HCC Insurance Holdings Inc.HCC

Morningstar Rating

Stock Research and Analysis

by Drew Woodbury

Specialty insurance underwriter HCC attempts to create value through an opportunistic underwriting approach. The company waits for other insurers to suffer losses in a particular insurance line before entering, benefiting from their mistakes. This strategy, Read more

Bulls Say

HCC has demonstrated the foresight to enter and exit lines when pricing is the most profitable.

Management has decided to exit all equity investments to reduce volatility in the firm's investment portfolio. The firm uses its portfolio for capital preservation in order to focus on its insurance underwriting.

A smart acquisition strategy helps the company buy insurance underwriters and agencies at a discount. Read more

Bears Say

Given the importance of management's discretion to properly allocate capital, recent management shakeups may have disrupted the business.

HCC's acquisition-centric business model adds overpayment and integration risks.

The company has a fairly large exposure to municipal bonds through its investment portfolio. These securities have been under stress and may be subject to write-downs. Read more

Strategy

HCC runs a decentralized operating structure and seeks to selectively write insurance when it is the most profitable. Underwriters have the incentive to manage their own book of business with an eye Read more

Management

Over recent years, the ranks of corporate executives at HCC have been in flux. The company's founder (and CEO at the time) was forced to resign from his executive role in 2006 in the midst of a stock option backdating scandal. He was replaced by CEO Read more

Profile

Formed in 1974, HCC Insurance Holdings is a Texas-based specialty insurance company with operations in Bermuda, Spain, and the United Kingdom. HCC's subsidiaries include Read more

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