EX-99.1 2 a13-5023_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

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