Profile: HCC Insurance Holdings Inc (HCC.N)
7 Mar 2014
HCC Insurance Holdings, Inc. (HCC) is a specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland. The Company underwrites a variety of relatively non-correlated specialty insurance products, including property and casualty, accident and health, surety, credit and aviation product lines, in approximately 180 countries. HCC markets its products through a network of independent agents and brokers, producers, managing general agents and directly to consumers. Its businesses are managed through five underwriting segments and HCC’s Investing segment. Its underwriting segments are U.S. Property & Casualty, Professional Liability, Accident & Health, U.S. Surety & Credit and International. In January 2012, the Company merged its wholly owned subsidiaries Pioneer General Insurance Company with and into American Contractors Indemnity Company.
U.S. Property & Casualty Segment
The Company’s U.S. Property & Casualty segment includes specialty lines of insurance, such as aviation, small account errors and omissions liability (E&O), public risk, contingency, disability, title and mortgage reinsurance, residual value, employment practices liability (EPLI), technical property, primary and excess casualty, and brown water marine written in the United States. The majority of the business is primary coverage, and claims are reported and settled on a short to medium-term basis. The aviation, public risk and technical property lines are exposed to natural peril and other catastrophic occurrences. A portion of its aviation business is written on a direct to consumer basis. In the United States, the Company provides customized coverage's for both private and commercial aircraft operators, excluding major United States airlines. Private coverage includes planes ranging in size from small single-engine aircraft to executive jets. With its commercial and special risk products, HCC provides coverage for risks, such as air ambulances, vintage war birds, air races and rotor wing aircraft. It also writes aviation business internationally, including accounts, such as national armed forces, law enforcement agencies and regional airlines.
The Company’s E&O business consists of policies with low limits ($5.0 million or less). It provides E&O coverage to more than 100 classes of professional service providers, of which architects, engineers and related construction practices represent the largest concentration of insured professionals. The Company does not write a material amount of E&O coverage for the legal, medical or accounting professions. Its E&O business is produced through both wholesale and specialty retail brokers and is underwritten on both an admitted and surplus lines basis. HCC provides insurance coverage and associated risk management services to municipal entities and special districts, mainly serving populations of less than 50,000 in the United States. The Company provides weather insurance and event cancellation, covering events, such as collegiate championships, All-Star Games and musical concerts. It writes large limits (greater than $10.0 million) and purchase proportional and excess of loss reinsurance to manage its contingency exposures. It also writes kidnap and ransom insurance, providing coverage worldwide. In addition, it is an underwriter of specialty disability products, providing coverage of irreplaceable human assets, such as high profile athletes, entertainers and business executives.
Professional Liability Segment
The Company’s Professional Liability segment primarily consists of its directors’ and officers’ (D&O) liability business. In addition, it writes related professional liability and crime business coverage's, including large account E&O liability, fiduciary liability, fidelity and bankers blanket bonds and EPLI for some D&O policyholders. The business is written for both the United States-based and International-based policyholders from its offices in the United States, the United Kingdom and Spain. It writes both primary and excess policies for public and private companies. Its policies cover a number of commercial classes and financial institution classes, which include investment banks, depository institutions, insurance companies and brokers and investment advisors.
Accident & Health Segment
The Company’s Accident & Health segment includes medical stop-loss, short-term domestic and international medical, Health Maintenance Organizations (HMO) reinsurance and medical excess coverage's, which are written in the United States. Medical stop-loss insurance provides protection for catastrophic losses to employers that self-fund their employee benefit plans. The Company delivers this insurance to employers through insurance brokers, consultants and third party administrators. Its underwriting offices are located throughout the United States. HMO reinsurance is coverage for high severity claims incurred by HMO’s. There are over 400 licensed HMOs in the United States, and HMO reinsurance is distributed through a network of consultants and brokers working directly with these organizations. International travel accident coverage provides health insurance to travelers while outside the jurisdiction of their primary medical insurance coverage. The products are purchased through an Internet portal accessed by brokers, consultants and individuals. In addition, it offers products for foreign nationals seeking citizenship in the United States and American expatriates stationed worldwide.
U.S. Surety & Credit Segment
HCC’s U.S. Surety & Credit segment conducts business through separate specialty surety underwriting operations and credit underwriting operations. Its surety business includes contract surety bonds, commercial surety bonds and bail bonds. Large Commercial Surety business is typically received from a number of independent agents specializing in these coverage's or from specialized units of brokerage companies. The credit insurance business provides insurance policies insuring payment for export trade transactions, as well as structured trade transactions. Political risk insurance is also provided, as well as insurance for letters of credit being honored.
The Company’s International segment includes energy, property treaty, liability, surety, credit, property (direct and facultative), ocean marine, accident and health and other product lines written from operations in the United Kingdom, Spain and Ireland. A large part of the business is written from its London operations and some of that business is referred to in the insurance industry as a London Market Account. The business is written through both its insurance company operations and the Company’s Lloyd’s syndicate and is primarily received from the worldwide insurance brokerage companies. The energy, property treaty and property lines are exposed to natural peril and other catastrophic occurrences.
The Company provides coverage for insureds involved in all areas of energy, ranging from upstream exploration and production, through midstream storage and transmission, to downstream refining and petrochemical activities. Offshore risks include drilling rigs, production and gathering platforms, and pipelines. HCC underwrites physical damage, liability, business interruption and various ancillary coverage's. Claims for this business are reported and settled on a medium-term basis. The Company provides reinsurance to a variety of clients worldwide, offering coverage on a range of products, including property catastrophe treaty, property risk and engineering treaty, and property terrorism treaty in the United States and internationally. Its liability lines include the United Kingdom professional indemnity and the United Kingdom employers’ liability and public liability coverage's. Professional indemnity coverage's are focused on small and medium size enterprises and cover a range of professions. The employers’ liability and public liability line provides coverage on both a primary and excess basis for a range of professions.
HCC’s surety business specializes in performance bonds for construction companies and also writes customs bonds, pension bonds, environment bonds and auctioneer’s bonds in the United Kingdom and Ireland. The business is written directly with the client or through insurance brokers. Its credit business is written through the United Kingdom specialist broker market with a focus on the construction sector. The Company writes direct and facultative all risks property coverage, often with catastrophe exposure, for a number of classes, including manufacturing, retail, real estate, hotels and municipalities, with a focus on excess of loss attachment. It provides coverage for both physical damage and business interruption on a worldwide basis to companies ranging in size from small to multinational. The Company also writes all risks insurance for ocean-going vessels, as well as port authority and marine properties worldwide.
The Investing segment includes the Company’s consolidated investment portfolio, as well as the results from these investments, including investment income, investment related expenses, realized investment gains and losses, and other-than-temporary impairment credit losses on investments. As of December 31, 2011, the Company held a commercial mortgage-backed securities portfolio.
HCC Insurance Holdings Inc
13403 Northwest Freeway
HOUSTON TX 77040