Two specialty insurance groups–Houston-based HCC Insurance Holdings and Farmington, Conn.-based Darwin Professional Underwriters–reported big jumps in second-quarter earnings last night, with both underwriting profits and investment income contributing to each group's results.
Both organizations said the bottom-line figures represented record second-quarter numbers for their companies.
For HCC, a specialty group that consists of both underwriting and agency operations, second-quarter net income compared to the same period last year rose 13 percent, or $12.1 million, to $101.2 million, or 86 cents per share, marking the first time in its history that HCC reported quarterly earnings over the $100 million mark.
HCC's net income also increased significantly during the first six months of 2007, rising 18 percent to $197.9 million from $168.3 million. On a per-share basis, the first-half earnings were $1.69 per share, compared with $1.44 per share for the first six months of 2006.
At Darwin, a group of specialty insurers focused on writing directors and officers liability insurance, errors and omissions coverage, and medical malpractice liability insurance, net income more than doubled for both the quarter and six-month periods.
Second-quarter net income rose 130 percent, or $4.4 million, to $7.8 million, or 45 cents per share compared with the same period last year. The per-share value increased 10 cents.
In the first half of 2007, Darwin reported net income of $13 million, or 76 cents per share, compared with $6.2 million, or 37 cents per share in 2006.
Contributing to Darwin's growth in net income for the quarter were improved underwriting profitability–evidenced by a nearly 14-point decline in the combined ratio to 82.7 from 96.3–and a jump in net investment income of 43 percent to $7.9 million.
At HCC, investment income increased 35 percent to $48.7 million, while the combined ratio increased a bit–to 83.9 from 83 for the quarter.
Both specialists reported double-digit growth in gross and net premiums.
At HCC, a 14 percent increase in gross premiums and 10 percent jump in net was primarily driven by a 48 percent growth in the group's group life, accident and health book. Net premiums in total were $533.8 million, with the accident-health book contributing $191.5 million.
For diversified financial products, which include the surety line, HCC reported a similar volume of business–$207.9 million for the quarter–but a slight drop of 2 percent from the prior-year second quarter.
HCC reported a mixed bag of growth and declines in net premium for the smaller segments making up the remainder of its book: aviation plummeted 30 percent to $38.2 million; other specialty rose 35 percent to $47.4 million; and London market business fell 6 percent to $48.9 million.
At Darwin, gross written premiums grew 13 percent overall to $65.9 million, with its biggest segment, errors & omissions, exhibiting a 29 percent jump to $31.6 million. In addition, Darwin's gross premiums for directors & officers fell 7 percent to $11.2 million, while medical malpractice premiums had roughly the same percentage jump, rising to $23.1 million.
On a net-of-reinsurance basis, premiums jumped nearly 35 percent to $49 million in the second quarter.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.