HCC Insurance 8-K HCC Insurance Holdings Reports Earnings for the First Quarter of 2009

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS EARNINGS
FOR THE FIRST QUARTER OF 2009

HOUSTON (May 5, 2009) . . .
HCC Insurance Holdings, Inc. (NYSE: HCC)today released results for the first quarter of 2009, which ended March 31.

“We are extremely pleased to report solid earnings for the first quarter of 2009 and results that show an increase over 2008. Our investment income should resume its steady growth following our exit from alternative investments and as our investment assets continue to increase,” HCC Chief Executive Officer Frank J. Bramanti said.

Net earnings for the first quarter of 2009 were $83.2 million, compared with $80.5 million during the first quarter of 2008, a 3.4 percent increase. Net earnings per diluted share were $0.73 for the first quarter of 2009, compared to $0.69 for the same quarter of 2008, an increase of 5.8 percent.

The GAAP combined ratio for the first quarter of 2009 was 87.3 percent, compared to 83.7 percent for the first quarter of 2008. Book value per share increased to $24.14 at March 31, 2009, compared to $23.27 a share at December 31, 2008, a 3.7 percent increase. The Company’s annualized return on average equity for the first quarter of 2009 was 12.4 percent.

For the first quarter of 2009, the gross written premium of HCC’s insurance company subsidiaries increased 3.3 percent to $602.4 million, compared to $583.0 million for the same quarter of 2008. Net written premium was flat at $491.3 million during the first quarter of 2009, compared with net written premium of $493.6 million for the 2008 first quarter. Net earned premium increased 1.8 percent to $502.4 million for the first quarter of 2009, compared to $493.5 million for the same quarter of 2008.

“While we are optimistic about an eventual turn in the pricing cycle, our observation is that it has not happened yet. Accordingly, we remain disciplined in our approach to risk selection and pricing. Our underwriting results continue to be good but rates are continuing to fall in certain lines of business, albeit at a slowing pace. On the other hand, we continue to see improvement in pricing in our international aviation, medical stop-loss, financial institution professional liability and offshore energy businesses. These increases should lead to improving results into 2010,” Mr. Bramanti added.

During the first quarter of 2009, HCC had net adverse prior year reserve development of

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$4.7 million, compared to net favorable prior year reserve development of $5.1 million for the same period in 2008. The adverse development is principally due to case reserve and IBNR increases in certain Life, Accident and Health lines of business.

Other operating income was $22.9 million for the 2009 first quarter, versus a loss of $4.9 million for the same period in 2008, reflecting the commutation of the MGIC reinsurance contract that the Company had been accounting for using the deposit method. HCC received $25.0 million of cash from the MGIC commutation, of which $5.0 million was recorded as fee and commission income. After reinsurance and other costs, the commutation increased pretax earnings by $15.6 million in the first quarter of 2009. The pretax earnings impact for the full year 2009, however, will be $7.8 million more than originally budgeted.

Investment income decreased during the first quarter of 2009 to $45.2 million, compared to $47.6 million a year earlier, reflecting much lower short-term interest rates in 2009.

HCC’s fixed income securities generated $45.4 million in investment income in the 2009 first quarter, versus $40.9 million in the 2008 first quarter. The Company’s fixed income investments increased 10.0 percent from March 31, 2008 to $4.3 billion at March 31, 2009.

As of March 31, 2009, HCC’s fixed income securities portfolio had an average rating of AA+, an average duration of 4.8 years and an average tax equivalent yield of 5.2 percent. The Company held $8.1 million of subprime-related and Alt-A securities, which had an average rating of A, and owned no CDO or CLO securities. HCC has never been a counterparty to any credit default swap.

“At the end of the first quarter of 2009, HCC completed its exit from the last of its equity and equity-related investments, including hedge funds and other alternative investments. Those funds have been reinvested in fixed income securities. We incurred a $1.0 million loss during the first quarter of 2009. Our fixed income portfolio has continued to perform well and we had a net unrealized gain of $60.0 million on our available for sale fixed income securities at March 31, 2009,” Mr. Bramanti said.

HCC repurchased 1.7 million common shares for a total of $35.5 million during the first quarter of 2009. This brings the total repurchased to 4.7 million shares for a total of $98.8 million at an average cost of $21.14 per share.

The Company’s outstanding convertible debt issue was subject to a put option that expired on April 1, 2009. Investors elected to hold these securities and, therefore, they remain outstanding. Investors’ next put option is April 1, 2014. HCC continues to maintain a $575 million syndicated bank line of credit facility that does not expire until the end of 2011. The Company’s liquidity and cash flow remain strong and its shareholders’ equity is a record $2.7 billion.

As of March 31, 2009, total investments were $5.0 billion, total assets were $8.6 billion,

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shareholders’ equity was $2.7 billion and the Company’s debt to total capital ratio remained very conservative at 13.6 percent.

See attached tables for further information about HCC’s first quarter financial results.

HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, May 6. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-1061. In addition, there will be a live webcast available on a listen-only basis that can be accessed through the HCC website atwww.hcc.com.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. (HCC) is a leading international specialty insurance group with offices across the United States and in Bermuda, Ireland, Spain and the United Kingdom. HCC has assets of $8.6 billion, shareholders’ equity of $2.7 billion and is rated AA (Very Strong) by Standard & Poor’s and AA (Very Strong) by Fitch Ratings. In addition, HCC’s major domestic insurance companies are rated A+ (Superior) by A.M. Best Company.

For more information, visit our website atwww.hcc.com.

Contact: Barney White, HCC Vice President of Investor Relations
Telephone: (713) 744-3719

Forward-looking statements contained in this press release are made under “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The types of risks and uncertainties which may affect the Company are set forth in its periodic reports filed with the Securities and Exchange Commission.

* * * * *

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HCC Insurance Holdings, Inc. and Subsidiaries
Financial Highlights
March 31, 2009
(Unaudited, in thousands except per share data)

	Three months ended March 31,
	2009			2008
				(as adjusted) (a)
Gross written premium	$	602,387		$	582,999
Net written premium		491,250			493,647
Net earned premium		502,388			493,546
Fee and commission income		30,294			30,999
Net investment income		45,218			47,621
Other operating income (loss)		22,896			(4,946	)
Total revenue		600,738			567,388
Net earnings		83,170			80,455
Earnings per share (diluted)		0.73			0.69
Cash flow from operations		133,602			135,800
Weighted-average shares outstanding (diluted)(in millions)		113.3			116.4
GAAP net loss ratio		62.8	%		59.4	%
GAAP combined ratio		87.3	%		83.7	%
Paid loss ratio		54.0	%		51.0	%
	March 31, 2009			December 31, 2008
				(as adjusted) (a)
Total investments	$	5,019,675		$	4,804,283
Total assets		8,623,917			8,332,000
Shareholders’ equity		2,704,910			2,640,023
Debt to total capital		13.6	%		11.5	%
Book value per share	$	24.14		$	23.27

(a) Certain amounts in 2008 changed due to our 1/1/2009 adoption of new accounting standards.

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HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

	March 31,			December 31,
	2009			2008
				(as adjusted) (a)
ASSETS
Investments:
Fixed income securities — available for sale	$	4,228,306		$	4,133,165
Fixed income securities — held to maturity		94,744			123,553
Short-term investments		671,355			497,477
Other investments		25,270			50,088
Total investments		5,019,675			4,804,283
Cash		33,013			27,347
Restricted cash and cash investments		184,666			174,905
Premium, claims and other receivables		807,177			770,823
Reinsurance recoverables		1,078,532			1,054,950
Ceded unearned premium		232,812			234,375
Ceded life and annuity benefits		63,513			64,235
Deferred policy acquisition costs		193,016			188,652
Goodwill		862,658			858,849
Other assets		148,855			153,581
Total assets	$	8,623,917		$	8,332,000
LIABILITIES
Loss and loss adjustment expense payable	$	3,490,033		$	3,415,230
Life and annuity policy benefits		63,513			64,235
Reinsurance balances payable		132,447			122,189
Unearned premium		974,687			977,426
Deferred ceding commissions		63,299			63,123
Premium and claims payable		423,919			405,287
Notes payable		424,714			343,649
Accounts payable and accrued liabilities		346,395			300,838
Total liabilities		5,919,007			5,691,977
SHAREHOLDERS’ EQUITY
Common stock		116,743			116,457
Additional paid-in capital		888,121			881,534
Retained earnings		1,746,943			1,677,831
Accumulated other comprehensive income		51,902			27,536
Treasury stock		(98,799	)		(63,335	)
Total shareholders’ equity		2,704,910			2,640,023
Total liabilities and shareholders’ equity	$	8,623,917		$	8,332,000

(a) Certain amounts in 2008 changed due to our 1/1/2009 adoption of new accounting standards.

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HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited, in thousands except per share data)

	Three months ended
	March 31,
	2009			2008
				(as adjusted) (a)
REVENUE
Net earned premium	$	502,388		$	493,546
Fee and commission income		30,294			30,999
Net investment income		45,218			47,621
Net realized investment gain (loss)		(58	)		168
Other operating income (loss)		22,896			(4,946	)
Total revenue		600,738			567,388
EXPENSE
Loss and loss adjustment expense, net		315,566			293,026
Policy acquisition costs, net		88,692			92,268
Other operating expense		68,998			59,204
Interest expense		4,639			4,953
Total expense		477,895			449,451
Earnings before income tax expense		122,843			117,937
Income tax expense		39,673			37,482
Net earnings	$	83,170		$	80,455
Basic earnings per share data:
Net earnings per share	$	0.73		$	0.70
Weighted-average shares outstanding (millions)		112.8			115.2
Diluted earnings per share data:
Net earnings per share	$	0.73		$	0.69
Weighted-average shares outstanding (millions)		113.3			116.4
Cash dividends declared, per share	$	0.125		$	0.110

(a) Certain amounts in 2008 changed due to our 1/1/2009 adoption of new accounting standards.

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HCC Insurance Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)

	Three months ended
	March 31,
	2009			2008
				(as adjusted) (a)
Operating activities:
Net earnings	$	83,170		$	80,455
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in premium, claims and other receivables		(28,719	)		3,779
Change in reinsurance recoverables		(29,973	)		2,671
Change in ceded unearned premium		(217	)		19,899
Change in loss and loss adjustment expense payable		67,544			91,845
Change in reinsurance balances payable		11,481			(5,761	)
Change in unearned premium		(11,335	)		(16,960	)
Change in premium and claims payable, net of restricted cash		8,859			(45,449	)
Change in accounts payable and accrued liabilities		(7,556	)		(7,015	)
Change in trading portfolio		—			9,062
Stock-based compensation expense		4,783			2,866
Depreciation and amortization expense		3,579			3,390
Other, net		31,986			(2,982	)
Cash provided by operating activities		133,602			135,800
Investing activities:
Sales of available for sale fixed income securities		119,092			120,075
Maturity or call of available for sale fixed income securities		69,280			75,875
Maturity or call of held to maturity fixed income securities		85,821			—
Cost of available for sale fixed income securities acquired		(210,093	)		(419,238	)
Cost of held to maturity fixed income securities acquired		(59,515	)		—
Cost of other investments acquired		—			(36,735	)
Change in short-term investments		(177,715	)		128,052
Proceeds from sales of other investments		48,579			19,038
Payments for purchase of businesses, net of cash received		(32,966	)		(71,486	)
Other, net		(3,482	)		(1,670	)
Cash used by investing activities		(160,999	)		(186,089	)
Financing activities:
Advances on line of credit		80,000			40,000
Sale of common stock		2,090			4,592
Purchase of common stock		(35,464	)		—
Dividends paid		(14,182	)		(12,658	)
Other, net		619			3,908
Cash provided by financing activities		33,063			35,842
Net increase (decrease) in cash		5,666			(14,447	)
Cash at beginning of period		27,347			39,135
Cash at end of period	$	33,013		$	24,688

(a) Certain amounts in 2008 changed due to our 1/1/2009 adoption of new accounting standards.

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HCC Insurance Holdings, Inc. and Subsidiaries
Insurance Company Premium
March 31, 2009
(Unaudited, in thousands)

	1st Qtr		1st Qtr			Change
	2009		2008			%
GROSS WRITTEN
Diversified financial products	$	245,112	$	211,364			16	%
Group life, accident & health		216,993		210,534			3
Aviation		41,952		44,828			(6	)
London market account		44,749		40,936			9
Other specialty lines		53,577		75,343			(29	)
Discontinued lines		4		(6	)	nm
	$	602,387	$	582,999			3	%
NET WRITTEN
Diversified financial products	$	203,363	$	180,501			13	%
Group life, accident & health		199,056		202,375			(2	)
Aviation		30,611		32,346			(5	)
London market account		26,394		29,028			(9	)
Other specialty lines		31,822		49,403			(36	)
Discontinued lines		4		(6	)	nm
	$	491,250	$	493,647			—	%
NET EARNED PREMIUM
Diversified financial products	$	214,084	$	192,177			11	%
Group life, accident & health		201,088		192,446			4
Aviation		32,814		34,993			(6	)
London market account		23,674		27,090			(13	)
Other specialty lines		30,724		46,846			(34	)
Discontinued lines		4		(6	)	nm
	$	502,388	$	493,546			2	%

nm — Not meaningful comparison

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HCC Insurance Holdings, Inc. and Subsidiaries
Investments — Selected Disclosures
March 31, 2009
(Unaudited, in thousands)

					% of			Average Ratings
	Amortized Cost		Fair Value		Portfolio			AAA		AA		A		BBB		Below BBB		Other		Average
Fixed Income Securities	$	4,263,073	$	4,323,738		100.0	%	$	2,123,820	$	1,447,155	$	618,295	$	119,768	$	12,106	$	2,594	AA+
Residential Mortgage Backed Securities & Collateralized Mortgage Obligations
Agency	$	722,952	$	766,643		17.7	%		766,643		—		—		—		—		—	AAA
Non-Agency
Prime		79,076		68,346		1.6	%		43,602		823		6,739		9,906		7,276		—	AA
Alt-A		7,048		6,426		0.1	%		2,860		662		778		183		1,943		—	A
Subprime		2,151		1,657		0.0	%		1,274		—		—		209		174		—	A+
Total Residential MBS/CMO	$	811,227	$	843,072		19.5	%
Agency Securities
Senior Agency Debt — FNMA / FHLMC	$	23,344	$	24,373		0.6	%		24,373		—		—		—		—		—	AAA
Corporate Bonds — Non Financial	$	391,168	$	398,387		9.2	%		47,544		42,697		263,289		42,331		2,526		—	A+
Corporate Bonds — Financial Institutions	$	223,852	$	213,751		4.9	%		41,613		46,838		122,138		3,162		—		—	AA-
Commercial Mortgaged Backed Securities	$	170,474	$	139,680		3.2	%		139,071		609		—		—		—		—	AAA
Municipal Bond Portfolio	$	2,005,822	$	2,054,822		47.5	%		489,458		1,314,880		193,153		54,452		—		2,879	AA
Insurance Enhanced	$	1,227,502	$	1,253,548		29.0	%		189,286		830,601		176,374		54,655		—		2,632	AA
Insured — Underlying Ratings	$	1,227,502	$	1,253,548		29.0	%		185,276		770,054		273,775		877		—		23,566	AA
Non-Insured	$	778,320	$	801,274		18.5	%		299,328		484,589		17,357		—		—		—	AA+
Asset Backed Securities
Auto	$	45,577	$	43,095		1.0	%		35,068		1,900		1,649		4,478		—		—	AA+
Credit Card		9,550		9,579		0.2	%		9,579		—		—		—		—		—	AAA
Other		5,883		5,279		0.1	%		1,278		—		3,320		681		—		—	AA
Total Asset Backed Securities	$	61,010	$	57,953		1.3	%

Notes:
There are no CDOs/CLOs in the portfolio.
Other Ratings are bonds with at least one enhanced rating; each issuer has an equivalent investment grade rating.
Received paydown of $0.7 million for the first quarter of 2009 on subprime and Alt-A securities.
Corporate Bonds — Financial Institutions includes $56.0 million of bonds issued by foreign financial institutions.

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HCC Insurance Holdings, Inc. and Subsidiaries
Net Investment Income and Unrealized Gains and Losses
Selected Disclosures
March 31, 2009
(Unaudited, in thousands)

	Three months ended
	March 31,
	2009			2008
Sources of net investment income:
Fixed income securities
Taxable	$	25,105		$	22,452
Exempt from U.S. income tax		20,333			18,472
Total from fixed income securities		45,438			40,924
Short-term investments		1,794			8,592
Alternative investments		(962	)		(1,205	)
Other investments		—			267
Total investment income		46,270			48,578
Investment expense		(1,052	)		(957	)
Net investment income	$	45,218		$	47,621
Unrealized gains and losses on available for sale fixed income securities:
Change in unrealized gain for period	$	45,351		$	1,114
Unrealized gain at March 31, 2009	$	59,977
Unrealized gain at December 31, 2008	$	14,626

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HCC Insurance Holdings, Inc. and Subsidiaries
Subprime Liability Exposure
March 31, 2009

• As of March 31, the Company had 62 “non-Side A only” D&O, E&O and Fiduciary Liability claims and 17 “Side A only” D&O claims relating to subprime issues.

• Of the D&O claims reported, three are on primary policies with gross policy limits totaling $12 million. The remaining D&O claims are on excess policies.

• The average policy limit on the “non-Side A only” claims is $13.0 million gross and $8.6 million net, with an average attachment point of $88 million.

• The average policy limit for “Side A only” claims is $14.2 million gross and $11.3 million net, with an average attachment point of $159 million.

• Based upon the Company’s present knowledge, HCC believes the ultimate subprime related losses will be contained within the current overall reserves for D&O, E&O and Fiduciary Liability business.

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HCC Insurance Holdings, Inc. and Subsidiaries
Consolidated Insurance Companies
Net Loss Ratios
March 31, 2009
(Unaudited, in thousands)

	Year to Date 2009								Full Year 2008
	Net Earned		Incurred			Loss			Net Earned		Incurred		Loss
Line of Business	Premium		Losses			Ratio			Premium		Losses		Ratio
Diversified financial products	$	214,084	$	110,846			51.8	%	$	805,604	$	387,718		48.1	%
Group life, accident & health		201,088		150,033			74.6			777,268		567,947		73.1
Aviation		32,814		20,125			61.3			139,838		87,525		62.6
London market account		23,674		9,766			41.3			106,857		49,571		46.4
Other specialty lines		30,724		24,899			81.0			173,449		116,526		67.2
Discontinued lines		4		(103	)	nm				4,758		2,586	nm
Total	$	502,388	$	315,566			62.8	%	$	2,007,774	$	1,211,873		60.4	%

nm — Not meaningful comparison

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