Oct 1 (Reuters) - CHICAGO, October 01 (Fitch) Fitch Ratings has affirmed the ratings of HCC Insurance Holdings, Inc. (NYSE: HCC), including the senior debt rating at 'A', as well as the Insurer Financial Strength (IFS) ratings of its operating subsidiaries at 'AA'. The Rating Outlook is Stable. See below for a complete listing of all ratings. The ratings reflect HCC's favorable niche in the specialty insurance markets, solid capitalization, disciplined underwriting, moderate financial leverage, and conservative reserving practices. The ratings also reflect the company's catastrophe risk, which increases the volatility of its underwriting results. Fitch views HCC's capitalization as solid, based on its net written premiums to surplus ratio of 1.0 as of year-end 2011. The company's GAAP equity increased by 2% to $3.3 billion as of June 30, 2012, as earnings and unrealized investment gains were offset by share repurchase activity. HCC continues to report favorable underwriting results with a GAAP combined ratio of 85% for first half 2012, which includes 1.1 percentage points of catastrophe related losses. This compares with a 91.9% combined ratio, including 6.9 points of catastrophe losses and 2.1 points of adverse reserve development for first half 2011. Underwriting actions taken at the end of 2011 appear to have been sufficient with no reserve development during first half 2012. The company's property treaty book produces increased underwriting volatility, due to the catastrophe risk associated with this line. Additionally, continued growth of longer-tail product lines could lead to greater reserve volatility, both of which could adversely affect ratings. HCC's financial leverage ratio remains modest at 16%. Continued share repurchase activity and/or modestly sized acquisitions could lead to periodic increases in financial leverage; however, Fitch expects run rate leverage to remain below 20%. The company maintained solid operating earnings-based interest coverage at 19.6 times (x) as of June 30, 2012. Fitch views a rating upgrade as unlikely, given HCC's size and limited resources in comparison to its rated peer group. Key rating triggers that could lead to a downgrade include: --Significant and sustained deterioration in underwriting results or significantly higher volatility; --Materially adverse reserve development; --Long-term debt-to-total-capital ratio (ex-unrealized gains and losses) that exceeds 20%; --GAAP operating earnings-based interest coverage that falls below 12x for a sustained period; --Meaningful deterioration in capitalization, such as operating and net leverage that exceeds 1.1x and 3.4x, respectively; or --A significant decline in the property/casualty or life companies' risk-based capital ratio. Fitch has affirmed the following ratings with a Stable Outlook: HCC Insurance Holdings, Inc. --IDR at 'A+'; --$300 million 6.3% senior notes due Nov. 15, 2019 at 'A'; --Senior shelf registration at 'A'. Houston Casualty Company Avemco Insurance Company HCC Life Insurance Company HCC Specialty Insurance Company U.S. Specialty Insurance Company Perico Life Insurance Company American Contractors Indemnity Company United States Surety Company --IFS ratings at 'AA'.