HCC Insurance Holdings Inc. (HCC, Financial) filed Quarterly Report for the period ended 2009-09-30.
HCC through its subsidiaries provides specialized property & casualty insurance coverages managing general agency services & insurance related services both to commercial customers & individuals. HCC's insurance products are underwritten on both a direct & reinsurance basis & are marketed by the Company itself & through a network of independent & affiliated agents & brokers. HCC's principal insurance company subsidiaries are Houston Casualty Co. U.S. Specialty Insurance Co. & Trafalgar Insurance Co. in Houston Texas; & AVEMCO Insurance Co. in Frederick Maryland. Hcc Insurance Holdings Inc. has a market cap of $3.02 billion; its shares were traded at around $26.93 with a P/E ratio of 9.5 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 15.5% over the past 10 years. GuruFocus rated Hcc Insurance Holdings Inc. the business predictability rank of 2.5-star.
We earned $269.1 million, or $2.37 per diluted share in the first nine months of 2009, compared to $230.5 million, or $1.99 per diluted share, in the first nine months of 2008. Our third quarter net earnings were $94.3 million, or $0.83 per diluted share in 2009, compared to $58.4 million, or $0.50 per diluted share, in 2008. Our 2009 year-to-date earnings include $15.6 million of pretax benefit due to a $25.0 million termination payment we received in the first quarter to commute a reinsurance contract that had been accounted for using the deposit method of accounting. Our year-to-date loss ratio for 2009 was 59.8%, compared to 61.2% for 2008. The 2008 loss ratio included $24.5 million of losses related to the 2008 hurricanes. Profitability from our underwriting operations remains at acceptable levels. Our year-to-date combined ratio was 84.6% for 2009, compared to 85.3% for 2008. Investment income increased $10.9 million year-over-year due to the effect of $16.7 million of losses on alternative investments in 2008 and lower short-term investment income in 2009. Realized investment gains offset the other-than-temporary credit losses in 2009, compared to $18.8 million of losses realized in 2008, primarily in the third quarter, related to the credit crisis. Our 2008 year-to-date results also included an $11.7 million loss related to trading securities, which we sold in the third quarter of that year. See the Results of Operations section below for additional discussion.
Net earnings were $269.1 million ($2.37 per diluted share) in the first nine months of 2009, compared to $230.5 million ($1.99 per diluted share) in the same period of 2008 and $94.3 million ($0.83 per diluted share) in the third quarter of 2009, compared to $58.4 million ($0.50 per diluted share) in the same period of 2008. The increase in year-to-date net earnings primarily resulted from: 1) the 2009 commutation of a reinsurance contract that had been accounted for using the deposit method of accounting, 2) catastrophic losses in 2008 from the 2008 hurricanes, and 3) higher investment-related losses in 2008, as described more fully below. Net earnings were higher quarter-over-quarter principally due to the lower investment-related losses in 2009 and hurricane losses in 2008. Diluted earnings per share in both periods of 2009 benefited from the repurchase of 4.7 million shares of our common stock in 2008 and the first quarter of 2009. The share repurchases reduced our diluted weighted-average shares outstanding, which were 112.9 million and 115.9 million in the first nine months of 2009 and 2008, respectively, and 112.9 million and 115.4 million in the third quarter of 2009 and 2008, respectively.
Other operating income was $29.8 million in the first nine months of 2009, compared to $10.8 million in the first nine months of 2008 and $1.4 million in the third quarter of 2009, compared to $4.8 million in the third quarter of 2008. The 2009 income includes the $20.0 million termination payment to commute a reinsurance contract that had been accounted for using the deposit method of accounting. The 2009 year-to-date and third quarter income include a $2.4 million gain from the sale of a strategic investment and a $4.2 million loss from sale of a subsidiary during the third quarter of 2009. The 2008 nine-month period included a $9.2 million gain from the sale of a strategic investment and losses related to our trading security portfolio that was sold in 2008. Period to period comparisons in this category may vary substantially, depending on acquisition of new investments, income or loss related to changes in the market values of certain investments, and gains or losses related to dispositions. The following table details the components of our other operating income.
We recognized, as a reduction of earnings, $5.3 million and $6.0 million of other-than-temporary impairment losses in the first nine months of 2009 and 2008, respectively, and $0.3 million and $4.4 million in the third quarter of 2009 and 2008, respectively. Gains on the sale of fixed income securities substantially offset the impairment losses in the first nine months of 2009. In the third quarter of 2008, we sold $26.6 million of bonds and preferred stock of certain issuers with credit-related exposure, as a result of extreme credit market issues, and realized losses of $19.4 million.
At September 30, 2009, book value per share was $26.54, up from $23.27 at December 31, 2008. Total assets were $9.0 billion and shareholders equity was $3.0 billion, compared to $8.3 billion and $2.6 billion, respectively, at December 31, 2008. We repurchased 1.7 million shares of our common stock in the first quarter of 2009, which increased book value per share by $0.07.
Read the The complete ReportHCC is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, Third Avenue Management, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co.
HCC through its subsidiaries provides specialized property & casualty insurance coverages managing general agency services & insurance related services both to commercial customers & individuals. HCC's insurance products are underwritten on both a direct & reinsurance basis & are marketed by the Company itself & through a network of independent & affiliated agents & brokers. HCC's principal insurance company subsidiaries are Houston Casualty Co. U.S. Specialty Insurance Co. & Trafalgar Insurance Co. in Houston Texas; & AVEMCO Insurance Co. in Frederick Maryland. Hcc Insurance Holdings Inc. has a market cap of $3.02 billion; its shares were traded at around $26.93 with a P/E ratio of 9.5 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 15.5% over the past 10 years. GuruFocus rated Hcc Insurance Holdings Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:
We had shareholders equity of $3.0 billion at September 30, 2009. Our book value per share increased 14% in the first nine months of 2009 to $26.54 at September 30, 2009, up from $23.27 at December 31, 2008. We had net earnings of $269.1 million, or $2.37 per diluted share, and generated $417.5 million of cash flow from operations in the first nine months of 2009. We declared dividends of $0.385 per share in the first nine months of 2009, compared to $0.345 per share in the first nine months of 2008, and paid $42.2 million of dividends in 2009. We repurchased 1.7 million shares of our common stock for $35.5 million, at an average cost of $21.36 per share in 2009. We currently have $4.9 billion of fixed income securities with an average rating of AA+ that are available to fund claims and other liabilities. We maintain a $575.0 million Revolving Loan Facility that allows us to borrow up to the maximum on a revolving basis, under which we have $240.0 million of additional capacity at October 31, 2009. The facility expires in December 2011. We are rated AA (Very Strong) by Standard & Poors Corporation and AA (Very Strong) by Fitch Ratings. Our major domestic insurance companies are rated A+ (Superior) by A.M. Best Company, Inc.We earned $269.1 million, or $2.37 per diluted share in the first nine months of 2009, compared to $230.5 million, or $1.99 per diluted share, in the first nine months of 2008. Our third quarter net earnings were $94.3 million, or $0.83 per diluted share in 2009, compared to $58.4 million, or $0.50 per diluted share, in 2008. Our 2009 year-to-date earnings include $15.6 million of pretax benefit due to a $25.0 million termination payment we received in the first quarter to commute a reinsurance contract that had been accounted for using the deposit method of accounting. Our year-to-date loss ratio for 2009 was 59.8%, compared to 61.2% for 2008. The 2008 loss ratio included $24.5 million of losses related to the 2008 hurricanes. Profitability from our underwriting operations remains at acceptable levels. Our year-to-date combined ratio was 84.6% for 2009, compared to 85.3% for 2008. Investment income increased $10.9 million year-over-year due to the effect of $16.7 million of losses on alternative investments in 2008 and lower short-term investment income in 2009. Realized investment gains offset the other-than-temporary credit losses in 2009, compared to $18.8 million of losses realized in 2008, primarily in the third quarter, related to the credit crisis. Our 2008 year-to-date results also included an $11.7 million loss related to trading securities, which we sold in the third quarter of that year. See the Results of Operations section below for additional discussion.
Net earnings were $269.1 million ($2.37 per diluted share) in the first nine months of 2009, compared to $230.5 million ($1.99 per diluted share) in the same period of 2008 and $94.3 million ($0.83 per diluted share) in the third quarter of 2009, compared to $58.4 million ($0.50 per diluted share) in the same period of 2008. The increase in year-to-date net earnings primarily resulted from: 1) the 2009 commutation of a reinsurance contract that had been accounted for using the deposit method of accounting, 2) catastrophic losses in 2008 from the 2008 hurricanes, and 3) higher investment-related losses in 2008, as described more fully below. Net earnings were higher quarter-over-quarter principally due to the lower investment-related losses in 2009 and hurricane losses in 2008. Diluted earnings per share in both periods of 2009 benefited from the repurchase of 4.7 million shares of our common stock in 2008 and the first quarter of 2009. The share repurchases reduced our diluted weighted-average shares outstanding, which were 112.9 million and 115.9 million in the first nine months of 2009 and 2008, respectively, and 112.9 million and 115.4 million in the third quarter of 2009 and 2008, respectively.
Other operating income was $29.8 million in the first nine months of 2009, compared to $10.8 million in the first nine months of 2008 and $1.4 million in the third quarter of 2009, compared to $4.8 million in the third quarter of 2008. The 2009 income includes the $20.0 million termination payment to commute a reinsurance contract that had been accounted for using the deposit method of accounting. The 2009 year-to-date and third quarter income include a $2.4 million gain from the sale of a strategic investment and a $4.2 million loss from sale of a subsidiary during the third quarter of 2009. The 2008 nine-month period included a $9.2 million gain from the sale of a strategic investment and losses related to our trading security portfolio that was sold in 2008. Period to period comparisons in this category may vary substantially, depending on acquisition of new investments, income or loss related to changes in the market values of certain investments, and gains or losses related to dispositions. The following table details the components of our other operating income.
We recognized, as a reduction of earnings, $5.3 million and $6.0 million of other-than-temporary impairment losses in the first nine months of 2009 and 2008, respectively, and $0.3 million and $4.4 million in the third quarter of 2009 and 2008, respectively. Gains on the sale of fixed income securities substantially offset the impairment losses in the first nine months of 2009. In the third quarter of 2008, we sold $26.6 million of bonds and preferred stock of certain issuers with credit-related exposure, as a result of extreme credit market issues, and realized losses of $19.4 million.
At September 30, 2009, book value per share was $26.54, up from $23.27 at December 31, 2008. Total assets were $9.0 billion and shareholders equity was $3.0 billion, compared to $8.3 billion and $2.6 billion, respectively, at December 31, 2008. We repurchased 1.7 million shares of our common stock in the first quarter of 2009, which increased book value per share by $0.07.
Read the The complete ReportHCC is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, Third Avenue Management, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co.
