-----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, JXv5oaTB+u8AsnxaowGw5JRfaUOdCvFcbWjch9NqWmK0NwalpPwzAYlSCiqkZpKi eb2tpROnJju1Ks+W5RuYyg== 0000950129-01-503884.txt : 20020410 0000950129-01-503884.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950129-01-503884 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011108 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20011109 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: 1779607 BUSINESS ADDRESS: STREET 1: 13403 NORTHWEST FRWY CITY: HOUSTON STATE: TX ZIP: 77040-6094 BUSINESS PHONE: 7136907300 8-K 1 h92010e8-k.txt HCC INSURANCE HOLDINGS INC - NOVEMBER 8, 2001 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) NOVEMBER 8, 2001 HCC INSURANCE HOLDINGS, INC. (EXACT NAME OF 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 --------------------------------------------- ITEM 5. OTHER EVENTS On November 8, 2001, HCC Insurance Holdings, Inc. ("HCC") announced its operating results for the Third Quarter ended September 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 November 8, 2001 announcing HCC's operating results for the Third Quarter ended September 30, 2001 and attachments thereto. 99.2 Supplementary Financial Data relating to HCC's operating results for the Third Quarter ended September 30, 2001. ITEM 9. Supplementary Financial Data relating to HCC's announced operating results for the Third Quarter ended September 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: November 8, 2001 HCC INSURANCE HOLDINGS, INC. By: /s/ Christopher L. Martin -------------------------------- Christopher L. Martin Vice President and General Counsel EXHIBIT INDEX Exhibits. 99.1 Press Release dated November 8, 2001 announcing HCC's operating results for the Third Quarter ended September 30, 2001 and attachments thereto. 99.2 Supplementary Financial Data relating to HCC's operating results for the Third Quarter ended September 30, 2001. EX-99.1 3 h92010ex99-1.txt PRESS RELEASE - OPERATING RESULTS FOR 3RD QUARTER Exhibit 99.1 HCC REPORTS THIRD QUARTER 2001 RESULTS WITH RISING OPTIMISM FOR THE FUTURE HOUSTON (November 8, 2001) . . . HCC INSURANCE HOLDINGS, INC. (NYSE SYMBOL: HCC) today released results for the third quarter and the first nine months of 2001. Operating earnings for the third quarter of 2001 were $417,000 or $0.01 per share compared to $17.4 million or $0.33 per share for the third quarter of last year. Operating earnings for the nine months ended September 30, 2001 were $36.7 million or $0.62 per share compared to $46.3 million or $0.90 per share in the same period of 2000. These operating results reflect an after tax loss of $22.8 million or $0.38 per share related to losses arising out of the events of September 11, 2001, the continuing dilutive effects from the March, 2001 equity offering and the net effect of two other catastrophe losses involving Petrobras and Totale. Net earnings for the third quarter of 2001 were a loss of $29.1 million or $0.49 per share, principally as a result of losses associated with the events of September 11, 2001, as well as other charges for discontinued lines of business. Net earnings for the first nine months of 2001 were $6.4 million or $0.11 per share. In conjunction with the third quarter of 2001, HCC announced its intention to exit the workers' compensation insurance business currently written through its subsidiary, U.S. Specialty Insurance Company. The related after tax charge for discontinued lines of business is $29.6 million or $0.50 per share, of which the majority is applicable to goodwill and adequate reserving to cover the run-off obligations. Stephen L. Way, Chairman and Chief Executive Officer commented, "Although rates are rising and profitability is returning to the workers' compensation line, it is not one of our core businesses and does not represent sufficient premium volume to maintain the division." He added, "With rates rising more dramatically in our specialty lines, we feel we can best use management's time and the Company's capital in other areas which are more likely to produce our expected return of at least 15 percent for next year." Total revenue showed strong growth in the third quarter of 2001, rising by 14 percent to $137.6 million and for the first nine months of 2001 by 3 percent to $373.3 million, both compared to the same periods of the previous year. As previously announced, 2 this growth was expected to accelerate in the second half of this year, driven by increases in written and net retained premium. Gross written premium grew 13 percent for the first nine months of 2001 to $688.9 million, net written premium increased 22 percent to $239.8 million and net earned premium increased 23 percent to $229.0 million, before discontinued lines of business and compared to the corresponding period in the previous year. This strong growth is a result of substantial rate increases, organic growth and higher net retained premium. Management fees decreased during the first nine months of 2001 to $43.7 million compared to the corresponding period of 2000. This reduction was primarily due to the integration of several of the Company's subsidiary underwriting agencies into its insurance company segment. Management fee income will benefit next year as a result of the acquisitions of ASU International and Professional Indemnity Agency, which were completed in October, 2001. During the first nine months of 2001, commission income was almost flat at $34.3 million, primarily due to the reduced level of reinsurance being purchased by its insurance company subsidiaries. Commission income is expected to rebound next year, as increased rates will positively affect all of HCC's agency operations. 3 Net investment income was flat in the third quarter of 2001 at $10.1 million, compared to the third quarter of 2000, despite substantially lower yields. For the first nine months of 2001, net investment income increased 7 percent to $30.6 million, compared to the same period in the previous year. Investment assets have grown substantially, rising 28 percent to $912 million since the end of last year and are helping offset rapidly falling interest rates. During the first nine months of 2001, other operating income decreased to $15.8 million compared to 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. During August, 2001 the Company completed an offering of $172.5 million of convertible notes which bear interest at a rate of 2.0 percent per annum, have a 20 year term and are convertible into HCC's common stock at $32.00 per share. The proceeds of the offering were used to repay the debt outstanding under the Company's bank loan facility and to fund the recently completed acquisitions. The Company's bank loan facility stands at $200 4 million, all of which is currently available at an interest rate of approximately 3 percent. Mr. Way said, "We are very well positioned to continue the growth of our specialty lines and we expect underwriting profits to continue to accelerate through at least the next two years." He added, "We are still very active in the M&A arena and anticipate further transactions in the near future." As of September 30, 2001, total assets were $3.2 billion, exceeding $3.0 billion for the first time and book value per share had increased 15 percent to $11.87 compared to December 31, 2000. For additional information, please see the 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 over $3.0 billion and its shares are traded on the NYSE (symbol: HCC) with a market capitalization of over $1.5 billion. HCC is rated AA (Very Strong) by Standard & Poor's and A+ (Superior) by A. M. Best Company. 5 The Company will hold an open conference call beginning at 8:00 a.m. Central Time on Friday, November 9th. To participate, please call domestically 877-679-9045 and internationally 952-556-2802. To listen to a replay, the number is 800-615-3210, access code 5614541 and will be available until midnight Central Time November 16, 2001. In addition, there will be a live webcast available on a listen-only basis that can be accessed through HCC's website at www.hcch.com. A replay of the webcast will be available until midnight Central Time November 16, 2001. For more information and to access the webcast, please visit HCC's website at www.hcch.com. CONTACT: L. BYRON WAY, VICE PRESIDENT AT HCC INSURANCE HOLDINGS, INC. (713) 690-7300 6 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED SEPTEMBER 30, 2001 2000 - -------------------------------- ---- ---- Gross written premium $242,899,000 $242,204,000 Net written premium 93,175,000 72,174,000 Net earned premium 93,471,000 66,279,000 Management fees 14,033,000 23,587,000 Commission income 9,507,000 11,597,000 Net investment income 10,105,000 10,373,000 Other operating income 10,382,000 8,156,000 Total revenue 137,621,000 120,539,000 Net (loss) earnings (29,076,000) 17,762,000 Earnings (loss) per share (0.49) 0.34 Operating earnings after tax(1) 417,000 17,406,000 Operating earnings per share(1) 0.01 0.33 Weighted average shares outstanding 59,399,000 52,037,000 SEPTEMBER 30, 2001 DECEMBER 31, 2000 ------------------ ----------------- Total investments $911,764,000 $711,113,000 Total assets 3,167,825,000 2,790,755,000 Shareholders' equity 711,375,000 530,930,000 Book value per share 11.87 10.29
(1) Net earnings excluding the effect of net realized investment gains and losses and charges from discontinued lines of business. Note: All earnings per share numbers are diluted. 7 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS
NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 - ------------------------------- ---- ---- Gross written premium $766,607,000 $713,482,000 Net written premium 271,264,000 214,754,000 Net earned premium 249,080,000 201,289,000 Management fees 43,668,000 77,396,000 Commission income 34,299,000 37,293,000 Net investment income 30,613,000 28,568,000 Other operating income 15,846,000 22,712,000 Total revenue 373,269,000 363,433,000 Net earnings 6,360,000 42,333,000 Earnings per share 0.11 0.83 Operating earnings after tax(1) 36,651,000 46,343,000 Operating earnings per share(1) 0.62 0.90 Weighted average shares outstanding 58,755,000 51,245,000 SEPTEMBER 30, 2001 DECEMBER 31, 2000 ------------------ ----------------- Total investments $911,764,000 $711,113,000 Total assets 3,167,825,000 2,790,755,000 Shareholders' equity 711,375,000 530,930,000 Book value per share 11.87 10.29
(1) Net earnings excluding a non-recurring expense for debt restructuring, merger expense, restructuring expense, change in accounting principle, the effect of net realized investment gains and losses and charges from discontinued lines of business. Note: All earnings per share numbers are diluted. 8 HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS ($ IN THOUSANDS) INSURANCE COMPANY GROSS WRITTEN PREMIUM
YTD YTD THROUGH THROUGH LINE OF BUSINESS 9/30/01 9/30/00 - ---------------- -------- -------- Aviation $137,123 $143,279 Life, Accident & Health 474,695 398,393 Marine, Energy & Property 65,825 54,317 Miscellaneous 11,285 14,243 Discontinued 77,679 103,250 -------- Total $766,607 $713,482 ======== ========
INSURANCE COMPANY NET WRITTEN PREMIUM
YTD YTD THROUGH THROUGH LINE OF BUSINESS 9/30/01 9/30/00 - ---------------- -------- -------- Aviation $67,460 $56,314 Life, Accident & Health 139,379 112,894 Marine, Energy & Property 22,906 13,336 Miscellaneous 10,075 13,742 Discontinued 31,444 18,468 -------- -------- Total $271,264 $214,754 ======== ========
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. * * * * 10 EX-99.2 4 h92010ex99-2.txt SUPPLEMENTARY FINANCIAL DATA EXHIBIT 99.2 HCC Insurance Holdings, Inc. and Subsidiaries --------- Condensed Consolidated Balance Sheets --------
September 30, 2001 December 31, 2000 ------------------ ----------------- (Unaudited) ASSETS Investments: Fixed income securities, at market (cost: 2001 $470,677,000; 2000 $422,821,000 ) $ 489,707,000 $ 433,844,000 Marketable equity securities, at market (cost: 2001 $4,724,000; 2000 $8,896,000) 4,674,000 6,282,000 Short-term investments, at cost, which approximates market 410,828,000 263,805,000 Other investments, at estimated fair value (cost: 2001 $6,941,000; 2000 $7,182,000) 6,555,000 7,182,000 -------------- -------------- Total investments 911,764,000 711,113,000 Cash 3,503,000 13,991,000 Restricted cash and cash investments 124,457,000 101,738,000 Premium, claims and other receivables 720,875,000 609,716,000 Reinsurance recoverables 897,632,000 789,412,000 Ceded unearned premium 83,110,000 114,469,000 Ceded life and annuity benefits 84,394,000 86,760,000 Deferred policy acquisition costs 29,011,000 39,108,000 Property and equipment, net 38,006,000 39,438,000 Goodwill 242,232,000 266,015,000 Other assets 32,841,000 18,995,000 -------------- -------------- TOTAL ASSETS $3,167,825,000 $2,790,755,000 ============== ============== LIABILITIES Loss and loss adjustment expense payable $1,127,715,000 $ 944,117,000 Life and annuity policy benefits 84,394,000 86,760,000 Reinsurance balances payable 100,216,000 130,746,000 Unearned premium 173,543,000 190,550,000 Deferred ceding commissions 17,872,000 30,013,000 Premium and claims payable 723,329,000 617,847,000 Notes payable 175,168,000 212,133,000 Accounts payable and accrued liabilities 54,213,000 47,659,000 -------------- -------------- Total liabilities 2,456,450,000 2,259,825,000 SHAREHOLDERS' EQUITY Common stock, $1.00 par value; 250,000,000 shares authorized; (shares issued and outstanding: 2001 59,790,501; 2000 51,342,006 59,791,000 51,342,000 Additional paid-in capital 367,106,000 196,999,000 Retained earnings 273,437,000 277,876,000 Accumulated other comprehensive income 11,041,000 4,713,000 -------------- -------------- Total shareholders' equity 711,375,000 530,930,000 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,167,825,000 $2,790,755,000 ============== ==============
See Notes to Condensed Consolidated Financial Statements. 1 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Earnings (Unaudited) --------
For the nine months ended September 30, 2001 2000 --------------- --------------- REVENUE Net earned premium $ 249,080,000 $ 201,289,000 Management fees 43,668,000 77,396,000 Commission income 34,299,000 37,293,000 Net investment income 30,613,000 28,568,000 Net realized investment loss (237,000) (3,825,000) Other operating income 15,846,000 22,712,000 --------------- --------------- Total revenue 373,269,000 363,433,000 EXPENSE Loss and loss adjustment expense 216,143,000 149,534,000 Operating expense: Policy acquisition costs, net 21,515,000 21,673,000 Compensation expense 51,135,000 64,223,000 Other operating expense 55,340,000 39,715,000 --------------- --------------- Net operating expense 127,990,000 125,611,000 Interest expense 6,631,000 15,592,000 --------------- --------------- Total expense 350,764,000 290,737,000 --------------- --------------- Earnings before income tax provision 22,505,000 72,696,000 Income tax provision 16,145,000 28,350,000 --------------- --------------- Earnings before cumulative effect of accounting change 6,360,000 44,346,000 Cumulative effect of accounting change, net of deferred tax effect of $1,335,000 -- (2,013,000) --------------- --------------- NET EARNINGS $ 6,360,000 $ 42,333,000 =============== =============== BASIC EARNINGS PER SHARE DATA: Earnings before accounting change $ 0.11 $ 0.88 Cumulative effect of accounting change -- (0.04) --------------- --------------- NET EARNINGS $ 0.11 $ 0.84 =============== =============== Weighted average shares outstanding 57,411,000 50,555,000 =============== =============== DILUTED EARNINGS PER SHARE DATA: Earnings before accounting change $ 0.11 $ 0.87 Cumulative effect of accounting change -- (0.04) --------------- --------------- NET EARNINGS $ 0.11 $ 0.83 =============== =============== Weighted average shares outstanding 58,755,000 51,245,000 =============== =============== Cash dividends declared, per share $ 0.1825 0.16 =============== ===============
See Notes to Condensed Consolidated Financial Statements. 2 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Earnings (Unaudited) --------
For the three months ended September 30, 2001 2000 -------------- -------------- REVENUE Net earned premium $ 93,471,000 $ 66,279,000 Management fees 14,033,000 23,587,000 Commission income 9,507,000 11,597,000 Net investment income 10,105,000 10,373,000 Net realized investment gain 123,000 547,000 Other operating income 10,382,000 8,156,000 -------------- -------------- Total revenue 137,621,000 120,539,000 EXPENSE Loss and loss adjustment expense 119,174,000 47,593,000 Operating expense: Policy acquisition costs, net 9,262,000 6,171,000 Compensation expense 15,669,000 20,847,000 Other operating expense 27,800,000 11,716,000 -------------- -------------- Net operating expense 52,731,000 38,734,000 Interest expense 1,470,000 5,256,000 -------------- -------------- Total expense 173,375,000 91,583,000 -------------- -------------- Earnings (benefit) before income tax provision (35,754,000) 28,956,000 Income tax provision (benefit) (6,678,000) 11,194,000 -------------- -------------- NET EARNINGS (LOSS) $ (29,076,000) $ 17,762,000 ============== ============== BASIC EARNINGS (LOSS) PER SHARE DATA: Earnings (loss) per share $ (0.49) $ 0.35 ============== ============== Weighted average shares outstanding 59,399,000 50,739,000 ============== ============== DILUTED EARNINGS (LOSS) PER SHARE DATA: Earnings (loss) per share $ (0.49) $ 0.34 ============== ============== Weighted average shares outstanding 59,399,000 52,037,000 ============== ============== Cash dividends declared, per share $ 0.0625 $ 0.06 ============== ==============
See Notes to Condensed Consolidated Financial Statements. 3 HCC Insurance Holdings, Inc. and Subsidiaries -------- Condensed Consolidated Statements of Cash Flows (Unaudited) --------
For the nine months ended September 30, 2001 2000 -------------- -------------- Cash flows from operating activities: Net earnings $ 6,360,000 $ 42,333,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Change in premium, claims and other receivables (100,469,000) (46,126,000) Change in reinsurance recoverables (190,056,000) (22,168,000) Change in ceded unearned premium 16,284,000 12,574,000 Change in other assets (16,375,000) 15,653,000 Change in loss and loss adjustment expense payable 266,322,000 24,220,000 Change in reinsurance balances payable (18,258,000) (7,088,000) Change in premium and claims payable, net of restricted cash 82,763,000 82,959,000 Change in accounts payable and accrued liabilities 7,558,000 (21,681,000) Gains on sales of other operating investments (8,171,000) (5,739,000) Depreciation, amortization an impairments 29,782,000 13,983,000 Other, net 6,236,000 (4,559,000) -------------- -------------- Cash provided by operating activities 81,976,000 84,361,000 Cash flows from investing activities: Sales of fixed income securities 88,621,000 86,079,000 Maturity or call of fixed income securities 25,843,000 27,406,000 Sales of equity securities 11,960,000 7,437,000 Dispositions of other operating investments 1,042,000 27,803,000 Change in short-term investments (148,364,000) (72,460,000) Cash paid for companies acquired, net of cash received -- (9,880,000) Cost of securities acquired (187,383,000) (148,245,000) Purchases of property and equipment and other, net (4,637,000) (6,248,000) -------------- -------------- Cash used by investing activities (212,918,000) (88,108,000) Cash flows from financing activities: Proceeds from notes payable, net of costs 168,058,000 26,700,000 Sale of common stock, net of costs 172,538,000 6,656,000 Payments on notes payable (209,523,000) (39,842,000) Dividends paid (10,619,000) (7,372,000) -------------- -------------- Cash provided (used) by financing activities 120,454,000 (13,858,000) -------------- -------------- Net change in cash (10,488,000) (17,605,000) Cash at beginning of period 13,991,000 26,825,000 -------------- -------------- CASH AT END OF PERIOD $ 3,503,000 $ 9,220,000 ============== ==============
See Notes to Condensed Consolidated Financial Statement 4 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM SEPTEMBER 30, 2001 ($ IN THOUSANDS)
3RD QTR 3RD QTR CHANGE 2001 2000 % ---------- ---------- ------ GROSS WRITTEN Life, Accident & Health $ 154,346 $ 143,757 7 Aviation 43,862 38,204 15 Marine, Energy & Property 14,684 14,605 1 Miscellaneous 3,505 5,123 (32) ---------- ---------- ------ 216,397 201,689 7% ====== Discontinued 26,502 40,515 ---------- ---------- $ 242,899 $ 242,204 ========== ========== NET WRITTEN Life, Accident & Health $ 50,511 $ 35,621 42 Aviation 19,232 19,793 (3) Marine, Energy & Property 6,442 5,081 27 Miscellaneous 3,251 5,197 (37) ---------- ---------- ------ 79,436 65,692 21% ====== Discontinued 13,739 6,482 ---------- ---------- $ 93,175 $ 72,174 ========== ========== NET EARNED PREMIUM Life, Accident & Health $ 50,716 $ 34,665 46 Aviation 23,397 17,996 30 Marine, Energy & Property 6,503 2,863 127 Miscellaneous 3,501 5,197 (33) ---------- ---------- ------ 84,117 60,721 39% ====== Discontinued 9,354 5,558 ---------- ---------- $ 93,471 $ 66,279 ========== ==========
5 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM SEPTEMBER 30, 2001 ($ IN THOUSANDS)
YTD YTD CHANGE 2001 2000 % --------- --------- --------- GROSS WRITTEN Life, Accident & Health $ 474,695 $ 398,393 19 Aviation 137,123 143,279 (4) Marine, Energy, & Property 65,825 54,317 21 Miscellaneous 11,285 14,243 (21) --------- --------- --------- 688,928 610,232 13% ========= Discontinued 77,679 103,250 --------- --------- $ 766,607 $ 713,482 ========= ========= NET WRITTEN Life, Accident & Health $ 139,379 $ 112,894 23 Aviation 67,460 56,314 20 Marine, Energy, & Property 22,906 13,336 72 Miscellaneous 10,075 13,742 (27) --------- --------- --------- 239,820 196,286 22% ========= Discontinued 31,444 18,468 --------- --------- $ 271,264 $ 214,754 ========= ========= NET EARNED PREMIUM Life, Accident & Health $ 137,369 $ 110,883 24 Aviation 65,675 54,411 21 Marine, Energy, & Property 15,640 7,708 103 Miscellaneous 10,325 13,742 (25) --------- --------- --------- 229,009 186,744 23% ========= Discontinued 20,071 14,545 --------- --------- $ 249,080 $ 201,289 ========= =========
6 HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY WRITTEN PREMIUM SEPTEMBER 30, 2001 ($ IN THOUSANDS)
YEAR TO DATE FULL YEAR FULL YEAR FULL YEAR 2001 2000 1999 1998 ------------ ------------ ------------ ------------ GROSS WRITTEN Life, Accident & Health $ 474,695 $ 546,702 $ 217,659 $ 116,843 Aviation 137,123 191,089 210,029 203,573 Marine, Energy & Property 65,825 64,352 82,003 141,456 Miscellaneous 11,285 29,281 17,962 12,240 ------------ ------------ ------------ ------------ 688,928 831,424 527,653 474,112 Discontinued 77,679 136,033 40,678 24,164 ------------ ------------ ------------ ------------ $ 766,607 $ 967,457 $ 568,331 $ 498,276 ============ ============ ============ ============ NET WRITTEN Life, Accident & Health $ 139,379 $ 148,100 $ 48,899 $ 38,794 Aviation 67,460 79,794 68,513 53,030 Marine, Energy & Property 22,906 16,256 9,561 16,334 Miscellaneous 10,075 14,552 8,730 4,998 ------------ ------------ ------------ ------------ 239,820 258,702 135,703 113,156 Discontinued 31,444 25,086 4,221 8,727 ------------ ------------ ------------ ------------ $ 271,264 $ 283,788 $ 139,924 $ 121,883 ============ ============ ============ ============ NET EARNED PREMIUM Life, Accident & Health $ 137,369 148,039 50,919 41,695 Aviation 65,675 73,695 62,784 65,258 Marine, Energy & Property 15,640 10,163 12,779 21,734 Miscellaneous 10,325 14,552 9,072 4,656 ------------ ------------ ------------ ------------ 229,009 246,449 135,554 133,343 Discontinued 20,071 21,198 6,808 9,757 ------------ ------------ ------------ ------------ $ 249,080 $ 267,647 $ 142,362 $ 143,100 ============ ============ ============ ============
7 HCC INSURANCE HOLDINGS, INC. OPERATING EARNINGS (AMOUNTS IN 000'S EXCEPT PER SHARE AMOUNTS) SEPTEMBER 30, 2001
Year to Date Full Year Full Year Full Year Full Year 2001 2000 1999 1998 1997 ------------ ------------ ------------ ------------ ------------ GAAP Net Income $ 6,360 $ 55,468 $ 26,572 $ 73,110 $ 50,083 ------------ ------------ ------------ ------------ ------------ Wtd Avg Shares O/S 58,755 51,619 50,646 49,933 49,206 ------------ ------------ ------------ ------------ ------------ Earnings per Share $ 0.11 $ 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 6,360 55,468 26,572 73,110 50,083 ------------ ------------ ------------ ------------ ------------ Pro forma Net Income $ 6,360 $ 55,468 $ 26,572 $ 73,217 $ 57,307 ============ ============ ============ ============ ============ Pro forma EPS $ 0.11 $ 1.07 $ 0.52 $ 1.47 $ 1.16 ============ ============ ============ ============ ============ OPERATING ADJUSTMENTS SAB 101 0 3,348 0 0 0 Discontinued Lines 37,277 0 0 0 0 Merger Expense / Other 772 5,154 48,951 0 10,000 Realized (gain)/loss 237 5,321 4,164 (845) 328 Income Tax (7,995) (5,012) (18,848) 296 (3,615) ------------ ------------ ------------ ------------ ------------ Total Operating Adjs 30,291 8,811 34,267 (549) 6,713 Pro forma Net Income 6,360 55,468 26,572 73,217 57,307 ------------ ------------ ------------ ------------ ------------ Operating Income $ 36,651 $ 64,279 $ 60,839 $ 72,668 $ 64,020 ============ ============ ============ ============ ============ Operating EPS $ 0.62 $ 1.25 $ 1.20 $ 1.46 $ 1.30 ============ ============ ============ ============ ============
8 HCC INSURANCE HOLDINGS, INC. SUPPLEMENTAL INFORMATION SEPTEMBER 30, 2001
QTD QTD YTD YTD 9/30/2001 9/30/2000 9/30/2001 9/30/2000 ------------ ------------ ------------ ------------ GAAP Loss Ratio 127.5% 71.8% 86.8% 74.3% GAAP Exp Ratio 25.3% 23.4% 26.8% 23.5% ------------ ------------ ------------ ------------ GAAP Combined Ratio 152.8% 95.2% 113.6% 97.8% Statutory Loss Ratio * 72.4% * 72.3% Statutory Exp Ratio * 25.9% * 27.7% ------------ ------------ ------------ ------------ Statutory Combined Ratio * 98.3% * 100.0% Paid Loss & LAE $ 60,237 $ 62,805 $ 159,952 $ 169,327 Change in Reserves 58,937 (15,212) 56,191 (19,793) ------------ ------------ ------------ ------------ =Incurred L+LAE $ 119,174 $ 47,593 $ 216,143 $ 149,534
As of As of As of 9/30/2001 6/30/2001 12/31/2000 ------------ ------------ ------------ Gross Reserves $ 1,127,715 $ 1,001,384 $ 944,117 Net Reserves 306,063 247,126 249,872 GAAP Equity by Insurance Company Houston Casualty Co. $ 358,944 $ 329,825 $ 317,381 Avemco Insurance Co. 112,828 110,581 98,724 US Specialty Insurance Co. 106,675 117,385 116,937 HCC Re 2,115 4,461 3,995 HCC Life 84,635 83,194 80,259 USFIC (Through 6/30 only)/CIC 22,547 39,537 39,553 NIU 5,700 5,561 5,154 Eliminations (213,857) (240,116) (236,749) ------------ ------------ ------------ HCC Total $ 479,587 $ 450,428 $ 425,254 Statutory Surplus by Insurance Company Houston Casualty Co. * $ 244,267 $ 231,165 Avemco Insurance Co. * 101,739 85,948 US Specialty Insurance Co. * 106,187 106,056 HCC Re * 4,461 3,995 HCC Life * 70,145 63,311 USFIC (Through 6/30 only)/CIC * 39,058 38,812 NIU * 5,331 5,141 Eliminations * (215,390) (208,179) ------------ ------------ ------------ HCC Total * $ 355,798 $ 326,249
All $ in thousands. * Information to follow 9 HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES NET LOSS RATIOS SEPTEMBER 30, 2001 ($ IN THOUSANDS)
Year to Date Full Year Full Year 2001 2000 1999 ------------------------- ------------------------- ------------------------- Net Earned Loss Net Earned Loss Net Earned Loss Line of Business Premium Ratio Premium Ratio Premium Ratio ---------------- ---------- ---------- ---------- ---------- ---------- ---------- Life, Accident & Health $ 137,369 86% $ 148,039 76% $ 50,919 74% Aviation 65,675 65 73,695 70 62,784 76 Marine, Energy & Property 15,640 61 10,163 81 12,779 131 Miscellaneous 10,325 85 14,552 41 5,723 17 ---------- ---------- ---------- ---------- ---------- ---------- 229,009 78 246,449 73 132,205 78 Discontinued 20,071 183 21,198 91 9,157 69 ---------- ---------- ---------- ---------- ---------- ---------- Total $ 249,080 87% $ 267,647 74% $ 141,362 78% ========== ========== ========== ========== ========== ========== Full Year 1998 ------------------------- Net Earned Loss Line of Business Premium Ratio ---------------- ---------- ---------- Life, Accident & Health $ 41,695 62% Aviation 65,258 62 Marine, Energy & Property 21,734 89 Miscellaneous 4,656 78 ---------- ---------- 133,343 67 Discontinued 9,757 25 ---------- ---------- Total $ 143,100 64% ========== ==========
10 HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES NET LOSS RATIOS SEPTEMBER 30, 2001 ($ IN THOUSANDS)
Actual Adjusted Year-to-Date Discontinued Net Earned Actual Loss Adjustments Adjusted Loss Line of Business Premium Losses Ratio Losses Ratio ---------------- ---------- ---------- ---------- ----------- ---------- ---------- Life, Accident & Health $ 137,369 $ 118,347 86% -- $ 118,347 86% Aviation 65,675 42,667 65 -- 42,667 65 Marine, Energy & Property 15,640 9,570 61 -- 9,570 61 Miscellaneous 10,325 8,820 85 -- 8,820 85 ---------- ---------- ---------- ---------- ---------- ---------- 229,009 179,404 78 -- 179,404 78 Discontinued 20,071 36,739 183 18,779 17,960 89 ---------- ---------- ---------- ---------- ---------- ---------- Total $ 249,080 $ 216,143 87% $ 18,779 $ 197,364 79% ========== ========== ========== ========== ========== ========== Adjusted Adjusted World Trade Center Discontinued & WTC Adjustments Adjusted Loss Adjusted Loss Line of Business Losses Ratio Losses Ratio ---------------- ----------- ---------- ---------- ---------- ---------- Life, Accident & Health $ 25,750 $ 92,597 67% $ 92,597 67% Aviation -- 42,667 65 42,667 65 Marine, Energy & Property 8,000 1,570 10 1,570 10 Miscellaneous -- 8,820 85 8,820 85 ---------- ---------- ---------- ---------- ---------- 33,750 145,654 64 145,654 64 Discontinued 1,250 35,489 177 16,710 83 ---------- ---------- ---------- ---------- ---------- Total $ 35,000 $ 181,143 73% $ 162,364 65% ========== ========== ========== ========== ==========
11 HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES GROSS LOSS RATIOS SEPTEMBER 30, 2001 ($ IN THOUSANDS)
Actual Adjusted Year-to-Date Discontinued Net Earned Actual Loss Adjustments Adjusted Loss Line of Business Premium Losses Ratio Losses Ratio ---------------- ---------- ---------- ---------- ----------- ---------- ---------- Life, Accident & Health $ 461,440 $ 474,682 103% $ -- $ 474,682 103% Aviation 138,282 85,202 62 -- 85,202 62 Marine, Energy & Property 57,479 172,225 300 -- 172,225 300 Miscellaneous 11,534 9,705 84 -- 9,705 84 ---------- ---------- ---------- ---------- ---------- ---------- 668,735 741,814 111 -- 741,814 111 Discontinued 91,944 115,615 126 36,784 78,831 86 ---------- ---------- ---------- ---------- ---------- ---------- Total $ 760,679 $ 857,429 113% $ 36,784 $ 820,645 108% ========== ========== ========== ========== ========== ========== Adjusted Adjusted World Trade Center Discontinued & WTC Adjustments Adjusted Loss Adjusted Loss Line of Business Losses Ratio Losses Ratio ---------------- ----------- ---------- ---------- ---------- ---------- Life, Accident & Health $ 122,112 $ 352,570 76% $ 352,570 76% Aviation -- 85,202 62 85,202 62 Marine, Energy & Property 17,000 155,225 270 155,225 270 Miscellaneous -- 9,705 84 9,705 84 ---------- ---------- ---------- ---------- ---------- 139,112 602,702 90 602,702 90 Discontinued 1,850 113,765 124 76,981 84 ---------- ---------- ---------- ---------- ---------- Total $ 140,962 $ 716,467 94% $ 679,683 89% ========== ========== ========== ========== ==========
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