Founder of Houston Insurance Firm Steps Down over Stock Option Woes

November 20, 2006 ( - The founder and chief executive officer of HCC Insurance Holdings Inc., Stephen Way, has stepped down after an independent probe uncovered improper stock option granting practices by the insurance firm.

A Web site statement  said that Way’s resignation was effective on Friday but that he will stay on as a director and serve as the non-executive chairman of the Board of Directors. Also, Chris Martin resigned as executive vice president and general counsel, according to the announcement.

HCC said its investigation concluded that the company used incorrect measurement dates for certain stock option grants covering a significant number of employees during the period from 1995 through 2006. The company and the special investigative committee are working with their advisers to pinpoint the appropriate measurement dates and assess the related financial effects.

The estimated cumulative pre-tax financial impact of recording additional non-cash charges associated with stock option grants is not likely to exceed $37 million spread over the vesting periods of the options in question. The company said it has changed its option granting practices to provide for fixed grant dates.

HCC also tapped Frank Bramanti as its new chief executive officer. Bramanti has more than 25 five years of experience in the property and casualty business, almost all of which were with HCC, according to the announcement.