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Hallmark (HALL) Q1 Loss Narrower Than Expected, Revenues Miss
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Hallmark Financial Services, Inc. (HALL - Free Report) incurred first-quarter 2023 operating loss of $2.74 per share, narrower than the Zacks Consensus Estimate of a loss of $4.05 per share but wider than a loss of $1.80 per share incurred in the year-ago quarter.
A decline in the top line and higher expenses weighed on quarterly results.
Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise
Total revenues declined 53.1% year over year to $39.7 million in the quarter under review. The top line missed the Zacks Consensus Estimate by 8.1%.
Gross premiums written decreased 3.6% year over year to $57.2 million.
Net premiums written increased 2.7% year over year to $42.4 million, attributable to higher premiums in the Commercial segment.
Net investment income was $4.8 million, up more than threefold year over year, primarily due to the reinvestment of cash into higher-yielding securities.
The net combined ratio deteriorated 7880 basis points (bps) to 215.7.
The expense ratio of 131.3 deteriorated 9640 bps year over year.
Total expenses increased 39.5% year over year to $79.6 million due to higher operating expenses and interest expenses.
Segmental Update
Commercial: Net premiums written increased 42% year over year to $28.9 million. The combined ratio improved 2020 bps to 85.7.
Personal: Net premiums decreased 19.3% year over year to $13.5 million. The combined ratio of 110 deteriorated 1040 bps.
Runoff Specialty: Net premiums written was $0.01 million versus $4.2 million in the year-ago quarter.
Corporate: Total revenues were $3.8 million, up 96.6% year over year. The pre-tax loss was $1.6 million, narrower than $2.9 million incurred in the year-ago quarter.
Financial Position
As of first-quarter 2023 end, cash and cash equivalents were $105.5 million, up 78.4% from 2022 end.
Shareholder equity decreased 61% from 2022 end to $23.5 million at first-quarter 2023 end.
Book value per share decreased 63% year over year to $3.62 at first-quarter 2023 end.
The Travelers Companies (TRV - Free Report) reported first-quarter 2022 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41. However, the bottom line decreased 2.6% year over year. Travelers’ total revenues increased 10% from the year-ago quarter to $9.7 billion, primarily driven by higher premiums. The top-line figure however missed the Zacks Consensus Estimate of $9.8 billion.
Net written premiums increased 12% year over year to a record $9.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $8.9 billion.
Catastrophe losses totaled $422 million, wider than $36 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from severe wind and hail storms in multiple states. Travelers witnessed an underwriting gain of $501 million, down 12.9% year over year. The combined ratio deteriorated 410 bps year over year to 95.4.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 as well as our estimate of $1.50. The bottom line declined 20.7% year over year.
Operating revenues were about $14.2 billion, up 15.8% year over year. This improvement was driven by a 15% increase in premiums, 18.5% higher fees and other revenues, a 7.1% increase in service revenues and a 73.2% higher investment income. The top line exceeded the Zacks Consensus Estimate of $14.1 billion and our estimate of $13.1 billion.
Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion. The combined ratio deteriorated 450 bps from the prior-year quarter’s level to 99.
RLI Corp. (RLI - Free Report) reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Operating revenues for the reported quarter were $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.
Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%). Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability in its Property and Casualty segment. Combined ratio remained flat year over year at 77.9.
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Hallmark (HALL) Q1 Loss Narrower Than Expected, Revenues Miss
Hallmark Financial Services, Inc. (HALL - Free Report) incurred first-quarter 2023 operating loss of $2.74 per share, narrower than the Zacks Consensus Estimate of a loss of $4.05 per share but wider than a loss of $1.80 per share incurred in the year-ago quarter.
A decline in the top line and higher expenses weighed on quarterly results.
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
Total revenues declined 53.1% year over year to $39.7 million in the quarter under review. The top line missed the Zacks Consensus Estimate by 8.1%.
Gross premiums written decreased 3.6% year over year to $57.2 million.
Net premiums written increased 2.7% year over year to $42.4 million, attributable to higher premiums in the Commercial segment.
Net investment income was $4.8 million, up more than threefold year over year, primarily due to the reinvestment of cash into higher-yielding securities.
The net combined ratio deteriorated 7880 basis points (bps) to 215.7.
The expense ratio of 131.3 deteriorated 9640 bps year over year.
Total expenses increased 39.5% year over year to $79.6 million due to higher operating expenses and interest expenses.
Segmental Update
Commercial: Net premiums written increased 42% year over year to $28.9 million. The combined ratio improved 2020 bps to 85.7.
Personal: Net premiums decreased 19.3% year over year to $13.5 million. The combined ratio of 110 deteriorated 1040 bps.
Runoff Specialty: Net premiums written was $0.01 million versus $4.2 million in the year-ago quarter.
Corporate: Total revenues were $3.8 million, up 96.6% year over year. The pre-tax loss was $1.6 million, narrower than $2.9 million incurred in the year-ago quarter.
Financial Position
As of first-quarter 2023 end, cash and cash equivalents were $105.5 million, up 78.4% from 2022 end.
Shareholder equity decreased 61% from 2022 end to $23.5 million at first-quarter 2023 end.
Book value per share decreased 63% year over year to $3.62 at first-quarter 2023 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 Some Other P&C Insurers
The Travelers Companies (TRV - Free Report) reported first-quarter 2022 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41. However, the bottom line decreased 2.6% year over year. Travelers’ total revenues increased 10% from the year-ago quarter to $9.7 billion, primarily driven by higher premiums. The top-line figure however missed the Zacks Consensus Estimate of $9.8 billion.
Net written premiums increased 12% year over year to a record $9.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $8.9 billion.
Catastrophe losses totaled $422 million, wider than $36 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from severe wind and hail storms in multiple states. Travelers witnessed an underwriting gain of $501 million, down 12.9% year over year. The combined ratio deteriorated 410 bps year over year to 95.4.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 as well as our estimate of $1.50. The bottom line declined 20.7% year over year.
Operating revenues were about $14.2 billion, up 15.8% year over year. This improvement was driven by a 15% increase in premiums, 18.5% higher fees and other revenues, a 7.1% increase in service revenues and a 73.2% higher investment income. The top line exceeded the Zacks Consensus Estimate of $14.1 billion and our estimate of $13.1 billion.
Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion. The combined ratio deteriorated 450 bps from the prior-year quarter’s level to 99.
RLI Corp. (RLI - Free Report) reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Operating revenues for the reported quarter were $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.
Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%). Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability in its Property and Casualty segment. Combined ratio remained flat year over year at 77.9.