HCC ANNOUNCES RECORD 2006 RESULTS

HOUSTON (February 20, 2007) . . .
HCC Insurance Holdings, Inc. (NYSE symbol: HCC) today reported record results for the fourth quarter and year ended December 31, 2006.

Net earnings for the fourth quarter of 2006 increased 24% to $80.7 million, or $0.69 per diluted share, from $65.0 million, or $0.57 per diluted share, for the same period in 2005. Net earnings for the fourth quarter of 2006 were negatively affected $7.6 million, or $0.07 per diluted share, by costs related to the Company’s option investigation and $13.1 million, or $0.11 per diluted share, by a large reinsurance commutation recorded during the quarter.

Net earnings for all of 2006 increased 79% to $342.3 million, or $2.93 per diluted share, from $191.2 million, or $1.75 per diluted share, in 2005. Affecting the 2006 results were after-tax charges of $9.3 million, or $0.08 per diluted share, for costs related to the Company’s option investigation and $14.5 million, or $0.12 per diluted share, for reinsurance commutations.

Frank J. Bramanti, Chief Executive Officer of HCC, said, “We are extremely pleased with our 2006 results. Our employees continue to execute the business plan with superior ability and results.”

Total revenue for 2006 increased 26% to $2.1 billion compared to $1.6 billion in 2005, driven by significant increases in net earned premium and investment income. The Company anticipates continued revenue growth in 2007.

The Company’s 2006 net written premium increased 21% to $1.8 billion and net earned premium increased 25% to $1.7 billion. The premium growth is due to a reduction in ceded reinsurance, organic growth and recent acquisitions. The Company anticipates a continued rise in gross and net premium in 2007 due mainly to the effect of businesses acquired in 2006. The GAAP combined ratio improved from 93.2% to 84.2% for the full year 2006.

Fee and commission income increased in 2006 to $137.1 million from $132.6 million in 2005. The Company will continue to focus on expanding non-risk bearing revenue from its agency operations.

Cash flow from operating activities remained very strong in 2006, increasing to $653.4 million. This does not include $100 million of cash received in 2007 related to the 2006 commutation.

During 2006, net investment income grew 55% to $152.8 million due to substantially increased investment assets and higher interest rates. The Company’s investment strategy continues to be very conservative with a relatively short duration and highly rated portfolio, no high-yield low-rated bonds and few equity investments. Other operating income increased from $39.8 million in 2005 to $77.0 million in 2006.

As of December 31, 2006, total assets increased 9% to $7.6 billion; total investments increased 21% to $3.9 billion; shareholders’ equity increased 21% to $2.0 billion; and book value per share increased 20% to $18.28, all compared to December 31, 2005. Mr. Bramanti commented, “The results for 2006 were excellent as reflected by our 20% return on equity.”

See attached tables for additional financial information.

HCC will hold an open conference call beginning at 8:00 a.m. Central Time on Wednesday, February 21, 2007. 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 until Friday, March 9, 2007.

Headquartered in Houston, Texas, HCC is a leading international specialty insurance group with offices across the United States and in Bermuda, Spain, Ireland, and the United Kingdom. HCC has assets exceeding $7.5 billion, shareholders’ equity of over $2 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.hcc.com.

©2005 HCC Insurance Holdings, Inc.