HCC Insurance Holdings
) fourth quarter adjusted earnings of 94 cents breezed past the
Zacks Consensus Estimate by 46.9%. Results were up 23.7% year
over year from 76 cents earned in the year ago quarter.
Operating income for the reported quarter included net favorable
loss development of $35.4 million.
Including net realized investment gain net of tax worth $14.7
million and foreign currency expense of $0.5 million, HCC
reported net income of $1.06 in the fourth quarter, up 43.2% year
Quarterly Operational Update
Total revenues increased 6.1% year over year to $652.3 million in
the fourth quarter. This was driven by solid improvement in net
realized investment gain (up from $0.5 million in the year-ago
quarter), net earned premiums (up 3% year over year) and net
investment income (up 4.7% year over year). It surpassed the
Zacks Consensus Estimate of $628 million.
Net written premiums in the quarter increased 0.3% year over year
to $522.6 million.
Total expenses of $502.8 million in the quarter showed a marginal
increase of 0.1% year over year mainly due to increases in
interest expense (up 0.8% year over year) and other operating
expenses (up 5.6% year over year).
Combined ratio for the company improved 250 basis points year
over year to 84.5%.
Behind the Headlines
Net written premiums in the U.S. Property & Casualty division
decreased 9% year over year to $86.1 million in the fourth
In the Professional Liability division, net written premiums
declined 9% year over year to $113.7 million.
Accident & Health reported net written premiums of $213
million, up 11% year over year.
Net written premiums in the U.S. Surety &Credit reduced 8%
year over year to $49.0 million.
In the International division, net written premium increased 7%
year over year to $51 million.
Net written premiums in the Exited Lines declined 1% year over
year to $9.8 million.
Full Year Highlights
Adjusted earnings of $3.74 per share improved 59.8% year over
year. Results exceeded the Zacks Consensus Estimate of $3.42 per
Including net realized investment gain net of tax worth $20.2
million, OTTI credit losses net of tax worth $0.7 million and
foreign currency expense of $4.0 million, net income for 2012 was
$391.2 million or $3.83 per share as against $255.2 million or
$2.30 per share in 2011.
Total revenues for full year 2012 increased 6.4% year over year
to $2.5 billion.
Combined ratio improved 750 basis points from the year ago-period
to 83.6%. For full year 2012, loss ratio was 56.7% compared to
58.9% in 2011.
HCC exited 2012 with cash and short term investments of $434.4
million and $305.1 million of available capacity under its
revolving loan facility of $600 million.
Net cash from operating activities stood at $661.1 million in
2012, up 56.9% year over year.
As of Dec 31, 2012, total assets of the company were $10.3
billion, up 7.3% year over year.
Shareholders' equity increased 6.1% year over year to $3.5
billion at 2012 end. The debt to capital ratio of the company
deteriorated 140 basis points to 14.2%.
It projects adjusted income to be between $3.20 per share to
$3.50 per share.
Net written premium is expected to increase by 1%. Combined ratio
is expected to be in the range of 86%-88%.
HCC currently carries a Zacks Rank #1 (Strong Buy).
AmTrust Financial Services Inc.
First American Financial
Fidelity National Financial inc.
) sharing the same Zacks Rank are expected to report their fourth
quarter and full year 2012 results shortly.
AMTRUST FIN SVC (AFSI): Free Stock Analysis
FIRST AMER FINL (FAF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis
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