HCC Insurance stock up analyst names it top pick

Shares of HCC Insurance Holdings Inc. rose Friday after an analyst added the specialty insurer to his top pick list, saying the company's book value is well protected.

Citi Investment Research analyst Joshua Shanker said that with a clean balance sheet and a balanced and profitable underwriting portfolio, the company's book value _ or total assets less liabilities _ is "well protected."

Book value per share grew 4 percent to $22.13 during the first nine months of the year.

"We view potential investment or underwriting losses as earnings, not capital, events," he wrote in a research note to clients late Thursday.

He does have concerns regarding the company's directors and officers liability insurance offerings, saying losses are likely to continue pressuring the company's stock.

Such insurance, often called D&O, is insurance payable to the directors and officers of a company, or to the corporation itself, to cover damages or defense costs in the event they are sued for wrongful acts while they were with that company.

Such losses "may damage management's credibility as savvy underwriters," Shanker wrote.

Last week, HCC Insurance said it will acquire Surety Company of the Pacific for an undisclosed sum. Surety, based in Encino, Calif., writes license and permit bonds for California contractors. The move will allow HCC Insurance to grow extensively, particularly in its California low-limit license and permit business, the company said.

Shanker maintained his 2008 earnings-per-share estimate of $2.80. Analysts polled by Thomson Reuters, on average, forecast earnings of $2.82 per share for the year.

The analyst has a $29 price target on HCC Insurance, implying he expects shares to rise 29 percent over the next year.

http://money.cnn.com/news/newsfeeds/articles/apwire/69c0f392b2013

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HCC Insurance stock up analyst names it top pick