HCC INSURANCE HOLDINGS REPORTS RESULTS
FOR SECOND QUARTER AND FIRST HALF OF 2008

HOUSTON (August 5, 2008) . . .
HCC Insurance Holdings, Inc. (NYSE: HCC) today released earnings for the second quarter and first half of 2008, which ended June 30.

Net earnings for the second quarter of 2008 were $92.3 million, compared with $101.2 million during the second quarter of 2007. Net earnings per diluted share were $0.80 for the second quarter of 2008, compared to $0.86 in the same quarter of 2007. Net earnings for the first six months of 2008 were $173.4 million, versus $197.9 million for the first half of the previous year. Net earnings per diluted share were $1.49 for the first six months of 2008, versus $1.69 for the first half of 2007. These reductions were directly related to losses from HCC’s trading securities, lower alternative investment returns and lower gains from the sales of strategic investments in 2008 than in 2007.

The GAAP combined ratio for the first six months of 2008 was 83.9 percent, compared to 84.0 percent for the corresponding period of 2007.

“We are very pleased with our second quarter and first half results, given the current soft market environment. The results are consistent with our 2008 guidance issued in February 2008. Our combined ratio remains below 85 percent, our target for 2008. We remain a focused underwriting organization that continues to execute its soft market plan of disciplined underwriting in order to maximize underwriting profits,” HCC Chief Executive Officer Frank J. Bramanti said.

HCC’s Board of Directors authorized a $100.0 million share repurchase on June 20, 2008. The Company repurchased 1.1 million shares for a total of $21.9 million through July 31, 2008. HCC plans to continue to opportunistically repurchase its shares, if they trade at a discount to book value, as part of its philosophy of building long-term shareholder value.

Book value per share increased to $22.19 at June 30, 2008, up five percent since December 31, 2007. The Company’s annualized return on average equity for the second quarter of 2008 was 14.5 percent.

Total revenue of $593.9 million in the second quarter of 2008 was essentially flat, compared with $594.3 million in the same quarter of 2007. Total revenue was $1.2 billion for the first halves of 2008 and 2007.

Net earned premium of HCC’s insurance company subsidiaries was $506.6 million, up two percent in the second quarter of 2008, compared with $494.4 million in the same quarter of 2007. During the 2008 second quarter, net written premium increased six percent to $567.2 million, while gross written premium increased four percent to $691.6 million, compared to the second quarter of 2007.

Net earned premium of HCC’s insurance company subsidiaries was $1.0 billion, up one percent for the first six months of 2008. During the first half of 2008, net written premium increased three percent to $1.1 billion, while gross written premium increased one percent to $1.3 billion, compared to the first half of 2007.

“We continue to see opportunities to profitably expand our premium base. We have recently begun two new underwriting operations that will further allow us to expand our footprint in the insurance industry and build for the future,” Mr. Bramanti said.

During the second quarter of 2008, HCC had net positive reserve development of $9.3 million compared to net adverse development of $3.4 million in 2007. For the first six months of 2008, the Company recorded $14.4 million of net positive reserve development, compared to net adverse development of $3.6 million for 2007.

Fee and commission income was relatively flat at $61.8 million in the first half of 2008, compared to $63.3 million in the same period of 2007.

Investment income decreased slightly during 2008, compared to 2007. This was caused by investment performance from alternative investments which resulted in a loss of $1.2 million for the second quarter of 2008, versus income of $5.0 million for the second quarter of 2007, and a loss of $2.4 million for the first half of 2008, compared to income of $12.6 million for the first half of 2007. Excluding income and losses from alternative investments, HCC’s remaining investments generated $48.4 million in investment income in the 2008 second quarter, versus $43.7 million in the 2007 second quarter and $97.3 million for the first half of 2008, compared to $85.6 million for the first half of 2007, as the Company’s fixed income and short-term investments increased 11 percent from June 30, 2007 to $4.6 billion at June 30, 2008.

As of June 30, 2008, HCC’s fixed income securities portfolio had an average rating of AA+, an average duration of 5.0 years and an average tax equivalent yield of 5.3 percent. The Company held $13.2 million of subprime-related and Alt-A securities, which had an average rating of AAA, and owned no CDO or CLO securities.

“We continue to closely monitor our investment portfolio and have eliminated a few headline risk assets. Our alternative investment portfolio continues to underperform in the short run compared to our expectations; however, we believe in the long-term results of this asset class,” Mr. Bramanti said. “We remain pleased with the overall performance of our investment portfolio and believe our high quality, low risk approach will continue to differentiate HCC from the market.”

Other operating income was $10.9 million for the 2008 second quarter, compared to $20.1 million for the same period in 2007. The difference in second quarter results was principally due to losses on the Company’s trading portfolio, versus gains in 2007. Other operating income was $6.0 million for the first half of 2008, compared to $38.7 million for the same period in 2007. Trading gains were $8.3 million in 2007, compared to losses of $11.7 million in 2008. In addition, gains on sales of strategic investments were $21.6 million in 2007, compared to $9.2 million in 2008. HCC’s 2008 guidance assumed other operating income of approximately $3.3 million per quarter, excluding the effects of any trading portfolio activity or sales of strategic investments.

As of June 30, 2008, total investments increased to $4.8 billion, total assets were $8.3 billion, shareholders’ equity was $2.6 billion and the Company’s debt to total capital ratio remained very conservative at 12.6 percent.

See attached tables for further information about HCC’s quarter and year to-date financial results.

HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, August 6. To participate, the number for domestic calls is (800) 374-0290 and the number for international calls is (706) 634-1303. In addition, there will be a live webcast available on a listen-only basis that can be accessed through the HCC website at www.hcc.com. A replay of the webcast will be available on the website until Tuesday, August 19, 2008.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. (HCC) is a leading international specialty insurance group with offices across the United States and in Belgium, Bermuda, Ireland, Spain and the United Kingdom. HCC has assets of $8.3 billion, shareholders’ equity of $2.6 billion and is rated AA (Very Strong) by Standard & Poor’s and AA (Very Strong) by Fitch Ratings. In addition, HCC’s major domestic insurance companies are rated A+ (Superior) by A.M. Best Company.

For more information, visit our website at www.hcc.com.

©2005 HCC Insurance Holdings, Inc.