HCC INSURANCE HOLDINGS INC/DE/, S-3, 1997-06-30

HCC INSURANCE HOLDINGS INC/DE/
S-3, 1997-06-30
FIRE, MARINE & CASUALTY INSURANCE

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<PAGE> 1
As filed with the Securities and Exchange Commission on June 30, 1997
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

--------------------

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

--------------------

HCC INSURANCE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)

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<TABLE>
<S> <C> <C>
DELAWARE 76-0336636 6331
(State or other jurisdiction of (I.R.S. Employer Identification No.) (Primary Standard Industrial
incorporation or organization) Classification Code Number)
</TABLE>

13403 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040-6094
(713) 690-7300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

--------------------

STEPHEN L. WAY
13403 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040-6094
(713) 690-7300
(Name, address including zip code, and telephone number, including area code,
of agent for service)

--------------------

Copies to:

ARTHUR S. BERNER, ESQ. CHRISTOPHER L. MARTIN
WINSTEAD SECHREST & MINICK P.C. VICE PRESIDENT AND GENERAL COUNSEL
910 TRAVIS, SUITE 1700 HCC INSURANCE HOLDINGS, INC.
HOUSTON, TEXAS 77002 13403 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040-6094

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Approximate date of commencement of proposed sale to the public: Upon
exercise of the stock options pursuant to which the securities offered hereby
are issuable, at the option of the holders of such options, after the effective
date of this Registration Statement.

--------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act") other than securities
offered only in connection with dividends or interest reinvestment plans, check
the following box. [x]

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=======================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Registration
Securities to be Registered Registered(1) Unit Price(1) Fee(2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$1.00 par value. . . . . . . 715,625 $26.9375 $19,277,148 $5,842
=======================================================================================================
</TABLE>

(1) Pursuant to Rule 416 under the Securities Act, this registration statement
also covers an indeterminate number of shares as may be required to cover
possible adjustments by reason of any stock split, stock dividend or similar
transaction.

(2) Calculated, pursuant to Rule 457(c), solely for the purpose of determining
the registration fee, on the basis of the average high and low price
reported for the common stock on the New York Stock Exchange.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.

<PAGE> 2
PROSPECTUS

[LOGO]

HCC INSURANCE HOLDINGS, INC.

715,625 SHARES OF
COMMON STOCK

HCC Insurance Holdings, Inc. ("HCCH") is offering hereby shares of its
common stock, $1.00 par value per share (the "Common Stock"), issuable upon
exercise of stock options of AVEMCO Corporation (the "AVEMCO Options"). See
"Recent Developments." The Common Stock is traded on the New York Stock
Exchange (the "NYSE") under the symbol of "HCC." On June 26, 1997, the closing
price of the Common Stock as reported by the NYSE was $26 15/16 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 3 HEREOF FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.

--------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

--------------------

The date of this Prospectus is July __, 1997.

<PAGE> 3
No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with this offering and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offering in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.

--------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Documents Incorporated by Reference . . . . . . . . . . . . . . . . . . . . 3

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

<PAGE> 4
AVAILABLE INFORMATION

HCCH is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). These materials may be
inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's
regional offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of these materials may also be obtained from the SEC at
prescribed rates by writing to the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a World
Wide Web site that contains reports, proxy statements, and other information
regarding companies (including HCCH) that file electronically with the SEC
(http://www.sec.gov). The shares of HCCH Common Stock are listed on the NYSE
and the periodic reports, proxy statements and other information filed by HCCH
with the SEC may therefore also be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005.

HCCH has filed with the SEC a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and the exhibits and schedules filed as a part
thereof. Statements made in this Prospectus as to the contents of any contract
or any other document referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or documents filed as
an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference to such exhibit. A copy of the Registration
Statement and/or the exhibits and schedules thereto may be inspected and copied
at the public reference facilities maintained by the SEC as provided in the
preceding paragraph.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents, filed by HCCH with the SEC under the
Exchange Act, are incorporated in this Prospectus by reference:

1. Annual Report on Form 10-K, as amended, for the year ended
December 31, 1996, as amended (File No. 1-13790) (the "HCCH 1996 10-K").

2. Quarterly Report on Form 10-Q for March 31, 1997.

3. Current reports on Form 8-K filed on January 21, 1997, March
6, 1997 and June 19, 1997.

4. The description of the HCCH Common Stock contained in the
Registration Statement on Form 8-A dated October 27, 1992.

All documents filed by HCCH pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the shares offered hereby shall be deemed
to be incorporated by reference herein and shall be a part hereof from the date
of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes hereof to the extent that a statement
contained herein (or in any other subsequently filed document which also is or
is

<PAGE> 5
deemed to be incorporated by reference herein) modifies or superseded such
statement. Any statements that are modified or superseded shall not be deemed
to constitute a part hereof except as so modified or superseded, to constitute
a part of this Prospectus.

HCCH will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits to such documents which are not specifically incorporated by
reference in such documents). Any request for such copies should be directed
to HCC Insurance Holdings, Inc, 13403 Northwest Highway, Houston, Texas, 77040,
Attn: Frank J. Bramanti, Secretary, telephone: (712) 690-7300.

<PAGE> 6
RISK FACTORS

In addition to the other information contained in this Prospectus and
incorporated herein by reference, prospective investors should carefully
consider the following factors in evaluating an investment in the shares of
Common Stock offered by this Prospectus.

Expansion. HCCH has actively pursued acquisitions for several years.
On February 28, 1997, HCCH entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which a wholly owned subsidiary of HCCH would
merge with and into AVEMCO Corporation, a Delaware corporation ("AVEMCO")
resulting in AVEMCO becoming a wholly-owned subsidiary of HCCH (the "Merger").
On June 17, 1997, HCCH consummated the Merger and acquired AVEMCO. HCCH has
also acquired the stock of or merged with other companies in businesses related
to AVEMCO's business and will continue to consider other possible strategic
acquisitions. The process of combining acquired companies may cause an
interruption of, or a loss of momentum in, the activities the businesses of
HCCH and such acquired companies and may materially adversely affect the
revenue and results of operations of the combined companies, at least in the
immediate period following each such acquisition. Furthermore, the process of
combining newly-acquired companies could have a material adverse effect on
employee morale and on the ability of the combined company to retain key
management and customers, underwriting, and sales and marketing personnel who
are critical to the combined company's future operations.

Natural Disasters. A significant portion of HCCH's and its
affiliates' business is providing property and casualty insurance and
reinsurance and acting as underwriting manager for medical and accident and
health insurance and reinsurance facilities. Their profitability is,
therefore, susceptible to losses caused by earthquakes, windstorms, floods and
other severe weather conditions or natural disasters. In recent years, natural
disasters such as Hurricane Andrew, earthquakes in California and Japan, and
windstorms in Europe have resulted in significant losses to the property and
casualty insurance industry. HCCH's results of operations and cash flows have
not been significantly adversely affected by such natural disasters but there
can be no assurances that future natural disasters will not have a material
adverse effect on HCCH's or its respective affiliates' results of operations.

Cyclical Nature of the Industry. A significant portion of HCCH's and
its respective affiliates' gross written premium ("GWP") is derived from the
property and casualty insurance industry, which has historically been cyclical.
These cycles are characterized by periods of excess capital and significant
competition in policy pricing, terms and conditions, followed by periods of
capital shortages, typically resulting from adverse loss experience, which
leads to decreased competition, higher premium rates and stricter underwriting
standards. The unpredictability of the property and casualty insurance
industry may contribute to significant fluctuations in underwriting results and
net earnings from quarter to quarter and from year to year. HCCH's and its
respective affiliates' business is also affected by industry conditions in the
insurance and reinsurance areas, which historically have been subject to
significant volatility in demand, supply and price. Insurance companies
generally purchase reinsurance in order, among other things, to manage their
exposures on insured risks, maintain acceptable financial ratios and protect
their underwriting results from the effects of catastrophic events. The
propensity of insurers to purchase, as well as the propensity of reinsurers to
supply, reinsurance is affected by a variety of factors, including the level of
surplus capacity in the insurance and reinsurance markets, prevailing premium
rates for insurance and reinsurance, underwriting experience, regulatory
considerations, changes in the investment environment and general economic
conditions and business trends. Because HCCH both purchases reinsurance and
manages reinsurance arrangements for others, it can be significantly affected
by these factors. To the extent that these factors influence the need for and
availability and price of reinsurance, they may also affect the amount of
reinsurance underwriting management and intermediary revenue received by HCCH.

<PAGE> 7
When reinsurance premium rates rise, the revenue associated with a particular
amount of coverage placed may increase. HCCH's ability to earn increased
revenue in such a situation may, however, be limited if insurers purchase less
reinsurance or if the supply of certain reinsurance coverage is curtailed.
Conversely, declining prices for reinsurance would generally reduce such
revenue, but could also reduce HCCH's cost of reinsurance to the extent it
purchases reinsurance. In any event, changes in the reinsurance market could
adversely affect HCCH or its respective affiliates.

Volatility of Aviation Insurance. HCCH's and its respective
affiliates' business as a direct writer of aviation insurance has historically
been subject to significant volatility in demand, supply and price. In the
agency distribution of aviation insurance, market share is highly fragmented,
and HCCH competes against numerous managing general agencies, independent
agencies, pools, syndicates and insurance companies. In addition, the
substantial decline in production in new general aviation aircraft provides
HCCH and its respective affiliates fewer units for which it can compete to
insure. Because of delays in learning of and settling claims, insurance may be
sold at inadequate rates for a period of time, exacerbating price competition
for those units which are available to insure. HCCH's and its affiliates'
other specialty insurance lines, including lenders' single interest, short-term
health and pleasure marine lines, are highly competitive, and in those areas
HCCH and its affiliates compete with many specialty insurance companies, as
well as multi-line insurance companies, many of which have more experience,
larger volumes of business and greater financial resources than the resources
of HCCH.

Reinsurance Considerations. HCCH's property and casualty insurance
business is partially dependent upon its ability to cede significant amounts of
the risk insured by HCCH. HCCH also provides reinsurance and retrocessions for
certain underwriting facilities with various reinsurers. The operation of such
underwriting facilities of HCCH is dependent, in part, on obtaining sufficient
reinsurance or retrocessional protection for the insurers and reinsurers
participating in the various facilities. The amount, availability and cost of
reinsurance or retrocessional protection are subject to prevailing market
conditions beyond the control of HCCH, and may affect the level of business and
profitability of HCCH, as well as the level of business assumed by the
facilities and the profitability thereof. HCCH and the facilities it manages
are also subject to credit risk with respect to the reinsurers to which
business has been ceded, since the ceding of risk to reinsurers does not
relieve the participating insurers or reinsurers under the facilities of their
liability to their insureds or reinsureds. No assurances can be given as to
HCCH's ability to maintain its current reinsurance or retrocessional protection
facilities, which generally are subject to annual renewal. If HCCH were unable
to maintain such facilities upon their expiration, either its net exposures
would increase, or, if it were unwilling to bear such increase in net
exposures, HCCH would be required to reduce the level of its underwriting
commitments. HCCH's management agreements for the reinsurance facilities for
which it serves as a reinsurance underwriting manager generally provide for
termination without cause upon written notice periods, usually 90 to 120 days,
or under certain circumstances, immediately; if certain of these agreements
were terminated, HCCH could be materially adversely affected.

Adequacy of Loss Reserves. Applicable insurance laws require HCCH and
its respective affiliates to maintain reserves to cover their estimated
ultimate liability for loss and loss adjustment expense ("LAE") with respect to
reported and incurred but not reported claims as of the end of each accounting
period. At any given time, these reserves are based on estimates of what HCCH
expects the ultimate settlement and administration of claims will cost,
assuming the facts and circumstances then known, predictions of future events,
estimates of future trends in claims severity and other variable, subjective
factors. The profit commission revenue of HCCH on its underwriting management
activities is partially paid in advance of final settlement of all claims and,
accordingly, is based upon similar estimates. No assurances can be given that
such estimates will accurately reflect actual losses incurred by HCCH and its
affiliates or actual profit commissions earned by HCCH, and any deviation from
such estimates and

<PAGE> 8
loss reserves or adjustment to such estimates and reserves may materially
adversely affect their respective results of operations reported in any given
period.

Medical Stop-Loss Business. HCCH's medical stop-loss business is
highly competitive and involves a diversified field of participants from small
start-up operations to large, well-established organizations. While the
medical stop-loss business has been historically competitive, during the past
several years there has been significant growth in the number of medical
stop-loss insurance underwriters. HCCH faces intense and growing pressure from
fully-insured plans, HMOs, Point of Service plans, large well established
direct insurers and competing underwriting managers providing medical stop-loss
products similar to those offered by HCCH to employer sponsored self-insured
health plans. Historically, most employer sponsored self-insured health plans
indemnify healthcare providers on a fee-for-service basis with little or no
managed-care elements. The current trend toward managed-care plan designs and,
more specifically, fully-insured plans, HMOs and Point of Service plans, has
had an adverse impact on the number of self-insured plans which has in turn
reduced the sales opportunities for the medical stop-loss products that HCCH
underwrites. Moreover, governmental regulation of self-insured plans, whether
directly or indirectly, could make self-insurance significantly less attractive
to employers. No assurances can be given that any such reduced medical
stop-loss opportunities and the other factors described herein will not have a
material adverse effect on HCCH or one of its respective affiliates.

Impact of Inflation and Changes in Interest Rates. A significant
portion of HCCH's revenue is related to healthcare insurance and reinsurance
products which are subject to the effects of the underlying inflation of
medical costs. Such inflation in the costs of healthcare tends to generate
increases in premiums for medical stop-loss coverage, resulting in greater
revenue, but also higher claim payments. Inflation may have a negative impact
on insurance and reinsurance operations by causing higher claim settlements
than may originally have been estimated without an immediate increase in
premiums to a level necessary to maintain profit margins being possible. No
express provision for inflation is made, although trends are considered when
setting underwriting terms and claim reserves for purposes of determining
revenue from underwriting profit commissions. Such reserves are subject to a
continuing review process to assess their adequacy and are adjusted as deemed
appropriate. In addition, the market value of the investments held by HCCH and
its respective affiliates varies depending on economic and market conditions
and interest rates, which are highly sensitive to the policies of governmental
and regulatory authorities. Any significant change in interest rates could
therefore have a material effect on the market value of the companies'
investments.

ERISA. ERISA governs the relationships between certain benefit plans
and the "fiduciaries" of those plans. In general, ERISA is designed to protect
the ultimate beneficiaries of the plans from wrongdoing by the fiduciaries.
ERISA provides that a person is a "fiduciary" of a plan to the extent that such
person has discretionary authority in the administration of the plan or with
respect to the plan's assets. The employers who are the customers of HCCH in
the medical stop-loss area are fiduciaries of the plans that they sponsor, but
there can also be other fiduciaries of a plan. ERISA imposes various express
obligations on fiduciaries. These include avoiding transactions in which the
fiduciary would have a conflict of interest with the plan and certain
transactions between the plan and parties in interest to the plan. Generally,
a "party in interest" with respect to a plan includes a fiduciary of the plan
and persons that provide services to the plan. Violations of ERISA by
fiduciaries can result in the rescission of any affected agreements and the
imposition of substantial civil penalties on fiduciaries and parties in
interest. The application of ERISA to the operations of HCCH and its customers
is an evolving area of law and is subject to ongoing regulatory and judicial
interpretations of ERISA. HCCH attempts to minimize the applicability of ERISA
to its business and further attempts to ensure both that its practices are not
inconsistent with ERISA and that it will not be deemed to be a "fiduciary."
There can, however, be no assurance that courts, the Department of Labor, or
other regulatory bodies will not take positions contrary

<PAGE> 9
to the present or future interpretations or practices of HCCH. Any such
contrary positions could require changes to the business practices of HCCH or
result in HCCH incurring the risk of liabilities as described above and could
have a material adverse effect on HCCH. Similarly, there can be no assurances
that future statutory changes to ERISA will not materially adversely affect the
business of HCCH.

Competition. The insurance business is generally highly competitive
and the aviation insurance industry, in which HCCH's wholly owned subsidiary
AVEMCO is primarily involved, is even more intensely competitive. HCCH faces
competition from domestic and foreign insurers, some of whom are larger and
have greater financial, marketing and management resources than HCCH. HCCH's
and its respective affiliates' profitability is affected by many other factors,
including rate competition, severity and frequency of claims, interest rates,
state regulations, court decisions, the judicial climate and general business
conditions, all of which are outside the control of HCCH or its affiliates.
HCCH's medical stop-loss business involves a diversified field of participants
from small start-up operations to large, well-established organizations. While
the medical stop-loss business has been historically competitive, during the
past several years there has been significant growth in the number of medical
stop-loss insurance underwriters. HCCH also faces intense and growing pressure
from alternatives to employer sponsored self-insured health plans, such as
fully-insured plans, HMOs and Point of Service plans, as well as from large
well established direct insurers and competing underwriting managers providing
similar medical stop-loss products to those offered by HCCH to employer
sponsored self-insured health plans. Competition in the reinsurance
marketplace is primarily due to an increase in the number of reinsurers
participating in the market as well as a tendency by reinsureds to retain a
greater percentage of their own risk. HCCH competes with other reinsurance
underwriting managers and domestic and international reinsurance companies.
HCCH's results of operations may also be affected by the competition for
reinsurance business between broker reinsurance markets and direct reinsurance
writers. HCCH also competes with many reinsurance intermediaries in the broker
reinsurance market, some of which are affiliated with primary insurance brokers
with substantial financial resources. In each of the above business areas, a
significant number of HCCH's and its respective affiliates' competitors have
financial resources, employees, facilities, market recognition, marketing,
management, experience, and other resources substantially greater than those of
HCCH.

Regulation and Licensing. HCCH and its respective affiliates are
subject to governmental regulation in each of the states in which they conduct
business. Such regulation is vested in state agencies, which have broad
supervisory, regulatory and administrative powers to deal with all aspects of
the business of HCCH and its affiliates, including licenses, rates, policy
forms, capital adequacy, payment of dividends, security deposits, methods of
accounting, investments, form and content of financial statements, reserves for
unpaid loss and LAE, reinsurance, standards of solvency, periodic examinations
and annual and other report filings. A change in such laws and regulations may
adversely affect the revenues and expenses of HCCH and its respective
affiliates. In general, state agencies are primarily concerned with the
protection of policyholders rather than shareholders. In addition, legislation
has been considered or is pending or being contemplated which could have a
material adverse effect on HCCH and its respective affiliates. HCCH does not
know at this time the extent to which federal or state legislative or
regulatory initiatives may be adopted, and no assurance can be given that any
such adoption would not have a material adverse effect on HCCH's or its
affiliates' business. The operations of HCCH and its respective affiliates are
also subject to state insurance laws and regulations requiring the licensing of
insurance agents, brokers, reinsurance intermediaries, reinsurance underwriting
managers, and managing general agents and regulating certain aspects of their
business. These laws and regulations are intended primarily for the protection
of policyholders, rather than shareholders of the licensed entities, and may
include requirements for certain provisions in contracts entered into between
HCCH and various insurers or reinsurers, certain record keeping and reporting
requirements, advertising and business practice rules, and other matters. The
businesses of HCCH and its respective affiliates depend on obtaining and

<PAGE> 10
maintaining licenses and approvals pursuant to which they operate, as well as
compliance with pertinent regulations. There can be no assurance given that
HCCH or its affiliates have all such required licenses, approvals or complying
contracts or that such licenses, approvals or complying contracts can always be
obtained or continued. In all jurisdictions, the applicable laws and
regulations are subject to amendment or interpretation by regulatory
authorities, and the possibility exists that HCCH or one of its affiliates may
be precluded or temporarily suspended from carrying on some or all of its
activities in a given jurisdiction. Such preclusion or suspension could have a
materially adverse effect on the business and results of operations of HCCH.

Holding Company Structure and Dividends. HCCH is defined, for
purposes of state laws, as an "insurance holding company" and is dependent upon
the ability of its insurer subsidiaries to pay dividends to it (or to the
intermediate parents within the holding company structure of which they are a
part) to meet their obligations and cover their expenses. Insurance companies
are limited by law to the payment of dividends out of surplus earnings above a
specified level, generally the greater of ten percent of the insurer's surplus
as regards its policyholders or the prior year's investment income (Texas) or,
under certain conditions, the prior year's statutory net income (Maryland).
Dividends in excess of those thresholds are "extraordinary dividends" and
subject to prior regulatory approval. In the past, the NAIC has encouraged
various state insurance regulatory authorities and legislatures to promote the
adoption of standards for approval of dividends that would exceed the lesser of
the surplus/earnings (investment income) tests, which would reduce the
"extraordinary dividend" threshold and increase the frequency of regulatory
approval for the payment of dividends by insurers.

Foreign Operations. Approximately 59% of HCCH's 1996 GWP was for
insureds located outside the United States. As such, it is subject to
regulations in the countries in which it operates, as well as United States
restrictions on doing business in certain countries, and other regulations
relating to foreign operations. International operations are subject to
various risks not present in domestic operations such as fluctuations in
currency exchange rates, nationalization or expropriation of assets,
import/export controls, political instability, limitations on foreign
investment, restrictions on the ability to convert currency, and the additional
expense and risks inherent in conducting operations in geographically distant
locations, with customers speaking different languages and having different
cultural approaches to the conduct of business. There can be no assurance that
the business of HCCH will not be materially adversely affected by these factors
in the future.

Factors Affecting Market Price of HCCH Common Stock. Since the market
prices of HCCH Common Stock is subject to fluctuation, there can be no
assurance that the market value of the shares of HCCH Common Stock will
maintain or equal the price at which its shares have traded in the past. The
prices at which HCCH Common Stock trades may be influenced by many factors
including, among others, the liquidity of the market for HCCH Common Stock,
investor and market analyst perceptions of HCCH and the industry in which it
operates, the combined operating results of HCCH and its respective affiliates,
HCCH's dividend policy, the short and long term effects of the merger with
AVEMCO and general economic and market conditions.

THE COMPANIES

HCCH and its subsidiaries provide specialized property and casualty
insurance to commercial customers, underwritten on both a direct and a
reinsurance basis, and, to a lesser extent, insurance agency services. HCCH's
principal insurance company subsidiaries are Houston Casualty Company and
AVEMCO Corporation, which operate in both domestic and international markets.
HCCH's principal insurance agency subsidiary is LDG Management Company
Incorporated ("LDG"). HCCH's underwriting activities are focused on providing
aviation, marine, offshore energy, property and accident and health

<PAGE> 11
insurance on a worldwide basis, as well as international reinsurance on these
same lines of business. HCCH also specializes in marketing and servicing
complicated, high value, structured insurance and reinsurance programs placed
on behalf of domestic and foreign clients which cover large, ocean marine
fleets; complex, multinational energy and industrial businesses; international
aviation operations; large, international property accounts and a variety of
accident and health related risks. HCCH derives substantially the same amount
of its business from domestic as from international operations. HCCH operates
primarily on a surplus lines or non-admitted basis and is licensed in Texas and
Oklahoma.

HCCH's operating philosophy is to maximize underwriting profit, both
for itself and for the insurance and reinsurance companies for which it
provides underwriting management, marketing and related services, while
preserving the integrity of shareholders' equity. HCCH concentrates its
underwriting in selected, narrowly defined liens of business in which it
believes there is a substantial opportunity to achieve underwriting profits.
In addition to acting as a reinsurance underwriting manager, HCCH purchases a
substantial amount of reinsurance to limit its net loss form both individual
and catastrophic risks. HCCH believes its operational flexibility, experienced
underwriting personnel and access to, and expertise in, the reinsurance
marketplace enable HCCH to complement its strategies of emphasizing more
profitable lines of business during periods of severe competition and offering
reinsurance capacity to meet market opportunities, together with providing
quality underwriting, management decision-making and support and resource for
the development of new reinsurance products.

RECENT DEVELOPMENTS

On February 28, 1997, HCCH entered into a Merger Agreement pursuant to
which AVEMCO would merge with and into HCCH, resulting in AVEMCO becoming a
wholly-owned subsidiary of HCCH. On June 17, 1997, the Merger was consummated
and AVEMCO became a wholly-owned subsidiary of HCCH. AVEMCO is engaged in the
business of providing specialty property and casualty insurance products and
services, principally involving aviation. Non-aviation specialty lines
include lenders single interest, short-term health, and pleasure marine.
Insurance products are distributed on a direct basis nationally and in Canada
(except Quebec), and through agency and brokerage networks nationwide.
AVEMCO's principal offices are in Frederick, Maryland.

Pursuant to the Merger Agreement, HCCH issued 8,403,787 shares of its
Common Stock to the holders of AVEMCO common stock. In addition, holders of
AVEMCO Options, entitled to exercise such options at their respective exercise
prices for an aggregate of 715,625 shares of common stock of AVEMCO, will,
pursuant to the Merger Agreement and upon exercise of the AVEMCO Options,
receive an aggregate of 715,625 shares in satisfaction thereof. Each holder of
an AVEMCO Option will receive that number of shares of common stock of HCCH to
which such holder would have been entitled upon consummation of the Merger if
such option had been exercised immediately before the Merger.

On April 30, 1997, HCCH acquired all of the outstanding capital stock
of The Interworld Group of companies, including Aviation and Marine Insurance
Group, Inc., Signal Aviation Underwriters, Inc. and Signal Aviation Insurance
Services, Inc. The Interworld Group specializes in underwriting general
aviation risks throughout the United States with special emphasis on private
and corporate aircraft as well as small to medium-size airports.

USE OF PROCEEDS

HCCH intends to use the net proceeds for general corporate purposes.

<PAGE> 12
PLAN OF DISTRIBUTION

The Common Stock offered hereby is not offered through underwriters.
Such stock will be issued directly to holders of AVEMCO Options upon exercise
thereof.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being
passed upon for the Company by Winstead Sechrest & Minick P.C., Houston, Texas.

EXPERTS

The consolidated financial statements and financial statement schedules
as of December 31, 1996 and 1995 and for the three years in the period ended
December 31, 1996 of HCCH incorporated by reference in the Prospectus and
Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their reports. In their reports, that
firm states that with respect to HCCH, its opinion is based, in part, on the
report of Tonneson & Company C.P.A.'s P.C., independent certified public
accountants, with respect to their audit of the combined financial statements
of LDG for the year ended December 31, 1994. The financial statements and
financial statement schedules referred to above have been incorporated by
reference herein in reliance upon the authority of those firms as experts in
accounting and auditing in giving said reports.

<PAGE> 13
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses of this offering will be paid by HCC Insurance Holdings,
Inc. (the "Registrant") and are estimated as follows:

<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . $ 5,842
Printing Including Engraving of Share Certificates . . . 5,000*
Legal Fees and Expenses . . . . . . . . . . . . . . . . 10,000*
Accounting Fees and Expenses . . . . . . . . . . . . . . 5,000*
Miscellaneous . . . . . . . . . . . . . . . . . . . . 4,158*
===========
Total . . . . . . . . . . . . . . . . . $ 30,000*
</TABLE>

----------
* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Reference is made to Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director to the corporation or its stock holders for
monetary damages for breach of the director's fiduciary duty, except (i) for
any breach of the director's duty of loyalty to the corporation to its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions), or (iv) for any
transaction from which the director derived an improper personal benefit. The
Registrant's Certificate of Incorporation contains provision permitted by
Section 102(b)(7) of the DGCL.

HCCH is incorporated under the laws of the State of Delaware. Section
145 of the DGCL ("Section 145") provides that a Delaware corporation may
indemnify any persons who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was unlawful. A Delaware corporation may indemnify
any persons who were or are parties, or are threatened to be made a party, to
any threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person is or was a director,
officer, employee or agent of such corporation or enterprise. The indemnity
may include expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interest
except that no indemnification is permitted without judicial approval if the
officer is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director has actually and reasonably incurred.

<PAGE> 14
Article IX of HCCH's Restated Certificate of Incorporation, as
amended, requires HCCH to indemnify HCCH's directors and officers to the extent
permitted under Section 145.

Article VIII of HCCH's Bylaws provides that HCCH shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (other than an action by or in the
right of HCCH), by reason of the fact that he is or was a director or officer
of HCCH, or is or was serving at the request of HCCH as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of HCCH and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The determination of
whether an incumbent or former director or officer is entitled to
indemnification because such officer or director has met the applicable
standards of conduct set forth above is to be made, unless ordered by a court:
(i) by a majority vote of a quorum consisting of directors who at the time of
the vote are not parties to the proceeding; (ii) if such quorum cannot be
obtained, or even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion; or (iii) by a vote of
shareholders of HCCH. The HCCH Bylaws further provide that the expenses
(including attorneys' fees) incurred in any such action by a director of
officer of HCCH may be paid or reimbursed by HCCH in advance of the final
disposition of such action, suit or proceeding upon receipt of a written
undertaking by or on behalf of the director or officer to repay the amount paid
or reimbursed if it is ultimately determined that he is not entitled to be
indemnified by HCCH as authorized therein.

HCCH's Bylaws also provide that HCCH may indemnify to the extent of
the provisions set forth therein, any person, other than an officer or
director, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was an employee or agent of HCCH, or was serving at the request of HCCH as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, if such person makes written application
for such indemnification to the HCCH Board and the HCCH Board so determines
that indemnification is appropriate and the extent thereof.

HCCH's Bylaws further provide that the indemnification described
therein is not exclusive, and shall not exclude any other rights to which the
person seeking to be indemnified may be entitled under statute, any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in his official capacity and to his action in another capacity
while holding such office.

ITEM 16. EXHIBITS

EXHIBIT NO. EXHIBIT
- ----------- -------

2.1 Agreement and Plan of Reorganization between HCCH, AVEMCO et al.
Filed with the SEC as Appendix A to the Proxy Statement contained
in the Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.
3.1 Restated Certificate of Incorporation of HCC Insurance Holdings,
Inc. as filed with the Delaware Secretary of State on July 23, 1996
Filed with the SEC as Appendix D to the Proxy Statement contained
in the Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.

II-2

<PAGE> 15
3.2 Bylaws of HCC Insurance Holdings, Inc., as amended. Filed with
the SEC as Appendix E to the Proxy Statement contained in the
Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.
4.1 Specimen Common Stock Certificate, $1.00 par value per share, of
HCC Insurance Holdings, Inc. Filed with the SEC as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-1, Reg. No.
33-48737, and incorporated herein by reference.
5 Opinion and Consent of Winstead Sechrest & Minick P.C. regarding
legality -- Filed herewith.
23.1 Consent of Coopers & Lybrand L.L.P. -- Filed herewith
23.2 Consent of Tonneson & Company C.P.A.'s P.C. -- Filed herewith
23.3 Consent of Winstead Sechrest & Minick P.C. -- Included in their
opinion filed as Exhibit 5.
24 Powers of Attorney -- Filed herewith
28 Information from reports furnished to the State Board of Insurance
for the State of Texas. Filed with the SEC as Exhibits to the
Registrant's Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 15 above, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling persons of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:

(i) to include any Prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the Prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
and

(iii) to include any information with respect to the plan
of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in any post-effective
amendment by those paragraphs is contained in periodical reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) or the Securities and Exchange Act of 1934
that are incorporated by reference in the Registration Statement.

II-3

<PAGE> 16
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post\effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(3) To remove from Registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.

(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange act of 1934
that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.

II-4

<PAGE> 17
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 27th day of
June, 1997.

HCC INSURANCE HOLDINGS, INC.

By: /s/ Stephen L. Way
----------------------------------
Stephen L. Way
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 27, 1997.

<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Stephen L. Way Chairman of the Board and Chief Executive Officer
- ---------------------------------- (Principal Executive Officer)
Stephen L. Way

/s/ Frank J. Bramanti President, Secretary, Chief Financial Officer (Principal
- ---------------------------------- Financial Officer and Principal Accounting Officer)
Frank J. Bramanti

/s/ Stephen J. Lockwood Vice Chairman of the Board and Director
- ----------------------------------
Stephen J. Lockwood*

/s/ James M. Berry Director
- ----------------------------------
James M. Berry*

/s/ Patrick B. Collins Director
- ----------------------------------
Patrick B. Collins*

/s/ J. Robert Dickerson Director
- ----------------------------------
J. Robert Dickerson*

/s/ Edwin H. Frank, III Director
- ----------------------------------
Edwin H. Frank, III*

/s/ Allan W. Fulkerson Director
- ----------------------------------
Allan W. Fulkerson*

/s/ Walter J. Lack Director
- ----------------------------------
Walter J. Lack*

/s/ Hugh T. Wilson Director
- ----------------------------------
Hugh T. Wilson*

*By: /s/ Frank J. Bramanti
------------------------------
Frank J. Bramanti
Attorney-in-fact
</TABLE>

II-5

<PAGE> 18
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization between HCCH, AVEMCO et al.
Filed with the SEC as Appendix A to the Proxy Statement contained
in the Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.
3.1 Restated Certificate of Incorporation of HCC Insurance Holdings,
Inc. as filed with the Delaware Secretary of State on July 23, 1996
Filed with the SEC as Appendix D to the Proxy Statement contained
in the Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.
3.2 Bylaws of HCC Insurance Holdings, Inc., as amended. Filed with
the SEC as Appendix E to the Proxy Statement contained in the
Registrant's Registration Statement on Form S-4, Reg. No.
333-25513, and incorporated herein by reference.
4.1 Specimen Common Stock Certificate, $1.00 par value per share, of
HCC Insurance Holdings, Inc. Filed with the SEC as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-1, Reg. No.
33-48737, and incorporated herein by reference.
5 Opinion and Consent of Winstead Sechrest & Minick P.C. regarding
legality -- Filed herewith.
23.1 Consent of Coopers & Lybrand L.L.P. -- Filed herewith
23.2 Consent of Tonneson & Company C.P.A.'s P.C. -- Filed herewith
23.3 Consent of Winstead Sechrest & Minick P.C. -- Included in their
opinion filed as Exhibit 5.
24 Powers of Attorney -- Filed herewith
28 Information from reports furnished to the State Board of Insurance
for the State of Texas. Filed with the SEC as Exhibits to the
Registrant's Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.
</TABLE>

<PAGE> 1
EXHIBIT 5

[WINSTEAD SECHREST & MINICK LETTERHEAD]

June 27, 1997

Board of Directors
HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040-6094

Gentlemen:

You have requested our opinion as to the legality of the issuance of the
715,625 shares (the "Shares") of the common stock, $1.00 par value per share,
of HCC Insurance Holdings, Inc. (the "Company"), which are the subject of a
Registration Statement on Form S-3 (the "Registration Statement") filed by the
Company with the Securities and Exchange Commission ("SEC") pursuant to the
Securities Act of 1933, as amended. You have also requested our opinion as to
whether the Shares, either issued or to be issued, are or will be fully-paid
and non-assessable.

We have examined the Certificate of Incorporation of the Company, the
Bylaws and such other corporate records, documents and proceedings (including
the resolutions adopted by the Board of Directors of the Company in connection
with the issuance of the Shares) as we have deemed necessary for the purposes
of this opinion.

On the basis of the foregoing, it is our opinion that the 715,625 Shares
to be issued by the Company have been duly and validly authorized by all
necessary corporate action of the Company and, subject to payment therefor,
each of such Shares are or will be duly and validly issued, fully paid and
non-assessable shares of common stock of the Company.
<PAGE> 2
Board of Directors
June 27, 1997
Page 2

We are aware that we are named in the Registration Statement and we
hereby consent to the use of our name in the Registration Statement and to the
filing of this opinion as Exhibit 5 to the Registration Statement.

Very truly yours,

WINSTEAD SECHREST & MINICK P.C.

By: /s/ Arthur S. Berner
------------------------------------------
Arthur S. Berner, for the Firm

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration statement of
HCC Insurance Holdings, Inc. on Form S-3 of our reports dated March 27, 1997,
on our audits of the consolidated financial statements and financial statement
schedules of HCC Insurance Holdings, Inc. as of December 31, 1996 and 1995,
and for the three years in the period ended December 31, 1996. Our reports
state that our reports are based on the report of Tonneson & Company C.P.A.'s
P.C., independent certified public accountants with respect to their audit of
the combined financial statements of LDG Management Company Incorporated and
Affiliates for the year ended December 31, 1994. We also consent to the
reference to our firm under the caption "Experts".

Coopers & Lybrand L.L.P.

/s/ Coopers & Lybrand L.L.P.

Houston, Texas
June 30, 1997

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration
statement on Form S-3 of our report dated April 6, 1995 on our audit of the
combined financial statements of LDG Management Company Incorporated (an
S corporation) and Affiliates (S corporations) for the year ended December 31,
1994. We also consent to the reference to our firm under the caption "Experts".

TONNESON & COMPANY C.P.A.'s P.C.

/s/ Tonneson & Company C.P.A.'s P.C.

Wakefield, Massachusetts
June 30, 1997

<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints STEPHEN L. WAY and FRANK J. BRAMANTI, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him and in his name, place, and stead, in any and all
capacities, to sign the Form S-3 Registration Statement of HCC Insurance
Holdings, Inc. (the "Registrant") with respect to shares of common stock of the
Registrant issuable upon exercise of certain options issued by AVEMCO
Corporation before its merger into a wholly owned subsidiary of the Registrant,
to sign any and all amendments to same (including post-effective amendments),
and to file same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and/or any state
securities department or any other federal or state agency or governmental
authority, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, or any of them, whether
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

/s/ Stephen J. Lockwood
------------------------------
Stephen J. Lockwood
<PAGE> 2

POWER OF ATTORNEY

/s/ James M. Berry
------------------------------
James M. Berry
<PAGE> 3

POWER OF ATTORNEY

/s/ Patrick B. Collins
------------------------------
Patrick B. Collins
<PAGE> 4

POWER OF ATTORNEY

/s/ J. Robert Dickerson
------------------------------
J. Robert Dickerson
<PAGE> 5

POWER OF ATTORNEY

/s/ Edwin H. Frank, III
------------------------------
Edwin H. Frank, III

<PAGE> 6

POWER OF ATTORNEY

/s/ Allan W. Fulkerson
------------------------------
Allan W. Fulkerson
<PAGE> 7

POWER OF ATTORNEY

/s/ Walter J. Lack
------------------------------
Walter J. Lack
<PAGE> 8

POWER OF ATTORNEY

/s/ Hugh T. Wilson
------------------------------
Hugh T. Wilson