Hallmark Financial Services, Inc. Announces Third Quarter 2016 Earnings Results

FORT WORTH, Texas, Nov. 07, 2016 (GLOBE NEWSWIRE) -- Hallmark Financial Services, Inc. (NASDAQ:HALL) today announced earnings for its third fiscal quarter ended September 30, 2016, including the following highlights:
  • 3 rd quarter net income of $5.0 million, or $0.27 per diluted share
  • 3 rd quarter catastrophe losses of $2.2 million, or $0.08 per diluted share net of tax
  • 3 rd quarter net combined ratio of 96.6%, including 2.4% attributable to catastrophe losses
  • 3 rd quarter gross premiums written up 11% compared to prior year
  • 3 rd quarter operating cash flow up 127% compared to prior year
  • 3 rd quarter ending book value per share of $14.53, up 7% compared to September 30, 2015

"Our Specialty Commercial Segment and Standard Commercial Segment continued to perform well both in the quarter and on a year to date basis. Our investments in additional underwriting talent and new products in the Specialty Commercial Segment are beginning to deliver as expected.  We continue to find opportunities for profitable growth.  As a result, the Specialty Commercial Segment now represents over 70% of our portfolio," said Naveen Anand, President and Chief Executive Officer.

"Auto results in our Personal Segment continue to face challenging headwinds. We will continue to address these challenges by increasing rates, culling unprofitable sectors of this business and implementing changes in our claims processes to improve performance," concluded Mr. Anand.

Mark E. Schwarz, Executive Chairman of Hallmark, stated, "Hallmark reported book value per share of $14.53 as of September 30, 2016, an increase of 7% over September 30, 2015.  Total cash and investments increased $28.9 million during the first nine months of 2016 to $730.7 million, an increase of 7% per share to $39.19 per share.  Our cash balances (including restricted cash) totaled $81.1 million as of September 30, 2016."
Third Quarter        
    2016       2015     % Change      
  ($ in thousands, unaudited)      
Gross premiums written   147,065       132,141       11 %      
Net premiums written   95,685       89,924       6 %      
Net premiums earned   90,795       88,406       3 %      
Investment income, net of expenses   4,070       3,495       16 %      
Gain on investments   1,105       28       3846 %      
Other-than-temporary impairments   -       (363 )     -100 %      
Total revenues   97,618       93,684       4 %      
Net income   5,048       6,698       -25 %      
Net income per share - basic $ 0.27     $ 0.35       -23 %      
Net income per share - diluted $ 0.27     $ 0.35       -23 %      
Book value per share $ 14.53     $ 13.62       7 %      
Cash flow from operations   23,198       10,223       127 %      
                 
                 
         
Year to Date        
    2016       2015     % Change      
  ($ in thousands, unaudited)      
Gross premiums written   419,549       390,708       7 %      
Net premiums written   278,554       274,603       1 %      
Net premiums earned   262,820       263,578       0 %      
Investment income, net of expenses   11,943       10,051       19 %      
Gain on investments   1,589       5,881       -73 %      
Other-than-temporary impairments   (2,888 )     (2,193 )     32 %      
Total revenues   278,698       282,331       -1 %      
Net income   10,188       18,417       -45 %      
Net income per share - basic $ 0.54     $ 0.96       -44 %      
Net income per share - diluted $ 0.54     $ 0.95       -43 %      
Book value per share $ 14.53     $ 13.62       7 %      
Cash flow from operations   25,532       43,101       -41 %      
                 

Third Quarter 2016 Commentary

Hallmark reported net income of $5.0 million and $10.2 million for the three and nine months ended September 30, 2016 as compared to net income of $6.7 million and $18.4 million for the same periods the prior year. On a diluted basis per share, the Company reported net income of $0.27 per share and $0.54 per share for the three and nine months ended September 30, 2016, as compared to net income of $0.35 per share and $0.95 per share for the same periods the prior year.

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