Hallmark Financial Exploring the Separation of its Specialty Commercial Business
Hallmark Financial Services is considering separating its Specialty Commercial business to potentially unlock value by improving operational structures. The Board's initial evaluations suggest that this separation could enhance capital access and overall company valuation. The Specialty Commercial segment accounted for 75% of gross premiums and 68% of net premiums in the first three quarters of 2020, with rates increasing from 7% to over 20% in Q3 2020. The decision remains contingent on various approvals and no final structure has been determined.
- Potential for significant value unlock through separation.
- Specialty Commercial segment's strong performance with a 75% share of gross premiums.
- No assurance that the separation will take place or its timing.
- Reliance on various approvals adds uncertainty to the proposed transaction.
DALLAS, Jan. 21, 2021 (GLOBE NEWSWIRE) -- Hallmark Financial Services, Inc. (the “Company” or “Hallmark Financial”), a property and casualty insurance company comprised of three business segments (Specialty Commercial, Standard Commercial, and Personal), announced that it is exploring the separation of its Specialty Commercial business.
Initial evaluations by Hallmark Financial’s Board of Directors indicate that separating the Specialty Commercial business may unlock significant value by segregating the operational structures of its segments. Each segment currently operates under a unique business model, utilizes its own distribution channels and has a different return profile. The Board believes that establishing two separate companies may achieve a more appropriate aggregate valuation and improve access to capital.
Hallmark Financial’s Specialty Commercial segment represented
Hallmark Financial’s Board of Directors and executive management team are working with assistance from its financial, business and legal advisors Raymond James & Associates, Inc., Willis Re Inc., Olshan Frome Wolosky LLP and McGuire, Craddock & Strother, P.C. to evaluate the Company’s current structure and the strategic, operational, capital and tax implications of the potential separation. Additionally, the Board of Directors has engaged the executive search firm Reilly Partners, Inc. of Chicago to identify qualified candidates to serve as the chief executive officer of a stand-alone Specialty Commercial company.
No final decision has yet been made with respect to the structure of the proposed establishment of a stand-alone Specialty Commercial company. No assurance can be given whether a separation transaction will take place, the form of any such transaction or the timing of any transaction. Any separation of the Specialty Commercial business remains subject to numerous conditions and approvals including, but not limited to, the approval of the Board of Directors and required regulatory approvals.
About Hallmark Financial
Hallmark Financial is a property and casualty insurance company with a diversified portfolio of insurance products written on a national platform. Through its six insurance subsidiaries, Hallmark Financial markets, underwrites and services both commercial and personal lines insurance in select markets. Hallmark Financial is headquartered in Dallas, Texas and its common stock is listed on NASDAQ under the symbol "HALL".
Investor Contact
David Webb
Senior Vice President, Corporate Development & Strategy
817.348.1600
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FAQ
What is Hallmark Financial considering for the Specialty Commercial business?
How significant is the Specialty Commercial segment for Hallmark Financial?
What rate increases has Hallmark Financial's Specialty Commercial business seen?
What is the current status of the proposed separation of Hallmark Financial's business segments?
Who is assisting Hallmark Financial in evaluating the separation?
