Hallmark Financial Services, Inc.

Hallmark Financial Services, Inc. Announces Agreement to Acquire Pan American Acceptance Corporation

11/30/2005

CONTACT:
Mark J. Morrison
Chief Operating Officer
Hallmark Financial Services, Inc.
(817) 348-1600
http://www.hallmarkgrp.com

FORT WORTH, Texas -- November 30, 2005 -- Hallmark Financial Services, Inc. (Amex: HAF) today announced that it has executed a definitive agreement to acquire Pan American Acceptance Corporation ("PAAC"). PAAC is engaged in financing premiums on property and casualty insurance products marketed by two affiliated entities, Texas General Agency, Inc. ("TGA") and TGA Special Risk, Inc. ("TGASRI"). The Company has previously executed a definitive agreement to acquire TGA and TGASRI. Closing conditions include, among other things, obtaining consent to the transaction from the Texas Department of Insurance and the prior or contemporaneous closing of Hallmark's acquisition of TGA and TGASRI. The transaction is expected to be effective as of January 1, 2006.

Hallmark has filed with the Securities and Exchange Commission a Current Report on Form 8-K containing additional information concerning the PAAC purchase agreement.

Hallmark Financial Services, Inc. engages primarily in the sale of property and casualty insurance products. The Company's business involves marketing and underwriting of non-standard personal automobile insurance primarily in Texas, Arizona and New Mexico; marketing and underwriting commercial insurance primarily in Texas, New Mexico, Idaho, Oregon, Montana and Washington; third party 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.

###