Notes Payable

12 Months Ended

Dec. 31, 2012

Notes Payable [Abstract]

Notes Payable

(7) Notes Payable

Our notes payable consisted of the following atDecember 31, 2012 and 2011.

		2012		2011
6.30% Senior Notes		$	298,944	$	298,790
$600.0 million Revolving Loan Facility			285,000		180,000
	Total notes payable	$	583,944	$	478,790

The estimated fair value of our Senior Notes was $351.4million at December 31, 2012 and $325.7million at December 31, 2011, based on quoted market prices.The estimated fair value of our Revolving Loan Facility approximated the carrying value at December 31, 2012 and 2011, based on borrowing rates offered to us at that time.

Senior Notes

Our $300.0 million 6.30% Senior Notes due 2019 were issued in 2009 at a discount of $1.5 million, for an effective interest rate of 6.37%. We pay interest semi-annually in arrears on May 15 and November 15. The Senior Notes are unsecured and subordinated general obligations of HCC. The Senior Notes may be redeemed in whole at any time or in part from time to time, at our option, at the redemption price determined in the manner described in the indenture governing the Senior Notes. The indenture contains covenants that impose conditions on our ability to create liens on the capital stock of our restricted subsidiaries (as defined in the indenture) or to engage in sales of the capital stock of our restricted subsidiaries. We were in compliance with these covenants at December 31, 2012.

Revolving Loan Facility

In 2011, we entered into an agreement for a four-year $600.0 million Revolving Loan Facility (Facility). The Facility allows us to borrow up to the maximum allowed on a revolving basis until the Facility expires on March 8, 2015. The borrowing rate is LIBOR plus 137.5 basis points,subject to increase or decrease based on changes in our debt rating. The weighted-average interest rate on borrowings under the Facility at December 31, 2012 was 1.59%.In addition, we pay an annual commitment fee of 20 basis points. Borrowings under the Facility are used primarily to fund purchases of our common stock. The borrowings and letters of credit issued under the Facility reduced our available borrowing capacity on the Facility to $305.1 million at December 31, 2012. The Facility contains restrictive financial covenants that require HCC to maintain a minimum consolidated net worth (excluding accumulated other comprehensive income) and a maximum leverage ratio of 35%.We were in compliance with these covenants at December 31, 2012.

Standby Letter of Credit Facility

We have a $90.0million Standby Letter of Credit Facility (Standby Facility) that is used to guarantee our performance in our Lloyd's of London Syndicate 4141.The Standby Facility expires on December 31, 2016. We pay an annual fee of 90 basis points. Letters of credit issued under the Standby Facility are unsecured commitments of HCC.The Standby Facility contains the same restrictive financial covenants as the Facility,and we were in compliance with these covenants at December 31, 2012.

Subsidiary Letters of Credit

At December 31, 2012, certain of our subsidiaries had outstanding letters of credit with banks totaling $10.4million.Of this amount, $9.9million of outstanding letters of credit reduced our borrowing capacity under the Revolving Loan Facility at year-end 2012.