CONTACT:
Mark J. Morrison
Chief Operating Officer
Hallmark Financial Services, Inc.
(817) 348-1600
http://www.hallmarkgrp.com
FORT WORTH, Texas -- March 22, 2006 -- Hallmark Financial Services,
Inc. (Amex: HAF) today reported operating results for the quarter and year ended
December 31, 2005. Net income for the quarter ended December 31, 2005, was $2.9
million as compared to $1.4 million for the same period in 2004. Net income
for the year ended December 31, 2005, increased 57.1% to $9.2 million, or $0.13
per diluted share, as compared to net income of $5.8 million, or $0.14 per diluted
share, for the same period in 2004. The decrease in net income per diluted share
was primarily attributable to an increase in the weighted average shares outstanding
as the result of a successful stockholder rights offering completed in the second
quarter of 2005.
Total revenues for the quarter and year ended December 31, 2005, also increased
as compared to the same periods of 2004. Total revenue for the fourth quarter
increased 65.9% to $26.6 million in 2005 as compared to $16.1 million in 2004.
Total revenue of $87.0 million for the 2005 fiscal year was $23.9 million greater
than the $63.1 million in total revenue for fiscal 2004.
"I am pleased to report that the operating results for fiscal 2005 were
the best in the Company's history," stated Mark E. Schwarz, Chief Executive
Officer. "We look forward to building on our success with the recently
completed acquisitions of Texas General Agency and Aerospace Insurance Managers,"
Mr. Schwarz continued.
"The increase in total revenues for the quarter and year ended December
31, 2005, as compared to the same periods in fiscal 2004, were mostly attributable
to American Hallmark Insurance Company retaining the commercial business previously
produced for a third party insurer," stated Mark J. Morrison, Chief Operating
Officer and Chief Financial Officer. "The increase in net income for the
quarter and year ended December 31, 2005, versus the same periods in fiscal
2004 reflects continued favorable loss development in both operating units,
increased premium retention and additional investment income from the successful
completion of our capital plan in the second quarter of fiscal 2005," Mr.
Morrison concluded.
Hallmark Financial Services, Inc. engages primarily in sale of property and
casualty insurance products. The Company's business involves marketing and underwriting
commercial insurance in Texas, New Mexico, Idaho, Oregon, Montana and Washington;
marketing and underwriting non-standard personal automobile insurance in Texas,
New Mexico and Arizona; marketing of general aviation insurance in 44 states;
claims administration; and other insurance related services. The Company is
headquartered in Fort Worth, Texas and its common stock is listed on the American
Stock Exchange under the symbol "HAF".
Forward-looking statements in this Release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Act of 1995. Investors
are cautioned that actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and uncertainties including,
but not limited to, continued acceptance of the Company's products and services
in the marketplace, competitive factors, interest rate trends, the availability
of financing, underwriting loss experience and other risks detailed from time
to time in the Company's periodic report filings with the Securities and Exchange
Commission.
For further information, please contact: Mark J. Morrison, Chief
Operating Officer at 817.348.1600 http://www.hallmarkgrp.com
HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31 December 31
2005 2004 2005 2004
Gross premiums written $26,482 $10,215 $89,467 $33,389
Ceded premiums written (663) (347) (1,215) (322)
Net premiums written 25,819 9,868 88,252 33,067
Change in net unearned
premiums (5,362) (1,095) (29,068) (622)
Net premiums earned 20,457 8,773 59,184 32,445
Investment income,
net of expenses 1,562 392 3,836 1,386
Realized gain (loss) 6 30 58 (27)
Finance charges 508 539 2,044 2,183
Commission and fees 3,169 4,865 16,703 21,100
Processing and service fees
931 1,443 5,183 6,003
Other income 5 10 27 31
Total revenues 26,638 16,052 87,035 63,121
Losses and loss adjustment
expenses 11,200 5,037 33,784 19,137
Other operating costs
and expenses 10,740 8,944 38,492 35,290
Interest expense 600 3 1,264 64
Amortization of intangible
asset (4) 7 27 28
Total expenses 22,536 13,991 73,567 54,519
Income before income
tax expense 4,102 2,061 13,468 8,602
Income tax expense 1,208 660 4,282 2,753
Net income $2,894 $1,401 $9,186 $5,849
Basic earnings per share $0.03 $0.03 $0.13 $0.14
Diluted earnings per share $0.03 $0.03 $0.13 $0.14
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