HOUSTON, May 3, 2011 (GLOBE NEWSWIRE) -- HCC Insurance Holdings, Inc. (NYSE:HCC) today released results for its first quarter ended March 31, 2011.
Net earnings were $47.0 million for the first quarter of 2011, compared to $71.4 million for the first quarter of 2010. Net earnings per diluted share were $0.41 for the first quarter of 2011, versus $0.62 for the same quarter of 2010. The 2011 results included pretax losses of $51.5 million, net of reinsurance and reinstatement premium, stemming from the first quarter catastrophes in Japan, New Zealand and Australia that reduced net earnings by $0.29 per share. The 2010 results included pretax losses of $20.6 million, net of reinsurance, stemming from several catastrophes, the largest of which was the Chilean earthquake, that reduced net earnings by $0.12 per share in the first quarter of 2010. The 2011 results were also impacted by a $3.1 million out-of-period correction related to other-than-temporary impairments, which reduced the first quarter 2011 net earnings by $0.02 per share.
Book value per share increased to $28.87 at March 31, 2011, compared to $28.67 at December 31, 2010. The Company's annualized return on average equity was 5.7% for the first quarter of 2011. The Company repurchased 1.3 million shares of its common stock during the first quarter of 2011 for $40.2 million, or an average cost of $30.69 per share. The Company purchased an additional 1.1 million shares following the close of the quarter. As of May 3, 2011, $224.4 million remains under the Company's $300.0 million share buyback authorization announced on March 14, 2011.
The Company's GAAP combined ratio was 94.7% for the first quarter of 2011, compared to 89.8% for the first quarter of 2010. Excluding the 2011 catastrophe losses, HCC's net loss ratio was 58.8%, and its combined ratio was 84.8%. HCC's paid loss ratio was 58.4% for the first quarter of 2011, compared to 60.4% for the same quarter of 2010. The Company's current accident year net loss ratio was 66.6%, and the combined ratio was 92.9%. Excluding catastrophe losses, HCC's current accident year net loss ratio was 57.1%, and its combined ratio was 83.1%.
"HCC's core businesses continued to perform well, but a series of horrific catastrophes punctuated the quarter's results," said John N. Molbeck, Jr., HCC's Chief Executive Officer.
Gross written premium of HCC's insurance company subsidiaries increased 4% to $649.2 million for the first quarter of 2011, compared to $622.5 million for the first quarter of 2010. Net written premium increased 8% to $538.9 million for the first quarter of 2011, versus $498.3 million for the same quarter of 2010. Net earned premium was essentially flat at $508.5 million for the first quarter of 2011, compared to $509.6 million for the same quarter of 2010.
HCC had net adverse prior year reserve development of $9.0 million in the first quarter of 2011, compared to $5.0 million in the same quarter of 2010.
Investment income increased to $51.6 million for the first quarter of 2011, compared to $49.2 million for the same quarter of 2010, reflecting higher income from fixed income securities due to an increased level of investments. The Company's fixed income securities portfolio increased 11% to $5.5 billion at March 31, 2011 from $4.9 billion at March 31, 2010.
As of March 31, 2011, HCC's fixed income securities portfolio had an average rating of AA+, with a duration of 5.4 years and an average long-term tax equivalent yield of 4.9%. As of March 31, 2011, HCC's total investments had an average combined duration of 5.2 years.
Other operating income was $7.3 million for the first quarter of 2011, compared to $17.9 million for the same quarter of 2010. In 2010, the Company terminated its interest in a derivative contract, which generated an $8.0 million gain.
The Company's liquidity position remains strong with $357.5 million of cash and short-term investments and $586.8 million of available capacity under its new $600.0 million revolving loan facility at March 31, 2011. The Company generated $82.1 million of cash flow from operating activities in the first quarter of 2011, compared to $42.5 million in the first quarter of 2010.
As of March 31, 2011, total investments were $5.7 billion, total assets were $9.3 billion, shareholders' equity was $3.3 billion and the Company's debt to total capital ratio was 8.3%.
The Company also announced that Chris Williams, formerly the Chairman of the Company's Board of Directors, has been appointed as President by the Board. "I am very pleased to welcome Chris Williams to the Company as President. Chris is an industry veteran, who as Chairman of the Board developed a great understanding of the Company's strategy, finances and organization," said HCC's CEO John N. Molbeck, Jr.
For further information about HCC's 2011 first quarter earnings results, see the supplemental financial schedules that are accessible on HCC's website at , as well as directly in the Investor Relations section of HCC's website at .
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HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, May 4. 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 . The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, August 5, 2011.
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. 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 .
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.
CONTACT: Doug Busker, Director of Investor Relations HCC Insurance Holdings, Inc. Telephone: (713) 996-1192
