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Hallmark Financial (HALL) Q2 Earnings, Revenues Lag Estimates

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Hallmark Financial Services (HALL - Free Report) incurred operating loss of 19 cents per share against the Zacks Consensus Estimate of earnings of 8 cents per share and the year-ago earnings of 28 cents per share.

The quarter witnessed lower premiums in Specialty Commercial and Personal segments. However, Hallmark Financial continued to achieve substantial rate increases, particularly in the Specialty Commercial segment.

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

Quarterly Operational Update

Total revenues declined 21.6% year over year to $101.2 million in the quarter under review. The top line missed the Zacks Consensus Estimate by 1%.

Gross premiums written decreased 8% year over year to $169.7 million.

Net premiums written dropped 18% year over year to $89.1 million, attributable to lower premium in Specialty Commercial and Personal segments.

Net investment income was $2.4 million, down 26% year over year owing to lower interest rates.

Net combined ratio deteriorated 730 basis points (bps) to 105.7.

Expense ratio of 26.9 deteriorated 400 bps year over year.

Total expenses decreased about 16% year over year to $106.7 million due to lower loss and loss adjustment expenses, operating expenses, interest expenses and amortization of intangible assets.

Net catastrophe losses were $3.7 million in the quarter, narrower than $6.6 million loss incurred in the year-ago quarter.

Segmental Update

Specialty Commercial: Net premiums written declined 24.3% year over year to $56 million. Combined ratio deteriorated 30 bps to 97.2.

Standard Commercial: Net premiums written were up 3.4% year over year to $17.4 million. Combined ratio deteriorated 1700 bps to 117.1.

Personal: Net premiums decreased 13.6% year over year to $15.7 million. Combined ratio deteriorated 2680 bps to 112.4

Corporate: Total revenues were $2.9 million, up 49.5% year over year. Pretax loss of $1.1 million was narrower than the year-ago loss of $3 million.

Financial Position

As of second-quarter 2021 end, cash and cash equivalents were $326.6 million, up more than three-fold from 2020 end level.

Shareholder equity increased 4.7% from 2020 end to $178.9 million at second-quarter 2021 end.

Book value per share increased 4% from 2020 end to $9.84 at second-quarter 2021 end.

Zacks Rank

Hallmark Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Second-quarter earnings per share of The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate.