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Hallmark Financial Services Inc. Reports Operating Results (10-Q)

November 12, 2009 | About:
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10qk

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Hallmark Financial Services Inc. (HALL) filed Quarterly Report for the period ended 2009-09-30.

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 $161.1 million; its shares were traded at around $8.01 with a P/E ratio of 9.1 and P/S ratio of 0.6.

Highlight of Business Operations:

Management Overview. During the three and nine months ended September 30, 2009, our total revenues were $71.9 million and $213.6 million, representing a 11% and 2% increase from the $65.0 million and $208.5 million in total revenues for the same periods of 2008. This increase in revenue was primarily attributable to 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. Increased revenue was partially offset by reduced earned premium in our Standard Commercial Segment due to the deterioration of the general economic environment in our major markets and by lower commission and fee income in our Specialty Commercial Segment due to profit sharing commission adjustments related to adverse loss development on prior accident years as well as the shift from a third party agency structure to an insurance underwriting structure.

We reported net earnings of $4.2 million and $15.3 million for the three and nine months ended September 30, 2009, which were $3.6 million higher than the $0.6 million reported for the third quarter 2008 and the same as reported for the nine months ended September 30, 2008. On a diluted basis per share, net earnings were $0.20 and $0.73 per share for the three months and nine months ended September 30, 2009, as compared to $0.03 and $0.73 per share for the same periods in 2008. The increase in net earnings for the three months ended September 30, 2009 was primarily attributable to increased revenue, partially offset by higher loss and loss adjustment expense (“LAE”) due mostly to unfavorable prior year loss development of $1.7 million recognized in the three months ending September 30, 2009 as compared to favorable development of $0.1 million recognized during the three months ending September 30, 2008. The increase in revenue for the nine months ending September 30, 2009 was offset by increased loss and LAE due mostly to unfavorable prior year loss development of $3.5 million recognized during the nine months ending September 30, 2009 as compared to favorable development of $1.9 million recognized during the nine months ending September 30, 2008.

Read the The complete ReportHALL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

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