Exhibit 99.1
HCC INSURANCE HOLDINGS REPORTS
RECORD EARNINGS PER SHARE FOR 2012
Highlights:
· Record net earnings of $108.1 million, or $1.06 per diluted share, for the fourth quarter
· Annualized return on equity of 12.3% and annualized operating return on equity(a) of 11.7% for the fourth quarter
· Record earnings per diluted share of $3.83 for the full year
· GAAP combined ratio of 84.5% for the fourth quarter and 83.6% for the full year
· Net earned premium increased 3% to $566.5 million for the fourth quarter and 5% to $2.2 billion for the full year
· Book value per share increased 11.6% for the full year to $35.10
HOUSTON (February 12, 2013) . . .
HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for the fourth quarter and full year of 2012.
Net earnings were $108.1 million for the fourth quarter of 2012, compared to $78.3 million for the fourth quarter of 2011. Net earnings per diluted share were $1.06 for the fourth quarter of 2012, versus $0.74 for the same quarter of 2011. Net earnings were $391.2 million for 2012, or $3.83 per diluted share, compared to $255.2 million, or $2.30 per diluted share, for 2011.
The 2012 results include accident year pretax net catastrophe losses of $32.5 million and $52.8 million for the fourth quarter and full year, respectively. The 2011 results include accident year pretax net catastrophe losses of $10.0 million and $117.9 million for the fourth quarter and full year, respectively.
The Company’s combined ratio was 84.5% for the fourth quarter of 2012, compared to 87.0% for the fourth quarter of 2011. The combined ratio was 83.6% for the full year of 2012, versus 91.1% for the same period of 2011. HCC’s paid loss ratio was 56.7% for 2012, compared to 58.9% for 2011.
Book value per share increased 1.4% and 11.6% for the fourth quarter and full year of 2012, respectively, to $35.10 at December 31, 2012. Book value per share grew at a compounded rate of 10.7% over the last five years.
HCC’s annualized return on equity was 12.3% for the fourth quarter of 2012 and 11.5% for the full year of 2012. The Company’s annualized operating return on equity(a) was 11.7% for the fourth quarter of 2012 and 11.9% for the full year of 2012.
“The fourth quarter represented our second consecutive quarter with record earnings and capped a record full year performance for our shareholders. We grew book value per share by an impressive 11.6%. These results were once again driven by our commitment to underwriting performance, evident in yet another year with a combined ratio below 85%,” HCC Chief Executive Officer Christopher J.B. Williams said.
HCC had net favorable loss development of $35.4 million in the fourth quarter of 2012, including $18.9 million of favorable development related to prior year catastrophes, compared to net favorable development of $11.5 million in the same quarter of 2011. Net favorable development was $70.0 million in the full year of 2012, versus net adverse development of $10.1 million in the same period of 2011.
The Company’s 2012 accident year net loss ratio was 61.5% and its accident year combined ratio was 87.2% for the full year of 2012. HCC’s accident year combined ratio includes 2.4 percentage points for catastrophes.
Gross written premium increased 2% to $644.1 million for the fourth quarter of 2012, compared to $629.0 million for the same quarter of 2011. Net written premium increased slightly to $522.6 million for the fourth quarter of 2012, versus $521.1 million for the same quarter of 2011. Net earned premium increased 3% to $566.5 million for the fourth quarter of 2012, compared to $550.2 million for the same quarter of 2011.
Gross written premium increased 5% to $2.8 billion for the full year of 2012, compared to $2.6 billion for the same period of 2011. Net written premium increased 3% to $2.3 billion for the full year of 2012, versus $2.2 billion for the same period of 2011. Net earned premium increased 5% to $2.2 billion for the full year of 2012, compared to $2.1 billion for the same period of 2011.
Investment income increased to $56.0 million for the fourth quarter of 2012, compared to $53.5 million for the same period of 2011. Investment income increased to $222.6 million for the full year of 2012, compared to $212.3 million for the same period of 2011. The Company’s fixed maturity securities portfolio increased 7% to $6.3 billion at December 31, 2012, from $5.9 billion at December 31, 2011. The Company’s total investments increased 15% to $7.0 billion at December 31, 2012, from $6.0 billion at December 31, 2011.
As of December 31, 2012, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 4.7 years and an average long-term tax equivalent yield of 4.7%.
HCC generated cash flow from operating activities of $661.1 million in 2012, compared to $421.3 million in 2011. The Company’s liquidity position remains strong with $434.4 million of cash and short-term investments and $305.1 million of available capacity under its $600.0 million revolving loan facility at December 31, 2012.
As of December 31, 2012, total assets were $10.3 billion, shareholders’ equity was $3.5 billion and the Company’s debt to total capital ratio was 14.2%.
EARNINGS GUIDANCE: HCC’s management estimates the Company will achieve net earnings of $3.20 to $3.50 per diluted share for 2013. These estimated results assume the following: a 1% increase in gross and net written premium; a combined ratio of 86% to 88%; and average fully diluted shares outstanding of 97 million shares. The Company’s guidance includes 2.7 loss ratio points for net catastrophe losses. These assumptions do not include any provision for loss development, foreign currency fluctuation, net realized investment gains (losses) or other-than-temporary impairment credit losses.
For further information about HCC’s 2012 fourth quarter results, see the supplemental financial schedules that are accessible on HCC’s website at http://www.hcc.com, as well as directly in the Investor Relations section of HCC’s website at http://ir.hcc.com.
(Note: If clicking on the above links does not open in a new web page, please cut and paste the above URLs into your browser’s address bar.)
HCC will hold an open conference call beginning at 8:00 a.m. Central Standard Time on Wednesday, February 13. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-0161. There will also be a live webcast available on a listen-only basis that can be accessed through the HCC website at http://www.hcc.com. The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, May 17, 2013.
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, Inc., “AA (Very Strong)” from Fitch Ratings, and “A1 (Good Security)” from Moody’s Investors Service, Inc.
For more information about HCC, please visit http://www.hcc.com.
a) Non-GAAP Financial Measure
Annualized operating return on equity is a non-GAAP financial measure 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.
* * * * *
HCC Insurance Holdings, Inc. and Subsidiaries
Financial Highlights
(Unaudited, in thousands except per share data)
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| December 31, |
| December 31, |
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| 2012 |
| 2011 |
| 2012 |
| 2011 |
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Gross written premium |
| $ | 2,784,073 |
| $ | 2,649,126 |
| $ | 644,068 |
| $ | 628,989 |
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Net written premium |
| 2,253,396 |
| 2,182,158 |
| 522,597 |
| 521,067 |
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Net earned premium |
| 2,242,625 |
| 2,127,170 |
| 566,503 |
| 550,183 |
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Net investment income |
| 222,634 |
| 212,271 |
| 55,992 |
| 53,489 |
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Total revenue |
| 2,525,827 |
| 2,374,005 |
| 652,343 |
| 614,921 |
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Net earnings |
| 391,240 |
| 255,243 |
| 108,101 |
| 78,338 |
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Operating earnings* |
| 375,682 |
| 255,203 |
| 93,936 |
| 79,709 |
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Earnings per share (diluted) |
| $ | 3.83 |
| $ | 2.30 |
| $ | 1.06 |
| $ | 0.74 |
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Weighted-average shares outstanding (millions) |
| 100.5 |
| 109.2 |
| 99.9 |
| 104.4 |
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Net loss ratio |
| 58.2 | % | 65.8 | % | 59.3 | % | 61.3 | % | |||||
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Combined ratio |
| 83.6 | % | 91.1 | % | 84.5 | % | 87.0 | % | |||||
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Paid loss ratio |
| 56.7 | % | 58.9 | % | 57.9 | % | 57.5 | % | |||||
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| December 31, |
| December 31, |
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| 2012 |
| 2011 |
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Total investments |
| $ | 6,950,398 |
| $ | 6,049,750 |
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Total assets |
| 10,267,807 |
| 9,597,278 |
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Shareholders’ equity |
| 3,542,612 |
| 3,273,982 |
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Debt to total capital ratio |
| 14.2 | % | 12.8 | % |
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Book value per share |
| $ | 35.10 |
| $ | 31.45 |
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* Non-GAAP financial measure as defined by Regulation G. See calculation on S - 9. Management believes operating earnings is a useful measure for understanding the Company’s profitability before consideration of investment-related gains (losses) and foreign currency benefit (expense) that the Company does not consider in evaluating its operating results internally.
HCC Insurance Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited, in thousands)
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| December 31, |
| December 31, |
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| 2012 |
| 2011 |
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ASSETS |
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Investments: |
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Fixed income securities - available for sale, at fair value |
| $ | 6,281,781 |
| $ | 5,718,834 |
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Fixed income securities - held to maturity, at amortized cost |
| — |
| 161,102 |
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Equity securities |
| 284,639 |
| — |
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Short-term investments |
| 363,053 |
| 133,917 |
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Other investments |
| 20,925 |
| 35,897 |
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Total investments |
| 6,950,398 |
| 6,049,750 |
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Cash |
| 71,390 |
| 104,550 |
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Restricted cash |
| 101,480 |
| 229,821 |
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Premium, claims and other receivables |
| 549,725 |
| 688,732 |
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Reinsurance recoverables |
| 1,071,222 |
| 1,056,068 |
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Ceded unearned premium |
| 256,988 |
| 222,300 |
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Ceded life and annuity benefits |
| 58,641 |
| 61,061 |
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Deferred policy acquisition costs |
| 191,960 |
| 189,633 |
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Goodwill |
| 885,860 |
| 872,814 |
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Other assets |
| 130,143 |
| 122,549 |
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Total assets |
| $ | 10,267,807 |
| $ | 9,597,278 |
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LIABILITIES |
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Loss and loss adjustment expense payable |
| $ | 3,767,850 |
| $ | 3,658,317 |
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Life and annuity policy benefits |
| 58,641 |
| 61,061 |
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Reinsurance, premium and claims payable |
| 294,621 |
| 366,499 |
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Unearned premium |
| 1,069,956 |
| 1,031,034 |
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Deferred ceding commissions |
| 74,609 |
| 62,364 |
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Notes payable |
| 583,944 |
| 478,790 |
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Accounts payable and accrued liabilities |
| 875,574 |
| 665,231 |
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Total liabilities |
| 6,725,195 |
| 6,323,296 |
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SHAREHOLDERS’ EQUITY |
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Common stock |
| 125,114 |
| 122,720 |
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Additional paid-in capital |
| 1,052,253 |
| 1,001,308 |
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Retained earnings |
| 2,756,166 |
| 2,429,818 |
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Accumulated other comprehensive income |
| 295,271 |
| 227,659 |
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Treasury stock |
| (686,192 | ) | (507,523 | ) | ||
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Total shareholders’ equity |
| 3,542,612 |
| 3,273,982 |
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Total liabilities and shareholders’ equity |
| $ | 10,267,807 |
| $ | 9,597,278 |
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HCC Insurance Holdings, Inc. and Subsidiaries
Consolidated Statements of Earnings
(Unaudited, in thousands except per share data)
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| December 31, |
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| 2012 |
| 2011 |
| 2012 |
| 2011 |
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REVENUE |
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Net earned premium |
| $ | 2,242,625 |
| $ | 2,127,170 |
| $ | 566,503 |
| $ | 550,183 |
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Net investment income |
| 222,634 |
| 212,271 |
| 55,992 |
| 53,489 |
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Other operating income |
| 30,448 |
| 35,590 |
| 7,219 |
| 11,965 |
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Net realized investment gain |
| 31,148 |
| 3,653 |
| 22,629 |
| 484 |
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Other-than-temporary impairment credit losses |
| (1,028 | ) | (4,679 | ) | — |
| (1,200 | ) | ||||
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Total revenue |
| 2,525,827 |
| 2,374,005 |
| 652,343 |
| 614,921 |
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EXPENSE |
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Loss and loss adjustment expense, net |
| 1,305,511 |
| 1,399,247 |
| 335,744 |
| 337,007 |
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Policy acquisition costs, net |
| 281,201 |
| 266,125 |
| 69,647 |
| 72,945 |
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Other operating expense |
| 359,060 |
| 330,557 |
| 90,896 |
| 86,066 |
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Interest expense |
| 25,628 |
| 23,070 |
| 6,527 |
| 6,473 |
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Total expense |
| 1,971,400 |
| 2,018,999 |
| 502,814 |
| 502,491 |
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Earnings before income tax expense |
| 554,427 |
| 355,006 |
| 149,529 |
| 112,430 |
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Income tax expense |
| 163,187 |
| 99,763 |
| 41,428 |
| 34,092 |
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Net earnings |
| $ | 391,240 |
| $ | 255,243 |
| $ | 108,101 |
| $ | 78,338 |
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Basic earnings per share data: |
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Net earnings per share |
| $ | 3.84 |
| $ | 2.31 |
| $ | 1.07 |
| $ | 0.74 |
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Weighted-average shares outstanding (millions) |
| 100.2 |
| 109.1 |
| 99.7 |
| 104.3 |
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Diluted earnings per share data: |
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Net earnings per share |
| $ | 3.83 |
| $ | 2.30 |
| $ | 1.06 |
| $ | 0.74 |
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Weighted-average shares outstanding (millions) |
| 100.5 |
| 109.2 |
| 99.9 |
| 104.4 |
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Cash dividends declared, per share |
| $ | 0.640 |
| $ | 0.600 |
| $ | 0.165 |
| $ | 0.155 |
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HCC Insurance Holdings, Inc. and Subsidiaries
Gross Written Premium
(Unaudited, in thousands)
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| Twelve months ended December 31, |
| Three months ended December 31, |
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| 2012 |
| 2011 |
| Change |
| 2012 |
| 2011 |
| Change |
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U.S. Property & Casualty |
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Aviation |
| $ | 144,621 |
| $ | 154,903 |
| (7 | )% | $ | 27,321 |
| $ | 37,970 |
| (28 | )% |
E&O |
| 60,639 |
| 68,846 |
| (12 | ) | 14,156 |
| 15,885 |
| (11 | ) | ||||
Public Risk |
| 85,857 |
| 73,168 |
| 17 |
| 18,791 |
| 17,444 |
| 8 |
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Other |
| 323,577 |
| 243,519 |
| 33 |
| 73,402 |
| 59,404 |
| 24 |
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| 614,694 |
| 540,436 |
| 14 |
| 133,670 |
| 130,703 |
| 2 |
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Professional Liability |
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U.S. D&O |
| 424,099 |
| 453,669 |
| (7 | ) | 126,166 |
| 140,788 |
| (10 | ) | ||||
International D&O |
| 115,284 |
| 108,834 |
| 6 |
| 35,341 |
| 28,812 |
| 23 |
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| 539,383 |
| 562,503 |
| (4 | ) | 161,507 |
| 169,600 |
| (5 | ) | ||||
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Accident & Health |
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Medical Stop-loss |
| 777,351 |
| 703,814 |
| 10 |
| 193,712 |
| 176,413 |
| 10 |
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Other |
| 58,445 |
| 53,283 |
| 10 |
| 19,471 |
| 15,449 |
| 26 |
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| 835,796 |
| 757,097 |
| 10 |
| 213,183 |
| 191,862 |
| 11 |
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U.S. Surety & Credit |
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Surety |
| 159,159 |
| 169,237 |
| (6 | ) | 38,072 |
| 42,018 |
| (9 | ) | ||||
Credit |
| 62,309 |
| 57,075 |
| 9 |
| 16,718 |
| 14,926 |
| 12 |
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| 221,468 |
| 226,312 |
| (2 | ) | 54,790 |
| 56,944 |
| (4 | ) | ||||
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International |
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Energy |
| 136,070 |
| 128,078 |
| 6 |
| 10,492 |
| 14,668 |
| (28 | ) | ||||
Property Treaty |
| 138,065 |
| 128,767 |
| 7 |
| 3,538 |
| 4,017 |
| (12 | ) | ||||
Liability |
| 75,466 |
| 89,519 |
| (16 | ) | 17,173 |
| 20,806 |
| (17 | ) | ||||
Surety & Credit |
| 84,288 |
| 84,683 |
| — |
| 22,529 |
| 18,830 |
| 20 |
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Other |
| 97,278 |
| 86,336 |
| 13 |
| 17,324 |
| 11,707 |
| 48 |
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| 531,167 |
| 517,383 |
| 3 |
| 71,056 |
| 70,028 |
| 1 |
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Exited Lines |
| 41,565 |
| 45,395 |
| (8 | ) | 9,862 |
| 9,852 |
| — |
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Totals |
| $ | 2,784,073 |
| $ | 2,649,126 |
| 5 | % | $ | 644,068 |
| $ | 628,989 |
| 2 | % |
HCC Insurance Holdings, Inc. and Subsidiaries
Net Written Premium
(Unaudited, in thousands)
|
| Twelve months ended December 31, |
| Three months ended December 31, |
| ||||||||||||
|
| 2012 |
| 2011 |
| Change |
| 2012 |
| 2011 |
| Change |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Property & Casualty |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Aviation |
| $ | 112,712 |
| $ | 117,333 |
| (4 | )% | $ | 20,669 |
| $ | 28,547 |
| (28 | )% |
E&O |
| 58,066 |
| 67,606 |
| (14 | ) | 13,731 |
| 15,571 |
| (12 | ) | ||||
Public Risk |
| 69,081 |
| 58,096 |
| 19 |
| 14,896 |
| 14,170 |
| 5 |
| ||||
Other |
| 144,079 |
| 124,261 |
| 16 |
| 36,776 |
| 35,796 |
| 3 |
| ||||
|
| 383,938 |
| 367,296 |
| 5 |
| 86,072 |
| 94,084 |
| (9 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional Liability |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. D&O |
| 311,576 |
| 347,834 |
| (10 | ) | 92,782 |
| 107,940 |
| (14 | ) | ||||
International D&O |
| 66,562 |
| 64,428 |
| 3 |
| 20,958 |
| 16,828 |
| 25 |
| ||||
|
| 378,138 |
| 412,262 |
| (8 | ) | 113,740 |
| 124,768 |
| (9 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accident & Health |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Medical Stop-loss |
| 776,965 |
| 703,619 |
| 10 |
| 193,621 |
| 176,364 |
| 10 |
| ||||
Other |
| 58,043 |
| 52,920 |
| 10 |
| 19,369 |
| 15,370 |
| 26 |
| ||||
|
| 835,008 |
| 756,539 |
| 10 |
| 212,990 |
| 191,734 |
| 11 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Surety & Credit |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Surety |
| 144,573 |
| 158,116 |
| (9 | ) | 34,499 |
| 38,336 |
| (10 | ) | ||||
Credit |
| 51,331 |
| 50,743 |
| 1 |
| 14,540 |
| 14,762 |
| (2 | ) | ||||
|
| 195,904 |
| 208,859 |
| (6 | ) | 49,039 |
| 53,098 |
| (8 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Energy |
| 88,834 |
| 75,286 |
| 18 |
| 5,481 |
| 6,957 |
| (21 | ) | ||||
Property Treaty |
| 105,442 |
| 98,370 |
| 7 |
| (7,860 | ) | (1,769 | ) | nm |
| ||||
Liability |
| 69,546 |
| 81,855 |
| (15 | ) | 15,592 |
| 18,607 |
| (16 | ) | ||||
Surety & Credit |
| 74,977 |
| 78,418 |
| (4 | ) | 19,090 |
| 16,263 |
| 17 |
| ||||
Other |
| 80,356 |
| 57,890 |
| 39 |
| 18,663 |
| 7,475 |
| 150 |
| ||||
|
| 419,155 |
| 391,819 |
| 7 |
| 50,966 |
| 47,533 |
| 7 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exited Lines |
| 41,253 |
| 45,383 |
| (9 | ) | 9,790 |
| 9,850 |
| (1 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Totals |
| $ | 2,253,396 |
| $ | 2,182,158 |
| 3 | % | $ | 522,597 |
| $ | 521,067 |
| — | % |
HCC Insurance Holdings, Inc. and Subsidiaries
Net Earned Premium
(Unaudited, in thousands)
|
| Twelve months ended December 31, |
| Three months ended December 31, |
| ||||||||||||
|
| 2012 |
| 2011 |
| Change |
| 2012 |
| 2011 |
| Change |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Property & Casualty |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Aviation |
| $ | 116,236 |
| $ | 113,341 |
| 3 | % | $ | 28,346 |
| $ | 29,462 |
| (4 | )% |
E&O |
| 61,976 |
| 73,666 |
| (16 | ) | 14,799 |
| 17,312 |
| (15 | ) | ||||
Public Risk |
| 65,281 |
| 50,440 |
| 29 |
| 16,918 |
| 13,917 |
| 22 |
| ||||
Other |
| 110,557 |
| 95,963 |
| 15 |
| 28,394 |
| 27,598 |
| 3 |
| ||||
|
| 354,050 |
| 333,410 |
| 6 |
| 88,457 |
| 88,289 |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional Liability |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. D&O |
| 332,661 |
| 359,178 |
| (7 | ) | 80,039 |
| 88,770 |
| (10 | ) | ||||
International D&O |
| 62,026 |
| 51,638 |
| 20 |
| 16,194 |
| 14,806 |
| 9 |
| ||||
|
| 394,687 |
| 410,816 |
| (4 | ) | 96,233 |
| 103,576 |
| (7 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accident & Health |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Medical Stop-loss |
| 776,965 |
| 703,619 |
| 10 |
| 193,621 |
| 176,364 |
| 10 |
| ||||
Other |
| 54,862 |
| 54,651 |
| — |
| 14,129 |
| 13,588 |
| 4 |
| ||||
|
| 831,827 |
| 758,270 |
| 10 |
| 207,750 |
| 189,952 |
| 9 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
U.S. Surety & Credit |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Surety |
| 158,711 |
| 164,879 |
| (4 | ) | 39,767 |
| 43,786 |
| (9 | ) | ||||
Credit |
| 49,244 |
| 45,656 |
| 8 |
| 13,956 |
| 13,440 |
| 4 |
| ||||
|
| 207,955 |
| 210,535 |
| (1 | ) | 53,723 |
| 57,226 |
| (6 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Energy |
| 85,764 |
| 66,512 |
| 29 |
| 24,387 |
| 19,143 |
| 27 |
| ||||
Property Treaty |
| 100,565 |
| 90,912 |
| 11 |
| 23,143 |
| 26,384 |
| (12 | ) | ||||
Liability |
| 76,484 |
| 81,339 |
| (6 | ) | 18,881 |
| 21,158 |
| (11 | ) | ||||
Surety & Credit |
| 71,378 |
| 73,832 |
| (3 | ) | 17,677 |
| 17,823 |
| (1 | ) | ||||
Other |
| 78,662 |
| 56,153 |
| 40 |
| 26,462 |
| 16,782 |
| 58 |
| ||||
|
| 412,853 |
| 368,748 |
| 12 |
| 110,550 |
| 101,290 |
| 9 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exited Lines |
| 41,253 |
| 45,391 |
| (9 | ) | 9,790 |
| 9,850 |
| (1 | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Totals |
| $ | 2,242,625 |
| $ | 2,127,170 |
| 5 | % | $ | 566,503 |
| $ | 550,183 |
| 3 | % |
HCC Insurance Holdings, Inc. and Subsidiaries
Net Investment Income and Unrealized Gain
(Unaudited, in thousands)
|
| Twelve months ended |
| Three months ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sources of net investment income: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fixed maturity securities |
|
|
|
|
|
|
|
|
| ||||
Taxable |
| $ | 114,047 |
| $ | 113,293 |
| $ | 27,499 |
| $ | 29,065 |
|
Exempt from U.S. income taxes |
| 107,488 |
| 98,729 |
| 27,325 |
| 24,016 |
| ||||
Total fixed maturity securities |
| 221,535 |
| 212,022 |
| 54,824 |
| 53,081 |
| ||||
Equity securities |
| 3,959 |
| — |
| 1,620 |
| — |
| ||||
Short-term investments |
| 620 |
| 537 |
| 223 |
| 117 |
| ||||
Other |
| 2,856 |
| 4,486 |
| 1,157 |
| 1,494 |
| ||||
Total investment income |
| 228,970 |
| 217,045 |
| 57,824 |
| 54,692 |
| ||||
Investment expense |
| (6,336 | ) | (4,774 | ) | (1,832 | ) | (1,203 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
| $ | 222,634 |
| $ | 212,271 |
| $ | 55,992 |
| $ | 53,489 |
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized gain on available for sale securities: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Increase in unrealized gain for period, before tax |
| $ | 105,626 |
| $ | 196,417 |
| $ | (39,381 | ) | $ | 40,178 |
|
|
|
|
|
|
|
|
|
|
| ||||
Unrealized gain at: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2012 |
| $ | 436,695 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| ||||
September 30, 2012 |
| $ | 476,076 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| ||||
June 30, 2012 |
| $ | 385,723 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| ||||
March 31, 2012 |
| $ | 352,538 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2011 |
| $ | 331,069 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| ||||
HCC Insurance Holdings, Inc. and Subsidiaries
Net Loss Ratios
(Unaudited, in thousands)
|
| Twelve months ended |
| Twelve months ended |
| ||||||
|
| December 31, 2012 |
| December 31, 2011 |
| ||||||
|
| Net earned |
| Loss |
| Net earned |
| Loss |
| ||
|
| premium |
| ratio |
| premium |
| ratio |
| ||
U.S. Property & Casualty |
|
|
|
|
|
|
|
|
| ||
Aviation |
| $ | 116,236 |
| 56.2 | % | $ | 113,341 |
| 63.7 | % |
E&O |
| 61,976 |
| 70.9 |
| 73,666 |
| 70.8 |
| ||
Public Risk |
| 65,281 |
| 94.1 |
| 50,440 |
| 79.8 |
| ||
Other |
| 110,557 |
| 34.9 |
| 95,963 |
| 37.9 |
| ||
|
| 354,050 |
| 59.1 |
| 333,410 |
| 60.3 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Professional Liability |
|
|
|
|
|
|
|
|
| ||
U.S. D&O |
| 332,661 |
| 64.6 |
| 359,178 |
| 90.3 |
| ||
International D&O |
| 62,026 |
| 24.2 |
| 51,638 |
| 8.2 |
| ||
|
| 394,687 |
| 58.2 |
| 410,816 |
| 80.0 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Accident & Health |
|
|
|
|
|
|
|
|
| ||
Medical Stop-loss |
| 776,965 |
| 73.7 |
| 703,619 |
| 74.5 |
| ||
Other |
| 54,862 |
| 52.1 |
| 54,651 |
| 51.8 |
| ||
|
| 831,827 |
| 72.3 |
| 758,270 |
| 72.8 |
| ||
|
|
|
|
|
|
|
|
|
| ||
U.S. Surety & Credit |
|
|
|
|
|
|
|
|
| ||
Surety |
| 158,711 |
| 16.6 |
| 164,879 |
| 20.6 |
| ||
Credit |
| 49,244 |
| 24.9 |
| 45,656 |
| 40.0 |
| ||
|
| 207,955 |
| 18.5 |
| 210,535 |
| 24.8 |
| ||
|
|
|
|
|
|
|
|
|
| ||
International |
|
|
|
|
|
|
|
|
| ||
Energy |
| 85,764 |
| 27.1 |
| 66,512 |
| 35.7 |
| ||
Property Treaty |
| 100,565 |
| 24.4 |
| 90,912 |
| 80.0 |
| ||
Liability |
| 76,484 |
| 33.1 |
| 81,339 |
| 34.0 |
| ||
Surety & Credit |
| 71,378 |
| 122.6 |
| 73,832 |
| 56.6 |
| ||
Other |
| 78,662 |
| 36.6 |
| 56,153 |
| 121.0 |
| ||
|
| 412,853 |
| 45.9 |
| 368,748 |
| 63.4 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Exited Lines |
| 41,253 |
| 90.5 |
| 45,391 |
| 69.1 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Totals |
| $ | 2,242,625 |
| 58.2 | % | $ | 2,127,170 |
| 65.8 | % |
HCC Insurance Holdings, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures to GAAP
(Unaudited, in thousands)
|
| Twelve months ended |
| Three months ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Numerator: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
GAAP net earnings |
| $ | 391,240 |
| $ | 255,243 |
| $ | 108,101 |
| $ | 78,338 |
|
|
|
|
|
|
|
|
|
|
| ||||
Exclude: |
|
|
|
|
|
|
|
|
| ||||
Net realized investment gain, net of tax* |
| 20,246 |
| 2,374 |
| 14,709 |
| 314 |
| ||||
OTTI credit losses, net of tax* |
| (668 | ) | (3,041 | ) | — |
| (780 | ) | ||||
Foreign currency benefit (expense), net of tax* |
| (4,020 | ) | 707 |
| (544 | ) | (905 | ) | ||||
Total items excluded from operating earnings |
| 15,558 |
| 40 |
| 14,165 |
| (1,371 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating earnings |
| $ | 375,682 |
| $ | 255,203 |
| $ | 93,936 |
| $ | 79,709 |
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
GAAP equity - beginning of period |
| $ | 3,273,982 |
| $ | 3,278,400 |
| $ | 3,504,820 |
| $ | 3,249,107 |
|
|
|
|
|
|
|
|
|
|
| ||||
Exclude - Accumulated other comprehensive income |
| 227,659 |
| 97,186 |
| 318,239 |
| 202,018 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning equity, as adjusted |
| $ | 3,046,323 |
| $ | 3,181,214 |
| $ | 3,186,581 |
| $ | 3,047,089 |
|
|
|
|
|
|
|
|
|
|
| ||||
GAAP equity - end of period |
| $ | 3,542,612 |
| $ | 3,273,982 |
| $ | 3,542,612 |
| $ | 3,273,982 |
|
|
|
|
|
|
|
|
|
|
| ||||
Exclude - Accumulated other comprehensive income |
| 295,271 |
| 227,659 |
| 295,271 |
| 227,659 |
| ||||
�� |
|
|
|
|
|
|
|
|
| ||||
Ending equity, as adjusted |
| $ | 3,247,341 |
| $ | 3,046,323 |
| $ | 3,247,341 |
| $ | 3,046,323 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average equity, as adjusted |
| $ | 3,146,832 |
| $ | 3,113,769 |
| $ | 3,216,961 |
| $ | 3,046,706 |
|
|
|
|
|
|
|
|
|
|
| ||||
Annualized operating return on equity |
| 11.9 | % | 8.2 | % | 11.7 | % | 10.5 | % | ||||
* Tax adjustment calculated using 35% statutory tax rate.