HOUSTON, Feb. 22, 2011 (GLOBE NEWSWIRE) -- HCC Insurance Holdings, Inc. (NYSE:HCC) today released earnings for the fourth quarter and full year 2010.
Net earnings for the fourth quarter of 2010 were $97.3 million, compared to $84.8 million for the fourth quarter of 2009. Net earnings per diluted share were $0.84 for the fourth quarter of 2010, versus $0.74 for the same quarter of 2009. Net earnings for the full year of 2010 were $345.1 million, compared to $353.9 million for the 2009 full year. Net earnings per diluted share were $2.99 for 2010, versus $3.11 for 2009.
"Our return on average equity was 10.9% for the year. We are very pleased with this performance in an environment which remains challenging," HCC President and Chief Executive Officer John N. Molbeck, Jr. said.
Book value per share increased 8% during the year from $26.58 to $28.67. The 2010 book value reflects dividends of $0.56 per share. This was the 14th consecutive year in which HCC raised its dividend. Book value per share grew at a compounded rate of 13% over the last five years. The Company repurchased 1.3 million shares of its common stock during 2010, for a total cost of $35.1 million and a weighted-average cost of $26.99 per share. Currently, $265.3 million remains under its $300 million share buyback authorization.
The Company's GAAP combined ratio for the fourth quarter of 2010 was 82.3%, compared to 85.2% for the fourth quarter of 2009. The GAAP combined ratio for the full year of 2010 was 84.6%, versus 84.0% for 2009. HCC's paid loss ratio for the year was 59.7%, compared to a paid loss ratio of 55.8% in 2009.
The accident year combined ratio was 87.0% for the fourth quarter of 2010 and 85.6% for the full year of 2010, compared to 88.5% and 86.6% for the same periods in 2009, respectively.
"Once again our combined ratio remained excellent for the year and our accident year combined ratio of 85.6% is a reflection of our strong underwriting culture, well managed expense ratio and the continued value of our non-correlated portfolio of businesses," Mr. Molbeck said.
Gross written premium of HCC's insurance company subsidiaries decreased 5% to $624.2 million for the fourth quarter of 2010, compared to $655.7 million for the same quarter of 2009. Net written premium decreased 6% to $486.7 million during the 2010 fourth quarter, compared to net written premium of $518.4 million for the 2009 fourth quarter. Net earned premium for the fourth quarter of 2010 decreased 1% to $509.8 million, versus net earned premium of $512.8 million for the same quarter of 2009. Gross written premium was essentially flat at $2.6 billion for the full year of 2010, as were net written premium and net earned premium of $2.0 billion.
During the fourth quarter of 2010, HCC had net favorable prior year reserve development of $23.9 million, compared to net favorable prior year reserve development of $16.9 million for the same period of 2009. For the full year of 2010, the Company recorded $22.7 million of net favorable prior year reserve development, compared to $53.5 million of net favorable prior year reserve development for the full year of 2009.
Investment income increased to $53.2 million during the fourth quarter of 2010, compared to $50.2 million during the fourth quarter of 2009. On a year-to-date basis, investment income grew to $203.8 million in 2010 from $192.0 million in 2009. This resulted from growth in the Company's fixed income securities investment portfolio, partially offset by lower interest rates. The portfolio increased 12% from $4.6 billion at December 31, 2009 to $5.2 billion at December 31, 2010.
As of December 31, 2010, HCC's fixed income securities portfolio had a weighted-average rating of AA+, a weighted-average duration of 5.5 years and an average long-term tax equivalent yield of 5.0%. As of December 31, 2010, HCC's total investments had a weighted-average duration of 5.1 years.
Other operating income was $9.8 million for the 2010 fourth quarter, compared to $12.9 million for the same period in 2009. Other operating income was $44.8 million for the full year of 2010, compared to $82.7 million for the 2009 full year.
The Company's liquidity position remains strong with $585.9 million of cash and short-term investments and $556.8 million of available capacity under its $575.0 million revolving loan facility at December 31, 2010. The Company generated $100.6 million and $415.2 million of cash flow from operating activities in the fourth quarter and full year 2010, respectively, compared to $165.3 million and $582.8 million for the same periods in 2009.
As of December 31, 2010, total investments were $5.7 billion, total assets were $9.1 billion, shareholders' equity was $3.3 billion and the Company's debt to total capital ratio was 8.3%.
EARNINGS GUIDANCE: HCC's management estimates the Company will achieve net earnings of $2.75 to $3.05 per diluted share for 2011. These estimated results assume the following: gross written premium of $2.7 billion; net written premium of $2.2 billion; total revenue of $2.4 billion; a combined ratio of 85%-87%; and average fully diluted shares outstanding of 112 million shares. These assumptions do not include any provision for catastrophe losses that exceed the Company's attritional loss assumptions on property treaty business, reserve development or capital gains or losses.
For further information about HCC's 2010 fourth quarter and full-year 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 Standard Time on Wednesday, February 23. 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, May 6, 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. As of December 31, 2010, HCC had assets of $9.1 billion and shareholders' equity of $3.3 billion. 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)" by 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