HOUSTON—Widespread and growing probes into U.S. companies' stock options practices last week claimed another longtime insurance industry executive.

Stephen L. Way, founder and chief executive of HCC Insurance Holdings Inc., resigned after an independent probe uncovered improper stock option granting practices by the company, whose units write various lines including aviation, directors and officers liability, and accident and health.

The probe—conducted by an audit committee of HCC's board of directors; law firm Skadden, Arps, Slate, Meagher & Flom L.L.P.; and forensic accountants LECG L.L.C.—found that HCC "used incorrect measurement dates for certain stock option grants covering a significant number of employees during the period from 1995 through 2006," HCC said in a statement.

Corrections for the errors will likely cost Houston-based HCC no more than $37 million pretax, HCC said. Whether a restatement of previously filing earnings is necessary has yet to be determined, it noted.

Mr. Way, who founded HCC in 1974, is credited with taking the company public in 1992 and growing the company's assets from $162 million to more than $7 billion, among other things. Under the terms of his resignation, effective last week, Mr. Way will continue as a director of the company and serve as nonexecutive chairman of the board.

Replacing Mr. Way as chief executive officer is Frank J. Bramanti, an HCC board member since 1980 and former chief financial officer and interim president at the company.

HCC also announced the resignation of Chris L. Martin, executive vp and general counsel.

Both Messrs. Way and Martin agreed to pay HCC the difference between the initial strike price and the closing price on new measurement dates for options they exercised that were incorrectly priced.

HCC said it intends to continue cooperating with the Securities and Exchange Commission regarding the agency's informal inquiry into this matter.

Following HCC's announcement, New York-based Standard & Poor's Corp. said it would keep the company's AA financial strength rating on HCC's principal insurance unit, Houston Casualty Insurance Group.

Oldwick, N.J.-based A.M. Best Co. Inc., though, placed its A+ financial strength ratings on various HCC property/casualty units under review with negative implications.