HCC Reports Profitable Underwriting Results

HCC Insurance Holdings Inc. reported greatly improved earnings for the third quarter and first nine months of 2002. Net earnings for the third quarter of 2002 increased to $24.3 million from a loss of $29.1 million for the third quarter of 2001. For the first nine months of 2002, net earnings increased to $74.3 million from $6.4 million for the same period of 2001.

Net earnings reflect an increase to loss reserves related to a discontinued line of business in the amount of $5.0 million or $0.08 per share. This discontinued line of business was written by a former subsidiary prior to the company’s ownership and further deterioration is not expected.

Total revenue continued to grow substantially, increasing 30 percent for the first nine months of 2002 to $483.3 million from $373.3 million for the first nine months of 2001. This increase was primarily due to the growth of earned premium in our insurance company subsidiaries, which is expected to continue through 2003.

Gross written premium of our insurance company subsidiaries, excluding discontinued lines, increased 23 percent to $844.1 million during the first nine months of 2002 compared to the first nine months of 2001. During the same period and also excluding discontinued lines, net written premium increased by 65 percent to $395.8 million and net earned premium increased by 51 percent to $346.4 million. These increases are as a result of higher rates, increased retentions and strong growth in all of our lines of business. This growth is expected to continue through next year.

The GAAP combined ratio for our insurance company subsidiaries, improved considerably for the first nine months of 2002 to 87.3 percent from 113.0 percent (98.9 percent excluding the effects of 9/11) in the corresponding period of 2001.