HALLMARK FINANCIAL and its wholly owned subsidiaries engage in the sale of property and casualty insurance products. Their business primarily involves marketing underwriting and premium financing of non-standard automobile insurance as well as claims adjusting and other insurance related services. Hallmark Financial Services Inc. has a market cap of $144.4 million; its shares were traded at around $6.92 with a P/E ratio of 6.8 and P/S ratio of 0.5.
Highlight of Business Operations:Management Overview. During the three and six months ended June 30, 2009, our total revenues were $70.7 million and $141.7 million, representing a 2% and 1% decrease from the $72.0 million and $143.5 million in total revenues for the same periods of 2008. This decrease in revenue was primarily attributable to lower commission and fee income in our Standard Commercial and Specialty Commercial Segments due to profit sharing commission adjustments related to adverse loss development on prior accident years as well as a shift in our Specialty Commercial Segment from a third party agency structure to an insurance underwriting structure. This decrease in revenue was partially offset by increased earned premium due to increased retention of business in our Specialty Commercial Segment, the acquisition of our Heath XS Operating Unit in the third quarter of 2008 and increased production by our Personal Lines Segment, 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 net income attributable to Hallmark of $4.3 million and $11.1 million for the three and six months ended June 30, 2009, which was $3.1 million and $3.6 million lower than the $7.4 million and $14.7 million reported for the same periods in 2008. On a diluted basis per share, net income was $0.20 and $0.53 per share for the three months and six months ended June 30, 2009, as compared to $0.35 and $0.70 per share for the same periods in 2008. The decrease in net income attributable to Hallmark for the three and six months ended June 30, 2009 was primarily attributable to decreased revenue as discussed above and higher loss and loss adjustment expense (“LAE”) due mostly to unfavorable prior year loss development of $1.8 million recognized in both the three months and six months ending June 30, 2009 as compared to favorable development of $0.3 million and $1.8 million recognized during the three months and six months ending June 30, 2008.
Read the The complete ReportHALL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.