HCC - HCC Insurance Holdings Inc.

[Liberty]

I figure these guys probably deserve their own thread.

 

But before we get into anything else, I'd like to ask if anyone on this board has more details on the backdating options story:

 

http://www.insurancejournal.com/news/national/2008/07/22/92069.htm

 

http://www.lawyersandsettlements.com/settlements/10821/hcc-stock-option-fraud.html

 

http://uk.reuters.com/article/2008/02/08/hccinsurance-lawsuit-idUKWNAS022520080208

 

There doesn't seem to be much out in the open about the real story, but it doesn't smell too good and makes me very hesitant about considering investing in them if there's any ethics problems and/or fishy options.

 

What do you guys think? Is it a lot of BS that means nothing, or a sign that maybe something is wrong behind the curtain at HCC?

[Guest dealraker]

I held stock in HCC for many years.  I have sold that I'm guessing at least 8 years ago.  I sold it becasue of a couple of reasons- too much reliance on reinsurance companies and Way's pay was in my view revolting.  The financial performance under him was good during that time although the stock got well over priced.

[Guest dealraker]

Yep on Way: Bright man.

 

I have decided that over the last 30 years my study of insurance companies, for years it was intense, has left me feeling that most often I don't know enough or trust enough to buy stock.  In the last couple of years I have reunited with the brokers, added to Markel, and that's about it.  Already own Fairfax, Berkshire, and Loews.  Bought the Chinese broker CNinsure during the panic but soon bailed on it too.

[Liberty]

Yep on Way: Bright man.

 

I have decided that over the last 30 years my study of insurance companies, for years it was intense, has left me feeling that most often I don't know enough or trust enough to buy stock.  In the last couple of years I have reunited with the brokers, added to Markel, and that's about it.  Already own Fairfax, Berkshire, and Loews.  Bought the Chinese broker CNinsure during the panic but soon bailed on it too.

 

I'm curious to know what you think of WRB and RLI, if you are familiar with them.

[Rabbitisrich]

Whamond resigned a couple of weeks ago, which is not a great sign for 3Q earnings. The COO position is a teaching/testing ground for internally promoted executives, and Whamond's resignation mighy signal poor performance.

[Rabbitisrich]

From the 4Q conference call (Seeking Alpha):

John Molbeck

Well, I will let Chris talk about the property CAT, but on the liability, the original pricing, the price that we get has been slightly moving up. So that is attractive. We continue to be supported by our panel of reinsurers as we have for the last decade, and they pretty much participate in everything that we do. We haven’t seen a reduction in ceding commissions as far as HCC is concerned, or we haven’t seen terms and conditions that have materially changed in the renewal process. I understand that is not true for everybody, but that is where HCC is.

Chris Williams

In regard to the reinsurance account that we’re writing on the property treaty side, we have elected not to increase our aggregate exposure. On the business that we are writing, we are seeing a 10% to 15% rate increase.

[Rabbitisrich]

Decent quarter http://www.sec.gov/Archives/edgar/data/888919/000110465912052726/a12-17391_1ex99d1.htm

 

•           Net earnings of $93.5 million, or $0.92 per diluted share
  
•           Net earned premium increased 8% to $565.3 million
  
•           GAAP combined ratio of 84.9%
  

•         1.9 million shares of common stock repurchased for $59.5 million at an average cost of $31.17 per share

  
  

 

Net written premiums increased by 5.3% yoy. Book value per share up by 11.9% yoy. Low leverage, good ROE, low expense ratio.

[no_thanks]

I was looking through their latest investor presentation for Q3 2013, and they look pretty solid.  I am pretty slow when it comes to investing, and was wondering where the first few places to look were when checking out insurance companies besides the obvious metrics that they highlight in this presentation.  Price to Book is about 1.3 I believe, and the rest of the metrics are shown in the short presentation attached.

 

Thanks and Happy Holidays!

HCC_3Q13Pres_112613vFINAL.pdf