Hallmark Financial Announces Exit from Binding Primary Commercial Auto Business; Reports Loss Development for Prior Underwriting Years

DALLAS, March 02, 2020 (GLOBE NEWSWIRE) -- Hallmark Financial Services, Inc. (“Hallmark Financial” or the “Company”) (NASDAQ: HALL), a specialty property and casualty insurance company, announced last month to its brokers and agents that the Company had made the strategic decision to exit its Binding Primary Auto business. Despite several years of implementing proactive rate actions and policy changes, the Company has continued to experience increasing claim severity from prior accident years. As a result, Hallmark Financial has made the decision that its in-force policies will be placed into run-off and non-renewed in accordance with applicable state requirements.

Naveen Anand, President & CEO of Hallmark Financial, stated, “Over the past few years, we have worked diligently to diversify our business mix in specialty insurance, while continuing to work to improve our binding auto results to a level of sustainable profitability. Ultimately, we have seen greater than expected claim severity throughout all of commercial auto and made the decision to fully focus on our growing specialty lines.”
       
Mr. Anand continued, “By exiting this book of business and focusing on our core specialty lines, the Company can continue to write profitable business without the continued strain on our results. In the coming months, we will continue to work with our agency partners to assist in the transition from binding auto, and evaluate reinsurance options that help to facilitate an orderly exit, such as an adverse development cover or loss portfolio transfer, to mitigate future volatility associated with this book of business.”

The Company also announced that it will file its annual insurance statutory reports today, which will include pre-tax adverse prior year loss development of $63.8 million, net of reinsurance, for fiscal 2019, as provided in Schedule P, of which $56.1 million was recorded in the fourth quarter of 2019. These losses are primarily related to the Binding Primary Auto business for the 2016 and 2017 underwriting years, with a smaller remainder largely attributable to general liability. These amounts are unaudited and based on statutory requirements rather than generally accepted accounting principles.