Hamilton Insurance Group, Ltd. (HG): what the price requires

At today's price, Hamilton Insurance Group, Ltd. (HG) is priced for 8.0% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/HG

Headline

FieldValue
TickerHG
CompanyHamilton Insurance Group, Ltd.
Current price$35.32/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed8.0%
Return on equity now29.8%
ROE gap-21.8pp
Price-to-book0.86x

Solve inputs: computed at a 8.7% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~0.9pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-1.05σ
cohort percentile (of 80 peers)9
sustained it ~10 years at this level82%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.38x3justifies
Earnings0.36x2justifies
Relative0.42x3justifies
Growth0.50x2justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=10)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$165.670.21xyesTBVPS $25.92 × 6.39x (ROE (TTM) 32.2% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$85.040.42xyesP/E 8.24x (blended: static sector reference 11x + trailing (TTM) 4x), scenarios: 6.7x / 8.2x / 9.8x (bear / base = reference held flat / bull), EV/EBITDA 10x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$277.810.13xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$93.010.38xyesBV/sh $26.74, ROE (TTM) 32.2%, ke 9.3%
Two-Stage Excess ReturnAsset$181.530.19xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$40.410.87xyesRev $2.9B, growth 21% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.2x / 1.5x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$73.080.48xyesEPS $6.09, growth 1% (input: historical EPS growth), PEG=2.86 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$60.540.58xyes√(22.5 × EPS $6.09 × BVPS $26.74) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$196.500.18xyesEPS $6.09 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$228.380.15xyesEPS $6.09 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$65.840.54xyesEPS $6.09 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-0.4%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Hamilton's structural advantage is a two-engine model most insurers cannot replicate. The company describes itself in its filing as operating with "a unique investment management relationship with Two Sigma" alongside underwriting operations in London, Dublin, Bermuda, and across the United States. That is the differentiator: a specialty underwriter whose float is managed by a quantitative investment firm with a long track record, so the company earns money both from disciplined underwriting and from an investment portfolio that has compounded well above a typical insurer's bond book. The Two Sigma Hamilton Fund has delivered roughly a 13% annualized return since its 2014 inception, which is the kind of investment edge that, sustained, can drive returns on equity no plain-vanilla carrier matches.

The underwriting half has turned sharply profitable. In Q1 2026 the combined ratio improved to 89.8% from 111.6% a year earlier, meaning Hamilton kept more than 10 cents of every premium dollar after claims and expenses, helped by no catastrophe losses in the quarter. Net income was $133.5 million and gross premiums written grew 11.5% to $940.1 million, led by 19.7% growth in the International segment and a Bermuda combined ratio that fell to 81.8%. A carrier growing premiums double digits while improving its underwriting margin is firing on the part of the business it controls most directly.

The valuation is where the bull case sharpens. Hamilton has recently been earning a return on equity near 30%, yet the stock trades at about 0.8 times book, below its tangible book value. Every family of valuation method supports the price, none calls it expensive, and the inversion shows the market assuming the return on equity fades all the way to about 7.6%, a fraction of what the company has earned. The investment-driven volatility is real, but a profitable underwriter with a differentiated investment engine, trading below book while compounding both, is the kind of value setup the methods rarely line up behind so uniformly.

Bear Case

The fragility in Hamilton is on the balance sheet, and it comes from the very feature the bull case celebrates. Most insurers invest their float in high-grade bonds precisely so the asset side stays stable while the underwriting side takes the risk. Hamilton instead runs a large share of its portfolio through the Two Sigma Hamilton Fund, a quantitative strategy valued at about $2.3 billion, and that means the company's book value moves with the fund's performance quarter to quarter. The evidence is in the most recent print: book value per share fell 3.8% in Q1 2026 even though underwriting was profitable, because the investment side did not keep pace. An insurer whose net worth can decline in a quarter of clean underwriting is carrying a kind of risk its peers deliberately avoid.

That investment dependence compounds the inherent volatility of the underwriting itself. The year-ago combined ratio of 111.6% is a reminder that this is a specialty and reinsurance book exposed to catastrophe losses; a single heavy season can swing the underwriting result from this quarter's profit to a loss. When both the underwriting and the investment engines can have a bad period at the same time, the high recent return on equity near 30% is best read as a peak rather than a through-cycle figure, and the market's assumption that it fades toward 7.6% may simply reflect that the two-engine model is more variable than the headline return suggests.

The sub-book valuation is itself a signal worth respecting rather than dismissing. The stock trades at roughly 0.8 times book and sits in the lower half of its peer group's price-to-book, which is the market applying a discount to a relatively young public company with a complex, hedge-fund-linked investment portfolio and a short track record as a listed insurer. A reinsurer that can lose book value in a benign quarter, whose returns depend on a single external investment manager, and whose underwriting carries genuine catastrophe tail risk, is a business the market is pricing cautiously for reasons that are not obviously wrong.

Valuation

An insurer is worth the return it earns on its capital, so the lens is price against book value. At about $31.43 (June 27, 2026) Hamilton trades near 0.8 times book, below its tangible book value, and the price assumes a sustained return on equity of only about 7.6%. The company has recently been earning closer to 29.8%, so the price is not asking the business to improve; it is assuming the high return collapses to a quarter of its recent level. That is an unusually conservative bet, which is why the methods line up the way they do.

Every family of valuation method supports the price. The asset-value and earnings-power approaches, which read the insurer off its book and current returns, land well above today's price; the relative-multiple and growth methods reach it too. No family calls the stock expensive. The peer-multiple read blends a sector earnings multiple near 11 times with a depressed trailing figure, reflecting how lumpy Hamilton's reported earnings can be. The honest framing is that the price is supported on every measure and trades at a discount to book, with the discount reflecting the market's caution about the investment-driven volatility rather than any method judging the underwriting expensive.

Solvency for an insurer is capital adequacy and payout capacity, not corporate leverage; net-debt and coverage math do not apply to a float-funded balance sheet. The relevant facts are the strong underwriting margin on a 89.8% combined ratio, the share count edging slightly lower, and the central swing factor, the Two Sigma Hamilton Fund whose performance moves book value directly. What a buyer underwrites at this price is a profitable specialty insurer trading below book, with a differentiated investment engine that is both the source of its above-average returns and the reason its book value, and therefore its valuation, can move in ways a conventional carrier's would not.

Catalysts

Hamilton's first quarter of 2026 combined strong underwriting with a solid investment quarter. Net income was $133.5 million and operating income $166.7 million on net premiums earned of $570.5 million, with the combined ratio improving sharply to 89.8% from 111.6% a year earlier, helped by the absence of catastrophe losses. Gross premiums written grew 11.5% year over year to $940.1 million, led by 19.7% growth in the International segment and a Bermuda combined ratio that fell to 81.8%.

The investment side, the company's distinguishing feature, contributed net investment results of $177.1 million, including $93.1 million from the Two Sigma Hamilton Fund, which returned 4.3% in the quarter. The fund, valued at about $2.3 billion, has delivered a roughly 13% annualized return since its 2014 inception. Despite the profitable quarter, book value per share declined 3.8% from year-end, though book value plus dividends rose 3.2%, illustrating how the investment portfolio drives the equity base.

The forward catalysts to watch are the upcoming catastrophe season and its effect on the combined ratio, the quarter-to-quarter performance of the Two Sigma Hamilton Fund and its impact on book value, and the continued premium growth in the International and Bermuda segments.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

HG Q1 2026 results, May 2026 · HG FY2025 10-K · HG Q1 2026 earnings release, May 2026

View the full interactive HG report on boothcheck