HCC Insurance 8-K HCC Insurance Holdings Reports Strong Earnings Growth for the Second Quarter of 2012

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS STRONG EARNINGS GROWTH FOR THE SECOND QUARTER OF 2012

Second Quarter 2012 Highlights:

·Annualized operating return on equity(a) of 11.3%

·Net earnings of $93.5 million, or $0.92 per diluted share

·Net earned premium increased 8% to $565.3 million

·GAAP combined ratio of 84.9%

·1.9 million shares of common stock repurchased for $59.5 million at an average cost of $31.17 per share

HOUSTON (July 31, 2012) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for its second quarter ended June 30, 2012.

Net earnings were $93.5 million for the second quarter of 2012, compared to $69.5 million for the second quarter of 2011.  Net earnings per diluted share were $0.92 for the second quarter of 2012, versus $0.61 for the same quarter of 2011.  Net earnings were $176.1 million for the first six months of 2012, or $1.71 per diluted share, compared to $116.5 million, or $1.02 per diluted share, for the same period of 2011.

The 2012 results include pretax net catastrophe losses of $4.7 million and $12.3 million for the second quarter and first six months of 2012, respectively, which reduced net earnings by $0.03 and $0.08 per share in the respective periods.  The 2011 results include pretax net catastrophe losses of $21.9 million and $73.3 million for the second quarter and first six months of 2011, respectively, from catastrophes in Japan, New Zealand, Australia and the United States, which reduced net earnings by $0.13 and $0.42 per share in the respective periods.  Catastrophe losses added 0.9 and 1.1 percentage points to the Company’s net loss ratio for the second quarter and first six months of 2012, respectively.

The Company’s combined ratio was 84.9% for the second quarter of 2012, compared to 89.2% for the second quarter of 2011.  The combined ratio was 85.0% for the first six months of 2012, versus 91.9% for the same period of 2011.  HCC’s paid loss ratio was 54.9% for the first half of 2012, compared to 61.5% for the same period of 2011.

Book value per share increased 3.0% for the second quarter of 2012 to $33.19 at June 30, 2012.  HCC’s annualized return on equity and annualized operating return on equity(a) were both 11.3% for the second quarter of 2012.

“We are obviously pleased with the quarter and the first six months of 2012.  The pricing environment remains positive, margins attractive and Mother Nature, at least for the moment, calm,” HCC Chief Executive Officer John N. Molbeck, Jr. said.

The Company repurchased 1.9 million shares of its common stock during the second quarter of 2012 for $59.5 million at an average cost of $31.17 per share.

HCC had no loss development in the second quarter of 2012, compared to net adverse loss development of $13.3 million for the same quarter of 2011, and no loss development in the first six months of 2012, versus net adverse loss development of $22.3 million in the same period of 2011.

Gross written premium increased 7% to $791.6 million for the second quarter of 2012, compared to $742.1 million for the same quarter of 2011.  Net written premium increased 5% to $642.1 million for the second quarter of 2012, versus $609.9 million for the same quarter of 2011.  Net earned premium increased 8% to $565.3 million for the second quarter of 2012, compared to $524.3 million for the same quarter of 2011.

Gross written premium increased 6% to $1.5 billion for the first six months of 2012, compared to $1.4 billion for the same period of 2011.  Net written premium increased 5% to $1.2 billion for the first half of 2012, versus $1.1 billion for the same period of 2011.  Net earned premium increased 8% to $1.1 billion for the first six months of 2012, compared to $1.0 billion for the same period of 2011.

Investment income increased to $53.3 million in the second quarter of 2012, compared to $52.4 million in the same period of 2011.  Investment income increased to $110.3 million in the first six months of 2012, compared to $104.0 million in the same period of 2011.  The Company’s fixed maturity securities portfolio increased 9% to $6.1 billion at June 30, 2012, from $5.6 billion at June 30, 2011.  The Company’s total investments increased 10% to $6.4 billion at June 30, 2012, from $5.8 billion at June 30, 2011.

As of June 30, 2012, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 4.5 years and an average long-term tax equivalent yield of 4.8%.

In the first half of 2012, the Company generated cash flow from operating activities of $244.6 million, compared to $121.8 million in the same period of 2011.  The Company’s liquidity position remains strong with $280.3 million of cash and short-term investments and $298.1 million of available capacity under its $600.0 million revolving loan facility at June 30, 2012.

As of June 30, 2012, total assets were $10.0 billion, shareholders’ equity was $3.3 billion and the Company’s debt to total capital ratio was 15.0%.

For further information about HCC’s 2012 second quarter results, see the supplemental financial schedules that are accessible on HCC’s website at http://www.hcc.com, as well as directly in the Investor Relations section of HCC’s website at http://ir.hcc.com.

2

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HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, August 1.  To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-0161.  There will also be a live webcast available on a listen-only basis that can be accessed through the HCC website at http://www.hcc.com.  The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, November 2, 2012.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading international specialty insurance group with offices in the United States, the United Kingdom, Spain and Ireland.  HCC’s major domestic and international insurance companies have financial strength ratings of “AA (Very Strong)” from Standard & Poor’s Corporation, “A+ (Superior)” from A.M. Best Company, “AA (Very Strong)” from Fitch Ratings, and “A1 (Good Security)” from Moody’s Investors Service, Inc.

For more information about HCC, please visit http://www.hcc.com.

a) Non-GAAP Financial Measure

Annualized operating return on equity is a non-GAAP financial measure as defined by Regulation G and is calculated as operating earnings (or net earnings excluding after-tax net realized investment gain (loss), other-than-temporary impairment credit losses and foreign currency benefit (expense)) divided by average shareholders’ equity excluding accumulated other comprehensive income.  To annualize a quarterly rate, the result is multiplied by four.  See the supplemental financial schedules for a reconciliation of this non-GAAP financial measure to corresponding GAAP amounts.  Management believes annualized operating return on equity is a useful measure for understanding the Company’s profitability relative to shareholders’ equity before consideration of investment-related gains (losses) and foreign currency benefit (expense) that the Company does not consider in evaluating its operating results internally.

Contact:	Doug Busker, Director of Investor Relations
	HCC Insurance Holdings, Inc.
	Telephone: (713) 996-1192

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

*     *     *     *     *

3

HCC Insurance Holdings, Inc. and Subsidiaries

Financial Highlights

(Unaudited, in thousands except per share data)

	Six months ended						Three months ended
	June 30,						June 30,
	2012			2011			2012			2011
Gross written premium	$	1,474,242		$	1,391,290		$	791,553		$	742,082
Net written premium	1,200,492			1,148,757			642,088			609,873
Net earned premium	1,112,472			1,032,731			565,331			524,251
Net investment income	110,300			104,017			53,290			52,422
Total revenue	1,241,811			1,148,560			632,288			584,852
Net earnings	176,077			116,468			93,493			69,478
Earnings per share (diluted)	$	1.71		$	1.02		$	0.92		$	0.61
Weighted-average shares outstanding (millions)	101.0			112.9			99.9			111.8
Net loss ratio	59.8		%	66.0		%	59.6		%	63.8		%
Combined ratio	85.0		%	91.9		%	84.9		%	89.2		%
Paid loss ratio	54.9		%	61.5		%	47.0		%	64.5		%

	June 30,			December 31,
	2012			2011
Total investments	$	6,446,333		$	6,049,750
Total assets	10,009,141			9,597,278
Shareholders’ equity	3,343,257			3,273,982
Debt to total capital ratio	15.0		%	12.8		%
Book value per share	$	33.19		$	31.45

S-1

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited, in thousands)

	June 30,			December 31,
	2012			2011
ASSETS
Investments:
Fixed income securities - available for sale, at fair value	$	6,097,866		$	5,718,834
Fixed income securities - held to maturity, at amortized cost	—			161,102
Equity securities	93,660			—
Short-term investments	217,087			133,917
Other investments	37,720			35,897
Total investments	6,446,333			6,049,750
Cash	63,184			104,550
Restricted cash	202,642			229,821
Premium, claims and other receivables	679,569			688,732
Reinsurance recoverables	1,056,999			1,056,068
Ceded unearned premium	255,078			222,300
Ceded life and annuity benefits	59,803			61,061
Deferred policy acquisition costs	204,387			189,633
Goodwill	873,627			872,814
Other assets	167,519			122,549
Total assets	$	10,009,141		$	9,597,278
LIABILITIES
Loss and loss adjustment expense payable	$	3,755,699		$	3,658,317
Life and annuity policy benefits	59,803			61,061
Reinsurance, premium and claims payable	359,260			366,499
Unearned premium	1,147,121			1,031,034
Deferred ceding commissions	71,767			62,364
Notes payable	590,867			478,790
Accounts payable and accrued liabilities	681,367			665,231
Total liabilities	6,665,884			6,323,296
SHAREHOLDERS’ EQUITY
Common stock	123,449			122,720
Additional paid-in capital	1,019,570			1,001,308
Retained earnings	2,574,411			2,429,818
Accumulated other comprehensive income	259,776			227,659
Treasury stock	(633,949		)	(507,523		)
Total shareholders’ equity	3,343,257			3,273,982
Total liabilities and shareholders’ equity	$	10,009,141		$	9,597,278

S-2

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

	Six months ended						Three months ended
	June 30,						June 30,
	2012			2011			2012			2011
REVENUE
Net earned premium	$	1,112,472		$	1,032,731		$	565,331		$	524,251
Net investment income	110,300			104,017			53,290			52,422
Other operating income	12,389			14,796			7,188			7,475
Net realized investment gain	7,047			495			6,876			1,054
Other-than-temporary impairment credit losses	(397		)	(3,479		)	(397		)	(350		)
Total revenue	1,241,811			1,148,560			632,288			584,852
EXPENSE
Loss and loss adjustment expense, net	665,753			681,868			336,825			334,282
Policy acquisition costs, net	143,934			135,684			74,490			65,841
Other operating expense	167,706			160,237			80,424			82,390
Interest expense	13,139			10,987			6,230			5,434
Total expense	990,532			988,776			497,969			487,947
Earnings before income tax expense	251,279			159,784			134,319			96,905
Income tax expense	75,202			43,316			40,826			27,427
Net earnings	$	176,077		$	116,468		$	93,493		$	69,478
Basic earnings per share data:
Net earnings per share	$	1.71		$	1.02		$	0.92		$	0.61
Weighted-average shares outstanding (millions)	100.8			112.6			99.6			111.4
Diluted earnings per share data:
Net earnings per share	$	1.71		$	1.02		$	0.92		$	0.61
Weighted-average shares outstanding (millions)	101.0			112.9			99.9			111.8
Cash dividends declared, per share	$	0.310		$	0.290		$	0.155		$	0.145

S-3

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2012		2011		Change		2012			2011		Change
U.S. Property & Casualty
Aviation	$	82,870	$	79,056	5	%	$	45,780		$	37,608	22	%
E&O	31,493		36,998		(15	)	14,602			17,305		(16	)
Public Risk	43,245		34,298		26		23,461			16,845		39
Other	161,005		115,159		40		81,623			64,203		27
	318,613		265,511		20		165,466			135,961		22
Professional Liability
U.S. D&O	186,184		200,661		(7	)	111,188			123,470		(10	)
International D&O	59,566		61,611		(3	)	33,317			37,682		(12	)
	245,750		262,272		(6	)	144,505			161,152		(10	)
Accident & Health
Medical Stop-loss	387,974		351,154		10		194,741			176,197		11
Other	46,290		46,669		(1	)	23,400			25,326		(8	)
	434,264		397,823		9		218,141			201,523		8
U.S. Surety & Credit
Surety	80,762		86,962		(7	)	40,836			45,257		(10	)
Credit	29,940		26,991		11		15,373			14,925		3
	110,702		113,953		(3	)	56,209			60,182		(7	)
International
Energy	110,714		96,381		15		90,119			80,078		13
Property Treaty	113,855		104,115		9		44,517			32,296		38
Liability	40,242		48,071		(16	)	20,982			23,953		(12	)
Surety & Credit	43,451		47,189		(8	)	22,493			20,516		10
Other	56,649		55,825		1		29,124			26,390		10
	364,911		351,581		4		207,235			183,233		13
Exited Lines	2		150		nm		(3		)	31		nm
Totals	$	1,474,242	$	1,391,290	6	%	$	791,553		$	742,082	7	%

nm - Not meaningful comparison

S-4

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2012		2011		Change		2012			2011		Change
U.S. Property & Casualty
Aviation	$	63,405	$	59,085	7	%	$	35,898		$	31,691	13	%
E&O	30,235		36,586		(17	)	13,730			17,020		(19	)
Public Risk	35,567		26,396		35		19,973			13,144		52
Other	68,687		58,369		18		35,965			31,859		13
	197,894		180,436		10		105,566			93,714		13
Professional Liability
U.S. D&O	136,826		153,692		(11	)	81,121			94,081		(14	)
International D&O	34,311		36,956		(7	)	19,103			22,776		(16	)
	171,137		190,648		(10	)	100,224			116,857		(14	)
Accident & Health
Medical Stop-loss	387,673		351,056		10		194,586			176,147		10
Other	46,067		46,444		(1	)	23,270			25,248		(8	)
	433,740		397,500		9		217,856			201,395		8
U.S. Surety & Credit
Surety	73,385		82,743		(11	)	37,251			42,985		(13	)
Credit	22,711		22,358		2		14,141			12,409		14
	96,096		105,101		(9	)	51,392			55,394		(7	)
International
Energy	81,013		62,897		29		68,189			57,845		18
Property Treaty	99,819		86,126		16		37,517			24,966		50
Liability	37,316		44,433		(16	)	19,424			22,073		(12	)
Surety & Credit	39,813		43,466		(8	)	20,786			18,708		11
Other	43,662		38,000		15		21,137			18,890		12
	301,623		274,922		10		167,053			142,482		17
Exited Lines	2		150		nm		(3		)	31		nm
Totals	$	1,200,492	$	1,148,757	5	%	$	642,088		$	609,873	5	%

nm -  Not meaningful comparison

S-5

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2012		2011		Change		2012			2011		Change
U.S. Property & Casualty
Aviation	$	58,220	$	54,600	7	%	$	29,397		$	27,318	8	%
E&O	31,979		38,357		(17	)	15,602			18,800		(17	)
Public Risk	31,792		23,179		37		16,574			11,927		39
Other	55,861		43,039		30		27,261			20,876		31
	177,852		159,175		12		88,834			78,921		13
Professional Liability
U.S. D&O	170,667		180,254		(5	)	84,413			90,279		(6	)
International D&O	30,238		22,920		32		15,054			12,145		24
	200,905		203,174		(1	)	99,467			102,424		(3	)
Accident & Health
Medical Stop-loss	387,673		351,056		10		194,586			176,147		10
Other	48,724		49,601		(2	)	24,144			25,970		(7	)
	436,397		400,657		9		218,730			202,117		8
U.S. Surety & Credit
Surety	79,608		80,809		(1	)	39,688			40,148		(1	)
Credit	21,236		20,594		3		13,427			9,891		36
	100,844		101,403		(1	)	53,115			50,039		6
International
Energy	40,889		28,683		43		25,795			16,634		55
Property Treaty	49,007		37,965		29		26,918			21,961		23
Liability	39,131		39,898		(2	)	19,649			19,966		(2	)
Surety & Credit	34,945		36,057		(3	)	17,184			18,683		(8	)
Other	32,500		25,561		27		15,642			13,473		16
	196,472		168,164		17		105,188			90,717		16
Exited Lines	2		158		nm		(3		)	33		nm
Totals	$	1,112,472	$	1,032,731	8	%	$	565,331		$	524,251	8	%

nm - Not meaningful comparison

S-6

HCC Insurance Holdings, Inc. and Subsidiaries

Net Investment Income and Unrealized Gain

(Unaudited, in thousands)

	Six months ended						Three months ended
	June 30,						June 30,
	2012			2011			2012			2011
Sources of net investment income:
Fixed maturity securities
Taxable	$	58,218		$	54,219		$	27,103		$	27,124
Exempt from U.S. income taxes	52,872			49,826			26,260			24,915
Total fixed maturity securities	111,090			104,045			53,363			52,039
Equity securities	993			—			993			—
Short-term investments	102			321			40			165
Other	868			2,030			401			1,388
Total investment income	113,053			106,396			54,797			53,592
Investment expense	(2,753		)	(2,379		)	(1,507		)	(1,170		)
Net investment income	$	110,300		$	104,017		$	53,290		$	52,422
Unrealized gain on available for sale securities:
Increase in unrealized gain for period, before tax	$	54,654		$	58,356		$	33,185		$	77,121
Unrealized gain at:
June 30, 2012	$	385,723
March 31, 2012	$	352,538
December 31, 2011	$	331,069

S-7

HCC Insurance Holdings, Inc. and Subsidiaries

Net Loss Ratios

(Unaudited, in thousands)

	Six months ended				Six months ended
	June 30, 2012				June 30, 2011
	Net earned		Loss		Net earned		Loss
	premium		ratio		premium		ratio
U.S. Property & Casualty
Aviation	$	58,220	55.8	%	$	54,600	63.7	%
E&O	31,979		60.8		38,357		57.3
Public Risk	31,792		77.8		23,179		66.9
Other	55,861		43.4		43,039		46.8
	177,852		56.7		159,175		58.1
Professional Liability
U.S. D&O	170,667		69.7		180,254		69.3
International D&O	30,238		51.0		22,920		57.2
	200,905		66.9		203,174		67.9
Accident & Health
Medical Stop-loss	387,673		75.5		351,056		74.0
Other	48,724		65.9		49,601		64.2
	436,397		74.4		400,657		72.8
U.S. Surety & Credit
Surety	79,608		24.8		80,809		25.3
Credit	21,236		33.0		20,594		44.9
	100,844		26.5		101,403		29.3
International
Energy	40,889		41.6		28,683		59.8
Property Treaty	49,007		17.7		37,965		103.4
Liability	39,131		49.5		39,898		51.2
Surety & Credit	34,945		58.2		36,057		41.2
Other	32,500		43.7		25,561		151.3
	196,472		40.5		168,164		77.5
Exited Lines	2		nm		158		nm
Totals	$	1,112,472	59.8	%	$	1,032,731	66.0	%

nm - Not meaningful comparison

S-8

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measure to GAAP

(Unaudited, in thousands)

	Six months ended						Three months ended
	June 30,						June 30,
	2012			2011			2012			2011
Numerator:
GAAP net earnings	$	176,077		$	116,468		$	93,493		$	69,478
Exclude:
Net realized investment gain, net of tax*	4,581			322			4,470			685
OTTI credit losses, net of tax*	(258		)	(2,261		)	(258		)	(227		)
Foreign currency benefit, net of tax*	936			1,303			2,733			507
Total items excluded from operating earnings	5,259			(636		)	6,945			965
Operating earnings	$	170,818		$	117,104		$	86,548		$	68,513
Denominator:
GAAP equity - beginning of period	$	3,273,982		$	3,278,400		$	3,293,957		$	3,290,128
Exclude - Accumulated other comprehensive income	227,659			97,186			244,295			95,477
Beginning equity, as adjusted	$	3,046,323		$	3,181,214		$	3,049,662		$	3,194,651
GAAP equity - end of period	$	3,343,257		$	3,251,662		$	3,343,257		$	3,251,662
Exclude - Accumulated other comprehensive income	259,776			145,887			259,776			145,887
Ending equity, as adjusted	$	3,083,481		$	3,105,775		$	3,083,481		$	3,105,775
Average equity, as adjusted	$	3,064,902		$	3,143,495		$	3,066,572		$	3,150,213
Annualized operating return on equity	11.1		%	7.5		%	11.3		%	8.7		%

* Tax adjustment calculated using 35% statutory tax rate.

S-9