EX-99.1 2 a14-5647_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

HCC INSURANCE HOLDINGS REPORTS

RECORD EARNINGS FOR 2013

 

Highlights:

 

·                  Record net earnings of $115.0 million, or $1.14 per diluted share, for the fourth quarter

·                  Record net earnings of $407.2 million, or $4.04 per diluted share, for the full year

·                  Return on equity and operating return on equity(a) of 11.3% for the full year

·                  GAAP combined ratio of 81.2% for the fourth quarter and 83.4% for the full year

·                  Gross written premium increased 4% to $671.7 million for the fourth quarter and 3% to $2.9 billion for the full year

·                  Book value per share increased 4% for the full year to $36.62

 

HOUSTON (February 11, 2014) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for the fourth quarter and full year of 2013.

 

Net earnings were $115.0 million, or $1.14 per diluted share, for the fourth quarter of 2013, compared to $108.1 million, or $1.06 per diluted share, for the same quarter of 2012.  Net earnings were $407.2 million, or $4.04 per diluted share, for 2013, versus $391.2 million, or $3.83 per diluted share, for 2012.

 

The 2013 results included accident year pretax net catastrophe losses of $7.5 million and $52.0 million for the fourth quarter and full year, respectively, which reduced net earnings by $0.05 and $0.34 per share for the respective periods.  The 2012 results included catastrophe losses of $32.5 million and $52.8 million for the fourth quarter and full year, respectively, which reduced net earnings by $0.21 and $0.34 per share for the respective periods.

 

The Company’s combined ratio was 81.2% for the fourth quarter of 2013, compared to 84.5% for the same quarter of 2012.  The combined ratio was 83.4% for 2013, versus 83.6% for 2012.  HCC’s net paid loss ratio was 56.5% for 2013, compared to 56.7% for 2012.

 

“The fourth quarter was the best quarter in our history and capped a second consecutive year of record earnings for our shareholders.  These results produced an operating return on equity well in excess of our stated goal and were driven, once again, by another outstanding underwriting performance.  We believe HCC is well-positioned to continue to generate favorable and consistent results in 2014,” said Christopher J.B. Williams, HCC’s Chief Executive Officer.

 


 

HCC had net favorable loss development of $34.1 million in the fourth quarter of 2013, compared to $35.4 million in the same quarter of 2012, and $73.7 million in the full year of 2013, versus $70.0 million in the same period of 2012.

 

The Company’s 2013 accident year net loss ratio was 60.9% and its accident year combined ratio was 86.8% for the full year of 2013.  These ratios include 2.4 percentage points for catastrophes.

 

Gross written premium increased 4% to $671.7 million for the fourth quarter of 2013, compared to $644.1 million for the same quarter of 2012.  Net written premium increased 1% to $525.4 million for the fourth quarter of 2013, versus $522.6 million for the same quarter of 2012.  Net earned premium decreased 1% to $560.0 million for the fourth quarter of 2013, compared to $566.5 million for the same quarter of 2012.

 

For the full year of 2013, compared to the same period of 2012, gross written premium increased 3% to $2.9 billion; net written premium was flat at $2.3 billion; and net earned premium was flat at $2.2 billion.

 

Investment income was $54.5 million in the fourth quarter of 2013, compared to $56.0 million in the same quarter of 2012, and $220.2 million in the full year of 2013, versus $222.6 million in the same period of 2012.  As of December 31, 2013, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 5.1 years and an average long-term tax equivalent yield of 4.5%.

 

HCC generated cash flow from operations of $262.7 million in 2013, compared to $661.1 million in 2012.  Cash flow for 2013 was decreased by $121.7 million of U.S. Surety collateral repayments, whereas cash flow for 2012 was increased by $96.6 million of U.S. Surety collateral receipts.  At December 31, 2013, the Company had $237.1 million of cash and short-term investments and $239.1 million of available capacity under its $600.0 million revolving loan facility.

 

As of December 31, 2013, total assets were $10.3 billion, shareholders’ equity was $3.7 billion and the Company’s debt to total capital ratio was 15.1%.

 

For further information about HCC’s 2013 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 12.  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 16, 2014.

 

2


 

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 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)

 

 

 

Twelve months ended

 

Three months ended

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Gross written premium

 

$

2,880,249

 

$

2,784,073

 

$

671,688

 

$

644,068

 

 

 

 

 

 

 

 

 

 

 

Net written premium

 

2,255,323

 

2,253,396

 

525,371

 

522,597

 

 

 

 

 

 

 

 

 

 

 

Net earned premium

 

2,239,240

 

2,242,625

 

560,030

 

566,503

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

220,182

 

222,634

 

54,541

 

55,992

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

2,536,904

 

2,525,827

 

636,630

 

652,343

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

407,197

 

391,240

 

115,010

 

108,101

 

 

 

 

 

 

 

 

 

 

 

Operating earnings*

 

383,314

 

375,682

 

111,264

 

93,936

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (diluted)

 

$

4.04

 

$

3.83

 

$

1.14

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

99,113

 

100,456

 

99,046

 

99,926

 

 

 

 

 

 

 

 

 

 

 

Net loss ratio

 

57.6

%

58.2

%

53.1

%

59.3

%

 

 

 

 

 

 

 

 

 

 

Combined ratio

 

83.4

%

83.6

%

81.2

%

84.5

%

 

 

 

 

 

 

 

 

 

 

Paid loss ratio

 

56.5

%

56.7

%

68.2

%

57.9

%

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

Total investments

 

$

6,718,692

 

$

6,950,398

 

 

 

 

 

 

 

Total assets

 

10,344,520

 

10,267,807

 

 

 

 

 

 

 

Shareholders’ equity

 

3,674,430

 

3,542,612

 

 

 

 

 

 

 

Debt to total capital ratio

 

15.1

%

14.2

%

 

 

 

 

 

 

Book value per share

 

$

36.62

 

$

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)

 

 

 

December 31,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

 

 

 

Fixed maturity securities — available for sale, at fair value

 

$

6,022,473

 

$

6,281,781

 

Equity securities — available for sale, at fair value

 

517,466

 

284,639

 

Short-term investments

 

178,753

 

363,053

 

Other investments

 

—

 

20,925

 

Total investments

 

6,718,692

 

6,950,398

 

Cash

 

58,301

 

71,390

 

Restricted cash and securities

 

125,777

 

101,480

 

Premium, claims and other receivables

 

580,107

 

549,725

 

Reinsurance recoverables

 

1,277,257

 

1,071,222

 

Ceded unearned premium

 

305,438

 

256,988

 

Ceded life and annuity benefits

 

56,491

 

58,641

 

Deferred policy acquisition costs

 

201,698

 

191,960

 

Goodwill

 

895,200

 

885,860

 

Other assets

 

125,559

 

130,143

 

 

 

 

 

 

 

Total assets

 

$

10,344,520

 

$

10,267,807

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense payable

 

$

3,902,132

 

$

3,767,850

 

Life and annuity policy benefits

 

56,491

 

58,641

 

Reinsurance, premium and claims payable

 

332,985

 

294,621

 

Unearned premium

 

1,134,849

 

1,069,956

 

Deferred ceding commissions

 

89,528

 

74,609

 

Notes payable

 

654,098

 

583,944

 

Accounts payable and accrued liabilities

 

500,007

 

875,574

 

 

 

 

 

 

 

Total liabilities

 

6,670,090

 

6,725,195

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

125,577

 

125,114

 

Additional paid-in capital

 

1,073,105

 

1,052,253

 

Retained earnings

 

3,085,501

 

2,756,166

 

Accumulated other comprehensive income

 

118,651

 

295,271

 

Treasury stock

 

(728,404

)

(686,192

)

 

 

 

 

 

 

Total shareholders’ equity

 

3,674,430

 

3,542,612

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

10,344,520

 

$

10,267,807

 

 

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,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premium

 

$

2,239,240

 

$

2,242,625

 

$

560,030

 

$

566,503

 

Net investment income

 

220,182

 

222,634

 

54,541

 

55,992

 

Other operating income

 

35,452

 

30,448

 

11,144

 

7,219

 

Net realized investment gain

 

42,030

 

31,148

 

10,915

 

22,629

 

Other-than-temporary impairment credit losses

 

—

 

(1,028

)

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

2,536,904

 

2,525,827

 

636,630

 

652,343

 

 

 

 

 

 

 

 

 

 

 

EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense, net

 

1,290,050

 

1,305,511

 

297,503

 

335,744

 

Policy acquisition costs, net

 

279,439

 

281,201

 

76,052

 

69,647

 

Other operating expense

 

368,495

 

359,060

 

100,138

 

90,896

 

Interest expense

 

26,210

 

25,628

 

6,554

 

6,527

 

 

 

 

 

 

 

 

 

 

 

Total expense

 

1,964,194

 

1,971,400

 

480,247

 

502,814

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

572,710

 

554,427

 

156,383

 

149,529

 

Income tax expense

 

165,513

 

163,187

 

41,373

 

41,428

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

407,197

 

$

391,240

 

$

115,010

 

$

108,101

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to unvested stock

 

(6,638

)

(6,982

)

(1,884

)

(1,832

)

 

 

 

 

 

 

 

 

 

 

Net earnings available to common stock

 

$

400,559

 

$

384,258

 

$

113,126

 

$

106,269

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share data:

 

 

 

 

 

 

 

 

 

Net earnings per share

 

$

4.05

 

$

3.84

 

$

1.15

 

$

1.07

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

98,853

 

100,176

 

98,770

 

99,686

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share data:

 

 

 

 

 

 

 

 

 

Net earnings per share

 

$

4.04

 

$

3.83

 

$

1.14

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding

 

99,113

 

100,456

 

99,046

 

99,926

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared, per share

 

$

0.780

 

$

0.640

 

$

0.225

 

$

0.165

 

 

S - 3


 

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

 

 

 

Twelve months ended December 31,

 

Three months ended December 31,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

139,673

 

$

144,621

 

(3

)%

$

24,672

 

$

27,321

 

(10

)%

E&O

 

54,871

 

60,639

 

(10

)

12,962

 

14,156

 

(8

)

Public Risk

 

70,665

 

85,857

 

(18

)

12,908

 

18,791

 

(31

)

Other

 

405,555

 

323,577

 

25

 

85,713

 

73,402

 

17

 

 

 

670,764

 

614,694

 

9

 

136,255

 

133,670

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

410,669

 

424,099

 

(3

)

125,900

 

126,166

 

—

 

International D&O

 

125,416

 

115,284

 

9

 

39,001

 

35,341

 

10

 

 

 

536,085

 

539,383

 

(1

)

164,901

 

161,507

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

817,943

 

777,351

 

5

 

207,577

 

193,712

 

7

 

Other

 

65,112

 

58,445

 

11

 

22,696

 

19,471

 

17

 

 

 

883,055

 

835,796

 

6

 

230,273

 

213,183

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

165,505

 

159,159

 

4

 

40,270

 

38,072

 

6

 

Credit

 

63,425

 

62,309

 

2

 

18,855

 

16,718

 

13

 

 

 

228,930

 

221,468

 

3

 

59,125

 

54,790

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

142,551

 

136,070

 

5

 

15,389

 

10,492

 

47

 

Property Treaty

 

139,056

 

138,065

 

1

 

5,478

 

3,538

 

55

 

Liability

 

82,380

 

75,466

 

9

 

22,388

 

17,173

 

30

 

Surety & Credit

 

90,584

 

84,288

 

7

 

22,398

 

22,529

 

(1

)

Other

 

93,928

 

97,278

 

(3

)

13,522

 

17,324

 

(22

)

 

 

548,499

 

531,167

 

3

 

79,175

 

71,056

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

12,916

 

41,565

 

(69

)

1,959

 

9,862

 

(80

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

2,880,249

 

$

2,784,073

 

3

%

$

671,688

 

$

644,068

 

4

%

 

S - 4


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

 

 

 

Twelve months ended December 31,

 

Three months ended December 31,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

111,446

 

$

112,712

 

(1

)%

$

19,906

 

$

20,669

 

(4

)%

E&O

 

48,724

 

58,066

 

(16

)

11,755

 

13,731

 

(14

)

Public Risk

 

55,666

 

69,081

 

(19

)

8,556

 

14,896

 

(43

)

Other

 

169,519

 

144,079

 

18

 

37,245

 

36,776

 

1

 

 

 

385,355

 

383,938

 

—

 

77,462

 

86,072

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

287,391

 

311,576

 

(8

)

88,939

 

92,782

 

(4

)

International D&O

 

72,118

 

66,562

 

8

 

23,387

 

20,958

 

12

 

 

 

359,509

 

378,138

 

(5

)

112,326

 

113,740

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

816,499

 

776,965

 

5

 

206,806

 

193,621

 

7

 

Other

 

64,869

 

58,043

 

12

 

22,702

 

19,369

 

17

 

 

 

881,368

 

835,008

 

6

 

229,508

 

212,990

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

147,517

 

144,573

 

2

 

35,771

 

34,499

 

4

 

Credit

 

51,604

 

51,331

 

1

 

15,374

 

14,540

 

6

 

 

 

199,121

 

195,904

 

2

 

51,145

 

49,039

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

78,103

 

88,834

 

(12

)

5,154

 

5,481

 

(6

)

Property Treaty

 

111,334

 

105,442

 

6

 

(1,835

)

(7,860

)

(77

)

Liability

 

77,097

 

69,546

 

11

 

20,838

 

15,592

 

34

 

Surety & Credit

 

77,857

 

74,977

 

4

 

18,531

 

19,090

 

(3

)

Other

 

72,648

 

80,356

 

(10

)

10,283

 

18,663

 

(45

)

 

 

417,039

 

419,155

 

(1

)

52,971

 

50,966

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

12,931

 

41,253

 

(69

)

1,959

 

9,790

 

(80

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

2,255,323

 

$

2,253,396

 

—

%

$

525,371

 

$

522,597

 

1

%

 

S - 5


 

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

 

 

 

Twelve months ended December 31,

 

Three months ended December 31,

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation

 

$

112,597

 

$

116,236

 

(3

)%

$

28,406

 

$

28,346

 

—

%

E&O

 

52,230

 

61,976

 

(16

)

12,736

 

14,799

 

(14

)

Public Risk

 

63,791

 

65,281

 

(2

)

15,261

 

16,918

 

(10

)

Other

 

138,517

 

110,557

 

25

 

34,085

 

28,394

 

20

 

 

 

367,135

 

354,050

 

4

 

90,488

 

88,457

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. D&O

 

303,278

 

332,661

 

(9

)

73,777

 

80,039

 

(8

)

International D&O

 

64,889

 

62,026

 

5

 

16,728

 

16,194

 

3

 

 

 

368,167

 

394,687

 

(7

)

90,505

 

96,233

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

816,499

 

776,965

 

5

 

206,806

 

193,621

 

7

 

Other

 

67,016

 

54,862

 

22

 

18,714

 

14,129

 

32

 

 

 

883,515

 

831,827

 

6

 

225,520

 

207,750

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

 

 

 

 

Surety

 

147,041

 

158,711

 

(7

)

37,671

 

39,767

 

(5

)

Credit

 

47,245

 

49,244

 

(4

)

11,942

 

13,956

 

(14

)

 

 

194,286

 

207,955

 

(7

)

49,613

 

53,723

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

79,637

 

85,764

 

(7

)

17,366

 

24,387

 

(29

)

Property Treaty

 

112,042

 

100,565

 

11

 

26,975

 

23,143

 

17

 

Liability

 

75,329

 

76,484

 

(2

)

20,658

 

18,881

 

9

 

Surety & Credit

 

72,294

 

71,378

 

1

 

18,108

 

17,677

 

2

 

Other

 

73,904

 

78,662

 

(6

)

18,838

 

26,462

 

(29

)

 

 

413,206

 

412,853

 

—

 

101,945

 

110,550

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

12,931

 

41,253

 

(69

)

1,959

 

9,790

 

(80

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

2,239,240

 

$

2,242,625

 

—

%

$

560,030

 

$

566,503

 

(1

)%

 

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,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Sources of net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturity securities

 

 

 

 

 

 

 

 

 

Taxable

 

$

98,966

 

$

114,047

 

$

23,559

 

$

27,499

 

Exempt from U.S. income taxes

 

113,875

 

107,488

 

28,812

 

27,325

 

Total fixed maturity securities

 

212,841

 

221,535

 

52,371

 

54,824

 

Equity securities

 

14,537

 

3,959

 

3,779

 

1,620

 

Short-term investments

 

160

 

620

 

38

 

223

 

Other

 

668

 

2,856

 

318

 

1,157

 

Total investment income

 

228,206

 

228,970

 

56,506

 

57,824

 

Investment expense

 

(8,024

)

(6,336

)

(1,965

)

(1,832

)

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

220,182

 

$

222,634

 

$

54,541

 

$

55,992

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available for sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(282,631

)

$

105,626

 

$

(19,035

)

$

(39,381

)

 

 

 

 

 

 

 

 

 

 

Unrealized gain at:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

$

154,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2013

 

$

173,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

Twelve months ended

 

Twelve months ended

 

 

 

December 31, 2013

 

December 31, 2012

 

 

 

Net earned

 

Loss

 

Net earned

 

Loss

 

 

 

premium

 

ratio

 

premium

 

ratio

 

U.S. Property & Casualty

 

 

 

 

 

 

 

 

 

Aviation

 

$

112,597

 

55.0

%

$

116,236

 

56.2

%

E&O

 

52,230

 

46.9

 

61,976

 

70.9

 

Public Risk

 

63,791

 

76.1

 

65,281

 

94.1

 

Other

 

138,517

 

29.0

 

110,557

 

34.9

 

 

 

367,135

 

47.7

 

354,050

 

59.1

 

 

 

 

 

 

 

 

 

 

 

Professional Liability

 

 

 

 

 

 

 

 

 

U.S. D&O

 

303,278

 

57.3

 

332,661

 

64.6

 

International D&O

 

64,889

 

33.2

 

62,026

 

24.2

 

 

 

368,167

 

53.1

 

394,687

 

58.2

 

 

 

 

 

 

 

 

 

 

 

Accident & Health

 

 

 

 

 

 

 

 

 

Medical Stop-loss

 

816,499

 

72.7

 

776,965

 

73.7

 

Other

 

67,016

 

54.8

 

54,862

 

52.1

 

 

 

883,515

 

71.3

 

831,827

 

72.3

 

 

 

 

 

 

 

 

 

 

 

U.S. Surety & Credit

 

 

 

 

 

 

 

 

 

Surety

 

147,041

 

11.8

 

158,711

 

16.6

 

Credit

 

47,245

 

14.3

 

49,244

 

24.9

 

 

 

194,286

 

12.4

 

207,955

 

18.5

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

Energy

 

79,637

 

30.4

 

85,764

 

27.1

 

Property Treaty

 

112,042

 

47.0

 

100,565

 

24.4

 

Liability

 

75,329

 

36.5

 

76,484

 

33.1

 

Surety & Credit

 

72,294

 

156.9

 

71,378

 

122.6

 

Other

 

73,904

 

42.6

 

78,662

 

36.6

 

 

 

413,206

 

60.3

 

412,853

 

45.9

 

 

 

 

 

 

 

 

 

 

 

Exited Lines

 

12,931

 

122.8

 

41,253

 

90.5

 

 

 

 

 

 

 

 

 

 

 

Totals

 

$

2,239,240

 

57.6

%

$

2,242,625

 

58.2

%

 

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,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net earnings

 

$

407,197

 

$

391,240

 

$

115,010

 

$

108,101

 

 

 

 

 

 

 

 

 

 

 

Exclude:

 

 

 

 

 

 

 

 

 

Net realized investment gain*

 

27,320

 

20,246

 

7,095

 

14,709

 

OTTI credit losses*

 

—

 

(668

)

—

 

—

 

Foreign currency expense*

 

(3,437

)

(4,020

)

(3,349

)

(544

)

Total items excluded from operating earnings

 

23,883

 

15,558

 

3,746

 

14,165

 

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

$

383,314

 

$

375,682

 

$

111,264

 

$

93,936

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP equity - beginning of period

 

$

3,542,612

 

$

3,273,982

 

$

3,588,079

 

$

3,504,820

 

 

 

 

 

 

 

 

 

 

 

Exclude - Accumulated other comprehensive income

 

295,271

 

227,659

 

130,002

 

318,239

 

 

 

 

 

 

 

 

 

 

 

Beginning equity, as adjusted

 

$

3,247,341

 

$

3,046,323

 

$

3,458,077

 

$

3,186,581

 

 

 

 

 

 

 

 

 

 

 

GAAP equity - end of period

 

$

3,674,430

 

$

3,542,612

 

$

3,674,430

 

$

3,542,612

 

 

 

 

 

 

 

 

 

 

 

Exclude - Accumulated other comprehensive income

 

118,651

 

295,271

 

118,651

 

295,271

 

 

 

 

 

 

 

 

 

 

 

Ending equity, as adjusted

 

$

3,555,779

 

$

3,247,341

 

$

3,555,779

 

$

3,247,341

 

 

 

 

 

 

 

 

 

 

 

Average equity, as adjusted

 

$

3,401,560

 

$

3,146,832

 

$

3,506,928

 

$

3,216,961

 

 

 

 

 

 

 

 

 

 

 

Annualized operating return on equity

 

11.3

%

11.9

%

12.7

%

11.7

%

 

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

 

S-9