HCC Insurance Holdings Inc. (HCC, Financial) filed Quarterly Report for the period ended 2009-03-31.
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 $2.78 billion; its shares were traded at around $24.51 with a P/E ratio of 8.5 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 $83.2 million or $0.73 per diluted share in the first quarter of 2009, compared to $80.5 million or $0.69 per diluted share (as adjusted) in the first quarter of 2008. The increase primarily relates to a $10.1 million after-tax net impact in 2009 due to a $25.0 million termination payment we received to commute a reinsurance contract that had been accounted for using the deposit method of accounting. Profitability from our underwriting operations remains at acceptable levels. Our combined ratio for the first three months of 2009 was 87.3%, compared to 83.7% for the same period of 2008. During 2009, we had $4.7 million of adverse reserve development, compared to $5.1 million of positive reserve development in the first quarter of 2008. Investment income on our fixed income securities grew $4.5 million in 2009, but dropped $6.8 million on our short-term investments compared to the first quarter of 2008. Our 2008 net earnings also included a $9.0 million loss related to trading securities, which we sold later in 2008. See the Results of Operations section below for additional discussion.
We produced $600.7 million of revenue in the first quarter of 2009, an increase of 6% compared to the first quarter of 2008. This increase principally resulted from a combined $20.0 million of other operating income and $5.0 million of fee and commission income related to the commutation of a reinsurance contract that had been accounted for using the deposit method of accounting, as well as $9.0 million of losses on trading securities in the 2008 quarter.
Net earnings were $83.2 million ($0.73 per diluted share) in 2009 compared to $80.5 million ($0.69 per diluted share) in 2008. The increase in net earnings primarily resulted from the commutation of a reinsurance contract that had been accounted for using the deposit method of accounting and other items described below. Diluted earnings per share 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 113.3 million in the first quarter of 2009 and 116.4 million in the first quarter of 2008.
Other operating expense includes $3.6 million and $2.9 million in the first quarter of 2009 and 2008, respectively, of stock-based compensation expense, after the effect of the deferral and amortization of policy acquisition costs related to stock-based compensation for our underwriters. At March 31, 2009, there was approximately $30.6 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 2.7 years.
At March 31, 2009, book value per share was $24.14, up from $23.27 at December 31, 2008. Total assets were $8.6 billion and shareholders equity was $2.7 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 $0.04.
Read the The complete ReportHCC is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, David Dreman of Dreman Value Management.
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 $2.78 billion; its shares were traded at around $24.51 with a P/E ratio of 8.5 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 $2.7 billion at March 31, 2009. Our book value per share increased 4% in the first three months of 2009 to $24.14 at March 31, 2009, up from $23.27 per share at December 31, 2008. We had net earnings of $83.2 million, or $0.73 per diluted share, and generated $133.6 million of cash flow from operations in the first quarter of 2009. We declared dividends of $0.125 per share in the first quarter of 2009, compared to $0.11 per share in the first quarter 2008, and paid $14.2 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 $4.3 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 $275.0 million of additional capacity at April 30, 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 $83.2 million or $0.73 per diluted share in the first quarter of 2009, compared to $80.5 million or $0.69 per diluted share (as adjusted) in the first quarter of 2008. The increase primarily relates to a $10.1 million after-tax net impact in 2009 due to a $25.0 million termination payment we received to commute a reinsurance contract that had been accounted for using the deposit method of accounting. Profitability from our underwriting operations remains at acceptable levels. Our combined ratio for the first three months of 2009 was 87.3%, compared to 83.7% for the same period of 2008. During 2009, we had $4.7 million of adverse reserve development, compared to $5.1 million of positive reserve development in the first quarter of 2008. Investment income on our fixed income securities grew $4.5 million in 2009, but dropped $6.8 million on our short-term investments compared to the first quarter of 2008. Our 2008 net earnings also included a $9.0 million loss related to trading securities, which we sold later in 2008. See the Results of Operations section below for additional discussion.
We produced $600.7 million of revenue in the first quarter of 2009, an increase of 6% compared to the first quarter of 2008. This increase principally resulted from a combined $20.0 million of other operating income and $5.0 million of fee and commission income related to the commutation of a reinsurance contract that had been accounted for using the deposit method of accounting, as well as $9.0 million of losses on trading securities in the 2008 quarter.
Net earnings were $83.2 million ($0.73 per diluted share) in 2009 compared to $80.5 million ($0.69 per diluted share) in 2008. The increase in net earnings primarily resulted from the commutation of a reinsurance contract that had been accounted for using the deposit method of accounting and other items described below. Diluted earnings per share 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 113.3 million in the first quarter of 2009 and 116.4 million in the first quarter of 2008.
Other operating expense includes $3.6 million and $2.9 million in the first quarter of 2009 and 2008, respectively, of stock-based compensation expense, after the effect of the deferral and amortization of policy acquisition costs related to stock-based compensation for our underwriters. At March 31, 2009, there was approximately $30.6 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 2.7 years.
At March 31, 2009, book value per share was $24.14, up from $23.27 at December 31, 2008. Total assets were $8.6 billion and shareholders equity was $2.7 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 $0.04.
Read the The complete ReportHCC is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, David Dreman of Dreman Value Management.
