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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