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FOR IMMEDIATE RELEASE
HALLMARK FINANCIAL SERVICES, INC.
ANNOUNCES FIRST QUARTER 2018 EARNINGS RESULTS
FORT WORTH, Texas, (May 8, 2018) - Hallmark Financial Services, Inc. (NASDAQ: HALL) today announced results for its first quarter ended March 31, 2018, including the following highlights:
|·||1st quarter 2018 net income of $0.6 million, or $0.04 per diluted share versus $4.0 million, or $0.21 per diluted share for 1st quarter 2017|
|·||1st quarter 2018 operating earnings (1) of $4.5 million, or $0.24 per diluted share, versus $2.6 million, or $0.14 per diluted share, for 1st quarter 2017|
|·||1st quarter 2018 net combined ratio of 97.4% versus 98.6% for 1st quarter 2017|
|·||1st quarter favorable prior year reserve development of $0.5 million for both 2018 and 2017|
|·||1st quarter 2018 gross premiums written of $153.5 million increased 14% from $135.1 million in 1st quarter 2017|
|·||1st quarter 2018 net premiums written of $91.4 million increased 3% from $88.5 million in 1st quarter 2017|
|(1)||See “Non-GAAP Financial Measures” below|
“I am pleased to report a strong start to fiscal 2018. Our first quarter underwriting results reflect improvement from the various actions we have undertaken the past couple of years to address the challenges that had emerged in our commercial and personal auto portfolios. We are also seeing results from our efforts to diversify into new specialty product lines and to re-balance the geographic footprint of our book. We reported a net combined ratio of 97.4% for the quarter which is higher than our long-term goal as an organization but improved from the first quarter of last year and in line with our expectations for this quarter. We continue to see strong pricing momentum in many product lines across our portfolio which contributed to the 14% increase in gross premiums written for the quarter. Excluding the impact of investment gains and losses, our operating earnings were $4.5 million, or $0.24 per diluted share, as compared to $2.6 million, or $0.14 per diluted share, for the first quarter of 2017,” said Naveen Anand, President and Chief Executive Officer.
“A temporary acceleration of paid claims as we improved our claims practices to address the increase in frequency and severity in our commercial auto portfolio resulted in a decrease in operating cash flow this quarter. We expect our paid claims to trend back closer to our historical levels over the next few quarters as we address the large claim inventory from older accident years,” concluded Mr. Anand.
Mark E. Schwarz, Executive Chairman of Hallmark, stated, “First quarter book value per share increased slightly to $13.85 compared to $13.82 at December 31, 2017. Net investment income was $4.4 million, a 1% decline compared to the first quarter of 2017. Total cash and investments was $709.8 million, or $39.15 per share, as of March 31, 2018, a decrease of 2% from $40.12 per share as of December 31, 2017.”
“Due to the adoption of Accounting Standards Update No. 2016-01, we are now required to include the changes in unrealized gains/losses of our equity security investments as a component of investment gains/losses in our earnings statements. Investment gains/losses in the first quarter include a charge of $4.5 million due to changes in the unrealized gains/losses of our investments in equity securities held at March 31, 2018. Also related to the adoption of the new accounting standard, we reclassified net unrealized gains on equity securities of $21.5 million before tax ($17.0 million after tax) from accumulated other comprehensive income to retained earnings,” continued Mr. Schwarz.
The following information was filed by Hallmark Financial Services Inc (HALL) on Tuesday, May 8, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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