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Hallmark Financial (HALL) Q2 Earnings and Revenues Beat

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Hallmark Financial (HALL - Free Report) 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%.

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 - Free Report) , Cincinnati Financial (CINF - Free Report) , and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.

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