HCC Merges Two Surety Subsidiaries

The American Contractors Indemnity Co. is absorbing Pioneer General Insurance Co.

Both ACIC and PGIC are owned by HCC. All of PGIC's business has already moved to ACIC, HCC Insurance Holdings Inc. said in a statement.

An attempt to reach HCC Insurance for comment was not successful. The merger was part of an ongoing effort to reorganize its legal entity structure, the company said.

On Jan 16, A.M. Best Co. withdrew PGIC's A- (Excellent) financial strength rating and issuer credit rating of a- (Best's News Service, Jan. 16, 2012).

Denver-based PGIC specialized in underwriting surety risks in Colorado, primarily bail and civil bonds, according to BestLink. PGIC had a limited amount of business in Arizona, New Mexico, Utah, Nevada, Montana, Wyoming, Kansas, Nebraska and Missouri.

Written and earned premium, along with related net income, declined in recent years as other HCC Surety Group Cos. picked up new civil bond business, according to BestLink. PGIC's net premiums written in 2010 were $4.9 million and $5.3 million in 2009. The company's net loss was $203,000 in 2010, compared with a net income of $311,000 in 2009.

ACIC, based in Los Angeles, is a monoline company specializing in surety bonds for contract, court, bail, license and permit, and other miscellaneous bond needs, according to BestLink. ACIC operates mostly in California, but has significantly smaller market shares in Washington, Oregon, Louisiana and Arizona.

The company's net premiums written were $104.7 million</money> in 2010 and $98.8 million in 2009, according to BestLink. Net income was $12 million in 2010 and $1.7 million in 2009.

HCC Insurance Holdings, Inc. is based in Houston and is an international specialty insurance group.

ACIC currently has a Best's Financial Strength Rating of A+ (Superior). The company's rating was unchanged by the merger. On the afternoon of Jan. 16, shares of HCC (NYSE: HCC) were trading at $27.79, down 0.25%.

The top five writers of surety in Colorado in 2010 were: Travelers Group, with market share of 21.8%; Liberty Mutual Insurance Cos., with 11.22%; CNA Insurance Cos., with 9.33%; Zurich Financial Services North America Group, with 6.98%; and HCC Insurance Group, with 6.91%, according to BestLink.

(By Michael Buck, senior associate editor, BestWeek: [email protected])