EX-99.1 2 a13-17577_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

HCC INSURANCE HOLDINGS REPORTS STRONG

SECOND QUARTER AND RECORD EARNINGS PER SHARE

FOR THE FIRST SIX MONTHS OF 2013

 

Second Quarter 2013 Highlights:

 

·                  Net earnings of $88.2 million, or $0.87 per diluted share

·                  GAAP combined ratio of 85.3%

·                  Catastrophe losses of $21.4 million

·                  Annualized return on equity of 9.9%

·                  Annualized operating return on equity(a) of 10.3%

·                  Net investment income increased 4% to $55.7 million

 

HOUSTON (July 30, 2013) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for its second quarter ended June 30, 2013.

 

Net earnings were $88.2 million, or $0.87 per diluted share, for the second quarter of 2013, compared to $93.5 million, or $0.92 per diluted share, for the second quarter of 2012.  Net earnings were $194.0 million for the first six months of 2013, or $1.92 per diluted share, compared to $176.1 million, or $1.71 per diluted share, for the same period of 2012.

 

The 2013 results included accident year pretax net catastrophe losses of $21.4 million and $26.6 million for the second quarter and first six months of 2013, respectively, which reduced net earnings by $0.14 and $0.17 per share for the respective periods.  The 2012 results included catastrophe losses of $4.7 million and $12.3 million for the second quarter and first six months of 2012, respectively, which reduced net earnings by $0.03 and $0.08 per share for the respective periods.

 

The Company’s combined ratio was 85.3% for the second quarter of 2013, compared to 85.2% for the second quarter of 2012.  The combined ratio was 84.5% for the first six months of 2013, versus 85.3% for the same period of 2012.  HCC’s net paid loss ratio was 52.2% for the first half of 2013, compared to 54.9% for the same period of 2012.

 

“We are very pleased to report record earnings per share for the first half of the year, driven by a combined ratio that was once again below 85%.  Our businesses continue to generate strong, consistent returns, and we are finding good opportunities to grow our existing businesses, as well as to add teams focused on new lines,” said Christopher J.B. Williams, HCC’s Chief Executive Officer.

 


 

HCC had favorable loss development of $11.8 million in the second quarter and first six months of 2013, compared to no loss development in the same periods of 2012.

 

Gross written premium increased 2% to $809.4 million for the second quarter of 2013, compared to $791.6 million for the same quarter of 2012.  Net written premium decreased 2% to $629.0 million for the second quarter of 2013, versus $642.1 million for the same quarter of 2012.  Net earned premium decreased 1% to $561.4 million for the second quarter of 2013, compared to $565.3 million for the same quarter of 2012.

 

For the first six months of 2013, compared to the same period of 2012, gross written premium increased 4% to $1.5 billion; net written premium increased 1% to $1.2 billion; and net earned premium increased 1% to $1.1 billion.

 

Investment income increased to $55.7 million for the second quarter of 2013, compared to $53.3 million for the same period of 2012.  Investment income increased to $111.4 million for the first six months of 2013, compared to $110.3 million for the same period of 2012.  As of June 30, 2013, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 5.5 years and an average long-term tax equivalent yield of 4.5%.

 

HCC generated operating cash flow of $176.3 million in the first six months of 2013, compared to $293.3 million in the same period of 2012.  Operating cash flow is cash flow from operating activities excluding surety collateral outflows of $74.3 million and $21.2 million in the first six months of 2013 and 2012, respectively, as well as a payment of $27.5 million in 2012 to commute a large contract in Exited Lines.  The Company’s liquidity position remains strong with $256.1 million of cash and short-term investments and $253.6 million of available capacity under its $600.0 million revolving loan facility at June 30, 2013.

 

As of June 30, 2013, total assets were $10.2 billion, shareholders’ equity was $3.5 billion and the Company’s debt to total capital ratio was 15.4%.

 

For further information about HCC’s 2013 second 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 Daylight Time on Wednesday, July 31.  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, November 1, 2013.

 

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland.  HCC’s major

 

2


 

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 under Regulation G and is calculated as net earnings excluding after-tax net realized investment gain/loss, other-than-temporary impairment credit losses, and foreign currency benefit/expense (collectively, operating earnings) 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, both of which management excludes when evaluating operating results internally.

 

Contact:

Doug Busker, Director of Investor Relations

 

HCC Insurance Holdings, Inc.

 

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.

 

*     *     *     *     *

 

3


 

HCC Insurance Holdings, Inc. and Subsidiaries

Financial Highlights

(Unaudited, in thousands except per share data)

 

 

 

Six months ended

 

Three months ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Gross written premium

 

$

1,529,648

 

$

1,474,242

 

$

809,443

 

$

791,553

 

 

 

 

 

 

 

 

 

 

 

Net written premium

 

1,208,218

 

1,200,492

 

629,034

 

642,088

 

 

 

 

 

 

 

 

 

 

 

Net earned premium

 

1,122,542

 

1,112,472

 

561,356

 

565,331

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

111,433

 

110,300

 

55,668

 

53,290

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,263,797

 

1,241,811

 

629,431

 

632,288

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

194,012

 

176,077

 

88,162

 

93,493

 

 

 

 

 

 

 

 

 

 

 

Operating earnings*

 

179,558

 

170,818

 

86,419

 

86,548

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (diluted)

 

$

1.92

 

$

1.71

 

$

0.87

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding (millions)

 

99.2

 

101.0

 

99.1

 

99.9

 

 

 

 

 

 

 

 

 

 

 

Net loss ratio

 

59.9

%

59.8

%

60.5

%

59.6

%

 

 

 

 

 

 

 

 

 

 

Combined ratio

 

84.5

%

85.3

%

85.3

%

85.2

%

 

 

 

 

 

 

 

 

 

 

Paid loss ratio

 

52.2

%

54.9

%

51.1

%

47.0

%

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Total investments

 

$

6,659,291

 

$

6,950,398

 

 

 

 

 

 

 

Total assets

 

10,153,494

 

10,267,807

 

 

 

 

 

 

 

Shareholders’ equity

 

3,505,383

 

3,542,612

 

 

 

 

 

 

 

Debt to total capital ratio

 

15.4

%

14.2

%

 

 

 

 

 

 

Book value per share

 

$

35.00

 

$

35.10

 

 

*         Non-GAAP financial measure under 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, both of which management excludes when evaluating operating results internally.

 

S-1


 

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited, in thousands)

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

Fixed maturity securities — available for sale, at fair value

 

$

6,094,640

 

$

6,281,781

 

Equity securities — available for sale, at fair value

 

347,840

 

284,639

 

Short-term investments

 

216,793

 

363,053

 

Other investments

 

18

 

20,925

 

Total investments

 

6,659,291

 

6,950,398

 

Cash

 

39,353

 

71,390

 

Restricted cash and securities

 

115,031

 

101,480

 

Premium, claims and other receivables

 

648,438

 

549,725

 

Reinsurance recoverables

 

1,086,435

 

1,071,222

 

Ceded unearned premium

 

291,939

 

256,988

 

Ceded life and annuity benefits

 

57,841

 

58,641

 

Deferred policy acquisition costs

 

202,322

 

191,960

 

Goodwill

 

885,999

 

885,860

 

Other assets

 

166,845

 

130,143

 

 

 

 

 

 

 

Total assets

 

$

10,153,494

 

$

10,267,807

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense payable

 

$

3,814,684

 

$

3,767,850

 

Life and annuity policy benefits

 

57,841

 

58,641

 

Reinsurance, premium and claims payable

 

337,666

 

294,621

 

Unearned premium

 

1,189,520

 

1,069,956

 

Deferred ceding commissions

 

82,119

 

74,609

 

Notes payable

 

639,021

 

583,944

 

Accounts payable and accrued liabilities

 

527,260

 

875,574

 

 

 

 

 

 

 

Total liabilities

 

6,648,111

 

6,725,195

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

125,350

 

125,114

 

Additional paid-in capital

 

1,063,949

 

1,052,253

 

Retained earnings

 

2,917,086

 

2,756,166

 

Accumulated other comprehensive income

 

126,119

 

295,271

 

Treasury stock

 

(727,121

)

(686,192

)

 

 

 

 

 

 

Total shareholders’ equity

 

3,505,383

 

3,542,612

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

10,153,494

 

$

10,267,807

 

 

S-2


 

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

 

 

 

Six months ended

 

Three months ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premium

 

$

1,122,542

 

$

1,112,472

 

$

561,356

 

$

565,331

 

Net investment income

 

111,433

 

110,300

 

55,668

 

53,290

 

Other operating income

 

16,629

 

12,389

 

7,784

 

7,188

 

Net realized investment gain

 

13,193

 

7,047

 

4,623

 

6,876

 

Other-than-temporary impairment credit losses

 

—

 

(397

)

—

 

(397

)

 

 

 

 

 

 

 

 

 

 

Total revenue

 

1,263,797

 

1,241,811

 

629,431

 

632,288

 

 

 

 

 

 

 

 

 

 

 

EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense, net

 

672,171

 

665,753

 

339,474

 

336,825

 

Policy acquisition costs, net

 

137,745

 

143,934

 

70,796

 

74,490

 

Other operating expense

 

164,572

 

167,706

 

87,719

 

80,424

 

Interest expense

 

13,082

 

13,139

 

6,611

 

6,230

 

 

 

 

 

 

 

 

 

 

 

Total expense

 

987,570

 

990,532

 

504,600

 

497,969

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

276,227

 

251,279

 

124,831

 

134,319

 

Income tax expense

 

82,215

 

75,202

 

36,669

 

40,826

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

194,012

 

$

176,077

 

$

88,162

 

$

93,493

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share data:

 

 

 

 

 

 

 

 

 

Net earnings per share

 

$

1.93

 

$

1.71

 

$

0.88

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding (millions)

 

99.0

 

100.8

 

98.9

 

99.6

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share data:

 

 

 

 

 

 

 

 

 

Net earnings per share

 

$

1.92

 

$

1.71

 

$

0.87

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding (millions)

 

99.2

 

101.0

 

99.1

 

99.9

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared, per share

 

$

0.330

 

$

0.310

 

$

0.165

 

$

0.155

 

 

S-3


 

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

 

 

 

Six months ended June 30,

 

Three months ended June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

75,182

 

$

82,870

 

(9

)%

$

38,184

 

$

45,780

 

(17

)%

E&O

 

28,328

 

31,493

 

(10

)

13,254

 

14,602

 

(9

)

Public Risk

 

37,105

 

43,245

 

(14

)

15,664

 

23,461

 

(33

)

Other

 

217,773

 

161,005

 

35

 

116,149

 

81,623

 

42

 

 

 

358,388

 

318,613

 

12

 

183,251

 

165,466

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

186,845

 

186,184

 

—

 

111,606

 

111,188

 

—

 

International D&O

 

59,548

 

59,566

 

—

 

30,768

 

33,317

 

(8

)

 

 

246,393

 

245,750

 

—

 

142,374

 

144,505

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

405,039

 

387,974

 

4

 

202,231

 

194,741

 

4

 

Other

 

25,431

 

24,901

 

2

 

12,678

 

12,807

 

(1

)

 

 

430,470

 

412,875

 

4

 

214,909

 

207,548

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

80,327

 

80,762

 

(1

)

42,631

 

40,836

 

4

 

Credit

 

31,111

 

29,940

 

4

 

16,558

 

15,373

 

8

 

 

 

111,438

 

110,702

 

1

 

59,189

 

56,209

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

111,859

 

110,714

 

1

 

85,314

 

90,119

 

(5

)

Property Treaty

 

113,995

 

113,855

 

—

 

41,650

 

44,517

 

(6

)

Liability

 

40,210

 

40,242

 

—

 

22,077

 

20,982

 

5

 

Surety & Credit

 

46,196

 

43,451

 

6

 

25,030

 

22,493

 

11

 

Other

 

60,933

 

56,649

 

8

 

31,315

 

29,124

 

8

 

 

 

373,193

 

364,911

 

2

 

205,386

 

207,235

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

9,766

 

21,391

 

(54

)

4,334

 

10,590

 

(59

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

1,529,648

 

$

1,474,242

 

4

%

$

809,443

 

$

791,553

 

2

%

 

S-4


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

 

 

 

Six months ended June 30,

 

Three months ended June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

60,134

 

$

63,405

 

(5

)%

$

31,520

 

$

35,898

 

(12

)%

E&O

 

24,691

 

30,235

 

(18

)

12,153

 

13,730

 

(11

)

Public Risk

 

29,880

 

35,567

 

(16

)

14,109

 

19,973

 

(29

)

Other

 

94,164

 

68,687

 

37

 

47,205

 

35,965

 

31

 

 

 

208,869

 

197,894

 

6

 

104,987

 

105,566

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

129,578

 

136,826

 

(5

)

77,879

 

81,121

 

(4

)

International D&O

 

34,183

 

34,311

 

—

 

18,256

 

19,103

 

(4

)

 

 

163,761

 

171,137

 

(4

)

96,135

 

100,224

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

404,604

 

387,673

 

4

 

202,010

 

194,586

 

4

 

Other

 

25,264

 

24,698

 

2

 

12,590

 

12,687

 

(1

)

 

 

429,868

 

412,371

 

4

 

214,600

 

207,273

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

72,146

 

73,385

 

(2

)

38,456

 

37,251

 

3

 

Credit

 

25,982

 

22,711

 

14

 

14,168

 

14,141

 

—

 

 

 

98,128

 

96,096

 

2

 

52,624

 

51,392

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

71,120

 

81,013

 

(12

)

56,451

 

68,189

 

(17

)

Property Treaty

 

101,266

 

99,819

 

1

 

35,099

 

37,517

 

(6

)

Liability

 

37,577

 

37,316

 

1

 

21,007

 

19,424

 

8

 

Surety & Credit

 

40,290

 

39,813

 

1

 

21,641

 

20,786

 

4

 

Other

 

47,573

 

43,662

 

9

 

22,156

 

21,137

 

5

 

 

 

297,826

 

301,623

 

(1

)

156,354

 

167,053

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

9,766

 

21,371

 

(54

)

4,334

 

10,580

 

(59

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

1,208,218

 

$

1,200,492

 

1

%

$

629,034

 

$

642,088

 

(2

)%

 

S-5


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

 

 

 

Six months ended June 30,

 

Three months ended June 30,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

56,286

 

$

58,220

 

(3

)%

$

28,429

 

$

29,397

 

(3

)%

E&O

 

26,433

 

31,979

 

(17

)

13,235

 

15,602

 

(15

)

Public Risk

 

32,755

 

31,792

 

3

 

16,395

 

16,574

 

(1

)

Other

 

69,489

 

55,861

 

24

 

33,373

 

27,261

 

22

 

 

 

184,963

 

177,852

 

4

 

91,432

 

88,834

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

153,721

 

170,667

 

(10

)

77,016

 

84,413

 

(9

)

International D&O

 

31,502

 

30,238

 

4

 

15,428

 

15,054

 

2

 

 

 

185,223

 

200,905

 

(8

)

92,444

 

99,467

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

404,604

 

387,673

 

4

 

202,010

 

194,586

 

4

 

Other

 

30,343

 

27,355

 

11

 

15,812

 

13,561

 

17

 

 

 

434,947

 

415,028

 

5

 

217,822

 

208,147

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

72,725

 

79,608

 

(9

)

37,118

 

39,688

 

(6

)

Credit

 

24,506

 

21,236

 

15

 

12,936

 

13,427

 

(4

)

 

 

97,231

 

100,844

 

(4

)

50,054

 

53,115

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

43,457

 

40,889

 

6

 

22,418

 

25,795

 

(13

)

Property Treaty

 

58,498

 

49,007

 

19

 

29,743

 

26,918

 

10

 

Liability

 

35,583

 

39,131

 

(9

)

18,408

 

19,649

 

(6

)

Surety & Credit

 

36,066

 

34,945

 

3

 

17,853

 

17,184

 

4

 

Other

 

36,808

 

32,500

 

13

 

16,848

 

15,642

 

8

 

 

 

210,412

 

196,472

 

7

 

105,270

 

105,188

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

9,766

 

21,371

 

(54

)

4,334

 

10,580

 

(59

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

1,122,542

 

$

1,112,472

 

1

%

$

561,356

 

$

565,331

 

(1

)%

 

S-6


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Investment Income and Unrealized Gain

(Unaudited, in thousands)

 

 

 

Six months ended

 

Three months ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Sources of net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities

 

 

 

 

 

 

 

 

 

Taxable

 

$

51,022

 

$

58,218

 

$

25,062

 

$

27,103

 

Exempt from U.S. income taxes

 

56,075

 

52,872

 

28,186

 

26,260

 

Total fixed maturity securities

 

107,097

 

111,090

 

53,248

 

53,363

 

Equity securities

 

7,808

 

993

 

4,228

 

993

 

Short-term investments

 

80

 

102

 

68

 

40

 

Other

 

319

 

868

 

366

 

401

 

Total investment income

 

115,304

 

113,053

 

57,910

 

54,797

 

Investment expense

 

(3,871

)

(2,753

)

(2,242

)

(1,507

)

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

111,433

 

$

110,300

 

$

55,668

 

$

53,290

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available for sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in unrealized gain for period, before tax

 

$

(260,622

)

$

54,654

 

$

(221,657

)

$

33,185

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain at:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2013

 

$

176,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

$

397,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

$

436,695

 

 

 

 

 

 

 

 

S-7


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Loss Ratios

(Unaudited, in thousands)

 

 

 

Six months ended

 

Six months ended

 

 

 

June 30, 2013

 

June 30, 2012

 

 

 

Net earned

 

Loss

 

Net earned

 

Loss

 

 

 

premium

 

ratio

 

premium

 

ratio

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

Aviation

 

$

56,286

 

63.0

%

$

58,220

 

55.8

%

E&O

 

26,433

 

61.1

 

31,979

 

60.8

 

Public Risk

 

32,755

 

76.7

 

31,792

 

77.8

 

Other

 

69,489

 

44.1

 

55,861

 

43.4

 

 

 

184,963

 

58.1

 

177,852

 

56.7

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

U.S. D&O

 

153,721

 

62.8

 

170,667

 

69.7

 

International D&O

 

31,502

 

48.6

 

30,238

 

51.0

 

 

 

185,223

 

60.4

 

200,905

 

66.9

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

404,604

 

75.2

 

387,673

 

75.5

 

Other

 

30,343

 

53.9

 

27,355

 

52.3

 

 

 

434,947

 

73.7

 

415,028

 

74.0

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

Surety

 

72,725

 

19.8

 

79,608

 

24.8

 

Credit

 

24,506

 

18.1

 

21,236

 

33.0

 

 

 

97,231

 

19.4

 

100,844

 

26.5

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

Energy

 

43,457

 

45.4

 

40,889

 

41.6

 

Property Treaty

 

58,498

 

51.1

 

49,007

 

17.7

 

Liability

 

35,583

 

49.4

 

39,131

 

49.5

 

Surety & Credit

 

36,066

 

63.0

 

34,945

 

58.2

 

Other

 

36,808

 

40.6

 

32,500

 

43.7

 

 

 

210,412

 

49.9

 

196,472

 

40.5

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

9,766

 

88.3

 

21,371

 

80.7

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

1,122,542

 

59.9

%

$

1,112,472

 

59.8

%

 

S - 8


 

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP

(Unaudited, in thousands)

 

 

 

Six months ended

 

Three months ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net earnings

 

$

194,012

 

$

176,077

 

$

88,162

 

$

93,493

 

 

 

 

 

 

 

 

 

 

 

Exclude:

 

 

 

 

 

 

 

 

 

Net realized investment gain*

 

8,575

 

4,581

 

3,004

 

4,470

 

OTTI credit losses*

 

—

 

(258

)

—

 

(258

)

Foreign currency benefit (expense)*

 

5,879

 

936

 

(1,261

)

2,733

 

Total items excluded from operating earnings

 

14,454

 

5,259

 

1,743

 

6,945

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

$

179,558

 

$

170,818

 

$

86,419

 

$

86,548

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP equity - beginning of period

 

$

3,542,612

 

$

3,273,982

 

$

3,585,249

 

$

3,293,957

 

 

 

 

 

 

 

 

 

 

 

Exclude - Accumulated other comprehensive income

 

295,271

 

227,659

 

268,100

 

244,295

 

 

 

 

 

 

 

 

 

 

 

Beginning equity, as adjusted

 

$

3,247,341

 

$

3,046,323

 

$

3,317,149

 

$

3,049,662

 

 

 

 

 

 

 

 

 

 

 

GAAP equity - end of period

 

$

3,505,383

 

$

3,343,257

 

$

3,505,383

 

$

3,343,257

 

 

 

 

 

 

 

 

 

 

 

Exclude - Accumulated other comprehensive income

 

126,119

 

259,776

 

126,119

 

259,776

 

 

 

 

 

 

 

 

 

 

 

Ending equity, as adjusted

 

$

3,379,264

 

$

3,083,481

 

$

3,379,264

 

$

3,083,481

 

 

 

 

 

 

 

 

 

 

 

Average equity, as adjusted

 

$

3,313,303

 

$

3,064,902

 

$

3,348,207

 

$

3,066,572

 

 

 

 

 

 

 

 

 

 

 

Annualized operating return on equity

 

10.8

%

11.1

%

10.3

%

11.3

%

 

* Net of tax, calculated using 35% statutory tax rate.

 

S - 9