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Hallmark Financial Services, Inc. Announces Second Quarter 2013 Results

Stocks in this article: HALL

FORT WORTH, Texas, Aug. 8, 2013 (GLOBE NEWSWIRE) -- Hallmark Financial Services, Inc. (Nasdaq:HALL) today reported second quarter 2013 net loss of $3.2 million, or $0.16 per share, compared to a net loss of $1.8 million, or $0.10 per share reported for second quarter 2012. Year to date, Hallmark reported a net loss of $1.5 million, or $0.08 per share, compared to a net loss of $1.7 million, or $0.09 per share for the same period the prior year. Total revenues were $99.3 million for the second quarter of 2013 as compared to $84.6 million for the second quarter of 2012. Year to date total revenues for 2013 were $192.4 million, up 15% from the $167.6 million reported for the same period the prior year.

Hallmark Logo (EPR)

Mark J. Morrison, President and Chief Executive Officer, said, "The results for the quarter were adversely impacted by severe wind and hail storms that occurred in May throughout Texas and Oklahoma. Total catastrophe losses were $5.5 million for the quarter, or $0.18 per share. However, absent these catastrophe losses, we continue to see year-over-year accident year improvement in underwriting profitability in our Specialty Commercial and Personal Segments."

Mark E. Schwarz, Executive Chairman of Hallmark, stated, "Book value per share was $11.68 at the end of the quarter, an increase of 5% over prior year and an increase of 2% over prior year end. Cash flow from operations was $18.2 million in the second quarter, up from $12.4 million the second quarter 2012. Total cash and investments increased 3% during the second quarter 2013 to $576.7 million, or $29.94 per share. Hallmark continues to carry significant cash of $139.4 million as of June 30, 2013, which we seek to opportunistically deploy in ways that will generate a higher return for shareholders in the future."

Second Quarter  
  2013 2012 % Change
  ($ in thousands, unaudited)
Gross premiums written  119,467  100,815 19%
Net premiums written  99,545  85,137 17%
Net premiums earned  92,844  78,249 19%
Investment income, net of expenses  3,278  3,932 -17%
Net realized gains  1,597  991 61%
Total revenues  99,299  84,571 17%
Net loss (1)  (3,151)  (1,843) 71%
Net loss per share - basic  $ (0.16)  $ (0.10) 60%
Net loss per share - diluted  $ (0.16)  $ (0.10) 60%
Book value per share  $ 11.68  $ 11.08 5%
Cash flow from operations 18,208 12,409 47%
Year to Date  
  2013 2012 % Change
  ($ in thousands, unaudited)
Gross premiums written  227,614  198,210 15%
Net premiums written  193,441  170,099 14%
Net premiums earned  179,332  155,457 15%
Investment income, net of expenses  6,906  7,778 -11%
Net realized gains  2,773  872 218%
Total revenues  192,440  167,557 15%
Net loss (1)  (1,457)  (1,672) -13%
Net loss per share - basic  $ (0.08)  $ (0.09) -11%
Net loss per share - diluted  $ (0.08)  $ (0.09) -11%
Book value per share  $ 11.68  $ 11.08 5%
Cash flow from operations 24,033 17,222 40%
(1) Net loss for each period is net loss attributable to Hallmark Financial Services, Inc. as reported in the consolidated statements of operations as determined in accordance with U.S. generally accepted accounting principles (GAAP).

Second Quarter 2013 Commentary

During the three and six months ended June 30, 2013, total revenues were $99.3 million and $192.4 million, representing a 17% and 15% increase, respectively, from the $84.6 million and $167.6 million in total revenues for the same periods of 2012. This increase in revenue was primarily attributable to increased production in the Specialty Commercial Segment and the Standard Commercial Segment. Further contributing to this increase in revenue were higher net realized gains. These increases in revenue were partially offset by lower net investment income and lower finance charges and earned premium in the Personal Lines business unit due mostly to the impact of a reduction of premium written in underperforming states and products exited.

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