HCC INSURANCE HOLDINGS REPORTS RESULTS
FOR FIRST QUARTER OF 2008

HOUSTON (May 6, 2008) . . .
HCC Insurance Holdings, Inc. (NYSE: HCC) today released earnings for the first quarter of 2008, which ended March 31.

Net earnings for the first quarter of 2008 were $81.1 million, compared with $96.7 million during the first quarter of 2007. During the same periods, net earnings per diluted share were $0.70 compared to $0.83 in 2007.

The net earnings of the Insurance Company segment increased during the first quarter of 2008, due to favorable underwriting margins despite conditions in the insurance market. The GAAP combined ratio remained consistent for the first three months of 2008 at 83.7 percent compared to 84.0 percent for the corresponding period of 2007.

“We are very pleased with our underwriting results for the first quarter of 2008 given the softening market. We have projected a combined ratio of 85 percent for 2008 and our results for the first quarter are on track,” HCC Chief Executive Officer Frank J. Bramanti said.

The decline in first quarter consolidated net earnings was principally due to unrealized losses in HCC’s trading portfolio -- which consists of investments in American Safety Insurance Holdings, Ltd. and Tower Group, Inc. -- of $9.0 million pretax ($5.9 million after tax) in 2008, versus a realized and unrealized pretax gain of $2.2 million ($1.4 million after tax) in 2007; a pretax loss of $1.2 million ($0.8 million after tax) on the Company’s alternative investments portfolio in 2008, versus pretax income of $7.0 million ($4.5 million after tax) in 2007; and a gain of $10.8 million pretax ($7.0 million after tax) on the sale of a strategic investment in 2007, versus no activity in 2008. This investment-related activity reduced diluted earnings per share by $0.06 in 2008 and increased diluted earnings per share by $0.11 in 2007.

Book value per share increased to $21.88 at March 31, 2008, up three percent since December 31, 2007. The Company’s annualized return on average equity as of March 31, 2008 was 13.1 percent.

Total revenue of $567.4 million in the first quarter of 2008 was $29.8 million lower than in the same quarter of 2007. The decrease was primarily due to the $30.2 million pretax change in the investment-related items discussed above.

Net earned premium of the Company’s insurance company subsidiaries was $493.5 million, down one percent during the first three months of 2008, compared with $497.6 million for the first quarter of 2007. During the same period, net written premium also decreased one percent to $493.6 million, while gross written premium declined three percent to $583.0 million compared to the first quarter of 2007. This trend is in line with the Company’s expectations for 2008.

“Gross written premium, net written premium and net earned premium were all down slightly from 2007 amounts due to the impact of softening rates in several of our markets, which has curtailed our risk appetite. Despite these softening rates, our margins remain at acceptable levels of profitability thanks to our consistent underwriting discipline,” Mr. Bramanti said.

During the first quarter of 2008, fee and commission income decreased slightly to $31.0 million, compared to $32.1 million during the same period in 2007.

Investment income from the Company’s fixed income securities increased 20 percent during the first quarter of 2008, while total net investment income declined four percent in 2008 to $47.6 million from $49.5 million in 2007. The decline in income from the Company’s $159.8 million alternative investments portfolio exceeded the increase in income on its fixed income securities portfolio.

As of March 31, 2008, HCC’s fixed income securities portfolio had an average rating of AA+, average duration of five years and an average tax equivalent yield of 5.3 percent. The Company held only $15.4 million of subprime-related securities, which had an average rating of AAA, and owned no CDO or CLO securities.

“We are pleased with the growth in income produced by our fixed income securities portfolio and remain confident that our high quality investment portfolio and our conservative investment policy will continue to help protect our shareholders’ equity from the volatility and excessive losses being experienced in the marketplace,” Mr. Bramanti said.

Other operating income (loss) was $(4.9) million in 2008, compared to $18.6 million in 2007. The 2008 loss includes the $9.0 million loss on the Company’s trading portfolio discussed above. HCC’s projection for other operating income for 2008 is approximately $3.3 million per quarter, excluding the effect of any trading portfolio activity or sales of strategic investments.

As of March 31, 2008, total investments increased to $4.8 billion, total assets exceeded $8.2 billion, shareholders’ equity was more than $2.5 billion and the Company’s debt to total capital ratio remained very conservative at 12.6 percent. (See attached tables).

The Company continues to closely monitor its D&O and E&O exposure to subprime issues. While the environment remains challenging, based upon the Company’s current knowledge, the Company continues to believe that it has provided for the ultimate losses that will eventually be incurred on this business and that its D&O and E&O business remains profitable.

“The difficult underwriting environment highlights the strength of our ability to manage the bottom half of the underwriting cycle. Our continuing discipline and focus on underwriting profitability should allow us to minimize the impact of declining rates on our operating results and financial position,” Mr. Bramanti said.

HCC will hold an open conference call beginning at 8:00 a.m. Central Daylight Time on Wednesday, May 7. 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 on the website until Tuesday, May 20, 2008.

Headquartered in Houston, Texas, HCC Insurance Holdings, Inc. (HCC) is a leading international specialty insurance group with offices across the United States and in Belgium, Bermuda, Ireland, Spain and the United Kingdom. HCC has assets of more than $8.2 billion, shareholders’ equity in excess of $2.5 billion and is rated AA (Very Strong) by Standard & Poor’s and AA (Very Strong) by Fitch Ratings. In addition, HCC’s major domestic insurance companies are rated A+ (Superior) by A.M. Best Company.

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

©2005 HCC Insurance Holdings, Inc.