Good morning everyone and welcome to HCC’s first quarter earnings call. With me today is our President, Bill Burke; our CFO, Brad Irick; Executive Vice Presidents, Mike Schell and Mark Callahan.

HCC once again has started the year with excellent results. Our net earnings were $113 million or $1.17 per share, which compares to $108 million or $1.07 per share in 2014.

Our industry leading combined ratio was 86.5% compared to 83.4% in 2014. The 2015 combined ratio includes for the first time a crop business, which increased our overall combined ratio by 1.9%.

Our return on equity was 11.5% and operating return on equity was just below 10%. In the first quarter we’ve returned to shareholders $83 million through dividends and share buybacks.

There was no loss development this quarter with the majority of our detailed actuarial reviews occur in the last two quarters of the year. Our book value per share increased 1.5% to $41.03.

Turning to the crop business, we closed on the ProAg acquisition January 1, and are pleased with the integration process to date. As we mentioned in last quarter’s call, we are reserving this business in 2015 at a 100% combined ratio and is projected to be accretive in 2016.

Before turning the call over to Brad to cover our detailed financial results, I’m pleased to announce that yesterday Fitch reaffirmed our AA very strong rating. Brad.

Thanks Chris. Our investing segment generated earnings of $67 million in the first quarter.

These earnings included $53 million of net investment income essentially flat to the fourth quarter and down 6% compared to the prior year. We also realized gains of $13 million, primarily from rebalancing in the equity portfolio as well as opportunistic sales of bonds.

The decline in net investment income from the prior year is primary due to reduced dividend income following our equity sales in 2014. Net investment income will remain under pressure compared to 2014, due to the continued low interest rate environment.

However we do expect cash flows from our underwriting operations to drive growth in the portfolio during 2015, offsetting to a large degree the drag of lower rates. With respect to reserves, we recorded net losses of $5 million related to various small CATs within the international segment and we made no adjustments to prior year reserves.

Cash flow from operations was $31 million, which was down compared to the prior year due to the timing of federal tax payments and higher paid losses. With respect to liquidity, we have approximately $650 million in short term funds and available capacity under our credit facility.

Chris mentioned our share purchases in the first quarter. Since the end of the quarter we purchased an additional $9 million of our stock bringing the total purchases in 2015 to 1.1 million shares at an average cost of $55.93.

We currently have $289 million remaining under our existing buyback authorization and remain active, opportunistic buyers. This quarter we included for the first time, the results of ProAg.

On our last call I mentioned that the seasonal nature of this business could result in a loss from its operations in the first half of 2015 and a breakeven result for the full year. That continues to be our expectation.

The after tax loss from ProAg’s operations including transaction related costs of $2 million was $8 million in the first quarter. On the balance sheet we recorded identifiable intangibles of $54 million and good will of $45 million in connection with purchase accounting.

Details of the purchase accounting adjustments will be provided in our Form 10-Q. This quarter we recorded a $6 million tax benefit related to our decision to permanently reinvest the 2014 and prior earnings of our foreign subsidiaries.

We expect a further benefit related to 2015 earnings in the fourth quarter assuming an extension of certain US tax regulations. Finally, as I’m sure you’ve seen, we are now reporting our results consistent with our new reporting structure, the details of which were previously announced.

Last week we provided quarterly and annual data for 2014 and 2013 adjusted to reflecting this structure. Bill.

Thanks Brad. We had solid performance in a competitive market in the first quarter with net written premium growth of 13% or 4% excluding crop, while maintaining underwriting profitability with an 86.5% combined ratio.

The North America P&C businesses excluding crop had a mixed rate environment resulting in overall flat rates for the quarter. The international market is more competitive, particularly in energy and property treaty resulting in a mid-single digit rate decrease for the first quarter.

The retention rate across all segments was 82%. Looking at our specific segments, in North America property and casualty we had a year-over-year increase in net written premium of 34% including crop and 4% excluding crop, with increases in our primary excess causality and D&O businesses in the liability line.

The largest increase in our casualty business is coming from our continued build out of various segments for primary casualty, with a particular focus on general liability for construction risks. Our Aviation, surety, public risk and sports and entertainment businesses, all remain steady for the quarter.

The net written premium for the crop business was $55 million for the first quarter and is largely attributable to crop policies with sales closing dates occurring in late 2014, particularly winter wheat and policies for ranchers. The combined ratio for North America P&C was 82.6% without crop compared to 80% in the first quarter of 2014.

The combined ratio increases to 88.3% for the first quarter of 2015 with crop included. Turning to the international segment, our net written premium was down 2% versus prior year with decreases in energy and marine along with property treaty, both in the London market line, offset in part by increases in various international specialty lines including credit, D&O, liability and surety.

We do see opportunities for continued premium growth in our specialty lines. One example would be trade credit based on increased economic activity across Europe.

For the overall segment, even with the competitive market we were able to utilize risk selection along with limits and retention management to achieve strong earnings with a combined ratio just under 80% which was comparable to 2014. Chris.

Thanks Bill. Our accident and health business continues to perform very well, with gross premium increasing 10% for the quarter.

Of importance, the combined ratio remains very consistent at 88.6%. Our Medical Stop Loss continues to be the significant driver with our average case size now exceeding 600 lives, now average deductibles in excess of 130,000 for the quarter.

The actually effective rate achieved in the first quarter was slightly below trend and we’ve seen this gap narrow since the close of the quarter. We expect our actual effective rate achieved which to remind you is a combination of the actual rate increase and deducible increase to exceed trend by year end.

Of significance, our risk selections remains strong, where we are renewing a greater percentage of our better performing accounts and non-renewing poorer performing ones. The short term medical business continues to grow.

In prior calls we’ve referenced that we should not assume a run rate as this business developed. We believe we are now at a stage that this business is sustainable contributing to the A&H segments very satisfactory combined ratio.

We are estimating that our accident and health business will exceed $1 billion in premium in 2015, which as you all know has produced very consistent results. The importance of the diversified portfolio of business has never been more important with over 50% of our business in other than traditional property casualty lines, with different cycles and little to no correlation with the traditional property casualty market.

Before opening the lines up for questions I wanted to mention a change of date for our Investor meeting. Unfortunately the June date was problematic for a number of attendees and we will now be holding the conference September 30 in Houston.

The later date will also allow us to share a more comprehensive view of our business with another quarter under our belt. Operator, please open the lines for questions.

Hi. Good morning gentlemen.

Good morning.

Just to start off, I’m mean a solid quarter here, so maybe more questions on the housekeeping side, but just on ProAg at least looking at the statutory direct premiums in the past years, if you can make those comparisons. It looks like there may have been a ramp up in the 1Q of premiums.

And so I just wanted to check and see if that may have been the case. And then obviously this is a very seasonal business as you guys pointed out and so in the second quarter, ProAg at least in ’14 and ’13 looks have generated a direct loss ratio in the 10% range and so hesitant to extrapolate that to your GAAP results, but I mean is that type of seasonality directionally what we should expect in 2Q and then see that come back up in the third and fourth quarters to get you back to that 100% pick?

Yes, good question. Good morning Vince, its Chris Williams.

Let me give a better line of sight on that. I mean we are projecting the crop business to do about $550 million of gross premium this year and as you saw it was quite a low earned amount in Q1.

That will step up a little bit in Q2, but you will see the bulk of that coming through in Q3 and Q4.

Okay. On the loss ratio side, I mean is it anybody’s guess on where that comes in or is it pretty…

Yes, look its obviously early in the year. I think in terms of the results for the second quarter, that will probably somewhere consistent with where they have been in the first quarter, but we’re not seeing anything on the horizon that would give us any particular pause for Q3 or Q4.

So we feel as though we are on pace. As we said in the last quarter’s call, we are reserving at 100 combined and we haven’t seen anything that would cause us to change it.

Okay, perfect. Thanks for the color there and then with the re-segmenting, I think the old U.S.

surety segment, that was on a 4Q review cycle and so I’m just curious with the way that things have shifted around. Is there going to be any syncing between the new businesses and how they are reported.

Just wanted to get a sense for what units will be hitting the reserve reviews and what quarter?

Yes, Vincent this is Brad. I’m glad to take that.

Yes, the U.S. surety business will be in North America P&C, which will be a third quarter review; A&H and International will be in the fourth quarter.

Okay, got it. Thank you.

And then just one last one here. On the public risk side, maybe it’s just because I’m sitting in Baltimore here today, but I’m just wondering, is that environment potentially ramping up from a claims standpoint, particularly around police liability and I’m not necessarily thinking about direct exposure to any of these cities where things have erupted, but generally is that environment becoming anymore litigious in light of shifting public sentiment there.

Hi, this is Bill Burke. We don’t see it as getting more litigious.

There’s been exposure for police issues over the years. Our book of business is really smaller public entities and so we don’t see the exposure as dramatically as we can see on TV or where you are locally.

Okay, got it. Thanks guys.

Best of luck.

Good morning guys. Just to quickly follow up on the crop segment, this is more I guess, more of a modeling question, but you guys retained about 76% of the gross premiums.

Is that a fair way to look at it for the rest of the year? Just trying to figure out how much you guys are going to retain.

It will be somewhere in that ball park. Again, we I think have mentioned it last quarter when we looked at this for 2015.

We’ve restructured the reinsurance program; we’ve almost completed all of that. So I think that’s – it might move around a little bit, but I think that’s fairly accurate.

And would you guys be buying stop loss protection on that book?

Yes, we’re switched more from quota share to stop loss. We continue to look at hedging opportunities as well, but we have switched generally to excess stop loss rather than quota share.

And any idea if you guys can share where that attaches on a combined ratio or loss ratio.

Various.

Okay. And then quickly just shifting into the A&H book, I think in the past you guys have noted that loss cost inflation, you guys, last year the average adjusted rate increases were a little bit higher than loss inflation.

Can you guys just maybe just give those numbers again? The loss inflation last year I have it around 15.5%.

I just want to see if that’s staying in the same ballpark and where the average rate increase is coming right now.

Yes, look like its stepped up a little bit this year. We’re seeing a bit more claims activity.

It’s quite interesting with the – talking to some of our peers as well. The claim activity is increased in terms of larger claims, so we’re having to manage them a little bit harder.

We are, as I had mentioned a little bit behind trend in Q1, although we made some good headway there. We expect to be ahead of trend by the end of the year.

I can’t tell you exactly where that’s going to be, but it’s probably somewhere in the 17% ballpark on a leverage basis.

Great and thanks for that. And then just my last one is in the re-segmenting.

You guys kind of broke out where other income was flowing through. It looks like to me they are coming out of the North America PC segment.

I’ve never really gotten a great detail as to what kind of that other income is and its usually around $8 million to $10 million a quarter. Could you maybe just give a little more detail as to what the components are of that?

Yes, and you will see in our 10-Q quarterly filings we’ll give some details on that, but its fee and commission income that really comes from some of our business we write, third party business and fee and commission off of that. It’s pretty stable as you said, around $8 million or $9 million a quarter.

Good. Thanks for the answers guys.

Thank you.

Yes, good morning. If you can stand one more question on the Ag business, just trying to get the flows through correctly.

You said that you were recording that to 100% combined ratio. So what accounts for the difference between the 100% combined ratio and the $7 million loss in the quarter.

Are you really saying its 100% combined ratio on a full year basis, so there’s – the first quarter will be more of a mismatch.

Mark, this is Brad. You’ve got it right.

We’re talking about the 100% combined ratio. As I said in my comments, for the full year breakeven will result.

But given the expenses, that come more evenly throughout the year, you’ll see that the expense ratio will be higher early on in the year. That should normalize to a level that brings you back to that breakeven result for the full year.

Okay, that’s what I thought. Just wanted to clarify.

And then the couple of million of acquisition related costs that you mentioned on that, are those all in the other corporate expense line or are they somewhere else?

That’s correct.

Okay. And then, finally can you just talk through, you made some brief comments on the opening remarks about the tax.

Can you just clarify that a little bit? I guess if I’m understanding correctly, the favorable tax impacts will have occurred in this quarter and then not again until the fourth quarter.

Why would they disappear?

Yes, thanks for asking. So the assertion that we made under U.S.

GAAP was the reinvestment of our foreign earnings for 2014 and prior. So that’s the $6 million impact and one thing I would point out as I’ve seen in this question is, you can’t really back into that at 15% for you to say its $40 million of earnings.

It will be a tax rate rec in our form 10-Q that I think I’m sure the tax people will be excited, that people will really want to look at this quarter. But it will show the components of that.

It’s about $300 million of prior earnings and also a deferred tax asset that was set up at the same time in the past as we were accruing this at 35%. It was taken down at the same time.

So the $6 million is the net benefit of all that. So the reason why we can’t – we’re not showing that in 2015 is there is the active financing exception for insurance companies, is part of the extender program that the U.S.

congress typically renews each year in December. Sometimes that can be January, but usually in December.

Once they extend that, assuming that they do extend that program, which they have for the last several years, we would be able to extend our assertion for 2015. If they extend it for more than one year, we would be able to extend it indefinitely into the future and we’d have the benefit for the 2015 earnings that we would then be able to book at the 20% UK rate as opposed to 35%.

Sorry for the long explanation, but thanks for asking.

So the amount that you’ll pick up in the fourth quarter, presuming congress behaves, bad assumption… [Cross Talk] Its everything we know about assumptions right. But assuming that you are able to book that, then that would be an amount based upon the full year 2015 earnings, whereas the amount that we’ve picked up this quarter really reflects multiple prior years.

And let me clarify one other thing to you. So those multiple prior years.

Remember the UK tax rate has been coming down over the last couple of years. So if you go back further in time, the UK and U.S.

tax rate wasn’t that different, so there’s not as much benefit. So there’s 15% benefit that exists today.

It doesn’t apply to that full $300 million of prior year earnings. So to give you some idea of where this is, historically those international operations, so the earnings within those foreign subsidiaries that are impacted.

A number roughly in the range of $100 million would be consistent with our history, and I’ll caveat that by these are businesses that are subject to CATs. There’s reserve development in those prior year numbers and everything.

So I think the $100 million on a historical basis is reasonable to think about.

Good. That’s very helpful, thank you.

That’s all are my questions.

Thanks for taking up the follow ups on just two quick ones. One on the tax side, the first year.

So if I hear correctly, it’s a $300 million reinvestment and so just curious where you might put that permanently to work?

Well, it really is just supporting the – its sitting in those foreign subsidiaries supporting that business today. The capital level that we have there is effectively what we’re saying is the capital in those businesses is sufficient to continue the growth within that business and so we’re going to let it be there and be support those businesses as opposed to bringing it back to the U.S.

Okay. So this isn’t a situation where you have to go out and buy a building or any type of actual direct things like that?

No, there’s really no change. More of an acknowledgement I guess as we look at – you have Solvency II coming up and capital requirements.

It’s more of an acknowledgement that the capital level that we have there is adequate and appropriate and so we’re going to leave there to support those businesses.

Vincent, just to add to that, as you know we’ve publicly said that we like the UK structure to grow, our international business. We want to continue to grow our international business.

I think with a lot of the M&A activity that’s going on at the moment, this opportunity is because of some of the disruption. So to us it was just a prudent decision given that our international expansion is headquartered in the UK.

That’s a great segway to the last follow up. So this quarter we’ve heard a lot of your peers, you mentioned about talking to additional teams in response to a lot of this disruption.

And so far, it seems like there has been a lot of conversation, but not a lot of team hires yet and so to your point on the international growth plans; have you really brought any teams on here in the beginning of the year or is it still ongoing conversations.

It’s still ongoing conversations. What I would say is some of those transactions start to close, I think as soon as this Friday and so it will be interesting to see what happens after the closing.

All right, it sounds good. Will stay tuned.

Thanks guys.

Thank you.

Thanks guys. Actually the tax questions are already discussed, so I’m all set.

Thanks.

Thank you.

I’m not sure if that’s exactly right name of, my firm, but good morning gentlemen. Congratulations on a solid quarter.

Thank you.

First question for Brad, just a clarification; the $100 million, was that a pre tax number?

That’s a pre tax number, yes.

Okay. And then maybe for Chris, in the A&H segment, can you give any color on how the other medical, specifically the short term medical product grew year-over-year?

Yes, so then it grew quite significantly last year Brian. What I would say is the rate of increase as we’ve rolled into 2015 has started to slow down.

We expected a larger falloff when we went through the most recent enrolment period and just to remind you, this is very short term coverage. Our average policy period is 45 days, so it is the ultimate short term line and as I said in my operating remarks, I mean we’ve been reluctant to call it a run rate, but to give you some of sort of idea, we’ve moved up about 10% over where it was last year.

Terrific, that’s all I had. Thank you very much.

Thank you Brian.

Thanks Maria. Thank you everyone for participating in today’s call.

We are off to a very good start in 2015. I look forward to speaking with you again next quarter and also to seeing you all at the end of September.

Many thanks.