HCC Insurance 8-K HCC Insurance Holdings Reports Strong

Exhibit 99.1

HCC INSURANCE HOLDINGS REPORTS STRONG

THIRD QUARTER EARNINGS AND RECORD EARNINGS PER SHARE FOR THE FIRST NINE MONTHS OF 2013

Third Quarter 2013 Highlights and Updated 2013 Guidance:

·Net earnings of $98.2 million, or $0.98 per diluted share

·GAAP combined ratio of 83.5%

·Pretax net catastrophe losses of $17.9 million

·Annualized return on equity of 11.1%

·Annualized operating return on equity(a) of 10.8%

·Updated net earnings guidance for 2013 of $3.70 to $3.80 per diluted share

HOUSTON (October 29, 2013) . . .

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

Net earnings were $98.2 million, or $0.98 per diluted share, for the third quarter of 2013, compared to $107.1 million, or $1.05 per diluted share, for the third quarter of 2012.  Net earnings were $292.2 million for the first nine months of 2013, or $2.90 per diluted share, compared to $283.1 million, or $2.76 per diluted share, for the same period of 2012.

The 2013 results included accident year pretax net catastrophe losses of $17.9 million and $44.5 million for the third quarter and first nine months, respectively, which reduced net earnings by $0.12 and $0.29 per share for the respective periods.  The 2012 results included catastrophe losses of $8.0 million and $20.3 million for the third quarter and first nine months, respectively, which reduced net earnings by $0.05 and $0.13 per share for the respective periods.

The Company’s combined ratio was 83.5% for the third quarter of 2013, compared to 79.1% for the third quarter of 2012.  The combined ratio was 84.1% for the first nine months of 2013, versus 83.3% for the same period of 2012.  HCC’s net paid loss ratio was 52.6% for the first nine months of 2013, compared to 56.3% for the same period of 2012.

“Our combined ratio remains below 85% for the year, and our businesses are performing at or above our expectations.  We continue on a record pace for the year after a very strong 2012,” said Christopher J.B. Williams, HCC’s Chief Executive Officer.

HCC had net favorable loss development of $27.8 million in the third quarter of 2013, compared to $34.6 million in the same quarter of 2012, and $39.6 million in the first nine months of 2013, versus $34.6 million in the same period of 2012.  The net favorable development in 2013

includes strengthening of reserves in the International Surety & Credit line of business to address a recent Spanish Supreme Court ruling.

Gross written premium increased 2% to $678.9 million for the third quarter of 2013, compared to $665.8 million for the same quarter of 2012.  Net written premium decreased 2% to $521.7 million for the third quarter of 2013, versus $530.3 million for the same quarter of 2012.  Net earned premium decreased 1% to $556.7 million for the third quarter of 2013, compared to $563.7 million for the same quarter of 2012.

For the first nine months of 2013, compared to the same period of 2012, gross written premium increased 3% to $2.2 billion; net written premium was flat at $1.7 billion; and net earned premium was flat at $1.7 billion.

Investment income was $54.2 million in the third quarter of 2013, compared to $56.3 million in the same period of 2012, and $165.6 million in the first nine months of 2013, compared to $166.6 million in the same period of 2012.  As of September 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 cash flow from operations of $271.4 million in the first nine months of 2013, compared to $496.0 million in the same period of 2012.  Cash flow for 2013 was decreased by $127.9 million of U.S. Surety collateral repayments, whereas cash flow for 2012 was increased by $81.0 million of U.S. Surety collateral receipts.  At September 30, 2013, the Company had $284.2 million of cash and short-term investments and $239.1 million of available capacity under its $600.0 million revolving loan facility.

As of September 30, 2013, total assets were $10.4 billion, shareholders’ equity was $3.6 billion and the Company’s debt to total capital ratio was 15.4%.

UPDATED EARNINGS GUIDANCE: Based on the Company’s results through the first nine months, HCC’s management estimates the Company will achieve net earnings of $3.70 to $3.80 per diluted share for the full year of 2013.  For the fourth quarter of 2013 and consistent with the Company’s prior guidance, these estimated results assume 2.7 loss ratio points for net catastrophe losses and no 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 2013 third 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, October 30.  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

2

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, January 31, 2014.

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 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)

	Nine months ended						Three months ended
	September 30,						September 30,
	2013			2012			2013			2012
Gross written premium	$	2,208,561		$	2,140,005		$	678,913		$	665,763
Net written premium	1,729,952			1,730,799			521,734			530,307
Net earned premium	1,679,210			1,676,122			556,668			563,650
Net investment income	165,641			166,642			54,208			56,342
Total revenue	1,900,274			1,873,484			636,477			631,673
Net earnings	292,187			283,139			98,175			107,062
Operating earnings*	272,050			281,746			92,492			110,928
Earnings per share (diluted)	$	2.90		$	2.76		$	0.98		$	1.05
Weighted-average shares outstanding (millions)	99.1			100.6			99.0			99.7
Net loss ratio	59.1		%	57.9		%	57.6		%	53.9		%
Combined ratio	84.1		%	83.3		%	83.5		%	79.1		%
Paid loss ratio	52.6		%	56.3		%	53.5		%	59.2		%
	September 30,			December 31,
	2013			2012
Total investments	$	6,857,161		$	6,950,398
Total assets	10,448,779			10,267,807
Shareholders’ equity	3,588,079			3,542,612
Debt to total capital ratio	15.4		%	14.2		%
Book value per share	$	35.82		$	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)

	September 30,			December 31,
	2013			2012
ASSETS
Investments:
Fixed maturity securities — available for sale, at fair value	$	6,194,625		$	6,281,781
Equity securities — available for sale, at fair value	433,345			284,639
Short-term investments	229,191			363,053
Other investments	—			20,925
Total investments	6,857,161			6,950,398
Cash	55,037			71,390
Restricted cash and securities	121,231			101,480
Premium, claims and other receivables	600,311			549,725
Reinsurance recoverables	1,215,577			1,071,222
Ceded unearned premium	301,891			256,988
Ceded life and annuity benefits	57,137			58,641
Deferred policy acquisition costs	204,740			191,960
Goodwill	894,851			885,860
Other assets	140,843			130,143
Total assets	$	10,448,779		$	10,267,807
LIABILITIES
Loss and loss adjustment expense payable	$	4,021,847		$	3,767,850
Life and annuity policy benefits	57,137			58,641
Reinsurance, premium and claims payable	315,638			294,621
Unearned premium	1,165,580			1,069,956
Deferred ceding commissions	86,804			74,609
Notes payable	654,059			583,944
Accounts payable and accrued liabilities	559,635			875,574
Total liabilities	6,860,700			6,725,195
SHAREHOLDERS’ EQUITY
Common stock	125,423			125,114
Additional paid-in capital	1,068,338			1,052,253
Retained earnings	2,992,720			2,756,166
Accumulated other comprehensive income	130,002			295,271
Treasury stock	(728,404		)	(686,192		)
Total shareholders’ equity	3,588,079			3,542,612
Total liabilities and shareholders’ equity	$	10,448,779		$	10,267,807

S-2

Consolidated Statements of Earnings

(Unaudited, in thousands except per share data)

	Nine months ended					Three months ended
	September 30,					September 30,
	2013		2012			2013		2012
REVENUE
Net earned premium	$	1,679,210	$	1,676,122		$	556,668	$	563,650
Net investment income	165,641		166,642			54,208		56,342
Other operating income	24,308		23,229			7,679		10,840
Net realized investment gain	31,115		8,519			17,922		1,472
Other-than-temporary impairment credit losses	—		(1,028		)	—		(631		)
Total revenue	1,900,274		1,873,484			636,477		631,673
EXPENSE
Loss and loss adjustment expense, net	992,547		969,767			320,376		304,014
Policy acquisition costs, net	203,387		211,554			65,642		67,620
Other operating expense	268,357		268,164			103,785		100,458
Interest expense	19,656		19,101			6,574		5,962
Total expense	1,483,947		1,468,586			496,377		478,054
Earnings before income tax expense	416,327		404,898			140,100		153,619
Income tax expense	124,140		121,759			41,925		46,557
Net earnings	$	292,187	$	283,139		$	98,175	$	107,062
Basic earnings per share data:
Net earnings per share	$	2.91	$	2.77		$	0.98	$	1.06
Weighted-average shares outstanding (millions)	98.9		100.3			98.7		99.4
Diluted earnings per share data:
Net earnings per share	$	2.90	$	2.76		$	0.98	$	1.05
Weighted-average shares outstanding (millions)	99.1		100.6			99.0		99.7
Cash dividends declared, per share	$	0.555	$	0.475		$	0.225	$	0.165

S-3

HCC Insurance Holdings, Inc. and Subsidiaries

Gross Written Premium

(Unaudited, in thousands)

	Nine months ended September 30,						Three months ended September 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	115,001	$	117,300	(2	)%	$	39,819	$	34,430	16	%
E&O	41,909		46,483		(10	)	13,581		14,990		(9	)
Public Risk	57,757		67,066		(14	)	20,652		23,821		(13	)
Other	319,842		250,175		28		102,069		89,170		14
	534,509		481,024		11		176,121		162,411		8
Professional Liability
U.S. D&O	284,769		297,933		(4	)	97,924		111,749		(12	)
International D&O	86,415		79,943		8		26,867		20,377		32
	371,184		377,876		(2	)	124,791		132,126		(6	)
Accident & Health
Medical Stop-loss	610,366		583,639		5		205,327		195,665		5
Other	42,416		38,974		9		16,985		14,073		21
	652,782		622,613		5		222,312		209,738		6
U.S. Surety & Credit
Surety	125,235		121,087		3		44,908		40,325		11
Credit	44,570		45,591		(2	)	13,459		15,651		(14	)
	169,805		166,678		2		58,367		55,976		4
International
Energy	127,162		125,578		1		15,303		14,864		3
Property Treaty	133,578		134,527		(1	)	19,583		20,672		(5	)
Liability	59,992		58,293		3		19,782		18,051		10
Surety & Credit	68,186		61,759		10		21,990		18,308		20
Other	80,406		79,954		1		19,473		23,305		(16	)
	469,324		460,111		2		96,131		95,200		1
Exited Lines	10,957		31,703		(65	)	1,191		10,312		(88	)
Totals	$	2,208,561	$	2,140,005	3	%	$	678,913	$	665,763	2	%

S-4

HCC Insurance Holdings, Inc. and Subsidiaries

Net Written Premium

(Unaudited, in thousands)

	Nine months ended September 30,						Three months ended September 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	91,540	$	92,043	(1	)%	$	31,406	$	28,638	10	%
E&O	36,969		44,335		(17	)	12,278		14,100		(13	)
Public Risk	47,110		54,185		(13	)	17,230		18,618		(7	)
Other	132,274		107,303		23		38,110		38,616		(1	)
	307,893		297,866		3		99,024		99,972		(1	)
Professional Liability
U.S. D&O	198,452		218,794		(9	)	68,874		81,968		(16	)
International D&O	48,731		45,604		7		14,548		11,293		29
	247,183		264,398		(7	)	83,422		93,261		(11	)
Accident & Health
Medical Stop-loss	609,693		583,344		5		205,089		195,671		5
Other	42,167		38,674		9		16,903		13,976		21
	651,860		622,018		5		221,992		209,647		6
U.S. Surety & Credit
Surety	111,746		110,074		2		39,600		36,689		8
Credit	36,230		36,791		(2	)	10,248		14,080		(27	)
	147,976		146,865		1		49,848		50,769		(2	)
International
Energy	72,949		83,353		(12	)	1,829		2,340		(22	)
Property Treaty	113,169		113,302		—		11,903		13,483		(12	)
Liability	56,259		53,954		4		18,682		16,638		12
Surety & Credit	59,326		55,887		6		19,036		16,074		18
Other	62,365		61,693		1		14,792		18,031		(18	)
	364,068		368,189		(1	)	66,242		66,566		—
Exited Lines	10,972		31,463		(65	)	1,206		10,092		(88	)
Totals	$	1,729,952	$	1,730,799	—	%	$	521,734	$	530,307	(2	)%

S-5

HCC Insurance Holdings, Inc. and Subsidiaries

Net Earned Premium

(Unaudited, in thousands)

	Nine months ended September 30,						Three months ended September 30,
	2013		2012		Change		2013		2012		Change
U.S. Property & Casualty
Aviation	$	84,191	$	87,890	(4	)%	$	27,905	$	29,670	(6	)%
E&O	39,494		47,177		(16	)	13,061		15,198		(14	)
Public Risk	48,530		48,363		—		15,775		16,571		(5	)
Other	104,432		82,163		27		34,943		26,302		33
	276,647		265,593		4		91,684		87,741		4
Professional Liability
U.S. D&O	229,501		252,622		(9	)	75,780		81,955		(8	)
International D&O	48,161		45,832		5		16,659		15,594		7
	277,662		298,454		(7	)	92,439		97,549		(5	)
Accident & Health
Medical Stop-loss	609,693		583,344		5		205,089		195,671		5
Other	48,302		40,733		19		17,959		13,378		34
	657,995		624,077		5		223,048		209,049		7
U.S. Surety & Credit
Surety	109,370		118,944		(8	)	36,645		39,336		(7	)
Credit	35,303		35,288		—		10,797		14,052		(23	)
	144,673		154,232		(6	)	47,442		53,388		(11	)
International
Energy	62,271		61,377		1		18,814		20,488		(8	)
Property Treaty	85,067		77,422		10		26,569		28,415		(6	)
Liability	54,671		57,603		(5	)	19,088		18,472		3
Surety & Credit	54,186		53,701		1		18,120		18,756		(3	)
Other	55,066		52,200		5		18,258		19,700		(7	)
	311,261		302,303		3		100,849		105,831		(5	)
Exited Lines	10,972		31,463		(65	)	1,206		10,092		(88	)
Totals	$	1,679,210	$	1,676,122	—	%	$	556,668	$	563,650	(1	)%

S - 6

HCC Insurance Holdings, Inc. and Subsidiaries

Net Investment Income and Unrealized Gain

(Unaudited, in thousands)

	Nine months ended						Three months ended
	September 30,						September 30,
	2013			2012			2013			2012
Sources of net investment income:
Fixed maturity securities
Taxable	$	75,407		$	86,548		$	24,385		$	28,330
Exempt from U.S. income taxes	85,063			80,163			28,988			27,291
Total fixed maturity securities	160,470			166,711			53,373			55,621
Equity securities	10,758			2,339			2,950			1,346
Short-term investments	122			397			42			295
Other	350			1,699			31			831
Total investment income	171,700			171,146			56,396			58,093
Investment expense	(6,059		)	(4,504		)	(2,188		)	(1,751		)
Net investment income	$	165,641		$	166,642		$	54,208		$	56,342
Unrealized gain on available for sale securities:
Increase (decrease) in unrealized gain for period, before tax	$	(263,596	)	$	145,007		$	(2,974	)	$	90,353
Unrealized gain at:
September 30, 2013	$	173,099
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)

	Nine months ended				Nine months ended
	September 30, 2013				September 30, 2012
	Net earned		Loss		Net earned		Loss
	premium		ratio		premium		ratio
U.S. Property & Casualty
Aviation	$	84,191	52.7	%	$	87,890	56.9	%
E&O	39,494		42.2		47,177		74.1
Public Risk	48,530		73.2		48,363		95.9
Other	104,432		23.5		82,163		27.8
	276,647		43.8		265,593		58.0
Professional Liability
U.S. D&O	229,501		55.7		252,622		64.9
International D&O	48,161		29.3		45,832		14.5
	277,662		51.1		298,454		57.1
Accident & Health
Medical Stop-loss	609,693		75.2		583,344		73.1
Other	48,302		52.5		40,733		50.5
	657,995		73.5		624,077		71.7
U.S. Surety & Credit
Surety	109,370		21.5		118,944		24.7
Credit	35,303		24.8		35,288		37.0
	144,673		22.3		154,232		27.5
International
Energy	62,271		26.7		61,377		42.5
Property Treaty	85,067		54.6		77,422		22.0
Liability	54,671		29.2		57,603		49.5
Surety & Credit	54,186		189.4		53,701		57.7
Other	55,066		40.8		52,200		45.9
	311,261		65.6		302,303		41.9
Exited Lines	10,972		86.0		31,463		91.7
Totals	$	1,679,210	59.1	%	$	1,676,122	57.9	%

S - 8

HCC Insurance Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures to GAAP

(Unaudited, in thousands)

	Nine months ended						Three months ended
	September 30,						September 30,
	2013			2012			2013			2012
Numerator:
GAAP net earnings	$	292,187		$	283,139		$	98,175		$	107,062
Exclude:
Net realized investment gain*	20,225			5,537			11,650			956
OTTI credit losses*	—			(668		)	—			(410		)
Foreign currency expense*	(88		)	(3,476		)	(5,967		)	(4,412		)
Total items excluded from operating earnings	20,137			1,393			5,683			(3,866		)
Operating earnings	$	272,050		$	281,746		$	92,492		$	110,928
Denominator:
GAAP equity - beginning of period	$	3,542,612		$	3,273,982		$	3,505,383		$	3,343,257
Exclude - Accumulated other comprehensive income	295,271			227,659			126,119			259,776
Beginning equity, as adjusted	$	3,247,341		$	3,046,323		$	3,379,264		$	3,083,481
GAAP equity - end of period	$	3,588,079		$	3,504,820		$	3,588,079		$	3,504,820
Exclude - Accumulated other comprehensive income	130,002			318,239			130,002			318,239
Ending equity, as adjusted	$	3,458,077		$	3,186,581		$	3,458,077		$	3,186,581
Average equity, as adjusted	$	3,352,709		$	3,116,452		$	3,418,671		$	3,135,031
Annualized operating return on equity	10.8		%	12.1		%	10.8		%	14.2		%

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

S - 9