Hamilton Insurance Group, Ltd.HG
Hamilton Insurance Group, Ltd. Income Taxes Disclosure
Income Taxes
Hamilton Group and its Bermuda domiciled subsidiaries were not subject to income tax in Bermuda in 2024 and prior. On December 27, 2023, Bermuda enacted a 15% corporate income tax that generally became effective on January 1, 2025. The legislation defers the effective date until 2030 for Bermuda companies that meet certain requirements. Hamilton Group expects to meet the requirements to remain exempt until 2030. The legislation includes a provision referred to as the Economic Transition Adjustment ("ETA"), which is intended to provide a fair and equitable transition into the tax regime. As of December 31, 2025, the Company holds a deferred tax asset of $35.4 million relating to the ETA on its balance sheet, which it expects to utilize to reduce future taxes paid. The Company expects to incur increased taxes on its Bermuda-sourced income beginning in 2030.
Hamilton Group has global subsidiaries and branches that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which Hamilton Group’s subsidiaries and branches are currently subject to tax are the United Kingdom, Ireland and the United States. The Company and some of its subsidiaries file income tax returns in the U.S. federal jurisdiction, various U.S. states, and certain foreign jurisdictions.
Income (loss) before taxes by tax jurisdiction is as follows:
| Years Ended December 31, | |||||||||||||||||
($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Jurisdiction | |||||||||||||||||
| Domestic: | |||||||||||||||||
| Bermuda | $ | 722,159 | $ | 581,915 | $ | 247,113 | |||||||||||
| Foreign: | |||||||||||||||||
| United States | 30,566 | 9,122 | (2,263) | ||||||||||||||
| United Kingdom | 71,161 | 32,249 | 12,362 | ||||||||||||||
| Ireland | 1,019 | (1,726) | (1,991) | ||||||||||||||
| Income (loss) before income tax | $ | 824,905 | $ | 621,560 | $ | 255,221 | |||||||||||
Income tax expense (benefit) consists of the following components:
| Years Ended December 31, | |||||||||||||||||
($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current income tax expense (benefit) | |||||||||||||||||
| Bermuda | $ | — | $ | — | $ | — | |||||||||||
| United States | 14,004 | 9,928 | 10,913 | ||||||||||||||
| United Kingdom | 32 | 91 | 61 | ||||||||||||||
| Ireland | (7) | (111) | 92 | ||||||||||||||
| Total current tax expense (benefit) | 14,029 | 9,908 | 11,066 | ||||||||||||||
| Deferred income tax expense (benefit) | |||||||||||||||||
| Bermuda | — | (375) | (35,063) | ||||||||||||||
| United States | (1,685) | — | — | ||||||||||||||
| United Kingdom | (27,425) | (1,027) | (1,087) | ||||||||||||||
| Ireland | (43) | (104) | 18 | ||||||||||||||
| Total deferred tax expense (benefit) | (29,153) | (1,506) | (36,132) | ||||||||||||||
| Total income tax expense (benefit) | $ | (15,124) | $ | 8,402 | $ | (25,066) | |||||||||||
The following table reconciles taxes pursuant to the format prescribed by ASU 2023-09 Income Taxes, which requires expanded disclosures for all years beginning after December 15, 2024. Although the Company is not an in-scope company for purposes of the Bermuda Corporate income tax, the reconciliation is presented using Bermuda’s statutory income tax rate for in-scope companies of 15%. This presentation as an in-scope company with adjustment for the effect of the Bermuda Limited International Footprint exemption aligns with the intent of ASU 2023-09.
| Year Ended December 31, 2025 | ||||||||||||||
($ in thousands) | Amount | % | ||||||||||||
| Bermuda statutory tax rate at 15% | $ | 123,736 | 15.0 | % | ||||||||||
| Foreign tax effects: | ||||||||||||||
| United Kingdom: | ||||||||||||||
| Statutory tax rate differential | 7,116 | 0.9 | % | |||||||||||
| Change in valuation allowance | (43,392) | (5.3) | % | |||||||||||
| United States: | ||||||||||||||
| Statutory tax rate differential | 1,834 | 0.2 | % | |||||||||||
| State and local income taxes, net of federal benefit | 3 | 0.0 | % | |||||||||||
| Change in valuation allowance | (2,429) | (0.3) | % | |||||||||||
| Withholding tax | 9,179 | 1.1 | % | |||||||||||
| Ireland: | ||||||||||||||
| Statutory tax rate differential | (25) | 0.0 | % | |||||||||||
| Change in valuation allowance | (128) | 0.0 | % | |||||||||||
| Nontaxable or Nondeductible Items: | ||||||||||||||
| Bermuda Limited International Footprint Exemption | (68,820) | (8.3) | % | |||||||||||
| Non-controlling interest | (39,504) | (4.8) | % | |||||||||||
| Share based compensation | (2,582) | (0.3) | % | |||||||||||
| Other | 242 | 0.0 | % | |||||||||||
| Other adjustments | (354) | 0.0 | % | |||||||||||
| Total income tax expense (benefit): | $ | (15,124) | (1.8) | % | ||||||||||
For comparative purposes, the following table presents a reconciliation of taxes calculated using the historical 0% Bermudian statutory rate (the tax rate at which the majority of Hamilton Group's worldwide operations are effectively taxed) to the income tax expense (benefit) on pre-tax income (loss):
| Years Ended December 31, | |||||||||||||||||
($ in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Expected tax provision at Bermuda statutory tax rate of 0% | $ | — | $ | — | $ | — | |||||||||||
| Permanent differences: | |||||||||||||||||
| Taxes on earnings subject to rate other than Bermuda statutory rate | 24,336 | 9,762 | 2,182 | ||||||||||||||
| Change in valuation allowance | (45,948) | (12,496) | (3,567) | ||||||||||||||
| Other permanent adjustments | (2,316) | (318) | (42) | ||||||||||||||
| Other prior year adjustments | (408) | 2,234 | 376 | ||||||||||||||
| Tax rate changes | — | — | 273 | ||||||||||||||
| Withholding tax | 9,179 | 9,381 | 10,377 | ||||||||||||||
| Bermuda economic transition adjustment | — | — | (35,063) | ||||||||||||||
| State income tax | 33 | (161) | 398 | ||||||||||||||
| Total income tax expense (benefit): | $ | (15,124) | $ | 8,402 | $ | (25,066) | |||||||||||
The following table presents net income tax (refunds) payments by jurisdiction for the years ended December 31, 2025, 2024 and 2023, respectively.
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Bermuda corporate income tax | $ | — | $ | — | $ | — | ||||||||||||||
| Foreign taxes | ||||||||||||||||||||
| United States | 16,723 | 10,661 | 4,415 | |||||||||||||||||
| Other foreign | (254) | (240) | (204) | |||||||||||||||||
| Total net income tax payments (refunds) | $ | 16,469 | $ | 10,421 | $ | 4,211 | ||||||||||||||
Deferred tax assets and liabilities are valued at the tax rate at which they are expected to be realized. In June 2021, the U.K. enacted a tax rate of 25% with an effective date of April 1, 2023, an increase from the previous corporation tax rate of 19%. Accordingly, for the year ended November 30, 2021, the Company revalued all of its U.K. deferred tax assets and liabilities that were expected to reverse after December 31, 2023. Revaluations of U.K. deferred tax assets and liabilities continued to occur until January 1, 2024, when both the current and deferred tax rates were aligned at 25%. The revaluation of the deferred tax assets resulted in a tax expense (benefit) of $Nil, $Nil and $0.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. The financial statement impact of the rate changes were offset in each period by a valuation allowance, resulting in a related net tax expense (benefit) after valuation allowance of $Nil, $Nil, and $0.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. The following table presents Hamilton Group’s significant deferred tax assets and liabilities:
| December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| U.K. net operating loss carryforwards | $ | 47,307 | $ | 45,590 | |||||||
| U.S. net operating loss carryforwards | 3,251 | 3,255 | |||||||||
| Ireland net operating loss carryforwards | 204 | 218 | |||||||||
| Bermuda intangible assets | 28,875 | 28,875 | |||||||||
| Reserve for losses and loss adjustment expenses | 11,034 | 9,198 | |||||||||
| Unearned premium reserve | 5,582 | 5,486 | |||||||||
| Share based compensation | 2,853 | 5,213 | |||||||||
| Foreign tax credit | 2,630 | 1,949 | |||||||||
| Capital loss carryforward | 1,472 | 1,733 | |||||||||
| Other | — | 4,258 | |||||||||
| Total gross deferred tax assets | 103,208 | 105,775 | |||||||||
| Less: valuation allowance | (17,084) | (63,032) | |||||||||
| Total net deferred tax assets | 86,124 | 42,743 | |||||||||
| Deferred tax liabilities: | |||||||||||
| U.K. intangible assets | (13,163) | (14,233) | |||||||||
| Fixed assets | (2,933) | (3,520) | |||||||||
| Lloyd's deferred taxable income | (18,671) | (3,340) | |||||||||
| Other | (1,000) | (446) | |||||||||
| Total deferred tax liabilities | (35,767) | (21,539) | |||||||||
| Net deferred tax asset (liability) | $ | 50,357 | $ | 21,204 | |||||||
Hamilton Group records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense (benefit) in the period of change. When evaluating the Company’s ability to realize the benefit of its deferred tax assets, the Company considers the relevant impact of all available positive and negative evidence, including historical earnings, expected future earnings, carryback and carryforward periods and strategies (if available) that would result in the realization of a deferred tax asset. Future realization of the Company’s deferred tax asset depends on the existence of sufficient taxable income of the appropriate character (for example, ordinary income versus capital gains) to utilize the deferred tax assets within the applicable carry-forward periods provided under the tax law.
Of the $17.1 million valuation allowance recorded at December 31, 2025, $9.2 million related to deferred tax assets on net operating losses and other deferred tax benefits in the U.K., $7.0 million related to deferred tax assets on net operating losses and other deferred tax benefits in the U.S. and $0.9 million related to deferred tax assets on net operating losses and other deferred tax benefits in Ireland. It is not expected that these companies will generate sufficient future taxable income to utilize their deferred tax assets.
In the fourth quarter of 2025, the Company recorded tax benefits of $43.4 million, $2.4 million and $0.2 million arising from the net release of valuation allowances against deferred tax assets in its U.K., U.S. and Irish domiciled subsidiaries, respectively. The Company's U.K. domiciled entities had previously built up substantial deferred tax assets, primarily due to net operating loss carryforwards, which primarily related to prior years' pre-tax losses in these entities. Valuation allowances had been established on these deferred tax assets prior to the fourth quarter of 2025 because the subsidiaries did not expect to earn sufficient future taxable income to utilize them. The profitability of the U.K. subsidiaries improved significantly in the past few years, supporting the conclusion that the majority of their deferred tax assets are realizable.
The Company had the following net operating loss carry-forwards, inclusive of cumulative currency translation adjustments:
| ($ in thousands) | December 31, 2025 | |||||||||||||||||||
| Tax jurisdiction | Losses Carried Forward | Tax Effect | Expiration | |||||||||||||||||
| Bermuda | $ | — | $ | — | n/a | |||||||||||||||
| Ireland | 1,633 | 204 | No expiry | |||||||||||||||||
| United States | 15,480 | 3,251 | 2042-2045 | |||||||||||||||||
| United Kingdom | $ | 189,227 | $ | 47,307 | No expiry | |||||||||||||||
Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. At December 31, 2025, the Company believes that it has no uncertain tax positions that, if challenged on technical merits, would cause a material effect on the Company's audited consolidated financial statements.
Hamilton Group classifies all interest and penalties on income taxes as part of . During the years ended December 31, 2025, 2024 and 2023, the Company recognized less than $0.1 million interest income or expense. There was no accrued interest as of December 31, 2025. With few exceptions, Hamilton Group is no longer subject to tax examinations by U.S. federal or state examinations before 2022 or non-U.S. tax examinations before 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Mar 7, 2024 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.