigma or its products will be successful in achieving any or all of their investment objectives. Moreover, all investments involve some degree of risk, not all of which will be successfully mitigated.
(1)As referenced on this slide, “Two Sigma” or “the Firm” generally refers collectively to Two Sigma Investments, LLC, and Two Sigma Advisers, LLC and their affiliates.(2) AuM and employee count are approximate as of October 1, 2015.(3) Two Sigma Investments, LLC and Two Sigma Advisers, LLC are registered with the U.S. Securities and Exchange Commission (the “SEC”). Registration does not imply review, endorsement or approval by the SEC.(4) “Net alpha” is measured against zero for absolute return products and against the applicable benchmark for beta-1 products and is net of management fees, incentive allocations and all other fund and trading expenses, in each case, to the extent applicable. Statistics regarding investor and product performance are dollar-weighted by AuM as of December 31, 2014. Performance statistics only include performance of unaffiliated investors. “Net product quarters” is an asset weighted figure derived by (i) adding the sum of the average notional AuM of each Two Sigma-managed product group by quarter and (ii) dividing the number of positive net alpha quarters by the total number of product quarters.
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FINANCIAL HIGHLIGHTS CORPORATE ORGANIZATION CHART
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Appendix
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Hamilton Insurance Group Financial Highlights
CONSOLIDATED BALANCE SHEETS
September 30, 2016 December 31, 2015 December 31, 2014
($ in millions) Unaudited Audited Audited
Cash and investments $ 1,839 $ 1,819 $ 1,231
Premiums receivable 148 75 51
Losses and LAE recoverable 109 113 86
Intangible assets 41 41 7
Other 116 68 24
Total assets 2,253 2,116 1,399
Reserve for losses and LAE 306 226 147
Unearned premiums 212 97 51
Payable to related parties 20 158 117
Notes payable 20 20 15
Other 60 50 22
Total liabilities 618 551 352
Non-controlling interest 3 — —
Shareholders’ equity 1,632 1,565 1,047
Total liabilities and shareholders’ equity $ 2,253 $ 2,116 $ 1,399
Book value per share $ 16.01 $ 15.43 $ 12.83
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Hamilton Re Financial Highlights
CONSOLIDATED BALANCE SHEETS
September 30, 2016 December 31, 2015 December 31, 2014
($ in millions) Unaudited Audited Audited
Cash and investments $ 1,745 $ 1,746 $ 1,177
Premiums receivable 147 79 51
Losses and LAE recoverable 24 11 1
Other 89 56 24
Total assets 2,005 1,892 1,253
Reserve for losses and LAE 210 124 61
Unearned premiums 188 93 51
Payable to related parties 19 154 113
Notes payable 20 20 15
Other 28 16 44
Total liabilities 465 407 284
Non-controlling interest 6 3 2
Shareholder’s equity 1,534 1,482 967
Total liabilities and shareholder's equity $ 2,005 $ 1,892 $ 1,253
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Corporate Organization Chart
Hamilton Insurance Group, Ltd. (Bermuda)
September 4, 2013
Hamilton Insurance Services (Bermuda), Ltd.
Hamilton U.S. Holdings, Inc. (Delaware)
February 5, 2014
Hamilton Specialty Insurance Company
(Delaware)
(acquired October 6, 2014)
Hamilton Insurance Company (Delaware)
(acquired October 6, 2014)
Lloyd’s Syndicate 3334 (Managed by Hamilton Underwriting Limited)
Hamilton Services, LLC (Delaware)
February 5, 2014
Hamilton Underwriting Limited (U.K.)
(acquired April 1, 2015)
Hamilton Corporate Member Limited
(U.K.)
(acquired April 1, 2015)
Attune Holdings, LLC (Delaware)
August 15, 2016
Attune Insurance Services, LLC
(Delaware)
February 5, 2015
Hamilton Customer Care Insurance Services, LLC
(acquired April, 2016)
Hamilton Re, Ltd. (Bermuda)
June 8, 2012
Hamilton UK Holdings Limited (U.K.)
September 30, 2014
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Wellesley House North, 1st Floor 90 Pitts Bay RoadPembroke HM08
Bermuda+1 (441) 405 5200
www.hamiltongroup.com
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