2009-11-11 16:23:01 -

Fitch Ratings has assigned an 'A' rating to HCC Insurance Holdings, Inc.

(NYSE: HCC) new issue of $300 million 6.3% senior unsecured notes due Nov. 15, 2019. The rating is equivalent to the rating on HCC's existing senior debt. The Rating Outlook is Stable.

HCC intends to use the net proceeds of the issuance to repay outstanding indebtedness under its revolving

loan facility. The facility expires on Dec. 19, 2011, and the outstanding balance was $320 million as of Sept.

30, 2009.

Following the new debt issuance, HCC's debt-to-total capital ratio will remain unchanged at 13%. Although operating-earnings based interest coverage will decline due to higher interest expense, Fitch expects coverage to remain strong at above 15 times. Also, Fitch views the additional flexibility provided by the new debt to be an improvement to HCC's capital structure and liquidity.

Fitch's current ratings on HCC reflect the company's leading market position in a number of narrowly defined, non-correlated specialty insurance segments, solid capital position at its insurance subsidiaries and low financial leverage at the holding company, conservative investment profile, strong underwriting results and adequate loss reserves.

HCC's GAAP equity increased 8% during 2008 and 13% through Sept. 30, 2009, which is primarily due to strong underwriting results and minimal investment losses. Through Sept. 30, 2009, HCC reported a GAAP combined ratio of 84.6%, which included 2.4 points of favorable loss reserve development.

Fitch notes that any topics that are covered in its criteria reports not specifically mentioned above are considered neutral to the rating as of the date of this publication.

Fitch assigns the following rating with a Stable Outlook to HCC Insurance Holdings, Inc..

--$300 million 6.3% senior debt due Nov. 15, 2019 'A'.

Fitch currently rates HCC Insurance Holdings, Inc. and its insurance subsidiaries as follows.

--Issuer Default Rating 'A+';

--$125 million 1.3% convertible notes due April 1, 2023 'A'.

Houston Casualty Company


Avemco Insurance Company


HCC Life Insurance Company


HCC Specialty Insurance Company


U.S. Specialty Insurance Company


Perico Life Insurance Company


HCC Insurance Company


American Contractors Indemnity Company


United States Surety Company


--Insurer Financial Strength 'AA'.

The Rating Outlook is Stable.

Additional information is available at www.fitchratings.com : .

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Fitch Ratings, ChicagoDafina M. Dunmore, CFA, +1-312-368-3136James
B. Auden, CFA, +1-312-368-3146Media Relations, New YorkBrian
Bertsch, +1-212-908-0549 brian.bertsch@fitchratings.com : mailto:brian.bertsch@fitchratings.com