Hallmark Financial (HALL) Falls Despite Q4 Earnings Beat - Analyst Blog

Hallmark Financial Services Inc.HALL reported fourth-quarter 2014 net income of 19 cents per share surpassing the Zacks Consensus Estimate of 15 cents per share by 26.7% and improving 5.6% year over year. The upside was driven by solid underwriting results during the quarter.

However, this solid beat did not pull up the share price in the last trading session as the stock lost 0.4% due to broader market dynamics.

Hallmark Financial Services Inc. - Earnings Surprise | FindTheCompany

Operational Update

Hallmark Financial's total revenue of $88 million was almost flat as lower revenues in Standard Commercial and Personal segments were partially offset by marginal improvement in the Specialty Commercial segment.

Net premiums written improved 30% year over year to $83.7 million due to an improvement in net premiums written in Specialty Commercial and Personal segments.

Hallmark Financial's total expense declined 1.5% to $82.4 million in the reported quarter due to lower losses and loss adjustment expenses, interest expenses and amortization of intangible assets expenses.

The company reported combined ratio of 95.9%, improving 70 basis points (bps) year over year. This enhancement was driven by improved combined ratio at Standard Commercial segment (by 1430 bps).

Full-Year Highlights

Hallmark Financial reported full year 2014 net income of 69 cents per share, improving 60.5% year over year. Results also surpassed the Zacks Consensus Estimate of 65 cents by 6.1%.

Total revenue came in at $337.4 million, declining from the year-ago figure of $389.4 million. However, results surpassed the Zacks Consensus Estimate of $330 million by 2.2%.

Financial Update

Hallmark Financial exited 2014 with cash and cash equivalents of $130.9 million compared with $141.7 million as of 2013-end.

Total shareholder's equity as of Dec 31, 2014 came in at $252 million, up 5.8% from 2013-end.

Book value per share improved 6% to $13.11 as of Dec 31, 2014.

Cash flow from operations as of Dec 31, 2014 was $33.7 million, down from $68.3 million as of 2013-end.

Currently, Hallmark Financial carries a Zacks Rank #3 (Hold)

Performance of Other Property and Casualty Insurers

ProAssurance Corporation PRA reported fourth-quarter 2014 operating earnings per share of $1.04, which surpassed the Zacks Consensus Estimate of 76 cents. The figure also increased from 99 cents per share earned in the year-ago quarter.

The Travelers Companies Inc. TRV posted operating earnings of $3.07 per share in the fourth quarter of 2014, outperforming the Zacks Consensus Estimate by 21%. Earnings improved 14.6% year over year.

Progressive Corp.'s PGR earnings per share for fourth-quarter 2014 came in at 60 cents, 40% above the Zacks Consensus Estimate and up about 43% year over year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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