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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 08, 2016 03:15 PM (EDT)
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, TX). Additionally, A.M. Best has 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 has revised the outlook to stable from negative and affirmed the indicative rating of “bbb-” on senior unsecured debt under Hallmark Financial’s shelf registration. (See below for a detailed listing of the companies.)
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% 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:
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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