Hallmark Financial Services, Inc. (“Hallmark”) (NASDAQ: HALL) today
announced financial results for the second quarter and six months
ended June 30, 2022.
|
Second Quarter |
|
Year-to-Date |
|
|
2022 |
2021 |
|
2022 |
2021 |
|
$ in
millions: |
|
|
|
|
|
|
Net (Loss) Income |
$ |
(69.4 |
) |
$ |
(0.8 |
) |
|
$ |
(72.6 |
) |
$ |
8.1 |
|
Operating (Loss) Income (1) |
$ |
(42.4 |
) |
$ |
(3.9 |
) |
|
$ |
(45.6 |
) |
$ |
0.5 |
|
|
|
|
|
|
|
|
$ per diluted share: |
|
|
|
|
|
|
Net (Loss) Income |
$ |
(3.82 |
) |
$ |
(0.05 |
) |
|
$ |
(4.00 |
) |
$ |
0.45 |
|
Operating (Loss) Income (1) |
$ |
(2.33 |
) |
$ |
(0.22 |
) |
|
$ |
(2.51 |
) |
$ |
0.03 |
|
(1) See “Non-GAAP Financial
Measures” belowHighlights:
- Net loss of $69.4 million, or $3.82
per share, in the second quarter of 2022 as compared to a net loss
of $0.8 million, or $0.05 per share, for the same period of 2021.
Year-to-date net loss of $72.6 million, or $4.00 per share, as
compared to net income of $8.1 million, or $0.45 per share, for the
same period of 2021.
- The net loss for the second quarter
and first six months of 2022 included a full valuation allowance of
$23.9 million against net deferred tax assets primarily due to
recent net losses, including the current period net loss.
- The net loss for the second quarter
included a $42.7 million after-tax impact from the previously
announced exited contract binding business. This impact was driven
by unfavorable prior year loss reserve development of $35.6 million
during the quarter, of which $29.6 million related to exceeding the
aggregate limit of the loss portfolio transfer agreement entered
into in fiscal 2020.
- Net combined ratio of 169.2% and 137.1% for the three and six
months ended June 30, 2022, compared to 106.4% and 101.3% for the
same periods the prior year
- Underlying combined ratio
(excluding net prior year development and catastrophe losses) of
97.3% and 96.3% for the three and six months ended June 30, 2022,
compared to 99.4% and 95.9% for the same periods the prior year.
See Non-GAAP Financial Measures below.
- Gross premiums written for the
three and six months ended June 30, 2022 increased 7.3% and 0.1%,
respectively, compared to the same period the prior year.
- Net catastrophe losses were $2.0
million in the second quarter of 2022, or 2.5 points of the net
combined ratio, as compared to $3.7 million, or 3.8 points of the
net combined ratio, for the same period the prior year. Net
catastrophe losses were $3.1 million for the first six months of
2022, or 1.9 points of the net combined ratio, as compared to $9.6
million, or 4.8 points of the net combined ratio, for the same
period the prior year.
- Net investment income was $3.1
million and $5.0 million during the three and six months ended June
30, 2022, as compared to $2.4 million and $5.4 million during the
same periods in 2021.
- Net investment losses of $4.0
million during the second quarter of 2022 as compared to net
investment gains of $3.9 million during the same period the prior
year. Net investment losses of $3.9 million for the six months
ended June 30, 2022 as compared to net investment gains of $9.7
million during the same period the prior year.
Second Quarter and Year-to-Date 2022
Financial Review
|
|
|
|
|
|
|
|
|
Second Quarter |
|
Year-to-Date |
|
2022 |
2021 |
% Change |
|
2022 |
2021 |
% Change |
($ in
thousands) |
|
|
|
|
|
|
|
Gross premiums written |
$ |
182,066 |
|
$ |
169,716 |
|
7 |
% |
|
$ |
333,025 |
|
$ |
332,734 |
|
0 |
% |
Net premiums written |
$ |
84,301 |
|
$ |
87,486 |
|
-4 |
% |
|
$ |
162,622 |
|
$ |
178,983 |
|
-9 |
% |
Net premiums earned |
$ |
80,113 |
|
$ |
96,584 |
|
-17 |
% |
|
$ |
162,589 |
|
$ |
198,436 |
|
-18 |
% |
Investment income, net of expenses |
$ |
3,120 |
|
$ |
2,353 |
|
33 |
% |
|
$ |
4,979 |
|
$ |
5,363 |
|
-7 |
% |
Investment (losses) gains ,net |
$ |
(3,994 |
) |
$ |
3,876 |
|
nm |
|
$ |
(3,943 |
) |
$ |
9,655 |
|
nm |
Net (loss) income |
$ |
(69,417 |
) |
$ |
(845 |
) |
nm |
|
$ |
(72,636 |
) |
$ |
8,125 |
|
nm |
Operating (loss) income (1) |
$ |
(42,374 |
) |
$ |
(3,908 |
) |
nm |
|
$ |
(45,633 |
) |
$ |
498 |
|
nm |
Net (loss) income per share - basic |
$ |
(3.82 |
) |
$ |
(0.05 |
) |
nm |
|
$ |
(4.00 |
) |
$ |
0.45 |
|
nm |
Net (loss) income per share - diluted |
$ |
(3.82 |
) |
$ |
(0.05 |
) |
nm |
|
$ |
(4.00 |
) |
$ |
0.45 |
|
nm |
Operating (loss) income per share - diluted (1) |
$ |
(2.33 |
) |
$ |
(0.22 |
) |
nm |
|
$ |
(2.51 |
) |
$ |
0.03 |
|
nm |
Book value per share |
$ |
5.30 |
|
$ |
9.63 |
|
-45 |
% |
|
$ |
5.30 |
|
$ |
9.63 |
|
-45.0 |
% |
(1) See “Non-GAAP Financial Measures” below
Gross Premiums WrittenGross premiums written
were $182.1 million and $333.0 million during the three and six
months ended June 30, 2022, representing an increase of 7% and 0%
from the $169.7 million and $332.7 in gross premiums written for
the same periods in 2021.
Net Premiums WrittenNet premiums written were
$84.3 million and $162.6 million during the three and six months
ended June 30, 2022, representing a decrease of 4% and 9% from the
$87.5 million and $179.0 million in net premiums written for the
same periods in 2021.
Net Premiums EarnedNet premiums earned were
$80.1 million and $162.6 million for the three and six months ended
June 30, 2022, representing a decrease of 17% and 18% from the
$96.6 million and $198.4 million in net premiums earned for the
same periods in 2021.
InvestmentsTotal return on investment securities
was -1.1% during the second quarter of 2022. Despite both equity
and fixed income portfolios outperforming benchmarks, severe
declines in equity and fixed income markets during the quarter
prevented investments from contributing positively to results. The
total return on Hallmark’s equity portfolio was -6.0% compared to
-16.1% for the S&P 500 Stock Index. The total return on
Hallmark’s fixed income portfolio was -0.9% compared to -4.5% for
the Bloomberg Aggregate Bond Index.
Total return on investment securities was -1.3%
during the six months ended June 30, 2022, again significantly
outperforming market averages. The total return on Hallmark’s
equity portfolio was -3.2% compared to -20.0% for the S&P 500
Stock Index. The total return on Hallmark’s fixed income portfolio
was -1.6% compared to -10.4% for the Bloomberg Aggregate Bond
Index.
Beginning in second quarter of 2020, following
the steep decline in interest rates resulting from COVID-19
stimulus measures, significant restraint was exercised in making
new commitments to bond investments. The amount of cash held
steadily increased, growing to more than $350 million by 2021
year-end. As interest rates rose significantly in the latter part
of the first quarter of 2022, $154 million of cash was deployed
into fixed income securities at yields comparable to, or higher
than, the average yield of the existing portfolio. During the
second quarter of 2022, an additional $92 million was deployed in
debt securities of similar or better yields.
These actions had two primary purposes. First,
the cash reserves and short duration of debt securities held
provided protection to the balance sheet during what has been
described as among the worst periods of performance in bond markets
in U.S. history – avoiding unrealized losses in longer dated
maturities that will likely persist for years. Second,
opportunistic reinvestment of large sums of cash into income
generating securities with comparatively attractive yields is
expected to contribute to an increase in investment income in
future periods.
Net investment income was $3.1 million and $5.0
million during the three and six months ended June 30, 2022, as
compared to $2.4 million and $5.4 million during the same periods
in 2021. The 33% increase in net investment income during the
second quarter of 2022 was primarily due to the reinvestment of
cash into higher yielding securities, as discussed above.
Net investment losses were $4.0 million for the
second quarter of 2022 as compared to net investment gains of $3.9
million for the same period in 2021. Net realized gains on common
stocks of $1.0 million were offset by a $5.0 million reduction in
the amount of unrealized gains on common and preferred stocks
existing at March 31, 2022.
Net investment losses were $3.9 million for the
six months ended June 30, 2022 as compared to net investment gains
of $9.7 million for the same period in 2021. Net realized gains on
common stocks of $1.2 million were offset by a $5.1 million
reduction in the amount of unrealized gains on common and preferred
stocks existing at December 31, 2021.
Fixed-income securities were $435.3 million at
June 30, 2022, with a tax equivalent book yield of 2.9% compared to
2.4% as of December 31, 2021. As of June 30, 2022, the fixed-income
portfolio had an average modified duration of 1.0 years and
85% of the securities had remaining time to maturity of five years
or less. As of June 30, 2022, 9% of the investment portfolio
was invested in equity securities.
Total investments were $479.6 million at June
30, 2022. Cash and cash equivalents, including restricted cash were
$117.2 million. Total investments, cash and cash equivalents, and
restricted cash were $596.8 million or $32.81 per share.
Pre-Tax (Loss) IncomePre-tax loss was $57.6
million for the three months ended June 30, 2022, as compared to a
pre-tax loss of $1.0 million reported during the same period in
2021. The decline in pre-tax results for the second quarter of 2022
compared to the same period of the prior year was predominately
driven by higher loss and LAE of $35.4 million, as well as lower
revenue driven by lower net premiums earned of $16.5 million, net
investment losses of $4.0 million compared to net investment gains
of $3.9 million the prior year, and lower finance charges of $0.1
million, partially offset by higher net investment income of $0.8
million. Lower operating expenses of $2.7 million partially offset
the increase in pre-tax loss for the three months ended June 30,
2022 as compared to the same period of the prior year.
Pre-tax loss was $61.7 million for the six
months ended June 30, 2022, as compared to pre-tax income of $10.2
million reported for the same period the prior year. The decline in
pre-tax results for the six months ended June 30, 2022, was
predominately driven by higher loss and LAE of $30.0 million, as
well as lower revenue driven by decreased net premiums earned of
$35.8 million, net investment losses of $3.9 million compared to
net investment gains of $9.7 million the prior year, lower net
investment income of $0.4 million and lower finance charges of $0.3
million, partially offset by higher commission and fees of $0.1
million. Lower operating expenses of $8.3 million partially offset
the increase in pre-tax loss for the six months ended June 30, 2022
as compared to pre-tax income reported for the same period of the
prior year.
Loss and Loss Adjustment Expenses (“LAE”) and
Net Combined RatiosLosses and LAE increased by $35.4 million to
$111.9 million for the three months ended June 30, 2022, as
compared to the same period of the previous year. The increase in
losses and LAE during the second quarter 2022 was primarily due to
$55.6 million of adverse prior year loss reserve development, $35.6
million of which was from the exited contract binding line of the
primary commercial automobile business, as compared to $3.1 million
of unfavorable prior year loss reserve development for the same
period the prior year, partially offset by lower earned premium
volume and lower net catastrophe losses. Losses and LAE for the
second quarter of 2022 included $2.0 million of net catastrophe
losses as compared to $3.7 million during the same period of the
prior year.
Losses and LAE increased by $30.0 million to
$176.0 million for the six months ended June 30, 2022, as compared
to the same period of the previous year. The increase in losses and
LAE for the first six months of 2022 was primarily due to $63.3
million of unfavorable prior year loss reserve development, $44.4
million of which was from the exited contract binding line of the
primary commercial automobile business, as compared to $1.0 million
of unfavorable prior year loss reserve development for the prior
year period, partially offset by lower earned premium volume and
lower net catastrophe losses. Losses and LAE for the six months
ended June 30, 2022, included $3.1 million of net catastrophe
losses as compared to $9.6 million during the same period of the
prior year.
Net (Loss) Income Net loss was $69.4 million and
$72.6 million for the three and six months ended June 30, 2022 as
compared to net loss of $0.8 million and net income of $8.1 million
for the same periods during 2021. On a diluted basis per share, net
loss was $3.82 per share and $4.00 per share for the three and six
months ended June 30, 2022 as compared to a net loss of $0.05 per
share and net income of $0.45 per share for the three and six
months ended June 30, 2021. The effective tax rate was -17.8% for
the first six months of 2022 compared to 20.5% for the same
period in 2021. During the second quarter of 2022 Hallmark recorded
a full valuation allowance of $23.9 million against net deferred
tax assets primarily due to recent net losses, including the
current period net loss. The effective rate for the six months
ended June 30, 2021 varied from the statutory tax rates primarily
due to tax exempt interest income.
Net Loss, Expense and Combined RatiosThe net
loss ratio was 139.7% and 108.2% for the three and six months ended
June 30, 2022, as compared to 79.2% and 73.6% reported during the
same periods in 2021. Net unfavorable prior year loss reserve
development contributed 69.4 points and 38.9 points to the net loss
ratio for the three and six months ended June 30, 2022,
respectively, as compared to 3.2 points and 0.5 points for the same
periods during 2021. Catastrophe losses contributed 2.5 points and
1.9 points to the net loss ratio for the three and six months ended
June 30, 2022, respectively, as compared to 3.8 points and 4.8
points for the same periods during 2021.
The expense ratio was 29.5% and 28.9% for the
three and six months ended June 30, 2022, as compared to 27.2% and
27.7% during the same periods in 2021. The net combined ratio was
169.2% and 137.1% for the three and six months ended June 30, 2022,
as compared to 106.4% and 101.3% for the same periods during 2021.
The exited contract binding business adversely impacted the net
combined ratio by 45.2 points and 27.6 points during the three and
six months ended June 30, 2022.
Book Value Per ShareBook value per share
decreased 45% to $5.30 per share as of June 30, 2022 as compared to
$9.66 per share as of December 31, 2021.
Non-GAAP Financial Measures
The Company’s financial statements are prepared
in accordance with United States generally accepted accounting
principles (“GAAP”). However, the Company also presents and
discusses certain non-GAAP financial measures that it believes are
useful to investors as measures of operating performance.
Management may also use such non-GAAP financial measures in
evaluating the effectiveness of business strategies and for
planning and budgeting purposes. However, these non-GAAP financial
measures should not be viewed as an alternative or substitute for
the results reflected in the Company’s GAAP financial statements.
In addition, the Company’s definitions of these items may not be
comparable to the definitions used by other companies.
Operating income and operating income per share
are calculated by excluding net investment gains and losses and
asset impairments or valuation allowances from GAAP net income.
Asset impairments and valuation allowances are unusual and
infrequent charges for the Company. Management believes that
operating income and operating income per share provide useful
information to investors about the performance of and underlying
trends in the Company’s core insurance operations. Net income and
net income per share are the GAAP measures that are most directly
comparable to operating earnings and operating earnings per share.
A reconciliation of operating income and operating income per share
to the most comparable GAAP financial measures is presented
below.
Hallmark
Financial Services, Inc. and Subsidiaries |
|
Non-GAAP
Financial Measures Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Income
(Loss) |
Less
Tax |
Net |
Average |
Diluted |
|
($ in
thousands) |
Before
Tax |
Effect |
After Tax |
Shares
Diluted |
Per
Share |
|
Second Quarter 2022 |
|
|
|
|
|
|
Reported GAAP measures |
$ |
(57,550 |
) |
$ |
11,867 |
|
$ |
(69,417 |
) |
|
18,186 |
|
$ |
(3.82 |
) |
|
Excluded deferred tax valuation allowance |
$ |
- |
|
$ |
(23,888 |
) |
$ |
23,888 |
|
|
18,186 |
|
$ |
1.31 |
|
|
Excluded investment (gains)/losses |
$ |
3,994 |
|
$ |
839 |
|
$ |
3,155 |
|
|
18,186 |
|
$ |
0.17 |
|
|
Operating loss |
$ |
(53,556 |
) |
$ |
(11,182 |
) |
$ |
(42,374 |
) |
|
18,186 |
|
$ |
(2.33 |
) |
|
|
|
|
|
|
|
|
Second Quarter 2021 |
|
|
|
|
|
|
Reported GAAP measures |
$ |
(1,011 |
) |
$ |
(165 |
) |
$ |
(846 |
) |
|
18,171 |
|
$ |
(0.05 |
) |
|
Excluded investment (gains)/losses |
$ |
(3,876 |
) |
$ |
(814 |
) |
$ |
(3,062 |
) |
|
18,171 |
|
$ |
(0.17 |
) |
|
Operating loss |
$ |
(4,887 |
) |
$ |
(979 |
) |
$ |
(3,908 |
) |
|
18,171 |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
Year-to-Date 2022 |
|
|
|
|
|
|
Reported GAAP measures |
$ |
(61,669 |
) |
$ |
10,967 |
|
$ |
(72,636 |
) |
|
18,179 |
|
$ |
(4.00 |
) |
|
Excluded deferred tax valuation allowance |
$ |
- |
|
$ |
(23,888 |
) |
$ |
23,888 |
|
|
18,179 |
|
$ |
1.31 |
|
|
Excluded investment (gains)/losses |
$ |
3,943 |
|
$ |
828 |
|
$ |
3,115 |
|
|
18,179 |
|
$ |
0.17 |
|
|
Operating loss |
$ |
(57,726 |
) |
$ |
(12,093 |
) |
$ |
(45,633 |
) |
|
18,179 |
|
$ |
(2.51 |
) |
|
|
|
|
|
|
|
|
Year-to-Date 2021 |
|
|
|
|
|
|
Reported GAAP measures |
$ |
10,216 |
|
$ |
2,091 |
|
$ |
8,125 |
|
|
18,157 |
|
$ |
0.45 |
|
|
Excluded investment (gains)/losses |
$ |
(9,655 |
) |
$ |
(2,028 |
) |
$ |
(7,627 |
) |
|
18,157 |
|
$ |
(0.42 |
) |
|
Operating income |
$ |
561 |
|
$ |
63 |
|
$ |
498 |
|
|
18,157 |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
2ndQ
2022 |
2ndQ
2021 |
YTD
2022 |
YTD
2021 |
|
Net combined ratio |
|
169.2 |
% |
|
106.4 |
% |
|
137.1 |
% |
|
101.3 |
% |
|
Impact on net combined ratio |
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
69.4 |
% |
|
3.2 |
% |
|
38.9 |
% |
|
0.5 |
% |
|
Catastrophes, net of reinsurance |
|
2.5 |
% |
|
3.8 |
% |
|
1.9 |
% |
|
4.9 |
% |
|
Underlying combined ratio |
|
97.3 |
% |
|
99.4 |
% |
|
96.3 |
% |
|
95.9 |
% |
|
About Hallmark
Hallmark is a specialty property and casualty
insurance holding company with a diversified portfolio of insurance
products written on a national platform. With six insurance
subsidiaries, Hallmark markets, underwrites and services commercial
and personal insurance in select markets. Hallmark is headquartered
in Dallas, Texas and its common stock is listed on NASDAQ under the
symbol "HALL."
Forward-looking statements in this release are
made pursuant to the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
that actual results may differ materially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, continued acceptance
of the Company’s products and services in the marketplace,
competitive factors, interest rate trends, general economic
conditions, the availability of financing, underwriting loss
experience and other risks detailed from time to time in the
Company’s filings with the Securities and Exchange Commission.
For further information, please contact:
Chris KenneyPresidentChief Financial Officer
817.348.1600www.hallmarkgrp.com
Hallmark Financial Services, Inc. and
Subsidiaries |
Consolidated Balance Sheets |
|
|
|
|
($ in
thousands, except par value) |
|
Jun. 30 |
|
Dec. 31 |
ASSETS |
|
2022 |
|
2021 |
Investments: |
|
(unaudited) |
|
Debt securities, available-for-sale, at fair value (amortized cost:
$442,218 in 2022 and $288,175 in 2021) |
$ |
435,266 |
|
$ |
290,073 |
|
Equity securities (cost: $42,856 in 2022 and $42,120 in 2021) |
|
44,325 |
|
|
48,695 |
|
Total
investments |
|
479,591 |
|
|
338,768 |
|
Cash and
cash equivalents |
|
113,207 |
|
|
352,867 |
|
Restricted
cash |
|
4,019 |
|
|
3,810 |
|
Ceded
unearned premiums |
|
158,634 |
|
|
146,433 |
|
Premiums
receivable |
|
99,994 |
|
|
90,621 |
|
Accounts
receivable |
|
4,413 |
|
|
6,914 |
|
Receivable
from reinsurer |
|
38,645 |
|
|
- |
|
Receivable
for securities |
|
3,970 |
|
|
1,326 |
|
Reinsurance
recoverable |
|
522,957 |
|
|
549,964 |
|
Deferred
policy acquisition costs |
|
5,318 |
|
|
6,811 |
|
Intangible
assets, net |
|
567 |
|
|
819 |
|
Federal
income tax recoverable |
|
2,906 |
|
|
18,217 |
|
Deferred
federal income taxes, net |
|
- |
|
|
8,906 |
|
Prepaid
pension |
|
57 |
|
|
- |
|
Prepaid
expenses |
|
4,141 |
|
|
2,389 |
|
Other
assets |
|
27,584 |
|
|
25,753 |
|
Total Assets |
$ |
1,466,003 |
|
$ |
1,553,598 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Senior unsecured notes due 2029 (less unamortized debt issuance
costs of $697 in 2022 and $746 in 2021) |
$ |
49,303 |
|
$ |
49,254 |
|
Subordinated debt securities (less unamortized debt issuance costs
of $717 in 2022 and $744 in 2021) |
|
55,985 |
|
|
55,959 |
|
Reserves for unpaid losses and loss adjustment expenses |
|
848,207 |
|
|
816,681 |
|
Unearned premiums |
|
296,662 |
|
|
284,427 |
|
Reinsurance payable |
|
64,466 |
|
|
117,908 |
|
Pension liability |
|
- |
|
|
174 |
|
Payable for securities |
|
1,078 |
|
|
3,280 |
|
Accounts payable and other liabilities |
|
53,930 |
|
|
50,394 |
|
Total
Liabilities |
|
1,369,631 |
|
|
1,378,077 |
|
Commitments and contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common stock, $.18 par value, authorized 33,333,333 shares; issued
20,872,831 shares in 2022 and 2021 |
3,757 |
|
|
3,757 |
|
Additional paid-in capital |
|
123,166 |
|
|
122,844 |
|
Retained earnings |
|
2,067 |
|
|
74,703 |
|
Accumulated other comprehensive loss |
|
(7,984 |
) |
|
(1,035 |
) |
Treasury stock (2,688,007 shares in 2022 and 2,700,364 shares in
2021), at cost |
|
(24,634 |
) |
|
(24,748 |
) |
Total
Stockholders Equity |
|
96,372 |
|
|
175,521 |
|
Total
Liabilities & Stockholders Equity |
$ |
1,466,003 |
|
$ |
1,553,598 |
|
|
Hallmark Financial Services, Inc. and
Subsidiaries |
|
|
|
|
Consolidated Statements of Operations |
Three Months
Ended |
|
Year-to-Date |
($ in
thousands, except per share amounts, unaudited) |
June
30, |
|
June
30, |
|
2022 |
2021 |
|
2022 |
2021 |
Gross premiums written |
$ |
182,066 |
|
$ |
169,716 |
|
|
$ |
333,025 |
|
$ |
332,734 |
|
Ceded premiums written |
|
(97,765 |
) |
|
(82,230 |
) |
|
|
(170,403 |
) |
|
(153,751 |
) |
Net premiums
written |
|
84,301 |
|
|
87,486 |
|
|
|
162,622 |
|
|
178,983 |
|
Change in unearned premiums |
|
(4,188 |
) |
|
9,098 |
|
|
|
(33 |
) |
|
19,453 |
|
Net premiums
earned |
|
80,113 |
|
|
96,584 |
|
|
|
162,589 |
|
|
198,436 |
|
|
|
|
|
|
|
|
|
|
|
Investment
income, net of expenses |
|
3,120 |
|
|
2,353 |
|
|
|
4,979 |
|
|
5,363 |
|
Investment
(losses) gains, net |
|
(3,994 |
) |
|
3,876 |
|
|
|
(3,943 |
) |
|
9,655 |
|
Finance
charges |
|
980 |
|
|
1,109 |
|
|
|
1,963 |
|
|
2,242 |
|
Commission
and fees |
|
283 |
|
|
250 |
|
|
|
570 |
|
|
510 |
|
Other income |
|
12 |
|
|
16 |
|
|
|
28 |
|
|
35 |
|
Total revenues |
|
80,514 |
|
|
104,188 |
|
|
|
166,186 |
|
|
216,241 |
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses |
|
111,933 |
|
|
76,489 |
|
|
|
175,957 |
|
|
145,968 |
|
Operating
expenses |
|
24,639 |
|
|
27,335 |
|
|
|
49,016 |
|
|
57,307 |
|
Interest
expense |
|
1,366 |
|
|
1,249 |
|
|
|
2,630 |
|
|
2,498 |
|
Amortization of intangible assets |
|
126 |
|
|
126 |
|
|
|
252 |
|
|
252 |
|
Total expenses |
|
138,064 |
|
|
105,199 |
|
|
|
227,855 |
|
|
206,025 |
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income before tax |
|
(57,550 |
) |
|
(1,011 |
) |
|
|
(61,669 |
) |
|
10,216 |
|
Income tax expense (benefit) |
|
11,867 |
|
|
(165 |
) |
|
|
10,967 |
|
|
2,091 |
|
Net (loss) income |
$ |
(69,417 |
) |
$ |
(846 |
) |
|
$ |
(72,636 |
) |
$ |
8,125 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income per share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
(3.82 |
) |
$ |
(0.05 |
) |
|
$ |
(4.00 |
) |
$ |
0.45 |
|
Diluted |
$ |
(3.82 |
) |
$ |
(0.05 |
) |
|
$ |
(4.00 |
) |
$ |
0.45 |
|
|
|
|
|
|
|
Hallmark
Financial Services, Inc. and Subsidiaries |
Consolidated
Segment Data |
|
|
|
|
Three Months Ended Jun. 30 |
|
|
|
|
|
|
|
|
|
|
|
Specialty
Commercial Segment |
Standard
Commercial Segment |
Personal
Segment |
Corporate |
Consolidated |
($ in thousands, unaudited) |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
Gross premiums written |
$ |
138,379 |
|
$ |
126,190 |
|
$ |
28,569 |
|
$ |
27,712 |
|
$ |
15,118 |
|
$ |
15,814 |
|
$ |
- |
|
$ |
- |
|
$ |
182,066 |
|
$ |
169,716 |
|
Ceded premiums written |
|
(86,846 |
) |
|
(71,805 |
) |
|
(10,845 |
) |
|
(10,330 |
) |
|
(74 |
) |
|
(95 |
) |
|
- |
|
|
- |
|
|
(97,765 |
) |
|
(82,230 |
) |
Net premiums
written |
|
51,533 |
|
|
54,385 |
|
|
17,724 |
|
|
17,382 |
|
|
15,044 |
|
|
15,719 |
|
|
- |
|
|
- |
|
|
84,301 |
|
|
87,486 |
|
Change in unearned premiums |
|
(3,838 |
) |
|
7,937 |
|
|
(1,160 |
) |
|
(835 |
) |
|
810 |
|
|
1,996 |
|
|
- |
|
|
- |
|
|
(4,188 |
) |
|
9,098 |
|
Net premiums
earned |
|
47,695 |
|
|
62,322 |
|
|
16,564 |
|
|
16,547 |
|
|
15,854 |
|
|
17,715 |
|
|
- |
|
|
- |
|
|
80,113 |
|
|
96,584 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
49,087 |
|
|
64,890 |
|
|
16,888 |
|
|
17,240 |
|
|
17,048 |
|
|
19,115 |
|
|
(2,509 |
) |
|
2,943 |
|
|
80,514 |
|
|
104,188 |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses |
|
85,765 |
|
|
46,112 |
|
|
12,074 |
|
|
14,138 |
|
|
14,094 |
|
|
16,239 |
|
|
- |
|
|
- |
|
|
111,933 |
|
|
76,489 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income (loss) |
|
(45,907 |
) |
|
4,848 |
|
|
(786 |
) |
|
(1,976 |
) |
|
(2,819 |
) |
|
(2,766 |
) |
|
(8,038 |
) |
|
(1,117 |
) |
|
(57,550 |
) |
|
(1,011 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss
ratio (1) |
|
179.8 |
% |
|
74.0 |
% |
|
72.9 |
% |
|
85.4 |
% |
|
88.9 |
% |
|
91.7 |
% |
|
|
|
139.7 |
% |
|
79.2 |
% |
Net expense ratio (1) |
|
19.2 |
% |
|
23.8 |
% |
|
34.5 |
% |
|
31.7 |
% |
|
31.6 |
% |
|
27.2 |
% |
|
|
|
29.5 |
% |
|
27.2 |
% |
Net
combined ratio (1) |
|
199.0 |
% |
|
97.8 |
% |
|
107.4 |
% |
|
117.1 |
% |
|
120.5 |
% |
|
118.9 |
% |
|
|
|
169.2 |
% |
|
106.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Impact on
net combined ratio |
|
|
|
|
|
|
|
|
|
|
Net
Unfavorable (Favorable) Prior Year Development |
|
111.7 |
% |
|
1.8 |
% |
|
2.8 |
% |
|
0.1 |
% |
|
11.6 |
% |
|
11.2 |
% |
|
|
|
69.4 |
% |
|
3.2 |
% |
Catastrophes, net of reinsurance |
|
2.4 |
% |
|
0.2 |
% |
|
4.7 |
% |
|
19.3 |
% |
|
0.4 |
% |
|
2.3 |
% |
|
|
|
2.5 |
% |
|
3.8 |
% |
Underlying combined ratio (1) |
|
84.9 |
% |
|
95.8 |
% |
|
99.9 |
% |
|
97.7 |
% |
|
108.5 |
% |
|
105.4 |
% |
|
|
|
97.3 |
% |
|
99.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
53,278 |
|
|
1,127 |
|
|
470 |
|
|
18 |
|
|
1,835 |
|
|
1,985 |
|
|
- |
|
|
- |
|
|
55,583 |
|
|
3,130 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The net loss ratio is calculated as
incurred losses and loss adjustment expenses divided by net
premiums earned, each determined in accordance with GAAP. The net
expense ratio is calculated as total underwriting expenses offset
by agency fee income divided by net premiums earned, each
determined in accordance with GAAP. The net combined ratio is
calculated as the sum of the net loss ratio and the net expense
ratio. The underlying combined ratio is the net combined ratio
excluding the impact of net prior year reserve development and
catastrophes.
Hallmark
Financial Services, Inc. and Subsidiaries |
Consolidated
Segment Data |
|
|
|
|
Six
Months Ended Jun. 30 |
|
|
|
|
|
|
|
|
|
|
|
Specialty
Commercial Segment |
Standard
Commercial Segment |
Personal
Segment |
Corporate |
Consolidated |
($ in thousands, unaudited) |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
Gross premiums written |
$ |
242,229 |
|
$ |
240,180 |
|
$ |
58,846 |
|
$ |
57,447 |
|
$ |
31,950 |
|
$ |
35,107 |
|
$ |
- |
|
$ |
- |
|
$ |
333,025 |
|
$ |
332,734 |
|
Ceded premiums written |
|
(147,915 |
) |
|
(133,009 |
) |
|
(22,338 |
) |
|
(20,580 |
) |
|
(150 |
) |
|
(162 |
) |
|
- |
|
|
- |
|
|
(170,403 |
) |
|
(153,751 |
) |
Net premiums
written |
|
94,314 |
|
|
107,171 |
|
|
36,508 |
|
|
36,867 |
|
|
31,800 |
|
|
34,945 |
|
|
- |
|
|
- |
|
|
162,622 |
|
|
178,983 |
|
Change in unearned premiums |
|
3,591 |
|
|
22,362 |
|
|
(3,237 |
) |
|
(3,254 |
) |
|
(387 |
) |
|
345 |
|
|
- |
|
|
- |
|
|
(33 |
) |
|
19,453 |
|
Net premiums
earned |
|
97,905 |
|
|
129,533 |
|
|
33,271 |
|
|
33,613 |
|
|
31,413 |
|
|
35,290 |
|
|
- |
|
|
- |
|
|
162,589 |
|
|
198,436 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
|
100,998 |
|
|
134,489 |
|
|
34,016 |
|
|
34,928 |
|
|
33,867 |
|
|
38,074 |
|
|
(2,695 |
) |
|
8,750 |
|
|
166,186 |
|
|
216,241 |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses |
|
125,077 |
|
|
89,095 |
|
|
24,207 |
|
|
26,229 |
|
|
26,673 |
|
|
30,644 |
|
|
- |
|
|
- |
|
|
175,957 |
|
|
145,968 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income (loss) |
|
(43,342 |
) |
|
16,196 |
|
|
(1,478 |
) |
|
(1,610 |
) |
|
(3,845 |
) |
|
(4,389 |
) |
|
(13,004 |
) |
|
19 |
|
|
(61,669 |
) |
|
10,216 |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
ratio (1) |
|
127.8 |
% |
|
68.8 |
% |
|
72.8 |
% |
|
78.0 |
% |
|
84.9 |
% |
|
86.8 |
% |
|
|
|
108.2 |
% |
|
73.6 |
% |
Net expense ratio (1) |
|
20.7 |
% |
|
24.0 |
% |
|
34.6 |
% |
|
31.7 |
% |
|
30.3 |
% |
|
28.8 |
% |
|
|
|
28.9 |
% |
|
27.7 |
% |
Net
combined ratio (1) |
|
148.5 |
% |
|
92.8 |
% |
|
107.4 |
% |
|
109.7 |
% |
|
115.2 |
% |
|
115.6 |
% |
|
|
|
137.1 |
% |
|
101.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Impact on
net combined ratio |
|
|
|
|
|
|
|
|
|
|
Net
Unfavorable (Favorable) Prior Year Development |
|
60.9 |
% |
|
-0.6 |
% |
|
0.6 |
% |
|
-0.6 |
% |
|
8.7 |
% |
|
-4.0 |
% |
|
|
|
38.9 |
% |
|
0.5 |
% |
Catastrophes, net of reinsurance |
|
2.1 |
% |
|
2.8 |
% |
|
2.9 |
% |
|
2.8 |
% |
|
0.3 |
% |
|
15.4 |
% |
|
|
|
1.9 |
% |
|
4.9 |
% |
Underlying combined ratio (1) |
|
85.5 |
% |
|
90.6 |
% |
|
103.9 |
% |
|
107.5 |
% |
|
106.2 |
% |
|
104.2 |
% |
|
|
|
96.3 |
% |
|
95.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
59,658 |
|
|
(772 |
) |
|
208 |
|
|
(1,343 |
) |
|
3,408 |
|
|
3,159 |
|
|
|
|
63,274 |
|
|
1,044 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The net loss ratio is calculated as
incurred losses and loss adjustment expenses divided by net
premiums earned, each determined in accordance with GAAP. The net
expense ratio is calculated as total underwriting expenses offset
by agency fee income divided by net premiums earned, each
determined in accordance with GAAP. The net combined ratio is
calculated as the sum of the net loss ratio and the net expense
ratio. The underlying combined ratio is the net combined ratio
excluding the impact of net prior year reserve development and
catastrophes.
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