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Hallmark Financial Services Inc. (HALL - Free Report) posted operating loss of 20 cents per share in the fourth quarter of 2016. The Zacks Consensus Estimate was of earnings of 22 cents per share. The quarterly loss also compared unfavorably with the year-ago earnings of 18 cents per share.
Hallmark Financial’s quarterly results were hurt by weak performance in the automobile line of business, both commercial and personal. This apart, the company incurred wider-than-expected property catastrophe losses.
Behind the Headlines
Hallmark Financial generated operating revenues of $95 million, up 36.7% year over year. Higher net premiums earned (up 6%) as well as investment income (up 12%) supported the improvement. However, lower finance charge revenues and lower commission and fee revenues were partial offsets. Higher net premiums written in the Specialty Commercial Segment and Personal Segment drove total net premiums earned.
Total expense of Hallmark Financial increased 7.9% year over year to $103.4 million due to higher losses and loss adjustment expenses and interest expenses.
Net loss ratio deteriorated 1730 basis points (bps) year over year to 85.5%. The company’s combined ratio deteriorated 1550 bps to 111%.
2016 Fiscal Highlights
Hallmark Financial posted net income of 34 cents on revenues of $376 million. This translates to a year-over-year decline of 69% for the bottom line, while an increase of 1% for the top line.
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise
Specialty Commercial: Total revenue increased 7.4% year over year to $66.4 million.
Pre-tax loss of $1.4 million compared unfavorably with income of $11.4 million in the year-ago quarter. Combined ratio deteriorated 2170 bps to 108.2%.
Standard Commercial: Total revenue was down 2.2% year over year to $17.5 million.
Pre-tax income of $1.2 million compared favorably with the year-ago loss of $0.6 million.
Combined ratio improved 1220 bps over year at 98.4%.
Personal Segment: Total revenue inched up 3.2% year over year to $12.8 million in the quarter.
Pre-tax loss of $3 million was wider than a loss of $0.3 million incurred in the year-ago quarter.
Combined ratio deteriorated 2290 bps to 131.8%.
Corporate: Total revenue was $0.5 million compared with ($2.1) million in the year-ago quarter.
Pre-tax loss of $3 million was narrower than a loss of $5.6 million in the year-ago quarter.
Financial Details
Hallmark Financial’s total investment of $654.1 million jumped 13% from year-end 2015.
The company exited 2016 with cash and cash equivalents of $87 million, down 28% from 2015.
Cash flow from operations declined 42% year over year to $30.8 million in 2016.
As of Dec 31, 2016, Hallmark Financial’s book value per share was $14.28, up 4% year over year. Stockholder’s equity was $265.7 million, up 1.4% from year-end 2015.
Zacks Rank
Hallmark Financial carries a Zacks Rank #5 (Strong Sell).
Performance of Other P&C Insurers
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
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Hallmark Financial (HALL) Posts Q4 Loss, Revenues Grow Y/Y
Hallmark Financial Services Inc. (HALL - Free Report) posted operating loss of 20 cents per share in the fourth quarter of 2016. The Zacks Consensus Estimate was of earnings of 22 cents per share. The quarterly loss also compared unfavorably with the year-ago earnings of 18 cents per share.
Hallmark Financial’s quarterly results were hurt by weak performance in the automobile line of business, both commercial and personal. This apart, the company incurred wider-than-expected property catastrophe losses.
Behind the Headlines
Hallmark Financial generated operating revenues of $95 million, up 36.7% year over year. Higher net premiums earned (up 6%) as well as investment income (up 12%) supported the improvement. However, lower finance charge revenues and lower commission and fee revenues were partial offsets. Higher net premiums written in the Specialty Commercial Segment and Personal Segment drove total net premiums earned.
Total expense of Hallmark Financial increased 7.9% year over year to $103.4 million due to higher losses and loss adjustment expenses and interest expenses.
Net loss ratio deteriorated 1730 basis points (bps) year over year to 85.5%. The company’s combined ratio deteriorated 1550 bps to 111%.
2016 Fiscal Highlights
Hallmark Financial posted net income of 34 cents on revenues of $376 million. This translates to a year-over-year decline of 69% for the bottom line, while an increase of 1% for the top line.
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise | Hallmark Financial Services, Inc. Quote
Segment Update
Specialty Commercial: Total revenue increased 7.4% year over year to $66.4 million.
Pre-tax loss of $1.4 million compared unfavorably with income of $11.4 million in the year-ago quarter. Combined ratio deteriorated 2170 bps to 108.2%.
Standard Commercial: Total revenue was down 2.2% year over year to $17.5 million.
Pre-tax income of $1.2 million compared favorably with the year-ago loss of $0.6 million.
Combined ratio improved 1220 bps over year at 98.4%.
Personal Segment: Total revenue inched up 3.2% year over year to $12.8 million in the quarter.
Pre-tax loss of $3 million was wider than a loss of $0.3 million incurred in the year-ago quarter.
Combined ratio deteriorated 2290 bps to 131.8%.
Corporate: Total revenue was $0.5 million compared with ($2.1) million in the year-ago quarter.
Pre-tax loss of $3 million was narrower than a loss of $5.6 million in the year-ago quarter.
Financial Details
Hallmark Financial’s total investment of $654.1 million jumped 13% from year-end 2015.
The company exited 2016 with cash and cash equivalents of $87 million, down 28% from 2015.
Cash flow from operations declined 42% year over year to $30.8 million in 2016.
As of Dec 31, 2016, Hallmark Financial’s book value per share was $14.28, up 4% year over year. Stockholder’s equity was $265.7 million, up 1.4% from year-end 2015.
Zacks Rank
Hallmark Financial carries a Zacks Rank #5 (Strong Sell).
Performance of Other P&C Insurers
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
You can see the complete list of today’s Zacks #1 Rank stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>