A.M. Best Affirms Ratings of HCC Life; Assigns Ratings to Perico Life.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of "aa-"of HCC Life Insurance Company (HCC Life) (Indianapolis, IN). Additionally, A.M. Best has assigned a FSR of A (Excellent) and an ICR of "a+" to HCC Life's newly acquired subsidiary, Perico Life Insurance Company (Perico Life) (formerly known as MIC Life Insurance Company) (Wilmington, DE). All ratings have a stable outlook. Both companies are ultimately owned by HCC Insurance Holdings, Inc. (HCC) (NYSE: HCC) (Houston, TX).

Over the past five years, HCC has been a leading group stop-loss writer. Over that period, the majority of business, which was previously written by a property/casualty affiliate, has been transferred to HCC Life. Additionally, HCC no longer reinsurers any stop-loss risk. Consequently, HCC Life's premium income has risen considerably in recent years, particularly in 2005. To fund this growth, HCC is in the process of contributing $30 million in cash to HCC Life, in addition to contributing a subsidiary, Perico Life. These actions were necessary for HCC Life to maintain an appropriate level of capital for its ratings, based on A.M. Best's risk-based capital model. HCC Life has reported favorable profitability in recent years and such profitability is expected to continue, which should also strengthen its capitalization position.

Perico Life was purchased by HCC in December 2005. Beginning in January 2006, Perico Life will be used to write small case, group stop-loss coverages formally produced by a managing general underwriter (Perico) that was also purchased by HCC within the past month. This is a distinct market niche and distribution system from HCC Life's own stop-loss business, which focuses on the large case market. While there is a loss ratio history associated with Perico's business when it was written previously through unaffiliated carriers, it will take some time to observe how it performs in comparison to HCC Life's stop-loss business, as Perico's business is moved into Perico Life over the next few years.

Both life companies' ratings have been uplifted from being part of HCC. HCC Life and Perico Life will need to maintain appropriate levels of capitalization and operating performance in order to maintain their current A.M. Best ratings going forward.

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For current Best's Ratings, independent data and analysis on more than 1,100 individual life/health companies and A.M. Best groups, please visit www.ambest.com/lh.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.