HCC REPORTS RECORD FIRST QUARTER 2004 RESULTS

HOUSTON (May 04, 2004) . . .
HCC Insurance Holdings, Inc. (NYSE symbol: HCC) today released earnings for the first quarter of 2004.

Net earnings increased significantly for the first quarter of 2004 to $44.6 million, or $0.68 per diluted share, from $23.8 million, or $0.38 per diluted share, for the same period of 2003*.

Stephen L. Way, Chairman and Chief Executive Officer, said, “Our first quarter results reflect the growth and continuing strong margins from all reporting segments in line with our 2004 business plan, and we anticipate achieving results near the top end of the range of the earnings guidance previously provided.”

Total revenue grew 39% during the first quarter of 2004 to $278.0 million compared to the first quarter of 2003. As last year, this increase was primarily due to the growth in our insurance company subsidiaries’ earned premium, as market conditions in our specialty lines continue to be very strong. As we predicted last year, fee and commission revenue also grew substantially, as did investment income. Overall revenue is expected to continue to increase for the rest of this year and into 2005.

Gross written premium of our insurance company subsidiaries increased 21% to $459.6 million during the first quarter of 2004 compared to the corresponding quarter of 2003. During the same period, net written premium increased by 23% to $236.0 million and net earned premium increased by 34% percent to $217.1 million. This growth over last year’s record levels was achieved as a result of generally increased retentions and strong growth in our Diversified Financial Products line of business. We expect this premium growth to continue.

The GAAP combined ratio for the first three months of 2004 was 83.3% compared to 88.8% in the corresponding period of 2003 and 91.0% for the full year of 2003.

Mr. Way added, “Our recently affirmed S&P rating of AA (Very Strong) already gives us a competitive advantage, particularly on longer tail business, and as we move into the maintenance stage of the insurance cycle, we believe our superior underwriting skills will further differentiate our results from those of our peers.”

Fee and commission income increased substantially during the first quarter of 2004 to $43.8 million from $25.7 million during the same period in 2003*. This growth was fueled by strong performances at most of our underwriting agencies and intermediary subsidiaries.

Net investment income continues to increase rapidly, growing 31% in the first quarter of 2004 to $14.4 million compared to the first quarter of 2003. Increased investment assets, a result of
strong cash flow from operations and increased loss reserves as we retain more of our business, have fueled this increase and we anticipate this growth continuing for the rest of this year and into 2005.

As of March 31, 2004, total investments increased to $1.93 billion, total assets exceeded $5.0 billion for the first time, book value per share increased to $17.12 and the Company’s debt to total capital ratio was 22.0%. See attached tables.

HCC will hold an open conference call beginning at 4:00 p.m. Central Time on Tuesday, May 4. To participate, the number for domestic calls is (888) 243-0813 and the number for international calls is (703) 925-2400. 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, May 11, 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 is traded on the NYSE (symbol: HCC), has assets exceeding $5.0 billion and is rated AA (Very Strong) by Standard & Poor’s and A+ (Superior) by A. M. Best Company.

* For comparative purposes, it should be noted that the 2003 net income includes $0.02 per diluted share for discontinued operations following the sale of a subsidiary, but is after $0.06 per diluted share charge for the cumulative effect of the fourth quarter 2003 restatement to change certain accounting for fee and commission income. This change also decreased fee and commission income by $6.5 million during the first quarter of 2003.

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