HCC Insurance Holdings Inc. (HCC, Financial) filed Quarterly Report for the period ended 2012-06-30.
Hcc Insurance Holdings, Inc. has a market cap of $3.12 billion; its shares were traded at around $31.86 with a P/E ratio of 11.2 and P/S ratio of 1.3. The dividend yield of Hcc Insurance Holdings, Inc. stocks is 2%. Hcc Insurance Holdings, Inc. had an annual average earning growth of 13.2% over the past 10 years.
For the first six months of 2012, 62% of our other operating expense related to compensation and benefits for our 1,866 employees. Other operating expense increased 5% year-over-year, primarily due to increased bonus expense related to higher net earnings in 2012. Other operating expense decreased 2% quarter-over-quarter, primarily due to higher foreign currency benefit in 2012. We recognized foreign currency benefit of $1.4 million and $4.2 million in the first six months and second quarter of 2012, respectively, directly related to the fluctuations in the British pound sterling. The foreign currency benefit was $2.0 million and $0.8 million in the first six months and second quarter of 2011, respectively. Other operating expense included stock-based compensation expense of $6.4 million in 2012 and $7.8 million in 2011. At June 30, 2012, there was approximately $26.7 million of total unrecognized compensation expense related to unvested options and restricted stock awards and units that is expected to be recognized over a weighted-average period of 2.8 years.
Our U.S. Property & Casualty segment pretax earnings increased 15% year-over-year due to higher net earned premium and a lower net loss ratio. Net earned premium was higher in 2012 due to $6.0 million of additional premium from our new technical property, primary casualty and excess casualty underwriting teams, as well as increases in aviation, public risk, contingency, residual value and title reinsurance premium. These increases more than offset lower premium in our E&O line of business. Our new underwriting teams wrote $28.4 million of gross premium in the first six months of 2012, compared to $4.5 million in the same period of 2011. Segment earnings were impacted by $4.0 million of net catastrophe losses in the first quarter of 2012, primarily in our public risk line of business. The 2011 segment earnings and net loss ratio reflect the impact of $2.5 million of adverse loss development, including $1.0 million in the second quarter of 2011. The segment had no loss development in 2012.
Our Professional Liability segment pretax earnings decreased 2% year-to-date due to lower net earned premium in 2012 and increased 14% quarter-over-quarter due to adverse development in 2011. Premium was lower in 2012 primarily due to reunderwriting our diversified financial products (DFP) product, which is included in U.S. D&O. In addition, we obtained more reinsurance in 2012. In 2011, the segment had adverse loss development related to DFP of $17.0 million (representing 6.0 percentage points of the net loss ratio) in the first six months, and $10.8 million (11.9 percentage points) in the second quarter. The segment had no adverse loss development in 2012. We increased DFPs ultimate loss ratio on underwriting year 2011 in the third quarter of 2011 and continued to use that same ultimate loss ratio in 2012 for DFPs underwriting year 2011 premium that earned in 2012.
The Accident & Health segment pretax earnings increased 3% in the first six months of 2012, compared to 2011. This increase was directly related to higher net earned premium in our medical stop-loss product line due to writing new business and rate increases, which were in line with medical loss cost trends, on renewal business.
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Hcc Insurance Holdings, Inc. has a market cap of $3.12 billion; its shares were traded at around $31.86 with a P/E ratio of 11.2 and P/S ratio of 1.3. The dividend yield of Hcc Insurance Holdings, Inc. stocks is 2%. Hcc Insurance Holdings, Inc. had an annual average earning growth of 13.2% over the past 10 years.
Highlight of Business Operations:
Our net paid loss ratio decreased in 2012 due to substantially lower claims payments in our Professional Liability segment and our energy line of business in the second quarter of 2012, compared to the same period in 2011. We paid $27.5 million in the first quarter of 2012 and $26.7 million in the second quarter of 2011 to commute large contracts included in our Exited Lines. These commutations had no material effect on net earnings but increased our net paid loss ratios by 2.5 percentage points for the first six months of 2012, and 2.6 percentage points and 5.1 percentage points for the first six months and second quarter of 2011, respectively. The amount of claims paid fluctuates period to period due to our mix of business and the timing of claims settlement and catastrophic events.For the first six months of 2012, 62% of our other operating expense related to compensation and benefits for our 1,866 employees. Other operating expense increased 5% year-over-year, primarily due to increased bonus expense related to higher net earnings in 2012. Other operating expense decreased 2% quarter-over-quarter, primarily due to higher foreign currency benefit in 2012. We recognized foreign currency benefit of $1.4 million and $4.2 million in the first six months and second quarter of 2012, respectively, directly related to the fluctuations in the British pound sterling. The foreign currency benefit was $2.0 million and $0.8 million in the first six months and second quarter of 2011, respectively. Other operating expense included stock-based compensation expense of $6.4 million in 2012 and $7.8 million in 2011. At June 30, 2012, there was approximately $26.7 million of total unrecognized compensation expense related to unvested options and restricted stock awards and units that is expected to be recognized over a weighted-average period of 2.8 years.
Our U.S. Property & Casualty segment pretax earnings increased 15% year-over-year due to higher net earned premium and a lower net loss ratio. Net earned premium was higher in 2012 due to $6.0 million of additional premium from our new technical property, primary casualty and excess casualty underwriting teams, as well as increases in aviation, public risk, contingency, residual value and title reinsurance premium. These increases more than offset lower premium in our E&O line of business. Our new underwriting teams wrote $28.4 million of gross premium in the first six months of 2012, compared to $4.5 million in the same period of 2011. Segment earnings were impacted by $4.0 million of net catastrophe losses in the first quarter of 2012, primarily in our public risk line of business. The 2011 segment earnings and net loss ratio reflect the impact of $2.5 million of adverse loss development, including $1.0 million in the second quarter of 2011. The segment had no loss development in 2012.
Our Professional Liability segment pretax earnings decreased 2% year-to-date due to lower net earned premium in 2012 and increased 14% quarter-over-quarter due to adverse development in 2011. Premium was lower in 2012 primarily due to reunderwriting our diversified financial products (DFP) product, which is included in U.S. D&O. In addition, we obtained more reinsurance in 2012. In 2011, the segment had adverse loss development related to DFP of $17.0 million (representing 6.0 percentage points of the net loss ratio) in the first six months, and $10.8 million (11.9 percentage points) in the second quarter. The segment had no adverse loss development in 2012. We increased DFPs ultimate loss ratio on underwriting year 2011 in the third quarter of 2011 and continued to use that same ultimate loss ratio in 2012 for DFPs underwriting year 2011 premium that earned in 2012.
The Accident & Health segment pretax earnings increased 3% in the first six months of 2012, compared to 2011. This increase was directly related to higher net earned premium in our medical stop-loss product line due to writing new business and rate increases, which were in line with medical loss cost trends, on renewal business.
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