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Hallmark Financial (HALL) Q2 Earnings and Revenues Beat

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Zacks Equity Research
·3 min read
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Hallmark Financial HALL reported second-quarter 2020 operating income of 28 cents per share, beating the Zacks Consensus Estimate of 10 cents per share. The bottom line dropped 33.3% year over year.

The quarter witnessed lower premiums and adverse impact of the COVID-19 pandemic.

Total revenues improved 15.2% year over year to $129 million in the quarter under review. The top line beat the Zacks Consensus Estimate by 1.4%.

Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise

Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise

Hallmark Financial Services, Inc. price-consensus-eps-surprise-chart | Hallmark Financial Services, Inc. Quote

Quarterly Operational Update

Gross premiums decreased 16% year over year to $183.6 million.

Net premiums written declined 12% year over year to $109 million.

Investment income dropped 41% year over year to $3.2 billion in the quarter, attributable to lower interest rates and an increase in the proportion of short-term investments held relative to longer maturity investments.

Net catastrophe losses of $6.6 million includes $3.7 million net losses for COVID-19 claims, which deteriorated net combined ratio by 520 basis points (bps).

Net combined ratio deteriorated 390 bps to 98.4%. The exit of the Binding Primary Auto business had a 260 bps negative impact on net combined ratio.

Expense ratio of 22.9% improved 280 bps year over year.

Total expenses increased 21.7% year over year to $127.1 million due to higher losses and loss adjustment costs, operating expenses and interest expense.

Segmental Update

Specialty Commercial Segment: Net premiums written declined 17.4% year over year to $74 million. Combined ratio deteriorated 510 bps to 96.9%.

Standard Commercial Segment: Net premiums written were up 14.6% year over year to $16.8 million. Combined ratio deteriorated 590 bps to 100.1%.

Personal Segment: Net premiums decreased 7.2% year over year to $20.9 million. Combined ratio deteriorated 60 bps to 92.1%.

Corporate Segment: Total revenues was $2 million, down from $6.9 million in the year-ago quarter. Pretax loss was $3 million against year-ago income $1.6 million.

Financial Position

As on Jun 30, 2020 end, cash and cash equivalents were $126.6 million, up 137.4% from 2019 end level.

Total assets decreased 4.1% year over year to $1.4 billion at Jun 30, 2020.

Book value per share dropped 30% year over year to $11.14 as on Jun 30, 2020.

Zacks Rank

Hallmark Financial currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR, Cincinnati Financial CINF, and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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RLI Corp. (RLI) : Free Stock Analysis Report
 
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report
 
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Zacks Investment Research