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Hallmark Financial (HALL) Q2 Earnings Miss, Revenues in Line
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Hallmark Financial Services Inc. (HALL - Free Report) posted operating earnings of 15 cents per share in the second quarter of 2016 that missed the Zacks Consensus Estimate of 20 cents. Earnings plunged 54.5% year over year. The underperformance primarily stemmed from higher catastrophe losses.
Behind the Headlines
Hallmark Financial generated total revenue of $92 million, down 5.3% year over year, mainly due lower net premium. Operating revenues were in line with the Zacks Consensus Estimate.
Total expenses of Hallmark Financial inched up 1.9% year over year to $89.6 million due to higher operating expenses.
Net loss ratio improved 80 basis points (bps) to 66.7% from 67.5% in the prior-year quarter. Combined ratio of Hallmark Financial was 95.9% as against 96.1% in the year-ago quarter. This marks an improvement of 20 bps.
Segment Update
Standard Commercial: Total revenue declined 9.5% year over year to $18.2 million due to lower net premiums written and adverse change in unearned premiums.
Pre-tax income plunged 20% to $3 million in the quarter.
Combined ratio improved 530 bps to 88%.
Specialty Commercial: Total revenue inched up 1% year over year to $63 million due to increase in net premium written.
Pre-tax income dipped 5.2% year over year to $7.3 million in the quarter.
Combined ratio remained flat year over year at 92.3%.
Personal Segment: Total revenue grew 3.4% year over year to $12.1 million in the quarter due to higher net premiums earned.
Pre-tax loss of $1 million was wider than a loss of $0.7 million incurred in the year-ago quarter. Increase in losses and loss adjustment expenses resulted in the wider loss.
Combined ratio deteriorated 610 bps to 114.5%.
Corporate: Total revenue was ($2.35) million compared with $2.97 million in the year-ago quarter.
Pre-tax loss of $7.8 million was wider than $0.8 million in the year-ago quarter.
Financial Details
Hallmark Financial exited the quarter with total investments of $618.7 million, up 6.9% from year-end 2015.
Cash and cash equivalents declined 17.7% to $101.2 million in the quarter.
Cash flow from operations was $3.6 million in the reported quarter compared with cash flow from operations of $29.2 million a year ago.
Hallmark Financial’s book value per share was $14.25 as of Jun 30, 2016, up 4.5% year over year. Stockholder’s equity was $266.1 million as against $262 million in the year-ago quarter.
Zacks Rank
Hallmark Financial carries a Zacks Rank #3 (Hold).
Among the other players in the insurance industry that have reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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Hallmark Financial (HALL) Q2 Earnings Miss, Revenues in Line
Hallmark Financial Services Inc. (HALL - Free Report) posted operating earnings of 15 cents per share in the second quarter of 2016 that missed the Zacks Consensus Estimate of 20 cents. Earnings plunged 54.5% year over year. The underperformance primarily stemmed from higher catastrophe losses.
Behind the Headlines
Hallmark Financial generated total revenue of $92 million, down 5.3% year over year, mainly due lower net premium. Operating revenues were in line with the Zacks Consensus Estimate.
Total expenses of Hallmark Financial inched up 1.9% year over year to $89.6 million due to higher operating expenses.
Net loss ratio improved 80 basis points (bps) to 66.7% from 67.5% in the prior-year quarter. Combined ratio of Hallmark Financial was 95.9% as against 96.1% in the year-ago quarter. This marks an improvement of 20 bps.
Segment Update
Standard Commercial: Total revenue declined 9.5% year over year to $18.2 million due to lower net premiums written and adverse change in unearned premiums.
Pre-tax income plunged 20% to $3 million in the quarter.
Combined ratio improved 530 bps to 88%.
Specialty Commercial: Total revenue inched up 1% year over year to $63 million due to increase in net premium written.
Pre-tax income dipped 5.2% year over year to $7.3 million in the quarter.
Combined ratio remained flat year over year at 92.3%.
Personal Segment: Total revenue grew 3.4% year over year to $12.1 million in the quarter due to higher net premiums earned.
Pre-tax loss of $1 million was wider than a loss of $0.7 million incurred in the year-ago quarter. Increase in losses and loss adjustment expenses resulted in the wider loss.
Combined ratio deteriorated 610 bps to 114.5%.
Corporate: Total revenue was ($2.35) million compared with $2.97 million in the year-ago quarter.
Pre-tax loss of $7.8 million was wider than $0.8 million in the year-ago quarter.
Financial Details
Hallmark Financial exited the quarter with total investments of $618.7 million, up 6.9% from year-end 2015.
Cash and cash equivalents declined 17.7% to $101.2 million in the quarter.
Cash flow from operations was $3.6 million in the reported quarter compared with cash flow from operations of $29.2 million a year ago.
Hallmark Financial’s book value per share was $14.25 as of Jun 30, 2016, up 4.5% year over year. Stockholder’s equity was $266.1 million as against $262 million in the year-ago quarter.
Zacks Rank
Hallmark Financial carries a Zacks Rank #3 (Hold).
HALLMARK FINL Price, Consensus and EPS Surprise
HALLMARK FINL Price, Consensus and EPS Surprise | HALLMARK FINL Quote
Performance of Other Insurers
Among the other players in the insurance industry that have reported their second-quarter results so far, the bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7Best Stocks for the Next 30 Days. Click to get this free report >>