Hallmark Financial Services Inc., a property/casualty insurance company with three business segments – Specialty Commercial, Standard Commercial and Personal – plans to pursue an initial public offering of a non-controlling ownership stake in the core businesses within the Specialty Commercial business segment, creating a separate company named Hallmark Specialty Group Inc.
Dallas-based Hallmark Financial announced in January that it was exploring the separation of its specialty commercial business to unlock its value and improve access to capital.
While the number of shares of Hallmark Specialty Group to be offered and the price range for the offering have not yet been determined, the offered shares are expected to represent an economic ownership stake of approximately 50%.
Hallmark Financial intends to retain at least a majority of the combined voting power of Hallmark Specialty Group’s shares through its ownership of high-vote common shares.
The IPO process is expected to be completed during the third quarter of 2021. However, the company said, execution of the IPO is dependent upon, and subject to, a number of factors and uncertainties, including business and market conditions.
“Our Specialty Commercial business has grown significantly over the past 15 years. We have concluded that this transaction will allow Hallmark Financial and Hallmark Specialty Group to focus on their respective businesses and unique opportunities for long-term growth and profitability and to allocate capital and corporate resources in a manner that focuses on achieving each company’s own strategic priorities,” said Mark Schwarz, Hallmark Financial’s executive chairman, president and chief executive officer, in a statement.
Hallmark Financial said it currently has no intention of spinning off or otherwise divesting its ownership interest in Hallmark Specialty Group following the completion of the IPO.
Hallmark Specialty Group will not include business produced by the Aerospace & Programs business unit, the exited Binding Primary Auto business, or any business produced by third-party program managers (which includes a senior care and a commercial auto program), each of which will be retained by Hallmark Financial.
About Hallmark Financial
Hallmark Financial is a property and casualty insurance company with a diversified portfolio of insurance products written on a national platform. Through its six insurance subsidiaries, Hallmark Financial markets, underwrites and services commercial and personal insurance in select markets.
Source: Hallmark Financial
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