Notes Payable

12 Months Ended

Dec. 31, 2014

Notes Payable [Abstract]

Notes Payable

(7) Notes Payable

Our notes payable consisted of the following atDecember 31,2014 and 2013.

		2014		2013
6.30% Senior Notes		$	299,251	$	299,098
Revolving Loan Facility			525,000		355,000
	Total notes payable	$	824,251	$	654,098

The estimated fair value of our Senior Notes was $350.1 million at December 31,2014 and $352.7 million at December 31,2013, based on quoted market prices. The estimated fair value of our Revolving Loan Facility approximated the carrying value at December 31,2014 and 2013, 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 31,2014.

Revolving Loan Facility

On April 30, 2014, we entered into an agreement to modify our $600.0 million Revolving Loan Facility (Facility) to increase the borrowing capacity to $825.0 million and extend the term to April 30, 2019, among other changes. The Facility allows us to borrow up to the maximum allowed on a revolving basis until the Facility expires. The borrowing rate is LIBOR plus 125 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 31,2014 was 1.4%.In addition, we pay an annual commitment fee of 15 basis points on the unused balance of the Facility. The borrowings and letters of credit issued under the Facility reduced our available borrowing capacity on the Facility to $294.1million at December 31,2014. The Facility contains two restrictive financial covenants that require HCC to maintain a minimum consolidated net worth and a maximum leverage ratio of 35%. We were in compliance with these covenants at December 31,2014. In addition, HCC is restricted from paying annual dividends in excess of the greater of $150.0 million or 33% of our prior year’s net earnings.

Subsidiary Letters of Credit

At December 31,2014, certain of our subsidiaries had outstanding letters of credit with banks totaling $6.3million. Of this amount, $5.9million of outstanding letters of credit reduced our borrowing capacity under the Facility at year-end 2014.

Standby Letter of Credit Facility

We had a $90.0 million Standby Letter of Credit Facility (Standby Facility) that was used to guarantee our performance in our Lloyd’s of London Syndicate, which was scheduled to expire on December 31, 2017. In December 2014, we internally funded the guarantee, cancelled all letters of credit issued under the Standby Facility and terminated the Standby Facility. We paid an annual fee of 105 basis points for the Standby Facility in 2014.