Outlooks Revised to Stable for Hallmark Financial Services, Subsidiaries

June 9, 2016

Ratings agency, A.M. Best, has revised the outlooks to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of the members of Hallmark Insurance Group (Hallmark Group), headquartered in Fort Worth, Texas.

Additionally, A.M. Best revised the outlook to stable from negative and affirmed the ICR of “bbb-” of the group’s holding company parent, Hallmark Financial Services Inc. (Hallmark Financial) (Nevada).

A.M. Best also revised the outlook to stable from negative and affirmed the indicative rating of “bbb-” on senior unsecured debt under Hallmark Financial’s shelf registration.

The revised outlooks reflect Hallmark Group’s return to underwriting and operating profitability, primarily driven by corrective actions to address unprofitable business segments and geographies in the group’s commercial and personal lines.

These actions have included non-renewing the group’s Florida non-standard personal automobile business; de-emphasizing personal and commercial property exposures; exiting unprofitable states; sale of its workers’ compensation renewals; and aggressively raising premium rates, along with tightening underwriting guidelines.

The group’s risk-adjusted capital also benefited from a substantive capital contribution by the parent, Hallmark Financial, in late 2015.

These positive rating factors are partially offset by the group’s volatile operating results in recent years primarily due to its significant underwriting losses in 2010-2013, and concentration risk, as approximately 47 percent of the group’s business is conducted in Texas, exposing Hallmark Group to frequent and severe weather-related losses.

The ratings and outlooks could come under pressure should soft market conditions and a lack of underwriting discipline result in underwriting and overall operating performance falling short of A.M. Best’s expectations, or should there be a material decline in the group’s risk adjusted capitalization.

The outlooks have been revised to stable from negative and the FSR of A- (Excellent) and the ICRs of “a-” have been affirmed for the members of Hallmark Insurance Group:

  • American Hallmark Insurance Company of Texas
  • Hallmark Insurance Company
  • Hallmark Specialty Insurance Company
  • Hallmark County Mutual Insurance Company
  • Hallmark National Insurance Company

Source: A.M. Best

Topics Trends Texas AM Best

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