888919--3/2/2009--HCC_INSURANCE_HOLDINGS

related topics

{loss, insurance, financial}

{acquisition, growth, future}

{capital, credit, financial}

{loan, real, estate}

{personnel, key, retain}

{operation, international, foreign}

{operation, natural, condition}

{product, market, service}

{debt, indebtedness, cash}

{product, liability, claim}

{cost, regulation, environmental}

{tax, income, asset}

Our loss reserves are based on an estimate of our future liability, which may prove to be inadequate. We may be impacted by claims relating to the recent credit market downturn and subprime insurance exposures. The effects of emerging claim and coverage issues on our business are uncertain. We are subject to extensive governmental regulation. Our reliance on brokers subjects us to their credit risk. Risks Relating to our Business Our inability to accurately assess underwriting risk could reduce our net earnings. Retentions in various lines of business expose us to potential losses. If we are unable to purchase adequate reinsurance protection for some of the risks we have underwritten, we will be exposed to any resulting unreinsured losses. If the companies that provide our reinsurance do not pay all of our claims, we could incur severe losses. As a direct insurer, we may have significant exposure for terrorist acts. We may be unsuccessful in competing against larger or more well-established business rivals. If rating agencies downgrade our financial strength ratings, our business and competitive position in the industry may suffer. We may require additional capital or funds for liquidity in the future, which may not be available or may only be available on unfavorable terms. We may be unable to attract and retain qualified employees. We invest a significant amount of our assets in securities that have experienced market fluctuations, which may greatly reduce the value of our investment portfolio, reduce investment income or generate realized investment losses. Our strategy of acquiring other companies for growth may not succeed. We are exposed to goodwill impairment risk as part of our business acquisition strategy. We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts from our subsidiaries. Because we operate internationally, fluctuations in currency exchange rates may affect our receivable and payable balances and our reserves.

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888919--3/2/2009--HCC_INSURANCE_HOLDINGS_INC/DE/