S&P affirms HCC Insurance

Standard & Poor's said it affirmed its A counterparty credit and senior debt ratings, A- subordinated debt and BBB+ preferred stock ratings on HCC Insurance Holdings Inc.

At the same time, S&P said it affirmed its AA financial strength ratings on the members of the Houston Casualty Insurance Group.

The outlook is stable.

The agency said that this affirmation follows the company's announcements on Dec. 19 that it had increased its revolving loan facility to $300 million from $200 million and on Dec. 20 that the company will amend its year-end 2005 and first-quarter 2006 financial statements to include aggregate pretax charges of about $30 million to correct past errors in its accounting for stock-based compensation.

The ratings on the company are based on the company's very strong competitive position in its target markets, exceptional operating performance, low financial leverage and strong coverage ratios and very strong operating company capitalization, S&P said, noting that partially offsetting these positive factors are increased balance-sheet risk as the group expands its business into longer-tail lines and increases its retentions, relatively high reinsurance recoverable risk and the integration risk associated with frequent smaller acquisitions.

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