Highlights:
- Record net earnings of $115.0 million, or $1.14 per diluted share, for the fourth quarter
- Record net earnings of $407.2 million, or $4.04 per diluted share, for the full year
- Return on equity and operating return on equity (a) of 11.3% for the full year
- GAAP combined ratio of 81.2% for the fourth quarter and 83.4% for the full year
- Gross written premium increased 4% to $671.7 million for the fourth quarter and 3% to $2.9 billion for the full year
- Book value per share increased 4% for the full year to $36.62
HOUSTON, Feb. 11, 2014 (GLOBE NEWSWIRE) -- HCC Insurance Holdings, Inc. (NYSE: HCC ) today released results for the fourth quarter and full year of 2013.
Net earnings were $115.0 million, or $1.14 per diluted share, for the fourth quarter of 2013, compared to $108.1 million, or $1.06 per diluted share, for the same quarter of 2012. Net earnings were $407.2 million, or $4.04 per diluted share, for 2013, versus $391.2 million, or $3.83 per diluted share, for 2012.
The 2013 results included accident year pretax net catastrophe losses of $7.5 million and $52.0 million for the fourth quarter and full year, respectively, which reduced net earnings by $0.05 and $0.34 per share for the respective periods. The 2012 results included catastrophe losses of $32.5 million and $52.8 million for the fourth quarter and full year, respectively, which reduced net earnings by $0.21 and $0.34 per share for the respective periods.
The Company's combined ratio was 81.2% for the fourth quarter of 2013, compared to 84.5% for the same quarter of 2012. The combined ratio was 83.4% for 2013, versus 83.6% for 2012. HCC's net paid loss ratio was 56.5% for 2013, compared to 56.7% for 2012.
"The fourth quarter was the best quarter in our history and capped a second consecutive year of record earnings for our shareholders. These results produced an operating return on equity well in excess of our stated goal and were driven, once again, by another outstanding underwriting performance. We believe HCC is well-positioned to continue to generate favorable and consistent results in 2014," said Christopher J.B. Williams, HCC's Chief Executive Officer.
HCC had net favorable loss development of $34.1 million in the fourth quarter of 2013, compared to $35.4 million in the same quarter of 2012, and $73.7 million in the full year of 2013, versus $70.0 million in the same period of 2012.
The Company's 2013 accident year net loss ratio was 60.9% and its accident year combined ratio was 86.8% for the full year of 2013. These ratios include 2.4 percentage points for catastrophes.
Gross written premium increased 4% to $671.7 million for the fourth quarter of 2013, compared to $644.1 million for the same quarter of 2012. Net written premium increased 1% to $525.4 million for the fourth quarter of 2013, versus $522.6 million for the same quarter of 2012. Net earned premium decreased 1% to $560.0 million for the fourth quarter of 2013, compared to $566.5 million for the same quarter of 2012.
For the full year of 2013, compared to the same period of 2012, gross written premium increased 3% to $2.9 billion; net written premium was flat at $2.3 billion; and net earned premium was flat at $2.2 billion.
Investment income was $54.5 million in the fourth quarter of 2013, compared to $56.0 million in the same quarter of 2012, and $220.2 million in the full year of 2013, versus $222.6 million in the same period of 2012. As of December 31, 2013, HCC's fixed maturity securities portfolio had an average rating of AA, with a duration of 5.1 years and an average long-term tax equivalent yield of 4.5%.
HCC generated cash flow from operations of $262.7 million in 2013, compared to $661.1 million in 2012. Cash flow for 2013 was decreased by $121.7 million of U.S. Surety collateral repayments, whereas cash flow for 2012 was increased by $96.6 million of U.S. Surety collateral receipts. At December 31, 2013, the Company had $237.1 million of cash and short-term investments and $239.1 million of available capacity under its $600.0 million revolving loan facility.
As of December 31, 2013, total assets were $10.3 billion, shareholders' equity was $3.7 billion and the Company's debt to total capital ratio was 15.1%.
For further information about HCC's 2013 fourth quarter results, see the supplemental financial schedules that are accessible on HCC's website at http://www.hcc.com , as well as directly in the Investor Relations section of HCC's website at http://ir.hcc.com .
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HCC will hold an open conference call beginning at 8:00 a.m. Central Standard Time on Wednesday, February 12. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-0161. There will also be a live webcast available on a listen-only basis that can be accessed through the HCC website at http://www.hcc.com . The webcast replay will be archived in the Investor Relations section of the HCC website through Friday, May 16, 2014.
Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. is a leading specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland. HCC's major domestic and international insurance companies have financial strength ratings of "AA (Very Strong)" from Standard & Poor's Corporation, "A+ (Superior)" from A.M. Best Company, Inc., "AA (Very Strong)" from Fitch Ratings, and "A1 (Good Security)" from Moody's Investors Service, Inc.
For more information about HCC, please visit http://www.hcc.com .
a) Non-GAAP Financial Measure
Annualized operating return on equity is a non-GAAP financial measure under Regulation G and is calculated as net earnings excluding after-tax net realized investment gain/loss, other-than-temporary impairment credit losses, and foreign currency benefit/expense (collectively, operating earnings) divided by average shareholders' equity excluding accumulated other comprehensive income. To annualize a quarterly rate, the result is multiplied by four. See the supplemental financial schedules for a reconciliation of this non-GAAP financial measure to corresponding GAAP amounts. Management believes annualized operating return on equity is a useful measure for understanding the Company's profitability relative to shareholders' equity before consideration of investment-related gains/losses and foreign currency benefit/expense, both of which management excludes when evaluating operating results internally.
Forward-looking statements contained in this press release are made under "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. The types of risks and uncertainties which may affect the Company are set forth in its periodic reports filed with the Securities and Exchange Commission.
Doug Busker, Director of Investor Relations HCC Insurance Holdings, Inc. Telephone: (713) 996-1192
