HCC REPORTS STRONG SECOND QUARTER
AND FIRST SIX MONTHS 2004 RESULTS

HOUSTON (August 3, 2004) . . .
HCC Insurance Holdings, Inc. (NYSE symbol: HCC) today released earnings for the second quarter of 2004.

Net earnings increased substantially during the second quarter of 2004, rising 41% to $46.4 million from $33.0 million and diluted earnings per share grew 37% to $0.71 from $0.52, both compared to the same period in 2003. Net earnings increased significantly during the first six months of 2004, rising 60% to $91.0 million compared to $56.7 million and diluted earnings per share grew 56% to $1.39 from $0.89, both compared to the first six months of 2003.

Stephen L. Way, Chairman and Chief Executive Officer, commenting on the results said, “The Company’s record second quarter 2004 earnings are as a result of the continuing bottom line improvement across all of our reporting segments. We continue to outperform our peers and barring any major catastrophe loss, expect earnings to continue to grow through 2005.”

Total revenue grew substantially during the first six months of 2004, rising 36% to $595.3 million from $437.8 million in the corresponding period in 2003. Revenue continues to increase strongly across all of the Company’s reporting segments.

Net earned premium of the Company’s insurance company subsidiaries continues to grow substantially, rising by 36% to $469.1 million during the first six months of 2004 compared to $345.9 million in the first half of 2003. During the same period net written premium increased by 23% to $544.8 million from $443.6 million. These record levels were achieved as a result of strong growth in new business, increased retentions and higher rates in some lines of business.

The GAAP combined ratio of the Company’s insurance company subsidiaries was 85.0% for the first six months of 2004 compared to 88.9% in the corresponding period of 2003. Mr. Way added, “This continuing strong underwriting performance was achieved while keeping our loss reserves at very conservative levels, well above the mid-point of the actuarial range. We expect earned premium growth with this level of underwriting success to continue into 2005.”

Management fee and commission income increased significantly during the first six months of 2004 rising 41% to $89.9 million, from $63.7 million in the first half of 2003. These increased revenues came from new business and an acquisition made in 2003.

Net investment income increased by 29% in the first half of 2004 to $29.4 million compared to $22.9 million in the corresponding period in 2003. This growth was due to increased investment assets, which grew 18% from year-end 2003. The Company maintains a very short duration investment portfolio of fixed income securities and therefore, the negative effect of rising interest rates and the resulting unrealized loss in value of those securities has a much reduced effect on the Company’s shareholders’ equity. Conversely, if rates continue to rise, this will provide the Company with opportunities to rapidly extend durations and allow investment income to continue to grow substantially.

As of June 30, 2004, total investments surpassed $2.0 billion for the first time in the Company’s history; total assets were $5.3 billion; book value per share increased 7% to $17.46 despite a $0.22 per share reduction in unrealized investment gains from the Company’s fixed-income investment portfolio; and the Company’s debt to total capital ratio reduced to 22.2%; all compared to December 31, 2003. See attached tables.

HCC will hold an open conference call beginning at 4:00 p.m. (CDT) on Tuesday, August 3, to discuss these results. To participate, the number for domestic calls is (888) 806-9459 and the number for international calls is (703) 871-3093. In addition, there will be a live webcast available on a listen-only basis that can be accessed through the HCC website at www.hcch.com. A replay of the webcast will be available on the website until Tuesday, August 10, 2004.

HCC is an international insurance holding company and a leading specialty insurance group since 1974, based in Houston, Texas with offices across the USA and in Bermuda, England and Spain. HCC has assets of $5.3 billion, shareholders’ equity of over $1.1 billion and is rated AA (Very Strong) by Standard & Poor’s and A+ (Superior) by A.M. Best Company.

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