HCC Insurance sees tough 2009
BANGALORE (Reuters) - HCC Insurance Holdings Inc (HCC.N) sees a tough 2009 as insurers cut prices to win new business, putting pressure on their revenue growth and margins.
The rate cuts have been especially pronounced in the United States, where insurers have recorded strong earnings over the past two years because of few large claims.
The rates U.S. insurers charge for some types of business coverage fell as much as 30 percent in the quarter, although catastrophe rates rose in some areas, according to a survey conducted by the Council of Insurance Agents and Brokers.
"The market is still soft and prices are still going down, Chief Executive Frank Bramanti said in a conference call. "I think that 2009 is going to be a tougher year for the industry than 2008 has been to date."
Bramanti said business could look up only if prices for renewal of insurance business hold steady or go up.
Analyst Dean Evans of Keefe, Bruyette & Woods said the insurance industry has been plagued by pricing pressure across the board.
However, he said fewer claims at HCC's insurance for directors and officers (D&O) segment should be viewed positively by the investment community.
According to Evans, HCC had only six new claims in the latest second quarter, compared with 41 in the first quarter and 15 in the fourth quarter, indicating a deceleration in trend.
Evans has an "outperform" rating on the stock.
The company on Tuesday reported second-quarter earnings that topped analysts' expectations, helped by a marginal growth in earned premiums.
Shares of the company were up 71 cents at $24.40 in morning trade on the New York Stock Exchange.
(Editing by Anil D'Silva)
