-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FoOf+gk8w8bzuH//7ypAOpbHxvjTtBuTs/vTIs/jjhKv+Wm7bl/9rGv1lw7+iiSD OnCOsGn/+d/iXbrys+l8Zw== 0000950129-03-002555.txt : 20030508 0000950129-03-002555.hdr.sgml : 20030508 20030508163553 ACCESSION NUMBER: 0000950129-03-002555 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030508 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HCC INSURANCE HOLDINGS INC/DE/ CENTRAL INDEX KEY: 0000888919 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 760336636 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13790 FILM NUMBER: 03688398 BUSINESS ADDRESS: STREET 1: 13403 NORTHWEST FRWY CITY: HOUSTON STATE: TX ZIP: 77040-6094 BUSINESS PHONE: 7136907300 8-K 1 h05670e8vk.txt HCC INSURANCE HOLDINGS, INC. - DATED 5/8/03 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) May 8, 2003 HCC INSURANCE HOLDINGS, INC. (EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER) STATE OR OTHER COMMISSION IRS EMPLOYER JURISDICTION FILE NUMBER: IDENTIFICATION OF INCORPORATION: NUMBER: DELAWARE 0-20766 76-0336636 13403 NORTHWEST FREEWAY HOUSTON, TEXAS 77040-6094 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE - (713) 690-7300 --------------------------------------------- ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (b) Exhibits. -------- 99.1 Press Release dated May 8, 2003 announcing HCC's operating results for the First Quarter of 2003 and attachments thereto. ITEM 9. The following information required to be disclosed pursuant to Item 12 - - "Results of Operations and Financial Condition" is being furnished under Item 9 - "Regulation FD Disclosure" in accordance with the Securities and Exchange Commission's Final Rule Release No. 33-8216. On May 8, 2003, HCC Insurance Holdings, Inc. ("HCC") announced its operating results for the First Quarter of 2003. A press release setting forth the announcement is attached as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: May 8, 2003 HCC INSURANCE HOLDINGS, INC. By: /s/ Christopher L. Martin -------------------------------------------- Christopher L. Martin Executive Vice President and General Counsel EXHIBIT INDEX Exhibits. - -------- 99.1 Press Release dated May 8, 2003 announcing HCC's operating results for the First Quarter of 2003 and attachments thereto. EX-99.1 3 h05670exv99w1.txt PRESS RELEASE DATED MAY 8, 2003 EXHIBIT 99.1 HCC REPORTS RECORD FIRST QUARTER RESULTS WITH CONTINUING STRONG GROWTH IN ALL OPERATIONS HOUSTON (May 8, 2003) . . . HCC INSURANCE HOLDINGS, INC. (NYSE SYMBOL: HCC) today released earnings for the first quarter of 2003. Net earnings increased 30 percent for the first quarter of 2003 to $30.3 million or $0.48 per share from $23.3 million or $0.37 per share for the same period of 2002. Stephen L. Way, Chairman and Chief Executive Officer said, "We are extremely pleased with our record first quarter results, which are in line with our 2003 business plan. We are now firing on all cylinders and the future looks very bright indeed." Total revenue grew substantially during the first quarter of 2003 to $210.7 million, a 39 percent increase from $151.7 million in the first quarter of 2002. This increase was primarily due to the growth in our insurance company subsidiaries' earned premium, as market conditions in our specialty lines continue to show strength. Our underwriting agencies' and intermediaries' revenue also grew solidly and overall revenue is expected to continue to increase for the rest of this year and into 2004. Gross written premium of our insurance company subsidiaries increased 53 percent to $379.4 million during the first quarter of 2003 compared to the first quarter of 2002. During the same period, net written premium increased by 57 percent to $192.5 million and net earned premium increased by 46 percent to $162.4 million. These record levels were achieved as a result of higher rates, increased retentions and strong growth, particularly in our Diversified Financial Products line of business. The GAAP combined ratio was substantially the same for the first three months of 2003 at 88.8 percent compared to the corresponding period of 2002. Mr. Way stated that, "This continuing strong underwriting performance should be viewed as even more impressive, considering we maintained our margins on substantially increased earned premium." Due to the higher amount of ceded reinsurance in our Diversified Financial Products line of business, our overall recoverables grew in the first quarter of 2003 primarily in the IBNR category, although case loss recoverables were reduced and paid losses were only slightly increased. There were no new recoverable issues. Management fees increased 28 percent during the first quarter of 2003 to $24.9 million, from $19.4 million in the first quarter of 2002, due to increased business and acquisitions completed in 2002. During the same period, commission income also returned to growth, as we promised it would, rising 13 percent to $11.5 million, due to growth in our non-affiliated business. We anticipate further growth in both segments. Even our net investment income came through at last, increasing significantly in the quarter by 27 percent to $11.0 million, compared to the first quarter of 2002. Increased investment assets, primarily as a result of cash flow from operations, have fueled this increase and we anticipate this continuing for the rest of this year and into 2004. As of March 31, 2003, total investments increased to $1.33 billion, total assets were over $4.0 billion for the first time, book value per share increased to $14.56 and the Company's debt to total capital ratio was 25 percent. See attached tables. HCC will hold an open conference call beginning at 4:00 p.m. Central Time on Thursday, May 8th to discuss these results. To participate, the number for domestic calls is (877) 679-9054 and the number for international calls is (952) 556-2807. A replay will be available until Friday, May 16, 2003, at (800) 615-3210, access code 114714. In addition, there will be a live webcast available on a listen-only basis, that can be accessed through the HCC website at www.hcch.com. A replay of the webcast will be available on the website until Friday, May 16, 2003. HCC is an international insurance holding company trading on the NYSE (symbol: HCC) and is one of the largest specialty insurance groups in the USA. HCC is rated AA (Very Strong) by Standard & Poor's and A+ (Superior) by A. M. Best Company. For more information, visit our website at WWW.HCCH.COM. Contact: L. Byron Way, Vice President. HCC Insurance Holdings, Inc. Telephone (713) 690-7300 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. * * * * HCC INSURANCE HOLDINGS, INC. FINANCIAL HIGHLIGHTS MARCH 31, 2003 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 2003 2002 - -------------------------------------------------------------------------------------------------------------- Gross written premium $ 379,448 $ 247,768 Net written premium 192,501 122,272 Net earned premium 162,422 111,478 Management fees 24,870 19,412 Commission income 11,507 10,160 Net investment income 10,998 8,694 Other operating income 897 1,463 Total revenue 210,673 151,709 Pre-tax earnings 47,257 35,720 Net earnings 30,275 23,282 Earnings per share (diluted) 0.48 0.37 Cash flow from operations 101,871 13,102 Weighted average shares outstanding (diluted) 63,335 62,713 GAAP gross loss ratio 68.9% 69.3% GAAP net loss ratio 61.6% 61.3% GAAP combined ratio 88.8% 87.3%
MARCH 31, 2003 DECEMBER 31, 2002 ---------------------------------------------------- Total investments $ 1,327,582 $ 1,167,636 Total assets 4,062,428 3,704,151 Shareholders' equity 912,892 882,907 Book value per share 14.56 14.15
HCC Insurance Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (unaudited, in thousands, except per share data)
March 31, 2003 December 31, 2002 ----------------------- ----------------------- ASSETS Investments: Fixed income securities, at market (cost: 2003 - $821,003; 2002 - $807,772) $ 854,671 $ 841,548 Marketable equity securities, at market (cost: 2003 - $15,331; 2002 - $15,815) 15,132 15,609 Short-term investments, at cost, which approximates market 455,604 307,215 Other investments, at estimated fair value (cost: 2003 - $2,175; 2002 - $3,264) 2,175 3,264 ------------ ------------ Total investments 1,327,582 1,167,636 Cash 18,776 40,306 Restricted cash 208,150 189,396 Premium, claims and other receivables 814,199 753,527 Reinsurance recoverables 845,966 798,934 Ceded unearned premium 188,655 164,224 Ceded life and annuity benefits 78,675 78,951 Deferred policy acquisition costs 80,959 68,846 Goodwill 336,945 335,288 Other assets 162,521 107,043 ------------ ------------ TOTAL ASSETS $ 4,062,428 $ 3,704,151 ============ ============ LIABILITIES Loss and loss adjustment expense payable $ 1,234,211 $ 1,155,290 Life and annuity policy benefits 78,675 78,951 Reinsurance balances payable 195,494 166,659 Unearned premium 387,274 331,050 Deferred ceding commissions 56,708 49,963 Premium and claims payable 810,028 749,523 Notes payable 311,692 230,027 Accounts payable and accrued liabilities 75,454 59,781 ------------ ------------ Total liabilities 3,149,536 2,821,244 SHAREHOLDERS' EQUITY Common stock, $1.00 par value; 250.0 million shares authorized; (shares issued and outstanding: 2003 - 62,679; 2002 - 62,358) 62,679 62,358 Additional paid-in capital 420,692 416,406 Retained earnings 409,579 383,378 Accumulated other comprehensive income 19,942 20,765 ------------ ------------ Total shareholders' equity 912,892 882,907 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,062,428 $ 3,704,151 ============ ============
HCC Insurance Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (unaudited, in thousands, except per share data)
For the three months ended March 31, 2003 2002 ----------------------- ----------------------- REVENUE Net earned premium $ 162,422 $ 111,478 Management fees 24,870 19,412 Commission income 11,507 10,160 Net investment income 10,998 8,694 Net realized investment gain (loss) (21) 502 Other operating income 897 1,463 ------------------ ------------------ Total revenue 210,673 151,709 EXPENSE Loss and loss adjustment expense 100,032 68,331 Operating expense: Policy acquisition costs, net 20,511 13,054 Compensation expense 26,351 19,626 Other operating expense 14,840 12,600 ------------------ ------------------ Net operating expense 61,702 45,280 Interest expense 1,682 2,378 ------------------ ------------------ Total expense 163,416 115,989 ------------------ ------------------ Earnings before income tax provision 47,257 35,720 Income tax provision 16,982 12,438 ------------------ ------------------ Net earnings $ 30,275 $ 23,282 ================== ================== BASIC EARNINGS PER SHARE DATA: Earnings per share $ 0.48 $ 0.38 ================== ================== Weighted average shares outstanding 62,637 61,936 ================== ================== DILUTED EARNINGS PER SHARE DATA: Earnings per share $ 0.48 $ 0.37 ================== ================== Weighted average shares outstanding 63,335 62,713 ================== ================== Cash dividends declared, per share $ 0.065 $ 0.0625 ================== ==================
HCC Insurance Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited, in thousands, except per share data)
For the three months ended March 31, 2003 2002 ----------------------- ----------------------- Cash flows from operating activities: Net earnings $ 30,275 $ 23,282 Adjustments to reconcile net earnings to net cash provided by operating activities: Change in premium, claims and other receivables (62,217) 9,286 Change in reinsurance recoverables (47,032) 617 Change in ceded unearned premium (24,431) (2,488) Change in loss and loss adjustment expense payable 78,921 17,100 Change in reinsurance balances payable 28,835 3,147 Change in unearned premium 56,224 12,138 Change in premium and claims payable, net of restricted cash 41,751 (54,819) Depreciation and amortization expense 2,976 2,747 Other, net (3,431) 2,092 ----------------- ----------------- Cash provided by operating activities 101,871 13,102 Cash flows from investing activities: Sales of fixed income securities 95,229 68,311 Maturity or call of fixed income securities 27,358 9,812 Sales of equity securities 983 1,189 Change in short-term investments (148,199) (1,193) Cost of securities acquired (164,237) (92,951) Purchases of property and equipment (1,523) (1,325) ----------------- ----------------- Cash used by investing activities (190,389) (16,157) Cash flows from financing activities: Proceeds from notes payable, net of costs 134,845 -- Sale of common stock 3,731 6,570 Payments on notes payable (67,527) (2,527) Dividends paid and other, net (4,061) (5,067) ----------------- ----------------- Cash provided (used) by financing activities 66,988 (1,024) ----------------- ----------------- Net change in cash (21,530) (4,079) Cash at beginning of period 40,306 16,891 ----------------- ----------------- CASH AT END OF PERIOD $ 18,776 $ 12,812 ================= =================
HCC INSURANCE HOLDINGS, INC. INSURANCE COMPANY PREMIUM MARCH 31, 2003 ($ IN THOUSANDS)
1ST QTR 1ST QTR CHANGE 2003 2002 % ----------------------- ------------------------------------ GROSS WRITTEN Group life, accident & health $ 139,320 $ 122,904 13% Diversified financial products 94,814 15,813 500 London market account 60,718 47,545 28 Aviation 44,531 44,114 1 Other specialty lines 20,880 4,202 397 ----------------------- ------------------------------------ 360,263 234,578 54% Discontinued lines 19,185 13,190 ----------------------- -------------------- $ 379,448 $ 247,768 ======================= ==================== NET WRITTEN Group life, accident & health $ 76,185 $ 51,820 47% Diversified financial products 28,031 7,341 282 London market account 37,232 28,536 30 Aviation 20,679 22,633 (9) Other specialty lines 17,450 3,581 387 ----------------------- ------------------------------------ 179,577 113,911 58% Discontinued lines 12,924 8,361 ----------------------- -------------------- $ 192,501 $ 122,272 ======================= ==================== NET EARNED PREMIUM Group life, accident & health $ 71,983 $ 51,567 40% Diversified financial products 15,066 2,703 457 London market account 29,376 16,252 81 Aviation 23,882 25,183 (5) Other specialty lines 9,528 3,635 162 ----------------------- ---------------------------------- 149,835 99,340 51% Discontinued lines 12,587 12,138 ----------------------- -------------------- $ 162,422 $ 111,478 ======================= ====================
HCC INSURANCE HOLDINGS, INC. CONSOLIDATED INSURANCE COMPANIES NET LOSS RATIOS MARCH 31, 2003 ($ IN THOUSANDS)
Year to Date 2003 Full Year 2002 Net Earned Actual Loss Net Earned Actual Loss Line of Business Premium Losses Ratio Premium Losses Ratio - ------------------------------------------ --------------------------------------------------------------------------------------- Group life, accident & health $ 71,983 $ 45,766 63.6% $ 240,070 $ 149,251 62.2% Diversified financial products 15,066 6,101 40.5 23,102 10,708 46.4 London market account 29,376 12,390 42.2 89,260 45,937 51.5 Aviation 23,882 15,634 65.5 100,960 46,732 46.3 Other specialty lines 9,528 6,309 66.2 22,337 22,581 101.1 --------------------------------------------------------------------------------------- 149,835 86,200 57.5 475,729 275,209 57.8 Discontinued lines 12,587 13,832 109.9 29,792 31,282 105.0 --------------------------------------------------------------------------------------- Total $ 162,422 $ 100,032 61.6% $ 505,521 $ 306,491 60.6% =======================================================================================
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