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):  April 28, 2015

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:

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

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

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

o Pre-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 April 28, 2015, HCC Insurance Holdings, Inc. (the “Company”) announced its financial results for the first quarter of 2015. 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 April 28, 2015

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:  April 28, 2015

3

EX-99.1

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS RECORD FIRST QUARTER NET EARNINGS AND EARNINGS PER SHARE

Highlights:

·Net earnings of $112.9 million, or $1.17 per diluted share

·GAAP combined ratio of 86.5%

·Gross written premium increased 11% to $826.1 million

·Net written premium increased 13% to $668.9 million

·Annualized return on equity of 11.5% and operating return on equity(a) of 9.9%

·Book value per share increased to $41.03

HOUSTON (April 28, 2015) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for its first quarter ended March 31, 2015.

Net earnings were $112.9 million, or $1.17 per diluted share, in the first quarter of 2015, compared to $107.9 million, or $1.07 per diluted share, in the same quarter of 2014.

The Company’s consolidated results for the first quarter of 2015 include the results of Producers Ag Insurance Group, Inc. (ProAg), which HCC acquired effective January 1, 2015 for $104.5 million.  ProAg contributed $72.6 million, $54.7 million and $17.0 million of gross written, net written and net earned premium, respectively, to consolidated premium.  Including transaction costs, ProAg’s operations generated a loss of $7.7 million, or $0.08 per share.  The majority of this loss relates to the seasonal nature of the crop insurance business.  The loss increased the Company’s first quarter 2015 consolidated loss ratio, expense ratio and combined ratio by 0.8, 1.1 and 1.9 percentage points, respectively.

The Company’s combined ratio was 86.5% for the first quarter of 2015 (84.6% excluding ProAg), compared to 83.4% for the same quarter of 2014.  The net paid loss ratio was 64.7% for both quarters.  HCC had no reserve development in either the first quarter of 2015 or 2014.

First quarter 2015 net earnings benefited from the Company’s assertion to permanently reinvest accumulated undistributed earnings of the Company’s controlled foreign corporations for 2014 and prior years.  With this assertion, deferred taxes on these earnings, which had previously been booked at the U.S. tax rate of 35%, were adjusted to the U.K. tax rate of 20%.  This assertion resulted in reduced tax expense of $5.9 million in the first quarter of 2015.

“For the third consecutive year, we are pleased to report record first quarter results.  Despite a challenging market, we continue to grow our businesses selectively and profitably, with net written premium up 13% overall and 4% excluding ProAg.  We are pleased with ProAg’s results, which are slightly ahead of our expectations,” said Christopher J.B. Williams, HCC’s Chief Executive Officer.

Gross written premium increased 11% to $826.1 million (or 1% to $753.5 million excluding ProAg) in the first quarter of 2015, compared to $746.7 million in the same quarter of 2014.  Net written premium increased 13% to $668.9 million (or 4% to $614.2 million excluding ProAg) versus $590.2 million in the respective quarters.  Net earned premium increased 7% to $600.6 million (or 4% to $583.6 million excluding ProAg) in the first quarter of 2015, compared to $562.6 million in the same quarter of 2014.

Investment income was $53.5 million in the first quarter of 2015, compared to $56.8 million in the same quarter of 2014.  As of March 31, 2015, HCC’s fixed maturity securities portfolio had an average rating of AA, a duration of 4.7 years and an average long-term tax equivalent yield of 4.1%.

HCC generated cash flow from operations of $31.1 million in the first quarter of 2015, compared to $95.5 million in the same quarter of 2014.  At March 31, 2015, the Company had $418.6 million of cash and short-term investments and $230.1 million of available capacity under its $825.0 million revolving loan facility.

The Company purchased 1.0 million shares of its common stock during the first quarter of 2015 for $54.4 million at an average cost of $55.77 per share.

As of March 31, 2015, total assets were $11.0 billion, shareholders’ equity was $3.9 billion and the Company’s debt to total capital ratio was 18.4%.

For further information about HCC’s 2015 first quarter earnings results, see the supplemental financial schedules that are available in the Investor Relations section of the Company’s website at http://ir.hcc.com.

HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, April 29.  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 Investor Relations section of the Company’s website at http://ir.hcc.com.  The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, July 31, 2015.

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 Financial Services LLC, “A+ (Superior)” from A.M. Best Company, Inc., “AA (Very Strong)” from Fitch Ratings, and “A1 (Good Security)” from Moody’s Investors Service, Inc.

2

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.  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)

	Three months ended
	March 31,
	2015			2014
Gross written premium	$	826,136		$	746,722
Net written premium	668,916			590,182
Net earned premium	600,563			562,612
Net investment income	53,482			56,806
Total revenue	676,450			648,930
Net earnings	112,917			107,911
Operating earnings*	92,659			97,293
Earnings per share (diluted)	$	1.17		$	1.07
Weighted-average shares outstanding (diluted)	95,197			98,913
Net loss ratio	60.8		%	58.8		%
Expense ratio	25.7		%	24.6		%
Combined ratio	86.5		%	83.4		%
Paid loss ratio	64.7		%	64.7		%

	March 31,			December 31,
	2015			2014
Total investments	$	7,112,361		$	7,164,906
Total assets	11,026,297			10,714,346
Shareholders’ equity	3,933,427			3,903,351
Debt to total capital ratio	18.4		%	17.4		%
Book value per share	$	41.03		$	40.44

*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)

	March 31,			December 31,
	2015			2014
ASSETS
Investments
Fixed maturity securities — available for sale, at fair value	$	6,452,444		$	6,610,368
Equity securities — available for sale, at fair value	334,763			296,352
Short-term investments	325,154			258,186
Total investments	7,112,361			7,164,906
Cash	93,464			102,093
Restricted cash and securities	122,526			119,010
Premium, claims and other receivables	727,615			553,027
Reinsurance recoverables	1,176,141			1,168,900
Ceded unearned premium	332,646			316,715
Ceded life and annuity benefits	48,590			48,499
Deferred policy acquisition costs	236,661			220,321
Goodwill	949,351			905,636
Other assets	226,942			115,239
Total assets	$	11,026,297		$	10,714,346
LIABILITIES
Loss and loss adjustment expense payable	$	3,693,165		$	3,728,085
Life and annuity policy benefits	48,590			48,499
Reinsurance, premium and claims payable	434,198			301,476
Unearned premium	1,305,327			1,198,930
Deferred ceding commissions	101,169			94,202
Notes payable	889,290			824,251
Accounts payable and accrued liabilities	621,131			615,552
Total liabilities	7,092,870			6,810,995
SHAREHOLDERS’ EQUITY
Common stock	126,794			126,472
Additional paid-in capital	1,115,796			1,113,551
Retained earnings	3,526,071			3,441,424
Accumulated other comprehensive income	172,262			175,014
Treasury stock	(1,007,496		)	(953,110		)
Total shareholders’ equity	3,933,427			3,903,351
Total liabilities and shareholders’ equity	$	11,026,297		$	10,714,346

S - 2

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

	Three months ended
	March 31,
	2015			2014
REVENUE
Net earned premium	$	600,563		$	562,612
Net investment income	53,482			56,806
Other operating income	9,219			9,266
Net realized investment gain	13,186			20,246
Total revenue	676,450			648,930
EXPENSE
Loss and loss adjustment expense, net	365,162			330,746
Policy acquisition costs, net	75,211			69,041
Other operating expense	77,483			87,052
Interest expense	7,766			7,119
Total expense	525,622			493,958
Earnings before income tax expense	150,828			154,972
Income tax expense	37,911			47,061
Net earnings	$	112,917		$	107,911
Net earnings attributable to unvested stock	(1,641		)	(1,692		)
Net earnings available to common stock	$	111,276		$	106,219
Basic earnings per share data:
Net earnings per share	$	1.17		$	1.08
Weighted-average shares outstanding	94,881			98,662
Diluted earnings per share data:
Net earnings per share	$	1.17		$	1.07
Weighted-average shares outstanding	95,197			98,913
Cash dividends declared, per share	$	0.295		$	0.225

S - 3

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

	Three months ended March 31,
	2015			2014		Change
North America Property & Casualty
Liability	$	128,277		$	121,537	6	%
Agriculture	72,615			—		nm
Other Specialty	148,485			166,737		(11	)
	349,377			288,274		21
Accident & Health	260,144			235,917		10
International
London Market	117,931			131,979		(11	)
Specialty	98,687			90,261		9
	216,618			222,240		(3	)
Exited Lines	(3		)	291		nm
Totals	$	826,136		$	746,722	11	%

nm - Not meaningful

S - 4

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

	Three months ended March 31,
	2015			2014		Change
North America Property & Casualty
Liability	$	95,951		$	85,403	12	%
Agriculture	54,657			—		nm
Other Specialty	87,619			91,729		(4	)
	238,227			177,132		34
Accident & Health	255,918			234,751		9
International
London Market	96,678			107,259		(10	)
Specialty	78,096			70,749		10
	174,774			178,008		(2	)
Exited Lines	(3		)	291		nm
Totals	$	668,916		$	590,182	13	%

nm - Not meaningful

S - 5

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

	Three months ended March 31,
	2015			2014		Change
North America Property & Casualty
Liability	$	101,507		$	96,075	6	%
Agriculture	16,989			—		nm
Other Specialty	90,743			105,259		(14	)
	209,239			201,334		4
Accident & Health	254,950			232,143		10
International
London Market	63,358			61,661		3
Specialty	73,019			67,183		9
	136,377			128,844		6
Exited Lines	(3		)	291		nm
Totals	$	600,563		$	562,612	7	%

nm - Not meaningful

S-6

HCC Insurance Holdings, Inc. and Subsidiaries

Net Investment Income and Unrealized Gain

(Unaudited, in thousands)

	Three months ended
	March 31,
	2015			2014
Sources of net investment income:
Fixed maturity securities
Taxable	$	24,718		$	23,260
Exempt from U.S. income taxes	27,341			28,583
Total fixed maturity securities	52,059			51,843
Equity securities	2,736			6,637
Other	418			431
Total investment income	55,213			58,911
Investment expense	(1,731		)	(2,105		)
Net investment income	$	53,482		$	56,806
Unrealized gain on available for sale securities:
Increase in unrealized gain for period, before tax	$	6,823		$	65,834
Unrealized gain at:
March 31, 2015	$	269,736
December 31, 2014	$	262,913

S-7

HCC Insurance Holdings, Inc. and Subsidiaries

Underwriting Ratios

(Unaudited)

	Three months ended
	March 31,
	2015		2014
North America Property & Casualty
Liability	62.1	%	63.7	%
Agriculture	88.0		—
Other Specialty	42.4		40.2
Loss Ratio	55.6		51.4
Expense Ratio	32.7		28.6
Combined Ratio	88.3	%	80.0	%
Accident & Health
Loss Ratio	73.4	%	73.6	%
Expense Ratio	15.2		14.9
Combined Ratio	88.6	%	88.5	%
International
London Market	38.9	%	36.5	%
Specialty	50.4		50.3
Loss Ratio	45.1		43.7
Expense Ratio	34.7		36.1
Combined Ratio	79.8	%	79.8	%
Consolidated
Loss Ratio	60.8	%	58.8	%
Expense Ratio	25.7		24.6
Combined Ratio	86.5	%	83.4	%

S-8

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP

(Unaudited, in thousands)

	Three months ended
	March 31,
	2015			2014
Numerator:
GAAP net earnings	$	112,917		$	107,911
Exclude:
Net realized investment gain*	8,571			13,160
Foreign currency benefit (expense)*	11,687			(2,542		)
Total items excluded from operating earnings	20,258			10,618
Operating earnings	$	92,659		$	97,293
Denominator:
GAAP equity - beginning of period	$	3,903,351		$	3,674,430
Exclude - Accumulated other comprehensive income	175,014			118,651
Beginning equity, as adjusted	$	3,728,337		$	3,555,779
GAAP equity - end of period	$	3,933,427		$	3,782,113
Exclude - Accumulated other comprehensive income	172,262			162,221
Ending equity, as adjusted	$	3,761,165		$	3,619,892
Average equity, as adjusted	$	3,744,751		$	3,587,836
Annualized operating return on equity	9.9		%	10.8		%

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

S-9