EX-99.2 4 h98865exv99w2.txt SUPPLEMENTARY FINANCIAL DATA - 2ND QUARTER 2002 Exhibit 99.2 HCC Insurance Holdings, Inc. Financial Highlights June 30, 2002 (amounts in thousands, except per share data)
THREE MONTHS ENDED JUNE 30, 2002 2001 --------------------------- ---------- ---------- Gross written premium $ 305,852 $ 294,494 Net written premium 135,390 105,584 Net earned premium 114,627 83,688 Management fees 19,583 13,885 Commission income 11,068 10,151 Net investment income 9,484 9,876 Other operating income 483 2,492 Total revenue 155,912 120,556 Pre-tax earnings 41,910 32,364 Net earnings 26,782 20,258 Earnings per share (diluted) $ 0.43 $ 0.34 Cash flow from operations 33,580 (2,571) Weighted average shares outstanding 62,889 60,470 GAAP gross loss ratio 51.5% 77.8% GAAP net loss ratio 59.1% 57.9% GAAP combined ratio 84.4% 83.8% DECEMBER 31, JUNE 30, 2002 2001 ------------- ------------ Total investments $ 964,998 $ 888,466 Total assets 3,356,111 3,219,120 Shareholders' equity 822,800 763,453 Debt to total capital 20.3% 19.2% Book value per share $ 13.21 $ 12.40
HCC Insurance Holdings, Inc. Financial Highlights June 30, 2002 (amounts in thousands, except per share data)
SIX MONTHS ENDED JUNE 30, 2002 2001 ------------------------- ---------- ----------- Gross written premium $ 553,620 $ 523,708 Net written premium 257,662 178,089 Net earned premium 226,105 155,609 Management fees 38,995 29,635 Commission income 21,228 24,792 Net investment income 18,178 20,508 Other operating income 1,946 5,464 Total revenue 307,621 235,648 Pre-tax earnings 77,630 58,259 Net earnings 50,064 35,436 Earnings per share (diluted) $ 0.80 $ 0.61 Cash flow from operations 46,682 16,536 Weighted average shares outstanding 62,805 57,793 GAAP gross loss ratio 60.1% 85.2% GAAP net loss ratio 60.2% 62.3% GAAP combined ratio 85.9% 89.3% DECEMBER 31, JUNE 30, 2002 2001 ------------- ------------ Total investments $ 964,998 $ 888,466 Total assets 3,356,111 3,219,120 Shareholders' equity 822,800 763,453 Debt to total capital 20.3% 19.2% Book value per share $ 13.21 $ 12.40
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE SIX MONTHS ENDED JUNE 30, FOR THE THREE MONTHS ENDED 2002 2001 2002 2001 --------- --------- --------- --------- REVENUE Net earned premium $ 226,105 $ 155,609 $ 114,627 $ 83,688 Management fees 38,995 29,635 19,583 13,885 Commission income 21,228 24,792 11,068 10,151 Net investment income 18,178 20,508 9,484 9,876 Net realized investment gain (loss) 1,169 (360) 667 464 Other operating income 1,946 5,464 483 2,492 --------- --------- --------- --------- Total revenue 307,621 235,648 155,912 120,556 EXPENSE Loss and loss adjustment expense 136,083 96,969 67,752 48,427 Operating expense: Policy acquisition costs, net 25,534 12,253 12,480 7,979 Compensation expense 39,541 35,466 19,915 16,847 Other operating expense 23,992 27,540 11,392 13,125 --------- --------- --------- --------- Net operating expense 89,067 75,259 43,787 37,951 Interest expense 4,841 5,161 2,463 1,814 --------- --------- --------- --------- Total expense 229,991 177,389 114,002 88,192 --------- --------- --------- --------- Earnings before income tax provision 77,630 58,259 41,910 32,364 Income tax provision 27,566 22,823 15,128 12,106 --------- --------- --------- --------- Net earnings $ 50,064 $ 35,436 $ 26,782 $ 20,258 ========= ========= ========= ========= BASIC EARNINGS PER SHARE DATA: Earnings per share $ 0.81 $ 0.63 $ 0.43 $ 0.34 ========= ========= ========= ========= Weighted average shares outstanding 62,087 56,374 62,236 58,998 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE DATA: Earnings per share $ 0.80 $ 0.61 $ 0.43 $ 0.34 ========= ========= ========= ========= Weighted average shares outstanding 62,805 57,793 62,889 60,470 ========= ========= ========= ========= Cash dividends declared, per share $ 0.125 $ 0.12 $ 0.0625 $ 0.06 ========= ========= ========= =========
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED, IN THOUSANDS)
JUNE 30, DECEMBER 31, 2002 2001 ---------- ------------ ASSETS Investments: Fixed income securities, at market (cost: 2002 - $619,439; 2001 - $513,674) $ 638,983 $ 525,428 Marketable equity securities, at market (cost: 2002 - $16,380; 2001 - $16,431) 16,426 16,569 Short-term investments, at cost, which approximates market 297,402 338,904 Other investments, at estimated fair value (cost: 2002 - $12,836; 2001 - $8,007) 12,187 7,565 ---------- ---------- Total investments 964,998 888,466 Cash 19,457 16,891 Restricted cash 153,369 138,545 Premium, claims and other receivables 703,416 665,965 Reinsurance recoverables 869,092 899,128 Ceded unearned premium 110,450 71,140 Ceded life and annuity benefits 81,848 83,013 Deferred policy acquisition costs 50,717 32,071 Property and equipment, net 51,652 52,486 Goodwill 315,619 315,318 Other assets 35,493 56,097 ---------- ---------- TOTAL ASSETS $3,356,111 $3,219,120 ========== ========== LIABILITIES Loss and loss adjustment expense payable $1,095,584 $1,130,748 Life and annuity policy benefits 81,848 83,013 Reinsurance balances payable 127,096 88,637 Unearned premium 247,909 179,530 Deferred ceding commissions 31,108 16,681 Premium and claims payable 690,605 717,159 Notes payable 208,988 181,928 Accounts payable and accrued liabilities 50,173 57,971 ---------- ---------- Total liabilities 2,533,311 2,455,667 SHAREHOLDERS' EQUITY Common stock, $1.00 par value; 250.0 million shares authorized; (shares issued and outstanding: 2002 - 62,232; 2001 - 61,438) 62,232 61,438 Additional paid-in capital 413,276 402,089 Retained earnings 335,724 293,426 Accumulated other comprehensive income 11,568 6,500 ---------- ---------- Total shareholders' equity 822,800 763,453 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,356,111 $3,219,120 ========== ==========
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES -------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 2001 --------- --------- Cash flows from operating activities: Net earnings $ 50,064 $ 35,436 Adjustments to reconcile net earnings to net cash provided by operating activities: Change in premium, claims and other receivables (37,451) (51,749) Change in reinsurance recoverables 30,036 (53,411) Change in ceded unearned premium (39,310) 4,625 Change in loss and loss adjustment expense payable (35,164) 57,267 Change in reinsurance balances payable 38,459 (23,021) Change in unearned premium 68,379 15,279 Change in premium and claims payable, net of restricted cash (41,378) 22,156 Depreciation and amortization expense 5,378 9,299 Other, net 7,669 655 --------- --------- Cash provided by operating activities 46,682 16,536 Cash flows from investing activities: Sales of fixed income securities 154,164 71,128 Maturity or call of fixed income securities 19,691 20,654 Sales of equity securities 3,417 2,471 Change in short-term investments 41,502 21,761 Cost of securities acquired (287,100) (135,512) Purchases of property and equipment (2,838) (2,991) --------- --------- Cash used by investing activities (71,164) (22,489) Cash flows from financing activities: Issuance of notes payable 40,000 -- Sale of common stock, net of costs 9,261 161,837 Payments on notes payable (13,269) (158,500) Dividends paid and other, net (8,944) (7,077) --------- --------- Cash provided (used) by financing activities 27,048 (3,740) --------- --------- Net change in cash 2,566 (9,693) Cash at beginning of period 16,891 13,991 --------- --------- CASH AT END OF PERIOD $ 19,457 $ 4,298 ========= =========
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SFAS NO. 142 RECONCILIATION (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA) The tables below reconcile net earnings and earnings per share we reported to adjusted amounts that we would have reported had we adopted SFAS No. 142 on January 1, 2001 instead of January 1, 2002:
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED JUNE 30, JUNE 30, 2002 2001 2002 2001 ------- ------- ------- ------- Net earnings: Reported net earnings $50,064 $35,436 $26,782 $20,258 Add back goodwill amortization -- 5,921 -- 3,098 Add back license amortization -- 313 -- 96 Less tax benefit from goodwill amortization -- (533) -- (260) ------- ------- ------- ------- ADJUSTED NET INCOME $50,064 $41,137 $26,782 $23,192 ======= ======= ======= ======= Basic earnings per share: Reported basic earnings per share $ 0.81 $ 0.63 $ 0.43 $ 0.34 Add back amortization, net of tax effect -- 0.10 -- 0.05 ------- ------- ------- ------- ADJUSTED BASIC EARNINGS PER SHARE $ 0.81 $ 0.73 $ 0.43 $ 0.39 ======= ======= ======= ======= Diluted earnings per share: Reported diluted earnings per share $ 0.80 $ 0.61 $ 0.43 $ 0.34 Add back amortization, net of tax effect -- 0.10 -- 0.04 ------- ------- ------- ------- ADJUSTED DILUTED EARNINGS PER SHARE $ 0.80 $ 0.71 $ 0.43 $ 0.38 ======= ======= ======= =======
HCC INSURANCE HOLDINGS, INC. Insurance Company Premium June 30, 2002 ($ in thousands) 2ND QTR 2ND QTR CHANGE 2002 2001 % --------- --------- ----- GROSS WRITTEN Group life, accident & health $ 152,863 $ 169,711 (10) Aviation 59,990 58,323 3 Property, marine & energy 42,431 36,862 15 Other specialty lines 48,238 4,331 1,014 ----------- ----------- -------- 303,522 269,227 13% Discontinued lines 2,330 25,267 ----------- ----------- $ 305,852 $ 294,494 =========== =========== NET WRITTEN Group life, accident & health $ 65,234 $ 48,426 35 Aviation 29,421 29,963 (2) Property, marine & energy 26,110 10,156 157 Other specialty lines 13,176 4,349 203 ----------- ----------- -------- 133,941 92,894 44% Discontinued lines 1,449 12,690 ----------- ----------- $ 135,390 $ 105,584 =========== =========== NET EARNED PREMIUM Group life, accident & health $ 64,227 $ 46,392 38 Aviation 25,571 21,936 17 Property, marine & energy 8,977 5,158 74 Other specialty lines 9,921 4,349 128 ----------- ----------- -------- 108,696 77,835 40% Discontinued lines 5,931 5,853 ----------- ----------- $ 114,627 $ 83,688 =========== ===========
HCC INSURANCE HOLDINGS, INC. Insurance Company Premium June 30, 2002 ($ in thousands)
YEAR TO DATE YEAR TO DATE CHANGE 2002 2001 % ----------- ----------- ------- GROSS WRITTEN Group life, accident & health $ 298,746 $ 320,349 (7) Aviation 104,104 93,261 12 Property, marine & energy 76,259 51,141 49 Other specialty lines 68,253 7,780 777 ----------- ----------- ------- 547,362 472,531 16% Discontinued lines 6,258 51,177 ----------- ----------- $ 553,620 $ 523,708 =========== =========== NET WRITTEN Group life, accident & health $ 130,161 $ 88,868 46 Aviation 52,054 48,228 8 Property, marine & energy 46,575 16,464 183 Other specialty lines 24,099 6,824 253 ----------- ----------- ------- 252,889 160,384 58% Discontinued lines 4,773 17,705 ----------- ----------- $ 257,662 $ 178,089 =========== =========== NET EARNED PREMIUM Group life, accident & health $ 129,111 $ 86,653 49 Aviation 50,754 42,278 20 Property, marine & energy 17,159 9,137 88 Other specialty lines 16,259 6,824 138 ----------- ----------- ------- 213,283 144,892 47% Discontinued lines 12,822 10,717 ----------- ----------- $ 226,105 $ 155,609 =========== ===========
HCC INSURANCE HOLDINGS, INC. Insurance Company Premium June 30, 2002 ($ in thousands) YEAR TO DATE FULL YEAR FULL YEAR FULL YEAR 2002 2001 2000 1999 ------------ --------- --------- --------- GROSS WRITTEN Group life, accident & health $ 298,746 $ 629,228 $ 546,702 $ 217,659 Aviation 104,104 198,015 191,089 210,029 Property, marine & energy 76,259 83,068 64,352 82,003 Other specialty lines 68,253 15,602 29,281 17,962 --------- ----------- --------- --------- 547,362 925,913 831,424 527,653 Discontinued lines 6,258 84,162 136,033 40,678 --------- ----------- --------- --------- $ 553,620 $ 1,010,075 $ 967,457 $ 568,331 ========= =========== ========= ========= NET WRITTEN Group life, accident & health $ 130,161 $ 188,580 $ 148,100 $ 48,899 Aviation 52,054 98,249 79,794 68,513 Property, marine & energy 46,575 34,750 16,256 9,561 Other specialty lines 24,099 14,390 14,552 8,730 --------- ----------- --------- --------- 252,889 335,969 258,702 135,703 Discontinued lines 4,773 36,989 25,086 4,221 --------- ----------- --------- --------- $ 257,662 $ 372,958 $ 283,788 $ 139,924 ========= =========== ========= ========= NET EARNED PREMIUM Group life, accident & health $ 129,111 $ 186,188 148,039 50,919 Aviation 50,754 91,377 73,695 62,784 Property, marine & energy 17,159 23,748 10,163 12,779 Other specialty lines 16,259 15,124 14,552 9,072 --------- ----------- --------- --------- 213,283 316,437 246,449 135,554 Discontinued lines 12,822 26,350 21,198 5,808 --------- ----------- --------- --------- $ 226,105 $ 342,787 $ 267,647 $ 141,362 ========= =========== ========= =========
HCC INSURANCE HOLDINGS, INC. Consolidated Insurance Companies Net Loss Ratios June 30, 2002 ($ in thousands)
Year to Date Full Year 2001 Full Year 2000 Full Year 1999 Net Net Net Net Earned Actual Loss Earned Actual Loss Earned Actual Loss Earned Actual Loss Line of Business Premium Losses Ratio Premium Losses Ratio Premium Losses Ratio Premium Losses Ratio ------------------- ------------------------- -------------------------- ------------------------- --------------------------- Group life, accident & health $129,111 $ 82,126 63.6% $186,188 $146,809 78.8% $148,039 $113,242 76.5% $ 50,919 $ 37,816 74.3% Aviation 50,754 26,916 53.0 91,377 57,152 62.5 73,695 51,703 70.2 62,784 47,739 76.0 Property, marine & energy 17,159 5,972 34.8 23,748 12,688 53.4 10,163 8,225 80.9 12,779 16,783 31.3 Other specialty lines 16,259 12,455 76.6 15,124 11,108 73.4 14,552 5,954 40.9 9,072 6,343 69.9 ------------------------- -------------------------- ------------------------- --------------------------- 213,283 127,469 59.8 316,437 227,757 72.0 246,449 179,124 72.7 135,554 108,681 80.2 Discontinued lines 12,822 8,614 67.2 26,350 39,633 150.4 21,198 19,346 91.3 5,808 969 16.7 ------------------------- -------------------------- ------------------------- --------------------------- Total $226,105 $136,083 60.2% $342,787 $267,390 78.0% $267,647 $198,470 74.2% $141,362 $109,650 77.6%