AM Best Comments on Credit Ratings of Hallmark Financial Services, Inc. and Its Subsidiaries Following Announced Specialty Commercial Business Separation Plan
AM Best has confirmed that the Long-Term Issuer Credit Rating (ICR) of Hallmark Financial Services, Inc. (HALL) remains at 'bbb-' while its Financial Strength Rating (FSR) stays at A- (Excellent). The credit ratings outlook is currently negative. This follows Hallmark's decision to explore the segregation of its specialty commercial segment into separate entities to enhance valuation and capital access. AM Best will monitor the situation closely, awaiting further details on the potential impact on credit quality and capital structure.
- Hallmark Financial's ICR remains stable at 'bbb-'.
- Financial Strength Rating (FSR) remains strong at A- (Excellent).
- Plans to segregate the specialty commercial segment may lead to improved valuation and capital access.
- The outlook for the credit ratings is negative, indicating potential future risks.
- AM Best is awaiting crucial details on the impact of the separation on credit quality and capital structure.
AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” and the Long-Term Issue Credit Ratings (Long-Term IR) of Hallmark Financial Services, Inc. (Hallmark Financial) [NASDAQ: HALL] are unchanged, following the recent announcement that Hallmark Financial is exploring opportunities to segregate its specialty commercial segment. Concurrently, the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term ICRs of “a-” of the members of Hallmark Insurance Group also remain unchanged. The outlook of these Credit Ratings (ratings) is negative. Operations are headquartered in Dallas, TX. (See below for a detailed listing of the companies and ratings).
On Jan. 21, 2021, Hallmark Financial announced its intention to explore opportunities to segregate its specialty commercial segment from its other business segments to create separately operated companies. The Hallmark Financial board of directors believes establishing separation of the operational structures of its business segments may achieve a more appropriate aggregate valuation and improve access to capital.
AM Best awaits additional necessary details on how this separation may proceed, the impact it will have on the overall capital structure and the credit quality of each segment, along with a planned timeline. AM Best will continue to monitor Hallmark Financial results and react accordingly as details arise.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” remain unchanged for the following members of Hallmark Insurance Group:
- American Hallmark Insurance Company of Texas
- Hallmark Insurance Company
- Hallmark Specialty Insurance Company
- Hallmark County Mutual Insurance Company
- Hallmark National Insurance Company
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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FAQ
What are the current credit ratings of Hallmark Financial (HALL)?
Why is the outlook for Hallmark Financial's credit ratings negative?
What does Hallmark Financial's plan to segregate its specialty commercial segment involve?
