Wunderlich Securities Comments On HCC Insurance Holdings

HCC Insurance Holdings HCC Chairman John Molbeck was quick to articulate optimism for HCC's future on the 4Q10 conference call. The positive outlook is slightly in contrast to the 2011 earnings guidance HCC provided with the 4Q10 release. EPS for 2011 are expected to be in a range of $2.75 to $3.05, and HCC's track record is for results to be at the higher end of guidance. Wunderlich Securities is adjusting its 2011 EPS estimate to $3.00 from $3.10 to reflect a more modest growth rate for the year. It remain optimistic, relying on HCC's superior capabilities to support its Buy rating. In addition, Wunderlich believes management's optimism is fueled by a more favorable outlook in terms of competition and opportunity. Share repurchase became an increasingly important use of capital. HCC repurchased $35.1 million of common stock in 2010 of a total authorization of $300 million. The guidance for 2011 assumes a more aggressive share buyback program to reduce average diluted shares outstanding during the year to 112 million from 114 million. Acquisitions also remain an important use of capital; however, prices for properties have yet to meet HCC's criteria. Wunderlich has a $34 PT and Buy rating on HCC HCC closed Wednesday at $30.99