Hallmark Financial Services Inc. Reports Operating Results (10-Q)
Hallmark Financial Services Inc. has a market cap of $186.94 million; its shares were traded at around $9.29 with a P/E ratio of 7.94 and P/S ratio of 0.65. Hallmark Financial Services Inc. had an annual average earning growth of 16% over the past 5 years.HALL is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Management Overview. During the three and six months ended June 30, 2010, our total revenues were $75.7 million and $151.5 million, representing a 7% increase from the $70.7 million and $141.7 million in total revenues for the same periods of 2009. This increase in revenue was primarily attributable to increased earned premium due to increased production by our Personal Segment and gains realized on our investment portfolio. These increases in revenue were partially offset by reduced earned premium in our Standard Commercial Segment due to the deterioration of the general economic environment in our major markets.
We reported a net loss attributable to Hallmark of $0.4 million and net income attributable to Hallmark of $5.9 million for the three and six months ended June 30, 2010, respectively, which was $4.7 million and $5.2 million lower than the $4.3 million and $11.1 million net income attributable to Hallmark reported for the same periods of 2009. On a diluted basis per share, net loss was $0.02 per share and net income was $0.29 per share for the three and six months ended June 30, 2010, respectively, as compared to net income of $0.20 and $0.53 per share for the same periods in 2009. The decrease in net income for the three and six months ending June 30, 2010 was primarily due to increased loss and loss adjustment expenses (“LAE”), including unfavorable prior year loss development of $4.3 million and $6.5 million recognized during the three and six months ended June 30, 2010, respectively, as compared to $1.8 million unfavorable development recognized for the three and six months ended June 30, 2009. Partially offsetting the increased loss and LAE was the increase in revenue for the three and six months ending June 30, 2010, as well as lower operating expenses due to lower production related expenses in our E&S Commercial and General Aviation business units and lower information technology costs in our Standard Commercial Segment. The Company s effective income tax rate for the six months ending June 30, 2010 was 24.6% as compared to the 27.4% effective income tax rate for the same period during 2009. The decrease in the effective tax rate was primarily due to the increase in the tax exempt income effect relative to lower pre-tax income and the recognition of a tax benefit related to the disposal of certain securities.
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