Shares of Hallmark Financial Services Inc. (HALL, Financial) fell by about 9% to $3.53 on Thursday after management reported a decline in key metrics related to premiums for fourth-quarter and full fiscal 2021.
The specialty property and casualty insurance holding company, which has a diversified portfolio of insurance products written on a national platform, reported a net loss of $2.5 million, or 14 cents per share, for the quarter ended Dec. 31, compared to a net loss of $7.8 million, or 43 cents per share, in the year-ago period. Analysts polled by FactSet expected a loss of 2 cents a share. Revenue declined to $91.1 million for the quarter from $119.1 million in the same period last year.
Net premiums written dropped to $70 million from $85.9 million. Wall Street had been looking for $81.8 million. The company recorded $86.5 million in net premiums earned, less than the $109.9 million reported for the same period last year. Investors had estimated $88.8 million.
Shortly after midday on Thursday, shares were trading at about $3.58, down 8.23%.
According to management, the pre-tax loss was $3.1 million for the fourth quarter, as compared to pre-tax loss of $13.3 million reported for the same period in 2020. Pre-tax income was $11.5 million for the fiscal year ended Dec. 31, as compared to a pre-tax loss of $115.8 million for fiscal 2020.
The net loss was $2.5 million, or 14 cents per diluted share, in the fourth quarter as compared to a net loss of $7.8 million, or 43 cents per diluted share, in the prior-year quarter. Fiscal 2021 net income was $9 million, or 50 cents per diluted share, as compared to a net loss of $94.4 million, or $5.20 per diluted share, a year ago.
The net combined ratio was 106.1% for the quarter and 101.1% for the year, compared to 117.7% and 111.3% for the same periods the prior year.
Gross premiums written for fiscal 2021 decreased 12% from last year. Excluding premiums from the exited binding primary commercial auto business, gross premiums written for the year would have decreased 9% compared to the same period in 2020.
Net premiums written for 2021 decreased 21%. Excluding premiums from the exited commercial auto business, gross premiums written for the year would have decreased 16% compared to fiscal 2020.
Net catastrophe losses were $5.9 million in the fourth quarter, or 6.8 points of the net combined ratio, as compared to $0.8 million, or 0.8 points, for the same period a year ago. Net catastrophe losses were $18.3 million for the year, or 4.8 points of the net combined ratio, as compared to $23.1 million, or 4.9 point, last year.
Despite the downbeat results, Hallmark remains one of the most respected companies in the field. A rating of 85 put the company near the top of the insurance - property and casualty industry according to InvestorsObserver. That score “means it scores higher than 85% of stocks in the industry." Hallmark Financial also received an overall rating of 63, putting it above 63% of all stocks. Property and casualty insurance is ranked 53rd out of the 148 industries.
Several major investors have recently bought and sold shares of the stock. GuruFocus data shows BlackRock Inc., for example, added to its holding by 2.1% during the fourth quarter, bringing its investment up to 265,433 shares based on 13F filings.
Billionaire investor Steven Cohen (Trades, Portfolio) also established a 17,600-share position in the stock.
