Hallmark Announces Third Quarter Results
14 Novembre 2023 - 10:20PM
Hallmark Financial Services, Inc. (“Hallmark”) (NASDAQ: HALL) today
filed its Form 10-Q and announced financial results for the third
quarter and nine months ended September 30, 2023.
|
Third Quarter |
|
Year-to-Date |
|
2023 |
2022 |
|
2023 |
2022 |
$ in millions: |
|
|
|
|
|
Net loss from continuing operations |
$ |
(16.7 |
) |
$ |
(29.2 |
) |
|
$ |
(73.7 |
) |
$ |
(104.9 |
) |
Net (loss) income from discontinued operations |
$ |
(4.8 |
) |
$ |
1.1 |
|
|
$ |
1.1 |
|
$ |
4.2 |
|
Net loss |
$ |
(21.5 |
) |
$ |
(28.1 |
) |
|
$ |
(72.6 |
) |
$ |
(100.7 |
) |
Operating loss from continuing operations(1) |
$ |
(11.7 |
) |
$ |
(20.6 |
) |
|
$ |
(29.1 |
) |
$ |
(69.2 |
) |
|
|
|
|
|
|
$ per diluted share (2): |
|
|
|
|
|
Net loss from continuing operations |
$ |
(9.16 |
) |
$ |
(16.08 |
) |
|
$ |
(40.53 |
) |
$ |
(57.72 |
) |
Net (loss) income from discontinued operations |
$ |
(2.67 |
) |
$ |
0.60 |
|
|
$ |
0.62 |
|
$ |
2.28 |
|
Net loss |
$ |
(11.83 |
) |
$ |
(15.48 |
) |
|
$ |
(39.91 |
) |
$ |
(55.44 |
) |
Operating loss from continuing operations (1) |
$ |
(6.43 |
) |
$ |
(11.30 |
) |
|
$ |
(16.00 |
) |
$ |
(38.09 |
) |
(1) See “Non-GAAP Financial Measures” below |
(2) Per share amounts have been restated to reflect
one-for-ten reverse stock split |
|
- Net loss from continuing operations
in the third quarter of 2023 of $16.7 million, or $9.16 per share,
includes $13.6 million, (including $2.3 million of reinstatement
premiums), or $7.46 per share of current accident year CAT related
activity primarily related to the Maui wildfire event as compared
to a net loss of $29.2 million, or $16.08 per share for the
comparable period in 2022. Year-to-date net loss from continuing
operations of $73.7 million, or $40.53 per share for 2023, includes
$29.24 per share related to the DARAG(a) write-off of $36.8 million
to bad debt expense on the final definitive award declared on June
2, 2023 and $16.3 million, (including $2.3 of reinstatement
premiums), of current accident year CAT related activity primarily
related to the Maui wildfire event as compared to a net loss of
$104.9 million, or $57.72 per share, for the comparable period in
2022.
- Net loss from discontinued
operations of $4.8 million, or $2.67 per share, in the third
quarter of 2023 as compared to a net income from discontinued
operations of $1.1 million, or $0.60 per share, for the comparable
period in 2022. Year-to-date net income from discontinued
operations of $1.1 million, or $0.62 per share, for 2023 as
compared to net income of $4.2 million, or $2.28 per share, for the
comparable period in 2022.
- Net loss of $21.5 million, or
$11.83 per share, in the third quarter of 2023 includes $13.6
million, (including $2.3 million of reinstatement premiums), or
$7.46 per share of current accident year CAT related activity
primarily related to the Maui wildfire event, compared to a net
loss of $28.1 million, or $15.48 per share, for the comparable
period in 2022. Year-to-date net loss of $72.6 million, or $39.91
per share for 2023, includes $29.24 per share related to the
DARAG(a) write-off of $36.8 million to bad debt expense on the
final definitive award declared on June 2, 2023 and $16.3 million,
(including $2.3 of reinstatement premiums), of current accident
year CAT related activity primarily related to the Maui wildfire
event, as compared to a net loss of $100.7 million, or $55.44 per
share, for the comparable period in 2022. See Non-GAAP Financial
Measures below.
- Net combined ratio of 150.1% for
the three months ended September 30, 2023, compared to 177.1% for
the same periods the prior year. Year-to-date net combined ratio
for 2023 of 173.8% as compared to 184.1% for the comparable period
in 2022.
- Underlying combined ratio
(excluding net prior year development, catastrophe losses and
write-off of DARAG(a) receivable) of 103.6% for the three months
ended September 30, 2023, compared to 115.5% for the same period
the prior year. Year-to-date underlying combined ratio for 2023 of
111.1% as compared to 114.0% for the comparable period in 2022. See
Non-GAAP Financial Measures below.
- We have taken the following actions
to address the profitability and the overall volatility of the
property results in our Commercial Accounts business unit within
our Commercial Lines Segment. Our Commercial Accounts business unit
continues to achieve rate increase including during the third
quarter of 2023, a 6.2% property rate and 4.2% casualty rate
increases. Additionally, effective February 1, 2023, our Commercial
Accounts business filed an overall countrywide rate change of 24.4%
in our property line of business. Furthermore, our Commercial
Accounts business unit is exiting certain unprofitable property
classes and shifting marketing tactics in weather-prone states to
industries and classes that are more casualty premium-driven
accounts.
- Targeted rate increases have been
ongoing since 2022 in our Personal Lines Segment which included an
aggregate countrywide net increase of 40% and continued into 2023
including the third quarter of 2023 which experienced personal auto
rate increases in 8 states aggregating a countrywide net increase
of approximately 7%.
- Net investment income was $4.2
million during the three months ended September 30, 2023, as
compared to $3.7 million during the same period in 2022.
Year-to-date net investment income for 2023 of $12.6 million as
compared to $8.7 million for the comparable period in 2022.
- As of September 30, 2023, the
Company has $75.7 million in cash and cash equivalents. Our debt
securities were $267.7 million as of September 30, 2023 as compared
to $426.6 million as of December 31, 2022. Furthermore, 94% of debt
securities have maturities of five years or less and overall our
debt securities portfolio has an average modified duration of 1.2
years.
- The Company maintained a full
valuation allowance of $46.4 million against its deferred tax
assets.
- On May 5, 2023, the Company entered
into an agreement with an A.M. Best rated “A” insurance company to
continue to write new business in circumstances that require an
A.M. Best financial strength rating.
- At the 2023 Annual Meeting of
Stockholders, reconvened on October 5, 2023, all matters submitted
to stockholders were approved, including the Tax Asset Protection
Amendment restricting ownership of 4.99% or more of Company
Securities without prior approval, and The Capital Authorization
Amendment authorizing the creation of 200,000,000 shares of Class A
Common Stock and 10,000,000 shares of preferred stock, with rights
and preferences to be determined by the Company’s Board of
Directors from time to time.
a) |
|
As previously disclosed in Hallmark’s public filings, certain of
Hallmark’s subsidiaries were parties to an arbitration proceeding
relating to a Loss Portfolio Transfer Reinsurance Contract with
DARAG Bermuda Ltd. and DARAG Insurance Limited. On May 4, 2023, the
arbitration panel rendered an interim final award, which resulted
in a write-off of $32.9 million recognized during the first quarter
of 2023, subject to final determination of certain amounts under
settlement which may increase or decrease our total write-off. As
of March 31, 2023, our consolidated balance sheet included $3.9
million of account receivable from DARAG related to cost incurred
in which we contended we have right of reimbursement. On June 2,
2023, the final definitive binding award was declared by the
arbitration panel which resulted in an additional write-off to
Hallmark of $3.9 million, or $3.1 million if tax effected, during
the second quarter of 2023. This additional write-off results in a
total write-off of $36.8 million, or $29.1 million if tax effected,
included in our year-to-date net loss. |
|
|
|
Third Quarter and Year-to-Date 2023
Financial Measures
|
Third Quarter |
|
Year-to-Date |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
($ in thousands) |
|
|
|
|
Gross premiums written |
$ |
54,293 |
|
$ |
52,520 |
|
|
$ |
165,976 |
|
$ |
167,857 |
|
Net premiums written |
$ |
43,738 |
|
$ |
36,618 |
|
|
$ |
129,994 |
|
$ |
115,325 |
|
Net premiums earned |
$ |
36,779 |
|
$ |
36,380 |
|
|
$ |
108,906 |
|
$ |
112,732 |
|
Investment income, net of expenses |
$ |
4,212 |
|
$ |
3,721 |
|
|
$ |
12,573 |
|
$ |
8,700 |
|
Investment gains (losses), net |
$ |
144 |
|
$ |
(2,821 |
) |
|
$ |
(248 |
) |
$ |
(6,764 |
) |
Net (loss) from continuing operations |
$ |
(16,661 |
) |
$ |
(29,253 |
) |
$ |
(73,692 |
) |
$ |
(104,943 |
) |
Net (loss) income from discontinued operations |
$ |
(4,847 |
) |
$ |
1,100 |
|
|
$ |
1,133 |
|
$ |
4,154 |
|
Net (loss) income |
$ |
(21,508 |
) |
$ |
(28,153 |
) |
$ |
(72,559 |
) |
$ |
(100,789 |
) |
Operating (loss) income from continuing operations (2) |
$ |
(11,805 |
) |
$ |
(20,553 |
) |
$ |
(29,194 |
) |
$ |
(69,240 |
) |
Net (loss) income per share from continuing operations basic &
diluted (1) |
$ |
(9.16 |
) |
$ |
(16.08 |
) |
|
$ |
(40.53 |
) |
$ |
(57.72 |
) |
Net (loss) income per share from discontinued operations - basic
& diluted |
$ |
(2.67 |
) |
$ |
0.60 |
|
|
$ |
0.62 |
|
$ |
2.28 |
|
Net loss per share - basic & diluted |
$ |
(11.83 |
) |
$ |
(15.48 |
) |
|
$ |
(39.91 |
) |
$ |
(55.44 |
) |
Operating (loss) per share from continuing operations - basic &
diluted (2) |
$ |
(6.49 |
) |
$ |
(11.30 |
) |
|
$ |
(16.06 |
) |
$ |
(38.09 |
) |
Book value per share |
$ |
(4.27 |
) |
$ |
36.18 |
|
|
$ |
(4.27 |
) |
$ |
36.18 |
|
(1) Per share amounts have been restated for a
reverse stock split |
|
(2) See “Non-GAAP Financial Measures” below |
|
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 from
continuing operations. 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 from continuing operations and net income per share from
continuing operations 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.
|
|
|
|
|
|
($ in thousands) |
Income (Loss)from Continuing OperationsBefore
Tax |
Less TaxEffect |
NetAfter Tax |
WeightedAverageShares Diluted |
DilutedPer Share |
Third Quarter 2023 |
|
|
|
|
|
Reported GAAP measures |
$ |
(16,205 |
) |
$ |
456 |
|
$ |
(16,661 |
) |
|
1,818 |
|
$ |
(9.16 |
) |
Excluded deferred tax valuation allowance |
$ |
- |
|
$ |
(4,970 |
) |
$ |
4,970 |
|
|
1,818 |
|
$ |
2.73 |
|
Operating loss |
$ |
(16,205 |
) |
$ |
(4,514 |
) |
$ |
(11,691 |
) |
|
1,818 |
|
$ |
(6.43 |
) |
|
|
|
|
|
|
Third Quarter 2022 |
|
|
|
|
|
Reported GAAP measures |
$ |
(30,260 |
) |
$ |
(1,007 |
) |
$ |
(29,253 |
) |
|
1,819 |
|
$ |
(16.08 |
) |
Excluded tax valuation allowance |
$ |
- |
|
$ |
(6,471 |
) |
$ |
6,471 |
|
|
1,819 |
|
$ |
3.56 |
|
Excluded investment (gains)/losses |
$ |
2,821 |
|
$ |
592 |
|
$ |
2,229 |
|
|
1,819 |
|
$ |
1.23 |
|
Operating loss |
$ |
(27,439 |
) |
$ |
(6,886 |
) |
$ |
(20,553 |
) |
|
1,819 |
|
$ |
(11.30 |
) |
|
|
|
|
|
|
Year-to-Date 2023 |
|
|
|
|
|
Reported GAAP measures |
$ |
(73,903 |
) |
$ |
(211 |
) |
$ |
(73,692 |
) |
|
1,818 |
|
$ |
(40.53 |
) |
Excluded deferred tax valuation allowance |
$ |
- |
|
$ |
(15,209 |
) |
$ |
15,209 |
|
|
1,818 |
|
$ |
8.37 |
|
Excluded write-off receivable from reinsurer |
$ |
36,826 |
|
$ |
7,733 |
|
$ |
29,093 |
|
|
1,818 |
|
$ |
16.00 |
|
Excluded investment (gains)/losses |
$ |
392 |
|
$ |
82 |
|
$ |
310 |
|
|
1,818 |
|
$ |
0.17 |
|
Operating loss |
$ |
(36,685 |
) |
$ |
(7,605 |
) |
$ |
(29,080 |
) |
|
1,818 |
|
$ |
(16.00 |
) |
|
|
|
|
|
|
Year-to-Date 2022 |
|
|
|
|
|
Reported GAAP measures |
$ |
(99,701 |
) |
$ |
5,242 |
|
$ |
(104,943 |
) |
|
1,818 |
|
$ |
(57.72 |
) |
Excluded tax valuation allowance |
$ |
- |
|
$ |
(30,359 |
) |
$ |
30,359 |
|
|
1,818 |
|
$ |
16.70 |
|
Excluded investment (gains)/losses |
$ |
6,764 |
|
$ |
1,420 |
|
$ |
5,344 |
|
|
1,818 |
|
$ |
2.94 |
|
Operating income |
$ |
(92,937 |
) |
$ |
(23,697 |
) |
$ |
(69,240 |
) |
|
1,818 |
|
$ |
(38.09 |
) |
|
|
|
|
|
|
Underlying combined ratio is calculated by
excluding the impact of net favorable or unfavorable prior year
loss development and catastrophe losses from the calculation of the
net combined ratio. Management believes that the underlying
combined ratio provides useful information to investors about the
current performance of the Company's insurance operations absent
historical developments and uncontrollable events. Combined ratio
is the GAAP measure most comparable to underlying combined ratio. A
reconciliation of the underlying combined ratio to the combined
ratio is presented below.
|
|
|
|
|
|
3rdQ 2023 |
3rdQ 2022 |
YTD 2023 |
YTD 2022 |
Net combined ratio |
150.1% |
177.1% |
173.8% |
184.1% |
Impact on net combined ratio |
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
9.7% |
56.7% |
13.9% |
67.3% |
Catastrophes, net of reinsurance inclusive of reinstatement premium
of $2.3 million |
36.9% |
5.9% |
15.0% |
2.8% |
Write-off receivable from reinsurer |
0.0% |
0.0% |
33.8% |
0.0% |
Underlying combined ratio |
103.6% |
114.5% |
111.1% |
114.0% |
|
|
|
|
|
A copy of our Form 10-Q is available on our
website at www.hallmarkgrp.com or on the SEC website at
www.sec.gov. Readers are urged to review the Form 10-Q for a more
complete discussion of our financial performance.
About Hallmark
Hallmark is a property and casualty insurance
holding company with a diversified portfolio of insurance products
written on a national platform. With six insurance subsidiaries,
Hallmark markets, underwrites and services commercial and personal
insurance in select markets. Hallmark is headquartered in Dallas,
Texas and its common stock is listed on NASDAQ under the symbol
"HALL."
Forward-looking statements in this release are
made pursuant to the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
that actual results may differ materially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, continued acceptance
of the Company’s products and services in the marketplace,
competitive factors, interest rate trends, general economic
conditions, the availability of financing, underwriting loss
experience and other risks detailed from time to time in the
Company’s filings with the Securities and Exchange Commission.
For further information, please contact:
Chris KenneyChief Executive Officer
817.348.1600www.hallmarkgrp.com
|
Hallmark Financial Services, Inc. and
Subsidiaries |
Consolidated Balance Sheets |
|
|
|
|
($ in
thousands, except par value) |
|
Sep. 30 |
|
Dec. 31 |
ASSETS |
|
2023 |
|
2022 |
Investments: |
|
|
|
Debt securities, available-for-sale, at fair value (amortized cost:
$299,544 in 2023 and $434,119 in 2022; allowance for expected
credit losses of $0 in 2023) |
$ |
267,684 |
|
$ |
426,597 |
|
Equity securities (cost: $24,284 in 2023 and $30,058 in 2022) |
|
19,759 |
|
|
28,199 |
|
Total investments |
|
287,443 |
|
|
454,796 |
|
Cash and cash equivalents |
|
75,667 |
|
|
59,133 |
|
Restricted cash |
|
11,029 |
|
|
29,486 |
|
Ceded unearned premiums |
|
30,881 |
|
|
237,086 |
|
Premiums receivable |
|
54,393 |
|
|
78,355 |
|
Accounts receivable |
|
2,384 |
|
|
10,859 |
|
Receivable from reinsurer |
|
0 |
|
|
58,882 |
|
Receivable for securities |
|
1,981 |
|
|
945 |
|
Reinsurance recoverable (net of allowance for expected credit
losses of $200 in 2023) |
|
591,936 |
|
|
578,424 |
|
Deferred policy acquisition costs |
|
14,676 |
|
|
8 |
|
Federal income tax recoverable |
|
86 |
|
|
2,668 |
|
Prepaid pension assets |
|
277 |
|
|
163 |
|
Prepaid expenses |
|
1,294 |
|
|
1,508 |
|
Other assets |
|
20,875 |
|
|
24,389 |
|
Total Assets |
$ |
1,092,922 |
|
$ |
1,536,702 |
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Senior unsecured notes due 2029 (less unamortized debt issuance
costs of $599 in 2023 and $648 in 2022) |
$ |
49,426 |
|
$ |
49,352 |
|
Subordinated debt securities (less unamortized debt issuance costs
of $666 in 2023 and $691 in 2022) |
|
56,049 |
|
|
56,011 |
|
Reserves for unpaid losses and loss adjustment expenses |
|
719,987 |
|
|
880,869 |
|
Unearned premiums |
|
107,574 |
|
|
292,691 |
|
Reinsurance payable |
|
76,362 |
|
|
128,950 |
|
Accounts payable and other liabilities |
|
91,292 |
|
|
68,535 |
|
Total Liabilities |
|
1,100,690 |
|
|
1,476,408 |
|
Commitments and contingencies |
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock, $1.00 par value, authorized 3,333,333 shares; issued
2,087,283 shares in 2023 and 2022 |
2,087 |
|
|
2,087 |
|
Additional paid-in capital |
|
124,913 |
|
|
124,740 |
|
(Accumulated deficit) retained earnings |
|
(105,454 |
) |
|
(33,407 |
) |
Accumulated other comprehensive loss |
|
(4,680 |
) |
|
(8,492 |
) |
Treasury stock (268,801 shares in 2023 and 2022), at cost |
|
(24,634 |
) |
|
(24,634 |
) |
Total Stockholders (Deficit) Equity |
|
(7,768 |
) |
|
60,294 |
|
Total Liabilities & Stockholders (Deficit) Equity |
$ |
1,092,922 |
|
$ |
1,536,702 |
|
|
|
|
|
|
|
Hallmark Financial Services, Inc. and
Subsidiaries |
|
|
|
|
Consolidated Statements of Operations |
Three Months
Ended |
|
Year-to-Date |
($ in
thousands, except per share amounts) |
September
30, |
|
September
30, |
|
2023 |
2022 |
|
2023 |
2022 |
Gross premiums written |
$ |
54,293 |
|
$ |
52,520 |
|
|
$ |
165,976 |
|
$ |
167,857 |
|
Ceded premiums written |
|
(10,555 |
) |
|
(15,902 |
) |
|
|
(35,982 |
) |
|
(52,532 |
) |
Net premiums written |
|
43,738 |
|
|
36,618 |
|
|
|
129,994 |
|
|
115,325 |
|
Change in unearned premiums |
|
(6,959 |
) |
|
(238 |
) |
|
|
(21,088 |
) |
|
(2,593 |
) |
Net premiums earned |
|
36,779 |
|
|
36,380 |
|
|
|
108,906 |
|
|
112,732 |
|
|
|
|
|
|
|
|
|
|
|
Investment income, net of expenses |
|
4,212 |
|
|
3,721 |
|
|
|
12,573 |
|
|
8,700 |
|
Investment gains (losses), net |
|
144 |
|
|
(2,821 |
) |
|
|
(248 |
) |
|
(6,764 |
) |
Finance charges |
|
836 |
|
|
937 |
|
|
|
2,347 |
|
|
2,900 |
|
Other income |
|
(72 |
) |
|
15 |
|
|
|
62 |
|
|
45 |
|
Total revenues |
|
41,899 |
|
|
38,232 |
|
|
|
123,640 |
|
|
117,613 |
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
39,473 |
|
|
49,141 |
|
|
|
105,989 |
|
|
161,168 |
|
Operating expenses |
|
16,595 |
|
|
17,816 |
|
|
|
85,682 |
|
|
51,967 |
|
Interest expense |
|
2,036 |
|
|
1,528 |
|
|
|
5,872 |
|
|
4,158 |
|
Amortization of intangible assets |
|
0 |
|
|
7 |
|
|
|
0 |
|
|
21 |
|
Total expenses |
|
58,104 |
|
|
68,492 |
|
|
|
197,543 |
|
|
217,314 |
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before tax |
|
(16,205 |
) |
|
(30,260 |
) |
|
|
(73,903 |
) |
|
(99,701 |
) |
Income tax expense (benefit) from continuing operations |
|
456 |
|
|
(1,007 |
) |
|
|
(211 |
) |
|
5,242 |
|
Net (loss) income from continuing operations |
$ |
(16,661 |
) |
$ |
(29,253 |
) |
|
$ |
(73,692 |
) |
$ |
(104,943 |
) |
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
Total pretax (loss) income from discontinued operations |
$ |
(4,847 |
) |
$ |
2,801 |
|
|
$ |
1,133 |
|
$ |
10,573 |
|
Income tax expense on discontinued operations |
|
- |
|
|
1,701 |
|
|
|
- |
|
|
6,419 |
|
(Loss) income (loss) from discontinued operations, net of tax |
$ |
(4,847 |
) |
$ |
1,100 |
|
|
$ |
1,133 |
|
$ |
4,154 |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(21,508 |
) |
$ |
(28,153 |
) |
|
$ |
(72,559 |
) |
$ |
(100,789 |
) |
|
|
|
|
|
|
|
|
|
|
Net (loss) basic income per share: |
|
|
|
|
|
|
|
|
|
Net loss from continuing operations |
$ |
(9.16 |
) |
$ |
(16.08 |
) |
|
$ |
(40.53 |
) |
$ |
(57.72 |
) |
Net (loss) income from discontinued operations |
|
(2.67 |
) |
|
0.60 |
|
|
|
0.62 |
|
|
2.28 |
|
Basic net (loss) income per share |
$ |
(11.83 |
) |
$ |
(15.48 |
) |
|
$ |
(39.91 |
) |
$ |
(55.44 |
) |
|
|
|
|
|
|
|
|
|
|
Net (loss) diluted income per share: |
|
|
|
|
|
|
|
|
|
Net loss from continuing operations |
$ |
(9.16 |
) |
$ |
(16.08 |
) |
|
$ |
(40.53 |
) |
$ |
(57.72 |
) |
Net (loss) income from discontinued operations |
|
(2.67 |
) |
|
0.60 |
|
|
|
0.62 |
|
|
2.28 |
|
Diluted net (loss) income per share |
$ |
(11.83 |
) |
$ |
(15.48 |
) |
|
$ |
(39.91 |
) |
$ |
(55.44 |
) |
|
|
|
|
|
|
|
|
|
|
Hallmark Financial Services, Inc. and
Subsidiaries |
Consolidated Segment Data |
|
|
|
|
Three Months Ended Sep. 30 |
|
|
|
|
|
|
|
|
|
|
|
Commercial Lines Segment |
Personal Lines Segment |
Runoff Specialty Segment |
Corporate |
Consolidated |
($ in thousands, unaudited) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gross premiums written |
$ |
31,096 |
|
$ |
34,557 |
|
$ |
23,194 |
|
$ |
15,638 |
|
$ |
3 |
|
$ |
2,325 |
|
$ |
- |
$ |
- |
|
$ |
54,293 |
|
$ |
52,520 |
|
Ceded premiums written |
|
(10,461 |
) |
|
(15,801 |
) |
|
(105 |
) |
|
(76 |
) |
|
11 |
|
|
(25 |
) |
|
- |
|
- |
|
|
(10,555 |
) |
|
(15,902 |
) |
Net premiums written |
|
20,635 |
|
|
18,756 |
|
|
23,089 |
|
|
15,562 |
|
|
14 |
|
|
2,300 |
|
|
- |
|
- |
|
|
43,738 |
|
|
36,618 |
|
Change in unearned premiums |
|
617 |
|
|
(207 |
) |
|
(7,577 |
) |
|
38 |
|
|
1 |
|
|
(69 |
) |
|
- |
|
- |
|
|
(6,959 |
) |
|
(238 |
) |
Net premiums earned |
|
21,252 |
|
|
18,549 |
|
|
15,512 |
|
|
15,600 |
|
|
15 |
|
|
2,231 |
|
|
- |
|
- |
|
|
36,779 |
|
|
36,380 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
21,271 |
|
|
18,574 |
|
|
16,343 |
|
|
16,529 |
|
|
(71 |
) |
|
2,229 |
|
|
4,356 |
|
900 |
|
|
41,899 |
|
|
38,232 |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
26,070 |
|
|
14,484 |
|
|
11,826 |
|
|
14,735 |
|
|
1,577 |
|
|
19,922 |
|
|
- |
|
- |
|
|
39,473 |
|
|
49,141 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) income |
$ |
(13,654 |
) |
$ |
(2,762 |
) |
$ |
(773 |
) |
$ |
(3,637 |
) |
$ |
(2,041 |
) |
$ |
(19,612 |
) |
$ |
263 |
$ |
(4,249 |
) |
$ |
(16,205 |
) |
$ |
(30,260 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss ratio (1) |
|
122.7 |
% |
|
78.1 |
% |
|
76.2 |
% |
|
94.5 |
% |
N/A (2) |
|
893.0 |
% |
|
|
|
107.3 |
% |
|
135.1 |
% |
Net expense ratio (1) |
|
41.6 |
% |
|
37.9 |
% |
|
28.8 |
% |
|
30.3 |
% |
N/A (2) |
|
45.1 |
% |
|
|
|
42.8 |
% |
|
42.0 |
% |
Net combined ratio (1) |
|
164.3 |
% |
|
116.0 |
% |
|
105.0 |
% |
|
124.8 |
% |
N/A (2) |
|
938.1 |
% |
|
|
|
150.1 |
% |
|
177.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Impact on net combined ratio |
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
3.9 |
% |
|
1.6 |
% |
|
6.4 |
% |
|
11.6 |
% |
N/A (2) |
|
830.5 |
% |
|
|
|
9.7 |
% |
|
56.7 |
% |
Catastrophes, net of reinsurance including reinstatement
premium |
|
61.5 |
% |
|
10.9 |
% |
|
3.2 |
% |
|
0.8 |
% |
N/A (2) |
|
0.0 |
% |
|
|
|
36.9 |
% |
|
4.9 |
% |
Write-off receivable from reinsurer |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
N/A (2) |
|
0.0 |
% |
|
|
|
0.0 |
% |
|
0.0 |
% |
Underlying combined ratio (1) |
|
98.9 |
% |
|
103.5 |
% |
|
95.4 |
% |
|
112.4 |
% |
N/A (2) |
|
107.6 |
% |
|
|
|
103.6 |
% |
|
115.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
825 |
|
|
300 |
|
|
990 |
|
|
1,810 |
|
|
1,764 |
|
|
18,528 |
|
|
- |
|
- |
|
|
3,579 |
|
|
20,638 |
|
(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 and excluding the write-off of a
receivable from reinsurer. |
(2) |
|
The Company’s Runoff Segment has reached a point of maturity that
earned premium is minimal and renders any ratios no longer
meaningful. |
|
|
|
Hallmark
Financial Services, Inc. and Subsidiaries |
Consolidated
Segment Data |
Year-to-Date
Ended Sep.
30 |
|
Commercial
Lines Segment |
Personal
Lines Segment |
Runoff
Segment |
Corporate |
Consolidated |
($ in thousands, unaudited) |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
Gross premiums written |
$ |
113,733 |
|
$ |
110,013 |
|
$ |
51,919 |
|
$ |
47,589 |
|
$ |
324 |
|
$ |
10,255 |
|
$ |
- |
|
$ |
- |
|
$ |
165,976 |
|
$ |
167,857 |
|
Ceded premiums written |
|
(35,460 |
) |
|
(51,434 |
) |
|
(316 |
) |
|
(226 |
) |
|
(206 |
) |
|
(872 |
) |
|
- |
|
|
- |
|
|
(35,982 |
) |
|
(52,532 |
) |
Net premiums written |
|
78,273 |
|
|
58,579 |
|
|
51,603 |
|
|
47,363 |
|
|
118 |
|
|
9,383 |
|
|
- |
|
|
- |
|
|
129,994 |
|
|
115,325 |
|
Change in unearned premiums |
|
(12,239 |
) |
|
(3,584 |
) |
|
(8,859 |
) |
|
(350 |
) |
|
10 |
|
|
1,341 |
|
|
- |
|
|
- |
|
|
(21,088 |
) |
|
(2,593 |
) |
Net premiums earned |
|
66,034 |
|
|
54,995 |
|
|
42,744 |
|
|
47,013 |
|
|
128 |
|
|
10,724 |
|
|
- |
|
|
- |
|
|
108,906 |
|
|
112,732 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
66,082 |
|
|
55,064 |
|
|
45,087 |
|
|
49,889 |
|
|
42 |
|
|
10,724 |
|
|
12,429 |
|
|
1,936 |
|
|
123,640 |
|
|
117,613 |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
59,483 |
|
|
40,398 |
|
|
36,469 |
|
|
41,408 |
|
|
10,037 |
|
|
79,362 |
|
|
- |
|
|
- |
|
|
105,989 |
|
|
161,168 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax (loss) income |
$ |
(15,151 |
) |
$ |
(4,261 |
) |
$ |
(7,265 |
) |
$ |
(7,989 |
) |
$ |
(49,266 |
) |
$ |
(73,929 |
) |
$ |
(2,221 |
) |
$ |
(13,522 |
) |
$ |
(73,903 |
) |
$ |
(99,701 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss ratio (1) |
|
90.1 |
% |
|
73.5 |
% |
|
85.3 |
% |
|
88.1 |
% |
N/A (2) |
|
740.0 |
% |
|
|
|
97.3 |
% |
|
143.0 |
% |
Net expense ratio (1) |
|
32.9 |
% |
|
35.7 |
% |
|
31.8 |
% |
|
30.3 |
% |
N/A (2) |
|
40.3 |
% |
|
|
|
76.5 |
% |
|
41.1 |
% |
Net combined ratio (1) |
|
123.0 |
% |
|
109.2 |
% |
|
117.1 |
% |
|
118.4 |
% |
N/A (2) |
|
780.3 |
% |
|
|
|
173.8 |
% |
|
184.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Impact on net combined ratio |
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
2.4 |
% |
|
0.5 |
% |
|
9.3 |
% |
|
11.1 |
% |
N/A (2) |
|
656.1 |
% |
|
|
|
13.9 |
% |
|
67.3 |
% |
Catastrophes, net of reinsurance including reinstatement
premium |
|
23.4 |
% |
|
5.4 |
% |
|
2.1 |
% |
|
0.4 |
% |
N/A (2) |
|
0.0 |
% |
|
|
|
15.0 |
% |
|
2.8 |
% |
Write-off receivable from reinsurer |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
|
0.0 |
% |
N/A (2) |
|
0.0 |
% |
|
|
|
33.8 |
% |
|
0.0 |
% |
Underlying combined ratio (1) |
|
97.2 |
% |
|
103.3 |
% |
|
105.7 |
% |
|
106.9 |
% |
N/A (2) |
|
124.2 |
% |
|
|
|
111.1 |
% |
|
114.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net Unfavorable (Favorable) Prior Year Development |
|
1,594 |
|
|
250 |
|
|
3,982 |
|
|
5,218 |
|
|
9,603 |
|
|
70,365 |
|
|
|
|
15,179 |
|
|
75,833 |
|
(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 and excluding the write-off of a
receivable from reinsurer. |
(2) |
|
The Company’s Runoff Segment has reached a point of maturity that
earned premium is minimal and renders any ratios no longer
meaningful. |
|
|
|
A photo accompanying this release is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/a204b59d-618d-45a4-823f-f2fc7a049fbd
Hallmark Financial Servi... (NASDAQ:HALL)
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