Mark E. Schwarz
Chief Executive Officer
817-348-1600
FORT WORTH, Texas -- March 30, 2004 -- Hallmark Financial
Services, Inc., (Amex: HAF.EC) ("The Company") today reported operating
results for the fourth quarter and year ended December 31, 2003. Net loss for
the quarter ended December 31, 2003 was $0.4 million or $0.01 per diluted share,
as compared to a net loss of $0.4 million or $0.04 per diluted share for the
same period in 2002. For the year ended December 31, 2003, the Company reported
net income of $8.7 million, or $0.46 per diluted share, as compared to a net
loss of $1.7 million, or $0.15 per diluted share, for the year ended December
31, 2002. Income before the extraordinary gain related to the Phoenix Indemnity
Insurance Company ("Phoenix") acquisition in the first quarter of
2003 and the cumulative effect of a change in accounting principle recorded
in 2002, for the year ended December 31, 2003 was $0.7 million, as compared
to breakeven results for the same period in 2002.
Total revenues were $16.4 million and $69.6 million for the fourth
quarter and year ended December 31, 2003, respectively, as compared to $8.7
million and $25.8 million for the corresponding 2002 periods.
The net loss reported for the fourth quarter 2003 includes an
accrual for a settlement of a bad faith claim in Phoenix in the amount of $2.1
million before tax and after considering reinsurance.
"The bad faith claim against Phoenix was a big disappointment
in what would have otherwise been the most profitable quarter ever reported
by Hallmark on an operating basis. We are, nonetheless, pleased to have the
matter behind us. We are now focused intently on realizing the benefits in 2004
of the many positive improvements achieved this past year. We more than doubled
the size of the Company in both revenue and surplus, added a new line of business,
expanded into new states and strengthened our management team, all of which
significantly enhance Hallmark's future prospects," stated Mark E. Schwarz,
Chief Executive Officer.
Hallmark Financial Services, Inc. engages primarily in sale of
property and casualty insurance products. The Company's business involves marketing,
underwriting and premium financing of non-standard personal automobile insurance
primarily in Texas, Arizona and New Mexico, marketing commercial insurance primarily
in Texas, New Mexico, Idaho, Oregon 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.EC".
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.
HALLMARK FINANCIAL SERVICES, INC.
AND CONSOLIDATED SUBSIDIARIES
(In thousands, except earnings per share)
Selected Operating Results
Three Months Ended December 31
2003 2002
Gross Premiums Written $ 6,934 $14,101
Total Revenues $16,428 $ 8,690
Pretax Income (Loss) $ (870) $ (587)
Income Tax Expense $ (473) $ (199)
Income before Extraordinary Gain (Loss) $ (397) $ (388)
Extraordinary Gain (Loss) $ (32) $ ---
Net Income $ (429) $ (388)
Basic Earnings Per Share $ (0.01) $ (0.04)
Diluted Earnings Per Share $ (0.01) $ (0.04)
Twelve Months Ended December 31
2003 2002
Gross Premiums Written $43,338 $51,643
Total Revenues $69,559 $25,797
Pretax Income $ 686 $ 36
Income Tax Expense $ 25 $ 13
Income before Cumulative Effect of Change
in Accounting Principle and
Extraordinary Gain $ 661 $ 23
Cumulative Effect of Change in
Accounting Principle $ --- $(1,694)
Extraordinary Gain $ 8,084 $ ---
Net Income (Loss) $ 8,745 $(1,671)
Basic Earnings (Loss) Per Share $ 0.47 $ (0.15)
Diluted Earnings (Loss) Per Share $ 0.46 $ (0.15)
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