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