HOUSTON, May 4, 2010 (GLOBE NEWSWIRE) -- HCC Insurance Holdings, Inc. (NYSE:HCC) today released results for its first quarter ended March 31, 2010.
Net earnings for the first quarter of 2010 were $71.4 million, compared with $83.2 million during the first quarter of 2009. Net earnings per diluted share were $0.62 for the first quarter of 2010, compared to $0.73 for the same quarter of 2009. The 2010 results included pretax losses, net of reinsurance, of $20.6 million stemming from several catastrophes, the largest of which was the Chilean earthquake. The catastrophe losses reduced net earnings by $0.12 per share.
The GAAP combined ratio for the first quarter of 2010 was 90.3%, compared to 87.3% for the same quarter of 2009. The first quarter 2010 accident year combined ratio was 89.3%, which included 4.0 percentage points of catastrophe losses. Book value per share increased to $26.91 at March 31, 2010, compared to $26.58 at December 31, 2009. The Company's annualized return on average equity for the first quarter of 2010 was 9.3%.
For the first quarter of 2010, the gross written premium of HCC's insurance company subsidiaries increased 3% to $622.5 million, compared to $602.4 million for the same quarter of 2009. Net written premium increased to $498.3 million in 2010, compared with net written premium of $491.3 million in 2009. Net earned premium increased to $509.6 million for the first quarter of 2010, compared to $502.4 million for the same quarter of 2009.
"HCC has continued to produce excellent underwriting performance and control expenses despite the continued competition for premium and the quarter's catastrophes," John N. Molbeck, Jr., HCC President and Chief Executive Officer said.
During the first quarter of 2010 and 2009, HCC had net adverse prior year reserve development of $5.0 million and $4.7 million, respectively. The adverse reserve development principally related to the group life, accident and health line of business.
Other operating income was $9.9 million and $22.9 million in the first quarter of 2010 and 2009, respectively. The 2010 quarter included an $8.0 million gain related to the commutation of a mortgage impairment insurance contract that had been accounted for as a derivative financial instrument. The 2009 quarter included $20.5 million from the commutation of a reinsurance contract with MGIC.
Investment income increased during the first quarter of 2010 to $49.2 million, compared to $45.2 million a year earlier, reflecting an increased amount of invested assets. HCC's fixed income securities generated $48.6 million in investment income in 2010, versus $45.4 million in 2009. The Company's fixed income investments increased 14% from March 31, 2009 to $4.9 billion at March 31, 2010.
As of March 31, 2010, HCC's fixed income securities portfolio had an average rating of AA+, an average duration of 5.0 years and an average tax equivalent yield of 5.0%. HCC recognized no other-than-temporary impairment losses on the portfolio in the first quarter of 2010.
The Company's liquidity position remains strong and its shareholders' equity was a record $3.1 billion at March 31, 2010. HCC has a $575.0 million revolving loan facility with $553.4 million of available capacity at March 31, 2010, which expires in December 2011. The Company generated $42.5 million of cash flow from operating activities in the first quarter of 2010, compared to $133.6 million in the first quarter of 2009, with the difference primarily due to increased paid losses, the timing of premium payments to reinsurers, and lower net earnings. The Company held $636.5 million of cash and short-term investments at the end of the quarter.
As of March 31, 2010, total investments were $5.5 billion, total assets were $8.9 billion, and the Company's debt to total capital ratio was 8.8%.
HCC participated in the Transocean placement, as well as the placement for one of the co-venture partners. Due to the complexity of this tragic loss, the Company does not yet have an estimate of its gross loss. HCC has purchased significant facultative reinsurance for this loss and expects its net loss will be minimal.
For further information about HCC's results, the supplemental financial schedules are accessible on the Company'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, May 5. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-0161. In addition, there will be a live webcast available on a listen-only basis that can be accessed through the HCC website at www.hcc.com. The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, August 6, 2010.
Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading international specialty insurance group with offices across the United States and in the United Kingdom, Spain and Ireland. As of March 31, 2010, HCC had assets of $8.9 billion and shareholders' equity of $3.1 billion. HCC's major domestic and international insurance companies have a financial strength rating of "AA (Very Strong)" from Standard & Poor's Corporation. HCC's major domestic insurance companies have a financial strength rating of "AA (Very Strong)" from Fitch Ratings, "A1 (Good Security)" from Moody's Investors Service, Inc., and "A+ (Superior)" by A.M. Best Company, Inc.
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.