A.M. Best Revises Outlook to Positive for Issuer Credit Ratings of HCC Insurance Holdings, Inc. and Certain Subsidiaries

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has revised the outlook to positive from stable for the issuer
credit ratings (ICR) of "aa-" and affirmed the ICRs and financial strength
rating (FSR) of A+ (Superior) of Houston Casualty Group (HCC) and its
property/casualty members.

A.M. Best also has upgraded the ICRs to "a+" from "a" and affirmed the FSRs of A
(Excellent) of American Contractors Indemnity Company (ACIC) (Los Angeles, CA)
and United States Surety Company (USSC) (Timonium, MD). In addition, A.M. Best
has affirmed the FSR of A- (Excellent) and ICR of "a-" of Pioneer General
Insurance Company (Pioneer General) (Denver, CO).

Additionally, A.M. Best has affirmed the FSRs of A+ (Superior) and A (Excellent)
and ICRs of "aa-" and "a+" of HCC Life Insurance Company (HCC Life)
(Indianapolis, IN) and Perico Life Insurance Company (Perico) (Dover, DE),
respectively. The outlook for all the above ratings is stable, except where
specified.

Concurrently, A.M. Best has affirmed the ICR of "a-" and the debt rating of "a-"
on $125 million of 1.3% convertible notes due 2023 of the holding company, HCC
Insurance Holdings, Inc. (HCC Holdings) (Houston, TX) [NYSE: HCC]. The outlook
for these ratings has been revised to positive from stable.

At the same time, A.M. Best has assigned indicative ratings of "a-" to senior
unsecured debt, "bbb+" to subordinated debt and "bbb+" to shelf trust preferred
securities of HCC Capital Trusts I and II, which may be issued under HCC
Holdings` recently renewed shelf registration statement. The assigned outlook on
the new indicative ratings is positive. (See link below for a complete listing
of the companies and ratings.)

This $1 billion shelf registration replaces HCC Holdings` previous $1 billion
shelf registration that was set to expire on May 25, 2009, but was replaced
shortly beforehand. A.M. Best has withdrawn its indicative ratings on the
securities related to the expired shelf.

These ratings reflect HCC`s sustained profitability, strong capitalization, as
well as the moderate financial leverage and substantial financial flexibility at
HCC Holdings. HCC`s business strategies have focused on a conservative
investment strategy and on underwriting within narrowly defined specialty lines,
effective utilization of affiliated underwriting agencies/insurance
intermediaries and the optimal utilization of reinsurance protection. These
strategies have helped produce increased operating profits in recent years
despite challenging market conditions. The ratings also acknowledge HCC`s
near-term earnings prospects and its strong position in the specialty admitted
and non-admitted markets.

Financial leverage at HCC Holdings as of June 30, 2009 remained relatively low,
as evidenced by a total debt-to-capital ratio of 13.4%. Furthermore, interest
coverage continues to be exceptionally strong. For liquidity purposes, a $575
million revolving credit facility is maintained. As of July 31, 2009, the
outstanding balance on the credit facility was $320 million leaving $255 million
of capacity available to HCC Holdings.

HCC Life is a market leader in the medical stop-loss insurance industry, while
Perico is active in writing smaller case size stop-loss coverage. Although the
cyclical medical stop-loss business continues to be in the soft part of the
underwriting cycle, A.M. Best expects both HCC Life and Perico to continue
generating favorable earnings due to their disciplined underwriting approach.

For a complete listing of HCC Insurance Holdings, Inc. and its subsidiaries`
FSRs, ICRs and debt ratings, please visit www.ambest.com/press/082702hcc.pdf.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
David S. Blades, CPCU-P/C, 908-439-2200, ext. 5422
david.blades@ambest.com
or
Thomas Zitelli-L/H, 908-439-2200, ext. 5412
thomas.zitelli@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009