The following ratings' changes were generated on September 22.

HCC Insurance Holding ( HCC) has been upgraded from hold to buy. HCC Insurance Holdings, together with its subsidiaries, provides property and casualty, surety, group life, accident, and health insurance coverage, and related agency and reinsurance brokerage services to commercial customers and individuals. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, relatively strong performance when compared with the S&P 500 during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow

HCC's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels.

HCC, with its decline in revenue, underperformed when compared with the industry average of 10.1%. Since the same quarter one year prior, revenue slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

Compared with where it was trading a year ago, HCC's share price has not changed very much due to the relatively weak year-over-year performance of the overall market, the company's stagnant earnings and other mixed results. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared with other companies in the insurance industry and the overall market, HCC's return on equity exceeds that of both the industry average and the S&P 500.

HCC'S earnings per share declined by 7.0% in the most-recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HCC increased its bottom line by earning $3.38 vs. $2.92 in the prior year. For the next year, the market is expecting a contraction of 10.4% in earnings ($3.03 vs. $3.38).

HCC had been rated a hold since March 11, 2008.

First BanCorp Holding ( FBP) has been upgraded from sell to hold. First BanCorp operates as the bank holding company for FirstBank Puerto Rico that provides financial services and products for retail, commercial and institutional clients in Puerto Rico, the U.S. and the British Virgin Islands.The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the commercial banks industry. The net income increased by 38.6% when compared with the same quarter one year prior, rising from $23.80 million to $32.99 million.

36.50% is the gross profit margin for FBP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.40% is above that of the industry average.

Net operating cash flow has increased to $45.76 million or 14.04% when compared with the same quarter last year. Despite an increase in cash flow of 14.04%, FBP is still growing at a significantly lower rate than the industry average of 354.46%.

FBP, with its decline in revenue, underperformed when compared with the industry average of 12.2%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared with other companies in the commercial banks industry and the overall market, FBP's return on equity is below that of both the industry average and the S&P 500.

FBP had been rated a sell since July 25, 2008.

Mercury General ( MCY) has been upgraded from sell to hold. Mercury General and its subsidiaries engage in writing private passenger and commercial automobile insurance in the U.S. The company also writes homeowners, mechanical breakdown, commercial and dwelling fire and commercial property insurance. The rating is based on the company's strong underwriting results and improved earnings, which are countered by declining revenue and lower operating income. Although the company is operating with low leverage, deteriorating returns and intense competition in the California automobile insurance market are areas of concern.

For the second quarter of fiscal year 2008, Mercury General's total revenue slipped 2.3% year over year to $787.90 million, weighed down by lower net premiums earned and a decline in net investment income. Net premiums declined 5.7% to $711.20 million while net investment income dropped 4.4% to $39.00 million during the quarter.

Deteriorating operating income. Net income for the quarter increased 1.8% year over year to $70.73 million or $1.29 per share. However, excluding net realized investment gains of $23.72 million or 43 cents per share, the company's operating income dropped 25.4% to $47.00 million or 86 cents per share from $63.02 million or $1.15 per share.

The company had a lower debt-to-equity ratio of 0.08, implying its successful management of debt.

For the latest second quarter, the company's combined ratio increased to 97.00% from 94.00% a year ago on an increase in the expenses ratio, which grew to 28.20% from 27.10%. The loss ratio also increased to 68.80% from 66.90% a year ago. Despite the increase, the combined ratio remained below the regulatory benchmark of 100.00%, reflecting sound underwriting results.

For the second quarter of fiscal year 2008, the company's return on equity diminished 452 basis points to 9.36% from 13.88% while return on assets reduced 163 basis points to 4.05% from 5.68% a year ago

MCY had been rated a sell since April 18, 2008.

Intersil ( ISIL) has been upgraded from hold to buy. Intersil engages in the design and manufacture of analog integrated circuits. It offers a portfolio of application specific standard products and general purpose proprietary products for high-end consumer, industrial, communications and computing markets. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

ISIL's revenue growth has slightly outpaced the industry average of 11.8%. Since the same quarter one year prior, revenue rose by 21.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

ISIL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.48, which clearly demonstrates the ability to cover short-term cash needs.

The gross profit margin for ISIL is rather high; currently it is at 59.10%. Regardless of ISIL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ISIL's net profit margin of 17.60% compares favorably with to the industry average.

ISIL's stock share price has done very poorly compared with where it was a year ago: Despite any rallies, the net result is that it is down by 44.13%, which is also worse that the performance of the S&P 500 Index.

Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we think that it is too soon to buy.

Net operating cash flow has decreased to $56.33 million or 22.15% when compared with the same quarter last year. In addition, when comparing the cash generation rate with the industry average, the firm's growth is significantly lower.

MCY had been rated a sell since September 19, 2006.

Cosan ( CZZ) has been initiated at sell. Cosan Limited, through its subsidiaries, engages in the manufacture and sale of sugar and ethanol primarily in Brazil. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income and poor profit margins.

CZZ has experienced a steep decline in earnings per share in the most-recent quarter in comparison with its performance from the same quarter a year ago.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared with that of the S&P 500 and the food products industry. The net income has significantly decreased by 2454.7% when compared with the same quarter one year ago, falling from $1.25 million to -$29.32 million.

The gross profit margin for CZZ is currently lower than what is desirable, coming in at 27.30%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -7.40% is significantly below that of the industry average.

The share price of CZZ is down 13.33% when compared to where it was trading one year earlier. This reflects both the trend in the overall market as well as the sharp decline in the company's earnings per share.

Compared with other companies in the food products industry and the overall market, CZZ's return on equity significantly trails that of both the industry average and the S&P 500.

Each business day, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.

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