HCC Insurance Holdings, Inc. today released results for its second quarter ended June 30, 2012.Net earnings were $93.5 million for the second quarter of 2012, compared to $69.5 million for the second quarter of 2011. Net earnings per diluted share were $0.92 for the second quarter of 2012, versus $0.61 for the same quarter of 2011. Net earnings were $176.1 million for the first six months of 2012, or $1.71 per diluted share, compared to $116.5 million, or $1.02 per diluted share, for the same period of 2011.
The 2012 results include pretax net catastrophe losses of $4.7 million and $12.3 million for the second quarter and first six months of 2012, respectively, which reduced net earnings by $0.03 and $0.08 per share in the respective periods. The 2011 results include pretax net catastrophe losses of $21.9 million and $73.3 million for the second quarter and first six months of 2011, respectively, from catastrophes in Japan, New Zealand, Australia and the United States, which reduced net earnings by $0.13 and $0.42 per share in the respective periods. Catastrophe losses added 0.9 and 1.1 percentage points to the Company's net loss ratio for the second quarter and first six months of 2012, respectively.
The Company's combined ratio was 84.9% for the second quarter of 2012, compared to 89.2% for the second quarter of 2011. The combined ratio was 85.0% for the first six months of 2012, versus 91.9% for the same period of 2011. HCC's paid loss ratio was 54.9% for the first half of 2012, compared to 61.5% for the same period of 2011.
Book value per share increased 3.0% for the second quarter of 2012 to $33.19 at June 30, 2012. HCC's annualized return on equity and annualized operating return on equity(a) were both 11.3% for the second quarter of 2012.
"We are obviously pleased with the quarter and the first six months of 2012. The pricing environment remains positive, margins attractive and Mother Nature, at least for the moment, calm," HCC Chief Executive Officer John N. Molbeck, Jr. said.
The Company repurchased 1.9 million shares of its common stock during the second quarter of 2012 for $59.5 million at an average cost of $31.17 per share.
HCC had no loss development in the second quarter of 2012, compared to net adverse loss development of $13.3 million for the same quarter of 2011, and no loss development in the first six months of 2012, versus net adverse loss development of $22.3 million in the same period of 2011.
Gross written premium increased 7% to $791.6 million for the second quarter of 2012, compared to $742.1 million for the same quarter of 2011. Net written premium increased 5% to $642.1 million for the second quarter of 2012, versus $609.9 million for the same quarter of 2011. Net earned premium increased 8% to $565.3 million for the second quarter of 2012, compared to $524.3 million for the same quarter of 2011.
Gross written premium increased 6% to $1.5 billion for the first six months of 2012, compared to $1.4 billion for the same period of 2011. Net written premium increased 5% to $1.2 billion for the first half of 2012, versus $1.1 billion for the same period of 2011. Net earned premium increased 8% to $1.1 billion for the first six months of 2012, compared to $1.0 billion for the same period of 2011.
Investment income increased to $53.3 million in the second quarter of 2012, compared to $52.4 million in the same period of 2011. Investment income increased to $110.3 million in the first six months of 2012, compared to $104.0 million in the same period of 2011. The Company's fixed maturity securities portfolio increased 9% to $6.1 billion at June 30, 2012, from $5.6 billion at June 30, 2011. The Company's total investments increased 10% to $6.4 billion at June 30, 2012, from $5.8 billion at June 30, 2011.
As of June 30, 2012, HCC's fixed maturity securities portfolio had an average rating of AA, with a duration of 4.5 years and an average long-term tax equivalent yield of 4.8%.
In the first half of 2012, the Company generated cash flow from operating activities of $244.6 million, compared to $121.8 million in the same period of 2011. The Company's liquidity position remains strong with $280.3 million of cash and short-term investments and $298.1 million of available capacity under its $600.0 million revolving loan facility at June 30, 2012.
As of June 30, 2012, total assets were $10.0 billion, shareholders' equity was $3.3 billion and the Company's debt to total capital ratio was 15.0%.
For further information about HCC's 2012 second quarter results, see the supplemental financial schedules that are accessible on HCC's website at http://www.hcc.com , as well as directly in the Investor Relations section of HCC's website at http://ir.hcc.com .