AM Best announced that it would not change the “A-” financial strength ratings of the members of Dallas-based specialty insurer Hallmark Insurance Group nor the “bbb-” long-term issue credit rating of Hallmark Financial Services, after Hallmark Financial announced its chief executive officer is resigning.
An 8-K filing with the Securities and Exchange Commission revealed that Naveen Anand submitted his resignation on Jan. 11, 2021 as president and chief executive officer, as well as all other positions with subsidiaries, effective Feb. 26, 2021, citing family and personal reasons.
On Jan. 14, Hallmark Financial’s board of directors appointed Executive Chair Mark E. Schwarz to fill the roles Anand is leaving. Schwarz, who previously served as CEO from January 2003 through August 2006, and as president from November 2003 through March 2006, became executive chairman in August 2006.
In September, Hallmark Financial announced that the chief financial officer, Jeff Passmore, had submitted his resignation.
In November, the company reported that third-quarter results were impacted by the cost of a loss portfolio transfer ($21.7 million pre-tax) and more adverse prior-year reserve development ($13.9 million pre-tax), mainly coming from commercial auto business. On the bottom line, the third-quarter loss came in at $28 million, and through nine months it was $85.6 million, compared to $33.3 million profit for the first nine months of 2019.
“With the completion of the loss portfolio transfer transaction in the third quarter, and the affirmation of our rating by A.M. Best, Hallmark Financial is beginning to emerge from what has been a difficult year for the company,” said Anand, in a November 2020 statement. “While the loss portfolio transfer impacted our results this quarter, it provides substantial reinsurance coverage for the binding primary commercial automobile business we exited earlier this year.”
Anand also commented at the time that Hallmark Financial had undertaken “a journey many years ago to transition from a regional auto insurer to an E&S focused specialty insurance company,” and that he was encouraged by the trajectory of pricing and the ability to better deploy limits to mitigate the impact of claims severity in the improved market environment which also supported the removal of underpriced risks through policy terms and conditions.
Schwarz, in addition to previously serving as CEO and president in the early 2000s, has indirectly controlled Newcastle Partners, L.P., a private investment firm, since 1993, according to the 8-K text. In addition, he presently serves as chairman of Rave Restaurant Group, Inc., an operator and franchisor of pizza restaurants; and Wilhelmina International, Inc., a model management and talent representation company.
Within the past five years, Schwarz has served as a director of SL Industries, Inc., a developer of power systems used in a variety of aerospace, computer, datacom, industrial, medical, telecom, transportation and utility equipment applications. He also serves as a director of various privately held companies, the filing says.
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