HOUSTON, June 17, 2008 (PRIME NEWSWIRE) -- HCC Insurance Holdings, Inc. (NYSE:HCC) announced today that its subsidiary, HCC Reinsurance Company Limited (HCC Re), has entered into a reinsurance agreement with a subsidiary of MGIC Investment Corporation (NYSE:MTG).
Under the terms of the agreement, which covers qualifying new mortgages originated from April 1, 2008 through December 31, 2010, HCC Re will reinsure up to 20 percent of covered business as defined in the reinsurance agreement. HCC Indemnity Guaranty Agency (HCCIG), the Company's New York based financial products underwriting unit, will also receive a five percent reinsurance commission of all premiums paid by MGIC under the reinsurance agreement.
Based upon HCC's assessment that this reinsurance contract does not pass risk transfer accounting guidelines, HCC expects to account for this transaction utilizing deposit accounting rules. HCC expects to recognize the related net underwriting effect of this transaction as Other Operating Income.
"With new, strengthened underwriting and pricing guidelines being implemented by MGIC, combined with the expertise of HCCIG's personnel and their successful track record in the mortgage guaranty business, we viewed this transaction as a compelling opportunity to enter the U.S. mortgage guaranty reinsurance business. This risk-remote transaction is consistent with the book of miscellaneous financial products developed by our exceptional team in New York," HCC Chief Executive Officer Frank J. Bramanti said.
Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. (HCC) is a leading international specialty insurance group with offices across the United States and in Belgium, Bermuda, Ireland, Spain and the United Kingdom. HCC has assets of nearly $8.2 billion, shareholders' equity in excess of $2.5 billion and is rated AA (Very Strong) by Standard & Poor's and AA (Very Strong) by Fitch Ratings. In addition, HCC's domestic property and casualty insurance companies are rated A+ (Superior) by A.M. Best Company.
For more information, visit our website at www.hcc.com.
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.