A.M. Best reiterated the issuer credit rating (ICR) of "bbb-" on
Hallmark Financial Services
). Concurrently, the rating agency also reiterated financial
strength rating (
) of A- (Excellent) and ICR of "a-" of Hallmark Insurance Group and
its operating subsidiaries. The outlook remains stable.
The rating affirmations of Hallmark Insurance Group and its
operating subsidiaries came on the back of the strong risk-adjusted
capitalization, moderate operational performance over the five
years and financial support provided by Hallmark Financial. The
strong risk-adjusted capitalization stemmed from impressive
investment income, capital gains and other incomes, though
underwriting loss somewhat muted the positives.
The rating agency also noted that Hallmark Group remains focused
on expanding its exposure to less competitive markets in an effort
to enhance its operational performance.
However, acquisition integration risks along with risks related
to geographic and product expansion efforts are partial offsets to
these positives. Hallmark Group suffered hugely in the past two
years due to adverse loss experience in Florida non-standard
personal automobile. In order to weather the headwind, Hallmark
Group terminated new business productions, altered their policy
renewal terms, and increased rates.
Besides these changes, it also expanded the potential of its
personal lines claims department and enlarged the claims employee
base in Florida.
The rating agency noted that no renewals were made in Florida
personal automobile policies with only a small amount of claims
Nevertheless, Hallmark Group will be subject to rating
downgrades if there is further corrosion in operational
performances and risk adjusted capitalization.
In the fourth quarter of 2011, Hallmark Financial reported an
income of 2 cents per share, in line with the year-ago results. The
quarter benefited from the strong underwriting results at Standard
Commercial Segment and Specialty Commercial Segment.
The quantitative Zacks #3 Rank (short-term Hold rating) for
Hallmark Financial indicates no clear directional pressure on the
stock over the near term.
Headquartered in Fort Worth, Texas, Hallmark Financial Services
is an insurance holding company, offering marketing, distributing,
underwriting, and servicing property/casualty insurance products.
The company competes with
The Hartford Financial Services Group Inc.
The Travelers Companies Inc.
HALLMARK FINL (
): Free Stock Analysis Report
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