HALLMARK FINCL SVCS INC - HALL STOCK NEWS

Hallmark Financial Services, Inc. (NASDAQ: HALL) announced its financial results for the third quarter and nine months ended September 30, 2023. The company reported a net loss of $21.5 million in the third quarter, with a net loss of $72.6 million year-to-date. The net combined ratio for the three months ended September 30, 2023, was 150.1%, an improvement from 177.1% for the same period in 2022. The company also disclosed actions taken to address profitability and volatility in its Commercial Accounts business unit.

Hallmark Financial Services, Inc. received a final determination in an arbitration proceeding, resulting in a total aggregate write-off of $36.9 million. This includes a write-off of $4.0 million during Q2 2023 and $32.9 million recognized during Q1 2023. Hallmark had previously included the $4.0 million amount as an account receivable in its balance sheet.

Hallmark Financial Services, Inc. (NASDAQ: HALL) reported a net loss of $39.1 million in Q1 2023, compared to a net loss of $3.2 million in Q1 2022. The net combined ratio was 215.7% for Q1 2023, compared to 136.9% for the same period last year. The company recognized a write-off to bad debt expense of $32.9 million related to a dispute with reinsurers.

Hallmark Financial Services reported significant net losses for Q4 and the fiscal year 2022, filing its Form 10-K on March 28, 2023. The company experienced a net loss from continuing operations of $30.0 million for Q4, translating to a loss per share of $16.48, compared to a loss of $5.9 million in Q4 2021. Year-to-date losses from continuing operations reached $134.9 million. Despite a net income from discontinued operations of $22.7 million for Q4, gross premiums written increased 4% for the quarter but decreased 7% for the year. The net combined ratio was 183.9% for Q4, reflecting poor underwriting performance.

Hallmark Financial Services (NASDAQ: HALL) reported a net loss from continuing operations of $29.3 million or $1.61 per share for Q3 2022, a significant increase from a $2.0 million loss in Q3 2021. Year-to-date losses reached $104.9 million or $5.77 per share. The company's net income from discontinued operations fell to $1.1 million. Gross premiums written decreased 5% and 10% for the quarter and year-to-date, respectively. The net combined ratio deteriorated to 177.1% in Q3 2022, compared to 105.5% the previous year. Hallmark also noted net investment losses of $2.8 million for Q3.

AM Best has placed the Long-Term Issuer Credit Rating of Hallmark Financial Services (HALL) under review with negative implications, reflecting concerns over its recent transaction with Core Specialty Insurance Holdings. Hallmark will sell its specialty business for $40 million and $19.9 million for unearned premium reserves. The company is also managing previous adverse reserve developments and faces execution risks in restoring profitability. Ratings for Hallmark’s subsidiaries are similarly impacted as the review continues until AM Best evaluates the implications of these actions.

Hallmark Financial Services, Inc. (NASDAQ: HALL) has sold its excess and surplus (E&S) lines operations to Core Specialty Insurance Holdings, Inc. for $40 million in cash, plus $19.9 million for acquisition costs related to certain unearned premium reserves. The sale, effective September 30, 2022, involves nine business units and the transition of approximately 200 employees. Hallmark anticipates a $59.9 million increase in statutory capital, enhancing its balance sheet for better business focus.