HCC Insurance Holdings Inc. (HCC, Financial) filed Quarterly Report for the period ended 2012-09-30.
Hcc Insurance Holdings Inc. has a market cap of $3.53 billion; its shares were traded at around $35.61 with a P/E ratio of 11.3 and P/S ratio of 1.5. The dividend yield of Hcc Insurance Holdings Inc. stocks is 1.9%. Hcc Insurance Holdings Inc. had an annual average earning growth of 13.2% over the past 10 years.
Our U.S. Property & Casualty segment pretax earnings increased 22% year-over-year and 35% quarter-over-quarter due to higher net earned premium and a lower net loss ratio. Net earned premium was higher in 2012 due to $9.8 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 and residual value premium. Our new underwriting teams wrote $38.5 million of gross premium in the first nine months of 2012, compared to $6.8 million in the same period of 2011.
Our Professional Liability segment pretax earnings increased $69.2 million year-over-year due to an improved accident year loss ratio and changes in loss development. The segment had favorable loss development of $26.2 million in the first nine months and third quarter of 2012, compared to adverse loss development of $48.1 million and $31.2 million in the first nine months and third quarter of 2011, respectively. The 2012 favorable development consisted of $9.3 million in U.S. D&O and $16.9 million in International D&O. The 2012 favorable development related to lower than expected reported loss development in underwriting years 2003 2006, partially offset by higher expected losses in underwriting year 2008.
The segments expense ratios reflect the impact of profit commissions due from reinsurers, which reduce the segments Other Expense. The segment recognized profit commissions of $5.9 million and $13.7 million in the first nine months of 2012 and 2011, respectively, and $6.0 million and $13.6 million in the third quarter of 2012 and 2011, respectively. The profit commissions reduced the expense ratios by 2.0 and 4.5 percentage points for year-to-date 2012 and 2011, respectively, and by 6.1 and 13.0 percentage points for third quarter 2012 and 2011, respectively.
The Accident & Health segment pretax earnings increased 23% year-over-year and 54% quarter-over-quarter due to higher net earned premium and the change in loss development. Medical stop-loss premium increased in 2012 due to writing new business and rate increases on renewal business, which were in line with medical loss cost trends. The segment had favorable loss development of $10.7 million in the first nine months and third quarter of 2012, compared to adverse loss development of $2.0 million in the first nine months of 2011. The 2012 development related to favorable claims activity in the medical stop-loss product line for the 2011 underwriting year. The 2011 adverse development related to our short-term medical reinsurance product (included in Other).
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Hcc Insurance Holdings Inc. has a market cap of $3.53 billion; its shares were traded at around $35.61 with a P/E ratio of 11.3 and P/S ratio of 1.5. The dividend yield of Hcc Insurance Holdings Inc. stocks is 1.9%. Hcc Insurance Holdings Inc. had an annual average earning growth of 13.2% over the past 10 years.
Highlight of Business Operations:
For the first nine months of 2012, 61% of our other operating expense related to compensation and benefits for our 1,875 employees. Other operating expense increased 10% year-over-year and 19% quarter-over-quarter, primarily due to increased compensation expense, including higher bonus expense directly related to higher pretax earnings in 2012, and the fluctuation in foreign currency gain and loss. We recognized foreign currency loss of $5.3 million and $6.8 million in the first nine months and third quarter of 2012, respectively, primarily related to the fluctuations in the British pound sterling. Conversely, we recognized foreign currency benefit of $2.5 million and $0.5 million in the first nine months and third quarter of 2011, respectively. Other operating expense included stock-based compensation expense of $10.6 million in 2012 and $10.4 million in 2011. At September 30, 2012, there was approximately $27.2 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 3.0 years.Our U.S. Property & Casualty segment pretax earnings increased 22% year-over-year and 35% quarter-over-quarter due to higher net earned premium and a lower net loss ratio. Net earned premium was higher in 2012 due to $9.8 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 and residual value premium. Our new underwriting teams wrote $38.5 million of gross premium in the first nine months of 2012, compared to $6.8 million in the same period of 2011.
Our Professional Liability segment pretax earnings increased $69.2 million year-over-year due to an improved accident year loss ratio and changes in loss development. The segment had favorable loss development of $26.2 million in the first nine months and third quarter of 2012, compared to adverse loss development of $48.1 million and $31.2 million in the first nine months and third quarter of 2011, respectively. The 2012 favorable development consisted of $9.3 million in U.S. D&O and $16.9 million in International D&O. The 2012 favorable development related to lower than expected reported loss development in underwriting years 2003 2006, partially offset by higher expected losses in underwriting year 2008.
The segments expense ratios reflect the impact of profit commissions due from reinsurers, which reduce the segments Other Expense. The segment recognized profit commissions of $5.9 million and $13.7 million in the first nine months of 2012 and 2011, respectively, and $6.0 million and $13.6 million in the third quarter of 2012 and 2011, respectively. The profit commissions reduced the expense ratios by 2.0 and 4.5 percentage points for year-to-date 2012 and 2011, respectively, and by 6.1 and 13.0 percentage points for third quarter 2012 and 2011, respectively.
The Accident & Health segment pretax earnings increased 23% year-over-year and 54% quarter-over-quarter due to higher net earned premium and the change in loss development. Medical stop-loss premium increased in 2012 due to writing new business and rate increases on renewal business, which were in line with medical loss cost trends. The segment had favorable loss development of $10.7 million in the first nine months and third quarter of 2012, compared to adverse loss development of $2.0 million in the first nine months of 2011. The 2012 development related to favorable claims activity in the medical stop-loss product line for the 2011 underwriting year. The 2011 adverse development related to our short-term medical reinsurance product (included in Other).
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