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):  February 12, 2013

HCC INSURANCE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

13403 Northwest Freeway

Houston, Texas 77040

(Address of principal executive offices, including zip code)

(713) 690-7300

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

oPre-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 February 12, 2013, HCC Insurance Holdings, Inc. (the “Company”) announced its financial results for the fourth quarter of 2012 and for the full year ended December 31, 2012. A copy of the press release announcing the Company’s results is attached to this Current Report on Form 8-K (this “Current Report”) as Exhibit 99.1 and incorporated herein in its entirety by reference thereto.

Item 9.01.             Financial Statements and Exhibits.

(d)

No.	Exhibit
99.1	Press Release dated February 12, 2013

In connection with the disclosure set forth in Item 2.02, the information in this Current Report, including the exhibits attached hereto, is being furnished and 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 such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any incorporation by reference language in any such filing. This Current Report will not be deemed an admission as to the materiality of any information in this Current Report that is required to be disclosed solely by Regulation FD.

2

SIGNATURE

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.

	HCC Insurance Holdings, Inc.
By:	/s/ Alexander M Ludlow
	Alexander M Ludlow
	Associate General Counsel & Assistant Secretary

DATED:  February 12, 2013

3

EX-99.1

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS

RECORD EARNINGS PER SHARE FOR 2012

Highlights:

·Record net earnings of $108.1 million, or $1.06 per diluted share, for the fourth quarter

·Annualized return on equity of 12.3% and annualized operating return on equity(a) of 11.7% for the fourth quarter

·Record earnings per diluted share of $3.83 for the full year

·GAAP combined ratio of 84.5% for the fourth quarter and 83.6% for the full year

·Net earned premium increased 3% to $566.5 million for the fourth quarter and 5% to $2.2 billion for the full year

·Book value per share increased 11.6% for the full year to $35.10

HOUSTON (February 12, 2013) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for the fourth quarter and full year of 2012.

Net earnings were $108.1 million for the fourth quarter of 2012, compared to $78.3 million for the fourth quarter of 2011.  Net earnings per diluted share were $1.06 for the fourth quarter of 2012, versus $0.74 for the same quarter of 2011.  Net earnings were $391.2 million for 2012, or $3.83 per diluted share, compared to $255.2 million, or $2.30 per diluted share, for 2011.

The 2012 results include accident year pretax net catastrophe losses of $32.5 million and $52.8 million for the fourth quarter and full year, respectively.  The 2011 results include accident year pretax net catastrophe losses of $10.0 million and $117.9 million for the fourth quarter and full year, respectively.

The Company’s combined ratio was 84.5% for the fourth quarter of 2012, compared to 87.0% for the fourth quarter of 2011.  The combined ratio was 83.6% for the full year of 2012, versus 91.1% for the same period of 2011.  HCC’s paid loss ratio was 56.7% for 2012, compared to 58.9% for 2011.

Book value per share increased 1.4% and 11.6% for the fourth quarter and full year of 2012, respectively, to $35.10 at December 31, 2012.  Book value per share grew at a compounded rate of 10.7% over the last five years.

HCC’s annualized return on equity was 12.3% for the fourth quarter of 2012 and 11.5% for the full year of 2012.  The Company’s annualized operating return on equity(a) was 11.7% for the fourth quarter of 2012 and 11.9% for the full year of 2012.

“The fourth quarter represented our second consecutive quarter with record earnings and capped a record full year performance for our shareholders.  We grew book value per share by an impressive 11.6%.  These results were once again driven by our commitment to underwriting performance, evident in yet another year with a combined ratio below 85%,” HCC Chief Executive Officer Christopher J.B. Williams said.

HCC had net favorable loss development of $35.4 million in the fourth quarter of 2012, including $18.9 million of favorable development related to prior year catastrophes, compared to net favorable development of $11.5 million in the same quarter of 2011.  Net favorable development was $70.0 million in the full year of 2012, versus net adverse development of $10.1 million in the same period of 2011.

The Company’s 2012 accident year net loss ratio was 61.5% and its accident year combined ratio was 87.2% for the full year of 2012.  HCC’s accident year combined ratio includes 2.4 percentage points for catastrophes.

Gross written premium increased 2% to $644.1 million for the fourth quarter of 2012, compared to $629.0 million for the same quarter of 2011.  Net written premium increased slightly to $522.6 million for the fourth quarter of 2012, versus $521.1 million for the same quarter of 2011.  Net earned premium increased 3% to $566.5 million for the fourth quarter of 2012, compared to $550.2 million for the same quarter of 2011.

Gross written premium increased 5% to $2.8 billion for the full year of 2012, compared to $2.6 billion for the same period of 2011.  Net written premium increased 3% to $2.3 billion for the full year of 2012, versus $2.2 billion for the same period of 2011.  Net earned premium increased 5% to $2.2 billion for the full year of 2012, compared to $2.1 billion for the same period of 2011.

Investment income increased to $56.0 million for the fourth quarter of 2012, compared to $53.5 million for the same period of 2011.  Investment income increased to $222.6 million for the full year of 2012, compared to $212.3 million for the same period of 2011.  The Company’s fixed maturity securities portfolio increased 7% to $6.3 billion at December 31, 2012, from $5.9 billion at December 31, 2011.  The Company’s total investments increased 15% to $7.0 billion at December 31, 2012, from $6.0 billion at December 31, 2011.

As of December 31, 2012, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 4.7 years and an average long-term tax equivalent yield of 4.7%.

HCC generated cash flow from operating activities of $661.1 million in 2012, compared to $421.3 million in 2011.  The Company’s liquidity position remains strong with $434.4 million of cash and short-term investments and $305.1 million of available capacity under its $600.0 million revolving loan facility at December 31, 2012.

As of December 31, 2012, total assets were $10.3 billion, shareholders’ equity was $3.5 billion and the Company’s debt to total capital ratio was 14.2%.

2

EARNINGS GUIDANCE: HCC’s management estimates the Company will achieve net earnings of $3.20 to $3.50 per diluted share for 2013.  These estimated results assume the following: a 1% increase in gross and net written premium; a combined ratio of 86% to 88%; and average fully diluted shares outstanding of 97 million shares.  The Company’s guidance includes 2.7 loss ratio points for net catastrophe losses.  These assumptions do not include any provision for loss development, foreign currency fluctuation, net realized investment gains (losses) or other-than-temporary impairment credit losses.

For further information about HCC’s 2012 fourth quarter results, see the supplemental financial schedules that are accessible on HCC’s website at http://www.hcc.com, as well as directly in the Investor Relations section of HCC’s website at http://ir.hcc.com.

(Note: If clicking on the above links does not open in a new web page, please cut and paste the above URLs into your browser’s address bar.)

HCC will hold an open conference call beginning at 8:00 a.m. Central Standard Time on Wednesday, February 13.  To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-0161.  There will also be a live webcast available on a listen-only basis that can be accessed through the HCC website at http://www.hcc.com.  The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, May 17, 2013.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading international specialty insurance group with offices in the United States, the United Kingdom, Spain and Ireland.  HCC’s major domestic and international insurance companies have financial strength ratings of “AA (Very Strong)” from Standard & Poor’s Corporation, “A+ (Superior)” from A.M. Best Company, Inc., “AA (Very Strong)” from Fitch Ratings, and “A1 (Good Security)” from Moody’s Investors Service, Inc.

For more information about HCC, please visit http://www.hcc.com.

a) Non-GAAP Financial Measure

Annualized operating return on equity is a non-GAAP financial measure as defined by Regulation G and is calculated as operating earnings (or net earnings excluding after-tax net realized investment gain (loss), other-than-temporary impairment credit losses and foreign currency benefit (expense)) divided by average shareholders’ equity excluding accumulated other comprehensive income.  To annualize a quarterly rate, the result is multiplied by four.  See the supplemental financial schedules for a reconciliation of this non-GAAP financial measure to corresponding GAAP amounts.  Management believes annualized operating return on equity is a useful measure for understanding the Company’s profitability relative to shareholders’ equity before consideration of investment-related gains (losses) and foreign currency benefit (expense) that the Company does not consider in evaluating its operating results internally.

Contact:Doug Busker, Director of Investor Relations

HCC Insurance Holdings, Inc.

3

Telephone:  (713) 996-1192

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.

*     *     *     *     *

4

HCC Insurance Holdings, Inc. and Subsidiaries

Financial Highlights

(Unaudited, in thousands except per share data)

	Twelve months ended						Three months ended
	December 31,						December 31,
	2012			2011			2012			2011
Gross written premium	$	2,784,073		$	2,649,126		$	644,068		$	628,989
Net written premium	2,253,396			2,182,158			522,597			521,067
Net earned premium	2,242,625			2,127,170			566,503			550,183
Net investment income	222,634			212,271			55,992			53,489
Total revenue	2,525,827			2,374,005			652,343			614,921
Net earnings	391,240			255,243			108,101			78,338
Operating earnings*	375,682			255,203			93,936			79,709
Earnings per share (diluted)	$	3.83		$	2.30		$	1.06		$	0.74
Weighted-average shares outstanding (millions)	100.5			109.2			99.9			104.4
Net loss ratio	58.2		%	65.8		%	59.3		%	61.3		%
Combined ratio	83.6		%	91.1		%	84.5		%	87.0		%
Paid loss ratio	56.7		%	58.9		%	57.9		%	57.5		%
	December 31,			December 31,
	2012			2011
Total investments	$	6,950,398		$	6,049,750
Total assets	10,267,807			9,597,278
Shareholders’ equity	3,542,612			3,273,982
Debt to total capital ratio	14.2		%	12.8		%
Book value per share	$	35.10		$	31.45

*Non-GAAP financial measure as defined by Regulation G.  See calculation on S - 9.  Management believes operating earnings is a useful measure for understanding the Company’s profitability before consideration of investment-related gains (losses) and foreign currency benefit (expense) that the Company does not consider in evaluating its operating results internally.

S - 1

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited, in thousands)

	December 31,			December 31,
	2012			2011
ASSETS
Investments:
Fixed income securities - available for sale, at fair value	$	6,281,781		$	5,718,834
Fixed income securities - held to maturity, at amortized cost	—			161,102
Equity securities	284,639			—
Short-term investments	363,053			133,917
Other investments	20,925			35,897
Total investments	6,950,398			6,049,750
Cash	71,390			104,550
Restricted cash	101,480			229,821
Premium, claims and other receivables	549,725			688,732
Reinsurance recoverables	1,071,222			1,056,068
Ceded unearned premium	256,988			222,300
Ceded life and annuity benefits	58,641			61,061
Deferred policy acquisition costs	191,960			189,633
Goodwill	885,860			872,814
Other assets	130,143			122,549
Total assets	$	10,267,807		$	9,597,278
LIABILITIES
Loss and loss adjustment expense payable	$	3,767,850		$	3,658,317
Life and annuity policy benefits	58,641			61,061
Reinsurance, premium and claims payable	294,621			366,499
Unearned premium	1,069,956			1,031,034
Deferred ceding commissions	74,609			62,364
Notes payable	583,944			478,790
Accounts payable and accrued liabilities	875,574			665,231
Total liabilities	6,725,195			6,323,296
SHAREHOLDERS’ EQUITY
Common stock	125,114			122,720
Additional paid-in capital	1,052,253			1,001,308
Retained earnings	2,756,166			2,429,818
Accumulated other comprehensive income	295,271			227,659
Treasury stock	(686,192		)	(507,523		)
Total shareholders’ equity	3,542,612			3,273,982
Total liabilities and shareholders’ equity	$	10,267,807		$	9,597,278

S - 2

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

	Twelve months ended						Three months ended
	December 31,						December 31,
	2012			2011			2012		2011
REVENUE
Net earned premium	$	2,242,625		$	2,127,170		$	566,503	$	550,183
Net investment income	222,634			212,271			55,992		53,489
Other operating income	30,448			35,590			7,219		11,965
Net realized investment gain	31,148			3,653			22,629		484
Other-than-temporary impairment credit losses	(1,028		)	(4,679		)	—		(1,200		)
Total revenue	2,525,827			2,374,005			652,343		614,921
EXPENSE
Loss and loss adjustment expense, net	1,305,511			1,399,247			335,744		337,007
Policy acquisition costs, net	281,201			266,125			69,647		72,945
Other operating expense	359,060			330,557			90,896		86,066
Interest expense	25,628			23,070			6,527		6,473
Total expense	1,971,400			2,018,999			502,814		502,491
Earnings before income tax expense	554,427			355,006			149,529		112,430
Income tax expense	163,187			99,763			41,428		34,092
Net earnings	$	391,240		$	255,243		$	108,101	$	78,338
Basic earnings per share data:
Net earnings per share	$	3.84		$	2.31		$	1.07	$	0.74
Weighted-average shares outstanding (millions)	100.2			109.1			99.7		104.3
Diluted earnings per share data:
Net earnings per share	$	3.83		$	2.30		$	1.06	$	0.74
Weighted-average shares outstanding (millions)	100.5			109.2			99.9		104.4
Cash dividends declared, per share	$	0.640		$	0.600		$	0.165	$	0.155

S - 3

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

	Twelve months ended December 31,						Three months ended December 31,
	2012		2011		Change		2012		2011		Change
U.S. Property & Casualty
Aviation	$	144,621	$	154,903	(7	)%	$	27,321	$	37,970	(28	)%
E&O	60,639		68,846		(12	)	14,156		15,885		(11	)
Public Risk	85,857		73,168		17		18,791		17,444		8
Other	323,577		243,519		33		73,402		59,404		24
	614,694		540,436		14		133,670		130,703		2
Professional Liability
U.S. D&O	424,099		453,669		(7	)	126,166		140,788		(10	)
International D&O	115,284		108,834		6		35,341		28,812		23
	539,383		562,503		(4	)	161,507		169,600		(5	)
Accident & Health
Medical Stop-loss	777,351		703,814		10		193,712		176,413		10
Other	58,445		53,283		10		19,471		15,449		26
	835,796		757,097		10		213,183		191,862		11
U.S. Surety & Credit
Surety	159,159		169,237		(6	)	38,072		42,018		(9	)
Credit	62,309		57,075		9		16,718		14,926		12
	221,468		226,312		(2	)	54,790		56,944		(4	)
International
Energy	136,070		128,078		6		10,492		14,668		(28	)
Property Treaty	138,065		128,767		7		3,538		4,017		(12	)
Liability	75,466		89,519		(16	)	17,173		20,806		(17	)
Surety & Credit	84,288		84,683		—		22,529		18,830		20
Other	97,278		86,336		13		17,324		11,707		48
	531,167		517,383		3		71,056		70,028		1
Exited Lines	41,565		45,395		(8	)	9,862		9,852		—
Totals	$	2,784,073	$	2,649,126	5	%	$	644,068	$	628,989	2	%

S - 4

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

	Twelve months ended December 31,						Three months ended December 31,
	2012		2011		Change		2012			2011			Change
U.S. Property & Casualty
Aviation	$	112,712	$	117,333	(4	)%	$	20,669		$	28,547		(28	)%
E&O	58,066		67,606		(14	)	13,731			15,571			(12	)
Public Risk	69,081		58,096		19		14,896			14,170			5
Other	144,079		124,261		16		36,776			35,796			3
	383,938		367,296		5		86,072			94,084			(9	)
Professional Liability
U.S. D&O	311,576		347,834		(10	)	92,782			107,940			(14	)
International D&O	66,562		64,428		3		20,958			16,828			25
	378,138		412,262		(8	)	113,740			124,768			(9	)
Accident & Health
Medical Stop-loss	776,965		703,619		10		193,621			176,364			10
Other	58,043		52,920		10		19,369			15,370			26
	835,008		756,539		10		212,990			191,734			11
U.S. Surety & Credit
Surety	144,573		158,116		(9	)	34,499			38,336			(10	)
Credit	51,331		50,743		1		14,540			14,762			(2	)
	195,904		208,859		(6	)	49,039			53,098			(8	)
International
Energy	88,834		75,286		18		5,481			6,957			(21	)
Property Treaty	105,442		98,370		7		(7,860		)	(1,769		)	nm
Liability	69,546		81,855		(15	)	15,592			18,607			(16	)
Surety & Credit	74,977		78,418		(4	)	19,090			16,263			17
Other	80,356		57,890		39		18,663			7,475			150
	419,155		391,819		7		50,966			47,533			7
Exited Lines	41,253		45,383		(9	)	9,790			9,850			(1	)
Totals	$	2,253,396	$	2,182,158	3	%	$	522,597		$	521,067		—	%

S - 5

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

	Twelve months ended December 31,						Three months ended December 31,
	2012		2011		Change		2012		2011		Change
U.S. Property & Casualty
Aviation	$	116,236	$	113,341	3	%	$	28,346	$	29,462	(4	)%
E&O	61,976		73,666		(16	)	14,799		17,312		(15	)
Public Risk	65,281		50,440		29		16,918		13,917		22
Other	110,557		95,963		15		28,394		27,598		3
	354,050		333,410		6		88,457		88,289		—
Professional Liability
U.S. D&O	332,661		359,178		(7	)	80,039		88,770		(10	)
International D&O	62,026		51,638		20		16,194		14,806		9
	394,687		410,816		(4	)	96,233		103,576		(7	)
Accident & Health
Medical Stop-loss	776,965		703,619		10		193,621		176,364		10
Other	54,862		54,651		—		14,129		13,588		4
	831,827		758,270		10		207,750		189,952		9
U.S. Surety & Credit
Surety	158,711		164,879		(4	)	39,767		43,786		(9	)
Credit	49,244		45,656		8		13,956		13,440		4
	207,955		210,535		(1	)	53,723		57,226		(6	)
International
Energy	85,764		66,512		29		24,387		19,143		27
Property Treaty	100,565		90,912		11		23,143		26,384		(12	)
Liability	76,484		81,339		(6	)	18,881		21,158		(11	)
Surety & Credit	71,378		73,832		(3	)	17,677		17,823		(1	)
Other	78,662		56,153		40		26,462		16,782		58
	412,853		368,748		12		110,550		101,290		9
Exited Lines	41,253		45,391		(9	)	9,790		9,850		(1	)
Totals	$	2,242,625	$	2,127,170	5	%	$	566,503	$	550,183	3	%

S - 6

HCC Insurance Holdings, Inc. and Subsidiaries

Net Investment Income and Unrealized Gain

(Unaudited, in thousands)

	Twelve months ended						Three months ended
	December 31,						December 31,
	2012			2011			2012			2011
Sources of net investment income:
Fixed maturity securities
Taxable	$	114,047		$	113,293		$	27,499		$	29,065
Exempt from U.S. income taxes	107,488			98,729			27,325			24,016
Total fixed maturity securities	221,535			212,022			54,824			53,081
Equity securities	3,959			—			1,620			—
Short-term investments	620			537			223			117
Other	2,856			4,486			1,157			1,494
Total investment income	228,970			217,045			57,824			54,692
Investment expense	(6,336		)	(4,774		)	(1,832		)	(1,203		)
Net investment income	$	222,634		$	212,271		$	55,992		$	53,489
Unrealized gain on available for sale securities:
Increase in unrealized gain for period, before tax	$	105,626		$	196,417		$	(39,381	)	$	40,178
Unrealized gain at:
December 31, 2012	$	436,695
September 30, 2012	$	476,076
June 30, 2012	$	385,723
March 31, 2012	$	352,538
December 31, 2011	$	331,069

S - 7

HCC Insurance Holdings, Inc. and Subsidiaries

Net Loss Ratios

(Unaudited, in thousands)

	Twelve months ended				Twelve months ended
	December 31, 2012				December 31, 2011
	Net earned		Loss		Net earned		Loss
	premium		ratio		premium		ratio
U.S. Property & Casualty
Aviation	$	116,236	56.2	%	$	113,341	63.7	%
E&O	61,976		70.9		73,666		70.8
Public Risk	65,281		94.1		50,440		79.8
Other	110,557		34.9		95,963		37.9
	354,050		59.1		333,410		60.3
Professional Liability
U.S. D&O	332,661		64.6		359,178		90.3
International D&O	62,026		24.2		51,638		8.2
	394,687		58.2		410,816		80.0
Accident & Health
Medical Stop-loss	776,965		73.7		703,619		74.5
Other	54,862		52.1		54,651		51.8
	831,827		72.3		758,270		72.8
U.S. Surety & Credit
Surety	158,711		16.6		164,879		20.6
Credit	49,244		24.9		45,656		40.0
	207,955		18.5		210,535		24.8
International
Energy	85,764		27.1		66,512		35.7
Property Treaty	100,565		24.4		90,912		80.0
Liability	76,484		33.1		81,339		34.0
Surety & Credit	71,378		122.6		73,832		56.6
Other	78,662		36.6		56,153		121.0
	412,853		45.9		368,748		63.4
Exited Lines	41,253		90.5		45,391		69.1
Totals	$	2,242,625	58.2	%	$	2,127,170	65.8	%

S - 8

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP

(Unaudited, in thousands)

	Twelve months ended						Three months ended
	December 31,						December 31,
	2012			2011			2012			2011
Numerator:
GAAP net earnings	$	391,240		$	255,243		$	108,101		$	78,338
Exclude:
Net realized investment gain, net of tax*	20,246			2,374			14,709			314
OTTI credit losses, net of tax*	(668		)	(3,041		)	—			(780		)
Foreign currency benefit (expense), net of tax*	(4,020		)	707			(544		)	(905		)
Total items excluded from operating earnings	15,558			40			14,165			(1,371		)
Operating earnings	$	375,682		$	255,203		$	93,936		$	79,709
Denominator:
GAAP equity - beginning of period	$	3,273,982		$	3,278,400		$	3,504,820		$	3,249,107
Exclude - Accumulated other comprehensive income	227,659			97,186			318,239			202,018
Beginning equity, as adjusted	$	3,046,323		$	3,181,214		$	3,186,581		$	3,047,089
GAAP equity - end of period	$	3,542,612		$	3,273,982		$	3,542,612		$	3,273,982
Exclude - Accumulated other comprehensive income	295,271			227,659			295,271			227,659
Ending equity, as adjusted	$	3,247,341		$	3,046,323		$	3,247,341		$	3,046,323
Average equity, as adjusted	$	3,146,832		$	3,113,769		$	3,216,961		$	3,046,706
Annualized operating return on equity	11.9		%	8.2		%	11.7		%	10.5		%

* Tax adjustment calculated using 35% statutory tax rate.

S - 9