HCC Life Insurance Company Company Overview A subsidiary of HCC Insurance Holdings, Inc. August 2011 HCC Overview • Specialty insurer since 1974 (NYSE: HCC) headquartered in Houston, TX • Non-correlated specialty lines of business underwritten in more than 180 countries: – Five segments: U.S. Property & Casualty, Professional Liability, Accident & Health, U.S. Surety & Credit and International – Offices in the U.S., U.K., Spain and Ireland • Financial Strength Ratings of “AA (Very Strong)” by Standard & Poor’s, “AA (Very Strong)” by Fitch Ratings, “A1 (Good Security)” by Moody’s, and “A+ (Superior)” by A.M. Best Company • Assets of $9.5 billion, shareholders’ equity of $3.3 billion and market capitalization of $3.6 billion as of June 30, 2011 2 HCC Insurance Holdings, Inc. Assets Gross Written Premium 10 8.83 9.1 4 8.07 8.33 7.63 8 3 2.45 2.50 2.56 2.58 ($ in billions) 2.24 ($ in billions) 6 2 4 1 2 0 0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Year Year Lines of Business 2010 Gross Written Premium • Accident & Health ($ in millions) • International U.S. Property & Casualty $538 • Professional Liability Accident & Health Professional $762 Liability $596 • U.S. Property & Casualty • U.S. Surety & Credit U.S. Surety & Credit International $227 $453 Total: $2,576 ($ in millions) Historical Performance Gross Written Premium ($ in millions) Net Written Premium ($ in millions) $4,000 $4,000 $3,000 $2,500 $2,560 $2,580 $3,000 $2,450 $2,240 $2,040 $1,990 $2,060 $2,050 $2,030 $2,000 $2,000 $1,810 $1,500 $1,000 $1,000 $0 $0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 GAAP Underwriting Ratios 85.1% 92.1% 82.9% 83.5% 84.0% 84.6% 84.0% 23.7% 23.9% 24.7% 24.3% 25.2% 24.3% 34.8% 59.2% 59.6% 60.4% 59.7% 59.4% 59.7% 57.3% 1 2006 2007 2008 2009 2010 5 year HCC 5 year peer average average Loss Ratio Expense Ratio 1 Peer group defined as AFG, AGII, CB, MKL, NAVG, ORI, RLI, TRV and WRB. Five-year peer average calculated by HCC as simple mean using SEC filings for peer companies. HCC Overview Peer Group Comparison – 2010 Combined Ratios 113 .1% 113 .7 % 111.4 % 10 6 .7 % 10 3 .2 % 10 2 .8 % 10 0 .7 % 10 1.1% 9 7 .6 % 9 9 .0 % 9 6 .2 % 9 7 .0 % 9 4 .7 % 9 3 .2 % 9 4 .5 % 8 8 .5 % 8 9 .5 % 8 4 .6 %8 5 .6 % 8 0 .7 % GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY GAAP AY Loss Ratio Net Positive Development Expense Ratio Note: Calculated by HCC using 12/31/10 SEC filings for peer companies. HCC Life Insurance Company (HCC Life) • Industry leader in Medical Stop Loss, HMO Reinsurance, and Medical Excess Reinsurance - HCC Life is one of the largest insurance providers in the self-funded marketplace - HCC Life’s Accident and Health Division provides coverage for more than 10 million lives • Rated A+ (Superior) by A.M. Best Company, AA (Very Strong) by Standard & Poor’s, and AA (Very Strong) by Fitch Ratings HCC Life Executive Management Craig Kelbel, President & CEO 34 years experience Mark Sanderford, Executive Vice President & CFO 26 years experience Dan Strusz, Executive Vice President 28 years experience Larry Stewart, Senior Vice President & CUO 22 years experience Suzi Johnson, Senior Vice President 37 years experience David Grider, Senior Vice President 20 years experience Jay Ritchie, Senior Vice President 19 years experience HCC Life Regional Offices Northeast Region Wakefield, MA Northwest Region Minnetonka, MN Southwest Region Dallas, TX Southeast Region Atlanta, GA Corporate Office West Region Scottsdale, AZ Regional Executives Region Name Phone Email Years* Northeast Mike Lee, Senior Vice President (781) 716-4885 firstname.lastname@example.org 30 Northwest Mike Holthaus, Senior Vice President (763) 486-1052 email@example.com 21 Southeast Mike Remeika, Senior Vice President (770) 693-6486 firstname.lastname@example.org 22 Southwest Jeff Petty, Senior Vice President (972) 381-4854 email@example.com 17 West Gary Hudgins, Regional Underwriting Manager (480) 278-7714 firstname.lastname@example.org 14 * Years of industry experience HCC Life Stop Loss Representatives Name Region Phone Email Tim Campbell, Vice President - Marketing Northeast (781) 716-4791 email@example.com Holgate Dean, Vice President - Marketing Southwest/West (714) 432-6572 firstname.lastname@example.org Peter Johnson, Vice President – Marketing Taft-Hartley (763) 486-1014 email@example.com Pam McGovern, Vice President - Marketing Northwest (763) 486-1012 firstname.lastname@example.org Gary Brown, Assistant Vice President - Marketing Southeast (314) 698-5329 email@example.com Val Flowers, Assistant Vice President - Marketing Southeast (770) 693-6491 firstname.lastname@example.org Bob Hosler, Assistant Vice President - Marketing Northwest (317) 696-7896 email@example.com Todd Marcoux, Assistant Vice President - Marketing Northeast (781) 716-4866 firstname.lastname@example.org Jim Miller, Assistant Vice President - Marketing Northwest (314) 698-5306 email@example.com Jim Reagan, Assistant Vice President - Marketing Southwest (512) 263-8155 firstname.lastname@example.org Chase Ambrosia, Regional Marketing Representative Northwest (763) 486-1048 email@example.com Shaun Johnson, Regional Marketing Representative Southeast (770) 693-6541 firstname.lastname@example.org Nichole Sivigny, Regional Marketing Representative Northwest (763) 486-1034 email@example.com Medical Stop Loss Options • Split-Funded Aggregate • Early Lock Down • Contract Advantage Plan (CAP) Value-Added Services • Specialty Claim Unit (SCU) – Ensures early case intervention for transplant and neo-natal claims in an effort to help reduce costs to the benefit plan and HCC Life. • Preliminary Claim Unit (PCU) – Receives early potential claim information via 50% notices, large case management reports and electronic pre-certs. • On-staff Medical Resources – 11 nurses on staff. • NetValue – Assists our clients in selecting the best managed care provider network in specific areas of operation. Medical Stop Loss Service Goals Claims 7……………….……… Average number of days to process complete claims Policy 5………………………. Days on average when policies were issued from the day complete information was received Underwriting 5………………………. Average number of days turnaround time for new business requests HCC Life Medical Stop Loss Advisory Board • Composed of HCC Life Insurance Company staff and producers from across the country • Generates potential product ideas and serves as a sounding board for current product improvement • Provides feedback on market trends and educational initiatives Why Choose HCC Life Medical Stop Loss? • Financial strength – Our products are backed by the financial resources and commitment of our parent company, HCC Insurance Holdings, Inc. – As a direct writer, HCC Life retains all of the stop loss financial risk. • Experience and expertise – HCC Life Insurance Company’s experience in stop loss spans more than 30 years. • Commitment to marketplace • Exceptional service – The professional and knowledgeable staff in marketing, underwriting, claims and administration helps clients find solutions to identify and manage their risk exposure. • Comprehensive, strong contract • Access to multiple transplant networks Why Choose HCC Life Medical Stop Loss? • Competitive rates – Continued analysis and research enables HCC Life to more accurately price products, leading to more competitive rates. • Advanced technology – Our proprietary medical stop loss administrative system increases communication capabilities across departments. We have also utilized Web-based applications and eliminated appointment forms in order to expedite time-critical communications between HCC Life and our producers. • Communications – We keep you updated with industry news and product promotions. • Regionalization – Regional offices have been strategically located to meet the unique needs of each region. • Easy access to key personnel Healthcare Risk Management (HCRM) Division • Located in Minnetonka, MN • Almost 30 years of experience providing HMO Reinsurance and Medical Excess Reinsurance solutions to HMOs and health insurers – HMO Reinsurance – Reinsurance for licensed HMOs or entities assuming risk and operating under government contracts. Target market is regionally focused HMOs from start-ups to 300,000 members. – Medical Excess Reinsurance – For insurance companies that offer medical coverage on either a fully insured or self-funded basis. HCRM Products Coverage Availability • Commercial • Medicare • Medicaid Product Overview • Specific coverage • Incurred contracts • Flexible attachment points • Flexible specific lifetime maximums • Contracts that clearly define eligible expenses HCRM Products Available options include: • Aggregating specific • Alternative funding arrangements – Experience refund – Swing rates – Riskshare corridor • Different deductibles by line of business, diagnosis or claim type • HMO Continuation of Coverage (insolvency) • HMO Out-of-Area Conversion Why Choose HCRM Reinsurance? • Financial strength – Our products are backed by the financial resources and commitment of our parent company, HCC Insurance Holdings, Inc. – As a direct writer, HCC Life retains all of the reinsurance financial risk. • Experience and expertise – HCRM’s experience in HMO Reinsurance and Medical Excess spans more than 30 years. • Commitment to marketplace – HCRM targets clients looking for a long term relationship creating partnerships with every client. • Exceptional service – The professional and knowledgeable staff in marketing, underwriting, claims and administration helps clients find solutions to identify and manage their risk exposure. • Comprehensive, strong contract • Access to multiple transplant networks Why Choose HCRM Reinsurance? • Competitive rates – Continued analysis and research enables HCRM to more accurately price products, leading to more competitive rates. • Advanced technology – Our proprietary reinsurance administrative and underwriting systems increase communication capabilities across departments and provide real time warehouse of claim experience on more than 10 million covered members – providing consultative analytics and superior service to our customers. • Communications – We keep you updated with industry news and product promotions. • Easy access to key personnel Value-Added Services • HCC Life Solutions – Provides innovative client-focused clinical and financial consultative resources. We partner with clients to find healthcare solutions while refraining from interfering with decision-making by physicians and patients. • Claims Paying Commitment – Paying claims accurately, efficiently and on time is a top priority. Our claim consultants are committed to providing a superior customer service experience with every interaction while adhering to prompt claim turnaround guidelines. HCRM Contacts Name Phone Email Years* Carol Krinke, Assistant Vice President - Marketing (763) 647-5052 firstname.lastname@example.org 26 Paul Larson, Assistant Vice President - Underwriting (763) 647-5073 email@example.com 30 Barbara Harris, Claims Manager (763) 647-5097 firstname.lastname@example.org 26 Lisa Gilbertson, Marketing Representative (763) 647-5090 email@example.com 10 * Years of industry experience HCC Medical Insurance Services (HCCMIS) Industry leader in individual and group major medical insurance, travel medical and life insurance for the international market • Corporate headquarters – Indianapolis, Indiana • Latin America/Caribbean Headquarters – Miami, Florida • Currently writes business in more than 180 countries • In 2010, insured more than 160,000 international travelers and individuals living and working abroad HCCMIS Key International Products • Atlas Travel Series – Individual Travel Medical Insurance • Atlas Group – Group Travel Medical Insurance • CitizenSecureSM – Individual, Annually Renewable Major Medical Insurance • GroupSecureSM – Group Major Medical • IC+ – Term Life Insurance • StudentSecureSM – Study Abroad Medical Insurance International products are underwritten by Lloyd’s of London Short Term Medical Policy • Domestic Short Term Medical Plan underwritten and administered by HCC Life • HCCMIS is the direct insurance agency for HCC Life short term medical policies • A temporary health insurance plan designed for individuals in transition. Ideal for: – recent college graduates – new employees – individuals between jobs – early retirees – COBRA alternative – individuals returning to the U.S. after an extended assignment • Available in both English and Spanish – Web site and quoting system – Brochure and application – Online fulfillment • Approved in most states – Currently approved in 44 states plus the District of Columbia Why Choose HCCMIS? • Quality Products that remain some of the strongest in the international marketplace. HCCMIS prides itself on its reputation and is committed to continually broaden its portfolio of products. • Experience & Expertise are assets as HCCMIS’s staff has years of industry experience and leadership that clients can rely on. • Exceptional Service and Support that is unrivaled in today’s market. HCCMIS delivers on its promise of outstanding service that adapts to the changing needs of its customers. • World Service Center Expertise applies its broad communication resources and expertise in assisting customers every day. HCCMIS strives for excellence by being responsive and flexible. • Innovative Technology is one of HCCMIS’s key assets as it leverages the power of the Internet to expand beyond physical boundaries and reaches potential clients around the globe. HCCMIS Marketing Contacts Name Phone Email Mark Carney, President & Chief Executive Officer (317) 221-8001 firstname.lastname@example.org Andrew Bard, Vice President of Sales (317) 221-8012 email@example.com Bryant Tutterow, Assistant Vice President of Marketing (317) 221-8037 firstname.lastname@example.org Juan Mas, International Sales Director (317) 221-8019 email@example.com Mike Watts, Director of Short Term Medical Insurance (317) 221-8016 firstname.lastname@example.org Robert Carrera, International Account Executive (317) 221-8028 email@example.com Brandon Merideth, International Account Executive (317) 221-8045 firstname.lastname@example.org Marco Marcelino, International Account Executive (317) 221-8029 email@example.com Krystina Trimble, Short Term Medical Account Development Specialist (317) 221-8064 firstname.lastname@example.org Dave Cataldi, Account Development Specialist (317) 221-8038 email@example.com Bryan Meyer, Account Development Specialist (317) 221-8063 firstname.lastname@example.org Other Products Offered • Kidnap & Ransom Coverage through Professional Indemnity Agency, Inc. (PIA) Contact: Bert Van Wagenen (914) 242-7850 email@example.com • High Limit Disability Coverage through HCC Specialty Underwriters, Inc. (HCCSU) Contact: Glenn Dorr (781) 994-6000 firstname.lastname@example.org Characteristics That Make HCC Unique Consistent Growth of Shareholders’ Equity through: 1. Specialty businesses with strong long-term fundamentals and market leadership 2. Underwriting culture with incentives based on underwriting profitability 3. Diversified underwriting portfolio with historically low correlation 4. Strong Enterprise Risk Management (ERM) rating 5. Primary investment objective is capital preservation 6. Disciplined balance sheet management and strong cash flow 7. Broadly experienced management team Questions?
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