‘AA’ Ratings for HCC Subs

Standard & Poor’s Ratings Services assigned its “AA” counterparty credit and financial strength ratings to HCC Specialty Insurance Co. (HCC Specialty) and HCC Life Insurance Co. (HCC Life). Also affirmed were “A” counterparty credit and senior debt ratings on HCC Insurance Holdings Inc. (HCC). At the same time, S&P affirmed its “AA” counterparty credit and financial strength ratings on three HCC subsidiaries: Houston Casualty Co., Avemco Insurance Co., and US Specialty Insurance Co. The outlook for all is stable.

S&P’s credit analyst Laline Carvalho said HCC has a strong business profile and operating performance, very strong capitalization, and good financial flexibility, all of which were reflected in the ratings. Somewhat negative factors include: “increased balance sheet risk and greater utilization of capital at the operating level (as the group increases net retention), relatively high reinsurance recoverable risk, and significant appetite for acquisitions.”

The ratings on HCC Life and HCC Specialty are based on S&P’s view that they are core to HCC. HCC Life is HCC’s major underwriting platform for medical stop loss business, while HCC Specialty is a new Oklahoma-based subsidiary formed to write excess and surplus lines business in Texas, HCC’s home-base state.

HCC’s operating performance is expected to remain strong, with the GAAP consolidated combined ratio in the 90 percent-92 percent range in 2002 and 2003. Capital adequacy is expected to remain at about 150 percent.

Topics Excess Surplus