8-K

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 5, 2008

HCC INSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13790	76-0336636
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

13403 Northwest Freeway
Houston, Texas	77040-6094
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 690-7300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On August 5, 2008, HCC Insurance Holdings, Inc. announced its results for the Second Quarter of 2008. A press release setting forth the announcement is furnished as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

No.	Exhibit
99.1	Earnings Press Release dated August 5, 2008

     The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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.

Date: August 6, 2008	HCC INSURANCE HOLDINGS, INC.
	By:	/s/ Frank J. Bramanti
		Frank J. Bramanti,
		Chief Executive Officer

EXHIBIT INDEX

No.	Exhibit
99.1	Earnings Press Release dated August 5, 2008

EX-99.1

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS RESULTS
FOR SECOND QUARTER AND FIRST HALF OF 2008

HOUSTON (August 5, 2008) . . .
HCC Insurance Holdings, Inc. (NYSE: HCC) today released earnings for the second quarter and first half of 2008, which ended June 30.

Net earnings for the second quarter of 2008 were $92.3 million, compared with $101.2 million during the second quarter of 2007. Net earnings per diluted share were $0.80 for the second quarter of 2008, compared to $0.86 in the same quarter of 2007. Net earnings for the first six months of 2008 were $173.4 million, versus $197.9 million for the first half of the previous year. Net earnings per diluted share were $1.49 for the first six months of 2008, versus $1.69 for the first half of 2007. These reductions were directly related to losses from HCC’s trading securities, lower alternative investment returns and lower gains from the sales of strategic investments in 2008 than in 2007.

The GAAP combined ratio for the first six months of 2008 was 83.9 percent, compared to 84.0 percent for the corresponding period of 2007.

“We are very pleased with our second quarter and first half results, given the current soft market environment. The results are consistent with our 2008 guidance issued in February 2008. Our combined ratio remains below 85 percent, our target for 2008. We remain a focused underwriting organization that continues to execute its soft market plan of disciplined underwriting in order to maximize underwriting profits,” HCC Chief Executive Officer Frank J. Bramanti said.

HCC’s Board of Directors authorized a $100.0 million share repurchase on June 20, 2008. The Company repurchased 1.1 million shares for a total of $21.9 million through July 31, 2008. HCC plans to continue to opportunistically repurchase its shares, if they trade at a discount to book value, as part of its philosophy of building long-term shareholder value.

Book value per share increased to $22.19 at June 30, 2008, up five percent since December 31, 2007. The Company’s annualized return on average equity for the second quarter of 2008 was 14.5 percent.

Total revenue of $593.9 million in the second quarter of 2008 was essentially flat, compared with $594.3 million in the same quarter of 2007. Total revenue was $1.2 billion for the first halves of 2008 and 2007.

Net earned premium of HCC’s insurance company subsidiaries was $506.6 million, up two percent in the second quarter of 2008, compared with $494.4 million in the same quarter of 2007. During the 2008 second quarter, net written premium increased six percent to $567.2 million, while gross written premium increased four percent to $691.6 million, compared to the second quarter of 2007.

Net earned premium of HCC’s insurance company subsidiaries was $1.0 billion, up one percent for the first six months of 2008. During the first half of 2008, net written premium increased three percent to $1.1 billion, while gross written premium increased one percent to $1.3 billion, compared to the first half of 2007.

“We continue to see opportunities to profitably expand our premium base. We have recently begun two new underwriting operations that will further allow us to expand our footprint in the insurance industry and build for the future,” Mr. Bramanti said.

During the second quarter of 2008, HCC had net positive reserve development of $9.3 million compared to net adverse development of $3.4 million in 2007. For the first six months of 2008, the Company recorded $14.4 million of net positive reserve development, compared to net adverse development of $3.6 million for 2007.

Fee and commission income was relatively flat at $61.8 million in the first half of 2008, compared to $63.3 million in the same period of 2007.

Investment income decreased slightly during 2008, compared to 2007. This was caused by investment performance from alternative investments which resulted in a loss of $1.2 million for the second quarter of 2008, versus income of $5.0 million for the second quarter of 2007, and a loss of $2.4 million for the first half of 2008, compared to income of $12.6 million for the first half of 2007. Excluding income and losses from alternative investments, HCC’s remaining investments generated $48.4 million in investment income in the 2008 second quarter, versus $43.7 million in the 2007 second quarter and $97.3 million for the first half of 2008, compared to $85.6 million for the first half of 2007, as the Company’s fixed income and short-term investments increased 11 percent from June 30, 2007 to $4.6 billion at June 30, 2008.

As of June 30, 2008, HCC’s fixed income securities portfolio had an average rating of AA+, an average duration of 5.0 years and an average tax equivalent yield of 5.3 percent. The Company held $13.2 million of subprime-related and Alt-A securities, which had an average rating of AAA, and owned no CDO or CLO securities.

“We continue to closely monitor our investment portfolio and have eliminated a few headline risk assets. Our alternative investment portfolio continues to underperform in the short run compared to our expectations; however, we believe in the long-term results of this asset class,” Mr. Bramanti said. “We remain pleased with the overall performance of our investment portfolio and believe our high quality, low risk approach will continue to differentiate HCC from the market.”

Other operating income was $10.9 million for the 2008 second quarter, compared to $20.1 million for the same period in 2007. The difference in second quarter results was principally due to losses on the Company’s trading portfolio, versus gains in 2007. Other operating income was $6.0 million for the first half of 2008, compared to $38.7 million for the same period in 2007. Trading gains were $8.3 million in 2007, compared to losses of $11.7 million in 2008. In addition, gains on sales of strategic investments were $21.6 million in 2007, compared to $9.2 million in 2008. HCC’s 2008 guidance assumed other operating income of approximately $3.3 million per quarter, excluding the effects of any trading portfolio activity or sales of strategic investments.

As of June 30, 2008, total investments increased to $4.8 billion, total assets were $8.3 billion, shareholders’ equity was $2.6 billion and the Company’s debt to total capital ratio remained very conservative at 12.6 percent.

See attached tables for further information about HCC’s quarter and year to-date financial results.

HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, August 6. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-1303. In addition, there will be a live webcast available on a listen-only basis that can be accessed through the HCC website at www.hcc.com. A replay of the webcast will be available on the website until Tuesday, August 19, 2008.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. (HCC) is a leading international specialty insurance group with offices across the United States and in Belgium, Bermuda, Ireland, Spain and the United Kingdom. HCC has assets of $8.3 billion, shareholders’ equity of $2.6 billion and is rated AA (Very Strong) by Standard & Poor’s and AA (Very Strong) by Fitch Ratings. In addition, HCC’s major domestic insurance companies are rated A+ (Superior) by A.M. Best Company.

For more information, visit our website at www.hcc.com.

Contact:	Barney White, HCC Vice President of Investor Relations
	Telephone: (713) 744-3719

Forward-looking statements contained in this press release are made under “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The types of risks and uncertainties which may affect the Company are set forth in its periodic reports filed with the Securities and Exchange Commission.

*       *      *      *      *

HCC Insurance Holdings, Inc. and Subsidiaries
Financial Highlights
June 30, 2008
(Unaudited, in thousands except per share data)

	Three months ended June 30,
	2008			2007
Gross written premium	$	691,593		$	665,601
Net written premium		567,150			533,820
Net earned premium		506,610			494,386
Fee and commission income		30,764			31,136
Net investment income		47,249			48,697
Other operating income		10,947			20,100
Total revenue		593,850			594,250
Net earnings		92,337			101,172
Earnings per share (diluted)		0.80			0.86
Cash flow from operations		94,639			169,989
Weighted average shares outstanding (diluted)		116,075			117,728
GAAP net loss ratio		59.8	%		61.3	%
GAAP combined ratio		84.1	%		83.9	%
Paid loss ratio		50.5	%		43.1	%

	June 30, 2008			December 31, 2007
Total investments	$	4,762,527		$	4,672,277
Total assets		8,315,278			8,074,645
Shareholders’ equity		2,564,419			2,440,365
Debt to total capital		12.6	%		11.7	%
Book value per share	$	22.19		$	21.21

HCC Insurance Holdings, Inc. and Subsidiaries
Financial Highlights
June 30, 2008
(Unaudited, in thousands except per share data)

	Six months ended June 30,
	2008			2007
Gross written premium	$	1,274,592		$	1,264,702
Net written premium		1,060,797			1,030,785
Net earned premium		1,000,156			991,986
Fee and commission income		61,763			63,261
Net investment income		94,870			98,164
Other operating income		6,001			38,685
Total revenue		1,161,238			1,191,472
Net earnings		173,438			197,862
Earnings per share (diluted)		1.49			1.69
Cash flow from operations		230,439			400,300
Weighted average shares outstanding (diluted)		116,218			117,381
GAAP net loss ratio		59.6	%		60.9	%
GAAP combined ratio		83.9	%		84.0	%
Paid loss ratio		49.1	%		49.0	%

	June 30, 2008			December 31, 2007
Total investments	$	4,762,527		$	4,672,277
Total assets		8,315,278			8,074,645
Shareholders’ equity		2,564,419			2,440,365
Debt to total capital		12.6	%		11.7	%
Book value per share	$	22.19		$	21.21

HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

	June 30,			December 31,
	2008			2007
ASSETS
Investments:
Fixed income securities	$	4,068,023		$	3,666,705
Short-term investments		527,086			783,650
Other investments		167,418			221,922
Total investments		4,762,527			4,672,277
Cash		27,129			39,135
Restricted cash and cash investments		188,862			193,151
Premium, claims and other receivables		810,109			763,401
Reinsurance recoverables		1,030,408			956,665
Ceded unearned premium		235,632			244,684
Ceded life and annuity benefits		65,275			66,199
Deferred policy acquisition costs		200,576			192,773
Goodwill		818,329			776,046
Other assets		176,431			170,314
Total assets	$	8,315,278		$	8,074,645
LIABILITIES
Loss and loss adjustment expense payable	$	3,446,824		$	3,227,080
Life and annuity policy benefits		65,275			66,199
Reinsurance balances payable		119,893			129,838
Unearned premium		998,922			943,946
Deferred ceding commissions		60,891			68,968
Premium and claims payable		422,068			497,974
Notes payable		369,714			324,714
Accounts payable and accrued liabilities		267,272			375,561
Total liabilities		5,750,859			5,634,280
SHAREHOLDERS’ EQUITY
Common stock		115,701			115,069
Additional paid-in capital		847,452			831,419
Retained earnings		1,594,030			1,445,995
Accumulated other comprehensive income		9,819			47,882
Treasury stock		(2,583	)		—
Total shareholders’ equity		2,564,419			2,440,365
Total liabilities and shareholders’ equity	$	8,315,278		$	8,074,645

HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited, in thousands except per share data)

	Six months ended						Three months ended
	June 30,						June 30,
	2008			2007			2008			2007
REVENUE
Net earned premium	$	1,000,156		$	991,986		$	506,610		$	494,386
Fee and commission income		61,763			63,261			30,764			31,136
Net investment income		94,870			98,164			47,249			48,697
Net realized investment loss		(1,552	)		(624	)		(1,720	)		(69	)
Other operating income		6,001			38,685			10,947			20,100
Total revenue		1,161,238			1,191,472			593,850			594,250
EXPENSE
Loss and loss adjustment expense, net		595,927			603,763			302,901			303,291
Policy acquisition costs, net		188,113			174,527			95,845			85,428
Other operating expense		116,718			111,108			57,514			53,467
Interest expense		7,767			4,399			3,808			1,096
Total expense		908,525			893,797			460,068			443,282
Earnings before income tax expense		252,713			297,675			133,782			150,968
Income tax expense		79,275			99,813			41,445			49,796
Net earnings	$	173,438		$	197,862		$	92,337		$	101,172
Basic earnings per share data:
Net earnings per share	$	1.50		$	1.76		$	0.80		$	0.90
Weighted average shares outstanding		115,363			112,117			115,492			112,273
Diluted earnings per share data:
Net earnings per share	$	1.49		$	1.69		$	0.80		$	0.86
Weighted average shares outstanding		116,218			117,381			116,075			117,728
Cash dividends declared, per share	$	0.22		$	0.20		$	0.11		$	0.10

HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

	Six months ended						Three months ended
	June 30,						June 30,
	2008			2007			2008			2007
Cash flows from operating activities:
Net earnings	$	173,438		$	197,862		$	92,337		$	101,172
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in premium, claims and other receivables		(43,624	)		30,041			(47,403	)		(57,125	)
Change in reinsurance recoverables		(73,812	)		94,621			(76,483	)		(16,646	)
Change in ceded unearned premium		9,052			(21,249	)		(10,847	)		(23,139	)
Change in loss and loss adjustment expense payable		219,858			105,937			128,013			89,492
Change in reinsurance balances payable		(9,945	)		(873	)		(4,184	)		7,452
Change in unearned premium		55,022			62,882			71,982			65,504
Change in premium and claims payable, net of restricted cash		(73,868	)		(42,100	)		(28,419	)		44,587
Change in current income taxes payable		(7,310	)		(14,690	)		(42,975	)		(38,013	)
Change in trading portfolio		42,574			4,865			33,512			(6,093	)
Gain on sales of strategic investments		(9,158	)		(21,618	)		(9,158	)		(10,811	)
Stock-based compensation expense		6,797			6,389			3,931			4,178
Depreciation and amortization expense		6,824			7,861			3,434			4,125
Other, net		(65,409	)		(9,628	)		(19,101	)		5,306
Cash provided by operating activities		230,439			400,300			94,639			169,989
Cash flows from investing activities:
Sales of fixed income securities		236,878			174,718			116,803			146,235
Maturity or call of fixed income securities		182,410			158,121			106,535			87,973
Cost of securities acquired		(925,693	)		(736,873	)		(469,720	)		(369,678	)
Change in short-term investments		256,564			(26,014	)		128,512			(50,871	)
Proceeds from sales of other investments		30,994			—			11,956			—
Proceeds from sales of strategic investments		22,818			39,816			22,818			16,866
Payments for purchase of subsidiaries, net of cash received		(72,369	)		(51,681	)		(883	)		(45,764	)
Other, net		(4,685	)		(5,356	)		(3,015	)		(3,188	)
Cash used by investing activities		(273,083	)		(447,269	)		(86,994	)		(218,427	)
Cash flows from financing activities:
Advances on line of credit		75,000			62,000			35,000			51,000
Payments on line of credit and notes payable		(30,000	)		(12,887	)		(30,000	)		(1,548	)
Sales of common stock		9,868			16,422			5,276			8,382
Dividends paid		(25,340	)		(22,381	)		(12,682	)		(11,208	)
Other, net		1,110			(2,544	)		(2,798	)		1,251
Cash provided (used) by financing activities		30,638			40,610			(5,204	)		47,877
Net increase (decrease) in cash		(12,006	)		(6,359	)		2,441			(561	)
Cash at beginning of period		39,135			48,290			24,688			42,492
Cash at end of period	$	27,129		$	41,931		$	27,129		$	41,931

HCC Insurance Holdings, Inc. and Subsidiaries
Insurance Company Premium
June 30, 2008
(Unaudited, in thousands)

	2nd Qtr		2nd Qtr			Change
	2008		2007			%
GROSS WRITTEN
Diversified financial products	$	271,942	$	260,149			5	%
Group life, accident & health		207,750		202,268			3
Aviation		51,801		54,430			(5	)
London market account		81,862		81,087			1
Other specialty lines		73,593		67,781			9
Discontinued lines		4,645		(114	)	nm
	$	691,593	$	665,601			4	%
NET WRITTEN
Diversified financial products	$	226,645	$	207,923			9	%
Group life, accident & health		197,454		191,522			3
Aviation		37,534		38,240			(2	)
London market account		51,068		48,837			5
Other specialty lines		49,758		47,420			5
Discontinued lines		4,691		(122	)	nm
	$	567,150	$	533,820			6	%
NET EARNED PREMIUM
Diversified financial products	$	197,906	$	193,337			2	%
Group life, accident & health		195,354		192,224			2
Aviation		34,719		37,747			(8	)
London market account		26,305		30,603			(14	)
Other specialty lines		47,580		40,597			17
Discontinued lines		4,746		(122	)	nm
	$	506,610	$	494,386			2	%

nm — Not meaningful comparison

HCC Insurance Holdings, Inc. and Subsidiaries
Insurance Company Premium
June 30, 2008
(Unaudited, in thousands)

	Year to Date		Year to Date			Change
	2008		2007			%
GROSS WRITTEN
Diversified financial products	$	483,306	$	472,402			2	%
Group life, accident & health		418,284		405,174			3
Aviation		96,629		106,093			(9	)
London market account		122,798		149,222			(18	)
Other specialty lines		148,936		132,276			13
Discontinued lines		4,639		(465	)	nm
	$	1,274,592	$	1,264,702			1	%
NET WRITTEN
Diversified financial products	$	407,146	$	379,715			7	%
Group life, accident & health		399,829		383,948			4
Aviation		69,880		77,843			(10	)
London market account		80,096		93,969			(15	)
Other specialty lines		99,161		95,741			4
Discontinued lines		4,685		(431	)	nm
	$	1,060,797	$	1,030,785			3	%
NET EARNED PREMIUM
Diversified financial products	$	390,083	$	385,851			1	%
Group life, accident & health		387,800		384,640			1
Aviation		69,712		77,091			(10	)
London market account		53,395		64,499			(17	)
Other specialty lines		94,426		80,335			18
Discontinued lines		4,740	(430		)		nm
	$	1,000,156	$	991,986			1	%

nm — Not meaningful comparison

HCC Insurance Holdings, Inc. and Subsidiaries
Investments — Selected Disclosures
June 30, 2008
(Unaudited, in thousands)

					Average Ratings
	Amortized Cost		Market Value		AAA		AA		A		BBB & below		Other		Average
Fixed Income Securities	$	4,102,100	$	4,068,023	$	2,475,392	$	1,019,040	$	492,638	$	80,953	$	—		AA	+
Residential Mortgage Backed Securities & Collateralized Mortgage Obligations
Agency	$	664,254	$	665,404		665,404		—		—		—		—		AAA
Non-Agency
Prime		103,291		95,608		95,608		—		—		—		—		AAA
Alt A		10,743		10,069		9,715		177		177		—		—		AAA
Subprime		3,264		3,133		2,412		—		—		721		—		AA	+
Total Residential MBS/CMO	$	781,552	$	774,214
Agency Securities
Debt	$	60,026	$	60,848		60,848		—		—		—		—		AAA
Preferred Stock	$	7,910	$	7,077		—		—		7,077		—		—		A	+
Commercial Mortgaged Backed Securities	$	195,253	$	190,014		190,014		—		—		—		—		AAA
Municipal Bond Portfolio	$	1,883,263	$	1,876,974		778,331		874,804		190,446		32,012		1,381		AA	+
Insurance Enhanced	$	1,190,141	$	1,183,127		491,471		490,170		170,489		30,997		—		AA
Insured — Underlying Ratings	$	1,190,141	$	1,183,127		179,954		711,178		266,440		473		25,082		AA
Non-Insured	$	693,122	$	693,847		288,483		384,825		19,289		1,250		—		AA	+
Short-Term
Bank Sweep Accounts — US	$	52,424	$	52,424
Bank Sweep Accounts — Non-US		41,071		41,071
Taxable Money Market Funds		433,591		433,591
Total Short-Term	$	527,086	$	527,086

Notes:

There are no CDOs/CLOs in the portfolio.

Other Ratings are bonds with at least one enhanced rating; each issuer has an equivalent investment grade rating.

Received paydown of $1.6 million on subprime and Alt A securities in second quarter 2008 and recognized an other-than-temporary impairment of $1.2 million related to these securities.

HCC Insurance Holdings, Inc. and Subsidiaries
Subprime Liability Exposure
June 30, 2008

• As of June 30, the Company had 38 “non-Side A only” D&O or E&O claims and nine “Side A only” D&O claims relating to subprime issues.

• Of the D&O claims reported, two are on primary policies with gross policy limits totaling $9 million. The remaining D&O claims are on excess policies.

• The average policy limit on the “non-Side A only” claims is $13.3 million gross and $8.7 million net, with an average attachment point of $89 million.

• The average policy limit for “Side A only” claims is $14.4 million gross and $11.7 million net, with an average attachment point of $180 million.

• The majority of this D&O business is written excess and usually with high attachment points.

• The majority of the Company’s E&O business is written with limits of $1 million or less.

• Except for run-off policies, HCC has not written multi-year policies.

• The insurance provided is “claims made” with defense costs included within the policy limits.

• Many major financial institutions purchase “Side A only” coverage.

• Based upon the Company’s present knowledge, the Company believes the ultimate subprime related losses will be contained within the current overall reserves for D&O and E&O business.

HCC Insurance Holdings, Inc. and Subsidiaries
Consolidated Insurance Companies
Net Loss Ratios
June 30, 2008
(Unaudited, in thousands)

	Year to Date 2008							Full Year 2007
	Net Earned		Incurred		Loss			Net Earned			Incurred		Loss
Line of Business	Premium		Losses		Ratio			Premium			Losses		Ratio
Diversified financial products	$	390,083	$	178,488		45.8	%	$	777,414		$	315,409		40.6	%
Group life, accident & health		387,800		287,718		74.2			758,516			579,780		76.4
Aviation		69,712		43,384		62.2			153,121			89,683		58.6
London market account		53,395		18,944		35.5			124,609			68,798		55.2
Other specialty lines		94,426		63,940		67.7			171,824			115,804		67.4
Discontinued lines		4,740		3,453	nm				(398	)		14,473	nm
Total	$	1,000,156	$	595,927		59.6	%	$	1,985,086		$	1,183,947		59.6	%

nm — Not meaningful comparison