HCC Unveils Record Q1 2004 Results

May 5, 2004

Houston-based HCC Insurance Holdings Inc. released earnings for the first quarter of 2004.

Net earnings increased significantly for the first quarter of 2004 to $44.6 million, or $0.68 per diluted share, from $23.8 million, or $0.38 per diluted share, for the same period of 2003(a).

Stephen Way, chairman and CEO, said, “Our first quarter results reflect the growth and continuing strong margins from all reporting segments in line with our 2004 business plan, and we anticipate achieving results near the top end of the range of the earnings guidance previously provided.”

Total revenue grew 39 percent during the first quarter of 2004 to $278.0 million compared to the first quarter of 2003. As last year, this increase was primarily due to the growth in the insurance company subsidiaries’ earned premium, as market conditions in our specialty lines continue to be very strong. As was predicted last year, fee and commission revenue also grew substantially, as did investment income.

Overall revenue is expected to continue to increase for the rest of this year and into 2005. Gross written premium of the insurance company subsidiaries increased 21 percent to $459.6 million during the first quarter of 2004 compared to the corresponding quarter of 2003.

During the same period, net written premium increased by 23 percent to $236.0 million and net earned premium increased by 34 percent to $217.1 million. This growth over last year’s record levels was achieved as a result of generally increased retentions and strong growth in the Diversified Financial Products line of business. The company expects this premium growth to continue.

The GAAP combined ratio for the first three months of 2004 was 83.3 percent compared to 88.8 percent in the corresponding period of 2003 and 91.0 percent for the full year of 2003.

Way added, “Our recently affirmed S&P rating of AA (Very Strong) already gives us a competitive advantage, particularly on longer tail business, and as we move into the maintenance stage of the insurance cycle, we believe our superior underwriting skills will further differentiate our results from those of our peers.”

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