-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nzb5yjQJ4ESYEz5Z2VVspGYRuOJ04NQMQVJcjQ3YOjkTwbg98wmQcN3/GVH8yQag rFqjiIqCJyyft1A9cWSKuQ== 0000950129-01-502438.txt : 20010813 0000950129-01-502438.hdr.sgml : 20010813 ACCESSION NUMBER: 0000950129-01-502438 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010809 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20010810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HCC INSURANCE HOLDINGS INC/DE/ CENTRAL INDEX KEY: 0000888919 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 760336636 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13790 FILM NUMBER: 1703071 BUSINESS ADDRESS: STREET 1: 13403 NORTHWEST FRWY CITY: HOUSTON STATE: TX ZIP: 77040-6094 BUSINESS PHONE: 7136907300 8-K 1 h89752e8-k.txt HCC INSURANCE HOLDINGS, INC. - AUGUST 9, 2001 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 9, 2001 HCC INSURANCE HOLDINGS, INC. (EXACT NAME OR REGISTRANT SPECIFIED IN ITS CHARTER) STATE OR OTHER COMMISSION IRS EMPLOYER JURISDICTION FILE NUMBER: IDENTIFICATION OF INCORPORATION: NUMBER: DELAWARE 0-20766 76-0336636 13403 NORTHWEST FREEWAY HOUSTON, TEXAS 77040-6094 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE - (713) 690-7300 --------------------------------------------- 2 ITEM 5. OTHER EVENTS On August 9, 2001, HCC Insurance Holdings, Inc. ("HCC") announced its operating results for the Second Quarter ended June 30, 2001. A press release setting forth the announcement is attached as Exhibit 99.1. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (b) Exhibits. -------- 99.1 Press Release dated August 9, 2001 announcing HCC's operating results for the Second Quarter ended June 30, 2001 and attachments thereto. 99.2 Supplementary Financial Data relating to HCC's operating results for the Second Quarter ended June 30, 2001. ITEM 9. Supplementary Financial Data relating to HCC's announced operating results for the Second Quarter ended June 30, 2001 is attached as Exhibit 99.2. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 9, 2001 HCC INSURANCE HOLDINGS, INC. By: /s/ Christopher L. Martin --------------------------------------- Christopher L. Martin Vice President and General Counsel 3 EXHIBIT INDEX Exhibits. -------- 99.1 Press Release dated August 9, 2001 announcing HCC's operating results for the Second Quarter ended June 30, 2001 and attachments thereto. 99.2 Supplementary Financial Data relating to HCC's operating results for the Second Quarter ended June 30, 2001. EX-99.1 3 h89752ex99-1.txt PRESS RELEASE - DATED AUGUST 9, 2001 1 Exhibit 99.1 HCC REPORTS STRONG SECOND QUARTER EARNINGS DRIVEN BY INCREASED UNDERWRITING PROFITS HOUSTON (August 9, 2001) . . . HCC INSURANCE HOLDINGS, INC. (NYSE symbol: HCC) today released earnings for the second quarter and first six months of 2001. Net earnings for the second quarter of 2001 increased 31 percent to $20.3 million, or $ 0.34 per share, compared to $13.2 million, or $0.26 per share for the same period in 2000. Net earnings for the first half of 2001 increased 27 percent to $35.4 million, or $0.61 per share compared to $24.6 million, or $0.48 per share for the first six months of the previous year. Operating earnings for the second quarter of 2001 increased 10 percent to $20.3 million, or $0.34 per share compared to $15.8 million, or $0.31 per share in the corresponding quarter in 2000, but grew 17 percent from the first quarter of 2001. Operating earnings for the six months ending June 30, 2001 were $36.2 million, or $0.63 per share, an 11 percent increase from the first half of 2000. Stephen L. Way, Chairman and Chief Executive Officer said, "We are extremely pleased with our results, which were achieved despite 2 approximately $0.02 per share of dilution from our recent equity offering and $0.01 per share from catastrophe losses affecting our insurance company operations during the quarter." Although total revenue for the second quarter of 2001 was basically flat at $120.6 million, compared to the same period in the previous year, the profit margin continues to improve as underwriting profits increase. Total revenue for the first six months of 2001 was $235.6 million compared to $242.9 million in the first half of 2000. Revenue will increase during the second half of this year as earned premium continues to rise. Net written premium increased substantially to $105.6 million during the second quarter of 2001, a 29 percent increase from the second quarter of 2000. During the same period, net earned premium grew 17 percent to $83.7 million and gross written premium increased 12 percent to $294.5 million. For the first half of 2001, net written premium grew 25 percent to $178.1 million, net earned premium increased 15 percent to $155.6 million and gross written premium increased 11 percent to $523.7 million, all compared to the corresponding period in the previous year. This strong growth is a result of rate increases, new business and increased retentions. 2 3 Mr. Way added, "We are seeing improved conditions in all of our lines of business, as growth in our net written and net earned premium gains momentum. Although further rate increases are necessary in some areas, most of our lines are now showing profitability, or are moving rapidly in that direction. Our GAAP combined ratio for the year to date is 90 percent, which is a substantial improvement over the 99 percent for the same period last year." Net investment income increased 13 percent for the first six months of 2001 to $20.5 million, compared to the same period in the previous year. Although interest rates continue to decline, anticipated positive cash flow in the second half of this year should allow the Company to meet its investment income objective, without any material change in its investment portfolio. Management fees decreased during the first six months of 2001 to $29.6 million, from $53.8 million in the same period of 2000. This planned reduction was primarily due to the integration of several of the Company's subsidiary underwriting agencies into its insurance company segment. Management fee income is expected to begin to grow again next year as a result of recently announced acquisitions. During the same period, commission income decreased to $24.8 million, from $25.7 million, primarily due to the reduced 3 4 level of reinsurance being purchased by our insurance company subsidiaries. During the first six months of 2001, other operating income decreased to $5.5 million from $14.6 million for the same period of 2000. This reduction was primarily the result of the disposition or closure of certain non-core operations during 2000 and the timing of recorded income from other operating investments, which varies from period to period. We anticipate an increase in this revenue during the second half of 2001. Comparing June 30, 2001 to December 31, 2000, total investments increased to $734.8 million from $711.1 million, total assets increased to $2.9 billion from $2.7 billion and book value per share increased to $12.28 from $10.29. For additional information, please see attached tables. HCC is one of the largest specialty insurance groups in the United States and consists of insurance company, underwriting agency and intermediary operations. HCC has assets of $2.9 billion and its shares are traded on the NYSE (symbol: HCC) with a market capitalization of approximately $1.5 billion. HCC is rated AA (Very Strong) by Standard & Poor's and A+ (Superior) by A. M. Best Company. 4 5 For more information, visit our website at www.hcch.com. Contact: L. Byron Way, Vice President at HCC Insurance Holdings, Inc. (713) 690-7300 5 6 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED JUNE 30, 2001 June 30, 2000 - ------------------ ------------- ------------- Gross written premium $294,494,000 $264,140,000 Net written premium 105,584,000 81,920,000 Net earned premium 83,688,000 71,654,000 Management fees 13,885,000 24,548,000 Commission income 10,151,000 10,863,000 Net investment income 9,876,000 9,946,000 Other operating income 2,492,000 7,905,000 Total revenue 120,556,000 120,947,000 Net earnings 20,258,000 13,180,000 Earnings per share $0.34 $0.26 Operating earnings after tax(1) 20,344,000 15,760,000 Operating earnings per share(1) $0.34 $0.31 Weighted average shares outstanding 60,470,000 51,083,000
JUNE 30, 2001 December 31,2000 ------------- ---------------- Total investments $734,827,000 $711,113,000 Total assets 2,896,702,000 2,767,760,000 Shareholders' equity 726,832,000 530,930,000 Book value per share $12.28 $10.29
(1) Net earnings excluding a non-recurring expense for debt restructuring and the effect of net realized investment gains/losses. Note: All earnings per share numbers are diluted. 6 7 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 2001 June 30,2000 - ---------------- ------------- ------------ Gross written premium $523,708,000 $471,278,000 Net written premium 178,089,000 142,580,000 Net earned premium 155,609,000 135,010,000 Management fees 29,635,000 53,809,000 Commission income 24,792,000 25,696,000 Net investment income 20,508,000 18,195,000 Other operating income 5,464,000 14,556,000 Total revenue 235,648,000 242,894,000 Net earnings 35,436,000 24,571,000 Earnings per share $0.61 $0.48 Operating earnings after tax(1) 36,234,000 28,937,000 Operating earnings per share(1) $0.63 $0.57 Weighted average shares outstanding 57,793,000 50,906,000
JUNE 30, 2001 December 31,2000 ------------- ---------------- Total investments $734,827,000 $711,113,000 Total assets 2,896,702,000 2,767,760,000 Shareholders' equity 726,832,000 530,930,000 Book value per share $12.28 $10.29
(1) Net earnings excluding a non-recurring expense for debt restructuring, merger expense, restructuring expense, change in accounting principle and the effect of net realized investment gains/losses. Note: All earnings per share numbers are diluted. 7 8 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS ($ IN THOUSANDS) INSURANCE COMPANY GROSS WRITTEN PREMIUM
YTD YTD THROUGH THROUGH LINE OF BUSINESS 6/30/01 6/30/00 - ---------------- ------- ------- Accident & Health $108,424 $ 83,839 Aviation 93,261 105,075 Marine & Offshore Energy 18,328 12,369 Medical Stop-Loss 211,606 170,797 Property 43,924 33,985 Workers' Compensation 28,423 31,877 Other 19,742 33,336 -------- -------- Total $523,708 $471,278 ======== ========
INSURANCE COMPANY NET WRITTEN PREMIUM
YTD YTD THROUGH THROUGH LINE OF BUSINESS 6/30/01 6/30/00 - ---------------- ------- ------- Accident & Health $23,572 $27,723 Aviation 48,228 36,521 Marine & Offshore Energy 10,016 5,357 Medical Stop-Loss 65,454 49,550 Property 8,266 3,764 Workers' Compensation 18,090 12,613 Other 4,463 7,052 -------- -------- Total $178,089 $142,580 ======== ========
8 9 This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate may occur in the future, including such things as future capital expenditures, business strategies, competitive strengths, goals, growth of our businesses and operations, plans and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "probably" or similar expressions, we are making forward-looking statements. Many risks and uncertainties may impact the matters addressed in these forward-looking statements. Many possible events or factors could affect our future financial results and performance. These could cause our results or performance to differ materially from those we express in our forward-looking statements. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this press release, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. Our forward-looking statements speak only as of the date made and we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release may not occur. * * * * 9 EX-99.2 4 h89752ex99-2.txt SUPPLEMENTARY FINANCIAL DATA RELATING TO HCC'S 1 Exhibit 99.2 HCC Insurance Holdings, Inc. and Subsidiaries --------- Condensed Consolidated Balance Sheets --------
June 30, 2001 December 31, 2000 -------------------- ----------------------- (Unaudited) ASSETS Investments: Fixed income securities, at market (cost: 2001 $461,837,000; 2000 $422,821,000 ) $ 474,059,000 $ 433,844,000 Marketable equity securities, at market (cost: 2001 $10,452,000; 2000 $8,896,000) 11,197,000 6,282,000 Short-term investments, at cost, which approximates market 242,044,000 263,805,000 Other investments, at cost, which approximates fair value 7,527,000 7,182,000 --------------------- --------------------- Total investments 734,827,000 711,113,000 Cash 4,298,000 13,991,000 Restricted cash and cash investments 131,583,000 101,738,000 Premium, claims and other receivables 638,470,000 586,721,000 Reinsurance recoverables 842,823,000 789,412,000 Ceded unearned premium 109,844,000 114,469,000 Ceded life and annuity benefits 84,505,000 86,760,000 Deferred policy acquisition costs 38,925,000 39,108,000 Property and equipment, net 39,394,000 39,438,000 Goodwill 260,367,000 266,015,000 Other assets 11,666,000 18,995,000 --------------------- --------------------- TOTAL ASSETS $ 2,896,702,000 $ 2,767,760,000 ===================== ===================== LIABILITIES Loss and loss adjustment expense payable $ 1,001,384,000 $ 944,117,000 Life and annuity policy benefits 84,505,000 86,760,000 Reinsurance balances payable 107,725,000 130,746,000 Unearned premium 205,829,000 190,550,000 Deferred ceding commissions 26,096,000 30,013,000 Premium and claims payable 646,853,000 594,852,000 Notes payable 53,456,000 212,133,000 Accounts payable and accrued liabilities 44,022,000 47,659,000 --------------------- --------------------- Total liabilities 2,169,870,000 2,236,830,000 SHAREHOLDERS' EQUITY Common stock, $1.00 par value; 250,000,000 shares authorized; (shares issued and outstanding: 2001 59,025,813; 2000 51,342,006) 59,026,000 51,342,000 Additional paid-in capital 354,034,000 196,999,000 Retained earnings 306,250,000 277,876,000 Accumulated other comprehensive income 7,522,000 4,713,000 --------------------- --------------------- Total shareholders' equity 726,832,000 530,930,000 --------------------- --------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,896,702,000 $ 2,767,760,000 ===================== =======================
2 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Earnings (Unaudited) --------
For the six months ended June 30, 2001 2000 --------------------- --------------------- REVENUE Net earned premium $ 155,609,000 $ 135,010,000 Management fees 29,635,000 53,809,000 Commission income 24,792,000 25,696,000 Net investment income 20,508,000 18,195,000 Net realized investment loss (360,000) (4,372,000) Other operating income 5,464,000 14,556,000 --------------------- --------------------- Total revenue 235,648,000 242,894,000 EXPENSE Loss and loss adjustment expense 96,969,000 101,941,000 Operating expense: Policy acquisition costs, net 12,253,000 15,502,000 Compensation expense 35,466,000 43,376,000 Other operating expense 27,540,000 27,999,000 --------------------- --------------------- Net operating expense 75,259,000 86,877,000 Interest expense 5,161,000 10,336,000 --------------------- --------------------- Total expense 177,389,000 199,154,000 --------------------- --------------------- Earnings before income tax provision 58,259,000 43,740,000 Income tax provision 22,823,000 17,156,000 --------------------- --------------------- Earnings before cumulative effect of accounting change 35,436,000 26,584,000 Cumulative effect of accounting change, net of deferred tax effect of $1,335,000 -- (2,013,000) --------------------- --------------------- NET EARNINGS $ 35,436,000 $ 24,571,000 ===================== ===================== BASIC EARNINGS PER SHARE DATA: Earnings before accounting change $ 0.63 $ 0.53 Cumulative effect of accounting change -- (0.04) --------------------- --------------------- NET EARNINGS $ 0.63 $ 0.49 ===================== ===================== Weighted average shares outstanding 56,374,000 50,462,000 ===================== ===================== DILUTED EARNINGS PER SHARE DATA: Earnings before accounting change $ 0.61 $ 0.52 Cumulative effect of accounting change -- (0.04) --------------------- --------------------- NET EARNINGS $ 0.61 $ 0.48 ===================== ===================== Weighted average shares outstanding 57,793,000 50,906,000 ===================== ===================== Cash dividends declared, per share $ 0.12 $ 0.10 ===================== =====================
3 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Earnings (Unaudited) --------
For the three months ended June 30, 2001 2000 --------------------- --------------------- REVENUE Net earned premium $ 83,688,000 $ 71,654,000 Management fees 13,885,000 24,548,000 Commission income 10,151,000 10,863,000 Net investment income 9,876,000 9,946,000 Net realized investment gain (loss) 464,000 (3,969,000) Other operating income 2,492,000 7,905,000 --------------------- --------------------- Total revenue 120,556,000 120,947,000 EXPENSE Loss and loss adjustment expense 48,427,000 53,132,000 Operating expense: Policy acquisition costs, net 7,979,000 6,181,000 Compensation expense 16,847,000 21,092,000 Other operating expense 13,125,000 13,891,000 --------------------- --------------------- Net operating expense 37,951,000 41,164,000 Interest expense 1,814,000 5,315,000 --------------------- --------------------- Total expense 88,192,000 99,611,000 --------------------- --------------------- Earnings before income tax provision 32,364,000 21,336,000 Income tax provision 12,106,000 8,156,000 --------------------- --------------------- NET EARNINGS $ 20,258,000 $ 13,180,000 ===================== ===================== BASIC EARNINGS PER SHARE DATA: Earnings per share $ 0.34 $ 0.26 ===================== ===================== Weighted average shares outstanding 58,998,000 50,525,000 ===================== ===================== DILUTED EARNINGS PER SHARE DATA: Earnings per share $ 0.34 $ 0.26 ===================== ===================== Weighted average shares outstanding 60,470,000 51,083,000 ===================== ===================== Cash dividends declared, per share $ 0.06 $ 0.05 ===================== =====================
4 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Cash Flows (Unaudited) --------
For the six months ended June 30, 2001 2000 ----------------- ----------------- Cash flows from operating activities: Net earnings $ 35,436,000 $ 24,571,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Change in premium, claims and other receivables (51,749,000) 24,845,000 Change in reinsurance recoverables (53,411,000) (8,003,000) Change in ceded unearned premium 4,625,000 (1,763,000) Change in loss and loss adjustment expense payable 57,267,000 28,191,000 Change in reinsurance balances payable (23,021,000) (2,071,000) Change in unearned premium 15,279,000 12,353,000 Change in premium and claims payable, net of restricted cash 22,156,000 (21,545,000) Change in accounts payable and accrued liabilities (3,622,000) (21,648,000) Net realized investment loss 360,000 4,372,000 Gains on sales of other operating investments -- (2,951,000) Depreciation and amortization expense 9,299,000 9,199,000 Other, net 3,917,000 5,864,000 ----------------- ----------------- Cash provided by operating activities 16,536,000 51,414,000 Cash flows from investing activities: Sales of fixed income securities 71,128,000 32,085,000 Maturity or call of fixed income securities 20,654,000 23,747,000 Sales of equity securities 2,471,000 6,538,000 Dispositions of other operating investments -- 20,503,000 Change in short-term investments 21,761,000 (49,544,000) Cash paid for companies acquired, net of cash received -- (9,880,000) Cost of securities acquired (135,512,000) (87,061,000) Purchases of property and equipment and other, net (2,991,000) (3,660,000) ----------------- ----------------- Cash used by investing activities (22,489,000) (67,272,000) Cash flows from financing activities: Proceeds from notes payable -- 24,000,000 Sale of common stock, net of costs 161,837,000 3,188,000 Payments on notes payable (158,500,000) (23,000,000) Dividends paid (7,077,000) (4,903,000) ----------------- ----------------- Cash used by financing activities (3,740,000) (715,000) ----------------- ----------------- Net change in cash (9,693,000) (16,573,000) Cash at beginning of period 13,991,000 26,825,000 ----------------- ----------------- CASH AT END OF PERIOD $ 4,298,000 $ 10,252,000 ================= =================
5 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM JUNE 30, 2001 ($ IN THOUSANDS)
2ND QTR 2ND QTR CHANGE 2001 2000 % ----------- ----------- ---------- GROSS WRITTEN Accident & Health $ 64,356 $ 52,788 22 % Aviation 58,323 63,245 (8) Marine & Offshore Energy 10,342 7,843 32 Medical Stop-Loss 105,220 90,327 16 Property 31,468 12,920 144 Workers' Compensation 16,567 17,936 (8) Other 8,218 19,081 (57) -------- -------- --------- $294,494 $264,140 11 % ======== ======== ========= NET WRITTEN Accident & Health $ 13,943 $ 16,778 (17)% Aviation 29,963 23,770 26 Marine & Offshore Energy 5,529 3,210 72 Medical Stop-Loss 34,825 26,067 34 Property 5,361 2,785 92 Workers' Compensation 14,345 7,344 95 Other 1,618 1,966 (18) -------- -------- --------- $105,584 $ 81,920 29 % ======== ======== ========= NET EARNED PREMIUM Accident & Health $ 11,762 $ 16,518 (29)% Aviation 21,936 18,450 19 Marine & Offshore Energy 2,089 1,167 79 Medical Stop-Loss 34,900 26,067 34 Property 3,796 1,348 182 Workers' Compensation 7,496 6,049 24 Other 1,709 2,055 (17) -------- -------- --------- $ 83,688 $ 71,654 17 % ======== ======== =========
6 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM JUNE 30, 2001 ($ IN THOUSANDS)
YTD YTD CHANGE 2001 2000 % -------- -------- ---------- GROSS WRITTEN Accident & Health $108,424 $ 83,839 29 % Aviation 93,261 105,075 (11) Marine & Offshore Energy 18,328 12,369 48 Medical Stop-Loss 211,606 170,797 24 Property 43,924 33,985 29 Workers' Compensation 28,423 31,877 (11) Other 19,742 33,336 (41) -------- -------- ------- $523,708 $471,278 11 % ======== ======== ======= NET WRITTEN Accident & Health $ 23,572 $ 27,723 (15)% Aviation 48,228 36,521 32 Marine & Offshore Energy 10,016 5,357 87 Medical Stop-Loss 65,454 49,550 32 Property 8,266 3,764 120 Workers' Compensation 18,090 12,613 43 Other 4,463 7,052 (37) -------- -------- ------- $178,089 $142,580 25 % ======== ======== ======= NET EARNED PREMIUM Accident & Health $ 21,170 $ 26,668 (21)% Aviation 42,278 36,415 16 Marine & Offshore Energy 3,934 3,102 27 Medical Stop-Loss 65,604 49,550 32 Property 6,687 2,519 165 Workers' Compensation 11,733 9,509 23 Other 4,203 7,247 (42) -------- -------- ------- $155,609 $135,010 15 % ======== ======== =======
7 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM JUNE 30, 2001 ($ IN THOUSANDS)
YEAR TO DATE FULL YEAR FULL YEAR FULL YEAR 2001 2000 1999 1998 ------------ ----------- ----------- ----------- GROSS WRITTEN Accident & Health $108,424 $177,808 $148,401 $109,797 Aviation 93,261 191,089 210,029 203,573 Marine/Offshore Energy 18,328 26,102 18,694 34,941 Medical Stop-Loss 211,606 368,450 69,258 7,046 Property 43,924 53,275 63,309 106,515 Workers' Compensation 28,423 65,778 37,065 13,948 Other 19,742 84,955 21,575 22,456 -------- -------- -------- -------- $523,708 $967,457 $568,331 $498,276 ======== ======== ======== ======== NET WRITTEN Accident & Health $ 23,572 $ 47,303 $ 28,567 $ 35,379 Aviation 48,228 79,794 68,513 53,030 Marine & Offshore Energy 10,016 8,435 6,616 7,978 Medical Stop-Loss 65,454 100,353 20,332 3,415 Property 8,266 10,015 2,945 8,356 Workers' Compensation 18,090 23,249 9,831 5,629 Other 4,463 14,639 3,120 8,096 -------- -------- -------- -------- $178,089 $283,788 $139,924 $121,883 ======== ======== ======== ======== NET EARNED PREMIUM Accident & Health $ 21,170 $ 47,605 $ 30,587 $ 38,280 Aviation 42,278 73,695 62,784 65,258 Marine & Offshore Energy 3,934 5,624 8,794 12,737 Medical Stop-Loss 65,604 100,053 20,332 3,415 Property 6,687 6,312 3,985 8,997 Workers' Compensation 11,733 19,767 11,284 6,335 Other 4,203 14,591 3,596 8,078 -------- -------- -------- -------- $155,609 $267,647 $141,362 $143,100 ======== ======== ======== ========
8 HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES GROSS LOSS RATIOS JUNE 30, 2001 ($ IN THOUSANDS)
Year to Date Full Year Full Year Full Year 2001 2000 1999 1998 Gross Earned Loss Gross Earned Loss Gross Earned Loss Gross Earned Loss Line of Business Premium Ratio Premium Ratio Premium Ratio Premium Ratio - ------------------------------------------------ --------------------- --------------------- -------------------- Accident & Health $ 96,063 77% $179,051 95% $150,738 85% $110,001 83% Aviation 90,345 59 197,086 74 209,604 92 188,212 86 Marine & Offshore Energy 13,361 641* 24,382 81 19,438 331 29,930 104 Medical Stop-Loss 211,755 66 368,150 70 69,258 92 7,046 70 Property 33,985 87 62,504 80 88,178 227 89,968 206 Workers' Compensation 30,417 81 60,073 65 29,701 74 7,864 85 Other 30,212 83 83,349 108 21,316 67 20,054 72 ------------------- --------------------- --------------------- --------------------- Total $506,138 85%** $974,595 79% $588,233 117% $453,075 109% =================== ===================== ===================== =====================
* Marine & Offshore Energy includes the Petrobras loss of $55.0 million. Without the Petrobras loss, the marine & offshore energy gross loss ratio would be 228% ** Total includes the Petrobras loss. Without the Petrobras loss, the total gross loss ratio would be 74% (YTD) 9 HCC INSURANCE HOLDINGS, INC. OPERATING EARNINGS (AMOUNTS IN 000'S EXCEPT PER SHARE AMOUNTS) JUNE 30, 2001
Year to Date Full Year Full Year Full Year Full Year 2001 2000 1999 1998 1997 ======================================================================= GAAP Net Income $ 35,436 $ 55,468 $ 26,572 $ 73,110 $ 50,083 ======================================================================= Wtd Avg Shares O/S 57,793 51,619 50,646 49,933 49,206 ======================================================================= Earnings per Share $ 0.61 $ 1.07 $ 0.52 $ 1.46 $ 1.02 ======================================================================= PRO FORMA ADJUSTMENTS Merger Expenses $ -- $ -- $ -- $ 107 $ 8,069 Income Tax 0 0 0 0 (845) ----------------------------------------------------------------------- Total Pro forma Adjs 0 0 0 107 7,224 Reported Net Income 35,436 55,468 26,572 73,110 50,083 ----------------------------------------------------------------------- Pro forma Net Income $ 35,436 $ 55,468 $ 26,572 $ 73,217 $ 57,307 ======================================================================= Pro forma EPS $ 0.61 $ 1.07 $ 0.52 $ 1.47 $ 1.16 ======================================================================= OPERATING ADJUSTMENTS SAB 101 0 3,348 0 0 0 Merger Expense - Schanen 176 0 0 0 0 Restructuring / Other 596 5,154 48,951 0 10,000 Realized (gain)/loss 360 5,321 4,164 (845) 328 Income Tax (334) (5,012) (18,848) 296 (3,615) ----------------------------------------------------------------------- Total Operating Adjs 798 8,811 34,267 (549) 6,713 Pro forma Net Income 35,436 55,468 26,572 73,217 57,307 ----------------------------------------------------------------------- Operating Income $ 36,234 $ 64,279 $ 60,839 $ 72,668 $ 64,020 ======================================================================= Operating EPS $ 0.63 $ 1.25 $ 1.20 $ 1.46 $ 1.30 =======================================================================
10 HCC INSURANCE HOLDINGS, INC. SUPPLEMENTAL INFORMATION JUNE 30, 2001
QTD QTD YTD YTD 6/30/01 6/30/00 6/30/01 6/30/00 ------- ------- ------- -------- GAAP Los Ratio ................. 57.9% 74.2% 62.3% 75.5% GAAP Exp Ratio ................. 26.5% 20.5% 27.7 23.6% ------- -------- -------- -------- GAAP Combined Ratio ............ 84.4% 94.7% 90.0% 99.1% Statutory Loss Ratio ........... * 76.4% * 72.3% Statutory Exp Ratio ........... * 26.6% * 28.6% ------- -------- -------- -------- Statutory Combined Ratio ....... * 101.2% * 100.9% Paid Loss & LAE ................ $49,480 $ 50,820 $99,715 $106,522 Change in Reserves ............. (1,053) 2,312 (2,746) (4,581) ------- -------- -------- -------- =Incurred L+LAE ................ $48,427 $ 53,132 $96,969 $101,941
As of As of As of 6/30/01 3/31/01 12/31/00 ------- ------- -------- Gross Reserves ................ $1,001,384 $990,722 $944,117 Net Reserves ................. 247,126 248,179 249,872 GAAP Equity by Insurance Company Houston Casualty Co. .......... $329,825 $321,747 $317,381 Avemco Insurance Co. .......... 110,581 105,051 98,724 US Specialty Insurance Co. .... 117,385 118,380 116,937 HCC Re ........................ 4,461 4,134 3,995 HCC Life ...................... 83,194 83,323 80,259 CIC/USFIC ..................... 39,537 40,184 39,553 NIU ........................... 5,561 5,522 5,154 Eliminations .................. (240,116) (241,911) (236,749) -------- -------- -------- HCC Total ..................... $450,428 $436,430 $425,254 Statutory Surplus by Insurance Company Houston Casualty Co. .......... * $228,601 $231,165 Avemco Insurance Co. .......... * 93,920 85,948 US Specialty Insurance Co. .... * 105,704 106,056 HCC Re ........................ * 4,134 3,995 HCC Life ...................... * 62,907 63,311 CIC/USFIC ..................... * 39,266 38,812 NIU ........................... * 5,168 5,141 Eliminations .................. * (207,877) (208,179) -------- -------- -------- HCC Total ..................... * $331,823 $326,249
All $ in thousands. * Statutory information to follow. 11 HCC INSURANCE HOLDINGS, INC. UNDERWRITING AGENCY MANAGEMENT FEES JUNE 30, 2001
YEAR TO DATE FULL YEAR FULL YEAR FULL YEAR 2001 2000 1999 1998 ------------ ---------- ---------- --------- LINE OF BUSINESS - ---------------------------- HCCA (1) 333,660 6,765,035 9,588,893 11,222,985 HCCB 15,749,465 44,730,918 28,319,354 24,454,702 HCCES (1) 2,229,285 15,372,094 18,998,248 9,953,752 LDG Re 10,184,755 24,988,665 28,320,550 22,265,814 LDG Re - London (1) 1,185,260 3,120,779 3,105,547 3,054,875 Other (47,298) 1,080,800 2,380,710 3,092,716 ----------------------------------------------------------- TOTAL MANAGEMENT FEES 29,635,127 96,058,291 90,713,302 74,044,844 =========================================================== (1) In run-off as these agencies were combined with insurance company operations January 1, 2001.
12 HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES NET LOSS RATIOS JUNE 30, 2001 ($ IN THOUSANDS)
Year to Date Full Year Full Year Full Year 2001 2000 1999 1998 Net Earned Loss Net Earned Loss Net Earned Loss Net Earned Loss Line of Business Premium Ratio Premium Ratio Premium Ratio Premium Ratio - ---------------------------- ------------------------- ------------------------- ------------------------ ------------------- Accident & Health $ 21,170 78% $ 47,605 83% $ 30,587 68% $ 38,280 61% Aviation 42,278 57 73,695 70 62,784 76 65,258 62 Marine & Offshore Energy 3,934 10 5,624 77 8,794 104 12,737 13 Medical Stop-Loss 65,604 64 100,053 73 20,332 84 3,415 75 Property 6,687 39 6,312 66 3,986 191 8,997 199 Workers' Compensation 11,733 74 19,767 45 11,284 66 6,335 73 Other 4,203 72 14,591 113 3,595 -2 8,078 18 ----------------------- ------------------------- -------------------------- ----------------- Total $155,609 62% $267,647 74% $141,362 78% $143,100 64% ======================= ========================= ========================== =================
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