Hamilton’s fees from Ada Capital third-party capital platform continued to rise in Q3

Hamilton, the Bermuda based insurance and reinsurance holding company, has continued to earn positive performance fees from activities under its Ada Capital Management third-party capital platform and its Ada Re collateralized reinsurance and retrocession underwriting vehicle, in the third-quarter of this year.

As we reported back in August, Hamilton’s performance fees earned through Ada Capital Management and Ada Re had increased through the first-half of this year.

The company’s third-quarter results, announced last night, show that positive performance fees continued to flow in recent months and now, after nine months, the fee income earned is well-up year-on-year.

Recall that, Hamilton launched Ada Capital Management Limited in 2020 as a largely retro focused collateralized underwriting agent and manager.

Ada Re Ltd., is a registered Bermuda special purpose insurer (SPI), which is the underwriting vehicle used for these reinsurance investment partnership strategies at Hamilton.

The Ada Capital platform is the main third-party capital management and ILS franchise at Hamilton, as it partners with institutional investors to share in the performance of some of the underwriting business of the group.

Last year, Hamilton Group started to disclose some of the inputs to its earnings from the Ada third-party capital management business, in the form of fee income.

After full-year 2023, Hamilton reported that third party fee income within its Bermuda business segment reached approximately $8.55 million for the period, up from just $0.2 million in 2022.

Hamilton attributed this as being “primarily driven by certain performance based management fees recognized by Ada Capital Management Limited for services provided to Ada Re, Ltd.”

In 2024, the increased performance fees from the Ada Capital and Ada Re platform continued to flow to Hamilton.

For Q1 2024, Hamilton’s Bermuda unit reported nearly $3.9 million in third-party fee income, again primarily driven by Ada Capital performance fee income and up from just $0.1 million a year earlier.

In Q2 2024, Hamilton said the Bermuda unit derived third party fee income reached $2.2 million, up from less than $0.1 million in the prior year period.

Now, having reported its third-quarter 2024 results, Hamilton said that third-party fee income of $294k was earned in the Bermuda segment, lower but still positive.

After the first nine months of the year, the fee income derived via the Bermuda unit and attributed to the Ada Capital Management activities has reached almost $6.4 million, well up on the $336k reported for the same period in 2023.

It’s possible that catastrophe activity in the third-quarter period dented the performance fees somewhat, but the fact they are still building for the year is positive for the company.

Once again, Hamilton cited the Ada Capital performance fees were accounted for as an offset to its other underwriting expense ratio, helping to reduce that figure slightly in the quarter.