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Hallmark Financial (HALL) Q4 Earnings Miss, Stock Down 9.3%
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Shares of Hallmark Financial Services (HALL - Free Report) lost 9.3% in the last two trading sessions as it delivered negative earnings and revenue surprise for the fourth quarter of 2020.
Operating loss of 55 cents per share was wider than the Zacks Consensus Estimate of a loss of 16 cents per share. Quarterly loss was, however, narrower than $2.01 per share incurred in the year-ago quarter.
Hallmark Financial continued to achieve substantial rate increases, particularly in the Specialty Commercial segment.
Total revenues declined 6.8% year over year to $115.7 million in the quarter under review. However, the top line missed the Zacks Consensus Estimate by 1.9%.
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise
Gross premiums decreased 24% year over year to $161.7 million.
Net premiums written dropped 31% year over year to $87.4 million, attributable to lower premium in Specialty Commercial and Personal segments.
Net investment income was $2.6 million, dropped 48% year over year owing to lower interest rates.
Net combined ratio improved 3040 basis points (bps) to 110.7
Expense ratio of 25 deteriorated 170 bps year over year.
Total expenses decreased 21.7% year over year to $134.8 million due to higher losses, loss adjustment costs and interest expenses.
Net catastrophe losses were $0.8 million in the fourth quarter.
Segmental Update
Specialty Commercial: Net premiums written rose dropped 40.3% year over year to $55.6 million. Combined ratio improved 4100 bps to 106.2
Standard Commercial: Net premiums written were up 1.1% year over year to $15.2 million. Combined ratio improved 3400 bps to 102.3
Personal: Net premiums decreased 14.5% year over year to $16.6 million. Combined ratio deteriorated 1290 bps to 127.8
Corporate: Total revenues increased 19.8% year over year to $4.2 million. Pretax loss widened to $3.9 million from $1.2 million loss incurred in the year-ago quarter.
Fiscal 2020 Highlights
Operating loss was 59 cents per share, narrower than 93 cents per share incurred in 2019.
Total revenues decreased 1.6% year over year to $478.7 million.
Net combined ratio of 110.7 deteriorated 270 basis points. Combined ratio was negatively impacted by 1240 basis points from the discontinued line of business, which included the $21.7 million cost of a loss portfolio transfer reinsurance agreement. Hallmark Financial announced its decision to exit the binding primary automobile business in the first quarter of 2020.
Financial Position
As of fiscal 2020 end, cash and cash equivalents were $108.3 million, up 97.1% year over year.
Total assets decreased 0.7% year over year to $1.5 billion at fiscal 2020 end.
Book value per share dropped 35.2% year over year to $9.42 at fiscal 2020 end.
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
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Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Hallmark Financial (HALL) Q4 Earnings Miss, Stock Down 9.3%
Shares of Hallmark Financial Services (HALL - Free Report) lost 9.3% in the last two trading sessions as it delivered negative earnings and revenue surprise for the fourth quarter of 2020.
Operating loss of 55 cents per share was wider than the Zacks Consensus Estimate of a loss of 16 cents per share. Quarterly loss was, however, narrower than $2.01 per share incurred in the year-ago quarter.
Hallmark Financial continued to achieve substantial rate increases, particularly in the Specialty Commercial segment.
Total revenues declined 6.8% year over year to $115.7 million in the quarter under review. However, the top line missed the Zacks Consensus Estimate by 1.9%.
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 24% year over year to $161.7 million.
Net premiums written dropped 31% year over year to $87.4 million, attributable to lower premium in Specialty Commercial and Personal segments.
Net investment income was $2.6 million, dropped 48% year over year owing to lower interest rates.
Net combined ratio improved 3040 basis points (bps) to 110.7
Expense ratio of 25 deteriorated 170 bps year over year.
Total expenses decreased 21.7% year over year to $134.8 million due to higher losses, loss adjustment costs and interest expenses.
Net catastrophe losses were $0.8 million in the fourth quarter.
Segmental Update
Specialty Commercial: Net premiums written rose dropped 40.3% year over year to $55.6 million. Combined ratio improved 4100 bps to 106.2
Standard Commercial: Net premiums written were up 1.1% year over year to $15.2 million. Combined ratio improved 3400 bps to 102.3
Personal: Net premiums decreased 14.5% year over year to $16.6 million. Combined ratio deteriorated 1290 bps to 127.8
Corporate: Total revenues increased 19.8% year over year to $4.2 million. Pretax loss widened to $3.9 million from $1.2 million loss incurred in the year-ago quarter.
Fiscal 2020 Highlights
Operating loss was 59 cents per share, narrower than 93 cents per share incurred in 2019.
Total revenues decreased 1.6% year over year to $478.7 million.
Net combined ratio of 110.7 deteriorated 270 basis points. Combined ratio was negatively impacted by 1240 basis points from the discontinued line of business, which included the $21.7 million cost of a loss portfolio transfer reinsurance agreement. Hallmark Financial announced its decision to exit the binding primary automobile business in the first quarter of 2020.
Financial Position
As of fiscal 2020 end, cash and cash equivalents were $108.3 million, up 97.1% year over year.
Total assets decreased 0.7% year over year to $1.5 billion at fiscal 2020 end.
Book value per share dropped 35.2% year over year to $9.42 at fiscal 2020 end.
Zacks Rank
Hallmark Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>