HCC Insurance 8-K HCC Insurance Holdings Reports Strong

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS STRONG

SECOND QUARTER AND RECORD EARNINGS PER SHARE

FOR THE FIRST SIX MONTHS OF 2013

Second Quarter 2013 Highlights:

·Net earnings of $88.2 million, or $0.87 per diluted share

·GAAP combined ratio of 85.3%

·Catastrophe losses of $21.4 million

·Annualized return on equity of 9.9%

·Annualized operating return on equity(a) of 10.3%

·Net investment income increased 4% to $55.7 million

HOUSTON (July 30, 2013) . . .

HCC Insurance Holdings, Inc. (NYSE: HCC) today released results for its second quarter ended June 30, 2013.

Net earnings were $88.2 million, or $0.87 per diluted share, for the second quarter of 2013, compared to $93.5 million, or $0.92 per diluted share, for the second quarter of 2012.  Net earnings were $194.0 million for the first six months of 2013, or $1.92 per diluted share, compared to $176.1 million, or $1.71 per diluted share, for the same period of 2012.

The 2013 results included accident year pretax net catastrophe losses of $21.4 million and $26.6 million for the second quarter and first six months of 2013, respectively, which reduced net earnings by $0.14 and $0.17 per share for the respective periods.  The 2012 results included 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 for the respective periods.

The Company’s combined ratio was 85.3% for the second quarter of 2013, compared to 85.2% for the second quarter of 2012.  The combined ratio was 84.5% for the first six months of 2013, versus 85.3% for the same period of 2012.  HCC’s net paid loss ratio was 52.2% for the first half of 2013, compared to 54.9% for the same period of 2012.

“We are very pleased to report record earnings per share for the first half of the year, driven by a combined ratio that was once again below 85%.  Our businesses continue to generate strong, consistent returns, and we are finding good opportunities to grow our existing businesses, as well as to add teams focused on new lines,” said Christopher J.B. Williams, HCC’s Chief Executive Officer.

HCC had favorable loss development of $11.8 million in the second quarter and first six months of 2013, compared to no loss development in the same periods of 2012.

Gross written premium increased 2% to $809.4 million for the second quarter of 2013, compared to $791.6 million for the same quarter of 2012.  Net written premium decreased 2% to $629.0 million for the second quarter of 2013, versus $642.1 million for the same quarter of 2012.  Net earned premium decreased 1% to $561.4 million for the second quarter of 2013, compared to $565.3 million for the same quarter of 2012.

For the first six months of 2013, compared to the same period of 2012, gross written premium increased 4% to $1.5 billion; net written premium increased 1% to $1.2 billion; and net earned premium increased 1% to $1.1 billion.

Investment income increased to $55.7 million for the second quarter of 2013, compared to $53.3 million for the same period of 2012.  Investment income increased to $111.4 million for the first six months of 2013, compared to $110.3 million for the same period of 2012.  As of June 30, 2013, HCC’s fixed maturity securities portfolio had an average rating of AA, with a duration of 5.5 years and an average long-term tax equivalent yield of 4.5%.

HCC generated operating cash flow of $176.3 million in the first six months of 2013, compared to $293.3 million in the same period of 2012.  Operating cash flow is cash flow from operating activities excluding surety collateral outflows of $74.3 million and $21.2 million in the first six months of 2013 and 2012, respectively, as well as a payment of $27.5 million in 2012 to commute a large contract in Exited Lines.  The Company’s liquidity position remains strong with $256.1 million of cash and short-term investments and $253.6 million of available capacity under its $600.0 million revolving loan facility at June 30, 2013.

As of June 30, 2013, total assets were $10.2 billion, shareholders’ equity was $3.5 billion and the Company’s debt to total capital ratio was 15.4%.

For further information about HCC’s 2013 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.

(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 Daylight Time on Wednesday, July 31.  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 1, 2013.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland.  HCC’s major

2

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 under Regulation G and is calculated as net earnings excluding after-tax net realized investment gain/loss, other-than-temporary impairment credit losses, and foreign currency benefit/expense (collectively, operating earnings) divided by average shareholders’ equity excluding accumulated other comprehensive income.  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, both of which management excludes when evaluating operating results internally.

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

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

*     *     *     *     *

3

HCC Insurance Holdings, Inc. and Subsidiaries

Financial Highlights

(Unaudited, in thousands except per share data)

	Six months ended						Three months ended
	June 30,						June 30,
	2013			2012			2013			2012
Gross written premium	$	1,529,648		$	1,474,242		$	809,443		$	791,553
Net written premium	1,208,218			1,200,492			629,034			642,088
Net earned premium	1,122,542			1,112,472			561,356			565,331
Net investment income	111,433			110,300			55,668			53,290
Total revenue	1,263,797			1,241,811			629,431			632,288
Net earnings	194,012			176,077			88,162			93,493
Operating earnings*	179,558			170,818			86,419			86,548
Earnings per share (diluted)	$	1.92		$	1.71		$	0.87		$	0.92
Weighted-average shares outstanding (millions)	99.2			101.0			99.1			99.9
Net loss ratio	59.9		%	59.8		%	60.5		%	59.6		%
Combined ratio	84.5		%	85.3		%	85.3		%	85.2		%
Paid loss ratio	52.2		%	54.9		%	51.1		%	47.0		%

	June 30,			December 31,
	2013			2012
Total investments	$	6,659,291		$	6,950,398
Total assets	10,153,494			10,267,807
Shareholders’ equity	3,505,383			3,542,612
Debt to total capital ratio	15.4		%	14.2		%
Book value per share	$	35.00		$	35.10

*Non-GAAP financial measure under Regulation G.  See calculation on S - 9.  Management believes operating earnings is a useful measure for understanding the Company’s profitability before consideration of investment-related gains/losses and foreign currency benefit/expense, both of which management excludes when evaluating operating results internally.

S-1

HCC Insurance Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited, in thousands)

	June 30,			December 31,
	2013			2012
ASSETS
Investments:
Fixed maturity securities — available for sale, at fair value	$	6,094,640		$	6,281,781
Equity securities — available for sale, at fair value	347,840			284,639
Short-term investments	216,793			363,053
Other investments	18			20,925
Total investments	6,659,291			6,950,398
Cash	39,353			71,390
Restricted cash and securities	115,031			101,480
Premium, claims and other receivables	648,438			549,725
Reinsurance recoverables	1,086,435			1,071,222
Ceded unearned premium	291,939			256,988
Ceded life and annuity benefits	57,841			58,641
Deferred policy acquisition costs	202,322			191,960
Goodwill	885,999			885,860
Other assets	166,845			130,143
Total assets	$	10,153,494		$	10,267,807
LIABILITIES
Loss and loss adjustment expense payable	$	3,814,684		$	3,767,850
Life and annuity policy benefits	57,841			58,641
Reinsurance, premium and claims payable	337,666			294,621
Unearned premium	1,189,520			1,069,956
Deferred ceding commissions	82,119			74,609
Notes payable	639,021			583,944
Accounts payable and accrued liabilities	527,260			875,574
Total liabilities	6,648,111			6,725,195
SHAREHOLDERS’ EQUITY
Common stock	125,350			125,114
Additional paid-in capital	1,063,949			1,052,253
Retained earnings	2,917,086			2,756,166
Accumulated other comprehensive income	126,119			295,271
Treasury stock	(727,121		)	(686,192		)
Total shareholders’ equity	3,505,383			3,542,612
Total liabilities and shareholders’ equity	$	10,153,494		$	10,267,807

S-2

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

	Six months ended					Three months ended
	June 30,					June 30,
	2013		2012			2013		2012
REVENUE
Net earned premium	$	1,122,542	$	1,112,472		$	561,356	$	565,331
Net investment income	111,433		110,300			55,668		53,290
Other operating income	16,629		12,389			7,784		7,188
Net realized investment gain	13,193		7,047			4,623		6,876
Other-than-temporary impairment credit losses	—		(397		)	—		(397		)
Total revenue	1,263,797		1,241,811			629,431		632,288
EXPENSE
Loss and loss adjustment expense, net	672,171		665,753			339,474		336,825
Policy acquisition costs, net	137,745		143,934			70,796		74,490
Other operating expense	164,572		167,706			87,719		80,424
Interest expense	13,082		13,139			6,611		6,230
Total expense	987,570		990,532			504,600		497,969
Earnings before income tax expense	276,227		251,279			124,831		134,319
Income tax expense	82,215		75,202			36,669		40,826
Net earnings	$	194,012	$	176,077		$	88,162	$	93,493
Basic earnings per share data:
Net earnings per share	$	1.93	$	1.71		$	0.88	$	0.92
Weighted-average shares outstanding (millions)	99.0		100.8			98.9		99.6
Diluted earnings per share data:
Net earnings per share	$	1.92	$	1.71		$	0.87	$	0.92
Weighted-average shares outstanding (millions)	99.2		101.0			99.1		99.9
Cash dividends declared, per share	$	0.330	$	0.310		$	0.165	$	0.155

S-3

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	75,182	$	82,870	(9	)%	$	38,184	$	45,780	(17	)%
E&O	28,328		31,493		(10	)	13,254		14,602		(9	)
Public Risk	37,105		43,245		(14	)	15,664		23,461		(33	)
Other	217,773		161,005		35		116,149		81,623		42
	358,388		318,613		12		183,251		165,466		11
Professional Liability
U.S. D&O	186,845		186,184		—		111,606		111,188		—
International D&O	59,548		59,566		—		30,768		33,317		(8	)
	246,393		245,750		—		142,374		144,505		(1	)
Accident & Health
Medical Stop-loss	405,039		387,974		4		202,231		194,741		4
Other	25,431		24,901		2		12,678		12,807		(1	)
	430,470		412,875		4		214,909		207,548		4
U.S. Surety & Credit
Surety	80,327		80,762		(1	)	42,631		40,836		4
Credit	31,111		29,940		4		16,558		15,373		8
	111,438		110,702		1		59,189		56,209		5
International
Energy	111,859		110,714		1		85,314		90,119		(5	)
Property Treaty	113,995		113,855		—		41,650		44,517		(6	)
Liability	40,210		40,242		—		22,077		20,982		5
Surety & Credit	46,196		43,451		6		25,030		22,493		11
Other	60,933		56,649		8		31,315		29,124		8
	373,193		364,911		2		205,386		207,235		(1	)
Exited Lines	9,766		21,391		(54	)	4,334		10,590		(59	)
Totals	$	1,529,648	$	1,474,242	4	%	$	809,443	$	791,553	2	%

S-4

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	60,134	$	63,405	(5	)%	$	31,520	$	35,898	(12	)%
E&O	24,691		30,235		(18	)	12,153		13,730		(11	)
Public Risk	29,880		35,567		(16	)	14,109		19,973		(29	)
Other	94,164		68,687		37		47,205		35,965		31
	208,869		197,894		6		104,987		105,566		(1	)
Professional Liability
U.S. D&O	129,578		136,826		(5	)	77,879		81,121		(4	)
International D&O	34,183		34,311		—		18,256		19,103		(4	)
	163,761		171,137		(4	)	96,135		100,224		(4	)
Accident & Health
Medical Stop-loss	404,604		387,673		4		202,010		194,586		4
Other	25,264		24,698		2		12,590		12,687		(1	)
	429,868		412,371		4		214,600		207,273		4
U.S. Surety & Credit
Surety	72,146		73,385		(2	)	38,456		37,251		3
Credit	25,982		22,711		14		14,168		14,141		—
	98,128		96,096		2		52,624		51,392		2
International
Energy	71,120		81,013		(12	)	56,451		68,189		(17	)
Property Treaty	101,266		99,819		1		35,099		37,517		(6	)
Liability	37,577		37,316		1		21,007		19,424		8
Surety & Credit	40,290		39,813		1		21,641		20,786		4
Other	47,573		43,662		9		22,156		21,137		5
	297,826		301,623		(1	)	156,354		167,053		(6	)
Exited Lines	9,766		21,371		(54	)	4,334		10,580		(59	)
Totals	$	1,208,218	$	1,200,492	1	%	$	629,034	$	642,088	(2	)%

S-5

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

	Six months ended June 30,						Three months ended June 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	56,286	$	58,220	(3	)%	$	28,429	$	29,397	(3	)%
E&O	26,433		31,979		(17	)	13,235		15,602		(15	)
Public Risk	32,755		31,792		3		16,395		16,574		(1	)
Other	69,489		55,861		24		33,373		27,261		22
	184,963		177,852		4		91,432		88,834		3
Professional Liability
U.S. D&O	153,721		170,667		(10	)	77,016		84,413		(9	)
International D&O	31,502		30,238		4		15,428		15,054		2
	185,223		200,905		(8	)	92,444		99,467		(7	)
Accident & Health
Medical Stop-loss	404,604		387,673		4		202,010		194,586		4
Other	30,343		27,355		11		15,812		13,561		17
	434,947		415,028		5		217,822		208,147		5
U.S. Surety & Credit
Surety	72,725		79,608		(9	)	37,118		39,688		(6	)
Credit	24,506		21,236		15		12,936		13,427		(4	)
	97,231		100,844		(4	)	50,054		53,115		(6	)
International
Energy	43,457		40,889		6		22,418		25,795		(13	)
Property Treaty	58,498		49,007		19		29,743		26,918		10
Liability	35,583		39,131		(9	)	18,408		19,649		(6	)
Surety & Credit	36,066		34,945		3		17,853		17,184		4
Other	36,808		32,500		13		16,848		15,642		8
	210,412		196,472		7		105,270		105,188		—
Exited Lines	9,766		21,371		(54	)	4,334		10,580		(59	)
Totals	$	1,122,542	$	1,112,472	1	%	$	561,356	$	565,331	(1	)%

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,
	2013			2012			2013			2012
Sources of net investment income:
Fixed maturity securities
Taxable	$	51,022		$	58,218		$	25,062		$	27,103
Exempt from U.S. income taxes	56,075			52,872			28,186			26,260
Total fixed maturity securities	107,097			111,090			53,248			53,363
Equity securities	7,808			993			4,228			993
Short-term investments	80			102			68			40
Other	319			868			366			401
Total investment income	115,304			113,053			57,910			54,797
Investment expense	(3,871		)	(2,753		)	(2,242		)	(1,507		)
Net investment income	$	111,433		$	110,300		$	55,668		$	53,290
Unrealized gain on available for sale securities:
Increase (decrease) in unrealized gain for period, before tax	$	(260,622	)	$	54,654		$	(221,657	)	$	33,185
Unrealized gain at:
June 30, 2013	$	176,073
March 31, 2013	$	397,730
December 31, 2012	$	436,695

S-7

HCC Insurance Holdings, Inc. and Subsidiaries

Net Loss Ratios

(Unaudited, in thousands)

	Six months ended				Six months ended
	June 30, 2013				June 30, 2012
	Net earned		Loss		Net earned		Loss
	premium		ratio		premium		ratio
U.S. Property & Casualty
Aviation	$	56,286	63.0	%	$	58,220	55.8	%
E&O	26,433		61.1		31,979		60.8
Public Risk	32,755		76.7		31,792		77.8
Other	69,489		44.1		55,861		43.4
	184,963		58.1		177,852		56.7
Professional Liability
U.S. D&O	153,721		62.8		170,667		69.7
International D&O	31,502		48.6		30,238		51.0
	185,223		60.4		200,905		66.9
Accident & Health
Medical Stop-loss	404,604		75.2		387,673		75.5
Other	30,343		53.9		27,355		52.3
	434,947		73.7		415,028		74.0
U.S. Surety & Credit
Surety	72,725		19.8		79,608		24.8
Credit	24,506		18.1		21,236		33.0
	97,231		19.4		100,844		26.5
International
Energy	43,457		45.4		40,889		41.6
Property Treaty	58,498		51.1		49,007		17.7
Liability	35,583		49.4		39,131		49.5
Surety & Credit	36,066		63.0		34,945		58.2
Other	36,808		40.6		32,500		43.7
	210,412		49.9		196,472		40.5
Exited Lines	9,766		88.3		21,371		80.7
Totals	$	1,122,542	59.9	%	$	1,112,472	59.8	%

S - 8

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP

(Unaudited, in thousands)

	Six months ended						Three months ended
	June 30,						June 30,
	2013			2012			2013			2012
Numerator:
GAAP net earnings	$	194,012		$	176,077		$	88,162		$	93,493
Exclude:
Net realized investment gain*	8,575			4,581			3,004			4,470
OTTI credit losses*	—			(258		)	—			(258		)
Foreign currency benefit (expense)*	5,879			936			(1,261		)	2,733
Total items excluded from operating earnings	14,454			5,259			1,743			6,945
Operating earnings	$	179,558		$	170,818		$	86,419		$	86,548
Denominator:
GAAP equity - beginning of period	$	3,542,612		$	3,273,982		$	3,585,249		$	3,293,957
Exclude - Accumulated other comprehensive income	295,271			227,659			268,100			244,295
Beginning equity, as adjusted	$	3,247,341		$	3,046,323		$	3,317,149		$	3,049,662
GAAP equity - end of period	$	3,505,383		$	3,343,257		$	3,505,383		$	3,343,257
Exclude - Accumulated other comprehensive income	126,119			259,776			126,119			259,776
Ending equity, as adjusted	$	3,379,264		$	3,083,481		$	3,379,264		$	3,083,481
Average equity, as adjusted	$	3,313,303		$	3,064,902		$	3,348,207		$	3,066,572
Annualized operating return on equity	10.8		%	11.1		%	10.3		%	11.3		%

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

S - 9