Thank you operator and good morning everyone and welcome to HCC’s 2012 second quarter conference call. Joining me today is Chris Williams, our President, Bill Burke, our Chief Financial Officer, Brad Irick, our Chief Financial Officer and Mike Schell, our Chief Property and Casualty Insurance Officer.

Brad will provide a financial overview and Chris and Bill will provide additional insight into the quarter’s results. As you can see by our press release HCC has a strong second quarter and first half in each segment.

Annualized operating return on equity was 11.3% for the quarter and 11.1% for the six months. Net earnings were $93.5 million or $0.92 per share for the quarter and a $176.1 million or a $1.71 per share for the first six months.

The earnings of both periods are records for earnings per share. Gross written premium increased 7% for the quarter and 6% for the six months and our GAAP combined ratio was 84.9% for the quarter and 85% for the first six months which included 8/10th percentage points of catastrophe losses in the quarter and 1.1% for the six months.

Our expense ratio remained excellent at 25.3% for the quarter and 25.2% for the six months and book value increased for the year by 5.5% to $33.19 per share. Brad will now review with you our financial highlights, Brad?

Thanks John, for the first time in our history total assets were as above $10 billion driven by growth in our investment portfolio of nearly 7% since year end 2011 to $6.4 billion. Investment performance included the following items.

A year-to-date long term tax equivalent yield of 4.8% at a book yield of 3.9%. A decrease in portfolio duration to 4.5 years driven by decreases in market rates which impacted call and prepayment expectations for municipal and structured securities.

Our unrealized gain position increased by $33 million compared to March 2012 to $386 million. In addition, realized investment gains of $7 million primarily from sales of lower yielding investments to fund our new investment initiatives which I will address later and some portfolio repositioning in the muni book.

During the quarter, our portfolio yield decreased slightly for two reasons, reinvestment rates decreased nearly 50 basis points in-line with a drop in the 10 year U.S. treasury.

Second, the quarter results included $2 million adjustments related to prepayment assumptions for structured securities which reduced net investment income. Assuming rates and spreads remain at their current levels we expect book yield for the full year largely in-line with our year-to-date results.

As John mentioned at our investor conference in June we are now investing in bank loans and high dividend equities. At quarter end we had invested approximately $100 million in each asset class and intend to invest between 5% to 10% of the portfolio in these classes over time.

These changes diversify our portfolio and shorten our overall duration without impacting average credit quality. As the year goes on we expect these investments to help improve our reinvestment rate as well.

We continue to monitor developments in Europe and consider the impact on our foreign investments. As we have disclosed in the past, our foreign investments remain modest relative to the overall portfolio and are of high quality with virtually no exposures in the most troubled countries.

With respect to reserves, we had no loss development and based on our quarterly review of reserved adequacy estimate our recorded reserves exceeded actuarial point estimate by 4.3% in-line with where we ended 2011. In the quarter, we had pretax net catastrophe losses at $4.7 million related to various small cats impacting our property treaty line of business.

From a capital management perspective we remain opportunistic buyers of our stock with purchases of 1.9 million shares for $59 million in the quarter leaving $100 million under our current authorization. We continue to utilize our revolving credit facility to fund these purchases resulting at a debt to total capital ratio of 15%.

Operating cash flow continues to be very strong at $170 million driven by the favorable paid loss ratio of 47% for the quarter. Year-to-date operating cash flows are about $125 million ahead of the prior year.

While we don’t expect the paid loss ratio to continue at this low level for the rest of the year we are positioned to once again deliver operating cash flows in excess of $400 million for the year. Chris?

Thanks Brad, as John and Brad have mentioned we had a strong second quarter and first half of the year. As you know HCC is driven by underwriting profit which is reflected in the results of our various business segments.

With benign catastrophes this year our loss ratio was 59.8% for the first six months of 2012 compared to 66% for the first six months of 2011. The retention rate across our segments increased to 87% this quarter compared to 85% for the second quarter of 2011.

We achieved an average rate increase of just under 4% for the second quarter for those lines of business where the measurement is meaningful. Our Accident & Health segment driven by a Medical Stop Loss business continues to perform extremely well producing just over $50 million of pretax earnings for the first six months of 2012.

Our international segment had a strong six months compared to last year’s, our pretax move from the 2011 six month loss of $24 million to a $50 million profit. The property treat book was impacted by significant catastrophe losses last year.

The industry wide cat losses have improved this market. The 2012 we repositioned treaty business by limiting our convictive storm exposure and non-renewing several major programs where we determined the pricing was inadequate.

We had net catastrophe losses of only $4.7 million in the second quarter of 2012 compared to $13.8 million for the corresponding period last year. Our energy business is generating low single digit pricing increases, the majority of this book is renewed for 2012 and is performing as we expected.

Our professional liability segment is showing single digit increases in our U.S. D&O book rather than the reductions we had anticipated last year.

Also we have continued to derisk our book by reducing limits moving up in programs as we have deemed appropriate. Importantly we are seeing rate increases in the commercial D&O book for the first time in six years.

Pricing for the international D&O was flat for the quarter and down to 2% for the year compared down to 3% for the first six months of 2011. We believe pricing in Europe is stabilizing with financial institution pricing rising.

The diversified financial products DFP book continues to achieve significant rate and deductible increases. Importantly due to our leadership the market appears to be moving towards these increased rate and deductible levels.

Bill?

Thanks Chris, I will start with U.S. property and casualty.

This segment showed improved results for the first six months of 2012 compared to 2011, net earned premium for the second quarter increased by 13% over the prior year and 12% for the first six months. The premium increase was driven primarily by increased premiums from new business lines, new business growth particularly in sports and entertainment and underlying rate increases in our surplus lines of businesses.

The loss ratio for the first half of 2012 was 57% down from 58% in 2011. A number of our peers have announced meaningful catastrophe losses for the quarter.

We are pleased that we had virtually no catastrophe losses in the second quarter in this segment. Turning to new lines of business, in our first quarter call and during our investor conference we reported on three lines of business that we started in 2012.

Primary and excess casualty along with technical property, gross written premium for these lines increased from $4.4 million in the second quarter of 2011 to $18 million in the second quarter of 2012. We continue to see strong submission flow, so far this year these new lines of business have generated $28 million of new gross written premium for the segment.

These lines are forecasted to achieve $60 million in gross written premium for the full year based on current market conditions we expect continued growth from these lines. Turning to U.S.

Surety & Credit, this segment continued to have excellent loss ratio with a 26.5% for the first six months despite the weak economic environment. As of year-end 2011, we had grown our U.S.

surety book to the six largest in the industry. We have strong leadership in this area and see continued growth opportunities particularly as economic climate improves.

John?

Thanks Bill. We continue our optimism about 2012; pricing remains positive overall and margins attractive.

With a little cooperation from Mother Nature we believe we are in track for double digit operating return on equity for the year. Capital management continues to be our priority whether addressing risk adjusted returns or stock buy backs.

Our capital management is evidenced by a repurchase of 4.1 million shares during the first six months of the year. In June we held our investor conference that provided a form for investors and analysts ask questions both of our management and our underwriters.

For the conference we provided a fairly extensive information about the company and this information is still available on our website. Operator with that I would like to open up the call to any questions.

Thank you.

A couple of questions mostly related to the investment portfolio, as you described I guess you have begun the process of building up the bank loan and the high dividend, I guess two questions about that, one just if you can go into a little bit more detail in terms of the nature of the bank loans of these commercial, residential whatever and then likewise just in terms of from an equity perspective there again I understand high dividend are there particularly sectors or areas that you are focusing on there.

Hi this is Brad Irick, I will try to take those two questions in order of the dividend equity investments, our basically focused on strong free cash flow companies, again yields that were in the range of 3.8% to 4% from a book yield perspective. There is a heavy focus on consumer staples and telecommunications and companies that have reasonable growth expectations in the coming periods and also that we believe we will have continued strong cash flow to fund the dividends.

We have partnered with Black Rock in that process and we are very pleased with their performance today. Also with Black Rock we are working on the bank loans, to your question the commercial is the focus of those bank loans and again in that market place we are looking to find good quality companies that with expectation of no defaults and those portfolios and we think there is good value in the yields that we are able to get of those loans.

Okay, just as a housekeeping question to the extent the bank loans those are reported in the fixed income line on the asset statement?

Yes you will see them within corporate fixed maturities within the detailed breakouts.

Okay and then the other investments line that continues to be just the various hedge fund positions?

Just various positions, I think we disclosed in our Q that there are various small asset positions and you know there is no change in those balances over.

And we don’t have any hedge funds.

And no hedge funds.

And then just again kind of a market comment or market pricing type of question, look like the growth in the international segment continued to be pretty stronger, are you seeing the rate increases there kind of matching what we are seeing in the U.S. yet or are they still lagging?

I think the rate increases are slightly higher than they are in the U.S. but predominately because it's more catastrophe exposed our U.S.

book of business and therefore and because of 2010 and 2011 its generating higher increases.

I was curious how much of the decrease in the professional liability premiums was DFP versus U.S. D&O?

I don’t have that number in front of me but we renewed roughly 70% of the book of business while I say that 70% of the book business we renewed we did get price increases but we also got deductible increases so if the book was a 100 million for the year, we have 25% reinsurance on it and we renewed 70% of it, I will let you do the math.

And then the improvement in the loss ratio for U.S. D&O compared to the first quarter of this year and the second quarter of last year, how much of that is loss activity compared to the actions that you have taken on the book?

This is Mike Schell, it's only a slight difference but the difference has to do with the mix of business between the public company U.S. D&O and the diversified financial products.

John talked about the reinsurance on the diversified financial products and between the reinsurance been more than it was and us having less earned premium that we did a year ago because of the actions John took, we have more of the premium at the U.S. public company D&O loss ratio and less of the premium had to diversified financial products loss ratio.

Craig mentioned at the investors conference that there had been one new large group policy in Medical Stop Loss and I was wondering if we could spend a minute on trends just excluding that one new block of business and based on Craig’s comments I thought maybe excluding that block, be on the shrinking slightly or maybe flat but I was wondering if you could just discuss drivers and should we expect growth in the Medical Stop Loss lines just be lumpier in the future and I do have a full-up.

The pull that Craig mentioned at the investor day, it was about $30 million and to put that in perspective the earned premium through the end of the second quarter of that pull was 12 million. The total earned premium for the first six months had increased 36 million so as you can see it's actually less than half of the growth is in regard to the pull.

If you take that pull out the growth in the books of the first six months of this year is actually 6.5%, so we are seeing some growth in the book.

That’s terrific and is the new book of business pulling up the loss ratio slightly or if you or has the loss ratio been sort of steadily rising across the Medical Stop Loss book?

While when we established our loss pick last year, there was a lot of uncertainty in the economy and in healthcare in general combined with our anticipation of new business coming on board which generally runs at a slightly higher loss ratio. We increased our projected loss ratio.

Okay and last question, it looks like the reserves versus the actuarial midpoint are about in-line with the end of 2011 but maybe a little tighter than they were at the end of last quarter, I was wondering if you could just talk about I presume it was the actuarial assumption that changed or where that got a little tighter versus Q1?

Brian I wouldn’t really look at little tighter, it's just a measurement in a point in time and if you would follow it quarter by quarter by quarter the number is going to go up and down and the actuarial point estimate is just added, it's an estimate in the 4.3 percentages the number over the estimate, the next quarter it could be 4.8 or 3.7 and it really doesn’t mean anything material. In the first half of the year the only line that we reviewed in detail was exited lines which is our policy and we always compare the actual results versus the expected and nothing unusual has transpired in the first six months of 2012.

Thank you operator and thanks everybody for joining us for the second quarter conference call and we look forward to visiting with you again after the third quarter. Have a great day.

Thanks.