(Source: PrimeNewswire)
FORT WORTH, Texas, Aug. 13, 2009 (GLOBE NEWSWIRE) -- Hallmark Financial Services, Inc. (Nasdaq:HALL) ("Hallmark") today reported second quarter 2009 net earnings of $4.3 million compared to $7.4 million reported for second quarter 2008. Year to date, Hallmark reported net earnings of $11.1 million, compared to $14.7 million for the same period the prior year. On a fully diluted basis, net earnings were $0.20 per share and $0.53 per share for the second quarter and the first six months of 2009, as compared to $0.35 per share and $0.70 per share for the similar periods of 2008. Total revenues were $70.7 million and $141.7 million for the second quarter and first six months of 2009, as compared to $72.0 million and $143.5 million for the similar periods of 2008.
Mark J. Morrison, President and Chief Executive Officer, said, "Our premium production increased 8% this quarter compared to a year ago due to our ongoing geographic and product expansion in our Personal Segment and the expansion of our Specialty Commercial Segment with the acquisition of Heath XS late last year. However, our adherence to underwriting discipline during the prolonged soft market conditions has contributed to a decrease in premium production in our Standard Commercial Segment and the other lines of business in our Specialty Commercial Segment. Although we continue to see aggressive pricing on larger commercial accounts from national standard lines carriers and an increased appetite for risks that have historically been written in the E&S market, the greatest factor affecting our premium production is the impact of the economic slowdown on our insureds."
Mr. Morrison continued, "Our primary focus continues to be on underwriting profitability, as opposed to premium growth or market share. We are achieving this goal by remaining disciplined in soft market conditions, as evidenced by our 91.7% combined ratio for the quarter."
Mark E. Schwarz, Executive Chairman of Hallmark, stated, "Year-to-date book value per share increased 17% to $10.08 as of June 30, 2009. This follows our flat 2008 growth in book value per share -- a result that occurred despite producing a 91.6% combined ratio, due in large part to recognized impairment losses on certain securities that have since recovered in value. Strong investment performance and solid underwriting profits during the first six months of 2009 generated an annualized return on average equity of 11%, and cash flow from operations of $29 million."
Three Months Ended June 30, ----------------------------- % 2009 2008 Change --------- --------- ------ ($ in thousands) Gross premiums written $ 75,053 $ 63,115 19% Net premiums written 71,793 61,109 17% Net premiums earned 62,319 59,764 4% Commission and fee income 2,627 6,669 -61% Investment income, net of expenses 3,467 3,957 -12% Gain on investments 867 232 274% Total revenues 70,744 71,984 -2% Net earnings (1) 4,275 7,410 -42% Net earnings per share - basic $ 0.20 $ 0.36 -44% Net earnings per share - diluted $ 0.20 $ 0.35 -43% Annualized return on average equity 8.5% 15.7% -46% Book value per share $ 10.08 $ 9.24 9% Cash flow from operations $ 19,931 $ 17,361 15% Six Months Ended June 30, ----------------------------- % 2009 2008 Change --------- --------- ------ ($ in thousands) Gross premiums written $ 146,532 $ 127,352 15% Net premiums written 141,040 123,342 14% Net premiums earned 121,749 119,008 2% Commission and fee income 8,816 13,153 -33% Investment income, net of expenses 7,736 7,582 2% Gain on investments 519 1,091 -52% Total revenues 141,654 143,505 -1% Net earnings (1) 11,065 14,675 -25% Net earnings per share - basic $ 0.53 $ 0.71 -25% Net earnings per share - diluted $ 0.53 $ 0.70 -24% Annualized return on average equity 11.4% 15.8% -28% Book value per share $ 10.08 $ 9.24 9% Cash flow from operations $ 28,782 $ 29,749 -3% (1) Net earnings is net income attributable to Hallmark Financial Services, Inc. as reported in our consolidated statements of operations.
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 earnings of $4.3 million and $11.1 million for the three and six months ended June 30, 2009, which were $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 earnings were $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 earnings 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 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.
Hallmark's net loss ratio was 61.2% and 61.6% for the three and six months ended June 30, 2009 as compared to 60.3% and 60.1% for the same periods of 2008. Hallmark's net expense ratio was 30.5% and 30.6% for the three and six months ended June 30, 2009 as compared to 31.0% and 30.7% for the same periods of 2008. Hallmark maintained profitable net combined ratios of 91.7% and 92.2% for the three and six months ended June 30, 2009 as compared to 91.3% and 90.8% for the same periods in the prior year.
Hallmark Financial Services, Inc. is an insurance holding company which, through its subsidiaries, engages in the sale of property/casualty insurance products to businesses and individuals. Hallmark's business involves marketing, distributing, underwriting and servicing commercial insurance, personal insurance and general aviation insurance, as well as providing other insurance related services. The Company is headquartered in Fort Worth, Texas and its common stock is listed on NASDAQ under the symbol "HALL."
The Hallmark Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4395
Forward-looking statements in this Release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ substantially from such forward-looking statements.
