Summary of HCC INSURANCE HOLDINGS INC/DE/

Item 8.01 Other Events
HCC Insurance Holdings, Inc. is filing this Form 8-K to retrospectively adjust portions of its Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 2, 2009 (the 2008 Form 10-K), to reflect the adoption of two new accounting standards, as of January 1, 2009. This change relates to Accounting Standards Codification (ASC) Topic 470, Debt (originally issued as FSP APB 14-1), Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement) and ASC Topic 260, Earnings Per Share (originally issued as FSP EITF 03-6-1), Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.Both standards required retrospective application to prior financial statements.
Except as described in the next two paragraphs, no other changes have been made to the 2008 Form 10-K. Effective July 1, 2009, the ASC issued by the Financial Accounting Standards Board became the single authoritative source of accounting principles generally accepted in the United States of America (U.S. GAAP). Although ASC renames and renumbers all previous accounting literature, it does not change current U.S. GAAP. References to specific accounting literature in this Form 8-K are the same as originally disclosed in the 2008 Form 10-K and have not been changed to reflect new ASC references. All information in the 2008 Form 10-K is as of December 31, 2008 and does not reflect events occurring after the date of the 2008 Form 10-K, other than the retrospective adjustment of certain amounts and disclosures affected by the adoption of FSP APB 14-1 and EITF 03-6-1 subsequent to the date of the 2008 Form 10-K.
FSP EITF 03-6-1 clarifies whether instruments granted in share-based payments, such as restricted stock, are participating securities prior to vesting and, therefore, must be included in the earnings allocation in calculating earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. Under FSP EITF 03-6-1, unvested share-based payments that contain non-forfeitable rights to dividends or dividend-equivalents are treated as participating securities. Our adoption of FSP EITF 03-6-1 had no impact on our consolidated earnings per share in 2008 due to immateriality of our restricted stock awards that have such terms. There were no restricted stock awards outstanding prior to 2008.
FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion are not totally debt and requires issuers to bifurcate and separately account for the liability and equity components. In our consolidated financial statements and schedules, filed as Exhibits 99.4 and 99.5 to this Form 8-K, we adopted FSP APB 14-1 for our 1.30% Convertible Notes and 2.00% Convertible Notes and retrospectively adjusted our consolidated financial statements for all periods presented. The effective interest rate on our 1.30% and 2.00% Convertible Notes increased to 4.80% and 3.86%, respectively, which resulted in the recognition of a $22.6 million and $8.3 million discount, respectively, with the offsetting after-tax impact recorded in additional paid-in capital. The following line items in our consolidated financial statements were affected by the adoption of FSP APB 14-1:

                                                                   Twelve months ended December 31, 2008
                                                           As originally
                                                             reported             As adjusted           Change
Interest expense                                          $      16,288          $    20,362          $   4,074
Earnings before income tax expense                              436,312              432,238             (4,074 )
Income tax expense                                              131,544              130,118             (1,426 )
Net earnings                                                    304,768              302,120             (2,648 )
Basic earnings per share                                  $        2.65          $      2.63          $   (0.02 )
Diluted earnings per share                                         2.64                 2.61              (0.03 )

                                                                   Twelve months ended December 31, 2007
                                                           As originally
                                                             reported             As adjusted           Change
Interest expense                                          $      10,304          $    16,270          $   5,966
Earnings before income tax expense                              585,870              579,904             (5,966 )
Income tax expense                                              190,441              188,351             (2,090 )
Net earnings                                                    395,429              391,553             (3,876 )
Basic earnings per share                                  $        3.50          $      3.47          $   (0.03 )
Diluted earnings per share                                         3.38                 3.35              (0.03 )

                                                                   Twelve months ended December 31, 2006
                                                           As originally
                                                             reported             As adjusted           Change
Interest expense                                          $      11,396          $    18,128          $   6,732
Earnings before income tax expense                              509,834              503,102             (6,732 )
Income tax expense                                              167,549              165,191             (2,358 )
Net earnings                                                    342,285              337,911             (4,374 )
Basic earnings per share                                  $        3.08          $      3.04          $   (0.04 )
Diluted earnings per share                                         2.93                 2.89              (0.04 )

                                                                             December 31, 2008
                                                           As originally
                                                             reported             As adjusted           Change
Other assets (debt issuance costs and deferred tax
asset)                                                    $     153,964          $   153,581          $    (383 )
Notes payable                                                   344,714              343,649             (1,065 )
Additional paid-in capital                                      861,867              881,534             19,667
Retained earnings                                             1,696,816            1,677,831            (18,985 )
Total shareholders' equity                                    2,639,341            2,640,023                682

                                                                             December 31, 2007
                                                           As originally
                                                             reported             As adjusted           Change
Other assets (debt issuance costs)                        $     170,314          $   170,189          $    (125 )
Notes payable                                                   324,714              319,471             (5,243 )
Accounts payable and accrued liabilities (deferred
tax liability)                                                  375,561              377,349              1,788
Additional paid-in capital                                      831,419              851,086             19,667
Retained earnings                                             1,445,995            1,429,658            (16,337 )
Total shareholders' equity                                    2,440,365            2,443,695              3,330

The reduction in retained earnings and the increase in additional paid-in capital resulted from amortization of the implied discount as interest expense through the first contractual put date of the 2.00% Convertible Notes at September 1, 2007 and the 1.30% Convertible Notes at April 1, 2009. The 2.00% Convertible Notes were submitted for conversion during September and October 2007. The contractual interest expense was $1.6 million in 2008, 2007 and 2006. Interest expense resulting from amortization of the implied discount was $4.1 million, $6.0 million and $6.7 million in 2008, 2007 and 2006, respectively. The adoption of FSP APB 14-1 did not impact our past or current consolidated cash flows.
The following sections of the 2008 Form 10-K are being adjusted retrospectively to reflect the adoption of the accounting pronouncements described above. These items are attached as Exhibits hereto and incorporated by reference herein.

Part I - Item 1 - Business Part II - Item 6 - Selected Financial Data Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Part II - Item 8 - Financial Statements and Supplementary Data Part IV - Item 15(a) - Financial Statement Schedules Part IV - Item 15(b) - Exhibit 12 - Statement of Ratios This Form 8-K should be read in conjunction with HCC Insurance Holdings, Inc.'s periodic filings made with the SEC subsequent to the filing of the 2008 Form 10-K, as well as any Current Reports filed on Form 8-K subsequent to the date of the 2008 Form 10-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits

23.1   Consent of PricewaterhouseCoopers LLP

99.1   Item 1, Form 10-K - Business

99.2   Item 6, Form 10-K - Selected Financial Data

99.3   Item 7, Form 10-K - Management's Discussion and Analysis of Financial
       Condition and Results of Operations

99.4   Item 8, Form 10-K - Financial Statements and Supplementary Data

99.5   Item 15(a), Form 10-K - Financial Statement Schedules

99.6   Item 15(b), Form 10-K - Exhibit 12 - Statement of Ratios