Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

HCC Holdings to boost reserves citing losses in financial products business

Reprints

HOUSTON—HCC Holdings Inc. said it expects to report a net increase to loss reserves of $27.5 million when it releases its third-quarter earnings Tuesday, primarily because of losses in its diversified financial products business.

The Houston-based insurer said the $27.5 million reserve increase is because of increased 2011 accident-year loss ratios that generated $28.2 million in pretax losses. Virtually all of the adverse 2011 accident-year results relate to the company's diversified financial products professional liability segment, which includes coverage of private equity managers, hedge fund managers and investment managers.

The company said reserve development was slightly favorable with net favorable reserve development in its directors and officers liability business offsetting the adverse development in the diversified financial products line of business.

In a statement, HCC CEO John N. Molbeck Jr. said the insurer’s diversified financial products line of business “has been adversely impacted by continued depressed economic conditions and unfavorable litigation expense trends. The strengthening of reserves is primarily related to revised assumptions with respect to claims frequency and severity in the 2009-2011 accident years. We have taken immediate actions to improve performance, including re-underwriting the entire book of business.”

Mr. Molbeck said the insurer’s fundamentals “remain strong” and its U.S. and international directors and officers business has performed well and continues to “develop favorably.”

The company, which also reported $34.6 million in pretax catastrophe losses for the quarter, said it expects to report pretax third-quarter earnings of about $83 million, a decline from $132 million a year ago.