Fitch Rates HCC's $300MM Sr. Unsecured Notes 'A'; Outlook Stable

HCC intends to use the net proceeds of the issuance to repay outstanding
indebtedness under its revolving loan facility. The facility expires on
Dec. 19, 2011, and the outstanding balance was $320 million as of Sept.
30, 2009.

Following the new debt issuance, HCC's debt-to-total capital ratio will
remain unchanged at 13%. Although operating-earnings based interest
coverage will decline due to higher interest expense, Fitch expects
coverage to remain strong at above 15 times. Also, Fitch views the
additional flexibility provided by the new debt to be an improvement to
HCC's capital structure and liquidity.

Fitch's current ratings on HCC reflect the company's leading market
position in a number of narrowly defined, non-correlated specialty
insurance segments, solid capital position at its insurance subsidiaries
and low financial leverage at the holding company, conservative
investment profile, strong underwriting results and adequate loss
reserves.

HCC's GAAP equity increased 8% during 2008 and 13% through Sept. 30,
2009, which is primarily due to strong underwriting results and minimal
investment losses. Through Sept. 30, 2009, HCC reported a GAAP combined
ratio of 84.6%, which included 2.4 points of favorable loss reserve
development.

Fitch notes that any topics that are covered in its criteria reports not
specifically mentioned above are considered neutral to the rating as of
the date of this publication.

Fitch assigns the following rating with a Stable Outlook to HCC
Insurance Holdings, Inc.:

--$300 million 6.3% senior debt due Nov. 15, 2019 'A'.

Fitch currently rates HCC Insurance Holdings, Inc. and its insurance
subsidiaries as follows:

--Issuer Default Rating 'A+';

--$125 million 1.3% convertible notes due April 1, 2023 'A'.

Houston Casualty Company

Avemco Insurance Company

HCC Life Insurance Company

HCC Specialty Insurance Company

U.S. Specialty Insurance Company

Perico Life Insurance Company

HCC Insurance Company

American Contractors Indemnity Company

United States Surety Company

--Insurer Financial Strength 'AA'.

The Rating Outlook is Stable.

Additional information is available at www.fitchratings.com.

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IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
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PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
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SOURCE: Fitch Ratings

Fitch Ratings, Chicago 
Dafina M. Dunmore, CFA, +1-312-368-3136 
James B. Auden, CFA, +1-312-368-3146 
Media Relations, New York 
Brian Bertsch, +1-212-908-0549 
brian.bertsch@fitchratings.com

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