10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended June 30, 2014.

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

from                                to                                         

Commission file number 001-13790

HCC Insurance Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware 76-0336636

(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

13403 Northwest Freeway, Houston, Texas 77040-6094

(Address of principal executive offices) (Zip Code)

(713) 690-7300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

On July 25, 2014, there were approximately 100.0 million shares of common stock outstanding.

HCC Insurance Holdings, Inc. and Subsidiaries

Table of Contents

	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets — June 30, 2014 and December 31, 2013	5
Consolidated Statements of Earnings — Six and three months ended June 30, 2014 and 2013	6
Consolidated Statements of Comprehensive Income — Six and three months ended June 30, 2014 and 2013	7
Consolidated Statement of Changes in Shareholders’ Equity — Six months ended June 30, 2014	8
Consolidated Statements of Cash Flows — Six months ended June 30, 2014 and 2013	9
Notes to Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	40
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	41
Item 1A. Risk Factors	41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3. Defaults Upon Senior Securities	41
Item 4. Mine Safety Disclosures	41
Item 5. Other Information	41
Item 6. Exhibits	42
Signatures	43

2

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. These forward-looking statements reflect our current expectations and projections about future events and include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included or incorporated by reference in this Report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as growth of our business and operations, business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Generally, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probably” or similar expressions indicate forward-looking statements.

Many risks and uncertainties may have an impact on the matters addressed in these forward-looking statements, which could affect our future  financial results and performance, including, among other things:

•  the effects of catastrophe losses,

•  the cyclical nature of the insurance business,

•  inherent uncertainties in the loss estimation process, which can adversely impact the adequacy of loss reserves,

•  the impact of past and future potential economic or credit market downturns, including any potential ratings downgrade or  impairment of the debt securities of sovereign issuers,

•  the effects of emerging claim and coverage issues,

•  the effects of extensive governmental regulation of the insurance industry,

•  changes to the country’s health care delivery system,

•  the effects of climate change on the risks we insure,

•  potential risk with agents and brokers,

•  the effects of industry consolidations,

•  our assessment of underwriting risk,

•  our retention of risk, which could expose us to potential losses,

•  the adequacy of reinsurance protection,

•  the ability and willingness of reinsurers to pay balances due us,

•  the occurrence of terrorist activities,

•  our ability to maintain our competitive position,

•  fluctuations in securities markets, which may reduce the value of our investment portfolio, reduce investment income or  generate realized investment losses,

•  changes in our assigned financial strength ratings,

•  our ability to raise capital and funds for liquidity in the future,

•  attraction and retention of qualified employees,

3

•  our ability to successfully expand our business through the acquisition of insurance-related companies,

•  impairment of goodwill,

•  the ability of our insurance company subsidiaries to pay dividends in needed amounts,

•  fluctuations in foreign exchange rates,

•  failure of, or loss of security related to, our information technology systems,

•  difficulties with outsourcing relationships, and

•  change of control.

We described these risks and uncertainties in greater detail in Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2013.

These events or factors could cause our results or performance to differ materially from those we express in our forward-looking statements. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this Report, our inclusion of this information is not a representation by us or any other person that our objectives or plans will be achieved.

Our forward-looking statements speak only at the date made, and we will not update these forward-looking statements unless the securities laws require us to do so. In light of these risks, uncertainties and assumptions, any forward-looking events discussed in this Report may not occur.

4

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited, in thousands except per share data)

	June 30,           2014		December 31,     2013
ASSETS
Investments
Fixed maturity securities – available for sale, at fair value (amortized cost: 2014 – $6,078,453 and 2013 – $5,921,487)	$	6,333,191	$	6,022,473
Equity securities – available for sale, at fair value (cost: 2014 – $394,685 and 2013 – $464,388)		448,685		517,466
Short-term investments, at cost (approximates fair value)		342,335		178,753
Total investments		7,124,211		6,718,692
Cash		70,907		58,301
Restricted cash and securities		130,920		125,777
Premium, claims and other receivables		676,340		580,107
Reinsurance recoverables		1,178,200		1,277,257
Ceded unearned premium		340,853		305,438
Ceded life and annuity benefits		53,406		56,491
Deferred policy acquisition costs		226,333		201,698
Goodwill		895,799		895,200
Other assets		165,022		125,559
Total assets	$	10,861,991	$	10,344,520
LIABILITIES
Loss and loss adjustment expense payable	$	3,841,497	$	3,902,132
Life and annuity policy benefits		53,406		56,491
Reinsurance, premium and claims payable		388,855		332,985
Unearned premium		1,272,969		1,134,849
Deferred ceding commissions		100,571		89,528
Notes payable		734,174		654,098
Accounts payable and accrued liabilities		556,464		500,007
Total liabilities		6,947,936		6,670,090
SHAREHOLDERS’ EQUITY
Common stock, $1.00 par value; 250,000 shares authorized (shares issued: 2014 – 126,252 and 2013 – 125,577; outstanding: 2014 – 100,050 and 2013 – 100,336)		126,252		125,577
Additional paid-in capital		1,091,773		1,073,105
Retained earnings		3,245,554		3,085,501
Accumulated other comprehensive income		220,422		118,651
Treasury stock, at cost (shares: 2014 – 26,202 and 2013 – 25,241)		(769,946)		(728,404)
Total shareholders’ equity		3,914,055		3,674,430
Total liabilities and shareholders’ equity	$	10,861,991	$	10,344,520

See Notes to Consolidated Financial Statements.

5

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Earnings

(unaudited, in thousands except per share data)

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
REVENUE
Net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356
Net investment income		113,244		111,433		56,438		55,668
Other operating income		19,249		16,629		9,983		7,784
Net realized investment gain		25,151		13,193		4,905		4,623
Total revenue		1,292,504		1,263,797		643,574		629,431
EXPENSE
Loss and loss adjustment expense, net		648,938		672,171		327,094		339,474
Policy acquisition costs, net		142,011		137,745		72,970		70,796
Other operating expense		194,955		164,572		99,001		87,719
Interest expense		13,984		13,082		6,865		6,611
Total expense		999,888		987,570		505,930		504,600
Earnings before income tax expense		292,616		276,227		137,644		124,831
Income tax expense		87,569		82,215		40,508		36,669
Net earnings	$	205,047	$	194,012	$	97,136	$	88,162
Earnings per common share
Basic	$	2.05	$	1.93	$	0.97	$	0.88
Diluted	$	2.04	$	1.92	$	0.97	$	0.87

See Notes to Consolidated Financial Statements.

6

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited, in thousands)

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Net earnings	$	205,047	$	194,012	$	97,136	$	88,162
Other comprehensive income (loss)
Investment gains (losses):
Investment gains (losses) during the period		179,825		(247,429)		93,745		(217,034)
Income tax charge (benefit)		63,818		(87,443)		33,248		(77,116)
Investment gains (losses), net of tax		116,007		(159,986)		60,497		(139,918)
Less reclassification adjustments to:
Net realized investment gain		25,151		13,193		4,905		4,623
Income tax expense		8,803		4,618		1,717		1,619
Total reclassifications included in net earnings, net of tax		16,348		8,575		3,188		3,004
Net unrealized investment gains (losses)		99,659		(168,561)		57,309		(142,922)
Foreign currency translation adjustment		1,691		(1,145)		903		911
Income tax charge (benefit)		(421)		(554)		11		(30)
Foreign currency translation adjustment, net of tax		2,112		(591)		892		941
Other comprehensive income (loss)		101,771		(169,152)		58,201		(141,981)
Comprehensive income (loss)	$	306,818	$	24,860	$	155,337	$	(53,819)

See Notes to Consolidated Financial Statements.

7

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity

Six months ended June 30, 2014

(unaudited, in thousands except per share data)

	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income		Treasury stock		Total shareholders’ equity
Balance at December 31, 2013	$	125,577	$	1,073,105	$	3,085,501	$	118,651	$	(728,404)	$	3,674,430
Net earnings		-		-		205,047		-		-		205,047
Other comprehensive income		-		-		-		101,771		-		101,771
Issuance of 301 shares for exercise of options, including tax effect		301		9,786		-		-		-		10,087
Issuance of 44 shares for employee stock purchase plan		44		1,578		-		-		-		1,622
Purchase of 961 common shares		-		-		-		-		(41,542)		(41,542)
Stock-based compensation		330		7,304		-		-		-		7,634
Cash dividends declared, $0.45 per share		-		-		(44,994)		-		-		(44,994)
Balance at June 30, 2014	$	126,252	$	1,091,773	$	3,245,554	$	220,422	$	(769,946)	$	3,914,055

See Notes to Consolidated Financial Statements.

8

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited, in thousands)

	Six months ended June 30,
	2014		2013
Operating activities
Net earnings	$	205,047	$	194,012
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in premium, claims and other receivables		(109,043)		(99,897)
Change in reinsurance recoverables		96,770		(17,018)
Change in ceded unearned premium		(35,485)		(35,032)
Change in loss and loss adjustment expense payable		(57,118)		52,026
Change in unearned premium		138,248		119,759
Change in reinsurance, premium and claims payable		55,764		43,237
Change in accounts payable and accrued liabilities		(69,414)		(119,103)
Stock-based compensation expense		10,303		6,955
Depreciation and amortization expense		8,289		9,093
Gain on investments		(25,151)		(13,193)
Other, net		(22,924)		(38,849)
Cash provided by operating activities		195,286		101,990
Investing activities
Sales of available for sale fixed maturity securities		286,843		171,801
Sales of equity securities		170,182		44,308
Sales of other investments		-		23,719
Maturity or call of available for sale fixed maturity securities		269,468		375,924
Cost of available for sale fixed maturity securities acquired		(675,945)		(756,782)
Cost of equity securities acquired		(78,817)		(114,685)
Change in short-term investments		(168,241)		145,977
Payments for purchase of businesses		(2,579)		(8,214)
Proceeds from sales of subsidiaries		12,942		507
Other, net		(3,902)		(2,698)
Cash used by investing activities		(190,049)		(120,143)
Financing activities
Advances on line of credit		140,000		70,000
Payments on line of credit		(60,000)		(15,000)
Sale of common stock		11,709		7,408
Purchase of common stock		(41,542)		(46,586)
Dividends paid		(45,076)		(33,250)
Other, net		2,278		3,544
Cash provided (used) by financing activities		7,369		(13,884)
Net increase (decrease) in cash		12,606		(32,037)
Cash at beginning of year		58,301		71,390
Cash at end of period	$	70,907	$	39,353

See Notes to Consolidated Financial Statements.

9

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(1) General Information

HCC Insurance Holdings, Inc. (HCC) and its subsidiaries (collectively we, us or our) include domestic and foreign property and casualty and life insurance companies and underwriting agencies with offices in the United States, the United Kingdom, Spain and Ireland. We underwrite a variety of largely non-correlated specialty insurance products, including property and casualty, accident and health, surety and credit product lines, in approximately 180 countries. We market our products through a network of independent agents and brokers, through managing general agents owned by the company, and directly to consumers. In addition, we assume insurance written by other insurance companies.

Basis of Presentation

Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of HCC and its subsidiaries. We have made all adjustments that, in our opinion, are necessary for a fair statement of results of the interim periods, and all such adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013. The consolidated balance sheet at December 31, 2013 was derived from the audited financial statements but does not include all disclosures required by GAAP.

Management must make estimates and assumptions that affect amounts reported in our consolidated financial statements and in disclosures of contingent assets and liabilities. Ultimate results could differ from those estimates.

Goodwill

An indicator of impairment of goodwill exists when the fair value of a reporting unit is less than its carrying value. We conducted our annual goodwill impairment test as of June 30, 2014, which is consistent with the timeframe for our annual assessment in prior years. This test consisted of a qualitative assessment in which we determined that it is more likely than not that the fair value of each of our five reporting units exceeded its carrying amount as of June 30, 2014.

Recent Accounting Guidance

A new accounting standard issued in the second quarter of 2014 will change the manner in which most companies recognize revenue. The standard requires that revenue reflect the transfer of goods or services to customers based on the consideration/payment the company expects to be entitled to in exchange for those goods or services; however, the standard does not change the accounting for insurance contracts or investment income. The new standard also requires enhanced disclosures about revenue. This accounting guidance is effective in the first quarter of 2017 and may be applied on a full retrospective or modified retrospective approach. We are currently assessing the impact the implementation of this standard will have on our consolidated financial statements.

10

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(2)  Investments

The cost or amortized cost, gross unrealized gain or loss, and fair value of our fixed maturity and equity securities, all of which are classified as available for sale, were as follows:

	Cost or amortized             cost		Gross unrealized             gain		Gross unrealized             loss		Fair value
June 30, 2014
U.S. government and government agency securities	$	84,479	$	1,354	$	(206)	$	85,627
Fixed maturity securities of states, municipalities and political subdivisions		905,732		60,882		(909)		965,705
Special purpose revenue bonds of states, municipalities and political subdivisions		2,263,181		121,364		(7,582)		2,376,963
Corporate securities		1,151,993		51,846		(4,128)		1,199,711
Residential mortgage-backed securities		753,516		19,881		(8,863)		764,534
Commercial mortgage-backed securities		530,075		20,941		(3,899)		547,117
Asset-backed securities		304,866		622		(1,092)		304,396
Foreign government securities		84,611		4,630		(103)		89,138
Total fixed maturity securities	$	6,078,453	$	281,520	$	(26,782)	$	6,333,191
Equity securities	$	394,685	$	59,130	$	(5,130)	$	448,685
December 31, 2013
U.S. government and government agency securities	$	91,047	$	2,157	$	(495)	$	92,709
Fixed maturity securities of states, municipalities and political subdivisions		941,580		50,885		(5,979)		986,486
Special purpose revenue bonds of states, municipalities and political subdivisions		2,240,412		71,541		(46,758)		2,265,195
Corporate securities		1,195,387		40,860		(11,009)		1,225,238
Residential mortgage-backed securities		622,766		15,289		(19,936)		618,119
Commercial mortgage-backed securities		502,069		16,155		(13,336)		504,888
Asset-backed securities		183,660		319		(1,587)		182,392
Foreign government securities		144,566		3,237		(357)		147,446
Total fixed maturity securities	$	5,921,487	$	200,443	$	(99,457)	$	6,022,473
Equity securities	$	464,388	$	58,842	$	(5,764)	$	517,466

11

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

Substantially all of our fixed maturity securities are investment grade. The following tables display the gross unrealized losses and fair value of all available for sale securities that were in a continuous unrealized loss position for the periods indicated.

	Less than 12 months				12 months or more				Total
	Fair value		Unrealized   losses		Fair value		Unrealized   losses		Fair value		Unrealized   losses
June 30, 2014
Fixed maturity securities
U.S. government and government agency securities	$	5,838	$	(6)	$	11,410	$	(200)	$	17,248	$	(206)
Fixed maturity securities of states, municipalities and political subdivisions		6,015		(34)		38,173		(875)		44,188		(909)
Special purpose revenue bonds of states, municipalities and political subdivisions		51,330		(200)		327,557		(7,382)		378,887		(7,582)
Corporate securities		73,935		(366)		105,399		(3,762)		179,334		(4,128)
Residential mortgage-backed securities		58,198		(272)		259,170		(8,591)		317,368		(8,863)
Commercial mortgage-backed securities		-		-		150,806		(3,899)		150,806		(3,899)
Asset-backed securities		115,769		(927)		7,080		(165)		122,849		(1,092)
Foreign government securities		19,363		(55)		7,193		(48)		26,556		(103)
Equity securities		63,229		(4,599)		6,952		(531)		70,181		(5,130)
Total	$	393,677	$	(6,459)	$	913,740	$	(25,453)	$	1,307,417	$	(31,912)
December 31, 2013
Fixed maturity securities
U.S. government and government agency securities	$	23,717	$	(495)	$	-	$	-	$	23,717	$	(495)
Fixed maturity securities of states, municipalities and political subdivisions		136,160		(5,277)		8,997		(702)		145,157		(5,979)
Special purpose revenue bonds of states, municipalities and political subdivisions		684,560		(35,832)		83,228		(10,926)		767,788		(46,758)
Corporate securities		277,853		(8,202)		35,437		(2,807)		313,290		(11,009)
Residential mortgage-backed securities		306,874		(15,861)		31,687		(4,075)		338,561		(19,936)
Commercial mortgage-backed securities		203,347		(12,611)		4,915		(725)		208,262		(13,336)
Asset-backed securities		126,922		(1,587)		-		-		126,922		(1,587)
Foreign government securities		78,182		(357)		-		-		78,182		(357)
Equity securities		75,620		(5,437)		7,016		(327)		82,636		(5,764)
Total	$	1,913,235	$	(85,659)	$	171,280	$	(19,562)	$	2,084,515	$	(105,221)

12

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

At June 30, 2014, we held approximately 2,760 fixed maturity and equity securities, of which 20% included at least one lot in an unrealized loss position. A security has an impairment loss when its fair value is less than its cost or amortized cost at the balance sheet date. We evaluate our securities for possible other-than-temporary impairment losses at each quarter end. Our reviews cover all impaired securities where the loss exceeds $1.0 million and the loss either exceeds 10% of cost or the security had been in a loss position for longer than twelve consecutive months. We do not consider the $31.9 million of gross unrealized losses in our portfolio at June 30, 2014 to be other-than-temporary impairments as these losses relate to non-credit factors, such as interest rate changes and market conditions. We recognized no other-than-temporary impairment losses in the first six months of 2014 and 2013.

The amortized cost and fair value of our fixed maturity securities at June 30, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted-average life of our mortgage-backed and asset-backed securities was 5.5 years at June 30, 2014.

					Cost or   amortized cost		Fair value
Due in 1 year or less					$	192,394	$	195,936
Due after 1 year through 5 years						1,012,738		1,064,207
Due after 5 years through 10 years						1,366,848		1,450,529
Due after 10 years through 15 years						942,481		992,274
Due after 15 years						975,535		1,014,198
Securities with contractual maturities						4,489,996		4,717,144
Mortgage-backed and asset-backed securities						1,588,457		1,616,047
Total fixed maturity securities					$	6,078,453	$	6,333,191
Realized pretax gains (losses) on the sale of investments included the following:
	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Gains
Fixed maturity securities	$	6,150	$	4,139	$	4,135	$	635
Equity securities		25,863		5,989		1,425		4,649
Other investments		-		5,345		-		817
Total gains		32,013		15,473		5,560		6,101
Losses
Fixed maturity securities		(3,688)		(994)		(650)		(306)
Equity securities		(3,174)		(1,286)		(5)		(1,172)
Total losses		(6,862)		(2,280)		(655)		(1,478)
Net
Fixed maturity securities		2,462		3,145		3,485		329
Equity securities		22,689		4,703		1,420		3,477
Other investments		-		5,345		-		817
Net realized investment gain	$	25,151	$	13,193	$	4,905	$	4,623

13

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(3) Fair Value Measurements

Our financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in our financial statements. In determining fair value, we generally apply the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. We classify our financial instruments into the following three-level hierarchy:

• Level 1 – Inputs are based on quoted prices in active markets for identical instruments.

• Level 2 – Inputs are based on observable market data (other than quoted prices), or are derived from or corroborated by observable market data.

• Level 3 – Inputs are unobservable and not corroborated by market data.

Our Level 1 investments consist of U.S. Treasuries, money market funds and equity securities traded in an active exchange market. We use unadjusted quoted prices for identical instruments to measure fair value.

Our Level 2 investments include most of our fixed maturity securities, which consist of U.S. government agency securities, municipal bonds (including those held as restricted securities), corporate debt securities, bank loans, mortgage-backed and asset-backed securities (including collateralized loan obligations), and deposits supporting our Lloyd’s syndicate business. Level 2 also includes certificates of deposit and other interest-bearing deposits at banks, which we report as short-term investments. We measure fair value for the majority of our Level 2 investments using matrix pricing and observable market data, including benchmark securities or yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers, default rates, loss severity and other economic measures. We measure fair value for our structured securities using observable market data in cash flow models.

We are responsible for the prices used in our fair value measurements. We use independent pricing services to assist us in determining fair value for 99% of our Level 2 investments. The pricing services provide a single price or quote per security. We use data provided by our third party investment managers and Lloyd’s of London to value the remaining Level 2 investments. To validate that these quoted prices are reasonable estimates of fair value, we perform various quantitative and qualitative procedures, including: 1) evaluation of the underlying methodologies, 2) analysis of recent sales activity, 3) analytical review of our fair values against current market prices and 4) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for our investments were judged to be inactive at period end. Based on these procedures, we did not adjust the prices or quotes provided by our independent pricing services, third party investment managers or Lloyd’s of London as of June 30, 2014 or December 31, 2013.

Our Level 2 financial instruments also include our notes payable. We determine the fair value of our 6.30% Senior Notes based on quoted prices in an inactive market. The fair value of borrowings under our Revolving Loan Facility approximates the carrying amount because interest is based on 30-day LIBOR plus a margin.

Our Level 3 securities include certain fixed maturity securities and an insurance contract that we account for as a derivative and classify in other assets. Our Level 3 category also includes a liability for future earnout payments due to former owners of a business we acquired, which is classified within accounts payable and accrued liabilities. We determine fair value of the derivative and the earnout payments based on internally developed models that use assumptions or other data that are not readily observable from objective sources. Fixed maturity securities classified as Level 3 at December 31, 2013 included special purpose revenue bond auction rate securities, which had interest rates that reset at periodic intervals. These securities were thinly traded and observable market data was not readily available. We determined the fair value of these securities using prices quoted by a broker.

14

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

The following tables present the fair value of our financial instruments that were carried or disclosed at fair value. Unless indicated, these items were carried at fair value on our consolidated balance sheets.

	Level 1		Level 2		Level 3		Total
June 30, 2014
Fixed maturity securities
U.S. government and government agency securities	$	77,934	$	7,693	$	-	$	85,627
Fixed maturity securities of states, municipalities and political subdivisions		-		965,705		-		965,705
Special purpose revenue bonds of states, municipalities and political subdivisions		-		2,376,963		-		2,376,963
Corporate securities		-		1,199,562		149		1,199,711
Residential mortgage-backed securities		-		764,534		-		764,534
Commercial mortgage-backed securities		-		547,117		-		547,117
Asset-backed securities		-		304,396		-		304,396
Foreign government securities		-		89,138		-		89,138
Total fixed maturity securities		77,934		6,255,108		149		6,333,191
Equity securities		448,685		-		-		448,685
Short-term investments*		186,602		155,733		-		342,335
Restricted cash and securities		-		2,269		-		2,269
Premium, claims and other receivables		-		63,802		-		63,802
Other assets		20		-		1,099		1,119
Total assets measured at fair value	$	713,241	$	6,476,912	$	1,248	$	7,191,401
Notes payable*	$	-	$	783,738	$	-	$	783,738
Accounts payable and accrued liabilities - earnout liability		-		2,269		7,386		9,655
Total liabilities measured at fair value	$	-	$	786,007	$	7,386	$	793,393

* Carried at cost or amortized cost on consolidated balance sheet.

15

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

	Level 1		Level 2		Level 3		Total
December 31, 2013
Fixed maturity securities
U.S. government and government agency securities	$	84,032	$	8,677	$	-	$	92,709
Fixed maturity securities of states, municipalities and political subdivisions		-		986,486		-		986,486
Special purpose revenue bonds of states, municipalities and political subdivisions		-		2,255,928		9,267		2,265,195
Corporate securities		-		1,225,088		150		1,225,238
Residential mortgage-backed securities		-		618,119		-		618,119
Commercial mortgage-backed securities		-		504,888		-		504,888
Asset-backed securities		-		182,392		-		182,392
Foreign government securities		-		147,446		-		147,446
Total fixed maturity securities		84,032		5,929,024		9,417		6,022,473
Equity securities		517,466		-		-		517,466
Short-term investments*		68,958		109,795		-		178,753
Restricted cash and securities		-		1,853		-		1,853
Premium, claims and other receivables		-		66,515		-		66,515
Other assets		20		-		941		961
Total assets measured at fair value	$	670,476	$	6,107,187	$	10,358	$	6,788,021
Notes payable*	$	-	$	707,656	$	-	$	707,656
Accounts payable and accrued liabilities - earnout liability		-		1,853		7,259		9,112
Total liabilities measured at fair value	$	-	$	709,509	$	7,259	$	716,768

*Carried at cost or amortized cost on consolidated balance sheet.

In the first quarter of 2013, we purchased $9.4 million of special purpose revenue bond auction rate securities, which we continued to hold and classify in Level 3 at December 31, 2013. We sold these securities in the first quarter of 2014. There were no transfers between Level 1, Level 2 or Level 3 in the first six months of 2014 and 2013.

16

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(4) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to reinsurers through treaty and facultative reinsurance agreements. Although reinsurance does not discharge the direct insurer from liability to its policyholder, our insurance companies participate in such agreements in order to limit their loss exposure, protect them against catastrophic losses and diversify their business. The following tables present the effect of such reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs.

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Direct written premium	$	1,369,751	$	1,294,681	$	749,239	$	713,110
Reinsurance assumed		209,700		234,967		83,490		96,333
Reinsurance ceded		(342,255)		(321,430)		(185,715)		(180,409)
Net written premium	$	1,237,196	$	1,208,218	$	647,014	$	629,034
Direct earned premium	$	1,288,995	$	1,237,629	$	651,682	$	621,224
Reinsurance assumed		152,341		171,308		76,318		86,036
Reinsurance ceded		(306,476)		(286,395)		(155,752)		(145,904)
Net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356
Direct loss and loss adjustment expense	$	725,911	$	693,480	$	375,184	$	335,968
Reinsurance assumed		63,274		110,708		21,472		71,017
Reinsurance ceded		(140,247)		(132,017)		(69,562)		(67,511)
Net loss and loss adjustment expense	$	648,938	$	672,171	$	327,094	$	339,474
Policy acquisition costs	$	215,210	$	204,031	$	110,565	$	103,745
Ceding commissions		(73,199)		(66,286)		(37,595)		(32,949)
Net policy acquisition costs	$	142,011	$	137,745	$	72,970	$	70,796
The table below shows the components of our reinsurance recoverables in our consolidated balance sheets.
					June 30,		December 31,
					2014		2013
Reinsurance recoverable on paid losses					$	98,451	$	156,026
Reinsurance recoverable on outstanding losses						453,653		459,134
Reinsurance recoverable on incurred but not reported losses						627,596		663,597
Reserve for uncollectible reinsurance						(1,500)		(1,500)
Total reinsurance recoverables					$	1,178,200	$	1,277,257

17

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

Reinsurers not authorized by the respective states of domicile of our U.S. domiciled insurance companies are required to collateralize reinsurance obligations due to us. The table below shows letters of credit and cash that are available to us as collateral, as well as amounts we owe reinsurers that can be offset against amounts due to us.

	June 30,		December 31,
	2014		2013
Payables to reinsurers	$	220,281	$	208,850
Letters of credit		85,752		100,529
Funds held in trust		148,508		88,310
Total credits	$	454,541	$	397,689

(5) Liability for Unpaid Loss and Loss Adjustment Expense

The table below provides a reconciliation of our liability for loss and loss adjustment expense payable (referred to as reserves).

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Reserves at beginning of period	$	3,902,132	$	3,767,850	$	3,847,417	$	3,774,162
Less reinsurance recoverables on reserves		1,122,731		1,018,047		1,098,576		1,012,920
Net reserves at beginning of period		2,779,401		2,749,803		2,748,841		2,761,242
Net loss and loss adjustment expense		648,938		672,171		327,094		339,474
Net loss and loss adjustment expense payments		(674,070)		(586,326)		(319,114)		(286,797)
Foreign currency adjustment		5,979		(24,627)		3,427		(2,898)
Net reserves at end of period		2,760,248		2,811,021		2,760,248		2,811,021
Plus reinsurance recoverables on reserves		1,081,249		1,003,663		1,081,249		1,003,663
Reserves at end of period	$	3,841,497	$	3,814,684	$	3,841,497	$	3,814,684

We recognized no loss development in the first six months or second quarter of 2014. In the first six months and second quarter of 2013, we recognized favorable development of $9.5 million in our U.S. Surety & Credit segment and $2.3 million in our International segment. Our review of reserves in our U.S. Surety & Credit segment at that time indicated better experience than our actuarial expectations compared to the prior year review. As a result, we recognized favorable development of $3.7 million and $5.8 million for our surety and credit lines of business, respectively, related to the 2010 and prior underwriting years. In the International segment, we released catastrophe reserves related to the 2010 New Zealand earthquake, due to settlement of these claims in 2013.

18

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(6) Notes Payable

Our notes payable consisted of the following:

			June 30,		December 31,
			2014		2013
6.30% Senior Notes			$	299,174	$	299,098
Revolving Loan Facility				435,000		355,000
Total notes payable			$	734,174	$	654,098
On April 30, 2014, we entered into an agreement to modify our $600.0 million Revolving Loan Facility (Facility). The amended agreement increased the borrowing capacity under the Facility to $825.0 million and extended the term by two years to April 30, 2019, among other changes. The weighted-average interest rate on borrowings under the Facility at June 30, 2014 was 1.4%. The borrowings and letters of credit issued under the Facility reduced our available borrowing capacity on the Facility to $384.1 million at June 30, 2014. There were no other material changes to the Facility or to the terms and conditions of our Senior Notes or Standby Letter of Credit Facility (Standby Facility) from those described in Note 7, “Notes Payable” to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2013. We were in compliance with debt covenants related to our 6.30% Senior Notes, the Facility and the Standby Facility at June 30, 2014. (7) Accumulated Other Comprehensive Income The components of accumulated other comprehensive income in our consolidated balance sheets were as follows:
	Net unrealized    investment gains		Foreign currency translation       adjustment		Accumulated other   comprehensive     income
Six months ended June 30, 2014
Balance at December 31, 2013	$	99,960	$	18,691	$	118,651
Other comprehensive income		99,659		2,112		101,771
Balance at June 30, 2014	$	199,619	$	20,803	$	220,422
Three months ended June 30, 2014
Balance at March 31, 2014	$	142,310	$	19,911	$	162,221
Other comprehensive income		57,309		892		58,201
Balance at June 30, 2014	$	199,619	$	20,803	$	220,422

19

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(8) Earnings Per Share

The following table details the numerator and denominator used in our earnings per share calculations.

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Net earnings	$	205,047	$	194,012	$	97,136	$	88,162
Less: net earnings attributable to unvested restricted stock		(3,282)		(3,227)		(1,590)		(1,445)
Net earnings available to common stock	$	201,765	$	190,785	$	95,546	$	86,717
Weighted-average common shares outstanding		98,551		98,965		98,442		98,870
Dilutive effect of outstanding securities (determined using treasury stock method)		240		245		218		251
Weighted-average common shares and potential common shares outstanding		98,791		99,210		98,660		99,121
Earnings per common share
Basic	$	2.05	$	1.93	$	0.97	$	0.88
Diluted	$	2.04	$	1.92	$	0.97	$	0.87

(9) Stock-Based Compensation

In 2014, we granted the following shares of common stock, restricted stock and restricted stock units.

	Number      of shares		Weighted-average     grant date fair value		Aggregate       fair value		Vesting        period
Common stock		38	$	46.41	$	1,771		None
Restricted stock		333		43.60		14,525		0 - 4 years
Restricted stock units		13		45.14		593		4 years

For common stock grants, we measure fair value based on the closing stock price of our common stock on the grant date and expense it on the grant date.

Certain awards of restricted stock and restricted stock units contain a performance condition based on the ultimate results for the applicable underwriting year. The number of such shares that vest could be higher or lower than initially granted. We measure fair value for these awards based on the closing price of our common stock on the grant date, and we recognize expense on a straight-line basis over the vesting period for those restricted stock awards or units expected to vest.

Certain of our executive officers were granted performance-based restricted stock in 2014. This restricted stock vests after three years and can vest from 0% to 200% of the initial shares granted. Vesting is based equally on an operating return on equity performance factor and a total shareholder return performance factor.

20

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

(10) Segments

We report HCC’s results in six operating segments, including the following five insurance underwriting segments:

• U.S. Property & Casualty

• Professional Liability

• Accident & Health

• U.S. Surety & Credit

• International

The Investing segment includes our consolidated investment portfolio, as well as all investment income, investment related expenses, realized investment gains and losses, and other-than-temporary impairment credit losses on investments. All investment activity is reported as revenue, consistent with our consolidated presentation.

In addition to our segments, we include a Corporate & Other category to reconcile segment results to consolidated totals. The Corporate & Other category includes corporate operating expenses not allocated to the segments, interest expense on long-term debt, foreign currency expense (benefit), and underwriting results of our Exited Lines. Our Exited Lines include product lines that we no longer write and do not expect to write in the future.

The following tables present information by business segment.

	U.S. Property & Casualty		Professional  Liability		Accident  & Health		U.S. Surety  & Credit		International		Investing		Corporate  & Other		Consolidated
Six months ended June 30, 2014
Net earned premium	$	185,588	$	173,577	$	472,481	$	97,134	$	205,460	$	-	$	620	$	1,134,860
Other revenue		9,946		470		5,502		868		1,899		138,395		564		157,644
Segment revenue		195,534		174,047		477,983		98,002		207,359		138,395		1,184		1,292,504
Loss and LAE		93,388		103,321		341,295		28,558		82,380		-		(4)		648,938
Other expense		58,148		34,545		74,254		53,407		79,979		-		50,617		350,950
Segment expense		151,536		137,866		415,549		81,965		162,359		-		50,613		999,888
Segment pretax earnings (loss)	$	43,998	$	36,181	$	62,434	$	16,037	$	45,000	$	138,395	$	(49,429)	$	292,616
Six months ended June 30, 2013
Net earned premium	$	184,963	$	185,223	$	434,947	$	97,231	$	210,412	$	-	$	9,766	$	1,122,542
Other revenue		11,429		325		2,330		621		1,902		124,626		22		141,255
Segment revenue		196,392		185,548		437,277		97,852		212,314		124,626		9,788		1,263,797
Loss and LAE		107,394		111,821		320,566		18,851		104,916		-		8,623		672,171
Other expense		52,757		35,872		63,709		53,681		71,921		-		37,459		315,399
Segment expense		160,151		147,693		384,275		72,532		176,837		-		46,082		987,570
Segment pretax earnings (loss)	$	36,241	$	37,855	$	53,002	$	25,320	$	35,477	$	124,626	$	(36,294)	$	276,227

21

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

	U.S. Property & Casualty		Professional  Liability		Accident   & Health		U.S. Surety   & Credit		International		Investing		Corporate   & Other		Consolidated
Three months ended June 30, 2014
Net earned premium	$	88,536	$	88,127	$	240,338	$	50,191	$	104,727	$	-	$	329	$	572,248
Other revenue		4,070		195		3,862		580		931		61,343		345		71,326
Segment revenue		92,606		88,322		244,200		50,771		105,658		61,343		674		643,574
Loss and LAE		46,733		52,189		172,296		14,862		40,765		-		249		327,094
Other expense		29,055		17,420		37,875		27,463		41,302		-		25,721		178,836
Segment expense		75,788		69,609		210,171		42,325		82,067		-		25,970		505,930
Segment pretax earnings (loss)	$	16,818	$	18,713	$	34,029	$	8,446	$	23,591	$	61,343	$	(25,296)	$	137,644
Three months ended June 30, 2013
Net earned premium	$	91,432	$	92,444	$	217,822	$	50,054	$	105,270	$	-	$	4,334	$	561,356
Other revenue		4,245		739		1,140		384		1,124		60,291		152		68,075
Segment revenue		95,677		93,183		218,962		50,438		106,394		60,291		4,486		629,431
Loss and LAE		55,238		55,435		160,139		5,637		58,997		-		4,028		339,474
Other expense		25,452		18,124		32,583		27,402		36,212		-		25,353		165,126
Segment expense		80,690		73,559		192,722		33,039		95,209		-		29,381		504,600
Segment pretax earnings (loss)	$	14,987	$	19,624	$	26,240	$	17,399	$	11,185	$	60,291	$	(24,895)	$	124,831

(11) Commitments and Contingencies

Catastrophe and Large Loss Exposure

We have exposure to catastrophic and other large losses caused by natural perils (such as hurricanes, earthquakes, floods, tsunamis, hail storms and tornados) and man-made events (such as terrorist attacks). The incidence, timing and severity of these losses are unpredictable. We assess our exposures in areas most vulnerable to natural catastrophes and apply procedures to ascertain our probable maximum loss from a single event. We maintain reinsurance protection to reduce our potential losses from a future event. In the first six months of 2014, we recognized accident year net catastrophe losses, after reinsurance and reinstatement premium, of $9.5 million related to various small catastrophes. We recognized $26.6 million in the first six months of 2013, primarily due to European floods during the second quarter and various small catastrophes.

Litigation

We are a party to lawsuits, arbitrations and other proceedings that arise in the normal course of our business. Many of such lawsuits, arbitrations and other proceedings involve claims under policies that we underwrite as an insurer or reinsurer, the liabilities for which, we believe, have been adequately included in our loss reserves. Also, from time to time, we are a party to lawsuits, arbitrations and other proceedings that relate to disputes with third parties, or that involve alleged errors and omissions on the part of our subsidiaries. We have provided accruals for these items to the extent we deem the losses probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from our outside legal counsel, we believe the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

22

HCC Insurance Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited, tables in thousands except per share data)

Indemnifications

In conjunction with the sales of business assets and subsidiaries, we have provided indemnifications to the buyers. Certain indemnifications cover typical representations and warranties related to our responsibilities to perform under the sales contracts. Under other indemnifications, we agree to reimburse the purchasers for taxes or ERISA-related amounts, if any, assessed after the sale date but related to pre-sale activities. We cannot quantify the maximum potential exposure covered by all of our indemnifications because the indemnifications cover a variety of matters, operations and scenarios and some have no time limit. For those with a time limit, the longest indemnification expires in 2025. We accrue a loss when a valid claim is made by a purchaser and we believe we have potential exposure.

(12) Supplemental Information

Supplemental cash flow information was as follows:

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Income taxes paid	$	70,413	$	99,941	$	70,891	$	67,799
Interest paid		14,984		13,322		13,445		11,932
Proceeds from sales of available for sale fixed maturity securities		286,843		171,801		167,832		13,666
Proceeds from sales of equity securities		170,182		44,308		26,107		26,500
Dividends declared but not paid at end of period		22,493		16,523

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis should be read in conjunction with our Consolidated Financial Statements and the related Notes as of June 30, 2014 and December 31, 2013.

Overview

We are a specialty insurance group with offices in the United States, the United Kingdom, Spain and Ireland, transacting business in approximately 180 countries. Our shares trade on the New York Stock Exchange and closed at $47.94 on July 25, 2014, resulting in market capitalization of $4.8 billion.

We underwrite and manage a variety of largely non-correlated specialty insurance products through these five insurance underwriting segments: U.S. Property & Casualty, Professional Liability, Accident & Health, U.S. Surety & Credit and International. We market our insurance products through a network of independent agents and brokers, through managing general agents owned by the company, and directly to consumers. In addition, we assume insurance written by other insurance companies.

Our organization is focused on generating consistent, industry-leading combined ratios. We concentrate our insurance writings in selected specialty lines of business in which we believe we can achieve meaningful underwriting profit. We rely on experienced underwriting personnel working within defined and monitored limits and our access to and expertise in the reinsurance marketplace to limit or reduce risk. By focusing on underwriting profitability, we are able to accomplish our primary objectives of maximizing net earnings and growing book value per share.

Our major 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.

Our results and key metrics for the six months and quarter ended June 30, 2014 were as follows:

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earnings	$	205,047		$	194,012		$	97,136		$	88,162
Earnings per diluted share	$	2.04		$	1.92		$	0.97		$	0.87
Net loss ratio		57.2	%		59.9	%		57.2	%		60.5	%
Expense ratio		26.0			24.6			26.3			24.8
Combined ratio		83.2	%		84.5	%		83.5	%		85.3	%

Key facts about our consolidated group as of and for the six months and quarter ended June 30, 2014 are as follows:

• We had consolidated shareholders’ equity of $3.9 billion, with book value per share of $39.12.

• We produced total revenue of $1.3 billion and $643.6 million in the first six months and second quarter, respectively.

• We purchased $41.5 million of our common stock at an average cost of $43.21 per share in the first six months.

• We declared dividends of $0.45 per share and paid $45.1 million of dividends in the first six months.

• Our debt to total capital ratio was 15.8%.

24

Comparisons in the following sections refer to the first six months of 2014 compared to the same period of 2013, unless otherwise noted. Amounts in tables are in thousands, except for earnings per share, percentages, ratios and number of employees.

Revenue

Gross written premium, net written premium and net earned premium are detailed below by segment.

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
U.S. Property & Casualty	$	357,287	$	358,388	$	184,280	$	183,251
Professional Liability		245,930		246,393		140,502		142,374
Accident & Health		486,476		430,470		250,559		214,909
U.S. Surety & Credit		112,697		111,438		61,645		59,189
International		376,441		373,193		195,414		205,386
Exited Lines		620		9,766		329		4,334
Total gross written premium	$	1,579,451	$	1,529,648	$	832,729	$	809,443
U.S. Property & Casualty	$	185,385	$	208,869	$	95,377	$	104,987
Professional Liability		163,805		163,761		94,204		96,135
Accident & Health		483,761		429,868		249,010		214,600
U.S. Surety & Credit		98,058		98,128		53,977		52,624
International		305,567		297,826		154,117		156,354
Exited Lines		620		9,766		329		4,334
Total net written premium	$	1,237,196	$	1,208,218	$	647,014	$	629,034
U.S. Property & Casualty	$	185,588	$	184,963	$	88,536	$	91,432
Professional Liability		173,577		185,223		88,127		92,444
Accident & Health		472,481		434,947		240,338		217,822
U.S. Surety & Credit		97,134		97,231		50,191		50,054
International		205,460		210,412		104,727		105,270
Exited Lines		620		9,766		329		4,334
Total net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356

Growth in written premium occurred primarily in the Accident & Health segment, from growth of our medical stop-loss and short-term medical products. See the “Segment Operations” section below for further discussion of the relationship and changes in premium revenue within each insurance underwriting segment.

Net investment income, which is included in our Investing segment, increased 2% year-over-year primarily due to higher dividend income from equity securities, partially offset by lower income from reduced reinvestment yields. We recognized $25.2 million of net realized investment gains in the first six months of 2014, principally due to the sale of equity securities in the first quarter, compared to $13.2 million in the first six months of 2013. See the “Investing Segment” section below for further discussion of our investing activities.

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Loss and Loss Adjustment Expense

The tables below detail our net loss and loss adjustment expense and our net loss ratios on a consolidated basis and for our segments.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
U.S. Property & Casualty	$	93,388		$	107,394		$	46,733		$	55,238
Professional Liability		103,321			111,821			52,189			55,435
Accident & Health		341,295			320,566			172,296			160,139
U.S. Surety & Credit		28,558			18,851			14,862			5,637
International		82,380			104,916			40,765			58,997
Exited Lines		(4)			8,623			249			4,028
Net loss and loss adjustment expense	$	648,938		$	672,171		$	327,094		$	339,474
U.S. Property & Casualty		50.3	%		58.1	%		52.8	%		60.4	%
Professional Liability		59.5			60.4			59.2			60.0
Accident & Health		72.2			73.7			71.7			73.5
U.S. Surety & Credit		29.4			19.4			29.6			11.3
International		40.1			49.9			38.9			56.0
Consolidated net loss ratio		57.2	%		59.9	%		57.2	%		60.5	%
Consolidated accident year net loss ratio		57.2	%		60.9	%		57.2	%		62.6	%

Net loss and loss adjustment expense (referred to as loss expense) decreased $23.2 million in the first six months of 2014 compared to the same period in 2013. The lower loss expense stemmed from our: 1) U.S. Property & Casualty segment, primarily due to lower losses in our public risk business, 2) Professional Liability segment, primarily due to lower earned premium and 3) International segment, due to lower earned premium, lower catastrophe losses in our property treaty line of business and a lower loss ratio in our surety & credit line of business. These decreases were partially offset by higher loss expense from: 1) our Accident & Health segment, due to growth of our medical stop-loss and short-term medical products and 2) favorable development in 2013, primarily in our U.S. Surety & Credit segment. We recognized no prior year reserve development in the first six months of 2014. See the “Segment Operations” section below for additional discussion of the changes in our loss expense, as well as discussion of the net loss ratios for each segment for 2014 and 2013.

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The table below provides a reconciliation of our consolidated reserves for loss and loss adjustment expense payable, net of reinsurance ceded, the amount of our paid claims, and our net paid loss ratio.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net reserves at beginning of period	$	2,779,401		$	2,749,803		$	2,748,841		$	2,761,242
Net loss and loss adjustment expense		648,938			672,171			327,094			339,474
Net loss and loss adjustment expense payments		(674,070)			(586,326)			(319,114)			(286,797)
Foreign currency adjustment		5,979			(24,627)			3,427			(2,898)
Net reserves at end of period	$	2,760,248		$	2,811,021		$	2,760,248		$	2,811,021
Net paid loss ratio		59.4	%		52.2	%		55.8	%		51.1	%

The amount of claims paid fluctuates year-over-year due to the timing of claims settlement, the occurrence of catastrophic events and commutations, and the mix of our business. In the first six months of 2014, we paid $124.5 million to settle claims related to Spanish surety bonds, of which approximately 60% was reinsured, increasing the net paid loss ratio by 4.6 percentage points.

Policy Acquisition Costs

The percentage of policy acquisition costs to net earned premium was 12.5% and 12.3% for the first six months of 2014 and 2013, respectively, and 12.8% and 12.6% for the second quarter of 2014 and 2013, respectively. The difference between periods primarily related to increased commission rates on certain of our businesses.

Other Operating Expense

Other operating expense increased 18% year-over-year and 13% quarter-over-quarter in 2014 compared to 2013, primarily due to the fluctuation in foreign currency benefit/expense. Our foreign currency expense was $6.7 million and $2.8 million in the first six months and second quarter of 2014, respectively. We recognized a foreign currency benefit of $9.0 million and expense of $1.9 million in the first six months and second quarter of 2013, respectively. The foreign currency benefit/expense related to changes in the value of the British pound sterling and the Euro relative to the U.S. dollar.

Excluding the effect of foreign currency benefit/expense, other operating expense increased 8% year-over-year and 12% quarter-over-quarter, mainly due to increased compensation and benefit costs in 2014. Our employee count has grown to 1,933 from 1,900 at December 31, 2013, and our bonus expense increased in 2014 due to higher pretax earnings. Other operating expense included stock-based compensation expense of $9.3 million in 2014 and $7.2 million in 2013. At June 30, 2014, there was approximately $33.7 million of total unrecognized compensation expense related to unvested restricted stock awards and units, options and our employee stock purchase plan that is expected to be recognized over a weighted-average period of 2.5 years.

Interest Expense

Interest expense was $14.0 million and $13.1 million in the first six months of 2014 and 2013, respectively, and included $9.7 million for our Senior Notes in both years.

Income Tax Expense

Our effective income tax rate was 29.9% for the first six months of 2014, compared to 29.8% for the same period of 2013.

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Segment Operations

Each of our insurance segments bears risk for insurance coverage written within its portfolio of insurance products. Each segment generates income from premium written by our underwriting agencies, through third party agents and brokers, or on a direct basis. Certain segments also write facultative or individual account reinsurance, as well as treaty reinsurance business. In some cases, we purchase reinsurance to limit our losses from both individual policy losses and multiple policy losses from catastrophic occurrences and from aggregate losses in a year. Our segments maintain disciplined expense management and a streamlined management structure, which results in favorable expense ratios. The following provides operational information about our insurance underwriting segments, Investing segment and Corporate & Other category.

In 2014, we changed the presentation of certain categories of business that we disclose within our insurance underwriting segments and recast prior period financial data to be comparative with the revised presentation. However, we did not change our reportable segments. We believe this realignment of certain categories within segments provides better operational information for management and our shareholders.

U.S. Property & Casualty Segment

The following tables summarize the operations of the U.S. Property & Casualty segment.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earned premium	$	185,588		$	184,963		$	88,536		$	91,432
Other revenue		9,946			11,429			4,070			4,245
Segment revenue		195,534			196,392			92,606			95,677
Loss and loss adjustment expense, net		93,388			107,394			46,733			55,238
Other expense		58,148			52,757			29,055			25,452
Segment expense		151,536			160,151			75,788			80,690
Segment pretax earnings	$	43,998		$	36,241		$	16,818		$	14,987
Net loss ratio		50.3	%		58.1	%		52.8	%		60.4	%
Expense ratio		29.7			26.9			31.4			26.6
Combined ratio		80.0	%		85.0	%		84.2	%		87.0	%
Aviation	$	54,130		$	56,286		$	27,371		$	28,429
Liability		53,667			48,927			27,029			24,977
Sports & Entertainment		15,555			12,480			7,418			6,168
Public Risk		25,007			32,755			11,973			16,395
Other		37,229			34,515			14,745			15,463
Total net earned premium	$	185,588		$	184,963		$	88,536		$	91,432
Aviation		60.9	%		63.0	%		61.9	%		64.3	%
Liability		59.9			63.7			59.8			64.3
Sports & Entertainment		49.3			61.6			51.0			74.3
Public Risk		58.4			76.7			58.0			75.1
Other		16.1			23.0			19.7			25.9
Total net loss ratio		50.3	%		58.1	%		52.8	%		60.4	%

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	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Aviation	$	70,344	$	75,182	$	37,897	$	38,184
Liability		92,145		76,432		48,673		39,339
Sports & Entertainment		77,090		81,528		34,948		47,093
Public Risk		35,570		37,105		14,847		15,664
Other		82,138		88,141		47,915		42,971
Total gross written premium	$	357,287	$	358,388	$	184,280	$	183,251
Aviation	$	58,650	$	60,134	$	33,327	$	31,520
Liability		64,110		55,255		33,015		28,011
Sports & Entertainment		13,714		14,163		6,649		8,390
Public Risk		18,779		29,880		7,891		14,109
Other		30,132		49,437		14,495		22,957
Total net written premium	$	185,385	$	208,869	$	95,377	$	104,987

Our U.S. Property & Casualty segment pretax earnings increased 21% year-over-year, and 12% quarter-over-quarter, primarily due to lower loss expense, partially offset by higher other expenses. Gross written premium decreased in 2014 due to: 1) reduced pricing from increased competition in Aviation and 2) cyclical reductions in Sports & Entertainment and title and residual value insurance (both included in Other). These decreases were largely offset by increased writings of our expanding casualty business, included in Liability, and timing of renewals for our brown water marine business (included in Other). Net written premium for Public Risk decreased in 2014 due to additional quota share reinsurance. Higher net earned premium, due to growth in our casualty business, was partially offset by reduced premium earned by Public Risk due to the change in our reinsurance program. Loss expense decreased in 2014, compared to 2013, primarily due to lower losses in Public Risk based on our re-underwriting of that book of business in 2013. The segment’s expense ratio increased in 2014 primarily due to higher compensation costs.

Regarding changes in presentation, the segment now includes Liability and Sports & Entertainment categories. The Liability category includes the prior E&O category, as well as employment practices liability, primary casualty and excess casualty, which were previously included in the Other category. The Sports & Entertainment category includes disability and contingency, which were previously included in the Other category.

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Professional Liability Segment

The following tables summarize the operations of the Professional Liability segment.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earned premium	$	173,577		$	185,223		$	88,127		$	92,444
Other revenue		470			325			195			739
Segment revenue		174,047			185,548			88,322			93,183
Loss and loss adjustment expense, net		103,321			111,821			52,189			55,435
Other expense		34,545			35,872			17,420			18,124
Segment expense		137,866			147,693			69,609			73,559
Segment pretax earnings	$	36,181		$	37,855		$	18,713		$	19,624
Net loss ratio		59.5	%		60.4	%		59.2	%		60.0	%
Expense ratio		19.8			19.3			19.7			19.4
Combined ratio		79.3	%		79.7	%		78.9	%		79.4	%
Gross written premium	$	245,930		$	246,393		$	140,502		$	142,374
Net written premium	$	163,805		$	163,761		$	94,204		$	96,135

Our Professional Liability segment pretax earnings decreased 4% year-to-date in 2014, compared to the same period of 2013, due to lower net earned premium that was partially offset by an improved net loss ratio. The decrease in net earned premium related to lower net written premium in the second half of 2013, compared to the second half of 2012.

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Accident & Health Segment

The following tables summarize the operations of the Accident & Health segment.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earned premium	$	472,481		$	434,947		$	240,338		$	217,822
Other revenue		5,502			2,330			3,862			1,140
Segment revenue		477,983			437,277			244,200			218,962
Loss and loss adjustment expense, net		341,295			320,566			172,296			160,139
Other expense		74,254			63,709			37,875			32,583
Segment expense		415,549			384,275			210,171			192,722
Segment pretax earnings	$	62,434		$	53,002		$	34,029		$	26,240
Net loss ratio		72.2	%		73.7	%		71.7	%		73.5	%
Expense ratio		15.5			14.6			15.5			14.9
Combined ratio		87.7	%		88.3	%		87.2	%		88.4	%
Medical Stop-loss	$	429,124		$	404,604		$	214,894		$	202,010
Other		43,357			30,343			25,444			15,812
Total net earned premium	$	472,481		$	434,947		$	240,338		$	217,822
Medical Stop-loss		74.8	%		75.2	%		74.8	%		75.2	%
Other		46.4			53.9			45.2			51.8
Total net loss ratio		72.2	%		73.7	%		71.7	%		73.5	%
Medical Stop-loss	$	431,811		$	405,039		$	216,413		$	202,231
Other		54,665			25,431			34,146			12,678
Total gross written premium	$	486,476		$	430,470		$	250,559		$	214,909
Medical Stop-loss	$	429,096		$	404,604		$	214,864		$	202,010
Other		54,665			25,264			34,146			12,590
Total net written premium	$	483,761		$	429,868		$	249,010		$	214,600

The Accident & Health segment pretax earnings increased 18% in the first six months of 2014, and 30% in the second quarter of 2014, compared to the respective periods in 2013. This increase was directly attributable to writing new medical stop-loss and short-term medical business, as well as rate increases on renewal business in 2014. The segment’s expense ratio increased in 2014 due to higher commissions related to the short-term medical product, as well as higher compensation costs.

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U.S. Surety & Credit Segment

The following tables summarize the operations of the U.S. Surety & Credit segment.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earned premium	$	97,134		$	97,231		$	50,191		$	50,054
Other revenue		868			621			580			384
Segment revenue		98,002			97,852			50,771			50,438
Loss and loss adjustment expense, net		28,558			18,851			14,862			5,637
Other expense		53,407			53,681			27,463			27,402
Segment expense		81,965			72,532			42,325			33,039
Segment pretax earnings	$	16,037		$	25,320		$	8,446		$	17,399
Net loss ratio		29.4	%		19.4	%		29.6	%		11.3	%
Expense ratio		54.5			54.9			54.1			54.3
Combined ratio		83.9	%		74.3	%		83.7	%		65.6	%
Surety	$	71,723		$	72,725		$	36,878		$	37,118
Credit		25,411			24,506			13,313			12,936
Total net earned premium	$	97,134		$	97,231		$	50,191		$	50,054
Surety		24.9	%		19.8	%		24.7	%		14.9	%
Credit		42.2			18.1			43.2			0.8
Total net loss ratio		29.4	%		19.4	%		29.6	%		11.3	%
Surety	$	80,333		$	80,327		$	43,131		$	42,631
Credit		32,364			31,111			18,514			16,558
Total gross written premium	$	112,697		$	111,438		$	61,645		$	59,189
Surety	$	71,712		$	72,146		$	38,896		$	38,456
Credit		26,346			25,982			15,081			14,168
Total net written premium	$	98,058		$	98,128		$	53,977		$	52,624

Our U.S. Surety & Credit segment pretax earnings decreased $9.3 million year-over-year and $9.0 million quarter-over-quarter, due to $9.5 million of favorable loss development recognized in the first six months and second quarter of 2013. We recognized no loss development for the same periods of 2014.

In the second quarter of 2013, we conducted a limited review of the segment’s reserves due to the settlement of a large 2010 claim on favorable terms. This review indicated that actual loss experience for the 2010 and prior underwriting years was significantly better in 2013 compared to the prior year review. As a result, we recognized favorable development of $3.7 million for Surety and $5.8 million for Credit in the second quarter of 2013.

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International Segment

The following tables summarize the operations of the International segment.

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net earned premium	$	205,460		$	210,412		$	104,727		$	105,270
Other revenue		1,899			1,902			931			1,124
Segment revenue		207,359			212,314			105,658			106,394
Loss and loss adjustment expense, net		82,380			104,916			40,765			58,997
Other expense		79,979			71,921			41,302			36,212
Segment expense		162,359			176,837			82,067			95,209
Segment pretax earnings	$	45,000		$	35,477		$	23,591		$	11,185
Net loss ratio		40.1	%		49.9	%		38.9	%		56.0	%
Expense ratio		38.6			33.9			39.1			34.0
Combined ratio		78.7	%		83.8	%		78.0	%		90.0	%
Marine & Energy	$	43,550		$	52,292		$	21,703		$	26,584
Property Treaty		51,413			58,498			26,648			29,743
Surety & Credit		40,139			36,066			20,203			17,853
Liability		40,365			35,583			21,229			18,408
Other		29,993			27,973			14,944			12,682
Total net earned premium	$	205,460		$	210,412		$	104,727		$	105,270
Marine & Energy		49.8	%		48.0	%		51.8	%		46.5	%
Property Treaty		20.1			51.1			19.4			77.1
Surety & Credit		45.6			63.0			42.7			62.5
Liability		49.3			49.4			47.5			48.9
Other		40.4			34.3			37.8			27.9
Total net loss ratios		40.1	%		49.9	%		38.9	%		56.0	%
Marine & Energy	$	118,602		$	125,658		$	80,854		$	91,036
Property Treaty		99,929			113,995			31,937			41,650
Surety & Credit		55,251			46,196			28,894			25,030
Liability		50,078			40,210			27,387			22,077
Other		52,581			47,134			26,342			25,593
Total gross written premium	$	376,441		$	373,193		$	195,414		$	205,386

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	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Marine & Energy	$	82,082	$	82,972	$	57,197	$	61,499
Property Treaty		87,829		101,266		27,291		35,099
Surety & Credit		49,085		40,290		26,038		21,641
Liability		46,326		37,577		25,182		21,007
Other		40,245		35,721		18,409		17,108
Total net written premium	$	305,567	$	297,826	$	154,117	$	156,354

Our International segment pretax earnings increased $9.5 million in the first six months and $12.4 million in the second quarter of 2014, compared to the same period of 2013, due to the favorable impact of lower net catastrophe losses in Property Treaty, partially offset by lower net earned premium and higher other expenses in 2014. Gross written premium and net written premium increased year-to-date in 2014, compared to 2013, due to increased writings in Surety & Credit, Liability and our direct and facultative property line of business (included in Other). These increases were largely offset by decreased writings of Marine & Energy and Property Treaty, due to reduced pricing and expanded competition in these lines. The segment’s expense ratio increased in 2014 primarily due to higher compensation expense and the stronger British pound sterling compared to the U.S. dollar in 2014.

In the second quarter of 2013, we recognized large catastrophe losses of $15.0 million related to European floods, including $2.0 million of inward reinstatement premium. There were no large catastrophe losses in the first six months of 2014. The remaining net catastrophe losses in 2014 and 2013 related to small catastrophes. The following table summarizes the segment’s net catastrophes losses, as well as the impact on key metrics:

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Loss and loss adjustment expense, after reinsurance	$	10,355		$	29,921		$	5,172		$	22,935
Reinstatement premium, net		(816)			(3,291)			(269)			(1,515)
Total net catastrophe losses	$	9,539		$	26,630		$	4,903		$	21,420
Impact of net catastrophe losses (percentage points):
Net loss ratio		4.9	%		13.7	%		4.8	%		21.2	%
Expense ratio		(0.1)			(0.5)			(0.1)			(0.5)
Combined ratio		4.8	%		13.2	%		4.7	%		20.7	%

In the second quarter of 2013, we recognized favorable loss development of $2.3 million in the direct and facultative property line of business related to our 2010 New Zealand earthquake catastrophe losses, due to settlement of these claims in 2013.

Regarding changes in presentation, the Marine & Energy category now includes the marine business, which was previously included in the Other category.

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Investing Segment

We invest the majority of our funds in highly-rated fixed maturity securities, which are designated as available for sale securities. We held $6.3 billion of fixed maturity securities at June 30, 2014. Substantially all of our fixed maturity securities were investment grade and 73% were rated AAA or AA. In addition, we held $448.7 million of equity securities at June 30, 2014.

The following tables summarize the results and certain key metrics of our Investing segment.

	Six months ended June 30,					Three months ended June 30,
	2014		2013			2014			2013
Net investment income from:
Fixed maturity securities
Taxable	$	47,279	$	51,022		$	24,019		$	25,062
Exempt from U.S. income taxes		57,175		56,075			28,592			28,186
Total fixed maturity securities		104,454		107,097			52,611			53,248
Equity securities		12,143		7,808			5,506			4,228
Other		728		399			297			434
Total investment income		117,325		115,304			58,414			57,910
Investment expense		(4,081)		(3,871)			(1,976)			(2,242)
Total net investment income		113,244		111,433			56,438			55,668
Net realized investment gain		25,151		13,193			4,905			4,623
Segment pretax earnings	$	138,395	$	124,626		$	61,343		$	60,291
Fixed maturity securities:
Average yield *		3.5 %		3.7	%		3.5	%		3.6	%
Average tax equivalent yield *		4.4 %		4.5	%		4.4	%		4.5	%
Weighted-average life		8.2 years		8.4 years
Weighted-average duration		4.7 years		5.5 years
Weighted-average rating		AA		AA

* Excluding realized and unrealized gains and losses.

35

This table summarizes our investments by type, all of which were reported at fair value, at June 30, 2014 and December 31, 2013.

	June 30, 2014					December 31, 2013
	Amount		%			Amount		%
Fixed maturity securities
U.S. government and government agency securities	$	85,627		1	%	$	92,709		1	%
Fixed maturity securities of states, municipalities and political subdivisions		965,705		14			986,486		15
Special purpose revenue bonds of states, municipalities and political subdivisions		2,376,963		33			2,265,195		34
Corporate securities		1,199,711		17			1,225,238		18
Residential mortgage-backed securities		764,534		11			618,119		9
Commercial mortgage-backed securities		547,117		8			504,888		7
Asset-backed securities		304,396		4			182,392		3
Foreign government securities		89,138		1			147,446		2
Equity securities		448,685		6			517,466		8
Short-term investments		342,335		5			178,753		3
Total investments	$	7,124,211		100	%	$	6,718,692		100	%

At June 30, 2014, we held corporate fixed maturity securities issued by foreign corporations with an aggregate fair value of $484.3 million. In addition, we held securities issued by foreign governments, agencies or supranational entities with an aggregate fair value of $89.1 million. At December 31, 2013, we held $497.0 million and $147.4 million, respectively.

Our total investments increased $405.5 million in 2014, principally from a $154.7 million increase in the pretax net unrealized gain and newly generated cash flow. At June 30, 2014, the net unrealized gain on our investment portfolio was $308.7 million. The increase in the net unrealized gain was due to the decline in interest rates in 2014. Rates on 10-year U.S. Treasury notes declined 50 basis points in the first six months of 2014. The weighted-average duration of our fixed maturity securities portfolio decreased to 4.7 years at June 30, 2014 (compared to 5.1 years at December 31, 2013 and 5.5 years at June 30, 2013), primarily due to the impact of the lower market interest rates on our municipal securities with call options and structured securities with prepayment options.

In the first quarter of 2014, we sold equity securities with a book value of $142.0 million, and realized a net gain of $21.3 million, in order to reposition our overall investment portfolio. In July 2014, we sold equity securities with a book value of $197.0 million and realized a net gain of $35.2 million, which will be reported in the third quarter. Due to an increase in equity valuations in early July, we made a decision at that time to further reduce our overall equity exposure.

The ratings of our individual securities within our fixed maturity securities portfolio at June 30, 2014 were as follows:

	Amount		%
AAA	$	906,225		14	%
AA		3,753,885		59
A		1,268,221		20
BBB		253,753		4
BB and below		151,107		3
Total fixed maturity securities	$	6,333,191		100	%

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Corporate & Other

The following table summarizes activity in the Corporate & Other category.

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Net earned premium	$	620	$	9,766	$	329	$	4,334
Other revenue		564		22		345		152
Total revenue		1,184		9,788		674		4,486
Loss and loss adjustment expense, net		(4)		8,623		249		4,028
Other expense - Exited Lines		1,872		2,523		919		1,184
Other expense - Corporate		28,207		31,138		15,236		15,773
Interest expense		13,861		12,843		6,800		6,457
Foreign currency expense (benefit)		6,677		(9,045)		2,766		1,939
Total expense		50,613		46,082		25,970		29,381
Pretax loss	$	(49,429)	$	(36,294)	$	(25,296)	$	(24,895)

Net earned premium decreased year-over-year as we wrote less business due to our exiting HMO and medical excess reinsurance in late 2012. Premium related to the other products included in Exited Lines was insignificant in both periods. The loss and loss adjustment expense in 2013 related to the HMO and medical excess reinsurance products.

Our Corporate expenses not allocated to the segments decreased year-over-year, primarily due to lower compensation and benefit costs and allocation of certain stock-based compensation expense to our insurance underwriting segments beginning in 2014. The impact of foreign currency benefit/expense fluctuated period-over-period principally due to changes in the value of the British pound sterling and the Euro relative to the U.S. dollar. We hold available for sale securities denominated in non-functional currencies to economically hedge the currency exchange risk on our loss reserves denominated in non-functional currencies. The foreign currency benefit/expense related to loss reserves is recorded through the income statement, while the foreign currency benefit/expense related to available for sale securities is recorded through other comprehensive income within shareholders’ equity. This mismatch may cause fluctuations in our reported foreign currency benefit/expense in future periods.

37

Liquidity and Capital Management

We believe we have sufficient sources of liquidity at both a consolidated and insurance company legal entity level at a reasonable cost to pay claims and meet our other contractual obligations and liabilities as they become due in the short-term and long-term. Our current sources of liquidity include: 1) significant operating cash flow generated by our insurance companies, 2) our investment portfolio, most of which is held by our insurance companies, 3) our revolving loan and standby letter of credit facilities and 4) a $1.0 billion shelf registration. Our sources of liquidity are discussed below.

Cash Flow

We manage the liquidity of our insurance companies such that each subsidiary’s anticipated claims payments will be met by its own current operating cash flows, cash, short-term investments or investment maturities. Our insurance companies receive substantial cash from premiums, reinsurance recoverables, surety collateral, outward commutations, proceeds from sales and redemptions of investments, and investment income. Their principal cash outflows are for the payment of claims and loss adjustment expenses, premium payments to reinsurers, return of surety collateral, inward commutations, purchases of investments, policy acquisition costs, operating expenses, taxes and dividends paid to the parent company. We report all of the insurance companies’ investing activity in our Investing segment for segment reporting purposes. Our parent company’s principal cash inflows relate to its investment portfolio and dividends paid by the insurance companies, and its principal cash outflows relate to debt service, operating expenses, dividends paid to shareholders and common stock purchases. Cash provided by operating activities can fluctuate due to timing differences in the collection of premium receivables, reinsurance recoverables and surety collateral; the payment of losses, premium payables and return of surety collateral; and the completion of commutations.

The components of our net operating cash flows are summarized in the following table.

	Six months ended June 30,
	2014		2013
Net earnings	$	205,047	$	194,012
Change in premium, claims and other receivables, net of reinsurance, premium and claims payables		(53,279)		(56,660)
Change in unearned premium, net		102,763		84,727
Change in loss and loss adjustment expense payable, net of reinsurance recoverables		39,652		35,008
Change in accounts payable and accrued liabilities		(69,414)		(119,103)
Gain on investments		(25,151)		(13,193)
Other, net		(4,332)		(22,801)
Cash provided by operating activities	$	195,286	$	101,990

Our cash provided by operating activities was $195.3 million in the first six months of 2014, compared to $102.0 million in the same period of 2013. Cash provided by operating activities includes collateral funds we receive or refund for our U.S. surety business, for which we record a liability within accounts payable and accrued liabilities. We refunded U.S. surety collateral of $16.1 million in 2014 and $74.3 million in 2013. In addition, we paid $70.4 million of income tax payments in 2014, compared to $99.9 million in 2013. Other fluctuations in our cash provided by operating activities relate to the timing of the collection and the payment of insurance-related receivables and payables.

The net impact of our payment of claims and collection of recoverables related to Spanish surety bonds is expected to impact our cash provided by operating activities in future periods, although the amount and timing of such payments and receipts are not determinable at this time.

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Investments

At June 30, 2014, we held a $7.1 billion investment portfolio, which included $342.3 million of liquid short-term investments. Our fixed maturity and equity securities portfolios are classified as available for sale. We expect to hold our fixed maturity securities until maturity, but we would be able to sell these securities, as well as our equity securities, to generate cash if needed. The parent company held $629.5 million of cash and investments at June 30, 2014, which are available to cover the holding company’s required cash disbursements.

Revolving Loan and Standby Letter of Credit Facilities

At June 30, 2014, we maintained an $825.0 million Revolving Loan Facility (Facility) with $384.1 million of available capacity. During the past several years, we used the Facility to fund purchases of our common stock. We expect to continue to use the Facility to opportunistically repurchase stock in 2014. We also have a $90.0 million Standby Letter of Credit Facility (Standby Facility) that is used to guarantee our performance in our Lloyd’s of London syndicate. The Facility expires in April 2019 and the Standby Facility expires in December 2017. See Note 7, “Notes Payable” to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2013 for additional information related to the Facility, the Standby Facility and our long-term debt.

Share Purchases

In 2012, the Board approved a $300.0 million stock purchase plan (the Plan). Purchases under the Plan may be made in the open market or in privately negotiated transactions from time-to-time in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases under the Plan will be made subject to market and business conditions, the level of cash generated from our operations, cash required for acquisitions, our debt covenant compliance, and other relevant factors. The Plan does not obligate us to purchase any particular number of shares, has no expiration date, and may be suspended or discontinued at any time at the Board’s discretion. As of July 25, 2014, $164.7 million of repurchase authority remains under the Plan.

We purchased our common stock in 2014 and 2013 as follows:

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Shares of common stock		961		1,024		225		290
Total cost	$	41,542	$	40,929	$	10,129	$	12,160
Weighted-average cost per share	$	43.21	$	39.96	$	44.98	$	41.94

Shelf Registration

We have a “Universal Shelf” registration statement that expires in March 2015. The Universal Shelf provides for the issuance of $1.0 billion of securities, which may be debt securities, equity securities, or a combination thereof. The Universal Shelf provides us the means to access the debt and equity markets relatively quickly, if we are satisfied with the current pricing in the financial markets.

Recent Accounting Guidance

See Note 1, “General Information — Recent Accounting Guidance” to the Consolidated Financial Statements for a description of recently issued accounting guidance that will impact our consolidated financial statements in future periods.

Critical Accounting Policies

We provided information about our critical accounting policies in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies”, in our Annual Report on Form 10-K for the year ended December 31, 2013. We have made no changes in the identification or methods of application of these policies.

39

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Act)) that are designed to ensure that required information is recorded, processed, summarized and reported within the required timeframe, as specified in rules set forth by the Securities and Exchange Commission. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding required disclosures.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2014 using criteria established in the Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective in providing reasonable assurance of achieving the purposes described in Rule 13a-15(e) under the Act as of June 30, 2014.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

40

Part II — Other Information

Item 1. Legal Proceedings

We are a party to lawsuits, arbitrations and other proceedings that arise in the normal course of our business. Many of such lawsuits, arbitrations and other proceedings involve claims under policies that we underwrite as an insurer or reinsurer, the liabilities for which, we believe, have been adequately included in our loss reserves. Also, from time to time, we are a party to lawsuits, arbitrations and other proceedings that relate to disputes with third parties, or that involve alleged errors and omissions on the part of our subsidiaries. We have provided accruals for these items to the extent we deem the losses probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from our outside legal counsel, we believe the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In 2012, the Board approved the purchase of up to $300.0 million of our common stock (the Plan). Purchases under the Plan may be made in the open market or in privately negotiated transactions from time-to-time in compliance with applicable laws, rules and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases under the Plan will be made, subject to market and business conditions, the level of cash generated from our operations, cash required for acquisitions, our debt covenant compliance, and other relevant factors. The Plan does not obligate us to purchase any particular number of shares, has no expiration date, and may be suspended or discontinued at any time at the Board’s discretion. Our purchases in the second quarter of 2014 were as follows:

Period	Total number of             shares purchased	Average price                  paid per share	Total number of shares       purchased as part of publicly announced plans or programs	Approximate dollar         value of shares that may         yet be purchased under the plans or programs
April	184,462	$44.77	184,462	$167,901,624
May	40,741	$45.94	40,741	$166,029,942
June	-	-	-	$166,029,942

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number
3.1		Restated Certificate of Incorporation and Amendment of Certificate of Incorporation of HCC Insurance Holdings, Inc., filed with Delaware Secretary of State on July 23, 1996 and May 21, 1998, respectively (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 (Registration No. 333-61687) filed on August 17, 1998).
3.2		Fourth Amended and Restated Bylaws of HCC Insurance Holdings, Inc. (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 22, 2013).
4.1		Indenture, dated August 23, 2001, between HCC Insurance Holdings, Inc. and First Union National Bank related to Debt Securities (Senior Debt) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on August 24, 2001).
4.2		Form of Fourth Supplemental Indenture, dated November 16, 2009, between HCC Insurance Holdings, Inc. and U.S. Bank National Association related to 6.30% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed on November 13, 2009).
10.1		Third Amendment to Loan Agreement, dated April 30, 2014, among HCC Insurance Holdings, Inc., Wells Fargo Bank, National Association, as Administrative Agent, Barclays Bank PLC and KeyBank National Association, as Co-Syndication Agents, Bank of America, N.A., BMO Harris Bank, N.A., JPMorgan Chase Bank, N.A., The Royal Bank of Scotland PLC and U.S. Bank National Association, as Co-Documentation Agents, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 1, 2014).
12	†	Statement Regarding Computation of Ratios.
31.1	†	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	†	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 formatted in XBRL: 1) Consolidated Balance Sheets, 2) Consolidated Statements of Earnings, 3) Consolidated Statements of Comprehensive Income, 4) Consolidated Statement of Changes in Shareholders’ Equity, 5) Consolidated Statements of Cash Flows and 6) Notes to Consolidated Financial Statements.

†     Filed herewith.

42

SIGNATURES

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, thereunto duly authorized.

	HCC Insurance Holdings, Inc.
	(Registrant)
August 1, 2014	/s/ Christopher J.B. Williams
(Date)	Christopher J.B. Williams,
	Chief Executive Officer
August 1, 2014	/s/ Pamela J. Penny
(Date)	Pamela J. Penny, Executive Vice President and Chief Accounting Officer

43

EX-12

Exhibit 12

HCC Insurance Holdings, Inc. and Subsidiaries

Statement of Ratios

(unaudited, in thousands except ratios)

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net loss ratio
Loss and loss adjustment expense, net	$	648,938		$	672,171		$	327,094		$	339,474
Net earned premium		1,134,860			1,122,542			572,248			561,356
Net loss ratio (1)		57.2	%		59.9	%		57.2	%		60.5	%
(Net loss ratio = net loss and loss adjustment expense divided by net earned premium)
Expense ratio
Segment underwriting expense (2)	$	300,333		$	277,940		$	153,115		$	139,773
Segment revenue (3)		1,152,925			1,129,383			581,557			564,654
Expense ratio		26.0	%		24.6	%		26.3	%		24.8	%
(Expense ratio = segment underwriting expense divided by segment revenue)
Combined ratio		83.2	%		84.5	%		83.5	%		85.3	%
(Combined ratio = net loss ratio plus expense ratio)
Accident year net loss ratio
Loss and loss adjustment expense, net	$	648,938		$	672,171		$	327,094		$	339,474
Add: Favorable (adverse) development		-			11,792			-			11,792
Accident year net loss and loss adjustment expense	$	648,938		$	683,963		$	327,094		$	351,266
Net earned premium	$	1,134,860		$	1,122,542		$	572,248		$	561,356
Add: (Increase) decrease related to prior year reinstatement premium		-			-			-			-
Accident year net earned premium	$	1,134,860		$	1,122,542		$	572,248		$	561,356
Accident year net loss ratio		57.2	%		60.9	%		57.2	%		62.6	%
(Accident year net loss ratio = accident year net loss and loss adjustment expense divided by accident year net earned premium)

(1)  Calculated for our insurance companies using financial data reported in accordance with generally accepted accounting principles.

(2)  Sum of Other Expense for each of our insurance segments.

(3)  Sum of Segment Revenue for each of our insurance segments.

HCC Insurance Holdings, Inc. and Subsidiaries

Statement of Ratios

(unaudited, in thousands except ratios)

	Six months ended June 30,						Three months ended June 30,
	2014			2013			2014			2013
Net paid loss ratio
Losses paid, net of reinsurance	$	674,070		$	586,326		$	319,114		$	286,797
Net earned premium		1,134,860			1,122,542			572,248			561,356
Net paid loss ratio		59.4	%		52.2	%		55.8	%		51.1	%
(Net paid loss ratio = losses paid, net of reinsurance, divided by net earned premium)
Ratio of earnings to fixed charges
Interest factor of rent expense (4)	$	2,784		$	2,537		$	1,425		$	1,287
Interest expense		13,984			13,082			6,865			6,611
Total fixed charges	$	16,768		$	15,619		$	8,290		$	7,898
Earnings before income tax expense	$	292,616		$	276,227		$	137,644		$	124,831
Interest factor of rent expense (4)		2,784			2,537			1,425			1,287
Interest expense		13,984			13,082			6,865			6,611
Earnings per calculation	$	309,384		$	291,846		$	145,934		$	132,729
Ratio of earnings to fixed charges (5)		18.45			18.69			17.60			16.81

(4)  Estimated to be 33% of total rent expense.

(5)  Earnings per calculation divided by total fixed charges.

EX-31.1

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, Christopher J.B. Williams, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HCC Insurance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 1, 2014	/s/ Christopher J.B. Williams
(Date)	Christopher J.B. Williams,
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Brad T. Irick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of HCC Insurance Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 1, 2014	/s/ Brad T. Irick
(Date)	Brad T. Irick, Executive Vice President
	and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION WITH RESPECT TO

QUARTERLY REPORT OF

HCC INSURANCE HOLDINGS, INC.

The undersigned, being the Chief Executive Officer and Chief Financial Officer of HCC Insurance Holdings, Inc. (the Company), pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, do hereby certify to the best of their knowledge with respect to the Quarterly Report of the Company on Form 10-Q, as filed with the Securities and Exchange Commission for the quarter ended June 30, 2014 (the Report):

1. that the Report fully complies with all requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and

2. that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.

August 1, 2014	/s/ Christopher J.B. Williams
(Date)	Christopher J.B. Williams,
	Chief Executive Officer
August 1, 2014	/s/ Brad T. Irick
(Date)	Brad T. Irick, Executive Vice President
	and Chief Financial Officer

This certification is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of such section. This certification is not deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference. A signed original of this certification has been provided to HCC Insurance Holdings, Inc. and will be retained by HCC Insurance Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income, Net of Tax, Beginning Balance	$ 162,221		$ 118,651
Other comprehensive income	58,201	(141,981)	101,771	(169,152)
Accumulated Other Comprehensive Income, Net of Tax, Ending Balance	220,422		220,422
Accumulated Net Unrealized Investment Gain [Member]
Accumulated Other Comprehensive Income, Net of Tax, Beginning Balance	142,310		99,960
Other comprehensive income	57,309		99,659
Accumulated Other Comprehensive Income, Net of Tax, Ending Balance	199,619		199,619
Accumulated Translation Adjustment [Member]
Accumulated Other Comprehensive Income, Net of Tax, Beginning Balance	19,911		18,691
Other comprehensive income	892		2,112
Accumulated Other Comprehensive Income, Net of Tax, Ending Balance	20,803		20,803
Accumulated other comprehensive income [Member]
Other comprehensive income			$ 101,771

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Supplemental Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Supplemental Information
Income taxes paid (refunded)	$ 70,891	$ 67,799	$ 70,413	$ 99,941
Interest paid	13,445	11,932	14,984	13,322
Sales of available for sale fixed maturity securities	167,832	13,666	286,843	171,801
Sales of equity securities	26,107	26,500	170,182	44,308
Dividends declared but not paid at year end	$ 22,493	$ 16,523	$ 22,493	$ 16,523

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Segments (Tables)

6 Months Ended

Jun. 30, 2014

Segments [Abstract]

Information by business segment

			U.S. Property		Professional		Accident		U.S. Surety						Corporate
			& Casualty		Liability		& Health		& Credit		International		Investing		& Other		Consolidated
Six months ended June 30, 2014
Net earned premium			$	185,588	$	173,577	$	472,481	$	97,134	$	205,460	$	-	$	620	$	1,134,860
Other revenue				9,946		470		5,502		868		1,899		138,395		564		157,644
	Segment revenue			195,534		174,047		477,983		98,002		207,359		138,395		1,184		1,292,504
Loss and LAE				93,388		103,321		341,295		28,558		82,380		-		(4)		648,938
Other expense				58,148		34,545		74,254		53,407		79,979		-		50,617		350,950
	Segment expense			151,536		137,866		415,549		81,965		162,359		-		50,613		999,888
		Segment pretax earnings (loss)	$	43,998	$	36,181	$	62,434	$	16,037	$	45,000	$	138,395	$	(49,429)	$	292,616

Six months ended June 30, 2013
Net earned premium			$	184,963	$	185,223	$	434,947	$	97,231	$	210,412	$	-	$	9,766	$	1,122,542
Other revenue				11,429		325		2,330		621		1,902		124,626		22		141,255
	Segment revenue			196,392		185,548		437,277		97,852		212,314		124,626		9,788		1,263,797
Loss and LAE				107,394		111,821		320,566		18,851		104,916		-		8,623		672,171
Other expense				52,757		35,872		63,709		53,681		71,921		-		37,459		315,399
	Segment expense			160,151		147,693		384,275		72,532		176,837		-		46,082		987,570
		Segment pretax earnings (loss)	$	36,241	$	37,855	$	53,002	$	25,320	$	35,477	$	124,626	$	(36,294)	$	276,227

			U.S. Property		Professional		Accident		U.S. Surety						Corporate
			& Casualty		Liability		& Health		& Credit		International		Investing		& Other		Consolidated
Three months ended June 30, 2014
Net earned premium			$	88,536	$	88,127	$	240,338	$	50,191	$	104,727	$	-	$	329	$	572,248
Other revenue				4,070		195		3,862		580		931		61,343		345		71,326
	Segment revenue			92,606		88,322		244,200		50,771		105,658		61,343		674		643,574
Loss and LAE				46,733		52,189		172,296		14,862		40,765		-		249		327,094
Other expense				29,055		17,420		37,875		27,463		41,302		-		25,721		178,836
	Segment expense			75,788		69,609		210,171		42,325		82,067		-		25,970		505,930
		Segment pretax earnings (loss)	$	16,818	$	18,713	$	34,029	$	8,446	$	23,591	$	61,343	$	(25,296)	$	137,644

Three months ended June 30, 2013
Net earned premium			$	91,432	$	92,444	$	217,822	$	50,054	$	105,270	$	-	$	4,334	$	561,356
Other revenue				4,245		739		1,140		384		1,124		60,291		152		68,075
	Segment revenue			95,677		93,183		218,962		50,438		106,394		60,291		4,486		629,431
Loss and LAE				55,238		55,435		160,139		5,637		58,997		-		4,028		339,474
Other expense				25,452		18,124		32,583		27,402		36,212		-		25,353		165,126
	Segment expense			80,690		73,559		192,722		33,039		95,209		-		29,381		504,600
		Segment pretax earnings (loss)	$	14,987	$	19,624	$	26,240	$	17,399	$	11,185	$	60,291	$	(24,895)	$	124,831

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Stock based compensation (Details 3) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Common stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares	38
Weighted-average grant date fair value, awarded	$ 46.41
Aggregate fair value	$ 1,771
Restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares	333
Weighted-average grant date fair value, awarded	$ 43.6
Aggregate fair value	14,525
Restricted stock [Member] | MinimumMember
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	0 years
Restricted stock [Member] | MaximumMember
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Restricted stock units (RSU) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares	13
Weighted-average grant date fair value, awarded	$ 45.14
Aggregate fair value	$ 593
Restricted stock units (RSU) [Member] | MinimumMember
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Restricted stock units (RSU) [Member] | MaximumMember
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years

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Notes Payable (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Notes Payable [Line Items]
Notes payable	$ 734,174	$ 654,098
6.3% Senior Notes [Member]
Notes Payable [Line Items]
Notes payable	299,174	299,098
Revolving Loan Facility [Member]
Notes Payable [Line Items]
Notes payable	$ 435,000	$ 355,000

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Reinsurance (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Components of reinsurance recoverables
Reinsurance recoverable on paid losses	$ 98,451	$ 156,026
Reinsurance recoverable on outstanding losses	453,653	459,134
Reinsurance recoverable on incurred but not reported losses	627,596	663,597
Reserve for uncollectible reinsurance	(1,500)	(1,500)
Total reinsurance recoverables	$ 1,178,200	$ 1,277,257

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(11)Commitments and Contingencies

Catastrophe and Large Loss Exposure

We have exposure to catastrophic and other large losses caused by natural perils (such as hurricanes, earthquakes, floods, tsunamis, hail storms and tornados) and man-made events (such as terrorist attacks). The incidence, timing and severity of these losses are unpredictable. We assess our exposures in areas most vulnerable to natural catastrophes and apply procedures to ascertain our probable maximum loss from a single event. We maintain reinsurance protection to reduce our potential losses from a future event.In the first six months of 2014, we recognized accident year net catastrophe losses, after reinsurance and reinstatement premium, of $9.5 million related to various small catastrophes. We recognized $26.6 million in the first six months of 2013, primarily due to European floods during the second quarter and various small catastrophes.

Litigation

We are a party to lawsuits, arbitrations and other proceedings that arise in the normal course of our business. Many of such lawsuits, arbitrations and other proceedings involve claims under policies that we underwrite as an insurer or reinsurer, the liabilities for which, we believe, have been adequately included in our loss reserves. Also, from time to time, we are a party to lawsuits, arbitrations and other proceedings that relate to disputes with third parties, or that involve alleged errors and omissions on the part of our subsidiaries. We have provided accruals for these items to the extent we deem the losses probable and reasonably estimable. Although the ultimate outcome of these matters cannot be determined at this time, based on present information, the availability of insurance coverage and advice received from our outside legal counsel, we believe the resolution of any such matters will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Indemnifications

In conjunction with the sales of business assets and subsidiaries, we have provided indemnifications to the buyers. Certain indemnifications cover typical representations and warranties related to our responsibilities to perform under the sales contracts. Under other indemnifications, we agree to reimburse the purchasers for taxes or ERISA-related amounts, if any, assessed after the sale date but related to pre-sale activities. We cannot quantify the maximum potential exposure covered by all of our indemnifications because the indemnifications cover a variety of matters, operations and scenarios and some have no time limit. For those with a time limit, the longest indemnification expires in 2025. We accrue a loss when a valid claim is made by a purchaser and we believe we have potential exposure.

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Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share, Basic and Diluted
Net earnings	$ 97,136	$ 88,162	$ 205,047	$ 194,012
Less: net earnings attributable to unvested restricted stock	(1,590)	(1,445)	(3,282)	(3,227)
Net earnings available to common stock	$ 95,546	$ 86,717	$ 201,765	$ 190,785
Weighted-average common shares outstanding	98,442	98,870	98,551	98,965
Dilutive effect of outstanding securities (determined using treasury stock method)	218	251	240	245
Weighted-average common shares and potential common shares outstanding	98,660	99,121	98,791	99,210
Earnings Per Share, Basic	$ 0.97	$ 0.88	$ 2.05	$ 1.93
Earnings Per Share, Diluted	$ 0.97	$ 0.87	$ 2.04	$ 1.92

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income [Text Block]

(7) Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income in our consolidated balance sheets were as follows:

				Foreign		Accumulated
		Net unrealized		currency		other
		investment		translation		comprehensive
		gains		adjustment		income
Six months ended June 30, 2014
Balance at December 31, 2013		$	99,960	$	18,691	$	118,651
Other comprehensive income			99,659		2,112		101,771
	Balance at June 30, 2014	$	199,619	$	20,803	$	220,422
Three months ended June 30, 2014
Balance at March 31, 2014		$	142,310	$	19,911	$	162,221
Other comprehensive income			57,309		892		58,201
	Balance at June 30, 2014	$	199,619	$	20,803	$	220,422

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Supplemental Information

6 Months Ended

Jun. 30, 2014

Supplemental Information [Abstract]

Supplemental Information

(12) Supplemental Information

Supplemental cash flow information was as follows:

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Income taxes paid	$	70,413	$	99,941	$	70,891	$	67,799
Interest paid		14,984		13,322		13,445		11,932
Proceeds from sales of available for sale fixed maturity
securities		286,843		171,801		167,832		13,666
Proceeds from sales of equity securities		170,182		44,308		26,107		26,500
Dividends declared but not paid at end of period		22,493		16,523

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Segments

6 Months Ended

Jun. 30, 2014

Segments [Abstract]

Segments

(10) Segments

We report HCC’s results in six operating segments, including the following five insurance underwriting segments:

U.S. Property & Casualty

Professional Liability

Accident & Health

U.S. Surety & Credit

International

The Investing segment includes our consolidated investment portfolio, as well as all investment income, investment related expenses, realized investment gains and losses, and other-than-temporary impairment credit losses on investments. All investment activity is reported as revenue, consistent with our consolidated presentation.

In addition to our segments, we include a Corporate & Other category to reconcile segment results to consolidated totals. The Corporate & Other category includes corporate operating expenses not allocated to the segments, interest expense on long-term debt, foreign currency expense (benefit), and underwriting results of our Exited Lines. Our Exited Lines include product lines that we no longer write and do not expect to write in the future.

The following tables present information by business segment.

			U.S. Property		Professional		Accident		U.S. Surety						Corporate
			& Casualty		Liability		& Health		& Credit		International		Investing		& Other		Consolidated
Six months ended June 30, 2014
Net earned premium			$	185,588	$	173,577	$	472,481	$	97,134	$	205,460	$	-	$	620	$	1,134,860
Other revenue				9,946		470		5,502		868		1,899		138,395		564		157,644
	Segment revenue			195,534		174,047		477,983		98,002		207,359		138,395		1,184		1,292,504
Loss and LAE				93,388		103,321		341,295		28,558		82,380		-		(4)		648,938
Other expense				58,148		34,545		74,254		53,407		79,979		-		50,617		350,950
	Segment expense			151,536		137,866		415,549		81,965		162,359		-		50,613		999,888
		Segment pretax earnings (loss)	$	43,998	$	36,181	$	62,434	$	16,037	$	45,000	$	138,395	$	(49,429)	$	292,616

Six months ended June 30, 2013
Net earned premium			$	184,963	$	185,223	$	434,947	$	97,231	$	210,412	$	-	$	9,766	$	1,122,542
Other revenue				11,429		325		2,330		621		1,902		124,626		22		141,255
	Segment revenue			196,392		185,548		437,277		97,852		212,314		124,626		9,788		1,263,797
Loss and LAE				107,394		111,821		320,566		18,851		104,916		-		8,623		672,171
Other expense				52,757		35,872		63,709		53,681		71,921		-		37,459		315,399
	Segment expense			160,151		147,693		384,275		72,532		176,837		-		46,082		987,570
		Segment pretax earnings (loss)	$	36,241	$	37,855	$	53,002	$	25,320	$	35,477	$	124,626	$	(36,294)	$	276,227

			U.S. Property		Professional		Accident		U.S. Surety						Corporate
			& Casualty		Liability		& Health		& Credit		International		Investing		& Other		Consolidated
Three months ended June 30, 2014
Net earned premium			$	88,536	$	88,127	$	240,338	$	50,191	$	104,727	$	-	$	329	$	572,248
Other revenue				4,070		195		3,862		580		931		61,343		345		71,326
	Segment revenue			92,606		88,322		244,200		50,771		105,658		61,343		674		643,574
Loss and LAE				46,733		52,189		172,296		14,862		40,765		-		249		327,094
Other expense				29,055		17,420		37,875		27,463		41,302		-		25,721		178,836
	Segment expense			75,788		69,609		210,171		42,325		82,067		-		25,970		505,930
		Segment pretax earnings (loss)	$	16,818	$	18,713	$	34,029	$	8,446	$	23,591	$	61,343	$	(25,296)	$	137,644

Three months ended June 30, 2013
Net earned premium			$	91,432	$	92,444	$	217,822	$	50,054	$	105,270	$	-	$	4,334	$	561,356
Other revenue				4,245		739		1,140		384		1,124		60,291		152		68,075
	Segment revenue			95,677		93,183		218,962		50,438		106,394		60,291		4,486		629,431
Loss and LAE				55,238		55,435		160,139		5,637		58,997		-		4,028		339,474
Other expense				25,452		18,124		32,583		27,402		36,212		-		25,353		165,126
	Segment expense			80,690		73,559		192,722		33,039		95,209		-		29,381		504,600
		Segment pretax earnings (loss)	$	14,987	$	19,624	$	26,240	$	17,399	$	11,185	$	60,291	$	(24,895)	$	124,831

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General Information

6 Months Ended

Jun. 30, 2014

General Information [Abstract]

General Information

(1) General Information

HCC Insurance Holdings, Inc. (HCC) and its subsidiaries (collectively we, us or our) include domestic andforeign property and casualty and life insurance companies and underwriting agencies with offices in theUnited States, the United Kingdom, Spain and Ireland. We underwrite a variety of largely non-correlated specialtyinsurance products, including property and casualty, accident and health, surety andcredit product lines,in approximately 180 countries. We market our products through a network of independent agents and brokers, throughmanaging general agents owned by the company, and directly to consumers. In addition, we assume insurance written by other insurance companies.

Basis of Presentation

Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of HCC and its subsidiaries. We have made all adjustments that, in our opinion, are necessary for a fair statement of results of the interim periods, and all such adjustments are of a normal recurring nature. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013. The consolidated balance sheet at December 31, 2013 was derived from the audited financial statements but does not include all disclosures required by GAAP.

Management must make estimates and assumptions that affect amounts reported in our consolidated financial statements and in disclosures of contingent assets and liabilities. Ultimate results could differ from those estimates.

Goodwill

An indicator of impairment of goodwill exists when the fair value of a reporting unit is less than its carrying value. We conducted our annual goodwill impairment test as of June 30, 2014, which is consistent with the timeframe for our annual assessment in prior years. This test consisted of a qualitative assessment in which we determined that it is more likely than not that the fair value of each of our five reporting units exceeded its carrying amount as of June 30, 2014.

Recent Accounting Guidance

A new accounting standard issued in the second quarter of 2014 will change the manner in which most companies recognize revenue. The standard requires that revenue reflect the transfer of goods or services to customers based on the consideration/payment the company expects to be entitled to in exchange for those goods or services; however, the standard does not change the accounting for insurance contracts or investment income. The new standard also requires enhanced disclosures about revenue. This accounting guidance is effective in the first quarter of 2017 and may be applied on a full retrospective or modified retrospective approach. We are currently assessing the impact the implementation of this standard will have on our consolidated financial statements.

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Stock based Compensation

6 Months Ended

Jun. 30, 2014

Stock based Compensation [Abstract]

Stock based Compensation

(9) Stock-Based Compensation

In 2014, we granted the following shares of common stock, restricted stock and restricted stock units.

		Weighted-average
	Number	grant date		Aggregate		Vesting
	of shares	fair value		fair value		period
Common stock	38	$	46.41	$	1,771	None
Restricted stock	333		43.60		14,525	0 - 4 years
Restricted stock units	13		45.14		593	4 years

For common stock grants, we measure fair value based on the closing stock price of our common stock on the grant date and expense it on the grant date.

Certain awards of restricted stock and restricted stock units contain a performance condition based on the ultimate results for the applicable underwriting year.The number of such shares that vest could be higher or lowerthan initially granted.We measure fair value for these awards based on the closing price of our common stock on the grant date, and we recognize expense on a straight-line basis over the vesting period for those restricted stock awards or units expected to vest.

Certain of our executive officers were granted performance-based restricted stock in 2014. This restricted stock vests after three years and can vest from 0% to 200% of the initial shares granted.Vesting is based equally on an operating return on equity performance factor and a total shareholder return performance factor.

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Liability for Unpaid Loss and Loss Adjustment Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
LiabilityForUnpaidClaimsAndClaimsAdjustmentExpenseNetAbstract
Reserves at beginning of period	$ 3,847,417	$ 3,774,162	$ 3,902,132	$ 3,767,850
Less reinsurance recoverables on reserves	1,098,576	1,012,920	1,122,731	1,018,047
Net reserves at beginning of period	2,748,841	2,761,242	2,779,401	2,749,803
Net loss and loss adjustment expense:
Net loss and loss adjustment expense	327,094	339,474	648,938	672,171
Net loss and loss adjustment expense payments for claims occurring during:
Net loss and loss adjustment expense payments	(319,114)	(286,797)	(674,070)	(586,326)
Foreign currency adjustment	3,427	(2,898)	5,979	(24,627)
Net reserves at end of period	2,760,248	2,811,021	2,760,248	2,811,021
Plus reinsurance recoverables on reserves	1,081,249	1,003,663	1,081,249	1,003,663
Reserves at end of period	$ 3,841,497	$ 3,814,684	$ 3,841,497	$ 3,814,684

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Liability for Unpaid Loss and Loss Adjustment Expense (Tables)

6 Months Ended

Jun. 30, 2014

Liability for Unpaid Loss and Loss Adjustment Expense

Rollforward of Liability for Unpaid Loss and Loss Adjustment Expense

		Six months ended June 30,				Three months ended June 30,
		2014		2013		2014		2013
Reserves at beginning of period		$	3,902,132	$	3,767,850	$	3,847,417	$	3,774,162
Less reinsurance recoverables on reserves			1,122,731		1,018,047		1,098,576		1,012,920
	Net reserves at beginning of period		2,779,401		2,749,803		2,748,841		2,761,242
Net loss and loss adjustment expense			648,938		672,171		327,094		339,474
Net loss and loss adjustment expense payments			(674,070)		(586,326)		(319,114)		(286,797)
Foreign currency adjustment			5,979		(24,627)		3,427		(2,898)
	Net reserves at end of period		2,760,248		2,811,021		2,760,248		2,811,021
Plus reinsurance recoverables on reserves			1,081,249		1,003,663		1,081,249		1,003,663
	Reserves at end of period	$	3,841,497	$	3,814,684	$	3,841,497	$	3,814,684

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Share-based Compensation [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

		Weighted-average
	Number	grant date		Aggregate		Vesting
	of shares	fair value		fair value		period
Common stock	38	$	46.41	$	1,771	None
Restricted stock	333		43.60		14,525	0 - 4 years
Restricted stock units	13		45.14		593	4 years

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Liability for Unpaid Loss and Loss Adjustment Expense (Details Textuals1) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
U.S. Surety & Credit [Member]
Segment Lob Event Reporting Information [Line Items]
Net (Favorable) Adverse Loss Development	$ (9.5)	$ (9.5)
International [Member]
Segment Lob Event Reporting Information [Line Items]
Net (Favorable) Adverse Loss Development	(2.3)	(2.3)
Surety [Member] | U.S. Surety & Credit [Member]
Segment Lob Event Reporting Information [Line Items]
Net (Favorable) Adverse Loss Development	(3.7)	(3.7)
Credit LOB [Member] | U.S. Surety & Credit [Member]
Segment Lob Event Reporting Information [Line Items]
Net (Favorable) Adverse Loss Development	$ (5.8)	$ (5.8)

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Notes Payable

6 Months Ended

Jun. 30, 2014

Notes Payable [Abstract]

Notes Payable

(6) Notes Payable

Our notes payable consisted of the following:

		June 30,		December 31,
		2014		2013
6.30% Senior Notes		$	299,174	$	299,098
Revolving Loan Facility			435,000		355,000
	Total notes payable	$	734,174	$	654,098

On April 30, 2014, we entered into an agreement to modify our $600.0 million Revolving Loan Facility (Facility). The amended agreement increased the borrowing capacity under the Facility to $825.0million and extended the term by two years to April 30, 2019, among other changes. The weighted-average interest rate on borrowings under the Facility at June 30, 2014was 1.4%. The borrowings and letters of credit issued under the Facility reduced our available borrowing capacity on the Facility to $384.1 million at June 30, 2014.

There were no other material changes to the Facility or to the terms and conditions of our Senior Notes or Standby Letter of Credit Facility (Standby Facility) from those described in Note 7, “Notes Payable” to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2013.

We were in compliance with debt covenants related to our 6.30% Senior Notes, the Facility and the Standby Facility at June 30, 2014.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities
Net earnings	$ 205,047	$ 194,012
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in premium, claims and other receivables	(109,043)	(99,897)
Change in reinsurance recoverables	96,770	(17,018)
Change in ceded unearned premium	(35,485)	(35,032)
Change in loss and loss adjustment expense payable	(57,118)	52,026
Change in unearned premium	138,248	119,759
Change in reinsurance, premium and claims payable	55,764	43,237
Change in accounts payable and accrued liabilities	(69,414)	(119,103)
Stock-based compensation expense	10,303	6,955
Depreciation and amortization expense	8,289	9,093
Gain on investments	(25,151)	(13,193)
Other, net	(22,924)	(38,849)
Cash provided by operating activities	195,286	101,990
Investing activities
Sales of available for sale fixed maturity securities	286,843	171,801
Sales of equity securities	170,182	44,308
Sales of other investments	0	23,719
Maturity or call of available for sale fixed maturity securities	269,468	375,924
Cost of available for sale fixed maturity securities acquired	(675,945)	(756,782)
Cost of equity securities acquired	(78,817)	(114,685)
Change in short-term investments	(168,241)	145,977
Payments for purchase of businesses	(2,579)	(8,214)
Proceeds from sale of subsidiaries	12,942	507
Other, net	(3,902)	(2,698)
Cash provided (used) by investing activities	(190,049)	(120,143)
Financing activities
Advances on line of credit	140,000	70,000
Payments on line of credit	(60,000)	(15,000)
Sale of common stock	11,709	7,408
Purchase of common stock	(41,542)	(46,586)
Dividends paid	(45,076)	(33,250)
Other, net	2,278	3,544
Cash provided (used) by financing activities	7,369	(13,884)
Net increase (decrease) in cash	12,606	(32,037)
Cash at beginning of year	58,301	71,390
Cash at end of period	$ 70,907	$ 39,353

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2014

Notes Payable [Abstract]

Notes Payable

		June 30,		December 31,
		2014		2013
6.30% Senior Notes		$	299,174	$	299,098
Revolving Loan Facility			435,000		355,000
	Total notes payable	$	734,174	$	654,098

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

(8)Earnings Per Share

The following table details the numerator and denominator used in our earnings per share calculations.

				Six months ended June 30,				Three months ended June 30,
				2014		2013		2014		2013
Net earnings				$	205,047	$	194,012	$	97,136	$	88,162
Less: net earnings attributable to unvested restricted stock					(3,282)		(3,227)		(1,590)		(1,445)
		Net earnings available to common stock		$	201,765	$	190,785	$	95,546	$	86,717
Weighted-average common shares outstanding					98,551		98,965		98,442		98,870
Dilutive effect of outstanding securities (determined using
	treasury stock method)				240		245		218		251
		Weighted-average common shares and potential
			common shares outstanding		98,791		99,210		98,660		99,121
Earnings per common share
		Basic		$	2.05	$	1.93	$	0.97	$	0.88
		Diluted		$	2.04	$	1.92	$	0.97	$	0.87

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Supplemental Information (Tables)

6 Months Ended

Jun. 30, 2014

Supplemental Information [Abstract]

Supplemental Information

	Six months ended June 30,				Three months ended June 30,
	2014		2013		2014		2013
Income taxes paid	$	70,413	$	99,941	$	70,891	$	67,799
Interest paid		14,984		13,322		13,445		11,932
Proceeds from sales of available for sale fixed maturity
securities		286,843		171,801		167,832		13,666
Proceeds from sales of equity securities		170,182		44,308		26,107		26,500
Dividends declared but not paid at end of period		22,493		16,523

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments
Fixed maturity securities - available for sale, at fair value (amortized cost: 2014 - $6,078,453 and 2013 - $5,921,487)	$ 6,333,191	$ 6,022,473
Equity securities - available for sale, at fair value (cost: 2014 - $394,685 and 2013 - $464,388)	448,685	517,466
Short-term investments, at cost (approximates fair value)	342,335	178,753
Total investments	7,124,211	6,718,692
Cash	70,907	58,301
Restricted cash and securities	130,920	125,777
Premium, claims and other receivables	676,340	580,107
Reinsurance recoverables	1,178,200	1,277,257
Ceded unearned premium	340,853	305,438
Ceded life and annuity benefits	53,406	56,491
Deferred policy acquisition costs	226,333	201,698
Goodwill	895,799	895,200
Other assets	165,022	125,559
Total assets	10,861,991	10,344,520
LIABILITIES
Loss and loss adjustment expense payable	3,841,497	3,902,132
Life and annuity policy benefits	53,406	56,491
Reinsurance, premium and claims payable	388,855	332,985
Unearned premium	1,272,969	1,134,849
Deferred ceding commissions	100,571	89,528
Notes payable	734,174	654,098
Accounts payable and accrued liabilities	556,464	500,007
Total liabilities	6,947,936	6,670,090
SHAREHOLDERS' EQUITY
Common stock, $1.00 par value; 250,000 shares authorized (shares issued: 2014 - 126,252 and 2013 - 125,577; outstanding: 2014 - 100,050 and 2013 - 100,336)	126,252	125,577
Additional paid-in capital	1,091,773	1,073,105
Retained earnings	3,245,554	3,085,501
Accumulated other comprehensive income	220,422	118,651
Treasury stock, at cost (shares: 2014 - 26,202 and 2013 - 25,241)	(769,946)	(728,404)
Total shareholders' equity	3,914,055	3,674,430
Total liabilities and shareholders' equity	$ 10,861,991	$ 10,344,520

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Stock based Compensation (Details Textuals)	6 Months Ended
	Jun. 30, 2014
MinimumMember
Stock Based Compensation [Line Items]
Percentage Of Restricted Stock Shares Vesting Range	0.00%
MaximumMember
Stock Based Compensation [Line Items]
Percentage Of Restricted Stock Shares Vesting Range	200.00%

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Consolidated Statement of Changes in Shareholders' Equity (USD $) In Thousands	Total	Common stock [Member]	Additional paid-in capital [Member]	Retained earnings [Member]	Accumulated other comprehensive income [Member]	Treasury stock [Member]
Balance at Dec. 31, 2013	$ 3,674,430	$ 125,577	$ 1,073,105	$ 3,085,501	$ 118,651	$ (728,404)
Net earnings	205,047			205,047
Other comprehensive income	101,771				101,771
Issuance of 301 shares for exercise of options, including tax effect	10,087	301	9,786
Issuance of 44 shares for employee stock purchase plan	1,622	44	1,578
Purchase of 961 common shares	(41,542)					(41,542)
Stock-based compensation	7,634	330	7,304
Cash dividends declared, $0.45 per share	(44,994)			(44,994)
Balance at Jun. 30, 2014	$ 3,914,055	$ 126,252	$ 1,091,773	$ 3,245,554	$ 220,422	$ (769,946)

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Differences between our effective tax rate for financial statement purposes and the Federal statutory rate
Income tax expense	$ 40,508	$ 36,669	$ 87,569	$ 82,215

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Reinsurance

6 Months Ended

Jun. 30, 2014

Reinsurance [Abstract]

Reinsurance

(4) Reinsurance

In the normal course of business, our insurance companies cede a portion of their premium to reinsurers through treaty and facultative reinsurance agreements. Although reinsurance does not discharge the direct insurer from liability to its policyholder, our insurance companies participate in such agreements in order to limit their loss exposure, protect them against catastrophic losses and diversify their business. The following tables present the effect of such reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs.

		Six months ended June 30,				Three months ended June 30,
		2014		2013		2014		2013
Direct written premium		$	1,369,751	$	1,294,681	$	749,239	$	713,110
Reinsurance assumed			209,700		234,967		83,490		96,333
Reinsurance ceded			(342,255)		(321,430)		(185,715)		(180,409)
	Net written premium	$	1,237,196	$	1,208,218	$	647,014	$	629,034
Direct earned premium		$	1,288,995	$	1,237,629	$	651,682	$	621,224
Reinsurance assumed			152,341		171,308		76,318		86,036
Reinsurance ceded			(306,476)		(286,395)		(155,752)		(145,904)
	Net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356
Direct loss and loss adjustment expense		$	725,911	$	693,480	$	375,184	$	335,968
Reinsurance assumed			63,274		110,708		21,472		71,017
Reinsurance ceded			(140,247)		(132,017)		(69,562)		(67,511)
	Net loss and loss adjustment expense	$	648,938	$	672,171	$	327,094	$	339,474

Policy acquisition costs		$	215,210	$	204,031	$	110,565	$	103,745
Ceding commissions			(73,199)		(66,286)		(37,595)		(32,949)
	Net policy acquisition costs	$	142,011	$	137,745	$	72,970	$	70,796

The table below shows the components of our reinsurance recoverables in our consolidated balance sheets.

		June 30,		December 31,
		2014		2013
Reinsurance recoverable on paid losses		$	98,451	$	156,026
Reinsurance recoverable on outstanding losses			453,653		459,134
Reinsurance recoverable on incurred but not reported losses			627,596		663,597
Reserve for uncollectible reinsurance			(1,500)		(1,500)
	Total reinsurance recoverables	$	1,178,200	$	1,277,257

Reinsurers not authorized by the respective states of domicile of our U.S. domiciled insurance companies are required to collateralize reinsurance obligations due to us. The table below shows letters of credit and cash that are available to us as collateral, as well as amounts we owe reinsurers that can be offset against amounts due to us.

		June 30,		December 31,
		2014		2013
Payables to reinsurers		$	220,281	$	208,850
Letters of credit			85,752		100,529
Funds held in trust			148,508		88,310
	Total credits	$	454,541	$	397,689

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Components Of Income Tax Expense Benefit Continuing Operations Abstract
Income tax expense	$ 40,508	$ 36,669	$ 87,569	$ 82,215

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Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Effect of reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs
Direct written premium	$ 749,239	$ 713,110	$ 1,369,751	$ 1,294,681
Reinsurance assumed	83,490	96,333	209,700	234,967
Reinsurance ceded	(185,715)	(180,409)	(342,255)	(321,430)
Net written premium	647,014	629,034	1,237,196	1,208,218
Direct earned premium	651,682	621,224	1,288,995	1,237,629
Reinsurance assumed	76,318	86,036	152,341	171,308
Reinsurance ceded	(155,752)	(145,904)	(306,476)	(286,395)
Net earned premium	572,248	561,356	1,134,860	1,122,542
Direct loss and loss adjustment expense	375,184	335,968	725,911	693,480
Reinsurance assumed	21,472	71,017	63,274	110,708
Reinsurance ceded	(69,562)	(67,511)	(140,247)	(132,017)
Net loss and loss adjustment expense	327,094	339,474	648,938	672,171
Policy acquisition costs	110,565	103,745	215,210	204,031
Ceding commissions	(37,595)	(32,949)	(73,199)	(66,286)
Net policy acquisition costs	$ 72,970	$ 70,796	$ 142,011	$ 137,745

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Consolidated Statement of Changes in Shareholders' Equity (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Issuance of shares for exercise of options	301
Issuance of shares for employee stock purchase plan	44
Purchase of common shares	961
Cash dividends declared	$ 0.45

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments
Fixed maturity securities, available for sale, amortized cost	$ 6,078,453	$ 5,921,487
Equity securities, available for sale, cost	$ 394,685	$ 464,388
SHAREHOLDERS' EQUITY
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	250,000	250,000
Common stock, shares issued	126,252	125,577
Common stock, shares outstanding	100,050	100,336
Treasury stock	26,202	25,241

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Investments (Details Textuals) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Investment [Abstract]
Condition for categorizing the impaired securities	$ 1,000,000
Condition for categorizing the impaired securities, percentage	10.00%
Weighted-average life of mortgage-backed and asset-backed securities, Years	5.5
Number of fixed maturity and equity securities held	2,760
Percentage of securities in unrealized loss position	20.00%
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ (31,912,000)	$ (105,221,000)

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Document and Entity Information In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	HCC INSURANCE HOLDINGS INC/DE/
Entity Central Index Key	0000888919
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	100.0

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Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Measurements [Abstract]

Fair Value Measurements

(3) Fair Value Measurements

Our financial instruments include assets and liabilities carried at fair value, as well as assets and liabilities carried at cost or amortized cost but disclosed at fair value in our financial statements.In determining fair value, we generally apply the market approach, which uses prices and other relevant data based on market transactions involving identical or comparable assets and liabilities. We classify our financial instruments into the following three-level hierarchy:

•Level 1 – Inputs are based on quoted prices in active markets for identical instruments.

•Level 2 – Inputs are based on observable market data (other than quoted prices), or are derived from or corroborated by observable market data.

•Level 3 – Inputs are unobservable and not corroborated by market data.

Our Level 1 investments consist ofU.S. Treasuries, money market fundsand equity securities traded in an active exchange market. We use unadjusted quoted prices for identical instruments to measure fair value.

Our Level 2 investments include most of our fixed maturity securities, which consist of U.S. government agency securities, municipal bonds (including those held as restricted securities), corporate debt securities, bank loans, mortgage-backed and asset-backed securities (including collateralized loan obligations), and deposits supporting our Lloyd’s syndicate business. Level 2 also includes certificates of deposit and other interest-bearing deposits at banks, which we report as short-term investments. We measure fair value for the majority of our Level 2 investments using matrix pricing and observable market data, including benchmark securities or yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers, default rates, loss severity and other economic measures. We measure fair value for our structured securities using observable market data in cash flow models.

We are responsible for the prices used in our fair value measurements. We use independent pricing services to assist us in determining fair value for 99% of our Level 2 investments. The pricing services provide a single price or quote per security. We use data provided by our third party investment managers and Lloyd’s of London to value the remaining Level 2 investments. To validate that these quoted prices are reasonable estimates of fair value, we perform various quantitative and qualitative procedures, including: 1) evaluation of the underlying methodologies, 2) analysis of recent sales activity, 3) analytical review of our fair values against current market prices and 4) comparison of the pricing services’ fair value to other pricing services’ fair value for the same investment. No markets for our investments were judged to be inactive at period end. Based on these procedures, we did not adjust the prices or quotes provided by our independent pricing services, third party investment managers or Lloyd’s of London as of June 30, 2014 or December 31, 2013.

Our Level 2 financial instruments also include our notes payable. We determine the fair value of our 6.30% Senior Notes based on quoted prices in an inactive market. The fair value of borrowings under our Revolving Loan Facility approximates the carrying amount because interest is based on 30-day LIBOR plus a margin.

Our Level 3 securities include certain fixed maturity securities and an insurance contract that we account for as a derivative and classify in other assets. Our Level 3 category also includes a liability for future earnoutpayments due to former owners of a business we acquired, which is classified within accounts payable and accrued liabilities. We determine fair value of the derivative and the earnout payments based on internally developed models that use assumptions or other data that are not readily observable from objective sources. Fixed maturity securities classified as Level 3 at December 31, 2013 included special purpose revenue bond auction rate securities, which had interest rates that reset at periodic intervals.  These securities were thinly traded and observable market data was not readily available.  We determined the fair value of these securities using prices quoted by a broker.

The following tables present the fair value of our financial instruments that were carried or disclosed at fair value. Unless indicated, these items were carried at fair value on our consolidated balance sheets.

			Level 1		Level 2		Level 3		Total
June 30, 2014
Fixed maturity securities
	U.S. government and government agency securities		$	77,934	$	7,693	$	-	$	85,627
	Fixed maturity securities of states, municipalities
		and political subdivisions		-		965,705		-		965,705
	Special purpose revenue bonds of states, municipalities
		and political subdivisions		-		2,376,963		-		2,376,963
	Corporate securities			-		1,199,562		149		1,199,711
	Residential mortgage-backed securities			-		764,534		-		764,534
	Commercial mortgage-backed securities			-		547,117		-		547,117
	Asset-backed securities			-		304,396		-		304,396
	Foreign government securities			-		89,138		-		89,138
		Total fixed maturity securities		77,934		6,255,108		149		6,333,191
Equity securities				448,685		-		-		448,685
Short-term investments*				186,602		155,733		-		342,335
Restricted cash and securities				-		2,269		-		2,269
Premium, claims and other receivables				-		63,802		-		63,802
Other assets				20		-		1,099		1,119
	Total assets measured at fair value		$	713,241	$	6,476,912	$	1,248	$	7,191,401
Notes payable*			$	-	$	783,738	$	-	$	783,738
Accounts payable and accrued liabilities - earnout liability				-		2,269		7,386		9,655
	Total liabilities measured at fair value		$	-	$	786,007	$	7,386	$	793,393

__________

* Carried at cost or amortized cost on consolidated balance sheet.

			Level 1		Level 2		Level 3		Total
December 31, 2013
Fixed maturity securities
	U.S. government and government agency securities		$	84,032	$	8,677	$	-	$	92,709
	Fixed maturity securities of states, municipalities
		and political subdivisions		-		986,486		-		986,486
	Special purpose revenue bonds of states, municipalities
		and political subdivisions		-		2,255,928		9,267		2,265,195
	Corporate securities			-		1,225,088		150		1,225,238
	Residential mortgage-backed securities			-		618,119		-		618,119
	Commercial mortgage-backed securities			-		504,888		-		504,888
	Asset-backed securities			-		182,392		-		182,392
	Foreign government securities			-		147,446		-		147,446
		Total fixed maturity securities		84,032		5,929,024		9,417		6,022,473
Equity securities				517,466		-		-		517,466
Short-term investments*				68,958		109,795		-		178,753
Restricted cash and securities				-		1,853		-		1,853
Premium, claims and other receivables				-		66,515		-		66,515
Other assets				20		-		941		961
	Total assets measured at fair value		$	670,476	$	6,107,187	$	10,358	$	6,788,021
Notes payable*			$	-	$	707,656	$	-	$	707,656
Accounts payable and accrued liabilities - earnout liability				-		1,853		7,259		9,112
	Total liabilities measured at fair value		$	-	$	709,509	$	7,259	$	716,768

__________

*Carried at cost or amortized cost on consolidated balance sheet.

In the first quarter of 2013, we purchased $9.4million of special purpose revenue bond auction rate securities, which we continued to hold and classify in Level 3 at December 31, 2013. We sold these securities in the first quarter of 2014. There were no transfers between Level 1, Level 2 or Level 3 in the first six months of 2014and2013.

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Consolidated Statement of Earnings (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
REVENUE
Net earned premium	$ 572,248	$ 561,356	$ 1,134,860	$ 1,122,542
Net investment income	56,438	55,668	113,244	111,433
Other operating income	9,983	7,784	19,249	16,629
Net realized investment gain	4,905	4,623	25,151	13,193
Total revenue	643,574	629,431	1,292,504	1,263,797
EXPENSE
Loss and loss adjustment expense, net	327,094	339,474	648,938	672,171
Policy acquisition costs, net	72,970	70,796	142,011	137,745
Other operating expense	99,001	87,719	194,955	164,572
Interest expense	6,865	6,611	13,984	13,082
Total expense	505,930	504,600	999,888	987,570
Earnings before income taxes	137,644	124,831	292,616	276,227
Income tax expense	40,508	36,669	87,569	82,215
Net earnings	$ 97,136	$ 88,162	$ 205,047	$ 194,012
Earnings per common share
Basic	$ 0.97	$ 0.88	$ 2.05	$ 1.93
Diluted	$ 0.97	$ 0.87	$ 2.04	$ 1.92

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Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investment [Abstract]

Fixed Maturity & Equity Securities Available For Sale

		Cost or		Gross		Gross
		amortized		unrealized		unrealized
		cost		gain		loss		Fair value
June 30, 2014
U.S. government and government agency securities		$	84,479	$	1,354	$	(206)	$	85,627
Fixed maturity securities of states, municipalities
	and political subdivisions		905,732		60,882		(909)		965,705
Special purpose revenue bonds of states, municipalities
	and political subdivisions		2,263,181		121,364		(7,582)		2,376,963
Corporate securities			1,151,993		51,846		(4,128)		1,199,711
Residential mortgage-backed securities			753,516		19,881		(8,863)		764,534
Commercial mortgage-backed securities			530,075		20,941		(3,899)		547,117
Asset-backed securities			304,866		622		(1,092)		304,396
Foreign government securities			84,611		4,630		(103)		89,138
	Total fixed maturity securities	$	6,078,453	$	281,520	$	(26,782)	$	6,333,191
Equity securities		$	394,685	$	59,130	$	(5,130)	$	448,685

December 31, 2013
U.S. government and government agency securities		$	91,047	$	2,157	$	(495)	$	92,709
Fixed maturity securities of states, municipalities
	and political subdivisions		941,580		50,885		(5,979)		986,486
Special purpose revenue bonds of states, municipalities
	and political subdivisions		2,240,412		71,541		(46,758)		2,265,195
Corporate securities			1,195,387		40,860		(11,009)		1,225,238
Residential mortgage-backed securities			622,766		15,289		(19,936)		618,119
Commercial mortgage-backed securities			502,069		16,155		(13,336)		504,888
Asset-backed securities			183,660		319		(1,587)		182,392
Foreign government securities			144,566		3,237		(357)		147,446
	Total fixed maturity securities	$	5,921,487	$	200,443	$	(99,457)	$	6,022,473
Equity securities		$	464,388	$	58,842	$	(5,764)	$	517,466

Gross unrealized losses and fair value of all available for sale fixed maturity securities loss that were in a continuous loss position

				Less than 12 months				12 months or more				Total
						Unrealized				Unrealized				Unrealized
				Fair value		losses		Fair value		losses		Fair value		losses
June 30, 2014
Fixed maturity securities
	U.S. government and government agency
		securities		$	5,838	$	(6)	$	11,410	$	(200)	$	17,248	$	(206)
	Fixed maturity securities of states,
		municipalities and political subdivisions			6,015		(34)		38,173		(875)		44,188		(909)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			51,330		(200)		327,557		(7,382)		378,887		(7,582)
	Corporate securities				73,935		(366)		105,399		(3,762)		179,334		(4,128)
	Residential mortgage-backed securities				58,198		(272)		259,170		(8,591)		317,368		(8,863)
	Commercial mortgage-backed securities				-		-		150,806		(3,899)		150,806		(3,899)
	Asset-backed securities				115,769		(927)		7,080		(165)		122,849		(1,092)
	Foreign government securities				19,363		(55)		7,193		(48)		26,556		(103)
Equity securities					63,229		(4,599)		6,952		(531)		70,181		(5,130)
			Total	$	393,677	$	(6,459)	$	913,740	$	(25,453)	$	1,307,417	$	(31,912)

December 31, 2013
Fixed maturity securities
	U.S. government and government agency
		securities		$	23,717	$	(495)	$	-	$	-	$	23,717	$	(495)
	Fixed maturity securities of states,
		municipalities and political subdivisions			136,160		(5,277)		8,997		(702)		145,157		(5,979)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			684,560		(35,832)		83,228		(10,926)		767,788		(46,758)
	Corporate securities				277,853		(8,202)		35,437		(2,807)		313,290		(11,009)
	Residential mortgage-backed securities				306,874		(15,861)		31,687		(4,075)		338,561		(19,936)
	Commercial mortgage-backed securities				203,347		(12,611)		4,915		(725)		208,262		(13,336)
	Asset-backed securities				126,922		(1,587)		-		-		126,922		(1,587)
	Foreign government securities				78,182		(357)		-		-		78,182		(357)
Equity securities					75,620		(5,437)		7,016		(327)		82,636		(5,764)
			Total	$	1,913,235	$	(85,659)	$	171,280	$	(19,562)	$	2,084,515	$	(105,221)

Amortized cost and fair value of fixed maturity securities investments classified by contractual maturity date

		Cost or amortized cost		Fair value
Due in 1 year or less		$	192,394	$	195,936
Due after 1 year through 5 years			1,012,738		1,064,207
Due after 5 years through 10 years			1,366,848		1,450,529
Due after 10 years through 15 years			942,481		992,274
Due after 15 years			975,535		1,014,198
	Securities with contractual maturities		4,489,996		4,717,144
Mortgage-backed and asset-backed securities			1,588,457		1,616,047
	Total fixed maturity securities	$	6,078,453	$	6,333,191

Realized pretax gains (losses) on the sale of investments

			Six months ended June 30,				Three months ended June 30,
			2014		2013		2014		2013
Gains
	Fixed maturity securities		$	6,150	$	4,139	$	4,135	$	635
	Equity securities			25,863		5,989		1,425		4,649
	Other investments			-		5,345		-		817
		Total gains		32,013		15,473		5,560		6,101
Losses
	Fixed maturity securities			(3,688)		(994)		(650)		(306)
	Equity securities			(3,174)		(1,286)		(5)		(1,172)
		Total losses		(6,862)		(2,280)		(655)		(1,478)
Net
	Fixed maturity securities			2,462		3,145		3,485		329
	Equity securities			22,689		4,703		1,420		3,477
	Other investments			-		5,345		-		817
		Net realized investment gain	$	25,151	$	13,193	$	4,905	$	4,623

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Investments

6 Months Ended

Jun. 30, 2014

Investment [Abstract]

Investments

(2) Investments

The cost or amortized cost, gross unrealized gain or loss, and fair value of our fixed maturity and equity securities, all of which are classified as available for sale, were as follows:

				Less than 12 months				12 months or more				Total
						Unrealized				Unrealized				Unrealized
				Fair value		losses		Fair value		losses		Fair value		losses
June 30, 2014
Fixed maturity securities
	U.S. government and government agency
		securities		$	5,838	$	(6)	$	11,410	$	(200)	$	17,248	$	(206)
	Fixed maturity securities of states,
		municipalities and political subdivisions			6,015		(34)		38,173		(875)		44,188		(909)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			51,330		(200)		327,557		(7,382)		378,887		(7,582)
	Corporate securities				73,935		(366)		105,399		(3,762)		179,334		(4,128)
	Residential mortgage-backed securities				58,198		(272)		259,170		(8,591)		317,368		(8,863)
	Commercial mortgage-backed securities				-		-		150,806		(3,899)		150,806		(3,899)
	Asset-backed securities				115,769		(927)		7,080		(165)		122,849		(1,092)
	Foreign government securities				19,363		(55)		7,193		(48)		26,556		(103)
Equity securities					63,229		(4,599)		6,952		(531)		70,181		(5,130)
			Total	$	393,677	$	(6,459)	$	913,740	$	(25,453)	$	1,307,417	$	(31,912)

December 31, 2013
Fixed maturity securities
	U.S. government and government agency
		securities		$	23,717	$	(495)	$	-	$	-	$	23,717	$	(495)
	Fixed maturity securities of states,
		municipalities and political subdivisions			136,160		(5,277)		8,997		(702)		145,157		(5,979)
	Special purpose revenue bonds of states,
		municipalities and political subdivisions			684,560		(35,832)		83,228		(10,926)		767,788		(46,758)
	Corporate securities				277,853		(8,202)		35,437		(2,807)		313,290		(11,009)
	Residential mortgage-backed securities				306,874		(15,861)		31,687		(4,075)		338,561		(19,936)
	Commercial mortgage-backed securities				203,347		(12,611)		4,915		(725)		208,262		(13,336)
	Asset-backed securities				126,922		(1,587)		-		-		126,922		(1,587)
	Foreign government securities				78,182		(357)		-		-		78,182		(357)
Equity securities					75,620		(5,437)		7,016		(327)		82,636		(5,764)
			Total	$	1,913,235	$	(85,659)	$	171,280	$	(19,562)	$	2,084,515	$	(105,221)

At June 30,2014, we held approximately 2,760 fixed maturity and equity securities, of which 20% included at least one lot in an unrealized loss position. A security has an impairment loss when its fair value is less than its cost or amortized cost at the balance sheet date. We evaluate our securities for possible other-than-temporary impairment losses at each quarter end. Our reviews cover all impaired securities where the loss exceeds $1.0 million and the loss eitherexceeds 10% of cost or the security had been in a loss position for longer than twelve consecutive months. We do not consider the $31.9 million of gross unrealized losses in our portfolio atJune 30,2014 to be other-than-temporary impairments as these losses relate to non-credit factors, such as interest rate changes and market conditions. We recognized no other-than-temporary impairment losses in the first six months of 2014 and2013.

The amortized cost and fair value of our fixed maturity securities at June 30,2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The weighted-average life of our mortgage-backed and asset-backed securities was 5.5 years at June 30,2014.

		Cost or amortized cost		Fair value
Due in 1 year or less		$	192,394	$	195,936
Due after 1 year through 5 years			1,012,738		1,064,207
Due after 5 years through 10 years			1,366,848		1,450,529
Due after 10 years through 15 years			942,481		992,274
Due after 15 years			975,535		1,014,198
	Securities with contractual maturities		4,489,996		4,717,144
Mortgage-backed and asset-backed securities			1,588,457		1,616,047
	Total fixed maturity securities	$	6,078,453	$	6,333,191

Realized pretax gains (losses) on the sale of investments included the following:

			Six months ended June 30,				Three months ended June 30,
			2014		2013		2014		2013
Gains
	Fixed maturity securities		$	6,150	$	4,139	$	4,135	$	635
	Equity securities			25,863		5,989		1,425		4,649
	Other investments			-		5,345		-		817
		Total gains		32,013		15,473		5,560		6,101
Losses
	Fixed maturity securities			(3,688)		(994)		(650)		(306)
	Equity securities			(3,174)		(1,286)		(5)		(1,172)
		Total losses		(6,862)		(2,280)		(655)		(1,478)
Net
	Fixed maturity securities			2,462		3,145		3,485		329
	Equity securities			22,689		4,703		1,420		3,477
	Other investments			-		5,345		-		817
		Net realized investment gain	$	25,151	$	13,193	$	4,905	$	4,623

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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2014

Reinsurance [Abstract]

Effect of reinsurance transactions on our premium, loss and loss adjustment expense and policy acquisition costs

		Six months ended June 30,				Three months ended June 30,
		2014		2013		2014		2013
Direct written premium		$	1,369,751	$	1,294,681	$	749,239	$	713,110
Reinsurance assumed			209,700		234,967		83,490		96,333
Reinsurance ceded			(342,255)		(321,430)		(185,715)		(180,409)
	Net written premium	$	1,237,196	$	1,208,218	$	647,014	$	629,034
Direct earned premium		$	1,288,995	$	1,237,629	$	651,682	$	621,224
Reinsurance assumed			152,341		171,308		76,318		86,036
Reinsurance ceded			(306,476)		(286,395)		(155,752)		(145,904)
	Net earned premium	$	1,134,860	$	1,122,542	$	572,248	$	561,356
Direct loss and loss adjustment expense		$	725,911	$	693,480	$	375,184	$	335,968
Reinsurance assumed			63,274		110,708		21,472		71,017
Reinsurance ceded			(140,247)		(132,017)		(69,562)		(67,511)
	Net loss and loss adjustment expense	$	648,938	$	672,171	$	327,094	$	339,474

Policy acquisition costs		$	215,210	$	204,031	$	110,565	$	103,745
Ceding commissions			(73,199)		(66,286)		(37,595)		(32,949)
	Net policy acquisition costs	$	142,011	$	137,745	$	72,970	$	70,796

Components of our reinsurance recoverables

		June 30,		December 31,
		2014		2013
Reinsurance recoverable on paid losses		$	98,451	$	156,026
Reinsurance recoverable on outstanding losses			453,653		459,134
Reinsurance recoverable on incurred but not reported losses			627,596		663,597
Reserve for uncollectible reinsurance			(1,500)		(1,500)
	Total reinsurance recoverables	$	1,178,200	$	1,277,257

Amounts of letters of credit and cash available to us as collateral, plus other potential offsets

		June 30,		December 31,
		2014		2013
Payables to reinsurers		$	220,281	$	208,850
Letters of credit			85,752		100,529
Funds held in trust			148,508		88,310
	Total credits	$	454,541	$	397,689

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Measurements [Abstract]

Assets and liabilities at fair value

			Level 1		Level 2		Level 3		Total
June 30, 2014
Fixed maturity securities
	U.S. government and government agency securities		$	77,934	$	7,693	$	-	$	85,627
	Fixed maturity securities of states, municipalities
		and political subdivisions		-		965,705		-		965,705
	Special purpose revenue bonds of states, municipalities
		and political subdivisions		-		2,376,963		-		2,376,963
	Corporate securities			-		1,199,562		149		1,199,711
	Residential mortgage-backed securities			-		764,534		-		764,534
	Commercial mortgage-backed securities			-		547,117		-		547,117
	Asset-backed securities			-		304,396		-		304,396
	Foreign government securities			-		89,138		-		89,138
		Total fixed maturity securities		77,934		6,255,108		149		6,333,191
Equity securities				448,685		-		-		448,685
Short-term investments*				186,602		155,733		-		342,335
Restricted cash and securities				-		2,269		-		2,269
Premium, claims and other receivables				-		63,802		-		63,802
Other assets				20		-		1,099		1,119
	Total assets measured at fair value		$	713,241	$	6,476,912	$	1,248	$	7,191,401
Notes payable*			$	-	$	783,738	$	-	$	783,738
Accounts payable and accrued liabilities - earnout liability				-		2,269		7,386		9,655
	Total liabilities measured at fair value		$	-	$	786,007	$	7,386	$	793,393

			Level 1		Level 2		Level 3		Total
December 31, 2013
Fixed maturity securities
	U.S. government and government agency securities		$	84,032	$	8,677	$	-	$	92,709
	Fixed maturity securities of states, municipalities
		and political subdivisions		-		986,486		-		986,486
	Special purpose revenue bonds of states, municipalities
		and political subdivisions		-		2,255,928		9,267		2,265,195
	Corporate securities			-		1,225,088		150		1,225,238
	Residential mortgage-backed securities			-		618,119		-		618,119
	Commercial mortgage-backed securities			-		504,888		-		504,888
	Asset-backed securities			-		182,392		-		182,392
	Foreign government securities			-		147,446		-		147,446
		Total fixed maturity securities		84,032		5,929,024		9,417		6,022,473
Equity securities				517,466		-		-		517,466
Short-term investments*				68,958		109,795		-		178,753
Restricted cash and securities				-		1,853		-		1,853
Premium, claims and other receivables				-		66,515		-		66,515
Other assets				20		-		941		961
	Total assets measured at fair value		$	670,476	$	6,107,187	$	10,358	$	6,788,021
Notes payable*			$	-	$	707,656	$	-	$	707,656
Accounts payable and accrued liabilities - earnout liability				-		1,853		7,259		9,112
	Total liabilities measured at fair value		$	-	$	709,509	$	7,259	$	716,768

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Investments (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Amortized cost and fair value of fixed maturity securities investments classified by contractual maturity date
Due in 1 year or less, Available for sale, Cost or amortized cost	$ 192,394
Due after 1 year through 5 years, Available for sale, Cost or amortized cost	1,012,738
Due after 5 years through 10 years, Available for sale, Cost or amortized cost	1,366,848
Due after 10 years through 15 years, Available for sale, Cost or amortized cost	942,481
Due after 15 years, Available for sale, Cost or amortized cost	975,535
Securities with contractual maturities, Available for sale, Cost or amortized cost	4,489,996
Mortgage-backed and asset-backed securities, Available for sale, Cost or amortized cost	1,588,457
Available-for-sale fixed maturity Securities, Amortized Cost Basis	6,078,453	5,921,487
Due in 1 year or less, Available for sale, Fair value	195,936
Due after 1 year through 5 years, Available for sale, Fair value	1,064,207
Due after 5 years through 10 years, Available for sale, Fair value	1,450,529
Due after 10 years through 15 years, Available for sale, Fair value	992,274
Due after 15 years, Available for sale, Fair value	1,014,198
Securities with contractual maturities, Available for sale, Fair value	4,717,144
Mortgage-backed and asset-backed securities, Available for sale, Fair value	1,616,047
Available-for-sale Securities, Fixed Maturity Securities, Fair value	$ 6,333,191

XML

Investments (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	$ 6,078,453	$ 5,921,487
Gross unrealized gain	281,520	200,443
Gross unrealized loss	(26,782)	(99,457)
Fixed maturity securities - available for sale	6,333,191	6,022,473
Available for sale equity securities
Available-for-sale Equity Securities, Amortized Cost Basis	394,685	464,388
Gross unrealized gain	59,130	58,842
Gross unrealized loss	(5,130)	(5,764)
Available-for-sale Securities, Equity Securities	448,685	517,466
US Government and Government Agency Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	84,479	91,047
Gross unrealized gain	1,354	2,157
Gross unrealized loss	(206)	(495)
Fixed maturity securities - available for sale	85,627	92,709
Fixed Maturity Securities of States, Municipalities and Political Subdivisions Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	905,732	941,580
Gross unrealized gain	60,882	50,885
Gross unrealized loss	(909)	(5,979)
Fixed maturity securities - available for sale	965,705	986,486
Special Purpose Revenue Bonds Of States Municipalities And Political Subdivisions [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	2,263,181	2,240,412
Gross unrealized gain	121,364	71,541
Gross unrealized loss	(7,582)	(46,758)
Fixed maturity securities - available for sale	2,376,963	2,265,195
Corporate Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	1,151,993	1,195,387
Gross unrealized gain	51,846	40,860
Gross unrealized loss	(4,128)	(11,009)
Fixed maturity securities - available for sale	1,199,711	1,225,238
Residential Mortgage Backed Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	753,516	622,766
Gross unrealized gain	19,881	15,289
Gross unrealized loss	(8,863)	(19,936)
Fixed maturity securities - available for sale	764,534	618,119
Commercial Mortgage Backed Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	530,075	502,069
Gross unrealized gain	20,941	16,155
Gross unrealized loss	(3,899)	(13,336)
Fixed maturity securities - available for sale	547,117	504,888
Asset-backed Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	304,866	183,660
Gross unrealized gain	622	319
Gross unrealized loss	(1,092)	(1,587)
Fixed maturity securities - available for sale	304,396	182,392
Foreign Government Securities [Member]
Fixed Maturity & Equity Securities Available for Sale
Available-for-sale Fixed Maturity Securities, Amortized Cost Basis	84,611	144,566
Gross unrealized gain	4,630	3,237
Gross unrealized loss	(103)	(357)
Fixed maturity securities - available for sale	$ 89,138	$ 147,446

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	$ 393,677	$ 1,913,235
Less than 12 months, Unrealized losses	(6,459)	(85,659)
12 months or more, Fair value	913,740	171,280
12 months or more, Unrealized losses	(25,453)	(19,562)
Total, Fair value	1,307,417	2,084,515
Total, Unrealized losses	(31,912)	(105,221)
US Government and Government Agency Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	5,838	23,717
Less than 12 months, Unrealized losses	(6)	(495)
12 months or more, Fair value	11,410	0
12 months or more, Unrealized losses	(200)	0
Total, Fair value	17,248	23,717
Total, Unrealized losses	(206)	(495)
Fixed Maturity Securities of States, Municipalities and Political Subdivisions Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	6,015	136,160
Less than 12 months, Unrealized losses	(34)	(5,277)
12 months or more, Fair value	38,173	8,997
12 months or more, Unrealized losses	(875)	(702)
Total, Fair value	44,188	145,157
Total, Unrealized losses	(909)	(5,979)
Special Purpose Revenue Bonds Of States Municipalities And Political Subdivisions [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	51,330	684,560
Less than 12 months, Unrealized losses	(200)	(35,832)
12 months or more, Fair value	327,557	83,228
12 months or more, Unrealized losses	(7,382)	(10,926)
Total, Fair value	378,887	767,788
Total, Unrealized losses	(7,582)	(46,758)
Corporate Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	73,935	277,853
Less than 12 months, Unrealized losses	(366)	(8,202)
12 months or more, Fair value	105,399	35,437
12 months or more, Unrealized losses	(3,762)	(2,807)
Total, Fair value	179,334	313,290
Total, Unrealized losses	(4,128)	(11,009)
Residential Mortgage Backed Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	58,198	306,874
Less than 12 months, Unrealized losses	(272)	(15,861)
12 months or more, Fair value	259,170	31,687
12 months or more, Unrealized losses	(8,591)	(4,075)
Total, Fair value	317,368	338,561
Total, Unrealized losses	(8,863)	(19,936)
Commercial Mortgage Backed Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	0	203,347
Less than 12 months, Unrealized losses	0	(12,611)
12 months or more, Fair value	150,806	4,915
12 months or more, Unrealized losses	(3,899)	(725)
Total, Fair value	150,806	208,262
Total, Unrealized losses	(3,899)	(13,336)
Asset-backed Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	115,769	126,922
Less than 12 months, Unrealized losses	(927)	(1,587)
12 months or more, Fair value	7,080	0
12 months or more, Unrealized losses	(165)	0
Total, Fair value	122,849	126,922
Total, Unrealized losses	(1,092)	(1,587)
Foreign Government Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	19,363	78,182
Less than 12 months, Unrealized losses	(55)	(357)
12 months or more, Fair value	7,193	0
12 months or more, Unrealized losses	(48)	0
Total, Fair value	26,556	78,182
Total, Unrealized losses	(103)	(357)
Equity Securities [Member]
Gross unrealized losses and fair value of all available for sale securities that were in a continuous loss position
Less than 12 months, Fair value	63,229	75,620
Less than 12 months, Unrealized losses	(4,599)	(5,437)
12 months or more, Fair value	6,952	7,016
12 months or more, Unrealized losses	(531)	(327)
Total, Fair value	70,181	82,636
Total, Unrealized losses	$ (5,130)	$ (5,764)

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Investments (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Realized pretax gains (losses) on the sale of investments
Gains	$ 5,560	$ 6,101	$ 32,013	$ 15,473
Losses	(655)	(1,478)	(6,862)	(2,280)
Net realized investment gain	4,905	4,623	25,151	13,193
Fixed Maturity Securities [Member]
Realized pretax gains (losses) on the sale of investments
Gains	4,135	635	6,150	4,139
Losses	(650)	(306)	(3,688)	(994)
Net realized investment gain	3,485	329	2,462	3,145
Others [Member]
Realized pretax gains (losses) on the sale of investments
Gains	0	817	0	5,345
Losses	0	0	0	0
Net realized investment gain	0	817	0	5,345
Equity Securities [Member]
Realized pretax gains (losses) on the sale of investments
Gains	1,425	4,649	25,863	5,989
Losses	(5)	(1,172)	(3,174)	(1,286)
Net realized investment gain	$ 1,420	$ 3,477	$ 22,689	$ 4,703

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Notes Payable (Detail Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Notes Payable [Abstract]
Interest rate of senior notes	6.30%
Borrowing capacity under line of credit facility	$ 825.0	$ 600.0
Borrowing rate under revolving loan facility	1.40%
Remaining borrowing capacity under Revolving Loan Facility as reduced by outstanding letters of credit	$ 384.1
Line of credit facility expiration date	Apr. 30, 2019

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Commitments and Contingencies (Details Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Commitments And Contingencies Line Items [Abstract]
Pretax cat loss after reinsurance	$ 9.5	$ 26.6
Longest Indemnification Expiration Date	2025

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Fair Value Measurements (Details Textuals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013 Fair Value, Inputs, Level 3 [Member] Fixed Maturity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Independent pricing services to assist in determining fair value	99.00%
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases		$ 9.4

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Reinsurance (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Amounts of letters of credit and cash available to us as collateral, plus other potential offsets
Payables to reinsurers	$ 220,281	$ 208,850
Letters of credit	85,752	100,529
Funds held in trust	148,508	88,310
Total credits	$ 454,541	$ 397,689

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Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Information by business segment
Net earned premium	$ 572,248	$ 561,356	$ 1,134,860	$ 1,122,542
Other revenue	71,326	68,075	157,644	141,255
Total revenue	643,574	629,431	1,292,504	1,263,797
Loss and LAE	327,094	339,474	648,938	672,171
Other expense	178,836	165,126	350,950	315,399
Segment expense	505,930	504,600	999,888	987,570
Segment pretax earnings (loss)	137,644	124,831	292,616	276,227
U.S. Property & Casualty [Member]
Information by business segment
Net earned premium	88,536	91,432	185,588	184,963
Other revenue	4,070	4,245	9,946	11,429
Total revenue	92,606	95,677	195,534	196,392
Loss and LAE	46,733	55,238	93,388	107,394
Other expense	29,055	25,452	58,148	52,757
Segment expense	75,788	80,690	151,536	160,151
Segment pretax earnings (loss)	16,818	14,987	43,998	36,241
Professional Liability [Member]
Information by business segment
Net earned premium	88,127	92,444	173,577	185,223
Other revenue	195	739	470	325
Total revenue	88,322	93,183	174,047	185,548
Loss and LAE	52,189	55,435	103,321	111,821
Other expense	17,420	18,124	34,545	35,872
Segment expense	69,609	73,559	137,866	147,693
Segment pretax earnings (loss)	18,713	19,624	36,181	37,855
Accident & Health [Member]
Information by business segment
Net earned premium	240,338	217,822	472,481	434,947
Other revenue	3,862	1,140	5,502	2,330
Total revenue	244,200	218,962	477,983	437,277
Loss and LAE	172,296	160,139	341,295	320,566
Other expense	37,875	32,583	74,254	63,709
Segment expense	210,171	192,722	415,549	384,275
Segment pretax earnings (loss)	34,029	26,240	62,434	53,002
U.S. Surety & Credit [Member]
Information by business segment
Net earned premium	50,191	50,054	97,134	97,231
Other revenue	580	384	868	621
Total revenue	50,771	50,438	98,002	97,852
Loss and LAE	14,862	5,637	28,558	18,851
Other expense	27,463	27,402	53,407	53,681
Segment expense	42,325	33,039	81,965	72,532
Segment pretax earnings (loss)	8,446	17,399	16,037	25,320
International [Member]
Information by business segment
Net earned premium	104,727	105,270	205,460	210,412
Other revenue	931	1,124	1,899	1,902
Total revenue	105,658	106,394	207,359	212,314
Loss and LAE	40,765	58,997	82,380	104,916
Other expense	41,302	36,212	79,979	71,921
Segment expense	82,067	95,209	162,359	176,837
Segment pretax earnings (loss)	23,591	11,185	45,000	35,477
Investing [Member]
Information by business segment
Net earned premium	0	0	0	0
Other revenue	61,343	60,291	138,395	124,626
Total revenue	61,343	60,291	138,395	124,626
Loss and LAE	0	0	0	0
Other expense	0	0	0	0
Segment expense	0	0	0	0
Segment pretax earnings (loss)	61,343	60,291	138,395	124,626
Corporate & Other [Member]
Information by business segment
Net earned premium	329	4,334	620	9,766
Other revenue	345	152	564	22
Total revenue	674	4,486	1,184	9,788
Loss and LAE	249	4,028	(4)	8,623
Other expense	25,721	25,353	50,617	37,459
Segment expense	25,970	29,381	50,613	46,082
Segment pretax earnings (loss)	$ (25,296)	$ (24,895)	$ (49,429)	$ (36,294)

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings per share

				Six months ended June 30,				Three months ended June 30,
				2014		2013		2014		2013
Net earnings				$	205,047	$	194,012	$	97,136	$	88,162
Less: net earnings attributable to unvested restricted stock					(3,282)		(3,227)		(1,590)		(1,445)
		Net earnings available to common stock		$	201,765	$	190,785	$	95,546	$	86,717
Weighted-average common shares outstanding					98,551		98,965		98,442		98,870
Dilutive effect of outstanding securities (determined using
	treasury stock method)				240		245		218		251
		Weighted-average common shares and potential
			common shares outstanding		98,791		99,210		98,660		99,121
Earnings per common share
		Basic		$	2.05	$	1.93	$	0.97	$	0.88
		Diluted		$	2.04	$	1.92	$	0.97	$	0.87

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Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Income and Comprehensive Income [Abstract]
Net earnings	$ 97,136	$ 88,162	$ 205,047	$ 194,012
Investment gains (losses):
Investment gains (losses) during the period	93,745	(217,034)	179,825	(247,429)
Income tax charge (benefit)	33,248	(77,116)	63,818	(87,443)
Investments gains (losses), net of tax	60,497	(139,918)	116,007	(159,986)
Less reclassification adjustments to:
Net realized investment gain	4,905	4,623	25,151	13,193
Income tax expense	1,717	1,619	8,803	4,618
Total reclassifications included in net earnings, net of tax	3,188	3,004	16,348	8,575
Net unrealized investment gains (losses)	57,309	(142,922)	99,659	(168,561)
Foreign currency translation adjustment	903	911	1,691	(1,145)
Income tax charge (benefit)	11	(30)	(421)	(554)
Foreign currency translation adjustment, net of tax	892	941	2,112	(591)
Other comprehensive income (loss)	58,201	(141,981)	101,771	(169,152)
Comprehensive income	$ 155,337	$ (53,819)	$ 306,818	$ 24,860

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General Information (Details Textuals)	6 Months Ended
	Jun. 30, 2014 countries
General Information [Abstract]
Number of countries in which The Company underwrites non-correlated specialty insurance products	180

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Liability for Unpaid Loss and Loss Adjustment Expense

6 Months Ended

Jun. 30, 2014

Liability for Unpaid Loss and Loss Adjustment Expense

Liability For Future Policy Benefits And Unpaid Claims Disclosure TextBlock

(5) Liability for Unpaid Loss and Loss Adjustment Expense

The table below provides a reconciliation of our liability for loss and loss adjustment expense payable (referred to as reserves).

		Six months ended June 30,				Three months ended June 30,
		2014		2013		2014		2013
Reserves at beginning of period		$	3,902,132	$	3,767,850	$	3,847,417	$	3,774,162
Less reinsurance recoverables on reserves			1,122,731		1,018,047		1,098,576		1,012,920
	Net reserves at beginning of period		2,779,401		2,749,803		2,748,841		2,761,242
Net loss and loss adjustment expense			648,938		672,171		327,094		339,474
Net loss and loss adjustment expense payments			(674,070)		(586,326)		(319,114)		(286,797)
Foreign currency adjustment			5,979		(24,627)		3,427		(2,898)
	Net reserves at end of period		2,760,248		2,811,021		2,760,248		2,811,021
Plus reinsurance recoverables on reserves			1,081,249		1,003,663		1,081,249		1,003,663
	Reserves at end of period	$	3,841,497	$	3,814,684	$	3,841,497	$	3,814,684

We recognized no loss development in the first six months or second quarter of 2014. In the first six months and second quarter of 2013, we recognized favorable development of $9.5million in our U.S. Surety & Credit segment and $2.3 million in our International segment. Our review of reserves in our U.S. Surety & Credit segment at that time indicated better experience than our actuarial expectations compared to the prior year review. As a result, we recognized favorable development of $3.7million and $5.8million for our surety and credit lines of business, respectively, related to the 2010 and prior underwriting years. In the International segment, we released catastrophe reserves related to the 2010 New Zealand earthquake, due to settlement of these claims in 2013.

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income [Table Text Block]

				Foreign		Accumulated
		Net unrealized		currency		other
		investment		translation		comprehensive
		gains		adjustment		income
Six months ended June 30, 2014
Balance at December 31, 2013		$	99,960	$	18,691	$	118,651
Other comprehensive income			99,659		2,112		101,771
	Balance at June 30, 2014	$	199,619	$	20,803	$	220,422
Three months ended June 30, 2014
Balance at March 31, 2014		$	142,310	$	19,911	$	162,221
Other comprehensive income			57,309		892		58,201
	Balance at June 30, 2014	$	199,619	$	20,803	$	220,422

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	$ 6,333,191	$ 6,022,473
Equity securities - available for sale, at fair value	448,685	517,466
Short-term investments*	342,335	178,753
Restricted cash and securities	2,269	1,853
Premium, claims and other receivables	63,802	66,515
Other assets	1,119	961
Total assets measured at fair value	7,191,401	6,788,021
Notes payable	783,738	707,656
Accounts payable and accrued liabilities - earnout liability	9,655	9,112
Total liabilities measured at fair value	793,393	716,768
Fair Value, Inputs, Level 1 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	77,934	84,032
Equity securities - available for sale, at fair value	448,685	517,466
Short-term investments*	186,602	68,958
Other assets	20	20
Total assets measured at fair value	713,241	670,476
Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	6,255,108	5,929,024
Short-term investments*	155,733	109,795
Restricted cash and securities	2,269	1,853
Premium, claims and other receivables	63,802	66,515
Total assets measured at fair value	6,476,912	6,107,187
Notes payable	783,738	707,656
Accounts payable and accrued liabilities - earnout liability	2,269	1,853
Total liabilities measured at fair value	786,007	709,509
Fair Value, Inputs, Level 3 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	149	9,417
Other assets	1,099	941
Total assets measured at fair value	1,248	10,358
Accounts payable and accrued liabilities - earnout liability	7,386	7,259
Total liabilities measured at fair value	7,386	7,259
US Government and Government Agency Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	85,627	92,709
US Government and Government Agency Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	77,934	84,032
US Government and Government Agency Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	7,693	8,677
Fixed Maturity Securities of States, Municipalities and Political Subdivisions Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	965,705	986,486
Fixed Maturity Securities of States, Municipalities and Political Subdivisions Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	965,705	986,486
Special Purpose Revenue Bonds Of States Municipalities And Political Subdivisions [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	2,376,963	2,265,195
Special Purpose Revenue Bonds Of States Municipalities And Political Subdivisions [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	2,376,963	2,255,928
Special Purpose Revenue Bonds Of States Municipalities And Political Subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale		9,267
Corporate Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	1,199,711	1,225,238
Corporate Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	1,199,562	1,225,088
Corporate Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	149	150
Residential Mortgage Backed Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	764,534	618,119
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	764,534	618,119
Commercial Mortgage Backed Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	547,117	504,888
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	547,117	504,888
Asset-backed Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	304,396	182,392
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	304,396	182,392
Foreign Government Securities [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	89,138	147,446
Foreign Government Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fixed maturity securities-available for sale
Fixed maturity securities - available for sale	$ 89,138	$ 147,446